2020 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
21 Corporate Governance Statement
24 Directors’ Report
28 Auditor’s Independence Declaration
29 Statement of Profit or Loss and Other Comprehensive Income
30 Statement of Financial Position
31 Statement of Changes in Equity
32 Statement of Cash Flows
33 Notes to the Financial Statements
49 Directors’ Declaration
50 Independent Auditor’s Report
55 Shareholder Information
57 Corporate Information
Bailador provides investors
with exposure to expansion-stage
technology companies at attractive
valuations before they are public.
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).
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.
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 18 of the Financial Report for further information.
Capital Structure
The Company’s capital structure comprises 122,859,263
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-20
30-Jun-19
0.705
(3.41)
171,716
1.235
1.146
1.05
14.18
178,370
1.313
1.207
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 2020
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 company
Kathmandu Holdings Limited and is Chairman of Forsyth Barr
Limited, a privately owned investment firm and the Sydney Festival.
David is also a director of the Lord Howe Island board. David holds
several BTI portfolio directorships as Chairman of Rezdy and
SMI and a director each of Instaclustr, 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 8,651,466 ordinary shares in BTI and an indirect
interest in a further 792,200 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 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 3,977,041 ordinary shares in BTI and has an indirect
interest in a further 420,146 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 2020
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 Audit and Risk Committee.
• Andrew holds interest in 410,422 ordinary shares in BTI.
Jolanta Masojada
Independent Non-Executive Director
• Jolanta (appointed 2018) is Principal of MasMedia Advisers, providing strategic
investor relations and communications advice to listed companies. She has more
than 25 years’ experience in financial markets and equity research in the media and
technology sectors in Australia and the US. Jolanta was formerly Director Equity
Research at Credit Suisse and Deutsche Bank, with previous roles at Macquarie Bank
and Pierson Sal. Oppenheim in New York.
• Jolanta is a graduate of the University of KwaZulu-Natal and Cambridge University.
She is a fellow of the Financial Services Institute of Australasia and a graduate of the
Australian Institute of Company Directors.
• Jolanta is the Chair of Bailador’s Nomination and Remuneration Committee.
• Jolanta holds interest in 122,843 ordinary shares in BTI.
Brodie Arnhold
Independent Non-Executive Director
• Brodie (appointed 30 August 2019) is an experienced ASX-listed board member with
over 15 years domestic and international experience in private equity, investment
banking and corporate finance.
• Brodie is the CEO and Executive Director of iSelect (ASX:ISU) having joined the Board
in September 2014 and stepping into the CEO role in April 2018. Prior to his current
role with iSelect, Brodie was the CEO of Melbourne Racing Club. He has also worked
for Investec Bank from 2010 – 2013 where he was responsible for building a high-
net-worth private client business and for Westpac Banking Corporation where he
was Investment Director at Westpac’s private equity fund. Brodie has also worked at
leading accounting and investment firms including Deloitte (Australia), Nomura (UK)
and Goldman Sachs (Hong Kong).
• Brodie is also the Chairman and Non-Executive Director of Shaver Shop Group Ltd
(ASX:SSG) and is Chairman of private companies Endota Spa Pty Ltd and Industry
Beans Pty Ltd.
• Brodie holds a Bachelor of Commerce and MBA for the University of Melbourne and is
a member of the Institutes of Chartered Accountants in Australia and New Zealand.
• Brodie holds interest in 55,000 ordinary shares in BTI.
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2020
5
2020 was a year of solid progress and important preparation along
with a couple of disappointments. There were two partial cash
realisations, resulting in BTI paying its first dividend (fully franked).
The NTA per share net of all fees decreased by 5.3% during the
year. This compared to an 18.2% increase in 2019. The value of your
investment in 10 growth-stage information technology companies
in 2020 was essentially flat, down by 1.0%. The remaining decrease
in fund NTA per share (4.3%) was largely a result of the dividend
payment, which reduces cash in the fund, and the issuing of new
shares through the Dividend Reinvestment Plan.
Overall the portfolio continues to grow strongly. Total revenue of the
underlying portfolio companies grew by 20% in 2020 to reach $278m.
This period included four months of COVID-19 disruption. There are
just three SaaS companies listed on the ASX with higher revenue
than the Bailador portfolio. Importantly the revenue generated by
the Bailador portfolio is high quality revenue. 86% of the revenue
generated by the portfolio in 2020 was recurring revenue and the
gross margin was over 75%. These numbers have changed little
over time. There is a partial causal relationship between these
two numbers. Recurring revenue, which is very largely subscription
revenue, is revenue that doesn’t have to be “re-won” every year.
The customer simply continues on the payment arrangements in
place and the software continues to be available to drive important
activities in the customer’s business. The gross margin remains
stable, or improves as the business gains economies of scale.
Highlights in 2020
SiteMinder
It seems a long time ago now, but back in December 2019 the fund
achieved the milestone of having its first unicorn. A unicorn refers to
a technology company valued at more than $1 billion. In a funding
round led by highly regarded global investment company, BlackRock,
SiteMinder raised over $100 million at a valuation of more than
$1 billion. The valuation was a 27% uplift over the carrying value
of SiteMinder at the time and took the value of our investment in
SiteMinder to $92.4 million. We took the opportunity at the time
to realise some cash for investors and sold down $10 million of
our position, leaving our investment at $82.5m.
Given the size of SiteMinder in the portfolio – it is now about 54% of
the total portfolio – we are now reviewing our valuation of SiteMinder
more regularly than our smaller positions. To quickly recap our
valuation approach, when there is a third-party cash transaction
(realisation or investment) we mark our valuation to that benchmark.
Otherwise, if 12 months passes and there has been no cash transaction
we review company performance, comparable transactions and
the valuation multiples of comparable companies, both listed and
unlisted, and consider whether a valuation change is appropriate.
We are not consistent in the speed at which we mark investments
up and mark investments down. We mark up slowly and always try
to leave a margin for error by being conservative. We mark down
immediately and try always to ensure a mark down is a one-off event.
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BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2020
This policy is reflected in the track record of our portfolio companies
when raising capital. There has never been a capital raising or third-
party transaction for a Bailador portfolio company at a valuation lower
than the value at which we were holding our investment at the time
the capital was raised. We like that record and we are going to try very
hard to maintain it.
Figure 1: All 20 third party transactions at or above BTI’s valuation
171% uplift
over cost
Cost1
Third party
transaction value
1 Cost is the total original cash cost of investment
Back to SiteMinder. Our policy now is to review the SiteMinder
valuation in December and June coinciding with the financial half
and full year ends. At the financial year end we have the benefit of an
Independent Expert’s review of the full portfolio and at both the year
end and half year end we have oversight from the Auditor.
Our holding value for SiteMinder was therefore reviewed as at 30 June
2020. This was of course right in the middle of COVID-19 shutdowns
and consequent disruptions to travel and the hotel business. We were
pleased to report at the time that valuation multiples and SiteMinder’s
continuing performance fully justified the valuation set in December
2019. SiteMinder’s revenue is more than 90% recurring revenue, very
largely subscription revenue. This has been sustained through the
COVID-19 disruptions in a way that companies that “clip the ticket”
on transactions – such as travel agents, car rental companies and
hotels themselves – has not.
Instaclustr
Alongside SiteMinder, Instaclustr has been the standout performer
in the portfolio in 2020. We expect the continued fast growth rate
of Instaclustr on an increasingly large revenue base to rapidly make
Instaclustr a sizable counterweight to SiteMinder in the portfolio
and so an important business for investors to understand.
Instaclustr provides a platform for companies to safely and easily
utilise a range of open source software solutions in the fundamentally
important information technology areas of database selection
and management, search, analytics and messaging. Additional
functionalities facilitating the use of other open source technologies
continue to be developed and added to the Instaclustr portfolio.
Letter from the Founders Instaclustr was founded in 2013 having emerged from the University
of Canberra and is now headquartered in Redwood City, California.
Over 90% of Instaclustr’s revenue is generated from outside Australia
and the company’s customers include IBM, Sephora, Atlassian, Sonos,
Dream11, GoDaddy, FedEx, Clear Capital, EA Sports and many more.
Instaclustr has a subscription based recurring revenue model, high
gross margins and a very large addressable market. Instaclustr is
the global leader in its space.
In August 2019 we revalued Instaclustr up by 30%, a rate comfortably
below the company’s revenue growth rate, and continued to apply
a conservative revenue multiple. Instaclustr has continued to
grow strongly since then and the valuation multiples of peers in
the open source database and related technologies space have
expanded markedly.
Figure 2: Instaclustr’s peers trade on high multiples
Peer Median = 20x
Instaclustr1
(Last equity raise)2
Elastic
MongoDB
US Infra Software3
(median)
Megaport
ASX high-growth SaaS4
(median)
Global Infra
Software
(Listed)
AU SaaS
(Listed)
EV/LTM Revenue Multiple
0x
5x
10x
15x
20x
25x
30x
35x
40x
1 Valuation multiple implied by BTI Carrying value as 30 June 2020.
2 Equity raising undertaken in August 2018.
3 US infrastructure sector SaaS companies include Datadog, Servicenow,
Splunk, Dynatrace and vmware.
4 ASX SaaS companies include Xero, Wisetech, Altium, TechnologyOne,
Megaport, FINEOS, Nearmap, Elmo, Volpara, Limeade, Infomedia, Class,
Pro Medicus and Damstra. Source data: Factsetdata of 30 June 2020,
Company Filings, News Reports, Bailador Analysis.
Bailador’s valuation of Instaclustr is due for review in August 2020
with the results to be published in our August NTA Statement in
early September.
Disappointments in 2020
Stackla
In September 2019 Stackla suffered a wholly unexpected and wholly
unjustified blow when Facebook rescinded Stackla’s right to operate
on the Facebook and Instagram platforms. Stackla is a world leader
in the identification, storage, management and curation of User
Generated Content for hundreds of leading global brands. Being
removed from the single largest source of user generated content
– the Facebook and Instagram platforms – was a body blow for
the company. We immediately wrote our investment down to zero.
Stackla was reinstated on the Facebook platforms six weeks later but
had suffered some customer losses, a shrinking of the sales pipeline
and a general loss of business momentum. The business has since
traded solidly winning new customers and continuing to develop
its technology. We will review Stackla’s valuation again at the end
of September 2020.
Viostream
Viostream is a small business with a dedicated team doing a great job
for its government and corporate customer base. Early in the 2020
financial year, the business lost a couple of important customers
and, faced with an unclear growth and cash operating path, we wrote
the business down to zero. Since that time Viostream has secured
its position as the leading provider of video platform services to
federal and state government departments and large corporates
while shedding smaller less profitable customers and reducing staff
numbers. The business delivered a record cash operating profit in
the 2020 financial year on flat growth. Again, we will be slow to write
Viostream back up, given the inherent uncertainty in the current
operating environment, but there is certainly upside potential for
the investment should the business continue on its current path.
“Alongside SiteMinder,
Instaclustr has been
the standout performer.”
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2020
7
Letter from the Founders (continued) The rest of the portfolio
Realisations
The remaining six portfolio companies have all performed somewhere
between well and very well in 2020. A summary of the performance
and prospects of each of the companies in the portfolio can be
found in the Review of Operations in this Annual Report. Lendi and
Brosa in particular have benefited from the COVID-19 disruptions
as consumers have migrated to online solutions for mortgages and
furniture. Straker has also benefited from COVID-19 disruption as
companies look for more cost-effective translation services. SMI’s
unique data has been crucial for US media companies to understand
their operating environment and DocsCorp’s customers simply
cannot operate without the document productivity software
DocsCorp provides. Rezdy provides booking and customer
acquisition-related software for tours and activities providers.
Approximately 70% of revenue prior to COVID-19 was subscription
based, which has held up well. Cost reductions, a swing to domestic
tourism and a small funding round will allow us to position the
company well for the recovery when it comes.
We understand that crystallising value for shareholders will come
through realisations. That is, through outright sales of portfolio
companies that deliver strong money-on-money cash returns and
through IPOs at attractive prices. We will typically hold a significant
part of our investment position at IPO and expect to be long term
owners of companies with strong growth prospects and quite
possibly a multiple re-rating.
As you can see from the graph below, we believe we are moving now
into the phase of accelerating realisations in the portfolio and we
believe this will flow through to significant shareholder value creation.
Figure 3: BTI has begun harvesting profitable cash realisations
3. Realisations & exits
BTI NTA
2. Grow the businesses
$180m
1. Build the portfolio
Our First Special Dividend
Shareholders will be aware that in March we paid our first dividend. We
paid 2.5c per share which was a 2.3% dividend yield at the time it was
announced in February. We instigated a Dividend Reinvestment Plan
at the same time. Our dividend payment plans remain unchanged
but bear repeating. Investors in BTI should be expecting to increase
the value of their investment in line with the increase in value of
the underlying portfolio companies and should not expect a steady
stream of dividends. We will consider special dividends when we
have realisations and compare the expected return on reinvestment
of cash with the benefits to shareholders of distributions.
$160m
$140m
$120m
$100m
$80m
$60m
$40m
First special dividend
(2.5cps, fully-franked)
Deployment
of capital
Team
Partial cash realisations
2015
2016
2017
2018
2019
2020
The team at Bailador has worked very hard and very effectively for
you during the year. We were very pleased to report that in January
2020 James Johnstone was promoted to Partner. In 2020 James has
led our investments in DocsCorp and Lendi, supported on Straker and
SiteMinder and picked up the care and consideration of Viostream,
guiding the company to its best ever performance in a year. James
has certainly earned his promotion and we are delighted to have him
join us as a Partner in the firm. In May 2020 Mike Hayes was promoted
to Investment Director and is increasingly taking on a leadership role
in his engagement with portfolio companies. Mike has been involved
with Instaclustr from the beginning and you will have read earlier how
well Instaclustr is going. Mike can’t claim all the credit, but good things
don’t happen by accident and Mike has been supporting and guiding
the company just as we would wish.
Annual Meeting
We look forward to engaging with those of you who are able to
attend our Annual General Meeting to be held at 11am on 27 October
2020. This year the AGM will be online only as you would expect with
further detail provided in our Notice of Meeting being released to the
ASX in September.
David Kirk
Chairman and Executive Director
Paul Wilson
Executive Director
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BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2020
Letter from the Founders 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-place 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 loss of the Company for the financial year ended 30 June 2020 was
$4,118,000 (2019 $17,053,000 profit), after providing for income tax.
Combined revenue growth of the underlying portfolio companies
(portfolio weighted) for the financial year ended 30 June 2020 was
20%. 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 change in the Net Tangible Assets (NTA) per share
between 1 July 2019 and 30 June 2020 (pre-tax, after all fees), was
a decrease of 5.3% pa over the year. The Company paid a dividend
through the period of 2.5 cents per share and instituted a Dividend
Reinvestment Plan (DRP). The Company issued shares under the DRP
and completed a shortfall placement under the DRP to a number of
investors. The total shares issued under DRP and shortfall placement
was 2,611,432 (2.2% of previously issued shares).
Review of Operations
The portfolio continued to perform strongly throughout FY20 with
the highlight of the year being SiteMinder’s capital raising which
saw SiteMinder valued in excess of $1bn and Bailador’s valuation
increase by 26.8%. The cash realisation that accompanied SiteMinder’s
capital raising prompted the payment of Bailador’s first dividend
to shareholders of 2.5 cents per share (fully franked).
Bailador’s investment in Instaclustr continued to be a strong
performer increasing by 30% in August. Write downs in Viostream
and Stackla offset the otherwise strong H1 performance.
The uncertainty surrounding COVID-19 has impacted some of the
forward momentum across the portfolio in the second half of the year
with portfolio performance in H2 largely flat. The Straker Translations
share price was impacted due to COVID-19 but along with the rest of
the market, is recovering.
Importantly, Bailador’s portfolio companies are well capitalised
and are in a strong position to navigate the uncertainty 2020 has
presented to businesses worldwide.
Paul Wilson
Executive Director
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2020
9
Operating and Financial Review Valuation of Investments
The Board has reviewed the value of the investment portfolio and
the Net Tangible Assets of BTI as at 30 June 2020. In conducting their
valuation review, the Board has 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 19 of the financial statements and in the section below
“Operating Reports on Portfolio Companies”.
Investments are currently held at fair value via a mark to market,
the valuation implied by the latest third-party investment or at
a price determined by globally benchmarked revenue multiples
and trading performance.
Review of Operations (continued)
Realisations
SiteMinder
In December 2019 BTI sold a small proportion of its holding in
SiteMinder for proceeds of $9.9m. The realisation was part of
a large equity raise by SiteMinder which saw significant demand
for SiteMinder shares at a valuation of $1.1bn. The transaction
also saw SiteMinder’s valuation in the BTI portfolio lift 26.8%.
Straker Translations
In July 2019 BTI sold 1,000,000 Straker Translations shares at a
price of $1.95, which was 29.1% above Straker’s IPO price.
The Straker Translations share price underperformed throughout
FY20 closing FY20 at $0.875, down 48.7% on its June 2019 closing
price. At 30 June 2020, BTI held marketable securities in Straker
as follows:
No. of
$ at $0.875
Shares
30 June 2020
6,404,201
6,404,201
$5,603,676
$5,603,676
Current marketable securities:
Ordinary shares
Total
Revaluations
The following investments were re-valued upwards during the year
to a new market value set by third party investment:
• SiteMinder: Increased in value 26.8% during FY20. BTI increased
its valuation in SiteMinder in line with the price of an equity
raising completed in January 2020. The equity transaction
was strongly supported by institutional investors and saw
SiteMinder valued at $1.1bn.
The following investments were revalued under BTI’s revaluation
policy, including independent review, by reference to comparable
trading and transaction multiples:
• Instaclustr: increased by 30% ($4.4m) in August 2019 following
strong trading performance.
• Rezdy: decreased by 2.5% ($0.1m) in June 2020 due to the
impact of COVID-19.
• Stackla: decreased by 100% ($12.6m) in September 2019 due
to Facebook platform interruption. See Stackla operating
report for details.
• Viostream: decreased by 100% ($7.8m) in September 2019.
See Viostream operation report for details.
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BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2020
Operating and Financial Review (continued) Review of Operations (continued)
Operating Reports on Portfolio Companies
SiteMinder
SiteMinder is the largest player in the hotel guest acquisition platform
market servicing over 35,000 hotels in over 160 countries. SiteMinder’s
platform helps hotels increase online revenue, streamline business
processes and drive down the cost of acquiring bookings. SiteMinder
seamlessly connects to hundreds of distribution partners, including
leading Online Travel Agents (OTAs) such as Booking.com, Expedia,
TripAdvisor, Google, and CTrip. It operates a subscription business
model and has more than $100m in revenue of which more than
90% is recurring in nature.
Sankar Narayan (ex-Xero COO) joined SiteMinder as the business’
first externally appointed CEO who, alongside co-founder Mike Ford,
is driving the company’s vision, strategy, and product innovation.
During FY2020 the company put in place a new three-year plan that
focusses on establishing the people, processes and systems to drive
and support SiteMinder’s strong revenue growth plans.
The SiteMinder product continues to evolve to a true ‘platform’
whereby SiteMinder offers its core channel manager product to
hotels alongside a demand management, yield management,
payment, website hosting and Data-as-a-Service plugins. At the
end of 2019 SiteMinder launched the Hotel App Store which allows
hotels to access a range of hotel apps by utilising the SiteMinder
Data-as-a-Service plugin. Product development is underway
to streamline and automate the customer onboarding process.
The business’ performance has been temporarily impacted by
COVID-19 in the last quarter of FY2020 as revenue derived from
booking transactions declined. The monthly subscription revenue
remains resilient and this accounts for 90% of the business’ gross
profit. Despite SiteMinder’s resilience in the face of the COVID-19
travel restrictions, management took decisive action to make cost
savings and selectively reduce staff levels where appropriate.
The business has still been acquiring new customers during the
COVID-19 disruption and its technology will be a vital tool for hotels
as they recover from the COVID-19 restrictions. The business is now
more profitable than it was pre-COVID-19 with a very strong balance
sheet and cash position.
Sankar, alongside co-founder Mike Ford, leads a distinguished
executive team that includes Jonathan Bedford, the former VP
Commercial at Open Text; Inga Latham, the former General Manager
of digital experience at Commonwealth Bank; Jonathan Kenny, the
former CFO at global online education company 3P Learning; and
Mark Renshaw as CMO.
In January 2020 the company completed a $100m+ capital raise
led by renowned institutional investor, BlackRock. This investment
valued SiteMinder at over $1bn and saw BTI increase the valuation
of its stake in SiteMinder to $82.5m, while also realising $9.9m
in cash proceeds.
After reviewing SiteMinder’s valuation in June 2020 BTI has held its
valuation of SiteMinder at $82.5m which is in line with the valuation
set by third-parties as part of the BlackRock investment round in
January 2020.
Valuation 30 June 2020:
Valuation at 30 June 2019:
Realisation since 30 June 2019:
$82.5m (after $9.9m
realisation)
$72.9m
$9.9m
Basis for valuation:
Securities held:
Cost of third-party investment
Convertible preference shares
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2020
11
Operating and Financial Review (continued) Over the past 12 months, Instaclustr has built out a strong Go-To-
Market team to accelerate the sale of their multi-tech platform and go
after a growing addressable market. The new CRO, who was hired in
2019, has had a meaningful impact on the outbound sales engine and
Instaclustr’s ability to win large enterprise deals. A new CMO and Head
of Consulting were hired in early 2020, and they have already helped
to increase the size and quality of the pipeline.
The company employs 100+ full-time staff across its three major
offices: its headquarters in Palo Alto, California, its founding office
in Canberra, Australia, and its office in Boston, Massachusetts.
BTI increased the valuation of its investment in Instaclustr by 30%
in August 2019 to reflect the strong operating performance in the
12 months since the third-party Level Equity investment in August 2018.
BTI believes that there is still a long runway of growth ahead
of Instaclustr driven by the strong structural tailwinds of big data,
applications and databases moving to the cloud, and adoption
of open source technologies.
Valuation 30 June 2020:
Valuation 30 June 2019:
Investment since 30 June 2019:
$19.0m
$14.6m
$0m
Basis for valuation:
Securities held:
Revenue multiple
Convertible preference shares
Review of Operations (continued)
Instaclustr
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
technology 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 and many other blue-chip
companies as customers. Instaclustr has a diversified customer
base spanning multiple industries and geographies, and 90%+
of Instaclustr’s revenue comes from outside of Australia. Instaclustr’s
revenue is high margin and 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 sticky with 90%+ of total revenue classified as recurring.
Instaclustr has demonstrated excellent operational performance over
the 12 months ending 30 June 2020. Despite the overall environment
resulting from the COVID-19 crisis, Instaclustr had one of its best
quarters ever in June 2020 with major new client wins in May and June.
Since BTI invested in 2016, Instaclustr has also evolved from being
a ‘Database-as-a-Service’ provider, focused on Apache Cassandra,
to an ‘Open-Source-as-a-Service’ provider. Instaclustr’s Open-Source-
as-a-Service platform now offers additional technologies such as
Apache Kafka, Elasticsearch and Redis, and management anticipates
that this evolution will generate significant growth for the company.
Building out the multi-tech platform has led to a number of benefits
for the company; 1) It has increased revenue and share of wallet per
customer, by being able to upsell additional products 2) It has given
Instaclustr a competitive advantage vs. single technology companies
3) it has allowed them to have more strategic discussions with large
enterprise customers who are looking to solve business problems
vs. a specific technology problem. Some of the recent deals won
with large customers were driven by Instaclustr’s ability to manage
multiple technologies.
12
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2020
Operating and Financial Review (continued) Review of Operations (continued)
DocsCorp
DocsCorp provides on-premise and cloud-based document
productivity software for law firms, accounting firms and document
management professionals. The company operates within the
Document Productivity segment of the large and growing Enterprise
Content Management market. BTI invested in DocsCorp in July 2016.
In FY2019 the company invested in both people and process changes
within its sales function which delivered meaningful improvements
in new sales momentum in FY2020. These improvements were
experienced in all major sales regions, with standout revenue growth
in North America prior to the onset of COVID-19.
The vast majority of DocsCorp’s revenue is recurring in nature and
the business continues to see this recurring revenue mix increase.
This has been driven by internal changes implemented by DocsCorp
along with the professional services industry increasingly moving
away from on-premise to cloud based software solutions.
From a product development perspective, the company has a busy
development pipeline and in June 2020 the company launched
a major enhancement to its flagship compareDocs product. This,
along with other product releases, will present revenue expansion
opportunities for the company while also expanding the breadth
of its product suite.
In July 2020 the company acquired Verowave Technologies which
is a UK-based document production and assembly software product
used by professional services firms. This is an important acquisition
by the company and will see Verowave’s products made available to
DocsCorp’s customer base and reseller network. Verowave’s products
are highly complementary with DocsCorp’s product suite and further
enhance the breadth of DocsCorp’s offering to the legal market.
The mission critical nature of DocsCorp’s product suite has seen
it largely insulated it from the impacts of COVID-19. The company’s
new sales pipeline has held up very well, but they have experienced
delays in sales pipeline conversion in North America and Europe.
Management have taken proactive action to reduce costs where
appropriate and swiftly implemented remote working arrangements.
DocsCorp now has more than 5,000 customers and 700,000 end
users across 70 countries. The company has a loyal customer base
with strong net revenue retention of over 100% and customer churn
rate of less than 1% in its key enterprise customer segment. The
company is cash generative with a strong balance sheet and well
positioned to capitalise on the evolving competitive landscape.
While the company performed well in FY2020 and continued to grow
its revenue BTI has held DocsCorp’s carrying value at $10.9m for
FY2020 due to general market uncertainty.
Valuation 30 June 2020:
Valuation 30 June 2019:
Investment since 30 June 2019:
$10.9m
$10.9m
$0m
Basis for valuation:
Securities held:
Revenue multiples
Convertible preference shares
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2020
13
Operating and Financial Review (continued) Lendi completed a substantial capital raise in December 2019
through the issue of a convertible note linked to future IPO pricing.
As the convertible note had no specified valuation BTI has held its
valuation of Lendi at $10.7m which is in line with the last third-party
equity investment round.
Valuation 30 June 2020:
Valuation 30 June 2019:
Realisation since 30 June 2019:
$10.7m
$10.7m
$0m
Basis for valuation:
Securities held:
Recent third-party investment
Ordinary shares
Lendi
Lendi is a disruptive fintech business that has developed an end-to-
end online mortgage platform that fundamentally improves the home
loan selection and application process for Australian consumers.
Lendi is tackling the $1.7 trillion and highly profitable mortgage
sector that is currently dominated by the slow-moving “big four”
banks and traditional face-to-face mortgage brokers.
The Lendi platform uses advanced technology to match borrowers
with over 1,500+ home loan products offered by a panel of over
35+ lenders. Lendi has implemented a number of operational
processes via data connections and innovative partnerships to
reduce the time/effort (for both the customer and Lendi’s operators)
required to complete a home loan application.
FY2020 saw the company benefit from the stabilisation and
resurgence of the wider home loan market which was driven by
the completion of the Royal Banking Commission findings. These
tailwinds have seen the company deliver market leading revenue
growth rates with the business’ revenue growth continuing to
accelerate through the COVID-19 disruptions.
Lendi has been a net beneficiary of the COVID-19 disruptions as
a result of consumers becoming increasingly comfortable with
digital, rather than face-to-face, distribution. The home loan market
has also seen strong competition from the banks as interest rates
reach historic lows and consumers seek to take advantage of these
low interest rate offers. The main impact of COVID-19 for Lendi was
the complex task of migrating multiple domestic and international
offices to remote working which the Executive team managed well.
In FY2020 Lendi expanded its product and engineering team which
has propelled the development and release of a series of new
platform features and integrations that have enabled efficiency
gains amongst their home loan specialists or enabled customers to
complete their home loan application entirely unassisted and online.
An example of one such feature was the launch of Lendi’s Approval
Confidence indicator which provides consumers an insight into
which lenders on Lendi’s panel will approve them for a home loan.
The business’ JV with Domain continues to perform well and both
companies have worked hard to expand Lendi’s integration within
the Domain marketplace.
14
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2020
Operating and Financial Review (continued) Review of Operations (continued)
Standard Media Index
SMI is a market leading data and analytics platform specialising
in the management and distribution of media and advertising data.
SMI is the only company in the world that aggregates actual ad
spend data based on real invoices with the world’s largest media
buying groups, providing decision-grade ad expenditure and pricing
metrics which are used by leading media companies, brands and
financial institutions to understand historical and forward trends
and assist making fundamental strategic decisions.
Depending on the market, SMI captures between 70 and 95% of all
agency spend. By aggregating it, SMI offers detailed ad intelligence
across all media types, including Television, Digital, Out-of-Home,
Print, and Radio. Data can be broken down by unit cost, media
owner, ad type, buy type, advertiser product category, and other
dimensions based on your specific needs. SMI sources its data
through exclusive arrangements with buying agencies who are
represented in more than 32 countries.
SMI’s flagship product, AccuTV, launched in FY18 provides
a comprehensive analytical view of the US TV market for large
Enterprise clients such as ABC/Disney, MGM, Fox, Turner and
Discovery Channel. The success of AccuTV has established SMI
as the gold standard for understanding and analysing television
media spend in the US.
SMI also provides data and analytics products to leading institutional
investors, asset managers, hedge funds, family offices, and private
equity firms. These groups use SMI data to identify changes to
companies’ ad revenue and to uncover signals about a company’s
fundamental performance, track revenue against consensus
estimates, and build better models.
FY20 was another period of solid growth for SMI, underpinned by
strong performance in the US market which now contributes to over
80% of total revenue. The business has experienced some impact
from COVID-19 mainly in Australia but has seen increased demand
for its unique data set in the much larger and more competitive
US media and financial services markets. In turbulent markets,
the clarity of insight produced by the SMI data is even more valuable.
Overall, the business is well capitalised and continues to generate
profitable growth.
SMI’s growth prospects remain promising, underpinned by three
continuing initiatives: (1) continuing to grow the revenue of AccuTV
in the US market and in new markets such as Canada, which launched
in June 2020, (2) increasing its addressable market through new
product innovations and (3) continuing to grow sales to the financial
services market, which has been a stand-out success.
Bailador has reviewed its investment in SMI and held its valuation
constant to be conservative in the absence of a third-party
transaction. However, with the majority of the company’s financial
year budget already achieved (SMI has a December financial year
end), a strong pipeline of clients and planned regional and product
expansions underway, SMI is well positioned to continue its growth
in the coming year.
Valuation 30 June 2020:
Valuation at 30 June 2019:
Investment since 30 June 2019:
Basis for valuation:
Securities held:
$9.6m
$9.6m
$0m
Revenue multiples
Convertible notes and
ordinary shares
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2020
15
Operating and Financial Review (continued) Bailador has reviewed its investment in Rezdy resulting in a
2.5% reduction to its valuation. BTI holds convertible securities
with a senior position in the Rezdy capital structure, meaning
a relatively modest Enterprise Value is required to redeem face
value, and Bailador has marked its valuation of Rezdy to that level.
Valuation 30 June 2020:
Valuation 30 June 2019:
Investment since 30 June 2019:
Basis for valuation:
$5.7m
$5.9m
$0m
Revenue multiples and capital
structure seniority
Securities held:
Convertible preference shares
Rezdy
Rezdy is one of the few global independent technology providers
of connectivity technology and tools to a broad cross-section of
the estimated $250bn tours and activities industry. Rezdy’s B2B
marketplace offering combines leading booking software, channel
management and in-destination agent tools to drive connectivity
of online sales of tours and activities globally.
Rezdy’s booking software platform is used by over 3,500 tour and
activity operators globally, simplifying back-end operations for
customers with inventory, scheduling and reservation engines.
Rezdy’s booking engine connects operators to both direct to
consumer website bookings as well as to hundreds of online
distribution channels including leading OTAs and over 8,200
independent agents in over 130 countries.
Rezdy’s B2B marketplace offering continues to strengthen with
the business securing a large number of enterprise level agreements
and strategic partnerships across both supply and demand side
channels. During the year, Rezdy also successfully trialled its
‘concierge’ booking tool through a commercial arrangement with
one of the world’s leading hotel chains. Rezdy also signed a preferred
partnership deal with GetYourGuide who, along with Berlin-based
booking software company, BookingKit, have agreed to an exclusive
global distribution and marketing arrangement.
Rezdy experienced strong growth in the first half of FY20, however the
business’ performance has been temporarily impacted by COVID-19.
Although Rezdy’s customer base and the industry as a whole were
severely impacted by widespread shutdowns and travel restrictions,
subscription revenue which is the predominate source of revenue
for the business remained resilient. While transaction volume went
to nearly zero during March and April, volumes began steadily
increasing from May onwards.
Despite ongoing challenges relating to COVID-19, we believe Rezdy
is very well positioned for continued growth and will become an
increasingly leading technology provider to the global experience
industry. As a result of the better than expected revenue recovery
and a number of cost savings implemented, the business is
appropriately capitalised and focussed on domestic demand
for tours and activities which is already increasing.
16
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2020
Operating and Financial Review (continued) Review of Operations (continued)
Straker Translations
Straker Translations (Straker) is a world-leading AI data-driven
language translation platform powering the global growth of
businesses. Straker has developed a proprietary, enterprise grade,
end-to-end cloud-based translation platform, “Ai RAY”, which utilises
a combination of AI, machine-learning and a crowd-sourced pool of
over 13,000 freelance translators. This AI-driven technology platform
allows Straker to achieve high volume translations with superior
accuracy and deliver industry leading gross margins.
Straker has scaled up rapidly over the past few years through
a combination of organic growth and strategic acquisitions.
For Straker, acquisitions provide an opportunity to add revenue,
key customer relationships in strategically important categories,
geographic diversity, human capital and generate operating
leverage as acquired entities are migrated onto the Company’s
proprietary Ai RAY technology platform.
In October 2018 Straker completed a $20m raising and IPO on
the ASX, with funds raised to further Straker’s acquisition plans.
Since listing, Straker has executed on these plans acquiring three
translation businesses including two in Spain and one in New
Zealand. With a total of seven acquisitions in the last four years,
Straker now has significant acquisition and integration experience
enabling a faster integration and margin improvement of the
businesses acquired.
The financial year ended 31 March 2020 (FY20) was another
successful year with solid revenue growth (up 13% to NZ$27.7m),
improved gross profit and stable EBITDA. Importantly, repeat
revenues increased 18% during FY20 to NZ$23.9 million and
represented 86% of overall revenue. Reflecting the Company’s
strategy to focus on its Enterprise customers, Straker experienced
70% growth in its Enterprise customer base and 18% growth in
average project revenue on FY19. Straker’s Media business also
rapidly gained momentum increasing 55% on FY19, underpinned
by several important customer relationships with U-based global
media organisations established during the year.
The prospects for Straker are increasingly strong as the business
continues to scale-up their translation platform in the growing
US$43.0bn language services market. Straker entered the FY21
financial year in a strong capital position with NZ$11.2 million cash
at bank at 31 March 2020 and no debt. Straker’s increased focus on
Enterprise customers will remain a key element of the Company’s
growth strategy going forward. Despite some delays in Straker’s
acquisition plans due to COVID-19, the pipeline remains strong
with a number of discussions already underway.
As a publicly listed company, the valuation of BTI’s investment
in Straker is determined by the change in closing share price for
the period. As at 30 June 2020, Straker’s share price was $0.875,
representing a 49% decrease on 30 June 2019. However, during
the year BTI realised $1.95m of its holding in Straker at a share
price of $1.95, for an implied IRR of 25%.
Valuation 30 June 2020:
Valuation 30 June 2019:
Realisation since 30 June 2019:
Basis for valuation:
Securities held:
$5.6m
$12.6m
$1.95m
Mark to market
ASX:STG
6,404,201 ordinary shares
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2020
17
Operating and Financial Review (continued) Brosa
Stackla
Brosa is a technology-led, vertically integrated furniture brand and
online retailer. Digitally-native brands like Brosa have an advantage
over typical retailers, with access to data across the consumer
purchasing lifecycle that can inform and optimise future investment
in inventory and pricing.
The management of Brosa believes there is an opportunity for
digitally native retailers to utilise technology to optimise all parts
of the furniture purchase and delivery supply chain, from design
to delivery. 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.
Established in 2014, Brosa is based in Melbourne. The business
operates an omni-channel retail model, which includes
predominantly online sales supported by physical showrooms
in Melbourne and Sydney.
Brosa has upgraded its senior management team over the
past 18 months and has hired a new COO, CFO, CMO and
Head of Merchandising, and this is having a positive impact
on operating performance.
Brosa has been a net beneficiary from COVID-19. Demand for
furniture is up as people isolate at home, and Brosa’s digital-first
model is perfectly placed to take advantage of consumers increased
willingness to order goods online, driving record results.
BTI has kept the valuation of Brosa flat over FY20 in line with the
price of a small funding round Brosa completed in October 2018.
This valuation also recognises BTI’s position in the capital structure
of the company.
Valuation 30 June 2020:
Valuation 30 June 2019:
Basis for valuation:
Securities held:
$3.0m
$3.0m
Third-party transaction
Convertible preference shares
Stackla is a content discovery platform focused on User Generated
Content (UGC) and Digital Asset Management (DAM) that enables
brands to feature UGC throughout their marketing stack and
content strategy.
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.
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 that revenue has high gross margins.
Stackla is positioned at the higher priced and enterprise-focused end
of the UGC landscape and compares favourably to competitors based
on the technical depth of the product and the ability to integrate with
other software in the marketing ecosystem. It continues to prove its
technology leadership in the space.
A new Organic Influencer product was launched in November 2019.
The Organic Influencer solution is built to help brands turn their
organic advocates into influencers. Another major product release
in FY20 was Stackla’s enhanced retail capabilities, and recently
they overhauled their analytics dashboards and reports.
BTI reduced the valuation of its investment in Stackla to $nil in
September 2019 due to uncertainty at that time over access to
the Facebook platform. The issue was resolved and the business
has performed well since that time. There has been no third-party
transaction, and BTI has not increased its valuation, maintaining
a conservative approach. However, there is good prospect of
value realisation.
18
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2020
Operating and Financial Review (continued) Stackla
Stackla is a content discovery platform focused on User Generated
Content (UGC) and Digital Asset Management (DAM) that enables
brands to feature UGC throughout their marketing stack and
content strategy.
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.
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 that revenue has high gross margins.
Stackla is positioned at the higher priced and enterprise-focused end
of the UGC landscape and compares favourably to competitors based
on the technical depth of the product and the ability to integrate with
other software in the marketing ecosystem. It continues to prove its
technology leadership in the space.
A new Organic Influencer product was launched in November 2019.
The Organic Influencer solution is built to help brands turn their
organic advocates into influencers. Another major product release
in FY20 was Stackla’s enhanced retail capabilities, and recently
they overhauled their analytics dashboards and reports.
BTI reduced the valuation of its investment in Stackla to $nil in
September 2019 due to uncertainty at that time over access to
the Facebook platform. The issue was resolved and the business
has performed well since that time. There has been no third-party
transaction, and BTI has not increased its valuation, maintaining
a conservative approach. However, there is good prospect of
value realisation.
Review of Operations (continued)
The Facebook issue combined with COVID-19 has provided a difficult
set of circumstances for the business to operate under, but the
company continues to win new large enterprise deals with blue chip
customers and is still rolling out new product offerings despite the
smaller team size.
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
The business continues to generate high quality recurring revenue
and with cost reductions made in FY20 it has been able to operate
in a sustainable manner.
Valuation 30 June 2020:
Valuation 30 June 2019:
Investment since 30 June 2019:
$0.0m
$12.6m
$0m
Basis for valuation:
Securities held:
Revenue multiples
Convertible preference shares
In Q2 of FY2020 Viostream was notified of two meaningful customers
that would not be renewing their contracts with Viostream. As a result
of the decline in revenue and the application of a lower revenue
multiple BTI revised its valuation of Viostream down to $nil.
Post Q2 FY2020 the business has performed very well and ended
FY2020 both profitable and cash flow positive. This result was
underpinned by strong customer renewals, key account expansion
wins, combined with disciplined cost management.
The management and wider team have been focussed on
Viostream’s high quality customer base throughout FY2020,
delivering a number of important product releases that contributed
to the company’s strong renewal rate in H2 FY2020.
The Viostream team continued their relentless focus on cost
management and reduced their average operating cost base by 30%
in FY2020. These cost reductions have been delivered by continuing
to optimise Viostream’s infrastructure setup along with moving
to a small and very committed organisational structure.
COVID-19 has resulted in the strengthening of Viostream’s use case
as the use of digital video grows exponentially. Some disruption
has been experienced in Viostream’s events production business
as a result of the restriction on large physical gathering, but this
reduction has been offset by increased spend within Viostream’s
government customer base.
Viostream is now is self-sustaining, boasts a strong roster of
blue-chip clients and positioned with a simple capital structure
to due-diligence.
Valuation 30 June 2020:
Valuation at 30 June 2019:
Investment since 30 June 2019:
Basis for valuation:
Securities held:
$0.0m
$7.8m
$0.0m
Revenue multiples
Ordinary shares
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2020
19
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 funding;
• 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 representation on portfolio
company boards.
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
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 when the
Company does have a significant cash holding, that cash will not
necessarily be available to Shareholders.
20
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2020
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 2020 and have been approved by the Board.
Board Composition
The Board comprises five 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
Jolanta Masojada
Brodie Arnhold (appointed 30th August 2019)
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 2020, 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 2020
21
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.
22
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2020
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 2020
23
Corporate Governance Statement (continued) Your directors submit the financial report of the Company for the
financial year ended 30 June 2020. The information in the preceding
operating and financial review forms part of this Directors’ Report
for the year ended 30 June 2020 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
Jolanta Masojada
Brodie Arnhold – appointed 30 August 2019
Sankar Narayan – retired 30 August 2019
Dividends
Dividends paid or declared for payment during the financial year are
as follows:
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.
Special dividend of 2.5 cents per share fully franked
paid on 26 March 2020 following the partial realisations
of SiteMinder (January 2020) and Straker Translations
(July 2019)
$3,006,196
Taxation Services
$
$9,934
$
The following fees were paid or payable to Hall Chadwick for
non-audit services provided during the year ended 30 June 2020:
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.
Auditor’s Independence Declaration
The auditor’s independence declaration for the year ended
30 June 2020 has been received and can be found on page 28 of the
Financial Report.
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.
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.
New Accounting Standards
Implemented
The Company implemented AASB 16: Leases during the period.
There have been no transitional impacts due to the implementation
of this standard.
24
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2020
Directors’ Report Options
There are no unissued ordinary shares of the Company under options as at 30 June 2020.
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, 10 meetings of directors and five committee meetings were held. Attendances by each director during the period was
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
Jolanta Masojada
Brodie Arnhold
Sankar Narayan
10
10
10
10
8
2
10
10
10
10
8
1
Remuneration Report (Audited)
Remuneration Policy
3
3
3
3
2
1
3
3
3
3
2
1
2
2
2
2
1
1
2
2
2
2
1
1
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, Jolanta Masojada and Brodie Arnhold, are to receive $60,000 per annum.
The Executive Directors do not receive any remuneration.
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2020
25
Directors’ Report (continued) 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 gains. The hurdle
was not reached in FY20 and as such there is no performance fee payable for the period. The FY19 performance fee of $4,035,242 was paid to
the Manager following cash realisations from Straker Translations and SiteMinder.
Amounts paid or payable to the Manager relating to the year ended 30 June 2020 are as follows:
Base management fee
Reimbursement of portfolio management expenses
$2,693,880
$289,514
Key Management Personnel (KMP) Remuneration
Remuneration paid or payable to each KMP of the Company during the financial year is as follows:
Position
Directors’ Fees
David Kirk
Paul Wilson
Chairman and Executive Director
Executive Director
Andrew Bullock
Non-executive Director
Jolanta Masojada
Non-executive Director
Brodie Arnhold
Sankar Narayan
Non-executive Director (appointed 30 August 2019)
Non-executive Director
Non-recoverable GST incurred on director payments
–
–
60,000
60,000
50,000
10,000
12,000
192,000
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
Jolanta Masojada
Brodie Arnhold
Net number
Shares
Net number
Balance at
of shares
issued under
of shares
Balance at
30 June 2019
acquired
Company DRP
disposed
30 June 2020
8,387,841
3,461,802
410,422
60,000
-
64,900
501,779
-
60,000
55,000
198,725
13,460
-
2,843
-
12,320,065
681,679
215,028
-
-
-
-
-
-
8,651,466
3,977,041
410,422
122,843
55,000
13,216,772
KMP Option Holdings
There were no options on issue to KMP at any point during the financial year.
26
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2020
Directors’ Report (continued) 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 2019 to 30 June 2020,
David Kirk earned $50,000 from DocsCorp and $30,000 from Instaclustr. Paul Wilson earned $50,000 from SiteMinder, $80,000 from Stackla and
$59,500 from Straker Translations.
The Manager receives directors’ fees in relation to directorships of portfolio companies. For the year 1 July 2019 to 30 June 2020, the Manager
earned (net of GST) $50,000 from DocsCorp.
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 14th day of August 2020
Paul Wilson
Director
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2020
27
Directors’ Report (continued) 28
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2020
Auditor’s Independence Declaration (Decrease)/Increase in value of financial assets
Interest income
Accounting fees
ASX fees
Audit fees
Costs of realisation of financial assets
Directors’ fees
Due diligence costs
Independent valuations
Insurance
Investor relations
Legal fees
Manager’s fees
Manager’s performance fees
Registry administration
Other expenses
(Loss)/Profit before income tax
Income tax benefit / (expense)
(Loss)/Profit for the year
Other comprehensive income
Total comprehensive (loss)/income 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
3
8
8
30 June 2020
30 June 2019
$000
(1,648)
23
(237)
(74)
(68)
(285)
(192)
–
(83)
(179)
(261)
(29)
(2,694)
–
(54)
(100)
(5,881)
1,763
(4,118)
–
(4,118)
(3.41)
(3.41)
$000
32,038
44
(203)
(57)
(67)
(52)
(196)
(33)
(84)
(148)
(145)
(41)
(2,507)
(4,035)
(27)
(121)
24,366
(7,313)
17,053
–
17,053
14.18
14.18
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2020
29
Statement of Profit or Loss and Other Comprehensive Incomefor the Year Ended 30 June 2020 ASSETS
CURRENT ASSETS
Cash and cash equivalents
Current marketable securities
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 30 June 2020
As at 30 June 2019
Note
$000
$000
9
4
10
4
12
11
12
13
4,612
5,604
147
10,363
141,594
19,759
161,353
171,716
197
197
30,783
30,783
30,980
140,736
119,231
21,505
140,736
1,423
2,805
107
4,336
157,882
16,152
174,034
178,370
4,327
4,327
28,939
28,939
33,266
145,104
116,475
28,629
145,104
30
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2020
Statement of Financial Positionas at 30 June 2020 Balance at 1 July 2018
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 2019
Balance at 1 July 2019
Comprehensive income
Loss for the year
Total comprehensive income for the period
Transactions with owners, in their capacity as owners,
and other transfers
Dividend paid
Shares issued under company DRP and associated placement
Total transactions with owners and other transfers
Balance at 30 June 2020
The accompanying notes form part of these financial statements.
Note
7
13
Ordinary
Share Capital
Retained
Earnings
$000
116,475
–
–
–
116,475
$000
11,576
17,053
17,053
–
28,629
Total
$000
128,051
17,053
17,053
–
145,104
116,475
28,629
145,104
–
–
–
2,756
2,756
119,231
(4,118)
(4,118)
(3,006)
–
(3,006)
21,505
(4,118)
(4,118)
(3,006)
2,756
(250)
140,736
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2020
31
Statement of Changes in Equityfor the Year Ended 30 June 2020 30 June 2020
30 June 2019
Note
$000
$000
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers and employees
Interest received
Net cash used in operating activities
15
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of financial assets at fair value through profit and loss
Sale of financial assets at fair value through profit and loss
Proceeds from / (net cash used in) investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares
Dividends paid
Net cash provided by financing activities
Net increase/(decrease) in cash held
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
The accompanying notes form part of these financial statements.
(8,410)
22
(8,388)
–
11,828
11,828
1,658
(1,909)
(251)
3,189
1,423
4,612
(3,632)
46
(3,586)
450
1,686
1,236
–
–
–
(2,350)
3,774
1,423
32
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2020
Statement of Cash Flowsfor the Year Ended 30 June 2020 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.
Impacts of COVID-19
The company has given particular concern to the impacts of COVID-19
on the operations of the business and the impacts of valuation
of the portfolio. The Manager has worked closely with the portfolio
throughout the period and has provided regular briefings to the
Board on the impact of COVID-19 on the portfolio of investments.
• To date, COVID-19 has slowed the otherwise rapid growth
of some companies in the portfolio. This has meant some
companies did not grow at the rates expected in the March
– June period. One business, exposed to the travel industry
has had its valuation reduced by $144,000. No other adjustments
to valuation as a result of COVID-19 have been required or made.
• Businesses in the portfolio are well capitalised and where
appropriate have implemented cost-cutting strategies to
ensure cash reserves. The Board is not anticipating cash/capital
requirements from any of the portfolio businesses in calendar
year 2020 but does not rule out raising money into portfolio
companies to accelerate growth or otherwise improve the
market position of a company.
• Marketable securities in Straker Translations have been
impacted by market volatility. The Board considers the
underlying performance of ASX:STG to be strong.
• The timetable for cash realisations may be delayed due to
COVID-19 but the level of uncertainty in the market makes
any prediction difficult. The Board is committed to ensuring
realisations maximise shareholder value.
Other than the items noted above, the Company has been largely
unaffected by COVID-19 and the Board remains confident of the
Company’s operation as a going concern.
These financial statements were authorised for issue on
14th August 2020.
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. The board will, if relevant, give consideration to any
commercial negotiations underway at the time of valuation and
may maintain the value of an investment if a change in valuation
would prejudice the interests of the company.
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 (i.e. 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.
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2020
33
Notes to the Financial Statementsfor the Year Ended 30 June 2020 Note 1: Summary of Significant Accounting Policies (continued)
To the extent possible, market information is extracted from either
the principal market for the asset or liability (i.e. 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 (i.e. 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 Note 19.
The Board has given consideration to detailed analysis and up to
date information that may impact the fair value of the portfolio due
to the impacts of COVID-19. In doing so, the Board also considered
special COVID-19 valuation guidance issued by the International
Private Equity and Venture Capital Valuation Guidelines Board (IPEV).
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.
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.
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
34
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2020
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 (i.e. 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. Where available, quoted prices in an
active market are used to determine fair value. In other circumstances,
valuation techniques are adopted.
Classification and Subsequent Measurement
Financial instruments are subsequently measured at amortised cost
or fair value through profit or loss.
A financial asset that is managed solely to collect contractual cash
flows and the contractual terms within the financial asset give rise
to cash flows that are solely payments of principal and interest
is measured at amortised cost.
All financial assets that are not measured at amortised cost are
measured at fair value through profit or loss.
(i) Financial assets at fair value through profit or loss
A financial asset is classified at “fair value through profit or loss”
when it eliminates or reduces an accounting mismatch or to
enable performance evaluation where a group of financial assets
is managed 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.
The initial designation of the financial instruments to measure at fair
value through profit or loss is a one-time option on initial classification
and is irrevocable until the financial asset is derecognised.
(ii) 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.
Notes to the Financial Statement for the Year Ended 30 June 2020 (continued) Note 1: Summary of Significant Accounting Policies (continued)
Impairment
f. Trade and Other Receivables
The Company recognises a loss allowance for expected credit losses
on financial assets that are measured at amortised cost.
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.
Derecognition
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 and
the Company no longer controls the asset.
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
On derecognition of a financial asset measured at amortised cost,
the difference between the asset’s carrying amount and the sum of
consideration received and receivable is recognised in profit or loss.
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).
An exchange of an existing financial liability for a new one with
substantially modified terms, or a substantial modification to the
terms of a financial liability is treated as an extinguishment of the
existing liability and recognition of a new financial liability. 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.
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.
e. Cash and Cash Equivalents
i. Interest Income
Cash and cash equivalents include cash on hand, deposits available
on demand with banks, other short term highly liquid investments
with original maturities of three months or less.
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 19 in the financial statements.
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2020
35
Notes to the Financial Statement for the Year Ended 30 June 2020 (continued) 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 2018 to 30 June 2019.
m. New Accounting Standards Implemented
The Company has implemented one new Accounting Standard that is applicable for the current reporting period:
AASB 16: Leases has been applied retrospectively, with the cumulative effect of initially applying the standard recognised as an adjustment to the
opening balance of retained earnings at 1 July 2019. Therefore, the comparative information has not been restated and continues to be reported
under AASB 117: Leases. As the company has no leases, this standard has had no impact on the company.
Note 2: (Loss)/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 and marketable securities at fair value through
profit or loss
30 June 2020
30 June 2019
$000
$000
(1,648)
32,038
(in ‘000s)
• SiteMinder increased $19,557 (27%)
• Instaclustr increased $4,394 (30%)
• Straker Translations decreased $5,070 (40%)
• Rezdy decreased $144 (2.5%)
• Stackla ($12,577) and Viostream (7,821) were written down to zero
Note 3: Tax Expense
a. The components of tax expense comprise:
Current tax
Deferred tax
b. The prima facie tax on (loss)/profit from ordinary activities before income tax is reconciled
to income tax payable as follows:
(Loss)/Profit for the period before income tax expense
Prima facie tax on (loss)/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:
36
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2020
30 June 2020
30 June 2019
$000
$000
(778)
2,541
1,763
(5,880)
1,764
(1)
1,763
30%
9,482
(16,795)
(7,313)
24,366
(7,310)
(3)
(7,313)
30%
Notes to the Financial Statement for the Year Ended 30 June 2020 (continued) Note 4: Marketable Securities Financial Assets
Current Marketable Securities
Straker Translations
Total Current Marketable Securities
Financial Assets
SiteMinder
Instaclustr
DocsCorp
Lendi
SMI
Rezdy
Brosa
Straker Translations
Stackla
Viostream
Total Financial Assets
Total Financial Assets & Marketable Securities
As at
As at
30 June 2020
30 June 2019
$000
$000
5,604
5,604
82,536
19,041
10,936
10,727
9,638
5,716
3,000
–
–
–
141,594
147,198
2,805
2,805
72,857
14,647
10,936
10,727
9,638
5,861
3,000
9,819
12,577
7,807
157,882
160,688
During the year Straker Translations shares previously in escrow were reclassified as Current Marketable Securities.
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 $2,693,880 of management fees payable to the Manager, of which $65,704 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 $289,514 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 a
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%.
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2020
37
Notes to the Financial Statement for the Year Ended 30 June 2020 (continued) 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 30 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 meet the performance fee hurdle, so no performance fee is payable for the period. In addition, as there
has not been a positive movement in net tangible assets during the period, the Company has not accrued any contingent performance fee. The
Performance fee payable from FY19 of $4,035,242 (including $98,721 non-recoverable GST) was paid to the Manager during the period. In line
with performance fee policy, payment of performance fee may only be made from the proceeds of cash realisations. Throughout the period, the
Company realised $1.95m from its investment in Straker Translations and $9.9m from its investment in SiteMinder.
Note 6: Auditor’s Remuneration
Remuneration of the auditor for:
Auditing or reviewing the financial statements
Taxation services
Note 7: Dividends
Special fully franked dividend of 2.5 cents per share franked at the tax rate of 27.5%.
This is Bailador’s first dividend.
At 30 June 2020, Bailador’s franking account balance is $656,649.
38
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2020
30 June 2020
30 June 2019
$000
$000
68
10
78
67
33
100
30 June 2020
30 June 2019
$000
3,006
$000
–
Notes to the Financial Statement for the Year Ended 30 June 2020 (continued) Note 8: Earnings per Share
(Loss)/Profit after income tax
30 June 2020
30 June 2019
$000
(4,118)
$000
17,053
Number
Number
Weighted average number of ordinary shares used in calculating basic and diluted earnings per share
120,934,673
120,247,831
Basic earnings per share
Diluted earnings per share
Cents
(3.41)
(3.41)
Cents
14.18
14.18
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 9: Cash and Cash Equivalents
Cash at bank
Note 10: Trade and Other Receivables
CURRENT
GST receivable
Interest receivable
Other prepayments
As at
As at
30 June 2020
30 June 2019
$000
4,612
4,612
$000
1,423
1,423
As at
As at
30 June 2020
30 June 2019
$000
$000
56
1
90
147
51
1
55
107
The Company does not have Trade Receivables. The Company uses the approaches in Note 1(d) in assessing credit losses on GST, interest
receivable and other prepayments. At 30 June 2020 all receivables and prepayments were within expected terms.
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2020
39
Notes to the Financial Statement for the Year Ended 30 June 2020 (continued) Note 11: Trade and Other Payables
CURRENT
Trade creditors
Performance fee payable
Other payables
Note 12: Income Tax
CURRENT
Income tax payable
NON-CURRENT
Deferred tax liability
Tax on unrealised gains
Tax on acquisition assets on opening
NON-CURRENT
Deferred tax liability
Tax on unrealised gains
Tax on acquisition assets on opening
As at
As at
30 June 2020
30 June 2019
$000
$000
101
–
96
197
180
4,035
112
4,327
As at
As at
30 June 2020
30 June 2019
$000
$000
–
–
Balance at
Charged to
Charged
directly
Balance at
30 June 2018
profit or loss
to equity
30 June 2019
$000
$000
$000
$000
17,250
2,458
19,708
9,231
–
9,231
–
–
–
26,481
2,458
28,939
Balance at
Charged to
Charged
directly
Balance at
30 June 2019
profit or loss
to equity
30 June 2020
$000
$000
$000
$000
26,481
2,458
28,939
1,844
–
1,844
–
–
–
28,325
2,458
30,783
40
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2020
Notes to the Financial Statement for the Year Ended 30 June 2020 (continued) Note 12: Income Tax (continued)
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 2018
profit or loss
to equity
30 June 2019
$000
$000
$000
$000
24
86
299
10,683
3,142
14,234
1,211
(6)
(170)
(8,600)
9,482
1,917
–
–
–
–
–
–
1,235
80
129
2,083
12,624
16,151
Balance at
Charged to
Charged
directly
Balance at
1 July 2019
profit or loss
to equity
30 June 2020
$000
$000
$000
$000
1,235
80
129
2,083
12,624
16,151
(1,215)
(3)
(87)
5,692
(779)
3,608
–
–
–
–
–
–
20
77
42
7,775
11,845
19,759
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 2020
41
Notes to the Financial Statement for the Year Ended 30 June 2020 (continued) Note 13: Issued Capital
Movements in share capital are set out below:
Opening balance at 1 July 2018
Ordinary shares issued
Closing balance at 30 June 2019
Opening balance at 1 July 2019
Ordinary shares issued
Closing balance at 30 June 2020
Capital Management
No.
$
120,247,831
116,475,156
–
–
120,247,831
116,475,156
120,247,831
116,475,156
2,611,432
2,755,697
122,859,263
119,230,853
The Company’s objectives for managing capital are as follows:
• 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 14: 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 and marketable securities held at fair value through profit or loss.
Note 15: Cash Flow Information
30 June 2020
30 June 2019
$000
$000
(4,118)
1,648
(25)
(4,130)
(1,763)
(8,388)
17,053
(32,038)
(38)
4,123
7,311
(3,586)
Reconciliation of Cash Flow from Operation with (Loss)/Profit after Income Tax
(Loss)/Profit after income tax
Non-cash flows in profit:
Unrealised fair value losses/(gains) on financial assets at fair value through profit or loss
Decrease in trade and other receivables
(Decrease)/Increase in trade and other payables
(Decrease)/Increase in deferred tax
Cash flow from operating activities
Note 16: Contingent Liabilities
There were no contingent liabilities at 30 June 2019 and 30 June 2020.
42
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2020
Notes to the Financial Statement for the Year Ended 30 June 2020 (continued) Note 17: Events After the Reporting Period
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 18: 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 9: Financial Instruments as detailed in the accounting
policies to these financial statements are as follows:
Financial assets
Cash and cash equivalents
Current marketable securities
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
Financial Risk Management Policies
30 June 2020
30 June 2019
Note
$000
$000
8
4
4
9
10
4,612
5,604
141,594
147
151,957
197
197
1,423
2,805
157,882
107
162,218
4,327
4,327
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.
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2020
43
Notes to the Financial Statement for the Year Ended 30 June 2020 (continued) Note 18: Financial Risk Management (continued)
Note 19: Fair Value Measurement
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.
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:
30 June 2020
Profit
Equity
Level 1
$000
$000
+/- 5% in gain on equity investments
47
47
Measurements based on quoted prices (unadjusted)
in active markets for identical assets or liabilities that
the entity can access at the measurement date.
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.
Level 2
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 including ongoing
discussions with potential purchasers.
• Income approach: valuation techniques that convert estimated
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.
44
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2020
Notes to the Financial Statement for the Year Ended 30 June 2020 (continued) 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;
• discounted cash flows of the underlying assets;
• 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.
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.
Note 19: Fair Value Measurement (continued)
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 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.
In addition to the AVCAL Valuation Guidelines, the Board has given
consideration to detailed analysis and up to date information that
may impact the fair value of the portfolio due to the impacts of
COVID-19. In doing so, the Board also considered special COVID-19
valuation guidance issued by the International Private Equity and
Venture Capital Valuation Guidelines Board (IPEV).
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.
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2020
45
Notes to the Financial Statement for the Year Ended 30 June 2020 (continued) Note 19: Fair Value Measurement (continued)
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
Current marketable securities
Financial assets
Trade and other receivables
Financial liabilities:
Trade and other payables
30 June 2020
Carrying Amount
Fair Value
$000
$000
4,612
5,604
141,594
147
151,957
197
197
4,612
5,604
141,594
147
151,597
197
197
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
Current marketable securities
Financial assets at fair value through profit or loss
Fair Value Measurements at
30 June 2020 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)
5,604
–
5,604
–
96,263
96,263
Inputs
$000
(Level 3)
–
45,331
45,331
46
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2020
Notes to the Financial Statement for the Year Ended 30 June 2020 (continued) Note 19: Fair Value Measurement (continued)
Description
Recurring fair value measurements
Marketable securities
Financial assets at fair value through profit or loss
Fair Value Measurements at
30 June 2019 Using:
Significant
Quoted Prices in
Observable Inputs
Significant
Active Markets for
Other than
Unobservable
Identical Assets
Level 1 Inputs
$000
(Level 1)
2,805
9,819
12,624
$000
(Level 2)
–
40,950
40,950
Inputs
$000
(Level 3)
–
107,114
107,114
e. Valuation Techniques and Inputs Used to Determine Level 2 Fair Values
SiteMinder
Lendi
Brosa
Fair Value at
30 June 2020
$000
82,535
10,727
3,000
Valuation Techniques
Range of Observable Inputs
Price of third-party transaction
Price of third-party transaction
Price of third-party transaction
Price of third-party transaction
Price of third-party transaction
Price of third-party transaction
f. Valuation Techniques and Inputs Used to Determine Level 3 Fair Values
Fair Value at
30 June 2020
Range of
Unobservable
$000
Valuation Techniques
Significant Unobservable Inputs
Inputs
19,041
10,936
9,639
5,716
Revenue multiple
Revenue multiple
Revenue multiple
Revenue multiple
Revenue multiple
Revenue multiple
Revenue multiple
Interest on Convertible Instruments
Revenue multiple
Interest on Convertible Instruments
–
–
Revenue multiple
Revenue multiple
Revenue multiple
Revenue multiple
3.5x – 4.5x
2.3x – 3.1x
1.5x – 2.5x
1.5x – 2.5x
–
–
Instaclustr
DocsCorp
SMI
Rezdy
Stackla
Viostream
There were no changes during the year in the valuation techniques used by the Company to determine Level 3 fair values.
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2020
47
Notes to the Financial Statement for the Year Ended 30 June 2020 (continued) Note 19: Fair Value Measurement (continued)
g. Sensitivity Information
The relationships between the significant unobservable inputs and the fair value are as follows:
Inputs
Revenue multiple
Impact on Fair Value from
Impact on Fair Value from
Increase in Input
Decrease in Input
Increase
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 2019
Transfers out to Level 2 (SiteMinder $72.9m)
Transfer in from Level 2 (Instaclustr $14.6m & Stackla $12.6m)
Gains and losses recognised in profit or loss
Closing balance 30 June 2020
Financial Assets
$000
107,114
(72,857)
27,223
(16,148)
45,332
Note 20: Related Party Transactions
Remuneration paid or payable to key management personnel (KMP) of the Company during the period are:
• Management Fees of $2,693,880 (including $65,704 unclaimable GST).
• Directors fees of $192,000 (including $12,000 unclaimable GST).
• Salary and director’s fees paid to KMP by portfolio companies on arms-length terms of $319,500.
• FY19 performance fee payable to the Manager of $4,035,242 (including $98,421 unclaimable GST) was paid in cash during the year following
cash realisations from SiteMinder and Straker Translations.
• Reimbursement of expenses to the Manager of $289,514.
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 2020.
Note 21: Company Details
The principal place of business and registered office of the company is:
Suite 3, Level 20
20 Bond Street
Sydney NSW 2000
48
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2020
Notes to the Financial Statement for the Year Ended 30 June 2020 (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 29-48, 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 2020 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 14th day of August 2020
Paul Wilson
Director
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2020
49
Directors’ Declaration 50
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2020
Independent Auditor's Report BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2020
51
Independent Auditor's Report (continued) 52
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2020
Independent Auditor's Report (continued) BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2020
53
Independent Auditor's Report (continued) 54
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2020
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 2020.
Holder Name
Washington H Soul Pattinson and Company Limited
David Kirk
Citicorp Nominees Pty Limited
HSBC Custody Nominees (Australia) Limited
JP Morgan Nominees Australia Limited
Paul Wilson
Patagorang Pty Ltd
National Nominees Limited
BNP Paribas Nominees Pty Ltd Hub24 Custodial Services Ltd
Pepstock II Pty Ltd
Paul Lewis
Ladybird Limited
Mr Simon Fenwick
Mrs Virginia Hancock
Mr Paul Kendrick
Mr Paul Meehan
Mr Alan Draper and Mrs Evelyn Draper
Macareus Pty Ltd
Merrill Lynch (Australia) Nominees Pty Limited
Mr Sam Morgan
Total
Substantial Shareholders
The names of the substantial shareholders in the Company’s register are:
Washington H Soul Pattinson and Company Limited
David Kirk
Ordinary
% of
Shares Held
Issued Shares
23,169,763
18.86%
8,651,466
6,361,314
6,098,912
4,709,822
3,977,041
1,954,033
1,886,412
1,644,323
1,435,274
1,428,312
1,253,088
1,126,061
1,000,000
999,978
926,545
818,953
802,114
778,679
776,057
7.04%
5.18%
4.96%
3.83%
3.24%
1.59%
1.54%
1.34%
1.17%
1.16%
1.02%
0.92%
0.81%
0.81%
0.75%
0.67%
0.65%
0.63%
0.63%
69,798,147
56.81%
Ordinary Shares
23,169,763
8,651,466
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2020
55
Shareholder Information Distribution of Shares
Analysis of numbers of equity security holders, by size of holding as at 30 June 2020.
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
210
396
273
692
150
105,194
1,191,250
2,268,805
22,832,192
96,461,822
1,721
122,859,263
0.09%
0.97%
1.85%
18.58%
78.51%
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 2020 is 137.
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.
56
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2020
Shareholder Information (continued) Corporate Information
Registered Office
Bailador Technology Investments Limited
Suite 3, Level 20
20 Bond Street
Sydney NSW 2000
www.bailador.com.au
Directors
David Kirk (Chairman)
Paul Wilson
Andrew Bullock
Jolanta Masojada
Brodie Arnhold
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 Codes
Shares : BTI
Manager
Bailador Investment Management Pty Ltd
Suite 3, Level 20
20 Bond Street
Sydney NSW 2000
(AFSL 400811)
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2020
57
Shareholder Information (continued) Bailador Technology Investments Limited
ABN 38 601 048 275
Suite 3, Level 20, 20 Bond Street, Sydney NSW 2000
+61 2 9223 2344 | www.bailador.com.au
58
BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2020
Shareholder Information (continued)