ReadyTech Holdings Limited
ABN 25 632 137 216
21 October 2020
2020 Annual Report – Typeset version
ReadyTech Holdings Limited (ASX: RDY) attaches a typeset version of the 2020 Annual Report.
There have been no changes to the version lodged with ASX on 26 August 2020, other than
typesetting.
Yours sincerely,
Nimesh Shah
Chief Financial Officer & Company Secretary
ReadyTech Holdings Limited
FY20
ANNUAL
REPORT
READYTECH HOLDINGS LIMITED
ABN 25 632 137 216 - 30 JUNE 2020
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CONTENTS
Chairman’s letter
Chief Executive Officer’s letter
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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81
NEXT
GENERATION
SAAS
PEOPLE CENTRIC SOFTWARE
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Dear Shareholder,
ReadyTech Holdings Limited completed its first full year as an ASX-listed entity at
the close of FY20. During what are unarguably unprecedented times for global and
local economies, as well as for the businesses, investors and individuals that are their
lifeblood, I’m pleased to introduce an Annual Report that reflects ReadyTech’s status as
a mission-critical partner for those customers who rely on its technology to conduct the
essential tasks of running their businesses and operations.
As I noted in last year’s Annual Report, ReadyTech is a provider of people management
software, primarily for Australian education providers and employers. Positioned at the
core of these sectors, software like ReadyTech’s offerings in student management and
payroll make it a key enabler in the conduct of fundamental tasks, from compliance in
education, to the payment of employees in the employment segment.
This provides ReadyTech with inherent resilience. Combined with an enterprise strategy
focused on growing its footprint into higher value markets while retaining and adding
value to existing customers, ReadyTech’s management team have been able to deliver
on investor expectations during what is more broadly a challenging time. In line with
previous FY20 guidance, ReadyTech today reports revenue growth of 19.1% to $39.3
million, a 21.5% increase in underlying EBITDA to $15.6 million, and a 63.9% increase in
underlying NPAT to $3.6 million excluding the impact of non-recurring costs.
Current economic conditions bring about significant opportunities for the technology
sector, and for ReadyTech. With the immediate requirement for educators and
employers to reassess and optimise the way they interact with students and employees,
and an acceleration of digital transformation initiatives, ReadyTech is in a strong position
to be their partner of choice as they undertake digital initiatives designed to support
their growth and success into the future. This will require innovative thinking and the
ability to adapt, both of which ReadyTech is well-equipped for.
I and the Board would like to thank investors for their continued support. ReadyTech’s
management team, headed by CEO Marc Washbourne, have been investing for many
years in SaaS designed to help industries remain agile through times of change. This
is now being repaid in its ability to meet the fast-changing customer needs presented
by a new economic environment, and a new decade. I look forward to working with you
all on our shared journey into the future of work, as ReadyTech enables its mission of
becoming a world-class technology company through customer success.
Yours sincerely,
Chairman’s letter
TONY
FAURE
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Whether it is managing
compliance reporting in
the education sector, or
paying employees using
our workforce solutions
software, we operate from a
foundational position at the
very core of our customers’
everyday business
operations
We are a ‘must-have’,
not a ‘nice-to-have’.
PERFORMANCE
HIGHLIGHTS
FY20
>
REVENUE
19.1%
TO $39.3m
UNDERLYING
EBITDA*
21.5%
TO $15.6m
OPERATING
CASH FLOW
18.4%
TO $14.8m
CLTV to CAC
RATIO
1.5x
TO 8.4X; CLTV OF $64K
ARPC
18%
TO $10.5k
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YoY Comparisons to FY19, > Organic revenue growth of 10%, * Underlying results exclude the impact of
non-recurring costs of $0.6M
Dear Shareholder,
There is no doubt 2020 has been a year like no other we can remember. For many
businesses and investors in Australia, and indeed around the world, it has brought about
significant disruption and change. Whether that be entire workforces working from
home, or businesses being asked to think differently about the ways they’ve operated
in the past – or even about some new opportunities that are arising – we’ve all had to
undertake adaptation amidst change, and do so at a fast pace.
I’m pleased to report ReadyTech has remained robust and resilient throughout this
period. For over 20 years, we have delivered non-negotiable software solutions that our
customers rely on to perform mission-critical functions within their businesses. Whether
that is managing compliance reporting in the education sector, or paying employees
using our workforce solutions software, we operate from a foundational position that sits
at the very core of our customers’ everyday business operations.
Much of what we offer is a ‘must-have’, not a ‘nice-to-have’.
This allows us to hold strong during challenging times while continually offering new value
through innovation. As a result in FY20, ReadyTech is pleased to report that we have
continued to deliver sustainable growth. This includes underlying revenue growth of 19.1%
to $39.3 million, an underlying Net Profit After Tax (‘NPAT’) of $3.6 million, up 63.9%, and
the maintenance of our characteristically high client retention rate of 95%.
As a result of strong investment over many years, ReadyTech has now built a cohesive
suite of next generation SaaS solutions in our key verticals that are valued by 4,000+
customers for helping them stay nimble through change, for being a joy to use, and for
putting their needs first and foremost. During the year, although we could never have
expected the conditions encountered in 2020, we’ve found ourselves in a position of
being ready for change - and being able to help our customers navigate that too.
FY20 results update
ReadyTech experienced strong top line growth in FY20, translating into growing earnings
and cash flow. As mentioned previously, in FY20 the combination of new client wins and
cross-selling to existing customers underpinned 19.1% growth in revenue to $39.3 million.
Within this, subscription and license revenue grew 18.2%, and comprised 89% of total
revenue.
ReadyTech’s cloud-based SaaS offering has demonstrated its scalability and strong
operating leverage, with earnings continuing to grow faster than revenue, up 21.5%
to $15.6 million. This highlights the scalable nature of SaaS student and workforce
management platforms as more clients seek to replace their legacy vendors with
ReadyTech’s leading-edge, cloud-based offerings. While operating expenses were
up 17.9% to $23.7 million, this reflects additional investment in employment costs as
additional sales and technology related talent is added to the ReadyTech team to
underpin future growth.
CEO
MARC
WASHBOURBNE
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Product & strategy
ReadyTech continues to pursue a highly customer-centric SaaS strategy in the industries
in which we operate. Backed by avshared platform of capability for best practice SaaS
that can be applied across all our industry verticals, we’ve been successful in our aim
of attracting new and higher value customers in our core segments while retaining and
increasingvrevenue from existing customers. Our key product differentiators - our agility,
usability and customer-centricity - are seeingvus displace less flexible legacy technology
and generate a pipeline of new, higher value business.
Enterprise customers
FY20 was a record year for new business across ReadyTech. In line with our strategy,
we experienced strong demand for our next generation SaaS offerings at an enterprise
level, evidenced by our breakthrough TAFE contract with Bendigo Kangan Institute (‘BKI’)
in Victoria who selected our Student Management System, JR Plus, as the preferred
technology for their student journey digital transformation project. Worth $7m including
a 5-year software subscription, we expect this validation to lead to significant growth in
both the TAFE and the broader enterprise education market.
The strategic acquisition of New Zealand-based workforce management platform
Zambion has also allowed us to attract larger customers and attract strong new badges
in the employment segment during the second half. With a very advanced, mobile and
cloud-based workforce management capability now unified as part of our HR3+ payroll
and workforce management proposition across both Australia and New Zealand, we are
experiencing and expect further interest from higher value customers in this segment.
Customer retention
ReadyTech’s formidable customer retention record continued in FY20, with a client
retention rate maintained at 95%. The strong customer satisfaction and intimacy we
maintain has allowed us to continue to grow our customer usage through product
upsell and adoption, leading to ARPC growth of 18%. This was complemented by strong
cross-sell across our product suite, with particular success offering our behavioural
science-backed assessment and predictive analytics technology into the education and
apprenticeships markets to support graduation and completion outcomes.
Future retention is underpinned by our understanding of customer businesses, their
participation in our development roadmap and investment in our customer success
framework.
Research & Development
Investment in R&D was maintained at over $11m in FY20. With a key focus on improving
usability and ensuring our platforms are an even better market fit for enterprise-level
customers, ReadyTech released well received new modules including digital credentials
for education and automated workflows for employment. Our agile development process
remains highly responsive to changing customer needs (never more important than
during COVID-19) and we expect continued commitment to R&D will be essential in
supporting sustainable growth across our business into the future.
M&A
The strategic acquisition of Zambion and WageLink in FY20 demonstrated ReadyTech’s
ability to buy and successfully integrate complementary capability and companies.
Where such businesses have been diligently de-risked and can be plugged into our
shared platform of best practice capability, our expertise means that we are in a strong
position to help them to the next stages of accelerated growth. ReadyTech maintains a
strong pipeline of future M&A opportunities and remains open to opportunities in the
current COVID-19 environment that might not otherwise present themselves.
Talent and culture
ReadyTech continues to invest in new talent across the organisation. Most notably,
we recently welcomed senior hire James Diamond into a brand new role as Chief
Executive, Education to lead growth and development in this segment. With a very
strong background in high growth SaaS and enterprise sales, we expect James to play a
key role alongside our Chief Executive of Workforce Solutions, Daniel Wyner, in realising
ReadyTech’s ambitions for enterprise customer growth. Other new additions including
new sales and marketing roles that will underpin our brand and this future sales pipeline.
The benefit of our commitment to people and culture has never been clearer than
during COVID-19. Since we transitioned in just 24 hours to a ‘work-from-home’
operational model, our team has adopted a business-as-usual approach, remaining
highly productive and purposeful while ensuring our projects and sales pipelines are
successfully managed remotely. Our team of ‘ReadyTechers’ have displayed inspirational
dedication to our customers, including managing the seamless remote conduct of key
enterprise projects with Bendigo Kangan Institute and University of Queensland.
Navigating COVID-19
ReadyTech entered the COVID-19 environment from a position of strength. With SaaS
offerings in markets synonymous with sticky, ‘rusted-on’ customers, our business is
characterised by long customer tenures, high levels of recurring revenue and low levels
of churn, making it resilient and defensive in nature. In education, international students
account for only 3% of students serviced.
ReadyTech has broadly maintained customer spend during this challenging economic
period while benefitting in new areas of opportunity such as the adoption of technology
to support remote work and delivery (including online learning and assessment) and
accelerated sales processes. We’ve seen growing momentum in the Back-to-Work
sector and are playing a key role in supporting increasing Jobseeker caseloads. Rapid
response initiatives such as our ‘Remote Control’ customer content hub to support
remote delivery and servicing, as well as the deployment of support for JobKeeper in
payroll has deepened customer loyalty and trust in ReadyTech’s team and brand.
As a result, we’ve remained on the front foot during COVID-19. As previously mentioned,
we are hiring additional resources to underpin our next wave of growth and are pleased
to have not stood down or reduced hours for any employees due to COVID-19.
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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)
There were no dividends paid, recommended or declared during the current financial
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
●• Employment - provider of payroll and employee management solutions from cloud-
based technology to outsourcing of human resource function.
Principal activities
providers; and
Dividends
year or previous financial period.
Review of operations
June 2018: $5,201,000).
expenses were $13,140,990.
of $21.5 million, and
$6.0 million.
Outlook
ReadyTech expects strong opportunities for continued growth across education and
employment verticals in the year ahead, despite the challenges presented to the
economy by the direct and indirect impacts of COVID-19. In fact, despite the impact of
COVID-19 in Q4 FY20, ReadyTech has responded well with sales volume growth of 55%
in Q4. The strong pipeline we have in place, combined with forward visibility of sales and
revenues, gives the Board confidence to provide financial guidance for FY21, with our
expected revenue percentage growth in the mid-teens and an EBITDA margin in the
range of 37%-39% (inclusive of LTIP).
There is a strong requirement for agile technology to support the education, training
and employment journey, with rising demand for learning, upskilling, reskilling and the
realisation of employment outcomes across Australia now a key plank of economic
recovery. This is evidenced by the policy response, with Federal and State Governments
through the JobTrainer program set to invest an extra $2.5bn in training, including the
creation of 340,000 training places which will benefit many
ReadyTech Holdings Limited
Chief Executive Officer's letter
30 June 2020
content hub to support remote delivery and servicing, as well as the deployment of support for JobKeeper in payroll has
deepened customer loyalty and trust in ReadyTech’s team and brand.
As a result, we’ve remained on the front foot during COVID-19. As previously mentioned, we are hiring additional resources
to underpin our next wave of growth and are pleased to have not stood down or reduced hours for any employees due to
COVID-19.
ReadyTech customers.
Overall, we believe COVID-19 has exposed the inflexibility of many existing systems,
and with a momentum for digital transformation and change we expect benefits for
ReadyTech’s more refreshing next generation systems in the long-term.
Outlook
ReadyTech expects strong opportunities for continued growth across education and employment verticals in the year ahead,
despite the challenges presented to the economy by the direct and indirect impacts of COVID-19. In fact, despite the impact
The future of (our) work
of COVID-19 in Q4 FY20, ReadyTech has responded well with sales volume growth of 55% in Q4. The strong pipeline we
have in place, combined with forward visibility of sales and revenues, gives the Board confidence to provide financial
I would like to thank shareholders for their continued support during FY20. While this may
guidance for FY21, with our expected revenue percentage growth in the mid-teens and an EBITDA margin in the range of
be an unprecedented and challenging time for many, I would like to finish by assuring
37%-39% (inclusive of LTIP).
you that your investment in ReadyTech is an investment in technology that supports
There is a strong requirement for agile technology to support the education, training and employment journey, with rising
demand for learning, upskilling, reskilling and the realisation of employment outcomes across Australia now a key plank of
the aspirational journey of individuals through learning and work, a contribution that
economic recovery. This is evidenced by the policy response, with Federal and State Governments through the JobTrainer
pays off for our community well beyond dollars and cents. Across our systems each
program set to invest an extra $2.5bn in training, including the creation of 340,000 training places which will benefit many
ReadyTech customers.
day, ReadyTech supports the management and development of students learning with
their hands and their minds, in trades, in vocational education, and in higher education.
Overall, we believe COVID-19 has exposed the inflexibility of many existing systems, and with a momentum for digital
transformation and change we expect benefits for ReadyTech’s more refreshing next generation systems in the long-term.
We enable Australian employers to pay their employees on time, every time, as those
employees seek to provide for their families. We assist governments, as they seek to
roll out new workforce policy programs at scale and at speed. We back employment
services providers as they help transition job seekers through the trials of job seeking
into the dignity of paid employment.
The future of (our) work
I would like to thank shareholders for their continued support during FY20. While this may be an unprecedented and
challenging time for many, I would like to finish by assuring you that your investment in ReadyTech is an investment in
technology that supports the aspirational journey of individuals through learning and work, a contribution that pays off for our
community well beyond dollars and cents.
Across our systems each day, ReadyTech supports the management and development of students learning with their hands
and their minds, in trades, in vocational education, and in higher education. We enable Australian employers to pay their
We feel privileged in these times to be such a part of the fabric of the economy and
employees on time, every time, as those employees seek to provide for their families. We assist governments, as they seek
to roll out new workforce policy programs at scale and at speed. We back employment services providers as they help
individual aspiration, and we look forward to working with you through FY21 and beyond
transition job seekers through the trials of job seeking into the dignity of paid employment.
to ensure our customers are ready for the future of work.
We feel privileged in these times to be such a part of the fabric of the economy and individual aspiration, and we look
forward to working with you through FY21 and beyond to ensure our customers are ready for the future of work.
The loss for the Group after providing for income tax amounted to $1,490,000 (30
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
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
• Facility B: A fully committed three year revolving multi-option working capital facility of
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
Yours sincerely,
Yours sincerely,
10
___________________________
Marc Washbourne
Chief Executive Officer
26 August 2020
Sydney
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#imareadytecher
ReadyTech Holdings Limited
Appendix 4E
Preliminary final report
1. Company details
Name of entity:
ABN:
Reporting period:
Previous period:
ReadyTech Holdings Limited
25 632 137 216
For the year ended 30 June 2020
For the year ended 30 June 2019
2. Results for announcement to the market
ReadyTech Holdings Limited
Appendix 4E
Preliminary final report
6. Dividends
Current period
There were no dividends paid, recommended or declared during the current financial period.
Previous period
There were no dividends paid, recommended or declared during the previous financial period.
$'000
Not applicable.
7. Dividend reinvestment plans
Revenues from ordinary activities
Profit from ordinary activities after tax attributable to the owners of
ReadyTech Holdings Limited
Profit for the year attributable to the owners of ReadyTech Holdings
Limited
up
up
up
20.0% to
39,254
364.6% to
364.6% to
3,943
3,943
8. Details of associates and joint venture entities
Not applicable.
9. Foreign entities
Dividends
There were no dividends paid, recommended or declared during the current financial period.
Details of origin of accounting standards used in compiling the report:
Comments
The profit for the Group after providing for income tax amounted to $3,943,000 (30 June 2019: loss of $1,490,000).
Not applicable.
Refer to the Chief Executive Officer's letter and the 'Review of operations' in the Directors' report for further commentary
and analysis on the results.
10. Audit qualification or review
Details of audit/review dispute or qualification (if any):
3. Net tangible assets
The financial statements have been audited and an unqualified opinion has been issued.
Reporting
period
Cents
Previous
period
Cents
(36.52)
(29.45)
11. Attachments
Details of attachments (if any):
Net tangible assets per ordinary security
4. Control gained over entities
Name of entities (or group of entities)
WageLink Australia Pty Ltd; Zambion Limited and its controlled entities
Date control gained
9 October 2019
Contribution of such entities to the reporting entity's profit/(loss) from ordinary activities before income tax
during the period (where material)
Profit/(loss) from ordinary activities before income tax of the controlled entity (or group of entities) for the
whole of the previous period (where material)
$'000
287
-
5. Loss of control over entities
Not applicable.
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The Annual Report of ReadyTech Holdings Limited for the year ended 30 June 2020 is attached.
12. Signed
As authorised by the Board of Directors
Signed ___________________________
Date: 26 August 2020
Tony Faure
Chairman
Sydney
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2020 READYTECH ANNUAL REPORT2020 READYTECH ANNUAL REPORT
ReadyTech Holdings Limited
Corporate directory
30 June 2020
Directors
Company secretaries
Registered office
Principal place of business
Share register
Auditor
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 - Non-Executive Director
Mark Summerhayes - alternate Non-Executive Director to Tom Matthews
Nimesh Shah
Melissa Jones
William Hundy
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
Stock exchange listing
ReadyTech Holdings Limited shares are listed on the Australian Securities Exchange
(ASX code: RDY)
Website
www.readytech.com.au
Business objectives
ReadyTech Holdings Limited has used cash and cash equivalents held at the time of
listing, in a way consistent with its stated business objectives.
Corporate Governance Statement
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 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 at
https://investors.readytech.com.au
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ReadyTech Holdings Limited
Directors' report
30 June 2020
The Directors present their report, together with the financial statements, on the consolidated entity ('Group' or
'ReadyTech') consisting of ReadyTech Holdings Limited ('Company' or 'parent entity') and the entities it controlled for the
year ended 30 June 2020.
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
Marc Washbourne - Chief Executive Officer
Elizabeth Crouch - Non-Executive Director
Timothy Ebbeck - Non-Executive Director
Tom Matthews - Non-Executive Director
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
● Workforce Solutions (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
ReadyTech Holdings Limited (ASX: RDY), a leading provider of SaaS technology in workforce solutions (employment) and
education, is pleased to announce its results for the 12 months ended 30 June 2020 ('FY20'), that saw the Group achieve
strong growth and performance across all of its key financial metrics.
ReadyTech’s operating strategy and business continuity planning has helped the Group navigate the current COVID-19-
impacted operating environment, while positioning the business to further grow revenues and earnings through FY21.
The statutory net profit after tax ('NPAT') increased by 364.6% to $3.9 million.
Commenting on the FY20 results, ReadyTech CEO Marc Washbourne said: “FY20 has clearly shown the mission-critical
nature of ReadyTech’s technology, which is supporting our customers through COVID-19 with next generation SaaS
solutions. The continued growth achieved reflects the exceptional agility and dedication of the entire ReadyTech
team. Importantly, growing operating cashflow, debt headroom, low gearing and a strong balance sheet support our
investment in technological innovation and growing our team to deliver on the exciting opportunities we see.”
Strong top line growth translated to growing earnings and cashflows
Over FY20, the combination of new client wins and cross-selling to existing clients underpinned 20% growth in revenue to
$39.3 million. Within this, subscription and license revenue grew 18.2%, and comprised 89% of total revenue.
With multiple attractive growth runways available, ReadyTech increased its investment in technology innovation and
people to underpin future growth. Operating expenses were up 17.9% to $23.7 million reflecting additional employment
costs as additional sales and technology related talent was added to the ReadyTech team. One strong investment, James
Diamond was appointed into the newly created role of Chief Executive, Education, to lead sales and marketing as well as
the team responsible for ReadyTech’s education technology solutions.
ReadyTech’s cloud-based SaaS offering demonstrated its scalability and strong operating leverage, with earnings
continuing to grow faster than revenue, up 21.5% to $15.6 million. This highlights the scalable nature of SaaS student and
workforce management platforms as more clients seek to replace their legacy vendors with ReadyTech’s flexible, cloud-
based offerings.
Client growth and uptake of new modules underpins growth in Education
Education revenue was up 6.6% to $21.3 million reflecting client growth and uptake of new modules by existing clients for
remote student serviceability during COVID-19.
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2020 READYTECH ANNUAL REPORT2020 READYTECH ANNUAL REPORT
ReadyTech Holdings Limited
Directors' report
30 June 2020
ReadyTech Holdings Limited
Directors' report
30 June 2020
A landmark enterprise contract with Bendigo TAFE & Kangan Institute was signed in January 2020. The implementation of
this $7 million 5-year subscription contract for over 40,000 students is well underway, with the project being successfully
managed remotely given COVID-19 restrictions.
“ReadyTech has experienced growing momentum in the Back-to-Work and Skills sectors, where clients are supporting job
seekers with self-service support and job search to get back into the workforce. The rapid increase in job seeker caseloads
and the increased support ReadyTech is providing to this segment of the market is especially pleasing,” said Mr
Washbourne.
Rapid growth in Workforce Solutions (Employment)
Despite the challenging operating conditions due to COVID-19, Workforce Solutions (Employment) revenue was up 37.9%
to $17.9 million reflecting platform capabilities to manage compliance requirements and remote staff management. Existing
customer spend has increased driven by additional module uptake.
The complementary acquisitions of Zambion and WageLink are performing well. Following the successful integration into
an all-in-one workforce management platform, HR3+, ReadyTech is gaining market share from legacy platform and
enhancing trust from new blue-chip clients, including Glassons, dnata and Bed Bath & Beyond.
Positive outlook for continued growth in FY21
Commenting on ReadyTech’s outlook, Mr Washbourne said: “We expect strong growth across education and employment
verticals, as there is strong demand for agile technology to support the upskilling and reskilling of our workforce in
Australia, a key plank of economic recovery. This is evidenced by the policy response from Federal and State
Governments, including the JobTrainer program which is set to commit over $2 billion in funding to support apprenticeships
and create 340,000 new training places that will benefit many ReadyTech customers.
“Despite the impact of COVID-19 on the Australian economy in Q4 FY20, our business has responded well with FY20 Q4
new business up 55% compared to FY19 Q4. While COVID-19 has impacted the operating environment and created much
uncertainty, we are seeing positive customer trends as the need to more effectively and efficiently remote manage
employees and students has become critical. We believe these trends will gain momentum in FY21 and support further
growth."
“The strong pipeline we have in place, combined with forward visibility of sales and revenues, gives the Board confidence
to provide guidance for FY21, with the Group expected to deliver revenue growth in the mid-teens in terms of percentage
growth, with an EBITDA margin in the range of 37%-39% (inclusive of LTIP).”
Significant changes in the state of affairs
On 9 October 2019, the Group acquired 100% of the ordinary shares in WageLink Australia Pty Limited ('WageLink') and
Zambion Limited and its controlled entities ('Zambion') for total consideration of $1,550,000 and $10,317,000 respectively.
WageLink provides a range of payroll management services for small to medium sized businesses whilst Zambion
provides web and app based payroll, HR, time and attendance, leave management system for small to medium sized
businesses to manage their workforce.
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
The impact of the Coronavirus (COVID-19) pandemic is ongoing and it is not practicable to estimate the potential impact,
positive or negative, after the reporting date. The situation is rapidly developing and is dependent on measures imposed by
the Australian Government and other countries, such as maintaining social distancing requirements, quarantine, travel
restrictions and any economic stimulus that may be provided.
Education
ReadyTech’s cloud-based software for managing people has proven to be resilient through the COVID-19 environment,
with high recurring revenues of approximately 89% and low churn. In addition, ReadyTech has low exposure to the
international student segment, accounting for only 3% of total students serviced by our Student Management System
platforms.
ReadyTech has also experienced growing momentum in the Back-to-Work sector, where clients are supporting job seekers
with self-service support and job search to get back into the workforce. The rapid increase in JobSeeker caseloads and the
increased support ReadyTech is providing to this segment of the market is positive.
Workforce Solutions (Employment)
ReadyTech’s workforce solutions platforms are at the heart of employer systems. The significant changes to compliance
requirements in 2020 that affect awards, annualised salaries, single touch payroll and now the complexity of managing
JobKeeper payments, are all standard capabilities of the software platform.
No other matter or circumstance has arisen since 30 June 2020 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
administration, 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.
Environmental regulation
The Group is not subject to any significant environmental regulation under Australian Commonwealth or State law.
Information on Directors
Name:
Title:
Qualifications:
Experience and expertise:
Tony Faure
Independent Non-Executive Chairman
Tony holds a Bachelor of Economics (hons) from the University of Sussex.
Tony is a deeply experienced business leader with a career history that includes
advising some of Australia’s leading technology and digital media companies.
Other current directorships:
Former directorships (last 3 years): Stackla, Medical Media.
Special responsibilities:
Interests in shares:
Name:
Title:
Qualifications:
Experience and expertise:
A former CEO of both ninemsn and HomeScreen Entertainment, Tony was the launch
Managing Director of Yahoo! Australia & NZ between 1997 and 2001. He is a
respected board member and has previously been a 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.
Chairman of oOh!media Ltd (ASX: OML), Uno Homeloans, PredictHQ Limited
Member of the Audit and Risk Committee and Remuneration and Nomination
Committee
224,818 ordinary shares
Marc Washbourne
Chief Executive Officer
Marc achieved a first-class in History from the University of Leeds, UK.
Marc Washbourne is a founder of the ReadyTech business and was appointed CEO
in 2006. A former software developer and original architect of JobReady, Marc brings
to ReadyTech over 20 years of experience in technology and software solutions
within the education and employment industries.
Marc now heads up a global team of 200 people committed to the innovation and
better technology for over 4,000 customers. Marc couples his strong technical
background with a strategic vision for ReadyTech’s Software-as-a-Service ('SaaS')
products and underpinning best practice approaches shared across the platforms.
Other current directorships:
None
Former directorships (last 3 years): None
None
Special responsibilities:
4,008,414 ordinary shares
Interests in shares:
18
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2020 READYTECH ANNUAL REPORT2020 READYTECH ANNUAL REPORT
ReadyTech Holdings Limited
Directors' report
30 June 2020
Name:
Title:
Qualifications:
Experience and expertise:
Elizabeth Crouch AM
Independent Non-Executive Director
Elizabeth holds a Bachelor of Economics and will complete a Master of Cyber
Security in 2020. She is a Fellow of the Australian Institute of Company Directors.
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.
Elizabeth is the Emeritus Deputy Chancellor of Macquarie University and held
previous non-executive Director roles with Chandler Macleod Group, McGrath Estate
Agents and Macquarie University Hospital.
Other current directorships:
Former directorships (last 3 years): None
Special responsibilities:
She chairs the Board of the Sydney Children’s Hospital Network, CREST-ANZ and
SGS Economics and Planning and is also on the Boards of Bingo Industries and the
NSW Government’s Institute of Sport and Health Infrastructure.
Non-Executive Director of Bingo Industries Ltd (ASX: BIN)
Chairman of the Audit and Risk Committee and a member of the Remuneration and
Nomination Committee
9,934 ordinary shares
ReadyTech Holdings Limited
Directors' report
30 June 2020
Name:
Title:
Qualifications:
Experience and expertise:
Tom Matthews
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 17 years of experience in private equity, principal investment,
investment banking and middle market advisory and valuations in both Australia and
the UK.
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, Marque Group, Open Office and ONCALL. 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.
Marque Group, Open Office, ONCALL
Other current directorships:
Former directorships (last 3 years): None
None
Special responsibilities:
34,565,926 ordinary shares
Interests in shares:
Interests in shares:
Name:
Title:
Qualifications:
Experience and expertise:
Timothy Ebbeck
Independent Non-Executive Director
Timothy holds a Bachelor of Economics, 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.
Timothy has over 30 years of board, executive, and advisory experience across a
breadth of industries including technology, media, consulting, and finance.
Timothy’s 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.
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships:
Former directorships (last 3 years):
Special responsibilities:
Interests in shares:
He is presently principal of Ebbeck TIG Consulting and consultant to MyWave.AI
Group.
None
IXUP Limited (ASX: IXU), GeoOp Limited (NZE: GEO), Nextgen Distribution Pty Ltd,
Nvoi Limited (ASX: NVO).
Chairman of the Remuneration and Nomination Committee and a member of the
Audit and Risk Committee
6,623 ordinary shares
Other current directorships:
Mark Summerhayes
Alternate Non-Executive Director to Tom Matthews
Mark holds a Master’s Degree in Economics from the University of Cambridge.
After graduating from Cambridge University in 1987, Mark spent seven years at Bain
& Company advising corporates on a mix of strategy, Mergers and Acquisitions
('M&A'), and operational improvement projects. He was based in London, Munich and
Sydney. Mark led assignments for leading European players in the Fast-Moving
Consumer Goods ('FMCG'), financial services, telecoms healthcare and industrial
sectors. In 1996 Mark co-founded SB Capital Partners, a private equity partnership,
which was backed by Bain Capital, one of the leading US private equity firms. On the
back of the success of this venture, Bain Capital subsequently launched its first
dedicated European buy-out fund. In parallel to this activity, Mark assisted a wealthy
Norwegian family build its own portfolio of private equity investments in both early and
late stage situations and private equity funds. In 2001 Mark joined Smedvig Capital
full time and as a Managing Director was one of the senior executives responsible for
investing, managing and reporting on a diversified A$350 million private equity
portfolio. Mark moved to Sydney in 2005 to join Pemba Capital Partners and co-led
the spin out of the captive fund from Pemba in 2009 and then more recent $650
million fundraising (backed by HarbourVest and a group of other global and local LPs)
which established the firm as one of the leaders in its segment in Australia and NZ.
Chairman of the Board at Coverforce and a Director of Ausreo, Instant Access,
InteriorCo and ONCALL.
Former directorships (last 3 years): None
None
Special responsibilities:
None
Interests in shares:
Company secretaries
Nimesh Shah, Melissa Jones and William Hundy are joint company secretaries.
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.
20
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2020 READYTECH ANNUAL REPORT2020 READYTECH ANNUAL REPORT
ReadyTech Holdings Limited
Directors' report
30 June 2020
ReadyTech Holdings Limited
Directors' report
30 June 2020
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).
William Hundy is a Solicitor and Company Secretary with Company Matters Pty Limited. William has over 30 years’
experience as a lawyer, company secretary and governance professional. William is admitted as a Solicitor of the Supreme
Court of New South Wales and holds a Bachelor of Laws, Bachelor of Commerce (UNSW), a Bachelor of Science
(University of Sydney) and a Diploma of Corporate Management. He is a fellow of the Governance Institute of Australia,
the Chartered Governance Institute and Australian Institute of Company Directors.
Meetings of Directors
The number of meetings of the company's Board of Directors ('the Board') held during the period ended 30 June 2020, and
the number of meetings attended by each Director were:
Full Board
Attended
Held
Nomination and
Remuneration Committee
Attended
Held
Audit and Risk Committee
Attended
Held
Tony Faure
Marc Washbourne**
Elizabeth Crouch
Timothy Ebbeck
Tom Matthews**
Mark Summerhayes*
13
13
13
13
12
7
13
13
13
13
13
12
2
2
2
2
2
-
2
2
2
2
2
-
4
4
4
4
4
-
4
4
4
4
4
-
Held: represents the number of meetings held during the time the Director held office.
Mark Summerhayes attended six board meetings as an observer and one meeting as alternative director
*
** Marc Washbourne and Tom Matthews attended four Audit and Risk Committee meetings and two Nomination and
Remuneration Committee meetings as observers
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 ('KMP') 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
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 incentives 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.
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 2020, 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 Director who devotes special attention to the business of the Group or who performs services which, in
the opinion of the Remuneration Committee, 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; and
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 remuneration.
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.
22
12
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2020 READYTECH ANNUAL REPORT2020 READYTECH ANNUAL REPORT
ReadyTech Holdings Limited
Directors' report
30 June 2020
The Group currently provides certain members of its senior management team with annual short-term incentives ('STI')
which become payable upon satisfaction of specified performance criteria. These incentives are set out in each KMP
service agreement. Payment of STI's in any given year will be determined by the company and will be conditional upon
achievement of:
●
●
performance criteria tailored to each respective role (if any); and
the Group’s financial performance against criteria set by the Nomination and Remuneration Committee.
No STI will be payable if the performance criteria are not met by the relevant KMP with respect to his or her STI award.
The STI program is designed to align the targets of the business units with the performance hurdles of executives. STI
payments are granted to executives based on specific annual targets and key performance indicators ('KPI's') being
achieved. KPI's include profit contribution, customer satisfaction, leadership contribution and product management.
From time to time the Nomination and Remuneration Committee may, at their discretion, award bonuses to certain
executives in recognition of work performed which are not linked to any specified performance criteria.
For KMP, the STI is maximum 40% of base salary with 70% based on Financial KPI and 30% on Personal KPI's.
The Financials KPIs are based on achieving Group revenue and Group net profit after tax ('NPAT') targets.
The Group will implement a long-term incentives ('LTI') plan in the financial year 2021.
Group performance and link to remuneration
Remuneration for certain individuals is directly linked to the performance of the Group. 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.
Refer to the section 'Additional information' below for details of the earnings and total shareholders return for the last 4
years.
Use of remuneration consultants
The Group did not engage any remuneration consultants during the years ended 30 June 2020 and 30 June 2019.
Details of remuneration
Amounts of remuneration
Details of the remuneration of key management personnel of the Group are set out in the following tables.
The key management personnel of the Group consisted of the following Directors of ReadyTech Holdings Limited:
●
Tony Faure - Non-Executive Chairman
● Marc Washbourne - Chief Executive Officer
Elizabeth Crouch - Non-Executive Director
●
Timothy Ebbeck - Non-Executive Director
●
●
Tom Matthews - Non-Executive Director
● Mark Summerhayes - Alternate Non-Executive Director to Tom Matthews (appointed on 22 July 2019)
And the following person:
●
Nimesh Shah - Chief Financial Officer
ReadyTech Holdings Limited
Directors' report
30 June 2020
2020
Non-Executive Directors:
Tony Faure
Elizabeth Crouch
Timothy Ebbeck
Executive Directors:
Marc Washbourne*
Other Key Management
Personnel:
Nimesh Shah*
Short-term benefits
Post-
employment
benefits
Long-term
benefits
Share-
based
payments
Cash salary
and fees
$
Cash
bonus
$
Annual
leave
$
Super-
annuation
$
Long
service
leave
$
Equity-
settled
$
150,000
69,996
70,038
-
-
-
-
-
-
-
-
-
-
-
-
310,000
24,800
(719)
21,003
3,112
287,500
887,534
24,000
48,800
1,670
951
21,003
42,006
1,350
4,462
Total
$
150,000
69,996
70,038
358,196
335,523
983,753
-
-
-
-
-
-
*
Marc Washbourne and Nimesh Shah received cash bonuses which were approved by the Nomination and
Remuneration Committee and were not linked to any performance criteria.
Short-term benefits
Post-
employment
benefits
Long-term
benefits
Share-
based
payments
Cash salary
and fees
$
Cash
bonus
$
Annual
leave
$
Super-
annuation
$
Long
service
leave
$
Equity-
settled**
$
Total
$
37,500
17,499
17,499
31,846
285,000
257,500
115,640
115,760
878,244
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
262,740
-
-
-
300,240
17,499
17,499
31,846
9,313
20,531
1,174
-
316,018
8,703
(9,196)
(6,873)
1,947
20,531
15,760
15,640
72,462
511
2,266
2,293
6,244
-
-
-
262,740
287,245
124,470
126,820
1,221,637
2019
Non-Executive Directors:
Tony Faure*
Elizabeth Crouch*
Timothy Ebbeck*
Tom Matthews*
Executive Directors:
Marc Washbourne
Other Key Management
Personnel:
Nimesh Shah
Michael Benyon*/***
Rick Verloop*/***
*
**
represents remuneration from the date of appointment and/or to the date of resignation.
Prior to the IPO, 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.
*** Michael Benyon and Rick Verloop resigned on a Directors from various subsidiaries of the Group on 8 March 2019
and were no longer designated as a KMP.
24
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2020 READYTECH ANNUAL REPORT2020 READYTECH ANNUAL REPORT
ReadyTech Holdings Limited
Directors' report
30 June 2020
ReadyTech Holdings Limited
Directors' report
30 June 2020
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Additional disclosures relating to key management personnel
Name
Non-Executive Directors:
Tony Faure
Elizabeth Crouch
Timothy Ebbeck
Executive Directors:
Marc Washbourne
Other Key Management
Personnel:
Nimesh Shah
Michael Benyon
Rick Verloop
Fixed remuneration
2019
2020
At risk - STI
At risk - LTI
2020
2019
2020
2019
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:
100%
100%
100%
100%
100%
100%
-
-
-
93%
100%
7%
93%
-
-
100%
100%
100%
7%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Ordinary shares
Tony Faure
Marc Washbourne
Elizabeth Crouch
Timothy Ebbeck
Tom Matthews*
Nimesh Shah
Balance at
the start of
the year
Received
as part of
remuneration
Additions
Disposals/
other
207,113
4,008,414
9,934
6,623
34,539,611
1,290,432
40,062,127
-
-
-
-
-
-
-
55,000
-
-
-
26,315
-
81,315
-
-
-
-
-
-
-
Balance at
the end of
the year
262,113
4,008,414
9,934
6,623
34,565,926
1,290,432
40,143,442
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 provides for short term incentives. Upon the termination of Mr Washbourne’s
employment contract, Mr Washbourne will be subject to post employment restraints
for up to 12 months.
Nimesh Shah
Chief Financial Officer
7 August 2017
No fixed term
Base salary of $300,000 and 6 month notice period. Mr Shah’s employment contract
provides for short term incentives. Upon the termination of Mr Shah's employment
contract, Mr Shah will be subject to post employment restraints for up to 12 months.
Key management personnel have no entitlement to termination payments in the event of removal for misconduct.
Share-based compensation
*
34,539,611 is attributed to Tom Matthews through his capacity as director of Pemba Capital Partners.
Other transactions with key management personnel and their related parties
During the year ended 30 June 2020, Tom Matthews and Mark Summerhayes received $nil (2019: $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 2020 $nil (2019: $nil) was outstanding in relation to the services provided.
This concludes the remuneration report, which has been audited.
Shares under option
There were no unissued ordinary shares of ReadyTech Holdings Limited under option outstanding at the date of this
report.
Shares issued on the exercise of options
There were no ordinary shares of ReadyTech Holdings Limited issued on the exercise of options during the year ended 30
June 2020 and up to the date of this 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.
Issue of shares
There were no shares issued to Directors and other key management personnel as part of compensation during the year
ended 30 June 2020.
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.
Options
There were no options over ordinary shares issued to Directors and other key management personnel as part of
compensation that were outstanding as at 30 June 2020.
There were no options over ordinary shares granted to or vested by Directors and other key management personnel as
part of compensation during the year ended 30 June 2020.
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 29 to the financial statements.
26
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2020 READYTECH ANNUAL REPORT2020 READYTECH ANNUAL REPORT
ReadyTech Holdings Limited
Directors' report
30 June 2020
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 29 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
Chairman
26 August 2020
Sydney
28
18
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Grosvenor Place
225 George Street
Sydney, NSW, 2000
Australia
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Phone: +61 2 9322 7000
Grosvenor Place
www.deloitte.com.au
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
The Directors
ReadyTech Holdings Limited
Level 1
35 Saunders Street
26 August 2020
Pyrmont NSW 2009
Dear Directors
26 August 2020
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
Dear Directors
of independence to the directors of ReadyTech Holdings Limited.
Auditor’s Independence Declaration to ReadyTech Holdings Limited
As lead audit partner for the audit of the financial report of ReadyTech Holdings Limited for the year ended 30
June 2020, I declare that to the best of my knowledge and belief, there have been no contraventions of:
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.
(i)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
As lead audit partner for the audit of the financial report of ReadyTech Holdings Limited for the year ended 30
June 2020, I declare that to the best of my knowledge and belief, there have been no contraventions of:
(ii) any applicable code of professional conduct in relation to the audit.
(i)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(ii) any applicable code of professional conduct in relation to the audit.
Yours faithfully
DELOITTE TOUCHE TOHMATSU
Yours faithfully
Joshua Tanchel
DELOITTE TOUCHE TOHMATSU
Partner
Chartered Accountants
Joshua Tanchel
Partner
Chartered Accountants
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (“DTTL”), its global network of member firms, and their related entities
(collectively, the “Deloitte organisation”). DTTL (also referred to as “Deloitte Global”) and each of its member firms and related entities are
legally separate and independent entities, which cannot obligate or bind each other in respect of third parties. DTTL and each DTTL member
firm and related entity is liable only for its own acts and omissions, and not those of each other. DTTL does not provide services to clients.
Please see www.deloitte.com/about to learn more.
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (“DTTL”), its global network of member firms, and their related entities
(collectively, the “Deloitte organisation”). DTTL (also referred to as “Deloitte Global”) and each of its member firms and related entities are
legally separate and independent entities, which cannot obligate or bind each other in respect of third parties. DTTL and each DTTL member
Liability limited by a scheme approved under Professional Standards Legislation.
firm and related entity is liable only for its own acts and omissions, and not those of each other. DTTL does not provide services to clients.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
Please see www.deloitte.com/about to learn more.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
19
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29
2020 READYTECH ANNUAL REPORT2020 READYTECH ANNUAL REPORT
ReadyTech Holdings Limited
Statement of profit or loss and other comprehensive income
For the year ended 30 June 2020
ReadyTech Holdings Limited
Statement of financial position
As at 30 June 2020
Revenue from contracts with customers
5
39,254
32,711
Assets
Consolidated
Note
2020
$'000
2019
$'000
Consolidated
Note
2020
$'000
2019
$'000
Interest revenue calculated using the effective interest method
14
20
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
Profit/(loss) before income tax (expense)/benefit
Income tax (expense)/benefit
Profit/(loss) after income tax (expense)/benefit for the year attributable to the
owners of ReadyTech Holdings Limited
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation
Other comprehensive income for the year, net of tax
Total comprehensive income for the year attributable to the owners of
ReadyTech Holdings Limited
Basic earnings per share
Diluted earnings per share
6
7
(2,836)
(17,349)
(9,375)
(467)
(800)
(591)
(1,047)
(365)
-
(845)
(920)
(1,961)
(14,033)
(8,063)
(464)
(6,482)
(678)
(707)
(384)
(112)
(526)
(1,938)
4,673
(2,617)
(730)
1,127
3,943
(1,490)
(86)
(86)
-
-
3,857
(1,490)
Cents
Cents
40
40
4.93
4.93
(2.15)
(2.15)
Current assets
Cash and cash equivalents
Trade and other receivables
Contract assets
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
Lease liabilities
Income tax payable
Employee benefits
Provisions
Contingent consideration
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
8
9
10
11
12
13
7
14
15
16
7
17
18
19
20
21
22
23
24
25
9,214
4,536
540
720
15,010
1,016
62,607
2,818
4,399
70,840
6,322
3,474
-
471
10,267
532
52,918
2,046
3,909
59,405
85,850
69,672
3,890
11,741
828
1,709
2,603
-
4,096
24,867
214
25,000
61
2,310
331
27,916
3,061
10,354
543
246
995
49
756
16,004
496
21,500
59
1,653
750
24,458
52,783
40,462
33,067
29,210
119,581
(83,030)
(3,484)
119,581
(82,944)
(7,427)
33,067
29,210
30
The above statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
20
The above statement of financial position should be read in conjunction with the accompanying notes
21
31
2020 READYTECH ANNUAL REPORT2020 READYTECH ANNUAL REPORT
ReadyTech Holdings Limited
Statement of changes in equity
For the year ended 30 June 2020
Consolidated
Balance at 1 July 2018
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 24)
Share-based payments
Reorganisation reserve
Deemed contribution
Issued
capital
$'000
Reserves
$'000
Accumulated
losses
$'000
Total equity
$'000
28,432
(10,058)
(6,325)
12,049
-
-
-
-
-
-
(1,490)
-
(1,490)
-
(1,490)
(1,490)
91,149
-
-
-
-
162
(73,048)
-
-
-
-
388
91,149
162
(73,048)
388
Balance at 30 June 2019
119,581
(82,944)
(7,427)
29,210
Consolidated
Balance at 1 July 2019
Issued
capital
$'000
Reserves
$'000
Accumulated
losses
$'000
Total equity
$'000
119,581
(82,944)
(7,427)
29,210
Profit after income tax expense for the year
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
-
-
-
-
(86)
(86)
3,943
-
3,943
3,943
(86)
3,857
Balance at 30 June 2020
119,581
(83,030)
(3,484)
33,067
ReadyTech Holdings Limited
Statement of cash flows
For the year ended 30 June 2020
Consolidated
Note
2020
$'000
2019
$'000
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 acquisition costs
Payment of IPO costs
Income taxes paid
Net cash from operating activities
Cash flows from investing activities
Payment for purchase of subsidiaries, net of cash acquired
Payment of contingent consideration
Final payments for prior period's subsidiary acquisition
Payments for property, plant and equipment
Payments for intangibles
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares
Payment of share issue transaction costs and IPO expenses from proceeds
Proceeds from borrowings
Repayment of borrowings
Repayment of lease liabilities
Payment of bank guarantee
Net cash from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
37
35
28
11
12
24
Cash and cash equivalents at the end of the financial year
8
43,767
(27,587)
34,328
(21,495)
16,180
14
(920)
(312)
-
(1,211)
12,833
20
(1,938)
-
(4,480)
(4,330)
13,751
2,105
(5,426)
(2,119)
(756)
(639)
(4,329)
(1,454)
-
(480)
(322)
(3,592)
(13,269)
(5,848)
-
-
6,000
(2,500)
(612)
(478)
2,410
2,892
6,322
9,214
17,100
(3,859)
-
(8,250)
(512)
-
4,479
736
5,586
6,322
32
The above statement of changes in equity should be read in conjunction with the accompanying notes
22
The above statement of cash flows should be read in conjunction with the accompanying notes
23
33
2020 READYTECH ANNUAL REPORT2020 READYTECH ANNUAL REPORT
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2020
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 26 August 2020. 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 16 'Leases' and its related amendments, which was mandatorily effective for annual periods commencing on or after
1 January 2019 was early adopted effective from 1 July 2018, the impact of which was disclosed in the annual report for
the year ended 30 June 2019.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.
Details of new Accounting Standards and Interpretations adopted during the year ended 30 June 2020 which are most
relevant to the Group are provided below:
Interpretation 23 Uncertainty over Income Tax
The Group has adopted Interpretation 23 from 1 July 2019. The interpretation clarifies how to apply the recognition and
measurement requirements of AASB 112 ‘Income Taxes’ in circumstances where uncertain tax treatments exists. The
interpretation requires: the Group to determine whether each uncertain tax treatment should be treated separately or
together, based on which approach better predicts the resolution of the uncertainty; the Group to consider whether it is
probable that a taxation authority will accept an uncertain tax treatment; and if the Group concludes that it is not probable
that the taxation authority will accept an uncertain tax treatment, it shall reflect the effect of uncertainty in determining the
related taxable profit (tax loss), tax bases, unused tax losses, unused tax credits or tax rates, measuring the tax uncertainty
based on either the most likely amount or the expected value. In making the assessment it is assumed that a taxation
authority will examine amounts it has a right to examine and have full knowledge of all related information when making
those examinations. Interpretation 23 was adopted using the modified retrospective approach and as such comparatives
have not been restated. There was no impact of adoption on opening accumulated losses as at 1 July 2019.
Deficiency of net current assets
The statement of financial position has a deficiency of net current assets of $9,857,000 (2019: $5,737,000) at the reporting
date. The deficiency is attributable to contract liabilities of $11,741,000 (2019: $10,354,000) 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.
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2020
Note 2. Significant accounting policies (continued)
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 (prior year)
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 33.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of ReadyTech Holdings
Limited as at 30 June 2020 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.
34
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25
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2020 READYTECH ANNUAL REPORT2020 READYTECH ANNUAL REPORT
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2020
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2020
Note 2. Significant accounting policies (continued)
Note 2. Significant accounting policies (continued)
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 the entity's functional currency 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.
Foreign operations
The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the
reporting date. The revenues and expenses of foreign operations are translated into Australian dollars using the average
exchange rates, which approximate the rates at the dates of the transactions, for the period. All resulting foreign exchange
differences are recognised in other comprehensive income through the foreign currency reserve in equity.
The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is disposed of.
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, Zambion, HR3 Plus 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.
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 gain access to 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.
Revenue is recognised on the basis of stage of completion. ReadyTech determines stage of completion based on input
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.
(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.
(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. There
is optionality for customers to purchase additional support and maintenance. This is accounted for as a separate
performance obligation and revenue is recognised over time.
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.
(iii) Training, consultancy and other revenue
Training, consultancy 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.
36
26
27
37
2020 READYTECH ANNUAL REPORT2020 READYTECH ANNUAL REPORT
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2020
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2020
Note 2. Significant accounting policies (continued)
Note 2. Significant accounting policies (continued)
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
Variable consideration within the transaction price, if any, reflects concessions provided to the customer such as additional
licenses, discounts, rebates and refunds. 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.
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.
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.
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.
Interest income is recognised on a time proportionate basis that takes into account the effective yield on the financial
asset.
Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-current classification.
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.
Government grants
Government grants relating to costs are deferred and recognised in profit or loss over the period necessary to match them
with the costs that they are intended to compensate.
During the financial year ended 30 June 2020, the Group received $210,000 in payments from the Australian Government
as part of its ‘Boosting Cash Flow for Employers’ scheme in response to the Coronavirus (‘COVID-19’) pandemic. These
non-tax amounts have been net off in the relevant expenses.
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.
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.
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.
Contract assets
Contract assets are recognised when the Group has transferred goods or services to the customer but where the Group is
yet to establish an unconditional right to consideration. Contract assets are treated as financial assets for impairment
purposes.
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2020 READYTECH ANNUAL REPORT2020 READYTECH ANNUAL REPORT
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2020
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2020
Note 2. Significant accounting policies (continued)
Note 2. Significant accounting policies (continued)
Financial assets at amortised cost
A financial asset is measured at amortised cost only if both of the following conditions are met: (i) it is held within a
business model whose objective is to hold assets in order to collect contractual cash flows; and (ii) the contractual terms of
the financial asset represent contractual cash flows that are solely payments of principal and interest.
Impairment of financial assets
The Group recognises a loss allowance for expected credit losses on financial assets which are either measured at
amortised cost or fair value through other comprehensive income. The measurement of the loss allowance depends upon
the Group's assessment at the end of each reporting period as to whether the financial instrument's credit risk has
increased significantly since initial recognition, based on reasonable and supportable information that is available, without
undue cost or effort to obtain.
Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month expected
credit loss allowance is estimated. This represents a portion of the asset's lifetime expected credit losses that is attributable
to a default event that is possible within the next 12 months. Where a financial asset has become credit impaired or where
it is determined that credit risk has increased significantly, the loss allowance is based on the asset's lifetime expected
credit losses. The amount of expected credit loss recognised is measured on the basis of the probability weighted present
value of anticipated cash shortfalls over the life of the instrument discounted at the original effective interest rate.
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.
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 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.
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. Useful life of intangible assets are 5 years.
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.
Patents and trademarks
Significant costs associated with patents and trademarks are deferred and amortised on a straight-line basis over the
period of their expected benefit, being their finite life of 10 years.
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.
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.
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2020 READYTECH ANNUAL REPORT2020 READYTECH ANNUAL REPORT
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2020
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2020
Note 2. Significant accounting policies (continued)
Note 2. Significant accounting policies (continued)
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.
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.
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.
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 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.
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.
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.
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.
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2020 READYTECH ANNUAL REPORT2020 READYTECH ANNUAL REPORT
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2020
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2020
Note 2. Significant accounting policies (continued)
Note 2. Significant accounting policies (continued)
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 AASB 3 '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.
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 2020. 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.
Conceptual Framework for Financial Reporting (Conceptual Framework)
The revised Conceptual Framework is applicable to annual reporting periods beginning on or after 1 January 2020 and
early adoption is permitted. The Conceptual Framework contains new definition and recognition criteria as well as new
guidance on measurement that affects several Accounting Standards. Where the Group has relied on the existing
framework in determining its accounting policies for transactions, events or conditions that are not otherwise dealt with
under the Australian Accounting Standards, the Group may need to review such policies under the revised framework. At
this time, the application of the Conceptual Framework is not expected to have a material impact on the Group's financial
statements.
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.
Coronavirus (COVID-19) pandemic
Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic has had, or may
have, on the Group based on known information. This consideration extends to the nature of the products and services
offered, customers, supply chain, staffing and geographic regions in which the Group operates. Other than as addressed in
specific notes, there does not currently appear to be either any significant impact upon the financial statements or any
significant uncertainties with respect to events or conditions which may impact the Group unfavourably as at the reporting
date or subsequently as a result of the Coronavirus (COVID-19) pandemic.
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, historical collection rates, the impact
of the Coronavirus (COVID-19) pandemic and forward-looking information that is available. The allowance for expected
credit losses, as disclosed in note 9, is calculated based on the information available at the time of preparation. The actual
credit losses in future years may be higher or lower.
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. Refer to note 28 for further information.
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2020 READYTECH ANNUAL REPORT2020 READYTECH ANNUAL REPORT
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2020
Note 3. Critical accounting judgements, estimates and assumptions (continued)
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. Refer to note 12 for further information.
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.
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2020
Note 4. Operating segments (continued)
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.
EBITDA is a financial measure which is not prescribed by Australian Accounting Standards (‘AAS’) and represents the
profit under AAS adjusted for non-specific non-cash and significant items. The Directors consider EBITDA to reflect the
core earnings of the Group.
The information reported to the CODM is on a monthly basis.
Types of products and services
The principal products and services of each of these operating segments are as follows:
Education
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
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.
Workforce Solutions
(Employment)
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.
Refer to note 5 for disclosure of revenues from external customers for these principal products and services.
Intersegment transactions
No intersegment transactions were made during the year ended 30 June 2020 (30 June 2019: $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 2020 and 30 June 2019 no single customer contributed 10% or more to the Group's
external revenue.
Contingent consideration
The contingent consideration liability is the difference between the total purchase consideration, usually on an acquisition
of a business combination, and the amounts paid or settled up to the reporting date, discounted to net present value. The
Group applies provisional accounting for any business combination. Any reassessment of the liability during the earlier of
the finalisation of the provisional accounting or 12 months from acquisition-date is adjusted for retrospectively as part of the
provisional accounting rules in accordance with AASB 3 'Business Combinations'. Thereafter, at each reporting date, the
deferred consideration liability is reassessed against revised estimates and any increase or decrease in the net present
value of the liability will result in a corresponding gain or loss to profit or loss. The increase in the liability resulting from the
passage of time is recognised as a finance cost. Refer to note 35 for further information.
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. Refer to note 35 for further information.
Capitalised software development expenditure
Software development expenditure have been capitalised only when the Group can demonstrate the technical feasibility of
completing the intangible asset so that it will be available for use or sale. Key judgements are applied in considering costs
to be capitalised which includes determining expenditures directly related to these activities and allocating overheads
between those that are expensed and capitalised. In addition, costs are only capitalised that are expected to be recovered
either through successful development or sale of the relevant software. To the extent that capitalised costs are determined
not to be recoverable in the future, they will be written off in the period in which this determination is made.
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.
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2020 READYTECH ANNUAL REPORT2020 READYTECH ANNUAL REPORT
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2020
Note 4. Operating segments (continued)
Operating segment information
Consolidated - 2020
Revenue
Sales to external customers
Interest revenue
Total revenue
EBITDA
Depreciation and amortisation
Interest revenue
Finance costs
Profit before income tax expense
Income tax expense
Profit after income tax expense
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
Workforce
Solutions
(Employment)
$'000
Education
$'000
Corporate
$'000
Total
$'000
17,920
13
17,933
21,334
1
21,335
-
-
-
8,198
8,782
(2,026)
39,254
14
39,268
14,954
(9,375)
14
(920)
4,673
(730)
3,943
Workforce
Solutions
(Employment)
$'000
Education
$'000
Corporate
$'000
Total
$'000
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)
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
Revenue from contracts with customers
Consolidated
2020
$'000
2019
$'000
39,254
32,711
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2020
Note 5. Revenue from contracts with customers (continued)
Disaggregation of revenue
The disaggregation of revenue from contracts with customers is as follows:
Consolidated - 2020
Major product lines
Subscription, licence and hosting
Implementation, training, consultancy and other
Consolidated - 2019
Major product lines
Subscription, licence and hosting
Implementation, training, consultancy and other
Workforce
Solutions
(Employment)
$'000
Education
$'000
Total
$'000
16,204
1,716
18,888
2,446
35,092
4,162
17,920
21,334
39,254
Workforce
Solutions
(Employment)
$'000
Education
$'000
Total
$'000
11,776
1,205
17,625
2,105
29,401
3,310
12,981
19,730
32,711
The aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied (or partially
unsatisfied) as of the end of the reporting period is $6.5 million. The Group expects to recognise this revenue over the
remaining four year duration of the contracts on a straight line basis.
Note 6. Expenses
Profit/(loss) before income tax includes the following specific expenses:
Finance costs
Interest and finance charges paid/payable on borrowings
Interest charges on lease liability right-of-use asset
Finance costs expensed
Superannuation expense
Defined contribution superannuation expense
Business combination expense included in employee benefits expense
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
2020
$'000
2019
$'000
880
40
920
1,797
141
1,938
1,478
1,316
-
-
(803)
426
298
4
-
6,357
48
38
39
49
2020 READYTECH ANNUAL REPORT2020 READYTECH ANNUAL REPORT
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2020
Note 6. Expenses (continued)
*
**
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.
Note 7. 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
Profit/(loss) before income tax (expense)/benefit
Tax at the statutory tax rate of 27.5% (2019: 30%)
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Acquisition costs
Research and development expenses
Research and development tax offset
Provision for bonus
Other non-assessable items
Adjustment recognised for prior periods
Income tax expense/(benefit)
Amounts credited directly to equity
Deferred tax assets
Consolidated
2020
$'000
2019
$'000
2,812
(1,805)
(277)
2,117
(2,943)
(301)
730
(1,127)
(1,805)
(2,943)
4,673
(2,617)
1,285
(785)
-
675
(945)
-
(8)
1,007
(277)
29
-
-
(241)
171
(826)
(301)
730
(1,127)
Consolidated
2020
$'000
2019
$'000
-
(526)
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2020
Note 7. 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
Brand names
IPO costs
Right-of-use assets
Lease liabilities
Other
Deferred tax asset
Movements:
Opening balance
Credited to profit or loss
Credited to equity
Additions through business combinations and common control transaction
Closing balance
Income tax payable
Income tax payable
Consolidated
2020
$'000
2019
$'000
61
1,178
3,288
809
344
1,123
50
(3,950)
(131)
1,324
(697)
864
136
16
992
3,275
531
226
1,204
91
(4,356)
-
1,834
-
-
96
4,399
3,909
3,909
1,805
-
(1,315)
4,399
532
2,943
526
(92)
3,909
Consolidated
2020
$'000
2019
$'000
1,709
246
As at 30 June 2020, the Group has capital losses totalling $3,005,000 (2019: $3,005,000) which have not been recognised
in the statement of financial position as the recovery of this benefit is uncertain.
50
40
41
51
2020 READYTECH ANNUAL REPORT2020 READYTECH ANNUAL REPORT
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2020
Note 8. Current assets - cash and cash equivalents
Cash at bank
Cash on deposit
Note 9. Current assets - trade and other receivables
Trade receivables
Less: Allowance for expected credit losses
Other receivables
Consolidated
2020
$'000
2019
$'000
9,210
4
9,214
6,243
79
6,322
Consolidated
2020
$'000
2019
$'000
3,612
(221)
3,391
1,145
4,536
3,096
(53)
3,043
431
3,474
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2020
Note 10. Current assets - contract assets
Contract assets
Reconciliation
Reconciliation of the written down values at the beginning and end of the current and
previous financial year are set out below:
Opening balance
Additions
Closing balance
Consolidated
2020
$'000
2019
$'000
540
-
540
540
-
-
-
-
Allowance for expected credit losses
The allowance for expected credit losses on contract assets for the year ended 30 June 2020 is $nil (2019: $nil).
Note 11. Non-current assets - property, plant and equipment
Allowance for expected credit losses
The Group has recognised a loss of $298,000 in profit or loss in respect of impairment of receivables for the period ended
30 June 2020 (2019: $4,000).
Leasehold improvements - at cost
Less: Accumulated depreciation
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
Expected credit loss rate
2020
%
2019
%
Carrying amount
2019
$'000
2020
$'000
Allowance for expected
credit losses
2020
$'000
2019
$'000
1.00%
2.50%
30.00%
49.50%
-
-
-
25.00%
1,428
1,770
216
198
3,612
1,778
914
194
210
3,096
14
44
65
98
221
-
-
-
53
53
The Group has analysed and provided more allowance for expected credit losses due to the Coronavirus ('Covid-19')
pandemic.
Movements in the allowance for expected credit losses are as follows:
Fixtures and fittings - at cost
Less: Accumulated depreciation
Motor vehicles - at cost
Less: Accumulated depreciation
Computer equipment - at cost
Less: Accumulated depreciation
Office equipment - at cost
Less: Accumulated depreciation
Opening balance
Additional provisions recognised
Receivables written off during the year as uncollectable
Closing balance
Consolidated
2020
$'000
2019
$'000
53
298
(130)
221
271
4
(222)
53
Consolidated
2020
$'000
2019
$'000
920
(378)
542
124
(31)
93
20
(6)
14
358
(148)
210
265
(108)
157
1,016
617
(303)
314
143
(104)
39
-
-
-
222
(137)
85
324
(230)
94
532
52
42
43
53
2020 READYTECH ANNUAL REPORT2020 READYTECH ANNUAL REPORT
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2020
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2020
Note 11. Non-current assets - property, plant and equipment (continued)
Note 12. 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:
Consolidated
Balance at 1 July 2018
Additions
Depreciation expense
Balance at 30 June 2019
Additions
Additions through business
combinations (note 35)
Disposals
Depreciation expense
Balance at 30 June 2020
Leasehold
improve-
ments
$'000
Fixtures and
fittings
$'000
Motor
vehicles
$'000
Computer
equipment
$'000
Office
equipment
$'000
Total
$'000
422
117
(225)
314
347
-
-
(119)
542
112
36
(109)
39
65
11
-
(22)
93
-
-
-
-
-
28
-
(14)
14
51
98
(64)
85
212
9
-
(96)
210
107
71
(84)
94
15
141
(1)
(92)
157
692
322
(482)
532
639
189
(1)
(343)
1,016
Note 12. Non-current assets - intangibles
Goodwill - at cost
Patents and trademarks - at cost
Customer relationships - at cost
Less: Accumulated amortisation
Software - at cost
Less: Accumulated amortisation
Consolidated
2020
$'000
2019
$'000
31,605
22,767
475
19,825
(5,463)
14,362
32,559
(16,394)
16,165
-
18,121
(3,605)
14,516
25,767
(10,132)
15,635
62,607
52,918
54
44
Consolidated
Balance at 1 July 2018
Additions
Additions through business combinations (note
35)
Amortisation expense
Balance at 30 June 2019
Additions
Additions through business combinations (note
35)
Exchange differences
Amortisation expense
Balance at 30 June 2020
Goodwill
$'000
Patents and
trademarks
$'000
Customer
relationships
$'000
Software
$'000
Total
$'000
21,250
-
1,517
-
22,767
-
8,872
(34)
-
31,605
-
-
-
-
-
-
477
(2)
-
475
15,633
-
605
(1,722)
14,516
-
1,707
(3)
(1,858)
16,396
3,592
902
(5,255)
15,635
4,329
2,524
15
(6,338)
53,279
3,592
3,024
(6,977)
52,918
4,329
13,580
(24)
(8,196)
14,362
16,165
62,607
Impairment testing
Goodwill acquired through business combinations has been allocated to the following groups of cash generating units
('CGU'):
Education
Workforce Solutions (Employment)
Consolidated
2020
$'000
2019
$'000
18,276
13,329
18,276
4,491
31,605
22,767
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 2021 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
Workforce Solutions
(Employment)
Pre-tax discount rate used
2020
%
2019
%
Terminal growth rate
2019
2020
%
%
EBITDA
growth rate
per annum
from FY21 to
FY25
2020
%
EBITDA
growth rate
per annum
from FY20 to
FY24
2019
%
17%
17%
17%
17%
45
1%
1%
3%
3%
1%
1%
3%
3%
55
2020 READYTECH ANNUAL REPORT2020 READYTECH ANNUAL REPORT
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2020
Note 12. Non-current assets - intangibles (continued)
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2020
Note 15. Current liabilities - contract liabilities
Impairment testing results
No impairment existed at 30 June 2020. 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.
Contract liabilities
Note 16. Current liabilities - lease liabilities
Note 13. Non-current assets - right-of-use assets
Right-of-use assets - at cost
Less: Accumulated depreciation
Consolidated
2020
$'000
2019
$'000
3,875
(1,057)
3,278
(1,232)
2,818
2,046
Lease liability
Refer to note 27 for further information on financial instruments.
Note 17. Current liabilities - employee benefits
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.
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Consolidated
Balance at 1 July 2018
Additions
Depreciation expense
Balance at 30 June 2019
Additions
Depreciation expense
Balance at 30 June 2020
Note 14. Current liabilities - trade and other payables
Trade payables
Accrued expenses
GST payable
Right-of-use
asset
$'000
1,389
1,261
(604)
2,046
1,608
(836)
2,818
Consolidated
2020
$'000
2019
$'000
185
2,050
1,655
3,890
806
1,621
634
3,061
Refer to note 27 for further information on financial instruments.
Contract liabilities
Employee benefits
Note 18. Current liabilities - provisions
Lease make good
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.
Note 19. Current liabilities - contingent consideration
Contingent consideration
Refer to note 28 and note 35 for further details on contingent consideration.
Note 20. Non-current liabilities - contract liabilities
56
46
47
57
Consolidated
2020
$'000
2019
$'000
11,741
10,354
Consolidated
2020
$'000
2019
$'000
828
543
Consolidated
2020
$'000
2019
$'000
2,603
995
Consolidated
2020
$'000
2019
$'000
-
49
Consolidated
2020
$'000
2019
$'000
4,096
756
Consolidated
2020
$'000
2019
$'000
214
496
2020 READYTECH ANNUAL REPORT2020 READYTECH ANNUAL REPORT
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2020
Note 21. Non-current liabilities - borrowings
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2020
Note 22. Non-current liabilities - provisions
Borrowings
25,000
21,500
Lease make good
Consolidated
2020
$'000
2019
$'000
Consolidated
2020
$'000
2019
$'000
61
59
Refer to note 27 for further information on financial instruments.
Total secured liabilities
The total secured liabilities (current and non-current) are as follows:
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.
Note 23. Non-current liabilities - lease liabilities
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)
The Group has established two facilities, Facility A and Facility B:
●
●
Facility A - $21,500,000 (30 June 2019: $21,500,000) with an amortising loan term over 3 years and an interest rate
set at BBSY plus a margin of 2.4% (30 June 2019: 2.75% to 3.75%) depending on the Net Leverage Ratio of the
Group. As at 30 June 2020, $21,500,000 (2019: $21,500,000) of the total facility has been drawn down.
Facility B - $6,000,000 (30 June 2019: $6,000,000) with a bullet term repayment after 3 years and an interest rate set
at BBSY plus a margin of 4.4% (30 June 2019: 3% to 4%) depending on the Net Leverage Ratio of the Group. As at
30 June 2020, $3,500,000 (2019: $nil) of the total facility has been drawn down.
Consolidated
2020
$'000
2019
$'000
25,000
21,500
Lease liability
Refer to note 27 for further information on financial instruments.
Consolidated
2020
$'000
2019
$'000
Current (note 16)
Non-current
Consolidated
2020
$'000
2019
$'000
2,310
1,653
Consolidated
2020
$'000
2019
$'000
828
2,310
3,138
543
1,653
2,196
21,500
6,000
27,500
21,500
3,500
25,000
-
2,500
2,500
21,500
6,000
27,500
21,500
-
21,500
-
6,000
6,000
Reconciliation
Reconciliation of lease liabilities (current and non-current) at the beginning and end of financial year are set out below:
Balance at start of the year
Additions
Repayment of lease liabilities
Balance at end of the year
Note 24. Equity - issued capital
Consolidated
2020
$'000
2019
$'000
2,196
1,554
(612)
3,138
1,447
1,261
(512)
2,196
Ordinary shares - fully paid
80,005,371
80,005,371
119,581
119,581
Consolidated
2020
Shares
2019
Shares
2020
$'000
2019
$'000
58
48
49
59
2020 READYTECH ANNUAL REPORT2020 READYTECH ANNUAL REPORT
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2020
Note 24. Equity - issued capital (continued)
Movements in ordinary share capital
Details
Date
Shares
Issue price
$'000
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)
1 July 2018
31 October 2018
19 March 2019
15 April 2019
16 April 2019
16 April 2019
38,171,440
100,000
100,000
1,138,383
29,237,269
-
11,258,279
-
$1.00
$2.63
$2.63
$0.00
$0.00
$1.51
$0.00
Balance
Balance
30 June 2019
80,005,371
30 June 2020
80,005,371
26,807
100
263
2,991
-
73,647
17,000
(1,227)
119,581
119,581
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.
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.
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2020
Note 25. Equity - reserves
Foreign currency reserve
Share-based payments reserve
Common control reserve
Reorganisation reserve
Consolidated
2020
$'000
2019
$'000
(86)
162
(10,058)
(73,048)
-
162
(10,058)
(73,048)
(83,030)
(82,944)
Foreign currency reserve
The reserve is used to recognise exchange differences arising from the translation of the financial statements of foreign
operations to Australian dollars. It is also used to recognise gains and losses on hedges of the net investments in foreign
operations.
Share-based payments reserve
The reserve is used to recognise the value of equity benefits provided to employees and Directors as part of their
remuneration, and other parties as part of their compensation for services.
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.
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.
Movements in reserves
Movements in each class of reserve during the current and previous financial year are set out below:
Consolidated
Balance at 1 July 2018
Share-based payments
Reorganisation
Balance at 30 June 2019
Foreign currency translation
Balance at 30 June 2020
Note 26. Equity - dividends
Foreign
currency
$'000
Share-based
payments
$'000
Common
control
$'000
Reorgan-
isation
$'000
Total
$'000
-
-
-
-
(86)
(86)
-
162
-
162
-
162
(10,058)
-
-
(10,058)
-
-
-
(73,048)
(73,048)
-
(10,058)
162
(73,048)
(82,944)
(86)
(10,058)
(73,048)
(83,030)
There were no dividends paid, recommended or declared during the current financial year or previous financial period.
60
50
51
61
2020 READYTECH ANNUAL REPORT2020 READYTECH ANNUAL REPORT
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2020
Note 27. 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 may use 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 and ageing analysis for credit
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 2020 and 30 June 2019 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.
As at the reporting date, the Group had the following variable rate borrowings and interest rate swap contracts outstanding:
Consolidated
Borrowings
2020
2019
Weighted
average
interest rate
%
Weighted
average
interest rate
%
Balance
$'000
Balance
$'000
2.84%
25,000
4.48%
21,500
Net exposure to cash flow interest rate risk
25,000
21,500
An analysis by remaining contractual maturities in shown in 'liquidity and interest rate risk management' below.
For the Group the borrowings outstanding totalling $25,000,000 (2019: $21,500,000), are principal and interest payment
loans. An increase/decrease in interest rates of 100 (2019: 100) basis points would have an adverse/favourable effect on
loss before tax of $250,000 (2019: $250,000) per annum. The percentage change is based on the expected volatility of
interest rates using market data and analysts forecasts.
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2020
Note 27. Financial instruments (continued)
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. As disclosed in note 9, due to the Coronavirus (COVID-19) pandemic, the calculation
of expected credit losses has been revised as at 30 June 2020 and rates have increased in each category up to 6 months
overdue.
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.
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 - 2020
Non-derivatives
Non-interest bearing
Trade payables
Other payables
Contingent consideration
Interest-bearing - variable
Bank loans
Lease liability
Total non-derivatives
Weighted
average
interest rate 1 year or less
%
$'000
Between 1
and 2 years
$'000
Between 2
and 5 years Over 5 years
$'000
$'000
Remaining
contractual
maturities
$'000
-
-
-
2.84%
3.50%
185
1,655
4,096
669
922
7,527
-
-
-
25,333
934
26,267
-
-
-
-
1,503
1,503
-
-
-
-
-
-
185
1,655
4,096
26,002
3,359
35,297
62
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2020 READYTECH ANNUAL REPORT2020 READYTECH ANNUAL REPORT
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2020
Note 27. Financial instruments (continued)
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2020
Note 28. Fair value measurement (continued)
Weighted
average
interest rate 1 year or less
%
$'000
Between 1
and 2 years
$'000
Between 2
and 5 years Over 5 years
$'000
$'000
Remaining
contractual
maturities
$'000
Level 3 assets and liabilities
Movements in level 3 assets and liabilities during the current and previous financial year are set out below:
Consolidated - 2019
Non-derivatives
Non-interest bearing
Trade payables
Other payables
Contingent consideration
Interest-bearing - variable
Bank loans
Lease liability
Total non-derivatives
-
-
-
4.48%
4.00%
806
634
756
958
543
3,697
-
-
-
-
-
-
882
1,653
2,535
21,898
-
21,898
-
-
-
-
-
-
806
634
756
23,738
2,196
28,130
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 28. 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 - 2020
Liabilities
Contingent consideration
Total liabilities
Consolidated - 2019
Liabilities
Contingent consideration
Total liabilities
Level 1
$'000
Level 2
$'000
Level 3
$'000
Total
$'000
Level 1
$'000
-
-
-
-
Level 2
$'000
-
-
-
-
4,096
4,096
4,096
4,096
Level 3
$'000
Total
$'000
756
756
756
756
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.
Consolidated
Balance at 1 July 2018
Losses recognised in profit or loss
Additions
Amounts paid
Balance at 30 June 2019
Additions
Amounts paid
Balance at 30 June 2020
Contingent
consideration
$'000
480
(244)
1,000
(480)
756
6,215
(2,875)
4,096
Refer to note 35 for details of the contingent consideration arrangements arising from business combinations.
The level 3 assets and liabilities unobservable inputs are as follows:
Description
Unobservable inputs
Range
Outcome
Contingent
consideration
Probability of achieving
revenue targets
to satisfy/not to satisfy
If revenue targets are achieved 100% of the
contingent consideration is payable/if revenue
targets are not achieved no contingent
consideration is payable
Note 29. Remuneration of auditors
During the financial year the following fees were paid or payable for services provided by Deloitte Touche Tohmatsu, the
auditor of the Company:
Deloitte and related network firms
Audit or review of the financial statements
Other services
Tax compliance
Research and development tax services
Other assurance services
Acquisition related services
IPO related services
Consolidated
2020
$
2019
$
203,500
140,000
33,000
36,066
46,263
-
-
-
-
-
95,524
1,269,051
115,329
1,364,575
318,829
1,504,575
64
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2020 READYTECH ANNUAL REPORT2020 READYTECH ANNUAL REPORT
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2020
Note 30. Key management personnel disclosures
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2020
Note 33. Parent entity information
Compensation
The aggregate compensation made to Directors and other members of key management personnel of the Group is set out
below:
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Short-term employee benefits
Post-employment benefits
Share-based payments
Note 31. Contingent liabilities
Consolidated
2020
$
2019
$
937,285
46,468
-
880,191
78,706
262,740
Loss after income tax
Total comprehensive income
983,753
1,221,637
Statement of financial position
The Group has given bank guarantees as at 30 June 2020 of $949,000 (2019: $472,000). The bank guarantees are for
various office leases and bank facility for WageLink. No cash outflows are expected from the bank guarantees given by the
Group.
Note 32. Related party transactions
Parent entity
ReadyTech Holdings Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 34.
Key management personnel
Disclosures relating to key management personnel are set out in note 30 and the remuneration report included in the
Directors' report.
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Issued capital
Reorganisation reserve
Accumulated losses
Total equity
Parent
2020
$'000
2019
$'000
(1,058)
(1,085)
(1,058)
(1,085)
Parent
2020
$'000
2019
$'000
15,104
14,956
29,857
29,898
1,263
1,263
246
246
120,208
(89,471)
(2,143)
120,208
(89,471)
(1,085)
28,594
29,652
Transactions with related parties
The following transactions occurred with related parties:
Consolidated
2020
$
2019
$
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2020 and 30 June 2019.
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 2020 and 30 June 2019.
Payment for goods and services:
Payment for services from key management personnel
-
28,982
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2020 and 30 June 2019.
Receivable from and payable to related parties
There were no trade receivables from or trade payables to related parties at the current and previous reporting date.
Loans to/from related parties
There were no loans to or from related parties at the current and previous reporting date.
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
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.
66
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2020 READYTECH ANNUAL REPORT2020 READYTECH ANNUAL REPORT
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2020
Note 34. 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:
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2020
Note 35. Business combinations
Acquisition of WageLink Australia Pty Ltd
On 9 October 2019, the Group acquired 100% of the ordinary shares of WageLink Australia Pty Ltd for the total
consideration transferred of $1,550,000. WageLink provides a range of payroll management services for small to medium
sized business. The goodwill of $909,000 represents future growth of WageLink. The values identified in relation to the
acquisition of WageLink Australia Pty Ltd are final as at 30 June 2020.
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
WageLink Australia Pty Ltd*
Zambion Limited*
Zambion Pty Ltd*
Principal place of business /
Country of incorporation
Ownership interest
2019
2020
%
%
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
Australia
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%
100.00%
100.00%
100.00%
100.00%
-
-
-
Details of the acquisition are as follows:
Cash and cash equivalents
Trade receivables
Property, plant and equipment
Customer relationships
Trade payables and other payables
Deferred tax liability
Employee benefits
Other provisions
Net assets acquired
Goodwill
*
Acquired by the Group during the year-ended 30 June 2020. Refer to note 35.
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
Fair value
$'000
151
35
4
933
(5)
(280)
(134)
(63)
641
909
1,550
1,240
310
1,550
126
1,550
(151)
(310)
1,089
As part of the acquisition of WageLink Pty Limited an amount of contingent consideration has been agreed, which is
subject to WageLink meeting pre-determined revenue thresholds based on the last twelve months' revenue. Refer to note
28 for further information.
The amount of contingent consideration recognised of $310,000 is the maximum amount payable if the pre-determined
revenue thresholds are met. If these thresholds are not met, then no amount is payable. Given the current performance of
the business, it appears probable that the thresholds will be met and as such, contingent consideration of $310,000 has
been recognised.
68
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2020 READYTECH ANNUAL REPORT2020 READYTECH ANNUAL REPORT
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2020
Note 35. Business combinations (continued)
Acquisition of Zambion Limited and its controlled entities
On 9 October 2019, the Group acquired 100% of the ordinary shares of Zambion Limited and its controlled entities
('Zambion') for the total consideration transferred of $10,317,000. Zambion develops and implements Software-as-a-
Service ("SaaS") solutions for small to medium sized businesses to manage their workforce. The software product is a web
and app based payroll, HR, time and attendance, leave management system that is compliant with Australia and New
Zealand's tax, superannuation and fair work legislation. The goodwill of $7,963,000 represents technology and revenue
synergies from cross-selling extended capability to ReadyTech’s existing client base as well as future growth. The values
identified in relation to the acquisition of Zambion are final as at 30 June 2020.
Details of the acquisition are as follows:
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2020
Note 35. Business combinations (continued)
Acquisition of eLearning Australia Pty Ltd ('eLearning') (prior year)
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.
Details of the acquisition are as follows:
Cash and cash equivalents
Trade receivables
Other current assets
Property, plant and equipment
Brand names and trademarks
Customer relationships
Software
Trade and other payables
Contract liabilities
Provision for income tax
Deferred tax liability
Employee benefits
Other provisions
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
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
Fair value
$'000
75
742
29
185
477
774
2,524
(255)
(710)
(139)
(1,035)
(106)
(207)
2,354
7,963
10,317
4,412
5,905
10,317
186
10,317
(75)
(5,905)
4,337
As part of the acquisition of Zambion Limited an amount of contingent consideration has been agreed. The contingent
consideration is payable in three amounts, dependent on recurring revenue growth targets. The Directors expect the
contingent consideration to be paid out during the next 12 months. Refer to note 28 for further information.
The amount of contingent consideration recognised of $5,905,000 is the maximum amount payable if the recurring revenue
growth targets are met. If these targets are not met, then no amount is payable. Given the current performance of the
business, it appears probable that the thresholds will be met and as such, contingent consideration of $5,905,000 has been
recognised.
Fair value
$'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
70
60
61
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2020 READYTECH ANNUAL REPORT2020 READYTECH ANNUAL REPORT
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2020
Note 36. Deed of cross guarantee
The following entities are party to a deed of cross guarantee under which each Company guarantees the debts of the
others:
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
WageLink Australia Pty Ltd
Zambion Limited
Zambion Pty Ltd
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.
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2020
Note 37. Reconciliation of profit/(loss) after income tax to net cash from operating activities
Profit/(loss) after income tax (expense)/benefit for the year
3,943
(1,490)
Consolidated
2020
$'000
2019
$'000
Adjustments for:
Depreciation and amortisation
Net loss on disposal of property, plant and equipment
Share-based payments
Foreign exchange differences
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
Increase in other operating assets
Increase 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/(decrease) in other provisions
Decrease in other operating liabilities
9,375
1
-
(62)
-
193
(490)
(249)
(511)
569
395
1,324
(1,315)
949
(317)
(54)
8,063
-
425
-
2,106
(635)
(2,851)
(262)
-
723
(1,019)
(2,425)
(181)
147
24
(520)
Net cash from operating activities
13,751
2,105
Note 38. Non-cash investing and financing activities
Share issued to KMP
Conversion of DC shares to ordinary shares
Increase in share capital on reorganisation of the Group
Note 39. Changes in liabilities arising from financing activities
Consolidated
Balance at 1 July 2018
Net cash used in financing activities
Recognition of lease liability on adoption of AASB 16
Additions
Balance at 30 June 2019
Net cash from/(used in) financing activities
Additions
Balance at 30 June 2020
Consolidated
2020
$'000
2019
$'000
-
-
-
-
263
2,991
73,048
76,302
Borrowings
$'000
Lease liability
$'000
Total
$'000
29,750
(8,250)
-
-
21,500
3,500
-
25,000
-
(512)
1,447
1,261
2,196
(612)
1,554
29,750
(8,762)
1,447
1,261
23,696
2,888
1,554
3,138
28,138
72
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2020 READYTECH ANNUAL REPORT2020 READYTECH ANNUAL REPORT
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2020
Note 40. Earnings per share
ReadyTech Holdings Limited
Directors' declaration
30 June 2020
In the Directors' opinion:
Profit/(loss) after income tax attributable to the owners of ReadyTech Holdings Limited
3,943
(1,490)
Weighted average number of ordinary shares used in calculating basic earnings per share
80,005,371
69,316,495
Weighted average number of ordinary shares used in calculating diluted earnings per share
80,005,371
69,316,495
Number
Number
Consolidated
2020
$'000
2019
$'000
Basic earnings per share
Diluted earnings per share
Note 41. Events after the reporting period
Cents
Cents
4.93
4.93
(2.15)
(2.15)
The impact of the Coronavirus (COVID-19) pandemic is ongoing and it is not practicable to estimate the potential impact,
positive or negative, after the reporting date. The situation is rapidly developing and is dependent on measures imposed by
the Australian Government and other countries, such as maintaining social distancing requirements, quarantine, travel
restrictions and any economic stimulus that may be provided.
Education
ReadyTech’s cloud-based software for managing people has proven to be resilient through the COVID-19 environment,
with high recurring revenues of approximately 89% and low churn. In addition, ReadyTech has low exposure to the
international student segment, accounting for only 3% of total students serviced by our Student Management System
platforms.
ReadyTech has also experienced growing momentum in the Back-to-Work sector, where clients are supporting job seekers
with self-service support and job search to get back into the workforce. The rapid increase in JobSeeker caseloads and the
increased support ReadyTech is providing to this segment of the market is positive.
Workforce Solutions (Employment)
ReadyTech’s workforce solutions platforms are at the heart of employer systems. The significant changes to compliance
requirements in 2020 that affect awards, annualised salaries, single touch payroll and now the complexity of managing
JobKeeper payments, are all standard capabilities of the software platform.
No other matter or circumstance has arisen since 30 June 2020 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.
●
●
●
●
●
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
2020 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 36 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
Chairman
26 August 2020
Sydney
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2020 READYTECH ANNUAL REPORT2020 READYTECH ANNUAL REPORT
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 members of ReadyTech
Holdings Limited
Report on the Audit of the Financial Report
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 2020, 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 2020 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 (including Independence Standards) (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.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
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Key Audit Matter
How the scope of our audit responded to the Key Audit
Matter
Revenue recognition
For the year ended 30 June 2020, the Group has
reported revenue from contracts with customers
of $39.25 million while
the consolidated
statement of financial position shows contract
liabilities of $11.96 million.
The revenue is disclosed in Note 5, and the
contract liabilities are disclosed in Notes 15 and
20.
Significant judgement is involved by management
in applying Accounting Standard AASB 15
“Revenue from Contracts with Customers” in
determining how
satisfies a
performance obligation and how the revenue
should be recognised, especially for bundled
goods or services and attributing the fair value to
each element of the bundled product.
the Group
In addition, the calculation of revenue and
contract liabilities is predominantly manual in
nature which increases the risk of a calculation
error.
Our procedures included, but were not limited to:
• Assessing the revenue recognition policy against the
requirements of the relevant accounting standard;
• Obtaining and understanding the process which
management uses to record revenue and contract
liabilities;
• Understanding the revenue cycle and evaluating the
relevant controls;
• Assessing the appropriateness of management’s
revenue recognition policies for any contract
involving bundled goods and services and ensuring
they are in accordance with the requirements of the
relevant accounting standard;
• Assessing the appropriateness of the fair value
attributed to each element of the bundle by
reviewing a sample of customer contracts to
determine
the
transaction price to the various performance
obligations;
the appropriate allocation of
• Obtaining the revenue and deferred revenue
schedules from management and assessing the
reconciliation of the amounts recorded to the
control accounts in the general ledger;
• On a sample basis, agreeing the revenue and
contract liabilities to supporting documentation
including customer contracts and cash receipts; and
•
Performing a recalculation of the expected revenue
and contract liabilities to be reported for the year
and as at 30 June 2020 and comparing them to
calculations performed by management.
We also assessed the appropriateness of the disclosures
in Notes 2, 5, 15 and 20 to the financial statements.
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Other Information
The directors are responsible for the other information. The other information comprises the information
included in the Group’s annual report for the year ended 30 June 2020, but does not include the financial report
and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and 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.
• 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, actions taken to eliminate threats
or safeguards applied.
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 the Directors’ Report for the year ended 30 June 2020.
In our opinion, the Remuneration Report of ReadyTech Holdings Limited, for the year ended 30 June 2020,
complies with section 300A of the Corporations Act 2001.
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2020 READYTECH ANNUAL REPORT2020 READYTECH ANNUAL REPORT
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, 26 August 2020
ReadyTech Holdings Limited
Shareholder information
30 June 2020
The shareholder information set out below was applicable as at 23 July 2020.
Distribution of equitable securities
Analysis of number of equitable 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
Number of
holders
% of holders
250
530
326
398
32
16.28
34.51
21.22
25.91
2.08
Number of
securities
144,818
1,473,280
2,523,623
10,490,386
65,373,260
% of holders
0.19
1.84
3.15
13.11
81.71
1,536
100.00
80,005,367
100.00
Holders holding less than a marketable parcel of shares*
64
4.71
14,264
0.02
*
Marketable parcel of shares is calculated based on closing market price on 23 July 2020 of $1.40
Equity security holders
Twenty largest quoted equity security holders
The names of the twenty largest security holders of quoted equity securities are listed below:
Pemba Capital Partners Fund I Gp Pty Ltd
National Nominees Limited
J P Morgan Nominees Australia Pty Limited
HSBC Custody Nominees (Australia) Limited
Marc Raymond Washbourne
Darren Coppin
Sycamore Management Pty Ltd (VERLOOP FAMILY)
Malvern Avenue Management Pty Ltd (THE BENYON HILL FAMILY)
Washbourne Group Pty Ltd (THE WASHBOURNE FAMILY)
Anksh Pty Ltd (Nimesh Shah)
Pemba Capital Partners Pty Ltd (THE LIRAC)
Sargon Ct Pty Ltd (HENROTH PTY LIMITED)
Marish Pty Ltd (THE JONES FAMILY)
Nimesh Shah
Pemba Capital Partners Pty Ltd (PEMBA CAPITAL CO-INVESTMENT)
Mr Brett David Goodrich
Cazria Pty Ltd
Trevor Fairweather
BNP Paribas Nominees Pty Ltd (IB AU NOMS RETAILCLIENT DRP)
Tony Jones
Unquoted equity securities
There are no unquoted equity securities.
Ordinary shares
Number held
% of total
shares
issued
33,294,212
7,867,202
5,728,780
2,928,215
2,861,363
1,592,419
1,310,190
1,300,190
1,147,051
860,288
841,731
719,536
659,717
430,144
403,668
388,618
331,125
261,000
239,691
208,771
63,373,911
41.61
9.83
7.16
3.66
3.58
1.99
1.64
1.63
1.43
1.08
1.05
0.90
0.82
0.54
0.50
0.49
0.41
0.33
0.30
0.26
79.21
80
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2020 READYTECH ANNUAL REPORT2020 READYTECH ANNUAL REPORT
ReadyTech Holdings Limited
Shareholder information
30 June 2020
Substantial holders
Substantial holders in the Company are set out below:
Pemba Entities*
ReadyTech Holdings Limited
Microequities Asset Management Pty Ltd
The Washbourne entities**
Ordinary shares
Number held
34,539,611
19,919,230
7,654,314
4,008,414
% of total
shares
issued
43.17
24.90
9.57
5.01
*
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)
** Marc Raymond Washbourne and Washbourne Group Pty Limited ACN 627 033 363 as trustee of the Washbourne
Familty Trust (together, the Washbourne Entities)
Voting rights
The voting rights attached to ordinary shares are set out below:
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.
Restricted securities
Class
Ordinary
Expiry date
31 December 2020
On-market buy back
There is no current on-market buy back.
Securities subject to voluntary escrow
Class
Ordinary shares
Expiry date
31 December 2020
Number
of shares
19,919,230
Number
of shares
19,919,230
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2020 READYTECH ANNUAL REPORT FY20
ANNUAL
REPORT
READYTECH HOLDINGS LIMITED
ABN 25 632 137 216 - 30 JUNE 2020
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