Lifelong Learning. Endless Possibilities. OpenLearning Limited (ASX:OLL) Annual Report 2019 For personal use only Contents Performance Highlights The OpenLearning solution Network Effect Managing Director’s Report Chairman’s Report Directors’ Report Auditor’s Independence Declaration Financial Report Consolidated statement of profit or loss 4 6 8 10 12 13 30 31 32 34 Consolidated statement of comprehensive income 33 Consolidated statement of financial position Consolidated statement of changes in equity Consolidated statement of cash flows Notes to the financial statements Directors’ declaration Independent auditor’s report Shareholder information 40 35 68 65 73 37 For personal use only A life long plan Powering the future of online education OpenLearning Limited is a Sydney-based, software-as-a- service company that provides a scalable online learning platform and learning design services to education providers; and a global marketplace of world-class micro-credentials and online degrees for learners. Built on proven learning sciences research and a social constructivist learning philosophy, OpenLearning goes beyond traditional instructivist approaches and static learning management systems to deliver authentic, active and connected learning experiences. Founded in 2012 in Sydney, OpenLearning’s vision is to improve access to quality education, promote lifelong learning, and future-proof the workforce by enabling education providers to design, deliver and sell transformative courses and degrees worldwide. OpenLearning expanded to Southeast Asia in 2015 by establishing an office in Kuala Lumpur, Malaysia, and is now the leading platform for online higher education in Southeast Asia. Today, OpenLearning employs over 45 people globally across its offices in Sydney and Kuala Lumpur, with remote team members spread across the world to serve its global client-base. OpenLearning is uniquely placed to be an education provider’s partner of choice thanks to its innovative proprietary online learning platform, depth of expertise in education, established partnerships with leading universities and organisations, and a large and growing user-base of lifelong learners. With more than 1.74 million learners worldwide, 7,900 courses and partnerships with over 62 education providers, OpenLearning is at the forefront of a new wave of education delivery. 9 1 0 2 t r o p e R l a u n n A | d e t i i m L g n i n r a e L n e p O 1 For personal use only Discover your passion, learn a new skill and change careers, online. Delivering transformative learning experiences online, worldwide. 2 For personal use only 3 For personal use only Performance Highlights Financial Highlights (all financial amounts are in AUD unless otherwise stated) 77% YoY increase in annualised recurring revenue (ARR) to $944k at the end of FY19 2.8% YoY increase in gross sales to $1.94m, while successfully transitioning to SaaS model 20.30% YoY increase in cash receipts to $2.24m 1 Annualised recurring SaaS revenue, calculated by utilising the generally accepted industry standard, which involves multiplying the monthly accrued SaaS revenue in the month at the end of the quarter by 12 (months). The ARR calculation does not take into account the future expiry of the term of any contract under which SaaS revenue is generated or any customer lost during the relevant month. 4 For personal use only Usage highlights 170%YoY increase in B2B SaaS clients to 62 at the end of FY19 29.4%YoY increase in unique registered learners to 1.74m at the end of FY19 39.8%YoY increase in enrolments to 2.54m at the end of FY19 9 1 0 2 t r o p e R l a u n n A | d e t i i m L g n i n r a e L n e p O 5 Strong cash position at end of FY19 of $7.74m For personal use only The OpenLearning Solution The OpenLearning platform has been built from the ground up on solid educational foundations since its inception. OpenLearning handles all aspects of delivering an online learning experience through its unique operating model that includes everything an education provider would need to launch an online education business: The goal is to provide a social learning environment in which students feel empowered, deep learning experiences are fostered, students are intrinsically motivated, and passionate communities of practice flourish through well-designed constructive experiences. This has been realised with the latest social technology, and is designed for a global, connected society. OpenLearning is an innovator in its field, providing a launch pad for new academic research and extending existing educational theory through advanced platform mechanics. We work with both educators and technologists in continual experiments to develop a next generation learning environment. 1. Scalable online learning platform hosted in Australia and accessible worldwide, which enables end-to-end online education delivery for university degrees, micro-credentials and vocational education and professional development to bridge skills gaps; 2. Learning services division comprised of learning designers (online learning specialists) who collaborate with subject matter experts to redesign their courses and upskill staff at education providers to create high quality online courses; and 3. Global marketplace for education where universities and education providers are able to promote their online courses or degrees to millions of learners worldwide. This approach enables OpenLearning to generate significant value for its partners across a range of use-cases and markets – solving some of the greatest challenges facing education providers: • Deliver their accredited and non-accredited courses online via its scalable cloud learning platform to domestic and international students, either fully online or blended; • Diversify their revenue streams through the delivery of university or higher education provider branded short courses and micro-credentials to bridge the skills gap for working professionals; • Diversify their sources of international students by raising their brand awareness in Southeast Asia by leveraging OpenLearning’s database of 1.74m learners; • Build a sustainable pipeline of international students by offering university foundation year programs online, offshore and in-country through partners; and, • Increase engagement of international students by offering large-scale language and enrichment courses to support students at both regional and urban higher education campuses. 6 For personal use only 1.74m+ learners 9 1 0 2 t r o p e R l a u n n A | d e t i i m L g n i n r a e L n e p O 7 For personal use only Network Effect The OpenLearning platform primarily operates on a B2B2C model, whereby education providers are utilising the platform to deliver courses to learners. Depending on the goals of the education provider and the type of courses they offer, the Company may be able to promote the education providers courses to other learners on the OpenLearning platform. This produces a network effect, which is enabled by a number of key design decisions, including: 1 Single global cloud platform whereby all education providers and learners use the same instance of the platform. 4 Learners are able to browse the marketplace and opt-in to receive information about new courses. 2 3 Strong relationship with the end-consumer by ensuring that the Company’s logo is visible on every page. 5 Profile for every user that automatically aggregates all of their evidence of learning into an online portfolio, as well as their badges, certificates and Course progress. Every user has an OpenLearning user account, regardless of whether they arrive at the OpenLearning platform through the marketplace or via an institution portal. In short, an increase in the number of education providers on the OpenLearning platform has the potential to lead to an increase in the number of Courses being delivered via the platform to both new and existing learners. This increase in Courses and learners attracts new education providers to deliver their Courses on the platform so that they can benefit from exposing their brand and Courses to the OpenLearning userbase. 8 For personal use only LEARNERS OPT-IN Student Acquisition Direct to Student (Customers promote courses to their learners) OpenLearning Marketplace (Courses promoted to existing user-base) B2B SaaS Model Corporate/Government (annual fees based on # of learners) Education Providers (annual fees based on # of learners) Industry-leading learning and capability Education Expertise 200+ courses CPD, Humanities & STEM Multi-language Universities & TVET Courses & Degrees Scalable education technology and online learning platform DIY course creation Collaboration Course delivery Learning analytics Technology Platform Certification Portfolios Badges Gamification Multi-currency Constructivist pedagogy Project-based learning 9 1 0 2 t r o p e R l a u n n A | d e t i i m L g n i n r a e L n e p O 9 For personal use only Managing Director’s Report Dear fellow shareholders, 2019 was a year of transition for OpenLearning with fundamental changes to our business model, team, and corporate structure, which have laid the foundations for further growth in 2020 and beyond. Over the course of the past 12 months, the Company completed its transition to a SaaS business model, successfully restructured its operations to invest in sales and marketing, complete its listing on the ASX, grew SaaS revenue into the Company’s largest revenue stream and raised enough capital to fully fund the Company’s growth strategy as outlined in its prospectus. As of the end of FY19, OpenLearning has had over 2.54 million enrolments from 1.74 million registered learners across 7,900 courses provided by 62 education providers, making it one of the world’s largest online education platforms. As a result of a restructure carried in Q3 19, the Company was able to reduce operational cash burn and operating costs in Q4 19. This provided a strong tailwind to the Company’s FY19 results. In FY19, the Company’s gross sales increased by 2.8% YoY to $1.94m with operating cash receipts increasing 20.30% to $2.24m. A strong result considering the Company’s change in business model to focus on SaaS and its restructure. The Company achieved a 91% YoY increase in high margin SaaS fees, which accounted for 37% of gross sales. The Company’s net cash flows used in operating activities improved to $3.87m in FY19 from $4.54m in the prior year. OpenLearning had cash at bank of $7.74m at 31 December 2019, ensuring that we are able to fully execute our growth strategy in FY20 and take advantage of the opportunities that present themselves as the world looks towards online education in the years to come. Solid growth in annualised recurring revenue and customer acquisition OpenLearning ended the year strongly, with ARR increasing by 77% YoY to $944k as a result of new B2B SaaS clients being onboarded in the quarter and an increase in usage (learners taking courses on the platform) amongst existing clients. The following charts show the growth in B2B SaaS Customers, SaaS annualised recurring revenue (ARR), cumulative unique users, and cumulative enrolments over the past seven quarters. B2B SaaS Customers 70 60 50 40 30 20 10 0 62 55 45 34 23 14 9 JUN 2018 SEP 2018 DEC 2018 MAR 2019 JUN 2019 SEP 2019 DEC 2019 SaaS ARR (AUD, ’000s) $1,000 $800 $600 $400 $200 $0 944 790 667 585 534 434 292 JUN 2018 SEP 2018 DEC 2018 MAR 2019 JUN 2019 SEP 2019 DEC 2019 Cumulative Unique Users (’000s) 2,000 Cumulative Enrolments (’000s) 3,000 1,735 1,652 1,423 1,341 1,535 1,500 1,158 1,023 1,000 5,00 0 JUN 2018 SEP 2018 DEC 2018 MAR 2019 JUN 2019 SEP 2019 DEC 2019 2,500 2,000 1,500 1,000 500 0 2,401 2,540 2,273 2,120 1,817 1,435 1,573 JUN 2018 SEP 2018 DEC 2018 MAR 2019 JUN 2019 SEP 2019 DEC 2019 Images 1 – 4: B2B SaaS Customers, SaaS ARR, Cumulative Unique Users, and Cumulative Enrolments Growth, June 2018 – December 2019 10 For personal use only OpenLearning ended FY19 with a strong and advanced pipeline of potential clients in Australia and Malaysia, and with a number of addition al clients already secured and expected to commence utilising the Company’s platform in FY20. online learning as a means of delivering both accredited and non-accredited courses in Australia, Malaysia and around the world. Successful listing on the ASX In a significant milestone for our team and shareholders, OpenLearning commenced trading on the Australian Securities Exchange (ASX) under the ticker code ‘OLL’ on December 12 following an oversubscribed Initial Public Offering (IPO). The IPO attracted significant interest, opening on November 13 and closing five days later after receiving applications from investors well in excess of the maximum raise of $8 million, including a strategic investment of $1 million from the Australian Catholic University – the first of its kind for an Australian university. The funds raised from the IPO are being utilised to accelerate sales and marketing activities to universities and other higher education providers in Australia and Malaysia. In addition, the Company is investing in initiatives to increase brand awareness, ensuring that the OpenLearning platform remains cutting edge and is able to attract education providers from outside its target markets. The IPO marks the next phase of OpenLearning’s journey and provides us with a platform to accelerate our growth. It will enable the Company to raise its profile, attract the best talent and ensure that it has the right corporate governance framework in place with the appropriate level of transparency. The support of our team, shareholders, customers and stakeholders throughout the process is a testament to the quality of the OpenLearning platform, the services that we provide and the critical importance of the problem that we’re solving. Strong sector tailwinds The Company is seeing increased demand from higher education providers to design and deliver both non- accredited and accredited courses online as a result of recent disruptions in the higher education sector due to COVID-19. Additionally, the potential impact on higher education providers’ revenue from a decline in international students and widespread campus closures has led to renewed interest from education providers in delivering their courses and degrees online, as well as diversifying their sources revenue by offering short courses and micro-credentials to working professionals. To capitalise on the opportunity, the Company has moved quickly to establish a partnership with Alibaba Cloud to ensure high speed access the OpenLearning platform in mainland China, where the majority of the international students who are unable to make it to Australia are located. The Company recently signed a SaaS and partnership agreement with High Resolves, a global not-for-profit to deliver their programs into hundreds of schools globally. While it is too early to determine the overall impact of the new dynamics we’re seeing in the market, the Company is well placed to support education providers as they explore Critical importance of higher education to the Australian economy Few industries are as critically important to Australia’s economy and our society as higher education. While technology is already transforming vast sections of our country, education providers have been slow to adapt – opting for incremental improvements as opposed to ground-breaking transformation. This dynamic is beginning to change. Students and working professionals require news skills to adapt to new ways of working, they’re demanding short courses rather than multi-year degrees. It is becoming increasing clear that higher education is moving and must move from a once-in- a-lifetime product to lifelong learning experience. The opportunity ahead of the Company is significant – in Australia, Malaysia, Southeast Asia and around the world as millions of people look to further their education online. Globally, there are only a handful of companies that are well placed to benefit from this once in a generation change and OpenLearning is leading the way. While significant change always takes time, the pace is definitely accelerating. To get us there, we have assembled a dedicated, innovative and passionate team, and an experienced and dynamic board with the right mix of skills to grow OpenLearning into Australia’s next great education technology company. Stellar team and board of directors I would like to thank my fellow directors, chairman Kevin Barry, Professor Beverley Oliver, Spiro Pappas, David Buckingham and Maya Hari for their support and expertise, and our previous directors who retired prior to the listing in December 2019, especially the Company’s former chairman and angel investor, Clive Mayhew. I’m proud to work alongside our diverse and highly regarded leadership team, including founder and CTO David Collien, Managing Director for Australia Cherie Diaz, Managing Director for Malaysia Sarveen Kandiah and CFO Huat Koh. Thank you for your support of OpenLearning. Together, I’m confident that the Company will continue to grow and generate significant returns for all our shareholders in the years to come. Kind regards Adam Brimo Managing Director and Group CEO 9 1 0 2 t r o p e R l a u n n A | d e t i i m L g n i n r a e L n e p O 11 For personal use only Chairman’s Report Dear fellow Shareholders I am delighted to present OpenLearning Limited’s (“OL”) Annual Report for the financial year ended 31 December 2019. The Company develops and operates an online education platform (OL Platform) on a software-as-a-service (SaaS) business model whose primary customers are education providers based in Australia and the South-East Asian markets. The Company successfully listed on the ASX in December 2019 raising $8 million to fund growth opportunities, reward and incentivise senior management to drive the underlying growth of the business and to further develop the OpenLearning Platform. FY19 Year Results During FY19 year, the Group restructured its operations in Australia and Malaysia to focus on growing Platform SaaS revenue by expanding its sales, marketing and customer success teams, and significantly reducing the headcount of its Services division. This change in strategy resulted in a decline in Services revenue in FY2019 as compared to FY2018 but led to strong growth in Platform SaaS and Marketplace gross sales, which grew by 91% and 108% respectively y-o-y. Gross sales for FY2019 increased by 2.8% y-o-y, despite the reduction in Services sales, due to strong growth in Platform SaaS and Marketplace sales. Statutory net loss for FY2019 increased 75.8% y-o-y to $(7,719,951) due to incurring of the following major cost elements: • operating costs to increase market share in the online education space; • costs related to rationalisation exercise; and • costs related to pre-IPO and IPO expenses There was no significant change y-o-y in the normalised loss after tax for FY2019 at $(4,398,704). Net cash flows used in operating activities improved to $(3,874,122) in FY2019 from $(4,544,548) in the prior year. Strategy The Company’s strategy is to increase high margin platform SaaS revenue by expanding its sales and marketing resources to acquire more clients from the higher education sector and increase usage of the platform by its existing clients. Historically, the majority of the Company’s revenue was derived from professional services and course sales through its marketplace, while these two divisions will continue to contribute to the Group’s revenue, the Group expects platform SaaS revenue to grow significantly faster and become the majority of the Group’s revenue over time. The Company is investing in its online sales channel and website to acquire and onboard Platform SaaS clients online and through inside sales, which will enable it to serve clients beyond its existing markets. People Our team is truly committed to bringing our business strategy to fruition. On behalf of the Board, I would like to thank each and every one of our dedicated team members for their hard work throughout the year culminating with the listing of the Company on the ASX in December 2019. Looking Ahead The world is currently facing a number of challenges due to COVID-19 and while the potential impact on the Company is not yet clear, a number of education providers have expressed an intention to expand their online education offerings and the Company is actively working with its clients to support their urgent needs. Through the work that has been performed in FY19, the Board believes the Company is well-positioned to grow and build up its position as one of the leading online education platforms in the market. Kevin Barry Chairman 12 For personal use only Directors’ Report 9 1 0 2 t r o p e R l a u n n A d e t i i m L g n i n r a e L n e p O 13 For personal use only Directors’ Report Your directors present their report on the Consolidated Entity (referred to herein as the Group) consisting of OpenLearning Limited and its controlled entities for the financial year ended 31 December 2019. Directors The following persons were directors of OpenLearning Limited during or since the end of the financial year up to the date of this report: Kevin Barry Non-Executive Chairman (appointed 30 August 2019) Adam Brimo Managing Director and Group CEO (appointed 30 August 2019) Spiro Pappas Non-Executive Director (appointed 30 August 2019) David Buckingham Non-Executive Director (appointed 9 December 2019) Professor Beverley Oliver Non-Executive Director (appointed 9 December 2019) Maya Hari Non-Executive Director (appointed 9 December 2019) Particulars of each director’s experience and qualifications are set out later in this report. Principal Activities The principal activities of the Group during the financial year were: • providing a cloud-hosted social learning platform for delivering short courses, blended learning and online degrees; • providing learning design services; and • promotion and sale of educational courses through a global marketplace. Review of operations and financial position Results for financial year 2019 (“FY2019”): • gross sales of $1,940,762, an increase of 2.8% year-on-year (“y-o-y”); • revenue of $1,602,613, a decline of (9.2)% y-o-y; • normalised loss after tax of $(4,398,704), no significant change y-o-y; • statutory loss after tax of $(7,719,951), an increase in losses of 75.8% y-o-y. Revenue from ordinary activities Revenue comprises of the following: Platform SaaS fees Marketplace sales Services sales Gross sales 2019 $ 2018 $ INC/(DEC) % 1,602,613 1,765,095 (9.2) 379,259 90.5 282,139 >100.0 722,525 585,928 632,309 1,227,101 1,940,762 1,888,499 (48.5) 2.8 Less: Sharing of revenue with course creators (338,149) (123,404) >100.0 Revenue 1,602,613 1,765,095 (9.2) 14 For personal use only Revenue for FY2019 declined by (9.2)% compared to the comparative FY2018 to $1,602,613 due to the decline in Services sales. In July 2019, the Company restructured its operations in Australia and Malaysia to focus on growing Platform SaaS revenue by expanding its sales, marketing and customer success teams, and significantly reducing the headcount of its Services division by no longer offering learning design services in Malaysia and reducing the scope of its Services division in Australia. This change in strategy resulted in a decline in Services revenue in FY2019 as compared to FY2018 but led to strong growth in Platform SaaS and Marketplace sales, which grew by 91% and 108% respectively y-o-y. Gross sales for FY2019 increased by 2.8% y-o-y, despite the reduction in Services sales, due to strong growth in Platform SaaS and Marketplace sales. Statutory net loss for FY2019 increased 75.8% y-o-y to $(7,719,951) due to incurring of the following major cost elements: • operating costs to increase market share in the online education space; • costs related to rationalisation exercise; • costs related to pre-IPO and IPO expenses. There was no significant change y-o-y in the normalised loss after tax for FY2019 at $(4,398,704). A reconciliation of statutory loss to normalised loss is appended below. Normalised loss after tax Costs incurred on rationalisation exercise Pre-IPO and related expenses IPO and related expenses Statutory loss after tax 2019 $ 2018 $ (4,398,704) (4,313,610) (250,537) (180,829) (2,889,881) (78,017) – – (7,719,951) (4,391,627) Cash and cash equivalents increased to $7,740,768 as at financial year-end due to the proceeds from the successful listing of the Company on the ASX in December 2019. Significant changes in the state of affairs The Group undertook the transactions described below during the financial year as part of a corporate reorganisation to facilitate the listing of the Company on the ASX. The Company acquired the entire issued and paid-up share capital of OLG Australia Investors Pte Ltd (“OLGAI”) from all its shareholders (“OLGAI Shareholders”) via the entry and execution of a share exchange agreement made between the OLGAI Shareholders and the Company (“OLGAI Share Exchange Agreement”). OLGAI together with a group of minority shareholders (“OLGSG Minority Shareholders”) own the entire issued and paid-up share capital of OpenLearning Global Pte Ltd (“OLGSG”). OLGSG in turn owns the entire issued and paid-up share capital in Open Learning Global Pty Ltd (“OLGAU”) and OpenLearning Global (M) Sdn Bhd (“OLGMY”). OLGAU and OLGMY are the operating subsidiaries of the Group providing a cloud-based social learning platform, learning design services and sale of education course through a global marketplace. The Company, together with the execution of the OLGAI Share Exchange Agreement, also acquired the entire issued and paid-up share capital of OLGSG via the entry and execution of a share exchange agreement made between the OLGSG Minority Shareholders and the Company (“OLGSG Share Exchange Agreement”). Pursuant to the OLGAI Share Exchange Agreement and the OLGSG Share Exchange Agreement (collectively, the “Group Share Exchange Agreements”), both the OLGAI Shareholders and the OLGSG Minority Shareholders sold and transferred all their respective shares in OLGAI and OLGSG to the Company in exchange for the Company allotting to each of the OLGAI Shareholders and OLGSG Minority Shareholders new shares in the Company representing all the issued and paid-up shares of the Company. Following the completion of the Group Share Exchange Agreements, the Company further issued shares (i) pursuant to conversion of convertible notes, (ii) to advisors and a director for services rendered and (iii) for the initial public offering of shares on the ASX. 9 1 0 2 t r o p e R l a u n n A | d e t i i m L g n i n r a e L n e p O 15 For personal use only Directors’ Report Continued Following the completion of the Group Share Exchange Agreements, the Company held the following subsidiaries as at 31 December 2019: Held by the Company OLG Australia Investors Pte Ltd OpenLearning Global Pte Ltd Held by OpenLearning Global Pte Ltd Open Learning Global Pty Ltd OpenLearning Global (M) Sdn Bhd * 63.89% held via OLG Australia Investors Pte Ltd. 2019 % 100 100* 100 100 Events after the reporting period The Company is currently reviewing and closely monitoring the Novel Coronavirus 2019 (COVID-19) situation as it unfolds, ensuring compliance and cooperation with protocols and advice as and when issued by the Government. The Directors are reviewing business operations and strategies and assessing the impact on the Group. The Group is unable to determine at this time the potential impact COVID-19 will have, noting that a number of education providers have expressed an intention to expand their on-line education offerings and the Group is actively working to support their urgent needs. Future development, prospects and business strategies Notwithstanding the potential impact that COVID-19 may have on the Group’s operations, the Group will continue its strategy to increase high margin platform SaaS revenue by expanding its sales and marketing resources to acquire more clients from the higher education sector and increase usage of the platform by its existing clients. Historically, the majority of the Group’s revenue was derived from professional services and course sales through its marketplace, while these two divisions will continue to contribute to the Group’s revenue, the Group expects platform SaaS revenue to grow significantly faster and become the majority of the Group’s revenue over time. The Group is investing in its online sales channel and website to acquire and onboard Platform SaaS clients online and through inside sales, which will enable it to serve clients beyond its existing markets. Environmental issues The Group’s operations are not regulated by any significant environmental regulations under the laws of the countries where the Group operates in. Dividends No dividends were paid or declared during or since the end of the financial year and there were no declared dividends unpaid at the date of this report. Indemnification and insurance of directors and officers During the year, the Group has paid a premium in respect of an insurance contract insuring all directors and officers of the Group against liabilities incurred in the capacity as a director or officer of the Group. Indemnification and insurance of auditor During the year, the Group has not indemnified or agreed to indemnify the auditor of the Company. Proceedings on behalf of the Company No person has applied for leave of court to bring proceedings on behalf of the Company or intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings. The Company was not a party to any such proceedings during the year. 16 For personal use only Non-audit Services The Board of Directors is satisfied that the provision of non-audit services during the year is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are satisfied that the services disclosed below did not compromise the external auditor’s independence as the nature of the services provided does not compromise the general principles relating to auditor independence in accordance with APES 110: Code of Ethics for Professional Accountants set by the Accounting Professional and Ethical Standards Board. During FY2019, the Company incurred investigating accountant’s fees payable to Hall Chadwick Corporate (NSW) Limited of $20,000 pertaining to the preparation of the prospectus for the Company’s listing on the ASX. Auditor’s Independence Declaration The lead auditor’s independence declaration for the year ended 31 December 2019 has been received and can be found on page 30 of the financial report. Options At the date of this report, the unissued ordinary shares of OpenLearning Limited under option are as follows: GRANT DATE DATE OF EXPIRY EXERCISE PRICE NUMBER UNDER OPTION 9 December 2019 9 December 2021 9 December 2019 9 December 2022 9 December 2019 9 December 2022 $0.20 $0.20 $0.30 30,833,307 2,793,333 5,000,000 Option holders do not have any rights to participate in any issues of shares or other interests of the Company or any other entity. For details of options issued to directors and executives as remuneration, refer to the remuneration report. During FY2019, a subsidiary of the Company, OLG Australia Investors Pte Ltd, issued a total of 89,589 ordinary shares arising from the exercise of employee share option plan. These shares were issued at the exercise prices per share of $0.10, $1.77 and $2.35. Other than the above, there have been no options granted over unissued shares or interests of any controlled entity within the Group during or since the end of the reporting period. Performance rights As at the date of this report there were 2,750,000 performance rights convertible to shares on 1:1 basis on issue (2018: Nil). 9 1 0 2 t r o p e R l a u n n A | d e t i i m L g n i n r a e L n e p O 17 For personal use only Directors’ Report Continued Information Relating to Directors and Company Secretary Kevin Barry Non-Executive Chairman Qualifications B.Comm, LLB Experience Kevin Barry is a director of TCAP Australia and Thakral Capital Holdings. His responsibilities include execution of investment opportunities, oversight and management of development projects, origination of senior construction and investment finance. Kevin is also the TCAP group representative director for the GemLife retirement business. Kevin has over 24 years’ experience in law, property finance and funds management. Initially he started as a structured finance lawyer in Sydney with KPMG & Blake Dawson, and then London with Norton Rose. In 2001, he moved to investment banking at Zurich Capital Markets Asia where he was Senior Vice President responsible for the structuring and execution of their principal finance business. He subsequently managed CHOPIN structured finance business whose primary activities included originating fixed income products across various asset classes. Prior to joining the TCAP group, Kevin was involved in setting up the credit strategies funds management business at Pengana Capital. Since 2010, Kevin has been on the Board as Chairman of the ASX listed ICS Global Limited (ASX: ICS). Interest in Shares and Options 1,839,788 fully paid ordinary shares Options to acquire a further 1,534,225 ordinary shares Special Responsibilities Member of Audit Committee Adam Brimo Managing Director and Group CEO Qualifications B.Eng (Software), B.Arts (Politics) Experience Adam Brimo is listed in the 2017 Forbes 30 Under 30 Asia for Consumer Technology and in The Pearcey Foundation 2018 NSW Tech Entrepreneur Hall of Fame. Adam previously worked at Macquarie Bank as a Software Engineer in the Fixed Income, Currencies and Commodities Group and at Westpac Institutional Bank as a Senior Software Engineer. In 2010-2011, Adam led the successful Vodafail consumer activist campaign, which resulted in nationwide media coverage, an ACMA inquiry and a $1bn network upgrade for Vodafone’s Australian business. Adam was named the Consumer Activist of the Year in 2011 by Choice Magazine for his transformative impact on the telecommunications sector in Australia. In 2012, Adam joined UNSW Professor Richard Buckland and David Collien to found OpenLearning.com, a social learning platform. Since that time, over 1.65 million students have joined courses, including the first massive open online courses (MOOCs) from Australia and Malaysia. Interest in Shares and Options 6,532,475 fully paid ordinary shares Options to acquire a further 126,358 ordinary shares Performance rights to allow conversion to 2,000,000 ordinary shares Special Responsibilities Group CEO Directorships held in other listed entities during the three years prior to the current year Current director of ICS Global Limited (since 23 July 2010) Directorships held in other listed entities during the three years prior to the current year None 18 For personal use only Professor Beverley Oliver Non-Executive Director David Buckingham Non-Executive Director Qualifications BA( (Hons), M.Phil PhD W.Aust, GradDipEd Murdoch, GAICD PFHEA Experience Emeritus Professor Beverley Oliver is an education change leader, a Principal Fellow of the Higher Education Academy, and an Australian National Teaching Fellow. She works as a higher education consultant and researcher in areas such as digital education, micro-credentials, curriculum transformation, quality assurance and graduate employability. She is the founder and editor of the Journal of Teaching and Learning for Graduate Employability. Beverley was Deputy Vice-Chancellor Education at Deakin University (2013-2018), Deputy Chair of Universities Australia’s Deputy Vice-Chancellors (Academic) (2018) and Deputy Chair of the Board of EduGrowth, a not-for-profit entity and Australia’s acceleration network for high-growth, scalable, borderless education (2016-18). Beverley’s leadership has been recognised through two national Citations for Outstanding Contributions to Student Learning and several nationally funded grants and two fellowships. In 2017, she was awarded Deakin University’s highest honour, the title of Alfred Deakin Professor, for her outstanding and sustained contribution to conceptualising the strategic enhancement of courses in the digital economy and furthering Deakin University’s research and scholarship in the field of higher education. Interest in Shares and Options Options to acquire 1,000,000 ordinary shares Special Responsibilities Member of Remuneration Committee Directorships held in other listed entities during the three years prior to the current year None Qualifications Engineering Science B.Tech (Hons), ACA ICAEW, GAICD Experience David Buckingham was most recently the Group CEO and Managing Director of Navitas (ASX: NVT) from 2018-2019 and the CFO from 2016-2018. David has a diverse educational background and impressive career which he began in the United Kingdom with PricewaterhouseCoopers. He later moved into the telecommunications industry to which he devoted much of his career. He has worked for Telewest Global as the Group Treasurer and Director of Financial Planning, Virginmedia, as Finance Director Business Division and iiNet where he held the roles of Chief Financial Officer and Chief Executive Officer between 2008 and 2015. Interest in Shares and Options 416,666 fully paid ordinary shares Options to acquire a further 1,416,666 ordinary shares Performance rights to allow conversion to 750,000 ordinary shares Special Responsibilities Member of Audit Committee Directorships held in other listed entities during the three years prior to the current year Navitas Limited (Appointed 1 July 2018; Resigned 5 July 2019) 9 1 0 2 t r o p e R l a u n n A | d e t i i m L g n i n r a e L n e p O 19 For personal use only Directors’ Report Continued Spiro Pappas Non-Executive Director Qualifications B.Comm (Merit), AICD Maya Hari Non-Executive Director Qualifications MBA, MS Engineering Experience Spiro Pappas is a former senior executive of NAB. In his almost 10 years at NAB, Spiro performed several leadership roles including Executive General Manager of Global Institutional Banking, CEO of Asia and Executive General Manager of International and Innovation. Prior to NAB, Spiro spent over 2 years in London and New York with Deutsche Bank and then 11 years in London with ABN AMRO/RBS where he managed a number of global businesses including Debt Capital Markets, Client Coverage for Financial Institutions and Corporate Finance and Advisory. Spiro has also served on the Advisory Board of both the Australia China Business Council and the Australia Japan Business Cooperation Council and is a Board Member of the European Australian Business Council. He is currently the Chairman of Atlas Iron, ASX-listed Splitit (a global payments Fintech) and Cognian Technologies (an innovative Australian wireless lighting technology company). Spiro was also recently a member of a taskforce advising the Federal Government on how to enable the SME sector for the digital age. Experience Maya Hari is the VP & Managing Director, Asia Pacific at Twitter. Asia Pacific has been the growth engine for Twitter in recent years. Maya’s focus has been to fuel Twitter strategy and rapid growth in key markets such as China, India, Australia and Indonesia. Maya brings diverse business experience having led functions in Sales, Marketing & Product Management. She serves as Chairperson of TIE in Singapore (Non-Profit focused on fuelling the entrepreneurial ecosystem). Prior to Twitter, Maya spent 16+ years in the digital media, mobile and eCommerce in the US and in Asia Pacific region for brands such as Google, Samsung, Microsoft & Cisco. She was also responsible for the digital transformation & re-engineering of media powerhouse Conde Nast in Asia – launching and bringing internet and mobile offerings for top tier publication titles such as Vogue, GQ and Condé Nast Traveller. Interest in Shares and Options Options to acquire 1,000,000 ordinary shares Special Responsibilities Member of Remuneration Committee Interest in Shares and Options 3,679,091 fully paid ordinary shares Options to acquire a further 1,547,508 ordinary shares Directorships held in other listed entities during the three years prior to the current year None Special Responsibilities Member of Audit Committee Justyn Stedwell Company Secretary Directorships held in other listed entities during the three years prior to the current year Current director of Splitit Payments Ltd (since 20 January 2019) Qualifications Bachelor of Business and Commerce (Management and Economics) – Monash University, Graduate Diploma of Accounting – Deakin University, Graduate Diploma of Applied Corporate Governance – Governance Institute of Australia , Graduate Certificate of Applied Finance – Kaplan Professional Experience Company Secretary with over 13 years’ experience as a Company Secretary of ASX listed companies in various industries including IT and telecommunications, mining and exploration, biotechnology and agriculture. 20 For personal use only Meetings of Directors There were no meetings of directors held during the financial year as the full board was only constituted upon the Company being admitted to the official list of the ASX on 10 December 2019. The Company’s shares commenced trading on the ASX on 12 December 2019. Remuneration Report The Remuneration Report for Non-Executive Directors, Executive Director and other Key Management Personnel have been prepared under the following main headings: (i) Remuneration policy (ii) Details of remuneration (iii) Service agreements (iv) Share-based remuneration (v) Other information (i) Remuneration Policy The remuneration policy of the Group has been designed: • to align rewards to business outcomes that deliver value to shareholders • to create a high performance culture by setting challenging objectives and rewarding individuals based on performance targets met • to ensure remuneration is competitive in line with market to motivate and retain executive talent The Board has established a Remuneration Committee which is responsible for determining and reviewing remuneration arrangements for the Directors and the executive team. The remuneration structure adopted by the Group consists of the following components: • fixed remuneration being annual salary; and • short term incentives, being employee share schemes and bonuses for selected executives. The payment of bonuses, share options, performance rights and other incentive payments are reviewed by the Remuneration Committee annually and a recommendation is put to the Board for approval. All bonuses, options, performance rights and incentives are linked to pre-determined performance criteria. 9 1 0 2 t r o p e R l a u n n A | d e t i i m L g n i n r a e L n e p O 21 For personal use only Directors’ Report Continued (ii) Details of remuneration The remuneration for key management personnel (KMP) of the Group during the year was as follows: SHORT-TERM BENEFITS Salary and Fees $ Profit Share and Bonuses $ 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018(1) 2019 2018 2019 2018 2019 2018 2019 2018 166,461 178,219 3,442 – 2,692 – 2,459 – 2,459 – 19,658 10,834 224,231 88,846 74,019 54,561 142,703 125,001 133,884 130,000 772,008 587,461 50,000 – – – – – – – – – – – – – – – – – – – 50,000 – Non- monetary $ – – – – – – – – – – – – – – – – – – – – – – Leave and Other $ 28,600 20,870 – – – – – – – – – – 15,911 7,723 4,902 3,322 11,589 39,196 11,598 9,013 72,600 80,124 POST-EMPLOYMENT BENEFITS LONG-TERM BENEFITS EQUITY-SETTLED SHARE-BASED PAYMENTS Pension and Super- annuation Other Incentive Plans LSL Shares/ Units Options/ Rights CASH- SETTLED SHARE- BASED PAYMENTS TERMIN- ATION BENEFITS 23,281 16,931 327 $ – – – – – – – 234 234 22,813 8,440 10,221 7,521 14,658 11,875 13,821 12,350 85,589 57,117 $ – – – – – – – – – – – – – – – – – – – – – – $ – – – – – – – – – – – – – – – – – – – – – – $ – – – – – – – – – – – – – – – – – – – – – – 191,667 31,632 $ – – – – – – – – – – – – – – – – – – – – 31,632 31,632 31,632 31,632 $ – – – – – – – – – – – – – – – – 191,667 158,160 $ – – – – – – – – – – – – – – – – – – – – – – TOTAL $ 268,342 216,020 35,401 225,991 – – – – 34,325 34,325 51,290 10,834 262,955 105,009 89,142 65,404 168,950 176,072 159,303 151,363 1,330,024 724,702 $ – – – – – – – – – – – – – – – – – – – – – – Executive Director Adam Brimo Non-Executive Directors Kevin Barry Spiro Pappas David Buckingham Professor Beverley Oliver Maya Hari Other KMP Cherie Diaz Sarveen Kandiah David Collien Huat Koh Total KMP (1) Cherie Diaz – joined 30 July 2018. 22 For personal use only (ii) Details of remuneration The remuneration for key management personnel (KMP) of the Group during the year was as follows: SHORT-TERM BENEFITS Profit Share and Bonuses Non- monetary Salary and Fees $ 166,461 178,219 50,000 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018(1) 2019 2018 2019 2018 2019 2018 2019 2018 3,442 2,692 2,459 2,459 – – – – 19,658 10,834 224,231 88,846 74,019 54,561 142,703 125,001 133,884 130,000 772,008 587,461 $ – – – – – – – – – – – – – – – – – – – – 50,000 Leave and Other $ 28,600 20,870 – – – – – – – – – – 15,911 7,723 4,902 3,322 11,589 39,196 11,598 9,013 72,600 80,124 $ – – – – – – – – – – – – – – – – – – – – – – POST-EMPLOYMENT BENEFITS LONG-TERM BENEFITS EQUITY-SETTLED SHARE-BASED PAYMENTS Pension and Super- annuation $ 23,281 16,931 327 – – – 234 – 234 – – – 22,813 8,440 10,221 7,521 14,658 11,875 13,821 12,350 85,589 57,117 Other Incentive Plans LSL Shares/ Units Options/ Rights $ – – – – – – – – – – – – – – – – – – – – – – $ – – – – – – – – – – – – – – – – – – – – – – $ – – – – – – – – – – – – – – – – – – – – – – $ – – – – $ – – 31,632 – 191,667 31,632 – – – – – – – – – – – – – – – – 31,632 – 31,632 – 31,632 – – – – – – – – – 191,667 158,160 – – CASH- SETTLED SHARE- BASED PAYMENTS TERMIN- ATION BENEFITS $ – – – – – – – – – – – – – – – – – – – – – – $ – – – – – – – – – – – – – – – – – – – – – – TOTAL $ 268,342 216,020 35,401 – 225,991 – 34,325 – 34,325 – 51,290 10,834 262,955 105,009 89,142 65,404 168,950 176,072 159,303 151,363 1,330,024 724,702 Executive Director Adam Brimo Non-Executive Directors Kevin Barry Spiro Pappas David Buckingham Professor Beverley Oliver Maya Hari Other KMP Cherie Diaz Sarveen Kandiah David Collien Huat Koh Total KMP (1) Cherie Diaz – joined 30 July 2018. 9 1 0 2 t r o p e R l a u n n A | d e t i i m L g n i n r a e L n e p O 23 For personal use only Directors’ Report Continued (iii) Service agreements Remuneration and other terms of employment for the Executive Director and other key management personnel are formalised in a Service Agreement. The major provisions of the agreements relating to remuneration are set out below: (a) Adam Brimo (Managing Director and Group CEO) Adam is paid a base salary of $200,000 per annum (plus superannuation). In addition to the base salary, Adam was paid a $50,000 cash bonus when the Company was admitted to the official list of ASX. He is also entitled to an incentive bonus of up to $75,000 payable based on achieving selected and verified performance criteria and 2,000,000 performance rights. (b) Cherie Diaz (Managing Director, Australia) Cherie is paid a base salary of $220,000 per annum (plus superannuation). In addition to the base salary, Cherie is entitled to an incentive bonus of up to $80,000 payable based on achieving selected and verified performance criteria. (c) Sarveen Kandiah (Managing Director, Malaysia) Sarveen is paid a base salary of MYR300,000 per annum. In addition to the base salary, Sarveen is entitled to an incentive bonus of up to MYR100,000 payable based on achieving selected and verified performance criteria. (iv) Share-based remuneration All options refer to options over ordinary shares of the Company, which are exercisable on a one-for-one basis under the terms of the agreements. Options were granted to the Directors during the year with the following key conditions: • amount payable upon exercise of each option is $0.30 • option will expire three (3) years following their date of issue • an option not exercised before the expiry date will automatically lapse on the expiry date. Performance rights were issued to 2 directors, Adam Brimo and David Buckingham, during the year. These performance rights shall vest (following which the holder of the performance rights may elect to convert the performance rights into ordinary shares of the Company) upon satisfaction of the following milestones: • 50% of the performance rights held by each holder will vest in the event that the annual recurring revenue of the Group is equal to or greater than $4,000,000 as at 31 December 2020; and • 50% of the performance rights held by each holder will vest in the event that the annual recurring revenue of the Group is equal to or greater than $8,000,000 as at 31 December 2021, (d) David Collien David is paid a base salary of $150,000 per annum (including superannuation). There is no incentive bonus element in David’s service agreement. and the relevant annual recurring revenue being confirmed by the signed attestation of a registered company auditor or is properly included in the Company’s audited financial statements. (e) Huat Koh Huat is paid a base salary of $160,000 per annum (including superannuation). There is no incentive bonus element in Huat’s service agreement. All the above service agreements otherwise contain customary terms for an agreement of such nature, including in relation to intellectual property being the property of the Group, restraint of trade and confidentially. The service agreements stipulate a range of two to three-month resignation periods. 24 For personal use only Options and rights granted as remuneration GRANT DETAILS EXERCISED LAPSED Balance at Beginning of Year Issue Date No. Value $ (Note 1) No. Value $ Balance at End of Year No. No. Options Kevin Barry Spiro Pappas David Buckingham Professor Beverley Oliver Maya Hari Performance rights Adam Brimo David Buckingham – – – – – – – – – 9/12/2019 1,000,000 31,632 9/12/2019 1,000,000 31,632 9/12/2109 1,000,000 31,632 9/12/2019 1,000,000 31,632 9/12/2019 1,000,000 31,632 5,000,000 158,160 9/12/2019 2,000,000 9/12/2019 750,000 2,750,000 – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 5,000,000 2,000,000 750,000 2,750,000 Note 1 The fair value of options granted as remuneration as shown in the above table has been determined in accordance with Australian Accounting Standards and will be recognised as an expense over the relevant vesting period to the extent that conditions necessary for vesting are satisfied. The performance rights are subject to non-market vesting conditions, accordingly no value has been recognised as the Company have not assessed that the condition is likely to be met at this point and will be reassessed at future reporting dates. 9 1 0 2 t r o p e R l a u n n A | d e t i i m L g n i n r a e L n e p O 25 For personal use only Directors’ Report Continued Group KMP Options Kevin Barry Spiro Pappas David Buckingham Professor Beverley Oliver Maya Hari Performance rights Adam Brimo David Buckingham Balance at End of Year No. Exercisable No. VESTED UNVESTED Unexer- cisable No. (Note 2) Total at End of Year No. Total at End of Year No. 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 5,000,000 2,000,000 750,000 2,750,000 – – – – – – – – – 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 5,000,000 5,000,000 – – – – – – – – – – – – 2,000,000 750,000 2,750,000 Note 2 The exercise period for the vested options is subject to escrow period imposed by the ASX. Description of Options/Rights Issued as Remuneration Details of the options and performance rights granted as remuneration to those KMP listed in the previous table are as follows: GRANT DATE ISSUER ENTITLEMENT ON EXERCISE DATES EXERCISABLE VALUE PER OPTION AT GRANT DATE $ AMOUNT PAID/ PAYABLE BY RECIPIENT $ EXERCISE PRICE $ 9 December 2019 Company 5,000,000 ordinary shares Within 3 years following grant date 0.30 0.032 1,500,000 9 December 2019 Company 2,750,000 ordinary shares Following satisfaction of revenue milestones and within 5 years following grant date – – – Option values at grant date were determined using the Black-Scholes method. No value has been recognised for the performance rights. An assessment of the performance criteria was carried out and the criteria were not met. 26 For personal use only (v) Other information The number of ordinary shares in the Company during the year held by each of the Group’s key management personnel, including their related parties, is set out below: Adam Brimo Kevin Barry Spiro Pappas David Buckingham Professor Beverley Oliver Maya Hari Cherie Diaz Sarveen Kandiah David Collien Huat Koh Total BALANCE AT BEGINNING OF YEAR GRANTED AS REMUNERATION DURING THE YEAR ISSUED ON EXERCISE OF OPTIONS DURING THE YEAR OTHER CHANGES DURING THE YEAR(1) BALANCE AT END OF YEAR – – – – – – – – – – – – – 958,333 – – – – – – – 958,333 – – – – – – – – – – – 6,532,475 6,532,475 1,839,788 1,839,788 2,720,758 3,679,091 416,666 416,666 – – – – 504,209 504,209 177,945 177,945 3,556,743 3,556,743 152,523 152,523 15,901,107 16,859,440 (1) Pursuant to a corporate reorganisation as disclosed under the caption ‘Significant changes in the state of affairs’ in this directors’ report. There were no other transactions conducted between the Group and KMP or their related parties, apart from those disclosed above relating to equity and compensation, that were conducted other than in accordance with normal employee, customer or supplier relationships on terms no more favourable than those reasonably expected under arm’s length dealings with unrelated persons. This directors’ report, incorporating the remuneration report, is signed in accordance with a resolution of the Board of Directors. Adam Brimo Managing Director Dated: 27 March 2020 9 1 0 2 t r o p e R l a u n n A | d e t i i m L g n i n r a e L n e p O 27 For personal use only 28 For personal use only Securing our future with 21st century skills. 9 1 0 2 t r o p e R l a u n n A | d e t i i m L g n i n r a e L n e p O 29 For personal use only Auditor’s Independence Declaration 30 For personal use only Financial Report 9 1 0 2 t r o p e R l a u n n A d e t i i m L g n i n r a e L n e p O 31 For personal use only Consolidated statement of profit or loss For the financial year ended 31 December 2019 Revenue Other income Items of expense Web-hosting and other direct costs Employee benefits expense Depreciation Promotional and advertising Professional services General and administrative costs Pre-IPO and IPO-related costs Finance income Finance expenses Loss before tax Income tax benefit Loss for the year Loss for the year attributable to: Owners of the Company Earnings/(losses) per share attributable to owners of the Company Basic earnings/(losses) per share (cents) Diluted earnings/(losses) per share (cents) NOTE 3 4 5 6 9 9 2019 $ 2018 $ 1,602,613 1,765,095 18,638 65,560 (394,814) (495,647) (4,602,273) (4,260,979) (62,859) (121,114) (242,663) (822,856) (3,070,710) (7,696,038) 7,131 (31,044) (23,962) (236,744) (338,100) (1,041,390) – (4,566,167) 29,963 (11,686) (7,719,951) (4,547,890) – 156,263 (7,719,951) (4,391,627) (7,719,951) (4,391,627) (5.53) (5.53) (13.83) (13.83) This statement should be read in conjunction with the notes to the financial statements. 32 For personal use only Consolidated statement of comprehensive income For the financial year ended 31 December 2019 Loss for the year Other comprehensive income: Item that may be reclassified subsequently to profit or loss: Exchange differences on translating foreign operations Total comprehensive loss for the year Attributable to: Owners of the Company This statement should be read in conjunction with the notes to the financial statements. 2019 $ 2018 $ (7,719,951) (4,391,627) (4,122) 17,727 (7,724,073) (4,373,900) (7,724,073) (4,373,900) 9 1 0 2 t r o p e R l a u n n A | d e t i i m L g n i n r a e L n e p O 33 For personal use only Consolidated statement of financial position As at 31 December 2019 ASSETS Current assets Trade and other receivables Prepayments Cash and cash equivalents Non-current assets Furniture, fittings and equipment Intangible assets Right-of-use asset Total assets EQUITY AND LIABILITIES Current liabilities Trade and other payables Provisions Lease liability Borrowing Deferred revenue Net current assets Non-current liability Lease liability Other payables Convertible preference shares Total liabilities Net assets NOTE 2019 $ 2018 $ 10 11 12 13 14 15 16 18 15 17 551,580 226,576 7,740,768 8,518,924 62,392 453,341 349,405 865,138 9,384,062 793,582 143,650 132,191 17,727 572,737 1,659,887 6,859,037 250,884 199,927 – 450,811 2,110,698 7,273,364 566,698 130,708 1,076,732 1,774,138 107,660 301,412 – 409,072 2,183,210 308,872 193,468 – – 421,271 923,611 850,527 – – 9 9 923,620 1,259,590 Equity attributable to the owners of the Company Share capital Accumulated losses Reserves Total equity 19 23,233,194 12,937,238 (19,413,440) (11,693,489) 20 3,453,610 7,273,364 15,841 1,259,590 This statement should be read in conjunction with the notes to the financial statements. 34 For personal use only Consolidated statement of changes in equity For the financial year ended 31 December 2019 Opening balance at 1 January 2019 12,937,238 15,841 (11,693,489) 1,259,590 SHARE CAPITAL (NOTE 19) OTHER RESERVES (NOTE 20) ACCUMULATED LOSSES $ $ $ TOTAL $ Loss for the year Other comprehensive income Foreign currency translation, representing total other comprehensive income/(loss) for the year Total comprehensive loss for the year Conversion of convertible preference shares Valuation of employee share plan Exercise of employee share plan Issuance of ordinary shares : – pursuant to conversion of convertible notes – issuance to advisors and a director – pursuant to initial public offering of shares Equity issuance costs – – – 9 824,606 96,863 3,700,000 766,667 8,000,000 (1,441,712) – (7,719,951) (7,719,951) (4,122) – (4,122) (4,122) (7,719,951) (7,724,073) – – – – – – – – – – – – – – – – 9 824,606 96,863 3,700,000 766,667 8,000,000 (1,441,712) – 1,791,414 Fair value adjustment on shares issued (1,650,477) 1,650,477 Valuation of options issued – 1,791,414 Closing balance at 31 December 2019 23,233,194 3,453,610 (19,413,440) 7,273,364 This statement should be read in conjunction with the notes to the financial statements. 9 1 0 2 t r o p e R l a u n n A | d e t i i m L g n i n r a e L n e p O 35 For personal use only Consolidated statement of changes in equity For the financial year ended 31 December 2019 SHARE CAPITAL (NOTE 19) OTHER RESERVES (NOTE 20) ACCUMULATED LOSSES $ $ $ TOTAL $ Opening balance at 1 January 2018 8,189,487 (1,886) (7,301,862) 885,739 Loss for the year Other comprehensive income Foreign currency translation, representing total other comprehensive income/(loss) for the year Total comprehensive loss for the year – – – – (4,391,627) (4,391,627) 17,727 – 17,727 17,727 (4,391,627) (4,373,900) Issuance of shares Equity issuance costs 5,550,000 (802,249) – – – – 5,550,000 (802,249) Closing balance at 31 December 2018 12,937,238 15,841 (11,693,489) 1,259,590 This statement should be read in conjunction with the notes to the financial statements. 36 For personal use only Consolidated statement of cash flows For the financial year ended 31 December 2019 Operating activities Receipts from customers Payments to suppliers and employees Proceeds from other income Net cash flows used in operating activities Investing activities Purchase of furniture, fittings and equipment, net of disposal Purchase of intangible assets Net cash flows used in investing activities Financing activities Proceeds from issuance of equity shares Proceeds from issuance of convertible notes Proceeds from exercise of employee share options Proceeds from issuance of convertible preference shares Proceeds from borrowing, net of repayment Payments for pre-IPO and IPO costs Share issue expenses Net cash flows generated from financing activities Net increase / (decrease) in cash and cash equivalents Effect of exchange rate changes on cash and cash equivalents Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the year NOTE 2019 $ 2018 $ 2,242,609 (6,135,369) 18,638 1,864,139 (6,474,247) 65,560 24 (3,874,122) (4,544,548) (45,589) (101,691) (147,280) (74,201) (240,006) (314,207) 8,000,000 3,700,000 96,863 – 17,727 (618,334) (511,401) 10,684,855 6,663,453 583 1,076,732 7,740,768 5,550,000 – – 8 – – (802,249) 4,747,759 (110,996) 5,234 1,182,494 1,076,732 11 This statement should be read in conjunction with the notes to the financial statements. 9 1 0 2 t r o p e R l a u n n A | d e t i i m L g n i n r a e L n e p O 37 For personal use only 38 For personal use only Educating the world, one course at a time. 9 1 0 2 t r o p e R l a u n n A | d e t i i m L g n i n r a e L n e p O 39 For personal use only Notes to the financial statements 31 December 2019 The consolidated financial statements and notes represent those of OpenLearning Limited and its Controlled Entities (the Group). The separate financial statements of the Parent Entity, OpenLearning Limited, have not been presented within this financial report as permitted by the Corporations Act 2001. The financial statements were authorised for issue on 27 March 2020 by the directors of the Company. 1.3 Principles of consolidation The consolidated financial statements incorporate all of the assets, liabilities and results of the Parent (OpenLearning Limited) and all of the subsidiaries (including any structured entities). Subsidiaries are entities the Parent controls. The Parent controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. A list of the subsidiaries is provided in Note 22. 1. Summary of significant accounting policies 1.1 Basis of preparation These general purpose consolidated financial statements have been prepared in accordance with the Corporations Act 2001, Australian Accounting Standards and Interpretations of the Australian Accounting Standards Board and in compliance with International Financial Reporting Standards as issued by the International Accounting Standards Board. The Group is a for-profit entity for financial reporting purposes under Australian Accounting Standards. Material accounting policies adopted in the preparation of these financial statements are presented below and have been consistently applied unless stated otherwise. Except for cash flow information, the financial statements have been prepared on an accrual basis and are based on historical costs, modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities. 1.2 Going concern The financial statements have been prepared on the going concern basis which assumes the Company and the Group will have sufficient cash to pay its debts, as and when they become payable, for a period of at least 12 months from the date the financial report was authorised for issue. The Group has incurred a net loss after tax of $7,719,951 (2018: $4,391,627) for the financial year ended 31 December 2019. During the financial year the Group also had net cash outflows from operating activities of $3,874,122 (2018: $4,544,548). The admission of the Company to the official list of the ASX on 10 December 2019 raised total proceeds of $8.0 million for the Group. The Company believes that the proceeds raised from the IPO, together with the on-going sales collection, will enable the continuation of its business. Therefore, the financial statements do not include adjustments relating to the recoverability and classification of recorded asset amounts, nor to the amounts and classification of liabilities that might be necessary should the Company and the Group not continue as going concerns. Intercompany transactions, balances and unrealised gains or losses on transactions between Group entities are fully eliminated on consolidation. Accounting policies of subsidiaries have been changed and adjustments made where necessary to ensure uniformity of the accounting policies adopted by the Group. Where applicable, equity interests in a subsidiary not attributable, directly or indirectly, to the Group are presented as “non-controlling interests”. The Group initially recognises non-controlling interests that are present ownership interests in subsidiaries and are entitled to a proportionate share of the subsidiary’s net assets on liquidation at either fair value or at the non-controlling interests’ proportionate share of the subsidiary’s net assets. Subsequent to initial recognition, non-controlling interests are attributed their share of profit or loss and each component of other comprehensive income. Non-controlling interests are shown separately within the equity section of the statement of financial position and statement of comprehensive income. The consolidated financial statements of the Group have been prepared in accordance with the pooling of interest method as the Group is a continuation of the existing business of OpenLearning Global Pte Ltd and its subsidiaries. The assets and liabilities of the combining entities are reflected at their carrying amounts as reported in the consolidated financial statements. Any difference between the consideration paid/transferred and the equity acquired is reflected within equity as a common control reserve. The consolidated income statements and consolidated statements of comprehensive income reflect the results of the combining entities for the entire periods under review, irrespective of when the combination took place. Apart from the above, subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. 1.4 Functional and presentation currency The functional currency of each of the Group’s entities is the currency of the primary economic environment in which that entity operates. The consolidated financial statements are presented in Australian dollars, which is the Parent Entity’s functional currency. 40 For personal use only 1. Summary of significant accounting policies (cont’d) 1.4 Functional and presentation currency (cont’d) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined. Exchange differences arising on the translation of monetary items are recognised in profit or loss, except exchange differences that arise from net investment hedges. Exchange differences arising on the translation of non-monetary items are recognised directly in other comprehensive income to the extent that the underlying gain or loss is recognised in other comprehensive income; otherwise the exchange difference is recognised in profit or loss. Group companies The financial results and position of foreign operations, whose functional currency is different from the Group’s presentation currency, are translated as follows: • assets and liabilities are translated at exchange rates prevailing at the end of the reporting period; • income and expenses are translated at exchange rates on the date of transaction; and • all resulting exchange differences are recognised in other comprehensive income. Exchange differences arising on translation of foreign operations with functional currencies other than Australian dollars are recognised in other comprehensive income and included in the foreign currency translation reserve in the statement of financial position and allocated to non-controlling interest where relevant. The cumulative amount of these differences is reclassified into profit or loss in the period in which the operation is disposed of. 1.5 Furniture, fittings and equipment All items of furniture, fittings and equipment are initially recorded at cost. Subsequent to recognition, furniture, fittings and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets as follows: Computer Office equipment Leasehold improvement 60 months 60 months 60 months The carrying values of furniture, fittings and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. The residual value, useful life and depreciation method are reviewed at each financial year-end, and adjusted prospectively, if appropriate. An item of furniture, fittings and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on de-recognition of the asset is included in profit or loss in the year the asset is derecognised. 1.6 Intangible assets Intangible assets acquired separately are measured initially at cost. Following initial acquisition, intangible assets are carried at cost and where applicable, less any accumulated amortisation and/or any accumulated impairment losses. Internally generated intangible assets, excluding capitalised development costs, are not capitalised and expenditure is reflected in profit or loss in the year in which the expenditure is incurred. The useful lives of intangible assets are assessed as either finite or indefinite. Intangible assets with finite useful lives are amortised over the estimated useful lives and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method are reviewed at least at each financial year-end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. Intangible assets with indefinite useful lives or not yet available for use are tested for impairment annually, or more frequently if the events and circumstances indicate that the carrying value may be impaired either individually or at the cash-generating unit level. Such intangible assets are not amortised. The useful life of an intangible asset with an indefinite useful life is reviewed annually to determine whether the useful life assessment continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis. Gains or losses arising from de-recognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in profit or loss when the asset is derecognised. 9 1 0 2 t r o p e R l a u n n A | d e t i i m L g n i n r a e L n e p O 41 For personal use only Notes to the financial statements Continued 1. Summary of significant accounting policies (cont’d) 1.6 Intangible assets (cont’d) (i) Domain names and trademarks Domain names and trademarks are recognised at cost of acquisition. They are considered to have an infinite life and are carried at cost less any impairment losses. (ii) Computer software Computer software is recorded at cost. Where software is acquired at no cost, or for a nominal cost, the cost is its fair value as at the date of acquisition. It has a finite life and is carried at cost less accumulated amortisation and any impairment losses. Software has an estimated useful life of ten years. Any costs incurred to improve the software after acquisition is expensed to the profit or loss. It is assessed annually for impairment. 1.7 Impairment of non-financial assets The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when an annual impairment testing for an asset is required, the Group makes an estimate of the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s fair value less costs of disposal and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. Impairment losses of continuing operations are recognised in profit or loss, except for assets that are previously revalued where the revaluation was taken to other comprehensive income. In this case, the impairment is also recognised in other comprehensive income up to the amount of any previous revaluation. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increase cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised previously. Such reversal is recognised in profit or loss unless the asset is measured at revalued amount, in which case the reversal is treated as a revaluation increase. 1.8 Financial instruments Initial recognition and measurement Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the instrument. For financial assets, this is equivalent to the date that the Group commits itself to either the purchase or the sale of the asset (ie trade date accounting is adopted). Financial instruments (except for trade receivables) are initially measured at fair value plus transaction costs, except where the instrument is classified “at fair value through profit or loss”, in which case transaction costs are expensed to profit or loss immediately. Where available, quoted prices in an active market are used to determine fair value. In other circumstances, valuation techniques are adopted. Trade receivables are initially measured at the transaction price if the trade receivables do not contain a significant financing component or if the practical expedient was applied as specified in paragraph 63 of AASB 15: Revenue from Contracts with Customers. Classification and subsequent measurement Financial liabilities are subsequently measured at amortised cost using the effective interest method. The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest expense to profit or loss over the relevant period. The effective interest rate is the internal rate of return of the financial asset or liability. That is, it is the rate that exactly discounts the estimated future cash flows through the expected life of the instrument to the net carrying amount at initial recognition. Financial assets Financial assets are subsequently measured at: • amortised cost; • fair value through other comprehensive income; or • fair value through profit or loss. Measurement is on the basis of two primary criteria: • the contractual cash flow characteristics of the financial asset; and • the business model for managing the financial assets. A financial asset that meets the following conditions is subsequently measured at amortised cost: • the financial asset is managed solely to collect contractual cash flows; and • the contractual terms within the financial asset give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding on specified dates. A financial asset that meets the following conditions is subsequently measured at fair value through other comprehensive income: • the contractual terms within the financial asset give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding on specified dates; and • the business model for managing the financial asset comprises both contractual cash flows collection and the selling of the financial asset. By default, all other financial assets that do not meet the measurement conditions of amortised cost and fair value through other comprehensive income are subsequently measured at fair value through profit or loss. 42 For personal use only 1. Summary of significant accounting policies (cont’d) 1.8 Financial instruments (cont’d) Derecognition Derecognition refers to the removal of a previously recognised financial asset or financial liability from the statement of financial position. Derecognition of financial liabilities A liability is derecognised when it is extinguished (ie when the obligation in the contract is discharged, cancelled or expires). An exchange of an existing financial liability for a new one with substantially modified terms, or a substantial modification to the terms of a financial liability, is treated as an extinguishment of the existing liability and recognition of a new financial liability. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss. Derecognition of financial assets A financial asset is derecognised when the holder’s contractual rights to its cash flows expires, or the asset is transferred in such a way that all the risks and rewards of ownership are substantially transferred. All the following criteria need to be satisfied for the derecognition of a financial asset: • the right to receive cash flows from the asset has expired or been transferred; • all risk and rewards of ownership of the asset have been substantially transferred; and • the Group no longer controls the asset (ie it has no practical ability to make unilateral decisions to sell the asset to a third party). • On derecognition of a financial asset measured at amortised cost, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognised in profit or loss. 1.9 Impairment The Group recognises a loss allowance for expected credit losses on financial assets that are measured at amortised cost or fair value through other comprehensive income. Loss allowance is not recognised for: • financial assets measured at fair value through profit or loss; or • equity instruments measured at fair value through other comprehensive income. Expected credit losses are the probability-weighted estimate of credit losses over the expected life of a financial instrument. A credit loss is the difference between all contractual cash flows that are due and all cash flows expected to be received, all discounted at the original effective interest rate of the financial instrument. The Group uses the following approaches to impairment, as applicable under AASB 9: Financial Instruments: • the general approach; and • the simplified approach. General approach Under the general approach, at each reporting period, the Group assesses whether the financial instruments are credit-impaired, and: • • if the credit risk of the financial instrument has increased significantly since initial recognition, the Group measures the loss allowance of the financial instruments at an amount equal to the lifetime expected credit losses; and if there has been no significant increase in credit risk since initial recognition, the Group measures the loss allowance for that financial instrument at an amount equal to 12-month expected credit losses. Simplified approach The simplified approach does not require tracking of changes in credit risk at every reporting period, but instead requires the recognition of lifetime expected credit loss at all times. This approach is applicable to: • trade receivables or contract assets that result from transactions that are within the scope of AASB 15: Revenue from Contracts with Customers, and which do not contain a significant financing component; and • lease receivables. • In measuring the expected credit loss, a provision matrix for trade receivables is used, taking into consideration various data to get to an expected credit loss (ie diversity of its customer base, appropriate groupings of its historical loss experience, etc). Recognition of expected credit losses in financial statements At each reporting date, the Group recognises the movement in the loss allowance as an impairment gain or loss in the statement of profit or loss and other comprehensive income. The carrying amount of financial assets measured at amortised cost includes the loss allowance relating to that asset. Assets measured at fair value through other comprehensive income are recognised at fair value with changes in fair value recognised in other comprehensive income. The amount in relation to change in credit risk is transferred from other comprehensive income to profit or loss at every reporting period. 9 1 0 2 t r o p e R l a u n n A | d e t i i m L g n i n r a e L n e p O 43 For personal use only Notes to the financial statements Continued 1. Summary of significant accounting policies (cont’d) 1.10 Cash and cash equivalents Cash and cash equivalents comprise cash at bank and with online payment providers, cash on hand and short-term deposits that are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value. 1.11 Convertible preference shares Convertible preference shares (“CPS”) are classified as liabilities until conversion or maturity of the CPS. When the conversion option is exercised, the carrying amount of the conversion option will be taken to share capital. When the conversion option is allowed to lapse, the carrying amount of the conversion option will be taken to retained earnings. 1.12 Provisions Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured. Provisions are measured using the best estimate of the amounts required to settle the obligation at the end of the reporting period. 1.13 Employee benefits Short-term employee benefits Provision is made for the Group’s obligation for short-term employee benefits. Short-term employee benefits are benefits (other than termination benefits) that are expected to be settled wholly before 12 months after the end of the annual reporting period in which the employees render the related service, including wages, salaries and sick leave. Short-term employee benefits are measured at the (undiscounted) amounts expected to be paid when the obligation is settled. The Group’s obligations for short-term employee benefits such as wages, salaries and sick leave are recognised as part of current trade and other payables in the statement of financial position. The Group’s obligations for employees’ annual leave entitlements are recognised as provisions in the statement of financial position. Defined contribution benefits All employees of the Group receive defined contribution entitlements, for which the Group pays fixed contribution to the employee’s superannuation fund of choice for the employees in Australia and to a state pension fund for the employees in Malaysia. All contributions in respect of employees’ defined contribution entitlements are recognised as an expense when they become payable. The Group’s obligation with respect to employees’ defined contribution entitlements is limited to its obligation for any unpaid contributions at the end of the reporting period. All obligations for unpaid contributions are measured at the (undiscounted) amounts expected to be paid when the obligation is settled and are presented as current liabilities in the Group’s statement of financial position. Termination benefits When applicable, the Group recognises a liability and expense for termination benefits at the earlier of: • the date when the Group can no longer withdraw the offer for termination benefits; and • when the Group recognises costs for restructuring pursuant to AASB 137: Provisions, Contingent Liabilities and Contingent Assets and the costs include termination benefits. In either case, unless the number of employees affected is known, the obligation for termination benefits is measured on the basis of the number of employees expected to be affected. Termination benefits that are expected to be settled wholly before 12 months after the annual reporting period in which the benefits are recognised are measured at the (undiscounted) amounts expected to be paid. Equity-settled compensation The Group operates an employee share and option plan. Share-based payments to employees are measured at the fair value of the instruments at grant date and amortised over the vesting periods. The fair value of options is determined using the Black-Scholes pricing model. The number of shares and options expected to vest is reviewed and adjusted at the end of each reporting period such that the amount recognised for services received as consideration for the equity instruments granted is based on the number of equity instruments that eventually vest. 1.14 Revenue Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured, regardless of when the payment is made. Revenue is measured at the fair value of consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duty. The following specific recognition criteria must also be met before revenue is recognised: (a) Platform SaaS fees Revenue from platform SaaS fees is recognised over the period during which customers are granted access to the platform. (b) Marketplace sales Revenue from marketplace sales is recognised when customers subscribe for the courses and the course is delivered. For courses sold on behalf of third parties, revenue is recognised based on revenue sharing arrangements. (c) Services sales Revenue from the provision of services is recognised by reference to the stage of completion of the transaction at the end of the reporting period and where outcome of the contract can be estimated reliably. Stage of completion is determined with reference to the services performed to date as a percentage of total anticipated services to be performed. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent that related expenditure is recoverable. 44 For personal use only 1. Summary of significant accounting policies (cont’d) 1.14 Revenue (cont’d) Platform SaaS fees and Services sold to customers in advance, which are yet to be utilised, are recognised initially in the balance sheet as deferred income and released to revenue in line with the above recognition criteria. 1.15 Taxes (a) Current income tax Current income 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 end of the reporting period, in the countries where the Group operates and generates taxable income. Current income taxes are recognised in profit or loss except to the extent that the tax relates to items recognised outside profit or loss, either in other comprehensive income or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate. (b) Deferred tax Deferred tax is provided using the liability method on temporary differences at the end of the reporting period between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax liabilities are recognised for all temporary differences, except: • In respect of deductible temporary differences associated with investments in subsidiaries and associate, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised. The carrying amount of deferred tax assets is reviewed at the end of each reporting period 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 tax asset to be utilised. Unrecognised deferred tax assets are reassessed at the end of each reporting period and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in 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 end of each reporting period. Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity and deferred tax arising from a business combination is adjusted against goodwill on acquisition. (c) Sales tax The applicable sales taxes are the Goods and Services Tax (GST) and the Sales and Service Tax (SST), depending on the tax jurisdiction where the Group operates. Revenues, expenses and assets are recognised net of the amount of sales tax except: • Where the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither accounting profit nor taxable profit or loss; and • Where the sales tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case the sales tax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and • In respect of taxable temporary differences associated with investments in subsidiaries and associate, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred income tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits 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 credits and unused tax losses can be utilised except: • Where the deferred tax asset relating to the deductible temporary difference 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 accounting profit nor taxable profit or loss; and • Receivables and payables are stated with the amount of sales tax included. 1.16 Borrowing Costs Borrowing costs are recognised in profit or loss in the period in which they are incurred. 1.17 Share capital and share issue expenses Proceeds from issuance of equity shares are recognised as share capital in equity. Incremental costs directly attributable to the issuance of ordinary shares are deducted against share capital. 9 1 0 2 t r o p e R l a u n n A | d e t i i m L g n i n r a e L n e p O 45 For personal use only Notes to the financial statements Continued 1. Summary of significant accounting policies (cont’d) 1.18 Leases The Group as lessee At inception of a contract, the Group assesses if the contract contains or is a lease. If there is a lease present, a right-of-use asset and a corresponding lease liability is recognised by the Group where the Group is a lessee. However, all contracts that are classified as short-term leases (i.e. a lease with a remaining lease term of 12 months or less) and leases of low-value assets are recognised as an operating expense on a straight-line basis over the term of the lease. Initially, the lease liability is measured at the present value of the lease payments still to be paid at commencement date. The lease payments are discounted at the interest rate implicit in the lease. If this rate cannot be readily determined, the Group uses the incremental borrowing rate. Lease payments included in the measurement of the lease liability are as follows: • fixed lease payments less any lease incentives; • variable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement date; • the amount expected to be payable by the lessee under residual value guarantees; • the exercise price of purchase options, if the lessee is reasonably certain to exercise the options; • lease payments under extension options, if lessee is reasonably certain to exercise the options; and • payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to terminate the lease. The right-of-use assets comprise the initial measurement of the corresponding lease liability as mentioned above, any lease payments made at or before the commencement date, as well as any initial direct costs. The subsequent measurement of the right-of-use assets is at cost less accumulated depreciation and impairment losses. Right-of-use assets are depreciated over the lease term or useful life of the underlying asset, whichever is the shortest. Where a lease transfers ownership of the underlying asset, or the cost of the right-of-use asset reflects that the Group anticipates to exercise a purchase option, the specific asset is depreciated over the useful life of the underlying asset. 1.19 New and Amended Accounting Policies Adopted by the Group Initial application of AASB 16 The Group has adopted AASB 16: Leases retrospectively with the cumulative effect of initially applying AASB 16 recognised at 1 January 2019. In accordance with AASB 16, the comparatives for the 2018 reporting period have not been restated. The Group has recognised a lease liability and right-of-use asset for all leases (with the exception of short-term and low-value leases) recognised as operating leases under AASB 117: Leases where the Group is the lessee. There has been no significant change from prior year treatment for leases where the Group is a lessor. The lease liabilities are measured at the present value of the remaining lease payments. The Group adopted a discount rate of 2.0% p.a. to discount the lease payments. The right-of-use assets for the Group’s leases were measured and recognised in the statement of financial position as at 1 January 2019. There is no impact to the Group’s financial position as at 1 January 2019 as the lease liability was only contracted at the end of the financial year 2019. The following practical expedients have been used by the Group in applying AASB 16 for the first time: • for a portfolio of leases that have reasonably similar characteristics, a single discount rate has been applied; • leases that have a remaining lease term of less than 12 months as at 1 January 2019 have been accounted for in the same way as short-term leases; • the use of hindsight to determine lease terms on contracts that have options to extend or terminate; • applying AASB 16 to leases previously identified as leases under AASB 117 and Interpretation 4: Determining whether an arrangement contains a lease without reassessing whether they are, or contain, a lease at the date of initial application; and • not applying AASB 16 to leases previously not identified as containing a lease under AASB 117 and Interpretation 4. 46 For personal use only 2. Critical accounting judgements and estimates The preparation of the Group’s consolidated financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected. 2.1 Judgements made in applying accounting policies In the process of applying the Group’s accounting policies, management has made the following judgements which have the most significant effect on the amounts recognised in the consolidated financial statements: (a) Recognition of Services revenue The amounts of revenue recognised in the reporting period depends on the extent to which the performance obligations have been satisfied. Recognising Services revenue requires significant judgement in determining milestones, actual work performed and the estimated costs to complete the work. (b) Share-based payment transactions The Company measures the cost of equity-settled transactions by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by an internal valuation using a Black-Scholes option pricing model. (c) Capitalisation of computer software Distinguishing the phases of a new customised software project and determining whether the recognition requirements for the capitalisation of development costs are met requires judgement. Post-capitalisation, management monitors whether the recognition requirements continue to be met and whether there are any indicators that capitalised costs may be impaired. 2.2 Key sources of estimation uncertainty The key assumptions concerning the future and other key sources of estimation uncertainty at the end of each reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. The Group based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising beyond the control of the Group. Such changes are reflected in assumptions when they occur. (a) Impairment of non-financial assets Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value in use. The fair value less costs to sell calculation is based on available data from binding sales transactions in an arm’s length transaction of similar assets or observable market prices less incremental costs for disposing the asset. The value in use calculation is based on a discounted cash flow model. (b) Impairment of receivables The Group assesses at the end of each reporting period whether there is any objective evidence that a financial asset is impaired. Factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments are objective evidence of impairment. In determining whether there is objective evidence of impairment, the Group considers whether there is observable data indicating that there have been significant changes in the debtor’s payment ability or whether there have been significant changes with adverse effect in the technological, market, economic or legal environment in which the debtor operates in. Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience for assets with similar credit risk characteristics. 9 1 0 2 t r o p e R l a u n n A | d e t i i m L g n i n r a e L n e p O 47 For personal use only Notes to the financial statements Continued 3. Revenue Revenue from contracts with customers Platform SaaS fees Marketplace sales Services sales GROUP 2019 $ 2018 $ 722,525 247,779 632,309 1,602,613 379,259 158,735 1,227,101 1,765,095 3.1 The Group has disaggregated revenue into various categories in the following table. The revenue is disaggregated by geographical market, product/service lines and timing of revenue recognition. YEAR TO 31 DECEMBER 2019 Platform SaaS Services Marketplace 2019 $ 2018 $ 2019 $ 2018 $ 2019 $ 2018 $ 2019 $ Total 2018 $ 499,726 320,361 375,475 696,300 207,234 93,649 1,082,435 1,110,310 211,579 58,089 256,834 530,801 40,545 65,086 508,958 653,976 11,220 809 – – – – 11,220 809 722,525 379,259 632,309 1,227,101 247,779 158,735 1,602,613 1,765,095 – – – – 247,779 158,735 247,779 158,735 722,525 379,259 632,309 1,227,101 – – 1,354,834 1,606,360 722,525 379,259 632,309 1,227,101 247,779 158,735 1,602,613 1,765,095 GROUP 2019 $ 13,632 5,006 18,638 2018 $ – 65,560 65,560 Geographical markets Australia Malaysia Singapore Timing of revenue recognition Products and services transferred to customers: At a point in time Over time 4. Other income Government grant Others 48 For personal use only 5. Loss for the year Loss before income tax from continuing operations includes the following specific expenses: Employee benefits expense – severance costs Depreciation – depreciation on furniture, fittings and equipment – depreciation on right-of-use asset Professional services – contractors General and administrative costs – write-off / loss on disposal of furniture, fittings and equipment – surrender of lease costs – foreign currency translation gains / (losses) – impairment of trade receivables – travelling costs Pre-IPO and IPO-related costs – share-based payments GROUP 2019 $ 2018 $ 183,019 78,017 31,095 31,764 23,962 – 104,437 108,338 61,017 67,518 13,538 15,354 101,131 14,775 – 26,857 180,826 150,300 2,452,376 – 6. Income tax 6.1 Income tax benefit There is no income tax expense for the current financial year as the Group does not have chargeable income. The Group recorded an income tax benefit of $156,263 for the comparative FY2018 arising from approved research and development tax incentives. At the end of the reporting period, the Group has tax losses of approximately $15,014,000 (2018: $9,302,000) that are available for offset against future taxable profits of the companies in which the losses arose, for which no deferred tax asset is recognised due to uncertainty of their recoverability. The use of these tax losses is subject to the agreement of the tax authorities and compliance with certain provisions of the tax legislation of the respective countries in which the companies operate. 9 1 0 2 t r o p e R l a u n n A | d e t i i m L g n i n r a e L n e p O 49 For personal use only Notes to the financial statements Continued 6. Income tax (cont’d) 6.2 The prima facie tax on losses from ordinary activities before income tax is reconciled to the income tax as follows: Loss before tax from continuing operations GROUP 2019 $ 2018 $ (7,719,951) (4,547,890) Prima facie tax benefit on loss from ordinary activities before tax at the domestic tax rates where the Group operates (2,041,189) (1,192,640) Add/(subtract): Tax effect of: – non-allowable items – effect of tax losses not recognised – tax benefit of deductible equity raising costs – under-provision for income tax in prior year – movement in unrecognised temporary difference Income tax attributable to entity 842,192 1,325,226 (117,456) 30,689 (39,462) – 52,402 1,189,842 – – (49,604) – The above reconciliation is prepared by aggregating separate reconciliations for each tax jurisdiction where the Group operates. A summary of the domestic tax rates by country where the Group operates is as follows: Australia Singapore Malaysia 2019 % 27.5 17.0 24.0 2018 % 27.5 17.0 24.0 7. Key Management Personnel Refer to the remuneration report contained in the directors’ report for details of the remuneration paid or payable to each member of the Group’s key management personnel (KMP) for the year ended 31 December 2019. The totals of remuneration paid to KMP of the Group during the year are as follows: Short-term employee benefits Post-employment benefits Share-based payments Total KMP compensation 50 2019 $ 894,608 85,589 349,827 1,330,024 2018 $ 667,585 57,117 – 724,702 For personal use only 7. Key Management Personnel (cont’d) Short-term employee benefits These amounts include fees paid to the non-executive Chairman and non-executive directors as well as all salary, paid leave benefits and any cash bonuses awarded to an executive director and other KMP. Post-employment benefits These amounts are the current-year’s estimated costs of providing for the Group’s superannuation contributions made during the year. Share-based payments These amounts represent the expense related to the participation of KMP in equity-settled benefit schemes as measured by the fair value of the options, rights and shares granted on grant date. Further information in relation to KMP remuneration can be found in the directors’ report. 8. Auditors’ remuneration Remuneration of the auditor for: – auditing or reviewing the financial statements – preparation of investigating accountants report GROUP 2019 $ 37,940 20,000 57,940 2018 $ 22,664 – 22,664 9. Earnings/(losses) per share Basic earnings/(losses) per share is calculated by dividing the profit/(loss) for the year attributable to owners of the Company by the weighted average number of ordinary shares outstanding during the financial year. The following table reflects the loss and share data used in the computation of basic earnings/(losses) per share for the years ended 31 December: Loss for the year attributable to owners of the Company ($) GROUP 2019 2018 (7,719,951) (4,391,627) Weighted average number of ordinary shares for basic earnings per share computation 139,666,641 31,749,315 The effects from the potential ordinary shares of the Company arising from the conversion of share-based payments are deemed anti-dilutive. Accordingly, the basic and diluted earnings per share for the financial years 2019 and 2018 are the same. 9 1 0 2 t r o p e R l a u n n A | d e t i i m L g n i n r a e L n e p O 51 For personal use only Notes to the financial statements Continued 10. Trade and other receivables CURRENT Trade receivables Provision for impairment Other receivables Provision for impairment Total current trade and other receivables Note 10a(i) GROUP 2019 $ 651,287 (187,094) 464,193 87,387 – 87,387 551,580 2018 $ 700,234 (183,908) 516,326 50,372 – 50,372 566,698 All amounts are short-term. The net carrying value of trade receivables is considered a reasonable approximation of fair value. The following table shows the movement in lifetime expected credit loss that has been recognised for trade and other receivables in accordance with the simplified approach set out in AASB 9: Financial Instruments. GROUP Net measurement of loss allowance $ Opening balance 1 January 2018 $ a. Lifetime Expected Credit Loss: Credit Impaired (i) Current trade receivables 3,082 180,826 Amounts written off Closing balance 31 December 2018 $ 183,908 $ – GROUP Net measurement of loss allowance Amounts written off Closing balance $ $ 31 December 2019 $ Opening balance 1 January 2019 $ a. Lifetime Expected Credit Loss: Credit Impaired (i) Current trade receivables 183,908 15,354 (12,168) 187,094 The Group applies the simplified approach to providing for expected credit losses prescribed by AASB 9, which permits the use of the lifetime expected loss provision for all trade receivables. To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the days past due. The loss allowance provision as at 31 December 2019 is determined as follows; the expected credit losses also incorporate forward-looking information. The “amounts written off”, if any, are all due to customers declaring bankruptcy, or term receivables that have now become unrecoverable. 52 For personal use only 10. Trade and other receivables (cont’d) 2019 Expected loss rate Gross carrying amount Loss allowing provision 2018 Expected loss rate Gross carrying amount Loss allowing provision CURRENT >30 DAYS PAST DUE >60 DAYS PAST DUE >90 DAYS PAST DUE $ 0% $ 0% $ 0% 421,584 26,629 66,903 – – – $ 83.7% 223,558 187,094 CURRENT >30 DAYS PAST DUE >60 DAYS PAST DUE >90 DAYS PAST DUE $ 0% 380,941 – $ 0% 26,193 – $ 0% 548 – $ 53.6% 342,924 183,908 TOTAL $ 25.3% 738,674 187,094 TOTAL $ 24.5% 750,606 183,908 Credit risk The Group has no significant concentration of credit risk with respect to any single counterparty or group of counterparties other than those receivables specifically provided for and mentioned within this note. In FY2017, there was a significant contract signed with a private education institution in Malaysia that subsequently encountered financial difficulty. The Group made an impairment of $178,481 for this receivable in FY2018 representing 50% of the total receivable from this debtor. This debtor has since settled the balance of the 50% owing that has not been impaired. The Group has determined that the amount impaired is uncollectible and has written off this amount as at the date of this report. The class of assets described as “trade and other receivables” is considered to be the main source of credit risk related to the Group. The Group writes off a trade receivable when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery; for example, when the debtor has been placed under liquidation or has entered into bankruptcy proceedings, or when the trade receivables are over two years past due, whichever occurs earlier. Collateral Pledged A charge over trade receivables transacted through the Paypal platform has been provided for a borrowing. Refer to Note 18 for further details. 11. Cash and cash equivalents Cash at bank and on hand Cash with online payment providers Short-terms deposits placed with banks GROUP 2019 $ 1,641,000 1,618 6,098,150 7,740,768 2018 $ 828,173 1,105 247,454 1,076,732 Included in short-term deposits of the Group as at 31 December 2019 is an amount of $98,150 (2018: $142,952) that is pledged to a bank as collateral for the issuance of a bank guarantee in respect of an office tenancy. The restriction on these bank deposits were removed prior to the date of this report. 9 1 0 2 t r o p e R l a u n n A | d e t i i m L g n i n r a e L n e p O 53 For personal use only Notes to the financial statements Continued 12. Furniture, fittings and equipment 2019 Cost At 1 January 2019 Additions Disposals Exchange difference At 31 December 2019 Accumulated depreciation At 1 January 2019 Depreciation for the year Disposals Exchange difference At 31 December 2019 Net carrying amount 2018 Cost At 1 January 2018 Additions Disposals Reclassified to Intangible assets Written off Exchange difference At 31 December 2018 Accumulated depreciation At 1 January 2018 Depreciation for the year Disposals Written off Exchange difference At 31 December 2018 Net carrying amount 54 GROUP Computer $ Office equipment $ Leasehold Improvement $ Total $ 54,649 6,207 57,865 5,490 42,402 33,892 154,916 45,589 (38,600) (44,027) (45,941) (128,568) 728 22,984 10,864 9,330 754 20,082 22,031 12,227 646 30,999 14,361 9,538 2,128 74,065 47,256 31,095 (14,184) (30,092) (23,274) (67,550) 192 6,202 16,782 403 4,569 15,513 277 902 30,097 872 11,673 62,392 GROUP Computer $ Office equipment $ Leasehold Improvement $ Total $ 21.898 47,584 (16,657) – – 1,824 54,649 10,058 9,237 (9,510) – 1,079 10,864 43,785 101,238 21,537 – (28,556) (39,147) 2,793 57,865 50,654 9,308 – (39,147) 1,216 22,031 35,834 44,455 5,080 (9,362) – (640) 2,869 42,402 10,395 5,417 (1,734) (640) 923 14,361 28,041 167,591 74,201 (26,019) (28,556) (39,787) 7,486 154,916 71,107 23,962 (11,244) (39,787) 3,218 47,256 107,660 For personal use only 13. Intangible assets 2019 Cost At 1 January 2019 Additions Exchange difference At 31 December 2019 Net carrying amount 2018 Cost At 1 January 2018 Additions Reclassified from Furniture, fittings and equipment At 31 December 2018 Net carrying amount Domain names and trademarks $ GROUP Computer software work- in-progress $ Goodwill $ 37,096 24,500 – – 37,096 37,096 – – 24,500 24,500 239,816 147,776 4,153 391,745 391,745 Domain names and trademarks $ GROUP Computer software work- in-progress $ Goodwill $ 8,350 190 28,556 37,096 37,096 24,500 – – 24,500 24,500 – 239,816 – 239,816 239,816 Total $ 301,412 147,776 4,153 453,341 453,341 Total $ 32,850 240,006 28,556 301,412 301,412 Domain names and trademarks are recognised at cost of acquisition. Goodwill represents premium paid for business assets. These are considered to have an infinite life and are carried at cost less any impairment losses. Computer software is recorded at cost. It has a finite life and is carried at cost less accumulated amortisation and any impairment losses. Software has an estimated useful life of ten years. Amortisation commences when the software is ready for commercial use. Domain names and trademarks and Goodwill are allocated to the cash-generating unit which is based on the Group’s reporting geographical segment in Australia. 9 1 0 2 t r o p e R l a u n n A | d e t i i m L g n i n r a e L n e p O 55 For personal use only Notes to the financial statements Continued 14. Right-of-use asset The Group’s lease comprises a lease of office premises. This lease has a lease term of 3 years. i) AASB 16 related amounts recognised in the balance sheet Right of use assets Leased office premises Accumulated depreciation Total right-of-use asset Movement in carrying amounts: Leased office premises: At 1 January 2019 Additions Depreciation expense Net carrying amount ii) AASB 16 related amounts recognised in the statement of profit or loss Depreciation charge related to right-of-use assets Interest expense on lease liabilities Short-term leases expense Low-value asset leases expense Total cash outflows for leases 2019 $ 381,169 (31,764) 349,405 – 381,169 (31,764) 349,405 2019 $ 31,764 1,906 277,288 27,572 304,860 56 For personal use only 15. Trade and other payables CURRENT Trade payables Other payables and accrued expenses NON-CURRENT Other payables a. Financial liabilities at amortised cost classified as trade and other payables Trade and other payables: – total current – total non-current Financial liabilities as trade and other payables GROUP 2019 $ 452,514 341,068 793,582 199,927 993,509 2018 $ 179,448 129,424 308,872 – 308,872 793,582 199,927 993,509 308,872 – 308,872 Included in other payables for 2019 is an amount of $389,516 of which $199,927 is disclosed as non-current (2018: Nil) owing to the Australian Tax Office being an instalment plan payable over 23 monthly instalments arising from PAYG withheld for which interest is charged at average rate of 7.98% p.a. Trade and other payables are otherwise non-interest bearing. 16. Provisions Current: Provision for annual leave GROUP 2019 $ 2018 $ 143,650 193,468 17. Convertible preference shares A subsidiary of the Company, OpenLearning Global Pte Ltd, issued a total of 5,580,982 convertible preference shares (“CPS”) in the comparative FY2018 at an aggregate issue price of $9.00 as part of a funds raising exercise completed in FY2018. These CPS were converted to equity shares in the subsidiary in FY2019 as part of a corporate restructuring in preparation for the Company’s listing on the ASX. 18. Borrowing The borrowing balance represents a working capital loan provided by Paypal which is secured over the funds transacted through the Paypal payment gateway. This borrowing attracts an upfront loan fee of 18.5% with the borrowing repaid from 30% deduction of the receivables collected through the payment gateway until the borrowing is fully settled. 9 1 0 2 t r o p e R l a u n n A | d e t i i m L g n i n r a e L n e p O 57 For personal use only Notes to the financial statements Continued 19. Share capital Issued and fully paid ordinary shares: At 1 January Issuance of shares during the period : – pursuant to OLGAI Share Exchange Agreement – pursuant to OLGSG Share Exchange Agreement – pursuant to conversion of convertible notes – issuance to advisors and a director – pursuant to initial public offering of shares Fair value adjustment on shares issued GROUP 2019 2018 No. of shares $ No. of shares $ 25,000,000 5,189,487 25,000,000 5,189,487 16,527,200 96,863 23,472,801 8,550,009 30,833,307 3,700,000 3,833,333 766,667 40,000,000 8,000,000 – (825,871) – – – – – – – – – – At 31 December 139,666,641 25,477,155 25,000,000 5,189,487 Issued and fully paid “A” shares: At 1 January Issuance of shares during the period Shares issued on conversion of convertible preference shares Transfer pursuant to OLGSG Share Exchange Agreement 7,500,000 7,500,000 3,000,000 3,000,000 – 4,895,597 – 3 (12,395,597) (7,500,003) 4,500,000 4,500,000 – – – – At 31 December – – 7,500,000 7,500,000 Issued and fully paid “B” shares: At 1 January Issuance of shares during the period Shares issued on conversion of convertible preference shares Transfer pursuant to OLGSG Share Exchange Agreement At 31 December Equity issuance costs 1,050,000 1,050,000 – – – 685,384 – 6 (1,735,384) (1,050,006) 1,050,000 1,050,000 – – – – – – – 1,050,000 1,050,000 (2,243,961) – (802,249) Total ordinary, “A” and “B” shares at 31 December 139,666,641 23,233,194 33,550,000 12,937,238 Corporate reorganisation The Group undertook the transactions described below in FY2019 as part of a corporate reorganisation to facilitate the listing of the Company on the ASX. The Company acquired the entire issued and paid-up share capital of OLG Australia Investors Pte Ltd (“OLGAI”) from all its shareholders (“OLGAI Shareholders”) via the entry and execution of a share exchange agreement made between the OLGAI Shareholders and the Company (“OLGAI Share Exchange Agreement”). 58 For personal use only 19. Share capital (cont’d) OLGAI together with a group of minority shareholders (“OLGSG Minority Shareholders”) owns the entire issued and paid-up share capital of OpenLearning Global Pte Ltd (“OLGSG”). OLGSG in turn owns the entire issued and paid-up share capital in Open Learning Global Pty Ltd (“OLGAU”) and OpenLearning Global (M) Sdn Bhd (“OLGMY”). OLGAU and OLGMY are the operating subsidiaries of the Group providing a cloud-based social learning platform, learning design services and sale of education courses through a global marketplace. The Company, together with the execution of the OLGAI Share Exchange Agreement, also acquired the entire issued and paid-up share capital of OLGSG via the entry and execution of a share exchange agreement made between the OLGSG Minority Shareholders and the Company (“OLGSG Share Exchange Agreement”). Pursuant to the OLGAI Share Exchange Agreement and the OLGSG Share Exchange Agreement (collectively, the “Group Share Exchange Agreements”), both the OLGAI Shareholders and the OLGSG Minority Shareholders sold and transferred all their respective shares in OLGAI and OLGSG to the Company in exchange for the Company allotting to each of the OLGAI Shareholders and OLGSG Minority Shareholders new shares in the Company representing all the issued and paid-up shares of the Company. Following the completion of the Group Share Exchange Agreements, the Company further issued shares (i) pursuant to conversion of convertible notes, (ii) to advisors and a director for services rendered and (iii) for the initial public offering of shares on the ASX. 20. Reserves Foreign currency translation reserve Common control reserve Share option reserve GROUP 2019 $ 11,719 1,650,477 1,791,414 3,453,610 2018 $ 15,841 – – 15,841 (i) Foreign currency translation reserve Foreign currency translation reserve represents exchange differences arising from the translation of the financial statements of the Company and its subsidiaries whose functional currencies are different from that of the Group’s presentation currency. (ii) Common control reserve Common control reserve records difference between the fair value of net assets acquired and consideration paid. (iii) Share option reserve Share option reserve records items recognised as expenses on valuation of share options. 21. Financial risk management The Group’s principal financial instruments comprise of receivables, payables, cash at bank and short-term deposits. The Board of Directors has overall responsibility for the oversight and management of the Group’s exposure to a variety of financial risks (including credit risk, foreign currency risk, liquidity risk and interest rate risk). The overall risk management strategy seeks to assist the Group in meeting its financial targets, while minimising potential adverse effects on the financial performance including the review of future cash flow requirements. 9 1 0 2 t r o p e R l a u n n A | d e t i i m L g n i n r a e L n e p O 59 For personal use only Notes to the financial statements Continued 21. Financial risk management (cont’d) (a) Liquidity risk Liquidity risk is the risk that the Group will encounter difficulty in meeting financial obligations due to shortage of funds. The Group’s exposure to liquidity risk arises primarily from cash outflows from current operating losses. The Group’s objective is to focus on maintaining an appropriate level of overheads in line with the Group’s business plan and available cash resources, with the objective of achieving a cashflow positive business within the budgeted timeline. The table below summarise the maturity profile of the Group’s financial assets and liabilities at the end of the reporting period based on contractual undiscounted repayment obligations. WITHIN 1 YEAR 1 TO 5 YEARS OVER 5 YEARS TOTAL 2019 $ 2018 $ 2019 $ 2018 $ 2019 $ 2018 $ 2019 $ 2018 $ Group Financial assets – cash flows realisable Trade and other receivables Cash and short-term deposits 551,580 566,698 7,740,768 1,076,732 – – – Total anticipated inflows 8,292,348 1,643,430 Financial liabilities due for payment Trade and other payables 793,582 308,872 199,927 Lease liability Borrowing 132,191 17,727 – – 250,884 – Total expected outflows 943,500 308,872 450,811 Net inflow/(outflow) on financial instruments 7,348,848 1,334,558 (450,811) – – – – – – – – – – – – – – – – – 551,580 566,698 – 7,740,768 1,076,732 – 8,292,348 1,643,430 – – – 993,509 308,872 383,075 17,727 – – – 1,394,311 308,872 – 6,898,037 1,334,558 (b) Credit risk Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations. The Group’s exposure to credit risk arises primarily from trade and other receivables. For other financial assets (including cash and short-term deposits), the Group minimise credit risk by dealing with high credit rating counterparties. The Group’s objective is to seek continual revenue growth while minimising losses incurred due to increased credit risk exposure. The Group trades with third parties that are considered creditworthy. In addition, receivable balances are monitored on an ongoing basis. Exposure to credit risk At the end of the reporting period, the Group’s maximum exposure to credit risk is represented by the carrying amount of each class of financial assets recognised on the balance sheets. Credit risk concentration profile Except as disclosed in Note 10 above, the Group does not have any significant exposure to any individual customer or counterparty nor does it have any major concentration of credit risk related to any financial instruments. Financial assets that are neither past due nor impaired Trade and other receivables that are neither past due nor impaired are with creditworthy debtors with good payment records with the Group. Cash and short-term deposits and investment securities that are neither past due nor impaired are placed with or entered into with reputable financial institutions. Financial assets that are either past due or impaired Information regarding financial assets that are either past due or impaired is disclosed in Note 10. 60 For personal use only 21. Financial risk management (cont’d) (c) Foreign currency risk Exposure to foreign currency risk may result in the fair value or future cash flows of a financial instrument fluctuating due to movement in foreign exchange rates of currencies in which the Group holds financial instruments which are other than the AUD functional currency of the Group. With instruments being held by overseas operations, fluctuations in the SGD Singapore dollar and USD United States dollar may impact on the Group’s financial results. The following table shows the foreign currency risk on the financial assets and liabilities of the Group’s operations denominated in currencies other than the functional currency of the operations. 2019 Group Functional currency of entity: Australian dollar Statement of financial position exposure 2018 Group Functional currency of entity: Australian dollar Statement of financial position exposure NET FINANCIAL ASSETS/(LIABILITIES) IN AUD USD SGD Other Total AUD 19,873 19,873 15,040 15,040 – – 34,913 34,913 NET FINANCIAL ASSETS/(LIABILITIES) IN AUD USD SGD Other Total AUD (2,774) (2,774) 2,989 2,989 – – 215 215 Foreign currency risk concentration profile The Group does not have any significant exposure to any specific foreign currency grouping nor does it have any major concentration of foreign currency risk related to any financial instruments. (d) Interest rate risk The Group’s exposure to market interest rates relate to cash deposits held at variable rates. The management monitors its interest rate exposure and consideration is given to potential renewals of existing positions. Sensitivity analysis for interest rate risk The following table demonstrate the sensitivity of profit/(loss) and equity to a reasonably possible change in interest rates of +/ – 50 basis points, will all other variables held constant. Year ended 31 December 2019 +0.5% in interest rates -0.5% in interest rates Year ended 31 December 2018 +0.5% in interest rates -0.5% in interest rates GROUP Profit $ Equity $ 38,704 38,704 (38,704) (38,704) 5,384 (5,384) 5,384 (5,384) 9 1 0 2 t r o p e R l a u n n A | d e t i i m L g n i n r a e L n e p O 61 For personal use only Notes to the financial statements Continued 22. Interests in subsidiaries NAME PRINCIPAL ACTIVITIES COUNTRY OF INCORPORATION PROPORTION (%) OF OWNERSHIP INTEREST Held by the Company OLG Australia Investors Pte Ltd Investment holding OpenLearning Global Pte Ltd Investment holding and provision of online education platform and services Held by OpenLearning Global Pte Ltd Open Learning Global Pty Ltd Provision of online education platform and services. OpenLearning Global (M) Sdn Bhd Provision of online education platform and services. Singapore Singapore Australia Malaysia * 63.89% held via OLG Australia Investors Pte Ltd. ** 74.52% held via OLG Australia Investors Pte Ltd. 2019 % 100 100* 100 100 2018 % 100 100** 100 100 23. Operating segments The Group has identified its operating segments based on the internal reports that are reviewed and used by management in assessing performance and determining the allocation of resources. The Group’s sales, marketing and professional services operations are managed on the basis of geographical location. The Group’s shared services, which includes software engineering, product management and finance, are primarily located in Australia and expenses are primarily booked within the Australian entity, with the addition of a separate corporate overheads segment. Operating segments are therefore determined on the same basis and the Group has four reportable segments as follows: (a) Australia (b) Malaysia (c) Singapore (d) Corporate (based in Australia) 62 For personal use only 23. Operating segments (cont’d) AUSTRALIA MALAYSIA SINGAPORE CORPORATE (AUSTRALIA) 2019 Revenue: External sales Segment results: $ $ $ 1,082,435 508,958 11,220 Web-hosting and other direct costs (200,007) (194,424) (383) $ – – TOTAL $ 1,602,613 (394,814) Employees benefit expenses (3,272,534) (1,133,985) (114,673) (81,081) (4,602,273) Depreciation Promotional and advertising Professional services General and administration Pre-IPO and IPO-related costs Segment loss Segment assets Segment liabilities (39,828) (93,721) (152,272) (22,734) (9,593) (13,184) (587,426) (207,977) (297) (1,366) (57,327) (15,604) – (62,859) (16,434) (121,114) (19,880) (242,663) (11,849) (822,856) – – (245,548) (2,825,162) (3,070,710) (3,277,271) (1,068,187) (422,964) (2,951,529) (7,719,951) 1,247,588 1,559,841 881,067 470,000 129,894 7,125,513 9,384,062 94,650 (13,793) 2,110,698 AUSTRALIA MALAYSIA SINGAPORE CORPORATE (AUSTRALIA) $ $ $ 2018 Revenue: External sales Segment results: 1,110,310 653,976 Web-hosting and other direct costs (392,830) (102,817) 809 – Employees benefit expenses (3,017,260) (1,182,466) (61,253) Depreciation Promotional and advertising Professional services (3,785) (170,144) (209,169) (20,036) (60,199) (35,902) General and administration (604,579) (401,359) (141) (6,401) (93,029) (35,452) Segment loss Segment assets Segment liabilities (3,265,068) (1,095,237) (187,585) 1,068,921 756,368 851,352 143,710 262,937 23,542 $ – – – – – – – – – – TOTAL $ 1,765,095 (495,647) (4,260,979) (23,962) (236,744) (338,100) (1,041,390) (4,547,890) 2,183,210 923,620 9 1 0 2 t r o p e R l a u n n A | d e t i i m L g n i n r a e L n e p O 63 For personal use only Notes to the financial statements Continued 24. Cash flow information Reconciliation of cash flows from operating activities with loss after income tax: Loss after tax Non-cash flows in loss for the year: Depreciation Write-off / Loss on disposal of furniture, fittings and equipment Unrealised exchange (gain) / loss Pre-IPO and IPO Costs Changes in assets and liabilities: Increase in trade and other receivables Increase in trade and other payables Net cash flows used in operating activities GROUP 2019 $ 2018 $ (7,719,951) (4,391,627) 62,859 61,017 (10,113) 3,070,710 23,962 14,775 7,705 – (80,750) 742,106 (209,493) 10,130 (3,874,122) (4,544,548) 25. Lease commitments Non-cancellable operating leases contracted for but not recognised in the financial statements: Payable – minimum lease payments: Not later than one year Later than one year and not later than five years GROUP 2019 $ 2018 $ – – – 270,729 809,450 1,080,179 The leases for the comparative FY2018 are in respect of commercial lease for the Group’s office premises that have been terminated in FY2019. 26. Events after the reporting period The Company is currently reviewing and closely monitoring the Novel Coronavirus 2019 (COVID-19) situation as it unfolds, ensuring compliance and cooperation with protocols and advice as and when issued by the Government. The Directors are reviewing business operations and strategies and assessing the impact on the Group. The Group is unable to determine at this time the potential impact COVID-19 will have, noting that a number of education providers have expressed an intention to expand their on-line education offerings and the Group is actively working to support their urgent needs. 64 For personal use only Directors’ declaration In accordance with a resolution of the directors of OpenLearning Limited, the directors of the Company declare that: 1. the financial statements and notes, as set out, are in accordance with the Corporations Act 2001 and: a. comply with Australian Accounting Standards, which, as stated in accounting policy Note 1 to the financial statements, constitutes compliance with International Financial Reporting Standards; and b. give a true and fair view of the financial position as at 31 December 2019 and of the performance for the year ended on that date of the consolidated group; 2. 3. in the directors’ opinion there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable; and the directors have been given the declarations required by section 295A of the Corporations Act 2001 from the Chief Executive Officer and Chief Financial Officer. On behalf of the Board of Directors Adam Brimo Managing Director Dated: 27 March 2020 9 1 0 2 t r o p e R l a u n n A | d e t i i m L g n i n r a e L n e p O 65 For personal use only Creating the leaders of tomorrow, today. 66 For personal use only 9 1 0 2 t r o p e R l a u n n A | d e t i i m L g n i n r a e L n e p O 67 For personal use only Independent auditor’s report OPENLEARNING LIMITED ABN 18 635 890 390 AND CONTROLLED ENTITIES INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF OPENLEARNING LIMITED Report on the Financial Report Opinion We have audited the financial report of OpenLearning Limited (the company) and its controlled entities (the group), which comprises the consolidated statement of financial position as at 31 December 2019, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies and the directors’ declaration. In our opinion the accompanying financial report of the group is in accordance with the Corporations Act 2001, including: a. giving a true and fair view of the group’s financial position as at 31 December 2019 and of its financial performance for the year then ended; and b. complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for Opinion We conducted our audit in accordance with Australian Auditing Standards. Those Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about whether the financial report is free from material misstatement. Our responsibilities under those Standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110: Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the company, would be in the same terms if given to the directors as at the time of this auditor’s report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Material Uncertainty Related to Going Concern We draw attention to Note 1 in the financial report, which indicates that the group incurred a net loss after tax of $7,719,951 and operating cash outflows of $3,874,122 for the year ended 31 December 2019. As stated in Note 1, these events or conditions, along with other matters as set forth in Note 1, indicate that a material uncertainty exists that may cast significant doubt on the group’s ability to continue as a going concern. Our opinion is not modified in respect of this matter. Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report for the year ended 31 December 2019. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. 68 For personal use only OPENLEARNING LIMITED ABN 18 635 890 390 AND CONTROLLED ENTITIES INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF OPENLEARNING LIMITED Key Audit Matter How Our Audit Addressed the Key Audit Matter Accounting for Corporate Reorganisation Refer to Note 19 Share capital to Pursuant the group share exchange agreement as disclosed in Note 19 to the financial statements, OLG Australia Investors Pte Ltd shareholders and Openlearning Global Pte Ltd minority shareholders sold and transferred all their respective shares in OLG Australia Investors Pte Ltd and Openlearning Global Pte Ltd to the company in exchange for the company allotting new shares to these shareholders. The accounting for the corporate restructure of the group was considered a key audit matter given its material effect on the group and the complexity of the transaction which occurred to give effect to the restructure. Our procedures included, amongst others: Obtaining an understanding of the substance and the restructure transaction by reviewing the underlying legal documents; form of legal Assessed evaluated and management’s accounting treatment the pertaining restructure accordance with transaction applicable accounting standards; Reviewed the appropriateness of the restructure journals recorded at the restructure date; and to in Assessed the adequacy of the related disclosures in the financial report. 9 1 0 2 t r o p e R l a u n n A | d e t i i m L g n i n r a e L n e p O 69 For personal use only OPENLEARNING LIMITED ABN 18 635 890 390 AND CONTROLLED ENTITIES INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF OPENLEARNING LIMITED Share-based payment transactions Refer to Note 2 Critical accounting judgements and estimates, Note 19 Share capital and Note 20 Reserves During the year ended 31 December 2019, the group undertook various share-based payment arrangements in relation to the settlement of supplier and consultant expenses through the issue of ordinary shares, options and performance rights. The accounting for share-based payments was a key audit matter because the expense incorporates an element of judgement in relation to the determination of fair value, particularly in relation to the options and performance rights. The group valued the options and performance rights, using an option pricing model, where inputs such as volatility, dividend yield and risk-free rate require judgement. Our procedures included, amongst others: We obtained and confirmed a reconciliation of shares and options on issue during the year, and assessed whether new shares, options and rights issued trigger the requirement of AASB 2: Share-based payment; We the reviewed share-based payment amount recognised during terms and the year against underlying conditions arrangement; the the of We reviewed the estimated fair value of options and performance rights using an option pricing model, the including reasonableness of key inputs used in the model; assessing Where applicable, we verified the fair value of the services received to supplier invoices; and We assessed the adequacy of the group’s disclosures in relation to the share-based payment transactions. Information Other than the Financial Report and Auditor’s Report Thereon The directors are responsible for the other information. The other information comprises the information included in the group’s annual report for the year ended 31 December 2019, but does not include the financial report and our auditor’s report thereon. Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. 70 For personal use only OPENLEARNING LIMITED ABN 18 635 890 390 AND CONTROLLED ENTITIES INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF OPENLEARNING LIMITED Responsibilities of the Directors for the Financial Report The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the ability of the group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or to cease operations, or have no realistic alternative but to do so. Auditor’s Responsibilities for the Audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: – Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control – Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the group’s internal control. – Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. – Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the group to cease to continue as a going concern. – Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation. 9 1 0 2 t r o p e R l a u n n A | d e t i i m L g n i n r a e L n e p O 71 For personal use only OPENLEARNING LIMITED ABN 18 635 890 390 AND CONTROLLED ENTITIES INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF OPENLEARNING LIMITED – Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the financial report. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial report of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on the Remuneration Report We have audited the Remuneration Report included in the directors’ report for the year ended 31 December 2019. In our opinion, the Remuneration Report of OpenLearning Limited for the year ended 31 December 2019 complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. HALL CHADWICK Level 40, 2 Park Street Sydney NSW 2000 DREW TOWNSEND Partner Dated: 27 March 2020 72 For personal use only Shareholder information The shareholder information set out below was applicable as at 23 March 2020. A. Distribution of Equity Securities – Ordinary Shares Analysis of numbers of equity security holders by size of holding: SPREAD OF HOLDINGS 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 and over TOTAL NUMBER OF HOLDERS NUMBER OF UNITS % OF TOTAL ISSUED CAPITAL 13 189 212 593 150 1,165 647,545 1,854,354 22,596,949 114,566,628 0.00% 0.46% 1.33% 16.18% 82.03% 1,157 139,666,641 100.00% Based on the price per security, number of holders with an unmarketable holding: 53, with total 78,207, amounting to 0.06% of Issued Capital. B. Distribution of Equity Securities – Share Options Analysis of numbers of option holders by size of holding: SPREAD OF HOLDINGS 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 and over TOTAL C. Distribution of Equity Securities – Performance Rights Analysis of numbers of Performance Rights holders by size of holding: SPREAD OF HOLDINGS 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 and over TOTAL NUMBER OF HOLDERS NUMBER OF UNITS % OF TOTAL ISSUED CAPITAL – – – 25 49 74 – – – – – – 1,718,374 36,908,266 38,626,640 4.45% 95.55% 100.00% NUMBER OF HOLDERS NUMBER OF UNITS % OF TOTAL ISSUED CAPITAL – – – – 2 2 – – – – – – – – 2,750,000 2,750,000 100.00% 100.00% 9 1 0 2 t r o p e R l a u n n A | d e t i i m L g n i n r a e L n e p O 73 For personal use only Shareholder information Continued D. Equity Security Holders – Ordinary Shares Twenty largest quoted equity security holders. The names of the twenty largest holders of quoted equity securities are listed below: NAME MAGNA INTELLIGENT SDN BHD PRESTARIANG CAPITAL SDN BHD CLIVE MAYHEW MR ADAM MAURICE BRIMO RICHARD BUCKLAND AUSTRALIAN CATHOLIC UNIVERSITY LIMITED NATIONAL NOMINEES LIMITED NARRON PTY LTDMR DAVID ANDREW COLLIEN NICOLETTE HARPER FRANK NOEL BEAUMONT SARGON CT PTY LTD AUTHENTICS AUSTRALIA PTY LTD MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LTD CITICORP NOMINEES PTY LIMITED SANDTON CAPITAL PTY LTD MR NICK THEODORAKOPOULOS ORIENT GLOBAL HOLDINGS PTY LTD PROVECHO PARTNERS PTY LTD RODERICK DE ABOITIZ BANNEN LIMITED ORDINARY SHARES NUMBER HELD 10,580,058 9,608,749 8,288,754 6,406,117 5,094,288 5,000,000 4,457,581 3,981,809 3,556,743 2,720,758 2,367,021 2,167,865 1,666,666 1,666,666 1,616,394 1,483,333 1,250,000 1,250,000 1,183,509 1,170,336 1,156,940 % OF ISSUED SHARES 7.58% 6.88% 5.93% 4.59% 3.65% 3.58% 3.19% 2.85% 2.55% 1.95% 1.69% 1.55% 1.19% 1.19% 1.16% 1.06% 0.90% 0.90% 0.85% 0.84% 0.83% As at 23 March 2020, the 20 largest shareholders held ordinary shares representing 55.72% of the issued share capital. Substantial Shareholders Substantial holders in the Company are set out below: NAME Magna Intelligent Sdn Bhd Prestariang Capital Sdn Bhd Clive Mayhew Partly Paid Shares The Company does not have any partly paid shares on issue. Voting Rights The voting rights attached to ordinary shares are set out below: ORDINARY SHARES NUMBER HELD 11,030,058 9,608,749 8,288,754 % OF ISSUED SHARES 7.90% 6.88% 5.93% On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote. On-market buy-back The Company is not currently conducting an on-market buy-back. 74 For personal use only Corporate Directory Directors Kevin Barry, Non-Executive Chairman Adam Brimo, Managing Director and Group CEO Spiro Pappas, Non-Executive Director David Buckingham, Non-Executive Director Professor Beverley Oliver, Non-Executive Director Maya Hari, Non-Executive Director Company Secretary Justyn Stedwell Registered Office Level 2, 235 Commonwealth Street Surry Hills NSW 2010 Auditors Hall Chadwick Level 40, 2 Park Street Sydney NSW 2000 Share Registrar Automic Pty Ltd Level 5, 126 Phillip Street Sydney NSW 2000 Stock Exchange Listing Australian Securities Exchange Code: OLL www.colliercreative.com.au #OPL0003 9 1 0 2 t r o p e R l a u n n A | d e t i i m L g n i n r a e L n e p O For personal use only openlearning.com For personal use only