ReadyTech Holdings Limited
ABN 25 632 137 216
18 October 2019
2019 Annual Report – Typeset version
ReadyTech Holdings Limited (ASX: RDY) attaches a typeset version of the 2019 Annual
Report.
There have been no changes to the version lodged with ASX on 22 August 2019, other than
typesetting.
Yours sincerely
Nimesh Shah
Chief Financial Officer & Company Secretary
ReadyTech Holdings Limited
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WE’RE
READY
ANNUAL REPORT 2019
READYTECH HOLDINGS LIMITED
ABN 25 632 137 216
CONTENTS
Chairman’s letter
Chief Executive Officer’s report
Corporate directory
Directors’ report
Auditor’s independence declaration
Statement of profit or loss and other comprehensive income
Statement of financial position
Statement of changes in equity
Statement of cash flows
Notes to the financial statements
Directors’ declaration
Independent auditor’s report to
the members of ReadyTech Holdings Limited
Shareholder information
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27
28
29
30-71
72
73-76
77
mission:
To be a world-class tech company
focused on mission critical software and
services based on trust and innovation
Dear Shareholder,
ReadyTech Holdings Limited completed its successful listing on the Australian Securities
Exchange (ASX) on 17 April 2019. On behalf of the Board of Directors I would like to
express my appreciation for the strong support shown by investors during and since this
initial public offering and introduce the company’s first Annual Report.
ReadyTech is a software-as-a-service (SaaS) provider of people management systems
for Australian educational institutions and employers. Having grown its footprint across
these sectors over 20 years, the company’s IPO prospectus detailed its financial
prospects through FY2019 and CY2019, as well as the future opportunities that exist
across these two core market segments.
I’m pleased to report that ReadyTech has exceeded all of the FY2019 targets outlined
in the prospectus. Pro forma revenue for FY2019 was up 13.5% on FY2018, ahead of
our prospectus forecast by 1%. Pro forma EBITDA and NPATA also outperformed our
forecasts. In addition, the Board and management remain confident the company is on
track to meet the prospectus forecasts for CY19.
ReadyTech is in a strong position to deliver on future growth opportunities. It’s growth
strategy is centred on winning new, higher value customers and driving greater spend for
existing customers with additional products and value-added services. In the education
segment, ReadyTech has been experiencing increased customer interest in higher value
markets for its student management systems. Its strong reputation in payroll and HR
admin systems is also attracting larger business customers in the employment segment.
In both markets, ReadyTech continues to offer customers additional products and
services designed to help them better manage their student and employee lifecycles.
While the group is well positioned for organic growth in these two segments, ReadyTech’s
management will continue to explore opportunities to buy, build or partner where
acquisition, development or partnership will contribute to growth in core markets.
The transition from private to listed public company brings significant change,
particularly in the areas of governance, market informing and reporting. The Board and
management have put in a considerable effort to meet all market requirements. We look
forward to feedback on this Annual Report and on our investor presentations.
ReadyTech’s ambition is to become a world-class technology company that will help
customers manage the future of education and work through SaaS. The Board
and I would like to thank Marc, Nimesh and the team for carrying this vision forward
successfully into life as a publicly listed company. ReadyTech’s management team
have a demonstrated track record of delivering value to customers through systems in
education and employment, and the Board and I have every confidence ReadyTech will
continue to earn our customers’ trust with some of the most mission-critical aspects of
their businesses well into the future.
Yours sincerely,
Tony Faure
Chairman
22 August 2019
Sydney
Chairman’s letter
TONY
FAURE
CEO message
30 June 2019
From its roots over 20 years ago providing
software that helped job seekers back
into work, ReadyTech has successfully
developed a suite of complementary people
management systems across the education
and employment sectors in Australia. We
have become a SaaS technology company
with a range of market-leading software
products in growing markets and a reputation
for innovation and great service our
customers can trust.
Today ReadyTech helps over 3,600
organisations to manage and grow their
businesses, while touching the lives of
hundreds of thousands of Australians who
are undertaking the increasingly complex
human journey through education and
training, work and career transitions.
In our first Annual Report as a publicly
listed company I can report that ReadyTech
continues to capitalise on its strong existing
position in the defensive sectors of education
and employment.
As well as pursuing new, higher value
customers across our product suite,
ReadyTech is also realising synergies and a
“parenting advantage” across the education
and employment segments of our business,
allowing us to offer value-added software
and services to existing customers, while
enhancing our perennial focus on customer
success to ensure we maintain our high rates
of customer retention.
About ReadyTech
ReadyTech is a provider of mission-critical people management software for
educators, employers and facilitators of career transitions. With a 20 year track record
of organic growth and uninterrupted profitability, as well as some more recent highly
complementary acquisitions, ReadyTech now offers educators and employers software
services that span the breadth of the student and employee lifecycle through tertiary
education and work.
In the tertiary education sector, our student management and apprenticeship
management systems have a market-leading presence in the vocational education and
training (VET) sector and are making strong inroads into the higher education market.
In employment, our payroll and HR admin systems service a range of employers
from SMEs to many larger businesses with over 1,000 employees. ReadyTech also
has a leading footprint in employment services, where we assist providers in getting
job seekers back into work and is adding value across these markets through the
integration of behavioural science intelligence.
As a whole, ReadyTech continues to support customers to remain compliant with their
respective regulatory environments, while better managing and engaging with students
and employees, as they evolve their businesses to be ready for the future of education
and work.
Growth vision
ReadyTech enjoys strong prospects for growth across both the education and
employment segments. By leveraging our position as a provider of bedrock software
and services for our customers in both markets - including regulatory and compliance
reporting in the education sector and payroll processing and HR compliance in
employment - ReadyTech is in a position to attract higher value customers and expand
the lifetime value of existing customers by adding increased value to their businesses.
2019 ANNUAL
REPORT
ReadyTech is pursuing growth through:
• Attracting new and higher value customers: ReadyTech is pursuing the largest
providers of tertiary education, including TAFEs and higher education customers,
with its advanced, enterprise SaaS product and there is a strong pipeline of interest
following recent wins including a contract with the University of Queensland. In the
employment segment, ReadyTech is enjoying increased interest from larger employers
through its full-spectrum, service-oriented offering and trusted reputation, whether
they are seeking an outsourced or technology payroll and HR administration solution.
• Increased spend per customer: Through its continued strong spend in R&D (over
$10m in FY19), ReadyTech relentlessly pursues further innovation and value for
customers. In education, ReadyTech is providing customers with additional features
including student services, online enrolment and student engagement tools, while
innovating with market leading, new build features for complex clients, including mass
scheduling for international and higher education providers. In employment, value-add
adoption is being driven through new modules such as onboarding, workplace health
and safety, business intelligence and employee self-service services.
• Realisation of cross-sell opportunities: ReadyTech’s stable of complementary
technology means it can offer additional systems and value to existing clients. For
example, ReadyTech is actively offering leading skills profiling and behavioural science
assessment tools, which are ready-made for adoption by over 10% of our education
customer base. These tools meet a direct need for not only improved management of
compliance, but also better knowledge and engagement of students to support higher
graduation rates and student outcomes.
The education and employment segments also contain significant opportunities to
expand our reach within the student and employee lifecycle, in areas such as student
experience for education and talent management for employers. ReadyTech will
actively seek quality opportunities to buy, build and partner where adding additional
functionality and services will deliver value for customers and contribute to a return on
investment for ReadyTech investors. We are excited to announce one particular, highly
beneficial partnership into FY20 with Flare HR, who will offer employee benefits to our
employment customers, assisting them to better improve employee engagement.
Customer success
ReadyTech continues to pursue excellence across our business in line with our vision
of becoming a world-class technology company. In FY19, we launched the Education
Products Standard Committee (REPS), which will promote the highest levels of
compliance across our education business while contributing to setting an agenda
for this sector into the future. As a technology company, IT security is an essential
consideration; ReadyTech is continually investing in the highest IT security standards,
reflected by the fact that our software system for the employment services market
recently became the first system in Australia to achieve the first step of IT security
accreditation from the Department of Employment, Skills, Small and Family Business.
In the end, ReadyTech’s ongoing growth as a SaaS provider comes down to the
success and satisfaction of our customers and how well we understand them. For this
reason, we are “doubling down” on our focus on customer success for our education
and employment businesses into the future. We are in the process of enhancing
the framework of our sales and customer success functions across both our core
segments to ensure our naturally ‘sticky’ customers - who rely on us for mission-critical
business functions - remain active promoters of our offerings due to the value we add
to their businesses and the ongoing service they receive through our partnership.
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Talent
To support our future growth and aspirations, we are focused on the attraction of
the best possible talent to ReadyTech, as well as retaining and growing our brightest
people. We have been investing in our enterprise sales team, to pursue the high value
customers and plan over the longer term to increase our spend on sales and marketing
from the current 8% to sustain our growth ambitions. We are also planning for future
investments in R&D, and we see investment in such areas of data analytics and AI
offering profound opportunities to our customers and being critical to our success in
the future.
The future
ReadyTech is a company that promises to prepare our customers for the future of
education and work. We believe the changing nature of education and employment
will offer remarkable opportunities. And we are heavily invested in maintaining our
forward-thinking culture to ensure we always stay open to innovative ideas and
these opportunities so that we can grow the value we provide our customers and our
investors into the future. I and the team at ReadyTech look forward to working closely
with all our stakeholders in the coming months and years ahead, as technology takes a
central role in the evolution of the future of work.
MARC
WASHBOURNE
Executive Director and Chief Executive Officer
2019 ANNUAL
REPORT
ReadyTech Holdings Limited
Corporate directory
30 June 2019
Directors
Tony Faure - Chairman and Independent Non-Executive Director
Marc Washbourne - Executive Director and Chief Executive Officer
Elizabeth Crouch - Independent Non-Executive Director
Timothy Ebbeck - Independent Non-Executive Director
Tom Matthews - Independent Non-Executive Director
Mark Summerhayes - alternate Non-Executive Director to Tom
Matthews
Company secretaries Nimesh Shah
Melissa Jones
Notice of annual
general meeting
Registered office
Principal place of
business
Share register
Auditor
Stock exchange
listing
Website
Business objectives
objectives.
Corporate
Governance
Statement
The details of the annual general meeting of
ReadyTech Holdings Limited are:
20 November 2019 at 11:00 am at:
Level 1, 35 Saunders St Pyrmont NSW 2009 Australia
Level 1, 35 Saunders St Pyrmont NSW 2009 Australia
Tel: +61 2 9018 5525
Level 1, 35 Saunders St Pyrmont NSW 2009 Australia
Tel: +61 2 9018 5525
Link Market Services Limited
Level 12, 680 George Street Sydney, NSW 2000 Australia
Tel: 1300 554 474
Deloitte Touche Tohmatsu
Level 9, Grosvenor Place 225 George Street
Sydney, NSW 2000, Australia
Tel: +61 2 9322 7000
ReadyTech Holdings Limited shares are listed on the Australian
Securities Exchange
(ASX code: RDY)
www.readytech.com.au
ReadyTech Holdings Limited has used cash and cash equivalents held at
the time of listing, in a way consistent with its stated business
The directors and management are committed to conducting
the business of ReadyTech Holdings Limited in an ethical
manner and in accordance with the highest standards of corporate
governance. ReadyTech Holdings Limited has adopted and
has substantially complied with the ASX Corporate Governance
Principles and Recommendations (Third Edition) (‘Recommendations’) to
the extent appropriate to the size and nature of its operations.
The Corporate Governance Statement, which sets out the corporate
governance practices that were in operation during the financial year
and identifies and explains any Recommendations that have not been
followed, was approved by the Board of Directors at the same time as
the Annual Report and can be found https://investors.readytech.com.au
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2019 ANNUAL
REPORT
provides software solutions to Australian recognised training organisations through
online platforms and mobile applications.
There were no other significant changes in the state of affairs of the Group during the
financial year.
Matters subsequent to the end of the financial year
No matter or circumstance has arisen since 30 June 2019 that has significantly
affected, or may significantly affect the Group’s operations, the results of those
operations, or the Group’s state of affairs in future financial years.
Likely developments and expected results of operations
The Group is the leading provider of mission critical people management software for
educators, employers and facilitators of career transitions. Bringing together the best in
student management, apprenticeship management, payroll and HR admin, work health
and safety, employment services and behavioural science technology we represent
Australia’s first software continuum supporting the development and success of
tomorrow’s workforce.
The group expects to deliver CY19 prospectus forecast for revenue and earnings
before interest, depreciation, amortisation and tax.
Environmental regulation
The Group is not subject to any significant environmental regulation under Australian
Commonwealth or State law.
ReadyTech Holdings Limited
Directors Report
30 June 2019
The directors present their report, together with the financial statements, on the
consolidated entity (referred to hereafter as the ‘Group’) consisting of ReadyTech
Holdings Limited (referred to hereafter as the ‘company’ or ‘parent entity’) and the
entities it controlled at the end of, or during, the year ended 30 June 2019.
Directors
The following persons were directors of ReadyTech Holdings Limited during the whole of
the financial year and up to the date of this report, unless otherwise stated:
Tony Faure - Non-Executive Chairman (appointed 8 March 2019)
Marc Washbourne - Chief Executive Officer (appointed 8 March 2019)
Elizabeth Crouch - Non-Executive Director (appointed 8 March 2019)
Timothy Ebbeck - Non-Executive Director (appointed 8 March 2019)
Tom Matthews - Non-Executive Director (appointed 8 March 2019)
Mark Summerhayes - Alternate Non-Executive Director to Tom Matthews
(appointed 22 July 2019)
Principal activities
During the financial year the principal continuing activities of the Group consisted of:
●• Education - market leading provider of student management system to vocational
education and training, international and English Language and higher education
providers; and
●• Employment - provider of payroll and employee management solutions from cloud-
based technology to outsourcing of human resource function.
Dividends
There were no dividends paid, recommended or declared during the current financial
year or previous financial period.
Review of operations
The loss for the Group after providing for income tax amounted to $1,490,000 (30
June 2018: $5,201,000).
Significant changes in the state of affairs
The Company was incorporated on 8 March 2019.
On 16 April 2019, the Company completed an initial public offering (‘IPO’) of 80,005,367
ordinary shares at $1.51 per share and was admitted to the Official List of ASX Limited
with the ASX code RDY. The net proceeds of the IPO after payment of fees and
expenses were $13,140,990.
On 16 April 2019, the Company has entered into a new bank facility consisting of:
• Facility A: A fully committed three year amortising non-revolving cash advance facility
of $21.5 million, and
• Facility B: A fully committed three year revolving multi-option working capital facility of
$6.0 million.
On 12 September 2018, the Group acquired 100% of the ordinary shares in eLearning
Australia Pty Ltd (‘eLearning’) for total consideration of $2,828,000. eLearning
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Board of Directors
Information on directors
ReadyTech’s Board of Directors bring together deep industry, technological, financial and governance expertise
REPORT
Elizabeth Crouch
Name:
2019 ANNUAL
Name:
Title:
Qualifications:
University of Sussex.
Director
Experience and expertise:
Tony Faure
Independent Non-Executive Chairman
Tony holds a Bachelor of Economics (hons) from the
Experience
Tony Faure
Independent Non-
Executive Chairman
Tony is a deeply experienced business leader with a career
history that includes advising some of Australia’s leading
technology and digital media companies. A former CEO
of both ninemsn and HomeScreen Entertainment, Tony
was the launch managing director of Yahoo! Australia &
NZ between 1997 and 2001. He has been a respected
board member at several companies, including Australian
Independent Business Media (publisher of Business
•
Spectator/Eureka Report), Junkee Media and iSelect, as
well as a member of the Starlight Children’s Foundation
Australia’s NSW Advisory Board.
•
•
• Currently the Chairman of ASX-listed oOh!media, data intelligence platform PredictHQ and start-up accelerator Pollenizer
Previously a board member of Australian Independent Business Media, Junkee Media, Torque Data, iSelect, biNu, Lasttix, and Stackla
Director
Previously CEO of ninemsn, and HomeScreen Entertainment, and Managing Director at the launch of Yahoo! Australia & NZ
Tony is also a member of the Audit and Risk Committee, and Remuneration and Nomination Committee
Elizabeth is a seasoned non-executive director with a career
that includes strong experience at senior levels of both the
public and private sectors in Australia.
Experience
Elizabeth has held previous non-executive director roles
with Chandler Macleod Group, McGrath Estate Agents and
Macquarie University Hospital. She currently serves on the
Board of the NSW Government’s Institute of Sport, Health
•
Infrastructure and the Western Sydney Local Health District
among other appointments.
•
Tony Faure
Independent Non-
Executive Chairman
Title:
Board of Directors
ReadyTech’s Board of Directors bring together deep industry, technological, financial and governance expertise
Elizabeth holds a Bachelor of Economics and is currently
completing a Master of Cyber Security.
Independent Non-executive Director
Qualifications:
Experience and expertise:
• Currently the Chairman of ASX-listed oOh!media, data intelligence platform PredictHQ and start-up accelerator Pollenizer
Previously a board member of Australian Independent Business Media, Junkee Media, Torque Data, iSelect, biNu, Lasttix, and Stackla
Previously CEO of ninemsn, and HomeScreen Entertainment, and Managing Director at the launch of Yahoo! Australia & NZ
Other current directorships:
Chairman of oOh!media Ltd (ASX: OML), Uno Homeloans,
See management slide
PredictHQ.
•
Marc Washbourne
CEO
Other current directorships: None
Former directorships
(last 3 years):
None
•
Tony is also a member of the Audit and Risk Committee, and Remuneration and Nomination Committee
Former directorships
(last 3 years):
Special responsibilities:
Interests in shares:
Name:
Title:
Qualifications:
Stackla, Medical Media.
Elizabeth Crouch
Independent Non-
Executive Director
207,113 ordinary shares
Member of the Audit and Risk Committee and
Remuneration and Nomination Committee
• Currently the Chairman of Customer Owned Banking Association, SGS Economics and Planning, and NSW Government’s Non-Government Schools
Special responsibilities:
Chairman of the Audit and Risk Committee and a member of
the Remuneration and Nomination Committee
Advisory Council, and is an Emeritus Deputy Chancellor of Macquarie University having served the governing council for 17 years
•
See management slide
• Currently on the board of the NSW Government’s Institute of Sport, Health Infrastructure and the Western Sydney Local Health District
Interests in shares:
Marc Washbourne
CEO
9,934 ordinary shares
•
Previously a Non-Executive Director at Chandler, Macleod Group, McGrath Estate Agents, and Macquarie University Hospital
Name:
•
Marc Washbourne
Chief Executive Officer
Marc achieved a first-class degree in History from the
University of Leeds. Experience and expertise:
of ReadyTech’s founders since 1999, Marc has overseen
ReadyTech’s growth from a small software development
house to a leading provider of education and employment
technology in Australia.
Timothy Ebbeck
Independent Non-
Executive Director
One
Elizabeth is also Chairman of the Audit and Risk Committee and a member of the Remuneration and Nomination Committee
Independent Non-Executive Director
Advisory Council, and is an Emeritus Deputy Chancellor of Macquarie University having served the governing council for 17 years
Title:
• Currently the Chairman of Customer Owned Banking Association, SGS Economics and Planning, and NSW Government’s Non-Government Schools
• Over 30 years of board, executive and advisory experience across a breadth of industries including technology, media, consulting and finance
Previously a Non-Executive Director at Chandler, Macleod Group, McGrath Estate Agents, and Macquarie University Hospital
• Currently the Managing Director and Senior Vice President of Automation Anywhere (ANZ)
Elizabeth is also Chairman of the Audit and Risk Committee and a member of the Remuneration and Nomination Committee
Qualifications:
• Currently on the board of the NSW Government’s Institute of Sport, Health Infrastructure and the Western Sydney Local Health District
Timothy Ebbeck
Elizabeth Crouch
Independent Non-
Executive Director
Timothy holds a Bachelor of Economics Degree from
Macquarie University, is a Fellow of CPA Australia, a Fellow of
the Australian Institute of Management, a Graduate Member
•
of the Australian Institute of Company Directors, and a
•
Member of the Australian Computer Society.
•
•
With 20 years’ experience building technology for the
education and employment sectors, Marc now heads up
a global team of 160 people committed to the relentless
pursuit of innovation and better technology for over 3,600
customers.
Previously CFO of Unisys South Pacific, Compaq Computers South Pacific, TMP Worldwide (Asia Pacific and Japan), CFO and CEO of SAP (ANZ),
Chief Commercial Officer of NBN Co, and Managing Director of Oracle (ANZ),
Timothy has over 30 years of board, executive, and
advisory experience across a breadth of industries including
technology, media, consulting, and finance. Timothy’s
Tim is also Chairman of the Remuneration and Nomination Committee and a member of the Audit and Risk Committee
executive experience includes roles as chief executive officer
at SAP (ANZ), managing director of Oracle (ANZ) and chief
commercial officer of NBN Co, as well as chief financial officer
•
of Compaq (ANZ), Unisys (ANZ) and TMP Worldwide (APJ).
His board roles have included being a non-executive director
for IXUP Limited, GeoOp Limited, Nvoi Limited, CPA Australia,
Nextgen Distribution, and Insite Organisation. He is presently
•
a Trustee of the Museum of Applied Arts & Sciences NSW
and SVP at Automation Anywhere, Inc.
Timothy Ebbeck
Independent Non-
Executive Director
Partner at Pemba, a leading private equity manger investing in small and mid-sized private businesses in Australia and New Zealand
Prior to Pemba, Tom worked at UK-based specialist private equity fund Sovereign Capital Partners where he focussed on healthcare, education and
businesses services sectors
• Over 15 years of experience in private equity, principal investment, investment banking and middle market advisory and valuations
Tom Matthews
Non-Executive Director
(Pemba Representative)
Marc is a former software developer who couples a
technical background with a strong strategic vision for
ReadyTech’s products, which unlock the value of SaaS and
additional services for customers.
Experience and expertise:
•
•
• Over 30 years of board, executive and advisory experience across a breadth of industries including technology, media, consulting and finance
• Currently the Managing Director and Senior Vice President of Automation Anywhere (ANZ)
Previously CFO of Unisys South Pacific, Compaq Computers South Pacific, TMP Worldwide (Asia Pacific and Japan), CFO and CEO of SAP (ANZ),
Chief Commercial Officer of NBN Co, and Managing Director of Oracle (ANZ),
Tim is also Chairman of the Remuneration and Nomination Committee and a member of the Audit and Risk Committee
Tom previously worked with the investment banking group at Macquarie Bank focussing on principal investment opportunities, and gained experience
Former directorships
at Deloitte Corporate Finance focussing on business valuations, independent expert’s reports and corporate advice
(last 3 years):
Partner at Pemba, a leading private equity manger investing in small and mid-sized private businesses in Australia and New Zealand
Other current directorships: None
• Over 15 years of experience in private equity, principal investment, investment banking and middle market advisory and valuations
Tom Matthews
Non-Executive Director
(Pemba Representative)
•
IXUP Limited, GeoOp Limited, Nextgen Distribution Pty Ltd,
Nvoi Limited.
•
Chairman of the Remuneration and Nomination Committee
and a member of the Audit and Risk Committee
Special responsibilities:
Prior to Pemba, Tom worked at UK-based specialist private equity fund Sovereign Capital Partners where he focussed on healthcare, education and
businesses services sectors
Interests in shares:
6,623 ordinary shares
•
Tom previously worked with the investment banking group at Macquarie Bank focussing on principal investment opportunities, and gained experience
at Deloitte Corporate Finance focussing on business valuations, independent expert’s reports and corporate advice
Other current directorships: None
Former directorships
(last 3 years):
Special responsibilities:
None
None
•
Interests in shares:
4,008,414 ordinary shares
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13
STRICTLY CONFIDENTIAL ½ PAGE 34
STRICTLY CONFIDENTIAL ½ PAGE 34
Board of Directors
Director
Experience
ReadyTech’s Board of Directors bring together deep industry, technological, financial and governance expertise
Tony Faure
Independent Non-
Executive Chairman
• Currently the Chairman of ASX-listed oOh!media, data intelligence platform PredictHQ and start-up accelerator Pollenizer
Previously a board member of Australian Independent Business Media, Junkee Media, Torque Data, iSelect, biNu, Lasttix, and Stackla
Previously CEO of ninemsn, and HomeScreen Entertainment, and Managing Director at the launch of Yahoo! Australia & NZ
Tony is also a member of the Audit and Risk Committee, and Remuneration and Nomination Committee
•
•
•
•
Marc Washbourne
See management slide
CEO
Elizabeth Crouch
Independent Non-
Executive Director
• Currently the Chairman of Customer Owned Banking Association, SGS Economics and Planning, and NSW Government’s Non-Government Schools
Advisory Council, and is an Emeritus Deputy Chancellor of Macquarie University having served the governing council for 17 years
• Currently on the board of the NSW Government’s Institute of Sport, Health Infrastructure and the Western Sydney Local Health District
•
•
Previously a Non-Executive Director at Chandler, Macleod Group, McGrath Estate Agents, and Macquarie University Hospital
Elizabeth is also Chairman of the Audit and Risk Committee and a member of the Remuneration and Nomination Committee
2019 ANNUAL
REPORT
• Over 30 years of board, executive and advisory experience across a breadth of industries including technology, media, consulting and finance
• Currently the Managing Director and Senior Vice President of Automation Anywhere (ANZ)
Previously CFO of Unisys South Pacific, Compaq Computers South Pacific, TMP Worldwide (Asia Pacific and Japan), CFO and CEO of SAP (ANZ),
Chief Commercial Officer of NBN Co, and Managing Director of Oracle (ANZ),
Tim is also Chairman of the Remuneration and Nomination Committee and a member of the Audit and Risk Committee
• Over 15 years of experience in private equity, principal investment, investment banking and middle market advisory and valuations
Partner at Pemba, a leading private equity manger investing in small and mid-sized private businesses in Australia and New Zealand
Prior to Pemba, Tom worked at UK-based specialist private equity fund Sovereign Capital Partners where he focussed on healthcare, education and
businesses services sectors
Tom previously worked with the investment banking group at Macquarie Bank focussing on principal investment opportunities, and gained experience
at Deloitte Corporate Finance focussing on business valuations, independent expert’s reports and corporate advice
ReadyTech builds mission-critical SaaS
and technology for managing people
in complex regulatory environments
and delivers additional customer value
through a range of offerings.
Name:
Title:
Qualifications:
Experience and expertise:
Non-Executive Director
Tom Matthews
Timothy Ebbeck
Independent Non-
Executive Director
Tom is a CFA charter holder, a member of the Sydney
CFA Society and also has a Masters of Applied Finance
and Investment from the Financial Services Institute of
Australasia. In 2001, Tom was awarded a Bachelor of
Sciences honours degree in Management Sciences from
•
the London School of Economics.
•
Tom has over 15 years of experience in private equity,
principal investment, investment banking and middle market
advisory and valuations in both Australia and the UK.
Tom Matthews
Non-Executive Director
(Pemba Representative)
A partner at leading private equity manager Pemba, Tom
has led a number of transactions across Pemba’s areas of
focus since 2015, including investments into HR3, JobReady
and Vital Software. Tom has held a variety of senior roles
prior to joining Pemba, including at private equity firm
Sovereign Capital Partners in the UK, the Investment
Banking Group of Macquarie Bank, and Deloitte Corporate
Finance in both Sydney and London.
•
•
•
Other current directorships: None
Former directorships
(last 3 years):
Special responsibilities:
None
None
Interests in shares:
34,539,611
‘Other current directorships’ quoted above are current directorships for listed entities only
and excludes directorships of all other types of entities, unless otherwise stated.
‘Former directorships (last 3 years)’ quoted above are directorships held in the last 3
years for listed entities only and excludes directorships of all other types of entities, unless
otherwise stated.
Company secretaries
Nimesh Shah and Melissa Jones are joint company secretaries.
STRICTLY CONFIDENTIAL ½ PAGE 34
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Nimesh Shah has been the Chief Financial Officer of ReadyTech since August 2017 and was
appointed company secretary on 28 March 2019. Nimesh has over 20 years’ experience as
an executive in technology and online digital industries, utilising experience gained working
across Australia and many parts of Asia.
Nimesh was Global CFO for pioneering social networking site, Friendster, Inc. Nimesh was
also Finance Director at Fairfax Digital Australia & New Zealand Pty Limited for seven years,
playing an instrumental role in navigating the company into the world of online publishing
and transaction businesses. Nimesh was also the Chief Financial Officer and Company
Secretary of ASX-listed iSentia Group Limited, a position which he held until July 2017,
where he played an instrumental role in transitioning iSentia to become a leading media
intelligence organisation in Asia Pacific.
Nimesh holds an MBA from the Australian Graduate School of Management and a Bachelor
of Commerce with Merit from the University of New South Wales. Nimesh is also a member
of Chartered Accountants Australia and New Zealand.
Melissa Jones is the General Manager of Company Matters, Link Group’s governance and
company secretarial team.
Melissa has over 15 years’ experience as a lawyer, company secretary and governance
professional.
Melissa is admitted as a Solicitor of the Supreme Court of New South Wales and holds a
Bachelor of Laws (Honours).
Meetings of directors
The number of meetings of the company’s Board of Directors (‘the Board’) held during the
period ended 30 June 2019, and the number of meetings attended by each director were:
Full Board
Nomination and
Remuneration Committee
Audit and Risk
Committee
Attended
Held
Attended
Held
Attended
Held
Tony Faure
Marc Washbourne
Elizabeth Crouch
Timothy Ebbeck
Tom Matthews
4
4
4
1
4
4
4
4
4
4
-
-
-
-
-
-
-
-
-
-
1
1
1
1
1
1
1
1
1
1
Held: represents the number of meetings held during the time the director held office.
There were no meetings of the Nomination and Remuneration Committee held during the
year ended 30 June 2019.
2019 ANNUAL
REPORT
Remuneration report (audited)
The remuneration report details the key management personnel remuneration
arrangements for the Group, in accordance with the requirements of the Corporations Act
2001 and its Regulations.
Key management personnel are those persons having authority and responsibility for
planning, directing and controlling the activities of the entity, directly or indirectly, including all
directors.
The remuneration report is set out under the following main headings:
• Principles used to determine the nature and amount of remuneration
• Details of remuneration
• Service agreements
• Share-based compensation
• Additional disclosures relating to key management personnel
Principles used to determine the nature and amount of remuneration
The objective of the Group’s executive reward framework is to ensure reward for
performance is competitive and appropriate for the results delivered. The framework aligns
executive reward with the achievement of strategic objectives and the creation of value for
shareholders, and it is considered to conform to the market best practice for the delivery
of reward. The Board of Directors (‘the Board’) ensures that executive reward satisfies the
following key criteria for good reward governance practices:
• competitiveness and reasonableness
• acceptability to shareholders
• performance linkage / alignment of executive compensation
• transparency
The Nomination and Remuneration Committee is responsible for determining and reviewing
remuneration arrangements for its directors and executives. The performance of the Group
depends on the quality of its directors and executives. The remuneration philosophy is to
attract, motivate and retain high performance and high quality personnel.
The Nomination and Remuneration Committee has structured an executive remuneration
framework that is market competitive and complementary to the reward strategy of the
Group.
The reward framework is designed to align executive reward to shareholders’ interests. The
Board has considered that it should seek to enhance shareholders’ interests by:
• having economic profit as a core component of plan design
• focusing on sustained growth in shareholder wealth, consisting of dividends and growth in
share price, and delivering constant or increasing return on assets as well as focusing the
executive on key non-financial drivers of value
• attracting and retaining high calibre executives
Additionally, the reward framework seeks to enhance executives’ interests by:
• rewarding capability and experience
• reflecting competitive reward for contribution to growth in shareholder wealth
• providing a clear structure for earning rewards
In accordance with best practice corporate governance, the structure of non-executive
director and executive director remuneration is separate.
16
17
2019 ANNUAL
REPORT
The consolidated entity has not put in place any equity incentive plan. The consolidated
entity may, however, consider putting such arrangements in place in the future.
Consolidated entity performance and link to remuneration
Remuneration for certain individuals is directly linked to the performance of the
consolidated entity. A portion of cash bonus and incentive payments are dependent on
defined earnings per share targets being met. The remaining portion of the cash bonus and
incentive payments are at the discretion of the Nomination and Remuneration Committee.
The Nomination and Remuneration Committee is of the opinion that the continued
improved results can be attributed in part to the adoption of performance based
compensation and is satisfied that this improvement will continue to increase shareholder
wealth if maintained over the coming years.
Use of remuneration consultants
The Group did not engage any remuneration consultants during the years ended 30 June
2019 and 30 June 2018.
Details of remuneration
Amounts of remuneration
Details of the remuneration of key management personnel of the Group are set out in the
following tables.
During the reporting period, the key management personnel of the Group consisted of the
following directors of ReadyTech Holdings Limited:
• Tony Faure - Non-Executive Chairman (appointed 8 March 2019)
• Marc Washbourne - Chief Executive Officer (appointed 8 March 2019
• Elizabeth Crouch - Non-Executive Director (appointed 8 March 2019)
• Timothy Ebbeck - Non-Executive Director (appointed 8 March 2019)
• Tom Matthews - Non-Executive Director (appointed 8 March 2019)
And the following persons:
• Nimesh Shah - Chief Financial Officer
• Michael Benyon - Director of Lirac HoldCo Pty Ltd, Lirac BidCo Pty Ltd, Hr3 Pty Ltd,
Non-executive directors remuneration
Fees and payments to non-executive directors reflect the demands and responsibilities
of their role. Non-executive directors’ fees and payments are reviewed annually by the
Nomination and Remuneration Committee. The Nomination and Remuneration Committee
may, from time to time, receive advice from independent remuneration consultants to
ensure non-executive directors’ fees and payments are appropriate and in line with the
market. The chairman’s fees are determined independently to the fees of other non-
executive directors based on comparative roles in the external market. The chairman is not
present at any discussions relating to the determination of his own remuneration. Non-
executive directors are not be entitled to participate in any employee incentive scheme
established by the Company.
ASX listing rules require the aggregate non-executive directors’ remuneration be
determined periodically by a general meeting. The most recent determination was
disclosed in the Prospectus dated 29 March 2019, where the maximum annual aggregate
remuneration is $750,000. For the financial year ended 30 June 2019, the fees payable
to the current non-executive directors (whether in cash or securities) will not exceed
$600,000 in aggregate.
The annual non-executive directors’ fees currently agreed to be paid by the Company are
inclusive of superannuation and are $150,000 to the chairman and $70,000 (inclusive of
superannuation) to each of the other Independent non-executive directors.
Any non-executive directors who devotes special attention to the business of the Group or
who performs services which, in the opinion of the Board, are outside the scope of ordinary
duties of a director, may be remunerated for the services (as determined by the Board)
out of the funds of the Company. There are no retirement benefit schemes for directors,
other than statutory superannuation contributions
Executive remuneration
The Group aims to reward executives based on their position and responsibility, with a level
and mix of remuneration which has both fixed and variable components.
The executive remuneration and reward framework has three components:
• base pay and non-monetary benefits
• short-term performance incentives
• other remuneration such as superannuation and long service leave
The combination of these comprises the executive’s total remuneration.
Fixed remuneration, consisting of base salary, superannuation and non-monetary benefits,
are reviewed annually by the Nomination and Remuneration Committee based on individual
and business unit performance, the overall performance of the Group and comparable
market remunerations.
Executives may receive their fixed remuneration in the form of cash or other fringe benefits
(for example motor vehicle benefits) where it does not create any additional costs to the
Group and provides additional value to the executive.
There was no short-term incentives (‘STI’) scheme in place during the year ended 30 June
2019. The company intends to implement a STI scheme during the year ending 30 June
2020.
18
19
2019 ANNUAL
REPORT
Service agreements
Remuneration and other terms of employment for key management personnel are formalised in
service agreements. Details of these agreements are as follows:
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Marc Washbourne
Chief Executive Officer
13 December 2016
No fixed term
Base salary of $310,000 and 6 month notice period. Mr
Washbourne’s employment contract does not provide for
a short term incentives or cash bonus payments. Upon the
termination of Mr Washbourne’s employment contract, Mr
Washbourne will be subject to post employment restraints for
up to 12 months. The Company intends to implement a STI
scheme during the year ended 30 June 2020.
Nimesh Shah
Chief Financial Officer
7 August 2017
No fixed term
Base salary of $275,000 and 6 month notice period. Mr Shah’s
employment contract does not provide for a short term
incentives or cash bonus payments. Upon the termination of
Mr Shah’s employment contract, Mr Shah will be subject to
post employment restraints for up to 12 months. The Company
intends to implement a STI scheme during the year ended 30
June 2020.
Key management personnel have no entitlement to termination payments in the event of removal for
misconduct.
20
21
Share-based compensation
Issue of shares
Details of shares issued to directors and other key management personnel as part of
compensation during the year ended 30 June 2019 are set out below:
Name
Tony Faure*
Date
17 April 2019
Shares
174,000
Issue price
$1.51
$
262,740
Tony Faure was issued 100,000 ordinary shares in ReadyTech HoldCo Pty Ltd on 19 March
2019. These shares were subsequently converted into 174,000 in ReadyTech Holdings
Limited on 17 April 2019.
Additional disclosures relating to key management personnel
Shareholding
The number of shares in the company held during the financial year by each director and
other members of key management personnel of the Group, including their personally
related parties, is set out below:
Michael Benyon and Rick Verloop’s shareholding are not disclosed as they are not directors for ReadyTech Holdings
Limited.
Tom Matthews (and other persons associated with him and Pemba) is entitled to receive a proportion of the
distributions from the sale of the ReadyTech Shares held by Pemba. The entitlements to distributions may be
determined by both reference to such persons being direct or indirect investors in the Pemba managed funds
which are Existing Shareholders and through profit share arrangements relating to the returns of those Pemba
funds as a whole.
Other transactions with key management personnel and their related parties
Prior to her appointment as a Director, Elizabeth Crouch received fees of $42,713 for consultancy services
provided to the Group in connection with the IPO and therefore these fees do not form part of Elizabeth’s
remuneration as disclosed in the ‘Details of Remuneration’ section.
Prior to his appointment as a Director, Timothy Ebbeck received fees of $5,833 for consultancy services provided
to the Group in connection with the IPO and therefore these fees do not form part of Timothy’s remuneration as
disclosed in the ‘Details of Remuneration’ section of the Directors Report.
During the year ended 30 June 2019, Tom Matthews and Mark Summerhayes received $28,982 for consultancy
services provided to the Group in connection with the IPO and various acquisitions and therefore these fees do
not form part of their remuneration as disclosed in the ‘Details of Remuneration’ section of the Directors Report.
As at 30 June 2019 $nil was outstanding in relation to the services provided.
This concludes the remuneration report, which has been audited.
2019 ANNUAL
REPORT
Indemnity and insurance of officers
The company has indemnified the directors and executives of the company for costs incurred, in their capacity as a director or
executive, for which they may be held personally liable, except where there is a lack of good faith.
During the financial year, the company paid a premium in respect of a contract to insure the directors and executives of the
company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of
the nature of the liability and the amount of the premium.
Indemnity and insurance of auditor
The company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the company or
any related entity against a liability incurred by the auditor.
During the financial year, the company has not paid a premium in respect of a contract to insure the auditor of the company or any
related entity.
Proceedings on behalf of the company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the
company, or to 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 part of those proceedings.
Non-audit services
Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the auditor are
outlined in note 30 to the financial statements.
The directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or by another person or
firm on the auditor’s behalf), is compatible with the general standard of independence for auditors imposed by the Corporations Act
2001.
The directors are of the opinion that the services as disclosed in note 30 to the financial statements do not compromise the external
auditor’s independence requirements of the Corporations Act 2001 for the following reasons:
• all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity of the
auditor; and
• none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for
Professional Accountants issued by the Accounting Professional and Ethical Standards Board, including reviewing or auditing the
auditor’s own work, acting in a management or decision-making capacity for the company, acting as advocate for the company or
jointly sharing economic risks and rewards.
Officers of the company who are former partners of Deloitte Touche Tohmatsu
There are no officers of the company who are former partners of Deloitte Touche Tohmatsu.
Rounding of amounts
The company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian Securities and Investments
Commission, relating to ‘rounding-off’. Amounts in this report have been rounded off in accordance with that Corporations
Instrument to the nearest thousand dollars, or in certain cases, the nearest dollar.
Auditor’s independence declaration
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out
immediately after this directors’ report.
Auditor
Deloitte Touche Tohmatsu continues in office in accordance with section 327 of the Corporations Act 2001.
This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act 2001.
On behalf of the directors
___________________________
Tony Faure
Director
22 August 2019
Sydney
22
23
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Grosvenor Place
225 George Street
Sydney, NSW, 2000
Australia
Phone: +61 2 9322 7000
www.deloitte.com.au
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Grosvenor Place
225 George Street
Sydney, NSW, 2000
Australia
Phone: +61 2 9322 7000
www.deloitte.com.au
The Directors
ReadyTech Holdings Limited
Level 1
35 Saunders Street
Pyrmont NSW 2009
22 August 2019
The Directors
ReadyTech Holdings Limited
Dear Directors
Level 1
35 Saunders Street
Pyrmont NSW 2009
Auditor’s Independence Declaration to ReadyTech Holdings 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 ReadyTech Holdings Limited.
22 August 2019
As lead audit partner for the audit of the financial report of ReadyTech Holdings Limited for the
year ended 30 June 2019, I declare that to the best of my knowledge and belief, there have been
no contraventions of:
Dear Directors
(i)
Auditor’s Independence Declaration to ReadyTech Holdings Limited
the auditor independence requirements of the Corporations Act 2001 in relation to
the audit; and
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the
following declaration of independence to the directors of ReadyTech Holdings Limited.
any applicable code of professional conduct in relation to the audit.
(ii)
As lead audit partner for the audit of the financial report of ReadyTech Holdings Limited for the
year ended 30 June 2019, I declare that to the best of my knowledge and belief, there have been
no contraventions of:
Yours faithfully
(i)
the auditor independence requirements of the Corporations Act 2001 in relation to
the audit; and
DELOITTE TOUCHE TOHMATSU
any applicable code of professional conduct in relation to the audit.
(ii)
Joshua Tanchel
Yours faithfully
Partner
Chartered Accountants
DELOITTE TOUCHE TOHMATSU
Joshua Tanchel
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte Network.
16
16
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte Network.
24
2019 ANNUAL
REPORT
ReadyTech Holdings Limited
Statement of profit or loss and other comprehensive income
For the year ended 30 June 2019
Revenue from contracts with customers from continuing operations
Other income
Interest revenue calculated using the effective interest method
Expenses
Hosting and other direct costs
Employee benefits expense
Depreciation and amortisation expense
Advertising and marketing expenses
Consultancy and professional expenses
Administration expenses
Communication and IT expenses
Occupancy costs
Management fees
Other expenses
Finance costs
Loss before income tax (expense)/benefit from continuing operations
Income tax (expense)/benefit
Loss after income tax (expense)/benefit from continuing operations
Loss after income tax expense from discontinued operations
Loss after income tax (expense)/benefit for the year attributable to the owners
of ReadyTech Holdings Limited
Other comprehensive income for the year, net of tax
Total comprehensive income for the year attributable to the owners of
ReadyTech Holdings Limited
Total comprehensive income for the year is attributable to:
Continuing operations
Discontinued operations
Note
Consolidated
2019
$'000
2018
$'000
5
6
7
8
9
32,711
25,626
-
20
248
36
(1,961)
(14,033)
(8,063)
(464)
(6,482)
(678)
(707)
(384)
(112)
(526)
(1,938)
(2,696)
(13,027)
(5,885)
(397)
(1,593)
(367)
(666)
(783)
(60)
(952)
(1,151)
(2,617)
(1,667)
1,127
(654)
(1,490)
(2,321)
-
(2,880)
(1,490)
(5,201)
-
-
(1,490)
(5,201)
(1,490)
-
(2,321)
(2,880)
(1,490)
(5,201)
The above statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
17
25
ReadyTech Holdings Limited
Statement of profit or loss and other comprehensive income
For the year ended 30 June 2019
ReadyTech Holdings Limited
Statement of financial position
As at 30 June 2019
Note
Consolidated
2019
$'000
2018
$'000
Cents
Cents
Earnings per share for loss from continuing operations attributable to the
owners of ReadyTech Holdings Limited
Basic earnings per share
Diluted earnings per share
Earnings per share for loss from discontinued operations attributable to the
owners of ReadyTech Holdings Limited
Basic earnings per share
Diluted earnings per share
43
43
43
43
Earnings per share for loss attributable to the owners of ReadyTech Holdings
Limited
Basic earnings per share
Diluted earnings per share
43
43
(2.15)
(2.15)
(3.85)
(3.85)
-
-
(4.78)
(4.78)
(2.15)
(2.15)
(8.63)
(8.63)
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Prepayments
Total current assets
Non-current assets
Property, plant and equipment
Intangibles
Right-of-use assets
Deferred tax
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Contract liabilities
Borrowings
Lease liabilities
Income tax payable
Employee benefits
Lease make good provision
Total current liabilities
Non-current liabilities
Contract liabilities
Borrowings
Provisions
Lease liabilities
Employee benefits
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
2019 ANNUAL
REPORT
Note
Consolidated
2019
$'000
2018
$'000
10
11
12
13
14
8
15
16
17
18
8
19
20
21
22
23
24
25
26
6,322
3,474
471
10,267
532
52,918
2,046
3,909
59,405
5,586
2,810
209
8,605
692
53,279
-
532
54,503
69,672
63,108
3,817
10,354
-
543
246
995
49
16,004
496
21,500
59
1,653
750
24,458
2,866
11,124
3,250
-
2,579
3,950
84
23,853
461
26,500
-
-
187
27,148
40,462
51,001
29,210
12,107
119,581
(82,944)
(7,427)
28,432
(10,058)
(6,267)
29,210
12,107
The above statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
18
The above statement of financial position should be read in conjunction with the accompanying notes
19
26
27
ReadyTech Holdings Limited
Statement of changes in equity
For the year ended 30 June 2019
Consolidated
Balance at 1 July 2017
Loss after income tax expense for the year
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Contributions of equity, net of transaction costs (note 25)
Partial return of capital (note 24)
Common control reserve
Issued
capital
$'000
Reserves
$'000
Accumulated
losses
$'000
Total equity
$'000
24,094
-
-
-
-
-
-
-
(1,066)
23,028
(5,201)
-
(5,201)
-
(5,201)
(5,201)
19,543
(15,205)
-
-
-
(10,058)
-
-
-
19,543
(15,205)
(10,058)
ReadyTech Holdings Limited
Statement of cash flows
For the year ended 30 June 2019
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Interest received
Interest and other finance costs paid
Payment of IPO operating expenses
Income taxes paid
2019 ANNUAL
REPORT
Note
Consolidated
2019
$'000
2018
$'000
34,328
(21,495)
30,960
(26,696)
12,833
20
(1,938)
(4,480)
(4,330)
4,264
36
(1,151)
-
(1,221)
Net cash from operating activities
40
2,105
1,928
Balance at 30 June 2018
28,432
(10,058)
(6,267)
12,107
Consolidated
Balance at 1 July 2018
Issued
capital
$'000
Reserves
$'000
Accumulated
losses
$'000
Total equity
$'000
28,432
(10,058)
(6,267)
12,107
Cash flows from investing activities
Payment for purchase of subsidiaries, net of cash acquired
Net cash acquired as part of common control transaction
Final payments for prior period's subsidiary acquisition
Payments for property, plant and equipment
Payments for intangibles
Proceeds from disposal of business, net of cash disposed
Adjustment for change in accounting policy (note 2)
-
-
(58)
(58)
Net cash used in investing activities
Balance at 1 July 2018 - restated
28,432
(10,058)
(6,325)
12,049
Loss after income tax benefit for the year
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Contributions of equity, net of transaction costs (note 25)
Share-based payments
Reorganisation reserve
Deemed contribution
-
-
-
-
-
-
(1,490)
-
(1,490)
-
(1,490)
(1,490)
91,149
-
-
-
-
162
(73,048)
-
-
-
-
388
91,149
162
(73,048)
388
Cash flows from financing activities
Proceeds from issue of shares
Payments for return of capital
Payment of share issue transaction costs and IPO expenses from proceeds
Proceeds from borrowings
Repayment of borrowings
Repayment of lease liabilities
Net cash from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
37
38
12
13
25
25
(1,454)
-
(480)
(322)
(3,592)
-
(1,569)
1,745
-
(577)
(2,883)
(425)
(5,848)
(3,709)
17,100
-
(3,859)
-
(8,250)
(512)
1,692
(15,205)
-
15,150
-
-
4,479
1,637
736
5,586
(144)
5,730
Balance at 30 June 2019
119,581
(82,944)
(7,427)
29,210
Cash and cash equivalents at the end of the financial year
10
6,322
5,586
The above statement of changes in equity should be read in conjunction with the accompanying notes
20
The above statement of cash flows should be read in conjunction with the accompanying notes
21
28
29
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2019
Note 1. General information
The financial statements cover ReadyTech Holdings Limited as a Group consisting of ReadyTech Holdings Limited
('company or 'parent entity') and the entities it controlled at the end of, or during, the period (collectively referred to in these
financial statements as the 'Group'). The financial statements are presented in Australian dollars, which is ReadyTech
Holdings Limited's functional and presentation currency.
ReadyTech Holdings Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its
registered office and principal place of business is:
Level 1, 35 Saunders St
Pyrmont
NSW 2009
Australia
A description of the nature of the Group's operations and its principal activities are included in the directors' report, which is
not part of the financial statements.
The financial statements were authorised for issue, in accordance with a resolution of directors, on 22 August 2019. The
directors have the power to amend and reissue the financial statements.
Note 2. Significant accounting policies
The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies
have been consistently applied to all the years presented, unless otherwise stated.
New or amended Accounting Standards and Interpretations adopted
The Group has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the
Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period.
AASB 15 'Revenue from Contracts with Customers' and its related amendments, which was otherwise mandatorily
effective for annual periods commencing on or after 1 January 2018 was early adopted effective from 29 November 2016.
Details of adoption of new Accounting Standards are provided below:
The Group has:
●
adopted AASB 9 'Financial Instruments' from 1 July 2018 using the modified retrospective approach. The impact on
the financial performance and position of the Group from the adoption of this Accounting Standard is detailed below;
and
early adopted AASB 16 'Leases' from 1 July 2018 using the modified retrospective approach and as such
comparatives have not been restated. Refer below for further details.
●
AASB 15 'Revenue from Contracts with Customers' and its related amendments, which was mandatorily effective for
annual periods commencing on or after 1 January 2018 was early adopted effective from 29 November 2016.
2019 ANNUAL
REPORT
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2019
Note 2. Significant accounting policies (continued)
AASB 9 'Financial Instruments'
The Group has adopted AASB 9 from 1 July 2018, using the modified retrospective approach. The standard introduced
new classification and measurement models for financial assets. A financial asset shall be measured at amortised cost if it
is held within a business model whose objective is to hold assets in order to collect contractual cash flows which arise on
specified dates and that are solely principal and interest. A debt investment shall be measured at fair value through other
comprehensive income if it is held within a business model whose objective is to both hold assets in order to collect
contractual cash flows which arise on specified dates that are solely principal and interest as well as selling the asset on
the basis of its fair value. All other financial assets are classified and measured at fair value through profit or loss unless
the entity makes an irrevocable election on initial recognition to present gains and losses on equity instruments (that are
not held-for-trading or contingent consideration recognised in a business combination) in other comprehensive income
('OCI'). Despite these requirements, a financial asset may be irrevocably designated as measured at fair value through
profit or loss to reduce the effect of, or eliminate, an accounting mismatch. For financial liabilities designated at fair value
through profit or loss, the standard requires the portion of the change in fair value that relates to the entity's own credit risk
to be presented in OCI (unless it would create an accounting mismatch). New simpler hedge accounting requirements are
intended to more closely align the accounting treatment with the risk management activities of the entity. New impairment
requirements use an 'expected credit loss' ('ECL') model to recognise an allowance. Impairment is measured using a 12-
month ECL method unless the credit risk on a financial instrument has increased significantly since initial recognition in
which case the lifetime ECL method is adopted. For receivables, a simplified approach to measuring expected credit losses
using a lifetime expected loss allowance is available.
AASB 16 'Leases'
The Group has early adopted AASB 16 from 1 July 2018, using the modified retrospective approach. The standard
replaced AASB 117 'Leases' and for lessees has eliminated the classifications of operating leases and finance leases.
Subject to certain exceptions, a 'right-of-use' asset is capitalised in the statement of financial position, measured at the
present value of the unavoidable future lease payments to be made over the lease term. The exceptions relate to short-
term leases of 12 months or less and leases of low-value assets (such as personal computers and small office furniture
that have total value less than $10,000) where an accounting policy choice exists whereby either a 'right-of-use' asset and
a lease liability is recognised or lease payments are expensed to profit or loss as incurred. A right-of-use asset
corresponding to the capitalised lease is also to be recognised, adjusted for lease prepayments, lease incentives received,
initial direct costs incurred and an estimate of any future restoration, removal or dismantling costs. Straight-line operating
lease expense recognition has been replaced with a depreciation charge for the leased asset (included in operating costs)
and an interest expense on the recognised lease liability (included in finance costs). For classification within the statement
of cash flows, the lease payments are separated into both a principal (financing activities) and interest (operating activities)
component. For lessor accounting, the standard has not substantially changed how a lessor accounts for leases.
Impact of adoption
AASB 9 'Financial Instruments'
The adoption of AASB 9 resulted in the provision for impairment of receivables being reclassified to allowance for expected
credit losses. There were no material changes in the carrying amounts on adoption of AASB 9 standards as at 1 July 2018
as management's assessment does not change.
AASB 16 'Leases'
On initial application of AASB 16 at 1 July 2018, using the transitional rules available, the Group elected to record right-of-
use assets based on its carrying amount as if the standard had been applied since the commencement date, but
discounted using the Group’s incremental borrowing rate at the date of initial application; the Group recorded the
corresponding lease liability based on the present value of the remaining lease payments, discounted using the lessee’s
incremental borrowing rate at the date of initial application. When measuring lease liabilities, the Group discounted lease
payments using its incremental borrowing rate at 1 July 2018. The interest rate is approximately 4%.
The following assets and liabilities were recognised on 1 July 2018:
Right-of-use assets (AASB 16)
Lease liabilities - current and non-current (AASB 16)
Net impact on retained earnings at 1 July 2018
1 July 2018
$
1,389
(1,447)
(58)
22
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31
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2019
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2019
Note 2. Significant accounting policies (continued)
Note 2. Significant accounting policies (continued)
2019 ANNUAL
REPORT
Reconciliation from operating lease commitments disclosure at 30 June 2018 to the opening lease liability at 1 July 2018:
Operating lease commitments as at 30 June 2018 (AASB 117)
Operating lease commitments discounted based on the incremental borrowing rate of approximately 4%
(AASB 16)
1,842
(395)
Lease liability recognised at 1 July 2018
1,447
At the date of authorisation, the Standards and interpretations that were issued but not yet effective and not early adopted,
are not expected to have any significant impact on the financial performance or position of the Group.
Deficiency of net current assets
The statement of financial position has a deficiency of net current assets of $5,737,000 (2018: $15,248,000) at the
reporting date. The deficiency is attributable to contract liabilities of $10,354,000 (2018: $11,124,000) disclosed as current
liabilities. Contract liabilities represents upfront payments received from customers on signed sales contracts. In
accordance with the Group’s revenue recognition policy as details below, revenue is recognised when the services are
performed.
The directors are satisfied that the Group will be able to meet its working capital requirements through the normal cyclical
nature of receipts and payments and budgeted cash flows generated from operations.
Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and
Interpretations issued by the Australian Accounting Standards Board ('AASB') and the Corporations Act 2001, as
appropriate for for-profit oriented entities. These financial statements also comply with International Financial Reporting
Standards as issued by the International Accounting Standards Board ('IASB').
Historical cost convention
The financial statements have been prepared under the historical cost convention.
Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a
higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial
statements, are disclosed in note 3.
Corporate/group reorganisation
ReadyTech Holdings Limited was incorporated on 8 March 2019. On 16 April 2019 the shareholders of the company
undertook a corporate reorganisation, in which ReadyTech Holdings Limited acquired ReadyTech HoldCo Pty Limited and
its subsidiaries ('existing Merged Group').
This corporate reorganisation did not represent a business combination in accordance with AASB 3 ‘Business
Combination’. Instead the appropriate accounting treatment for recognising the new group structure is on the basis that the
transaction is a form of capital reconstruction and group reorganisation. Accordingly the financial statements are a
continuation of the existing Merged Group and as such:
●
The assets and liabilities recognised and measured are at carrying amounts of the existing Merged Group rather than
at fair value
Shareholders' equity has come across at book value as at the date of the reorganisation;
No 'new' goodwill has been recognised as a result of the combination; and
The comparatives presented are those of the existing Merged Group.
●
●
●
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the Group only.
Supplementary information about the parent entity is disclosed in note 35.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of ReadyTech Holdings
Limited as at 30 June 2019 and the results of all subsidiaries for the period then ended.
Subsidiaries are all those entities over which the Group has control. The Group controls an entity when the Group is
exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns
through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is
transferred to the Group. They are de-consolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the Group are eliminated.
Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred.
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted
by the Group.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest,
without the loss of control, is accounted for as an equity transaction, where the difference between the consideration
transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity
attributable to the parent.
Where the Group loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-
controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The Group
recognises the fair value of the consideration received and the fair value of any investment retained together with any gain
or loss in profit or loss.
Operating segments
Operating segments are presented using the 'management approach', where the information presented is on the same
basis as the internal reports provided to the Chief Operating Decision Makers ('CODM'). The CODM is responsible for the
allocation of resources to operating segments and assessing their performance.
Foreign currency translation
The financial statements are presented in Australian dollars, which is ReadyTech Holdings Limited's functional and
presentation currency.
Foreign currency transactions
Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the
translation at financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are
recognised in profit or loss.
Revenue
The principal activities of the Group during the year consisted of:
●
Education: provider of student management system to vocational education and training, international and English
Language and higher education providers; and
Employment: provider of payroll and employee management solutions from cloud-based technology to outsourcing of
human resource function.
●
Subscription, implementation and hosting revenue
Subscription, implementation and hosting revenue includes sales from cloud based solutions that provide customers with
software, services, platforms and content such as Aussiepay, ePayroll, JobReady.Plus, JobReady.Live, HR3 Payroll, HR3
Human Resources, VETtrak Student Portal, VETtrak Trainer Portal and Myprofiling. Subscription based revenue can either
be hosted on the Group’s servers, or on premise, available to be purchased by the customer which allows immediate
download.
Training revenue
Training revenue includes assessment and behavioural intervention programs that deliver outcomes for government policy
objectives – particularly with adult, youth and disabled unemployed initiatives.
Revenue Recognition
Under AASB 15, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e. when 'control’ of the
goods or services underlying a particular performance obligation is transferred to the customer.
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2019 ANNUAL
REPORT
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2019
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2019
Note 2. Significant accounting policies (continued)
Note 2. Significant accounting policies (continued)
Revenue is recognised upon transfer of control of promised products and services to customers at an amount that reflects
the consideration to which the Group is expected to be entitled in exchange for transferring goods or services to a
customer. For each contract with a customer, the Group: identifies the contract with a customer; identifies the performance
obligations in the contract; determines the transaction price which takes into account estimates of variable consideration
and the time value of money; allocates the transaction price to the separate performance obligations on the basis of the
relative stand-alone selling price of each distinct good or service to be delivered; and recognises revenue when or as each
performance obligation is satisfied in a manner that depicts the transfer to the customer of the goods or services promised.
Revenue is recognised net of allowances for returns and any taxes collected from customers, which are subsequently
remitted to governmental authorities.
Revenue from contracts with customers
The Group provides cloud based hosted student management systems software, and employee and payroll management
software to its customers. Customers licence the use of the hosted Intellectual Property Software via licence subscription
fees, which provide them access to the software over the licence fee term. The Group can provide subscription licences,
hosting and implementation services within these contracts. The sale of software subscription licenses in conjunction with
integration services (including hosting) is treated as a single performance obligation (‘software solution services’) as the
licence, implementation and hosting are integrated services promised in the contract into an integrated bundle of services
that represent the combined output for which the customer has contracted.
Payment terms and conditions vary by contract type, although terms generally include a requirement of payment within 30
to 60 days. In instances where the timing of revenue recognition differs from the timing of invoicing, we have determined
our contracts generally do not include a significant financing component. The primary purpose of our invoicing terms is to
provide customers with simplified and predictable ways of purchasing our products and services, not to receive financing
from our customers, such as invoicing at the beginning of a subscription term with revenue recognised using the output
method (time) over the contract period, or to provide customers with financing.
Loss making contracts
A provision under AASB 137 is made for the difference between the expected cost of fulfilling a contract and the expected
unearned portion of the transaction price where the forecast costs are greater than the forecast revenue.
Variable consideration within the transaction price, if any, reflects concessions provided to the customer such as discounts,
rebates and refunds, any potential bonuses receivable from the customer and any other contingent events. Such estimates
are determined using either the 'expected value' or 'most likely amount' method. The measurement of variable
consideration is subject to a constraining principle whereby revenue will only be recognised to the extent that it is highly
probable that a significant reversal in the amount of cumulative revenue recognised will not occur. The measurement
constraint continues until the uncertainty associated with the variable consideration is subsequently resolved. Amounts
received that are subject to the constraining principle are recognised as a refund liability.
Revenue is recognised on the basis of stage of completion. ReadyTech determines stage of completion based on output
method (time) under AASB 15. Fees billed in advance are recognised in the statement of financial position as contract
liabilities and brought to account when the performance obligation has been satisfied.
Other income
Other income is recognised when it is received or when the right to receive payment is established. The revenue is
measured at the transaction price agreed under the contract.
(i) Off premise licences, implementation and hosting
ReadyTech has assessed and concluded that the performance obligations for the sale of software subscription licences,
related installation and hosting services are not distinct. The company assessed that the promise to the customer is
provision of the software subscription licence that is integrated to the customers’ network and hosted by ReadyTech.
Hence, under AASB 15, ReadyTech considers the sale of subscription licence, related installation and hosting service as a
single performance obligation as the subscription licence, implementation and hosting are integrated services promised in
the contract into an integrated bundle of services that represent the combined output for which the customer has
contracted. The related installation and hosting should be bundled as one performance obligation and recognised over the
period of the contract. The subscription license component of the contract is not considered to be predominant.
(ii) On-premise licences
Certain products are available to be purchased by the customer which allows immediate download. These products are not
tailored for customer use throughout the duration of the contact and no maintenance / training services are included.
However there is optionality for customer to purchase additional support and maintenance.
Accordingly, the sale of a licence represents a right of use license that a customer obtains of an entity’s intellectual
property, and revenue is recognised when the license transfers to the customer. For on premise licenses, this is assessed
to be at the point of sale.
Interest income is recognised on a time proportionate basis that takes into account the effective yield on the financial
asset.
Dividend income is recognised when the dividend is declared.
Research and Development ('R&D') Tax Credits are recognised as grant income in the period which R&D incentive is
received.
Income tax
The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the
applicable income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to
temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when
the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted,
except for:
●
When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a
transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting
nor taxable profits; or
When the taxable temporary difference is associated with interests in subsidiaries and the timing of the reversal can
be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.
(iii) Training and other revenue
Training and other revenue is earned as the services are delivered at a point in time.
●
Contract balances
Timing of revenue recognition may differ from the timing of invoicing to customers. Receivables are recorded when
revenue is recognised prior to invoicing, or deferred income when revenue is recognised subsequent to invoicing. For
multi-year agreements, customers are generally invoiced at the beginning of the contract.
Contract liabilities comprise mainly of unearned revenue related to subscription licences, which are cloud based. Contract
liabilities are generally invoiced at the beginning of each contract period.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that
future taxable amounts will be available to utilise those temporary differences and losses.
The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred
tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for
the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is
probable that there are future taxable profits available to recover the asset.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets
against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable
authority on either the same taxable entity or different taxable entities which intend to settle simultaneously.
26
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35
2019 ANNUAL
REPORT
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2019
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2019
Note 2. Significant accounting policies (continued)
Note 2. Significant accounting policies (continued)
ReadyTech Holdings Limited (the 'head entity') and its wholly-owned Australian subsidiaries have formed an income tax
consolidated group under the tax consolidation regime. The head entity and each subsidiary in the tax consolidated group
continue to account for their own current and deferred tax amounts. The tax consolidated group has applied the 'separate
taxpayer within group' approach in determining the appropriate amount of taxes to allocate to members of the tax
consolidated group.
In addition to its own current and deferred tax amounts, the head entity also recognises the current tax liabilities (or assets)
and the deferred tax assets arising from unused tax losses and unused tax credits assumed from each subsidiary in the tax
consolidated group.
Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts
receivable from or payable to other entities in the tax consolidated group. The tax funding arrangement ensures that the
intercompany charge equals the current tax liability or benefit of each tax consolidated group member, resulting in neither a
contribution by the head entity to the subsidiaries nor a distribution by the subsidiaries to the head entity.
Discontinued operations
A discontinued operation is a component of the Group that has been disposed of or is classified as held for sale and that
represents a separate major line of business or geographical area of operations, is part of a single co-ordinated plan to
dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The
results of discontinued operations are presented separately on the face of the statement of profit or loss and other
comprehensive income.
Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-current classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the
Group's normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months
after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle
a liability for at least 12 months after the reporting period. All other assets are classified as non-current.
A liability is classified as current when: it is either expected to be settled in the Group's normal operating cycle; it is held
primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no
unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities
are classified as non-current.
Deferred tax assets and liabilities are always classified as non-current.
Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly
liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and
which are subject to an insignificant risk of changes in value.
Trade and other receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective
interest method, less any allowance for expected credit losses. Trade receivables are generally due for settlement within
30 days.
The Group has applied the simplified approach to measuring expected credit losses, which uses a lifetime expected loss
allowance. To measure the expected credit losses, trade receivables have been grouped based on days overdue.
Receivables from related parties and other receivables are recognised at amortised cost, less any provision for impairment.
Depreciation is calculated on a straight-line or diminishing value basis to write off the net cost of each item of property,
plant and equipment (excluding land) over their expected useful lives as follows:
Leasehold improvements
Fixtures and fittings
Computer equipment
Office equipment
3-5 years
3-10 years
3-5 years
3-5 years
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting
date.
Leasehold improvements and plant and equipment under lease are depreciated over the unexpired period of the lease or
the estimated useful life of the assets, whichever is shorter.
An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the
Group. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss. Any
revaluation surplus reserve relating to the item disposed of is transferred directly to retained profits.
Right-of-use assets
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which
comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the
commencement date net of any lease incentives received, any initial direct costs incurred, and, except where included in
the cost of inventories, an estimate of costs expected to be incurred for dismantling and removing the underlying asset,
and restoring the site or asset.
Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful
life of the asset, whichever is the shorter. Where the Group expects to obtain ownership of the leased asset at the end of
the lease term, the depreciation is over its estimated useful life. Right-of use assets are subject to impairment or adjusted
for any remeasurement of lease liabilities.
The Group has elected not to recognise a right-of-use asset and corresponding lease liability for short-term leases with
terms of 12 months or less and leases of low-value assets. Lease payments on these assets are expensed to profit or loss
as incurred.
Intangible assets
Intangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fair value
at the date of the acquisition. Intangible assets acquired separately are initially recognised at cost. Indefinite life intangible
assets are not amortised and are subsequently measured at cost less any impairment. Finite life intangible assets are
subsequently measured at cost less amortisation and any impairment. The gains or losses recognised in profit or loss
arising from the derecognition of intangible assets are measured as the difference between net disposal proceeds and the
carrying amount of the intangible asset. The method and useful lives of finite life intangible assets are reviewed annually.
Changes in the expected pattern of consumption or useful life are accounted for prospectively by changing the amortisation
method or period.
Research costs are expensed in the period in which they are incurred.
Goodwill
Goodwill arises on the acquisition of a business. Goodwill is not amortised. Instead, goodwill is tested annually for
impairment, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at
cost less accumulated impairment losses. Impairment losses on goodwill are taken to profit or loss and are not
subsequently reversed.
Property, plant and equipment
Property, plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost
includes expenditure that is directly attributable to the acquisition of the items.
Customer relationships
Customer relationships acquired in a business combination are amortised on a straight-line basis over the period of their
expected benefit, being their finite useful life between 9 and 14 years.
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37
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2019
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2019
Note 2. Significant accounting policies (continued)
Note 2. Significant accounting policies (continued)
2019 ANNUAL
REPORT
Software
An intangible asset arising from software development expenditure on an internal project is recognised only when the
Group can demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or sale,
its intention to complete and its ability to use or sell the asset, how the asset will generate future economic benefits, the
availability of resources to complete the development and the ability to measure reliably the expenditure attributable to the
intangible asset during its development. Following the initial recognition, the cost model is applied requiring the asset to be
carried at cost less any accumulated amortisation and accumulated impairment losses. Significant costs associated with
the acquisition of software or software internally developed is amortised on a straight-line basis over the period of its
expected benefit, being a finite useful life of 5 years. Amortisation commences when the asset is available for use, i.e.
when it is in the location and condition necessary for it to be capable of operating in the manner intended by management.
Impairment of non-financial assets
Goodwill and other intangible assets that have an indefinite useful life are not subject to amortisation and are tested
annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired.
Other non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying
amount exceeds its recoverable amount.
Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-in-use is the
present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or
cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to
form a cash-generating unit.
Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year and
which are unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted. The
amounts are unsecured and are usually paid within 30 days of recognition.
Contract liabilities
Contract liabilities are recognised when a customer pays consideration, or when the Group recognises a receivable to
reflect its unconditional right to consideration (whichever is earlier), before the Group has transferred the goods or provided
the services to the customer. The liability is the Group's obligation to transfer goods or provide services to a customer from
which it has received consideration.
Borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They
are subsequently measured at amortised cost using the effective interest method.
Lease liabilities
A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present
value of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease
or, if that rate cannot be readily determined, the Group's incremental borrowing rate. Lease payments comprise of fixed
payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, amounts
expected to be paid under residual value guarantees, exercise price of a purchase option when the exercise of the option
is reasonably certain to occur, and any anticipated termination penalties. The variable lease payments that do not depend
on an index or a rate are expensed in the period in which they are incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured
if there is a change in the following: future lease payments arising from a change in an index or a rate used; residual
guarantee; lease term; certainty of a purchase option and termination penalties. When a lease liability is remeasured, an
adjustment is made to the corresponding right-of use asset, or to profit or loss if the carrying amount of the right-of-use
asset is fully written down.
Finance costs
Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in
the period in which they are incurred.
Provisions
Provisions are recognised when the Group has a present (legal or constructive) obligation as a result of a past event, it is
probable the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the
obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present
obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. If the time value
of money is material, provisions are discounted using a current pre-tax rate specific to the liability. The increase in the
provision resulting from the passage of time is recognised as a finance cost.
Employee benefits
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be
settled wholly within 12 months of the reporting date are measured at the amounts expected to be paid when the liabilities
are settled.
Other long-term employee benefits
The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting date are
measured at the present value of expected future payments to be made in respect of services provided by employees up to
the reporting date. Consideration is given to expected future wage and salary levels, experience of employee departures
and periods of service. Expected future payments are discounted using market yields at the reporting date on high quality
corporate bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.
Defined contribution superannuation expense
Contributions to defined contribution superannuation plans are expensed in the period in which they are incurred.
Share-based payments
Equity-settled and cash-settled share-based compensation benefits are provided to employees.
Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for
the rendering of services. Cash-settled transactions are awards of cash for the exchange of services, where the amount of
cash is determined by reference to the share price.
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined
using either the Binomial or Black-Scholes option pricing model that takes into account the exercise price, the term of the
option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the
expected dividend yield and the risk free interest rate for the term of the option, together with non-vesting conditions that do
not determine whether the Group receives the services that entitle the employees to receive payment. No account is taken
of any other vesting conditions.
The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the
vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the
best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The amount
recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less amounts already
recognised in previous periods.
The cost of cash-settled transactions is initially, and at each reporting date until vested, determined by applying either the
Binomial or Black-Scholes option pricing model, taking into consideration the terms and conditions on which the award was
granted. The cumulative charge to profit or loss until settlement of the liability is calculated as follows:
●
during the vesting period, the liability at each reporting date is the fair value of the award at that date multiplied by the
expired portion of the vesting period.
from the end of the vesting period until settlement of the award, the liability is the full fair value of the liability at the
reporting date.
●
All changes in the liability are recognised in profit or loss. The ultimate cost of cash-settled transactions is the cash paid to
settle the liability.
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2019 ANNUAL
REPORT
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2019
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2019
Note 2. Significant accounting policies (continued)
Note 2. Significant accounting policies (continued)
Market conditions are taken into consideration in determining fair value. Therefore any awards subject to market conditions
are considered to vest irrespective of whether or not that market condition has been met, provided all other conditions are
satisfied.
On the acquisition of a business, the Group assesses the financial assets acquired and liabilities assumed for appropriate
classification and designation in accordance with the contractual terms, economic conditions, the Group's operating or
accounting policies and other pertinent conditions in existence at the acquisition-date.
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made.
An additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair
value of the share-based compensation benefit as at the date of modification.
Where the business combination is achieved in stages, the Group remeasures its previously held equity interest in the
acquiree at the acquisition-date fair value and the difference between the fair value and the previous carrying amount is
recognised in profit or loss.
If the non-vesting condition is within the control of the Group or employee, the failure to satisfy the condition is treated as a
cancellation. If the condition is not within the control of the Group or employee and is not satisfied during the vesting
period, any remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining
expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and
new award is treated as if they were a modification.
Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the
fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date; and assumes that the transaction will take place either: in the
principal market; or in the absence of a principal market, in the most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset or liability,
assuming they act in their economic best interests. For non-financial assets, the fair value measurement is based on its
highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are
available to measure fair value, are used, maximising the use of relevant observable inputs and minimising the use of
unobservable inputs.
Assets and liabilities measured at fair value are classified into three levels, using a fair value hierarchy that reflects the
significance of the inputs used in making the measurements. Classifications are reviewed at each reporting date and
transfers between levels are determined based on a reassessment of the lowest level of input that is significant to the fair
value measurement.
For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is either
not available or when the valuation is deemed to be significant. External valuers are selected based on market knowledge
and reputation. Where there is a significant change in fair value of an asset or liability from one period to another, an
analysis is undertaken, which includes a verification of the major inputs applied in the latest valuation and a comparison,
where applicable, with external sources of data.
Issued capital
Ordinary shares and DC class shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax,
from the proceeds.
Dividends
Dividends are recognised when declared during the financial year and no longer at the discretion of the company.
Business combinations
The acquisition method of accounting is used to account for business combinations regardless of whether equity
instruments or other assets are acquired.
The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity instruments
issued or liabilities incurred by the acquirer to former owners of the acquiree and the amount of any non-controlling interest
in the acquiree. For each business combination, the non-controlling interest in the acquiree is measured at either fair value
or at the proportionate share of the acquiree's identifiable net assets. All acquisition costs are expensed as incurred to
profit or loss.
Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date fair value. Subsequent
changes in the fair value of the contingent consideration classified as an asset or liability is recognised in profit or loss.
Contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within
equity.
The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any non-controlling
interest in the acquiree and the fair value of the consideration transferred and the fair value of any pre-existing investment
in the acquiree is recognised as goodwill. If the consideration transferred and the pre-existing fair value is less than the fair
value of the identifiable net assets acquired, being a bargain purchase to the acquirer, the difference is recognised as a
gain directly in profit or loss by the acquirer on the acquisition-date, but only after a reassessment of the identification and
measurement of the net assets acquired, the non-controlling interest in the acquiree, if any, the consideration transferred
and the acquirer's previously held equity interest in the acquirer.
Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the
provisional amounts recognised and also recognises additional assets or liabilities during the measurement period, based
on new information obtained about the facts and circumstances that existed at the acquisition-date. The measurement
period ends on either the earlier of (i) 12 months from the date of the acquisition or (ii) when the acquirer receives all the
information possible to determine fair value.
Business combinations under common control
Common control transactions are specifically scoped out of AASB3 'Business Combinations'. Common control transactions
are accounted for in the consolidated financial statements prospectively from the date of obtaining the ownership interest.
The directors have elected to use existing book values of assets and liabilities of the entities subject to the business
combination and record the difference between the purchase price paid by the company and the existing book value of the
entity acquired immediately prior to the business combination as a reserve. Where equity instruments are issued as part of
the consideration, the value of the instruments is their market price as at the acquisition date. Transaction costs arising on
the issue of equity instruments are recognised directly in equity.
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of ReadyTech Holdings Limited,
excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares
outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account
the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the
weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential
ordinary shares.
Goods and Services Tax ('GST') and other similar taxes
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part
of the expense.
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 tax authority is included in other receivables or other payables in the statement of
financial position.
32
33
40
41
2019 ANNUAL
REPORT
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2019
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2019
Note 2. Significant accounting policies (continued)
Note 3. Critical accounting judgements, estimates and assumptions (continued)
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 tax authority, are presented as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority.
Rounding of amounts
The company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian Securities and
Investments Commission, relating to 'rounding-off'. Amounts in this report have been rounded off in accordance with that
Corporations Instrument to the nearest thousand dollars, or in certain cases, the nearest dollar.
New Accounting Standards and Interpretations not yet mandatory or early adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet
mandatory, have not been early adopted by the Group for the annual reporting period ended 30 June 2019. The Group's
assessment of the impact of these new or amended Accounting Standards and Interpretations, most relevant to the Group,
are set out below.
New Conceptual Framework for Financial Reporting
A revised Conceptual Framework for Financial Reporting has been issued by the AASB and is applicable for annual
reporting periods beginning on or after 1 January 2020. This release impacts for-profit private sector entities that have
public accountability that are required by legislation to comply with Australian Accounting Standards and other for-profit
entities that voluntarily elect to apply the Conceptual Framework. Phase 2 of the framework is yet to be released which will
impact for-profit private sector entities. The application of new definition and recognition criteria as well as new guidance on
measurement will result in amendments to several accounting standards. The issue of AASB 2019-1 Amendments to
Australian Accounting Standards – References to the Conceptual Framework, also applicable from 1 January 2020,
includes such amendments. The Group will apply the revised conceptual framework from 1 July 2020 and is yet to assess
its impact.
Note 3. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions that
affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in
relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates
and assumptions on historical experience and on other various factors, including expectations of future events,
management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will
seldom equal the related actual results. The judgements, estimates and assumptions that have a significant risk of causing
a material adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next
financial year are discussed below.
Allowance for expected credit losses
The allowance for expected credit losses assessment requires a degree of estimation and judgement. It is based on the
lifetime expected credit loss, grouped based on days overdue, and makes assumptions to allocate an overall expected
credit loss rate for each group. These assumptions include recent sales experience and historical collection rates.
Fair value measurement hierarchy
The Group is required to classify all assets and liabilities, measured at fair value, using a three level hierarchy, based on
the lowest level of input that is significant to the entire fair value measurement, being: Level 1: Quoted prices (unadjusted)
in active markets for identical assets or liabilities that the entity can access at the measurement date; Level 2: Inputs other
than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and Level
3: Unobservable inputs for the asset or liability. Considerable judgement is required to determine what is significant to fair
value and therefore which category the asset or liability is placed in can be subjective.
The fair value of assets and liabilities classified as level 3 is determined by the use of valuation models. These include
discounted cash flow analysis or the use of observable inputs that require significant adjustments based on unobservable
inputs.
Estimation of useful lives of assets
The Group determines the estimated useful lives and related depreciation and amortisation charges for its property, plant
and equipment and finite life intangible assets. The useful lives could change significantly as a result of technical
innovations or some other event. The depreciation and amortisation charge will increase where the useful lives are less
than previously estimated lives, or technically obsolete or non-strategic assets that have been abandoned or sold will be
written off or written down.
Goodwill and other indefinite life intangible assets
The Group tests annually, or more frequently if events or changes in circumstances indicate impairment, whether goodwill
and other indefinite life intangible assets have suffered any impairment, in accordance with the accounting policy stated in
note 2. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations.
These calculations require the use of assumptions, including estimated discount rates based on the current cost of capital
and growth rates of the estimated future cash flows.
Impairment of non-financial assets other than goodwill and other indefinite life intangible assets
The Group assesses impairment of non-financial assets other than goodwill and other indefinite life intangible assets at
each reporting date by evaluating conditions specific to the Group and to the particular asset that may lead to impairment.
If an impairment trigger exists, the recoverable amount of the asset is determined. This involves fair value less costs of
disposal or value-in-use calculations, which incorporate a number of key estimates and assumptions.
Income tax
The Group is subject to income taxes in the jurisdictions in which it operates. Significant judgement is required in
determining the provision for income tax. There are many transactions and calculations undertaken during the ordinary
course of business for which the ultimate tax determination is uncertain. The Group recognises liabilities for anticipated tax
audit issues based on the Group's current understanding of the tax law. Where the final tax outcome of these matters is
different from the carrying amounts, such differences will impact the current and deferred tax provisions in the period in
which such determination is made.
Recovery of deferred tax assets
Deferred tax assets are recognised for deductible temporary differences only if the Group considers it is probable that
future taxable amounts will be available to utilise those temporary differences and losses.
Business combinations
As discussed in note 2, business combinations are initially accounted for on a provisional basis. The fair value of assets
acquired, liabilities and contingent liabilities assumed are initially estimated by the Group taking into consideration all
available information at the reporting date. Fair value adjustments on the finalisation of the business combination
accounting is retrospective, where applicable, to the period the combination occurred and may have an impact on the
assets and liabilities, depreciation and amortisation reported.
Note 4. Operating segments
Identification of reportable operating segments
The Group is organised into two reportable operating segments: Education and Employment. These operating segments
are based on the internal reports that are reviewed and used by the Board of Directors (who are identified as the Chief
Operating Decision Makers ('CODM')) in assessing performance and in determining the allocation of resources.
The CODM reviews adjusted EBITDA (earnings before interest, tax, depreciation and amortisation adjusted for non-cash
and significant items). The accounting policies adopted for internal reporting to the CODM are consistent with those
adopted in the financial statements.
The information reported to the CODM is on a monthly basis.
34
35
42
43
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2019
Note 4. Operating segments (continued)
Types of products and services
The principal products and services of each of these operating segments are as follows:
Education
Employment
mainly provides products and services to tertiary education providers. Core products are its
cloud-based student management systems (SMS) for education and training providers to
manage the student lifecycle from student enrolment to course completion. ReadyTech also
provides platforms to help state governments manage vocational education and training
(VET) programs, software platforms for the pathways and back-to-work sector to manage
apprentices and job seekers, and a competency assessment and skills profiling tools to
track on-the-job training through a qualification; and
provides products and services to mid-sized company across various industries with payroll
software, outsourced payroll services and human resource management (HRM) software
solutions to employers to assist them with payroll and the management of their employees.
HRM consists of human resource (HR) administration and talent management. HR
administration involves employee records, workplace health and safety (WHS) and
organisational structure.
Intersegment transactions
No intersegment transactions were made during the year ended 30 June 2019 (30 June 2018: $nil).
Intersegment receivables, payables and loans
Intersegment loans are initially recognised at the consideration received. Intersegment loans receivable and loans payable
that earn or incur non-market interest are not adjusted to fair value based on market interest rates. Intersegment loans are
eliminated on consolidation.
Major customers
During the years ended 30 June 2019 and 30 June 2018 no single customer contributed 10% or more to the Group's
external revenue.
2019 ANNUAL
REPORT
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2019
Note 4. Operating segments (continued)
Consolidated - 2018
Revenue
Sales to external customers
Interest revenue
Total revenue
Adjusted EBITDA
IPO, transaction cost and related cost
Depreciation and amortisation
Interest revenue
Finance costs
Loss from discontinued operations
Loss before income tax expense
Income tax expense
Loss after income tax expense
Employment Education
Corporate
$'000
$'000
$'000
Total
$'000
8,380
11
8,391
17,246
25
17,271
-
-
-
3,381
6,491
(1,204)
25,626
36
25,662
8,668
(3,335)
(5,885)
36
(1,151)
(2,880)
(4,547)
(654)
(5,201)
All assets and liabilities, including taxes are not allocated to the operating segments as they are managed on an overall
group basis.
Note 5. Revenue from contracts with customers
Consolidated
2019
$'000
2018
$'000
Operating segment information
Consolidated - 2019
Revenue
Sales to external customers
Interest revenue
Total revenue
Adjusted EBITDA
IPO, transaction and related costs
Depreciation and amortisation
Interest revenue
Finance costs
Loss before income tax benefit
Income tax benefit
Loss after income tax benefit
Employment Education
Corporate
$'000
$'000
$'000
Total
$'000
Revenue from contracts with customers
32,711
25,626
From continuing operations
12,981
14
12,995
19,730
6
19,736
-
-
-
6,219
7,881
(1,087)
32,711
20
32,731
13,013
(5,649)
(8,063)
20
(1,938)
(2,617)
1,127
(1,490)
Disaggregation of revenue
The disaggregation of revenue from contracts with customers is as follows:
Consolidated - 2019
Major product lines
Subscription, licence and hosting
Implementation, training and other
Consolidated - 2018
Major product lines
Subscription, licence and hosting
Implementation, training and other
Employment Education
$'000
$'000
Total
$'000
11,776
1,205
17,625
2,105
29,401
3,310
12,981
19,730
32,711
Employment Education
$'000
$'000
Total
$'000
7,366
1,014
15,287
1,959
22,653
2,973
8,380
17,246
25,626
36
37
44
45
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2019
Note 6. Other income
Net foreign exchange gain
Management fees
Other income
Note 7. Expenses
Loss before income tax from continuing operations includes the following specific expenses:
Finance costs
Interest and finance charges paid/payable
Interest charges on lease liability right-of-use asset
Finance costs expensed
Net loss on disposal
Net loss on disposal of property, plant and equipment
Superannuation expense
Defined contribution superannuation expense
One off employee benefit expense included in employee benefits expense
One off employee benefit expense relating to the acquisition of Esher House Pty Ltd*
Share option expense for Daniel Wyner and Tony Faure (Chairman)
Impairment of receivables
Impairment of receivables
IPO expenses**
Consolidated
2019
$'000
2018
$'000
-
-
-
1
247
248
Consolidated
2019
$'000
2018
$'000
1,797
141
1,151
-
1,938
1,151
-
6
1,316
1,060
(803)
2,556
426
-
4
156
6,357
-
*
**
A portion of the Esher House acquisition consideration was settled by way of issue of a special class of shares which
are contingent on the ex-proprietor, Darren Coppin’s continuing employment with the business. These shares will be
transferred by Darren Coppin to the Company under the Security Sale Deed in exchange for Shares on Completion of
IPO. With valuation at IPO, a credit of $803,000 was recognised during the financial year ended 30 June 2019.
IPO expenses are included in 'Consultancy and professional expenses' and 'Other expenses' in the Statement of
profit or loss and other comprehensive income.
2019 ANNUAL
REPORT
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2019
Note 8. Income tax
Income tax expense/(benefit)
Current tax
Deferred tax - origination and reversal of temporary differences
Adjustment recognised for prior periods
Aggregate income tax expense/(benefit)
Deferred tax included in income tax expense/(benefit) comprises:
Increase in deferred tax assets
Numerical reconciliation of income tax expense/(benefit) and tax at the statutory rate
Loss before income tax (expense)/benefit from continuing operations
Loss before income tax expense from discontinued operations
Tax at the statutory tax rate of 30%
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Acquisition costs
Research and development income
Provision for bonus
Other non-deductible expenditure
Impact of tax consolidation
Other non-deductible items
Adjustment recognised for prior periods
Income tax expense/(benefit)
Amounts credited directly to equity
Deferred tax assets
Consolidated
2019
$'000
2018
$'000
2,117
(2,943)
(301)
2,271
(1,617)
-
(1,127)
654
(2,943)
(1,617)
(2,617)
-
(1,667)
(2,880)
(2,617)
(4,547)
(785)
(1,364)
29
-
(241)
-
-
171
(826)
(301)
(1,127)
237
(104)
767
115
195
808
654
-
654
Consolidated
2019
$'000
2018
$'000
(526)
-
38
39
46
47
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2019
Note 8. Income tax (continued)
Deferred tax asset
Deferred tax asset comprises temporary differences attributable to:
Amounts recognised in profit or loss:
Allowance for expected credit losses
Labour capitalisation
Contract liabilities
Employee benefits
Accrued expenses
Software
Borrowing costs
Customer relationships
IPO costs
Other
Deferred tax asset
Movements:
Opening balance
Credited to profit or loss
Credited to equity
Additions through business combinations and common control transaction
Derecognition as a consequence of discontinued operations
Closing balance
Income tax payable
Income tax payable
Consolidated
2019
$'000
2018
$'000
16
992
3,275
531
226
1,204
91
(4,356)
1,834
96
81
586
3,421
436
150
402
121
(4,690)
-
25
3,909
532
532
2,943
526
(92)
-
(459)
1,617
-
(846)
220
3,909
532
Consolidated
2019
$'000
2018
$'000
246
2,579
As at 30 June 2019, the Group has capital losses totalling $3,005,000 which have not been recognised in the statement of
financial position as the recovery of this benefit is uncertain.
2019 ANNUAL
REPORT
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2019
Note 9. Discontinued operations
Description
On 16 February 2018, due to lower than expected revenue synergies with the ReadyTech Group of companies, the Group
disposed of 100% of the share capital of DBL Group Holdings Pty Ltd for total consideration of $1.
Financial performance information
Revenue from contracts with customers
Other income
Total revenue
Raw materials and consumables used
Employee benefits expense
Depreciation and amortisation expense
Advertising and marketing expenses
Consultancy and professional expenses
Administration expenses
Communication and IT expenses
Occupancy costs
Other expenses
Finance costs
Total expenses
Loss before income tax expense
Income tax expense
Loss after income tax expense
Loss on disposal before income tax
Income tax expense
Loss on disposal after income tax expense
Loss after income tax expense from discontinued operations
Cash flow information
Net cash used in operating activities
Consolidated
2019
$'000
2018
$'000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,017
1
1,018
(66)
(863)
(67)
(19)
(46)
(14)
(51)
(68)
(72)
(1)
(1,267)
(249)
-
(249)
(2,631)
-
(2,631)
(2,880)
Consolidated
2019
$'000
2018
$'000
-
(315)
40
41
48
49
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2019
Note 9. Discontinued operations (continued)
Carrying amounts of assets and liabilities disposed
Cash and cash equivalents
Trade and other receivables
Other current assets
Property, plant and equipment
Intangibles
Total assets
Trade and other payables
Employee benefits
Total liabilities
Net assets
Details of the disposal
Carrying amount of net assets disposed
Loss on disposal before income tax
Loss on disposal after income tax
Note 10. Current assets - cash and cash equivalents
Cash at bank
Cash on deposit
Note 11. Current assets - trade and other receivables
Trade receivables
Less: Allowance for expected credit losses (2018: Provision for impairment)
Other receivables
Consolidated
2019
$'000
2018
$'000
-
-
-
-
-
-
-
-
-
-
425
262
2,009
62
29
2,787
110
46
156
2,631
Consolidated
2019
$'000
2018
$'000
-
-
-
(2,631)
(2,631)
(2,631)
Consolidated
2019
$'000
2018
$'000
6,243
79
4,489
1,097
6,322
5,586
Consolidated
2019
$'000
2018
$'000
3,096
(53)
3,043
2,691
(271)
2,420
431
390
3,474
2,810
2019 ANNUAL
REPORT
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2019
Note 11. Current assets - trade and other receivables (continued)
Allowance for expected credit losses
The Group has recognised a loss of $4,000 in profit or loss in respect of impairment of receivables for the period ended 30
June 2019 (2018: $156,000).
The ageing of the receivables and allowance for expected credit losses provided for above are as follows:
Consolidated
Not overdue
0 to 3 months overdue
3 to 6 months overdue
Over 6 months overdue
Movements in the allowance for expected credit losses are as follows:
Opening balance
Additional provisions recognised
Receivables written off during the year as uncollectable
Unused amounts reversed
Closing balance
Note 12. Non-current assets - property, plant and equipment
Leasehold improvements - at cost
Less: Accumulated depreciation
Fixtures and fittings - at cost
Less: Accumulated depreciation
Computer equipment - at cost
Less: Accumulated depreciation
Office equipment - at cost
Less: Accumulated depreciation
Expected
credit loss
rate
2019
%
Carrying
amount
2019
$'000
Allowance
for expected
credit losses
2019
$'000
0%
0%
0%
25%
1,778
914
194
210
3,096
-
-
-
53
53
Consolidated
2019
$'000
2018
$'000
271
4
(222)
-
53
826
200
(711)
(44)
271
Consolidated
2019
$'000
2018
$'000
617
(303)
314
143
(104)
39
222
(137)
85
324
(230)
94
532
503
(81)
422
486
(374)
112
289
(238)
51
371
(264)
107
692
42
43
50
51
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2019
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2019
Note 12. Non-current assets - property, plant and equipment (continued)
Note 13. Non-current assets - intangibles (continued)
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
2019 ANNUAL
REPORT
Consolidated
Balance at 1 July 2017
Additions
Additions through business combinations and
common control transactions
Depreciation expense
Balance at 30 June 2018
Additions
Depreciation expense
Balance at 30 June 2019
Note 13. Non-current assets - intangibles
Leasehold
improvements
$'000
Fixtures and
fittings
$'000
Computer
equipment
$'000
Office
equipment
$'000
Total
$'000
5
466
21
(70)
422
117
(225)
314
89
3
58
(38)
112
36
(109)
39
29
76
-
(54)
51
98
(64)
85
46
32
90
(61)
107
71
(84)
94
169
577
169
(223)
692
322
(482)
532
Goodwill - at cost
Customer relationships - at cost
Less: Accumulated amortisation
Software - at cost
Less: Accumulated amortisation
Consolidated
2019
$'000
2018
$'000
22,767
21,250
18,121
(3,605)
14,516
25,767
(10,132)
15,635
17,517
(1,884)
15,633
21,303
(4,907)
16,396
52,918
53,279
Consolidated
Balance at 1 July 2017
Additions
Additions through business combinations
Additions through common control transactions
Disposals
Amortisation expense
Balance at 30 June 2018
Additions
Additions through business combinations (note 37)
Amortisation expense
Goodwill
$'000
Customer
relationships
$'000
Software
$'000
Total
$'000
16,758
-
360
4,492
(360)
-
21,250
-
1,517
-
12,453
-
771
4,716
(725)
(1,582)
15,633
-
605
(1,722)
13,317
2,883
1,191
4,177
(1,092)
(4,080)
16,396
3,592
902
(5,255)
42,528
2,883
2,322
13,385
(2,177)
(5,662)
53,279
3,592
3,024
(6,977)
Balance at 30 June 2019
22,767
14,516
15,635
52,918
Impairment testing
Goodwill acquired through business combinations has been allocated to the following groups of cash generating units
('CGU'):
Education
Employment
Consolidated
2019
$'000
2018
$'000
18,276
4,491
16,759
4,491
22,767
21,250
Goodwill and the group of CGUs to which it belongs is tested annually for impairment or at the end of each reporting date
where an indicator impairment exists.
The recoverable amount of the group of CGUs, which includes the carrying values of all intangibles, is determined based
on value-in-use calculations using a five year discounted cash flow model, with a terminal value applied to the discounted
cash flows after year five. This model incorporates the forecast to 30 June 2020 and extrapolated for a further four years
using a steady growth rate.
The following table sets out the key assumptions used in the value-in-use calculations:
Groups of CGUs
Education
Employment
Pre-tax
discount rate
used
2019
%
Terminal
growth rate
2019
%
EBITDA
growth rate
per annum
from FY20 to
FY24
2019
%
17%
17%
3%
3%
3%
3%
44
45
52
53
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2019
Note 13. Non-current assets - intangibles (continued)
Impairment testing results
No impairment existed at 30 June 2019. Based on the value-in-use calculation methodology and assumptions stated
above, the carrying amount of each group of CGUs at balance date does not exceed its recoverable amount.
Impact of possible changes in assumptions
A reasonable possible change in assumptions would not cause the carrying amount of each group of CGUs to exceed its
recoverable amount.
Note 14. Non-current assets - right-of-use assets
Right-of-use assets - at cost
Less: Accumulated amortisation
Consolidated
2019
$'000
2018
$'000
3,278
(1,232)
2,046
-
-
-
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2019
Note 16. Current liabilities - contract liabilities
Contract liabilities
Refer to note 21 for further details.
Note 17. Current liabilities - borrowings
Borrowings
2019 ANNUAL
REPORT
Consolidated
2019
$'000
2018
$'000
10,354
11,124
Consolidated
2019
$'000
2018
$'000
-
3,250
Refer to note 22 for further information on assets pledged as security and financing arrangements.
The Group leases land and buildings for its offices under agreements of 5 years. At the inception of a lease management
determines the non-cancellable period of a lease, including options to extend the lease if it is reasonably certain to exercise
that option. The Group also leases plant and equipment under agreements of 3 years.
Refer to note 28 for further information on financial instruments.
Note 18. Current liabilities - lease liabilities
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Recognition of right-of-use asset on adoption of AASB 16 on 1 July 2018
Additions
Amortisation
Note 15. Current liabilities - trade and other payables
Trade payables
Accrued expenses
Payables to related parties
GST payable
Contingent consideration
Consolidated
2019
$'000
1,389
1,261
(604)
2,046
Consolidated
2019
$'000
2018
$'000
806
1,621
-
634
756
268
1,205
407
506
480
3,817
2,866
Lease liability
Refer to note 28 for further information on financial instruments.
Note 19. Current liabilities - employee benefits
Employee benefits
Remuneration payable with respect to Esher House Pty Ltd acquisition*
*relates to one off costs associated with the acquisition
Note 20. Current liabilities - lease make good provision
Refer to note 28 for further information on financial instruments.
Lease make good
Consolidated
2019
$'000
2018
$'000
543
-
Consolidated
2019
$'000
2018
$'000
995
-
995
1,394
2,556
3,950
Consolidated
2019
$'000
2018
$'000
49
84
46
47
Lease make good
The provision represents the present value of the estimated costs to make good the premises leased by the Group at the
end of the respective lease terms.
54
55
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2019
Note 21. Non-current liabilities - contract liabilities
Contract liabilities
Note 22. Non-current liabilities - borrowings
Borrowings
Refer to note 28 for further information on financial instruments.
Total secured liabilities
The total secured liabilities (current and non-current) are as follows:
Borrowings
Assets pledged as security
Borrowings are secured over the assets of the Group.
Financing arrangements
Unrestricted access was available at the reporting date to the following lines of credit:
Total facilities
Borrowings (Facility A)
Borrowings (Facility B)
Used at the reporting date
Borrowings (Facility A)
Borrowings (Facility B)
Unused at the reporting date
Borrowings (Facility A)
Borrowings (Facility B)
Consolidated
2019
$'000
2018
$'000
496
461
Consolidated
2019
$'000
2018
$'000
21,500
26,500
Consolidated
2019
$'000
2018
$'000
21,500
29,750
Consolidated
2019
$'000
2018
$'000
21,500
6,000
27,500
21,500
-
21,500
-
6,000
6,000
15,500
14,250
29,750
15,500
14,250
29,750
-
-
-
2019 ANNUAL
REPORT
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2019
Note 22. Non-current liabilities - borrowings (continued)
The Group has established two facilities, Facility A and Facility B:
●
●
Facility A - $21,500,000 (2018: $15,500,000) with an amortising loan term over 3 years and an interest rate set at
BBSY plus a margin ranging from 2.75% to 3.75% (2018: 2.75% to 3.75%) depending on the Net Leverage Ratio of
the Group. $nil (2018: $3,250,000) of the loan is shown in current liabilities being the contractual repayments over the
12 months to 30 June 2020.
Facility B $6,000,000 (2018: $14,250,000) with a bullet term repayment after 3 years and an interest rate set at BBSY
plus a margin of 3% to 4% (2018: 3% to 4%) depending on the Net Leverage Ratio of the Group.
Note 23. Non-current liabilities - provisions
Lease make good
Consolidated
2019
$'000
2018
$'000
59
-
Movements in provisions
Movements in each class of provision (current and non-current) during the current financial year, other than employee
benefits, are set out below:
Consolidated - 2019
Carrying amount at the start of the year
Additional provisions recognised
Carrying amount at the end of the year
Note 24. Non-current liabilities - lease liabilities
Lease liability
Refer to note 28 for further information on financial instruments.
Current (note 18)
Non-current
Lease make
good
$'000
84
24
108
Consolidated
2019
$'000
2018
$'000
1,653
-
Consolidated
2019
$'000
2018
$'000
543
1,653
2,196
-
-
-
48
49
56
57
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2019
Note 24. Non-current liabilities - lease liabilities (continued)
Reconciliation
Reconciliation of lease liabilities (current and non-current) at the beginning and end of financial year are set out below:
Adoption of AASB 16 on 1 July 2018
Additions
Repayment of lease liabilities
Note 25. Equity - issued capital
Ordinary shares - fully paid
DC class shares - fully paid
DBL class shares - fully paid
Movements in ordinary share capital
Consolidated
2019
$'000
1,447
1,261
(512)
2,196
Consolidated
2019
Shares
2018
Shares
2019
$'000
2018
$'000
80,005,371 38,171,440
1,025,000
-
600,000
-
119,581
-
-
26,807
1,025
600
80,005,371 39,796,440
119,581
28,432
Details
Date
Shares
Issue price
$'000
Balance
Issue of shares
Issue of shares
Share split
Issue of shares
Issue of shares on common control
Partial return of capital
Issue of shares
1 July 2017
21 July 2017
18 September 2017
19 September 2017
20 September 2017
21 September 2017
20 March 2018
9 April 2018
Balance
Issue of shares
Issue of shares
Conversion of DC class shares to ordinary shares
Share split (1 to 1.74)
Uplift of reorganisation
New shares issued on IPO
Less transaction costs (net of tax)
30 June 2018
31 October 2018
19 March 2019
15 April 2019
16 April 2019
16 April 2019
23,069,000
102,636
740,000
3,941,739
500,000
9,468,065
-
350,000
38,171,440
100,000
100,000
1,138,383
29,237,269
-
11,258,279
-
$1.00
$1.00
$0.00
$1.00
$1.82
$0.00
$1.00
$1.00
$2.63
$2.63
$0.00
$0.00
$1.51
$0.00
23,069
102
740
-
500
17,251
(15,205)
350
26,807
100
263
2,991
-
73,647
17,000
(1,227)
Balance
30 June 2019
80,005,371
119,581
Movements in DC class shares and DBL class shares:
●
Under the Security Sale Deed, The holders of ReadyTech DC Shares received an aggregate value of Shares (at the
Offer Price) calculated by reference to the proportion that the EBITDA of Esher House Pty Ltd (a wholly-owned
subsidiary of ReadyTech) bear to the EBITDA of the Group for the 12 months to 28 February 2019. The balance of
the Shares is issued to the remaining existing Shareholders in proportion to their holdings of ReadyTech Shares on a
one for 1.74 basis.
DBL shares was not converted to ordinary shares under ReadyTech Holdings Limited at IPO.
2019 ANNUAL
REPORT
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2019
Note 25. Equity - issued capital (continued)
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in
proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the
company does not have a limited amount of authorised capital.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each
share shall have one vote.
DC class shares
DC class shares:
●
confer on their holders voting rights which in aggregate are equal to 38.8% of the total votes that may be exercised on
a resolution relating to a DC Shareholder Reserved Matter; and
confer on their holders the right to receive notice of, and attend (together with Ordinary Shareholders), general
meetings of the Company at which a DC Shareholder Reserved Matter is to be considered.
●
Accordingly, ordinary shares carry voting rights which in aggregate are equal to 61.2% of the total votes that may be
exercised on a resolution relating to a DC Shareholder Reserved Matter.
DBL class shares
DBL class shares do not have any voting rights.
Share buy-back
There is no current on-market share buy-back.
Capital risk management
The Group's objectives when managing capital is to safeguard its ability to continue as a going concern, so that it can
provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to reduce
the cost of capital.
Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is calculated
as total borrowings less cash and cash equivalents.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders,
return capital to shareholders, issue new shares or sell assets to reduce debt.
The Group would look to raise capital when an opportunity to invest in a business or company was seen as value adding
relative to the current company's share price at the time of the investment. The Group is not actively pursuing additional
investments in the short term as it continues to integrate and grow its existing businesses in order to maximise synergies.
The Group is subject to certain financing arrangements covenants and meeting these is given priority in all capital risk
management decisions. There have been no events of default on the financing arrangements during the financial year.
Note 26. Equity - reserves
Share-based payments reserve
Common control reserve (note 38)
Reorganisation reserve
Consolidated
2019
$'000
2018
$'000
162
(10,058)
(73,048)
-
(10,058)
-
(82,944)
(10,058)
Common control reserve
Common control reserve is used to recognise the difference between the consideration paid and the historical values of
assets and liabilities acquired, between entities under common control.
●
58
50
51
59
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2019
Note 26. Equity - reserves (continued)
Reorganisation reserve
Reorganisation reserve is used to recognise the difference between the consideration paid and the historical values of
assets and liabilities acquired, between ReadyTech Holdings Limited and the subsidiaries it acquired.
Note 27. Equity - dividends
There were no dividends paid, recommended or declared during the current financial year or previous financial period.
Note 28. Financial instruments
Financial risk management objectives
The Group's activities expose it to a variety of financial risks: market risk (including foreign currency risk, price risk and
interest rate risk), credit risk and liquidity risk. The Group's overall risk management program focuses on the
unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the
Group. The Group uses derivative financial instruments such as forward foreign exchange contracts to hedge certain risk
exposures. The Group uses different methods to measure different types of risk to which it is exposed. These methods
include sensitivity analysis in the case of interest rate, foreign exchange and other price risks, ageing analysis for credit risk
and beta analysis in respect of investment portfolios to determine market risk.
Risk management is carried out by senior finance executives ('finance') under policies approved by the Board of Directors
('the Board'). These policies include identification and analysis of the risk exposure of the Group and appropriate
procedures, controls and risk limits. Finance identifies, evaluates and hedges financial risks within the Group's operating
units. Finance reports to the Board on a monthly basis.
Market risk
Foreign currency risk
The Group undertakes certain transactions denominated in foreign currency and is exposed to foreign currency risk
through foreign exchange rate fluctuations.
Foreign exchange risk arises from future commercial transactions and recognised financial assets and financial liabilities
denominated in a currency that is not the entity's functional currency. The risk is measured using sensitivity analysis and
cash flow forecasting.
The Group's foreign exchange risk is managed to ensure sufficient funds are available to meet foreign denominated
financial commitments in a timely and cost-effective manner. The Group will continually monitor this risk and consider
entering into forward foreign exchange, foreign currency swap and foreign currency option contracts if appropriate.
Creditors and debtors as at 30 June 2019 and 30 June 2018 were reviewed to assess currency risk at year end. The value
of transactions denominated in a currency other than the functional currency of the respective subsidiary was insignificant
and therefore the risk was determined as not being significant.
Price risk
The Group is not exposed to any significant price risk.
Interest rate risk
The Group's main interest rate risk arises from long-term borrowings. Borrowings obtained at variable rates expose the
Group to interest rate risk.
2019 ANNUAL
REPORT
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2019
Note 28. Financial instruments (continued)
As at the reporting date, the Group had the following variable rate borrowings and interest rate swap contracts outstanding:
Consolidated
Borrowings
2019
2018
Weighted
average
interest rate
%
Weighted
average
interest rate
%
Balance
$'000
Balance
$'000
4.48%
21,500
5.04%
29,750
Net exposure to cash flow interest rate risk
21,500
29,750
An analysis by remaining contractual maturities in shown in 'liquidity and interest rate risk management' below.
For the Group the borrowings outstanding, totalling $21,500,000 (2018: $29,750,000), are principal and interest payment
loans. An official increase/decrease in interest rates of 100 (2018: 100) basis points would have an adverse/favourable
effect on loss before tax of $22,000 (2018: $30,000) per annum. The percentage change is based on the expected volatility
of interest rates using market data and analysts forecasts.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the
Group. The Group has a strict code of credit, including obtaining agency credit information, confirming references and
setting appropriate credit limits. The Group obtains guarantees where appropriate to mitigate credit risk. The maximum
exposure to credit risk at the reporting date to recognised financial assets is the carrying amount, net of any provisions for
impairment of those assets, as disclosed in the statement of financial position and notes to the financial statements. The
Group does not hold any collateral.
The Group has adopted a lifetime expected loss allowance in estimating expected credit losses to trade receivables
through the use of a provisions matrix using fixed rates of credit loss provisioning. These provisions are considered
representative across all customers of the Group based on recent sales experience, historical collection rates and forward-
looking information that is available.
Generally, trade receivables are written off when there is no reasonable expectation of recovery. Indicators of this include
the failure of a debtor to engage in a repayment plan, no active enforcement activity and a failure to make contractual
payments for a period greater than 1 year.
Liquidity risk
Vigilant liquidity risk management requires the Group to maintain sufficient liquid assets (mainly cash and cash
equivalents) and available borrowing facilities to be able to pay debts as and when they become due and payable.
The Group manages liquidity risk by maintaining adequate cash reserves and available borrowing facilities by continuously
monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and liabilities.
52
53
60
61
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2019
Note 28. Financial instruments (continued)
Remaining contractual maturities
The following tables detail the Group's remaining contractual maturity for its financial instrument liabilities. The tables have
been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the
financial liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining
contractual maturities and therefore these totals may differ from their carrying amount in the statement of financial position.
Consolidated - 2019
Non-derivatives
Non-interest bearing
Trade payables
Other payables
Interest-bearing - variable
Bank loans
Lease liability
Total non-derivatives
Consolidated - 2018
Non-derivatives
Non-interest bearing
Trade payables
Other payables
Interest-bearing - variable
Borrowings
Total non-derivatives
Weighted
average
interest rate
%
1 year or less
$'000
Between 1
and 2 years
$'000
Between 2
and 5 years
$'000
Over 5 years
$'000
Remaining
contractual
maturities
$'000
-
-
4.48%
4.00%
806
1,390
958
543
3,697
-
-
-
-
882
1,653
2,535
21,898
-
21,898
-
-
-
-
-
806
1,390
23,738
2,196
28,130
Weighted
average
interest rate
%
1 year or less
$'000
Between 1
and 2 years
$'000
Between 2
and 5 years
$'000
Over 5 years
$'000
Remaining
contractual
maturities
$'000
-
-
268
1,393
-
-
4.82%
4,397
6,058
26,500
26,500
-
-
-
-
-
-
-
-
268
1,393
30,897
32,558
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed
above.
Fair value of financial instruments
Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value.
Note 29. Fair value measurement
Fair value hierarchy
The following tables detail the Group's assets and liabilities, measured or disclosed at fair value, using a three level
hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the
measurement date
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly
or indirectly
Level 3: Unobservable inputs for the asset or liability
Consolidated - 2019
Liabilities
Contingent consideration
Total liabilities
Level 1
$'000
Level 2
$'000
Level 3
$'000
Total
$'000
-
-
-
-
756
756
756
756
54
2019 ANNUAL
REPORT
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2019
Note 29. Fair value measurement (continued)
Consolidated - 2018
Liabilities
Contingent consideration
Total liabilities
Level 1
$'000
Level 2
$'000
Level 3
$'000
Total
$'000
-
-
-
-
480
480
480
480
There were no transfers between levels during the financial year.
The carrying amounts of trade and other receivables and trade and other payables are assumed to approximate their fair
values due to their short-term nature.
The fair value of financial liabilities is estimated by discounting the remaining contractual maturities at the current market
interest rate that is available for similar financial liabilities.
Valuation techniques for fair value measurements categorised within level 2 and level 3
Contingent consideration has been valued using a discounted cash flow model.
Level 3 assets and liabilities
Movements in level 3 assets and liabilities during the current and previous financial year are set out below:
Consolidated
Balance at 1 July 2017
Additions
Balance at 30 June 2018
Losses recognised in profit or loss
Additions
Amounts paid
Balance at 30 June 2019
Note 30. Remuneration of auditors
Contingent
consideration
$'000
300
180
480
(244)
1,000
(480)
756
During the financial year the following fees were paid or payable for services provided by Deloitte Touche Tohmatsu, the
auditor of the company:
Audit services - Deloitte Touche Tohmatsu
Audit or review of the financial statements
Other services - Deloitte Touche Tohmatsu
Acquisition related services
IPO related services
55
Consolidated
2019
$
2018
$
140,000
107,500
95,524
1,269,051
1,364,575
-
-
-
1,504,575
107,500
62
63
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2019
Note 31. Key management personnel disclosures
Compensation
The aggregate compensation made to directors and other members of key management personnel of the Group is set out
below:
Short-term employee benefits
Post-employment benefits
Share-based payments
Note 32. Contingent liabilities
Consolidated
2019
$
2018
$
880,191
78,706
262,740
863,322
75,778
-
1,221,637
939,100
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2019
Note 34. Related party transactions (continued)
Transactions with related parties
The following transactions occurred with related parties:
Payment for goods and services:
Payment for services from key management personnel
Payment for services from other related party
2019 ANNUAL
REPORT
Consolidated
2019
$
2018
$
28,982
-
-
401,763
Receivable from and payable to related parties
The following balances are outstanding at the reporting date in relation to transactions with related parties:
The Group has given bank guarantees as at 30 June 2019 of $472,000 (2018: $338,000). No cash outflows are expected
from the bank guarantees given by the Group.
Note 33. Commitments
Current payables:
Trade payables to other related party
Consolidated
2019
$
2018
$
-
406,594
Lease commitments - operating*
Committed at the reporting date but not recognised as liabilities, payable:
Within one year
One to five years
Consolidated
2018
$'000
514
1,328
1,842
*
Following the adoption of AASB 116 from 1 July 2018, there are no longer any lease commitments at 30 June 2019
reporting date that are not recognised as liabilities.
Operating lease commitments includes contracted amounts offices and plant and equipment under non-cancellable
operating leases. The leases have various escalation clauses. On renewal, the terms of the leases are renegotiated.
Note 34. Related party transactions
Parent entity
ReadyTech Holdings Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 36.
Key management personnel
Disclosures relating to key management personnel are set out in note 31 and the remuneration report included in the
directors' report.
Loans to/from related parties
During the financial year ended 30 June 2018, acquisition costs associated with the acquisition of DBL Group Holdings Pty
Ltd amounting to $134,541 (excluding GST) were paid by the ultimate controlling entity, Pemba Capital Partners Pty
Limited and subsequently recharged to the Group.
During the financial year ended 30 June 2018, (refer to note 38), the acquisition of Lirac HoldCo Pty Limited and it
controlled entities has been accounted for as a common control transaction, on the basis that the Group and Lirac HoldCo
Pty Limited have a common controlling entity, Pemba Capital Partners Pty Limited.
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
Note 35. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Loss after income tax
Total comprehensive income
Parent
2019
$'000
2018
$'000
(1,085)
(1,085)
-
-
56
57
64
65
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2019
Note 35. Parent entity information (continued)
Statement of financial position
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Issued capital
Reorganisation reserve
Accumulated losses
Total equity
Parent
2019
$'000
2018
$'000
14,956
29,898
246
246
120,208
(89,471)
(1,085)
29,652
-
-
-
-
-
-
-
-
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity had no guarantees in relation to the debts of its subsidiaries as at 30 June 2019.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2019.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2019.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the Group, as disclosed in note 2, except for the
following:
●
●
Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
Dividends received from subsidiaries are recognised as other income by the parent entity and its receipt may be an
indicator of an impairment of the investment.
Note 36. Interests in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in
accordance with the accounting policy described in note 2:
Name
ReadyTech HoldCo Pty Ltd
ReadyTech BidCo Pty Ltd
JobReady Tech Pty Ltd
Esher House Pty Ltd
Thymos Pty Ltd
VETtrak Pty Ltd
Rtoms Pty Ltd
Lirac HoldCo Pty Ltd
Lirac BidCo Pty Ltd
Australian Payroll Professionals Holdings Pty Ltd
HR3 Pty Ltd
eLearning Australia Pty Ltd*
Principal place of business /
Country of incorporation
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
58
Ownership interest
2018
2019
%
%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
-
2019 ANNUAL
REPORT
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2019
Note 36. Interests in subsidiaries (continued)
*
Acquired by the Group during the financial year. Refer to note 37.
DBL Group Holdings Pty Ltd was acquired by the Group and disposed of by the Group during the financial year ended 30
June 2018. Refer to note 9.
Note 37. Business combinations
Acquisition of eLearning Australia Pty Ltd ('eLearning')
On 12 September 2018, the Group acquired 100% of the ordinary shares eLearning Australia Pty Ltd for total consideration
of $2,828,000. eLearning provides software solutions to Australian recognised training organisations through online
platforms and mobile applications. Goodwill of $1,517,000 was recognised on acquisition which represents the expected
future growth of eLearning. eLearning contributed revenues of $959,000 and profit before tax of $581,000 to the Group for
the financial year ended 30 June 2019. Had eLearning been a subsidiary of the Group from 1 July 2018, it would have
contributed revenues of $1,212,000 and profit before tax of $753,000 to the Group for the financial year ended 30 June
2019.
Details of the acquisition are as follows:
Cash and cash equivalents
Trade receivables
Customer relationships
Software
Trade and other payables
Contract liabilities
Provision for income tax
Deferred tax liability
Employee benefits
Net assets acquired
Goodwill
Acquisition-date fair value of the total consideration transferred
Representing:
Cash paid or payable to vendor
Contingent consideration
Acquisition costs expensed to profit or loss
Cash used to acquire business, net of cash acquired:
Acquisition-date fair value of the total consideration transferred
Less: cash and cash equivalents
Less: contingent consideration
Net cash used
59
$'000
374
29
605
902
(25)
(284)
(92)
(181)
(17)
1,311
1,517
2,828
1,828
1,000
2,828
96
2,828
(374)
(1,000)
1,454
66
67
2019 ANNUAL
REPORT
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2019
Note 38. Common control transaction
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2019
Note 39. Deed of cross guarantee (continued)
Acquisition of Lirac HoldCo Pty Limited and its controlled entities (common control transaction)
On 21 September 2017 the Group acquired 100% of the ordinary shares of Lirac HoldCo Pty Limited and its controlled
entities, being Lirac BidCo Pty Limited, Australian Payroll Professionals Holdings Pty Ltd and HR3 Pty Limited (collectively
'Lirac') for total consideration transferred of $17,251,000. Lirac is a technology-led payroll solutions business, with
managed services and supporting products.
The acquisition of Lirac has been accounted as a common control transaction in accordance with the accounting policy
described in note 2.
Details of the common control transaction are as follows:
By entering into the deed, the wholly-owned entities have been relieved from the requirement to prepare financial
statements and directors' report under Corporations Instrument 2016/785 issued by the Australian Securities and
Investments Commission.
The above companies represent a 'Closed Group' for the purposes of the Corporations Instrument, and as there are no
other parties to the deed of cross guarantee that are controlled by ReadyTech Holdings Limited, they also represent the
'Extended Closed Group'.
The statement of profit or loss and other comprehensive income and statement of financial position are substantially the
same as the Group and therefore have not been separately disclosed.
$'000
Note 40. Reconciliation of loss after income tax to net cash from operating activities
Cash and cash equivalents
Trade receivables
Other receivables
Prepayments
Property, plant and equipment
Goodwill
Customer relationships
Software
Trade and other payables
Other payables
Provision for income tax
Deferred tax liability
Employee benefits
Other provisions
Contract liabilities
Net assets acquired
Representing:
ReadyTech HoldCo Pty Ltd shares issued to vendor
Common control reserve
Note 39. Deed of cross guarantee
1,745
1,131
522
38
140
4,492
4,716
4,177
(890)
(4,977)
(693)
(626)
(577)
(47)
(1,958)
7,193
17,251
(10,058)
7,193
Loss after income tax (expense)/benefit for the year
(1,490)
(5,201)
Consolidated
2019
$'000
2018
$'000
Adjustments for:
Depreciation and amortisation
Net loss on disposal of non-current assets
Share-based payments
IPO expenses included in investing activities
Change in operating assets and liabilities:
Decrease/(increase) in trade and other receivables
Increase in deferred tax assets
Increase in prepayments
Decrease in other operating assets
Increase/(decrease) in trade and other payables
Increase/(decrease) in contract liabilities
Increase/(decrease) in provision for income tax
Decrease in deferred tax liabilities
Increase in employee benefits
Increase in other provisions
Decrease in other operating liabilities
8,063
-
425
2,106
(635)
(2,851)
(262)
-
723
(1,019)
(2,425)
(181)
147
24
(520)
5,885
2,631
-
-
651
(532)
(142)
39
(4,957)
2,802
1,270
(1,305)
2,673
37
(1,923)
Net cash from operating activities
2,105
1,928
The following entities are party to a deed of cross guarantee under which each company guarantees the debts of the
others:
Note 41. Non-cash investing and financing activities
ReadyTech HoldCo Pty Ltd
ReadyTech BidCo Pty Ltd
JobReady Tech Pty Ltd
Esher House Pty Ltd
Thymos Pty Ltd
VETtrak Pty Ltd
Rtoms Pty Ltd
Lirac HoldCo Pty Ltd
Lirac BidCo Pty Ltd
Australian Payroll Professionals Holdings Pty Ltd
HR3 Pty Ltd
eLearning Australia Pty Ltd
Shares issued on acquisition of Lirac HoldCo Pty Limited
Shares issued on acquisition DBL Group Holdings Pty Ltd
Share issued to KMP
Conversion of DC shares to ordinary shares
Increase in share capital on reorganisation of the Group
Consolidated
2019
$'000
2018
$'000
-
-
263
2,991
73,048
17,251
600
-
-
-
76,302
17,851
60
61
68
69
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2019
Note 43. Earnings per share (continued)
Earnings per share for loss
Loss after income tax attributable to the owners of ReadyTech Holdings Limited
2019 ANNUAL
REPORT
Consolidated
2019
$'000
2018
$'000
(1,490)
(5,201)
Number
Number
Weighted average number of ordinary shares used in calculating basic earnings per share
69,316,495
60,244,971
Weighted average number of ordinary shares used in calculating diluted earnings per share
69,316,495
60,244,971
Basic earnings per share
Diluted earnings per share
Cents
Cents
(2.15)
(2.15)
(8.63)
(8.63)
The weighted average number of ordinary shares are calculated based on the number of ordinary shares that would have
been in existence had the corporate/group reorganisation occurred as at 1 July 2017.
Note 44. Events after the reporting period
No matter or circumstance has arisen since 30 June 2019 that has significantly affected, or may significantly affect the
Group's operations, the results of those operations, or the Group's state of affairs in future financial years.
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2019
Note 42. Changes in liabilities arising from financing activities
Consolidated
Balance at 1 July 2017
Net cash from financing activities
Balance at 30 June 2018
Net cash used in financing activities
Recognition of lease liability on adoption of AASB 16
Additions
Balance at 30 June 2019
Note 43. Earnings per share
Borrowings Lease liability
$'000
$'000
Total
$'000
14,600
15,150
29,750
(8,250)
-
-
-
-
-
(512)
1,447
1,261
14,600
15,150
29,750
(8,762)
1,447
1,261
21,500
2,196
23,696
Earnings per share for loss from continuing operations
Loss after income tax attributable to the owners of ReadyTech Holdings Limited
Consolidated
2019
$'000
2018
$'000
(1,490)
(2,321)
Number
Number
Weighted average number of ordinary shares used in calculating basic earnings per share
69,316,495
60,244,971
Weighted average number of ordinary shares used in calculating diluted earnings per share
69,316,495
60,244,971
Basic earnings per share
Diluted earnings per share
Earnings per share for loss from discontinued operations
Loss after income tax attributable to the owners of ReadyTech Holdings Limited
Cents
Cents
(2.15)
(2.15)
(3.85)
(3.85)
Consolidated
2019
$'000
2018
$'000
-
(2,880)
Number
Number
Weighted average number of ordinary shares used in calculating basic earnings per share
69,316,495
60,244,971
Weighted average number of ordinary shares used in calculating diluted earnings per share
69,316,495
60,244,971
Basic earnings per share
Diluted earnings per share
Cents
Cents
-
-
(4.78)
(4.78)
62
63
70
71
ReadyTech Holdings Limited
Directors' declaration
30 June 2019
In the directors' opinion:
●
●
●
●
●
the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the
Corporations Regulations 2001 and other mandatory professional reporting requirements;
the attached financial statements and notes comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board as described in note 2 to the financial statements;
the attached financial statements and notes give a true and fair view of the Group's financial position as at 30 June
2019 and of its performance for the financial year ended on that date;
there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due
and payable; and
at the date of this declaration, there are reasonable grounds to believe that the members of the Extended Closed
Group will be able to meet any obligations or liabilities to which they are, or may become, subject by virtue of the deed
of cross guarantee described in note 39 to the financial statements.
The directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
On behalf of the directors
___________________________
Tony Faure
Director
22 August 2019
Sydney
Independent Auditor’s Report
30 June 2019
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Grosvenor Place
225 George Street
Sydney, NSW, 2000
Australia
Phone: +61 2 9322 7000
www.deloitte.com.au
Independent Auditor’s Report to the directors of ReadyTech
Holdings Limited
Opinion
We have audited the financial report of ReadyTech Holdings Limited (the “Company”) and its subsidiaries
(the “Group”) which comprises the consolidated statement of financial position as at 30 June 2019, the
consolidated statement of profit or loss and other comprehensive income, the consolidated statement of
changes in equity and the consolidated statement of cash flows for the year then ended, and notes to
the financial statements, including a summary of significant accounting policies and other explanatory
information, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act
2001, including:
(i)
giving a true and fair view of the Group’s financial position as at 30 June 2019 and of its financial
performance for the year then ended; and
(ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section
of our report. We are independent of the Group in accordance with the auditor independence requirements
of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to
our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in
accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the time
of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
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 for 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.
72
73
64
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte Network.
65
Key Audit Matter
How the scope of our audit responded to the
Key Audit Matter
Accounting for capital raising costs
Our procedures included, but were not limited to:
As disclosed in Note 2, on 16 April 2019 the
Company completed an initial public offering
(“IPO”) and became listed on the Australian
Stock Exchange (“ASX”). As part of the IPO
process, the Group incurred $8.1 million of
costs.
•
Assessing and challenging management’s
determination of costs that are incremental and
directly attributable to the cost of raising new
capital;
• On a sample basis, agreeing costs of capital
raising to supporting documentation; and
Significant judgment is applied in determining
which costs are incremental and directly
attributable to the cost of raising new capital.
•
Assessing the appropriateness of the allocation
basis between costs recognised as an expense in
the profit and loss and the costs recorded in
equity.
As at 30 June 2019 the Group has recorded
$1.75 million of the capital raising costs
directly against issued capital. This is
presented net of a deferred tax asset of $0.53
million.
We also assessed the appropriateness of the
disclosures in Note 7 and Note 25 to the financial
statements.
Revenue recognition
Our procedures included, but were not limited to:
As at 30 June 2019 the Group has reported
revenue of $32.71 million from continuing
operations. The statement of financial position
shows contract liabilities of $11.27 million as
disclosed in notes 5, 16, and 21.
Significant judgment is involved in applying
Accounting Standard AASB 15 “Revenue from
Contracts with Customers” in determining
how the Group satisfies a performance
obligation and how the revenue should be
recognised. Furthermore, as the calculation of
revenue and contract liabilities is
predominantly manual in nature there is
increased risk of calculation error.
•
Assessing the revenue recognition policy against
the requirements of AASB 15;
• Obtaining and understanding of the process
management uses to record revenue and
contract liabilities;
•
Understanding the revenue cycle and evaluating
the controls over cycle processes;
• Obtaining the revenue and deferred revenue
schedules prepared by management and
assessing the reconciliation of the amounts
recorded to the control accounts in the general
ledger;
•
•
Agreeing the revenue and contract liabilities to
supporting documentation including customer
contracts and cash receipts on a sample basis;
and
Performing an independent recalculation of the
expected revenue and contract liabilities to be
recognised during the year and comparing it to
calculations performed by management.
We also assessed the appropriateness of the
disclosures in Note 2, Note 5, Note 16 and Note 21
to the financial statements.
Other Information
The directors are responsible for the other information. The other information comprises the information
included in the Company’s annual report for the year ended 30 June 2019, but does not include the
financial report and our auditor’s report thereon.
2019 ANNUAL
REPORT
Our opinion on the financial report does not cover the other information and we do not express any form
of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial report or
our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the
work we have performed, we conclude that there is a material misstatement of this other information, we
are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for
such internal control as the directors determine is necessary to enable the preparation of the financial
report that gives a true and fair view and is free from material misstatement, whether due to fraud or
error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with the Australian Auditing Standards will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if, individually or
in the aggregate, they could reasonably be expected to influence the economic decisions of users taken
on the basis of this financial report.
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 Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
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 Group’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 Group 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.
74
75
66
67
•
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are responsible
for the direction, supervision and performance of the Group’s 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 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
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 9 to 14 of the Directors’ Report for the year
ended 30 June 2019.
In our opinion, the Remuneration Report of ReadyTech Holdings Limited, for the year ended 30 June 2019,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an
opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing
Standards.
DELOITTE TOUCHE TOHMATSU
Joshua Tanchel
Partner
Chartered Accountants
Sydney, 22 August 2019
2019 ANNUAL
REPORT
ReadyTech Holdings Limited
Shareholder information
30 June 2019
Voting rights
Ordinary shares: On a show of hands every member present at a meeting in person or by proxy shall have one vote and
upon a poll each share shall have one vote. There are no other classes of equity securities.
Distribution of equity securities
Analysis of number of equity security holders by size of holding:
Range
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Total number of security holders
Number of
holders
83
305
312
500
36
1,236
% of
holders
6.72
24.68
25.24
40.45
2.91
100.00
Number of
securities
48,743
918,124
2,423,247
12,852,131
63,763,122
80,005,367
% of
securities
0.06
1.15
3.03
16.06
79.70
100.000
Holders holding less than a marketable parcel of shares*
25
2.06
6,507
0.02
*marketable parcel of shares calculated based on closing market price on 5 August 2019 of $1.550
Restricted securities
45,087,673 Shares (Escrowed Shares) are subject to voluntary escrow arrangements.
Of the 45,087,673 Shares subject to voluntary escrow arrangements, 39,838,457 are subject to the following escrow
restrictions:
-
-
50% of these Escrowed Shares will be released on the date on which ReadyTech announces its results for the half
year ending 31 December 2019 to the market; and
the remaining 50% of these Escrowed Shares (Second Tranche Escrowed Shares) will be released on the date
on which ReadyTech announces its results for the half year ending 31 December 2020 to the market,
provided that during the escrow period, the holder may deal in any of its Escrowed Shares if the dealing constitutes a
dealing involving the disposal (in one or more transactions) of the Second Tranche Escrowed Shares if:
-
-
ReadyTech's results for the financial year ending 30 June 2020 have been released to the market; and
thereafter, the price of ReadyTech's Shares as traded on ASX has traded at 30% or more of the Offer Price for 20
consecutive trading days.
The remaining 5,249,216 of the Escrowed Shares are escrowed until the date on which ReadyTech announces its results
for the half year ending 31 December 2019 to the market.
On-market buy back
There is no current on-market buy back.
Total of quoted restricted securities
Ordinary shares not subject to voluntary escrow (quoted
securities)
Ordinary shares subject to voluntary escrow (restricted
securities)
Total number of shares
Unquoted securities
There are no unquoted securities currently on issue.
69
34,917,694
45,087,673
80,005,367
76
77
68
ReadyTech Holdings Limited
Shareholder information
30 June 2019
Twenty largest quoted equity security holders
No. Shareholder
PEMBA CAPITAL PARTNERS FUND I GP PTY LTD
1
NATIONAL NOMINEES LIMITED
2
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
3
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
4
MARC RAYMOND WASHBOURNE
5
DARREN COPPIN
6
BNP PARIBAS NOMINEES PTY LTD
7
MALVERN AVENUE MANAGEMENT PTY LTD
8
SYCAMORE MANAGEMENT PTY LTD
8
WASHBOURNE GROUP PTY LTD
9
ANKSH PTY LTD
10
PEMBA CAPITAL PARTNERS PTY LTD
11
SARGON CT PTY LTD
12
13
AMP LIFE LIMITED
14 MARISH PTY LTD
15 MR BRETT DAVID GOODRICH
NIMESH SHAH
16
PEMBA CAPITAL PARTNERS PTY LTD
17
CAZRIA PTY LTD
18
TREVOR FAIRWEATHER
19
20
TONY JONES
Top 20 holders of Shares
Balance of Shares
Total Shares on issue
Substantial holders
Number of
shares
33,294,212
6,455,280
3,400,822
2,869,007
2,861,363
1,592,419
1,430,065
1,300,190
1,300,190
1,147,051
860,288
841,731
719,536
688,475
659,717
504,910
430,144
403,668
331,125
261,000
208,771
61,559,964
18,445,403
80,005,367
% of issued
equity
41.61
8.07
4.25
3.59
3.58
1.99
1.79
1.63
1.63
1.43
1.08
1.05
0.90
0.86
0.82
0.63
0.54
0.50
0.41
0.33
0.26
76.94
23.06
100.00
Shareholder
Deutsche Bank AG and its related bodies corporate
(together the “Deutsche Bank Group”)
Wilson Advisory and Stockbroking Limited
ReadyTech Holdings Limited
The Washbourne Entities2
The Pemba Entities3
1 Percentage of issued equity held as disclosed in the substantial holding notices provided to the Company.
23 April 2019
18 April 2019
18 April 2019
18 April 2019
Date of
notice
24 April 2019
Number of
shares
5,333,019
5,126,893
45,087,673
4,008,415
34,539,611
% of issued
equity1
6.67%
6.41%
56.40%
5.00%
43.2%
2 Marc Raymond Washbourne and Washbourne Group Pty Limited CAN 627 033 363 as trustee of the Washbourne Familty Trust (together, the Washbourne Entities)
3 Pemba Capital Partners Fund I Partnership LP, Pemba Capital Partners Pty Limited ACN 121 906 045 as trustee of The Pemba Capital Co-Investment Trust and Pemba Capital Partners
Pty Ltd ACN 121 906 045 as trustee of The Lirac Trust (together, the Pemba Entities)
2019 ANNUAL
REPORT
WE’RE
READY
78
70
33
ANNUAL REPORT 2019
READYTECH HOLDINGS LIMITED
ABN 25 632 137 216