2018 Annual Report
BAILADOR TECHNOLOGY INVESTMENTS LIMITED
(ASX:BTI)
Table of Contents
03 Corporate Summary
04 Board of Directors
06 Letter from the Founders
09 Operating and Financial Review
17 Corporate Governance Statement
20 Directors’ Report
24 Auditor’s Independence Declaration
25 Statement of Profit or Loss and Other Comprehensive Income
26 Statement of Financial Position
27 Statement of Changes in Equity
28 Statement of Cash Flows
29 Notes to the Financial Statements
45 Directors’ Declaration
46 Independent Auditor’s Report
51 Shareholder Information
53 Corporate Information
Providing access to
a portfolio of quality,
high growth companies
in the technology sector.
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BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2018
Corporate Summary
The Company
Risk
Bailador Technology Investments Limited (ACN 601 048 275)
is a listed investment company and its shares are listed on the
Australian Securities Exchange (ASX:BTI).
The company invests in expansion stage internet-related
businesses. The value of the shares and the income derived may
fall or rise depending on a range of factors. Refer to Note 17 of the
Financial Report for further information.
Objective
Bailador invests in internet-related businesses in Australia and
New Zealand that require growth capital. In particular, Bailador
focuses on software, internet, mobile data and online market-places
with proven revenue generation and management capability,
demonstrated business models and expansion opportunities.
Capital Structure
The Company’s capital structure comprises 120,247,831
Ordinary Shares which trade on the Australian Securities
Exchange (ASX:BTI).
Financial KPIs
Share Price
Earnings per share (cents)
Total Assets ($000)
NAV $ per share (pre-tax)
NAV $ per share (post-tax)
30-Jun-18
30-Jun-17
0.74
3.04
147,963
1.110
1.065
0.90
(4.44)
136,496
1.067
1.035
Investment Manager
Management Agreement
The Company has outsourced its investment management
function to Bailador Investment Management Pty Ltd (A.C.N. 143
060 511)(AFSL 400811). The Manager is a Sydney based privately
owned investment manager which commenced trading in 2010.
The Company has an agreement with Bailador Investment
Management Pty Ltd for the provision of management
services, the details of which are contained in Note 5 of the
Financial Report.
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2018
3
Board of Directors
David Kirk
Chairman and Executive Director
Paul Wilson
Executive Director
David (appointed 2014) has been chief executive of two ASX-listed
companies, including diversified media company, Fairfax Media
Limited, where he led a number of successful internet sector
investments. David is currently Chairman of ASX-listed companies,
Trade Me Group Limited and Kathmandu Holdings Limited and is
Chairman of Forsyth Barr Limited, a privately owned investment
firm and the Sydney Festival. David holds several BTI portfolio
directorships as Chairman of Rezdy and SMI and a director each
of DocsCorp and Viostream.
David is a Rhodes Scholar with degrees in Medicine from Otago
University and Philosophy, Politics and Economics from Oxford
University. David enjoyed a highly successful rugby career,
captaining the All Blacks to win the World Cup in 1987. He was
awarded an MBE in 1987.
David holds 8,387,841 ordinary shares in BTI and an indirect
interest in a further 773,887 ordinary shares.
David is a Director and shareholder of Bailador Investment
Management Pty Ltd which holds a contract with Bailador Technology
Investments Limited to act as Manager. Further details pertaining to
this agreement can be found in Note 5 of the Financial Report.
Paul (appointed 2014) has had extensive private equity investment
experience as a previous director of CHAMP Private Equity in Sydney
and New York and with MetLife in London. Paul was also previously
Executive Director at media focused investment group, Illyria Pty
Ltd. Paul is a Director of Bailador investee companies SiteMinder,
Straker Translations and Stackla. Paul is also a director of ASX-listed
Vita Group Limited along with Yellow Pages (New Zealand) and
the Rajasthan Royals IPL cricket franchise.
Paul holds a Bachelor of Business, Banking and Finance from
QUT and is a Fellow of FINSIA. He is a member of the Institute
of Chartered Accountants and of the Australian Institute
of Company Directors.
Paul holds 3,201,513 ordinary shares in BTI and has an indirect
interest in a further 410,423 ordinary shares.
Paul is a Director and shareholder of Bailador Investment
Management Pty Ltd which holds a contract with Bailador Technology
Investments Limited to act as Manager. Further details pertaining to
this agreement can be found in Note 5 of the Financial Report.
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BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2018
Board of Directors (continued)
Andrew Bullock
Independent Non-Executive Director
Andrew (appointed 2014) is a Managing Director at Adamantem
Capital, a private equity firm based in Sydney. Prior to joining
Adamantem, Andrew was for many years the head of the corporate
advisory and private equity practice of Gilbert + Tobin, one of
Australia’s leading law firms. He was also previously a partner
of Minter Ellison and spent three years in the London office of
Freshfields Bruckhaus Deringer.
Andrew has a Bachelor of Arts from Sydney University and
a Bachelor of Laws from the University of New South Wales.
Andrew is the Chair of Bailador’s Nomination and
Remuneration Committee.
Andrew holds interest in 410,422 ordinary shares in BTI.
Heith Mackay-Cruise
Independent Non-Executive Director
Heith (appointed 2014) is the independent Chairman of hipages
Group, Literacy Planet, ACG Education in New Zealand and
the Vision Australia Foundation. Heith is also a member of the
Adara Partners Advisory Board.
Heith has a Bachelor of Economics from the University of
New England and is a Fellow of the Australian Institute of
Company Directors.
Heith holds interest in 502,592 ordinary shares in BTI.
Sankar Narayan
Independent Non-Executive Director
Sankar (appointed 2014) is currently the Chief Operating and
Financial Officer of ASX listed company, Xero and an independent
non-executive director of global air transport company SITA. He has
previously been CFO at Virgin Australia Holdings Limited, Fairfax
Media and Foxtel.
Sankar has an MBA from the University of Chicago Booth School of
Business and is an FCPA (Australia). He also holds a masters degree
in electrical engineering from the State University of New York.
Sankar is the Chair of Bailador’s Audit and Risk Committee.
Sankar holds 200,000 ordinary shares in BTI.
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2018
5
Dear fellow shareholders,
Time Horizons
As investors of expansion capital for technology companies, we aim to
hold investments for a period of time sufficient for there to be substantial
value improvement.
We believe the performance of an investment in a concentrated
portfolio of private information technology companies at the expansion
stage should be assessed over the medium to long term, and cannot
be meaningfully assessed on an annual basis. The shortest period
meaningful conclusions can be drawn on the performance of a fund
such as Bailador Technology Investments (Bailador) is 5 years, and 10
years is better still. This view is shared by investors and fund managers
in private venture capital and private equity funds. These private funds
run for 10 or more years and performance is assessed on the final return
after the fund has sold all its assets and is closed.
Bailador is a publicly listed fund and therefore reports annually
according to the ASX listing requirements. We have no complaints about
this, believing the rigorous reporting requirements of a publicly listed
company to be good for investors, and to provide a strong endorsement
of the good governance practises we follow and believe all companies
managing other people’s money should also follow.
However, annual reporting for public companies, “the season”,
causes an unhealthy focus on short term performance and on
performance squeezed into a particular 12-month period ending
on 30 June each year.
Further, we publish NTA Statements on a monthly basis.
This exceedingly short-term measure of performance does help
us all to understand that the growth in value of our investee
companies happens incrementally but is only recognised in our
accounts occasionally. We go long periods without adjusting the
value of portfolio companies and then, when appropriate, we
recognise the value accumulated over a fairly lengthy period of time.
Valuations and the Incentives
The catalyst for a valuation adjustment in a portfolio investment
we continue to hold is one of:
• a third-party investment,
• a partial sale of our investment, or
• the passing of 12 months.
The first two of these valuation methods involve the payment of
cash in an arms-length transaction, almost invariably by highly
sophisticated investors. Few would argue with a market value set
in this fashion.
Third party investment has been by far the most common method
of valuation adjustment in the portfolio. Since we listed, 7 of the
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BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2018
10 companies in the portfolio have had their valuations adjusted
following independent third-party investment. And in every case
the valuation adjustment has been at or above our carrying value.
In every case independent third-party investors have put the same
or higher value on our portfolio company than the value we were
holding it at. We often say we hold our companies at conservative
valuations. Experience shows this is the case.
The third valuation method, a reset after 12 months by reference to
comparable public company trading multiples, relevant transaction
multiples (with the control premium stripped out) and observed
valuations achieved by comparable companies when they raise
funds, is less satisfactory. Rather than rely on the hard evidence of a
cash transaction, this method requires judgement. It is our view that
the quality of judgement delivered in these circumstances is related
to the incentives faced by the judges.
There are four different parties involved in valuing Bailador portfolio
investments. These are the Manager (a company owned by Paul
and David); BDO, the board’s Independent Valuation Expert; Hall
Chadwick, the Auditor of the company and the Independent
Directors of Bailador.
The people who have the most to gain financially in the short term
from higher than justified valuations are the managers of the fund
as higher fees are paid on higher valuations. However, the people
who have the most to lose in the long term from higher than justified
valuations are also the managers of the fund, because valuation
chickens always come home to roost. Given we have a lot of our
own money invested in Bailador shares, which we have no intention
of selling, it doesn’t make any sense for us to prefer anything but
accurate and if anything, conservative valuations.
Call us mean, but we don’t pay our Independent Valuation Experts,
our Auditors or our Independent Directors anywhere near enough for
them to conclude it would be a financial tragedy to lose Bailador as
a client or an employer.
The most powerful incentive for all of the parties involved in the
valuation of Bailador portfolio investments is reputation. Our
valuations are carried out by judges for whom the reputational
damage which will accrue, sooner or later, from valuing our
investments too high far exceeds any financial benefit they can
achieve from doing so.
Major Risks
At the highest level, there are two major risks you should be
concerned about in what we do on your behalf. They are:
1. Buying into the wrong business, and
2. Selling out of a good business at the wrong time.
Letter from the Founders minority by value, will welcome a dividend payment associated with
the sale of all or part of a portfolio company. We also believe that a
realisation is likely to be a catalyst for the closing of the share price
gap to NTA. But we will not sell early simply to achieve these ends.
Our job is to manage your investment over an extended period of
time and to take advantage of the compounding of value that occurs
in ever bigger licks as a company grows.
The graph below shows the growth in revenue over a 10-year period
of a company with starting revenue of $5 million growing at 32%
per year. The choice of these numbers is not random. $5 million is a
typical revenue at the time of investment for the companies Bailador
invests in and 32% annual revenue growth is the actual revenue
growth rate of the Bailador portfolio in FY 2018.
If we assume the amount invested is also $5 million (a typical initial
amount for Bailador to invest in a company) and there is no change
in the valuation multiple applied as the company grows (which is
conservative as multiples typically expand as companies grow and
prove they are expanding into a big market opportunity), then the
graph below also charts the growth in the value of the investment
of $5 million.
At the end of three years, the $5 million investment has grown to
$11.5 million, providing a 2.3x return on investment, after five years
the investment is worth $20 million, and the return is 4x the initial
investment and after 10 years the investment is worth $80.3 million
and the return is 16.1x the initial investment. In the first 5 years
after investment $15 million of value is created for the investors
of the initial $5 million and in the next 5 years, years 5 to 10 after
investment, $60.3 million of value is created for the investors of the
initial $5 million. As you can see four times the amount of value is
created in years 5-10 than is created in years 1-5.
We hope this little example makes it clear that if we have investments
we think will continue to grow strongly in value it makes sense for us
to hold them for longer on your behalf.
There is one way in which we can, to an extent, eat our cake and have
it. When we list companies from the portfolio – typically on the ASX
– we will not typically sell down more than a minority of our holding.
We do not foresee ourselves listing companies to exit them, rather
listing them to reveal value and to continue the funding journey for
the company.
Most of what we do at Bailador is to work with our portfolio
companies to help them grow their customers, revenue and
profitability. Amongst other things, we help our companies find
the right people, set up new systems, improve sales and marketing
capability, expand offshore and raise more capital. This goes on
for years, and we have no doubt we add a great deal of value to
our companies in doing this, but all of this pales into insignificance
compared to the value we lose, or leave on the table, by investing in
a bad business or selling our position in a good business too early.
We feel good about our allocation of capital to our ten current
investments. Five investments have been written up in the year (and
one increased further after year end), one investment is too new to
see a change and three were held stable. This year we have written
down Viostream quite aggressively because of slower growth and a
consequent lower valuation multiple. We think Viostream can grow
from here and we will continue to work closely with the business
to do that. We have a great management team working hard to get
a good result for us all. Greatly to the credit of the whole Viostream
team, The Australian Business Awards awarded Viostream an
Employer of Choice Award in their 2018 annual awards.
We have only sold one small piece of one investment. We sold a $5
million stake in SiteMinder back in late 2015 and this was at a 45%
uplift on our carrying value at the time. Our current investment is
held at $55.9 million so we continue to have plenty of exposure to
this excellent company.
We know that realisations are important for demonstrating the value
of our companies and that some shareholders, we think a fairly small
Compounding Revenue and
Value Growth
100.0
90.0
80.0
70.0
60.0
50.0
40.0
30.0
20.0
10.0
0.0
0
1
2
3
4
5
6
7
8
9
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BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2018
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Letter from the Founders (continued) Short Term Measure of Performance
The Next Phase
The next phase for all of us at Bailador and for investors is a phase
of consistent investment value growth, increasing numbers of
partial and full sales of investee companies, management of some
public company positions resulting from partial sales when we
list companies, additional investments to maintain the number of
portfolio companies at around 10 to 12 and continued development
of our networks and activity in Australia and New Zealand and further
afield, in particular the US, now that we have an established Bailador
presence there.
In the short term, the board of Straker Translations has publicly
communicated they are targeting an ASX listing in FY 2019 and we are
working closely with them on that. Straker Translations has executed
very well over the last year and has an established and repeatable
growth strategy, including organic growth and growth by acquisition.
We have high expectations of continuing strong performance.
Finally, we thank all our shareholders who have supported us
this year. We feel very good about the quality of our portfolio of
investments and the values at which they are held. We believe FY
2019 will be a successful year with strong portfolio growth and one
or more realisations.
We look forward to seeing those that are able to make it at our AGM
at 11am on 23 October at Level 40, 2 Park Street, Sydney.
David Kirk
Chairman and Executive Director
Paul Wilson
Executive Director
Notwithstanding the limited value we see in assessing the
investment performance of Bailador on an annual basis, we
appreciate that shareholders will be interested in understanding
the best estimate of annual performance we have. We believe this
is pre-tax, post fees, return on opening net assets. We propose the
calculation should be before tax because in some years tax losses
will be available to be offset against earnings and in others not. In
2018 we delivered a 4.1% return on opening net assets, after all fees
and costs, before tax.
The End of the Establishment Phase
The 2018 financial year marks the end of the third full year of
operations of Bailador Technology Investments and, we believe, the
end of the first phase of establishing a successful listed fund investing
in private expansion stage information technology companies. It may
be useful to summarise what we have achieved. We have:
• Grown funds under management from $62 million to
$134 million
• Increased our portfolio from 3 companies to 10 companies,
after 1 written off
• Increased our investment team from two to six, including
one now stationed in New York
• Grown our shareholders from 33 to 1,350
• Implemented first class public company governance and
disclosure processes
• Developed and implemented first class growth stage technology
company assessment and investment management capabilities
The list above chronicles good progress across a wide front and as
we look back on the three and half years, we are confident we have
established the foundations for future strong investment performance.
Building a portfolio was important to us and to investors and we
have done that. Understanding the best internet and IT business
and revenue models was important and we are confirmed in our
commitment to software-as-a-service and marketplace models.
Giving the portfolio time to shake out has been important. It is
a truism that your worst investments crystallise first and that is
what has happened to us, iPRO has gone and Viostream has been
aggressively written down to have upside from where it is now.
Our investment team is seasoned and performing very well, as is our
back office. We have established a US presence which is proving very
helpful in fundraising for portfolio companies and will, we believe,
be similarly valuable for ‘whole of company’ exits to US buyers.
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BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2018
Letter from the Founders (continued) Principal Activities
Operating Results
Bailador Technology Investments Limited (BTI) invests in information
technology businesses in Australia and New Zealand that are seeking
growth capital. The target businesses typically have an enterprise
valuation between $10 million and $200 million. In particular, the
Company focuses on software, internet, mobile, data and online
market-places businesses with proven revenue generation and
management capability, demonstrated successful business models
and expansion opportunities.
There have been no significant changes in the nature of the
Company’s principal activities during the financial year.
Our Business Model and Objectives
Providing satisfactory returns to shareholders is our primary objective.
Our success in achieving this objective is determined by total
shareholder return (TSR) over time. The TSR we deliver will, over time,
be directly related to the return on invested capital we achieve.
Our business model is to identify, buy and hold investments in a
number of private internet-related businesses with strong growth
prospects. Returns to shareholders will be delivered by growth in
the value of investments held and through potential distributions to
shareholders following the sale of investments. Following sales, we
will continue to make new investments to maintain a portfolio
of investments.
Investments made by BTI are typically structured to provide a level
of contractual protection superior to that available to investors in
ordinary shares, thereby reducing risk. Thorough due diligence is
carried out before investments are made and BTI representation on
most portfolio company boards ensures BTI’s close involvement with
operational decisions.
BTI continues to assess a strong pipeline of potential investments, and
will continue to make investments as attractive opportunities arise.
The Company has been classified under AASB 2013-5 as an Investment
Entity whose business purpose is to invest funds solely for returns via
capital appreciation and/or investment returns. As the Company has
been classified as an Investment Entity, the portfolio investments have
been accounted for at fair value through the profit or loss and shown
as Financial Assets in the Statement of Financial Position.
The profit of the Company for the financial year ended 30 June
2018 amounted to a profit of $3,653,669 (2017 $4,965,000 loss),
after providing for income tax.
Combined revenue growth of the underlying portfolio companies
(portfolio weighted) for the financial year ended 30 June 2018 was
32%. Further information on individual investee company growth
can be found in the portfolio operating reports.
The underlying investment performance of the Bailador portfolio,
measured as the increase in the NTA between 1 July 2017 and 30
June 2018 (pre-tax, after all fees), was an increase of 4.1% pa over
the year. Five of the companies in the portfolio have had positive
revaluations in the year, with one revaluation down.
Review of Operations
New Investments
Brosa
In October 2017, BTI made a $3m investment in Brosa. Brosa is BTI’s
first online retail investment and has made progress in the short time
since the investment.
Follow-on Investments
Viostream
Throughout the first half of FY2018 BTI invested a further $1.6m in
Viostream. In December 2018 BTI then also bought out Viostream’s
minority shareholders at a cost of $1m. The follow-on investments
have resulted in a much cleaner shareholder register, which has
Viostream better positioned to negotiate future M&A activity.
Revaluations
The following investments were re-valued upwards during the year
to a new market value set by third party investment:
• Straker Translactions : increased by 28% ($2.5m) in October
2017 in line with a pre-IPO funding round
• Lendi : increased by 32% ($2.3m) in December 2017 following
a successful third party capital raising
The following investments were revalued under BTI’s revaluation
policy, including independent review, by reference to comparable
trading and transaction multiples, following strong performance
and no third party transactions for twelve months.
• SiteMinder : increased by 38% ($15.4m) in June 2018
• Instaclustr : increased by 106% ($4.8m) in December 2017,
twelve months after BTI’s initial investment
• DocsCorp : increased by 23% ($1.7m) in June 2018
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2018
9
Paul Wilson
Executive Director
Operating and Financial Review Review of Operations (continued)
Impairments
Viostream
In December 2017 BTI wrote down its investment in Viostream
by $6.8m. BTI took a further write down of $11.5m in June 2018.
Viostream is cash flow positive and is looking to take new products
to market in the coming year. It continues to win new enterprise sales
deals. Revenue however, has not met expectations this year, and this
is reflected in its lower valuation.
Valuation of Investments
The Directors have reviewed the value of the investment portfolio
and the net tangible assets of BTI as at 30 June 2018. In conducting
their valuation review, the Directors have had regard to the BTI
investment portfolio Valuation Review Report prepared by BDO
Corporate Finance (Qld) Ltd.
Information regarding the valuation of the investment portfolio is set
out in Note 18 of the financial statements and in the section below
“Operating Reports on Portfolio Companies”.
Investments are currently held at cost (plus accrued interest where
applicable), the valuation implied by the latest third party investment
or at a price determined by globally benchmarked revenue multiples
and trading performance.
Operating Reports on Portfolio Companies
SiteMinder
SiteMinder is the world leader in hotel channel management
and distribution solutions for online accommodation bookings,
seamlessly connecting to more than 580 distribution partners,
including leading Online Travel Agents (OTAs) such as Booking.
com, Expedia, TripAdvisor, Google and C-Trip. Established in
2006, SiteMinder has developed a suite of products used by
accommodation providers in over 160 countries to help increase
online revenue, streamline business processes and drive down the
cost of acquisition of bookings. SiteMinder facilitates transactions in
the fast growing market of online accommodation booking.
SiteMinder is a software-as-a-service (SaaS) business, licencing
all products on its software platform on a monthly basis to over
30,000 customers worldwide, making it the largest hotel channel
management and distribution solution in the world. It operates a
subscription business model with greater than 90% of revenue being
recurring in nature.
The company’s flagship product is The Channel Manager, an online
distribution platform. The Siteminder Platform also includes The
Booking Button (a booking engine enabling direct hotel bookings
via the web), Canvas (an intelligent website creator for hoteliers),
Business Intelligence (a real-time rate intelligence tool) and GDS by
SiteMinder (a single point of entry to a network of travel agents and
the world’s leading global distribution systems). SiteMinder’s Little
Hotelier product also offers a Property Management System (PMS)
for boutique hotels.
strong top line revenue growth at
“ SiteMinder continued to deliver
very attractive gross margins.”
The business continues to invest in multiple products as part of its
platform offering. This includes the recent launch of Siteminder Pay
(a payments solution that enables monetisation of transaction value
processed by the Little Hotelier product) and Siteminder Exchange (a
marketplace enabling data exchange between PMS’s and other hotel
applications). Through additional strategic partnerships secured
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BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2018
Operating and Financial Review (continued) Review of Operations (continued)
during the year, SiteMinder continues to enhance the available
channels for hotels to distribute inventory. The business was first
to market with the announcement of a high profile distribution
partnership with Airbnb in February 2018.
In the year to 30 June 2018, Siteminder continued to deliver
strong top line revenue growth at very attractive gross margins.
The company broadened its senior management team through
the recruitment of a Chief Product Officer, and a Global Head of
Customer Success. The company employs 595 people across its
six offices in Sydney (global headquarters), Dallas, Galway, London,
Bangkok and Cape Town.
BTI increased the valuation of its investment in SiteMinder by 38% to
$55.9m in June 2018, reflecting its continued strong performance.
Valuation 30 June 2018:
Valuation at 30 June 2017:
Investment since 30 June 2017:
$55.9m
$40.5m
$0m
Basis for valuation:
Securities held:
Revenue multiples
Convertible preference shares
Stackla
Stackla is a content discovery platform that is focused on User
Generated Content (UGC) and Digital Asset Management (DAM)
enabling brands to feature UGC throughout their marketing stack
and content strategy. UGC is aggregated from over 30 data sources
such as Facebook, Twitter, Instagram, YouTube, Wordpress and
Twitch. Stackla leverages predictive intelligence and automation
to identify authentic and compelling content for each of a brand’s
consumer segments, delivering personalised experiences at scale.
The use of UGC in a brand’s marketing strategy has two core benefits:
(1) it provides a source of trusted third-party validation, increasing
customer conversion to sale through greater authenticity, and (2) it
reduces the cost to the company of content creation.
Stackla offers customisable displays, plugins for a brand’s marketing
tech stack, and a suite of APIs for developing deep integrations
and custom activations. The platform also offers brands the tools
required to obtain ‘rights for use’ from the content creator.
Established in 2012, Stackla is trusted by more than 350 brands
across travel & hospitality, consumer goods, retail, sport and not-for-
profit sectors. Stackla is designed to meet the needs of enterprise-
level organisations including Ford, Sony, Disney and McDonalds.
The business model is software-as-a-service (SaaS), licensing its
platform to customers on an annual basis. Over 90% of Stackla’s
revenue is recurring in nature and 60% of the company’s revenue is
generated outside of APAC.
Stackla employs ~60 FTEs across its offices in Sydney, San Francisco
(headquarters), New York, Austin and London.
Following on from the successful launch of ‘Co-Pilot’ (the company’s
machine learning and visual recognition product) in late FY17, Stackla
launched the Stackla Digital Asset Manager (DAM) in January 2018. The
strategic importance of the Stackla DAM is to offer brands a repository
of rights-management UGC that can be accessed retrospectively and
by multiple departments within the customer’s business.
Valuation 30 June 2018:
Valuation 30 June 2017:
Investment since 30 June 2017:
$12.6m
$12.6m
$0m
Basis for valuation:
Securities held:
Revenue multiples
Convertible preference shares
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2018
11
Operating and Financial Review (continued) Review of Operations (continued)
Straker Translations
Lendi
Straker Translations (Straker) is a 24/7 cloud-enabled translation
platform that services more than 8,000 customers across 20 countries,
ranging from small businesses to multi-national enterprises. Straker’s
proprietary technology and platform allow it to achieve industry
leading gross margins.
Lendi is a disruptive Fintech business that has developed an end-
to-end online mortgage platform that fundamentally improves and
simplifies the process of obtaining a home loan. Lendi is tackling
the $383bn and highly profitable mortgage market that is currently
dominated by the slow-moving “big four” banks.
Lendi’s online platform searches through 1,600 different home loans
from 37 lenders to match prospective borrowers with the right home
loan. Lendi’s platform utilises technology to power this home loan
search process and then streamline the home loan application process.
During FY2018 the company continued to scale-up its operations and
the business now has over 250 team members operating from offices
in Sydney, Melbourne and Brisbane. A substantial component of the
team’s growth has been front line sales staff.
In FY2017 the company launched a joint venture with Domain called
Domain Loan Finder that combines Domain’s property audience
with Lendi’s industry leading mortgage platform. The Domain joint
venture continues to perform well and there is strong potential for
this to grow considerably.
BTI is pleased with the progress that the Lendi team continue to
make. The company has now settled over $5bn in home loans and
delivered market leading revenue growth rates in FY2018.
BTI increased the valuation of its investment in Lendi by 32% to
$9.5m in December 2017 based on a 3rd party investment round.
Valuation 30 June 2018:
Valuation 30 June 2017:
Investment since 30 June 2017:
$9.5m
$7.2m
$0m
Basis for valuation:
Securities held:
Recent third party investment
Ordinary shares
Straker’s growth plans are built on four key areas including online
marketing, corporate sales, API Partnerships, and seeking out
appropriate M&A opportunities.
Straker has achieved considerable progress on each of these areas
over the last twelve months, and grew revenue by 44% for its
financial year ending March 2018.
In July 2018 the company continued its acquisition strategy acquiring
20-person Spanish translation company, Sociedad Management
System Solutions and German translation company, Eule. Having
completed two previous acquisitions, the business has proven out
the compelling economics of its acquisition strategy. There continues
to be a healthy pipeline of acquisition opportunities for Straker,
which will be a focus for the business in FY2019.
The Straker API strategy is now generating revenue and the business has
put in place a dedicated API sales team that are converting sales leads
generated as a result of Straker’s WordPress and Magento API plugins.
The Straker API plugin is now available in the Magento marketplace.
The business added to its senior sales team in each key region
(Europe, North America and Asia) to drive Straker’s corporate sales
strategy. This is generating a high-quality revenue pipeline and solid
base of repeating revenue. This senior sales team is succeeding in
expanding the accounts of customers acquired via acquisition off the
back of Straker’s superior technology.
In November 2017 Straker completed a pre-IPO founding round to
further its acquisition strategy. After completing its pre-IPO funding
round Straker commenced proceedings to list on the ASX and has
appointed legal, accounting and capital market advisors to prepare
for a potential ASX listing.
The strategic prospects for Straker are increasingly strong as they
continue to scale-up their translation platform in the growing
US$43.0bn language services market.
BTI increased the valuation of its investment in Straker Translations by
28% to $11.2m in October 2017, based on a third party investment round.
Valuation 30 June 2018:
Valuation 30 June 2017:
Investment since 30 June 2017:
$11.2m
$8.7m
$0m
Basis for valuation:
Securities held:
Recent third party investment
Convertible preference shares
12
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2018
Operating and Financial Review (continued) Review of Operations (continued)
Instaclustr
DocsCorp
Instaclustr is a global platform that manages the most powerful
open source technologies empowering customers to deliver big
data applications at scale. The company addresses a multi-billion
dollar fast growing industry underpinned by the growing adoption
of open source technologies and strong growth in Big Data Analytics
investment.
Instaclustr enables companies to focus their in-house development
resources on building proprietary software applications, whilst
it manages complex database, analytics, search and messaging
applications that are critical to success. Instaclustr also enables
companies to de-risk their investment in open-source based
technology, knowing that the back-end of their application
infrastructure meets stringent SLAs and is secure, scalable and reliable.
Established in 2013, Instaclustr is trusted by global industry leaders
and counts Atlassian, Sonos, Blackberry, Campaign Monitor and
Adstage amongst its customers. The revenue model is highly
recurring, with customers on either annual contracts (very similar to
a Software-as-a-Service business model) or paying monthly amounts
that vary slightly with usage. Revenue is extremely sticky with 80%+
of total revenue classified as recurring. Instaclustr has demonstrated
excellent operational performance over the twelve months ending 30
June 2018, with revenue growth in excess of 100% YoY and significant
improvement in core margins as the business scales.
The company employs 60+ full-time staff across its two offices:
its headquarters in Palo Alto, California, and its founding office in
Canberra, Australia.
BTI increased the valuation of its investment in Instaclustr by 106% in
December 2017 based on very strong performance since investment
twelve months earlier.
Valuation 30 June 2018:
Valuation 30 June 2017:
Investment since 30 June 2017:
$9.3m
$4.5m
$0m
Basis for valuation:
Securities held:
Revenue multiples
Convertible preference shares
DocsCorp provides on-premise and cloud-based document
productivity software for law firms, accounting firms and document
management professionals via a suite of four different products. The
company operates within the Enterprise Content Management (ECM)
market. BTI invested in DocsCorp in July 2016.
During FY2018 the company made a number of key executive hires to
set the business up for continued revenue growth and the execution
of its product partnership strategy. A global head of commercial
was appointed to drive global revenue growth while a senior sales
executive is now responsible for leading the company’s partnership
strategy efforts.
From a product development perspective, DocsCorp is expanding
out its cloud functionality across its product set given increased
client demand and the ability to leverage this technology across
lucrative partnership opportunities. This strategy has proven
successful with the company signing new partnership agreements
with Netdocuments and Worldox which will see DocsCorp’s
Content Crawler integrated into both companies’ cloud document
management systems. These partnerships will launch during FY2019.
DocsCorp has more than 3,000 customers in 32 countries deploying
over 450,000 licences. The company has market leading low
customer churn and net revenue churn highlighting the sticky nature
of its customer base and the successful execution of its land and
expand sales strategy.
BTI revalued its investment in DocsCorp up by 23% to $9.2m in June
2018 based on the business’ revenue growth and improved recurring
revenue mix.
Valuation 30 June 2018:
Valuation 30 June 2017:
Investment since 30 June 2017:
$9.2m
$7.5m
$0m
Basis for valuation:
Securities held:
Revenue multiples
Convertible preference shares
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2018
13
Operating and Financial Review (continued) Review of Operations (continued)
Standard Media Index
Viostream
SMI is a market leading data platform specialising in the
management and distribution of media and advertising data. SMI
holds exclusive contracts to source advertising spend data from
buying agencies in more than 32 countries.
In FY18, SMI commercialised its new full market TV product, ’AccuTV’
which offers a comprehensive analytical view of the US TV market.
This product is used by media companies, financial investors
and management consulting firms to make fundamental strategic
decisions and has had successful uptake, with key contracts secured
with ABC/Disney, Fox, Turner and Discovery Channel.
SMI continues to strengthen the accuracy of its offering to customers
through incorporating incremental agencies into its data pool and
establishing strategic partnerships with other key data players in the
market, such as Nielsen.
SMI’s growth prospects remain promising, underpinned by two main
initiatives (1) penetrating new industry verticals that demonstrate
a clear product-market fit for the existing data intelligence SMI
provides, and (2) building new products for existing and new
customers. The company’s expansion into the financial services
sector is a clear example of the success the company has had with
its first initiative. The company has exceeded full-year CY 2018
budget expectations within the first six months of the year, with a
strong pipeline persisting. SMI has demonstrated a track record of
launching new products – AccuTV was the first of its new product
suite launched at the end of last year. SMI has since extended its
AccuTV product into a digital product. This new full market digital
product is in the final stage of development and early stage of go-to-
market and has been received favourably in early beta discussions
with potential customers.
In the 12 months to June 2018, SMI grew revenue by 25%. The
business has demonstrated EBITDA profitability on a monthly basis.
Valuation 30 June 2018:
Valuation at 30 June 2017:
Investment since 30 June 2017:
Basis for valuation:
Securities held:
$7.4m
$7.4m
$0m
Cost with cross check of revenue
multiples
Convertible notes and ordinary
shares
14
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2018
Viostream is a cloud-based video platform for the creation,
management and distribution of live and on-demand video.
Viostream’s platform is used by corporate and government enterprises
to manage digital video for business communications such as
marketing, internal employee engagement and corporate relations.
Viostream’s run-rate revenue declined 3% in FY2018 as a result of lower
than forecast sales and the deliberate exiting of low margin contracts.
The company’s booked revenue increased 17% year-on-year as a result
of strong multi-year renewals from key customers.
During FY2018 management implemented a number of initiatives
to move the business to cash flow profitability while also securing
new licence fee revenue. During the last quarter Viostream secured
five new licence deals, including a number of key government
departments and agencies.
Viostream’s CEO has restructured the New Business and Customer
Success teams. These changes have better equipped the business
to upsell to their existing base and condense the sales cycle for new
business opportunities. The live events production business has
been streamlined such that it services only licence fee customers.
The delivery of lower margin, one-off events has ceased.
Management have worked hard to reduce the monthly cost base of
the business by 25%. These cost reductions have been achieved by
right-sizing the team and eliminating unnecessary overheads.
Despite management’s focus on cost optimisation the business has made
considered investments in two new important product development
initiatives which the company will bring to market in FY2019.
During the course of FY2018 BTI revised the carrying value of Viostream
down by $18.2m to $7.4m to reflect the performance of the business
and applicable revenue multiples. $11.5m of this write down occurred
in June 2018. The last quarter of FY2018 is an important sales period for
Viostream and despite all the good work completed by management the
business did not achieve anticipated new revenue forecasts.
Despite the lower than forecast new sales performance in the last
quarter, the second half of FY2018 delivered material cash flow
profitability. Going into FY2019 the business is positioned well with a
high margin recurring revenue stream and a substantially lower cost
base along with the planned of launch of two new products.
Valuation 30 June 2018:
Valuation at 30 June 2017:
Investment since 30 June 2017:
Basis for valuation:
Securities held:
$7.4m
$23.0m
$2.6m
Cost plus accrued interest, with
cross check of revenue multiples
Convertible preference shares
and convertible notes
Operating and Financial Review (continued) Review of Operations (continued)
Rezdy
Brosa
Rezdy is Australia’s leading booking software and channel
management tool for the tours and activities sector. The company’s
channel management and distribution solutions increase online
and mobile sales of tours and activities and facilitate greater reach
through leading global distribution partners such as Viator, C-Trip
and Expedia. Rezdy’s B2B marketplace connects tours and activity
operators with over 3,800 independent agents and handles activity
and commission payments. Rezdy’s booking software platform
enables tours and activities providers to sell directly to consumers
online, simplifying back-end operations for customers with inventory,
scheduling and reservation engines.
Established in 2012, Rezdy has over 2,500 active customers who
collectively process more than $1bn in booking revenue per annum
through the platform. The company generates approximately half
its revenue outside of Australia with the US being Rezdy’s second
biggest market. The core of Rezdy’s business (booking software)
generates revenue through a software-as-a-service (“SaaS”) model
in which subscription fees are paid on a monthly or annual basis
and transactional revenue is captured on a commission per booking
basis. The B2B marketplace generates revenue through license
subscriptions and transaction fees. Approximately 90% of Rezdy’s
revenue is recurring in nature.
Over the past twelve months Rezdy demonstrated revenue growth
of 48%. In April 2018, Rezdy’s founder, Simon Lenoir, made the
decision to step into a Founding Director position, handing over
the CEO position to Chris Atkin. Chris has made further hires to
strengthen the senior management team, with the addition of a
Global Head of Sales and VP of Engineering. In January 2018, Rezdy
opened a second US office based in Raleigh, North Carolina. Rezdy
employs 60 people across its three offices including Sydney (global
headquarters), Las Vegas (US headquarters) and Raleigh.
Valuation 30 June 2018:
Valuation 30 June 2017:
Investment since 30 June 2017:
$4.5m
$4.5m
$0m
Basis for valuation:
Securities held:
Recent third party investment
Convertible preference shares
Brosa is a technology-led, vertically integrated furniture brand and
online retailer. Digitally-native brands like Brosa have an acute
advantage over typical retailers, with access to data across the
consumer purchasing lifecycle that can inform and optimise future
investment in inventory and pricing.
Australian retailers have been slow to respond to the shifting
landscape of modern consumers. This has created an opportunity for
digitally native retailers to utilise technology to optimise all parts of
the supply chain, from design to delivery, with a true understanding
of the desires and preferences of their customers. Brosa is a next
generation retailer with a digitally-native mindset and full vertical
integration across the supply chain, enabling superior control of
the customer experience. Utilising these advantages, Brosa is well
positioned to become a market leader in the $13.0bn Australian
furniture retail industry.
Established in 2014, Brosa is based in Melbourne with 25 staff. The
business operates an online/offline retail model, which includes
predominantly online sales supported by two appointment-only
physical showrooms in Melbourne and Sydney.
The business has scaled rapidly to reach $19m in net revenue and
demonstrates strong unit economic profitability with superior margins
compared to traditional online retail peers. Capitalising on its capital
efficiency the company achieved EBITDA breakeven for the month
of June 2018 for the first time since inception. In the time since
BTI’s investment in October 2017, Brosa has recruited top talent to
spearhead its product range and merchandising strategy and refine its
focus on brand marketing to drive organic customer acquisition.
Valuation 30 June 2018:
Investment October 2017:
Basis for valuation:
Securities held:
$3.0m
$3.0m
Cost
Convertible preference shares
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2018
15
Operating and Financial Review (continued) General Investee Company Risks
There are risks relating to the growth stage Internet-related
Businesses in which the Company invests including:
• The business model of a particular investee company may be
rendered obsolete over time by competition or new technology;
• Some investee companies may not perform to the level
expected by the Manager and could fail to implement proposed
business expansion and/or product development, reduce in
size or be wound up;
• Some investee companies may fail to acquire new funding,
whether by way of debt funding or third party equity funders;
• There is no guarantee of appropriate or timely exit
opportunities for the Company, and accordingly the timeframe
for the realisation of returns on investments may be longer
than expected.
The Company uses a combination of strategies to minimise business
risks, including structural and contractual protections, a clear
investment strategy and Board representation.
Environmental Regulation
The operations of the Company are not subject to any particular
or significant environmental regulations under a Commonwealth,
State or Territory law.
Significant Changes in State of Affairs
There was no significant change in the Company’s state of affairs
during the year.
Events after the Reporting Period
In August 2018, Instaclustr completed a capital raising by an
independent third party. BTI has revalued its investment in
Instaclustr upwards by $5.3m (58%) to $14.6m reflecting the price set
by that capital raise. Refer to BTI’s announcement for further details.
Other than the aforementioned investment, no matter or
circumstance has arisen since the end of the year that has
significantly affected or may significantly affect the operations of the
Company, the results of those operations or the state of affairs of the
Company in subsequent financial years.
Future Developments, Prospects and
Business Strategies
The BTI portfolio is well positioned for continued growth. In addition,
the pipeline of potential new investment opportunities remains strong.
Likely developments, future prospects and the business strategies and
operations of the portfolio companies and the economic entity, and
the expected results of those operations have not been detailed in this
report as the directors believe the inclusion of such information would
be likely to result in unreasonable prejudice to the Company.
Business Risks
The following exposures to business risk may affect the Company’s
ability to deliver expected returns:
Market Risk
Investment returns are influenced by market factors such as changes
in economic conditions, the legislative and political environment,
investor sentiment, natural disasters, war and acts of terrorism.
The investment portfolio is constructed so as to minimise market
risks but those risks cannot be entirely eliminated and the
investment portfolio may underperform against the broader market.
Liquidity Risk
There is a risk that the investment portfolio’s underlying investments
or securities may not be easily converted to cash. Even where the
Company does have a significant cash holding, that cash will not
necessarily be available to Shareholders.
16
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2018
Operating and Financial Review (continued) Bailador Technology Investments
Limited’s Corporate Governance
Arrangements
The objective of the Board of Bailador Technology Investments
Limited is to create and deliver long-term shareholder value
through a range of diversified investments.
The Board considers there to be an unambiguous and positive
relationship between the creation and delivery of long-term
shareholder value and high quality corporate governance.
Accordingly, in pursuing its objective, the Board has committed
to corporate governance arrangements that strive to foster the
values of integrity, respect, trust and openness among and
between Board members, management and investee companies.
Bailador Technology Investments Limited and its subsidiaries
operate as a single economic entity with a unified Board. As such,
the Board’s corporate governance arrangements apply to all entities
within the Company.
Bailador Technology Investments Limited is listed on the Australian
Securities Exchange (ASX). Accordingly, unless stated otherwise
in this document, the Board’s corporate governance arrangements
comply with the recommendations of the ASX Corporate
Governance Council (including the 2014 amendments) as well
as current standards of best practice for the entire financial year
ended 30 June 2018 and have been approved by the Board.
Board Composition
The Board comprises 5 directors, three of whom are non-executive
and meet the Board’s criteria, and ASX Guidelines, as to be considered
independent. The names of the non-executive/independent
directors are:
Andrew Bullock
Heith Mackay-Cruise
Sankar Narayan
An independent director is a non-executive director who is not
a member of management and who is free of any business or other
relationship that could materially interfere with, or could reasonably
be perceived to materially interfere with, the independent exercise
of their judgement. For a director to be considered independent,
they must meet all of the following materiality thresholds:
• Not hold, either directly or indirectly through a related person
or entity, more than 5% of the company’s outstanding shares;
• Not benefit, either directly or through a related person or entity,
from any sales to or purchases from the company or any of its
related entities, and
• Derive no income, either directly or indirectly through a related
person or entity, from a contract with the company or any of its
related entities.
A list of the Board’s directors for the year ended 30 June 2018, along
with their biographical details, is provided in the Directors’ Report.
The Board considers the current board composition reflects
an appropriate balance between executive and non-executive
directors that promotes both the generation of shareholder value
and effective governance.
The Board also considers that the current board composition
reflects an appropriate balance of skills, expertise and experience
to achieve its objective of creating and delivering long-term
shareholder value. The diverse range of investments the company
is involved in necessitates the Board having a correspondingly
diverse range of skills, experience and expertise. As BTI invests
in internet-related businesses, directors are required to have a strong
working knowledge of this sector. In addition, directors need to have
a strong understanding of a range of other business requirements,
including finance and contract law. To this end, the Board considers
its current composition to be appropriate and has in place an active
program for assessing whether individual directors and the Board
as a whole have the skills and knowledge necessary to discharge
their responsibilities in accordance with the Board’s governance
arrangements. Details of the skills, expertise and experience of each
director are provided in the Directors’ Report.
Ethical Standards
The Board is committed to its core governance values of integrity,
respect, trust and openness among and between Board members,
management and portfolio companies. These values are
enshrined in the Board’s Code of Conduct policy which is available
at www.bailador.com.au.
The Code of Conduct policy requires all directors to at all times:
• Act in good faith in the best interests of the Company
and for a proper purpose;
• Comply with the law and uphold values of good
corporate citizenship;
• Avoid any potential conflict of interest or duty;
• Exercise a reasonable degree of care and diligence;
• Not make improper use of information or position; and
• Comply with the company’s Code of Conduct and Securities
Trading Policy.
Directors are required to be independent in judgment and ensure all
reasonable steps are taken to ensure the Board’s core governance
values are not compromised in any decisions the Board makes.
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2018
17
Corporate Governance Statement Nomination and Remuneration Committee
The role of the Nomination and Remuneration Committee is to assist
the Board by making recommendations to it about the appointment
of new directors of the company and advising on remuneration and
issues relevant to remuneration policies and practices including
for non-executive directors. Specifically, the Nomination and
Remuneration Committee oversees:
• Developing suitable criteria for Board candidates;
• Identifying, vetting and recommending suitable candidates
for the Board;
• Overseeing Board and director performance reviews;
• Developing remuneration policies for directors; and
• Reviewing remuneration packages annually.
The Nomination and Remuneration Committee comprises five
directors (including the Chair of the Board), three of whom are
non-executive/independent directors. Consistent with ASX’s
Corporate Governance Principles and Recommendations, the Chair
of the Nomination and Risk Committee is independent and does not
hold the position of Chair of the Board.
The names and qualifications of the Nomination and Remuneration
Committee members and their attendance at meetings of the
committee are included in the Directors’ Report.
There are no schemes for retirement benefits for directors.
Performance Evaluation
The Board assesses its performance, the performance of individual
directors and the performance of its committees annually through
internal peer review. The Board also formally reviews its governance
arrangements on a similar basis annually. The Board, along with the
Nomination and Remuneration Committee have met throughout
the year and have found the current board performance and
composition to be appropriate.
Further remuneration policy for non-executive/independent
directors is provided at www.bailador.com.au.
Share Ownership and Share
Trading Policy
Details of directors’ individual shareholdings in Bailador Technology
Investments Limited are provided in the remuneration report.
The Bailador Technology Investments Limited Securities Trading
Policy is set by the Board. The policy restricts directors from acting
on material information until it has been released to the market
and adequate time has been given for this to be reflected in the
company’s share price. A detailed description of the Board’s policy
regarding directors trading in Bailador Technology Investments
Limited shares is available from the Board’s Code of Conduct
and Securities Trading Policy, both of which are available
at www.bailador.com.au.
Directors are prohibited from trading for short term speculative gain.
Board Committees
To facilitate achieving its objectives, the Board has established two
sub-committees comprising Board members – the Audit and Risk
Committee and the Nomination and Remuneration Committee. Each
of these committees has formal terms of reference that outline the
committee’s roles and responsibilities, and the authorities delegated
to it by the Board. Copies of these terms of reference are available
at www.bailador.com.au.
Audit and Risk Committee
The role of the Audit and Risk Committee is to assist the Board
by advising on the establishment and maintenance of a framework
of internal controls and to assist the Board with policy on the quality
and reliability of financial information prepared for use by the Board.
Specifically, the Audit and Risk Committee oversees:
• The appointment, independence, performance and
remuneration of the external auditor;
• The integrity of the audit process;
• The effectiveness of the internal controls; and
• Compliance with applicable regulatory requirements.
Information on the Board’s procedures for the selection and
appointment of the external auditor, and for the rotation of the
external audit engagement partners, is available from the company’s
website www.bailador.com.au.
The Audit and Risk Committee comprises five directors (including the
Chair of the Board), three of whom are non-executive/independent
directors. Consistent with ASX’s Corporate Governance Principles
and Recommendations, the Chair of the Audit and Risk Committee
is independent and does not hold the position of Chair of the Board.
The names and qualifications of the Audit and Risk Committee
members and their attendance at meetings of the Committee are
included in the Directors’ Report.
18
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2018
Corporate Governance Statement (continued) Board Roles and Responsibilities
Shareholder Rights
The Board is accountable to the shareholders for creating and
delivering shareholder value through governance of the Company’s
business activities. The discharge of these responsibilities
is facilitated by the Board delivering to shareholders timely
and balanced disclosures about the Company’s performance.
As a part of its corporate governance arrangements, the Board
has established a strategy for engaging and communicating with
shareholders that includes:
• Monthly updates to the ASX and the Company website with
the Company’s net asset backing;
• Presentations to investors and media briefings, which are
also placed on the Company website; and
• Actively encouraging shareholders to attend and participate
in the Company’s Annual General Meeting.
A detailed description of the Board’s communication policy
is provided at www.bailador.com.au.
Shareholders are entitled to vote on significant matters impacting
on the business, which include the election and remuneration
of directors, changes to the constitution and receipt of annual
and interim financial statements. The Board actively encourages
shareholders to attend and participate in the Annual General
Meetings of Bailador Technology Investments Limited, to lodge
questions to be responded to by the Board and/or the Manager,
and to appoint proxies.
The Company ensures its statutory auditor attends the Annual
General Meeting and is available to answer questions from
shareholders relevant to the audit.
Risk Management
The Board considers identification and management of key risks
associated with the business as vital to creating and delivering
long-term shareholder value.
The Board is first and foremost accountable to provide value to its
shareholders through delivery of timely and balanced disclosures.
The main risks that could negatively impact on the performance
of the Company’s investments include:
The Board has delegated to the Manager, Bailador Investment
Management, all authorities appropriate and necessary to achieve
the Board’s objective to create and deliver long-term shareholder
value. A complete description of the functions reserved for the Board
and those it has delegated to the Manager along with guidance
on the relationship between the Board and the Manager is available
from the Board Charter available at www.bailador.com.au.
Notwithstanding, the Manager remains accountable to the Board
and the Board regularly monitors the decisions and actions
of the Manager.
The Board Charter requires all directors to act with integrity
and objectivity in taking an effective leadership role in relation
to the Company.
The Chair is responsible for ensuring individual directors, the Board
as a whole and the Manager comply with both the letter and spirit
of the Board’s governance arrangements. The Chair discharges their
responsibilities in a number of ways, primarily through:
• Setting agendas in collaboration with other directors and
the Manager;
• Encouraging critical evaluation and debate among directors;
• Managing board meetings to ensure all critical matters are
given sufficient attention; and
• Communicating with stakeholders as and when required.
The Board Charter provides independent directors the right to seek
independent professional advice on any matter connected with the
discharge of their responsibilities at the Company’s expense. Written
approval must be obtained from the Chair prior to incurring any such
expense on behalf of the Company.
• General market risk, particularly in worldwide tech sector stocks;
• General interruption to the Australian venture capital sector;
• The ability of the Manager to continue to manage the
portfolio, particularly retention of the Manager’s key
management personnel;
• Minority holdings risk where other larger investors in our
portfolio companies may make decisions the Company
disagrees with; and
• Other operational disruptions within portfolio companies due
to changes in competition or technology, key management
personnel, cash-flow and other general operational matters.
There have been no changes to the risk profile of the Company.
The Manager has been delegated the task of implementing internal
controls to identify and manage risks for which the Audit and Risk
Committee and the Board provide oversight. The effectiveness
of these controls is monitored and reviewed regularly.
A summary of the Board’s risk management policy is available
at www.bailador.com.au.
Other Information
Further information relating to the Company’s corporate governance
practices and policies has been made publicly available on the
company website www.bailador.com.au.
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2018
19
Corporate Governance Statement (continued) Your directors submit the financial report of the Company for the financial year ended 30 June 2018. The information in the preceding operating
and financial review forms part of this Directors’ Report for the year ended 30 June 2018 and is to be read in conjunction with this report:
Directors
The names of directors who held office during or since the end of the year:
David Kirk (Chairman)
Paul Wilson
Andrew Bullock
Sankar Narayan
Heith Mackay-Cruise
Dividends
There have been no dividends paid or declared during the year.
Indemnifying Officers or Auditor
During the year, Bailador Technology Investments Limited paid a premium to insure officers of the Company. The officers of the Company
covered by the insurance policy include all Directors.
The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought against the officers
in their capacity as officers of the Company, and any other payments arising from liabilities incurred by the officers in connection with such
proceedings, other than where such liabilities arise out of conduct involving a wilful breach of duty by the officers or the improper use by the
officers of their position or of information to gain advantage for themselves or someone else to cause detriment to the Company.
Details of the amount of the premium paid in respect of insurance policies are not disclosed as such disclosure is prohibited under the terms
of the contract.
The Company has not otherwise, during or since the end of the financial period, except to the extent permitted by law, indemnified or agreed
to indemnify any current or former officer or auditor of the Company against a liability incurred as such by an officer or auditor.
Proceedings on Behalf of Company
No person has applied for leave of court to bring proceedings on behalf of the Company or intervene in any proceedings to which the Company
is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings.
The Company was not a party to any such proceedings during the year.
Non-audit Services
The Board of Directors, in accordance with advice from the Audit and Risk Committee, is satisfied that the provision of non-audit services during
the period is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are
satisfied the services disclosed below did not compromise the external auditor’s independence as the nature of the services provided does not
compromise the general principles relating to audit independence in accordance with APES 110: Code of Ethics for Professional Accountants
set by the Accounting Professional and Ethical Standards Board. All non-audit services have been reviewed and approved to ensure they do not
impact the integrity and objectivity of the auditor.
The following fees were paid or payable to Hall Chadwick for non-audit services provided during the year ended 30 June 2018:
Taxation services
$
9,693
9,693
20
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2018
Directors’ Report Auditor’s Independence Declaration
The auditor’s independence declaration for the year ended 30 June 2018 has been received and can be found on page 24 of the Financial Report.
Rounding of Amounts
The Company has applied the relief available to it under ASIC Corporations (rounding in Financial/Directors’ Reports) Instrument 2016/191 and
accordingly certain amounts in the financial report and the Directors’ Report have been rounded off to the nearest $1,000.
Options
There are no unissued ordinary shares of the Company under options as at 30 June 2018.
No shares or options are issued to directors of Bailador Technology Investments Limited as remuneration.
Information Relating to Directors and Company Secretary
Information on directors is located on pages 4 and 5 of this report.
Helen Plesek
Company Secretary
• Helen has over 20 years of experience in finance, corporate development and governance holding
senior roles at Inchcape Motors Australia, Tubemakers of Australia and BRW Fast 100 winner and
technology company, LX Group. In addition, Helen has consulted on best practice finance systems
across a range of companies and government bodies.
• Helen holds a Bachelor of Commerce in Accounting and a Masters in Politics and Public Policy.
She is a Certified Practicing Accountant.
Meetings of Directors
During the period, 8 meetings of directors and 4 committee meeting were held. Attendances by each director during the period were as follows:
Directors’ Meetings
Committee Meetings
Committee Meetings
Audit & Risk
Nomination and Remuneration
Number eligible
Number
Number eligible
Number
Number eligible
Number
to attend
attended
to attend
attended
to attend
attended
David Kirk
Paul Wilson
Andrew Bullock
Sankar Narayan
Heith Mackay-Cruise
8
8
8
8
8
8
8
7
7
8
3
3
3
3
3
3
3
3
3
3
1
1
1
1
1
1
1
1
1
1
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2018
21
Directors’ Report (continued) Remuneration Report (Audited)
Remuneration Policy
Bailador Technology Investments Limited does not employee any personnel. The Board has delegated management of the investment portfolio
to the Manager, Bailador Investment Management Pty Ltd.
David Kirk and Paul Wilson are directors of Bailador Technology Investments Limited and are also directors and owners of Bailador Investment
Management Pty Ltd.
The Manager is responsible for managing the Investment Portfolio in accordance with the Company’s investment strategy. The Manager was
appointed in 2014 for an initial term of 10 years and will automatically extend after that term until it is terminated in accordance with the
agreement’s terms.
The Board has recognised the Manager as Key Management Personnel (KMP) given it has the authority and responsibility for planning, directing
and controlling the activities of the Company. At least one of David Kirk or Paul Wilson are required to continue to be directors of the Manager
and must continue to be actively involved in the management of the investment portfolio during the initial term of the agreement.
The Board has agreed that the independent Directors, Andrew Bullock, Sankar Narayan and Heith Mackay-Cruise, are to receive $60,000 per
annum. The Executive Directors do not receive any remuneration.
Bailador Technology Investments Limited pays a management fee of 1.75% per annum (plus GST) of the portfolio NAV. Fees are calculated and
paid at the beginning of each quarter in advance. The management fee for a quarter is then adjusted and paid at the end of the quarter based
on increases or decreases in the NAV. All the costs of the Manager, including staff, rent, training, and other costs are paid for from this fee.
In addition, the Manager is entitled to receive a performance fee equal to 17.5% per annum (plus GST) of the investment portfolio’s gain each
year subject to outperforming a hurdle of 8.0% per annum (compounded). The performance fee is only payable from realised gain. The hurdle
was not cleared in the year to 30 June 2018 and no performance fee has been accrued for payment.
Amounts paid or payable to the Manager relating to the year ended 30 June 2018 are as follows:
Base management fee
Reimbursement of portfolio management expenses
Key Management Personnel (KMP) Remuneration
Remuneration paid or payable to each KMP of the Company during the financial year is as follows:
David Kirk
Paul Wilson
Andrew Bullock
Sankar Narayan
Position
Chairman and Executive Director
Executive Director
Non-executive Director
Non-executive Director
Heith Mackay-Cruise
Non-executive Director
Non-recoverable GST incurred on director payments
$2,285,342
$48,965
Directors’ Fees
–
–
60,000
60,000
60,000
12,000
192,000
22
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2018
Directors’ Report (continued) KMP Shareholdings
The number of ordinary shares in Bailador Technology Investments Limited held by each KMP of the Company during the financial year
is as follows:
David Kirk
Paul Wilson
Andrew Bullock
Sankar Narayan
Heith Mackay-Cruise
Net number
Net number
Balance at
30 June 2017
8,387,841
3,068,136
410,422
200,000
502,592
of shares
acquired
–
133,377
–
–
–
12,568,991
133,377
of shares
Balance at
disposed
30 June 2018
–
–
–
–
–
–
8,387,841
3,201,513
410,422
200,000
502,592
12,702,368
KMP Option Holdings
There were no options on issue to KMP at any point during the financial year.
Other Transactions with KMP and their Related Parties
David Kirk and Paul Wilson receive directors’ fees in relation to directorships of portfolio companies. For the year 1 July 2017 to 30 June 2018,
David Kirk earned $16,667 from SiteMinder and $50,000 from DocsCorp. Paul Wilson earned $50,000 from SiteMinder, $40,000 from Stackla and
$37,200 from Straker Translations.
The Manager receives directors’ fees in relation to directorships of portfolio companies. For the year 1 July 2017 to 30 June 2018, the Manager
earned (net of GST) $50,000 from DocsCorp, $30,000 from Instaclustr, $40,000 from Stackla and $36,875 from Straker Translations.
There were no other transactions conducted between the Company and related parties, (other than those disclosed above with the Manager),
relating to equity, compensation and loans, that were conducted other than in accordance with normal supplier relationships on terms no more
favourable than those reasonably expected under arm’s length dealings with unrelated persons.
This Directors’ Report, incorporating the remuneration report, is signed in accordance with a resolution of the Board of Directors.
David Kirk
Director
Dated this 16th day of August 2018
Paul Wilson
Director
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2018
23
Directors’ Report (continued) Auditor’s Independence Declaration
BAILADOR TECHNOLOGY INVESTMENTS LIMITED
ABN 38 601 048 275
AUDITOR’S INDEPENDENCE DECLARATION
UNDER SECTION 307C OF THE CORPORATIONS ACT 2001
TO THE DIRECTORS OF BAILADOR TECHNOLOGY INVESTMENTS LIMITED
I declare that, to the best of my knowledge and belief, during the year ended 30 June
2018 there have been no contraventions of:
(i)
the auditor independence requirements as set out in the Corporations Act 2001
in relation to the review; and
(ii)
any applicable code of professional conduct in relation to the review.
Hall Chadwick
Level 40, 2 Park Street
Sydney, NSW 2000
SANDEEP KUMAR
Partner
Dated: 16 August 2018
SYDNEY · PENRITH · MELBOURNE · BRISBANE · PERTH · DARWIN
Liability limited by a scheme approved under Professional Standards Legislation
www.hallchadwick.com.au
24
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2018
Increase/(Decrease) in value of financial assets
Interest income
Accounting fees
ASX fees
Audit fees
Directors’ fees
Due diligence costs
Independent valuations
Insurance
Investor relations
Legal fees
Manager’s fees
Registry administration
Other expenses
Profit/(Loss) before income tax
Income tax expense
Profit/(Loss) for the year
Other comprehensive income
Total comprehensive income/(loss) for the year
Earnings per share
– basic earnings per share (cents)
– diluted earnings per share (cents)
The accompanying notes form part of these financial statements.
Note
2
6
5
2
3
7
7
30 June 2018
30 June 2017
$000
8,384
115
(224)
(57)
(63)
(192)
(9)
(111)
(90)
(86)
(29)
(2,285)
(27)
(103)
5,223
(1,570)
3,654
–
3,654
3.04
3.04
$000
(4,158)
343
(156)
(91)
(61)
(192)
(21)
(112)
(74)
(16)
(78)
(2,316)
(25)
(130)
(7,087)
2,122
(4,965)
–
(4,965)
(4.44)
(4.44)
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2018
25
Statement of Profit or Loss and Other Comprehensive Incomefor the Year Ended 30 June 2018 ASSETS
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Financial assets
Deferred tax assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Deferred tax liabilities
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Retained earnings
TOTAL EQUITY
The accompanying notes form part of these financial statements.
As at
As at
30 June 2018
30 June 2017
Note
$000
$000
8
9
4
11
10
11
12
3,774
69
3,843
129,886
14,234
144,120
147,963
205
205
19,708
19,708
19,913
128,051
116,475
11,576
128,051
12,517
105
12,622
115,919
7,955
123,874
136,496
240
240
11,859
11,859
12,099
124,397
116,475
7,922
124,397
26
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2018
Statement of Financial Positionas at 30 June 2018 Note
Balance at 1 July 2016
Comprehensive income
Profit for the period
Total comprehensive income for the period
Transactions with owners, in their capacity as owners,
and other transfers
Shares and options issued during the year
12
Transaction costs, net of tax
Total transactions with owners and other transfers
Balance at 30 June 2017
Balance at 1 July 2017
Comprehensive income
Profit for the year
Total comprehensive income for the period
Transactions with owners, in their capacity as owners,
and other transfers
Total transactions with owners and other transfers
Balance at 30 June 2018
The accompanying notes form part of these financial statements.
Ordinary
Share Capital
$000
96,971
–
–
19,985
(481)
19,504
116,475
Retained
Earnings
$000
12,887
(4,965)
(4,965)
–
–
–
7,922
Total
$000
109,858
(4,965)
(4,965)
19,985
(481)
19,504
124,397
116,475
7,922
124,397
–
–
–
116,475
3,654
3,654
–
11,576
3,654
3,654
–
128,051
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2018
27
Statement of Changes in Equityfor the Year Ended 30 June 2018 30 June 2018
30 June 2017
Note
$000
$000
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers and employees
Interest received
Net cash used in operating activities
14
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of financial assets at fair value through profit and loss
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares, net of payouts
Payments relating to costs of capital raising
Net cash provided by financing activities
Net (decrease)/increase in cash held
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of year
The accompanying notes form part of these financial statements.
(3,284)
124
(3,160)
(5,583)
(5,583)
–
–
–
(8,743)
12,517
3,774
(7,294)
365
(6,929)
(27,637)
(27,637)
19,985
(687)
19,298
(15,267)
27,784
12,517
28
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2018
Statement of Cash Flowsfor the Year Ended 30 June 2018 Note 1: Summary of Significant
Accounting Policies
Basis of Preparation
These general purpose financial statements have been prepared
in accordance with requirements of the Corporations Act 2001,
Australian Accounting Standards and Interpretations of the
Australian Accounting Standards Board and International Financial
Reporting Standards as issued by the International Accounting
Standards Board. The Company is a for-profit entity for financial
reporting purposes under Australian Accounting Standards.
It is recommended that this financial report be read in conjunction
with any public announcements made during the period. Material
accounting policies adopted in the preparation of these financial
statements are presented below and have been consistently
applied unless stated otherwise.
These financial statements were authorised for issue on
16th August 2018.
Accounting Policies
Except for cash flow information, the financial statements have
been prepared on an accruals basis and are based on historical
costs, modified, where applicable, by the measurement at fair value
of selected non-current assets, financial assets and financial liabilities.
a. Investments
The Company has been classified under AASB 2013-5 as an Investment
Entity whose business purpose is to invest funds solely for returns via
capital appreciation and/or investment returns. As the Company has
been classified as an Investment Entity, the portfolio investments have
been accounted for at fair value through the profit or loss and shown
as Financial Assets in the Statement of Financial Position.
Investments held at fair value through profit or loss are initially
recognised at fair value. Transaction costs related to acquisitions
are expensed to profit and loss immediately. Subsequent to initial
recognition, all financial instruments held at fair value are accounted for
at fair value, with changes to such values recognised in the profit or loss.
In determining year-end valuations, the board considers the annual
valuation review by an independent valuation expert and the
valuation report prepared by the Manager along with other material
deemed appropriate by the board in arriving at valuations.
In determining valuations, whilst considering individual portfolio
company valuations, the board determines the overall value of
the investment portfolio and determines company revenue as the
change in the total value of financial assets held at fair value through
profit or loss.
Investments are recognised on a trade date basis.
The entity is exempt from consolidating underlying investees it controls
in accordance with AASB 10 Consolidated Financial Statements.
b. Fair Value of Assets and Liabilities
The Company measures some of its assets and liabilities at fair
value on either a recurring or non-recurring basis, depending
on the requirements of the applicable accounting standard.
Fair value is the price the Company would receive to sell an asset
or would have to pay to transfer a liability in an orderly (ie unforced)
transaction between independent, knowledgeable and willing
market participants at the measurement date.
As fair value is a market-based measure, the closest equivalent
observable market pricing information is used to determine fair
value. Adjustments to market values may be made having regard
to the characteristics of the specific asset or liability. The fair values
of assets and liabilities that are not traded in an active market are
determined using one or more valuation techniques. These valuation
techniques maximise, to the extent possible, the use of observable
market data.
To the extent possible, market information is extracted from either
the principal market for the asset or liability (ie the market with the
greatest volume and level of activity for the asset or liability) or in the
absence of such a market, the most advantageous market available
to the entity at the end of the reporting period (ie the market that
maximises the receipts from the sale of the asset or minimises the
payments made to transfer the liability, after taking into account
transaction costs).
The fair value of liabilities and the entity’s own equity instruments
(excluding those related to share-based payment arrangements)
may be valued, where there is no observable market price
in relation to the transfer of such financial instruments, by reference
to observable market information where such instruments are held
as assets. Where this information is not available, other valuation
techniques are adopted and, where significant, are detailed in the
respective note to the financial statements.
c. Taxation
The income tax expense for the period comprises current income
tax expense and deferred tax expense.
Current income tax expense charged to profit or loss is the tax
payable on taxable income. Current tax liabilities/(assets) are
measured at the amounts expected to be paid to/(recovered from)
the relevant taxation authority.
Deferred income tax expense reflects movements in deferred tax
asset and deferred tax liability balances during the period as well
as unused tax losses.
No deferred income tax is recognised from the initial recognition
of an asset or liability, where there is no effect on accounting
or taxable profit or loss.
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2018
29
Notes to the Financial Statementsfor the Year Ended 30 June 2018 Note 1: Summary of Significant Accounting Policies (continued)
Deferred tax assets and liabilities are calculated at the tax rates that
are expected to apply to the period when the asset is realised or the
liability is settled and their measurement also reflects the manner
in which management expects to recover or settle the carrying
amount of the related asset or liability.
the contractual term) of the financial instrument to the net carrying
amount of the financial asset or financial liability. Revisions
to expected future net cash flows will necessitate an adjustment
to the carrying amount with a consequential recognition
of an income or expense item in profit or loss.
(i) Financial assets at fair value through profit or loss
Financial assets are classified at “fair value through profit or loss”
when they are held for trading for the purpose of short-term profit
taking, derivatives not held for hedging purposes, or when they are
designated as such to avoid an accounting mismatch or to enable
performance evaluation where a company of financial assets
is managed by key management personnel on a fair value basis
in accordance with a documented risk management or investment
strategy. Such assets are subsequently measured at fair value with
changes in carrying amount being included in profit or loss.
(ii) Loan and receivables
Loans and receivables are non-derivative financial assets with fixed
or determinable payments that are not quoted in an active market
and are subsequently measured at amortised cost. Gains or losses
are recognised in profit or loss through the amortisation process
and when the financial asset is derecognised.
(iii) Financial liabilities
Financial liabilities other than financial guarantees are subsequently
measured at amortised cost. Gains or losses are recognised in profit
or loss through the amortisation process and when the financial
liability is derecognised.
Impairment
A financial asset (or a group of financial assets) is deemed
to be impaired if, and only if, there is objective evidence of
impairment as a result of one or more events (a “loss event”)
having occurred, which has an impact on the estimated future
cash flows of the financial asset(s).
Impairment losses are recognised in the profit or loss immediately.
At the end of each reporting period, the Company assesses
whether there is any indication that an asset may be impaired.
The assessment will include the consideration of external and
internal sources of information. If such an indication exists,
an impairment test is carried out on the asset by comparing the
recoverable amount of the asset, to the asset’s carrying amount.
Any excess of the carrying amount over its recoverable amount
is recognised immediately in the profit or loss.
Deferred tax assets relating to temporary differences and unused tax
losses are recognised only to the extent that it is probable that future
taxable profit will be available against which the benefits of the
deferred tax asset can be utilised.
Current tax assets and liabilities are offset where a legally enforceable
right of set-off exists and it is intended that net settlement
or simultaneous settlement of the respective asset and liability will
occur. Deferred tax assets and liabilities are offset where: (a) a legally
enforceable right of set-off exists; and (b) the deferred tax assets and
liabilities relate to income taxes levied by the same taxation authority
on either the same taxable entity or different taxable entities where
it is intended that net settlement or simultaneous realisation and
settlement of the respective asset and liability will occur in future
periods in which significant amounts of deferred tax assets
or liabilities are expected to be recovered or settled.
d. Financial Instruments
Initial recognition and measurement
Financial assets and financial liabilities are recognised when
the entity becomes a party to the contractual provisions to the
instrument. For financial assets, this is equivalent to the date that
the Company commits itself to either the purchase or sale of the
asset (ie trade date accounting is adopted).
Financial instruments are initially measured at fair value plus
transaction costs, except where the instrument is classified “at fair
value through profit or loss”, in which case transaction costs are
expensed to profit or loss immediately.
Classification and Subsequent Measurement
Financial instruments are subsequently measured at fair value,
amortised cost using the effective interest method, or cost.
Amortised cost is calculated as the amount at which the financial
asset or financial liability is measured at initial recognition less
principal repayments and any reduction for impairment, and
adjusted for any cumulative amortisation of the difference between
that initial amount and the maturity amount calculated using the
effective interest method.
The effective interest method is used to allocate interest income
or interest expense over the relevant period and is equivalent to the
rate that discounts estimated future cash payments or receipts
(including fees, transaction costs and other premiums or discounts)
over the expected life (or when this cannot be reliably predicted,
30
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2018
Notes to the Financial Statement for the Year Ended 30 June 2018 (continued) Note 1: Summary of Significant Accounting Policies (continued)
Derecognition
i. Interest Income
Financial assets are derecognised when the contractual rights
to receipt of cash flows expire or the asset is transferred to another
party whereby the entity no longer has any significant continuing
involvement in the risks and benefits associated with the asset.
Financial liabilities are derecognised when the related obligations are
discharged, cancelled or have expired. The difference between the
carrying amount of the financial liability extinguished or transferred
to another party and the fair value of consideration paid, including
the transfer of non-cash assets or liabilities assumed, is recognised
in profit or loss.
e. Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, deposits available
on demand with banks, other short term highly liquid investments
with original maturities of 3 months or less.
f. Trade and Other Receivables
Trade and other receivables include amounts due from government
authorities and prepayments for services performed in the ordinary
course of business. Receivables expected to be collected (or utilised)
within 12 months of the end of the reporting period are classified
as 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 1(d) for
further discussion on the determination of impairment losses.
g. Trade and Other Payables
Trade and other payables represent the liabilities for goods and
services received by the entity that remain unpaid at the end of the
reporting period. The balance is recognised as a current liability
with the amounts normally paid within 30 days of recognition
of the liability.
h. Goods and Services Tax
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 (ATO).
Receivables and payables are stated inclusive of the amount of GST
receivable or payable. The net amount of GST recoverable from, or
payable to, the ATO is included with other receivables or payables in
the statement of financial position.
Cash flows are presented on a gross basis. The GST components
of cash flows arising from investing or financing activities which are
recoverable from, or payable to, the ATO are presented as operating
cash flows included in receipts from customers or payments
to suppliers.
Interest revenue is recognised using the effective interest method.
j. Rounding of Amounts
The Company has applied the relief available to it under ASIC
Corporations (rounding in Financial/Directors’ Reports) Instrument
2016/191 and accordingly certain amounts in the financial report and
the directors’ report have been rounded off to the nearest $1,000.
k. Critical Accounting Estimates and Judgements
The directors evaluate estimates and judgements incorporated
into the financial statements 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 Company.
Detailed information about each of these estimates and judgements
is included in Note 18 in the financial statements.
l. Comparative Figures
When required by accounting standards, comparative figures have
been adjusted to conform to changes in presentation for the current
financial year. The comparative period represents the period from
1 July 2016 to 30 June 2017.
m. New Accounting Standards for Application in Future Periods
Accounting standards and interpretations issued by the AASB
that are not yet mandatorily applicable to the Company,
together with an assessment of the potential impact of such
pronouncements on the Company when adopted in future periods,
are discussed below:
AASB 9 : Financial Instruments and associated Amending Standards
(applicable to annual reporting periods beginning on or after
1 January 2018).
The Standard will be applicable retrospectively (subject to certain
provisions on hedge accounting) and includes revised requirements
for the classification and measurement of financial instruments,
revised recognition and derecognition requirements for financial
instruments and simplified requirements for hedge accounting.
The key changes that may affect the Company on initial application
include certain simplifications to the classification of financial assets.
This Standard is not expected to significantly impact the Company’s
financial statements.
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2018
31
Notes to the Financial Statement for the Year Ended 30 June 2018 (continued) Note 1: Summary of Significant Accounting Policies (continued)
AASB 16: Leases (applicable to annual reporting periods beginning on or after 1 July 2019).
When effective, this Standard will replace the current accounting requirements applicable to leases in AASB 117: Leases and related
Interpretations. AASB 16 introduces a single lessee accounting model that eliminates the requirement for leases to be classified as operating
or finance leases.
The main changes introduced by the new Standard are as follows:
• recognition of a right-of-use asset and lease liability for all leases (excluding short-term leases with a lease term 12 months or less
of tenure and leases relating to low-value assets);
• depreciation of right-of-use assets in line with AASB 116: Property, Plant and Equipment in profit or loss and unwinding of the liability
in principal and interest components;
•
inclusion of variable lease payments that depend on an index or a rate in the initial measurement of the lease liability using the index
or rate at the commencement date;
• application of a practical expedient to permit a lessee to elect not to separate non-lease components and instead account for all
components as a lease; and
•
inclusion of additional disclosure requirements.
The transitional provisions of AASB 16 allow a lessee to either retrospectively apply the Standard to comparatives in line with AASB 108
or recognise the cumulative effect of retrospective application as an adjustment to opening equity on the date of initial application.
The company does not have any leases and the implementation of AASB16 will not impact the company.
Note 2: Profit For The Year
The following revenue and expense items are relevant in explaining the financial performance
for the year:
Fair value (losses)/gains on financial assets at fair value through profit or loss
8,384
(4,158)
There were strong gains in a number of portfolio companies, in particular (in ‘000s)
30 June 2018
30 June 2017
$000
$000
• SiteMinder increased $15,384 (38%)
• Instaclustr increased $4,776 (106%)
• Straker Translations increased $2,451 (28%)
• Lendi increased $2,287 (32%)
• DocsCorp increased $1,710 (23%)
These gains were partially offset by a write down in the value of Viostream by $18,226 over the course of the year.
32
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2018
Notes to the Financial Statement for the Year Ended 30 June 2018 (continued) Note 3: Tax Expense
a. The components of tax expense comprise:
Current tax
Deferred tax
b. The prima facie tax on profit from ordinary activities before income tax is reconciled to
income tax payable as follows:
Profit/(Loss) for the period before income tax expense
Prima facie tax payable on profit from ordinary activities before income tax at 30%
Tax effect of:
– Other deductions
Income tax attributable to entity
The weighted average effective tax rate is as follows:
c. Tax effects of items credited to equity:
Amounts credited to equity in relation to the income tax effect of amounts recognised in equity:
Share capital
Note 4: Financial Assets
SiteMinder
Stackla
Straker Translations
Lendi
Instaclustr
DocsCorp
SMI
Viostream
Rezdy
Brosa
30 June 2018
30 June 2017
$000
$000
3,140
(1,570)
1,570
5,223
1,567
3
1,570
30%
–
–
(4,447)
2,325
(2,122)
(7,087)
(2,126)
4
(2,122)
30%
206
206
As at
As at
30 June 2018
30 June 2017
$000
55,885
12,577
11,155
9,488
9,281
9,168
7,414
7,371
4,547
3,000
129,886
$000
40,500
12,577
8,704
7,201
4,505
7,458
7,414
23,013
4,547
–
115,919
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2018
33
Notes to the Financial Statement for the Year Ended 30 June 2018 (continued) Note 5: Management Fees
The Company has outsourced its investment management function to Bailador Investment Management Pty Ltd. Bailador Investment
Management Pty Ltd is a privately owned investment management company and is a related party of Bailador Technology Investments Limited.
a. Management fees
The Manager is entitled to be paid a management fee equal to 1.75% of the portfolio Net Asset Value (NAV) plus GST per annum.
The management fee is calculated and paid quarterly in advance. Each quarter the average of the opening and closing NAV for the quarter
is calculated and an adjustment to the pre-paid fee is made depending on whether NAV has increased or decreased during the quarter.
During the period, the Company incurred $2,285,342 of management fees payable to the Manager, of which $55,752 was unclaimable GST
the manager remitted as GST to the ATO.
b. Reimbursement of portfolio management expenses
Under the management agreement, the Manager is also entitled to be reimbursed for certain out of pocket expenses incurred in the acquisition
and disposal of portfolio assets and in the management of portfolio assets.
During the period, the Company reimbursed the Manager $48,965 for travel and other expenses incurred in the management of the investment portfolio.
c. Performance fees
At the end of each financial year, the Manager is entitled to receive a performance fee from the Company, the terms of which are outlined below:
The performance fee will be calculated as 17.5% of the NAV gain per annum plus GST, being the amount by which the portfolio NAV at the end
of financial year exceeds or is less than the portfolio NAV at the start of the financial year and where that gain exceeds a compound hurdle rate
of 8%.
The performance fee will be accrued on an annual basis in arrears and will only be paid at times when proceeds received from realisation
of investments is available to the Company and will be paid in respect of the whole amount of the gain (not just the amount over the 8% hurdle),
subject to the following caveats:
• If the performance fee for a financial year is a positive amount but the investment return for the financial year does not exceed the hurdle
return for the financial year, no performance fee shall be payable to the manager in respect of that financial year, and the positive amount
of the performance fee shall be carried forward to the following financial year;
• If the performance fee for a financial year is a negative amount, no performance fee shall be payable to the manager in respect of that
financial year, and the negative amount shall be carried forward to the following year; and
• Any negative performance fee amounts from previous financial years that are not recouped in a financial year shall be carried forward
to the following financial year.
The performance fee can be fully or partially paid by the issue of shares in Bailador Technology Investments Limited or in cash at the Manager’s
election, the details of which are outlined below:
If the Manager elects at least 5 business days prior to the performance fee payment date that all or part of the performance fee is to be applied
to the issue of shares in the company, the company must, if permitted by applicable laws (including the Listing Rules and the Corporations Act)
without receiving any approvals from the shareholders of the Company, apply the cash payable in respect of the relevant amount to the issue
of shares to the Manager or its nominee on the performance fee payment date where
N = PF / Issue Price
Where
N is the number of shares issued
PF is the cash value of the performance fee to be paid in shares
Issue Price is the lesser of:
• The volume weighted average price of shares traded on the ASX during the period of 340 calendar days up to but excluding the
performance fee payment date; and
• The last price on the last day on which the shares were traded on the ASX prior to the performance fee payment date.
During the period, the Company did not accrue or pay any performance fees paid or payable to the Manager.
34
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2018
Notes to the Financial Statement for the Year Ended 30 June 2018 (continued) Note 6: Auditor’s Remuneration
Remuneration of the auditor for:
Auditing or reviewing the financial statements
Taxation services
Note 7: Earnings per Share
Profit/(Loss) after income tax
30 June 2018
30 June 2017
$000
$000
63
10
73
61
28
89
30 June 2018
30 June 2017
$000
3,654
$000
(4,965)
Number
Number
Weighted average number of ordinary shares used in calculating basic and diluted
120,247,831
111,753,525
Basic earnings per share
Diluted earnings per share
Cents
Cents
3.04
3.04
(4.44)
(4.44)
In the calculation of diluted earnings per share, options are not considered to have a dilutive effect, as the average market price of ordinary
shares of the Company during the period did not exceed the exercise price of the options.
Note 8: Cash and Cash Equivalents
Cash at bank
As at
As at
30 June 2018
30 June 2017
$000
3,774
3,774
$000
12,517
12,517
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2018
35
Notes to the Financial Statement for the Year Ended 30 June 2018 (continued) Note 9: Trade and Other Receivables
CURRENT
Trade debtors
GST receivable
Interest receivable
Other prepayments
As at
As at
30 June 2018
30 June 2017
$000
$000
–
44
3
22
69
5
46
11
43
105
All of the Company’s trade and other receivables have been reviewed for indicators of impairment. The Company has determined that
no impairment is required.
Note 10: Trade and Other Payables
CURRENT
Trade creditors
Other payables
Note 11: Income Tax
CURRENT
Income tax payable
NON-CURRENT
Deferred tax liability
Tax on unrealised gains
Tax on acquisition assets on opening
As at
As at
30 June 2018
30 June 2017
$000
$000
118
87
205
135
105
240
As at
As at
30 June 2018
30 June 2017
$000
$000
–
–
Balance at
Charged to
Charged
directly
Balance at
1 July 2016
profit or loss
to equity
30 June 2017
$000
$000
$000
$000
5,054
2,458
7,512
4,347
–
4,347
–
–
–
9,401
2,458
11,859
36
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2018
Notes to the Financial Statement for the Year Ended 30 June 2018 (continued) Note 11: Income Tax (continued)
NON-CURRENT
Deferred tax liability
Tax on unrealised gains
Tax on acquisition assets on opening
Deferred tax asset
Provisions
Transaction costs on acquisitions
Transaction costs on equity issue
Deferred losses on financial assets
Losses carried forward
Deferred tax asset
Provisions
Transaction costs on acquisitions
Transaction costs on equity issue
Deferred losses on financial assets
Losses carried forward
Balance at
Charged to
Charged
directly
Balance at
1 July 2017
profit or loss
to equity
30 June 2018
$000
$000
$000
$000
9,401
2,458
11,859
7,849
–
7,849
–
–
–
17,250
2,458
19,708
Balance at
Charged to
Charged
directly
Balance at
1 July 2016
profit or loss
to equity
30 June 2017
$000
$000
$000
$000
797
56
430
–
–
1,283
(770)
27
(166)
3,729
3,646
6,466
–
–
206
–
–
206
27
83
470
3,729
3,646
7,955
Balance at
Charged to
Charged
directly
Balance at
30 June 2017
profit or loss
to equity
30 June 2018
$000
$000
$000
$000
27
83
470
3,729
3,646
7,955
(3)
3
(171)
6,954
(504)
6,279
–
–
–
–
–
–
24
86
299
10,683
3,142
14,234
The benefits of the above temporary differences and unused tax losses will only be realised if the conditions for deductibility set out in Note 1(c)
occur. These amounts have no expiry date.
The board has considered the deferred tax balances and is confident there will be sufficient future profits to utilise the deferred tax asset.
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2018
37
Notes to the Financial Statement for the Year Ended 30 June 2018 (continued) Note 12: Issued Capital and Share Option Reserve
Opening balance at 1 July 2016
Ordinary shares issued
Less Costs directly attributable to the issue of ordinary shares
Closing balance at 30 June 2017
Opening balance at 1 July 2017
Ordinary shares issued
Closing balance at 30 June 2018
Capital Management
The Company’s objectives for managing capital are as follows:
No.
$
100,844,918
19,402,913
96,970,710
19,985,000
–
(480,554)
120,247,831
116,475,156
120,247,831
116,475,156
–
–
120,247,831
116,475,156
• to invest the capital in investments meeting the description, risk exposure and expected return of the investment strategy of the Company;
• to maximise the returns to shareholders while safe-guarding capital by investing in a portfolio in line with investment strategies of the
Company; and
• to maintain sufficient liquidity to meet the ongoing expenses of the Company.
Note 13: Operating Segments
The Company has one operating segment: Internet-related Businesses in Australia. It earns revenue from gains on revaluation of financial
assets held at fair value through profit or loss, interest income and other returns from investment. This operating segment is based on the
internal reports that are reviewed and used by the Directors in assessing performance and in determining the allocation of resources.
There is no aggregation of operating segments.
The Company invests in securities recorded as financial assets held at fair value through profit or loss.
Note 14: Cash Flow Information
Reconciliation of Cash Flow from Operation with Profit after Income Tax
(Loss)/Profit after income tax
Non-cash flows in profit:
Unrealised fair value (gains)/losses on financial assets at fair value through profit or loss
Decrease/(Increase) in trade and other receivables
(Decrease) in trade and other payables
Decrease in current tax liabilities
Increase/(Decrease) in deferred tax
Cash flow from operating activities
30 June 2018
30 June 2017
$000
$000
3,654
(8,384)
36
(36)
–
1,569
(3,160)
(4,965)
4,158
(7)
(2,535)
(1,461)
(2,119)
(6,929)
38
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2018
Notes to the Financial Statement for the Year Ended 30 June 2018 (continued) Note 15: Contingent Liabilities
There were no contingent liabilities at 30 June 2017 and 30 June 2018.
Note 16: Events After the Reporting Period
In August 2018, Instaclustr completed a capital raising by an independent third party. BTI has revalued its investment in Instaclustr upwards
by $5.3m (58%) to $14.6m reflecting the price set by that capital raise. Refer to BTI’s announcement for further details.
Other than the aforementioned investment, no matter or circumstance has arisen since the end of the year that has significantly affected
or may significantly affect the operations of the Company, the results of those operations or the state of affairs of the Company in subsequent
financial years.
Note 17: Financial Risk Management
The Company’s financial instruments consist mainly of cash (cash at bank) and financial assets designated at fair value through profit or loss,
accounts receivable and payable.
The total for each category of financial instrument, measured in accordance with AASB 139: Financial Instruments: Recognition and Measurement
as detailed in the accounting policies to these financial statements are as follows:
Financial assets
Cash and cash equivalents
Financial assets at fair value through profit or loss
Trade and other receivables
Total financial assets
Financial liabilities
Financial liabilities at amortised cost
Total financial liabilities
30 June 2018
30 June 2017
Note
$000
$000
8
4
9
10
3,774
129,886
69
133,729
205
205
12,517
115,919
105
128,541
240
240
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2018
39
Notes to the Financial Statement for the Year Ended 30 June 2018 (continued) Note 17: Financial Risk Management (continued)
Financial Risk Management Policies
2. Credit Risk
Exposure to credit risk relating to financial assets arise from the
potential non-performance by counterparties that could lead
to a financial loss to the Company. The Company’s objective
in managing credit risk is to minimise the credit losses incurred
mainly on trade and other receivables.
Credit risk is managed by the Company through maintaining
procedures that ensure, to the extent possible, that counterparties
to transactions are of sound credit worthiness. As the Company
generally does not have trade receivables, receivables are usually
in the order of prepayments for particular services. The Company
ensures prepayments are only made where the counterparty
is reputable and can be relied on to fulfil the service.
The Company’s maximum credit risk exposure at the end of the
reporting period in relation to each class of recognised financial
assets is the carrying amount of those assets as indicated in the
statement of financial position. None of these assets are past due
or considered to be impaired.
The cash and cash equivalents are all held with one of Australia’s
reputable financial institutions.
3. Liquidity Risk
Liquidity risk arises from the possibility that the Company might
encounter difficulty in settling its debts or otherwise meeting its
obligations related to financial liabilities. As the Company’s major
cash outflows are the purchase of investments, the level of this
is managed by the Manager. The Company also manages this risk
through the following mechanisms:
• preparing forward-looking cash flow analyses in relation
to operating, investing and financing activities;
• managing credit risk related to financial assets;
• maintaining a clear exit strategy on financial assets; and
•
investing surplus cash only with major financial institutions.
The Company is exposed to a variety of financial risks as a result
of its activities. These risks include market risk (price risk), credit
risk, and liquidity risk. The Company’s risk management investment
policies, approved by the directors of the responsible entity,
aim to assist the Company in meeting its financial targets while
minimising the potential adverse effects of these risks on the
Company’s financial performance.
Specific Financial Risk Exposures and Management
1. Market Risk
Market risk is the risk that the fair value of future cash flows
of a financial instrument will fluctuate because of changes
in market prices. The Company is currently exposed to the
following risks as it presently holds financial instruments
measured at fair value and short-term deposits:
i. Price Risk
The Company is exposed to equity securities price risk.
This arises from investments held by the Company and classified
in the statement of financial position as financial assets at fair
value through profit or loss.
The Company seeks to manage and constrain market risk
by diversification of the investment portfolio across multiple
investments and through use of structural and contractual
protections in its investments such as investing in preference shares
or convertible notes, requiring minority protections in investment
documentation and maintaining active directorships in its
investment companies.
The portfolio is monitored and analysed by the Manager.
The Company’s net equity exposure is set out in Note 4 of the
financial statements.
Sensitivity analysis
The following table illustrates sensitivities to the Company’s
exposures to changes in equity prices. The table indicates the impact
on how profit and equity values reported at the end of the reporting
period would have been affected by changes in the relevant risk
variable that management consider to be reasonably possible.
30 June 2018
Profit
$000
Equity
$000
+/- 5% in gain on equity investments
288
288
40
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2018
Notes to the Financial Statement for the Year Ended 30 June 2018 (continued) Note 18: Fair Value Measurement
a. Fair Value Hierarchy
AASB 13: Fair Value Measurement requires the disclosure of fair value
information by level of the fair value hierarchy, which categorises fair
value measurements into one of three possible levels based on the
lowest level that an input that is significant to the measure can
be categorised into, as follows:
Level 1
Level 2
Measurements based on quoted prices (unadjusted)
in active markets for identical assets or liabilities that
the entity can access at the measurement date.
Measurements based on inputs other than quoted
prices included in level 1 that are observable for the
asset or liability, either directly or indirectly.
Level 3
Measurements based on unobservable inputs for the
asset or liability.
The fair values of assets and liabilities that are not traded in
an active market are determined using one or more valuation
techniques. These valuation techniques maximise, to the extent
possible, the use of observable market data. If all significant inputs
required to measure fair value are observable, the asset or liability
is included in level 2. If one or more significant inputs are not based
on observable market data, the asset or liability is included in Level 3.
b. Valuation Techniques
In the absence of an active market for an identical asset or liability,
the Company selects and uses one or more valuation techniques
to measure the fair value of the asset or liability. The Company
selects a valuation technique that is appropriate in the circumstances
and for which sufficient data is available to measure fair value.
The availability of sufficient and relevant data primarily depends
on the specific characteristics of the asset or liability being measured.
The valuation techniques selected by the Company are consistent
with one or more of the following valuation approaches:
• Market approach: valuation techniques that use prices and
other relevant information generated by market transactions
for identical or similar assets or liabilities.
transactions) and reflect the assumptions that buyers and sellers
would generally use when pricing the asset or liability are considered
observable, whereas inputs for which market data is not available
and therefore are developed using the best information available
about such assumptions are considered unobservable.
The Australian Private Equity and Venture Capital Association (AVCAL)
has prepared the International Private Equity and Venture Capital
Guidelines (Valuation Guidelines). The Valuation Guidelines set out
recommendations on the valuation of private equity investments
which are intended to represent current best practice. The directors
have referred to the Valuation Guidelines in order to determine the
“fair value” of the Company’s financial assets.
The “fair value” of financial assets is assumed to be the price that
would be received for the financial asset in an orderly transaction
between knowledgeable and willing but not anxious market
participants acting at arm’s length given current market conditions
at the relevant measurement date. Fair value for unquoted or
illiquid investments is often estimated with reference to the
potential realisation price for the investment or underlying business
if it were to be realised or sold in an orderly transaction at the
measurement date, regardless of whether an exit in the near future
is anticipated and without reference to amounts received or paid
in a distressed sale.
AVCAL suggests that one or more techniques should be adopted
to calculate a private equity investment based on the valuer’s opinion
of which method or methods are considered most appropriate given
the nature, facts and circumstances of the particular investment.
In considering the appropriateness of each technique, AVCAL
suggests the economic substance of the investment should take
priority over the strict legal form.
AVCAL provides guidance on a range of valuation methodologies
that are commonly used to determine the value of private equity
investments in the absence of an active market, including:
• price of recent investments;
• earnings multiples;
• revenue multiples;
• net asset values;
• Income approach: valuation techniques that convert estimated
• discounted cash flows of the underlying assets;
future cash flows or income and expenses into a single
discounted present value.
• Cost approach: valuation techniques that reflect the current
replacement cost of an asset at its current service capacity.
Each valuation technique requires inputs that reflect the
assumptions that buyers and sellers would use when pricing
the asset or liability, including assumptions about risks. When
selecting a valuation technique, the Company gives priority to those
techniques that maximise the use of observable inputs and minimise
the use of unobservable inputs. Inputs that are developed using
market data (such as publicly available information on actual
• discounted cash flows of the investment; and
•
industry valuation benchmarks.
The “price of recent investment” methodology refers to the price
at which a significant amount of new investment into a company
has been made which is used to estimate the value of other
investments in the company, but only if the new investment is deemed
to represent fair value and only for a limited period following the date
of the investment. The methodology therefore requires an assessment
at the measurement date of whether any changes or events during
the limited period following the date of the recent investment have
occurred that imply a change in the investment’s fair value.
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2018
41
Notes to the Financial Statement for the Year Ended 30 June 2018 (continued) Note 18: Fair Value Measurement (continued)
The “cost plus accrued interest” methodology refers to the face value of securities including any interest which has accrued at the measurement
date. It is particularly relevant where the security has either a structural or a contractual liquidity preference.
A “revenue multiple” methodology is often used as the basis of valuation for early and development stage businesses. Under this method,
the enterprise value is derived by multiplying the normalised historical or projected revenue of the business with a multiple or range of multiples.
The multiple or range of multiples applied should be an appropriate and reasonable indication of the value of each company, given the
company’s size, risk profile and growth prospects. The multiple or range of multiples is usually derived from market data observed for entities
considered comparable to the companies being valued.
c. Financial Instruments
The following table represents a comparison between the carrying amounts and fair values of financial assets and liabilities:
Financial assets:
Cash and cash equivalents
Trade and other receivables
Financial assets
Financial liabilities:
Trade and other payables
30 June 2018
Carrying Amount
Fair Value
$000
$000
3,774
69
129,886
133,729
205
205
3,774
69
129,886
133,729
205
205
d. Recurring and Non-recurring Fair Value Measurement Amounts and the Level of the Fair Value Hierarchy within which the Fair Value
Measurements are Categorised
Description
Recurring fair value measurements
Financial assets at fair value through profit or loss
Fair Value Measurements
at 30 June 2018 Using:
Significant
Quoted Prices in
Observable Inputs
Significant
Active Markets for
Other than
Unobservable
Identical Assets
Level 1 Inputs
$000
(Level 1)
$000
(Level 2)
–
–
28,190
28,190
Inputs
$000
(Level 3)
101,696
101,696
42
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2018
Notes to the Financial Statement for the Year Ended 30 June 2018 (continued) Note 18: Fair Value Measurement (continued)
Description
Recurring fair value measurements
Financial assets at fair value through profit or loss
Fair Value Measurements
at 30 June 2017 Using:
Quoted Prices in
Significant
Observable
Significant
Active Markets for
Inputs Other than
Unobservable
Identical Assets
Level 1 Inputs
$000
(Level 1)
–
–
$000
(Level 2)
37,534
37,534
Inputs
$000
(Level 3)
78,386
78,386
e. Valuation Techniques and Inputs Used to Determine Level 2 Fair Values
Fair Value
at 30 June 2018
$000
Valuation Techniques
Range of Observable Inputs
Straker Translations
11,155
Price of recent third party transaction
Price of recent third party transaction
Lendi
Rezdy
Brosa
9,488
4,547
3,000
Price of recent third party transaction
Price of recent third party transaction
Price of recent third party transaction
Price of recent third party transaction
Price of recent third party transaction
Price of recent third party transaction
There were no transfers between Level 1 and Level 2 for assets measured at fair value on a recurring basis during the year.
f. Valuation Techniques and Inputs Used to Determine Level 3 Fair Values
Fair Value at
30 June 2018
$000
Valuation Techniques
Significant Unobservable Inputs
SiteMinder
Stackla
Instaclustr
DocsCorp
SMI
Viostream
55,885
12,577
9,282
9,168
7,414
7,371
Revenue multiple
Revenue multiple
Revenue multiple
Revenue multiple
Revenue multiple
Revenue multiple
Revenue multiple
Revenue multiple
Cost plus accrued interest
Revenue multiple
Cost plus accrued interest
Revenue multiple
Interest on convertible preference shares
Revenue multiple
Interest on convertible notes
Revenue multiple
There were no changes during the year in the valuation techniques used by the Company to determine Level 3 fair values.
Range of
Unobservable
Inputs
5.8x – 8.0x
3.5x – 5.5x
1.5x – 4.0x
2.5x – 4.0x
1.0x – 2.0x
2.0x – 3.0x
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2018
43
Notes to the Financial Statement for the Year Ended 30 June 2018 (continued) Note 18: Fair Value Measurement (continued)
g. Sensitivity Information
The relationships between the significant unobservable inputs and the fair value are as follows:
Inputs
Revenue multiple
Cost plus accrued interest
Impact on Fair Value from
Impact on Fair Value from
Increase in Input
Decrease in Input
Increase
Increase
Decrease
Decrease
There were no significant interrelationships between unobservable inputs except as indicated above.
h. Reconciliation of Recurring Fair Value Measurement Amounts (Level 3)
Opening balance 30 June 2017
Transfers in from Level 2
Additions/purchases made during the period
Gains and losses recognised in profit or loss
Closing balance 30 June 2018
Financial Assets
$000
78,386
17,082
2,583
3,645
101,696
Note 19: Related Party Transactions
Remuneration paid or payable to key management personnel (KMP) of the Company during the period are $2,477,342 plus reimbursement
of expenses of $48,965. Refer to the Remuneration Report contained in the Directors’ Report for details of the remuneration paid or payable
to each member of the Company’s KMP for the year ended 30 June 2018.
Note 20: Company Details
The principal place of business and registered office of the company is:
Suite 4, Level 11
6 O’Connell Street
Sydney NSW 2000
44
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2018
Notes to the Financial Statement for the Year Ended 30 June 2018 (continued) In accordance with a resolution of the directors of Bailador Technology Investments Limited, the directors of the Company declare that:
1.
The financial statements and notes, as set out on pages 25-44, are in accordance with the Corporations Act 2001, and:
a.
comply with Australian Accounting Standards, which, as stated in accounting policy Note 1 to the financial statements, constitutes
compliance with International Financial Reporting Standards (IFRS); and
b.
give a true and fair view of the financial position as at 30 June 2018 and of the performance for the period ended on that date.
2.
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.
3.
The directors have been given the declarations required by s295A of the Corporations Act 2001.
David Kirk
Director
Dated this 16th day of August 2018
Paul Wilson
Director
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2018
45
Directors’ Declaration BAILADOR TECHNOLOGY INVESTMENTS LIMITED
ABN 38 601 048 275
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
BAILADOR TECHNOLOGY INVESTMENTS LIMITED
Opinion
We have audited the financial report of Bailador Technology Investments Limited, which
comprises the Statement of Financial Position as at 30 June 2018, the Statement of Profit or
Loss and Other Comprehensive Income, the Statement of Changes in Equity, the Statement
of Cash Flows for the year then ended and notes comprising a summary of significant
accounting policies and other explanatory information, and the directors’ declaration.
In our opinion:
(a) the accompanying financial report of the Company is in accordance with the
Corporations Act 2001, including:
i.
giving a true and fair view of the Company’s financial position as at 30 June
2018 and of its performance for the year ended on that date; and
complying with Australian Accounting Standards and the Corporations
Regulations 2001; and
ii.
(b) the financial report also complies with International Financial Reporting Standards
as disclosed in Note 1.
Basis of Opinion
in accordance with Australian Auditing Standards. Our
We conducted our audit
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 has
been given to the directors of the company.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional 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.
SYDNEY · PENRITH · MELBOURNE · BRISBANE · PERTH · DARWIN
Liability limited by a scheme approved under Professional Standards Legislation
www.hallchadwick.com.au
46
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2018
Independent Auditor's Report
BAILADOR TECHNOLOGY INVESTMENTS LIMITED
ABN 38 601 048 275
AND CONTROLLED ENTITIES
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
BAILADOR TECHNOLOGY INVESTMENTS LIMITED AND CONTROLLED ENTITITES
KEY AUDIT MATTER
HOW OUR AUDIT ADDRESSSED THE KEY AUDIT
MATTER
Valuation of Investments $130 million
Refer to:
Note 4 - Financial Assets
Accounting policy - Note 18 Fair Value Measurement
The Company has been classified under AASB 2013-5 as
an Investment Entity whose business purpose is to invest
funds solely for returns via capital appreciation and/or
investment returns.
is exempt
The entity
investees
Consolidated Financial Statements.
from consolidating underlying
in accordance with AASB 10
it controls
As the Company has been classified as an Investment
Entity, the portfolio investments have been accounted for
at fair value through the profit or loss and shown as
Financial Assets in the Statement of Financial Position.
In determining year-end valuations, the board considers
the annual valuation review by an independent valuation
expert and the valuation report prepared by the Manager.
Of these financial assets, $28 million were classified as
‘level 2’ financial instruments in accordance with AASB 13
Fair Value Measurement.
The measurement of level 2 financial assets are based on
inputs other than quoted prices that are observable for the
asset , either directly or indirectly. The valuation of the
level 2 financial instruments therefore requires a higher
level of judgement.
We have focussed on this area as a key audit matter due
to the company being an investment entity; amounts
involved being material; and the inherent judgement
involved in determining the fair value of investments.
The remaining financial assets of $102 million were
classified as ‘level 3’ in accordance with AASB 13 Fair
Value Measurement. The measurements of level 3
financial assets are based on unobservable inputs for the
asset. This requires a higher level of judgement.
Our procedures included amongst others:
• Evaluating the manager’s valuation approach to
value the investments; cross checking with
growth achieved and comparable market data.
• Assessing the valuation range to the manger’s
valuation and implied revenue multiple.
• Assessing
the scope, expertise and
the
independence of external valuer engaged by the
Company.
• Evaluating the appropriateness of the valuation
methodologies selected by the manager and
separately by the external valuer to determine
fair value of the investment to accepted market
practices and our industry experience.
•
Independently assessing and comparing the key
inputs adopted by the manager and the external
valuer to available market information relating to
similar transactions. We involved our valuation
specialist to assess that the market data used
seperately by the manager and the valuer is
reasonable in comparison to a credible external
source; the rationale for selected multiples;
reference to market data; revenue growth rates
and other business characteristics that are
reasonable.
• Assessing the adequacy of disclosure of level 2
and level 3 finacial assets in accordance with
AASB 13 Fair Value Measurement.
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2018
47
Independent Auditor's Report (continued)
BAILADOR TECHNOLOGY INVESTMENTS LIMITED
ABN 38 601 048 275
AND CONTROLLED ENTITIES
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
BAILADOR TECHNOLOGY INVESTMENTS LIMITED AND CONTROLLED ENTITITES
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 2018, 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 Company 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 Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions
of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
–
Identify and assess the risks of material misstatement of the financial report, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud may
involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal
control.
– Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company’s internal control.
– Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
48
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2018
Independent Auditor's Report (continued)
BAILADOR TECHNOLOGY INVESTMENTS LIMITED
ABN 38 601 048 275
AND CONTROLLED ENTITIES
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
BAILADOR TECHNOLOGY INVESTMENTS LIMITED AND CONTROLLED ENTITITES
– Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Company’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in our
auditor’s report to the related disclosures in the financial report or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to
the date of our auditor’s report. However, future events or conditions may cause the Company to
cease to continue as a going concern.
– Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events in a
manner that achieves fair presentation.
– Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Company to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Company audit. We remain solely
responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and these are therefore the key
audit matters. We describe these matters in our auditor’s report unless law or regulation precludes
public disclosure about the matter or when, in extremely rare circumstances, we determine that a
matter should not be communicated in our report because the adverse consequences of doing so
would reasonably be expected to outweigh the public interest benefits of such communication.
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2018
49
Independent Auditor's Report (continued)
BAILADOR TECHNOLOGY INVESTMENTS LIMITED
ABN 38 601 048 275
AND CONTROLLED ENTITIES
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
BAILADOR TECHNOLOGY INVESTMENTS LIMITED AND CONTROLLED ENTITITES
Report on the Remuneration Report
We have audited the remuneration report included in pages 22 to 23 of the directors’ report for the
year ended 30 June 2018.
The directors of the company are responsible for the preparation and presentation of the
remuneration report in accordance with s 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.
Opinion
In our opinion the remuneration report of Bailador Technology Investments Limited for the year ended
30 June 2018 complies with s 300A of the Corporations Act 2001.
Hall Chadwick
Level 40, 2 Park Street
Sydney, Nsw 2000
SANDEEP KUMAR
Partner
Dated: 16 August 2018
50
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2018
Independent Auditor's Report (continued)
Additional Information
The additional information required by the Australian Stock Exchange Limited Listing Rules is set out below.
20 Largest Shareholders
Details of the 20 largest ordinary shareholders and their respective holdings as at 30 June 2018.
Holder Name
Washington H Soul Pattinson and Company Limited
David Kirk
National Nominees Limited
HSBC Custody Nominees (Australia) Limited
Forsyth Barr Custodians Ltd
Paul Wilson
Bond Street Custodians Limited
Corom Pty Ltd
Patagorang Pty Ltd
Pepstock II Pty Ltd
Paul Lewis
Ladybird Limited
Gwynville Trading Pty Ltd
Mr Simon Fenwick
JP Morgan Nominees Australia Limited
Mr Paul Anthony Kendrick
BNP Paribas Nominees Pty Ltd
Mr Paul Meehan
Merrill Lynch (Australia) Nominees Pty Limited
Citicorp Nominees Pty Limited
Total
Substantial Shareholders
The names of the substantial shareholders in the Company’s register are:
Washington H Soul Pattinson and Company Limited
David Kirk
National Nominees Limited
Ordinary
% of
Shares Held
Issued Shares
23,000,000
19.13%
8,387,841
6,347,535
4,890,444
3,750,501
3,201,513
2,053,308
2,000,000
1,908,810
1,435,274
1,428,312
1,253,088
1,113,782
1,100,000
1,019,779
999,978
951,061
926,545
902,564
837,178
6.98%
5.28%
4.07%
3.12%
2.66%
1.71%
1.66%
1.59%
1.19%
1.19%
1.04%
0.93%
0.91%
0.85%
0.83%
0.79%
0.77%
0.75%
0.70%
67,507,513
56.14%
Ordinary Shares
23,000,000
8,387,841
6,347,535
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2018
51
Shareholder Information Distribution of Shares
Analysis of numbers of equity security holders, by size of holding as at 30 June 2018.
Holding
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Numbers of
Ordinary
% of
Shareholders
Shares Held
Issued Shares
81
278
246
606
138
42,437
894,857
2,076,355
21,309,017
95,925,165
1,349
120,247,831
0.04%
0.74%
1.73%
17.72%
79.77%
100%
The number of holders possessing less than a marketable parcel of the Company’s ordinary shares, based on the closing market price as at
30 June 2018 is 48.
Other Stock Exchanges Listing
Quotation has been granted for all ordinary shares and options of the Company on all member exchanges of the ASX.
Restricted Securities
The Company has no restricted securities.
Unquoted Securities
There are no unquoted securities on issue by the Company.
Buy-Back
There is currently no on market buy-back.
Use of Funds
For the purposes of ASX Listing Rule 4.10.19, the Company confirms that it has used its cash and assets in a form readily convertible to cash,
that it had at the time of admission, in a manner consistent with its business objectives, for the financial year.
52
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2018
Shareholder Information (continued) Corporate Information
Registered Office
Bailador Technology Investments Limited
Suite 4, Level 11
6 O’Connell Street
Sydney NSW 2000
www.bailador.com.au
Directors
David Kirk (Chairman)
Paul Wilson
Andrew Bullock
Sankar Narayan
Heith Mackay-Cruise
Share Registry
Link Market Services Limited
Level 12
680 George Street
Sydney NSW 2000
www.linkmarketservices.com.au
Auditor
Hall Chadwick
Level 40
2 Park Street
Sydney NSW 2000
www.hallchadwick.com.au
Company Secretary
Helen Plesek
Australian Stock Exchange Code
Shares : BTI
Manager
Bailador Investment Management Pty Ltd
Suite 4, Level 11
6 O’Connell Street
Sydney NSW 2000
(AFSL 400811)
Bailador Technology Investments Limited
ABN 38 601 048 275
Suite 4, Level 11, 6 O’Connell St, Sydney NSW 2000
+61 2 9223 2344 | www.bailador.com.au