ReadyTech Holdings Limited
ABN 25 632 137 216
14 October 2021
2021 Annual Report
ReadyTech Holdings Limited (ASX: RDY) (ReadyTech) attaches a typeset version of the 2021 Annual
Report.
There have been no changes to the version lodged with ASX on 24 August 2021, other than
typesetting.
This announcement has been authorised for release to ASX by the Chief Financial Officer and
Company Secretary of ReadyTech.
For more information please contact:
Nimesh Shah
Chief Financial Officer
E: nimesh.shah@readytech.io
P: + 61 437 980 296
ANNUAL
REPORT
30 JUNE 2021
READYTECH HOLDINGS LIMITED
ABN 25 632 137 216
CONTENTS
Chairman’s letter
Chief Executive Officer’s report
Corporate directory
Directors’ report
Auditor’s independence declaration
Statement of profit or loss and other comprehensive income
Statement of financial position
Statement of changes in equity
Statement of cash flows
Notes to the financial statements
Directors’ declaration
Independent auditor’s report to
the members of ReadyTech Holdings Limited
Shareholder information
4
6
9
12
27
28
29
30
31
32-73
74
75-79
80
NEXT GENERATION,
PEOPLE-CENTRIC
SOFTWARE
Dear Shareholder,
It is with great pleasure that I introduce ReadyTech Holdings Limited’s second Annual Report.
Last year, I noted that the Group’s position as a provider of mission-critical software in its
chosen markets had helped us navigate through an unprecedented global pandemic, while
continuing to deliver strong growth and results for our investors.
In conditions that required educators and employers to rapidly reassess their digital readiness
and accelerate transformation initiatives, ReadyTech was in a prime position to become a
partner of choice for both new and existing customers.
In Financial Year 2021 (FY21) we continued to reap the rewards of delivering in this
environment, strengthening our customer patronage and trust. Through the year, ReadyTech
continued to demonstrate the foundational role our products play in helping our customer to
be successful – including supporting them in areas such as online learning, digital employee
onboarding and engagement, and more – proving that we have the right strategy and
capabilities to deliver for them.
Our customers appreciate ReadyTech’s vertical focus which both delivers software specifically
designed for their business, and enables them to readily configure and integrate with our
flexible platforms.
The strength of the Group’s cloud Software-as-a-Service (SaaS) offering has also continued
to attract new, higher value enterprise customers across our key vertical market segments.
ReadyTech’s ongoing programs to upsell and cross-sell our technology products are delivering
greater value to customers and, as a result, gaining a larger share of wallet. Our technology
solutions are now helping more and more companies deliver better results across more
vertical markets.
ReadyTech has strong future growth potential. In FY21, investors approved an expansion
into the Government & Justice market with the acquisition of Open Office and McGirr
Technologies. These are vertical markets with very similar characteristics to ReadyTech’s
existing education and employment segments, and provide a great opportunity to add value
to governments, courts and citizens as well as investors.
ReadyTech has also completed a rebrand that is representative of both our vibrant culture,
and our core values which we are confident resonates with customers looking for technology
leadership and passion that will guide them into the future.
The Board and I would like to thank shareholders for showing their continued support in
ReadyTech. Having worked closely with the management team, I can vouch for the passion
they demonstrate each and every day. Their genuine desire to build innovative, customer-
centric products that our customers love, and to make a difference in the markets we serve
is clear – whether that is to the operations of their business customers, or to end users like
students, employees, jobseekers, apprentices, citizens and beyond.
This year, ReadyTech has declared itself ready for anything. We recommend watching this
space.
Yours sincerely,
TONY
FAURE
CHAIRMAN
Chairman’s letter
MARC
WASHBOURNE
CEO
Dear Shareholder,
Being ready has always been important at ReadyTech. Not only is it reflected in
our brand, it is also built into the fabric of the cloud-based, mission critical SaaS
platforms we offer, our customer-centric approach to product development
and customer service, and most importantly the culture of our teams. We’ve
always had a clear vision on where our technology future lies – to not only lead
trends in our markets and continue to innovate, but to also deliver continuous
value, and win the business (and ultimately trust) of our customers.
I’m pleased to report that FY21 was a validation of our approach. Across our
Education & Work Pathways and Workforce Solutions segments, our agile
and next generation software has the become the enabling platform for
customers accelerating digital transformation agendas as a result of COVID-19.
From student experience transformation projects in education, to employers
deepening engagement with their teams and empowering job seekers to enter
the workforce, we are helping customers transform their services and adapt to a
digital future.
This year we expanded into a new Government & Justice segment, opening
further attractive markets ripe for digital transformation. With the acquisition
of Open Office and McGirr Technologies (Open Office), we have added
strong technology platforms to our suite, and a talented team ready to meet
the opportunities for greater efficiency and an improved digital-first customer
experience in the local government and justice sectors. ReadyTech’s shared
capability in enterprise SaaS and our 365-strong team of ReadyTechers are
now leading excellence and growth in multiple large verticals, servicing 4,600+
customers across Australia, and expanding into new geographies.
We are ready for a very bright future.
“
We are ready for a
very bright future.
FY21 results
ReadyTech achieved strong results in FY21:
• Revenue up 27.4% to $50.0 million (organic revenue up 15.1%)
o Open Office contributing $4.8 million in FY21
o Customer revenue retention maintained at 96%
• Underlying EBITDA up 21.4% to $18.9 million
• Underlying NPAT up 36.9% to $6.2 million
• Non-recurring costs of $4.0 million
o Transaction and restructuring costs of $2.2 million
o Revaluation of contingent consideration of $1.8 million
Strategy update
ReadyTech’s FY21 results reflect the progress of our ambitious growth plans. A
clearly articulated strategy for ReadyTech is attracting higher value enterprise
customers across all segments. In the Education & Work Pathways and Workforce
Solutions segments, we are seeing strong evidence of success with significant wins
including Australia’s largest employment services provider, Max Solutions, Fedcap
UK and Mental Health First Aid for Education & Work Pathways, and J.C. Dahlsen
and PBT Transport for Workforce Solutions. It was also highly encouraging to see
our new Government & Justice segment convert multiple enterprise opportunities
within months of joining ReadyTech, including Legal Services Commission SA and
Town of Claremont in WA.
Additionally, we have an expanded $19 million high conviction new business
pipeline – with growing interest from new international markets. To fuel this growth,
our enterprise offerings are supported by deeper investment in our go-to-market
and delivery capabilities for larger technology buyers.
The cross-selling and upselling of new value via modules and products is performing
well to complement new business growth, with average revenue per customer
expanding 20.1% to $12.7K across ReadyTech. This additional value includes
the development of a wider ecosystem of complementary technologies in our
segments that customers both need and desire for success in their operations.
One example is our Learning Management System (‘LMS’) which has seen us
successfully launch a market-leading offering into the learning sector at a time
when education providers are seeking new tools to augment online and hybrid
learning capabilities. We continue to actively evaluate opportunities to extend our
product footprint into adjacent and international markets.
Our growth strategy is paired with an equally strong focus on customer retention.
ReadyTech has the benefit of offering ‘sticky’ products that our customers
simply must have in order to operate effectively. However, it is a great customer
experience and a focus on customer success, service and support that keeps
customers loyal to ReadyTech over the longterm. In FY21, we were very pleased
to achieve 96% revenue retention. We have continued to listen closely to our
customers, invest in our products to meet needs and act as a true technology
partner that offers trusted, secure and scalable innovation. We continue to see that
this customer-centric approach not only drives high retention, but also results in a
delighted customer base who advocate for ReadyTech products and differentiate
us from competitors.
Product-market fit is the cornerstone for SaaS company growth. ReadyTech
continues to design and build tech for the unique characteristics and complexities
of specific market verticals, while giving customers rapid onboarding journeys and
deep flexibility via our highly configurable products. This gives us an advantage
over competitors who offer more generic technology platforms. At the same time,
we don’t limit ReadyTech to one market with our approach, allowing us to operate
across multiple large and attractive markets. In FY21, we have continued to invest
in and refine our core platform of shared capability in SaaS practices across the
whole of ReadyTech, enabling us to leverage our collective IP and maximise
resources.
Open Office acquisition driving new growth
In FY21 ReadyTech also completed the acquisition of Open Office – a business
comprised of software servicing local and state governments, courts, tribunals
and commissions – both locally and internationally. Forming ReadyTech’s new
Government & Justice segment, the Open Office team has a shared vision with
ReadyTech for the future of technology coupled with delivering a customer-centric
approach. Together, we deliver trusted, customer-centric technology products
that closely meet their specific, complex and localised needs.
We have made excellent progress in uniting Open Office’s experienced
management team, wider staff, product set and practices with ReadyTech and
are looking forward to further fortifying the product streams in the coming year to
maximise their future potential. The acquisition also opened up a highly attractive
addressable market, including 500+ local councils across Australia, large state
government and global justice market opportunities.
With the global digitisation of government services, migration to cloud and
SaaS expected to accelerate in these markets – and increasing community
expectations for modern services – we believe this acquisition positions ReadyTech
to deliver new waves of growth in the Government & Justice sectors, including
further expansion into international markets.
ReadyTech’s investment in brand and reputation
Alongside these initiatives, ReadyTech also undertook a significant rebranding
project in FY21 with the objective to evolve and elevate ReadyTech’s master brand
and brand architecture while also underpinning our growth plans. The rebrand set
out to drive stronger cohesion between our product brands and ultimately build
upon our strong reputation, credibility and trust within the markets we operate
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ANNUAL REPORT 30 JUNE 2021ANNUAL REPORT 30 JUNE 2021
– all of which are critical factors for delivering ReadyTech’s enterprise strategy
and increasing our ability to attract and retain large customers. Headlined by our
bold aspiration to be ready for anything, ReadyTech’s new brand identity and
positioning demonstrate that we are not only ready to cut through the complexity
for our customers, but that we will also put people first, do the right thing and be
a part of positive change in the process – energising our team for a new phase of
both local and global growth.
Strategic vision for talent and culture
In FY21 we continued to invest in a high performance ReadyTecher culture. With
the recruitment of our new Head of People and Culture, Jess Griffin, we have
‘doubled down’ on our strategy to support the ongoing recruitment, engagement,
and retention of top talent at ReadyTech. Our vision for our people is inspired
ReadyTechers doing the best work of their lives. This includes a focus on our talent
attraction and acquisition efforts, enhancements to our ability to recruit high
potential candidates, and embedding rewards, recognition and professional
development programs into the end-to-end ReadyTecher employee journey. In this
elevated war for talent, we are confident that we have a competitive employer
proposition in the technology industry in Australia.
Ready for anything
ReadyTech is playing a mission-critical enabling role for customers in our chosen
verticals at a time of significant challenge, disruption, and change. Powered by our
inherent SaaS expertise, we continue to offer customers operating in complex
environments the ability to manage non-negotiable activities such as operations
and compliance with agile, cloud-first software platforms that help them undertake
digital transformation and leave clunky legacy systems behind.
We live in the age of the customer, and in line with the consumer experience
in banking, travel, retail, entertainment and leisure, we are bringing enterprise
technology into a new era of user experience – maximising engagement and
satisfaction while driving real business outcomes for customers.
As our market’s demands and expectations change, our ability to attract higher
value customers across our segments, gain a larger share of customer technology
spend through delivering new value, and nurture existing customers with a great
customer experience provides a solid foundation for the future. Our team’s
ability to innovate also puts us in a strong leadership position in the technology
race, ensuring we remain ready to creatively solve the many challenges that our
customers will face in the years to come.
The combination of these factors and our readiness for the future has supported
the compelling results included in this year’s Annual Report. At ReadyTech, we
believe we’re ready for anything. And we thank you for supporting our mission and
growth journey so far.
Yours sincerely,
Marc Washbourne
Chief Executive Officer
24 August 2021
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ANNUAL REPORT 30 JUNE 2021ANNUAL REPORT 30 JUNE 2021 Tony Faure - Chairman and Independent Non-Executive Director
Marc Washbourne - 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
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 2021.
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:
ReadyTech Holdings Limited
Directors' report
30 June 2021
ReadyTech Holdings Limited
Corporate directory
30 June 2021
Directors
Company secretaries
Registered office
Principal place of business
Share register
Auditor
Nimesh Shah
Melissa Jones
Level 1, 35 Saunders St
Pyrmont
NSW 2009
Australia
Ph: +61 2 9018 5525
Level 1, 35 Saunders St
Pyrmont
NSW 2009
Australia
Ph: +61 2 9018 5525
Link Market Services Limited
Level 12, 680 George Street
Sydney, NSW 2000
Australia
Ph: 1300 554 474
Deloitte Touche Tohmatsu
Level 9, Grosvenor Place
225 George Street
Sydney, NSW 2000, Australia
Ph: +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
(Fourth 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
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
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;
● Workforce Solutions - provider of payroll and employee management solutions from cloud-based technology to
●
outsourcing of human resource function; and
Government and Justice - provider of case management software as a service solution to local governments, state
governments and justice departments.
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 the Education & Work Pathways,
Workforce Solutions and Government & Justice markets, is pleased to announce its results for the year ended 30 June
2021 ('FY21') in which the Group continued to deliver strong growth and achieved earnings guidance.
Commenting on the FY21 result, ReadyTech’s CEO and Co-Founder, Marc Washbourne said:
“ReadyTech has delivered another strong and consistent year of revenue and earnings growth, which was achieved
through both organic growth and the initial contribution of our Government & Justice vertical, following the successful
integration of Open Office. Our performance is clear validation of our strategy and our vision to build a market-focused,
mission critical software powerhouse.”
“The results reflect increasing recognition in the marketplace of ReadyTech’s expertise in next generation customer-centric
SaaS solutions that streamline operations, improve user experience and meet the strict compliance and regulatory needs
of the education, workforce, government and justice sectors. This is particularly true of the higher value end of the market,
where have seen strong new business performance across all markets we serve, with an impressive list of new customers
onboarded during the year. At the same time, we continued to successfully execute on upsell/cross-sell to our loyal
customer base.”
“A strong top line and healthy profit margins have also allowed us to reinvest back in the business, supporting the long-
term growth and earnings power of the Group. ReadyTech operates in multiple large addressable markets that are ripe for
digital transformation – and we are listening very closely to the needs of customers and investing accordingly. Our
continued reinvestment in research and development supports ReadyTech’s strong product-market fit, new roles in sales
and marketing drive execution on go to market, and investment in customer onboarding contributes to the streamlining of
operations as we scale.”
Strong revenue and earnings growth in Education & Work Pathways
Education & Work Pathways delivered 16.9% growth in revenue to $24.9 million, driven by a combination of new business,
cross-sell and significant upgrades from existing customers.
New business is increasingly being by driven higher value and enterprise customers with average revenue per new
customer increasing 42% to $38,800 (FY20: $27,200), and with market adoption of ReadyTech’s cloud solutions increasing
across the education, training and back-to-work markets.
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ANNUAL REPORT 30 JUNE 2021ANNUAL REPORT 30 JUNE 2021 ReadyTech Holdings Limited
Directors' report
30 June 2021
Key customer wins during the year included an enterprise account with the Commonwealth Bank’s in-house registered
training organisation ('RTO'), a private RTO National Business Institute ('NBI') and UK employment services provider,
Fedcap Employment. The landmark Bendigo TAFE and Kangan Institute ('BKI TAFE') project is also progressing well with
subscriptions being triggered and scope expanded to reflect additional requirements.
High growth in Workforce Solutions
Workforce Solutions grew revenue 13.3% to $20.3 million, with particular new business strength in the all-in-one workforce
management suite and significant upgrades from existing customers.
New customer wins are driven by the stand-up economy, including the targeted industry verticals of hospitality,
manufacturing, aged care, agriculture and logistics. Strong uptake in the mid-to-enterprise market is evident in average
revenue per new customer increasing 19.7% to $39,400. Notable wins during the year included beverage manufacturer De
Bortoli, transport operator Tasco Petroleum and New Zealand grower Bostock, with customers attracted by ReadyTech’s
all-in-one cloud offering and strength in mission-critical payroll.
Successful integration of Open Office
The strategic acquisition of Open Office during the year established ReadyTech’s third vertical of Government & Justice.
ReadyTech’s FY21 results reflect the part year contribution of Open Office, which was $4.8 million in revenue and $1.7
million in EBITDA.
Significant changes in the state of affairs
On 6 November 2020, the Group issued 13,297,872 new fully paid ordinary shares to institutional investors to raise
$25,000,000 (before transaction costs).
ReadyTech Holdings Limited
Directors' report
30 June 2021
Information on Directors
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships:
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.
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), PredictHQ Limited, Tidal Ventures
Opportunity Fund
Former directorships (last 3 years): Stackla, Medical Media, Uno Homeloans
Special responsibilities:
Member of the Audit and Risk Committee and Remuneration and Nomination
Committee
341,804 ordinary shares
Interests in shares:
Name:
Title:
Qualifications:
On 11 December 2020, the Group issued 702,922 performance rights to key management personnel as part of its long
term incentives ('LTI') plan.
Experience and expertise:
On 23 March 2021, the Group acquired 100% of the ordinary shares in Pentagon Holdco Pty Ltd (which owns Open Office
Holdings Pty Ltd and McGirr Holdings Pty Ltd as well as other subsidiaries) for total consideration of $82,919,000.
On 21 April 2021, the Group issued 1,449,184 fully paid ordinary shares as part of a share purchase plan available to
eligible investors, raising $2,724,466.
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 consequences of the Coronavirus (COVID-19) pandemic are continuing to be felt around the world, and its impact on
the Group, if any, has been reflected in its published results to date. Whilst it would appear that control measures and
related government policies, including the roll out of the vaccine, have started to mitigate the risks caused by COVID-19, it
is not possible at this time to state that the pandemic will not subsequently impact the Group's operations going forward.
The Group now has experience in the swift implementation of business continuation processes should future lockdowns of
the population occur, and these processes continue to evolve to minimise any operational disruption. Management
continues to monitor the situation both locally and internationally.
No other matter or circumstance has arisen since 30 June 2021 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
Information on likely developments in the operations of the Group and the expected results of operations have not been
included in this report because the Directors believe it would be likely to result in unreasonable prejudice to the Group.
Environmental regulation
The Group is not subject to any significant environmental regulation under Australian Commonwealth or State law.
Marc Washbourne
Chief Executive Officer
First-class degree (History), University of Leeds, UK. Company Directors Course,
AICD
Marc Washbourne is a founder of the ReadyTech business and was appointed CEO
in 2006. A former software developer and original architect of the JobReady software,
Marc brings to ReadyTech over 20 years of experience in technology for the
education, employment and government sectors. Marc now heads up a global team
people committed to the innovation and better technology for over 4,600 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.
Year13, Digital Skills Organisation
Elizabeth Crouch AM
Independent Non-Executive Director
Elizabeth holds a Bachelor of Economics and a Master of Cyber Security. She is a
Fellow of the Australian Institute of Company Directors.
Elizabeth is a seasoned non-executive Director with a career that includes executive
experience in 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. She chairs the Boards of the Sydney Children’s Hospital Network,
the Customer Owned Banking Association and SGS Economics and Planning and is
also on the Boards of Bingo Industries and the NSW Government’s Health
Infrastructure and the NSW Institute of Sport.
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
31,555 ordinary shares
Other current directorships:
Former directorships (last 3 years): None
None
Special responsibilities:
4,059,414 ordinary shares
Interests in shares:
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships:
Former directorships (last 3 years): None
Special responsibilities:
Interests in shares:
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ANNUAL REPORT 30 JUNE 2021ANNUAL REPORT 30 JUNE 2021 ReadyTech Holdings Limited
Directors' report
30 June 2021
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships:
Former directorships (last 3 years):
Special responsibilities:
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), Chief Commercial Officer of SAP (APJ), 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 Tymlez Group Ltd (ASX:TYM), non-
executive Director for Xpon Technologies Ltd, Independent Chairman of the The Yield
Technology Solutions, and non-executive director positions with IXUP Limited,
GeoOp Limited, Nvoi Limited, CPA Australia, Nextgen Distribution, and Insite
Organisation.
He is presently principal of Ebbeck TIG Consulting and advisor to Surevision Global
Pty Ltd and Helio Media Pty Ltd.
Tymlez Group Ltd (ASX:TYM), Xpon Technologies Ltd, The Yield Technology
Solutions Pty Ltd.
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
17,273 ordinary shares
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 18 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, ONCALL and RxMx. 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, ONCALL, RxMx
Other current directorships:
Former directorships (last 3 years): None
None
Special responsibilities:
34,590,926 ordinary shares
Interests in shares:
16
ReadyTech Holdings Limited
Directors' report
30 June 2021
Name:
Title:
Qualifications:
Experience and expertise:
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 recently co-led
the $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:
519,000 ordinary shares
Interests in shares:
Company secretaries
Nimesh Shah and Melissa Jones 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.
Melissa Jones is the General Manager of Company Matters, Link Group’s governance and company secretarial team.
Melissa has over 15 years’ experience as a lawyer, company secretary and governance professional. Melissa is admitted
as a Solicitor of the Supreme Court of New South Wales and holds a Bachelor of Laws (Honours).
Meetings of Directors
The number of meetings of the Company's Board of Directors ('the Board') held during the period ended 30 June 2021, 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
16
16
16
16
16
13
16
16
16
16
16
16
2
2
2
2
2
-
2
2
2
2
2
-
4
4
4
4
4
-
4
4
4
4
4
-
17
ANNUAL REPORT 30 JUNE 2021ANNUAL REPORT 30 JUNE 2021 ReadyTech Holdings Limited
Directors' report
30 June 2021
ReadyTech Holdings Limited
Directors' report
30 June 2021
Held: represents the number of meetings held during the time the Director held office.
*
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 information
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; and
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; and
providing a clear structure for earning rewards.
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 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 2021, 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 and an additional fee of $10,000 for chairing board sub-committees.
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 four components:
(i)
(ii)
(iii)
fixed remuneration consisting of base pay, non-monetary benefits and other remuneration such as superannuation;
short-term incentives; and
long-term incentives.
The combination of these comprises the executive's total remuneration.
(i) Fixed 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.
(ii) Short-term incentives
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.
In accordance with best practice corporate governance, the structure of non-executive Director and executive Director
remuneration is separate.
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.
18
19
ANNUAL REPORT 30 JUNE 2021ANNUAL REPORT 30 JUNE 2021 ReadyTech Holdings Limited
Directors' report
30 June 2021
ReadyTech Holdings Limited
Directors' report
30 June 2021
The Financials KPIs are based on achieving Group revenue and Group net profit after tax ('NPAT') targets.
(iii) Long-term incentives
The long-term incentives ('LTI') include long service leave and share-based payments. The Group implemented a LTI plan
during the financial year ended 31 June 2021 where performance rights are awarded to executives over a period of three
years based on long-term incentive measures. These include earnings per share ('EPS') targets and a total shareholder
return ('TSR') targets relative to the S&P/ASX All Tech Index.
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.
Refer to the section 'Additional information' below for details of the earnings and total shareholders return for the last five
years.
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 2021 and 30 June 2020.
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
And the following person:
●
Nimesh Shah - Chief Financial Officer
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
$
150,000
69,996
69,996
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
150,000
69,996
69,996
310,000
101,680
10,243
21,694
3,255
97,342
544,214
300,000
899,992
98,400
200,080
7,958
18,201
21,694
43,388
2,481
5,736
94,201
191,543
524,734
1,358,940
2021
Non-Executive Directors:
Tony Faure
Elizabeth Crouch
Timothy Ebbeck**
Executive Directors:
Marc Washbourne*
Other Key Management
Personnel:
Nimesh Shah*
*
**
Marc Washbourne and Nimesh Shah received cash bonuses approved by the Nomination and Remuneration
Committee based on financial and personal KPIs.
The amount presented excludes expense reimbursements of $259.
Short-term benefits
Post-
employment
benefits
Long-term
benefits
Share-
based
payments
2020
Non-Executive Directors:
Tony Faure
Elizabeth Crouch
Timothy Ebbeck**
Executive Directors:
Marc Washbourne*
Other Key Management
Personnel:
Nimesh Shah*
Cash salary
and fees
$
Cash
bonus
$
Annual
leave
$
Super-
annuation
$
Long
service
leave
$
Equity-
settled
$
150,000
69,996
69,996
-
-
-
-
-
-
-
-
-
-
-
-
310,000
24,800
(719)
21,003
3,112
287,500
887,492
24,000
48,800
1,670
951
21,003
42,006
1,350
4,462
Total
$
150,000
69,996
69,996
358,196
335,523
983,711
-
-
-
-
-
-
*
**
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.
The amount presented excludes expense reimbursements of $42.
20
14
21
ANNUAL REPORT 30 JUNE 2021ANNUAL REPORT 30 JUNE 2021 ReadyTech Holdings Limited
Directors' report
30 June 2021
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Name
Non-Executive Directors:
Tony Faure
Elizabeth Crouch
Timothy Ebbeck
Executive Directors:
Marc Washbourne
Other Key Management
Personnel:
Nimesh Shah
Fixed remuneration
2020
2021
At risk - STI
At risk - LTI
2021
2020
2021
2020
100%
100%
100%
100%
100%
100%
-
-
-
-
-
-
-
-
-
62%
93%
20%
7%
18%
64%
93%
18%
7%
18%
The proportion of the cash bonus paid/payable or forfeited is as follows:
Name
Executive Directors:
Marc Washbourne
Other Key Management Personnel:
Nimesh Shah
Cash bonus paid/payable
2021
2020
Cash bonus forfeited
2020
2021
100%
100%
100%
100%
-
-
-
-
-
-
-
-
-
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 $375,000 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 $350,000 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
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 2021.
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 2021.
ReadyTech Holdings Limited
Directors' report
30 June 2021
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 2021.
Performance rights
The terms and conditions of each grant of performance rights over ordinary shares affecting remuneration of Directors and
other key management personnel in this financial year or future reporting years are as follows:
Grant date
11/12/2020
11/12/2020
Vesting date and
exercisable date
30/06/2022
30/06/2023
Expiry date
30/06/2022
30/06/2023
Fair value
per right
at grant date
$1.790
$1.800
Performance rights are subject to an earnings per share ('EPS') hurdle (50% of grant value) and a relative total shareholder
return ('TSR') hurdle which is compared against the S&P/ASX All Tech Index (50% of grant value).
Performance rights will be evaluated in two tranches. The first tranche, equivalent to 50% of the total grant value, will be
evaluated two years from 1 July 2020 ('the beginning of the performance period'). The second tranche, also equivalent to
50% of the total grant value, will be evaluated three years from the beginning of the performance period.
Details of the performance hurdles are as follows:
●
EPS - if the compound annual growth rate of EPS is less than the target of 9%, no vesting will occur. If the target is
met, 50% of rights will vest. In the event that the compound annual growth rate is between 10-14%, vesting will be
pro-rated between 50-100%.
TSR - if the relative TSR of the company ranks at or above the 75th percentile, 100% of the rights will vest. In the
event that the company ranks at the 50th percentile, 50% of the rights will vest. For any achievement between the
50th and 75th percentile, vesting will be pro-rated between 50-100%.
●
The performance rights are not subject to an exercise price.
Performance rights granted carry no dividend or voting rights.
Additional information
The earnings of the Group for the four years to 30 June 2021 are summarised below:
Sales revenue
Adjusted EBITDA*
Profit/(loss) after income tax
2021
$'000
2020
$'000
2019
$'000
2018
$'000
50,027
18,884
2,155
39,254
14,954
3,943
32,711
13,013
(1,490)
25,626
8,668
(5,201)
*
Earnings before interest, tax, depreciation, amortisation and other non-operating items.
The factors that are considered to affect total shareholders return ('TSR') are summarised below:
Share price at financial year end ($)
Basic earnings per share (cents per share)
2.40
2.37
1.40
4.93
1.54
(2.15)
-
(8.63)
*
No share price as at the 30 June 2018 as the Company was not listed on the Australian Securities Exchange ('ASX')
until 16 April 2019.
2021
2020
2019
2018*
22
23
ANNUAL REPORT 30 JUNE 2021ANNUAL REPORT 30 JUNE 2021 ReadyTech Holdings Limited
Directors' report
30 June 2021
Additional disclosures relating to key management personnel
Shareholding
The number of shares in the Company held during the financial year by each Director and other members of key
management personnel of the Group, including their personally related parties, is set out below:
Ordinary shares
Tony Faure
Marc Washbourne
Elizabeth Crouch
Timothy Ebbeck
Tom Matthews
Mark Summerhayes
Nimesh Shah
Balance at
the start of
the year
Received
as part of
remuneration
Additions
Disposals/
other
262,113
4,008,414
9,934
6,623
34,565,926
-
1,290,432
40,143,442
-
-
-
-
-
-
-
-
79,691
51,000
21,621
10,650
25,000
519,000
77,729
784,691
-
-
-
-
-
-
-
-
Balance at
the end of
the year
341,804
4,059,414
31,555
17,273
34,590,926
519,000
1,368,161
40,928,133
Performance rights holding
The number of performance rights over ordinary 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:
Performance rights over ordinary shares
Marc Washbourne
Nimesh Shah
Balance at
the start of
the year
Granted
Vested
Expired/
forfeited/
other
Balance at
the end of
the year
-
-
-
173,630
168,029
341,659
-
-
-
-
-
-
173,630
168,029
341,659
Other transactions with key management personnel and their related parties
There was no transaction with key management personnel and their related parties during the financial year ended 30
June 2021 (2020: none).
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 under performance rights
Unissued ordinary shares of ReadyTech Holdings Limited under performance rights at the date of this report are as
follows:
Grant date
11/12/2020
11/12/2020
Expiry date
30/06/2022
30/06/2023
Number
under rights
351,462
351,460
702,922
The performance rights are not subject to an exercise price.
No person entitled to exercise the performance rights had or has any right by virtue of the performance right to participate
in any share issue of the Company or of any other body corporate.
ReadyTech Holdings Limited
Directors' report
30 June 2021
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 2021 and up to the date of this report.
Shares issued on the exercise of performance rights
There were no ordinary shares of ReadyTech Holdings Limited issued on the exercise of performance rights during the
year ended 30 June 2021 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.
Indemnity and insurance of auditor
The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the
Company or any related entity against a liability incurred by the auditor.
During the financial year, the Company has not paid a premium in respect of a contract to insure the auditor of the
Company or any related entity.
Proceedings on behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on
behalf of the Company, or to intervene in any proceedings to which the Company is a party for the purpose of taking
responsibility on behalf of the Company for all or part of those proceedings.
Non-audit services
Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the auditor
are outlined in note 29 to the financial statements.
The Directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or by another
person or firm on the auditor's behalf), is compatible with the general standard of independence for auditors imposed by
the Corporations Act 2001.
The Directors are of the opinion that the services as disclosed in note 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 (including Independence Standards) 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.
24
25
ANNUAL REPORT 30 JUNE 2021ANNUAL REPORT 30 JUNE 2021 ReadyTech Holdings Limited
Directors' report
30 June 2021
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
24 August 2021
Sydney
The Directors
ReadyTech Holdings Limited
Level 1
35 Saunders Street
Pyrmont NSW 2009
The Directors
ReadyTech Holdings Limited
24 August 2021
Level 1
35 Saunders Street
Pyrmont NSW 2009
Dear Directors
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Grosvenor Place
225 George Street
Sydney, NSW, 2000
Australia
Phone: +61 2 9322 7000
www.deloitte.com.au
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Grosvenor Place
225 George Street
Sydney, NSW, 2000
Australia
Phone: +61 2 9322 7000
www.deloitte.com.au
24 August 2021
Auditor’s Independence Declaration to ReadyTech Holdings Limited
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following
declaration of independence to the directors of ReadyTech Holdings Limited.
Dear Directors
As lead audit partner for the audit of the financial report of ReadyTech Holdings Limited for the year
Auditor’s Independence Declaration to ReadyTech Holdings Limited
ended 30 June 2021, 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 2021, 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
Yours faithfully
(ii) any applicable code of professional conduct in relation to the audit.
DELOITTE TOUCHE TOHMATSU
Yours faithfully
Joshua Tanchel
Partner
DELOITTE TOUCHE TOHMATSU
Chartered Accountants
Joshua Tanchel
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
26
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
27
ANNUAL REPORT 30 JUNE 2021ANNUAL REPORT 30 JUNE 2021 ReadyTech Holdings Limited
Statement of profit or loss and other comprehensive income
For the year ended 30 June 2021
ReadyTech Holdings Limited
Statement of financial position
As at 30 June 2021
Revenue from contracts with customers
5
50,027
39,254
Assets
Consolidated
Note
2021
$'000
2020
$'000
Consolidated
Note
2021
$'000
2020
$'000
Interest revenue calculated using the effective interest method
3
14
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
Revaluation of contingent consideration
Other expenses
Finance costs
Profit before income tax expense
Income tax expense
6
7
(3,473)
(23,711)
(11,057)
(437)
(2,800)
(710)
(1,343)
(435)
(1,840)
(477)
(963)
(2,836)
(17,349)
(9,375)
(467)
(800)
(591)
(1,047)
(365)
-
(845)
(920)
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
Contract costs
Deferred tax
Total non-current assets
2,784
4,673
Total assets
(629)
(730)
Liabilities
Profit after income tax expense for the year attributable to the owners of
ReadyTech Holdings Limited
2,155
3,943
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
(32)
(32)
(86)
(86)
2,123
3,857
Cents
Cents
41
41
2.37
2.34
4.93
4.93
Current liabilities
Trade and other payables
Contract liabilities
Lease liabilities
Income tax payable
Employee benefits
Contingent consideration
Total current liabilities
Non-current liabilities
Contract liabilities
Borrowings
Provisions
Lease liabilities
Employee benefits
Contingent consideration
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
8
9
10
11
12
13
14
7
15
16
17
7
18
19
20
21
23
22
24
25
11,995
7,141
1,445
1,024
21,605
928
140,698
2,404
1,362
2,593
147,985
9,214
4,536
-
720
14,470
1,016
62,607
2,818
540
4,399
71,380
169,590
85,850
7,058
16,725
996
2,487
4,803
12,488
44,557
549
30,917
62
1,654
433
16,320
49,935
3,890
11,741
828
1,709
2,603
4,096
24,867
214
25,000
61
2,310
331
-
27,916
94,492
52,783
75,098
33,067
159,095
(82,668)
(1,329)
119,581
(83,030)
(3,484)
75,098
33,067
28
The above statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
The above statement of financial position should be read in conjunction with the accompanying notes
29
ANNUAL REPORT 30 JUNE 2021ANNUAL REPORT 30 JUNE 2021 ReadyTech Holdings Limited
Statement of changes in equity
For the year ended 30 June 2021
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
Consolidated
Balance at 1 July 2020
Profit after income tax expense for the year
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Contributions of equity, net of transaction costs (note 24)
Share-based payments (note 38)
Issued
capital
$'000
Reserves
$'000
Accumulated
losses
$'000
Total equity
$'000
119,581
(83,030)
(3,484)
33,067
-
-
-
39,514
-
-
(32)
(32)
-
394
2,155
-
2,155
2,155
(32)
2,123
-
-
39,514
394
Balance at 30 June 2021
159,095
(82,668)
(1,329)
75,098
ReadyTech Holdings Limited
Statement of cash flows
For the year ended 30 June 2021
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
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
Proceeds from disposal of property, plant and equipment
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares
Proceeds from borrowings
Share issue transaction costs
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
Consolidated
Note
2021
$'000
2020
$'000
37
35
28
11
12
24
59,748
(34,198)
43,767
(27,587)
25,550
3
(963)
(1,673)
(3,421)
16,180
14
(920)
(312)
(1,211)
19,496
13,751
(40,301)
-
(2,408)
(395)
(5,739)
4
(5,426)
(2,119)
(756)
(639)
(4,329)
-
(48,839)
(13,269)
27,724
15,000
(564)
(9,000)
(1,036)
-
32,124
2,781
9,214
-
6,000
-
(2,500)
(612)
(478)
2,410
2,892
6,322
9,214
Cash and cash equivalents at the end of the financial year
8
11,995
30
The above statement of changes in equity should be read in conjunction with the accompanying notes
The above statement of cash flows should be read in conjunction with the accompanying notes
31
ANNUAL REPORT 30 JUNE 2021ANNUAL REPORT 30 JUNE 2021 ReadyTech Holdings Limited
Notes to the financial statements
30 June 2021
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 24 August 2021. 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.
●
●
●
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2021
Note 2. Significant accounting policies (continued)
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.
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.
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.
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 2021 which are most
relevant to the Group are provided below:
Conceptual Framework for Financial Reporting (Conceptual Framework)
The Group has adopted the revised Conceptual Framework from 1 January 2020. The Conceptual Framework contains
new definition and recognition criteria as well as new guidance on measurement that affects several Accounting Standards,
but it has not had a material impact on the Group's financial statements.
Deficiency of net current assets
The statement of financial position has a deficiency of net current assets of $22,952,000 (2020: $10,397,000) at the
reporting date. The deficiency is mainly attributable to (i) contract liabilities of $16,725,000 disclosed in current liabilities,
contract liabilities represents upfront payments received from customers on signed sales contracts which will not result in
an outflow of cash within the next twelve months; (ii) an amount of $4,803,000 in relation to employee benefits is included
in current liabilities, the majority of this liability is not expected to be settled in cash within the next twelve months.
In addition, there is a contingent consideration liability of $12,488,000 which is payable only if recurring revenue targets
are met, consequently, this payable will be partially funded by the incremental operating cash flow to be generated from
acquired businesses.
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').
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.
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.
32
33
ANNUAL REPORT 30 JUNE 2021ANNUAL REPORT 30 JUNE 2021 ReadyTech Holdings Limited
Notes to the financial statements
30 June 2021
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2021
Note 2. Significant accounting policies (continued)
Note 2. Significant accounting policies (continued)
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
● Workforce Solutions: provider of payroll and employee management solutions from cloud-based technology to
●
outsourcing of human resource function.
Government and Justice - provider of case management software as a service solution to local governments, state
governments and justice departments.
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 as defined in the contract.
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.
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.
34
35
ANNUAL REPORT 30 JUNE 2021ANNUAL REPORT 30 JUNE 2021 ReadyTech Holdings Limited
Notes to the financial statements
30 June 2021
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2021
Note 2. Significant accounting policies (continued)
Note 2. Significant accounting policies (continued)
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.
Interest income is recognised on a time proportionate basis that takes into account the effective yield on the financial
asset.
Dividend income is recognised when the dividend is declared.
Government grants
Grants from the government are recognised at their fair value when there is reasonable assurance that the grant will be
received and the Group will comply with all attached conditions. 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.
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.
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.
Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-current classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the
Group's normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months
after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle
a liability for at least 12 months after the reporting period. All other assets are classified as non-current.
A liability is classified as current when: it is either expected to be settled in the Group's normal operating cycle; it is held
primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no
unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities
are classified as non-current.
Deferred tax assets and liabilities are always classified as non-current.
Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly
liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and
which are subject to an insignificant risk of changes in value.
Trade and other receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective
interest method, less any allowance for expected credit losses. Trade receivables are generally due for settlement within
30 days.
The Group has applied the simplified approach to measuring expected credit losses, which uses a lifetime expected loss
allowance. To measure the expected credit losses, trade receivables have been grouped based on days overdue.
Receivables from related parties and other receivables are recognised at amortised cost, less any provision for impairment.
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.
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.
36
37
ANNUAL REPORT 30 JUNE 2021ANNUAL REPORT 30 JUNE 2021 ReadyTech Holdings Limited
Notes to the financial statements
30 June 2021
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2021
Note 2. Significant accounting policies (continued)
Note 2. Significant accounting policies (continued)
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.
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 capitalised as an asset. These costs are not subsequently
amortised. Instead, patents and trademarks are tested annually for impairment, or more frequently if events or changes in
circumstances indicate that they might be impaired. They are carried at cost less accumulated impairment losses.
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 between 5 and 10 years. Amortisation commences when the asset is available
for use, i.e. when it is in the location and condition necessary for it to be capable of operating in the manner intended by
management.
Impairment of non-financial assets
Goodwill and other intangible assets that have an indefinite useful life are not subject to amortisation and are tested
annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired.
Other non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying
amount exceeds its recoverable amount.
Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-in-use is the
present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or
cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to
form a cash-generating unit.
Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year and
which are unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted. The
amounts are unsecured and are usually paid within 30 days of recognition.
Contract liabilities
Contract liabilities are recognised when a customer pays consideration, or when the Group recognises a receivable to
reflect its unconditional right to consideration (whichever is earlier), before the Group has transferred the goods or provided
the services to the customer. The liability is the Group's obligation to transfer goods or provide services to a customer from
which it has received consideration.
Borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They
are subsequently measured at amortised cost using the effective interest method.
Lease liabilities
A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present
value of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease
or, if that rate cannot be readily determined, the Group's incremental borrowing rate. Lease payments comprise of fixed
payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, amounts
expected to be paid under residual value guarantees, exercise price of a purchase option when the exercise of the option
is reasonably certain to occur, and any anticipated termination penalties.
The variable lease payments that do not depend on an index or a rate are expensed in the period in which they are
incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured
if there is a change in the following: future lease payments arising from a change in an index or a rate used; residual
guarantee; lease term; certainty of a purchase option and termination penalties. When a lease liability is remeasured, an
adjustment is made to the corresponding right-of use asset, or to profit or loss if the carrying amount of the right-of-use
asset is fully written down.
Finance costs
Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in
the period in which they are incurred.
Provisions
Provisions are recognised when the Group has a present (legal or constructive) obligation as a result of a past event, it is
probable the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the
obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present
obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. If the time value
of money is material, provisions are discounted using a current pre-tax rate specific to the liability. The increase in the
provision resulting from the passage of time is recognised as a finance cost.
38
39
ANNUAL REPORT 30 JUNE 2021ANNUAL REPORT 30 JUNE 2021 ReadyTech Holdings Limited
Notes to the financial statements
30 June 2021
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2021
Note 2. Significant accounting policies (continued)
Note 2. Significant accounting policies (continued)
Employee benefits
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be
settled wholly within 12 months of the reporting date are measured at the amounts expected to be paid when the liabilities
are settled.
Other long-term employee benefits
The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting date are
measured at the present value of expected future payments to be made in respect of services provided by employees up to
the reporting date. Consideration is given to expected future wage and salary levels, experience of employee departures
and periods of service. Expected future payments are discounted using market yields at the reporting date on high quality
corporate bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.
Defined contribution superannuation expense
Contributions to defined contribution superannuation plans are expensed in the period in which they are incurred.
Share-based payments
Equity-settled share-based compensation benefits are provided to employees.
Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for
the rendering of services.
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined
using either the Binomial or Black-Scholes option pricing model that takes into account the exercise price, the term of the
option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the
expected dividend yield and the risk free interest rate for the term of the option, together with non-vesting conditions that do
not determine whether the Group receives the services that entitle the employees to receive payment. No account is taken
of any other vesting conditions.
The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the
vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the
best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The amount
recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less amounts already
recognised in previous periods.
The cost of cash-settled transactions is initially, and at each reporting date until vested, determined by applying either the
Binomial or Black-Scholes option pricing model, taking into consideration the terms and conditions on which the award was
granted. The cumulative charge to profit or loss until settlement of the liability is calculated as follows:
●
during the vesting period, the liability at each reporting date is the fair value of the award at that date multiplied by the
expired portion of the vesting period.
from the end of the vesting period until settlement of the award, the liability is the full fair value of the liability at the
reporting date.
●
All changes in the liability are recognised in profit or loss. The ultimate cost of cash-settled transactions is the cash paid to
settle the liability.
Market conditions are taken into consideration in determining fair value. Therefore any awards subject to market conditions
are considered to vest irrespective of whether or not that market condition has been met, provided all other conditions are
satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made.
An additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair
value of the share-based compensation benefit as at the date of modification.
If the non-vesting condition is within the control of the Group or employee, the failure to satisfy the condition is treated as a
cancellation. If the condition is not within the control of the Group or employee and is not satisfied during the vesting
period, any remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining
expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and
new award is treated as if they were a modification.
Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the
fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date; and assumes that the transaction will take place either: in the
principal market; or in the absence of a principal market, in the most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset or liability,
assuming they act in their economic best interests. For non-financial assets, the fair value measurement is based on its
highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are
available to measure fair value, are used, maximising the use of relevant observable inputs and minimising the use of
unobservable inputs.
Assets and liabilities measured at fair value are classified into three levels, using a fair value hierarchy that reflects the
significance of the inputs used in making the measurements. Classifications are reviewed at each reporting date and
transfers between levels are determined based on a reassessment of the lowest level of input that is significant to the fair
value measurement.
For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is either
not available or when the valuation is deemed to be significant. External valuers are selected based on market knowledge
and reputation. Where there is a significant change in fair value of an asset or liability from one period to another, an
analysis is undertaken, which includes a verification of the major inputs applied in the latest valuation and a comparison,
where applicable, with external sources of data.
Issued capital
Ordinary shares 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.
40
41
ANNUAL REPORT 30 JUNE 2021ANNUAL REPORT 30 JUNE 2021 ReadyTech Holdings Limited
Notes to the financial statements
30 June 2021
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2021
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 2021. The Group has
not yet assessed the impact of these new or amended Accounting Standards and Interpretations.
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.
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.
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.
42
43
ANNUAL REPORT 30 JUNE 2021ANNUAL REPORT 30 JUNE 2021 ReadyTech Holdings Limited
Notes to the financial statements
30 June 2021
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2021
Note 3. Critical accounting judgements, estimates and assumptions (continued)
Note 4. Operating segments (continued)
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.
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 three reportable operating segments: Education, Workforce Solutions, and Government and
Justice. These operating segments are based on the internal reports that are reviewed and used by the Board of Directors
(who are identified as the Chief Operating Decision Makers ('CODM')) in assessing performance and in determining the
allocation of resources.
The CODM reviews adjusted EBITDA (earnings before interest, tax, depreciation and amortisation adjusted for non-cash
and significant items). The accounting policies adopted for internal reporting to the CODM are consistent with those
adopted in the financial statements.
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.
44
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) and learning management systems
(LMS) 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
Workforce Solutions
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.
Government and Justice
provides government and justice case management software as a service solutions to local
governments, state governments and justice departments. Core products in asset
management, property, licensing and compliance, finance, HR and payroll, customer
management and courts and justice.
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 2021 (30 June 2020: $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 2021 and 30 June 2020 no single customer contributed 10% or more to the Group's
external revenue.
Operating segment information
Consolidated - 2021
Revenue
Sales to external customers
Interest revenue
Total revenue
EBITDA
Transaction and restructuring costs
Revaluation of contingent consideration
Depreciation and amortisation
Interest revenue
Finance costs
Profit before income tax expense
Income tax expense
Profit after income tax expense
Workforce
Solutions
$'000
Education
$'000
Government
and Justice
$'000
Corporate
$'000
Total
$'000
20,288
2
20,290
24,901
-
24,901
8,496
11,614
4,838
1
4,839
1,699
-
-
-
(2,925)
50,027
3
50,030
18,884
(2,243)
(1,840)
(11,057)
3
(963)
2,784
(629)
2,155
45
ANNUAL REPORT 30 JUNE 2021ANNUAL REPORT 30 JUNE 2021 ReadyTech Holdings Limited
Notes to the financial statements
30 June 2021
Note 4. Operating segments (continued)
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2021
Note 6. Expenses
Government and Justice is a new operating segment during the financial year ended 30 June 2021. Refer note 35 for
further 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
Workforce
Solutions
$'000
Education
$'000
Government
and Justice
$'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
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
Disaggregation of revenue
The disaggregation of revenue from contracts with customers is as follows:
Consolidated
2021
$'000
2020
$'000
50,027
39,254
Workforce
Solutions
$'000
Education
$'000
Government
and Justice
$'000
Total
$'000
18,041
2,247
21,518
3,383
20,288
24,901
3,738
1,100
4,838
43,297
6,730
50,027
Workforce
Solutions
$'000
Education
$'000
Government
and Justice
$'000
Total
$'000
16,204
1,716
18,888
2,446
17,920
21,334
-
-
-
35,092
4,162
39,254
Consolidated - 2021
Major product lines
Subscription, licence and hosting
Implementation, training, consultancy and other
Consolidated - 2020
Major product lines
Subscription, licence and hosting
Implementation, training, consultancy and other
46
Profit 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
Impairment of receivables
Impairment of receivables
Consolidated
2021
$'000
2020
$'000
861
102
963
880
40
920
1,939
1,478
144
298
During the financial year ended 30 June 2021, the Group received $158,000 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 netted off in the relevant expenses.
Note 7. Income tax
Income tax expense
Current tax
Deferred tax - origination and reversal of temporary differences
Adjustment recognised for prior periods
Adjustment for change in tax rate
Aggregate income tax expense
Deferred tax included in income tax expense comprises:
Increase in deferred tax assets
Numerical reconciliation of income tax expense and tax at the statutory rate
Profit before income tax expense
Tax at the statutory tax rate of 30% (2020: 27.5%)
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Research and development expenses
Research and development tax offset
Other non-assessable items
Other non-deductible expenditure
Adjustment recognised for prior periods
Change in corporate tax rate
Income tax expense
Consolidated
2021
$'000
2020
$'000
4,043
(2,813)
(203)
(398)
2,812
(1,805)
(277)
-
629
730
(2,813)
(1,805)
2,784
835
717
(920)
(47)
645
1,230
(203)
(398)
629
4,673
1,285
675
(945)
(8)
-
1,007
(277)
-
730
47
ANNUAL REPORT 30 JUNE 2021ANNUAL REPORT 30 JUNE 2021 ReadyTech Holdings Limited
Notes to the financial statements
30 June 2021
Note 7. Income tax (continued)
Amounts credited directly to equity
Deferred tax assets
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
Contract costs
Other
Deferred tax asset
Movements:
Opening balance
Credited to profit or loss
Credited to equity
Additions through business combinations and common control transaction (note 35)
Adjustment recognised for prior periods
Change in tax rate
Closing balance
Income tax payable
Income tax payable
Consolidated
2021
$'000
2020
$'000
(242)
-
Consolidated
2021
$'000
2020
$'000
88
1,714
5,122
1,247
906
1,734
-
(8,621)
(142)
1,196
(721)
795
(670)
(55)
61
1,178
3,288
809
344
1,123
50
(3,950)
(131)
1,324
(697)
864
-
136
4,399
2,813
242
(4,853)
(406)
398
3,909
1,805
-
(1,315)
-
-
2,593
4,399
Consolidated
2021
$'000
2020
$'000
2,487
1,709
As at 30 June 2021, the Group has capital losses totalling $2,996,023 (2020: $3,005,000) which have not been recognised
in the statement of financial position as the recovery of this benefit is uncertain.
48
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2021
Note 7. Income tax (continued)
Change in corporate tax rate
The corporate tax rate applicable to base rate entities reduces from 27.5% to 26% for the 2020-21 income year and further
reduces to 25% prospectively from the 2021-22 income year. In financial year 2020, the Group qualifies as a base rate
entity as it has a turnover of less than $50 million and less than 80% of its assessable income is derived from base rate
entity passive income. In financial year 2021, the Group no longer qualifies as a base rate entity as it has a turnover of
more than $50 million and therefore full company tax rate of 30% applies. The Group has remeasured its deferred tax
balances, and any unrecognised potential tax benefits arising from carried forward tax losses, based on the effective tax
rate that is expected to apply in the year the temporary differences are expected to reverse or benefits from tax losses
realised. The impact of the change in tax rate on deferred tax balances has been recognised as tax expense in profit or
loss or as an adjustment to equity to the extent to which the deferred tax relates to items previously recognised outside
profit or loss.
Note 8. Current assets - cash and cash equivalents
Cash at bank
Cash on deposit
Note 9. Current assets - trade and other receivables
2,593
4,399
Trade receivables
Less: Allowance for expected credit losses
Other receivables
Consolidated
2021
$'000
2020
$'000
11,853
142
11,995
9,210
4
9,214
Consolidated
2021
$'000
2020
$'000
7,209
(293)
6,916
225
7,141
3,612
(221)
3,391
1,145
4,536
Allowance for expected credit losses
The Group has recognised a loss of $144,000 in profit or loss in respect of impairment of receivables for the period ended
30 June 2021 (2020: $298,000).
The ageing of the receivables and allowance for expected credit losses provided for above are as follows:
Consolidated
Not overdue
0 to 3 months overdue
3 to 6 months overdue
Over 6 months overdue
Expected credit loss rate
2021
%
2020
%
Carrying amount
2020
$'000
2021
$'000
Allowance for expected
credit losses
2021
$'000
2020
$'000
1.00%
1.00%
17.00%
48.00%
1.00%
2.50%
30.00%
49.50%
4,596
1,767
569
277
7,209
1,428
1,770
216
198
3,612
44
18
98
133
293
14
44
65
98
221
49
ANNUAL REPORT 30 JUNE 2021ANNUAL REPORT 30 JUNE 2021 ReadyTech Holdings Limited
Notes to the financial statements
30 June 2021
Note 9. Current assets - trade and other receivables (continued)
Movements in the allowance for expected credit losses are as follows:
Opening balance
Additional provisions recognised
Additions through business combinations
Receivables written off during the year as uncollectable
Closing balance
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
2021
$'000
2020
$'000
221
144
95
(167)
293
53
298
-
(130)
221
Consolidated
2021
$'000
2020
$'000
1,445
-
1,445
1,445
-
-
-
-
Allowance for expected credit losses
The allowance for expected credit losses on contract assets for the year ended 30 June 2021 is $nil (2020: $nil).
50
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2021
Note 11. Non-current assets - property, plant and equipment
Leasehold improvements - at cost
Less: Accumulated depreciation
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
Consolidated
2021
$'000
2020
$'000
920
(557)
363
210
(67)
143
20
(11)
9
655
(336)
319
274
(180)
94
928
920
(378)
542
124
(31)
93
20
(6)
14
358
(148)
210
265
(108)
157
1,016
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 2019
Additions
Additions through business
combinations (note 35)
Disposals
Depreciation expense
Balance at 30 June 2020
Additions
Disposals
Write off of assets
Depreciation expense
Balance at 30 June 2021
Leasehold
improve-
ments
$'000
Fixtures and
fittings
$'000
Motor
vehicles
$'000
Computer
equipment
$'000
Office
equipment
$'000
Total
$'000
314
347
-
-
(119)
542
-
-
-
(179)
363
39
65
11
-
(22)
93
86
-
(6)
(30)
143
-
-
28
-
(14)
14
-
-
-
(5)
9
85
212
9
-
(96)
210
297
-
-
(188)
319
94
15
141
(1)
(92)
157
12
(3)
(1)
(71)
94
532
639
189
(1)
(343)
1,016
395
(3)
(7)
(473)
928
51
ANNUAL REPORT 30 JUNE 2021ANNUAL REPORT 30 JUNE 2021 ReadyTech Holdings Limited
Notes to the financial statements
30 June 2021
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
2021
$'000
2020
$'000
81,431
31,605
474
475
36,476
(7,740)
28,736
53,888
(23,831)
30,057
19,825
(5,463)
14,362
32,559
(16,394)
16,165
140,698
62,607
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 2019
Additions
Additions through business combinations (note
35)
Exchange differences
Amortisation expense
Balance at 30 June 2020
Additions
Additions through business combinations (note
35)
Exchange differences
Write off of assets
Amortisation expense
Balance at 30 June 2021
Goodwill
$'000
Patents and
trademarks
$'000
Customer
relationships
$'000
Software
$'000
Total
$'000
22,767
-
8,872
(34)
-
31,605
-
49,842
(16)
-
-
81,431
-
-
477
(2)
-
475
-
-
(1)
-
-
14,516
-
1,707
(3)
(1,858)
14,362
-
16,653
(2)
-
(2,277)
15,635
4,329
2,524
15
(6,338)
16,165
5,739
15,591
(4)
(1)
(7,433)
52,918
4,329
13,580
(24)
(8,196)
62,607
5,739
82,086
(23)
(1)
(9,710)
474
28,736
30,057
140,698
Impairment testing
Goodwill acquired through business combinations has been allocated to the following groups of cash generating units
('CGU'):
Education
Workforce Solutions
Government and Justice
52
Consolidated
2021
$'000
2020
$'000
18,276
13,313
49,842
18,276
13,329
-
81,431
31,605
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2021
Note 12. Non-current assets - intangibles (continued)
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 2022 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
Government and Justice
Pre-tax discount rate used
2021
%
2020
%
Terminal growth rate
2020
2021
%
%
EBITDA
CAGR from
FY22 to FY26
2021
%
EBITDA
CAGR from
FY21 to FY25
2020
%
15%
15%
15%
17%
17%
-
2%
2%
3%
1%
1%
-
15.6%
22.1%
22.0%
16.9%
15.2%
-
Impairment testing results
No impairment existed at 30 June 2021. Based on the value-in-use calculation methodology and assumptions stated
above, the carrying amount of each group of CGUs at balance date does not exceed its recoverable amount.
Impact of possible changes in assumptions
A reasonable possible change in assumptions would not cause the carrying amount of each group of CGUs to exceed its
recoverable amount.
Note 13. Non-current assets - right-of-use assets
Land and buildings - right-of-use
Less: Accumulated depreciation
Consolidated
2021
$'000
2020
$'000
4,645
(2,241)
3,875
(1,057)
2,404
2,818
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.
53
ANNUAL REPORT 30 JUNE 2021ANNUAL REPORT 30 JUNE 2021 ReadyTech Holdings Limited
Notes to the financial statements
30 June 2021
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2021
Note 13. Non-current assets - right-of-use assets (continued)
Note 16. Current liabilities - contract liabilities
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 2019
Additions
Depreciation expense
Balance at 30 June 2020
Additions
Additions through business combinations (note 35)
Lease termination
Lease modification
Depreciation expense
Balance at 30 June 2021
Land and
buildings -
right-of-use
$'000
Contract liabilities
Note 17. Current liabilities - lease liabilities
2,046
1,608
(836)
2,818
359
173
(60)
(12)
(874)
2,404
Lease liability
Refer to note 27 for further information on financial instruments.
Note 18. Current liabilities - contingent consideration
For other lease related disclosures refer to the following, refer:
●
●
●
note 6 for details of interest on lease liabilities and other lease expenses;
note 17 and note 23 for details of lease liabilities at the beginning and end of the reporting period; and
consolidated statement of cash flows for repayment of lease liabilities.
Note 14. Non-current assets - contract costs
Contingent consideration
Refer to note 28 and note 35 for further details on contingent consideration.
Note 19. Non-current liabilities - contract liabilities
Costs to obtain contracts
Contract fulfilment costs
Note 15. Current liabilities - trade and other payables
Trade payables
Accrued expenses
GST payable
Refer to note 27 for further information on financial instruments.
54
Consolidated
2021
$'000
2020
$'000
413
949
1,362
351
189
540
Consolidated
2021
$'000
2020
$'000
1,695
3,880
1,483
7,058
185
2,050
1,655
3,890
Contract liabilities
Note 20. Non-current liabilities - borrowings
Borrowings
Less: establishment fees
Refer to note 27 for further information on financial instruments.
Total secured liabilities
The total secured liabilities (current and non-current) are as follows:
Borrowings
Consolidated
2021
$'000
2020
$'000
16,725
11,741
Consolidated
2021
$'000
2020
$'000
996
828
Consolidated
2021
$'000
2020
$'000
12,488
4,096
Consolidated
2021
$'000
2020
$'000
549
214
Consolidated
2021
$'000
2020
$'000
31,000
(83)
25,000
-
30,917
25,000
Consolidated
2021
$'000
2020
$'000
31,000
25,000
55
ANNUAL REPORT 30 JUNE 2021ANNUAL REPORT 30 JUNE 2021 ReadyTech Holdings Limited
Notes to the financial statements
30 June 2021
Note 20. Non-current liabilities - borrowings (continued)
Assets pledged as security
Borrowings are secured over the assets of the Group.
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2021
Note 23. Non-current liabilities - lease liabilities
Financing arrangements
Unrestricted access was available at the reporting date to the following lines of credit:
Lease liability
Consolidated
2021
$'000
2020
$'000
1,654
2,310
Consolidated
2021
$'000
2020
$'000
996
1,654
2,650
828
2,310
3,138
Consolidated
2021
$'000
2020
$'000
3,138
336
(64)
(12)
186
102
(1,036)
2,196
1,554
-
-
-
-
(612)
2,650
3,138
Total facilities
Borrowings (Facility A)
Borrowings (Facility B)
Used at the reporting date
Borrowings (Facility A)
Borrowings (Facility B)
Unused at the reporting date
Borrowings (Facility A)
Borrowings (Facility B)
Consolidated
2021
$'000
2020
$'000
23,000
14,500
37,500
23,000
8,000
31,000
21,500
6,000
27,500
21,500
3,500
25,000
-
6,500
6,500
-
2,500
2,500
Refer to note 27 for further information on financial instruments.
Current (note 16)
Non-current
Reconciliation
Reconciliation of lease liabilities (current and non-current) at the beginning and end of financial year are set out below:
The Group has established two facilities, Facility A and Facility B:
●
●
Facility A - $23,000,000 (30 June 2020: $21,500,000) with an amortising loan term over 3 years and an interest rate
set at BBSY plus a margin of 2.3% (30 June 2020: 2.4%) depending on the Net Leverage Ratio of the Group. As at 30
June 2021, $23,000,000 (30 June 2020: $21,500,000) of the total facility has been drawn down.
Facility B - $14,500,00 (30 June 2020: $6,000,000) with a bullet term repayment after 3 years and an interest rate set
at BBSY plus a margin of 2.3% (30 June 2020: 4.4%) depending on the Net Leverage Ratio of the Group. As at 30
June 2021, $8,000,000 (30 June 2020: $3,500,000) of the total facility has been drawn down.
Note 21. Non-current liabilities - provisions
Balance at start of the year
Additions
Lease termination
Lease modification
Additions through business combinations (note 35)
Interest
Repayment of lease liabilities
Balance at end of the year
Note 24. Equity - issued capital
Lease make good
Consolidated
2021
$'000
2020
$'000
62
61
Ordinary shares - fully paid
102,149,776
80,005,367
159,095
119,581
Consolidated
2021
Shares
2020
Shares
2021
$'000
2020
$'000
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 22. Non-current liabilities - Contingent consideration
Contingent consideration
Refer to note 28 and note 35 for further details on contingent consideration.
56
Consolidated
2021
$'000
2020
$'000
16,320
-
Movements in ordinary share capital
Details
Balance
Balance
Issue of shares
Shares issued on acquisition of subsidiary
Shares issued under Share Purchase Plan
Less transaction costs (net of tax)
Date
1 July 2019
30 June 2020
6 November 2020
23 March 2021
21 April 2021
Shares
Issue price
$'000
80,005,367
80,005,367
13,297,872
7,397,353
1,449,184
-
$1.88
$1.67
$1.88
$0.00
Balance
30 June 2021
102,149,776
119,581
119,581
25,000
12,354
2,724
(564)
159,095
57
ANNUAL REPORT 30 JUNE 2021ANNUAL REPORT 30 JUNE 2021 ReadyTech Holdings Limited
Notes to the financial statements
30 June 2021
Note 24. Equity - issued capital (continued)
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2021
Note 25. Equity - reserves (continued)
Ordinary shares
Ordinary shares entitle the holder to participate in any dividends declared and any proceeds attributable to shareholders
should the Company be wound up in proportions that consider both the number of shares held and the extent to which
those shares are paid up. 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.
Note 25. Equity - reserves
Foreign currency reserve
Share-based payments reserve
Common control reserve
Reorganisation reserve
Consolidated
2021
$'000
2020
$'000
(118)
556
(10,058)
(73,048)
(86)
162
(10,058)
(73,048)
(82,668)
(83,030)
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 2019
Foreign currency translation
Balance at 30 June 2020
Foreign currency translation
Share-based payments
Balance at 30 June 2021
Note 26. Equity - dividends
Foreign
currency
$'000
Share-based
payments
$'000
Common
control
$'000
Reorgan-
isation
$'000
Total
$'000
-
(86)
(86)
(32)
-
(118)
162
-
162
-
394
556
(10,058)
-
(10,058)
-
-
(73,048)
-
(73,048)
-
-
(82,944)
(86)
(83,030)
(32)
394
(10,058)
(73,048)
(82,668)
There were no dividends paid, recommended or declared during the current financial year or previous financial period.
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 2021 and 30 June 2020 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.
58
59
ANNUAL REPORT 30 JUNE 2021ANNUAL REPORT 30 JUNE 2021 2021
2020
Consolidated - 2021
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2021
Note 27. Financial instruments (continued)
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 outstanding:
Consolidated
Borrowings
Weighted
average
interest rate
%
Weighted
average
interest rate
%
Balance
$'000
Balance
$'000
2.68%
31,000
2.84%
25,000
Net exposure to cash flow interest rate risk
31,000
25,000
An analysis by remaining contractual maturities in shown in 'liquidity and interest rate risk management' below.
For the Group the borrowings outstanding totalling $31,000,000 (2020: $25,000,000), are principal and interest payment
loans. An increase/decrease in interest rates of 100 (2020: 100) basis points would have an adverse/favourable effect on
loss before tax of $310,000 (2020: $250,000) per annum. The percentage change is based on the expected volatility of
interest rates using market data and analysts forecasts.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the
Group. The Group has a strict code of credit, including obtaining agency credit information, confirming references and
setting appropriate credit limits. The Group obtains guarantees where appropriate to mitigate credit risk. The maximum
exposure to credit risk at the reporting date to recognised financial assets is the carrying amount, net of any provisions for
impairment of those assets, as disclosed in the statement of financial position and notes to the financial statements. The
Group does not hold any collateral.
The Group has adopted a lifetime expected loss allowance in estimating expected credit losses to trade receivables
through the use of a provisions matrix using fixed rates of credit loss provisioning. These provisions are considered
representative across all customers of the Group based on recent sales experience, historical collection rates and forward-
looking information that is available. 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 2021 and rates have increased in each category up to 6 months
overdue.
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2021
Note 27. Financial instruments (continued)
Remaining contractual maturities
The following tables detail the Group's remaining contractual maturity for its financial instrument liabilities. The tables have
been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the
financial liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining
contractual maturities and therefore these totals may differ from their carrying amount in the statement of financial position.
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
-
-
-
2.68%
3.50%
1,695
1,483
12,488
831
1,080
17,577
-
-
16,320
831
894
18,045
-
-
-
31,419
850
32,269
-
-
-
-
-
-
1,695
1,483
28,808
33,081
2,824
67,891
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
Non-derivatives
Non-interest bearing
Trade payables
Other payables
Contingent consideration
Interest-bearing - variable
Bank loans
Lease liability
Total non-derivatives
Consolidated - 2020
Non-derivatives
Non-interest bearing
Trade payables
Other payables
Contingent consideration
Interest-bearing - variable
Bank loans
Lease liability
Total non-derivatives
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed
above.
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.
Fair value of financial instruments
Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value.
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.
60
61
ANNUAL REPORT 30 JUNE 2021ANNUAL REPORT 30 JUNE 2021 ReadyTech Holdings Limited
Notes to the financial statements
30 June 2021
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 - 2021
Liabilities
Contingent consideration
Total liabilities
Consolidated - 2020
Liabilities
Contingent consideration
Total liabilities
Level 1
$'000
Level 2
$'000
Level 3
$'000
Total
$'000
28,808
28,808
28,808
28,808
Level 3
$'000
Total
$'000
Level 1
$'000
-
-
-
-
Level 2
$'000
-
-
-
-
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2021
Note 28. Fair value measurement (continued)
The level 3 unobservable inputs are as follows:
Description
Unobservable inputs
Range
Outcome
Contingent
consideration
Probability of achieving
revenue targets and
probability of executing
new key contracts
to satisfy/not to satisfy
If key contracts specified as earn-out triggers
are executed and the associated 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:
Consolidated
2021
$
2020
$
260,800
203,500
18,500
52,578
-
33,000
36,066
46,263
71,078
115,329
331,878
318,829
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.
Other services
Tax compliance
Research and development tax services
Other assurance services
4,096
4,096
4,096
4,096
Deloitte and related network firms
Audit or review of the financial statements
Valuation techniques for fair value measurements categorised within level 2 and level 3
Contingent consideration has been valued using a discounted cash flow model.
Level 3 assets and liabilities
Movements in level 3 assets and liabilities during the current and previous financial year are set out below:
Consolidated
Balance at 1 July 2019
Additions
Amounts paid
Balance at 30 June 2020
Additions
Revaluation of contingent consideration
Amounts paid
Balance at 30 June 2021
Note 30. Key management personnel disclosures
Compensation
The aggregate compensation made to Directors and other members of key management personnel of the Group is set out
below:
Short-term employee benefits
Post-employment benefits
Long-term employment benefits
Share-based payments
Note 31. Contingent liabilities
Consolidated
2021
$
2020
$
1,118,273
43,388
5,736
191,543
937,243
42,006
4,462
-
1,358,940
983,711
Contingent
consideration
$'000
756
6,215
(2,875)
4,096
25,280
1,840
(2,408)
28,808
Refer to note 35 for details of the contingent consideration arrangements arising from business combinations.
The Group has given bank guarantees as at 30 June 2021 of $632,000 (2020: $949,000). The bank guarantees are for
various office leases. No cash outflows are expected from the bank guarantees given by the Group.
62
56
63
ANNUAL REPORT 30 JUNE 2021ANNUAL REPORT 30 JUNE 2021 ReadyTech Holdings Limited
Notes to the financial statements
30 June 2021
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.
Transactions with related parties
Pentagon Holdco Pty Ltd and its controlled entities was majority owned by Pemba Capital, a related party, prior to its
acquisition by the Group. The impact of the acquisition is presented in the Business Combinations note (note 35).
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.
Note 33. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Loss after income tax
Total comprehensive income
Statement of financial position
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Issued capital
Share-based payments reserve
Reorganisation reserve
Accumulated losses
Total equity
Parent
2021
$'000
2020
$'000
(679)
(679)
(1,058)
(1,058)
Parent
2021
$'000
2020
$'000
693
15,104
70,222
29,857
2,399
2,399
1,263
1,263
159,722
394
(89,471)
(2,822)
120,208
-
(89,471)
(2,143)
67,823
28,594
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 2021 and 30 June 2020.
64
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2021
Note 33. Parent entity information (continued)
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2021 and 30 June 2020.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2021 and 30 June 2020.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the Group, as disclosed in note 2, except for the
following:
●
●
Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
Dividends received from subsidiaries are recognised as other income by the parent entity and its receipt may be an
indicator of an impairment of the investment.
Note 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:
Principal place of business /
Country of incorporation
Ownership interest
2020
2021
%
%
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*
Pentagon HoldCo Pty Ltd**
Pentagon BidCo Pty Ltd**
Open Office Holdings Pty Ltd**
McGirr Holdings Pty Ltd**
McGirr Information Technology Pty Ltd**
McGirr Technologies, Inc.**
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
Australia
Australia
Australia
Australia
Australia
Australia
Australia
*
**
Acquired by the Group during the year-ended 30 June 2020. Refer to note 35.
Acquired by the Group during the year-ended 30 June 2021. Refer to note 35.
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%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
-
-
-
-
-
-
65
ANNUAL REPORT 30 JUNE 2021ANNUAL REPORT 30 JUNE 2021 ReadyTech Holdings Limited
Notes to the financial statements
30 June 2021
Note 35. Business combinations
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2021
Note 35. Business combinations (continued)
Acquisition of Pentagon HoldCo Pty Ltd and its controlled entities
On 23 March 2021, the Group acquired 100% of the ordinary shares of Pentagon HoldCo Pty Ltd and its controlled entities
for the total consideration transferred of $82,919,000. This is a Government software as a service ('SaaS') provider
business and operates in the Government and Justice division of the Group. It was acquired to diversify into a new
segment. The goodwill of $49,842,000 represents future growth. The acquired business contributed revenues of
$4,838,000 and profit after tax of $1,574,000 to the Group for the period from 23 March 2021 to 30 June 2021. The values
identified in relation to the acquisition of Pentagon HoldCo Pty Ltd are final as at 30 June 2021.
Details of the acquisition are as follows:
As at 30 June 2021, recurring and total revenue targets related to the first tranche of contingent consideration have been
met.
Acquisition of WageLink Australia Pty Ltd (prior year)
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.
Fair value
$'000
Details of the acquisition are as follows:
Cash and cash equivalents
Trade receivables
Other assets
Right-of-use assets
Customer relationships
Software
Trade and other payables
Contract liabilities
Provision for income tax
Net deferred tax liability
Employee benefits
Lease liability
Net assets acquired
Goodwill
Acquisition-date fair value of the total consideration transferred
Representing:
Cash paid or payable to vendor
ReadyTech Holdings Limited shares issued 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
Less: shares issued by Company as part of consideration
Net cash used
4,984
5,394
362
173
16,653
15,591
(894)
(1,944)
(523)
(4,853)
(1,680)
(186)
33,077
49,842
82,919
45,285
12,354
25,280
82,919
1,673
82,919
(4,984)
(25,280)
(12,354)
40,301
As part of the acquisition of Pentagon Holdco Pty Ltd and its controlled entities an amount of contingent consideration has
been agreed. The contingent consideration is payable in three tranches, depending on total revenue and recurring revenue
targets. The first and second tranche are payable in cash or ordinary shares and the third tranche is payable in cash. Refer
to note 28 for further information.
The amount of contingent consideration recognised represents the fair value as at the date of acquisition, if the relevant
targets are met. If these targets are not met, then no amount is payable. As at 30 June 2021, the fair value of contingent
consideration has increased to $27,120,492.
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
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
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.
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
66
67
ANNUAL REPORT 30 JUNE 2021ANNUAL REPORT 30 JUNE 2021 ReadyTech Holdings Limited
Notes to the financial statements
30 June 2021
Note 35. Business combinations (continued)
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2021
Note 36. Deed of cross guarantee
Acquisition of Zambion Limited and its controlled entities (prior year)
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:
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
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.
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 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'.
Set out below is a consolidated statement of profit or loss and other comprehensive income and statement of financial
position of the 'Closed Group'.
Statement of profit or loss and other comprehensive income
Revenue
Interest revenue calculated using the effective interest method
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
Revaluation of contingent consideration
Other expenses
Finance costs
Profit before income tax expense
Income tax expense
Profit after income tax expense
Other comprehensive income
Foreign currency translation
Other comprehensive income for the year, net of tax
2021
$'000
2020
$'000
42,464
2
(2,861)
(19,786)
(9,441)
(423)
(2,745)
(663)
(1,241)
(409)
(1,840)
(561)
(947)
1,549
(536)
1,013
(10)
(10)
37,252
14
(2,792)
(16,353)
(8,871)
(454)
(798)
(569)
(927)
(356)
-
(817)
(919)
4,410
(727)
3,683
26
26
Total comprehensive income for the year
1,003
3,709
68
69
ANNUAL REPORT 30 JUNE 2021ANNUAL REPORT 30 JUNE 2021 ReadyTech Holdings Limited
Notes to the financial statements
30 June 2021
Note 36. Deed of cross guarantee (continued)
Equity - accumulated losses
Accumulated losses at the beginning of the financial year
Profit after income tax expense
Accumulated losses at the end of the financial year
Statement of financial position
Current assets
Cash and cash equivalents
Trade and other receivables
Contract assets
Prepayments
Non-current assets
Investments
Property, plant and equipment
Intangibles
Right-of-use assets
Contract costs
Deferred tax
Total assets
Current liabilities
Trade and other payables
Contract liabilities
Lease liabilities
Income tax payable
Employee benefits
Contingent consideration
Non-current liabilities
Contract liabilities
Borrowings
Provisions
Lease liabilities
Employee benefits
Contingent consideration
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
70
2021
$'000
2020
$'000
(3,519)
1,013
(7,202)
3,683
(2,506)
(3,519)
2021
$'000
2020
$'000
7,177
2,290
13
882
10,362
93,235
787
49,148
2,026
1,362
8,475
155,033
8,768
4,228
-
706
13,702
10,316
881
52,823
2,727
540
5,429
72,716
165,395
86,418
10,694
12,243
842
2,127
3,298
12,488
41,692
549
30,917
62
1,419
433
16,320
49,700
4,954
11,327
794
1,792
2,505
4,096
25,468
214
25,000
61
2,252
331
-
27,858
91,392
53,326
74,003
33,092
159,095
(82,586)
(2,506)
119,581
(82,970)
(3,519)
74,003
33,092
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2021
Note 37. Reconciliation of profit after income tax to net cash from operating activities
Profit after income tax expense for the year
Adjustments for:
Depreciation and amortisation
Write off of non-current assets
Net loss/(gain) on disposal of property, plant and equipment
Net fair value loss on financial assets
Share-based payments
Foreign exchange differences
Change in operating assets and liabilities:
Decrease in trade and other receivables
Decrease/(increase) in deferred tax assets
Increase in prepayments
Increase in other operating assets
Increase in trade and other payables
Increase in contract liabilities
Increase in provision for income tax
Decrease in deferred tax liabilities
Increase in employee benefits
Decrease in other provisions
Increase/(decrease) in other operating liabilities
Net cash from operating activities
Note 38. Share-based payments
Consolidated
2021
$'000
2020
$'000
2,155
3,943
11,057
8
(1)
1,840
394
(9)
2,789
1,806
(304)
(1,905)
2,191
3,375
255
(4,853)
2,302
(1,679)
75
9,375
-
1
-
-
(62)
193
(490)
(249)
(511)
569
395
1,324
(1,315)
949
(317)
(54)
19,496
13,751
On 11 December 2020, the Group issued 702,922 performance rights to key management personnel as part of its long
term incentives ('LTI') plan. The LTI performance rights are subject to an earnings per share ('EPS') hurdle (50% of grant
value) and a relative total shareholder return ('TSR') hurdle which is compared against the S&P/ASX All Tech Index (50%
of grant value).
These LTI performance rights will be evaluated in two tranches. The first tranche, equivalent to 50% of the total grant
value, will be evaluated two years from 1 July 2020 ('the beginning of the performance period'). The second tranche, also
equivalent to 50% of the total grant value, will be evaluated three years from the beginning of the performance period.
If the compound annual growth rate of EPS is less than the target of 9%, no vesting will occur. If the target is met, 50% of
rights will vest. In the event that the compound annual growth rate is between 10-14%, vesting will be pro-rated between
50-100%.
If the relative TSR of the Company ranks at or above the 75th percentile, 100% of the rights will vest. In the event that the
Company ranks at the 50th percentile, 50% of the rights will vest. For any achievement between the 50th and 75th
percentile, vesting will be pro-rated between 50-100%.
The performance rights are not subject to an exercise price.
71
ANNUAL REPORT 30 JUNE 2021ANNUAL REPORT 30 JUNE 2021 ReadyTech Holdings Limited
Notes to the financial statements
30 June 2021
Note 41. Earnings per share
Consolidated
2021
$'000
2020
$'000
Profit after income tax attributable to the owners of ReadyTech Holdings Limited
2,155
3,943
Weighted average number of ordinary shares used in calculating basic earnings per share
Adjustments for calculation of diluted earnings per share:
Options over ordinary shares
Number
Number
90,887,774
80,005,371
1,220,548
-
Weighted average number of ordinary shares used in calculating diluted earnings per share
92,108,322
80,005,371
Basic earnings per share
Diluted earnings per share
Note 42. Events after the reporting period
Cents
Cents
2.37
2.34
4.93
4.93
The consequences of the Coronavirus (COVID-19) pandemic are continuing to be felt around the world, and its impact on
the Group, if any, has been reflected in its published results to date. Whilst it would appear that control measures and
related government policies, including the roll out of the vaccine, have started to mitigate the risks caused by COVID-19, it
is not possible at this time to state that the pandemic will not subsequently impact the Group's operations going forward.
The Group now has experience in the swift implementation of business continuation processes should future lockdowns of
the population occur, and these processes continue to evolve to minimise any operational disruption. Management
continues to monitor the situation both locally and internationally.
No other matter or circumstance has arisen since 30 June 2021 that has significantly affected, or may significantly affect
the Group's operations, the results of those operations, or the Group's state of affairs in future financial years.
ReadyTech Holdings Limited
Notes to the financial statements
30 June 2021
Note 38. Share-based payments (continued)
Set out below are summaries of options granted under the plan:
2021
Grant date
Expiry date
11/12/2020
11/12/2020
30/06/2022
30/06/2023
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
-
-
-
351,462
351,460
702,922
-
-
-
-
-
-
351,462
351,460
702,922
No performance rights are exercisable at the end of the financial year ended 30 June 2021.
The weighted average share price during the financial year was $1.90 (2020: $1.65).
The weighted average remaining contractual life of options outstanding at the end of the financial year was 1.5 years.
For the performance rights granted during the current financial year, the valuation model inputs used to determine the fair
value at the grant date, are as follows:
Grant date
Expiry date
Share price
at grant date
Expected
volatility
Dividend
yield
Risk-free
interest rate
Fair value
at grant date
11/12/2020
11/12/2020
30/06/2022
30/06/2023
$2.10
$2.10
47.00%
47.00%
2.12%
2.12%
0.09%
0.12%
$1.790
$1.800
Note 39. Non-cash investing and financing activities
Additions to the right-of-use assets
Shares issued in relation to business combinations
Note 40. Changes in liabilities arising from financing activities
Consolidated
Balance at 1 July 2019
Net cash from/(used in) financing activities
Additions
Balance at 30 June 2020
Net cash from/(used in) financing activities
Acquisition of leases
Changes through business combinations (note 35)
Other changes
Consolidated
2021
$'000
2020
$'000
359
12,354
12,713
-
-
-
Borrowings
$'000
Lease liability
$'000
Total
$'000
21,500
3,500
-
25,000
6,000
-
-
(83)
2,196
(612)
1,554
3,138
(1,036)
336
186
26
23,696
2,888
1,554
28,138
4,964
336
186
(57)
Balance at 30 June 2021
30,917
2,650
33,567
72
73
ANNUAL REPORT 30 JUNE 2021ANNUAL REPORT 30 JUNE 2021 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
RReeppoorrtt oonn tthhee AAuuddiitt ooff tthhee FFiinnaanncciiaall RReeppoorrtt
ReadyTech Holdings Limited
Directors' declaration
30 June 2021
In the Directors' opinion:
●
●
●
●
●
the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the
Corporations Regulations 2001 and other mandatory professional reporting requirements;
the attached financial statements and notes comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board as described in note 2 to the financial statements;
the attached financial statements and notes give a true and fair view of the Group's financial position as at 30 June
2021 and of its performance for the financial year ended on that date;
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
24 August 2021
Sydney
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
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 2021, 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:
•
Giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its financial performance
for the year then ended; and
• 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 & 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.
74
75
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
ANNUAL REPORT 30 JUNE 2021ANNUAL REPORT 30 JUNE 2021 KKeeyy AAuuddiitt MMaatttteerr
HHooww tthhee ssccooppee ooff oouurr aauuddiitt rreessppoonnddeedd ttoo tthhee KKeeyy AAuuddiitt MMaatttteerr
KKeeyy AAuuddiitt MMaatttteerr
HHooww tthhee ssccooppee ooff oouurr aauuddiitt rreessppoonnddeedd ttoo tthhee KKeeyy AAuuddiitt MMaatttteerr
Acquisition of Pentagon Holdco Pty Ltd
and its subsidiaries including Open Office
and McGirr (collectively “Open Office”)
and associated fair values of acquired
balances
On 23 March 2021, the Group completed
the acquisition of Open Office for $82.92
million, resulting in goodwill of $49.84
million as disclosed in Notes 2 and 35.
This transaction falls under the scope of
AASB 3 Business Combinations which
requires
management
judgement in determining the fair value of
assets acquired, including intangible assets
which are inherently judgemental.
significant
The valuation of goodwill, customer
intangibles and contingent
relationship
liabilities requires management judgement
and can be affected by:
•
•
the likelihood of the Group being
awarded the Government Licensing
Project
the revenue growth assumptions in
determining the achievement of earn
out targets
The Group has elected to record the
acquisition related entries as final as at 30
June 2021.
Our procedures included, but were not limited to:
Capitalisation of internally generated
software
Our procedures included, but were not limited to:
During the year, the Group capitalised
internal software development project
costs totalling $5.52 million as disclosed in
Notes 2 and 12. These projects were
predominantly
the
development of the Group’s key platforms.
The costs mainly comprised of payroll
expenses.
relation
to
in
costs
requires
The capitalisation of internally generated
significant
software
judgment due to the size of the internal
costs
the
capitalised and assessing
capitalisation amount from the payroll
costs for each engineer.
capitalised
judgements also
The Group’s
included
costs were of
whether
developmental rather than research and
administrative nature (which would result
in the costs being expensed rather than
capitalised) and whether costs, including
payroll costs, were directly attributable to
relevant projects.
•
•
•
•
•
•
Assessing the nature of the projects against the
requirements of AASB 138 Intangible Assets if the
capitalisation criteria have been met;
Assessing management’s movement schedule of capitalised
labour by agreeing the underlying salaries and expenses to
the respective payroll report;
Assessing the procedures applied by the Group to review
the rates applied to capitalise payroll costs;
On a sample basis, discussing with respective entity’s
software engineers to corroborate the roles and
responsibilities as assessed by management;
Assessing the percentage of salaries and expenses that
were capitalised; and
Recalculating the amortisation expense for the year which
relates to capitalised labour.
We also assessed the appropriateness of the disclosures in Note
2 and Note 12 to the financial statements.
•
•
•
•
•
•
•
•
Completing a walkthrough of the acquisition process and
assessing the design and implementation of the key
controls addressing the risk;
Testing the opening balance sheet for the acquired
business;
Assessing the competence and objectivity of the
management’s experts;
Engaging our valuation specialists to assess the intangibles
valuation report, including attending a series of calls with
management and management’s experts to assess the
valuation methodology, key underlying assumptions and
understand subsequent adjustments made to the model;
Evaluating management’s assessment in relation to the
likelihood of securing the Government Licensing Project
through discussion with management, and corroborating
this assumption to correspondence with the relevant
government agency and Open Office’s sales pipeline.;
Assessing management’s assumption of time period
required to achieve the earn out targets and comparing the
assumptions against Open Office’s historical revenue
growth rates;
Performing an independent assessment of the time period
required to achieve the earn out revenue targets and
comparing against management’s assumptions;
Assessing the methodology used in allocating the
calculated goodwill to the Group’s identified cash-
generating unit (“CGU”)
We also assessed the appropriateness of the disclosures in Note
2 and Note 35 to the financial statements.
76
77
ANNUAL REPORT 30 JUNE 2021ANNUAL REPORT 30 JUNE 2021 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 2021,, but does not include the financial report and our
auditor’s report thereon.
Our opinion on the financial report does not cover the other information and 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.
78
•
•
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.
RReeppoorrtt oonn tthhee RReemmuunneerraattiioonn RReeppoorrtt
Opinion on the Remuneration Report
We have audited the Remuneration Report included on pages 12 to 18 of the Directors’ Report for the year
ended 30 June 2021. In our opinion, the Remuneration Report of ReadyTech Holdings Limited, for the year
ended 30 June 2021, complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration Report
in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
DELOITTE TOUCHE TOHMATSU
Joshua Tanchel
Partner
Chartered Accountants
Sydney, 24 August 2021
79
ANNUAL REPORT 30 JUNE 2021ANNUAL REPORT 30 JUNE 2021 ReadyTech Holdings Limited
Shareholder information
30 June 2021
Voting rights
Ordinary shares: On a show of hands every member present at a meeting in person or by proxy shall have one vote and
upon a poll each share shall have one vote.
There are currently 90,005 Class A Performance Shares and 90,005 Class B Performance Shares on issue. As set out in
the Notice of Meeting and accompanying documents dated 15 February 2021 (Notice), prior to Blooming (as defined in the
Notice) the holders will not be entitled to vote at any general meeting or class meeting of the Company except where a vote
is required by law.
After Blooming, the holders will not be entitled to vote ay any general meeting or class meeting of the Company except in
the following circumstances:
(i)
on a proposal to reduce the share capital of the Company;
(ii) on a resolution to approve the terms of a buy-back agreement;
(iii) on a proposal that affects rights attached to the Class A Performance Shares;
(iv) on a proposal to wind up the Company;
(v) on a proposal for the disposal of the whole of the Company’s property, business and undertaking;
(vi) during the winding up of the Company.
Holders of performance rights have no voting rights.
The below information is current as at 28 July 2021.
Distribution of equity securities
Analysis of number of equity security holders (fully paid ordinary shares) by size of holding:
Range
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Total number of security holders
Number of
holders
729
955
380
439
48
2,551
% of
holders
28.58
37.44
14.90
17.21
1.88
100.00
Holders holding less than a marketable parcel
of shares*
*marketable parcel of shares calculated based on closing market price on 28 July 2021 of $2.36.
1.65%
42
Number of
securities
429,914
2,534,742
2,888,707
11,214,713
85,081,700
102,149,776
% of
securities
0.42
2.48
2.83
10.98
83.29
100.00
1,230
0.00
ReadyTech Holdings Limited
Shareholder information
30 June 2021
Unquoted securities
Type of security
Class A Performance Shares
Class B Performance Shares
Performance Rights
Class A Performance Shares and Class B Performance Shares
Number of holders
8
8
4
Number of securities
90,005
90,005
702,922
Range
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Total number of
security holders
Performance Rights
Range
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Total number of
security holders
Number of
holders
3
2
1
2
0
8
% of holders
37.50
25.00
12.50
25.00
0
8
Number of
securities
2,408 Class A Performance Shares
2,408 Class B Performance Shares
2,112 Class A Performance Shares
2,112 Class B Performance Shares
6,775 Class A Performance Shares
6,775 Class B Performance Shares
78,710 Class A Performance Shares
78,710 Class Be Performance Shares
0
90,005 Class A Performance Shares
90,005 Class B Performance Shares
% of
securities
2.65
2.34
7.52
87.45
0
100.00
Number of
holders
0
0
0
0
4
4
% of holders
0
0
0
0
100.00
4
Number of
securities
0
0
0
0
702,922
702,922
% of
securities
0
0
0
0
100
100.00
Restricted securities
6,002,762 shares are currently subject to voluntary escrow arrangements. The voluntary escrow period ends on the date 5
trading days after the released by the Company of its 30 June 2021 audited full year accounts.
On-market buy back
There is no current on-market buy back.
Total of quoted and restricted securities
Ordinary shares not subject to voluntary escrow (quoted
securities)
Ordinary shares subject to voluntary escrow (restricted
securities)
Total number of shares
96,147,014
6,002,762
102,149,776
80
81
ANNUAL REPORT 30 JUNE 2021ANNUAL REPORT 30 JUNE 2021 ReadyTech Holdings Limited
Shareholder information
30 June 2021
Twenty largest quoted equity security holders
Shareholder
PEMBA CAPITAL PARTNERS FUND I GP PTY LTD
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
OPEN OFFICE PTY LTD
CITICORP NOMINEES PTY LIMITED
NATIONAL NOMINEES LIMITED
MARC RAYMOND WASHBOURNE
NANAYAKKARA HOLDINGS PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
CS THIRD NOMINEES PTY LIMITED
MALVERN AVENUE MANAGEMENT PTY LTD
SYCAMORE MANAGEMENT PTY LTD
No.
1
2
3
4
5
6
7
8
9
10
11
12 WASHBOURNE GROUP PTY LTD
13
14
15
16
17
18
19
20
Top 20 holders of Shares
Balance of Shares
Total Shares on issue
MARISH PTY LTD
ANKSH PTY LTD
DARREN COPPIN
PEMBA CAPITAL PARTNERS PTY LTD
BNP PARIBAS NOMINEES PTY LTD
LORD COPPIN OF MARLBOROUGH PTY LTD
NIMESH SHAH
PEMBA CAPITAL PARTNERS PTY LTD
Number of
shares
33,294,212
16,753,814
4,213,238
4,127,761
3,532,837
2,861,363
2,236,905
1,830,705
1,464,804
1,305,509
1,280,190
1,147,051
878,646
860,288
843,545
841,731
687,186
435,000
430,144
403,668
79,428,597
22,721,179
102,149,776
% of issued
equity
32.59
16.40
4.12
4.04
3.46
2.80
2.19
1.79
1.43
1.28
1.25
1.12
0.86
0.84
0.83
0.82
0.67
0.43
0.42
0.40
77.76
22.24
100.00
Substantial holders
Shareholder
Microequities Asset Management Pty Ltd
The Pemba Entities2
1 Percentage of issued equity held as disclosed in the substantial holding notices provided to the Company.
Date of
notice
11 November 2020
27 November 2020
Number of
shares
11,967,676
34,539,611
% of issued
equity1
12.83%
37%
2 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).
82
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