Bailador
Annual Report 2021

Plain-text annual report

2021 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 19 Sustainability Snapshot 23 Corporate Governance Statement 27 Directors’ Report 31 Auditor’s Independence Declaration 32 Statement of Profit or Loss and Other Comprehensive Income 33 Statement of Financial Position 34 Statement of Changes in Equity 35 Statement of Cash Flows 36 Notes to the Financial Statements 52 Directors’ Declaration 53 Independent Auditor’s Report 58 Shareholder Information 61 Corporate Information Bailador provides investors with exposure to quality expansion- stage technology companies at attractive valuations. 2 BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2021 Corporate Summary The Company Risk Bailador Technology Investments Limited (ACN 601 048 275) is a listed investment company and its shares are quoted 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 140,412,595 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-21 30-Jun-20 1.330 22.00 236,407 1.529 1.367 0.705 -3.41 171,716 1.235 1.146 Investment Manager Management Agreement The Company has outsourced its investment management function to Bailador Investment Management Pty Ltd (ACN 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 2021 3 Board of Directors David Kirk Chairman and Executive Director Paul Wilson Executive Director • David (appointed 2014) has been Chief Executive of two ASX- • Paul (appointed 2014) has had extensive private equity 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 an appointed member of the Lord Howe Island Board. David holds several BTI portfolio directorships as Chairman of Rezdy and SMI and director of Instaclustr. • 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 8,818,363 ordinary shares in BTI and an indirect interest in a further 828,715 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. 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 and Straker Translations. 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. 4 BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2021 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 432,319 ordinary shares in BTI. Jolanta Masojada Independent Non-Executive Director • Jolanta (appointed 2018) is Principal of MasMarket 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, a graduate of the Australian Institute of Company Directors and a Certified Investor Relations Officer (CIRO) of the Australasian Investor Relations Association (AIRA). • Jolanta is the Chair of Bailador’s Nomination and Remuneration Committee. • Jolanta holds interest in 144,740 ordinary shares in BTI. Brodie Arnhold Independent Non-Executive Director • Brodie (appointed 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 Chairman of iSelect (ASX:ISU). 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, Industry Beans Pty Ltd, Hungry Hungry Pty Ltd, and Prism Pay Pty Ltd. Brodie is a board member of Curatif 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 76,897 ordinary shares in BTI. BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2021 5 Bailador Technology Investment’s (BTI) net profit after tax in 2021 was $27.6 million. The value of the fund’s investments increased by $52.0 million in the year, and the increase in the Net Tangible Assets per share of the fund (before tax) was 24%. These are all record results, and we are pleased to be able to report them to you. The BTI share price increased by 89% in the year. This stellar performance was assisted by a low starting point caused by the COVID-19 induced share market declines of February-March 2020. The performance in 2021 is all the more satisfying because it was achieved without any change in the value of our largest investment, SiteMinder. SiteMinder provides software to the hotel industry and as shareholders will know, in 2021 international travel was severely curtailed due to the COVID-19 virus. The team at SiteMinder managed very effectively through the crisis, retaining customers, conserving cash and investing in product development to be ready for the return of travel. SiteMinder is well positioned, and we expect strong growth to return with the return of travel. Realisations The most important driver of the 23% increase in NTA per share in 2021 was the full realisation of two of our investments. In February 2021 DocsCorp was sold to a US software company in the same industry, and in May 2021 Lendi merged with the Commonwealth Bank-owned Aussie Home Loans. As part of the merger some investors wished to increase their shareholding in the merged entity and we sold all our shares to these parties as part of the transaction. These two transactions demonstrate some important aspects of our investment strategy and execution which we discuss here. Invest in category leaders with best-in-class products DocsCorp and Lendi were both leaders in their respective industry categories of document productivity software for legal firms and online mortgage broking and settlement. Accordingly, when it came to sell (or merge in Lendi’s case) the businesses were immediately attractive to buyers or merger partners in their industries. Hold investments at a value we expect to exceed when we sell There have now been 24 third-party investments in or sales of companies in the Bailador portfolio. Every single one of these has been at a value matching or higher than we were holding the investment at before the investment or sale. We believe holding our investments at conservative valuations gives investors confidence that BTI shares should trade (at least) at the prevailing NAV per share. Holding at conservative valuations also removes any psychological barrier to fully realising our positions when the time is right. DocsCorp was sold at a premium of 53% to our holding value and Lendi was sold at a premium of 21% to our holding value. Focus on the right metrics of performance – IRR and Cash-on-Cash The appropriate measure of investment performance is the percentage gain over time on money invested. The best measure of this is IRR or Internal Rate of Return. IRR measures the annualised return on invested capital over the lifetime of the investment. Both the return and the time- period are important in calculating IRR. The same dollar return achieved over three years will have a higher IRR than if it were achieved over five years. The IRR of our investment in DocsCorp was 30%. The IRR of our investment in Lendi was 21%. In other words, for the approximately five years of our investment in DocsCorp the Fund earned 30% a year on the money invested and for the approximately five years of our investment in Lendi the Fund earned 21% a year on the money invested. It was a very active FY21 for the Bailador portfolio 3 full cash exits 2 follow-on investments 1 merger 2 new investments • 53% uplift to carrying value • 30% IRR on investment • 21% uplift to carrying value • 21% IRR on investment • • • $1.1m uplift to carrying value $3.8m invested via convertible note structure (Jun-21) • Merger with Nosto (Jun-21) Largely scrip deal at BTI • carrying value • Global AI-powered e-commerce personalisation platform • $11.5m investment (via scrip) $5.2m invested via Straker’s $25m equity raising (Jun-21) • Leading digital healthcare platform in Australia • $5.5m invested (Jul-21) 6 BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2021 Letter from the FoundersWe also note and report cash-on-cash returns, that is, how much cash we put in and how much cash we got out. We invested $5 million dollars in DocsCorp and received $17 million when the business was sold. This was a 3.4x cash-on-cash return. We invested $5.5 million in Lendi and received $13 million when the business was sold for a 2.4x cash-on-cash return (on top of the $0.4 million we partially realised in December 2018). We think both measures of performance are important. IRR is technically the best measure of wealth creation, but you can’t buy lunch with percentage returns. Capital Management Capital management is one of the most important things we do. As a Manager we allocate capital to new investments and follow-on investments in portfolio companies and we judge the best time to sell investments and return cash to the Fund. As a Board we determine how much cash is appropriate to hold in the Fund, when to pay a dividend and when to raise cash by issuing new shares. In all of this we are guided by our focus on delivering strong investment returns over the long term. Our primary use of cash is investment in established (not start-up) fast-growing companies in the broad digital, internet and information technology markets. We expect investors in BTI to make their returns from capital gains and accordingly we do not pay regular dividends. We may pay Special Dividends when we have significant realisations. Franking credits are an important consideration as well. As shareholders will know, franking credits are generated when companies pay cash taxes. These accumulated tax credits can be distributed to shareholders with dividends. This year we announced a Special Dividend of 1.4 cents per share with our results. The dividend is fully franked and is sized to use up all our franking credits. It is important for us to reinforce again with shareholders that we are not a regular dividend paying investment. We will irregularly pay Special Dividends when we have had significant realisations and, in most cases, when there are franking credits available to attach to the dividend. The cash we hold in the Fund will cycle up and down with the timing of investments and realisations. We do not have a specific target for the cash balance in the Fund over the investment cycle, but we will always hold enough cash to comfortably support operating cost requirements, maintain flexibility to support portfolio companies with follow-on investments and take advantage of new opportunities as they arise. As some of our investments list on the ASX our marketable securities provide us increased liquidity flexibility and this is something we would also take into account. New Investments In 2021 BTI realised $31 million from the sales of our investments in DocsCorp, Lendi and Viostream and in May the fund raised $24 million of new capital through a placement and Shareholder Purchase Plan. Some of this cash has been immediately put to work in current portfolio companies and a new investment, and we are continuing to see a wide range of new opportunities. In June we invested $5.2 million in Straker Translations through a placement and entitlement offer undertaken by the company. In June we invested $3.8 million in Instaclustr as part of an internal round to finance an acquisition and just after year-end we made a new investment of $5.5 million in InstantScripts, a very exciting business in the digital health space. We have a strong pipeline of investment opportunities under review, and we are uncovering new opportunities constantly. In the coming year we are likely to invest in at least one or two businesses new to the portfolio, as well as potentially make additional investments in existing portfolio companies that we already know well. We remain focused on founder-led expansion stage companies with strong growth economics and a clear growth strategy. We continue to think an investment portfolio of eight to 12 companies is right for the fund, and we will continue to support our best performing companies with more capital as they need it. Inflection Points An inflection point is a point in time at which a trend makes a definitive change. In the companies we work with the inflection point we most often work towards is an inflection point in revenue growth. An inflection point, because it signals a maintainable change in a trend, occurs because of structural change in the revenue generating potential of the business. This structural change can come from many sources, including a new product release, entering a new market, a new sales channel partnership or a tipping point in scale and brand awareness. The important point is the change is maintainable because it is based on a fundamental structural change in the capacity of the business to add customers and grow revenue. As we look back over the nearly seven years BTI has been publicly listed we see that the first three years were focused on making investments and raising capital to build out the portfolio. For the next three years we focused on growing the investments we had made and, early in the period, cleaning up one or two mistakes. The seventh year, the year we are reporting on now, was a year of cash realisations, follow-on investments in successful companies and, just after year end, an exciting new investment. We believe it is safe to say BTI has moved into a new era. In 2021 we delivered record growth in NTA per share and fulfilled the final stage of our investment strategy by realising investments for cash and recycling that cash into new investments. There has been structural change in the portfolio over this seven-year period. Successful small companies have turned into successful big companies. SiteMinder’s revenue was about $5 million per annum when we first invested, it is now over $100 million per annum. Instaclustr’s revenue is about eight times greater now than when we first invested. Furthermore, almost all of the companies in the portfolio have established market-leading positions in the period we have been BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2021 7 Letter from the Founders (continued)investors. They are the providers of choice to their chosen (large) potential customer base. The structural changes that have occurred in the portfolio over this period are a structural increase in scale of investee companies and a structural decline in risk across the portfolio. Large, well-established companies are simply less risky than smaller, less established companies. It is at this stage of the investment cycle that the benefits of being a publicly listed fund, and thus able to hold our best investments for an indefinite period, are coming into focus. Were we a private fund, within a year or so we would be looking to find buyers for all our current investments and we would certainly not be making any new investments. No doubt in the future we will make mistakes and suffer setbacks, but we are now, as we were not earlier in the life of the fund, protected by the quality, growth momentum and scale of our largest investments. Disappointments at the riskier new investment end of our investment funnel will not have anything like the impact on overall NTA per share growth that they would have had two or three years ago. Put simply, the quantum of NTA per share growth from our now large and successful investments would, we expect, successfully cushion the impact of a disappointment with a smaller company. The Team The Bailador team – James, Helen, Bevin, Mike, Chloe and Jonathan – have done a wonderful job for shareholders in 2021. Much of the year was spent working from home but the team didn’t miss a beat. We thank them all very much for their contribution to a very successful year. Annual Meeting We look forward to engaging with those of you who are able to attend our Annual General Meeting to be held on 26 October 2021. We had hoped to be able to see you in person at our AGM, but COVID-19 has changed things again, and this year the AGM will be online only as you would expect. Further detail will be provided in our Notice of Meeting available on our website. David Kirk Chairman and Executive Director Paul Wilson Executive Director 8 BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2021 Letter from the Founders (continued)Principal Activities Operating Results Bailador Technology Investments Limited (BTI) invests in information technology businesses in Australia and New Zealand that are seeking growth capital. The target businesses typically have an enterprise valuation between $10m and $200m. In particular, the Company focuses on software, internet, mobile, data and online marketplace businesses with proven revenue generation and management capability, demonstrated successful business models and expansion opportunities. There have been no significant changes in the nature of the Company’s principal activities during the financial year. Our Business Model and Objectives Providing satisfactory returns to shareholders is our primary objective. Our success in achieving this objective is determined by total shareholder return (TSR) over time. The TSR we deliver will, over time, be directly related to the return on invested capital we achieve. Our business model is to identify, buy and hold investments in a number of private internet-related businesses with strong growth prospects. Returns to shareholders will be delivered by growth in the value of investments held and through potential distributions to shareholders following the sale of investments. Following sales, we will continue to make new investments to maintain a portfolio of investments. Investments made by BTI are typically structured to provide a level of contractual protection superior to that available to investors in ordinary shares, thereby reducing risk. Thorough due diligence is carried out before investments are made and BTI representation on most portfolio company boards ensures BTI’s close involvement with operational decisions. BTI continues to assess a strong pipeline of potential investments and will continue to make investments as attractive opportunities arise. The Company has been classified under AASB 2013-5 as an Investment Entity whose business purpose is to invest funds solely for returns via capital appreciation and/or investment returns. As the Company has been classified as an Investment Entity, the portfolio investments have been accounted for at fair value through the profit or loss and shown as Financial Assets in the Statement of Financial Position. The profit of the Company for the financial year ended 30 June 2021 was $27,580,000 (2020 $4,118,000 loss), after providing for income tax. Combined revenue growth of the underlying portfolio companies (portfolio weighted) for the financial year ended 30 June 2021 was 14% (36% ex-travel investments) and we expect growth to pick up as travel increases. Further information on individual investee company growth can be found in the portfolio operating reports. The performance of the Bailador portfolio, measured as the change in the Net Tangible Assets (NTA) per share between 1 July 2020 and 30 June 2021 (pre-tax, after all fees), was an increase of 24% for the year. The Company also completed a successful capital raise in May 2021 raising $24m. Review of Operations The 2021 financial year has been a year of excellent achievement for Bailador and for Bailador’s portfolio companies. In FY21 Bailador: • Fully realised the investment in three companies, DocsCorp, Lendi and Viostream all at values above their previous carrying value; • Merged Stackla with a highly complementary international company. It is now known as Nosto in the portfolio; • Increased the valuation of four of the portfolio companies (Instaclustr, Standard Media Index, Nosto and Rezdy) along with experiencing strong gains in the share price of Straker Translations; and • Stabilised and prepared the Company’s two travel industry investments, SiteMinder and Rezdy, for the upcoming bounce back in travel. Bailador also completed a successful capital raise in May 2021 via a placement and security purchase plan. The Company raised $24m at a price of $1.37 per share. Combined with the proceeds from realisations, the funds raised have provided Bailador a strong cash position to capitalise on a strong pipeline of investment opportunities. Last year we noted, amidst a lot of COVID uncertainty, that “Bailador’s portfolio companies are well capitalised and are in a strong position to navigate the uncertainty 2020 has presented to businesses worldwide”. This has indeed proven to be the case with the fund performing strongly in FY21 and well positioned for future growth. BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2021 9 Operating and Financial ReviewRevaluations The following investments were revalued under BTI’s revaluation policy, including independent review, by reference to comparable trading and transaction multiples. • Instaclustr: increased by 42% ($8m) in August 2020 following strong trading performance. Due to strong trading performance and the materiality of the gains in Instaclustr, Bailador revalued Instaclustr up again in March 2021 by a further 49% ($13.3m). • Standard Media Index: increased by 25% ($2.5m) in June 2021 following strong trading performance. • Stackla: increased from nil to $11.5m in September 2020. Stackla was merged with Nosto in June 2021 via a scrip transaction at the same valuation. • Rezdy: increased by 12% ($0.7m) in June 2021, reflecting Bailador’s seniority in the capital structure. The value of Straker Translations (ASX:STG) continues to be marked to the ASX market price of Straker Translations shares. At 30 June 2021 the Straker Translations share price was $1.94 (2020 $0.875) resulting in a gain on investment for the financial year of $6.9m. Valuation of Investments The Board has reviewed the value of the investment portfolio and the Net Tangible Assets of BTI as at 30 June 2021. 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 DocsCorp In February 2021 Bailador announced it had realised 100% of its investment in DocsCorp for $16.8m in cash proceeds. DocsCorp was sold at a value 53% above its carrying value, representing a 3.4x return on initial investment and a 30% IRR. Lendi In December 2020, Bailador announced that Lendi had entered into an agreement to merge with Aussie Home Loans. As part of that transaction, in May 2021 Bailador realised 100% of its investment in Lendi for $13.0m in cash proceeds. Lendi was sold at a value 21% above its carrying value, representing a 2.4x return on initial investment and a 21% IRR. Viostream In January 2021 Bailador announced it had realised 100% of its investment in Viostream for $1.1m in cash proceeds. Viostream had previously been written down to nil. Investments Instaclustr In June 2021 Bailador invested $3.8m in Instaclustr. The investment was part of an internal round. Straker Translations In June 2021 Bailador invested $5.2m in Straker Translations. Straker Translations raised $25m via a placement and rights issue under which Bailador took up its pro-rata allocation and sub-underwrote the retail rights issue. Portfolio valuation up 35% before follow-on investments and cash realisations Baialdor FY21 Portfolio Valuation Movements $220m $200m $180m $160m $140m $120m $100m $80m $60m $40m $20m $0m = third- party transaction June-20 Portfolio Value Third-party transaction uplift Fair value uplift Gross FY21 Portfolio Value Follow-on investments Cash realisations Jun-21 Portfolio Value 10 BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2021 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 with hotel subscribers 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. FY2021 saw the business deal with the COVID-19 related disruptions which impacted the travel industry. The company performed resiliently in the face of these challenges and SiteMinder outperformed virtually all other travel companies. As SiteMinder ended FY2021 it was witnessing the return of growth with travel reopening in some geographies and the business benefiting from the successful cross-selling of its newer products (SiteMinderPay and Demand+) to its existing customer base. The increased penetration of these newer products will allow SiteMinder to automatically capture revenue growth as travel returns. SiteMinder’s management team reacted quickly to the potential impact of COVID-19 and took proactive measures to reduce the operating cost base of the business. Significant cost savings were implemented, including reducing staff levels across selective areas of the business. This allowed the business to operate on a profitable basis and invest in product development. SiteMinder’s management team made a conscious decision to maintain as much capacity in the R&D function in order to push forward key product development efforts. 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. During FY2021 the company doubled-down on a number of new go-to-market product initiatives which are in the process of being launched. These new initiatives will open up new market opportunities, allow it to expand its average revenue per subscriber and make SiteMinder’s customer acquisition process more efficient. While SiteMinder’s revenue growth stalled temporarily, the work the business has done throughout FY2021 will enable it to solidify its strategic position and emerge from the COVID-19 disruption a much stronger business. The business has maintained a strong cash position which sets it up well to capitalise on a potentially more favourable competitive environment. SiteMinder is a leader in its market and remains a very real IPO prospect in the future. 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. After reviewing SiteMinder’s valuation in June 2021 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 2021: $82.5m Valuation at 30 June 2020: $82.5 (after $9.9m realisation) Realisation since 30 June 2020: $0.0 Basis for valuation: Price of third-party investment Securities held: Convertible preference shares Travel Sector 12-month Performance1 +68% • • • Travel Sector Revenue materially down in the last 12 months Capital markets have looked through that revenue decline to actually value travel companies more highly than a year ago SiteMinder has experienced flat revenue growth over the last 12 months, materially outperforming the broader travel sector -59% Average revenue Average enterprise valuation Note: 1Travel Sector performance over the 12 months to 30 June 2021. Travel Sector companies include Airbnb, Booking Holdings, Expedia Group, Trip.com Group, MakeMyTrip, Webjet Limited, eDreams, On the Beach Group, Despegar.com, lastminute.com, HolidayCheck Group, TripAdvisor, Trivago, Amadeus, Sabre and TravelSky. BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2021 11 Operating and Financial Review (continued)Review of Operations (continued) Instaclustr Instaclustr is a platform that manages the most powerful open-source database related technologies, empowering customers to deliver big data applications at scale. The company addresses a multi-billion- dollar fast growing market and it is well positioned to take advantage of numerous structural tailwinds including; the exponential growth in big data driving demand for technologies to process and store the data; applications and databases moving to the Cloud; the increased adoption of open source technologies; and companies outsourcing complex database operations. Instaclustr’s platform enables its customers to launch applications on open-source software quickly, reliably, at lower cost and at greater scale, so that they can focus on their core business and growing their own customer base. Instaclustr also enables customers 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, Doordash, Sephora 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. They also have very high customer retention numbers and strong customer account expansions – this is where customers increase their spend over time as they use the service more. Since BTI invested, Instaclustr has 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 offering now includes technologies such as Apache Kafka, Elasticsearch, Redis and PostgreSQL in addition to Apache Cassandra. More technologies will continue to be added to the platform as Instaclustr continues its mission to deliver reliability at scale using open-source technologies. Building out the multi-tech platform has led to a number of benefits for the company; 1) It has increased the size of the Total Addressable Market 2) It has increased revenue and share of wallet per customer, by being able to upsell additional products 3) It has given Instaclustr a competitive advantage vs. single technology companies 4) 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. 12 BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2021 The desire to add additional technologies and capabilities to the Instaclustr platform drove the acquisition of credativ, a global provider of support for open-source relational database PostgreSQL, in March 2021. The acquisition significantly increased the size and scale of Instaclustr, both financially and operationally. The addition of credativ also increases Instaclustr’s presence in Europe and significantly increases Instaclustr’s addressable market. Over the past 12 months, Instaclustr has continued to build out a strong Go-To-Market and product team to accelerate the development and sale of their multi-tech platform and go after a growing addressable market. The company has also upgraded its senior management team. In September 2020, the company promoted founder and former CFO/ COO Peter Lilley to CEO, and in November they hired Geoff Richardson (ex CFO of SAI Global) as CFO. Instaclustr has been a standout performer in the BTI portfolio, and it continued to demonstrate excellent operational performance over the 12 months ending 30 June 2021, growing at accelerating rates and delivering excellent customer retention and growth of established customers. As a result of the strong operating performance, BTI increased its carrying value in Instaclustr twice throughout FY21. BTI increased the valuation of its investment in Instaclustr by 42% in August 2020 to reflect the strong operating performance in the 12 months since the previous internal valuation. In March 2021, BTI revalued its investment in Instaclustr up 49% to $40.4m to reflect the strong growth since August 2020 and to reflect the fact that the credativ acquisition had materially increased the scale and growth prospects of the business. BTI believes there is still a long runway of growth ahead of Instaclustr driven by the strong structural tailwinds of massive growth in big data, applications and databases moving to the cloud, and adoption of open-source technologies. Instaclustr has experienced strong growth over the last few years, and it expects that growth to continue in the future led by: a rapidly increasing Total Addressable Market, the addition of new technologies to their multi-tech platform, the expansion in usage by existing customers, and continuous improvement in sales and marketing effectiveness. BTI is very excited about the future prospects of the company, investing a further $3.8m into Instaclustr in June 2021. Valuation 30 June 2021: Valuation 30 June 2020: Investment since 30 June 2020: $44.3m $19.0m $3.8m Basis for valuation: Securities held: Revenue multiple Convertible preference shares 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. On 21 January 2021, Straker announced the acquisition of Lingotek, a US-based translation company for a total consideration of US$6.5m across cash and scrip. Lingotek is an appealing opportunity for Straker as it provides greater access to enterprise customers to grow translation services revenue; has excellent overlap of technology; provides Straker with a larger local team in the critical US-market; includes a SaaS revenue framework; and has access to strategic content connectors. The prospects for Straker are increasingly strong as the business continues to scale-up its translation platform in the growing US$57bn language services market. Straker is in a strong capital position following its recent $25m equity raising in June 2021. Straker’s increased focus on Enterprise customers will remain a key element of the Company’s growth strategy going forward. The acquisition pipeline also remains strong and with a total of eight acquisitions in the last five years, management now has significant acquisition and integration experience enabling a faster integration and margin improvement of the businesses acquired. 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 2021, Straker’s share price was $1.94, representing a 122% increase over 30 June 2020. In June 2021, BTI participated in Straker’s $25m equity raising which resulted in a $5.2m increase in BTI’s investment in Straker at a price of $1.90 per share. Valuation 30 June 2021: Valuation 30 June 2020: Investment since 30 June 2020: Basis for valuation: Securities held: $17.8m $5.6m $5.2m Mark to market ASX:STG 9,160,354 ordinary shares The financial year ended 31 March 2021 (FY21) was another successful year with solid revenue growth of 13% over the prior year (15% on a constant currency basis) to NZ$31.3m and an adjusted EBITDA loss of NZ$0.2m. Revenue growth was largely driven by acquisitions including Lingotek (acquired in Q4 FY21) and NZTC (acquired in Q4 FY20). On a pro-forma basis, Straker’s FY21 revenue was NZ$41.2m and included SaaS revenue totalling c.NZ$6m. Straker also provided FY22 revenue guidance of a minimum NZ$50m, at an improved gross margin (53% in FY21), expected to be driven largely by organic revenue growth of c.NZ$10m (93% repeat or SaaS revenue). This guidance indicates Straker is entering a phase of strong growth with a forecast minimum 60% increase to revenue in FY22 on a statutory basis, or minimum 21% increase on a pro-forma basis. Straker has scaled up rapidly over the past few years through a combination of organic growth and strategic acquisitions. Straker has a growing base of both Enterprise and SME customers across three main regions including Asia-Pacific, Europe and North America. Acquisitions provide Straker 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. On 11 November 2020, Straker announced its appointment as a Strategic Translation Service Provider to IBM in a two-year agreement, with an option for an additional two years. The agreement sees Straker’s platform directly linked to IBM’s technology platforms including IBM Cloud Services, IBM Adaptive Translations Services and IBM Global Media Localisation. The agreement also extends Straker’s current relationship with IBM from one language (Spanish) to 75 languages. Although integration work is yet to be completed, IBM was a major contributor to the strong revenue result in Q4 FY21 and is expected to continue growing in FY22. BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2021 13 Operating and Financial Review (continued)Underpinning SMI’s growth initiatives has been the unrivalled global coverage of ad-spend billing data which SMI has secured via exclusive agreements with agencies globally. On average, SMI now captures over 90% of ad spend data pools across all major regions including the US, Canada, Australia, and the UK. SMI continues to expand its ad spend coverage to numerous countries across EMEA and Asia-Pacific region ahead of planned expansions over the next 12 months. At 30 June 2021, BTI increased the carrying value of SMI by 25% to $12.1m reflecting the strong performance and growth prospects of the business. Valuation 30 June 2021: Valuation at 30 June 2020: Investment since 30 June 2020: Basis for valuation: Securities held: $12.1m $9.6m $0m Revenue multiples Convertible notes, ordinary shares and warrants Review of Operations (continued) Standard Media Index Standard Media Index (SMI) is the most trusted source of advertising spend and pricing data globally. SMI has a market leading data and analytics platform and 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, across both traditional and digital markets. This unique, census-data approach provides 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. The 12 months to 30 June 2021 (FY21) was another period of solid growth for SMI, underpinned by strong sales performance in the US market which now contributes over 80% of total revenue. Although the business was impacted by COVID-19 it was mainly confined to the first half of the year. SMI delivered strong growth across all markets in the second half of the year and despite increasing its investment in product development and regional sales and marketing, the business grew profitably in FY21 and maintained a strong cash position. SMI has a strong track record of developing innovative advertising analytics products for its customers. SMI’s flagship product, AccuTV, launched in FY18, provides a comprehensive analytical view of the US TV market for large enterprise clients and is considered the gold standard for understanding and analysing television media spend in the US. In June 2021, SMI launched a new pricing intelligence suite that included multiple CPM pricing products which provide industry- first measures for return on ad-spend and a new standard for more accurate comparison in return on ad-spend across linear and OTT advertising markets. SMI continues to provide ad-spend 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. SMI’s growth prospects are strong, underpinned by three major initiatives including 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 the commercialisation of new product innovations such as CPM, and 3) Continuing to grow sales to the financial services market, which remains a stand-out success. 14 BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2021 Operating and Financial Review (continued)Review of Operations (continued) Nosto (formerly Stackla) In June 2021, Stackla was acquired by Nosto in a predominately share-based transaction. BTI accepted shares in Nosto in consideration for its position in Stackla, and BTI investors will now get exposure to a larger international business operating a leading personalisation platform in the very fast growth e-commerce space. Nosto is a leading e-commerce personalisation platform with operations in New York, Los Angeles, London, Paris, Berlin, Stockholm and Helsinki. Nosto enables retailers to deliver a personalised digital shopping experience at every touchpoint and across every device. Brands use Nosto to craft personalised e-commerce experiences that drive conversion and increase revenue. Nosto’s commerce experience platform allows customers to quickly deploy fully personalised, integrated commerce experiences across product recommendations, content, triggered overlays and popups, category pages, and more. Nosto is a larger well capitalised business with a leading position in the fast growing space of e-commerce personalisation. The fundamental proposition for the Nosto platform is that e-commerce sales are growing extremely rapidly worldwide and there is increasing demand for the personalisation of the e-commerce experience. The Nosto platform provides e-commerce personalisation, and the addition of Stackla’s UGC tech capability enhances the Nosto offering. Through the combination of Nosto and Stackla, retailers and brands will be able to collect visual UGC from consumers across social media platforms to then personalise their onsite shopping experiences. In September 2019, BTI wrote down the valuation of its investment in Stackla to nil when Stackla had its access to the Facebook platform suspended. Stackla’s access was rightly reinstated after six weeks. Despite Stackla’s reinstatement, BTI took the conservative approach of maintaining the carrying value of our investment at nil. We did this to allow time for any business impact to be clear, and then when COVID hit, we took further time to ensure we had clarity of business performance. After a full year of holding our valuation at nil, BTI revalued its investment in Stackla up by $11.5m in September 2020 based on demonstrated business performance and market attractiveness. Following the acquisition of Stackla by Nosto, the valuation of BTI’s investment in Stackla remains unchanged at $11.5m, but has transitioned to a shareholding in Nosto. Valuation 30 June 2021: Valuation 30 June 2020: Investment since 30 June 2020: $11.5m $0.0m $0.0m Basis for valuation: Price of third-party transaction Securities held: Ordinary shares “We are excited for Bailador investors to get exposure to a larger international business operating a leading personalisation platform in the very fast growing e-commerce space” Paul Wilson, June 2021 BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2021 15 Operating and Financial Review (continued)Review of Operations (continued) Rezdy Rezdy is one of the few global independent 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. Despite the strong performance, BTI applied a modest 12% to its carrying value in Rezdy reflecting the contractual value of its convertible preference shareholding at 30 June 2021. These convertible securities represent a senior position in the Rezdy capital structure, meaning a relatively modest Enterprise Value is required to redeem face value. Valuation 30 June 2021: Valuation 30 June 2020: Investment since 30 June 2020: Basis for valuation: $6.4m $5.7m $0m Revenue multiples and capital structure seniority Securities held: Convertible preference shares 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. The financial year to 30 June 2021 (FY21) was a challenging period for Rezdy given the ongoing effects of COVID-19. Despite the grounding of virtually all international travel, Rezdy proved resilient and delivered solid revenue growth in FY21. This was largely attributable to an increase in demand for domestic holidays resulting in a strong recovery in transaction volumes channelled through Rezdy’s platform, which peaked higher in the Australia/New Zealand season than pre-COVID levels. There are positive signs of continued improvement into FY22 with a strong start to the North American summer season where Rezdy also expects transaction volumes to peak higher than pre-COVID levels. 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 continued the rollout of its in-destination booking tool through a commercial arrangement with one of the world’s largest theme and amusement park owners, providing Rezdy with access to a long-tail of agents and resellers who serve a large portion of transactions for the estimated 67 million visitors annually. Rezdy is well positioned for continued growth as tour suppliers continue to seek technology to manage their business and tap into lucrative online channels. Rezdy also benefits from online demand channels as they seek a greater level of inventory of experiences in both local and overseas markets, and in-destination resellers as they seek a more effective tool to manage their customers demand for experiences. 16 BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2021 Operating and Financial Review (continued)Review of Operations (continued) Brosa 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 was a net beneficiary from the COVID-19 related lockdowns that saw e-commerce sales accelerate in FY21. Demand for furniture was up as people isolated at home, and Brosa’s digital-first model was perfectly placed to take advantage of consumers increased willingness to order goods online, driving record results. In August 2020, Brosa raised ~$4m in a convertible note round. The funding round, which was oversubscribed, was used to further accelerate Brosa’s growth plans. The company has made considerable progress towards establishing itself as the leader in digital-first furniture shopping experiences, and is poised to take advantage of the accelerating structural shift to online shopping. Brosa has traded strongly throughout FY21. Despite this strong trading, BTI has kept the valuation of Brosa flat in order to remain conservative. We do believe that there is upside to our current carrying value as the company continues to perform well, and consider that there is good prospect that we’ll have a future realisation above current levels. Valuation 30 June 2021: Valuation 30 June 2020: Basis for valuation: Securities held: $3.0m $3.0m Third-party transaction Convertible preference shares BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2021 17 Operating and Financial Review (continued)Significant Changes in State of Affairs 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. There was no significant change in the Company’s state of affairs during the year. Events after the Reporting Period In July 2021 Bailador announced a $5.5m investment in digital healthcare platform InstantScripts. Further details on the investment can be found in Bailador’s July 2021 NTA statement and shareholder update. Other than the investment in InstantScripts, 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. The cash realisations throughout the year combined with the $24m capital raising see Bailador in a position to capitalise on the strong pipeline of potential new investment opportunities. 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. 18 BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2021 Operating and Financial Review (continued)Giving Back The Smith Family Challenge In FY2021 Bailador again supported The Smith Family Challenge, sponsoring a team in which Paul Wilson participated and to which the firm and team members contributed financially. In total the Bailador team (including non-Bailador members) raised over $100,000 for The Smith Family. This was our third consecutive year of support for The Smith Family challenge (our first as a named sponsor) and our most successful fund-raising year to date. That said, we are competitive at Bailador, and look forward to raising the bar in FY2022. Stepping Stone House Stepping Stone House provides care for homeless children and young adults in its three houses in Sydney. Each year Stepping Stone House partners with the Royal Sydney Yacht Squadron to hold a regatta in which corporates sponsor and sail a boat for the day. Bailador participated as a Gold Sponsor for the ninth consecutive year and assisted Stepping Stone House raise just under $100,000 on the day. And again, for the competitive types amongst us, the Bailador team took home the Bledisloe Cup in the race itself. Bailador encourages our team to give back and provides time off for team members doing charitable work. Our team members are widely involved in governance roles and giving of their time in supporting community activities and not-for-profit enterprises. Our team gives their time to valuable causes such as Sydney Festival, food rescue organisations and Royal Lifesaving Australia. Bailador Technology Investments is regulated by ASIC and the ASX and adheres to the highest standards of corporate governance. Bailador’s standards of corporate governance are outlined in the Corporate Governance Statement found on Page 23 of this report. Bailador Technology Investments is not an operating company. It has no employees besides its three independent directors and does not consume resources or produce emissions. Bailador Technology Investments has outsourced its management to Bailador Investment Management. For this sustainability snapshot, we will refer to Bailador Technology Investments and Bailador Investment Management together as Bailador. People and Place Bailador is committed to an inclusive, diverse and merit-based workplace. Bailador recognises and promotes the values of diversity, respect and opportunity for learning and development the workplace. Male Female Total Partners Non-partners Total 3 3 6 100% 60% 75% 0 2 2 0% 40% 25% 3 5 8 100% 100% 100% Bailador’s work from home policy is flexible and adaptable. Our focus is providing team members the flexibility and resources to achieve their best. Our team members attend the office most of the time as most people feel this supports their professional development and enhances team building. In addition to adhering to government leave requirements, Bailador also offers a period of paid parental leave and encourage our team to put family first. In 2020 Bailador moved offices to a 5.5 star NABERS rated office. The new office has improved natural light, ergonomic sit/stand workstations and improved end of trip facilities to promote exercise to and from work. We also invested in a number of break out rooms to allow the team to chill out and work in a manner most comfortable to them. Bailador is a safe place to work and has not had a lost time injury since founding in 2010. We pay attention to mitigating risks in the office by ensuring we have good equipment that remains well maintained. Bailador presents regular opportunities for the team to contribute to broader strategy and direction, including holding an annual team offsite to come together as a group and focus our energies for the year ahead. Bailador is great at hiring great people. We hire for cultural fit first and foremost. Excluding interns, our average retention period across our current team is seven years. BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2021 19 Sustainability SnapshotBailador adheres to the highest standards of corporate governance and ESG principles. Climate Change and Carbon Emissions Bailador is committed to Measure, Manage and Mitigate the carbon emissions we are directly responsible for, and which arise indirectly from our activities. We follow the Greenhouse Gas Protocol in categorising direct and indirect emissions as set out below. Measure, Manage & Mitigate Greenhouse Gas Protocol Category Measure Manage Scope 1 Direct Emissions Emissions from the direct activities of Bailador or activities under our control. Scope 2 Indirect Emissions Emissions from electricity purchased and used by Bailador. Emissions are created during the production of the energy and eventually used by Bailador. Scope 3 Other Indirect Emissions Emissions from activities of Bailador occurring from sources we do not own or control. These are emissions associated with, for example, business travel, procurements, waste and water usage. We have no scope 1 emissions. For much of FY2021 Bailador’s office was empty and thus a sensible baseline for electricity usage by Bailador could not be set. We intent in 2022 to measure our 2022 emissions. In FY2021 Bailador moved to a 5.5 star NABERS rated building. The new office has more natural light and is equipped with automatic sensor lighting to reduce emissions. • Lights with movement and timer switches • Computer screen savers in use • Heating and cooling on timer switches • Energy efficient small appliances Our Scope 3 carbon footprint derives from Travel to and from work • Travel to and from work. • Travel on firm business. • Indirect emissions through the purchase of general office supplies In FY2021 employees worked long periods from home and there has been virtually no inter-state or international travel. Accordingly we have deferred measuring our Scope 3 emissions but intend to do so to better measure our carbon footprint in FY2022. • Encourage travel on public transport • Bailador moved to a new office with better end of trip facilities to encourage walking or cycling to work Travel on Bailador business • Use of video conferencing and phone when appropriate • Walking to meetings or if too far sharing taxis • Tight international travel schedules to maximise value of air miles Mitigate After our data collecting and analysis, which we are ramping up in FY2022, we expect to understand our carbon emissions and carbon intensity much better and when we do we will assess which mitigating actions to undertake. Our mitigating activities are likely to involve investment in projects that are removing carbon from the atmosphere and projects that where possible, provide other important benefits to society including job creation and biodiversity enhancement. BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2021 21 Sustainability Snapshot (continued)Our long-term sustainability framework and goals Establish best Integrate ESG principles across Work and influence practice at Bailador the Bailador investment cycle portfolio companies Governance People practices Climate change and carbon intensity Giving back Establish best practice at Bailador PPPPP PPPP P PPPP PPP PPPP PP PPP PPPP PPP P We believe our governance practices at Bailador are best practice for investment funds and we continue to look for opportunities to improve. Likewise, our people practices and involvement with the community through both financial and in-person contributions are wide-ranging and meaningful. We know we make a difference. We have established our framework for understanding and managing our company carbon intensity (Scope 2 and 3) in 2022 and we expect to make significant progress in both areas. Integrate ESG principles across the Bailador investment cycle The Bailador investment cycle Bailador currently undertakes the following governance and sustainability has four discrete steps: activities across the investment cycle: Step 1: Screening and qualification of opportunities P  Bailador undertakes a high-level assessment of carbon intensity and social impact of potential investments. Bailador considers high carbon intensity companies (for example data centres and bitcoin mining) to have a higher risk profile than low carbon intensity businesses Step 2: Due diligence, negotiation P  Bailador is meticulous in assessing governance capability and the commitment of founders and investment and management to high-class governance P  Background research on founders is undertaken P  Regular information rights (always) and a board seat (where possible) are negotiated and agreed Step 3: Governance and P  Bailador is almost invariably on the board of investments and from this position is able management support for investee companies to influence governance P  Bailador often takes the chair role P  Bailador works with the investee company to establish board papers and board sub committees Step 4: Sale and realisation of investment P  Bailador remains tightly involved in sale and realisation processes and supports sales only to reputable buyers P  Bailador engages throughout the realisation process to ensure the fair and equitable treatment of investee company employees Work and influence portfolio companies Bailador’s job as a minority investor is to support founders and management to run their businesses as well as possible. By establishing best practice in governance and sustainability at Bailador and communicating expectations, we aim to influence and encourage investee companies. We expect excellence in governance and people practices in portfolio companies and work hard to ensure these are in place. Over time we hope to see portfolio companies measuring, managing and mitigating carbon intensity and giving back to their communities but we understand we are not running investee companies and there will be variable commitment to this across the portfolio. We aim to be influential over time. 22 BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2021 Sustainability Snapshot (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 4th edition amendments) as well as current standards of best practice for the entire financial year ended 30 June 2021 and have been approved by the Board. A list of the Board’s directors for the year ended 30 June 2021, 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. The Chair, supported by the Chair of the Nomination and Remuneration Committee ensures the Board is provided appropriate professional development opportunities to develop and maintain the skills and knowledge needed to perform their role as directors effectively. Board Composition Ethical Standards 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 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. 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 2021 23 Corporate Governance StatementThe Company does not have a formal whistle-blower policy or anti- bribery and corruption policy. As the Company does not employ any staff, such policies fall to the responsibility of the Manager. Employees of the Manager have been provided access to the Chair of the Audit and Risk Committee as a point of contact for ethics concerns. 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. 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. 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. 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; Directors are prohibited from trading for short term speculative gain. • Overseeing Board and director performance reviews; 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. • 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 Chair has conducted individual performance appraisals with Board members throughout the year. In addition, 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. 24 BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2021 Corporate Governance Statement (continued)Board Roles and Responsibilities 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. 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. The Company Secretary of the Company is accountable to the Board, through the Chair, on all matters to do with the proper functioning of the Board. All Board members communicate directly with the Company Secretary. The Company Secretary through the Chair is responsible for ensuring: • All members of the Board receive copies of all market announcements on or prior to release; • Copies of any Company presentations with new substantive information are released to the market ahead of any presentation being given. A detailed description of the Board’s communication policy is provided at www.bailador.com.au. Shareholder Rights 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. All voting matters are determined via a poll. 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. The Board ensures security holders are provided with all material information in its possession relevant to a decision on whether or not to elect or re-elect a director. The Board encourages shareholders to receive information electronically wherever possible. The Board is first and foremost accountable to provide value to its shareholders through delivery of timely and balanced disclosures. 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 ensures all directors have a written agreement outlining their roles and responsibilities and that all directors are in receipt of relevant governance policies. 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. BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2021 25 Corporate Governance Statement (continued)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 main risks that could negatively impact on the performance of the Company’s investments include: • 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. The Board has reviewed its risk management framework, including the absence of significant environmental or social risk, in the last 12 months and is satisfied the framework is sound and appropriate for the risk appetite of the Board. The Company does not have an internal audit function. 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 is at www.bailador.com.au. 26 BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2021 Corporate Governance Statement (continued)Your directors submit the financial report of the Company for the financial year ended 30 June 2021. The information in the preceding operating and financial review forms part of this Directors’ Report for the year ended 30 June 2021 and is to be read in conjunction with this report: Directors 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. The names of directors who held office during or since the end of the year: Auditor’s Independence Declaration David Kirk (Chairman) Paul Wilson Andrew Bullock Jolanta Masojada Brodie Arnhold Dividends A fully franked special dividend of 1.4 cents per share amounting to $2.0m has been declared by the Board on 17 August 2021 to be paid on 8 September 2021 to shareholders on record as at 24 August 2021. The dividend will be fully franked at 25%. The Company’s dividend reinvestment plan (DRP) announced on 13 February 2020 will apply to the dividend announced on 17 August 2021. Indemnifying Officers or Auditor During the year, Bailador Technology Investments Limited paid a premium to insure officers of the Company. The officers of the Company covered by the insurance policy include all Directors. The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought against the officers in their capacity as officers of the Company, and any other payments arising from liabilities incurred by the officers in connection with such proceedings, other than where such liabilities arise out of conduct involving a wilful breach of duty by the officers or the improper use by the officers of their position or of information to gain advantage for themselves or someone else to cause detriment to the Company. The auditor’s independence declaration for the year ended 30 June 2021 has been received and can be found on page 31 of the Financial Report. Non-audit Services The Board of Directors, in accordance with advice from the Audit and Risk Committee, is satisfied that the provision of non-audit services during the period is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are satisfied the services disclosed below did not compromise the external auditor’s independence as the nature of the services provided does not compromise the general principles relating to audit independence in accordance with APES 110: Code of Ethics for Professional Accountants set by the Accounting Professional and Ethical Standards Board. All non-audit services have been reviewed and approved to ensure they do not impact the integrity and objectivity of the auditor. The following fees were paid or payable to Hall Chadwick for non-audit services provided during the year ended 30 June 2021: Taxation Services Rounding of Amounts $ $2,090 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. 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. Options 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. There are no unissued ordinary shares of the Company under options as at 30 June 2021. No shares or options are issued to directors of Bailador Technology Investments Limited as remuneration. BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2021 27 Directors’ Report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 25 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 and a Justice of the Peace in NSW. Meetings of Directors During the period, nine meetings of directors and four 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 9 9 9 9 9 9 9 9 9 9 3 3 3 3 3 3 3 3 3 3 1 1 1 1 1 1 1 1 1 1 Remuneration Report (Audited) Remuneration Policy Bailador Technology Investments Limited does not employee any personnel. The Board has delegated management of the investment portfolio to the Manager, Bailador Investment Management Pty Ltd. David Kirk and Paul Wilson are directors of Bailador Technology Investments Limited and are also directors and owners of Bailador Investment Management Pty Ltd. The Manager is responsible for managing the Investment Portfolio in accordance with the Company’s investment strategy. The Manager was appointed in 2014 for an initial term of 10 years and in accordance with the agreement’s terms will automatically extend after that term until either the agreement is terminated or a new agreement is agreed. 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 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 reached in FY21 and there are sufficient cash realisations to satisfy the payment of the accrued performance fee. 28 BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2021 Directors’ Report (continued)Amounts paid or payable to the Manager relating to the year ended 30 June 2021 are as follows: Base management fee Performance fee payable Reimbursement of portfolio management expenses Key Management Personnel (KMP) Remuneration Remuneration paid or payable to each KMP of the Company during the financial year is as follows: $3,143,799 $7,320,862 $304,388 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 Non-Executive Director (appointed 30 August 2019) Non-recoverable GST incurred on director payments – – 60,000 60,000 60,000 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 Net number Balance at 30 June 2020 of shares acquired of shares Balance at disposed 30 June 2021 8,651,466 3,977,041 410,422 122,843 55,000 166,897 – 21,897 21,897 21,897 13,216,772 232,588 – – – – – – 8,818,363 3,977,041 432,319 144,740 76,897 13,449,360 KMP Option Holdings There were no options on issue to KMP at any point during the financial year. BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2021 29 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 2020 to 30 June 2021, David Kirk earned $37,500 from DocsCorp and $30,000 from Instaclustr. Paul Wilson earned $50,000 from SiteMinder, $80,000 from Stackla and $60,000 from Straker Translations. The Manager receives directors’ fees in relation to directorships of portfolio companies. For the year 1 July 2020 to 30 June 2021, the Manager earned (net of GST) $37,500 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 17th day of August 2021 Paul Wilson Director 30 BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2021 Directors’ Report (continued)BAILADOR TECHNOLOGY INVESTMENTS LIMITED ABN 38 601 048 275 AUDITOR’S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001 TO THE DIRECTORS OF BAILADOR TECHNOLOGY INVESTMENTS LIMITED In accordance with Section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of independence to the directors of Bailador Technology Investments Limited. As the lead audit partner for the audit of the financial report of Bailador Technology Investments Limited for the year ended 30 June 2021, I declare that, to the best of my knowledge and belief, there have been no contraventions of: (i) the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and (ii) any applicable code of professional conduct in relation to the audit. Hall Chadwick (NSW) Level 40, 2 Park Street Sydney, NSW 2000 SANDEEP KUMAR Partner Dated: 17 August 2021 BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2021 31 Auditor’s Independence Declaration Increase/(Decrease) in value of financial assets Interest income Accounting fees ASX fees Audit fees Costs of realisation of financial assets Directors’ fees Independent valuations Insurance Investor relations Legal fees Manager’s fees Manager’s performance fees Registry administration Other expenses Profit/(Loss) before income tax Income tax (expense)/benefit Profit/(Loss) for the year Other comprehensive income Total comprehensive income/(loss) for the year Earnings per share – basic earnings per share (cents) – diluted earnings per share (cents) The accompanying notes form part of these financial statements. Note 2 6 5 5 3 8 8 30 June 2021 30 June 2020 $000 52,032 100 (281) (66) (71) (953) (192) (64) (216) (288) (35) (3,144) (7,321) (57) (41) 39,403 (11,823) 27,580 – 27,580 22.00 22.00 $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) 32 BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2021 Statement of Profit or Loss and Other Comprehensive Incomefor the Year Ended 30 June 2021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 2021 As at 30 June 2020 Note $000 $000 9 4 10 4 12 11 12 13 43,542 17,771 1,340 62,653 159,741 14,013 173,754 236,407 7,766 7,766 36,685 36,685 44,451 191,956 142,871 49,085 191,956 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 BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2021 33 Statement of Financial Positionas at 30 June 2021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 Balance at 1 July 2020 Comprehensive income Profit for the year Total comprehensive income for the period Transactions with owners, in their capacity as owners, and other transfers Shares issued during the period Costs associated with shares issued during the period Total transactions with owners and other transfers Balance at 30 June 2021 The accompanying notes form part of these financial statements. Note 7 13 7 13 Ordinary Share Capital $000 116,475 – – – 2,756 2,756 119,231 Retained Earnings $000 28,629 (4,118) (4,118) (3,006) – (3,006) 21,505 Total $000 145,104 (4,118) (4,118) (3,006) 2,756 (250) 140,736 119,231 21,505 140,736 – – 24,048 (408) 23,640 142,871 27,580 27,580 – – – 49,085 27,580 27,580 24,048 (408) 23,640 191,956 34 BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2021 Statement of Changes in Equityfor the Year Ended 30 June 2021CASH FLOWS FROM OPERATING ACTIVITIES Payments to suppliers and employees Interest received Net cash used in operating activities 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 Costs associated with sale of financial assets Proceeds from / (net cash used in) investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of shares Costs associated with raising capital Net cash provided by financing activities Net increase 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. 30 June 2021 30 June 2020 Note $000 $000 15 13 (4,419) 22 (4,396) (9,084) 29,738 (792) 19,891 24,048 (582) 23,466 38,931 4,612 43,542 (8,410) 22 (8,388) – 11,828 – 11,828 1,658 (1,909) (251) 3,189 1,423 4,612 BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2021 35 Statement of Cash Flowsfor the Year Ended 30 June 2021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. Bailador holds two investments with substantial exposure to the travel industry, SiteMinder and Rezdy. Both businesses have performed well throughout COVID and are returning to growth. These financial statements were authorised for issue on 17 August 2021. 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. 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. 36 BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2021 Notes to the Financial Statementsfor the Year Ended 30 June 2021Note 1: Summary of Significant Accounting Policies (continued) 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. 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. 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. 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. Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net settlement or simultaneous settlement of the respective asset and liability will occur. Deferred tax assets and liabilities are offset where: (a) a legally enforceable right of set-off exists; and (b) the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur in future periods in which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled. d. Financial Instruments Initial Recognition and Measurement Financial assets and financial liabilities are recognised when the entity becomes a party to the contractual provisions to the instrument. For financial assets, this is equivalent to the date that the Company commits itself to either the purchase or sale of the asset (i.e. trade date accounting is adopted). (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. Impairment 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. BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2021 37 Notes to the Financial Statement for the Year Ended 30 June 2021 (continued)Note 1: Summary of Significant Accounting Policies (continued) Derecognition h. Goods and Services Tax 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. 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. 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. e. Cash and Cash Equivalents Cash and cash equivalents include cash on hand, deposits available on demand with banks, other short term highly liquid investments with original maturities of 3 months or less. f. Trade and Other Receivables Trade and other receivables include amounts due from government authorities and prepayments for services performed in the ordinary course of business. Receivables expected to be collected (or utilised) within 12 months of the end of the reporting period are classified as current assets. Trade and other receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any provision for impairment. Refer to Note 1(d) for further discussion on the determination of impairment losses. g. Trade and Other Payables Trade and other payables represent the liabilities for goods and services received by the entity that remain unpaid at the end of the reporting period. The balance is recognised as a current liability with the amounts normally paid within 30 days of recognition of the liability. Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Taxation Office (ATO). Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the ATO is included with other receivables or payables in the statement of financial position. Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to, the ATO are presented as operating cash flows included in receipts from customers or payments to suppliers. i. Interest Income Interest revenue is recognised using the effective interest method. j. Rounding of Amounts The Company has applied the relief available to it under ASIC Corporations (rounding in Financial/Directors’ Reports) Instrument 2016/191 and accordingly certain amounts in the financial report and the directors’ report have been rounded off to the nearest $1,000. k. Critical Accounting Estimates and Judgements The directors evaluate estimates and judgements incorporated into the financial statements based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the Company. Detailed information about each of these estimates and judgements is included in Note 18 in the financial statements. l. Comparative Figures When required by accounting standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year. The comparative period represents the period from 1 July 2019 to 30 June 2020. m. New Accounting Standards Implemented No new accounting standards were adopted during the period. 38 BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2021 Notes to the Financial Statement for the Year Ended 30 June 2021 (continued)Note 2: Profit/(Loss) For The Year The following revenue and expense items are relevant in explaining the financial performance for the year: Fair value gains/(losses) on financial assets and marketable securities at fair value through profit or loss (in ‘000s) Unrealised financial assets and marketable securities of $42,892 where: 30 June 2021 30 June 2020 $000 $000 52,032 (1,648) • Instaclustr increased $21,374 (112%) • Nosto increased $11,450 (from $nil) • Straker Translations increased $6,931 (124%) • Standard Media Index increased $2,451 (25%) • Rezdy increased $686 (12%) Gains on realisation of financial assets of $9,139 where: • DocsCorp increased on realisation $5,821 (53%) • Lendi increased on realisation $2,254 (21%) • Viostream increased on realisation $1,064 (from $nil) Note 3: Tax Expense a. The components of tax expense comprise: Current tax Deferred tax b. The prima facie tax on profit/(loss) from ordinary activities before income tax is reconciled to income tax payable as follows: Profit/(Loss) for the period before income tax expense Prima facie tax on (profit)/loss 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: 30 June 2021 30 June 2020 $000 $000 (253) (11,570) (11,823) 39,403 (11,821) (2) (11,823) 30% (778) 2,541 1,763 (5,880) 1,764 (1) 1,763 30% BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2021 39 Notes to the Financial Statement for the Year Ended 30 June 2021 (continued)Note 4: Marketable Securities & Financial Assets Current Marketable Securities Straker Translations Total Current Marketable Securities Financial Assets SiteMinder Instaclustr Standard Media Index Nosto Rezdy Brosa DocsCorp Lendi Total Financial Assets Total Financial Assets & Marketable Securities Note 5: Management fees As at As at 30 June 2021 30 June 2020 $000 $000 17,771 17,771 82,536 44,263 12,090 11,450 6,402 3,000 – – 5,604 5,604 82,536 19,041 9,638 – 5,716 3,000 10,936 10,727 159,741 177,512 141,594 147,198 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 $3,143,799 of management fees payable to the Manager, of which $76,678 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 $304,388 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%. 40 BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2021 Notes to the Financial Statement for the Year Ended 30 June 2021 (continued)Note 5: Management fees (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 exceeded the performance fee hurdle and $7,320,862 (including $178,558 non-recoupable GST) has been accrued as performance fees payable. 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 $16.8m from its investment in DocsCorp, $13.0m from its investment in Lendi and $1.1m from its investment in Viostream. The FY21 performance fee will be paid from these proceeds. For further information on performance fee calculation please see the Company’s prospectus. Note 6: Auditor’s Remuneration Remuneration of the auditor for: Auditing or reviewing the financial statements Taxation services 30 June 2021 30 June 2020 $000 $000 71 2 73 68 10 78 BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2021 41 Notes to the Financial Statement for the Year Ended 30 June 2021 (continued)Note 7: Dividends No dividends were paid during the period (2020 2.5c per share fully franked) 30 June 2021 30 June 2020 $000 – $000 3,006 At 30 June 2021, Bailador’s franking account balance is $656,649. The 1.4 cent per share dividend declared on 17 August 2021 will fully utilise the Company’s franking account. The Company’s approach to paying dividends is set out in the Company’s prospectus. Note 8: Earnings per Share Profit/(Loss) after income tax Weighted average number of ordinary shares used in calculating basic and diluted earnings per share Basic earnings per share Diluted earnings per share Note 9: Cash and Cash Equivalents Cash at bank 30 June 2021 30 June 2020 $000 27,580 $000 (4,118) Number Number 125,381,189 120,934,673 Cents 22.00 22.00 Cents (3.41) (3.41) As at As at 30 June 2021 30 June 2020 $000 43,542 43,542 $000 4,612 4,612 42 BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2021 Notes to the Financial Statement for the Year Ended 30 June 2021 (continued)Note 10: Trade and Other Receivables CURRENT GST receivable Interest receivable Investment exits receivable Other prepayments As at As at 30 June 2021 30 June 2020 $000 $000 110 5 1,138 87 1,340 56 1 – 90 147 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 2021 all receivables and prepayments were within expected terms. 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 liabilities Tax on unrealised gains Tax on acquisition assets on opening As at As at 30 June 2021 30 June 2020 $000 $000 305 7,321 140 7,766 101 – 96 197 As at As at 30 June 2021 30 June 2020 $000 $000 – – 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 BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2021 43 Notes to the Financial Statement for the Year Ended 30 June 2021 (continued)Note 12: Income Tax (continued) NON-CURRENT Deferred tax liabilities Tax on unrealised gains Tax on acquisition assets on opening Deferred tax assets Provisions Transaction costs on acquisitions Transaction costs on equity issue Deferred losses on financial assets Losses carried forward Deferred tax assets 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 30 June 2020 profit or loss to equity 30 June 2021 $000 $000 $000 $000 28,325 2,458 30,783 5,902 – 5,902 – – – 34,227 2,458 36,685 Balance at 1 July 2019 $000 Charged to Charged directly Balance at profit or loss to equity 30 June 2020 $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 Balance at Charged to Charged directly Balance at 30 June 2020 profit or loss to equity 30 June 2021 $000 $000 $000 $000 20 77 42 7,775 11,845 19,759 2,202 (19) (77) (7,775) (252) (5,921) – – 175 – – 175 2,222 58 140 – 11,593 14,013 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 assets. 44 BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2021 Notes to the Financial Statement for the Year Ended 30 June 2021 (continued)Note 13: Issued Capital Movements in share capital are set out below: Opening balance at 1 July 2019 Ordinary shares issued Closing balance at 30 June 2020 Opening balance at 1 July 2020 Ordinary shares issued via placement and SPP May 2021 Costs associated with capital raised Closing balance at 30 June 2021 Capital Management The Company’s objectives for managing capital are as follows: No. 120,247,831 2,611,432 122,859,263 122,859,263 17,553,332 $ 116,475,156 2,755,697 119,230,853 119,230,853 24,048,069 (407,663) 140,412,595 142,871,259 • 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 Reconciliation of Cash Flow from Operation with Profit/(Loss) after Income Tax Profit/(Loss) after income tax Non-operating cash flows in profit: Unrealised (gains)/losses on financial assets at fair value through profit or loss Realised gains on financial assets received as cash flows from investing activities Realised gains on financial assets receivable as cash flows from investing activities Costs related to investment exits Increase in trade and other receivables Increase/(Decrease) in trade and other payables Increase/(Decrease) in deferred tax Cash flow from operating activities 30 June 2021 30 June 2020 $000 $000 27,580 (42,892) (8,075) (1,064) 792 (130) 7,570 11,823 (4,396) (4,118) 1,648 – – – (25) (4,130) (1,763) (8,388) BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2021 45 Notes to the Financial Statement for the Year Ended 30 June 2021 (continued)Note 16: Contingent Liabilities There were no contingent liabilities at 30 June 2020 and 30 June 2021. Note 17: Events After the Reporting Period In July 2021 Bailador announced a $5.5m investment in digital healthcare platform InstantScripts. Further details on the investment can be found in Bailador’s July 2021 NTA statement and shareholder update. Other than the investment in InstantScripts, 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 2021 30 June 2020 Note $000 $000 9 4 4 10 10 43,542 17,771 159,741 1,340 222,394 7,766 7,766 4,612 5,604 141,594 147 151,957 197 197 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. 46 BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2021 Notes to the Financial Statement for the Year Ended 30 June 2021 (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. 30 June 2021 Profit $000 Equity $000 +/- 5% in gain on equity investments 1,471 1,471 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. a. Fair Value Hierarchy AASB 13: Fair Value Measurement requires the disclosure of fair value information by level of the fair value hierarchy, which categorises fair value measurements into one of three possible levels based on the lowest level that an input that is significant to the measure can be categorised into, as follows: Level 1 Level 2 Measurements based on quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. Measurements based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 Measurements based on unobservable inputs for the asset or liability. The fair values of assets and liabilities that are not traded in an active market are determined using one or more valuation techniques. These valuation techniques maximise, to the extent possible, the use of observable market data. If all significant inputs required to measure fair value are observable, the asset or liability is included in Level 2. If one or more significant inputs are not based on observable market data, the asset or liability is included in Level 3. b. Valuation Techniques In the absence of an active market for an identical asset or liability, the Company selects and uses one or more valuation techniques to measure the fair value of the asset or liability. The Company selects a valuation technique that is appropriate in the circumstances and for which sufficient data is available to measure fair value. The availability of sufficient and relevant data primarily depends on the specific characteristics of the asset or liability being measured. The valuation techniques selected by the Company are consistent with one or more of the following valuation approaches: • Market approach: valuation techniques that use prices and other relevant information generated by market transactions for identical or similar assets or liabilities 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. BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2021 47 Notes to the Financial Statement for the Year Ended 30 June 2021 (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. 48 BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2021 Notes to the Financial Statement for the Year Ended 30 June 2021 (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 2021 Carrying Amount $000 43,542 17,771 159,741 1,340 222,394 7,766 7,766 Fair Value $000 43,542 17,771 159,741 1,341 222,395 7,766 7,766 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 Description Recurring fair value measurements Current marketable securities Financial assets at fair value through profit or loss Fair Value Measurements at 30 June 2021 Using: Significant Quoted Prices in Observable Inputs Significant Active Markets for Other than Unobservable Identical Assets Level 1 Inputs $000 (Level 1) 17,771 – 17,771 $000 (Level 2) – 96,986 96,986 Inputs $000 (Level 3) – 62,755 62,755 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) 5,604 – $000 (Level 2) – 96,263 Inputs $000 (Level 3) – 45,331 BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2021 49 Notes to the Financial Statement for the Year Ended 30 June 2021 (continued)Note 19: Fair Value Measurement (continued) e. Valuation Techniques and Inputs Used to Determine Level 2 Fair Values Fair Value at 30 June 2021 5,604 96,263 45,331 SiteMinder Nosto Brosa $000 Valuation Techniques Range of Observable Inputs 82,535 11,450 3,000 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 2021 Range of Unobservable $000 Valuation Techniques Significant Unobservable Inputs Inputs Instaclustr Standard Media Index Rezdy 44,263 12,090 Revenue multiple Revenue multiple 6,402 Revenue multiple Revenue multiple Revenue multiple Revenue multiple 4.8x – 6.4x 2.5x – 3.5x 1.3x – 1.9x Interest on Convertible Instruments Interest on Convertible Instruments There were no changes during the year in the valuation techniques used by the Company to determine Level 3 fair values. 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 2020 Transfers out to Level 2 (Nosto $11.5m, DocsCorp $10.9m) Additions Gains and losses recognised in profit or loss Closing balance 30 June 2021 50 BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2021 Financial Assets $000 45,332 (22,385) 3,847 35,961 62,755 Notes to the Financial Statement for the Year Ended 30 June 2021 (continued)Note 20: Related Party Transactions Remuneration paid or payable to key management personnel (KMP) of the Company during the period are: • Management Fees of $3,143,799 (including $76,678 unclaimable GST). • FY21 performance fee payable to the Manager (not yet paid) of $7,320,861 (including $178,558 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 $302,500. • Reimbursement of expenses to the Manager of $304,388. • David Kirk and Jolanta Masojada participated in the Straker Translations rights issue for shareholders on the same terms as all other Straker Translations shareholders. 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 2021. 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 BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2021 51 Notes to the Financial Statement for the Year Ended 30 June 2021 (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 32-51, 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 2021 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 17th day of August 2021 Paul Wilson Director 52 BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2021 Directors’ Declaration BAILADOR TECHNOLOGY INVESTMENTS LIMITED ABN 38 601 048 275 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF BAILADOR TECHNOLOGY INVESTMENTS LIMITED Opinion We have audited the financial report of Bailador Technology Investments Limited, which comprises the statement of financial position as at 30 June 2021, the statement of profit or loss and other comprehensive income, the statement of changes in equity, the statement of cash flows for the year then ended and notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration. In our opinion the accompanying financial report of the Bailador Technology Investments Limited is in accordance with the Corporations Act 2001, including: i. ii. giving a true and fair view of the Company’s financial position as at 30 June 2021 and of its performance for the year ended on that date; and complying with Australian Accounting Standards and the Corporations Regulations 2001 Basis of Opinion We conducted our audit in accordance with Australian Auditing Standards. Those Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about whether the financial report is free from material misstatement. Our responsibilities under those Standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110: Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We confirm that the independence declaration required by the Corporations Act 2001 has been given to the directors of the company. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. SYDNEY · PENRITH · MELBOURNE · BRISBANE · PERTH · DARWIN Liability limited by a scheme approved under Professional Standards Legislation www.hallchadwick.com.au BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2021 53 Independent Auditor's Report BAILADOR TECHNOLOGY INVESTMENTS LIMITED ABN 38 601 048 275 AND CONTROLLED ENTITIES INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF BAILADOR TECHNOLOGY INVESTMENTS LIMITED AND CONTROLLED ENTITITES KEY AUDIT MATTER Valuation of Investments $177.5 million Refer to: Note 4 - Financial Assets & Marketable Securities Accounting policy Note 1(d) & Note 19 Fair Value Measurement The Company has been classified under AASB 2013-5 as an Investment Entity whose business purpose is to invest funds solely for returns via capital appreciation and/or investment returns. The entity is exempt from consolidating underlying investees it controls in accordance with AASB 10 Consolidated Financial Statements. 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 and Marketable Securities in the Statement of Financial Position. In determining year-end valuations, the board considers the annual valuation review by an independent valuation expert and the valuation report prepared by the Manager. Of these financial assets, $17.8M were classified as ‘level 1’, $97M were classified as ‘level 2’ and $62.8M were classified as ‘level 3’ financial instruments in accordance with AASB 13 Fair Value Measurement. The measurement of level 1 marketable securities are based on quoted prices in active markets. The measurement of level 2 financial assets are based on inputs other than quoted prices that are observable for the asset, either directly or indirectly. The valuation of the level 2 financial instruments therefore requires a higher level of judgement. HOW OUR AUDIT ADDRESSSED THE KEY AUDIT MATTER Our procedures included amongst others: Evaluated the manager’s valuation approach to value the investments; cross checking with growth achieved and comparable market data. Assessed the valuation the manager’s valuation and implied revenue multiple. range to Assessed the scope, expertise and the independence of external valuer engaged by the Company. Evaluated the appropriateness of the valuation methodologies selected by the manager and separately by the external valuer the investment to accepted market practices and our industry experience. fair value of to determine valuer Independently assessed and compared the key inputs adopted by the manager and the available market to external information relating to similar transactions. We to involved our valuation specialist assess that the market data used seperately by the manager and the valuer is reasonable in comparison to a credible external source; selected multiples; the reference to market data; revenue growth rates and other business characteristics that are reasonable. rationale for The remaining financial assets of $62.8M were classified as ‘level 3’ in accordance with AASB 13 Fair Value Measurement. The measurements of financial assets are based on unobservable inputs for the asset. This requires a higher level of judgement. level 3 Assessed the adequacy of disclosure of level 1, level 2 and level 3 finacial assets in accordance with AASB 13 Fair Value Measurement. We have focussed on this area as a key audit matter due to the company being an investment entity; amounts involved being material; and the inherent judgement involved in determining the fair value of investments. 54 BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2021 Independent Auditor's Report (continued) BAILADOR TECHNOLOGY INVESTMENTS LIMITED ABN 38 601 048 275 AND CONTROLLED ENTITIES INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF BAILADOR TECHNOLOGY INVESTMENTS LIMITED AND CONTROLLED ENTITITES Information Other than the Financial Report and Auditor’s Report Thereon The directors are responsible for the other information. The other information comprises the information included in the Group’s annual report for the year ended 30 June 2021, but does not include the financial report and our auditor’s report thereon. Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Directors for the Financial Report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australia Accounting Standards and the Corporations Act 2001 and for such internal control as directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the Consolidated Entity’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Consolidated Entity or to cease operations, or have no realistic alternative but to do so. Auditor’s Responsibilities for the Audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: – Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. – Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. – Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2021 55 Independent Auditor's Report (continued) BAILADOR TECHNOLOGY INVESTMENTS LIMITED ABN 38 601 048 275 AND CONTROLLED ENTITIES INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF BAILADOR TECHNOLOGY INVESTMENTS LIMITED AND CONTROLLED ENTITITES – Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern. – Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation. – Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the financial report. We are responsible for the direction, supervision and performance of the Company audit. We remain solely responsible for our audit opinion. We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial report of the current period and these are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on the Remuneration Report We have audited the remuneration report included in pages 28 to 30 of the directors’ report for the year ended 30 June 2021. In our opinion the remuneration report of Bailador Technology Investments Limited for the year ended 30 June 2021 complies with s 300A of the Corporations Act 2001. 56 BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2021 Independent Auditor's Report (continued)BAILADOR TECHNOLOGY INVESTMENTS LIMITED ABN 38 601 048 275 AND CONTROLLED ENTITIES INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF BAILADOR TECHNOLOGY INVESTMENTS LIMITED AND CONTROLLED ENTITITES Responsibilities The directors of the company are responsible for the preparation and presentation of the remuneration report in accordance with s 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the remuneration report, based on our audit conducted in accordance with Australian Auditing Standards. Hall Chadwick (NSW) Level 40, 2 Park Street Sydney, NSW 2000 SANDEEP KUMAR Partner Dated: 17 August 2021 BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2021 57 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 2021. Ordinary % of Shares Held Issued Shares 24,190,921 17.23% 9,118,084 8,818,363 6,670,119 6,658,578 3,977,041 2,000,000 1,999,999 1,954,033 1,824,817 1,435,274 1,243,280 1,199,052 1,106,521 1,000,000 999,978 926,545 840,850 829,927 802,114 6.49% 6.18% 4.75% 4.74% 2.83% 1.42% 1.42% 1.39% 1.30% 1.02% 0.89% 0.85% 0.79% 0.71% 0.71% 0.66% 0.60% 0.59% 0.57% 77,595,496 55.26% Ordinary Shares 24,190,921 8,818,363 Holder Name Washington H Soul Pattinson and Company Limited HSBC Custody Nominees (Australia) Limited David Kirk JP Morgan Nominees Australia Limited Citicorp Nominees Pty Limited Paul Wilson Paul Lewis DDH Graham Limited Patagorang Pty Ltd Bond Street Custodians Pepstock II Pty Ltd BNP Paribas Nominees Pty Ltd Hub24 Custodial Services Ltd Mr Simon Fenwick National Nominees Limited Mrs Virginia Hancock Mr Paul Kendrick Mr Paul Meehan Mr Alan Draper and Mrs Evelyn Draper UBS Nominees Pty Ltd Macareus Pty Ltd Total Substantial Shareholders The names of the substantial shareholders in the Company’s register are: Washington H Soul Pattinson and Company Limited David Kirk 58 BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2021 Shareholder InformationDistribution of Shares Analysis of numbers of equity security holders, by size of holding as at 30 June 2021. 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 544 938 445 861 151 2,939 324,614 2,633,892 3,562,089 27,056,468 106,835,532 140,412,595 0.23% 1.88% 2.54% 19.27% 76.09% 100.00% 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 2021 is 125. 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. BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2021 59 Shareholder Information (continued)THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK. 60 BAILADOR TECHNOLOGY INVESTMENTS LIMITED ANNUAL REPORT 2021 Corporate Information Registered Office Share Registry Bailador Technology Investments Limited Link Market Services 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 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 Australian Stock Exchange Code Shares : BTI Helen Plesek Manager Bailador Investment Management Pty Ltd Suite 3, Level 20 20 Bond Street Sydney NSW 2000 (AFSL 400811) 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 

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