ICOLLEGE LIMITED
ABN 75 105 012 066
20 1 5 A NN UA L R E P OR T
ICOLLEGE LIMITED
ABN 75 105 012 066
Index:
Cor p ora t e D ir e ctor y
Dir e cto r s R ep ort
Au d i tor’ s In d ep en d en c e De cl ara tion
Con so lid at ed Stat e m en t of Pro f it o r L o ss an d Ot h er C om p r eh en si v e I n co m e
Con so lid at ed Stat e m en t of Fi n an cia l P o sit ion
Con so lid at ed Stat e m en t of Ca sh F lo w s
Con so lid at ed Stat e m en t of Ch an g e s in E q u ity
N ote s to th e F in an cia l S tat em en t s
Dir e cto r s’ De cl ara tion
In d ep en d en t A u d it or’ s R ep o rt
Ad d i tion al AS X In f or ma t ion
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55
ICOLLEGE LIMITED
CORPORATE DIRECTORY
Directors
Stock Exchange Listing
Mr Johannes de Back - Non-Executive Chairman
Mr Ross Cotton- Executive Director
Mr Victor Hawkins – Managing Director
Mr Philip Re - Non-Executive Director
ASX Limited
(Home branch - Perth, Western Australia)
ASX Code: ICT
Company Secretary
Auditor
Mr Christopher Watts
Registered Office
Suite 1 GF
437 Roberts Road
SUBIACO WA 6008
Telephone: + 61 8 6380 2555
Facsimile: + 61 8 9381 1122
Bentleys Audit and Corporate (WA) Pty Ltd
Level 1, 12 Kings Park Road
West Perth WA 6005
Bankers
Commonwealth Bank Limited
Ground Floor, 50 St Georges Terrace
PERTH WA 6000
Solicitors
Share Registry
Price Sierakowski
Level 24, St Martin’s Tower
44 St George’s Terrace
Perth, WA 6000
Link Market Services Limited
Level 4, 152 St George’s Terrace
Perth WA 6000
1
ICOLLEGE LIMITED
DIRECTORS REPORT
The Directors of iCollege Limited present their report on iCollege Limited and its Controlled Entities (“the
Company” or “iCollege” or “Consolidated Entity”) for the year ended 30 June 2015.
DIRECTORS
The Directors in office at the date of this report and at any time during the year are as follows. Directors were in
office for the entire period unless otherwise stated.
Current Directors
Mr Johannes de Back - Non-Executive Chairman
Mr Victor Hawkins - Managing Director
Mr Ross Cotton- Executive Director (appointed 20 October 2014)
Mr Philip Re - Non-Executive Director
Company Secretary
Mr Christopher Watts
INFORMATION ON DIRECTORS
Johannes de Back
Chairman and Non-Executive Director
Qualifications: Masters Degree in Corporate Law and International Tax Law (University of Amsterdam)
Johannes de Back is the managing partner of IncubAsia, an early stage technology investment firm. Mr de Back
previously worked as a lawyer for several international firms, specialising in mergers and acquisitions with a focus
on telecom, media & entertainment. In 1999 he co-founded Telitas Benelux, one of the first and most successful
mobile content providers in Europe which in 2002 was sold to Index for €50 million.
Mr De Back is a non executive director and substantial shareholder of Moko Social Media Limited.
Other Current Directorships of Listed Companies:
Moko Social Media Limited
Former Directorships of Listed Companies in the last three years:
None
Victor Hawkins
Managing Director
Qualifications: Nil
Victor Hawkins was a management consultant for 10 years working with close to 500 companies with 25 different
industries. In 2009, Mr Hawkins acquired the education business, National Education Academy. He successfully
restructured the company from a manual management business model to a cloud based digital management
business model. He is considered one of Australia’s foremost thinkers in the Online Education market.
Other Current Directorships of Listed Companies:
Nil
Former Directorships of Listed Companies in the last three years:
Nil
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ICOLLEGE LIMITED
DIRECTORS REPORT
Ross Cotton
Executive Director
Qualifications: Nil
Mr Cotton has extensive experience in both equity capital markets and corporate finance. As a corporate advisor,
he has been advising both public and private companies on strategy, financing, acquisitions and corporate re-
structuring across the technology, industrial and resource sectors for over 10 years.
As Executive Director of the Company Mr Cotton will focus on acquisitions, financing and promotional activities
for the Company.
Mr Cotton has raised significant capital (via both equity and debt arrangements) for a wide range of companies in
the small to mid-cap market and has a strong network of contacts in the investment industry throughout
Australia, Asia and the US.
Other Current Directorships of Listed Companies:
Nil
Former Directorships of Listed Companies in the last three years:
Nil
Philip Re
Non-Executive Director
Qualifications: B.Bus, CA
Philip Re is a Chartered Accountant and has his own successful Corporate Advisory business, Regency Corporate,
based in Western Australia. He has significant depth of experience in the capital markets, having held positions
such as Managing Director and Non-Executive Director of various ASX-listed companies. He has successfully
raised capital, restructured business and undertaken IPO’s during his career.
Other Current Directorships of Listed Companies:
Nil
Former Directorships of Listed Companies in the last three years:
South American Ferro Metals Limited
COMPANY SECRETARY
Christopher Watts
Qualifications: BBus, ACA, RCA
Chris is the Director of Regency Audit Pty Ltd, a corporate audit and advisory service, in Western Australia. With
close to 20 years professional and commercial experience in auditing, financial accounting, assurance and due
diligence – he previously held the position as Director of Audit and Corporate Services at a national chartered
accounting firm. The industries Chris has been involved in are wide and varied including: aged care, aquaculture,
biotechnology, building and construction, charities, education, engineering, food manufacturing, government,
healthcare, hospitality, mining exploration and services, retail and viticulture. Mr Watts holds a Bachelor of
Business degree from Curtin University, is a Member of the Australian Institute of Chartered Accountants, and a
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ICOLLEGE LIMITED
DIRECTORS REPORT
Registered Company Auditor (RCA). He is currently Company Secretary for ASX listed Consolidated Zinc Limited
and Potash Minerals Limited.
MEETINGS OF THE COMPANY’S DIRECTORS
There were four meetings of the Company’s Directors held during the year ended 30 June 2015. The number of
meetings attended by each Director were:
Number
Eligible to
Attend
Johannes de Back
7
7
Victor Hawkins
7
Ross Cotton
Philip Re
7
Number
Attended
6
7
7
7
Fourteen resolutions during the year were passed by a circulating resolution.
DIRECTORS’ SHAREHOLDING INTERESTS
The interest of each Director in the share capital of the Company at the date of this report is as follows:
Fully Paid
Ordinary Shares
Options
Direct
Interest
Indirect
Interest
Direct
Interest
Indirect
Interest
Details of Options
Johannes de Back
Victor Hawkins
-
-
654,819
7,530,000
-
-
-
-
3,750,000
2,500,000
Ross Cotton
92,918
709,773
41,064
268,048
Philip Re
-
2,946,667
-
-
1,458,333
972,223
exercisable at 30c on or before 31
March 2019
exercisable at 20c on or before 24
July 2017
exercisable at 30c on or before 31
March 2019
exercisable at 30c on or before 31
March 2019.
exercisable at 20c on or before 24
July 2017
In addition to the above, Victor Hawkins and Phil Re indirectly hold 4,500,000 and 1,750,002 Performance Shares
respectively issued on acquisition of iCollege Holdings Pty Ltd. The Performance Shares will convert into ordinary
shares when the following performance hurdles are achieved:
(i) Gross revenue reaches $1M for any continuous period of 12 months within a period of 2 years from 17
April 2014 being the date of issue then 1/3 will convert into ordinary shares;
(ii) EBITDA reaches $500,000 for any continuous period of 12 months within a period of 2 years from 17 April
2014 being the date of issue then 1/3 will convert into ordinary shares;
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ICOLLEGE LIMITED
DIRECTORS REPORT
(iii) EBITDA reaches $2.5M for any continuous period of 12 months within a period of 3 years 17 April 2014
being the date of issue then 1/3 will convert into ordinary shares.
EARNINGS PER SHARE
Basic Earnings Per Share was a loss of 3.81 cents (2014: loss of 2.53 cents).
PRINCIPAL ACTIVITIES
iCollege Limited is an Australian company listed on the Australian Securities Exchange (ASX code: ICT).
iCollege is a training organisation that has positioned itself to become one of Australia's leading educators
through growth spurred by acquisitions and current portfolio companies. Launched in 2014 to help students and
workers stay relevant in an ever-changing employment environment, their development is fuelled via the use of a
learning management platform – an innovative technology designed to make the e-learning experience more
flexible, dynamic and mobile.
REVIEW OF OPERATIONS
The Company recorded a loss after tax for the year ended 30 June 2015 of $2,257,894 (2014: $747,917).
The loss is mainly due to the following factors:
1. Development of the iCollege platform
2. Acquisition and due diligence costs of subsidiaries
3.
Integration costs associated post acquisitions
4. Continued corporate overheads including marketing, sales and promotion
5. The process and change of ownership and allocation of contracts for funding from State Education
Departments caused delays in revenue.
The Company is in the process of receiving confirmation of the change of ownership and allocation of
contracts for funding from State Education Departments. This confirmation will enable the payment of
the revenue due from sales of delivered training to iCollege.
Moving forward, it is common practice that all training delivered by the Group and subject to State
Government funding will be paid in the month following successful and compliant completion.
During the financial year, iCollege Limited completed the 100% acquisitions of the following companies:
1. The Bookkeeping School Pty Ltd (acquired 9 December 2014)
2. Mathisi Pty Ltd (acquired 1 April 2015)
3. Management Institute of Australia Pty Ltd (acquired 1 April 2015)
In addition, iCollege currently has entered into agreements to acquire the following companies subject to due
diligence:
1. Apollo Healthcare Solutions Pty Ltd
2. Celtic Training & Consultancy Pty Ltd
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ICOLLEGE LIMITED
DIRECTORS REPORT
Appointment of Chief Operating Officer
On 9 July 2015, iCollege Limited announced the appointment of Stuart Manifold as our new Chief Operating
Officer. His role will be to grow the company through strategic partnerships through his contacts developed over
20 years in the VET sector. Stuart will be directly responsible for the development of the strategic direction for
iCollege in close collaboration with the Board.
Integration Overview
iCollege has appointed a Head of Technology to assist with the harmonisation of all digital assets within the
group, which includes advances in the following areas:
· Continued development and review of the iCollege E-Learning and reporting platform
· Development of strategy and research into the latest technology around online registration of
students and connectivity with iCollege reporting functions
· Centralisation and consistency of messaging across all iCollege company websites and Social Media
platforms
· Gradual and prioritised migration of all sales and client information to a central Client Relationship
Management system (CRM)
iCollege has begun the process of establishing a shared services division within the business allowing the
Company to develop economies of scale in the following areas:
· Sales and Marketing
· Educational Instructors and Human Resources
· Governance and Compliance
· Customer Service and Satisfaction
· Streamlined accounting functions, which will allow a greater depth of reporting across the group
and within each individual asset
The integration process has been developed in line with the overall goals and objectives for iCollege Limited.
These have been shared with the entire team providing a solid direction moving into the FY16. This division is
headed by suitably qualified individuals who are tasked with expanding their teams to cope with the overall
scaling of the Company.
iCollege has instigated significant discussions with a number of corporate and community based organisations in
relation to the provision of long term training to assist those organisations in achieving their workforce
development goals.
Loyalty Option
On 18 June 2014, iCollege announced to undertake a fully underwritten non-renounceable rights issue of one
option to acquire a fully paid ordinary share in the capital of the Company (exercisable at 20 cents on or before
the date which is 3 three years from the date of issue) for every 3 shares held by shareholders at the record date
to raise up to A$186,736 before costs, which was finalised on 25 July 2014.
Placement Completion
On 3 December 2014, iCollege announced it had firm commitments in place for the placement of 3,333,334
shares at $0.15, to raise $500,000. The Placement shares were offered with a 1 for 2 free attaching listed option
(ASX.ICTO) and was subscribed to by key strategic Sophisticated investors. The placement was completed under
the company’s existing 7.1 and 7.1A Placement capacity.
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ICOLLEGE LIMITED
DIRECTORS REPORT
Successful Completion of Sale of Small Holdings of Shares
On 23 December 2014, iCollege was pleased to advise that the sale of small holdings of shares (“Sale”) announced
on 30 October 2014, was completed.
In total 504 minority holders holding an aggregate of 542,595 shares in the Company, participated in the Sale.
The holdings were sold to Eyeon Investments Pty Ltd as per the agreement (“Agreement”) with Eyeon
Investments Pty Ltd (a member of the Copulos Group) (“Purchaser”) under which the Purchaser agreed to buy the
ordinary shares of shareholders who hold shares in the Company valued at less than a “marketable parcel”
(defined in the ASX Listings Rules as a parcel of securities of not less than $500) (“Small Holding”) at a price of
$0.15 per share.
Acquisition Funding
On 20 March 2015, iCollege placed a Convertible Loan with the Copulos Group and other associated high net
worth investors for a minimum of $500,000.
Further to the announcement released to the ASX on 20 March 2015, iCollege Limited (ASX: ICT) (“iCollege” and
“the Company”) announced on 29 April 2015 that it has closed the convertible loan facility, successfully raising
$1.3m. No further capital will be accepted under this facility.
As previously announced, major shareholder, The Copulos Group provided $500k under the facility and has now
been joined by a consortium of highly strategic investors.
Most notably, Mr Peter Arvanitis, has provided $500k under the facility. Mr Arvanitis is the founder of Estia Health
(EHE.ASX). Under Peter’s leadership, Estia expanded successfully from its first aged care home to its current 45
facilities. As CEO, Peter led the acquisition and successful integration of 17 individual facilities.
Mr Arvanitis understanding of successful integration practices via improved documentation and compliance
standards and through the introduction of technology, systems and procedures, will be a great asset to iCollege,
as it moves forward with its strategy of acquiring and integrating Registered Training Organisations.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS
Likely developments in the operations of the Consolidated Entity and the expected results of those operations in
future financial years have not been included in this report as the inclusion of such information is likely to result in
unreasonable prejudice to the company.
FINANCIAL POSITION
The Consolidated Entity recorded a loss after tax for the year of $2,257,894 (2014: Loss of $747,917).
The net assets of the Consolidated Entity were $4,943,071 in 2015 (2014: $5,266,188).
The Consolidated Entity’s working capital deficiency, being current assets less current liabilities was $3,076,285 in
2015 (2014: $2,410,316 surplus).
DIVIDENDS PAID OR RECOMMENDED
No amounts have been paid or declared by way of dividends by the Company since the end of the previous
financial period and up until the date of this report. The directors do not recommend the payment of any
dividend for the financial year ended 30 June 2015.
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ICOLLEGE LIMITED
DIRECTORS REPORT
MATTERS SUBSEQUENT TO THE END OF THE YEAR
On 9 July 2015, iCollege Limited announced the appointment of Stuart Manifold as Chief Operating Officer and
together with that will acquire Apollo Healthcare Solutions Pty Ltd (“Apollo”). Apollo currently provides Nursing,
Return to Work Co-ordination and Injury Management for one of the world’s largest mining companies at a
significant Queensland mine site.
The acquisition terms are as follows:
·
iCollege will acquire 100% of the shares in Apollo via the issue of shares in ICT to the value of
$125,000 at an issue price of $0.15 per share.
· The acquisition is subject to further due diligence and completion of formal contractual
agreements.
On 19 August 2015, iCollege announced the execution of a Binding Term Sheet to acquire Celtic Training &
Consultancy Pty Ltd (‘Celtic’), a Registered Training Organisation providing over 30 courses in the rapidly
expanding aged care, nursing, health and safety and community services sectors.
Acquisition Terms
1. Total Purchase Price is $2,250,000 to be paid as follows:
a) An up-front payment of $750,000 consisting of 50 per cent scrip and 50 per cent cash. The scrip
portion is payable on the date of Change of Ownership, as issued and agreed by South Australian
Department of State Development. The cash portion ($375,000) will be deferred by three months
from date of Change of Ownership issued and agreed by South Australian Department of State
Development.
certain
up-front
conditions precedent being met by Celtic. These conditions are:
aforementioned
payment
subject
The
to
is
i. Reaching EBIT in-excess of $600,000 in FY15
ii. Confirmation of the same, similar or equivalent funding to be in place for 2015-2016
financial year
iii. integration with the iCOLLEGE e-learning platform and processes
iv. Consideration will be released on the completion the audit of FY15 financials
b) A payment of $775,000, consisting of $600,000 cash and $175,000 scrip on achieving an audited
EBIT of $700,000 in FY16.
c) A further $725,000 consisting of $550,000 cash and $175,000 scrip on the basis of the following
performance hurdles being achieved:
i. Achieving EBIT of $500,000 at the end of CY17 (Half Financial Year)(cid:850)
ii. This payment will be agreed and settled as per accounting standards accepted by the ASX and
reported in iCollege’s half year financial statements.
2. These terms will be documented in a binding Heads of Agreement (HOA) expected to be complete in
the next fourteen (14) days
3. 30 day Due Diligence period
4. Mr. David Leigh-Ewers is to continue employment with the business for a period of 18 months on the
following terms on a salary package of $150,000 (including superannuation) plus additional
performance incentives
5. For a period of three (3) months from date of change of ownership, the Vendor will retain sufficient
working capital in Celtic. This will protect iCollege’s cash position and allow for further capital
investment and growth initiatives.
iCollege obtaining shareholder approval for the issue of shares under ASX listing rules and the
Corporations Act (if required).
6.
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ICOLLEGE LIMITED
DIRECTORS REPORT
No other matters or circumstances has arisen since 30 June 2015 that has significantly affected or may
significantly affect the operations of the Consolidated Entity, the results of those operations or the state of affairs
of the Consolidated Entity, in subsequent financial years.
REMUNERATION REPORT (AUDITED)
This report details the nature and amount of remuneration for each director and executive of iCollege Holdings
Limited. The information provided in this remuneration report has been audited as required by section 308(3C) of
the Corporations Act 2001.
For the purposes of this report key management personnel of the Company are defined as those persons having
authority and responsibility for planning, directing and controlling the major activities of the Company, directly or
indirectly, including any director (whether executive or otherwise) of the Company and all key management
personnel.
Details of Key Management Personnel
Mr Johannes de Back
Mr Victor Hawkins
Mr Ross Cotton
Mr Philip Re
Remuneration Governance
Non-Executive Chairman
Managing Director
-
-
- Executive Director (appointed 20 October 2014)
-
Non-Executive Director
Due to the present size of the Company and of its operations and financial affairs, the use of a separate
remuneration committee is not considered appropriate. The Board has adopted the following policies for
Directors’ and executives’ remuneration.
To assist the Board to fulfil its function as the Remuneration Committee, the Board has adopted a Remuneration
Committee Charter. The Remuneration Committee Charter
is available on the Company’s website at
www.icollege.net.
Remuneration of Directors and senior management is determined with regard to the performance of the
Company, the performance and skills and experience of the particular person and prevailing remuneration
expectations in the market. Details of remuneration of Directors and Key Management Personnel are disclosed in
the Remuneration Report. The performance and remuneration of the senior management team will be reviewed
in the future at least annually.
Executives are prohibited from entering into transactions or arrangements which limit the economic risk of
participating in unvested entitlements.
Remuneration structure
In accordance with best practice corporate governance, the structure of Non-executive Director and executive
compensation is separate and distinct.
Non-executive Directors’ Remuneration
Non-executive Directors’ fees are paid within an aggregate limit which is approved by the shareholders from time
to time. This limit is currently set at $260,000. Any newly appointed Non-executive Directors will serve in
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ICOLLEGE LIMITED
DIRECTORS REPORT
accordance with a standard service contract, drafted by the Company’s lawyers, which sets out remuneration
arrangements. There are no termination or retirement benefits for non-executive Directors (other than for
superannuation). Non-executive Directors may be offered options as part of their remuneration, subject to
shareholder approval.
Executive Remuneration
Senior executives, including Executive Directors, are engaged under the terms of individual employment
contracts. Such contracts are based upon standard terms drafted by the Company’s lawyers. Executive Directors
do not receive any directors’ fees in addition to their remuneration arrangements. Base salary/consulting fees are
set to reflect the market salary for a position and individual of comparable responsibility and experience. Base
salary/consulting fees are regularly compared with the external market and during recruitment activities
generally. It is the policy of the Company to maintain a competitive salary structure to ensure continued
availability of experienced and effective management and staff.
Executives are prohibited from entering into transactions or arrangements which limit the economic risk of
participating in unvested entitlements.
Details of the nature and amount of each element of each Director, including any related company and each of
the officers of the Company receiving the highest emoluments are set out below.
Service Agreements
Remuneration and other terms of employment for the Chairman, Managing Director and Executive Director is
formalised in a service agreement which includes details of remuneration.
The Company has entered into a consultancy agreement with Performa Capital Pty Ltd (as trustee for the
Performa Trust) and Mr Victor Hawkins which was effective from the date of completion of the Acquisition for a
period of one year, with terms for extension. Under the CA, Mr Hawkins is engaged by the Company to provide
services to the Company in the capacity of Managing Director.
Mr Hawkins will be paid a fee of $250,000 per annum exclusive of GST. Mr Hawkins will be reimbursed for
reasonable expenses incurred in carrying out his duties.
The consultancy agreement contains standard termination provisions under which the Company must give 3
month’s written notice of termination and the Consultant must give 6 month's written notice of termination (or
shorter period in the event of serious misconduct or a material breach).
The Company has entered into a consultancy agreement with Dutchman Capital Pte Ltd and Mr Hans de Back
which was effective from 1 June 2014 for a period of one year, with terms for extension. Under the agreement,
Mr de Back is engaged by the Company to provide services to the Company in the capacity of Non-Executive
Chairman.
Mr de Back will be paid a fee of $60,000 per annum. Mr de Back will be reimbursed for reasonable expenses
incurred in carrying out his duties.
The Company has entered into a consultancy agreement with Richmond Food Systems Pty Ltd (as trustee for the
Montery Trust) and Mr Ross Cotton which was effective from the date of completion of his appointment. Under
the agreement, Mr Cotton is engaged by the Company to provide services to the Company in the capacity of
Executive Director.
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ICOLLEGE LIMITED
DIRECTORS REPORT
Mr Cotton will be paid a fee of $150,000 per annum. Mr Cotton will be reimbursed for reasonable expenses
incurred in carrying out his duties.
The consultancy agreement contains standard termination provisions under which the Company must give 3
month’s written notice of termination and the Consultant must give one month's written notice of termination (or
shorter period in the event of serious misconduct or a material breach).
Consolidated entity performance and link to remuneration
The remuneration policy has been tailored to increase goal congruence between shareholders, directors and
executives. Remuneration has not been linked to performance. The historical details in relation to the
consolidated entity’s performance has also not been disclosed on this basis.
Details of remuneration
2015
Key Management
Personnel
Short-term Benefits
Cash,
salary & fees
$
Cash profit
share
$
Non-cash
benefit
$
Other
$
Johannes de Back
60,000*
Victor Hawkins
250,000**
Ross Cotton
116,625***
Philip Re
60,000
486,625
-
-
-
-
-
-
-
-
Post-
employment
Benefits
Super-
annuation
$
-
-
-
-
-
-
-
-
Other
Long-term
Benefits
Share based Payment
Total
Total Remune-
ration Repre-
sented by
Options
Performance
Related
Other
$
Equity
$
Options
$
-
-
-
-
-
-
-
-
$
60,000
250,000
116,625
60,000
486,625
-
-
-
-
%
-
-
-
-
%
-
-
-
-
*Payment was made to Dutchman Cpaital Pte Ltd., where Mr de Beck is a director. Refer to Service Agreements.
**Payment was made to Performa Capital Pty Ltd (as trustee for the Performa Trust) where Mr Victor Hawkins is a beneficiary. Refer to Service Agreements.
***Payment was made to Richmond Food Systems Pty Ltd (as trustee for the Montery Trust) where Mr Ross Cotton is a beneficiary. Refer to Service Agreements.
2014
Key Management
Personnel
Short-term Benefits
Cash,
salary & fees
$
Cash profit
share
$
Non-cash
benefit
$
Other
$
Johannes de Back
5,000
Victor Hawkins
Philip Re
Roger Steinepreis
George Ventouras
Nick Castleden
83,331*
20,000
-
-
-
108,331
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Post-
employment
Benefits
Super-
annuation
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Other
Long-term
Benefits
Share based Payment
Total
Other
$
Equity
$
Options
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
5,000
83,331
20,000
-
-
-
108,331
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total Remune-
ration Repre-
sented by
Options
Performance
Related
%
%
*Payment was made to Performa Capital Pty Ltd (as trustee for the Performa Trust) where Mr Victor Hawkins is a beneficiary. Refer to Service Agreements.
-
-
-
-
-
-
-
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ICOLLEGE LIMITED
DIRECTORS REPORT
Share based compensation
2015
No shares or options were issued as remuneration to the directors during the year.
2014
No shares or options were issued as remuneration to the directors during the year.
Equity Instruments held by Key Management Personnel
(i) Share holdings
The number of ordinary shares in the Company held during the financial year by each Director of iCollege
Limited and any other key management personnel of the Company, including their personally related parties,
are as follows.
There were no shares granted during the year as compensation (2014: nil). There were no shares issued upon
exercise of options (2014: nil).
2015
Shares (held directly and indirectly)
Name
Johannes de Back
Victor Hawkins
Ross Cotton
Philip Re
Balance at
1 July 2014
-
7,500,000
-
2,916,667
Net change
during the year
654,819
30,000
681,884
30,000
Change due to
appointment/
(resignation)
-
-
120,807
-
Balance at
30 June 2015
654,819
7,530,000
802,691
2,946,667
Total Shares
10,416,667
1,396,703
120,807
11,934,177
Performance Shares
In addition to the above, Victor Hawkins and Phil Re indirectly hold 4,500,000 and 1,750,002 Performance
Shares respectively issued on acquisition of iCollege Holdings Pty Ltd. The Performance Shares will convert
into ordinary shares when the following performance hurdles are achieved:
(i) gross revenue reaches $1M for any continuous period of 12 months within a period of 2 years from 17
April 2014 being the date of issue then 1/3 will convert into ordinary shares;
(ii) EBITDA reaches $500,000 for any continuous period of 12 months within a period of 2 years from 17
April 2014 being the date of issue then 1/3 will convert into ordinary shares; and
(iii) EBITDA reaches $2.5M for any continuous period of 12 months within a period of 3 years 17 April 2014
being the date of issue then 1/3 will convert into ordinary shares.
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ICOLLEGE LIMITED
DIRECTORS REPORT
(ii) Option holdings
The number of options over ordinary shares in the Company held during the financial year by each Director
of iCollege Limited and any other key management personnel of the Consolidated Entity, including their
personally related parties, are as follows:
2015
Options (held directly and indirectly)
Name
Johannes de Back
Victor Hawkins
Ross Cotton
Philip Re
Total Options
Balance at
1 July 2014
-
3,750,000
-
1,458,333
5,208,333
Granted as
remuneration
during the year
-
-
-
-
Other
granted/purchased
during the year
-
2,500,000
14,446
972,223
Change due to
appointment/
(resignation)
-
-
294,666
-
Balance at
30 June 2015
-
6,250,000
309,112
2,430,556
Number
vested and
exercisable
-
2,500,000
309,112
972,223
-
3,486,669
294,666
8,989,668
3,781,335
Other Transactions with Key Management Personnel
2015
Mr Victor Hawkins, Director, is a beneficiary of the Performa Trust. The Company has entered into an
exclusive Licence Agreement with Performa Capital Pty Ltd (as trustee of the Performa Trust) to exploit the
Cloud Infrastructure, Cloud Platform and associated Intellectual Property for the purpose of providing online
education and professional development courses to end users. During the year an amount of $110,000 (net
of GST) was paid under the Licence Agreement. Furthermore, Performa Capital Pty Ltd obtained
reimbursements of costs totalling $13,363 (2014: Nil) which included rent, photocopier, staff, phone,
internet, motor vehicle and other costs.
Mr Philip Re, Director, is a Director of Regency Partners. During the year an amount of $52,895 (net of GST)
was paid to this business for accounting, bookkeeping, administration and secretarial services at normal
commercial rates.
Mr Ross Cotton, Director, is a Director of Richmond Food Systems Pty Ltd. Before his appointment as
Director on 20 October 2014, fees of $53,500 (net of GST) were paid to this Company for consulting services
at normal commercial rates.
2014
Mr Victor Hawkins, Director, is a beneficiary of the Performa Trust. The Company has entered into an
exclusive Licence Agreement with Performa Capital Pty Ltd (as trustee of the Performa Trust) to exploit the
Cloud Infrastructure, Cloud Platform and associated Intellectual Property for the purpose of providing online
education and professional development courses to end users. During the year an amount of $50,000 (net of
GST) was paid under the Licence Agreement.
Mr Philip Re, Director, is a Director of Regency Partners. During the year an amount of $94,500 (net of GST)
was paid to this business for accounting, bookkeeping, administration and secretarial services at normal
commercial rates.
Mr Roger Steinepreis, Director, is a partner of Steinepreis Paganin. During the year an amount of $129,183
(net of GST) was paid to this business for legal advice at normal commercial rates.
13
ICOLLEGE LIMITED
DIRECTORS REPORT
Mr George Ventouras, Director, is a director and shareholder of Ventouras Consulting Pty Ltd. During the
year an amount of $18,000 (net of GST) was paid to this business for work undertaken for maintenance of
intellectual property at normal commercial rates.
Mr George Ventouras, Director, was a consultant to Paragon Pearling Pty Ltd. During the year an amount of
$9,000 (net of GST) was paid to this business for work undertaken at normal commercial rates.
Mr Nick Castleden, Director, was a consultant to Cratonix Pty Ltd. During the year an amount of $24,000 (net
of GST) was paid to this business for work undertaken at normal commercial rates.
Use of Remuneration Consultants
During the financial year ended 30 June 2015, the Company did not engage any external remuneration
consultants to review its existing remuneration policies.
Voting and comments made at the Company’s 2014 Annual General Meeting (AGM)
The Company did not receive any votes against its remuneration report for the 2014 financial year and no specific
feedback at the AGM or throughout the year on its remuneration policies.
This is the end of the audited remuneration report.
SHARES UNDER OPTION
Unissued ordinary shares of the Company under option at the date of this report are as follows:
Listed Options
Unlisted Options
Unlisted Options
Unlisted Options
Number
23,756,507
2,989,994
3,334
11,666,674
Exercise Price
$0.20
$0.20
$30.00
$0.30
Expiry Date
24 July 2017
31 December 2015
1 May 2017
31 March 2019
Refer to the Directors Report for details of options held by the Directors.
INDEMNIFICATION AND INSURANCE OF OFFICERS
During or since the end of the financial year the Consolidated Entity has given an indemnity or entered into an
agreement to indemnify, or paid or agreed to pay insurance premiums as follows:
The Consolidated Entity has paid premiums to insure each of the following current and former Directors against
liabilities for costs and expenses incurred by them in defending any legal proceedings arising out of their conduct
while acting in the capacity of Director of the Consolidated Entity, other than conduct involving a wilful breach of
duty in relation to the Consolidated Entity. The contract of insurance prohibits disclosure of the nature of liability
and the amount of the premium.
PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied for leave of Court to bring proceedings on behalf of the Consolidated Entity or intervene in
any proceedings to which the Consolidated Entity is a party for the purpose of taking responsibility on behalf of
14
ICOLLEGE LIMITED
DIRECTORS REPORT
the Consolidated Entity for all or any part of those proceedings. The Consolidated Entity was not a party to any
such proceedings during the year.
AUDITOR INDEPENDENCE DECLARATION
A copy of the auditor’s independence declarations as required under section 307C of the Corporations Act 2001
for the year ended 30 June 2015 has been received and can be found on page 16.
AUDITOR
Bentleys Audit and Corporate (WA) Pty Ltd continues in office in accordance with Section 327 of the Corporations
Act 2001.
NON-AUDIT SERVICES
During the year non-audit services totalling nil in relation to non-audt services were provided by associated
entities of Bentleys Audit and Corporate (WA) Pty Ltd (2014: Paid $15,797 to BDO Audit (WA) Pty Ltd for taxation
services).
The Directors may engage auditors for non-audit services.
The Directors are satisfied that the provision of future non-audit services, by the auditor (or by CA300(11 B)(b).(c)
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 and will not, in the opinion of the Directors, compromise the
external auditor's independence requirements of the Corporations Act 2001 for the following reasons:
•
•
all non-audit services will be reviewed and approved to ensure that they do not impact the integrity and
objectivity of the auditor, and
none of the services will undermine the general principles relating to auditor independence as set out in
APES CA300(11B)(c) 110 Code of Ethics for Professional Accountants issued by the Accounting Professional
and Ethical Standards Board, including reviewing or auditing the auditor's own work, acting in a management
or decision-making capacity for the Company, acting as advocate for the Company or jointly sharing
economic risks and rewards.
Refer to Note 22 to the financial statements for details of fees paid / payable to the auditor of the Company.
Signed in accordance with a resolution of the Directors.
Victor Hawkins
Managing Director
Perth, Western Australia
29 September 2015
15
To The Board of Directors
As lead audit director for the audit of the financial statements of iCollege Limited for the
financial year ended 30 June 2015, I declare that to the best of my knowledge and belief,
there have been no contraventions of:
the auditor independence requirements of the Corporations Act 2001 in relation to
the audit; and
any applicable code of professional conduct in relation to the audit.
Yours faithfully
BENTLEYS
Chartered Accountants
MARK DELAURENTIS CA
Director
Dated at Perth this 29th day of September 2015
16
ICOLLEGE LIMITED
CON SOLID A T ED ST A T EM EN T OF PROFIT OR LOSS
A ND OT H ER COM PREHENSIV E IN COM E
FOR THE YEAR ENDED 30 JUNE 2015
Revenues
Revenue from customers
Cost of sales
Gross Profit
Interest Revenue
Research & Development Tax Incentive
Expenses
Accounting and audit expenses
Commissions paid
Compliance
Consultant fees
Depreciation and amortisation
Directors fees
Employee expenses
Finance costs
Impairment of assets
Interest expenses
Legal expenses
Marketing expenses
Occupancy expenses
Share based payments
Travel and accommodation
Other expenses
Total expenses
Profit/(loss) before Income Tax
Income tax expense
Profit/(loss) after income tax
attributable to members of iCollege
Limited
Other comprehensive income
Total comprehensive profit/(loss)
attributable to members of iCollege
Limited
Note
3
8,9
4
17
30 June 2015
$
30 June 2014
$
627,146
(294,457)
332,689
46,379
156,284
(43,248)
(132,500)
(93,568)
(811,328)
(3,769)
(237,715)
(593,723)
(25,500)
(1,511)
(27,871)
(49,898)
(141,597)
(99,707)
(163,333)
(197,567)
(170,411)
(2,793,246)
3,000
-
3,000
22,535
-
(30,238)
-
(48,643)
(206,570)
(23,347)
(25,000)
(76,768)
-
(63,508)
-
(107,910)
(52,927)
(27,272)
-
(9,371)
(101,898)
(773,452)
(2,257,894)
(747,917)
2
-
-
(2,257,894)
(747,917)
-
-
(2,257,894)
(747,917)
Earnings/(loss) per share
Basic Earnings/(loss) per share
Cents per Share
Cents per Share
6
(3.81)
(2.53)
The Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction
with the notes to the financial statements.
17
ICOLLEGE LIMITED
CON SOLID A T ED ST A T EM EN T OF FIN A N CI A L POSI T ION
AS AT 30 JUNE 2015
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Other assets
Total Current Assets
Non-Current Assets
Property, plant & equipment
Intangible assets
Total Non-Current Assets
Total Assets
LIABILITIES
Current Liabilities
Trade and other payables
Convertible notes
Current tax liabilities
Short-term provisions
Total Current Liabilities
Non-Current Liabilities
Deferred tax liabilities
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Issued capital
Reserves
Accumulated losses
Note
18(a)
7
8
9
11
12
13
14
15
16
17
30 June 2015
$
30 June 2015
$
271,847
382,073
3,680
657,600
85,257
9,253,532
9,338,789
2,515,334
84,931
-
2,600,265
74,407
2,781,465
2,855,872
9,996,389
5,456,137
1,900,615
1,300,000
515,968
17,302
3,733,885
1,319,433
1,319,433
189,949
-
-
-
189,949
-
-
5,053,318
189,949
4,943,071
5,266,188
32,045,047
1,017,497
(28,119,473)
30,449,137
678,630
(25,861,579)
Total Equity
4,943,071
5,266,188
The Consolidated Statement of Financial Position should be read in conjunction
with the notes to the financial statements.
18
ICOLLEGE LIMITED
CON SOLID A T ED ST A T EM EN T OF CA SH FLOW S
FOR THE YEAR ENDED 30 JUNE 2015
Note
Year ended
30 June 2015
$
Cash flows from operating activities
Receipts from customers
Research & Development Tax Incentive
Interest received
Payments to suppliers and employees
Net cash flows used in operating activities
18b
409,042
156,284
46,379
(2,468,451)
(1,856,746)
5
(1,598,596)
(709,524)
(39,564)
(2,347,684)
1,300,000
687,546
(26,603)
1,960,943
Cash flows from investing activities
Net cashflow from acquisition of
subsidiaries
Payments for intellectual property
Payments for plant and equipment
Net cash flows used in investing activities
Cash flows from financing activities
Proceeds from borrowings
Proceeds from issue of shares and options
Payment of share issue costs
Net cash flows provided by financing
activities
Net increase in cash and cash equivalents
held
Add opening cash and cash equivalents
brought forward
Closing cash and cash equivalents carried
forward
(2,243,487)
1,611,408
2,515,334
903,926
18a
271,847
2,515,334
Year ended
30 June 2014
$
3,300
-
22,535
(836,031)
(810,196)
416
(233,751)
(24,818)
(258,153)
-
3,080,807
(401,050)
2,679,757
The Consolidated Statement of Cash Flows should be read in conjunction
with the notes to the financial statements.
19
ICOLLEGE LIMITED
CON SOLID A T ED ST A T EM EN T OF CH A N GES IN EQUI T Y
FOR THE YEAR ENDED 30 JUNE 2015
Issued
Capital
$
Accumulated
Losses
$
Option
Reserve
$
Total
Equity
$
At 1 July 2013
25,943,274
(25,113,662)
116,130
945,742
Profit/(loss) for the year
Total comprehensive income/(loss) for the year
Transactions with owners in their capacity as
owners:
-
-
(747,917)
(747,917)
-
-
(747,917)
(747,917)
Shares & options issued on acquisition of subsidiary
Issue of share capital, net of transaction costs
1,750,000
2,755,863
-
-
562,500
-
At 30 June 2014
30,449,137
(25,861,579)
678,630
2,312,500
2,755,863
5,266,188
At 1 July 2014
30,449,137
(25,861,579)
678,630
5,266,188
Profit/(loss) for the year
Total comprehensive income/(loss) for the year
Transactions with owners in their capacity as
owners:
Shares & options issued on acquisition of subsidiary
Issue of share capital, net of transaction costs
Issue of fully paid listed options, net of transaction
costs
Share based payments
At 30 June 2015
-
-
(2,257,894)
(2,257,894)
1,000,000
595,910
-
-
-
-
-
-
-
-
-
175,533
(2,257,894)
(2,257,894)
1,000,000
595,910
175,533
163,334
163,334
32,045,047
(28,119,473)
1,017,497
4,943,071
The Consolidated Statement of Changes in Equity should be read in conjunction
with the notes to the financial statements.
20
ICOLLEGE LIMITED
NOTES TO T H E FIN A N CI A L ST A T EM ENT S
30 JUNE 2015
1.
ACCOUNTING POLICIES
The financial report covers iCollege Limited as a consolidated entity consisting of iCollege Limited and the entities it
controlled during the year. iCollege Limited is a listed public company limited by shares, incorporated and domiciled in
Australia. The registered office and principal place of business are disclosed in the Corporate Directory of the annual report.
The consolidated entity is a for profit entity.
(i)
Basis of Accounting
This general purpose financial report for the year ended 30 June 2015 has been prepared in accordance with Corporations
Act 2001 and Australian Accounting Standards (including Australian Accounting Interpretations) and authoritative
pronouncements of the Australian Accounting Standards Board.
This financial report has been prepared in accordance with the historical costs convention. The functional currency and
presentation currency of iCollege Limited is Australian dollars.
(ii)
Statement of Compliance
This financial report complies with International Financial Reporting Standards (IFRS) as issued by the Australian Accounting
Standards Board (AASB).
(iii) Going Concern
The financial report has been prepared on a going concern basis, which contemplates the continuity of normal business
activity and the realisation of assets and the settlement of liabilities in the ordinary course of business.
The Consolidated Entity recorded a loss after tax for the year of $2,257,894 (2014: Loss of $747,917). The net assets of the
Consolidated Entity were $4,943,071 in 2015 (2014: $5,266,188). The Consolidated Entity’s working capital deficiency, being
current assets less current liabilities was $3,076,285 in 2015 (2014: $2,410,316 surplus). Included in this working capital
deficiency is deferred consideration payable of $1,500,000 due on the 23rd of December 2015 (refer Note 5).
The ability of the Consolidated Entity to continue as a going concern is principally dependent upon the following:
·
·
forecasted profitability of the companies within the Consolidated Entity;
the ability of the Consolidated Entity to secure funds by raising capital from equity markets before the repayment
date of the deferred consideration;
expected conversion of convertible notes of $1,300,000 (refer Note 12) into equity before the repayment date; and
·
· managing cashflows in line with available funds.
These conditions indicate a material uncertainty that may cast significant doubt about the ability of the Consolidated Entity
to continue as a going concern.
The directors have prepared a cash flow forecast, which indicates that the Consolidated Entity will have sufficient cash flows
to meet all commitments (including those at Note 20) and working capital requirements for the 12 month period from the
date of signing this financial report.
Based on the cash flow forecasts and other factors referred to above, the directors are satisfied that the going concern basis
of preparation is appropriate. In particular, given the Consolidated Entity’s history of raising capital to date, the directors are
confident of the Consolidated Entity’s ability to raise additional funds as and when they are required.
Should the Consolidated Entity be unable to continue as a going concern it may be required to realise its assets and
extinguish its liabilities other than in the normal course of business and at amounts different to those stated in the financial
statements. The financial statements do not include any adjustments relating to the recoverability and classification of asset
carrying amounts or to the amount and classification of liabilities that might result should the Consolidated Entity be unable
to continue as a going concern and meet its debts as and when they fall due.
21
ICOLLEGE LIMITED
NOTES TO T H E FIN A N CI A L ST A T EM ENT S
30 JUNE 2015
(iv)
Adoption of New and Revised Standards
Amendments to AASBs and the new Interpretation that are mandatorily effective for the current year
In the current year, the Consolidated Entity has applied a number of amendments to AASBs and a new
interpretation issued by the Australian Accounting Standards Board (AASB) that is mandatorily effective from an
accounting period on or after 1 July 2014.
The application of these amendments and interpretation does not have any material impact on the Consolidated
Entity’s consolidated financial statements.
Standards and Interpretations in issue not yet adopted
At the date of authorisation of the financial statements, the Standards and Interpretations listed below were in
issue but not yet effective.
The Consolidated Entity does not anticipate that there will be a material effect on the financial statements from
the adoption of these standards.
‘Revenue
‘Amendments
‘Amendments
to Australian
for
Standard/Interpretation
AASB 9 ‘Financial Instruments’, and the relevant
amending standards
AASB 15
from Contracts with
Customers’ and AASB 2014-5 ‘Amendments to
Australian Accounting Standards arising from
AASB 15’
AASB 2014-3
Accounting Standards –
Accounting
Acquisitions of Interests in Joint Operations’
to Australian
AASB 2014-4
Accounting
Standards – Clarification of
Acceptable Methods of Depreciation and
Amortisation’
AASB 2014-6
to Australian
‘Amendments
Accounting Standards – Agriculture: Bearer
Plants’
AASB 2014-9
Accounting Standards – Equity Method
Separate Financial Statements’
AASB 2014-10
‘Amendments to Australian
Accounting Standards – Sale or Contribution of
Assets between an Investor and its Associate or
Joint Venture’
AASB 2015-1
to Australian
‘Amendments
Accounting Standards – Annual Improvements
to Australian Accounting Standards 2012-2014
Cycle’
AASB 2015-2
to Australian
‘Amendments
Accounting Standards – Disclosure Initiative:
Amendments to AASB 101’
AASB 2015-3
Accounting
to Australian
the
to Australian
in
‘Amendments
‘Amendments
Standards
arising
from
for annual
periods
Effective
reporting
beginning on or after
1 January 2018
Expected to be initially
applied in the financial
year ending
30 June 2019
1 January 2017
30 June 2018
1 January 2016
30 June 2017
1 January 2016
30 June 2017
1 January 2016
30 June 2017
1 January 2016
30 June 2017
1 January 2016
30 June 2017
1 January 2016
30 June 2017
1 January 2016
30 June 2017
1 July 2015
30 June 2016
22
ICOLLEGE LIMITED
NOTES TO T H E FIN A N CI A L ST A T EM ENT S
30 JUNE 2015
Withdrawal of AASB 1031 Materiality’
AASB 2015-4
to Australian
‘Amendments
Accounting Standards – Financial Reporting
Requirements for Australian Groups with a
Foreign Parent’
AASB 2015-5
to Australian
‘Amendments
Accounting Standards – Investment Entities:
Applying the Consolidation Exception’
1 July 2015
30 June 2016
1 January 2016
30 June 2017
Note that the following new Standards and Interpretations are not applicable for the Group but are relevant for
the period:
AASB 14 ‘Regulatory Deferral Accounts’ and AASB 2014-1 ‘Amendments to Australian Accounting Standards – Part
D: ’Consequential Amendments arising from AASB 14’ is not applicable to the Group as the Group is not a first-time
adopter of Australian Accounting Standards.
AASB 1056 ‘Superannuation Entities’ is not applicable to the Group as the Group is not a superannuation entity.
AASB 2015-6 ‘Amendments to Australian Accounting Standards – Extending Related Party Disclosures to Not-for-
Profit Public Sector Entities’ is not applicable to the Group as the Group is a for-profit entity.
(v)
Significant Accounting Estimates and Judgments
Significant accounting judgments
In the process of applying the Consolidated Entity’s accounting policies, management has made the following judgments,
apart from those involving estimations, which have the most significant effect on the amounts recognised in the financial
statements.
Significant accounting estimates and assumptions
The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions of future
events. The key estimates and assumptions that have a significant risk of causing a material adjustment to the carrying
amounts of certain assets and liabilities within the next annual reporting year are:
Impairment of assets
In determining the recoverable amount of assets, in the absence of quoted market prices, estimations are made regarding
the present value of future cash flows using asset-specific discount rates and the recoverable amount of the asset is
determined. Value-in-use calculations performed in assessing recoverable amounts incorporate a number of key estimates.
Useful life of intangible assets
Intangible assets are amortised in profit or loss on a straight line basis over their estimated useful lives from the date they are
available for use.
Recoverability of trade and other receivables
The Consolidated Entity assesses the likelihood of any impairment of the Consolidated Entity’s receivables at each reporting
date by evaluating those payments that are in arrears and making a judgement as to the likelihood of that receivable not
being paid passed on all knowledge available of the debtor.
Deferred tax assets
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and
unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible
temporary differences, and the carry-forward of unused tax assets and unused tax losses can be utilised.
23
ICOLLEGE LIMITED
NOTES TO T H E FIN A N CI A L ST A T EM ENT S
30 JUNE 2015
(vi)
Summary of 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.
Principles of consolidation
The consolidated financial statements incorporate the assets, liabilities and results of entities controlled by iCollege Limited
at the end of the reporting period. A controlled entity is any entity over which iCollege Limited has the power to direct the
relevant activities of the entity and has exposure to variable returns. Control will generally exist when the parent owns,
directly or indirectly through subsidiaries, more than half of the voting power of an entity. In assessing the power to direct
the relevant activities, the existence and effect of holdings of actual and potential voting rights are also considered. Where
controlled entities have entered or left the Group during the year, the financial performance of those entities are included
only for the period of the year that they were controlled. A list of controlled entities is contained in Note 10 to the financial
statements.
In preparing the consolidated financial statements, all inter-group balances and transactions between entities in the
consolidated group have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where
necessary to ensure consistency with those adopted by the parent entity. Non-controlling interests, being the equity in a
subsidiary not attributable, directly or indirectly, to a parent, are shown separately within the Equity section of the
consolidated Statement of Financial Position and Statement of Profit or Loss and other Comprehensive Income. The non-
controlling interests in the net assets comprise their interests at the date of the original business combination and their share
of changes in equity since that date.
Business Combinations
Business combinations occur where an acquirer obtains control over one or more businesses and results in the consolidation
of its assets and liabilities. A business combination is accounted for by applying the acquisition method, unless it is a
combination involving entities or businesses under common control. The acquisition method requires that for each business
combination one of the combining entities must be identified as the acquirer (ie: parent entity). The business combination
will be accounted for as at the acquisition date, which is the date that control over the acquiree is obtained by the parent
entity. At this date, the parent shall recognise, in the consolidated accounts, and subject to certain limited exceptions, the
fair value of the identifiable assets acquired and liabilities assumed. In addition, contingent liabilities of the acquiree will be
recognised where a present obligation has been incurred and its fair value can be reliably measured.
The acquisition may result in the recognition of goodwill or a gain from a bargain purchase. The method adopted for the
measurement of goodwill will impact on the measurement of any non-controlling interest to be recognised in the acquiree
where less than 100% ownership interest is held in the acquiree. The acquisition date fair value of the consideration
transferred for a business combination plus the acquisition date fair value of any previously held equity interest shall form
the cost of the investment in the separate financial statements. Consideration may comprise the sum of the assets
transferred by the acquirer, liabilities incurred by the acquirer to the former owners of the acquiree and the equity interests
issued by the acquirer. Fair value uplifts in the value of pre-existing equity holdings are taken to the statement of Profit or
Loss and other Comprehensive income. Where changes in the value of such equity holdings had previously been recognised
in other comprehensive income, such amounts are recycled to profit or loss.
Included in the measurement of consideration transferred is any asset or liability resulting from a contingent consideration
arrangement. Any obligation incurred relating to contingent consideration is classified as either a financial liability or equity
instrument, depending upon the nature of the arrangement. Rights to refunds of consideration previously paid are
recognised as a receivable. Subsequent to initial recognition, contingent consideration classified as equity is not remeasured
and its subsequent settlement is accounted for within equity. Contingent consideration classified as an asset or a liability is
remeasured each reporting period to fair value through the Statement of Profit or Loss and other Comprehensive income
unless the change in value can be identified as existing at acquisition date. All transaction costs incurred in relation to the
business combination are expensed to the statement of profit or loss and other comprehensive income.
24
ICOLLEGE LIMITED
NOTES TO T H E FIN A N CI A L ST A T EM ENT S
30 JUNE 2015
(vi)
Summary of Significant Accounting Policies - continued
Cash and cash equivalents
Cash and short-term deposits in the Consolidated Statement of Financial Position comprise cash at bank and in hand and
short-term deposits with an original maturity of three months or less. For the purposes of the Statement of Cash Flows, cash
and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts.
Trade and other receivables
Receivables are initially recognised at fair value and subsequently measured at amortised cost, less allowance for doubtful
debts. Current receivables for GST are due for settlement within 30 days and other current receivables within 12 months.
They are recognised initially at fair value and subsequently at amortised cost.
Share-based payment transactions
The Consolidated Entity may provide benefits to employees (including directors) and consultants of the Consolidated Entity in
the form of share-based payment transactions, whereby services are rendered in exchange for shares or rights over shares
(‘equity-settled transactions’).
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 consolidated entity 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 consolidated entity or employee, the failure to satisfy the condition is
treated as a cancellation. If the condition is not within the control of the consolidated entity 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.
25
ICOLLEGE LIMITED
NOTES TO T H E FIN A N CI A L ST A T EM ENT S
30 JUNE 2015
(vi)
Summary of Significant Accounting Policies - continued
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.
Property, plant and equipment
Plant and equipment are stated at historical cost less accumulated depreciation and any impairment.
Depreciation is calculated on a reducing balance basis to write off the net cost of each item of plant and equipment over its
expected useful life, being 2.5 to 5 years.
Impairment of assets
At each reporting date, the Consolidated Entity assesses whether there is any indication that an asset may be impaired.
Where an indicator of impairment exists, the Consolidated Entity makes a formal estimate of recoverable amount. Where the
carrying amount of an asset exceeds its recoverable amount the asset is considered impaired and is written down to its
recoverable amount.
Recoverable amount is the greater of fair value less costs to sell and value in use. It is determined for an individual asset,
unless the asset's value in use cannot be estimated to be close to its fair value less costs to sell and it does not generate cash
inflows that are largely independent of those from other assets or groups of assets, in which case, the recoverable amount is
determined for the cash-generating unit to which the asset belongs. When the carrying amount of an asset or cash-
generating unit exceeds its recoverable amount, the asset or cash-generating unit is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money and the risks specific to the asset.
Intangible Assets
Internally-generated intangible assets – research and development expenditure
Expenditure on research activities is recognised as an expense in the period in which it is incurred.
An internally-generated intangible asset arising from development (or from the development phase of an internal project) is
recognised if, and only if, all of the following have been demonstrated:
·
·
·
·
·
·
the technical feasibility of completing the intangible asset so that it will be available for use or sale;
the intention to complete the intangible asset and use or sell it;
the ability to use or sell the intangible asset;
how the intangible asset will generate probable future economic benefits;
the availability of adequate technical, financial and other resources to complete the development and to use or sell
the intangible asset; and
the ability to measure reliably the expenditure attributable to the intangible asset during its development.
The amount initially recognised for internally-generated intangible assets is the sum of the expenditure incurred from the
date when the intangible asset first meets the recognition criteria listed above. Where no internally-generated asset can be
recognised, development expenditure is recognised in profit or loss in the period in which it is incurred.
Subsequent to initial recognition, internally-generated intangible assets are reported at cost less accumulated amortisation
and accumulated impairment losses, on the same basis as intangible assets that are acquired separately.
Intangible assets acquired in a business combination
Intangible assets acquired in a business combination and recognised separately from goodwill are initially recognised at their
fair value at the acquisition date (which is regarded as their cost).
Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated
amortisation and accumulated impairment losses, on the same basis as intangible assets that are acquired separately.
26
ICOLLEGE LIMITED
NOTES TO T H E FIN A N CI A L ST A T EM ENT S
30 JUNE 2015
(vi)
Summary of Significant Accounting Policies - continued
Initial costs of acquisition of intellectual property are capitalised in the Statement of Financial Position where there is
evidence it will generate economic benefits.
Expenditures in relation to the development of identifiable and unique products, and that will probably generate economic
benefits exceeding costs beyond one year, are recognised as intangible assets and amortised over their estimated useful
lives. Any expenditure related to research is expensed as incurred.
Amortisation of intellectual property is charged to operating expenses and/or cost of services on a straight-line basis over
their estimated useful lives, from the date they are available for use. The residual values and useful lives are reviewed at each
reporting date and adjusted, if appropriate.
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.
Where there is an unconditional right to defer settlement of the liability for at least 12 months after the reporting date, the
loans or borrowings are classified as non-current.
Borrowing Costs
Borrowing costs attributable to qualifying assets are capitalised as part of the asset. All other borrowing costs are expensed
in the period in which they are incurred, including:
- interest on the bank overdraft;
- interest on short-term and long-term borrowings;
- interest on finance leases; and
- unwinding of the discount on provisions.
Convertible notes
The component parts of convertible notes issued by the Consolidated Entity are classified separately as financial liabilities
and equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an
equity instrument. Conversion options that will be settled by the exchange of a fixed amount of cash or another financial
asset for a fixed number of the Company’s own equity instruments is an equity instrument.
At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for similar
non-convertible instruments. This amount is recognised as a liability on an amortised cost basis using the effective interest
method until extinguishment upon conversion or at the instrument’s maturity date.
The conversion option classified as equity is determined by deducting the amount of the liability component from the fair
value of the compound instrument as a whole. This is recognised and included in equity, net of income tax effects, and is not
subsequently remeasured. In addition, the conversion option classified as equity will be transferred to share premium.
Where the conversion option remains unexercised at the maturity date of the convertible note, the balance recognised in
equity will be transferred to retained profits. No gain or loss is recognised in the profit or loss upon conversion or expiration
of the conversion option.
Transaction costs that relate to the issue of the convertible notes are allocated to the liability and equity components in
proportion to the allocation of the gross proceeds. Transaction costs relating to the equity component are recognised directly
in equity. Transaction costs relating to the liability component are included in the carrying amount of the liability component
and are amortised over the lives of the convertible notes using the effective interest method.
Trade and other payables
Trade payables and other payables are recognised initially at fair value and subsequently at amortised cost and represent
liabilities for goods and services provided to the Consolidated Entity prior to the end of the financial year that are unpaid and
arise when the Consolidated Entity becomes obliged to make future payments in respect of the purchase of these goods and
services. The amounts are unsecured and usually paid within 30 days of recognition.(vi) Summary of Significant Accounting
Policies - continued
27
ICOLLEGE LIMITED
NOTES TO T H E FIN A N CI A L ST A T EM ENT S
30 JUNE 2015
Provisions
Provisions are recognised when the Consolidated Entity has a present obligation (legal or constructive) as a result of a past
event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a
reliable estimate can be made of the amount of the obligation. Where the Consolidated Entity expects some or all of a
provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset
but only when the reimbursement is virtually certain. The expense relating to any provision is presented in profit or loss net
of any reimbursement.
If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows
at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks
specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a
finance cost.
Employee entitlements
Liabilities for wages and salaries, including non-monetary benefits, annual leave, and any other employee entitlements
expected to be settled within twelve months of the reporting date are measured at their nominal amounts based on
remuneration rates which are expected to be paid when the liability is settled.
Employee entitlements expenses and revenues arising in respect of wages and salaries, non-monetary benefits, annual leave,
long service leave, sick leave and other entitlements are charged against profits on a net basis.
Contributions are made to employee superannuation plans and are charged as expenses when incurred.
Issued capital
Issued and paid up capital is recognised at the fair value of the consideration received by the Company. Any transaction costs
arising on the issue of ordinary shares are recognised directly in equity as a reduction of the share proceeds received.
Revenue Recognition
Revenues are recognised at fair value of the consideration received net of the amount of goods and services tax (GST)
payable to the taxation authority. Exchanges of goods or services of the same nature and value without any cash
consideration are not recognised as revenues.
Revenue from education and training services is recognised by reference to the stage of completion method, based on actual
service provided as a proportion of total services to be provided. This is measured with reference to the number of units
completed as a proportion of the total numbers units to complete the course.
Interest revenue
Interest revenue is recognised as it accrues, taking into account the effective yield on the financial asset.
Income tax
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered
from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted
or substantively enacted at the reporting date.
Deferred income tax is provided on all temporary differences in the statement of financial position between the tax bases of
assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax is recognised for all taxable
temporary differences, except where the deferred tax arises from the initial recognition of an asset or liability in a transaction
that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit
or loss.
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and
unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible
temporary differences, and the carry-forward of unused tax assets and unused tax losses can be utilised.
28
ICOLLEGE LIMITED
NOTES TO T H E FIN A N CI A L ST A T EM ENT S
30 JUNE 2015
(vi)
Summary of Significant Accounting Policies - continued
The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no
longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be
utilised. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when
the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively
enacted at the reporting date.
Unrecognised deferred income tax assets are reassessed at each reporting date and are recognised to the extent that it has
become probable that future taxable profit will allow the deferred tax asset to be recovered.
Income taxes relating to items recognised directly in equity are recognised in equity and not in profit or loss.
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets
against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same
taxation authority.
Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not
recoverable from the taxation authority. In these circumstances the GST is recognised as part of the cost of acquisition of the
asset or as part of an item of the expense as applicable.
Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable
to, the taxation authority is included as part of receivables or payables in the statement of financial position.
Cash flows are included in Statements of Cash Flows on a gross basis. The GST components of cash flows arising from
investing and financing activities that are recoverable from, or payable to, the taxation authority are classified as operating
cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation
authority.
Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision
maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the
operating segments, has been identified as the Board of Directors that makes strategic decisions.
Earnings per share
Basic earnings per share is calculated as net profit attributable to members of the parent, adjusted to exclude any costs of
servicing equity (other than dividends) and preference share dividends, divided by the weighted average number of ordinary
shares, adjusted for any bonus element.
Diluted earnings per share is calculated as net profit attributable to the Consolidated Entity, adjusted for:
·
·
·
costs of servicing equity (other than dividends) and preference share dividends;
the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been
recognised as expenses; and
other non-discretionary changes in revenues or expenses during the year that would result from the dilution of
potential ordinary shares; divided by the weighted average number of ordinary shares and dilutive potential
ordinary shares, adjusted for any bonus element.
29
ICOLLEGE LIMITED
NOTES TO T H E FIN A N CI A L ST A T EM ENT S
30 JUNE 2015
(vi)
Summary of Significant Accounting Policies - continued
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 current when: it is expected to be realised or intended to be sold or consumed in normal operating cycle; it is held
primarily for the purpose of trading; it is expected to be realised within twelve 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 twelve months
after the reporting period. All other assets are classified as non-current.
Leases
The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and
requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets
and the arrangement conveys a right to use the asset.
A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially all the risks
and benefits incidental to ownership of leased assets, and operating leases, under which the lessor effectively retains
substantially all such risks and benefits.
Finance leases are capitalised. A lease asset and liability are established at the fair value of the leased assets, or if lower, the
present value of minimum lease payments. Lease payments are allocated between the principal component of the lease
liability and the finance costs, so as to achieve a constant rate of interest on the remaining balance of the liability.
Leased assets acquired under a finance lease are depreciated over the asset's useful life or over the shorter of the asset's
useful life and the lease term if there is no reasonable certainty that the consolidated entity will obtain ownership at the end
of the lease term.
Fair value of assets and liabilities
The Group measures some of its assets and liabilities at fair value, on either a recurring or non-recurring basis, depending on
the requirements of the applicable Accounting Standard.
Fair value is the price the Group would receive to sell an asset or would have to pay to transfer a liability in an orderly (ie
unforced) transaction between independent, knowledgeable and willing market participants at the measurement date.
To the extent possible, market information is extracted from either the principal market for the asset or liability (ie the
market with the greatest volume and level of activity for the asset or liability) or, in the absence of such a market, the most
advantageous market available to the entity at the end of the reporting period (ie the market that maximises the receipts
from the sale of the asset or minimises the payments made to transfer the liability, after taking into account transaction costs
and transport costs).
For non-financial assets, the fair value measurement also takes into account a market participant's ability to use the asset in
its highest and best use or to sell it to another market participant that would use the asset in its highest and best use.
The fair value of liabilities and the entity's own equity instruments (excluding those related to share-based payment
arrangements) may be valued, where there is no observable market price in relation to the transfer of such financial
instruments, by reference to observable market information where such instruments are held as assets. Where this
information is not available, other valuation techniques are adopted and, where significant, are detailed in the respective
note to the financial statement
Valuation techniques
In the absence of an active market for an identical asset or liability, the Group selects and uses one or more valuation
techniques to measure the fair value of the asset or liability, The Group selects a valuation technique that is appropriate in
the circumstances and for which sufficient data is available to measure fair value. The availability of sufficient and relevant
data primarily depends on the specific characteristics of the asset or liability being measured. The valuation techniques
selected by the Group are consistent with one or more of the following valuation approaches:
30
ICOLLEGE LIMITED
NOTES TO T H E FIN A N CI A L ST A T EM ENT S
30 JUNE 2015
(vi)
Summary of Significant Accounting Policies - continued
· Market approach: valuation techniques that use prices and other relevant information generated by market
·
·
transactions for identical or similar assets or liabilities.
Income approach: valuation techniques that convert estimated future cash flows or income and expenses into a
single discounted present value.
Cost approach: valuation techniques that reflect the current replacement cost of an asset at its current service
capacity.
Each valuation technique requires inputs that reflect the assumptions that buyers and sellers would use when pricing the
asset or liability, including assumptions about risks. When selecting a valuation technique, the Group gives priority to those
techniques that maximise the use of observable inputs and minimise the use of unobservable inputs. Inputs that are
developed using market data (such as publicly available information on actual transactions) and reflect the assumptions that
buyers and sellers would generally use when pricing the asset or liability are considered observable, whereas inputs for which
market data is not available and therefore are developed using the best information available about such assumptions are
considered unobservable.
Fair value hierarchy
AASB 13 requires the disclosure of fair value information by level of the fair value hierarchy, which categorises fair value
measurements into one of three possible levels based on the lowest level that an input that is significant to the
measurement can be categorised into as follows:
·
·
·
Level 1
Measurements based on quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity
can access at the measurement date.
Measurements based on inputs other than quoted prices included in Level 1 that are observable for the asset or
liability, either directly or indirectly.
Level 2
Measurements based on inputs other than quoted prices included in Level 1 that are observable for the asset or
liability, either directly or indirectly.
Level 3
Measurements based on unobservable inputs for the asset or liability.
The fair values of assets and liabilities that are not traded in an active market are determined using one or more valuation
techniques. These valuation techniques maximise, to the extent possible, the use of observable market data. If all significant
inputs required to measure fair value are observable, the asset or liability is included in Level 2. If one or more significant
inputs are not based on observable market data, the asset or liability is included in Level 3.
The Group would change the categorisation within the fair value hierarchy only in the following circumstances:
if a market that was previously considered active (Level 1) became inactive (Level 2 or Level 3) or vice versa; or
(i)
(ii) if significant inputs that were previously unobservable (Level 3) became observable (Level 2) or vice versa
When a change in the categorisation occurs, the Group recognises transfers between levels of the fair value hierarchy (i.e.
transfers into and out of each level of the fair value hierarchy) on the date the event or change in circumstances occurred.
Rounding of amounts
The Consolidated entity has not applied Class Order 98/100, issued by the Australian Securities and Investments Commission,
relating to 'rounding-off'. Amounts in this report have been rounded off to the nearest dollar.
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the consolidated entity only.
Supplementary information about the parent entity is disclosed in note 21.
31
ICOLLEGE LIMITED
NOTES TO T H E FIN A N CI A L ST A T EM ENT S
30 JUNE 2015
2.
INCOME TAX
The reconciliation between tax expense and the product of accounting profit/(loss) before income tax multiplied by the
Consolidated Entity’s applicable income tax rate is as follows:
(a) Income tax expense/(benefit)
Current tax
Deferred tax
(b) Reconciliation of income tax expense/(benefit) to prima facie tax
payable
Loss from ordinary activities before income tax
The prima facie tax payable on profit from ordinary activities before
income tax is reconciled to the income tax expense as follows:
Prima facie tax on operating profit at 30%
Add / (Less)
Tax effect of:
Share based payments
Entertainment
Other non-deductible expenses
Non assessable income
Deferred tax assets relating to tax losses not recognised
Other temporary differences not recognised
30 June 2015
$
-
-
-
30 June 2014
$
-
-
-
(2,257,894)
(747,917)
(677,368)
(224,375)
49,000
-
2,295
(46,885)
699,672
(26,714)
-
-
-
366,885
(142,510)
Income tax attributable to operating profit
-
-
The applicable weighted average effective tax rates are as follows:
Balance of franking account at year end
(c) Deferred tax assets
Tax Losses
Provisions & accruals
Capital raising costs
Other
Set-off deferred tax liabilities
Net deferred tax assets
Less deferred tax assets not recognised
Net tax assets
nil%
nil%
nil
nil
843,812
17,508
85,808
-
947,128
-
947,128
(947,128)
144,139
12,052
115,074
-
271,266
-
271,266
(271,266)
-
-
32
ICOLLEGE LIMITED
NOTES TO T H E FIN A N CI A L ST A T EM ENT S
30 JUNE 2015
2.
INCOME TAX - continued
(d) Deferred tax liabilities
Arising on recognition of separately identifiable intangible assets as part of
the business combination (Note 5)
Set-off deferred tax assets
Net deferred tax liabilities
(e) Tax losses
30 June 2015
$
30 June 2014
$
1,319,433
1,319,433
-
1,319,433
-
-
-
-
Unused tax losses for which no deferred tax asset has been recognised
2,812,707
5,472,663
Tax losses of $3,858,639 were derecognised during the current year, as a result of an assessment of the availability of
prior period tax losses. From the assessment performed, tax losses prior to the acquisition of iCollege Pty Ltd were
deemed to no longer be available and were derecognised
Potential deferred tax assets attributable to tax losses and temporary differences carried forward have not been
brought to account at 30 June 2015 because the directors do not believe it is appropriate to regard realisation of the
deferred tax assets as probable at this point in time. As the company is not a tax consolidated entity, deferred tax
assets can not be offset against the deferred tax liabilities that have arisen on the acquisition of entities during the
2015 financial year. Future tax benefits will only be obtained if:
i. the company derives future assessable income of a nature and of an amount sufficient to enable the benefit from
the deductions for the loss and temporary differences to be realised;
ii. the company continues to comply with conditions for deductibility imposed by law; and
iii. no changes in tax legislation adversely affect the company in realising the benefit from the deductions for the loss
and exploration expenditure.
3.
REVENUE
Course income
Franchise income
Other revenue
4.
IMPAIRMENT OF ASSETS
Plant and equipment
Intangible assets
5.
BUSINESS COMBINATIONS
30 June 2015
$
508,952
114,684
3,510
627,146
30 June 2014
$
-
-
3,000
3,000
30 June 2015
30 June 2014
$
1,511
-
1,511
$
20,150
43,358
63,508
Effective 9 December 2014, the Company acquired 100% of the issued shares of the Bookkeeping School Pty Ltd. The total
cost of the acquisition was $115,000 and comprised of a cash payment of $115,000.
The initial accounting for the acquisition of Bookkeeping School Pty Ltd has only been provisionally determined at the end of
the reporting period. At the date of these consolidated financial statements, the necessary identification and fair value
assessment of the separately identifiable intangible assets acquired have not been finalised and they have therefore only
been provisionally determined and grouped together as an intangible asset.
33
ICOLLEGE LIMITED
NOTES TO T H E FIN A N CI A L ST A T EM ENT S
30 JUNE 2015
5.
BUSINESS COMBINATIONS - continued
The fair value of the identifiable assets and liabilities of the Bookkeeping School Pty Ltd as at the date of acquisition was:
Cash payment
Value of assets acquired
Cash
Intangible Assets
Trade creditors
Other creditors
Deferred tax liability
Fair value of net assets acquired
9 December 2014
$
115,000
86
150,215
(416)
(220)
(34,665)
115,000
The contribution of the Bookkeeping School Pty Ltd to the consolidated entity’s loss was a loss of $42,741.
Effective 1 April 2015, the Company acquired 100% of the issued shares of Mathisi Pty Ltd. The total cost of the acquisition
was $550,000.
The initial accounting for the acquisition of Mathisi Pty Ltd has only been provisionally determined at the end of the reporting
period. At the date of these consolidated financial statements, the necessary identification and fair value assessment of the
separately identifiable intangible assets acquired have not been finalised and they have therefore only been provisionally
determined and grouped together as an intangible asset.
The fair value of the identifiable assets and liabilities of Mathisi Pty Ltd as at the date of acquisition was:
Cash payment
Less: Loan extinguished
Total Consideration
Value of assets acquired
Cash
GST Receivable
Other
Intangible Assets
Income tax payable
Deferred tax liability
Fair value of net assets acquired
The contribution of Mathisi Pty Ltd to the consolidated entity’s loss was a loss of $12,575.
1 April 2015
$
550,000
(66,300)
483,700
18
81,879
241
714,687
(148,197)
(164,928)
483,700
34
ICOLLEGE LIMITED
NOTES TO T H E FIN A N CI A L ST A T EM ENT S
30 JUNE 2015
5.
BUSINESS COMBINATIONS - continued
Effective 1 April 2015, the Company acquired 100% of the issued shares of Management Institute of Australia Pty Ltd and its
associated entities (refer Note 10 for further details). The upfront acquisition payment was $2,000,000 of which 50% was
paid in cash and 50% paid in fully paid shares. A further $1,500,000 is payable in cash on 23 December 2015.
The initial accounting for the acquisition of Management Institute of Australia Pty Ltd has only been provisionally determined
at the end of the reporting period. At the date of these consolidated financial statements, the necessary identification and
fair value assessment of the separately identifiable intangible assets acquired have not been finalised and they have
therefore only been provisionally determined and grouped together as an intangible asset.
The fair value of the identifiable assets and liabilities of Management Institute of Australia Pty Ltd and its associated entities
as at the date of acquisition was:
Cash payment
Fair value of shares issued
Cash payment on 23 December 2015
Total Consideration
Value of assets acquired
Receivables
GST Receivable
Other
Office equipment
Intangible Assets
Trade creditors
Sundry creditors
Income tax payable
Deferred tax liability
Fair value of net assets acquired
1 April 2015
$
1,000,000
1,000,000
1,500,000
3,500,000
139,568
15,898
2,821
7,958
4,852,641
(9,479)
(650)
(388,917)
(1,119,840)
3,500,000
The contribution of Management Institute of Australia Pty Ltd and its associated entities to the consolidated entity’s loss was
a loss of $126,932.
Net cash outflow on acquisition of subsidiaries
Consideration paid in cash
Less: cash and cash equivalent balances acquired
1 April 2015
$
(1,598,700)
104
(1,598,596)
35
ICOLLEGE LIMITED
NOTES TO T H E FIN A N CI A L ST A T EM ENT S
30 JUNE 2015
6.
EARNINGS PER SHARE
Basic profit/(loss) per share
30 June 2015
30 June 2014
Cents
(3.81)
Cents
(2.53)
The following reflects the earnings used in basic and diluted earnings per share computations:
a)
Earnings used in calculating earnings per share
Basic Earnings per share:
Total comprehensive profit/(loss) after income tax
attributable to members of iCollege Limited
b) Weighted average number of shares
Weighted average number of ordinary shares for basic
earnings per share
7.
TRADE AND OTHER RECEIVABLES
Current
Trade receivables
GST receivable
Total current receivables
30 June 2015
$
30 June 2015
$
2,257,894
747,917
30 June 2015
59,335,608
30 June 2014
29,514,489
30 June 2015
$
30 June 2014
$
243,918
138,154
382,072
-
84,931
84,931
Fair Value and Risk Exposures:
(i) Due to the short term nature of these receivables, their carrying value is assumed to approximate their fair value.
(ii) The maximum exposure to credit risk is the fair value of receivables. Collateral is not held as security.
(iii) Details regarding interest rate risk exposure are disclosed in Note 19.
(iv) Other receivables generally have repayments within 30 days.
Trade receivables disclosed above include amounts (see below for aged analysis) that are past due at the end of the reporting
period for which the Group has not recognised an allowance for doubtful debts because there has not been a significant change
in credit quality and the amounts are still considered receivable.
Age of receivables that are past due but not impaired
60-90 days
90-180 days
180+ days
Total
Average age (days)
30 June 2015
$
30 June 2014
$
28,153
50,591
31,923
110,667
113
-
-
-
-
36
ICOLLEGE LIMITED
NOTES TO T H E FIN A N CI A L ST A T EM ENT S
30 JUNE 2015
8.
PROPERTY, PLANT & EQUIPMENT
Office equipment
Opening balance
Additions
Depreciation
Assets Acquired
Total office equipment
Computer equipment
Opening balance
Additions
Disposals
Depreciation
Total computer software
Total Property, Plant & Equipment
9.
INTANGIBLE ASSETS
Intangible Assets – Provisionally Accounted for (i)
Opening balance
Additions
Acquired on acquisition of subsidiary (refer to note 5)
Accumulated amortisation
Impairment charges
Net carrying amount
iCollege Platform Development Expenditure (ii)
Opening balance
Additions
Acquired on acquisition of subsidiary (refer to note 5)
Accumulated amortisation
Impairment charges
Net carrying amount
Total Intangibles
30 June 2015
$
30 June 2014
$
17,900
10,109
(1,343)
8,554
35,221
56,507
29,263
(33,307)
(2,426)
50,037
85,257
-
18,910
(1,010)
-
17,900
-
74,606
-
(18,099)
56,507
74,407
30 June 2015
30 June 2014
$
$
-
-
5,717,543
-
-
5,717,543
2,781,465
754,525
-
-
-
3,535,990
9,253,533
-
-
-
-
-
-
32,947
292,615
2,504,579
(5,318)
(43,358)
2,781,465
2,781,465
(i)
(ii)
Intangible assets provisionally accounted for relate to business combinations which have taken place in the year,
refer note 5 for further details. At this point in time due to the proximity of the date of acquisition to the reporting
date, the Directors believe the value attributed to these intangible assets is appropriate due to the arm’s length
nature of the business combination transaction.
The iCollege Platform Development Expenditure relates to the online learning platform being developed and is
expected to be commercially operational during the 2016 financial year. The asset is expected to have a finite life
of between 5-10 years.
At this point in time the online learning platform is still in the development stage and has been assessed by the
directors to have no indication of impairment, based on the current progress of the development of the online
learning platform being in line with the directors expectations, ability of the company to continue to provide
funding to finalise the development and expected future economic benefits to be generated.
37
ICOLLEGE LIMITED
NOTES TO T H E FIN A N CI A L ST A T EM ENT S
30 JUNE 2015
10.
CONTROLLED ENTITIES
Name of subsidiary
Principal Activity
Place of
incorporation and
operation
Proportion of ownership interest
held by the Group
30 June 2015
30 June 2014
iCollege Holdings Pty Ltd
Bookkeeping School Pty Ltd
Mathisi Pty Ltd
Management Institute of Australia
Pty Ltd
Management Institute of Australia
No.1 Pty Ltd*
Management Institute of Australia
No. 2 Pty Ltd*
MIA Franchise Operations Pty Ltd*
Easy RPL No.1 Pty Ltd*
Education
Educational Services
Educational Services
Educational Services
Western Australia
Queensland
Queensland
New South Wales
Educational Services
New South Wales
Educational Services
New South Wales
Educational Services
Educational Services
New South Wales
New South Wales
100%
100%
100%
100%
100%
100%
100%
100%
*these company’s were all acquired at the same time when Management Institute of Australia Pty Ltd was acquired.
100%
-
-
-
-
-
-
-
11.
TRADE AND OTHER PAYABLES
Current
Trade payables
Sundry payables and accrued expenses
Accrued interest on convertible notes
Consideration payable (Note 5)
Total current payables
Fair Value and Risk Exposures
(i) Due to the short term nature of these payables, their carrying value is
assumed to approximate their fair value.
(ii) Trade and other payables are unsecured and usually paid within 30 days
of recognition.
(iii) All amounts are expected to be settled within 12 months.
30 June 2015
30 June 2014
$
276,189
96,555
27,871
1,500,000
1,900,615
$
134,153
55,796
-
-
189,949
38
ICOLLEGE LIMITED
NOTES TO T H E FIN A N CI A L ST A T EM ENT S
30 JUNE 2015
12.
CONVERTIBLE NOTES
Current
Convertible notes
30 June 2015
30 June 2014
$
1,300,000
1,300,000
$
-
-
Terms and conditions of the convertible notes
· Maturity 1 years post issue date
·
·
Coupon: 12% pa, payable quarterly in arrears
Conversion: The loanholder may convert the loan into ordinary shares of ASX.ICT at any time during the conversion
period at the conversion exercise price
Conversion period: The period commencing 10 days after the Issue Date and ending 10 business days prior to the
maturity date. The Issuer to advise the Loanholder within 30 days of maturity
Conversion Reference Price: 15 cents
·
·
13.
CURRENT TAX LIABILITIES
Current
Provision for income tax (refer to note 5)
14.
SHORT-TERM PROVISIONS
Current
Provision for annual leave
15.
DEFERRED TAX LIABILITIES
Non-Current
Deferred tax liability (Note 5)
30 June 2015
30 June 2014
$
515,968
515,968
$
-
-
30 June 2015
30 June 2014
$
17,302
17,302
$
-
-
30 June 2015
30 June 2014
$
1,319,433
1,319,433
$
-
-
39
ICOLLEGE LIMITED
NOTES TO T H E FIN A N CI A L ST A T EM ENT S
30 JUNE 2015
16.
ISSUED CAPITAL
(a)
Issued Capital
Ordinary shares fully paid
(b) Movements in Ordinary Share Capital
Number of
Shares
Summary of Movements:
56,020,846 Opening balance 1 July 2014
445 Exercise of options on 20 August 2014
2,666,668 Share placement on 24 December 2014
200,000 Shares issued in lieu of services 11 February 2015
333,333 Shares issued in lieu of services 1 April 2015
6,666,667 Shares issued to acquire subsidiary (refer Note 2)
170,000 Placement fee for convertible notes
666,667 Share placement on 13 May 2015
- Costs of capital raising
66,724,626 Closing balance at 30 June 2015
30 June 2015
30 June 2014
$
$
32,045,047
30,449,137
Issue Price
$0.20
$0.15
$0.15
$0.15
$0.15
$0.15
$0.15
-
$
30,449,137
89
400,000
30,000
50,000
1,000,000
25,500
100,000
(9,679)
32,045,047
Capital risk management
The Consolidated Entity’s objectives when managing capital are 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.
In order to maintain or adjust the capital structure, the Consolidated Entity may adjust the amount of dividends paid to
shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. There are no plans to distribute
dividends in the next year.
The Consolidated Entity’s capital includes ordinary shares capital and financial liabilities, supported by financial assets. The
Consolidated Entity’s working capital deficiency as at 30 June 2015, being current assets less current liabilities is $3,076,285
(2014: $2,410,316 asset). There are no externally imposed capital requirements.
17.
RESERVES
Options Reserve
30 June 2015
$
30 June 2014
$
1,017,497
1,017,497
678,630
678,630
40
ICOLLEGE LIMITED
NOTES TO T H E FIN A N CI A L ST A T EM ENT S
30 JUNE 2015
17.
RESERVES - continued
The options reserve is used to recognise the grant date fair value of options issued but not exercised.
The following securities were issued as share based payments during the year:
Listed options exercisable at $0.20 each on or before 24 July
2017 issued as placement fee for on sale of small holdings of
shares on 24 December 2014
Listed options exercisable at $0.20 each on or before 24 July
2017 issued as placement fee for issue to sophisticated
investors on 24 December 2014
Listed options exercisable at $0.20 each on or before 24 July
2017 issued as placement fee for issue of convertible notes
on 13 May 2015
Value per
Share/Option
Number
Value
$
0.05
1,000,000
50,000
0.05
1,666,667
83,333
0.04
750,000
30,000
163,333
The options were valued at the market price on the ASX on the date of issue.
18.
STATEMENT OF CASH FLOW INFORMATION
(a) Cash and cash equivalents
Cash at bank and in hand
(b) Reconciliation of profit/(loss) after tax to the net cash flows used in operations
Profit/(loss) after income tax
Non-Cash Items:
Depreciation
Amortisation
Impairment of assets
Share based payments - shares
Share based payments - options
Change in assets and liabilities:
(Increase)/decrease in receivables
Increase/(decrease) in payables
Increase/(decrease) in accrued interest
Increase/(decrease) in employee provision
Increase/(decrease) in income tax provision
30 June 2015
$
30 June 2014
$
271,847
271,847
2,515,334
2,515,334
(2,257,894)
(747,917)
3,769
-
1,511
105,500
163,333
(70,656)
158,664
27,871
17,302
(6,146)
21,690
1,657
63,508
-
-
(25,099)
(124,035)
-
-
-
Net cash flows (used in)/provided by operating activities
(1,856,746)
(810,196)
41
ICOLLEGE LIMITED
NOTES TO T H E FIN A N CI A L ST A T EM ENT S
30 JUNE 2015
18.
STATEMENT OF CASH FLOW INFORMATION - continued
Non-cash investing and financing activity
On 1 April 2015 the Consolidated Entity completed the acquisition of Management Institute of Australia Pty Ltd and its
associated entities. The total cost of the acquisition was $2,000,000 of which 50% was paid in cash and 50% paid in fully
paid shares. The issue of shares is not reflected in the Statement of Cash Flows. Refer to note 5 for details of acquisition.
19.
SEGMENT INFORMATION
Identification of reportable segments
The Group has identified its operating segments based on the internal reports that are reviewed and used by the Board of
Directors (chief operating decision makers) in assessing performance and determining the allocation of resources.
The Group is managed primarily on the basis of business category and geographical areas. Operating segments are therefore
determined on the same basis.
Reportable segments disclosed are based on aggregating operating segments where the segments are considered to have
similar economic characteristics.
Accounting policies adopted
Unless stated otherwise, all amounts reported to the Board of Directors as the chief decision maker with respect to operating
segments are determined in accordance with accounting policies that are consistent to those adopted in the annual financial
statements of the Group.
Segment assets
Where an asset is used across multiple segments, the asset is allocated proportionately to the applicable segments based on
its use. In the majority of instances, segment assets are clearly identifiable on the basis of their nature and physical location.
Unless indicated otherwise in the segment assets note, deferred tax assets and intangible assets have not been allocated to
operating segments.
Segment liabilities
Liabilities are allocated to segments where there is direct nexus between the incurrence of the liability and the operations of
the segment. Borrowings and tax liabilities are generally considered to relate to the Group as a whole and are not allocated.
Segment liabilities include trade and other payables.
The group has identified its operating segments based on the internal reports that are reviewed and used by the board of
directors (chief operating decision makers) in assessing performance and determining the allocation of resources.
Description of Operating Segments
Financing
iCollege Limited is the head office of the Group and conducts all corporate activities in relation to the Group. This includes
capital raisings which is used to provide funding for acquisitions and working capital.
Research and Development
iCollege Holdings Pty Ltd conducts all activities in relation to development of the iCollege education platform.
Education Services
This is the operational segment of the Group which contains the education services businesses as listed in Note 10.
42
ICOLLEGE LIMITED
NOTES TO T H E FIN A N CI A L ST A T EM ENT S
30 JUNE 2015
19.
SEGMENT INFORMATION - continued
Information about Reportable Segments
2015
Segment Income
Revenue from customers
Finance income
Other income
Total income
Segment Expenses
Cost of goods sold
Finance costs
Depreciation and amortisation
Net other costs
Total Expenses
Segment Loss before income tax
Segment Assets and Liabilities
Reportable segment assets
Reportable segment liabilities
Net assets
Geographical Segments
Financing
$
Research &
Development
$
Education
Services
$
Consolidated
$
-
46,379
-
46,379
-
(53,371)
(976)
(1,439,393)
(1,493,740)
(1,447,361)
182,658
(2,994,455)
(2,811,797)
-
-
156,284
156,284
-
-
(2,793)
(779,604)
(782,397)
(626,113)
627,146
-
-
627,146
(294,457)
-
(8,763)
(508,346)
(811,566)
(184,420)
1,264,461
(73,082)
1,191,379
8,549,270
(1,985,781)
6,563,489
627,146
46,379
156,284
829,809
(294,457)
(53,371)
(12,532)
(2,727,343)
(3,087,703)
(2,257,894)
9,996,389
(5,053,318)
4,943,071
The Consolidated Entity is domiciled in Australia and all revenue from external parties is generated in Australia.
2014
Management determined the operating segments based on the reports reviewed by the Board of Directors that are used to
make strategic decisions. The Consolidated Entity does not have any operating segments with discrete financial information.
The Consolidated Entity does not have any customers at this stage, and all the Consolidated Entity’s assets and liabilities are
located within Australia. The Board of Directors review internal management reports that are consistent with the
information provided in the statement of profit or loss and other comprehensive income, statement of financial position and
statement of cash flows. As a result no reconciliation is required because the information as presented is what is used by the
Board to make strategic decisions.
20.
COMMITMENTS AND CONTINGENT LIABILITIES
Mr Victor Hawkins, Director, is a beneficiary of the Performa Trust. The Company has entered into an exclusive Licence
Agreement with Performa Capital Pty Ltd (as trustee of the Performa Trust) to exploit the Cloud Infrastructure, Cloud
Platform and associated Intellectual Property for the purpose of providing online education and professional development
courses to end users. An annual fee of $10,000 plus GST per month is payable up to a total of $250,000 plus GST. At year
end 30 June, $80,000 plus GST is payable within one year.
43
ICOLLEGE LIMITED
NOTES TO T H E FIN A N CI A L ST A T EM ENT S
30 JUNE 2015
20.
COMMITMENTS AND CONTINGENT LIABILITIES - continued
The Company has issued 10,000,002 Performance Shares in accordance with the acquisition of iCollege Holdings Pty Ltd
which were issued to Victor Hawkins and Philip Re indirectly who hold 7,500,000 and 2,916,667 Performance Shares
respectively. The Performance Shares will convert into ordinary shares when the following performance hurdles are
achieved:
(i) gross revenue reaches $1M for any continuous period of 12 months within a period of 2 years from 17 April 2014
being the date of issue then 1/3 will convert into ordinary shares;
(ii) EBITDA reaches $500,000 for any continuous period of 12 months within a period of 2 years from 17 April 2014
being the date of issue then 1/3 will convert into ordinary shares;
(iii) EBITDA reaches $2.5M for any continuous period of 12 months within a period of 3 years 17 April 2014 being the
date of issue then 1/3 will convert into ordinary shares.
During the year, the company acquired Management Institute of Australia and its associated entities. The terms of the
acquisition of MIA are:
Total purchase price of AUD $10m to be paid as follows:
(i) $1m cash upon completion plus $1m in shares (at an issue price of $0.15). This has been paid;
(ii) Deferred consideration of $8M to be paid as follows:
(a) MIA reaching an EBIT of $2,000,000 for the financial year ending 30 June 2015, a payment of $500k
in cash;
(b) Payment of $1.5m cash on 23 December 2015;
(c) MIA reaching an EBIT of $4,000,000 for the financial year ending 30 June 2016, a payment of $1.25m
cash and $1.25m in ICT Shares (calculated as a VWAP of ICT shares for the 21 days preceding issue);
(d) MIA reaching an EBIT of $6,000,000 for the financial year ending 30 June 2017, a payment of $1.75m
cash and $1.75m in ICT Shares (calculated as a VWAP of ICT shares for the 21 days preceding issue);
(e) the CEO remaining with the company and signing an employment agreement until 2017.
The issue of the consideration shares will be subject to shareholder approval at the time these hurdles are met. If
shareholder approval is not granted, settlement will occur by way of cash.
During the year, the company acquired Mathisi Pty Ltd (“Mathisi”). The terms of the acquisition of Mathisi are:
Total purchase price of AUD $750,000 to be paid as follows:
(i) $550,000 cash at settlement. This has been paid; and
(ii) Deferred consideration of $200,000 to be paid as follows:
(a) Mathisi reaching a minimum EBIT of $850,000 during the financial year ending 30 June 2015;
(b) where the Company’s EBIT during the financial year ending 30 June 2015 is less than $850,000 the
deferred consideration will be reduced proportionally.
Apart from the above there are no other commitments or contingent assets/liabilities as at 30 June 2015.
44
ICOLLEGE LIMITED
NOTES TO T H E FIN A N CI A L ST A T EM ENT S
30 JUNE 2015
21.
RELATED PARTY TRANSACTIONS
(a) Key Management Personnel Compensation
Short-term benefits
Post employment benefits
Other long-term benefits
Termination benefits
Share-based payments
2015
$
2014
$
486,625
108,331
-
-
-
-
-
-
-
-
486,625
108,331
(b) Other Transactions with Related Parties
Balances and transactions between the Company and its subsidiaries, which are related parties of the Company, have
been eliminated on consolidation and are not disclosed in this note. Details of transactions between the Group and
other related parties are disclosed below.
2015
Mr Hans de Back, Director, is a Director of Dutchman Capital Pte Ltd. During the year an amount of $60,000 (net of GST)
was owing for services provided as Non-Executive Chairman as per the Consultancy Agreement.
Mr Victor Hawkins, Director, is a beneficiary of the Performa Trust. During the year an amount of $30,832 (net of GST)
was owing for services provided as Managing Director as per the Consultancy Agreement between the Company and
Performa Capital Pty Ltd (as trustee for the Performa Trust).
Mr Victor Hawkins, Director, is a beneficiary of the Performa Trust. The Company has entered into an exclusive Licence
Agreement with Performa Capital Pty Ltd (as trustee of the Performa Trust) to exploit the Cloud Infrastructure, Cloud
Platform and associated Intellectual Property for the purpose of providing online education and professional
development courses to end users. During the year an amount of $110,000 (net of GST) was paid under the Licence
Agreement. Furthermore, Performa Capital Pty Ltd obtained reimbursements of costs totalling $13,363 (2014: Nil)
which included rent, photocopier, staff, phone, internet, motor vehicle and other costs.
Mr Ross Cotton, Director, is a beneficiary of the Montery Trust. During the year an amount of $13,750 (net of GST) was
owing for services provided as Executive Director as per the Consultancy Agreement between the Company and
Richmond Food Systems Pty Ltd (as trustee for the Montery Trust).
Mr Philip Re, Director, is a Director of Regency Partners. During the year an amount of $52,844 (net of GST) was paid to
this business for accounting, bookkeeping, administration and secretarial services at normal commercial rates and an
amount of $5,000 (net of GST) is owing for services provided.
Mr Ross Cotton, Director, is a Director of Richmond Food Systems Pty Ltd. Before his appointment as Director on 20
October 2014, fees of $53,500 (net of GST) were paid to this Company for consulting services at normal commercial
rates.
There were no loans outstanding to and from Key Management Personnel at year end.
45
ICOLLEGE LIMITED
NOTES TO T H E FIN A N CI A L ST A T EM ENT S
30 JUNE 2015
21.
RELATED PARTY TRANSACTIONS - continued
2014
Mr Hans de Back, Director, is a Director of Dutchman Capital Pte Ltd. During the year an amount of $6,285 (net of GST)
was owing for services provided as Non-Executive Chairman as per the Consultancy Agreement.
Mr Victor Hawkins, Director, is a beneficiary of the Performa Trust. The Company has entered into an exclusive Licence
Agreement with Performa Capital Pty Ltd (as trustee of the Performa Trust) to exploit the Cloud Infrastructure, Cloud
Platform and associated Intellectual Property for the purpose of providing online education and professional
development courses to end users. During the year an amount of $50,000 (net of GST) was paid under the Licence
Agreement.
Mr Philip Re, Director, is a Director of Regency Partners. During the year an amount of $94,500 (net of GST) was paid to
this business for accounting advice at normal commercial rates.
Mr Roger Steinepreis, Director, is a partner of Steinepreis Paganin. During the year an amount of $129,183 (net of GST)
was paid to this business for legal advice at normal commercial rates.
Mr George Ventouras, Director, is a director and shareholder of Ventouras Consulting Pty Ltd. During the year an
amount of $18,000 (net of GST) was paid to this business for work undertaken for maintenance of intellectual property
at normal commercial rates.
Mr George Ventouras, Director, was a consultant to Paragon Pearling Pty Ltd. During the year an amount of $9,000 (net
of GST) was paid to this business for work undertaken at normal commercial rates.
Mr Nick Castleden, Director, was a consultant to Cratonix Pty Ltd. During the year an amount of $24,000 (net of GST)
was paid to this business for work undertaken at normal commercial rates.
There were no loans outstanding to and from Key Management Personnel at year end.
22.
AUDITORS’ REMUNERATION
Amount received or due and receivable by the auditor or their related entities:
Audit and review of the financial statements
Bentleys Audit & Corporate (WA) Pty Ltd
BDO Audit (WA) Pty Ltd
Taxation Services
BDO Corporate Tax (WA) Pty Ltd
30 June 2015
30 June 2014
$
$
34,000
-
-
34,000
-
28,508
15,979
44,487
46
ICOLLEGE LIMITED
NOTES TO T H E FIN A N CI A L ST A T EM ENT S
30 JUNE 2015
23.
FINANCIAL RISK MANAGEMENT OBJECTIVES, POLICIES AND INSTRUMENTS
The Consolidated Entity’s principal financial instruments comprise cash and short-term deposits. The main purpose of these
financial instruments is to provide working capital for the Consolidated Entity’s operations.
The Consolidated Entity has various other financial instruments such as trade debtors and trade creditors, which arise directly
from its operations. Furthermore, the Consolidated Entity obtained funding via convertible notes during the year.
The Consolidated Entity’s financial instruments are measured at amortised cost, less any provision for non-recovery. The
carrying amount of the financial assets and liabilities approximate their fair value.
It is, and has been throughout the year under review, the Consolidated Entity’s policy that no trading in financial instruments
shall be undertaken.
The main risks arising from the Consolidated Entity’s financial instruments are interest rate risk, liquidity risk and credit risk.
The Board reviews and agrees on policies for managing each of these risks and they are summarised below.
Categories of financial instruments
Financial Assets
Cash and cash equivalents
Trade and other receivables
Financial Liabilities
Trade payables
Sundry payables and accrued expenses
Accrued interest on convertible notes
Consideration payable
Convertible notes
30 June 2015
30 June 2014
$
$
271,847
382,073
2,515,334
84,931
276,189
96,555
27,871
1,500,000
1,300,000
134,153
55,796
-
-
-
Interest Rate Risk
At reporting date the Consolidated Entity’s exposure to market risk for changes in interest rates relates primarily to the
Consolidated Entity’s short-term cash deposits. The Consolidated Entity constantly analyses its exposure to interest rates,
with consideration given to potential renewal of existing positions, the mix of fixed and variable interest rates and the period
to which deposits may be fixed.
At reporting date, the Consolidated Entity had the following financial assets exposed to variable interest rates that are not
designated in cash flow hedges:
Financial Assets:
Cash and cash equivalents
(interest-bearing accounts)
Net exposure
The weighted average rate of interest is 3.33% (2014: 1.5%)
2015
$
2014
$
271,847
271,847
2,515,334
2,515,334
47
ICOLLEGE LIMITED
NOTES TO T H E FIN A N CI A L ST A T EM ENT S
30 JUNE 2015
23.
FINANCIAL RISK MANAGEMENT OBJECTIVES, POLICIES AND INSTRUMENTS - continued
The following sensitivity analysis is based on the interest rate risk exposures in existence at the reporting date for variable
interest bearing accounts. The 0.5% sensitivity is based on reasonably possible changes, over a financial year, using an
observed range of historical LIBOR movements over the last 3 years.
At 30 June 2015, if interest rates had moved on variable interest bearing accounts, as illustrated in the table below, with all
other variables held constant, post tax profit and equity relating to financial assets of the Consolidated Entity would have
been affected as follows:
Judgements of reasonably possible movements:
Post tax profit - higher / (lower)
+ 0.5%
- 0.5%
Equity - higher / (lower)
+ 0.5%
- 0.5%
Credit Risk
2015
$
113
(113)
113
(113)
2014
$
2,096
(2,096)
2,096
(2,096)
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the
Consolidated Entity. The Consolidated Entity has adopted the policy of dealing with creditworthy counterparties and
obtaining sufficient collateral or other security where appropriate, as a means of mitigating the risk of financial loss from
defaults. The Consolidated Entity measures credit risk on a fair value basis.
The Consolidated Entity has a credit risk in relation to its cash at bank, short-term deposits and receivables. However, this
risk is minimised as the cash is deposited only with AA or greater (Moodys) rated financial institutions. The Consolidated
Entity does not have any other significant credit risk exposure to a single counterparty or any group of counterparties having
similar characteristics.
Impairment losses are recorded against receivables unless the Consolidated Entity is satisfied that no recovery of the amount
owing is possible; at that point the amount is considered irrecoverable and is written off against the financial asset directly.
Management believes the balance date risk exposures are representative of the risk exposure inherent in financial
instruments.
Liquidity Risk
The Consolidated Entity has no significant exposure to liquidity risk as there is effectively no debt. Trade payables are all
expected to be paid within 30 days and their carrying amounts are considered to equal their contractual amount. The
Consolidated Entity manages liquidity risk by monitoring immediate and forecast cash requirements and ensuring adequate
cash reserves are maintained.
48
ICOLLEGE LIMITED
NOTES TO T H E FIN A N CI A L ST A T EM ENT S
30 JUNE 2015
23.
FINANCIAL RISK MANAGEMENT OBJECTIVES, POLICIES AND INSTRUMENTS - continued
2015
Weighted Average
Effective Interest
Rate %
Less than
one month
$
1 to 3
Months
$
3 Months to
one year
$
1 to 5
Years
$
Total
$
Financial Assets
Non-interest bearing
Variable interest rate
3.33%
Financial Liabilities
Non-interest bearing
382,073
271,847
653,920
-
-
-
400,615 1,500,000
-
-
-
-
Fixed interest rate
12%
-
-
1,300,000
Net financial
assets/(liabilities)
2014
Financial Assets
Non-interest bearing
Variable interest rate
1.56%
Financial Liabilities
Non-interest bearing
Net financial assets
400,615 1,500,000
1,300,000
253,304 (1,500,000)
(1,300,000)
84,931
2,515,334
2,600,265
189,949
189,949
2,410,316
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
382,073
271,847
653,920
1,900,615
1,300,000
3,200,615
(2,546,696)
84,931
2,515,334
2,600,265
189,949
189,949
2,410,316
24.
EVENTS OCCURING AFTER REPORTING DATE
On 9 July 2015, iCollege Limited announced the appointment of Stuart Manifold as Chief Operating Officer and together with
that will acquire Apollo Healthcare Solutions Pty Ltd (“Apollo”). Apollo currently provides Nursing, Return to Work Co-
ordination and Injury Management for one of the world’s largest mining companies at a significant Queensland mine site.
The acquisition of Apollo is consistent with the iCollege strategy of acquiring businesses across a broad range of sectors that
focus on delivering quality training outcomes and staffing to our clients.
The acquisition terms are as follows:
·
·
iCollege will acquire 100% of the shares in Apollo via the issue of shares in ICT to the value of $125,000 at an
issue price of $0.15 per share.
The acquisition is subject to further due diligence and completion of formal contractual agreements.
On 19 August 2015, iCollege announced the execution of a Binding Term Sheet to acquire Celtic Training & Consultancy Pty
Ltd (‘Celtic’), a Registered Training Organisation (RTO Code: 40179) providing over 30 courses in the rapidly expanding aged
care, nursing, health and safety and community services sectors.
49
ICOLLEGE LIMITED
NOTES TO T H E FIN A N CI A L ST A T EM ENT S
30 JUNE 2015
24.
EVENTS OCCURING AFTER REPORTING DATE - continued
Acquisition Terms
1. Total Purchase Price is $2,250,000 to be paid as follows:
a) An up-front payment of $750,000 consisting of 50 per cent scrip and 50 per cent cash. The scrip portion is
payable on the date of Change of Ownership, as issued and agreed by South Australian Department of State
Development. The cash portion ($375,000) will be deferred by three months from date of Change of
Ownership issued and agreed by South Australian Department of State Development. The aforementioned
up-front payment is subject to certain conditions precedent being met by Celtic. These conditions are:
i. Reaching EBIT in-excess of $600,000 in FY15
ii. Confirmation of the same, similar or equivalent funding to be in place for 2015-2016 financial year
iii.
iv. Consideration will be released on the completion the audit of FY15 financials
integration with the iCOLLEGE e-learning platform and processes
b) A payment of $775,000, consisting of $600,000 cash and $175,000 scrip on achieving an audited EBIT of
$700,000 in FY16.
c) A further $725,000 consisting of $550,000 cash and $175,000 scrip on the basis of the the following
performance hurdles being achieved:
i. Achieving EBIT of $500,000 at the end of CY17 (Half Financial Year)(cid:850)
ii. This payment will be agreed and settled as per accounting standards accepted by the ASX and reported
in iCollege’s half year financial statements.
2. These terms will be documented in a binding Heads of Agreement (HOA) expected to be complete in the next
fourteen (14) days
3. 30 day Due Diligence period
4. Mr. David Leigh-Ewers is to continue employment with the business for a period of 18 months on the following
terms on a salary package of $150,000 (including superannuation) plus additional performance incentives
5. For a period of three (3) months from date of change of ownership, the Vendor will retain sufficient working
capital in Celtic. This will protect iCollege’s cash position and allow for further capital investment and growth
initiatives.
iCollege obtaining shareholder approval for the issue of shares under ASX listing rules and the Corporations Act (if
required).
6.
No other matters or circumstances has arisen since 30 June 2015 that has significantly affected or may significantly affect the
operations of the Consolidated Entity, the results of those operations or the state of affairs of the Consolidated Entity, in
subsequent financial years.
50
ICOLLEGE LIMITED
NOTES TO T H E FIN A N CI A L ST A T EM ENT S
30 JUNE 2015
25.
PARENT ENTITY INFORMATION
Statement of Profit or Loss and other comprehensive income
Loss after income tax of the parent entity
Total comprehensive income of the parent entity
Statement of Financial Position
Total current assets
Total non-current assets
Total assets
Total current liabilities
Total liabilities
Issued Capital
Reserves
Accumulated losses
30 June 2015
30 June 2014
$
(1,419,220)
(1,419,220)
455,754
455,754
109,336
6,807,778
6,917,114
2,994,454
2,994,454
520,547
4,822,767
5,343,314
77,126
77,126
32,045,047
1,017,497
(29,139,884)
3,922,660
30,648,422
678,630
(26,060,864)
5,266,188
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 2015.
Commitments and Contingent liabilities
The parent entity has contingent commitments in relation to performance shares as per note 20.
Capital commitments – Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2015.
51
ICOLLEGE LIMITED
DIRECTORS’ DECLARATION
This declaration is made in accordance with a resolution of the Directors.
In the opinion of the Directors:
(a)
the financial statements and notes of the Consolidated Entity are in accordance with the
Corporations Act 2001, including:
(i) giving a true and fair view of the Consolidated Entity’s financial position at 30 June 2015 and of
its performance for the year ended on that date; and
(ii) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory
reporting requirements; and
there are reasonable grounds to believe that the Consolidated Entity will be able to pay its debts as
and when they become due and payable; and
the financial statements and notes comply with International Financial Reporting Standards as
disclosed in note 1.
(b)
(c)
This declaration has been made after receiving the declarations required to be made to the Directors in
accordance with section 295A of the Corporations Act 2001 for financial year ended 30 June 2015.
On behalf of the Board
Victor Hawkins
Managing Director
Perth, Western Australia
29 September 2015
52
We have audited the accompanying financial report of iCollege Limited (“the Company”)
and Controlled Entities (“the Consolidated Entity”), which comprises the statement of
financial position as at 30 June 2015, and the statement of profit or loss and other
comprehensive income, statement of changes in equity and statement of cash flows for
the year then ended, notes comprising a summary of significant accounting policies and
other explanatory information, and the directors’ declaration of the Consolidated Entity,
comprising the Company and the entities it controlled at the year’s end or from time to
time during the financial year.
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 Note 1, the
directors also state, in accordance with Accounting Standards AASB 101: Presentation
of Financial Statements, that the financial statements comply with International Financial
Reporting Standards.
Our responsibility is to express an opinion on the financial report based on our audit. We
conducted our audit in accordance with Australian Auditing Standards. These Auditing
Standards require that we comply with relevant ethical requirements relating to audit
engagements and plan and perform the audit to obtain reasonable assurance whether
the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial report. The procedures selected depend on the auditor’s
judgment, including the assessment of the risks of material misstatement of the financial
report, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity’s preparation of the financial report that
gives a true and fair view 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 entity’s internal control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates made by the
directors, as well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our audit opinion.
53
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.
In our opinion:
a. The financial report of iCollege Limited is in accordance with the Corporations Act 2001, including:
i.
giving a true and fair view of the Consolidated Entity’s financial position as at 30 June 2015 and of its
performance for the year ended on that date; and
ii.
complying with Australian Accounting Standards and the Corporations Regulations 2001;
b. The financial statements also comply with International Financial Reporting Standards as disclosed in
Note 1.
Without qualifying our opinion, we draw attention to Note 1(iii) in the financial report which indicates that the
Consolidated Entity incurred a loss after tax of $2,257,894 during the year ended 30 June 2015. This
condition, along with other matters as set forth in 1(iii), indicate the existence of a material uncertainty which
may cast significant doubt about the ability of the Consolidated Entity to continue as a going concern and
whether it will realise its assets and extinguish its liabilities in the normal course of business and at the
amounts stated in the financial report.
We have audited the Remuneration Report included in the directors’ report for the year ended 30 June 2015.
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.
In our opinion, the Remuneration Report of iCollege Limited for the year ended 30 June 2015, complies with
section 300A of the Corporations Act 2001.
BENTLEYS
Chartered Accountants
MARK DELAURENTIS CA
Director
Dated at Perth this 29th day of September 2015
54
ICOLLEGE LIMITED
ADDITIONAL ASX INFORMATION
Additional information required by ASX Ltd and not shown elsewhere in this report is as follows. The information is current as
at 23 September 2015.
Distribution of Securities Held
Size of Holding
1 -
1,001 -
5,001 -
10,001 -
1,000
5,000
10,000
100,000
100,000 and over
Total holders
Number of holders holding
marketable parcel
less than a
Twenty Largest Holders of Fully Paid Ordinary Shares
Fully Paid
Ordinary Shares
No. Holders
Listed Options
No. Holders
30
64
71
180
82
427
0
31
55
20
61
36
203
133
Name
Performa Capital Pty Ltd
1
2 Walker Investments (Australia) Pty Ltd
3
4
5
Frontier Capital Pte Ltd
HSBC Custody Nominees (Australia) Pty Ltd
Traditional Securities Group Pty Ltd
6 Mr Peter Arvanitis & Mrs Areti Arvanitis
7
8
9
Eyeon Investments Pty Ltd
Rivergrade Pty Ltd
Ironside Pty Ltd
10 Occasio Holdings Pty Ltd
11
Supermax Pty Ltd
12 Glamour Division Pty Ltd
13 Mr Denis Maxwell Fraser & Mrs Wendy Elena Fraser
14
15
Richmond Food Systems Pty Ltd
Seefeld Investments Pty Ltd
16 Garrido Investments Pty Ltd
17 Mr Peter Arvanitis & Mrs Areti Arvanitis
18
Fairfield Capital Pty Ltd
19 HSBC Custody Nominees (Australia) Pty Ltd >
20 Mr Paul Bernard Bastion & Mrs Belinda Louise Bastion
Number of
Shares
7,530,000
Percentage of
Issued Capital
11.25
6,666,667
3,166,666
3,066,847
2,946,667
2,932,692
2,377,400
2,083,334
1,584,254
1,250,000
1,194,424
1,050,000
1,000,000
968,881
835,834
798,281
700,000
666,667
654,819
580,001
9.96
4.73
4.58
4.40
4.38
3.55
3.11
2.37
1.87
1.78
1.57
1.49
1.45
1.25
1.19
1.05
1.00
0.98
0.87
42,053,434
62.83
55
ICOLLEGE LIMITED
ADDITIONAL ASX INFORMATION
Substantial Shareholders
An extract of the Company’s register of substantial shareholders is as follows:
Name
Performa Capital Pty Ltd
Walker Investments (Australia) Pty Ltd
Number of Fully Paid
Ordinary Shares
Number of
Listed Options
7,530,000
6,666,667
2,500,000
-
Twenty Largest Holders of Listed Options
Name
Performa Capital Pty Ltd
1
2 Mr Michael Grove & Mrs Jane Grove
3
4
5
6
Fairfield Capital Pty Ltd
First Investment Partners Pty Ltd
Eyeon Investments Pty Ltd
Lydian Enterprises Pty Ltd
6 Mr Stephen Anthony Ray
7
8
9
Rivergrade Pty Ltd
Traditional Securities Group Pty Ltd
Frontier Capital Pte Ltd
10
Ironside Pty Ltd
10 UBS Wealth Management Australia Nominees Pty Ltd
11 Walker Investments (Australia) Pty Ltd
12 Occasio Holdings Pty Ltd
13 Wimalex Pty Ltd
14 Mr David John McDougall
15 Garrido Investments Pty Ltd
15 Mr Robert Murray Raynes
15
16
17
Clapsy Pty Ltd
Seefeld Investments Pty Ltd
Richmond Food Systems Pty Ltd
18 NTJ Investments Pty Ltd
19
Seventy Three Pty Ltd
20 Mr Paul Bernard Bastion & Mrs Belinda Louise Bastion
Number of
Listed Options
2,500,000
2,390,000
2,000,001
2,000,000
1,666,667
1,000,000
1,000,000
994,445
972,223
575,000
528,085
528,085
469,528
416,667
366,668
340,000
300,000
300,000
300,000
278,612
256,936
250,000
208,334
193,334
Percentage of
Issued Capital
10.52
10.06
8.42
8.42
7.02
4.21
4.21
4.19
4.09
2.42
2.22
2.22
1.98
1.75
1.54
1.43
1.26
1.26
1.26
1.17
1.08
1.05
0.88
0.81
19,834,585
83.49
56
ICOLLEGE LIMITED
ADDITIONAL ASX INFORMATION
Unlisted Options
Number of
Options
11,666,674
3,334
2,989,994
Exercise
Price $
$0.30
$30.00
$0.20
Exercise date
31 March 2019
1 May 2017
31 December 2015
The names of option holders who hold 20% or more of each class of unlisted options are as follows:
Name
Options expiring 1 May 2017
Exercise Price $2.00
Bruce Newell
Options expiring 31 March 2019
Exercise Price $0.30
Performa Capital Pty Ltd
Number of
Options
Percentage
3,334
100%
3,750,000
32%
Performance Shares
A total of 10,000,002 performance shares are on issue. The holders are as follows:
Name
Performa Capital Pty Ltd (escrowed till 2.5.16)
Frontier Capital Pte Ltd
Traditional Securities Group Pty Ltd (escrowed till 2.5.16)
Rivergrade Pty Ltd
Number of
Performance Shares
4,500,000
2,499,999
1,750,002
1,250,001
Voting Rights
The voting rights attached to each class of equity security are as follows:
Ordinary Shares
-
Each ordinary share is entitled to one vote when a poll is called, otherwise each member present at a meeting or by
proxy has one vote on a how of hands.
Performance Shares
-
These shares have no voting rights.
Restricted securities
There are 6,666,667 fully paid ordinary shares subject to voluntary escrow on issue.
Use of Cash
During the reporting period, the use of cash has been consistent with the Company’s business objectives.
57