ReadyTech Holdings Limited
Appendix 4E
Preliminary final report
1. Company details
Name of entity:
ABN:
Reporting period:
Previous period:
ReadyTech Holdings Limited
25 632 137 216
For the year ended 30 June 2023
For the year ended 30 June 2022
2. Results for announcement to the market
Revenues from ordinary activities
up
32.0% to
103,321
Profit from ordinary activities after tax attributable to the owners of
ReadyTech Holdings Limited
down
43.4%
to
4,975
Profit for the year attributable to the owners of ReadyTech Holdings
Limited
down
43.4%
to
4,975
$'000
Dividends
There were no dividends paid, recommended or declared during the current financial period.
Comments
The profit for the Group after providing for income tax amounted to $4,975,000 (30 June 2022: $8,794,000).
Refer to the 'Review of operations' in the Directors' report for further commentary and analysis of the results.
3. Net tangible assets
Net tangible assets per ordinary security
4. Control gained over entities
Reporting
Previous
period
Cents
period
Cents
(73.70)
(49.04)
Name of entities (or group of entities)
IT Vision Pty Ltd (and its controlled entities)
Date control gained
25 July 2022
5. Loss of control over entities
Not applicable.
6. Dividends
Current period
There were no dividends paid, recommended or declared during the current financial period.
Previous period
There were no dividends paid, recommended or declared during the previous financial period.
ReadyTech Holdings Limited
Appendix 4E
Preliminary final report
7. Dividend reinvestment plans
Not applicable.
8. Details of associates and joint venture entities
Not applicable.
9. Foreign entities
Details of origin of accounting standards used in compiling the report:
Not applicable.
10. Audit qualification or review
Details of audit/review dispute or qualification (if any):
The financial statements have been audited and an unmodified opinion has been issued.
11. Attachments
Details of attachments (if any):
The Annual Report of ReadyTech Holdings Limited for the year ended 30 June 2023 is attached.
12. Signed
As authorised by the Board of Directors
Signed ___________________________
Date: 23 August 2023
Tony Faure
Chair
Sydney
ReadyTech Holdings Limited
ABN 25 632 137 216
Annual Report - 30 June 2023
ReadyTech Holdings Limited
Contents
30 June 2023
Corporate directory
Directors' report
Auditor's independence declaration
Consolidated statement of profit or loss and other comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
Directors' declaration
Independent auditor's report to the members of ReadyTech Holdings Limited
Shareholder information
2
3
19
20
21
22
23
24
75
76
80
1
ReadyTech Holdings Limited
Corporate directory
30 June 2023
Directors
Tony Faure - Chair and Independent Non-Executive Director
Marc Washbourne - Chief Executive Officer
Elizabeth Crouch AM - Independent Non-Executive Director
Timothy Ebbeck - Independent Non-Executive Director
Tom Matthews - Non-Executive Director
Mark Summerhayes - Alternate Non-Executive Director to Tom Matthews
Company secretaries
Nimesh Shah
Melissa Jones
Registered office
Principal place of business
Share register
Auditor
Level 12, 680 George Street,
Sydney
NSW 2000
Australia
Ph: +61 2 9018 5525
Level 2, 77 King Street
Sydney
NSW 2000
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
Quay Quarter Tower
50 Bridge 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
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 Council's 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
Recommendations that were followed during the reporting period and identifies and
explains any Recommendations that were not 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
2
ReadyTech Holdings Limited
Directors' report
30 June 2023
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 at the end of, or during,
the year ended 30 June 2023.
Directors
The following persons were Directors of ReadyTech Holdings Limited during the whole of the financial year and up to the
date of this report, unless otherwise stated:
Tony Faure - Non-Executive Chair
Marc Washbourne - Co-Founder & Chief Executive Officer
Elizabeth Crouch AM - 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 and Work Pathways - provider of education, apprenticeship and employment services technology powering
better outcomes for students, learners and job seekers;
● Workforce Solutions - provider of integrated payroll, rostering, HR and recruitment for the workforce; and
●
Government and Justice - provider of technology solutions for local and state government and justice agencies.
Dividends
There were no dividends paid, recommended or declared during the current financial year or previous financial period.
Review of operations
The profit for the Group after providing for income tax amounted to $4,975,000 (30 June 2022: $8,794,000).
Commenting on the FY23 result, ReadyTech Co-Founder and CEO, Marc Washbourne said:
ReadyTech delivered another financial year of strong like-to-like revenue growth while increasing recurring SaaS revenue
and earnings across all segments. The solid FY23 performance was achieved through our approach of positioning,
the education, employment
implementing and supporting our next generation cloud-based software across
services, workforce management, government and justice sectors.
At the heart of the Company has always been a culture of innovation, and ReadyTech is now well placed to capitalise on the
AI revolution with access to high-quality data and many years of R&D investment. I am excited to leverage emerging
technologies to augment our products and deliver additional value to our customers.
Our focused enterprise strategy is driving momentum and we are delivering growth through the acquisition of high-value
enterprise customers across all segments. The strategic plan, investments and growing track record have positioned
ReadyTech well to target serviceable markets of over $970 million1 across our segments. Our high-conviction pipeline of
new customers continues to mature and now exceeds $28 million reflecting unprecedented demand for our products, and a
positive indication for the year ahead.
Delivering profitable growth
Revenue was $103.3 million, an increase of 13.1% on a like-for-like basis2. The highly valued subscription and license
revenue was $84.3 million, representing a healthy 82% of total revenue.
During FY23 ReadyTech signed 11 new landmark enterprise contracts with total deal value of $12.4 million. As the Company
continues to successfully target high-value and enterprise customers, the average revenue per new customer increased
markedly 74% to $95,600.
With continued and disciplined investment for growth, expenses added to $68.5 million, up 14.9% on a like-for-like basis.
This included continued investment in Research and Development – an important driver of long-term and sustainable growth,
representing 30.7% of revenue.
1 Management estimates by internal market/customer analysis.
2 Like-for-like compares organic results excluding the impact of IT Vision.
3
ReadyTech Holdings Limited
Directors' report
30 June 2023
Underlying EBITDA was $34.8 million, representing an EBITDA margin of 33.7%. Excluding the Impact of IT Vision, the
EBITDA margin was 35.6%. The underlying cash EBITDA margin was 16.3%, including investments for enterprise growth
and the impact of recently acquired lower-margin businesses.
Continued growth in Education & Work Pathways
Education & Work Pathways revenue increased 16.4% to $36.1 million, with recurring revenue of $30.3 million. The additional
revenue was driven by focus on strong product-market fit and targeted investment in sales and marketing, reflected in pipeline
conversion and the recent customer wins including UNSW College, Training Services NSW (Phase 2) and TAFE SA (Ready
Skills product).
ReadyTech is well positioned to continue to drive growth across Education & Work Pathways segment, with many education
institutions expected to replace legacy technology with cloud solutions in the near future. In this segment, interoperability is
essential to connect complex ecosystems of education software and ReadyTech has built a reputation for providing flexibility,
choice and innovation.
Strong margin in Workforce Solutions
In the Workforce Solutions segment ReadyTech won 78 new customers in FY23 with an average deal value of $46,500, up
46% compared to FY22. The recent customer wins drove software revenue to $19.3 million, an increase of 20.4%, whilst the
managed services revenue grew 12.2% to $9.2 million. EBITDA (excluding LTIP) grew 21.4% to $11.4 million at a 40%
EBITDA margin.
The industry vertical strategy continues to deliver new customer growth through ReadyTech’s all-in-one workforce
management offering which is able to replace legacy systems with a single cloud solution. The new employee experience
gateway, Ready People, is a compelling example of applying an open ecosystem to elevate the user experience. This
segment is expected to continue to deliver strong growth in FY24.
Recent customer wins deliver growth in Government & Justice
The Government & Justice segment delivered revenue growth of $38.7 million which is a 61.9% growth rate. Excluding the
impact of IT Vision, the segment delivered a growth rate of 5.7% to $26.1 million. In FY23, government revenue was
impacted by downgrades of primarily project-based and non-recurring revenue by a number of State Government customers
worth $2 million.
In FY24, Government & Justice revenue growth is expected to return to the mid-teens level, supported by multiple recent
customer ERP wins, committed cloud upgrades for IT Vision and a strong high conviction pipeline.
The segment delivered EBITDA margin, excluding IT Vision, was 31.1%. For IT Vision, FY23 revenue was $12.6 million with
a 21.7% EBITDA margin, with margin improving to 27% in H2 and in line with plan.
Material business risks
The following is a summary of material business risks that could adversely affect our financial performance and growth
potential in future years.
Disruption to, or failure of, technology systems and software, including security breaches
The Group and its customers are dependent on the effective performance, reliability and availability of the Group’s technology
platforms, communications systems, servers, the internet, hosting services and the on-premise and cloud-based
environments in which it provides such software solutions.
There is a risk that the Group’s systems and software may be adversely affected by damaged or faulty equipment misuse by
staff or contractors, disruption, failure, service outages or data corruption that could occur as a result of computer viruses,
“worms”, malware, ransomware, internal or external misuse by websites, hacking or cyber-attacks, and other disruptions
including natural disasters, power surges or outages, terrorist attacks, or other similar events.
There is also a risk that security and technical precaution measures taken by the Group and its third-party operators will not
be sufficient to prevent unauthorised access to the Group’s networks, systems and databases.
Operational or business delays, and damage to reputation, may result from any disruption or failure of the Group’s information
systems and product delivery platforms, which may be caused by events outside the Group’s control. This could lead to
claims against the Group by its customers, reduce the attractiveness of the Group’s software and services to its clients,
subject the Group to legal action and/or regulatory scrutiny and the potential termination of customer contracts.
4
ReadyTech Holdings Limited
Directors' report
30 June 2023
Business growth
ReadyTech’s business is dependent on its ability to retain a portion of its existing clients and attract new business.
ReadyTech sells its products under various subscription and licence models, all of which are exposed to the risk of expiry,
non-renewal, and pricing risks. ReadyTech may fail to retain sufficient existing customers or attract sufficient new business
for a number of reasons, such as the failure to meet customer expectations, poor customer service, technology disruptions,
pricing or competition.
ReadyTech may also be unable to, or experience delays in, converting pipeline customers into new customers, especially
larger customers who generally have longer sales cycles and procurement and tender processes.
Talent retention and acquisition
The Group’s success depends to some extent on its ability to attract and retain key personnel; specifically technology talent,
implementation and customer success roles, payroll specialists and senior management with extensive experience in, and
knowledge of, the education, government, justice and employment industries in which the Group operates.
The loss of key personnel may adversely affect the Group’s ability to develop its products, or implement its business
strategies and may adversely affect its future financial performance. This continues to be an elevated risk due to a tight
labour market, wage inflation driven by an increased demand for this talent by acceleration of digital strategies, lack of
migration and skills shortages.
Technology and software
Long term development of software can lead to dependency on dated technology that restricts maintainability, speed of
development, security and The Group's competitiveness in the market. Rapid growth can incur technical debt in service of
speed to market. As with all information technology and software products, there is a risk of technology obsolescence. New
technology may be perceived by customers to have advantages over the Group’s current products.
Regulatory
The Group’s products are significantly influenced and affected by government policy and regulations which apply to the
education, employment and government related entities industries in which the Group operates. There is a risk that the Group
may fail to keep abreast of such policy and regulations and potential changes to the same, which may have an adverse
impact on its business, operations and financial performance.
Any material new or altered law, regulation or policy which impacts the Group’s products could require the Group to increase
spending and employee resources on regulatory compliance and/or change its business practices, which would adversely
affect the Group’s operations and profitability. Further, there is a risk that customers may reduce their usage of the Group’s
products, or that the Group may fail to attract new customers, if the Group fails to offer solutions with appropriate coverage
of compliance or regulatory requirements as sought by its customers.
Significant changes in the state of affairs
On 25 July 2022, the Group completed the acquisition of 100% of ordinary shares of IT Vision Pty Ltd (and its controlled
entities) for a total consideration of $53,102,000.
On 30 June 2023, the Group completed the loan refinancing and entered into a variation contract with the lender to extend
the credit facility to 30 June 2026 at the same facility limit.
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
In July 2023, the Group settled the contingent consideration in relation to PhoenixATS Australia Pty Ltd of $770,000 by cash.
Further, Open Windows Pty Ltd and IT Vision Pty Ltd have met their earn out targets as per the purchase sales agreement.
Open Windows Pty Ltd sellers elected to be paid $1,668,000 by cash and $2,502,000 by shares at $3.05 per share on 17
August 2023. IT Vision Pty Ltd sellers elected to be paid by $2,825,000 by cash and $3,003,000 by shares at $3.02 per share
on 18 August 2023.
No other matter or circumstance has arisen since 30 June 2023 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.
5
ReadyTech Holdings Limited
Directors' report
30 June 2023
Environmental regulation
The Group is not subject to any significant environmental regulation under Australian Commonwealth or State law.
Information on Directors
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships:
Tony Faure
Independent Non-Executive Chair
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
(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.
Chair of oOh!media Ltd (ASX:OML), PredictHQ Limited, Tidal Ventures Opportunity
Fund, Chair of LawPath
Independent Business Media
Former directorships (last 3 years): Stackla, Medical Media, Uno Homeloans
Special responsibilities:
Member of the Audit and Risk Committee and Nomination and Remuneration
Committee
378,819 ordinary shares
Interests in shares:
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships:
Former directorships (last 3 years): None
None
Special responsibilities:
4,146,229 ordinary shares
Interests in shares:
Name:
Title:
Qualifications:
Experience and expertise:
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 committed to
innovation and better technology. Marc couples his strong technical background with a
strategic vision
('SaaS') products,
underpinning best practice approaches shared across the platforms.
Year13, Digital Skills Organisation
for ReadyTech’s Software-as-a-Service
Elizabeth Crouch AM FAICD
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 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 Hearing Australia and Catholic Schools Parramatta Diocese Ltd.
She is also on the Boards of the NSW Government’s Health Infrastructure and the NSW
Institute of Sport.
None
Other current directorships:
Former directorships (last 3 years): Bingo Industries Pty Ltd
Special responsibilities:
Interests in shares:
Chair of the Audit and Risk Committee and a member of the Nomination and
Remuneration Committee
41,899 ordinary shares
6
ReadyTech Holdings Limited
Directors' report
30 June 2023
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships:
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 35 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 of Indara Digital Infrastructure Limited, Xpon Technologies Ltd
(ASX:XPN), Central Coast Local Health District, Museum of Applied Arts and Sciences,
CPA Australia, Nextgen Distribution, and Insite Organisation and as Independent Chair
of The Yield Technology Solutions.
He is presently principal of Ebbeck TIG Consulting and advisor to emerging technology
companies.
Indara Digital Infrastructure Limited, Xpon Technologies Ltd (ASX:XPN), The
Yield Technology Solutions Pty Ltd, and Central Coast Local Health District.
Former directorships (last 3 years): Envirosuite Ltd (ASX:EVS), Tymlez Group Ltd (ASX:TYM), IXUP Limited (ASX:IXU)
Special responsibilities:
Chair of the Nomination and Remuneration Committee and a member of the Audit and
Risk Committee
17,273 ordinary shares
Interests in shares:
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships:
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 20 years of experience in private equity, principal investment, investment
banking and middle market advisory and valuations in both Australia and the UK.
As a Managing Director at leading private equity manager Pemba, Tom has led a
number of transactions across Pemba’s areas of focus since 2015, including
investments into ReadyTech, Marque Group, Open Office, ONCALL, RxPx, Vets
Central, Acis, Aurizn, and Lumia Care. 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.
Smart Loyalty, ONCALL, RxPx, Vets Central, Acis, Aurizn, Lumia Care, QVS,
Outsourced
Former directorships (last 3 years): None
None
Special responsibilities:
36,644,933 ordinary shares*
Interests in shares:
*
Tom Matthews is a representative of Pemba entities. The number of shares includes Pemba interests.
7
ReadyTech Holdings Limited
Directors' report
30 June 2023
Name:
Title:
Qualifications:
Experience and expertise:
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. More recently has co-led a $650 million and a $400
million fundraising (backed by some of the largest global and local LPs) which has
established the firm as one of the leaders in its segment in Australia and NZ.
Director of Arteva, Ausreo, InteriorCo, ONCALL and RxMx
Other current directorships:
Former directorships (last 3 years): Coverforce and Instant Access
Special responsibilities:
Interests in shares:
None
555,036 ordinary 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 20 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 2023, and
the number of meetings attended by each Director were:
Full Board
Nomination and
Remuneration Committee
Audit and Risk Committee
Attended
Held
Attended
Held
Attended
Held
Tony Faure
Marc Washbourne*
Elizabeth Crouch AM
Timothy Ebbeck
Tom Matthews*
Mark Summerhayes**
12
12
11
12
10
9
12
12
12
12
12
12
1
2
2
2
-
-
2
2
2
2
-
-
4
4
4
4
-
-
4
4
4
4
-
-
Held: represents the number of meetings held during the time the Director held office.
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ReadyTech Holdings Limited
Directors' report
30 June 2023
*
**
Marc Washbourne attended 4 Audit and Risk Committee meetings and 2 Nomination and Remuneration Committee
meetings as an observer.
Mark Summerhayes is an Alternative Non-Executive Director for Tom Matthews and attended a number of meetings
either as alternate or in an observer capacity.
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 people who have 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; and
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 aligned to the 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.
In accordance with best practice corporate governance, the structure of non-executive Director and executive Director
remuneration is separate.
Non-executive Directors' remuneration
Fees and payments to non-executive Directors reflect the demands and responsibilities of their role. Non-executive Directors'
fees and payments are reviewed annually by the Nomination and Remuneration Committee. The Nomination and
Remuneration Committee may, from time to time, receive advice from independent remuneration consultants to ensure non-
executive Directors' fees and payments are appropriate and in line with the market. The Chair's fees are determined
independently to the fees of other non-executive Directors and all non-executive Director remuneration is based on
comparative roles in the external market. Non-executive Directors are not entitled to participate in any employee incentive
scheme established by the Company.
9
ReadyTech Holdings Limited
Directors' report
30 June 2023
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 2023, the fees payable to the current non-
executive Directors will not exceed $600,000 in aggregate.
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.
The annual non-executive Directors’ fees currently agreed to be paid by the Company are inclusive of superannuation and
are $170,000 to the Chair and $90,000 (inclusive of superannuation) to each of the other Independent non-executive
Directors.
For the financial year ending 30 June 2024, it was approved to increase the annual non-executive Directors’ fees inclusive
of superannuation to be $187,000 to the Chair and $97,500 to each of the other independent non-executive Directors,
inclusive fee for chairing the board sub-committees.
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.
fixed remuneration consisting of base pay, non-monetary benefits and other remuneration such as superannuation;
The executive remuneration and reward framework has three components:
(i)
(ii) short-term incentives; and
(iii) long-term incentives.
The combination of these comprises the executive's total remuneration.
(i) Fixed remuneration
Fixed remuneration, consisting of fixed salary, superannuation and non-monetary benefits, is 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.
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 financial 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 its 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 60% of fixed salary with 70% based on Financial KPI and 30% on Personal KPI's for the year
ended 30 June 2023.
The Financials KPIs are based on achieving Group revenue and Group net profit after tax, excluding acquired amortisation
expenses ('NPATA') targets.
10
ReadyTech Holdings Limited
Directors' report
30 June 2023
(iii) Long-term incentives
The long-term incentives include long service leave and share-based payments. The Group implemented a long-term
incentives ('LTI') plan during the financial year ended 30 June 2023 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, a
total shareholder return ('TSR') targets relative to the S&P/ASX All Tech Index and recurring revenue per share targets.
Group performance and link to remuneration
Remuneration for certain individuals is directly linked to the performance of the Group. A portion of cash bonus and incentive
payments are dependent on defined earnings per share targets being met. The remaining portion of the cash bonus and
incentive payments are at the discretion of the Nomination and Remuneration Committee.
The Nomination and Remuneration Committee is of the opinion that the continued improved results can be attributed in part
to the adoption of performance based compensation and is satisfied that this improvement will continue to increase
shareholder wealth if maintained over the coming years.
Refer to the section 'Additional information' below for details of the earnings and total shareholders return for the last 4 years.
Use of remuneration consultants
The Group did not engage any remuneration consultants during the year ended 30 June 2023.
Voting and comments made at the Company's 2022 Annual General Meeting ('AGM')
At the 2022 AGM, 99.91% of the votes received supported the adoption of the remuneration report for the year ended 30
June 2023. The Company did not receive any specific feedback at the AGM regarding its remuneration practices.
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 Chair
Marc Washbourne - Chief Executive Officer
Elizabeth Crouch AM - Non-Executive Director
Timothy Ebbeck - Non-Executive Director
Tom Matthews* - Non-Executive Director
Mark Summerhayes*- Alternate Non-Executive Director to Tom Matthews
*
Tom Matthews and Mark Summerhayes are representatives of Pemba entities and elect not to receive director fees.
And the following person:
●
Nimesh Shah - Chief Financial Officer
11
ReadyTech Holdings Limited
Directors' report
30 June 2023
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
$
170,000
90,000
90,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
170,000
90,000
90,000
425,000
109,140
(24,862)
25,292
23,541
444,525 1,002,636
375,000
1,150,000
64,200
173,340
5,062
(19,800)
25,292
50,584
936
24,477
324,501
794,991
769,026 2,147,627
2023
Non-Executive Directors:
Tony Faure
Elizabeth Crouch AM
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.
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
80,000
80,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
150,000
80,000
80,000
375,000
168,750
9,263
23,568
(3,744)
272,443
845,280
350,000
1,035,000
105,000
273,750
7,958
17,221
23,568
47,136
(888)
(4,632)
235,887
721,525
508,330 1,876,805
2022
Non-Executive Directors:
Tony Faure
Elizabeth Crouch AM
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.
12
ReadyTech Holdings Limited
Directors' report
30 June 2023
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Name
Non-Executive Directors:
Tony Faure
Elizabeth Crouch AM
Timothy Ebbeck
Executive Directors:
Marc Washbourne
Other Key Management
Personnel:
Nimesh Shah
Fixed remuneration
2022
2023
At risk – STI
At risk – LTI
2023
2022
2023
2022
100%
100%
100%
100%
100%
100%
-
-
-
-
-
-
-
-
-
-
-
-
45%
48%
11%
20%
44%
32%
51%
53%
8%
15%
41%
32%
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
2023
2022
Cash bonus forfeited
2022
2023
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
Fixed salary of $449,650 plus superannuation 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
Fixed salary of $396,750 plus superannuation 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.
13
ReadyTech Holdings Limited
Directors' report
30 June 2023
Share-based compensation
Issue of shares
Details of shares issued to Directors and other key management personnel as part of compensation during the year ended
30 June 2023 are set out below:
Name
Marc Washbourne
Nimesh Shah
Date
17 August 2022
17 August 2022
Shares
Issue price
86,815
84,015
$0.00
$0.00
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 2023.
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 2023.
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:
Name
Marc Washbourne
Nimesh Shah
Number of
rights
granted
Grant date
Vesting date and
exercisable date
86,815 11/12/2020
60,264 17/11/2021
60,264 17/11/2021
47,380 15/11/2022
47,380 15/11/2022
84,014 11/12/2020
56,246 13/09/2021
56,246 13/09/2021
41,806 11/10/2022
41,806 11/10/2022
30/06/2023
30/06/2023
30/06/2024
30/06/2024
30/06/2025
30/06/2023
30/06/2023
30/06/2024
30/06/2024
30/06/2025
Expiry date
30/06/2023
30/06/2023
30/06/2024
30/06/2024
30/06/2025
30/06/2023
30/06/2023
30/06/2024
30/06/2024
30/06/2025
Fair value
per right
at grant date
$1.80
$3.99
$3.99
$3.97
$3.97
$1.80
$3.06
$3.06
$2.92
$2.92
Performance rights granted in the financial year ended 30 June 2021
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 are evaluated in two tranches. The first tranche, equivalent to 50% of the total grant value vested on 30
June 2022. The second tranche, also equivalent to 50% of the total grant value, is subject to be evaluated three years from
the beginning of the performance period, 1 July 2020.
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%.
●
Performance rights granted in the financial year ended 30 June 2022
Performance rights are subject to an earnings per share ('EPS') hurdle (50% of grant value) and a recurring revenue per
share hurdle (50% of grant value).
14
ReadyTech Holdings Limited
Directors' report
30 June 2023
Performance rights will be evaluated in two tranches. The first tranche, equivalent to 50% of the total grant value, is subject
to be evaluated two years from 1 July 2021 ('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 13%, 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 13-17%, vesting will be pro-
rated between 50-100%.
Recurring revenue per share - if the compound annual growth rate of recurring revenue per share is less than the target
of 13%, 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 13-17%, vesting will be pro-rated between 50-100%.
●
Performance rights granted in the financial year ended 30 June 2023
Performance rights are subject to an earnings per share ('EPS') hurdle (50% of grant value) and a recurring revenue per
share hurdle (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 2022 ('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 13%, 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 13-17%, vesting will be pro-
rated between 50-100%.
Recurring revenue per share - if the compound annual growth rate of recurring revenue per share is less than the target
of 13%, 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 13-17%, 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 five years to 30 June 2023 are summarised below:
2023
$'000
2022
$'000
2021
$'000
2020
$'000
2019
$'000
Sales revenue
Adjusted EBITDA*
Profit/(loss) after income tax
103,306
33,039
4,975
78,284
27,472
8,794
50,027
18,884
2,155
39,254
14,954
3,943
32,711
13,013
(1,490)
*
Earnings before interest, tax, depreciation, amortisation and other non-operating items.
The factors that are considered to affect total shareholders return ('TSR') are summarised below:
Share price at financial year end ($)
Basic earnings per share (cents per share)
3.30
4.38
3.10
8.28
2.40
2.37
1.40
4.93
1.54
(2.15)
2023
2022
2021
2020
2019
15
ReadyTech Holdings Limited
Directors' report
30 June 2023
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:
Balance at Received
as part of
the start of
the year
remuneration Additions
Disposals/
other
Balance at
the end of
the year
Ordinary shares
Tony Faure
Marc Washbourne
Elizabeth Crouch AM
Timothy Ebbeck
Tom Matthews
Mark Summerhayes
Nimesh Shah
378,819
4,059,414
41,899
17,273
34,590,926
555,036
1,378,336
41,021,703
-
86,815
-
-
-
-
84,015
170,830
-
-
-
-
2,054,007
-
-
2,054,007
378,819
-
4,146,229
-
41,899
-
-
17,273
- 36,644,933
555,036
-
1,462,351
-
- 43,246,540
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
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
294,158
280,521
574,679
94,760
83,612
178,372
(86,815)
(84,015)
(170,830)
-
-
-
302,103
280,118
582,221
Performance rights over ordinary shares
Marc Washbourne
Nimesh Shah
Vested and Vested and
exercisable unexercisable
Balance at
the end of
the year
147,079
140,260
287,339
-
-
-
147,079
140,260
287,339
*
94,760 performance rights issued under ASX Listing Rule 10.14 with approval from shareholders received at the 2022
Annual General Meeting.
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
2023 (2022: 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.
16
ReadyTech Holdings Limited
Directors' report
30 June 2023
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
11/11/2020
13/09/2021
13/09/2021
17/11/2021
17/11/2021
11/10/2022
11/10/2022
15/11/2022
15/11/2022
Expiry date
30/06/2023
30/06/2023
30/06/2024
30/06/2023
30/06/2024
30/06/2024
30/06/2025
30/06/2024
30/06/2025
Number
under rights
351,460
217,394
217,390
60,264
60,264
244,319
244,309
47,380
47,380
1,490,160
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.
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 2023 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 2023 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 30 to the financial statements.
The Directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or by another
person or firm on the auditor's behalf), is compatible with the general standard of independence for auditors imposed by the
Corporations Act 2001.
17
ReadyTech Holdings Limited
Directors' report
30 June 2023
The Directors are of the opinion that the services as disclosed in note 30 to the financial statements do not compromise the
external auditor's independence requirements of the Corporations Act 2001 for the following reasons:
●
all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity
of the auditor; and
none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code
of Ethics for Professional Accountants (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.
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
Chair
23 August 2023
Sydney
18
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Quay Quarter Tower
50 Bridge Street
Sydney NSW 2000
Australia
Phone: +61 2 9322 7000
www.deloitte.com.au
The Directors
ReadyTech Holdings Limited
Level 2
77 King Street
Sydney NSW 2000
23 August 2023
Dear Directors
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.
As lead audit partner for the audit of the financial report of ReadyTech Holdings Limited for the year
ended 30 June 2023, I declare that to the best of my knowledge and belief, there have been no
contraventions of:
(i)
the auditor independence requirements of the Corporations Act 2001 in relation to the
audit; and
(ii) any applicable code of professional conduct in relation to the audit.
Yours faithfully
DELOITTE TOUCHE TOHMATSU
Sandeep Chadha
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
19
ReadyTech Holdings Limited
Consolidated statement of profit or loss and other comprehensive income
For the year ended 30 June 2023
Revenue from contracts with customers
5
103,306
78,284
Note
Consolidated
2023
$'000
2022
$'000
Interest revenue calculated using the effective interest method
Revaluation of contingent consideration
Expenses
Hosting and other direct costs
Employee benefits expense
Depreciation and amortisation expense
Impairment of assets
Advertising and marketing expenses
Consultancy and professional expenses
Administration expenses
Communication and IT expenses
Occupancy costs
Other expenses
Finance costs
Profit before income tax expense
Income tax expense
Profit after income tax expense for the year attributable to the owners of
ReadyTech Holdings Limited
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation
Other comprehensive income for the year, net of tax
Total comprehensive income for the year attributable to the owners of
ReadyTech Holdings Limited
6
7
15
-
-
6,027
(8,244)
(59,480)
(17,272)
-
(1,094)
(2,909)
(970)
(2,031)
(723)
(1,238)
(2,563)
(4,685)
(41,970)
(14,079)
(4,373)
(542)
(2,089)
(767)
(1,628)
(530)
(981)
(1,043)
6,797
11,624
(1,822)
(2,830)
4,975
8,794
137
137
(73)
(73)
5,112
8,721
Cents
Cents
Basic earnings per share
Diluted earnings per share
43
43
4.38
4.38
8.28
8.28
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
20
ReadyTech Holdings Limited
Consolidated statement of financial position
As at 30 June 2023
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Contract assets
Derivative financial instruments
Income tax refund receivable
Prepayments
Total current assets
Non-current assets
Property, plant and equipment
Intangibles
Right-of-use assets
Contract costs
Deferred tax
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Contract liabilities
Derivative financial liability
Lease liabilities
Income tax payable
Employee benefits
Contingent consideration
Total current liabilities
Non-current liabilities
Contract liabilities
Borrowings
Provisions
Lease liabilities
Deferred tax
Employee benefits
Contingent consideration
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained profits
Total equity
Note
Consolidated
2023
$'000
2022
$'000
8
9
10
11
7
12
13
14
15
7
16
17
18
19
7
20
21
22
24
7
23
25
26
20,616
10,434
1,489
76
2,150
2,969
37,734
9,201
11,377
1,383
-
-
1,355
23,316
2,229
212,511
4,783
2,025
-
221,548
1,042
150,639
3,149
2,120
5,704
162,654
259,282
185,970
11,767
19,527
-
1,229
-
7,246
10,181
49,950
888
46,949
307
3,932
2,718
375
25,911
81,080
6,824
18,974
17
1,176
3,227
6,240
12,971
49,429
368
33,949
64
2,214
-
322
1,451
38,368
131,030
87,797
128,252
98,173
194,292
(78,480)
12,440
171,916
(81,208)
7,465
128,252
98,173
The above consolidated statement of financial position should be read in conjunction with the accompanying notes
21
ReadyTech Holdings Limited
Consolidated statement of changes in equity
For the year ended 30 June 2023
Consolidated
Balance at 1 July 2021
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 25)
Share-based payments (note 40)
Issued
capital
$'000
Reserves
$'000
(Accumulat-
ed losses)/
Retained
profits
$'000
Total equity
$'000
159,095
(82,668)
(1,329)
75,098
-
-
-
-
(73)
(73)
8,794
-
8,794
(73)
8,794
8,721
12,821
-
-
1,533
-
-
12,821
1,533
Balance at 30 June 2022
171,916
(81,208)
7,465
98,173
Consolidated
Balance at 1 July 2022
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 25)
Share-based payments (note 40)
Exercise of performance rights (note 26)
Issued
capital
$'000
Retained
Reserves
$'000
profits
$'000
Total equity
$'000
171,916
(81,208)
7,465
98,173
-
-
-
21,747
-
629
-
137
137
-
3,220
(629)
4,975
-
4,975
137
4,975
5,112
-
-
-
21,747
3,220
-
Balance at 30 June 2023
194,292
(78,480)
12,440
128,252
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes
22
ReadyTech Holdings Limited
Consolidated statement of cash flows
For the year ended 30 June 2023
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
Note
Consolidated
2023
$'000
2022
$'000
113,266
(80,151)
81,983
(57,626)
33,115
15
(2,429)
(521)
(2,374)
24,357
-
(911)
(1,190)
(5,256)
Net cash from operating activities
39
27,806
17,000
Cash flows from investing activities
Payment for purchase of subsidiaries, net of cash acquired
Payments for contract assets
Payments for property, plant and equipment
Payments for intangibles
Payments of contingent consideration
37
12
13
29
Net cash used in investing activities
Cash flows from financing activities
Repayment of borrowings
Share issue transaction costs
Proceeds from borrowings
Repayment of lease liabilities
Net cash from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
(6,424)
(578)
(1,463)
(18,239)
(1,074)
(5,354)
(1,027)
(572)
(12,038)
(2,297)
(27,778)
(21,288)
-
-
13,000
(1,613)
(1,800)
(20)
4,817
(1,503)
11,387
1,494
11,415
9,201
(2,794)
11,995
Cash and cash equivalents at the end of the financial year
8
20,616
9,201
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes
23
ReadyTech Holdings Limited
Notes to the consolidated financial statements
30 June 2023
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 2, 77 King Street
Sydney
NSW 2000
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 23 August 2023. The
Directors have the power to amend and reissue the financial statements.
Note 2. Significant accounting policies
The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies
have been consistently applied to all the years presented, unless otherwise stated.
New or amended Accounting Standards and Interpretations adopted
The Group has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the
Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.
Deficiency of net current assets
The statement of financial position has a deficiency of net current assets of $12,216,000 (2022: $26,113,000) at the reporting
date. The deficiency is mainly attributable to (i) contract liabilities of $19,527,000 disclosed in current liabilities, which
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 $7,246,000 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.
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
Statement of compliance
These general-purpose financial statements have been prepared in accordance with Australian Accounting Standards and
Interpretations issued by the Australian Accounting Standards Board ('AASB') and the Corporations Act 2001, as appropriate
for for-profit oriented entities. These financial statements also comply with International Financial Reporting Standards as
issued by the International Accounting Standards Board ('IASB').
Historical cost convention
The financial statements have been prepared under the historical cost convention, except for derivatives at fair value through
profit or loss.
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.
24
ReadyTech Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 2. Significant accounting policies (continued)
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the Group only.
Supplementary information about the parent entity is disclosed in note 35.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of ReadyTech Holdings Limited
as at 30 June 2023 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 has the
power over the investee, is exposed to, or has rights to, variable returns from its involvement with the entity and has the
ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from
the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the Group are eliminated.
Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred.
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by
the Group.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest,
without the loss of control, is accounted for as an equity transaction, where the difference between the consideration
transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity attributable
to the parent.
Where the Group loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-controlling
interest in the subsidiary together with any cumulative translation differences recognised in equity. The Group recognises
the fair value of the consideration received and the fair value of any investment retained together with any gain or loss in
profit or loss.
Operating segments
Operating segments are presented using the 'management approach', where the information presented is on the same basis
as the internal reports provided to the Chief Operating Decision Makers ('CODM'). The CODM is responsible for the allocation
of resources to operating segments and assessing their performance.
Foreign currency translation
The financial statements are presented in Australian dollars, which is ReadyTech Holdings Limited's functional and
presentation currency.
Foreign currency transactions
Foreign currency transactions are translated into 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.
25
ReadyTech Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 2. Significant accounting policies (continued)
Revenue
The principal activities of the Group are to provide technology-based solutions to its customers that are organized into three
reportable operating segments: Education and Work Pathways, Workforce Solutions and Government and Justice.
Main products of the Group:
Segment
Main Product
Description
Education and Work
Pathways
JR Plus and AVAXA
Ready LMS
JR Plus, AVAXA and Ready LMS are ReadyTech’s student management
system empowering enterprise tertiary educators to create digital student
experiences and to adhere to strict compliance standards.
VeTtrak, incuding
VETtrak Cloud
Ready Skills
VETtrak is a student management system for Registered Training
Organisations (RTOs).
Ready Skills provides vocational skills tracking, recognition, planning and
assessment technology.
Job Ready, Ready
Recruit and Job
Apprentice
Job Ready, Ready Recruit and Job Apprentice exists to help employment
services providers, Group Training Organisations (GTOs) and Australian
Apprenticeship Support Network (AASN) provides to support the
completion of apprenticeship lifecycle and deliver work opportunities for
jobseekers and customers.
Esher House
Esher House delivers behavioural assessment technology and
intervention programs for Back to Work, apprentices and more.
Workforce Solutions
Ready Workforce
Ready Workforce is an all-in-one cloud payroll, HR, rostering, time &
attendance and leave management software platform.
Ready Employ
Ready Employ by Phoenix is a cloud-based talent management system
with everything you need to manage your processes online, easily.
Ready Pay
Ready Pay provides people management software, combined with an
end-to-end payroll outsourcing service, with local payroll experts
providing customers with payroll, HR administration and workplace health
& safety software and services.
Government and
Justice
Ready Community
(powered by Open
Office)
Ready Community (powered by Open Office) is provider of high function,
integrated, statutory and compliance management systems for local
government.
Ready Case
Ready Case (formerly case HQ, part of McGirr Technologies) is the
market leader in case management systems for courts, tribunals and
related justice sector agencies.
Ready Contracts and
Ready Buy
Ready Contracts and Ready Buy are designed as procurement software
suite to support distributed procurement and commercial operations to
procure goods and services efficiently, cost effectively, and at reduced
risk, while reducing workload on centralised procurement.
Government and
Justice
Altus (powered by IT
Vision)
Synergysoft (powered
by IT Vision)
Altus is a comprehensive enterprise resource planning (ERP) platform
designed specifically for local governments who need to automate and
optimise their systems, enhance cross department collaboration and
provide a customer experience to both community members and staff.
SynergySoft is a legacy product suite used by local governments, which
can be fully integrated with Altus solutions.
26
ReadyTech Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 2. Significant accounting policies (continued)
The accounting policies below apply to the Group’s products as summarised in the above table.
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.
Contracts with customers can include various combinations of subscription fees and services, which are in certain
circumstances bundled and in other circumstances are capable of being distinct and accounted for as separate performance
obligations. Where a contract with multiple performance obligations is not bundled, the revenue associated with each
performance obligation is calculated based on its relative stand-alone selling price.
Revenue is recognised over time if:
●
●
●
the customer simultaneously receives and consumes the benefits as the Group performs;
the customer controls the asset as the Group creates or enhances it; or
the Group’s performance does not create an asset for which the Group has an alternative use and there is a right to
payment for performance to date.
Where the above criteria is not met, revenue is recognised at a point in time when control transfers.
The Group earns its revenues from two main sources:
Subscription, licences, support and hosting fees
a.
Training, consultancy and other services
b.
Subscription, support and hosting fees
Subscription revenues represent revenues earned from customers accessing the cloud-based products hosted by the Group.
Customers gain access to use the Group’s cloud-based products without taking possession of the software. Customers pay
a fixed subscription fee over the contract term. Subscription contracts are sold along with configuration and/or customisation,
support and hosting services.
For some large enterprise contracts, the contract may include customisation of the software for the customer’s specific use.
Product customisation covers services to create new functions or features and special customisation of the standard reports
to meet the customer’s need. Customisation service is critical to the functioning of the software for the customer’s specific
use. A customer is not able to fully benefit from the software without the required software customisation. Knowledge on how
to modify the software code or writing additional code is proprietary of the Group and only the Group can perform this service.
Therefore, there are no other readily available resources for the customer to obtain the benefit from the software
customisation prior to accessing the product.
Support revenues represent revenues earned from providing post-sale technical support to respond to customers’ service
requests.
Hosting revenues represent revenues earned from providing the cloud-based hosting service for the service components,
storage infrastructure, operating and database software.
The Group has assessed and concluded that the sale of subscription, customisation, hosting and support services together
are not distinct as they represent a bundled service to use the Group’s cloud-based product over the contract term. Hence,
the Group considers the sale of subscription fees, customisation, hosting and technical support services as a single
performance obligation. Revenue is recognised over time on a straight-line basis over the term of the subscription period, as
the customers simultaneously receive and consume the benefits of accessing the product and services. The Group’s
subscription revenues do not contain refund-type provisions.
Costs incurred and payments received from the customer for customisation services prior to the commencement of the
subscription period are deferred on the balance sheet and recognised in the profit or loss on a straight-line basis over the
term of the subscription period.
27
ReadyTech Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 2. Significant accounting policies (continued)
Licences, support and hosting fees
Licence revenues represent revenues from the sales of on-premise products. These products are hosted in the customer’s
infrastructure environment. These products are not tailored for customer’s use and no maintenance/ training services are
included.
When a licence is purchased by a customer, there is an optionality for the customers to also purchase post-sale technical
support or hosting services for an agreed term. Where a licence is sold with these support and hosting services, each good
or service is considered to be a distinct performance obligation because the customer can benefit from the use of the software
without the provision of the support or hosting services.
Revenue is recognised at the point in time when the customer has purchased the licence as control of the software has
transferred at that point. Revenue is recognised for the provision of support and hosting services over time on a straight line
basis over the agreed term. This is because the customer is deemed to simultaneously receive and consume the benefits
provided by the Group’s performance of the support and hosting services as it is performed during the contract term.
Training, consultancy and other services
Training revenues represent revenues earned from providing in-depth training on the product, refresher courses or induction
for new users of the product.
Consultancy and other services revenue represent revenues earned from providing consultation services such as business
process mapping, project management of change projects, and best practice of business process.
The Group has assessed and concluded that revenues from training, consultancy and other services are able to be provided
by a third party supplier or can be consumed by the customer on its own or with readily available resources. Therefore,
training, consultancy and other services are considered to be distinct performance obligations.
Training, consultancy and other services revenue is charged to the customer either on a time and materials basis or as a
fixed price. Revenue is recognised as the services are rendered over time on a proportional basis using an input method,
being time or cost, depending on the terms and conditions of the customer contract.
28
ReadyTech Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 2. Significant accounting policies (continued)
Summary of revenue recognition:
Revenue categories
Subscription fees
Customisation services
Performance obligation
Timing of revenue recognition
Provide access to the Group’s
intellectual property over the agreed
period
Over time on a straight-line basis across
the customer’s subscription term.
Services to customise the product to
meet the customers' requirements or
specifications; bundled with subscription
fees
Over time on a straight-line basis across
the customer’s subscription term.
Support services – subscription
Provision of post-sale support services
over the agreed period; bundled with
subscription fees
Over time on a straight-line basis across
the customer’s subscription term.
Hosting fees - subscription
Provision
of
services over
bundled with subscription fees
cloud-based
hosting
the agreed period;
Over time on a straight-line basis across
the customer’s subscription term.
Licence fees
Sale of a software licence
At the point of sale
Support services – licence
Provision of post-sale support services
over the agreed period
Over time as the services are rendered.
Hosting fees - licence
Provision of licence hosting services
over the agreed period
Over time as the services are rendered.
Training services
Services to provide training to the users Over time as the services are rendered.
Consultancy services
Service includes services for software and
project services
Over time as the services are rendered.
Principal vs agent
For selected products, the Group collaborates with third parties software providers or consultants in completing the
performance obligations as per customer contracts. The Group is acting as a principal when it controls the provision of the
third party product or implementation service before the product or service is transferred to the customer. In the contract with
a customer, the Group has control over the establishment of pricing, including determining pricing for the third party products
and services. The Group is also primarily responsible for fulfilling the promise to provide the third party products to the
customer and assumes fulfilment risk such as addressing customer support requests and rectifying any service issues.
Contract assets/ liabilities
Timing of revenue recognition may differ from the timing of invoicing to customers. Contract liabilities represent the Group’s
obligation to transfer goods or services to a customer and are recognized when customer pays the consideration in advance,
or when the Group recognizes a receivable to reflect its unconditional right to consideration (whichever earlier) before the
Group has transferred the goods or services to the customer.
Contract liabilities comprise mainly of unearned revenue related to subscription licences fees that are not refundable.
Contract liabilities are generally invoiced at the beginning of each contract period.
Contract assets represent unbilled revenue for goods and services that have been provided to customers but not yet billed.
When corresponding payment milestones are met, contract assets are released to trade receivables. Contract assets are
treated as financial assets for impairment purposes.
Contract costs
Incremental costs incurred in obtaining a contract
Costs incurred in obtaining the customer contract are expensed, unless they are incremental to obtaining the contract and
the Group expects to recover those costs. Costs that meet the criteria for capitalisation will be amortised over the life of the
contract that they relate to. The Group has identified certain sales commission costs as meeting the criteria of directly related
contract costs. These costs are capitalised in the month in which they are incurred and amortised over the contract term.
29
ReadyTech Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 2. Significant accounting policies (continued)
Costs to fulfil a contract
Employee costs related to a contract of which product customisation is performed for a specific customer and the
corresponding revenues are recognized over the contract terms, are capitalised in the month in which they are incurred and
amortised over the contract term.
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.
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.
30
ReadyTech Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 2. Significant accounting policies (continued)
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.
Derivative financial instruments
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently
remeasured to their fair value at each reporting date. The accounting for subsequent changes in fair value depends on
whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged.
Derivatives are classified as current or non-current depending on the expected period of realisation.
Property, plant and equipment
Property, plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost
includes expenditure that is directly attributable to the acquisition of the items.
Depreciation is calculated on a straight-line or diminishing value basis to write off the net cost of each item of property, plant
and equipment (excluding land) over their expected useful lives as follows:
Leasehold improvements
Fixtures and fittings
Computer equipment
Office equipment
3-5 years
3-10 years
3-5 years
3-5 years
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date.
Leasehold improvements are depreciated over the unexpired period of the lease or the estimated useful life of the assets,
whichever is shorter.
An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the
Group. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss.
Right-of-use assets
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which
comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the
commencement date net of any lease incentives received, any initial direct costs incurred, and, except where included in the
cost of inventories, an estimate of costs expected to be incurred for dismantling and removing the underlying asset, and
restoring the site or asset.
31
ReadyTech Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 2. Significant accounting policies (continued)
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.
Management consider patents and trademarks to have indefinite useful lives because the potential to generate cash flows
is unlimited.
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.
32
ReadyTech Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 2. Significant accounting policies (continued)
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
Trade and other payables represent liabilities for goods and services provided to the Group prior to the end of the financial
year and which are unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted. The
amounts are unsecured and are usually paid within 30 days of recognition.
Contract liabilities
Contract liabilities are recognised when a customer pays consideration, or when the Group recognises a receivable to reflect
its unconditional right to consideration (whichever is earlier), before the Group has transferred the goods or provided the
services to the customer. The liability is the Group's obligation to transfer goods or provide services to a customer from which
it has received consideration.
Borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They
are subsequently measured at amortised cost using the effective interest method.
Lease liabilities
A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present
value of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease or,
if that rate cannot be readily determined, the Group's incremental borrowing rate. Lease payments comprise of fixed
payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, amounts expected
to be paid under residual value guarantees, exercise price of a purchase option when the exercise of the option is reasonably
certain to occur, and any anticipated termination penalties.
The variable lease payments that do not depend on an index or a rate are expensed in the period in which they are incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured
if there is a change in the following: future lease payments arising from a change in an index or a rate used; residual
guarantee; lease term; certainty of a purchase option and termination penalties. When a lease liability is remeasured, an
adjustment is made to the corresponding right-of use asset, or to profit or loss if the carrying amount of the right-of-use asset
is fully written down.
Finance costs
Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in
the period in which they are incurred.
Provisions
Provisions are recognised when the Group has a present (legal or constructive) obligation as a result of a past event, it is
probable the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the
obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present
obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. If the time value of
money is material, provisions are discounted using a current pre-tax rate specific to the liability. The increase in the provision
resulting from the passage of time is recognised as a finance cost.
Employee benefits
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be
settled wholly within 12 months of the reporting date are measured at the amounts expected to be paid when the liabilities
are settled.
33
ReadyTech Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 2. Significant accounting policies (continued)
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.
34
ReadyTech Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 2. Significant accounting policies (continued)
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.
35
ReadyTech Holdings Limited
Notes to the consolidated financial statements
30 June 2023
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 additional ordinary shares that would have been outstanding assuming conversion of all 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.
36
ReadyTech Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 2. Significant accounting policies (continued)
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 2023. The Group's assessment of
the impact of these new or amended Accounting Standards and Interpretations, most relevant to the Group, are set out
below.
AASB 2020-1 Amendments to Australian Accounting Standards – Classification of Liabilities as Current or Non-Current
and AASB 2022-6 Amendments to Australian Accounting Standards - Non-current Liabilities with Covenants
AASB 2020-1 was issued in March 2020 and is applicable to annual periods beginning on or after 1 January 2024, as
extended by AASB 2020-6. Early adoption is permitted. AASB 2022-6 was issued in December 2022 and is applicable to
annual periods beginning on or after 1 January 2024. Early adoption is permitted where AASB 2020-1 is also early adopted.
These standards amend AASB 101 ‘Presentation of Financial Statements’ to clarify requirements for the presentation of
liabilities in the statement of financial position as current or non-current. The amendments clarify that a liability is classified
as non-current if an entity has the right at the end of the reporting period to defer settlement of the liability for at least 12
months after the reporting period. If the deferral right is subject to the entity complying with covenants in the loan arrangement
based on information up to and including reporting date, the deferral right will exist where the entity is able to comply with
the covenant on or before the end of the reporting date even if compliance is assessed after the reporting date. The deferral
right will be deemed to exist at reporting date if the entity is required to comply with the covenant only after the reporting date
based on post-reporting date information. Additional disclosure is required about loan arrangements classified as non-current
liabilities in such circumstances which enables users of financial statements to understand the risk that the liabilities could
become repayable within twelve months after the reporting period. Classification of a liability as non-current is unaffected by
the likelihood that the entity will exercise its right to defer settlement of the liability for at least 12 months after the reporting
date or even if the entity settles the liability prior to issue of the financial statements. The meaning of settlement of a liability
is also clarified.
The Group will adopt this standard from 1 January 2024 but the impact of its adoption is yet to be assessed by the Group.
At this time, the application of AASB 2021-1 is not expected to have a material impact on the Group's financial statements.
AASB 2021-2 Amendments to Australian Accounting Standards – Disclosure of Accounting Policies and Definition
of Accounting Estimates
AASB 2021-2 was issued in March 2021 and is applicable to annual periods beginning on or after 1 January 2023. Early
adoption is permitted.
This standard amends AASB Standards to improve accounting policy disclosures so that they provide more useful
information to investors and users of the financial statements and clarify the distinction between accounting policies and
accounting estimates. Specifically, AASB 2021-2 amends:
●
●
●
●
●
AASB 7 Financial Instruments: Disclosures, to clarify that information about measurement bases for financial
instruments is expected to be material to an entity’s financial statements.
AASB 101 Presentation of Financial Statements, to require entities to disclose their material accounting policy
information rather than their significant accounting policies.
AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors, to clarify how entities should distinguish
changes in accounting policies and changes in accounting estimates.
AASB 134 Interim Financial Reporting, to identify material accounting policy information as a component of a complete
set of financial statements.
AASB Practice Statement 2 Making Materiality Judgements, to provide non-mandatory guidance on how to apply the
concept of materiality to accounting policy disclosures.
The Group will adopt this standard for the interim period ended 31 December 2023 but the impact of its adoption is yet to be
assessed by the Group. At this time, the application of AASB 2021-2 is not expected to have a material impact on the Group's
financial statements.
37
ReadyTech Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 2. Significant accounting policies (continued)
IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 ‘Climate-related
Disclosures
Sustainability standards IFRS S1 ‘General Requirements for Disclosure of Sustainability-related Financial Information’ and
IFRS S2 ‘Climate-related Disclosures’ were issued in June 2023 by the International Sustainability Standards Board (‘ISSB’).
IFRS S1 and IFRS S2 are effective for annual reporting periods beginning on or after 1 January 2024. Earlier application is
permitted, but only if both IFRS S1 and S2 are to be applied at the same time.
The objective of IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information is to require
an entity to disclose information about its sustainability-related risks and opportunities that is useful to primary users of
general purpose financial reports in making decisions relating to providing resources to the entity. It aims to capture the
environmental and social dimensions of business practices with social considerations including issues such as diversity and
inclusion, modern slavery, worker safety, occupational health and safety issues and product safety.
The objective of IFRS S2 Climate-related Disclosures is to require an entity to disclose information about its climate-related
risks and opportunities that is useful to primary users of general purpose financial reports in making decisions relating to
providing resources to the entity. IFRS S2 ‘Climate-related Disclosures’ sets out specific climate-related disclosures and is
designed to be used with IFRS S1. It sets out disclosure requirements about transition plans and scenario analysis that will
facilitate users assessing the impact of these risks and opportunities on the entity’s financial position, performance and cash
flows and, strategy and business model.
The standards are designed to meet the needs of all companies, not just the most sophisticated. They provide a clear idea
of what companies need to report to meet the needs of global capital markets – providing investors with globally comparable
information.
Both standards adopt a four-pillar core content framework which requires an entity to provide disclosures about its approach
to sustainability-related considerations through its governance, strategy, risk management and use of metrics and targets.
The standards fully incorporate the recommendations of the Task Force on Climate-related Financial Disclosures. The
standards and frameworks also reference the standards issued by the Climate Disclosure Standards Board (CDSB), the
Value Reporting Foundation’s Integrated Reporting Framework and industry-based Sustainability Accounting Standards
Board (SASB) Standards and the World Economic Forum’s Stakeholder Capitalism Metrics.
The applicability of both standards in Australia has not yet been determined, however both the AASB and ASIC are assessing
how and when these will become applicable to companies in Australia.
The Group will adopt this standard from 1 January 2024. The impact of its adoption is to be assessed by the Group.
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.
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.
38
ReadyTech Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 3. Critical accounting judgements, estimates and assumptions (continued)
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 29 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 13 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.
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 29, 37 and 40 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 29, 37 and 40 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.
Revenue recognition
For some large enterprise contracts, product customisation service is typically bundled with the implementation, training,
consulting and other services into a single performance obligation. Management uses judgment and estimates in allocating
the transaction price to different revenue streams which have more than one performance obligation. Allocation of the
transaction price is determined based on the estimated costs of satisfying the performance obligation and then adds an
appropriate margin.
39
ReadyTech Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 4. Operating segments
Identification of reportable operating segments
The Group is organised into three reportable operating segments: Education and Work Pathways, 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.
The information reported to the CODM is on a monthly basis.
Types of products and services
The principal products and services of each of these operating segments are as follows:
Education and Work
Pathways
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.
Workforce Solutions
provides products and services to mid-sized company across various industries with payroll
software, outsourced payroll services, human resource management (HRM) and
recruitment 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 2023 (30 June 2022: $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 2023 and 30 June 2022, no single customer contributed 10% or more to the Group's external
revenue.
40
ReadyTech Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 4. Operating segments (continued)
Operating segment information
Consolidated - 2023
Revenue
Sales to external customers
Total revenue
Adjusted EBITDA
Transaction, including takeover defense and
acquisition related costs
Contingent consideration charged as employee
expenses
Employee share gifts
EBITDA
Depreciation and amortisation
Interest revenue
Finance costs
Profit before income tax expense
Income tax expense
Profit after income tax expense
Consolidated - 2022
Revenue
Sales to external customers
Total revenue
Adjusted EBITDA
Transaction and restructuring costs
Contingent consideration charged as employee
expenses
Revaluation of contingent consideration
Impairment of assets
Employee share gifts
EBITDA
Depreciation and amortisation
Finance costs
Profit before income tax expense
Income tax expense
Profit after income tax expense
Workforce
Solutions
$'000
Education
and Work
Pathways
$'000
Government
and Justice
$'000
Corporate
$'000
Total
$'000
28,573
28,573
36,051
36,051
38,682
38,682
-
-
103,306
103,306
11,120
15,269
10,764
(4,114)
33,039
(3,141)
(2,912)
(369)
26,617
(17,272)
15
(2,563)
6,797
(1,822)
4,975
Workforce
Solutions
$'000
Education
and Work
Pathways
$'000
Government
and Justice
$'000
Corporate
$'000
Total
$'000
23,461
23,461
30,966
30,966
23,857
23,857
-
-
8,741
13,825
8,566
(3,660)
78,284
78,284
27,472
(1,190)
(797)
6,027
(4,373)
(393)
26,746
(14,079)
(1,043)
11,624
(2,830)
8,794
All assets and liabilities, including taxes are not allocated to the operating segments as CODM reviews and manages on an
overall group basis.
The Group operates predominantly in Australia and New Zealand region.
41
ReadyTech Holdings Limited
Notes to the consolidated financial statements
30 June 2023
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
2023
$'000
2022
$'000
103,306
78,284
Consolidated - 2023
Major product lines
Subscription, licence, support and hosting
Training, consultancy and other
Consolidated - 2022
Major product lines
Subscription, licence, support and hosting
Training, consultancy and other
Note 6. Expenses
Workforce
Solutions
$'000
Education
and Work
Pathways
$'000
Government
and Justice
$'000
Total
$'000
24,500
4,073
29,714
6,337
30,119
8,563
84,333
18,973
28,573
36,051
38,682
103,306
Workforce
Solutions
$'000
Education
and Work
Pathways
$'000
Government
and Justice
$'000
Total
$'000
20,895
2,566
26,648
4,318
18,104
5,753
65,647
12,637
23,461
30,966
23,857
78,284
Profit before income tax includes the following specific expenses:
Finance costs
Interest and finance charges paid/payable on borrowings
Interest charges on lease liability
Finance costs expensed
Superannuation expense
Defined contribution superannuation expense
Share-based payments expense
Share-based payments expense
Impairment of receivables
Impairment of receivables
42
Consolidated
2023
$'000
2022
$'000
2,337
226
2,563
944
99
1,043
4,993
3,505
3,220
1,533
195
472
ReadyTech Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 7. Income tax
Income tax expense
Current tax
Deferred tax - origination and reversal of temporary differences
Adjustment recognised for prior periods
Aggregate income tax expense
Deferred tax included in income tax expense comprises:
Decrease/(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%
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
Tax rate differential
Income tax expense
Amounts credited directly to equity
Deferred tax assets
Consolidated
2023
$'000
2022
$'000
1,611
1,216
(1,005)
5,851
(3,503)
482
1,822
2,830
1,216
(3,503)
6,797
11,624
2,039
3,487
2,508
(3,342)
1,528
94
2,827
(1,005)
-
657
(844)
(976)
49
2,373
482
(25)
1,822
2,830
Consolidated
2023
$'000
2022
$'000
-
(8)
The adjustment recognised for prior period is related to application of temporary full expensing (TFE) in the 2022 lodged tax
return.
43
ReadyTech Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 7. Income tax (continued)
Deferred tax (liability)/asset
Deferred tax (liability)/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
Customer relationships
Brand names
Property, plant and equipment
Prepayments
IPO costs
Right-of-use assets
Lease liabilities
Contract costs
Other
Deferred tax asset/(liability)
Movements:
Opening balance
Credited/(charged) to profit or loss
Credited to equity
Additions through business combinations (note 37)
Adjustment recognised for prior periods
Adjustment related to prior period TFE application
Tax impact on the finalisation of provisional accounting of business combinations
Closing balance
Income tax refund due
Income tax refund due
Income tax payable
Income tax payable
Consolidated
2023
$'000
2022
$'000
172
(3,821)
6,001
2,087
1,185
2,587
(8,968)
(498)
(1,138)
-
314
(1,435)
1,544
(768)
20
171
2,066
5,919
1,600
1,006
2,446
(7,121)
(139)
(239)
(3)
651
(913)
994
(685)
(49)
(2,718)
5,704
5,704
(1,216)
-
(2,946)
(618)
(2,991)
(651)
2,593
3,503
8
(55)
(345)
-
-
(2,718)
5,704
Consolidated
2023
$'000
2022
$'000
2,150
-
Consolidated
2023
$'000
2022
$'000
-
3,227
As at 30 June 2023, the Group has capital losses totalling $2,996,023 (2022: $2,996,023) which have not been recognised
in the statement of financial position as the recovery of this benefit is uncertain.
44
ReadyTech Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 8. Current assets - cash and cash equivalents
Cash at bank
Cash on deposit
Note 9. Current assets - trade and other receivables
Trade receivables
Less: Allowance for expected credit losses
Other receivables
Consolidated
2023
$'000
2022
$'000
20,417
199
9,059
142
20,616
9,201
Consolidated
2023
$'000
2022
$'000
10,557
(574)
9,983
11,529
(570)
10,959
451
418
10,434
11,377
Trade receivables are non-interest bearing and are on 30 day credit term.
Allowance for expected credit losses
The Group has recognised a loss of $195,000 in profit or loss in respect of impairment of receivables for the year ended 30
June 2023 (2022: $472,000).
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
2023
%
2022
%
Carrying amount
2022
$'000
2023
$'000
Allowance for expected
credit losses
2023
$'000
2022
$'000
2.26%
2.87%
10.16%
43.19%
2.00%
2.55%
6.97%
26.36%
4,647
4,563
738
609
6,846
2,502
1,062
1,119
10,557
11,529
105
131
75
263
574
137
64
74
295
570
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
Unused amounts reversed
Closing balance
45
Consolidated
2023
$'000
2022
$'000
570
195
274
(78)
(387)
574
293
403
13
(139)
-
570
ReadyTech Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 9. Current assets - trade and other receivables (continued)
In determining the recoverability of a trade receivable, the Group considers any change in the credit quality of the trade
receivable from the date credit was initially granted up to the reporting date. The concentration of credit risk is limited due to
the customer base being large and unrelated.
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
Transfer to trade receivables
Closing balance
Consolidated
2023
$'000
2022
$'000
1,489
1,383
1,383
5,465
(5,359)
1,445
487
(549)
1,489
1,383
Allowance for expected credit losses
The allowance for expected credit losses on contract assets for the year ended 30 June 2023 is $nil (2022: $nil).
Note 11. Current assets - derivative financial instruments
Interest rate swap
Refer to note 28 for further information on financial instruments.
Refer to note 29 for further information on fair value measurement.
Consolidated
2023
$'000
2022
$'000
76
-
Interest rate swap represents the fair value of interest rate swap as at 30 June 2023. The Group enters into an interest rate
swap arrangement to hedge the variable rate of $20,000,000 loan (2022: $20,000,000) with a fixed rate of 3.795% (2022:
2.884%) that is settled on a quarterly basis. The contract expires on 1 February 2024 (2022: 1 May 2023).
46
ReadyTech Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 12. 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
2023
$'000
2022
$'000
1,598
(277)
1,321
356
(235)
121
-
-
-
1,740
(973)
767
262
(242)
20
928
(701)
227
289
(109)
180
22
(15)
7
1,143
(580)
563
264
(199)
65
2,229
1,042
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 2021
Additions
Additions through business
combinations (note 37)
Exchange differences
Write off of assets
Depreciation expense
Balance at 30 June 2022
Additions
Additions through business
combinations (note 37)
Write off of assets
Depreciation expense
Balance at 30 June 2023
Leasehold
improve-
ments
$'000
Fixtures and
fittings
$'000
Motor
vehicles
$'000
Computer
equipment
$'000
Office
equipment
$'000
Total
$'000
9
2
-
-
-
(4)
7
-
-
-
(7)
-
319
479
50
(1)
(8)
(276)
563
504
96
-
(396)
767
94
-
32
(7)
(17)
(37)
65
2
-
-
(47)
20
928
579
82
(11)
(31)
(505)
1,042
1,673
221
-
(707)
2,229
363
9
-
-
(3)
(142)
227
1,097
125
-
(128)
1,321
143
89
-
(3)
(3)
(46)
180
70
-
-
(129)
121
47
ReadyTech Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 13. 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
2023
$'000
2022
$'000
125,360
88,785
1,660
474
44,506
(14,612)
29,894
98,798
(43,201)
55,597
35,103
(10,819)
24,284
69,759
(32,663)
37,096
212,511
150,639
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 2021
Additions
Additions through business combinations (note
37)
Exchange differences
Impairment of assets*
Write off of assets
Amortisation expense
Balance at 30 June 2022
Additions**
Additions through business combinations (note
37)
Adjustments to the provisional values
Exchange differences
Amortisation expense
Goodwill
$'000
Patents and
trademarks
$'000
Customer
relationships
$'000
Software
$'000
Total
$'000
81,431
-
7,350
4
-
-
-
88,785
-
36,447
27
101
-
474
-
-
-
-
-
-
474
-
1,194
-
(8)
-
28,736
-
2,986
14
(4,373)
-
(3,079)
24,284
-
8,773
624
6
(3,793)
30,057
12,038
140,698
12,038
3,862
(16)
-
(13)
(8,832)
14,198
2
(4,373)
(13)
(11,911)
37,096
18,239
150,639
18,239
10,800
-
-
(10,538)
57,214
651
99
(14,331)
Balance at 30 June 2023
125,360
1,660
29,894
55,597
212,511
*
**
Acquired customer relationships at net carrying amount of $4,373,000 was written-off during the financial year ended
30 June 2022 since Open Office did not secure the contract that was expected during the acquisition due diligence
period.
Additions of software during the period include internally generated assets of $16,344,000 and assets externally
acquired amounting to $1,895,000.
Impairment testing
Goodwill acquired through business combinations has been allocated to the following groups of cash generating units
('CGU'):
48
ReadyTech Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 13. Non-current assets - intangibles (continued)
Education and Work Pathways
Workforce Solutions
Government and Justice
Consolidated
2023
$'000
2022
$'000
19,286
15,527
90,547
19,286
15,563
53,936
125,360
88,785
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. As at 30 June 2023, management performed the annual assessment and considered
whether impairment indicators existed for all CGUs and concluded that there were none.
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 2024 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
Pre-tax discount rate used
2023
%
2022
%
Terminal growth rate
2022
2023
%
%
EBITDA
CAGR from
FY24 to FY28
2023
%
EBITDA
CAGR from
FY23 to FY27
2022
%
Education and Work Pathways
Workforce Solutions
Government and Justice
13.0%
13.0%
13.0%
15.0%
15.0%
15.0%
3.0%
3.0%
3.0%
2.0%
2.0%
3.0%
13.0%
14.0%
19.0%
16.0%
14.6%
16.3%
Impairment testing results
No impairment existed at 30 June 2023. 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
In respect of impairment testing of goodwill, judgements and estimates were made. With the Government and Justice CGU,
the goodwill balance would need to be impaired, should these judgements and estimates change as per below:
●
●
●
Increase in the discount rate by more than 1% with all other assumptions remaining constant.
Decrease in the EBITDA compound annual growth rate ("CAGR") FY24 to FY28 by more than 2% with all other
assumptions remaining constant.
Decrease in the terminal growth by more than 1.3% with all other assumptions remaining constant.
With Education and Work Pathways and Workforce Solutions CGUs, a reasonable possible change in assumptions would
not cause the carrying amount of each group of CGUs to exceed its recoverable amount.
49
ReadyTech Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 14. Non-current assets - right-of-use assets
Land and buildings - right-of-use
Less: Accumulated depreciation
Consolidated
2023
$'000
2022
$'000
8,611
(3,828)
6,784
(3,635)
4,783
3,149
The Group leases land and buildings for its offices under agreements of 4 to 5 years (2022: 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.
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 2021
Additions
Additions through business combinations (note 37)
Lease modification
Exchange differences
Depreciation expense
Balance at 30 June 2022
Additions
Additions through business combinations (note 37)
Depreciation expense
Balance at 30 June 2023
Land and
buildings -
right-of-use
$'000
2,404
1,968
72
106
(7)
(1,394)
3,149
1,438
1,720
(1,524)
4,783
For other lease related disclosures refer to the following, refer:
●
●
●
note 6 for details of interest on lease liabilities and other lease expenses;
note 19 and note 24 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.
For impairment testing, the right-of-use assets have been allocated to all cash-generating units. Refer to note 13 for further
information on the impairment testing key assumptions and sensitivity analysis.
50
ReadyTech Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 15. Non-current assets - contract costs
Costs to obtain contracts
Contract fulfilment costs
Consolidated
2023
$'000
2022
$'000
518
1,507
326
1,794
2,025
2,120
Certain commission costs that meet the criteria as costs to obtain contracts are capitalised. Contract fulfilment costs represent
costs incurred by the Group that are related to future performance or delivery of services. These costs are capitalised and
amortised over the contract terms.
Note 16. Current liabilities - trade and other payables
Trade payables
Accrued expenses
GST payable
Trade payables are non-interest bearing and are on 30 day credit term.
Refer to note 28 for further information on financial instruments.
Note 17. Current liabilities - contract liabilities
Contract liabilities
Note 18. Current liabilities - derivative financial liability
Interest rate swap
Refer to note 11 for further information.
Note 19. Current liabilities - lease liabilities
Lease liability
Refer to note 28 for maturity analysis of lease liabilities.
51
Consolidated
2023
$'000
2022
$'000
3,560
4,811
3,396
1,736
3,257
1,831
11,767
6,824
Consolidated
2023
$'000
2022
$'000
19,527
18,974
Consolidated
2023
$'000
2022
$'000
-
17
Consolidated
2023
$'000
2022
$'000
1,229
1,176
ReadyTech Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 20. Current liabilities - contingent consideration
Contingent consideration
Consolidated
2023
$'000
2022
$'000
10,181
12,971
The amount as at 30 June 2023 represents contingent consideration in relation to PhoenixATS Australia Pty Ltd, Open
Windows Pty Ltd, and IT Vision Pty Ltd acquisitions. Refer to note 37 for further details.
In July 2022, Pentagon HoldCo Pty Ltd and its controlled entities have met the earn out revenue targets as per the purchase
sales agreement. The sellers elected to be paid via shares. A deferred consideration of $9,000,000 was settled by shares at
$3.0977 per share on or about 17 August 2022.
In July 2023, the Group settled the contingent consideration in relation to PhoenixATS Australia Pty Ltd of $770,000 by cash.
Further, Open Windows Pty Ltd and It Vision Pty Ltd have met their earn out targets as per the purchase sales agreement.
Open Windows Pty Ltd sellers elected to be paid $1,668,000 by cash and $2,502,000 by shares at $3.05 per share on 17
August 2023. IT Vision Pty Ltd sellers elected to be paid by $2,825,000 by cash and $3,003,000 by shares at $3.02 per share
on 18 August 2023.
Note 21. Non-current liabilities - contract liabilities
Consolidated
2023
$'000
2022
$'000
888
368
Consolidated
2023
$'000
2022
$'000
47,000
(51)
34,000
(51)
46,949
33,949
Consolidated
2023
$'000
2022
$'000
47,000
34,000
Contract liabilities
Note 22. Non-current liabilities - borrowings
Borrowings
Less: establishment fees
Refer to note 28 for further information on financial instruments.
Total secured liabilities
The total secured liabilities (current and non-current) are as follows:
Borrowings
Assets pledged as security
Borrowings are secured over the assets of the Group.
52
ReadyTech Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 22. Non-current liabilities - borrowings (continued)
Financing arrangements
Unrestricted access was available at the reporting date to the following lines of credit:
Total facilities
Borrowings (Facility A and A1)
Borrowings (Facility B)
Used at the reporting date
Borrowings (Facility A and A1)
Borrowings (Facility B)
Unused at the reporting date
Borrowings (Facility A and A1)
Borrowings (Facility B)
Consolidated
2023
$'000
2022
$'000
35,000
15,000
50,000
35,000
12,000
47,000
23,000
14,500
37,500
23,000
11,000
34,000
-
3,000
3,000
-
3,500
3,500
The Group has established two facilities, Facility A and Facility B:
●
●
Facility A and A1 - $35,000,000 (2022: $23,000,000) as a non-revolving cash advance loan term for a period of 3 years
and an interest rate set at BBSY plus a margin of 2.05-2.75% (2022: 2.1-2.2%) depending on the Net Leverage Ratio
of the Group. As at 30 June 2023, $35,000,000 (2022: $23,000,000) of the total facility has been drawn down.
Facility B - $15,000,000 (2022: $14,500,000) as a revolving cash advance facility for a period of 3 years and an interest
rate set at BBSY plus a margin of 2.05-2.75% (2022: 2.0-2.2%) depending on the Net Leverage Ratio of the Group. As
at 30 June 2023, $12,000,000 (2022: $11,000,000) of the total facility has been drawn down.
In addition, the Group has a bank guarantee facility of $1,328,000 (refer to note 32).
Note 23. Non-current liabilities - Contingent consideration
Contingent consideration
Consolidated
2023
$'000
2022
$'000
25,911
1,451
The amount as at 30 June 2023 represents contingent consideration in relation to Open Windows Pty Ltd, and IT Vision Pty
Ltd acquisitions that are not expected to be settled within 12 months. Refer to note 37 for further details.
Refer to note 29 for further details on fair value measurement of the contingent consideration.
Note 24. Non-current liabilities - lease liabilities
Lease liability
Refer to note 28 for further information on financial instruments.
53
Consolidated
2023
$'000
2022
$'000
3,932
2,214
ReadyTech Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 24. Non-current liabilities - lease liabilities (continued)
Current (note 19)
Non-current
Consolidated
2023
$'000
2022
$'000
1,229
3,932
1,176
2,214
5,161
3,390
Reconciliation
Reconciliation of lease liabilities (current and non-current) at the beginning and end of financial year are set out below:
Balance at start of the year
Additions
Lease modification
Additions through business combinations (note 37)
Interest
Repayment of lease liabilities
Balance at end of the year
Note 25. Equity - issued capital
Consolidated
2023
$'000
2022
$'000
3,390
1,438
-
1,720
226
(1,613)
2,650
1,966
106
72
99
(1,503)
5,161
3,390
Consolidated
2023
Shares
2022
Shares
2023
$'000
2022
$'000
Ordinary shares - fully paid
114,321,851 106,977,894
194,292
171,916
Movements in ordinary share capital
Details
Date
Shares
Issue price
$'000
Balance
Shares issued on earn-out tranche 1 of Pentagon
HoldCo Pty Ltd
Shares issued under employee share plan
Shares issued on acquisition of Open Windows
Software Pty Ltd
Less transaction costs (net of tax)
1 July 2021
102,149,776
24 August 2021
6 October 2021
16 December 2021
4,500,250
117,786
210,082
-
Balance
Shares issued on acquisition of IT Vision Pty Ltd
Shares issued to Pentagon HoldCo Pty Ltd
Shares issued under long term incentive plan
Shares issued under employee share gift
30 June 2022
25 July 2022
17 August 2022
17 August 2022
14 October 2022
106,977,894
3,960,792
2,905,537
351,462
126,166
Balance
30 June 2023
114,321,851
$2.60
$3.33
$3.56
$0.00
$3.05
$3.20
$1.79
$2.92
159,095
11,701
392
748
(20)
171,916
12,080
9,298
629
369
194,292
54
ReadyTech Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 25. Equity - issued capital (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 26. Equity - reserves
Foreign currency reserve
Share-based payments reserve
Common control reserve
Reorganisation reserve
Consolidated
2023
$'000
2022
$'000
(54)
4,680
(10,058)
(73,048)
(191)
2,089
(10,058)
(73,048)
(78,480)
(81,208)
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.
55
ReadyTech Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 26. Equity - reserves (continued)
Reorganisation reserve
Reorganisation reserve is used to recognise the difference between the consideration paid and the historical values of assets
and liabilities acquired, between ReadyTech Holdings Limited and the subsidiaries it acquired.
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 2021
Foreign currency translation
Share-based payments
Balance at 30 June 2022
Foreign currency translation
Share-based payments
Exercise of performance rights (note 40)
Foreign
currency
$'000
Share-based
payments
$'000
Common
control
$'000
Reorgan-
isation
$'000
Total
$'000
(118)
(73)
-
(191)
137
-
-
556
-
1,533
2,089
-
3,220
(629)
(10,058)
-
-
(10,058)
-
-
-
(73,048)
-
-
(73,048)
-
-
-
(82,668)
(73)
1,533
(81,208)
137
3,220
(629)
Balance at 30 June 2023
(54)
4,680
(10,058)
(73,048)
(78,480)
Note 27. Equity - dividends
There were no dividends paid, recommended or declared during the current financial year or previous financial period.
Note 28. Financial instruments
Financial risk management objectives
The Group's activities expose it to a variety of financial risks: market risk (including foreign currency risk, price risk and
interest rate risk), credit risk and liquidity risk. The Group's overall risk management program focuses on the unpredictability
of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group. The Group
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 2023 and 30 June 2022 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.
56
ReadyTech Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 28. 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
2023
2022
Weighted
average
interest rate
%
Weighted
average
interest rate
%
Balance
$'000
Balance
$'000
4.78%
47,000
2.85%
34,000
Net exposure to cash flow interest rate risk
47,000
34,000
An analysis by remaining contractual maturities in shown in 'liquidity and interest rate risk management' below.
For the Group the borrowings outstanding totalling $47,000,000 (2021: $34,000,000), are principal and interest payment
loans. An increase/decrease in interest rates of 100 (2022: 100) basis points would have an adverse/favourable effect on
loss before tax of $500,000 (2022: $340,000) per annum. The percentage change is based on the expected volatility of
interest rates using market data and analysts forecasts.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the
Group. The Group has a strict code of credit, including obtaining agency credit information, confirming references and setting
appropriate credit limits. The Group obtains guarantees where appropriate to mitigate credit risk. The maximum exposure to
credit risk at the reporting date to recognised financial assets is the carrying amount, net of any provisions for impairment of
those assets, as disclosed in the statement of financial position and notes to the financial statements. The Group does not
hold any collateral.
The Group has adopted a lifetime expected loss allowance in estimating expected credit losses to trade receivables through
the use of a provisions matrix using fixed rates of credit loss provisioning. These provisions are considered representative
across all customers of the Group based on recent sales experience, historical collection rates and forward-looking
information that is available.
Generally, trade receivables are written off when there is no reasonable expectation of recovery. Indicators of this include
the failure of a debtor to engage in a repayment plan, no active enforcement activity and a failure to make contractual
payments for a period greater than 1 year.
Liquidity risk
Vigilant liquidity risk management requires the Group to maintain sufficient liquid assets (mainly cash and cash equivalents)
and available borrowing facilities to be able to pay debts as and when they become due and payable.
The Group manages liquidity risk by maintaining adequate cash reserves and available borrowing facilities by continuously
monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and liabilities.
57
ReadyTech Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 28. Financial instruments (continued)
Remaining contractual maturities
The following tables detail the Group's remaining contractual maturity for its financial instrument liabilities. The tables have
been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial
liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining contractual
maturities and therefore these totals may differ from their carrying amount in the statement of financial position.
Weighted
average
interest rate
%
1 year or less
$'000
Between 1
and 2 years
$'000
Between 2
and 5 years
$'000
Over 5 years
$'000
Remaining
contractual
maturities
$'000
Consolidated - 2023
Non-derivatives
Non-interest bearing
Trade payables
Other payables
Contingent consideration
Interest-bearing - variable
Bank loans
Lease liability
Total non-derivatives
-
-
-
4.78%
4.81%
3,560
3,396
10,181
-
1,270
18,407
-
-
25,911
-
1,192
27,103
-
-
-
47,000
2,747
49,747
-
-
-
-
-
-
-
-
3,560
3,396
36,092
47,000
5,209
95,257
76
76
Derivatives
Interest rate swaps receivable
Total derivatives
-
76
76
-
-
-
-
Consolidated - 2022
Non-derivatives
Non-interest bearing
Trade payables
Other payables
Contingent consideration
Interest-bearing - variable
Bank loans
Lease liability
Total non-derivatives
Derivatives
Interest rate swaps payable
Total derivatives
Weighted
average
interest rate
%
1 year or less
$'000
Between 1
and 2 years
$'000
Between 2
and 5 years
$'000
Over 5 years
$'000
Remaining
contractual
maturities
$'000
-
-
-
2.85%
3.50%
1,736
1,831
12,971
-
1,140
17,678
-
-
758
34,000
819
35,577
-
17
17
-
-
-
-
693
-
1,325
2,018
-
-
-
-
-
-
-
-
-
-
1,736
1,831
14,422
34,000
3,284
55,273
17
17
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed
above.
Fair value of financial instruments
Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value.
58
ReadyTech Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 29. Fair value measurement
Fair value hierarchy
The following tables detail the Group's assets and liabilities, measured or disclosed at fair value, using a three level hierarchy,
based on the lowest level of input that is significant to the entire fair value measurement, being:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the
measurement date
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or
indirectly
Level 3: Unobservable inputs for the asset or liability
Consolidated - 2023
Assets
Interest rate swap
Total assets
Liabilities
Contingent consideration
Total liabilities
Consolidated - 2022
Liabilities
Contingent consideration*
Interest rate swap
Total liabilities
Level 1
$'000
Level 2
$'000
Level 3
$'000
Total
$'000
-
-
-
-
-
-
-
76
76
36,092
36,092
Level 2
$'000
Level 3
$'000
14,442
17
14,459
-
-
-
-
-
-
-
76
76
36,092
36,092
Total
$'000
14,442
17
14,459
Level 1
$'000
*
Contingent consideration for financial year ended 30 June 2022 is amended and disclosed as level 2 instead of level 3
as previously reported. This amendment to the fair value level disclosure has no impact to the financial performance or
financial position for the comparative period and does not represent a transfer between levels.
There were no transfers between levels during the financial year.
The carrying amounts of trade and other receivables and trade and other payables are assumed to approximate their fair
values due to their short-term nature.
The fair value of financial liabilities is estimated by discounting the remaining contractual maturities at the current market
interest rate that is available for similar financial liabilities.
Valuation techniques for fair value measurements categorised within level 2 and level 3
Contingent consideration has been valued using a discounted cash flow model.
Interest rate swap has been valued using the present value of the estimated future cash flows based on observable yield
curves.
Refer to note 37 and note 40 for details of the contingent consideration arrangements arising from business combinations.
59
ReadyTech Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 30. Remuneration of auditors
During the financial year the following fees were paid or payable for services provided by Deloitte Touche Tohmatsu, the
auditor of the Company:
Deloitte and related network firms
Audit or review of the financial statements
Other services
Tax compliance
Research and development tax services
Other services
Consolidated
2023
$
2022
$
425,000
343,000
32,000
80,000
18,540
26,500
72,500
-
130,540
99,000
555,540
442,000
Note 31. Key management personnel disclosures
Compensation
The aggregate compensation made to Directors and other members of key management personnel of the Group is set out
below:
Short-term employee benefits
Post-employment benefits
Long-term employment benefits
Share-based payments
Note 32. Contingent liabilities
Consolidated
2023
$
2022
$
1,303,540
50,585
24,477
769,025
1,325,971
47,136
(4,632)
508,330
2,147,627
1,876,805
The Group has given bank guarantees as at 30 June 2023 of $1,328,000 (2022: $1,129,000). The bank guarantees are for
various office leases. No cash outflows are expected from the bank guarantees given by the Group.
Note 33. Commitments
The Group had no commitments as at 30 June 2023 and 30 June 2022.
Note 34. Related party transactions
Parent entity
ReadyTech Holdings Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 36.
Key management personnel
Disclosures relating to key management personnel are set out in note 31 and the remuneration report included in the
Directors' report.
60
ReadyTech Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 34. Related party transactions (continued)
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 37).
The following transactions occurred with related parties:
Other transactions:
Shares issued to related party on earn-out tranche 1 of Pentagon HoldCo Pty Ltd acquisition
Shares issued to related party on earn-out tranche 2 of Pentagon HoldCo Pty Ltd acquisition
9,297,718
- 11,700,650
-
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.
Consolidated
2023
$
2022
$
Loans to/from related parties
There were no loans to or from related parties at the current and previous reporting date.
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
Note 35. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Loss after income tax
Total comprehensive income
Parent
2023
$'000
2022
$'000
(337)
(337)
(201)
(201)
61
ReadyTech Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 35. Parent entity information (continued)
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
2023
$'000
2022
$'000
2,150
500
106,607
84,890
-
-
2,913
2,913
194,919
4,519
(89,471)
(3,360)
172,543
1,928
(89,471)
(3,023)
106,607
81,977
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 2023 and 30 June 2022.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2023 and 30 June 2022.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2023 and 30 June 2022.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the Group, as disclosed in note 2, except for the
following:
●
●
Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
Dividends received from subsidiaries are recognised as other income by the parent entity and its receipt may be an
indicator of an impairment of the investment.
Note 36. Interests in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance
with the accounting policy described in note 2:
Name
ReadyTech HoldCo Pty Ltd
ReadyTech BidCo Pty Ltd
JobReady Tech Pty Ltd
Esher House Pty Ltd
Thymos Pty Ltd
VETtrak Pty Ltd
Lirac HoldCo Pty Ltd
Lirac BidCo Pty Ltd
Ready Pay Services Pty Ltd
Readytech Workforce Solutions Pty Ltd
eLearning Australia Pty Ltd
Principal place of business /
Country of incorporation
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
62
Ownership interest
2022
2023
%
%
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%
ReadyTech Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 36. Interests in subsidiaries (continued)
Name
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.
Open Windows Software Pty Ltd*
Avaxa Pty Ltd*
Capital Software Limited*
PhoenixATS Australia Pty Ltd*
IT Vision Pty Ltd**
Principal place of business /
Country of incorporation
Ownership interest
2022
2023
%
%
Australia
New Zealand
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
Australia
Australia
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
-
*
**
Acquired by the Group during the year-ended 30 June 2022. Refer to note 37.
Acquired by the Group during the year-ended 30 June 2023. Refer to note 37.
63
ReadyTech Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 37. Business combinations
Acquisitions during the year ended 30 June 2023
Acquisition of IT Vision Pty Ltd (and its controlled entities)
On 25 July 2022, the Group acquired 100% of the ordinary shares of IT Vision Pty Ltd and its controlled entities, for the total
consideration transferred of $53,102,000. IT Vision Pty Ltd develops and implements ERP technology software in local
government segment. With this acquisition, the Group expects to broaden its market presence as the local government
software services provider. This acquisition is to bolster ReadyTech’s government and justice segment with a broad
geographic footprint across all Australian states and territories, ultimately strengthening ReadyTech’s position as a leading
local government software provider.
The values identified in relation to the acquisition of IT Vision Pty Ltd and subsidiaries were final as at 30 June 2023. The
goodwill of $36,447,000 represents future growth.
Details of the acquisition are as follows:
Cash and cash equivalents
Trade and other receivables, net
Other current assets
Right-of-use assets
Property, plant and equipment
Customer relationships
Trademarks
Software
Trade and other payables
Contract liabilities
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
Fair value
$'000
3,950
7,158
863
1,720
221
8,773
1,194
10,800
(2,909)
(9,469)
(2,946)
(980)
(1,720)
16,655
36,447
53,102
10,374
12,080
30,648
53,102
521
53,102
(3,950)
(30,648)
(12,080)
6,424
As part of the acquisition of IT Vision Pty Ltd, an amount of contingent consideration has been agreed. The contingent
consideration is payable depending on total revenue, recurring revenue and EBITDA targets.
64
ReadyTech Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 37. Business combinations (continued)
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 2023, the fair value of contingent
consideration was $30,650,000. In July 2023, IT Vision met its first milestone of the earn out target as per the purchase sales
agreement (refer to note 20).
Acquisitions during the year ended 30 June 2022
1. Acquisition of PhoenixATS Australia Pty Ltd
On 17 March 2022, the Group acquired 100% of the ordinary shares of Capital Software Limited and its subsidiary,
PhoenixATS Australia Pty Ltd ('PhoenixHRIS'), for the total consideration transferred of NZD$3,490,325 (or equivalent to
AUD$3,266,605). This is a cloud-based talent management and applicant tracking system, specialising in management of
online recruitment and onboarding business and operates in the workforce solution segment of the Group. It was acquired
to bolster the workforce solution all-in-one capability and product market fit in the stand-up economy, which will create
crosssell/upsell opportunities to existing customer base and to increase the attractiveness of the platform with the additional
functionality into the suite. The goodwill of AUD$2,110,000 represents technology and revenue synergies. The values
identified in relation to the acquisition of PhoenixHRIS were final as at 31 December 2022.
Details of the acquisition are as follows:
Cash and cash equivalents
Trade and other receivables
Allowance for expected credit losses
Deferred tax asset
Contract liabilities
GST payables
Accrued expenses
Software
Customer relationship
Deferred tax liabilities
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
65
Fair value
$'000
2
106
(12)
23
(41)
(33)
(25)
1,000
624
(487)
1,157
2,110
3,267
2,130
1,137
3,267
180
3,267
(2)
(1,137)
2,128
ReadyTech Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 37. Business combinations (continued)
As part of the acquisition of PhoenixHRIS, an amount of contingent consideration has been agreed. The contingent
consideration is payable depending on the integration of PhoenixHRIS product to the existing workforce solutions products
and revenue targets. The amount of contingent consideration recognised of NZD$1,208,757 (or equivalent to
AUD$1,137,000) represents the fair value as at the date of acquisition, if both the product integration and revenue thresholds
are met. If these thresholds are not met, then no amount is payable. At acquisition date, the total contingent consideration of
AUD$1,137,000 has been recognised given the probability that the threshold would be met was high.
In August and December 2022, a total contingent consideration of NZD$371,926 (or equivalent to AUD$342,000) has been
settled as product integration milestone has been achieved. The remaining contingent consideration amount of NZD$837,000
(or equivalent to AUD$781,000) payable as at 30 June 2023 was subsequently paid in July 2023.
2. Acquisition of Avaxa Pty Ltd
On 24 September 2021, the Group acquired 100% of the ordinary shares of Avaxa Pty Ltd for the total consideration
transferred of $2,039,000. This is a specialist enterprise student management software business and operates in the
Education and Work Pathways segment of the Group. It was acquired to expand ReadyTech's existing presence in the
Australian enterprise education market. The goodwill of $1,010,000 represents technology and revenue synergies. The
acquired business contributed revenues of $1,727,000 to the Group for the period from 24 September 2021 to 30 June 2022.
The values identified in relation to the acquisition of Avaxa Pty Ltd were final as at 30 June 2022.
Cash and cash equivalents
Trade and other receivables
Right-of-use assets
Property, plant and equipment
Customer relationships
Software
Trade and other payables
Contract liabilities
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
Deferred 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: deferred consideration
Net cash used
Fair value
$'000
219
180
18
50
846
806
(435)
(61)
(116)
(460)
(18)
1,029
1,010
2,039
733
1,306
2,039
159
2,039
(219)
(1,306)
514
As part of the acquisition of Avaxa Pty Ltd, an amount of deferred consideration of $1,306,000 has been agreed. As at 30
June 2023, there is no outstanding balance as the full amount has been paid.
66
ReadyTech Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 37. Business combinations (continued)
3. Acquisition of Open Windows Software Pty Ltd
On 16 December 2021, the Group acquired 100% of the ordinary shares of Open Windows Software Pty Ltd for the total
consideration transferred of $14,001,000. This is a cloud-based contract management and procurement software business
and operates in the Government and Justice segment of the Group. It was acquired as a strategic acquisition that enhances
ReadyTech’s Local and State Government product-market fit, whilst also providing the opportunity to cross-sell Open
Windows into ReadyTech’s existing government customer base. The goodwill of $4,094,000 represents technology and
revenue synergies. The acquired business contributed revenues of $2,292,000 to the Group for the period from 16 December
2021 to 30 June 2022. The values identified in relation to the acquisition of Open Windows Software Pty Ltd were final as at
30 June 2022.
Details of the acquisition are as follows:
Cash and cash equivalents
Trade and other receivables
Income tax refund due
Prepayments
Property, plant and equipment
Right-of-use assets
Customer relationships
Software
Deferred tax asset
Trade and other payables
Contract liabilities
Employee benefits
Lease liability
Net assets acquired
Goodwill
Acquisition-date fair value of the total consideration transferred
Representing:
Cash paid or payable to vendor
Contingent consideration
ReadyTech Holdings Limited shares issued to vendor
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, net working capital adjustment
Less: contingent consideration
Less: shares issued by Company as part of consideration
Net cash used
Fair value
$'000
1,022
307
42
65
32
54
2,140
2,056
38
(341)
(1,707)
(368)
(54)
3,286
4,094
7,380
3,736
2,896
748
7,380
273
7,380
(1,022)
(2,896)
(748)
2,714
As part of the acquisition of Open Windows Software Pty Ltd, an amount of contingent consideration has been agreed. The
contingent consideration is payable in two tranches, depending on revenue targets.
67
ReadyTech Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 37. Business combinations (continued)
The amount of contingent consideration recognised of $2,896,000 represents the fair value as at the date of acquisition, if
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 $2,896,000 has
been recognised. A portion of the contingent consideration amount as per share purchase agreement is treated as a
remuneration to the ex-founders who continue to work in the business (refer to note 40).
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 2023, the fair value of contingent
consideration was $6,604,000 (2022: $3,665,000). In July 2023, Open Windows Software met its milestone 2 of the earn out
target as per the purchase sales agreement (refer to Note 20).
Note 38. Deed of cross guarantee
The following entities are party to a deed of cross guarantee under which each Company guarantees the debts of the others:
ReadyTech HoldCo Pty Ltd
ReadyTech BidCo Pty Ltd
JobReady Tech Pty Ltd
Esher House Pty Ltd
Thymos Pty Ltd
VETtrak Pty Ltd
Lirac HoldCo Pty Ltd
Lirac BidCo Pty Ltd
Ready Pay Services Pty Ltd (previously Australian Payroll Professionals Holdings Pty Ltd)
Readytech Workforce Solutions Pty Ltd (previously HR3 Pty Ltd)
eLearning Australia Pty Ltd
WageLink Australia Pty Ltd
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
Open Windows Software Pty Ltd
Avaxa Pty Ltd
PhoenixATS Pty Ltd
IT Vision Australia Pty Ltd
IT Vision Software 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'.
68
ReadyTech Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 38. Deed of cross guarantee (continued)
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
Revaluation of contingent consideration
Hosting and other direct costs
Employee benefits expense
Depreciation and amortisation expense
Impairment of assets
Advertising and marketing expenses
Consultancy and professional expenses
Administration expenses
Communication and IT expenses
Occupancy costs
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
Total comprehensive income for the year
Equity - retained profits
Retained profits/(accumulated losses) at the beginning of the financial year
Profit after income tax expense
Cumulative profit prior to joining the “Closed Group”
Retained profits at the end of the financial year
2023
$'000
2022
$'000
97,746
-
(6,648)
(58,341)
(16,314)
-
(1,048)
(2,849)
(944)
(1,950)
(695)
(1,207)
(2,544)
5,206
(1,273)
72,043
6,027
(3,872)
(39,310)
(13,207)
(4,373)
(494)
(2,072)
(716)
(1,526)
(479)
(938)
(1,033)
10,050
(2,537)
3,933
7,513
-
-
8
8
3,933
7,521
2023
$'000
2022
$'000
5,783
3,933
-
(2,506)
7,513
776
9,716
5,783
69
ReadyTech Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 38. Deed of cross guarantee (continued)
Statement of financial position
Current assets
Cash and cash equivalents
Trade and other receivables
Contract assets
Derivative financial instruments
Income tax refund receivable
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
Derivative financial liability
Lease liabilities
Income tax payable
Employee benefits
Contingent consideration
Non-current liabilities
Contract liabilities
Borrowings
Provisions
Lease liabilities
Deferred tax
Employee benefits
Contingent consideration
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained profits
Total equity
70
2023
$'000
2022
$'000
19,941
9,589
1,353
76
1,815
2,876
35,650
13,583
2,151
202,609
4,615
2,025
-
224,983
7,786
9,582
1,383
-
-
1,264
20,015
20,939
901
130,242
2,922
2,112
6,069
163,185
260,633
183,200
14,049
19,344
-
1,167
-
7,100
10,181
51,841
872
46,949
307
3,808
1,706
375
25,911
79,928
8,968
16,020
17
1,152
3,580
5,702
12,971
48,410
344
33,949
64
2,011
-
322
1,450
38,140
131,769
86,550
128,864
96,650
197,558
(78,410)
9,716
171,916
(81,049)
5,783
128,864
96,650
ReadyTech Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 39. 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
Impairment of assets
Write off of non-current assets
Revaluation of contingent consideration
Share-based payments
Foreign exchange differences
Contingent consideration treated as remuneration expense
Other expenses - non-cash
Change in operating assets and liabilities:
Decrease/(increase) in trade and other receivables
Decrease/(increase) in deferred tax assets
Increase in prepayments
Decrease/(increase) in other operating assets
Increase/(decrease) in trade and other payables
Increase/(decrease) in contract liabilities
Increase/(decrease) in provision for income tax
Increase in employee benefits
Net cash from operating activities
Note 40. Share-based payments
Consolidated
2023
$'000
2022
$'000
4,975
8,794
17,272
-
-
-
3,220
(178)
1,442
730
7,996
4,825
(752)
(93)
2,062
(8,395)
(5,377)
79
14,079
4,373
44
(6,027)
1,463
(71)
800
100
(3,614)
(3,166)
(266)
61
(1,067)
259
740
498
27,806
17,000
FY2021 Plan
The Long Term Incentives ("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%.
During the financial year, the first tranche was vested. A total of 351,462 performance rights were exercised by issuance of
shares.
FY2022 Plan
The LTI performance rights are subject to an EPS hurdle (50% of grant value) and a recurring revenue hurdle (50% of grant
value).
These LTI performance rights will be evaluated in two tranches. The first of which, equivalent to 50% of the total grant value,
will be evaluated two years from the beginning of the performance period. The second or which, equivalent to 50% of the
total grant value, will be evaluated three years from the beginning of the period.
71
ReadyTech Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 40. Share-based payments (continued)
If the compound annual growth rate of EPS is less than the target of 13%, no vesting will occur. If the target is met, 50% of
rights will vest. In the event that performance is up to 4% above the target, vesting will be pro-rated between 50-100%.
If the compound annual growth rate of recurring revenue is less than the target of 13%, no vesting will occur. If the target is
met, 50% of rights will vest. In the event that performance is up to 4% above the target, vesting will be pro-rated between
50-100%.
FY2023 Plan
The LTI performance rights are subject to an EPS hurdle (50% of grant value) and a recurring revenue hurdle (50% of grant
value).
These LTI performance rights will be evaluated in two tranches. The first of which, equivalent to 50% of the total grant value,
will be evaluated two years from the beginning of the performance period. The second or which, equivalent to 50% of the
total grant value, will be evaluated three years from the beginning of the period.
If the compound annual growth rate of EPS is less than the target of 13%, no vesting will occur. If the target is met, 50% of
rights will vest. In the event that performance is up to 4% above the target, vesting will be pro-rated between 50-100%.
If the compound annual growth rate of recurring revenue is less than the target of 13%, no vesting will occur. If the target is
met, 50% of rights will vest. In the event that performance is up to 4% above the target, vesting will be pro-rated between
50-100%.
Set out below are summaries of performance rights granted under the plan:
2023
Grant date
Expiry date
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
11/12/2020
11/12/2020
13/09/2021
13/09/2021
17/11/2021
17/11/2021
11/10/2022
11/10/2022
15/11/2022
15/11/2022
2022
30/06/2022
30/06/2023
30/06/2023
30/06/2024
30/06/2023
30/06/2024
30/06/2024
30/06/2025
30/06/2024
30/06/2025
351,462
351,460
217,394
217,390
60,264
60,264
-
-
-
-
1,258,234
-
-
-
-
-
-
244,319
244,309
47,380
47,380
583,388
(351,462)
-
-
-
-
-
-
-
-
-
(351,462)
-
-
-
-
-
-
-
-
-
-
-
-
351,460
217,394
217,390
60,264
60,264
244,319
244,309
47,380
47,380
1,490,160
Grant date
Expiry date
11/12/2020
11/12/2020
13/09/2021
13/09/2021
17/11/2021
17/11/2021
30/06/2022
30/06/2023
30/06/2023
30/06/2024
30/06/2023
30/06/2024
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
-
-
217,394
217,390
60,264
60,264
555,312
-
-
-
-
-
-
-
-
-
-
-
-
-
-
351,462
351,460
217,394
217,390
60,264
60,264
1,258,234
The weighted average share price during the financial year was $3.30 (2022: $3.22).
The weighted average remaining contractual life of performance rights outstanding at the end of the financial year was 0.78
years (2022: 1.3 years).
72
ReadyTech Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 40. Share-based payments (continued)
For the performance rights granted during the current financial year, the valuation model inputs used to determine the fair
value are using the share price as at 11 October 2022 and 15 November 2022, which were $2.92 and $3.97 respectively.
Set out below are the performance rights exercisable at the end of the financial year:
Grant date
Expiry date
11/12/2020
13/09/2021
30/06/2023
30/06/2023
2023
2022
Number
Number
351,460
217,394
351,462
-
568,854
351,462
Deferred consideration in shares
As part of the acquisition of Open Windows Software Pty Ltd, an amount of contingent consideration has been agreed. A
portion of the consideration is treated as a remuneration to the ex-founders who continue to work in the business. As per
agreement, a maximum of 40% could be settled in cash whilst the remaining is in shares. During the financial year ended 30
June 2023, an amount of $1,470,000 (2022: $462,000) which represented an equity settlement, was charged as a share
based payment.
Note 41. Non-cash investing and financing activities
Additions to the right-of-use assets, including lease modification
Additions to lease make good assets
Shares issued in relation to exercise of vested performance
rights
Shares issued in relation to business combinations
Shares issued in relation to settlement of contingent consideration
Additional contingent consideration charged as employee expenses
Revaluation of contingent consideration
Changes in the fair value of interest rate swap
Note 42. Changes in liabilities arising from financing activities
Consolidated
2023
$'000
2022
$'000
1,438
215
629
12,080
9,298
1,470
-
-
2,074
-
-
11,701
-
800
6,027
17
25,130
20,619
Consolidated
Balance at 1 July 2021
Net cash from/(used in) financing activities
Lease modification
Acquisition of leases
Changes through business combinations (note 37)
Other changes
Balance at 30 June 2022
Net cash from/(used in) financing activities
Acquisition of leases
Changes through business combinations (note 37)
Interest expense
Borrowings Lease liability
$'000
$'000
Total
$'000
30,917
3,017
-
-
-
66
34,000
13,000
-
-
-
2,650
(1,503)
107
1,965
72
99
3,390
(1,613)
1,438
1,720
226
33,567
1,514
107
1,965
72
165
37,390
11,387
1,438
1,720
226
Balance at 30 June 2023
47,000
5,161
52,161
73
ReadyTech Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 43. Earnings per share
Profit after income tax attributable to the owners of ReadyTech Holdings Limited
4,975
8,794
Weighted average number of ordinary shares used in calculating basic earnings per share
113,605,727 106,170,879
Weighted average number of ordinary shares used in calculating diluted earnings per share 113,605,727 106,170,879
Number
Number
Consolidated
2023
$'000
2022
$'000
Basic earnings per share
Diluted earnings per share
Note 44. Events after the reporting period
Cents
Cents
4.38
4.38
8.28
8.28
In July 2023, the Group settled the contingent consideration in relation to PhoenixATS Australia Pty Ltd of $770,000 by cash.
Further, Open Windows Pty Ltd and IT Vision Pty Ltd have met their earn out targets as per the purchase sales agreement.
Open Windows Pty Ltd sellers elected to be paid $1,668,000 by cash and $2,502,000 by shares at $3.05 per share on 17
August 2023. IT Vision Pty Ltd sellers elected to be paid by $2,825,000 by cash and $3,003,000 by shares at $3.02 per share
on 18 August 2023.
No other matter or circumstance has arisen since 30 June 2023 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.
74
ReadyTech Holdings Limited
Directors' declaration
30 June 2023
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
2023 and of its performance for the financial year ended on that date;
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due
and payable; and
at the date of this declaration, there are reasonable grounds to believe that the members of the Extended Closed Group
will be able to meet any obligations or liabilities to which they are, or may become, subject by virtue of the deed of cross
guarantee described in note 38 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
Chair
23 August 2023
Sydney
75
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Quay Quarter Tower
50 Bridge Street
Sydney, NSW, 2000
Australia
Phone: +61 2 9322 7000
www.deloitte.com.au
Independent Auditor’s Report to the members of
ReadyTech Holdings Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of ReadyTech Holdings Limited (the “Company”) and its subsidiaries
(the “Group”) which comprises the consolidated statement of financial position as at 30 June 2023, 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 2023 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.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
76
Key Audit Matter
Capitalisation of software development costs
During the year, the Group capitalised internal
software development project costs of $16.34
million (total software capitalised during the year
$18.24 million including external costs) as disclosed
in Note 13. These projects were predominantly in
relation to the development of the Group’s key
software platforms. The costs mainly comprised of
payroll and related costs for software developers
and engineers.
Significant management judgement is required in
respect of the rate of capitalisation of payroll and
related costs for software developers and
engineers.
How the scope of our audit responded to the Key Audit
Matter
Our procedures included, but were not limited to:
Through inquiries with management obtaining an
understanding of the Group’s capitalisation policy,
including the rationale for the percentage of payroll and
related costs capitalised for software developers and
engineers;
Understanding the relevant controls over the
capitalisation of software development costs;
Performing analytical review of capitalised software
development as a percentage of payroll costs and year on
year movement analysis;
On a sample basis, testing capitalised software
development costs during the year through the following:
a. Assessing management’s movement schedule of
software development costs by agreeing the
underlying salaries to the respective payroll records;
b. Understanding the significant development projects
and activities undertaken during the year;
c. Assessing whether eligible employees are included,
and ineligible employees are excluded in the
calculations, where appropriate;
d. Challenging management’s key assumptions on
employee level software capitalisation rates;
e.
Performing direct interviews and confirming with
respective software developers and engineers to
corroborate the roles and responsibilities, key
development projects and software capitalisation
rates ;
f.
Tracing to underlying supporting records and other
information;
g. Assessing whether the costs incurred qualify for
capitalisation in accordance with Group’s accounting
policy and AASB 138 Intangible Assets.
We also assessed the appropriateness of the disclosures in
Note 2 and Note 13.
77
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 2023, 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 skepticism 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
78
audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause
the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and
whether the financial report represents the underlying transactions and events in a manner that achieves fair
presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Group to express an opinion on the financial report. We are responsible for the direction,
supervision and performance of the Group’s audit. We remain solely responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficiencies in internal control that we identify during our
audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may reasonably
be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards
applied.
From the matters communicated with the directors, we determine those matters that were of most significance
in the audit of the financial report of the current period and are therefore the key audit matters. We describe
these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or
when, in extremely rare circumstances, we determine that a matter should not be communicated in our report
because the adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 9 to 16 of the Directors’ Report for the year ended
30 June 2023.
In our opinion, the Remuneration Report of ReadyTech Holdings Limited, for the year ended 30 June 2023,
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
Sandeep Chadha
Partner
Chartered Accountants
Sydney, 23 August 2023
79
ReadyTech Holdings Limited
Shareholder information
30 June 2023
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.
Earn Out Share: There are currently 12 Earn Out Shares on issue. As set out in the Notice of Meeting and accompanying
documents dated 14 October 2022 (Notice), prior to Redemption (as outlined 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.
Performance Rights: There are currently 1,490,160 Performance Rights on issue. Holders of performance rights have no
voting rights.
The below information is current as at 1 August 2023.
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
Holders holding less than a marketable
parcel of shares*
Number of
holders
855
808
229
268
54
2,214
% of
holders
38.62
36.50
10.34
12.10
2.44
100.00
Number of
securities
433,795
2,094,841
1,756,819
7,568,735
104,291,544
116,145,734
% of
securities
0.37
1.80
1.51
6.52
89.79
100.00
84
3.79%
3,532
0.00
*The marketable parcel of shares was calculated based on the closing market price on 1 August 2023 of $3.34.
Restricted Securities
There are currently 1,823,883 restricted securities on issue. The restricted securities will be subject to escrow until the date
that is 5 Trading Days after the date on which the half-year reviewed accounts of ReadyTech for the period to 31 December
2023 are released to ASX.
On-Market Buy Back
There is no current on-market buy back.
Unquoted Securities
Type of security
Earn Out Shares
Performance Rights
Earn Out Shares
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
6
21
Number of securities
12
1,490,160
Number of
holders
% of holders
Number
of
securities
12
% of securities
100.00
100.00
100.00
12
100.00
6
6
80
ReadyTech Holdings Limited
Shareholder information
30 June 2023
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
0
0
3
14
4
21
% of holders
0
0
14.28
66.67
19.05
100.00
Twenty Largest Quoted Equity Security Holders
Number of
securities
0
0
26,756
373,045
1,090,359
1,490,160
% of
securities
0
0
01.79
25.04
73.17
100.00
5
6
No. Shareholder
1
2
3
4
PEMBA CAPITAL PARTNERS FUND I GP PTY LTD
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
CITICORP NOMINEES PTY LIMITED
OPEN OFFICE PTY LTD
PEMBA CAPITAL PARTNERS FUND 1 PARTNERSHIP
LP
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED -
A/C 2
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
MARC RAYMOND WASHBOURNE
SYNERGYSOFT PTY LTD
7
8
9
10 NANAYAKKARA HOLDINGS PTY LTD
11 NATIONAL NOMINEES LIMITED
12 MICROEQUITIES ASSET MANAGEMENT PTY LTD
13 WASHBOURNE GROUP PTY LTD
14 SYCAMORE MANAGEMENT PTY LTD
15 UBS NOMINEES PTY LTD
16 MALVERN AVENUE MANAGEMENT PTY LTD
17 MARISH PTY LTD
18 ANKSH PTY LTD
19 PEMBA TRUSCO 1 PTY LTD
20 SYNERGYSOFT PTY LTD
Top 20 holders of Shares
Balance of Shares
Total Shares on issue
Number of
shares
30,157,762
21,496,514
8,512,169
5,528,186
5,161,468
3,564,187
3,127,490
2,861,363
2,601,770
2,003,600
1,887,012
1,191,305
1,147,051
1,080,190
979,640
970,509
878,646
860,288
841,731
742,027
95,592,908
20,552,826
116,145,734
% of issued
equity
25.97
18.51
7.33
4.76
4.44
3.07
2.69
2.46
2.24
1.73
1.62
1.03
0.99
0.93
0.84
0.84
0.76
0.74
0.72
0.64
82.30
17.70
100.00
Substantial Holders
Shareholder
Microequities Asset Management Pty Ltd
The Pemba Entities2
Date of
notice
20 December 2022
22 December 2021
Number of
shares
17,415,318
34,539,611
% of issued
equity1
15.23%
32.35%
1 Percentage of issued equity held as disclosed in the substantial holding notices provided to the Company.
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).
81