Site Group International Limited
Annual Report 2023

Plain-text annual report

Appendix 4E SITE GROUP INTERNATIONAL LIMITED AND CONTROLLED ENTITIES ABN: 73 003 201 910 PRELIMINARY FINAL REPORT FOR THE YEAR ENDED 30 JUNE 2023 Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 1 of 3 Report for the year ended 30 June 2023 This report includes results for Site Group International Limited and its controlled entities for the year ended 30 June 2023 (current period) compared with the year ended 30 June 2022 (prior period). The financial results of Site Group International Limited and its controlled entities are prepared in accordance with requirements of the Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board (AASB). The preliminary final report should be read in conjunction with the audited financial statements for the financial year ended 30 June 2023 which are attached. Key Information Results for announcement to the market Revenue from ordinary activities 30-Jun 2023 6,917,693 2022 7,141,825 Change 23-22 % ( 3%) Decrease Loss after tax from continuing operations ( 3,898,551) ( 4,849,024) ( 20%) Decrease of loss Net profit / (loss) attributable to members 19,220,288 ( 7,254,842) Commentary on the results for the year Results for Site Group International Limited show a revenue line of $6,917,693 compared to $7,141,825 in the prior corresponding period. The loss for the period from continuing operations was $3,898,551 down from the loss of $4,849,024 in the prior corresponding period. The total result for the year incorporates the gain on sale of subsidiary company, Site Group Holdings Pty Ltd of $24,555,982. Refer to the Directors report for discussion of the review of operations for the year. Dividends paid There have been no dividends paid. Dividend reinvestment plan There was no dividend reinvestment plan in operation during the year. Net tangible assets per share Net tangible asset backing per ordinary security 0.10 cents (2.59) cents Current Period Previous corresponding period Control gained or lost over entities during the year Control Gained: None Control Lost: Site Group Holdings Pty Ltd from 23 November 2022 Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 2 of 3 Associates and joint ventures Site Group Holdings Pty Ltd is treated as an associate of the company from 23 November 2022. Audit The financial statements accompanying this Appendix 4E have been audited. The Independent Auditor’s Report includes a paragraph drawing attention to the going concern disclosure in the financial report that indicates a material uncertainty in relation to going concern. Attachments The annual report of Site Group International Limited for the year ended 30 June 2023 is attached. Signed As authorised by the Board of Directors. Craig Dawson Director Date: 31 August 2023 Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 3 of 3 Site Group International Limited and Controlled Entities ABN 73 003 201 910 Annual report – 30 June 2023 Table of Contents Annual General Meeting ....................................................................................................................... 2 Director Letter ....................................................................................................................................... 3 Corporate Directory .............................................................................................................................. 4 Directors’ Report ................................................................................................................................... 7 Principal Activity ................................................................................................................................... 8 Operating and Financial Review .......................................................................................................... 9 Corporate Governance Statement ..................................................................................................... 23 Auditor’s Independence Declaration ................................................................................................ 30 Statement of Profit or Loss and Other Comprehensive Income .................................................... 31 Statement of Financial Position ........................................................................................................ 32 Statement of Changes in Equity ........................................................................................................ 33 Statement of Cash Flows ................................................................................................................. ..34 Notes to the Financial Statements for the Year Ended 30 June 2023 ........................................... 35 Directors' Declaration ......................................................................................................................... 87 Independent Auditor’s Report ........................................................................................................... 88 Shareholder Information .................................................................................................................... 93 Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 2 of 96 Director Letter for Site Group Results from continuing operations of $6,917,693 compared to $7,141,825 in the prior corresponding period. The earnings before interest, taxes, depreciation and amortisation (EBITDA) from continuing operations was a loss of $1,871,494 compared to a loss of $2,803,882 in the prior corresponding period. International Limited show revenue As reported during the year, Site has several assets and business units that are now showing recovery from what has been a heavily Covid impacted 3 years. As the company’s core assets relied on revenues generated from cross border transactions, these were significantly impacted by closing of international borders preventing the transfer of labour and training services between jurisdictions. As of now the highlights of the opportunities for Site include: - The continuing steps towards potential development of SIT`s 30-hectare leasehold facility in Clark Philippines; - Continue to explore opportunities that could bring additional revenue through the utilisation of the existing facility; a recovery in training projects from customers such as OceanaGold (mining training at the Clark underground mine training facility) and the GE turbine training at the purpose designed and constructed GE training facility at Clark; the open for business and development approach in the Kingdom of Saudi Arabia (KSA) including the recovery of existing projects and the winning of new contracts; the recovery of the PNG market post covid restrictions; and the recovery of the Australian CRICOS education market for international students in Australia. - - - - Following shareholder approval in November 2022, Site completed the sale of 61.6% of subsidiary Site Group Holdings Pty Limited to an investor group consisting of a related party, existing substantial shareholders of Site as well as high net worth investors for $US10.005m. The transaction values the Clark property at $US16.25m and Site retains 38.4% of the project. Key capital raising initiatives were completed in the second half of the financial year including: - - a placement for $750,000 at 0.003 per share to sophisticated and professional investors; and a 1:1 non renounceable entitlement offer at $0.003 per share and subsequent shortfall placement to sophisticated and professional investors raising a total of $3.9m. These were a key step in recapitalising the company and allowed significant improvement of the Balance sheet including the retirement of all interest-bearing debt. The expectation of significant training contract wins in KSA previously alluded to in conjunction with increasing cohort numbers at the MCTC facility, remain a likely indicator that this region will drive significant growth in the international training business during 2024. The Company is awaiting the outcome of its application to seek leave to appeal the full bench decision of the Federal court for Site’s adverse decision in the litigation with the ACCC. I would like to thank my fellow Board members, our Chairman, Nicasio Alcantara and CEO of Site Institute, Jason Anfield, all management and staff and equally all shareholders for their ongoing support. Craig Dawson Director Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 3 of 96 Corporate Directory Directors Nicasio Alcantara Craig Dawson Jason Anfield Company Secretary Craig Dawson Principal registered office in Australia Principal place of business Site Group International Limited Level 2, 488 Queen Street Brisbane Qld 4000 Telephone: +61 7 3114 5188 Site Group International Limited Level 2, 488 Queen Street Brisbane Qld 4000 Telephone: +61 7 3114 5188 Share registry Auditor Solicitors Bankers Computershare Investor Services Pty Limited Level 1, 200 Mary Street Brisbane QLD 4000, Australia Telephone: +61 7 3237 2100 Pitcher Partners Level 38, 345 Queen Street Brisbane QLD 4000, Australia Telephone: +61 7 3222 8444 Hopgood Ganim Level 8, 1 Eagle Street Brisbane Qld 4000 Telephone: +61 7 3024 0000 National Australia Bank Level 17, 259 Queen Street Brisbane QLD 4000 Stock exchange listing Site Group International Limited shares are listed on the Australian Securities Exchange (code: SIT) Website address www.site.edu.au Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 4 of 96 [This page intentionally blank] Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 5 of 96 SITE GROUP INTERNATIONAL LIMITED AND CONTROLLED ENTITIES ABN: 73 003 201 910 Financial Report for the Year Ended 30 June 2023 Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 6 of 96 Directors’ Report Your Directors submit herewith the financial report of Site Group International Limited (the Company) and its controlled entities (the Group) for the year ended 30 June 2023. Directors The directors in office at any time during or since the end of the financial year, together with their qualifications and experience are: Nicasio Alcantara BA, MBA – Chairman and Non-Executive Director Mr Alcantara was appointed Director of the company on 12 October 2010 and has been a director of Site Group Holdings Pty Ltd since June 2009. Mr Alcantara is an experienced director with over 40 years’ experience in both public and private companies and his diverse industry experience includes manufacturing, banking & finance, property, information technology, agriculture and power & energy. Mr Alcantara is currently a director of Alsons Corporation, Alsons Development & Investment Corporation, C. Alcantara & Sons Inc., Lima Land Inc., Sarangani Agricultural Co. Inc, Seafront Resources Corporation (appointed 1995), the Philodrill Corporation (appointed 1991), Indophil Resources NL (appointed 29 December 2011) and BDO Private Bank Inc. Mr Alcantara has also previously been Chairman and President of Alsons Consolidated Resources Inc., Iligan Cement Corporation, Alsons Cement Corporation, Northern Mindanao Power Corporation and Refractories Corporation of the Philippines. He was also previously Chairman and Chief Executive Officer of Petron Corporation and a director of Bank One Savings and Bancasia Capital Corporation. Craig Dawson BCom, ACA - Executive Director Mr Dawson is the Chief Financial Officer and Company Secretary of the Group. He brings extensive financial management experience gained in ASX listed entities with both local and international operations in a variety of industries including media, financial services, gaming and wagering and most recently in the rapidly growing online sector. Most notably, Mr Dawson was CFO of Wotif.com for over 4 years as the group experienced rapid earnings growth, greatly extended its geographical reach and expanded its brands and products through both organic and acquisition growth. Prior to that, Mr Dawson was Queensland General Manager – Corporate Services at Tatts Group Limited heading up the finance and administration divisions of Tatts Queensland operations. Mr Dawson holds a Bachelor of Commerce and is a Chartered Accountant. Jason Anfield BInt Bus, MBA - Executive Director Mr Anfield is the Site Institute CEO. He brings extensive experience in operational, managerial, and strategic roles across a wide range of industries and international settings. With 9 years based in Tokyo, Mr Anfield worked on commercialising projects in Southeast Asia, Europe and the US across industries as diverse as commercial real estate, fashion, hospitality, aquaculture, food processing and timber products. Partnering companies included TAG Group SA, Mitsubishi, Okura, Nichirei, House of Florence and ABC Foods. Following experience in the Australia’s Higher Education and Vocational Training sectors, in 2011 Mr Anfield established the Business Productivity Institute, servicing the upskilling needs of the business services and construction industries. Clients included Construction Skills Queensland, Department of Transport and Main Roads, QUT and Transcity (Acciona, BMD and Ghella). Mr Anfield joined Site group in 2015. He holds a Bachelor of International Business and an MBA. Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 7 of 96 Directors’ Report continued Committee membership As at the date of this report, the company had an Audit and Risk committee and a Nomination and Remuneration committee of the board of directors. Members acting on the committees of the board during the year and up to the date of this report were: Audit and Risk Committee (AC) • Nicasio Alcantara (c) • Jason Anfield Both Mr Anfield and Mr Alcantara have extensive corporate experience and are qualified to serve on this Committee. Nomination and Remuneration Committee (NRC) • Nicasio Alcantara (c) • Jason Anfield (c) Designates the chairman of the committee. Meetings of Committees Nicasio Alcantara Craig Dawson Jason Anfield Board No. 5 5 5 Attended No. 5 5 5 AC No. 2 2 2 Attended No. 2 2 2 NRC No. 1 1 1 Attended No. 1 1 1 All directors were eligible to attend all meetings held. Principal activity The principal activity of the company during the period was the provision of training and education services in Australia and Internationally. The company is delivering workforce solutions across a variety of industries to both retail and corporate clients. There has been no significant change in the principal activities of the consolidated entity during the period. Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 8 of 96 Directors’ Report continued Operating and financial review Group Site historical revenue is demonstrated in the below graph. Total revenue from continuing operations for the year ended 30 June 2023 was down 3% to $6,917,693 (2022: $7,141,825). Revenue contribution and activity by each segment is illustrated in the two charts below. Gross Revenue by Segment 30 June 2023 versus 30 June 2022 (excludes eliminations) Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 9 of 96 Directors’ Report continued Operating and financial review continued The below table shows the result for the Group over the last 4 years. Revenue Net profit / (loss) add back Depreciation and amortisation Interest expense Income tax expense / (benefit) deduct Interest income EBITDA* - Continuing Operations EBITDA* - Discontinued Operations Non recurring items Financial Summary 30-Jun 2022 $ Change 23-22 % 30-Jun 2023 $ 30-Jun 2021 $ Change 22-21 % 6,917,693 7,141,825 (3%) 7,362,539 (3%) 30-Jun 2020 $ 15,320,718 (3,898,551) (4,849,024) (20%) (8,637,238) (44%) (8,095,105) 1,041,094 881,066 112,771 1,127,170 935,780 (11,904) (8%) (6%) - 1,436,904 1,723,418 (60,316) 7,874 (1,871,494) 5,904 (2,803,882) 33% (33%) 14,905 (5,552,137) 23,820,118 (1,354,896) - 2,748,661 (22%) (46%) - (60%) (49%) - Change 21-20 % (52%) 7% (10%) (16%) - (39%) 58% - 1,603,270 2,054,097 945,120 - 24,291 (3,516,909) (1,960,053) 1,096,000 - - Impairment of PP&E, intangibles and right of use assets Gain on sale of subsidiary Gain on sale of SST Domestic business - 469,291 (24,555,982) - - - 3,961,403 - (3,569,996) EBITDA before non recurring items (2,607,358) (3,689,487) (29%) (2,412,069) 53% (4,380,962) (45%) Operating cash inflow /(outflow) (3,631,987) (1,698,101) - (1,791,755) - (3,771,644) - * Earnings before interest, tax, depreciation, and amortisation (EBITDA) is a non-IFRS measure which is readily calculated and has broad acceptance and is used by regular users of published financial statements as a proxy for overall operating performance. EBITDA is not an audited number. **This a non-IFRS measure and is not an audited number. For the year ended 30 June 2023, Site Group International Limited reported a loss after tax from continuing operations of $3,898,551 compared to an after-tax loss of $4,849,024 in the previous corresponding period. The earnings before interest, taxes, depreciation, and amortisation (EBITDA) from continuing operations was a loss of $1,871,494 compared to a loss of $2,803,882 in the previous period. Following shareholder approval, the sale of 61.6% in the Company’s subsidiary, Site Group Holdings Pty Ltd (SGH), the holder of the Clark lease, was concluded with the transaction completed on 23 November 2022. The Group continues to work with the new shareholders in SGH to maximise the value of the Clark asset. During the final quarter of FY23, the company successfully completed a capital raise of $3.9m through an entitlement offer to existing shareholders and a placement to sophisticated and professional investors at an issue price of $0.003 per share. The capital raise met the initial raise target and was conducted at a discount to the 30-day VWAP. Due to the capital raise and other activities completed during the financial year the balance sheet of the company included significant improvement on the previous financial year with positive net assets of $2,567,380 versus a net liability in the previous year of $21,752,604. As at 30 June 2023, the group has no interest bearing debt compared to a $10,511,908 debt level at 30 June 2022. Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 10 of 96 Directors’ Report continued Operating and financial review continued Site Skills Training – International Site Skills Training – International division provides training and competency assurance services to organisations and governments in countries where local workforces require additional skills to meet global standards. The segment, based at Site's major training facility in Clark Freeport Zone near Manila in the Philippines, experienced a 13% increase in revenue to $3,713,144 in the 12 months to June 2023, compared with $3,271,834 in the prior year. EBITDA was a profit of $219,583 compared to an EBITDA loss of $773,607 in the prior year. The reopening of international borders is leading to a significant lift in utilisation of the Clark facility in the Philippines with historical customers Fieldcore and OceanaGold having recommenced training in July 2022. Additionally, Site WorkReady is increasing the provision of skilled trades people for markets in Australia, New Zealand and Africa. Site has seen increasing numbers of trainees for KSA (Kingdom of Saudi Arabia) in line with the forecast revenue targets for the region. The rapid growth led to an establishment of a partnership with the Saudi Water Academy to increase the training capacity for the current trades being delivered and also to expand on the course offering in the region. Energy Services The Energy services segment incorporating the Wild Geese International business in Perth and the internationally based Site Group International Energy division (“SGI”) provides specialist training services to the oil and gas industry including workforce design and identification, skills training and competency assessment and assurance. Revenue for the 12 months decreased by 33% to $553,114 (2022: $829,902) with an EBITDA profit of $121,233 (2022: EBITDA loss of $147,508). Wild Geese International has continued its successful involvement with the Queensland Natural Gas Exploration and Production Industry forum for the delivery of Queensland wide Industry Safety Inductions. Tertiary Education This segment provides tertiary education in Australia for international students seeking to develop careers in a range of different disciplines with a focus on connecting learning and industry practice in an innovative environment. The growth rate of this division slowed from previous years with reported revenue of $2,286,231 in 2023, down from $2,959,057 in 2022. An EBITDA loss of $18,198 was recorded compared to an EBITDA of $132,721 in 2022. Site Institute is continuing to see improving demand for its CRICOS Engineering and Trade courses at existing facilities. The value of new student applications received during the final quarter of the year increased to $1.6m, up 44% compared to the third quarter, demonstrating a return to pre-covid levels. This increase in new international student applications is encouraging, despite some evidence of visa processing delays and inconsistencies with visa issued for VET-sector international students increasing uncertainty around conversion rates and new student commencement projections. The fit out of Site Institute’s new regional campus at the Gold Coast commenced during the final quarter of the year. With works expected to be completed during Q2 FY24, the new campus is projected to be operational and accepting students by Q2 FY24, adding a regional presence and increased capacity to Site Institute’s offering. Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 11 of 96 Directors’ Report continued Operating and financial review continued Cash position At 30 June 2023, the Company had cash reserves of $267,936 and a net current asset deficiency of $2,214,261. No amount is reflected in the balance sheet for the receivable due from the Commonwealth Government Department of Education and Training (DET), even though the Group maintains the position that it is entitled to the funds. The Company is expecting the second and final earn out payment in FY24 from the sale of the Site Skills Training Domestic business completed in April 2021. Risks Risk management is overseen by the Audit and Risk Committee for the Group via the maintenance and review of a risk register. The following sets out a summary of some of the key risks relevant to the Company and its operations: Risk Details Regulatory risk The Group operates in a highly regulated market and the Group is regulated by the Australian Federal and State Governments and the Philippine Government. Failure to meet regulatory requirements may impact materially on the business. Financing Sovereign risk The ability to implement its business strategy may be dependent upon the Group’s capacity to raise additional capital. There is a risk that the Group may not be able to secure such funding on satisfactory terms or at all. The Group has significant operations in the Philippines. Those operations are potentially subject to a degree of political risk and civil disobedience, although the location of Clark Education City within the Clark Freeport Zone helps mitigate such risks. Cultural unrest Any cultural unrest or perceived cultural unrest in the location of the campuses may result in decreased client interest. Competition The market for education services in Australia and worldwide is highly competitive and the Group is likely to encounter strong competition from other entities as well as other countries for training and education. Industry downturn The industries to which the Group provides services may be affected by factors outside the Group’s control. Limited operating history Site’s business model is relatively new, and Site is yet to generate recurring profits from its group activities. The Group will be subject to all of the business risks and uncertainties associated with any developing business enterprise. Material contracts The Group has entered into various contracts which are important to the future of the Group. Any failure by counterparties to perform their job, or obligations could have an adverse effect on the Group. CDC lease Through its investment in SGH, the Group has a long-term lease with Clark Development Corporation (CDC). There are a number of circumstances in which the CDC lease may be terminated (subject to compliance with provisions enabling certain breaches to be remedied) by CDC in which case SGH does not have any rights to compensation or reimbursement for funds expended on the leased land, improvements and moveables on the leased property pass to Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 12 of 96 Risk Details CDC on termination. Such termination may occur where SGH has breached a provision of the CDC lease or where there is an insolvency event. The CDC lease may also be terminated in the event of any governmental expropriation of the leased property. In the event that the CDC lease was terminated, SGH would no longer be in a position to operate its Philippines facility which would have significant impact on the Group and the Group’s ongoing operations. Currency Some of Site’s revenue streams and expenses are denominated in currencies other than the Australian Dollar. It is possible that foreign exchange rates could move in a manner which would be unfavourable to the Company. Large holdings by some shareholders Two existing shareholders (and their associates) have combined holdings of approximately 30% of the shares which may impact on liquidity in the public market for share trading which may affect the market price. Key employees A small number of key employees are responsible for the day to day and strategic management of the Group. The Company has sought to mitigate the risk associated with this structure through entering service and employment agreements. Natural catastrophe Foreign judgements Material arrangements Geographic concentration The Philippines has experienced a number of major natural catastrophes over the years, including typhoons, drought, volcanic eruption and earthquakes. There can be no assurance that the occurrence of such natural catastrophes will not materially disrupt the Group’s operations. Whilst there are procedures for recognising foreign laws and judgements in the Philippines, the Philippine courts may reject the applicability of foreign law or judgment when the foreign law, judgment or contract is contrary to a sound and established public policy of the forum. Additionally, Philippine prohibitive laws concerning persons, their acts or property, and those which have for their object public order, public policy and good customs shall not be rendered ineffective by laws or judgements promulgated, or by determinations or conventions agreed upon in a foreign country. Accordingly, the enforcement of rights of the Group within the Philippines with respect to foreign judgments and laws may be adversely affected by observance of Philippine procedural laws. The Group has and expects to continue to enter into arrangements which are important to the future of the Group. It may be the case that these arrangements are non-binding and therefore unenforceable. The Group is also reliant upon third parties maintaining appropriate qualifications and accreditations and to the extent that these are not maintained, there may be an adverse impact on the Group. The Group’s expansion plans include the Philippines, Western Australia, Northern Territory and Queensland as well as potentially other national and international jurisdictions. If there are circumstances which impact negatively on these jurisdictions, this may adversely affect the Group’s continuing operations. Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 13 of 96 Directors’ Report continued Operating and financial review continued 2024 Outlook The capital raise consisting of the entitlement offer and shortfall placement was completed in June 2023. This is the key step in recapitalising Site after years of Covid-related disruptions, with a goal to enable management to pursue several tangible value creation avenues. Beyond returning to pre- pandemic activity and growth in Australia, there are significant global revenue opportunities, e.g. in upskilling Saudi Arabia’s workforce under the Kingdom’s Vision 2030 for which the company is well positioned thanks to Site’s partnership with Saudi Aramco. The Company’s stake in the commercial land holding in Clark represents an added tangible asset with a medium-term development-for-sale opportunity on the back of the Philippines’ government's efforts to decentralise the country away from Manila. The funds raised were used to progress the development of the remaining share in the lease holding at the Clark site in the Philippines (of which Site continues to own a 38.4% stake), and support ongoing working capital requirements for the purpose of pursuing Site’s global revenue pipeline. Directors’ shareholdings as of the date of this report Director Nicasio Alcantara Jason Anfield Craig Dawson Shares 8,371,325 1,600,000 3,000,000 Significant changes in state of affairs During the year the Group was involved in the following significant transactions: Clark Property Transaction Following shareholder approval, the sale of 61.6% in the Company’s subsidiary, Site Group Holdings Pty Ltd (SGH), the holder of the Clark lease, was concluded with the transaction completed on 23 November 2022. Total consideration was US$10.005m. The Group continues to work with the new shareholders in SGH to maximise the value of the Clark asset. Capital Raise On 1 March 2023 the company completed a share placement to sophisticated and professional investors through the issue of 250 million shares at $0.003 each placement raising $750,000. During the final quarter of FY23, the company successfully completed a capital raise of $3.9m through an entitlement offer to existing shareholders and a placement to sophisticated and professional investors at an issue price of $0.003 per share. After balance date events Other than as noted elsewhere in this report, there has been no other significant events post balance date. Dividends paid There have been no dividends paid. Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 14 of 96 Directors’ Report continued Environmental issues The Group’s operations are not regulated by any significant environment regulation under a law of the Commonwealth or of a State or Territory. Share options As at the date of this report there were 41,666,667 unissued shares under options provided to financiers of the company. No options were granted or exercised during the current year or up to the date of this report. In November 2011 the Shareholders approved the establishment of an Employee Share Plan that would enable employees, directors and eligible associates to subscribe for shares in the Company. Under the terms of the plan an eligible person is offered shares in the Company at a price determined by the board with a corresponding interest free loan to assist the person to subscribe for the shares. The shares are escrowed in two tranches with 50% being escrowed for 12 months and 50% being escrowed for 24 months. Subsequent to these minimum restriction periods, the shares are available for release from escrow on the repayment of the loan, and subject to continuation of employment (or acting as an associate or director) at the time of repayment. As at 31 August 2023, there are 7,450,000 ordinary shares subject to escrow restrictions. Details of these are outlined in Note 20 of the financial report. Indemnification and insurance of directors and officers During the financial year, the Company paid premiums for directors’ and officers’ liability insurance in respect of Directors and officers, including executive officers of the Company and Directors, executive officers and secretaries of its controlled entities as permitted by the Corporations Act 2001. The terms of the policy prohibit disclosure of details of the insurance cover and premiums. Indemnification of auditors To the extent permitted by law, the Company has agreed to indemnify its auditors, Pitcher Partners, as part of the terms of its audit engagement agreement against claims by third parties arising from the audit (for an unspecified amount). No payment has been made to indemnify Pitcher Partners during or since the financial year. Non-audit services Non-audit services were provided by the company’s auditor, Pitcher Partners, in the current financial year and in the comparative financial year. The Directors are satisfied that the provision of non-audit services is compatible with the general standards of independence for the auditor imposed by the Corporations Act 2001. Refer to note 27 Auditor’s Remuneration in the financial report for details and amounts for the provision of non-audit services. Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 15 of 96 Directors’ Report continued Remuneration Report (audited) This remuneration report for the year ended 30 June 2023 outlines the remuneration arrangements of Site Group International Limited (the Company) and its controlled entities (the Group) in accordance with the requirements of the Corporations Act 2001 (the Act) and its regulations. This information has been audited as required by section 308(3C) of the Act. The remuneration report details the remuneration arrangements for key management personnel (KMP) who are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Company and the Group, directly or indirectly, including any director (whether executive or otherwise) of the parent company. For the purposes of this report, the term “executive” includes the executive directors and other senior executives of the Group. Nomination and Remuneration Committee The directors established a Nomination and Remuneration Committee in 2012 and have agreed a charter and process. The committee convened once during the 2022 financial year with final discussions about remuneration or appointments being approved by the full board. The Nomination and Remuneration committee comprises one independent Non-Executive Directors (NEDs). The Nomination and Remuneration Committee has delegated decision making authority for some matters related to the remuneration arrangements for NEDs and executives and is required to make recommendations to the board on other matters. Specifically, the board approves the remuneration arrangements of the executives. The board also sets the aggregate remuneration of NEDs, which is then subject to shareholder approval, and NED fee levels. The board did not seek advice from external remuneration consultants during the year. The remuneration of the Executive Directors and Non-Executive Directors is set by the Chairman of Directors and ratified by the Board of Directors. Directors The following persons were directors of the Company during the financial year: • Nicasio Alcantara – Non-Executive Director • Craig Dawson – Chief Financial Officer • Jason Anfield – Chief Executive Officer, Site Institute Pty Ltd Executives (other than directors) with the greatest authority for strategic direction and management The following person was the executive with the highest authority for the strategic direction and management of the Group (“specified executives”) during the financial year; • Vernon Wills – Executive This executive was also considered part of the Key Management Personnel of the Group. Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 16 of 96 Directors’ Report continued Remuneration Report (audited) continued Remuneration of directors and executives Principles used to determine the nature and amount of remuneration The objective of the Company’s executive reward framework is to ensure reward for performance is competitive and appropriate for the results delivered. Relationship between remuneration and financial performance The Group has been impacted by a number of factors and has led to the divestment of assets of the Group. This process has incurred additional costs during this process. Therefore, there is no direct relationship between the Group’s financial performance and either the remuneration of directors and executives or the issue of shares and options to the directors and executives. Remuneration is set at levels to reflect market conditions and encourage the continued services of directors and executives. Executive and non-executive directors Fees and payments to executives and non-executive directors reflect the demands which are made on, and the responsibilities of the directors. Executive and non-executive directors’ fees and payments are reviewed annually by the Board. Directors’ fees There were Directors’ fees paid during the year to the NEDs with the executive director receiving a fixed salary of a full-time employee. Executive pay The executive pay and reward framework has the following components: • Base pay benefits • Other remuneration such as fringe benefits and superannuation • STI payable based on predetermined KPI’s • Eligibility to participate in the Employee Share Plan The combination of these comprises the executive’s total remuneration. Base pay Base pay is structured as a total employment cost package which is delivered in cash. Executives are offered a competitive base pay that comprises the fixed component of pay. Base pay for senior executives is reviewed annually. An executive’s pay is also reviewed on promotion. There are no guaranteed base pay increases fixed in any senior executives’ contracts. Retirement benefits Retirement benefits are delivered under a range of different superannuation funds. These funds provide accumulated benefits. Where applicable, statutory amounts are contributed to super funds for all Australian based Directors and Executives. Executive contractual arrangements As Non-Executive Directors are not employees of the company, there are no contractual agreements with these parties. Vernon Wills was employed as an Executive through a services contract with Wayburn Holdings Pty Limited on consistent terms with other executives. No sign on shares were granted. Escrowed shares are issued at the discretion of the Remuneration Committee from time to time. Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 17 of 96 Directors’ Report continued Remuneration Report (audited) continued Remuneration arrangements for other executives are formalised in employment agreements. Details of these contracts are provided below. All other executives have contracts with unspecified ending dates. The contracts are continuing unless terminated by either party. Executive termination provisions are as follows: Employer initiated termination Termination for cause Employee initiated termination Executive notice period CFO notice period 3 Months 6 months None None 3 Months 3 Months CFO Termination Benefit The Company may terminate the employment contract of the CFO at any time or for any reason or for no reason by providing 6 months written notice and paying a lump sum equal to the base amount. The Base amount is equal to the actual remuneration received for the preceding 12-month period (inclusive of the 6 month notice period) including any other entitlement accrued to that point. Details of remuneration Details of the remuneration of each director of the Company and the specified executive of the Group, including their personally related entities, are set out in the following tables. Directors The board seeks to set NED fees at a level which provides the Group with an ability to attract and retain NEDs with the highest calibre, whilst incurring a cost which is acceptable to shareholders. The Group’s constitution and ASX listing rules specifies the NED maximum aggregate fee pool shall be determined from time to time at a general meeting. The latest determination was at the 2010 AGM held on 22 November 2010 when shareholders approved an aggregate fee pool of $350,000 per year. NED fees consist of base fees and committee fees recognising the additional time commitment required by NEDs who serve on Board committees. The NEDs may be reimbursed for expenses reasonably incurred for attending to the Group’s affairs. NEDs do not receive retirement benefits beyond applicable superannuation contributions. Director & Specified Executives Disclosure 2023 Name Short Term Benefits Post- employment Long Term Benefits Share-based Payments Cash Salary Directors Fees Non- monetary benefits Super- annuation Long Service Leave Options Shares Total $ Vernon Wills Nicasio Alcantara Craig Dawson Jason Anfield Total 400,000 - 273,973 204,258 878,231 $ - 29,942 - - 29,942 $ 49,613 - 17,155 3,758 70,526 $ $ $ $ $ - - - - - - - - 5,251 - - 28,767 15,477 21,447 - - - - 20,728 50,214 449,613 29,942 325,146 244,940 1,049,641 Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 18 of 96 Directors’ Report continued Remuneration Report (audited) continued 2022 Name Vernon Wills Nicasio Alcantara Craig Dawson Brett McPhee1 Jason Anfield2 Total Cash Salary $ 400,000 - 273,973 137,205 12,663 823,841 Short Term Benefits Directors Fees $ Non- monetary benefits $ Post- employment Super- annuation $ Long Term Benefits Long Service Leave $ Share-based Payments Options Shares $ $ Total $ - 83,305 - - - 83,305 48,712 - 26,480 - 532 75,724 - - - - - - - - 5,453 - - 27,397 - - - - 332 - - 1,266 5,785 - - 28,663 448,712 83,305 333,303 137,205 14,793 1,017,318 1 Resigned as Director May 2022 2 Appointed as Director May 2022 Short term incentive (STI) Under the STI plan, executives have the opportunity to earn an annual incentive award which is delivered in cash or shares at the discretion of the Remuneration Committee. The STI recognises and rewards short term performance. The STI award is determined after the end of the financial year following a review of performance over the year against the STI performance measures. Group EBITDA and business unit EBITDA are the measures against which management and the remuneration committee assess the short-term financial performance of the Group. Both Mr Wills and Mr Dawson had a maximum STI opportunity of 30% of their fixed remuneration. For FY23 and FY22, 0% was earned and 100% forfeited because the service criteria were not met. Director and key management personnel options and rights holdings There were no options over ordinary shares held during the financial year by each KMP of the Group, other than in respect of the employee share plan below. Director and key management personnel participation in the employee share plan In November 2011 the Shareholders approved the establishment of an Employee Share Plan that would enable employees, directors and eligible associates to subscribe for shares in the Company. Under the terms of the plan an eligible person is offered shares in the Company at a price determined by the board with a corresponding interest free loan to assist the person to subscribe for the shares. The shares are escrowed in two tranches with 50% being escrowed for a minimum of 12 months and 50% being escrowed for a minimum of 24 months. Subsequent to these minimum restriction periods, the shares are available for release from escrow (i.e. vested and exercisable option) on the repayment of the loan, and subject to continuation of employment (including acting as an associate or director) at the time of repayment. For accounting purposes these shares are treated as if these were share options, as whilst the shares have been issued to the employee their rights to access the shares are subject to both a time based requirement (continued employment to escrow dates) and valuation uncertainty (share price exceeds issue price at date of escrow release). Accordingly, shares issued under the plan are valued using a Black Scholes Option Valuation model with the expense being recognised over the escrow period as a share based payment. Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 19 of 96 Directors’ Report continued Remuneration Report (audited) continued Mr Dawson was awarded 1,000,000 shares, Mr McPhee 750,000 and Mr Anfield 250,000 shares under the plan, with a grant date of 8 March 2019 and a loan price (option exercise price) of 4 cents per share with half escrowed to 29 March 2019 and the other half escrowed to 29 March 2020. No amount has been paid in respect of these shares. The related options have a grant date fair value of 0.64 cents per share and 0.97 cents per share respectively for each tranche. There are no performance conditions attached to the shares other than the employee remaining with the group during the escrow period. The shares have an expiry date (last option exercise date) of 29 March 2022. The number of ordinary shares held by each KMP of the Group under the plan is as follows: Name Craig Dawson Jason Anfield Total Balance 1 July 2022 1,000,000 Granted as remuneration - 250,000 1,250,000 - - Shares sold Forfeited Balance 30 June 2023 Tradable Escrowed Vested and Exercisable - - - - - - 1,000,000 250,000 1,250,000 - - - 1,000,000 1,000,000 250,000 250,000 1,250,000 1,250,000 Director and key management personnel share holdings The number of ordinary shares held by each KMP, other than shares under the Employee Share plan, is as follows: Granted as remuneration - Name Balance 1 July 2022 Vern Wills 123,395,630 Nicasio Alcantara Craig Dawson Jason Anfield 8,371,325 1,000,000 800,000 Total 133,566,955 - - - - Shares purchased Shares sold Balance 30 June 2023 236,666,666 - 1,000,000 550,000 238,216,666 - - - - - 360,062,296 8,371,325 2,000,000 1,350,000 371,783,621 Executive remuneration outcomes for 2023 As noted earlier the company is actively developing its core business in Asia and Australia in addition to the maximisation of the Clark property. Executive Remuneration is targeted at attracting and retaining quality people to lead the Company through this phase and on to profitability. The Company has incurred losses since 2017 however there are a number of metrics that may be used to judge the effectiveness of the leadership team during this period. Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 20 of 96 Directors’ Report continued Remuneration Report (audited) continued Share price performance The graph above illustrates the relative performance of the Company share price over the past 12 months. The blue line is the performance of the small ordinaries index – in comparative terms the Company’s share price has been significantly negatively impacted due to the regulatory actions currently in progress and the COVID-19 pandemic. Revenue growth The following table details reported revenue of the core business including the discontinued for the past five years: 2023 2022 2021 2020 2019 Total revenue ($) Growth % 6,917,693 (3%) 7,141,825 (58%) 16,939,116 (38%) 27,259,059 (12%) 30,913,290 2% Net profit/ (loss) and earnings/ (loss) per share The following table details the net profit/ (loss) and earnings/ (loss) per share including the discontinued operation for the past seven years: Total profit/(loss) Change % Earnings/(loss) per Share (cents) Share price at year end 2023 19,220,288 365% 1.51 $0.003 2022 (7,254,842) 0% (0.86) $0.003 2021 (7,276,206) 29% (0.86) $0.011 2020 (10,264,692) (116%) (1.32) $0.035 2019 (4,742,968) 22% (0.69) $0.027 The impact of the impairments reported, and the unexpected impact of COVID-19 on industries around the world has substantially impacted face to face delivery of training. The leadership team are focused on continuing to grow the core business revenue, adapting to the current market environment, controlling costs and growing earnings. Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 21 of 96 Directors’ Report continued Remuneration Report (audited) continued Approval of the FY2022 Remuneration Report At the Annual General Meeting of the Company on 30 November 2022, the FY2022 remuneration report was adopted by the shareholders with a vote of 99% in favour. Loan from Director related entity – Punta Properties Inc On 21 June 2018, the Group announced a financing facility of US$4million with Punta Properties, a company associated with Non-Executive Director Nicasio Alcantara. Repayment of funds drawn under the facility were via cash or equity to be issued at the last issue price of 4 cents per share subject to approval of shareholders. Interest charged on the loan was at a fixed rate of 10% per annum. On 23 November 2022, as part of the sale of Site Group Holdings Pty Ltd, the finance facility was repaid in full (Punta conversion amount) via the issue of equity in SGH. Movements in the loan balance during the year are as follows: Opening Balance Drawdowns Interest accrued during the year Foreign Currency movement Repayment of loan in full (via the issue of equity in SGH - refer Note 28) Closing Balance 2023 $ 7,642,015 - 291,402 445,032 (8,378,449) 2022 $ 5,234,958 1,366,092 458,128 582,837 - - 7,642,015 END OF REMUNERATION REPORT Rounding of amounts The company is of a kind referred to in ASIC Legislative Instrument 2016/191, relating to the ‘rounding off’ of amounts in the directors’ report. Amounts in the directors’ report have been rounded off in accordance with the instrument to the nearest thousand dollars, or in certain cases, to the nearest dollar. This report is made in accordance with a resolution of directors. Craig Dawson Director 31 August 2023 Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 22 of 96 Corporate Governance Statement The Australian Securities Exchange Limited (ASX) listing rules require a listed Company to provide in its annual report a statement of the main corporate governance practices that it had in place during the reporting period. The ASX listing rules also require a listed Company to report any instances where it has failed to follow the recommendations issued by the ASX Corporate Governance Council (“the Principles of Good Corporate Governance and Best Practice Recommendations, 4th Edition”) and the reasons for not following them. The best practice recommendations of the ASX Corporate Governance Council are differentiated between eight core principles that the council believes underlie good corporate governance. The below: board’s statements noted each area core are to Principle 1: Lay solid foundations for management and oversight The ASX Corporate Governance Council guidelines recommend that the board recognise and publish the respective roles and responsibilities of the board and management and how their performance is monitored and evaluated. The framework of responsibilities should be designed to: • enable the board to provide strategic guidance for the Company and effective oversight of • management; clarify the respective roles and responsibilities of board members and senior executives in order to facilitate board and management accountability; • undertake appropriate background checks on proposed new directors and ensure sufficient material information about a director being re-elected is provided to security holders; • ensure a balance of authority so that no single individual has unfettered powers; • ensure the Company enter in to written agreements with each director and senior executive setting out the terms of their appointment; • ensure the company secretary be accountable directly to the board, through the chair, on all matters to do with the proper functioning of the board; • establish a policy concerning diversity, that should include a requirement for the board to: o establish measurable objectives for gender diversity; o assess annually the objectives set for achieving gender diversity; and o assess annually the progress made towards achieving the objectives set; and • evaluate the performance of senior executives, the board, committees and individual directors. The board of Site Group International Limited are responsible for: • establishment of long term goals and strategic plans to achieve those goals; • the review and adoption of the annual business plan and budgets for the financial performance of the Company and monitoring the results on a monthly basis; • appointment and removal of the chief executive officer; • ensuring that the Company has implemented adequate systems of internal controls together with appropriate monitoring of compliance activities; and the approval of the annual and half yearly financial statements and reports. • These and other responsibilities are detailed in the approved Board Charter approved in February 2012. Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 23 of 96 Corporate Governance Statement continued The board meets on a regular basis to review the performance of the Company against its goals both financial and non-financial. In normal circumstances, prior to the scheduled board meetings, each board member is provided with a formal board package containing appropriate management and financial reports. Written agreements are entered in to with each director clearly setting out their roles and responsibilities. The responsibilities of the management including the chief executive officer and chief financial officer are contained in letters of appointment and job descriptions given to each executive on appointment and updated from time to time, usually annually. The board has not established formal evaluation criteria for the review of itself or its committees and has not undertaken a specific performance evaluation. The Site Group International Limited board uses a personal evaluation review to review the performance of Directors. Individual Directors are asked to communicate to the Chairman on a confidential basis to comment on their own performance, and the performance of the board and its committee. Key executives are reviewed periodically against the business objectives and their own contractual obligations, including their personal KPIs. Appropriate background checks are conducted on proposed new Directors and material information about a director being re-elected is provided to security holders. The company secretary work directly with the chair on the functioning of all board and committee procedures. The board approved and issued a Diversity Policy in January 2012. The nature of the Site Skills Training part of the business providing high risk licencing and trades training results in a high proportion of the trainers being male however the company actively encourages the recruitment of female staff/contractors where available. No specific measurable objectives have been established at this stage. As noted above, as the nature of the company’s business is quite specific, setting measurable objectives may restrict the company’s development at this stage. Notwithstanding this, the company actively encourages the recruitment of female staff/contractors where available and will continue to recruit and promote regardless of gender, age, ethnicity or cultural background. The following table indicates the current gender mix of employees: - Board Executive and Senior Managers All Other Total Male Female Male Female Total 3 3 25 31 0 1 19 20 100% 75% 57% 69% 0% 25% 43% 31% 3 4 44 51 Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 24 of 96 Corporate Governance Statement continued Principle 2: Structure the board to add value The ASX Corporate Governance Council guidelines recommend that the board be structured in such a way that it: • is of an effective composition, size and commitment to adequately discharge its responsibilities; • has a proper understanding of, and competence to deal with, the current and emerging issues of the business; and • has an appropriate number of independent non-executive directors who can challenge management and represent the best interests of security holders as a whole. To achieve best practice the Council recommends that: • the board should establish a nomination committee; • listed entities should disclose a board skills matrix; • a majority of the board be “independent‟ Directors; • the chairperson be an “independent” Director and should not be the same person as the CEO; and listed entities have a program for inducting new directors and provide appropriate professional development opportunities. • The Company has a Nomination and Remuneration Committee (the Committee) and the board has approved the charter for the Nomination and Remuneration Committee. The Committee charter is set out on the Company’s website. The number of meetings of the Committee held during 2023 is set out in the Directors’ Report. In 2023 the Committee comprised Mr Nicasio Alcantara and Jason Anfield. The Council recommends that remuneration committees be comprised of at least three independent directors. Mr Alcantara is a non-executive director. Due to Messrs, Alcantara and Anfield’s extensive corporate history and experience, the company believes that given the size and nature of its operations, non-compliance has not been detrimental. The Company is developing an appropriate board skills matrix. Comprehensive details about each director’s experience and skills are set out in the Directors’ Report. Site Group International Limited’s current board consists of one non-executive Director and two executive Directors. The Chairman of the Board Mr Alcantara is not considered to be independent due to being a substantial security holder. In accordance with the Council’s definition of independence, both Mr Anfield and Mr Dawson are not considered independent as they are employed in an executive capacity. Directors have the right to seek independent professional advice and are encouraged to undertake appropriate professional development opportunities in the furtherance of their duties as Directors at the Group’s expense. Informal induction is provided to any new Directors. Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 25 of 96 Corporate Governance Statement continued Principle 3: Act ethically and responsibly The ASX Corporate Governance Council guidelines recommend that the Company should: • clarify the standards of ethical behaviour of Directors and executives by establishing a code of conduct and encourage the observance of those standards; and the policy or a summary of that policy is to be disclosed. Site Group International Limited has a published code of conduct to guide executives, management, and employees in carrying out their duties and responsibilities. The code of conduct covers such matters as: responsibilities to shareholders; compliance with laws and regulations; relations with customers and suppliers; • • • • ethical responsibilities; • employment practices; and • responsibilities to the environment and the community. Principle 4: Safeguard integrity in corporate reporting The ASX Corporate Governance Council guidelines recommend that the Company have formal and rigorous processes that independently verify and safeguard the integrity of the company’s corporate reporting. To achieve best practice the Council recommends that: the board should establish an audit committee; • • CEO and CFO sign declarations attesting to the accuracy of the Company’s accounts and that appropriate internal controls are in place; and the Company ensure the external auditor attends the AGM. • The Company has an Audit Committee and the number of meetings of the committee held during the 2023 year is set out in the Directors’ Report. In 2023 the committee comprised Mr Brett McPhee, Mr Anfield and Mr Nicasio Alcantara. The Council recommends that audit committees be comprised of at least three independent directors. Due to Messrs Alcantara, McPhee and Anfield extensive corporate history and experience in financial matters, the company believes that given the size and nature of its operations, non-compliance has not been detrimental. Audit committee meetings are attended, by invitation, by the engagement partner (or their nominee) from the Company’s external auditor and such other senior staff or professional people as may be appropriate from time to time. Each year the Chief Executive Officer and Chief Financial Officer sign declarations in accordance with section 295A of the Corporations Act, to confirm that the accounts are correct and in accordance with relevant legislation and that appropriate financial controls are in place. The external auditors are required to attend the annual general meeting and are available to answer any questions from security holders relevant to the audit. Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 26 of 96 Corporate Governance Statement continued Principle 5: Make timely and balanced disclosure The ASX Corporate Governance Council guidelines recommend that a Company make timely and balanced disclosure of all matters concerning it that a reasonable person would expect to have a material effect on the price or value of the Company’s securities. It recommends that it put in place mechanisms designed to ensure all investors have equal and timely access to material information concerning the Company (including its financial position, performance, ownership and governance), and that a Company’s announcements are factual and presented in a clear and balanced way. The board and senior management team at Site Group International Limited are conscious of the ASX Listing Rule continuous disclosure requirements and have processes in place to ensure compliance. Company policy requires: • all announcements be reviewed by the Chairman and all directors; and • all media comment is by the Chairman and Chief Financial Officer. Principle 6: Respect the rights of security holders The ASX Corporate Governance Council guidelines recommend that a Company respects the rights of security holders by providing them with appropriate information and facilitates to allow them to exercise those rights effectively. To achieve best practice, the Council recommends that Companies: • Provide information about themselves and their governance on their website; • Design and implement a suitable investor relations program to facilitate effective two-way communication with investors; • Disclose policies and processes to encourage participation at meetings of security holders; and • Provide security holders with the option to receive communications electronically. Site Group International Limited promotes effective communication with shareholders and encourages effective participation at general meetings by providing information to shareholders: • Through the release of information to the market via the ASX; • Through the distribution of the Annual Report and notices of annual general meeting; • Through shareholder meetings and investor presentations; and • By posting relevant information on Site Group International’s website: www.site.edu.au The company’s website has a dedicated investor relations section for the purpose of publishing all important company information and relevant announcements made to the market. The external auditors are required to attend the annual general meeting and are available to answer any shareholder questions about the conduct of the audit and preparation of the audit report. The external auditors are required to attend the annual general meeting and are available to answer any questions from security holders relevant to the audit. Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 27 of 96 Corporate Governance Statement continued Principle 7: Recognise and manage risk The ASX Corporate Governance Council guidelines recommend that the Company establish a sound risk management framework to identify and manage risk on an ongoing basis. It recommends that the system be designed to identify, assess, monitor and manage risk; and inform investors of material changes to the Company’s risk profile. It suggests that to achieve “best practice”, the board or an appropriate board committee should establish policies on risk oversight and that the Company’s risk management and internal compliance and control system is operating efficiently and effectively in all material respects. The Audit and Risk Committee has in its Charter the requirement to consider risks that the Company has to manage. The Company has established a Risk Register that is reviewed by the Audit and Risk Committee annually. Risks are assessed and ranked in accordance with generally accepted risk management practices with appropriate mitigation strategies adopted where possible. The Company does not have a separate internal audit function. The board considers that the Company is not currently of the size or complexity to justify a separate internal audit function, and that appropriate internal financial controls are in place. Such controls are monitored by senior financial management and the Audit and Risk Committee. In addition, the board does consider the recommendations of the external auditors and other external advisers and where considered necessary, appropriate action is taken to ensure that an environment is in place that key risks, as identified, are managed. The Director’s Report sets out some of the key risks relevant to the Company and its operations. Although not specifically defined as such, the risks include economic, environmental and social sustainability risks. As noted above, the Company regularly reviews risks facing the Company and adopts appropriate mitigation strategies where possible. Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 28 of 96 Corporate Governance Statement continued Principle 8: Remunerate fairly and responsibly The ASX Corporate Governance Council guidelines recommend that the Company ensures that the level and composition of remuneration is sufficient and reasonable and that its relationship to corporate and individual performance is defined. In this regard it recommends that companies adopt remuneration policies that: • attract and retain high quality Directors; • attract, retain and motivate high quality senior executives; and to align their interests with the creation of value for security holders. The Company has a Nomination and Remuneration Committee and the board has approved the charter for the Nomination and Remuneration Committee. The Committee charter is set out on the Company’s website. The number of meetings of the committee held during the 2023 year is set out in the Directors’ Report. In 2023 the Committee comprised two members of the Board. The Council recommends that remuneration committees be comprised of at least three independent directors. Due to Messrs Alcantara and Anfield’s extensive corporate history and experience, the company believes that given the size and nature of its operations, non-compliance has not been detrimental. All matters of remuneration and executive appointments were also considered by the full board. At this stage it is reasonable that the board be accountable for setting their own remuneration and that of senior executives. The remuneration of the board’s non-executive and executive directors is set out in the relevant section of the Annual Report. Details of the nature and amount of each element of the remuneration of each director of the Company and the key management personnel of the Company are disclosed in the relevant section of the Annual Report. There is no retirement benefit scheme for directors other than payment of statutory superannuation. The Company has adopted a Trading Policy that includes a prohibition on hedging, aimed at ensuring participants do not enter into arrangements which would have the effect of limiting their exposure to risk relating to an element of their remuneration. Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 29 of 96 Level 38, 345 Queen Street Brisbane, QLD 4000 Postal address GPO Box 1144 Brisbane, QLD 4001 p. +61 7 3222 8444 The Directors Site Group International Limited Level 2, 488 Queen St BRISBANE QLD 4000 Auditor’s Independence Declaration In relation to the independent audit for the year ended 30 June 2023, to the best of my knowledge and belief there have been: (i) (ii) No contraventions of the auditor independence requirements of the Corporations Act 2001; and No contraventions of APES 110 Code of Ethics for Professional Accountants (including Independence Standards). This declaration is in respect of Site Group International Limited and the entities it controlled during the year. PITCHER PARTNERS JASON EVANS Partner Brisbane, Queensland 31 August 2023 Brisbane Sydney Newcastle Melbourne Adelaide Perth Pitcher Partners is an association of independent firms. An Independent Queensland Partnership ABN 84 797 724 539. Liability limited by a scheme approved under Professional Standards Legislation. Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities. pitcher.com.au NIGEL FISCHER MARK NICHOLSON PETER CAMENZULI JASON EVANS KYLIE LAMPRECHT NORMAN THURECHT BRETT HEADRICK WARWICK FACE COLE WILKINSON SIMON CHUN JEREMY JONES TOM SPLATT JAMES FIELD DANIEL COLWELL ROBYN COOPER FELICITY CRIMSTON CHERYL MASON KIERAN WALLIS MURRAY GRAHAM ANDREW ROBIN KAREN LEVINE EDWARD FLETCHER ROBERT HUGHES SITE GROUP INTERNATIONAL LIMITED ABN: 73 003 201 910 AND CONTROLLED ENTITIES FOR THE YEAR ENDED 30 JUNE 2023 Statement of Profit or Loss and Other Comprehensive Income Consolidated Group Note 2023 $ 2022 $ Continuing operations Revenue from contracts with customers Interest income Total income Contractor and other service providers Other direct fees and costs Employee benefits expense Sales and marketing expense Occupancy expenses Depreciation and amortisation expense Impairment expense Finance costs Foreign currency (loss) Fair value (loss)/ gain of financial liabilities at fair value through profit and loss Share of net profit of associate account for using the equity method Other expenses Profit (Loss) before tax from continuing operations Income tax (expense) / benefit Profit (Loss) for the period from continuing operations Profit/(Loss) for the year from discontinued operations Profit (Loss) for the period Other comprehensive income Items that may be reclassified to profit or loss in subsequent years (net of tax): Translation of foreign operations Items not to be reclassified to profit or loss in subsequent years (net of tax): Remeasurement gain/(loss) on defined benefit plan Total other comprehensive income /(loss) Total comprehensive profit (loss) Earnings per share Earnings per share for loss attributable to the ordinary equity holders of the parent Basic and diluted (cents per share) Earnings per share for continuing operations Earnings per share for loss from continuing operations attributable to the ordinary equity holders of the parent Basic and diluted (cents per share) 4 5 5 11 5 17 28 5 6 24 16 3 3 6,917,693 7,874 6,925,567 (146,896) (858,354) (4,031,451) (587,790) (438,729) (1,041,094) - (881,066) (326,258) 5,055 (178,948) (2,225,816) (3,785,780) (112,771) (3,898,551) 7,141,825 5,904 7,147,729 (1,310,787) (1,317,821) (3,324,247) (766,969) (374,663) (1,127,170) (469,291) (935,780) (671,717) 252,458 - (1,962,670) (4,860,928) 11,904 (4,849,024) 23,118,839 (2,405,818) 19,220,288 (7,254,842) 9,894 4,822 14,716 4,593 44,445 49,038 19,235,004 (7,205,804) 1.51 (0.86) (0.31) (0.58) The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes. Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 31 of 96 SITE GROUP INTERNATIONAL LIMITED ABN: 73 003 201 910 AND CONTROLLED ENTITIES AS AT 30 JUNE 2023 Statement of Financial Position Note Consolidated Group 2023 $ 2022 $ ASSETS CURRENT ASSETS Cash and cash equivalents Trade and other receivables Contract assets Inventories Prepayments Financial assets at fair value through profit or loss Current tax assets TOTAL CURRENT ASSETS NON-CURRENT ASSETS Property, plant and equipment Right-of-use assets Intangible assets Security deposits Investments accounted for using the equity method Other non-current financial assets Financial assets at fair value through profit or loss Deferred income tax asset TOTAL NON-CURRENT ASSETS TOTAL ASSETS LIABILITIES CURRENT LIABILITIES Trade and other payables Contract liabilites Interest bearing debt Lease liabilities Current tax liabilities Provisions Financial liabilities at fair value through profit or loss TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Trade and other payables Provisions Lease liabilities TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Issued capital Reserves Accumulated losses TOTAL EQUITY 7 8 24 9 12 10 28 24 6 13 14 15 12 16 17 13 16 12 18 19 19 267,936 939,024 32,551 6,965 169,326 777,297 5,678 2,198,777 2,924,640 880,084 2,060 495,320 6,400,503 16,435 - 335,106 11,054,148 13,252,925 3,366,374 48,945 - 488,580 - 505,610 3,530 4,413,039 5,595,083 102,927 574,496 6,272,506 10,685,545 2,567,380 139,287 1,012,711 10,353 11,471 159,116 600,000 - 1,932,938 3,132,956 3,675,803 2,034 523,910 - 16,435 783,085 767,993 8,902,216 10,835,154 8,425,843 43,305 10,511,908 1,062,640 2,598 299,024 8,585 20,353,903 5,595,083 232,482 6,406,290 12,233,855 32,587,758 (21,752,604) 88,804,521 2,710,126 (88,947,267) 2,567,380 83,719,540 2,700,232 (108,172,376) (21,752,604) The above statement of financial position should be read in conjunction with the accompanying notes. Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 32 of 96 SITE GROUP INTERNATIONAL LIMITED ABN: 73 003 201 910 AND CONTROLLED ENTITIES FOR THE YEAR ENDED 30 JUNE 2023 Statement of Changes in Equity Consolidated Group Balance at 30 June 2021 Comprehensive income Loss for the year Other comprehensive income for the year Total comprehensive income /(loss) for the year Transactions with owners, in their capacity as owners, and other transfers Shares issued during the year Transaction costs Share-based payments Total transactions with owners and other transfers Share Capital Accumulated losses Foreign currency translation reserve Share based payments reserve (note 18) $ (note 19) $ (note 19) $ (note 19) $ Total $ 83,719,540 (100,961,979) 1,157,277 1,538,362 (14,546,800) - - - - - - - (7,254,842) 44,445 (7,210,397) - - - - - 4,593 4,593 - - - - - - - - - - - (7,254,842) 49,038 (7,205,804) - - - - Balance at 30 June 2022 83,719,540 (108,172,376) 1,161,870 1,538,362 (21,752,604) Comprehensive income Profit for the year Other comprehensive income for the year Total comprehensive income /(loss) for the year - - - 19,220,287 4,822 19,225,109 Transactions with owners, in their capacity as owners, and other transfers Shares issued during the year Transaction costs Share-based payments Total transactions with owners and other transfers 5,388,735 (303,754) - 5,084,981 - - - - - 9,894 9,894 - - - - - - - - - - - 19,220,287 14,716 19,235,003 5,388,735 (303,754) - 5,084,981 Balance at 30 June 2023 88,804,521 (88,947,267) 1,171,764 1,538,362 2,567,380 The above statement of changes in equity should be read in conjunction with the accompanying notes. Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 33 of 96 SITE GROUP INTERNATIONAL LIMITED ABN: 73 003 201 910 AND CONTROLLED ENTITIES FOR THE YEAR ENDED 30 JUNE 2023 Statement of Cash Flows CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers Payments to suppliers and employees Interest received Interest paid Income tax paid Consolidated Group Note 2023 $ 2022 $ 6,947,477 (9,891,216) 2,150 (682,970) (7,428) 7,499,843 (8,353,278) 768 (841,907) (3,527) Net cash used in operating activities 25 (3,631,987) (1,698,101) CASH FLOWS FROM INVESTING ACTIVITIES Payment for property, plant and equipment Payments for investments Proceeds from sale of entities Proceeds from sale of business Cash backed performance bonds Net cash provided investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of shares Proceeds from borrowings Repayment of borrowings 28 28 (118,975) (225,406) 3,000,240 558,015 (39,915) 3,173,959 (24,268) - - - 196,087 171,819 4,943,735 - - 2,196,092 (2,526,989) (1,489,503) (332,366) - (678,711) - Principal repayments - lease liabilities 12 Transaction costs on shares Net cash provided by financing activities 594,877 1,517,381 Net increase / (decrease) in cash held Effect of exchange rates on cash holdings in foreign currencies Cash and cash equivalents at beginning of financial year Cash and cash equivalents at end of financial year 136,849 (8,901) (8,200) 139,287 267,936 (17,865) 166,053 139,287 The above statement of cash flows should be read in conjunction with the accompanying notes. Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 34 of 96 SITE GROUP INTERNATIONAL LIMITED ABN: 73 003 201 910 AND CONTROLLED ENTITIES Notes to the Financial Statements for the Year Ended 30 June 2023 Note 1 Corporate Information The consolidated financial report of Site Group International Limited (the Company) and its controlled entities (the Group) for the year ended 30 June 2023 was authorised for issue in accordance with a resolution of the directors on 31 August 2023. Site Group International Limited is a company limited by shares incorporated in Australia whose shares are publicly traded on the Australian Securities Exchange (ASX Code: SIT). The Group is a for-profit entity for the purposes of preparation of this financial report. The nature of the operations and principal activities of the Group are described in the directors' report. Note 1a Summary of significant accounting policies The principal accounting policies adopted in the preparation of this financial report are set out below. These policies have been consistently applied to the years presented unless otherwise stated. Basis of Preparation The financial report is a general purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board (AASB). The financial report has been prepared on an accruals basis and is based on historical costs unless otherwise stated. Australian Accounting Standards set out accounting policies that the AASB has concluded would result in a financial report containing relevant and reliable information about transactions, events and conditions. Significant accounting policies adopted in the preparation of this financial report are presented below. They have been consistently applied unless otherwise stated. The financial report is presented in Australian dollars and unless otherwise stated are rounded to the nearest dollar. (a) Compliance with IFRS The financial report complies with Australian Accounting Standards and International Financial Reporting Standards as issued by the International Accounting Standards Board. (b) Going concern For the financial year ended 30 June 2023 the Group made a loss of $3,898,551 (2022: loss of $4,849,024) and the cash outflow from operating activities for the year was $3,631,987 (2022: $1,698,101). At 30 June 2023, the Group had net assets of $2,567,380 (2022: deficiency of $21,752,604) and a net current asset deficiency of $2,214,261 (2022: deficiency of $18,420,965). Notwithstanding the reported results, this financial report has been prepared on a going concern basis as the directors consider that the company and the consolidated entity will be able to realise their assets and settle their liabilities in the normal course of business and at amount stated in the financial report. The directors have made enquiries of management, examined the Group current financial position and financial forecasts and have a reasonable expectation that the company and the Group has adequate financial resources to continue as a going concern. Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 35 of 96 Notes to the Financial Statements for the Year Ended 30 June 2023 continued Note 1a Summary of significant accounting policies continued Significant matters identified by the directors include:- - The reported loss after tax from continuing operations of $3,898,551 is not considered by the Directors to reflect the expected future performance of the Group. - Following the sale of Site Skills Training domestic assets the Group is expecting a further payment in FY24 (estimated at $0.77m). - The Group has sold 61.6% of Site Group Holdings Pty Ltd for $US10.005m, retaining 38.4% ownership of the Clark property project. The Group has the ability to sell down further ownership interest in the project to raise funding as required. The continuation of the company and the Group as a going concern is dependent on the ability to achieve the following objectives:- - Forecast cash flow from operations including savings associated with restructuring and streamlining the corporate operations following completion of the asset sale of Site Skills Training in Australia; - Forecast cash flow from realisation of the value of the Clark Property project in the form of third party investors providing funds to enable the Group to proceed with its strategy of maximising the value of the leasehold; - Proposed capital expenditure management; and - Support of its investors through capital raising by way of debt or equity. Should the above actions not generate the expected cash flow, there would be a material uncertainty which would cast significant doubt as to whether the Group would be able to meets its debts as and when they fall due, and therefore continue as a going concern. The Group may be required to realise assets and extinguish liabilities other than in the course of business and at amount different from those stated in the financial statements. The report does not include any adjustments relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the company and the Group not continue as a going concern. Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 36 of 96 Notes to the Financial Statements for the Year Ended 30 June 2023 continued Note 1a Summary of significant accounting policies continued (c) New or amended Accounting Standards and Interpretations adopted Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted. The following Accounting Standards and Interpretations are most relevant to the Group: Conceptual framework for financial reporting (Conceptual Framework) The Group has adopted the revised Conceptual Framework from 1 July 2020. The Conceptual Framework contains new definition and recognition criteria as well as new guidance on measurement that affects several Accounting Standards, but it has not had a material impact on the consolidated entity's financial statements. (d) Basis of consolidation and equity accounting The consolidated financial statements comprise the financial statements of the Group as at, and for the period ended, 30 June each year. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if and only if the Group has: • Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee); • Exposure, or rights, to variable returns from its involvement with the investee; and • The ability to use its power over the investee to affect its returns. When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including: • The contractual arrangement with the other vote holders of the investee; • The rights arising from other contractual arrangements; and • The Group’s voting rights and potential voting rights. The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the statement of profit or loss and other comprehensive income from the date the Group gains control until the date the Group ceases to control the subsidiary. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation. (i) Associates Associates are all entities over which the Group has significant influence but not control or joint control. This is generally the case where the Group holds between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting, after initially being recognised at cost. Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 37 of 96 Notes to the Financial Statements for the Year Ended 30 June 2023 continued Note 1a Summary of significant accounting policies continued (ii) Equity method Under the equity method of accounting, the investments are initially recognised at cost and adjusted thereafter to recognise the Group’s share of the post-acquisition profits or losses of the investee in profit or loss, and the Group’s share of movements in other comprehensive income of the investee in other comprehensive income. Dividends received or receivable from associates and joint ventures are recognised as a reduction in the carrying amount of the investment. Where the Group’s share of losses in an equity-accounted investment equals or exceeds its interest in the entity, including any other unsecured long-term receivables, the Group does not recognise further Unrealised gains on transactions between the Group and its associates and joint ventures are eliminated to the extent of the Group’s interest in these entities. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of equity-accounted investees have been changed where necessary to ensure consistency with the policies adopted by the Group. (iii) Changes in ownership interests The Group treats transactions with non-controlling interests that do not result in a loss of control as transactions with equity owners of the Group. A change in ownership interest results in an adjustment between the carrying amounts of the controlling and non-controlling interests to reflect their relative interests in the subsidiary. Any difference between the amount of the adjustment to non-controlling interests and any consideration paid or received is recognised in a separate reserve within equity. When the Group ceases to consolidate or equity account for an investment because of a loss of control, joint control or significant influence, any retained interest in the entity is remeasured to its fair value with the change in carrying amount recognised in profit or loss. This fair value becomes the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss. If the ownership interest in a joint venture or an associate is reduced but joint control or significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income are reclassified to profit or loss where appropriate. (e) Foreign currency translation Both the functional and presentation currency of Site Group International Limited and its Australian subsidiaries are Australian dollars ($). The Philippines branch’s functional currency is the Philippine Peso (PHP), Site Group International Pte Ltd’s functional currency is Singapore Dollars (SGD) and Competent Project Management Sdn Bhd’s functional currency is Malaysian Ringgit (MYR). Each of these is translated to the presentation currency. On consolidation, the assets and liabilities of the Asian operations are translated into Australian Dollars at the rate of exchange prevailing at the reporting date and the statement of profit or loss and other comprehensive income is translated at the exchange rate prevailing at the dates of the transactions. The exchange differences arising on translation for consolidation are recognised in other comprehensive income. Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 38 of 96 Notes to the Financial Statements for the Year Ended 30 June 2023 continued Note 1a Summary of significant accounting policies continued (f) Cash and cash equivalents Cash and cash equivalents in the statement of financial position and in the statement of cash flows comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. (g) Financial instruments – initial recognition and subsequent measurement Financial assets Initial recognition and measurement Financial assets within the scope of AASB 9 Financial Instruments are classified at amortised cost, at fair value through profit and loss, or at fair value through other comprehensive income. The Group determines the classification of its financial assets at initial recognition. All financial assets are recognised initially at fair value plus transaction costs, except financial assets recorded at fair value through profit or loss, on the basis of both the Group’s business model for managing the financial assets, and the contractual cash flow characteristics of the financial asset. The Group’s financial assets include cash and short-term deposits (amortised cost), receivables from contracts with customers (amortised cost), other receivables (amortised costs), and quoted and unquoted financial instruments (fair value through profit and loss). Receivables from contracts with customers are recognised when the Group has an unconditional right to consideration arising from the transfer of goods or services to the customer (i.e. only the passage of time is required before payment of the consideration is due). Where this is not the case, the resultant asset is a contract asset (refer note 1a (p)). Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognised on the trade date, i.e., the date that the Group commits to purchase or sell the asset. Other financial assets are recognised if the entity becomes party to contract provisions of the asset. Subsequent measurement The subsequent measurement of financial assets depends on their classification as described below. Financial assets at amortised cost Subsequent to initial measurement, these assets are measured at amortised cost using the Effective Interest Rate (EIR) method, less allowances for credit losses. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in interest revenue in the statement of profit or loss and other comprehensive income. Financial assets at fair value through profit and loss Subsequent to initial measurement, these assets are measured at fair value with changes in fair value being recognised in profit or loss as they arise. Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 39 of 96 Notes to the Financial Statements for the Year Ended 30 June 2023 continued Note 1a Summary of significant accounting policies continued Derecognition A financial asset (or, where applicable, a part of a financial asset or part of a Group of similar financial assets) is derecognised when: • The rights to receive cash flows from the asset have expired; or • The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a “pass-through” arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset. Impairment of financial assets at amortised cost The Group applies the simplified expected credit loss model prescribed in AASB 9 to determine an allowance for expected credit losses on receivables from contracts with customers and its other receivables measured at amortised cost. Under this approach, the lifetime expected credit losses are estimated using a provision matrix based on historical losses observed on similar assets, adjusted for the Group’s forecasts of future economic conditions. The measurement of expected credit losses reflects the Group’s ‘expected rate of loss’, which is a product of the probability of default and the loss given default, and its ‘exposure at default’, which is typically the carrying amount of the relevant asset. The Group has identified contractual payments more than 90 days past due as default events for the purpose of measuring expected credit losses. These default events have been selected based on the Group’s historical experience. Financial liabilities Initial recognition and measurement Financial liabilities within the scope of AASB 9 Financial Instruments are classified as at amortised cost, at fair value through profit and loss, or as derivatives designated as hedging instruments as appropriate. The Group determines the classification of its financial liabilities at initial recognition. All financial liabilities are recognised initially at fair value plus, in the case of loans and borrowings, directly attributable transaction costs. The Group’s financial liabilities include trade and other payables (amortised costs), loans and borrowings (amortised cost) and derivative financial instruments (fair value through profit and loss). Loans and borrowings After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in the statement of profit or loss and other comprehensive income when the liabilities are derecognised as well as through the EIR amortisation process. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance costs in the statement of profit or loss and other comprehensive income. Derivative financial instruments Derivative financial instruments held by the Group represent embedded conversion options on borrowing facilities. The embedded derivative component of the debt is required to be separated and accounted for as at fair value through profit and loss, with fair value gains and losses on remeasurement recognised in profit and loss. Derecognition A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 40 of 96 Notes to the Financial Statements for the Year Ended 30 June 2023 continued Note 1a Summary of significant accounting policies continued (h) Offsetting of financial instruments Financial assets and financial liabilities are offset, and the net amount reported in the consolidated statement of financial position if, and only if: • There is a currently enforceable legal right to offset the recognised amounts • There is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously (i) Property, plant, and equipment Each class of property, plant and equipment is carried at cost or fair value as indicated less, where applicable, any accumulated depreciation and impairment losses. Leasehold Improvements Leasehold improvements are initially shown at their cost, less subsequent depreciation. Plant and Equipment Plant and equipment are measured on the cost basis, less depreciation and impairment losses. Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the company and the cost of the item can be measured reliably. All other repairs and maintenance are charged to profit and loss during the financial period when they are incurred. Depreciation The depreciable amount of all fixed assets, excluding freehold land, is depreciated on a straight-line basis over the asset's useful life to the company commencing from the time the asset is held ready for use. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful life of the improvement. The estimated lives used for each class of depreciable assets are: Class of fixed asset Leasehold improvements Furniture and fittings Computer equipment Vehicles Estimated Life 2 – 25 years 2 – 20 years 3 – 5 years 3 – 5 years The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains or losses are included in profit or loss. (j) Leases At the commencement date of a lease (other than leases of 12-months or less and leases of low value assets), the Group recognises a lease asset representing its right to use the underlying asset and a lease liability representing its obligation to make lease payments. Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 41 of 96 Notes to the Financial Statements for the Year Ended 30 June 2023 continued Note 1a Summary of significant accounting policies continued Lease assets Lease assets are initially recognised at cost, comprising the amount of the initial measurement of the lease liability, any lease payments made at or before the commencement date of the lease, less any lease incentives received, any initial direct costs incurred by the Group, and an estimate of costs to be incurred by the Group in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease, unless those costs are incurred to produce inventories. Subsequent to initial recognition, lease assets are measured at cost (adjusted for any remeasurement of the associated lease liability), less accumulated depreciation and accumulated impairment loss. Lease assets are depreciated over the shorter of the lease term and the estimated useful life of the underlying asset, consistent with the estimated consumption of the economic benefits embodied in the underlying asset. Lease liabilities Lease liabilities are initially recognised at the present value of the future lease payments (i.e., the lease payments that are unpaid at the commencement date of the lease). These lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined, or otherwise using the Group’s incremental borrowing rate. Subsequent to initial recognition, lease liabilities are measured at the present value of the remaining lease payments (i.e., the lease payments that are unpaid at the reporting date). Interest expense on lease liabilities is recognised in profit or loss (presented as a component of finance costs). Lease liabilities are remeasured to reflect changes to lease terms, changes to lease payments and any lease modifications not accounted for as separate leases. Variable lease payments not included in the measurement of lease liabilities are recognised as an expense when incurred. Leases of 12-months or less and leases of low value assets Lease payments made in relation to leases of 12-months or less and leases of low value assets (for which a lease asset and a lease liability has not been recognised) are recognised as an expense on a straight-line basis over the lease term. Covid-19 related rent concessions The Group has elected to apply the practical expedient (as permitted by Australian Accounting Standards) not to assess whether rent concessions occurring as a direct consequence of the Covid- 19 pandemic are lease modifications, and to account for any changes in lease payments resulting from the rent concessions as if the changes were not lease modifications. Any gains arising from Covid-19 related rent concessions are recognised in profit or loss. The practical expedient only applies to rent concessions occurring as a direct consequence of the COVID-19 pandemic and only if all the following conditions are met: (a) the change in lease payments results in revised consideration for the lease that is substantially the same as, or less than, the consideration for the lease immediately preceding the change; (b) (c) any reduction in lease payments affects only payments due on or before 30 June 2022; and there is no substantive change to other terms and conditions of the lease. Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 42 of 96 Notes to the Financial Statements for the Year Ended 30 June 2023 continued Note 1a Summary of significant accounting policies continued (k) Intangible assets Goodwill Goodwill is initially recorded at the amount by which the purchase price for a business combination exceeds the fair value attributed to the interest in the net fair value of identifiable assets, and liabilities. After initial recognition, goodwill acquired in a business combination is measured at cost less any accumulated impairment losses. Goodwill is not amortised but is subject to impairment testing on an annual basis or whenever there is an indication of impairment. Training Licences and Course Material Site Group acquires licenced course material with significant scope (approved courses) in high risk training. The economic potential of these licences and courses was assessed as part of the acquisition price and recorded as an intangible asset which is being amortised on a straight line basis over five years. Licences Site Group acquires licences to offer scope of training and access to government funding options. The economic potential of these licences was assessed as part of the acquisition price and recorded as an intangible asset and amortised on a straight line basis over 20 years. Customer Contracts Site Group acquires customer contracts with significant value to be realised through the profit and loss in future periods. The economic potential of these contracts is measured as a risk adjusted discounted cash flow to be generated from these contracts and recorded as an intangible asset which is amortised on a straight line basis over the relevant contract period. Brand Site Group acquires brands that are recognised by customers in relevant markets and generate future activity for the company. The economic potential of these brands in the form of future revenue generating potential is assessed as a discounted cash flow and recorded as an indefinite useful life intangible and tested for impairment annually. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis. (l) Impairment of non-financial assets At each reporting date, the company reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is expensed to the statement of profit or loss and other comprehensive income. Impairment testing is performed annually for goodwill and intangible assets with indefinite lives. Where an individual asset does not independently generate cash flows, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs. (m) Provisions and employee benefits Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of cash or non-cash resources will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 43 of 96 Notes to the Financial Statements for the Year Ended 30 June 2023 continued Note 1a Summary of significant accounting policies continued When the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the statement of profit or loss and other comprehensive income net of any reimbursement. Provisions are measured at the present value of management's best estimate of the expenditure required to settle the present obligation at the reporting date. The discount rate used to determine the present value reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision resulting from the passage of time is recognised in finance costs. Employee leave benefits (i) Wages, salaries, annual leave and sick leave Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be wholly settled within 12 months of the reporting date are recognised in respect of employees' services up to the reporting date. They are measured at the amounts expected to be paid when the liabilities are settled. Based on historical evidence no discounting of annual leave has been applied. Expenses for non-accumulating sick leave are recognised when the leave is taken and are measured at the rates paid or payable. Liabilities for wages, salaries and annual leave are recognised as current liabilities and the Group does not have an unconditional right to defer settlement beyond 12 months. (ii) Long service leave The liability for long service leave is recognised and measured as the present value of expected future payments to be made in respect of services provided by employees once an employee reaches five years of service. Expected future payments are discounted using market yields at the reporting date on the applicable corporate bonds with terms to maturity and currencies that match, the estimated future cash outflows. Where the Group has an unconditional right to defer settlement of the liability beyond 12 months of the balance date, the provision is classified as non-current. (iii) Post employment obligations The liability recognised in the balance sheet in respect of the retirement obligations of staff in the Philippines is the present value of the defined benefit obligation at the end of the reporting period less the fair value of the plan assets. The defined benefit obligation is calculated annually by independent actuaries using the projected unit cost method. Remeasurement gains and losses arising from experience adjustments and change sin actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income. These are included in retained earnings in the statement of change in equity and in the balance sheet. For defined contribution plans, the Group pays contributions to publicly or privately administered superannuation plan on a mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid. The contributions are recognised as employee benefit expense when they are due. (n) Taxes Current Income Tax Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the tax authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the reporting date. Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 44 of 96 Notes to the Financial Statements for the Year Ended 30 June 2023 continued Note 1a Summary of significant accounting policies continued Deferred Income Tax Deferred tax is provided using the balance sheet liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax liabilities (DTL) are recognised for all taxable temporary differences except: • When the DTL arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss. • When the taxable temporary difference is associated with investments in subsidiaries or interests in joint ventures, and the timing of the reversal of the temporary difference can be controlled and probable the temporary difference will not reverse in the foreseeable future. Deferred income tax assets (DTA) 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: • When the DTA 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 the accounting profit nor taxable profit or loss. • When the deductible temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, a deferred tax asset is only recognised to the extent that it is probable that the temporary difference will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilised. The carrying amount of DTA is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised deferred tax assets are reassessed each reporting date and are recognised to the extent it has become probable that future taxable profit will allow recovery of the deferred tax asset. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to offset current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same tax authority. Tax consolidation legislation Site Group International Limited and its wholly owned Australian controlled entities have implemented the tax consolidation legislation. The head entity, Site Group International Limited and the controlled entities in the tax consolidated group continue to account for their own current and deferred tax amounts. The Group has applied the group allocation approach in determining the appropriate amount of current taxes and deferred taxes to allocate to members of the tax consolidated group. In addition to its own current and deferred tax amounts, Site Group International Limited also recognises the current tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from controlled entities in the tax consolidated group. Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts receivable from or payable to other entities in the Group. Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 45 of 96 Notes to the Financial Statements for the Year Ended 30 June 2023 continued Note 1a Summary of significant accounting policies continued Any differences between the amounts assumed and the amounts receivable or payable under the tax funding agreement are recognised as contributions to (or distribution from) wholly owned tax consolidated entities. Goods and services tax (GST) Revenues, expenses, assets and liabilities are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Tax Office. In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the balance sheet are shown inclusive of GST. GST receivable and payable has been offset against one another. Commitments are shown net of GST. In the statement of cash flows, receipts from customers are shown inclusive of GST and payments to suppliers and employees are shown inclusive of GST and GST recovered from the tax office is shown in receipts from customers. (o) Revenue recognition Revenue from contracts with customers is recognised either at a point in time or over time depending on the nature of the contract, including the timing of satisfaction of performance obligations and the transfer of control to the customer. The Group’s contracts with customers fall into the following categories: Revenue Stream Nature of Goods or Services Promised Typical Performance Obligations When Performance Obligation is Typically Satisfied Method Used to Determine Progress Towards Complete Satisfaction of Performance Obligation Course fees and Government subsidies Training Service Delivery of training course Over time, being throughout the period of the course. For short-term (i.e. one day) courses the performance obligation may be satisfied at a point in time, being the date of course delivery. An output method is used being contact days elapsed as a percentage of total contact days. This is considered the most appropriate basis for recognition of revenue as it is readily observable and sufficiently linked to the performance obligations specified in the contract. Specific projects with performance milestones & project delivery indicators Construction of Safe Life Processing Plant (SLPP) Facility accommodation Specific project milestones as specified in each individual contract. Project income Ongoing project service income Facility Management of Safe Life Processing Plant (SLPP) Delivery of a service over the length of the contract period. Performance obligation: Specific project milestones as specified in contract, with a transaction price allocated to each milestone. Project delivery in most instances will not extend over more than one financial period. Over time, being as the services are delivered over the duration of the contract. Placement services Recruitment and labour hire services 1. Placement of personnel at inception 2. Provision of employee for a fixed period of time Placement: At a point in time, being when the employee has been successfully placed (i.e. acceptance of placement by customer). Provision of employee: Over time, being the period of time that staff are employed. Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 An input method is used, based on the amount of contract costs incurred as a percentage of budgeted contract costs An output method is applied based on either time elapsed, units delivered, or milestones reached dependent on the terms of the individual contracts. Control is considered to pass in a manner consistent with measurement provided by this method. An output method (time elapsed on percentage of total time) is used. This reflects the expectation of consistency in transfer of services over the contract period for labour services. Page 46 of 96 Notes to the Financial Statements for the Year Ended 30 June 2023 continued Note 1a Summary of significant accounting policies continued Contracts with customers do not typically involve a significant financing component. Course fee contracts may specify an entitlement to receive a portion of the contract value in advance of services being provided, however the period of time between payment being received and course delivery is generally not greater than 12 months. Amounts received in advance of services being provided are recognised as contract liabilities (refer note 1a (p)). In the prior year the Group was eligible for the Australian Job Keeper wage subsidy and cash flow boost schemes during the year. Revenue from these government grant and subsidy is recognised when the Group is entitled to receive them. No disclosure has been made within the financial statements of the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied (or partially unsatisfied) as of the end of the reporting period, as these performance obligations relate to contracts that have an original expected duration of one year or less. There are no elements of consideration under any of the above revenue streams that are variable in nature. (p) Contract assets and contract liabilities Contract assets represent the Group’s right to consideration (not being an unconditional right recognised as a receivable) in exchange for goods or services transferred to the customer. Contract assets are measured at the amount of consideration that the Group expects to be entitled in exchange for goods or services transferred to the customer. Contract liabilities represent the Group’s obligation to transfer goods or services to the customer for which the Group has received consideration (or an amount of consideration is due) from the customer. Amounts recorded as contract liabilities are subsequently recognised as revenue when the Group transfers the contracted goods or services to the customer. (q) Comparative figures Where necessary, comparative figures have been adjusted to conform to changes in presentation for the current financial year where required by accounting standards or as a result of changes in accounting policy. (r) Share-based payment transactions The Group provides benefits to its employees (including key management personnel) in the form of share-based payments, whereby employees render services in exchange for shares or rights over shares (equity settled transactions). Site Group currently has an Employee Share Plan (ESP), which provides benefits to directors and all eligible employees. The cost of these equity-settled transactions with employees is measured by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by using a binomial model, further details of which are given in note 20. The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled (the vesting period), ending on the date on which the relevant employees become fully entitled to the award (the vesting date). Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 47 of 96 Notes to the Financial Statements for the Year Ended 30 June 2023 continued Note 1a Summary of significant accounting policies continued At each subsequent reporting date until vesting, the cumulative charge to profit or loss is the product of: • The grant date fair value of the award; • The current best estimate of the number of awards that will vest, taking into account such factors as the likelihood of employee turnover during the vesting period and the likelihood of non- market performance conditions being met; and • The expired portion of the vesting period. The charge to profit or loss for the period is the cumulative amount as calculated above less the amounts already charged in previous periods. There is a corresponding entry to equity. The expense associated with equity-settled awards granted by Site Group to employees of subsidiaries are recorded as an expense in the subsidiary and funded by advances from the parent which eliminate on consolidation. The expense recognised by the Group is the total expense associated with all awards. Until an award has vested, any amounts recorded are contingent and will be adjusted if more or fewer awards vest than were originally anticipated to do so. Any award subject to a market condition or non- vesting condition is considered to vest irrespective of whether or not that market condition or non- vesting is fulfilled, provided that all other conditions are satisfied. (s) Contributed equity Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax as applicable, from the proceeds. (t) Fair value measurement All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole: • Level 1 – Quoted (unadjusted) market prices in active markets for identical assets or liabilities • Level 2 – Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable • Level 3 – Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable The Group measures derivative financial liabilities at fair value through profit and loss (refer note 1a(g)) on a recurring basis. The valuation of these derivatives involves the use of unobservable inputs (level 3), which are detailed together with a reconciliation of changes in the fair value of these liabilities throughout the period in note 17. The carrying values of other financial assets and financial liabilities as disclosed in note 24 approximate their fair values. Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 48 of 96 Notes to the Financial Statements for the Year Ended 30 June 2023 continued Note 1b Significant accounting judgements, estimates and assumptions The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements and estimates on historical experience and on other various factors it believes to be reasonable under the circumstances, the result which form the basis of the carrying values of assets and liabilities that aren’t readily apparent from other sources. Management has identified the following critical accounting policies for which significant judgements, estimates and assumptions are made. Actual results may differ from these estimates under different assumptions and conditions and may materially affect financial results or the financial position reported in future periods. Further details may be found in the relevant notes to the financial statements. (a) Significant accounting judgements Determining the lease term of contracts with renewal and termination options The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised. The Group has several lease contracts that include extension and termination options. The Group applies judgement in evaluating whether it is reasonably certain whether or not to exercise the option to renew or terminate the lease. That is, it considers all relevant factors that create an economic incentive for it to exercise either the renewal or termination. After the commencement date, the Group reassesses the lease term if there is significant event or change in circumstances that is within its control and affects its ability to exercise or not to exercise the option to renew or to terminate (eg construction of significant leasehold improvements). Recovery of deferred tax assets Deferred tax assets are recognised for unused tax losses to the extent it is probable that future taxable profits will be available against which the losses can be utilised. . Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies. Total carried forward tax losses for the Group as at 30 June 2023 totalled $39,215,387 (balance at 30 June 2022 $45,658,684). Total carried forward capital losses as at 30 June 2023 amount to $Nil (30 June 2022: $Nil). Impairment of non-financial assets other than goodwill and indefinite life intangibles The Group assesses impairment of assets at each reporting date by evaluating conditions specific to the Group and to the particular asset that may lead to impairment. These include technology, economic and political environments and future product expectations. If an impairment trigger exists, the recoverable amount of the asset is determined. Given the current uncertain economic environment management considered that the indicators of impairment were significant enough and as such these assets have been tested for impairment in this financial period, refer below. Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 49 of 96 Notes to the Financial Statements for the Year Ended 30 June 2023 continued Note 1b continued Significant accounting judgements, estimates and assumptions Existence of significant influence Following the sale of 61.6% of Site Group Holdings Pty Ltd, Site Group international Limited is entitled to 1 board seat out of 3 via the shareholders agreement and participates in all significant financial and operating decisions. The Group has therefore determined that is has significant influence over this entity from 23 November 2022 and has equity accounted the investment from this date. The initial fair on date of sale was $6,354,045 (Refer note 28). (b) Significant accounting estimates and assumptions Impairment of non-current assets The Group determines whether goodwill and intangibles with indefinite useful lives are impaired at least on an annual basis. Further, the Group considers whether other non-current assets are impaired whenever there is an indication that impairment may exist. This requires an estimation of the recoverable amount of the cash generating units, using a value in use discounted cash flow methodology, to which the goodwill and intangibles with indefinite useful lives are allocated. The prior year impairment of $469,291 related to goodwill and right of use assets. The assumptions used in this estimation of recoverable amount and the carrying amount of goodwill and intangibles with indefinite useful lives are discussed in note 11. Revenue recognition – Course fees The Group recognises the revenue earned from delivery of a course over the period of the course that the service is provided. Where the duration of the course goes over a reporting date this is recorded as a contract liability on the statement of financial position. In calculating the amount of contract liability, consideration is also given to the probability of reversals and student refunds and the impact on the level of income recorded. Leases – Estimating the incremental borrowing rate The Group cannot readily determine the interest rate implicit in the lease, therefore it uses the incremental borrowing rate (IBR) to measure lease liabilities. The IBR is the rate of interest that the Group would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment. The IBR therefore reflects what the Group ‘would have to pay’, which requires estimation. The Group estimates the IBR based on recent third-party financing received and makes adjustments specific to the lease if required e.g. term, country currency and security. Contingent consideration asset The Group has determined the fair value of the potential cash consideration receivable following the sale of Site Skills Training - Domestic in FY2023 by estimating the present value of future cash flows. Inputs and assumptions are discussed further in note 24. Investments accounted for using the equity method The fair value of the equity interest retained by the Group (38.4%) in Site Group Holdings Pty Ltd is based on the independent valuation disclosed in the Independent Expert’s Report prepared by Advisory Partner Connect Pty Ltd. Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 50 of 96 Notes to the Financial Statements for the Year Ended 30 June 2023 continued Note 2 Operating Segments An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the same entity), whose operating results are regularly reviewed by the entity's chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance and for which discrete financial information is available. The Group has organised its business into three separate units based on the products and services offered – the Chief Operating Decision Makers (“CODM”), being the directors and executive management of the Group, review the results on this basis. The three reportable business segments of the Group are: - Site Skills Training - International operates a 300,000m2 facility at Clark Freeport Zone in the Philippines allowing the company to deliver Australian standard training in a low cost and controlled environment. This facility has the capacity to complete large scale residential training programs customised to meet client specific requirements. This division also incorporates Site WorkReady being the recruitment and assessment division for international clients. - Energy Services refers to the establishment of specialised energy training and services delivered to the Oil and Gas industry. - Tertiary Education delivers Diploma and certificate level courses at Site’s campuses in Australia through the Site Institute brand and also English language courses and conferences internationally through the TESOL Asia business. The CODM monitors the operating results of its business units separately for the purposes of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit/loss consistent with the operating profit/loss in the consolidated financial statements. Group financing and corporate overheads are managed on a group basis and not allocated to operating segments. Transfer prices between the operating segments are on an arm’s length basis in a manner similar to transactions with third parties. The following is an analysis of the revenue and results for the period, analysed by reportable operating unit: Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 51 of 96 Notes to the Financial Statements for the Year Ended 30 June 2023 continued Note 2 Operating Segments continued Year ended 30 June 2023 Site Skills Training (International) $ Energy Services $ Tertiary Education $ Total Segments $ Corporate and Eliminations $ Total $ Revenue from contracts with customers Revenue from contracts with customers - external customer 3,713,144 553,114 2,286,231 6,552,489 365,204 6,917,693 Revenue from contracts with customers - inter-segment - - - - - Total segment revenue 3,713,144 553,114 2,286,231 6,552,489 365,204 6,917,693 Segment net operating profit / (loss) before tax (236,178) 119,145 (284,728) (401,761) (3,205,071) (3,606,832) Interest revenue Interest expense Depreciation and amortisation EBITDA 4,576 (72,750) (387,587) - - 4,576 3,298 7,874 (2,088) (78,177) (153,015) (728,051) (881,066) - (188,353) (575,940) (465,154) (1,041,094) 219,583 121,233 (18,198) 322,618 (2,015,164) (1,692,546) Segment assets as at 30 June 2023 3,762,469 46,036 1,218,520 5,027,025 7,401,089 12,428,114 Segment liabilities as at 30 June 2023 656,080 70,771 1,698,940 2,425,791 6,856,703 9,282,494 Capital expenditure as at 30 June 2023 90,137 - 52,738 142,875 10,363 153,238 Year ended 30 June 2022 Site Skills Training (International) $ Energy Services $ Tertiary Education $ Total Segments $ Corporate and Eliminations $ Total $ Revenue from contracts with customers Revenue from contracts with customers - external customer 3,252,379 829,902 2,959,057 7,041,338 100,487 7,141,825 Revenue from contracts with customers - inter-segment 19,455 - - 19,455 (19,455) - Total segment revenue 3,271,834 829,902 2,959,057 7,060,793 81,032 7,141,825 Segment net operating profit / (loss) before tax (1,322,246) (144,581) (329,810) (1,796,637) (3,064,291) (4,860,928) Interest revenue Interest expense Depreciation and amortisation EBITDA 5,221 (54,312) (499,548) - (4,082) 7,009 - 5,221 683 5,904 (45,384) (103,778) (832,002) (935,780) (151,705) (644,244) (482,926) (1,127,170) (773,607) (147,508) (132,721) (1,053,836) (1,750,046) (2,803,882) Segment assets as at 30 June 2022 6,706,972 310,373 643,932 7,661,277 1,734,886 9,396,163 Segment liabilities as at 30 June 2022 9,127,841 436,964 1,674,974 11,239,779 19,354,023 30,593,802 Capital expenditure as at 30 June 2022 4,234 - 19,034 23,268 1,000 24,268 Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 52 of 96 Notes to the Financial Statements for the Year Ended 30 June 2023 continued Note 2 Operating Segments continued Reconciliation of loss Segment loss Inter-company management fees Head office occupancy costs Corporate employee benefits including Directors costs Legal accounting and other professional fees Travel costs Depreciation and amortisation expense Finance costs Fair value gain/loss of financial Liabilities at fair value Other corporate costs Corporate income Group profit (loss) before tax from continuing operations Reconciliation of assets Segment operating assets Discontinued operations Corporate assets Cash at bank Security deposits Investments accounted for using the equity method Other assets Inter-segment receivables Total assets per statement of financial position Reconciliation of liabilities Segment operating liabilities Discontinued operations Corporate liabilities Corporate trade payables Interest bearing debt Other financial liabilites Other liabilities Total liabilities per statement of financial position Consolidated Group 2023 $ 2022 $ (401,761) 786,669 (13,609) (1,017,742) (371,985) (93,337) (465,154) (637,830) 5,055 (1,762,342) 365,204 (3,606,832) (1,796,637) 1,334,448 (19,445) (1,408,212) (153,081) (18,152) (482,926) (832,002) 252,458 (1,818,411) 81,032 (4,860,928) 5,027,025 824,811 7,661,277 1,438,991 104,411 260,221 6,400,503 635,954 - 13,252,925 15,780 258,083 - 1,474,032 (13,009) 10,835,154 2,425,791 1,403,051 11,239,779 1,993,956 6,174,087 275,674 3,530 403,412 10,685,545 7,603,668 11,293,218 8,585 448,552 32,587,758 Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 53 of 96 Notes to the Financial Statements for the Year Ended 30 June 2023 continued Note 2 Operating Segments continued Disaggregation of Revenues As disclosed in note 1a(o), the Group derives its revenue from the transfer of services over time and at a point in time. The following table provided a disaggregation of revenue by major revenue class and by geographical location. Year ended 30 June 2023 Revenue from contracts with customers - external Course fees Placement services Government subsidies received Project income Other revenue Total revenue from contracts with customers - external Revenue from contracts with customers - inter segment Total revenue from contracts with customers Timing of revenue recognition Goods transferred at a point in time Services transferred over time Total revenue from contracts with customers Year ended 30 June 2022 Revenue from contracts with customers - external Course fees Placement services Project income Other revenue Total revenue from contracts with customers - external Revenue from contracts with customers - inter segment Total revenue from contracts with customers Timing of revenue recognition Goods transferred at a point in time Services transferred over time Total revenue from contracts with customers Australia Asia $ $ Corporate and Eliminations $ Total $ 2,553,346 - - 130,008 - 2,683,354 3,459,571 72,394 - 155,991 181,179 3,869,135 - - 2,683,354 3,869,135 114,683 - (16,241) - 266,762 365,204 - 365,204 6,127,600 72,394 (16,241) 285,999 447,941 6,917,693 - 6,917,693 - - 2,683,353 2,683,353 3,869,136 3,869,136 9,364 355,840 365,204 9,364 6,908,329 6,917,693 Australia Asia $ $ Corporate and Eliminations $ Total $ 3,186,878 - 310,420 1,364 3,498,662 - 3,498,662 2,949,429 100,559 260,482 232,206 3,542,676 19,455 3,562,131 - - - 100,487 100,487 (19,455) 81,032 6,136,307 100,559 570,902 334,057 7,141,825 - 7,141,825 - 3,498,662 3,498,662 53 3,562,078 3,562,131 7,286 73,746 81,032 7,339 7,134,486 7,141,825 Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 54 of 96 Notes to the Financial Statements for the Year Ended 30 June 2023 continued Note 3 Earnings per Share a) Earnings used in calculating earnings per share For basic and diluted earnings per share: Net loss excluding discontinued operations expense attributable to ordinary equity holders of the parent Net loss attributable to ordinary equity holders of the parent Consolidated Group 2023 2022 $ $ (3,898,551) 19,220,288 (4,849,024) (7,254,842) b) Weighted average number of shares Weighted average number of ordinary shares for basic and diluted earnings per share No. 1,271,971,506 No. 842,361,127 c) (Loss) / earnings per share (cents) Loss per share excluding discontinued operations attributable to the ordinary equity holders of the parent Loss per share attributable to the ordinary equity holders of the parent (0.31) 1.51 (0.77) (0.86) Options outstanding are anti-dilutive and therefore were not considered in the calculation of diluted earnings per share for the year ended 30 June 2023 and 2022. To calculate the EPS excluding discontinued operations, the weighted average number of ordinary shares is as per above. The following table provides profit / (loss) amounts used. Consolidated Group 2023 2022 $ $ Net profit /(loss) from discontinued operations attributable to ordinary equity holders of the parent 23,118,839 (2,405,818) Note 4 Revenue from Contracts with Customers from Continuing Operations Revenue from continuing operations Course fees Placement services Government support and subsidies Project income Other revenue Other Revenue & Income Interest income Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Consolidated Group 2023 2022 $ $ 6,127,600 72,394 (16,241) 285,999 447,941 6,917,693 6,136,307 100,559 - 570,902 334,057 7,141,825 Consolidated Group 2023 2022 $ $ 7,874 7,874 13,262 13,262 Page 55 of 96 Notes to the Financial Statements for the Year Ended 30 June 2023 continued Note 5 Expenses from Continuing Operations Employee benefits expense Wages and salaries Superannuation expense Payroll tax and workers compensation Changes in provisions for annual and long-service leave Other employment expenses Other expenses Legal, accounting and other professional fees Travel & accommodation Consultants cost Administrative expenses Finance costs Interest expense - third parties Interest expense - related parties Interest expense - lease liabilities Facilities fee Depreciation and amortisation Depreciation of property, plant & equipment Amortisation of intangible assets Depreciation of right-of-use assets Note Consolidated Group 2023 2022 $ $ 3,477,654 222,365 76,467 119,540 135,425 4,031,451 692,036 208,185 505,391 820,204 2,225,816 2,967,631 247,488 108,490 (90,482) 91,120 3,324,247 277,308 82,141 602,212 1,003,216 1,964,877 489,534 291,402 102,293 (2,163) 881,066 327,310 458,128 145,803 4,539 935,780 9 10 12 456,269 1,114 583,711 1,041,094 466,451 2,004 658,715 1,127,170 Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 56 of 96 Notes to the Financial Statements for the Year Ended 30 June 2023 continued Note 6 Taxation a) Income tax expense The major components of income tax expense are: Statement of profit or loss and other comprehensive income Current income tax Current income tax charge Adjustments in respect of current income tax of previous years Deferred income tax Relating to origination and reversal of timing differences Income tax expense reported in the statement of profit or loss and other comprehensive income Income tax expense is attributable to Profit (loss) from continuing operations Profit (loss) from discontinued operations 24 b) Numerical reconciliation of income tax expense to prima facie tax payable Total Profit / (loss) before income tax At the parent entity's statutory income tax rate of 30% (2022 - 30%) Differential in overseas tax rate to Australian tax rate Non-assessable income Non-deductible expenses Utilisation of previously unrecognised tax losses Impairment of PP&E, intangibles and right of use assets Deferred tax asset not recognised Income tax expense Note Consolidated Group 2023 $ 2022 $ - (1,227) 432,971 431,744 112,770 318,974 19,652,017 5,895,605 431,745 (1,863,117) 1,749,462 (5,781,951) - - 431,744 5,497 (9,801) 63,153 58,849 (11,904) 70,753 (7,195,993) (2,158,798) 58,849 (1,070,920) 2,009,816 - 132,305 1,087,598 58,850 Total carried forward tax losses for the Group as at 30 June 2023 totalled $39,215,387 (balance at 30 June 2022 $45,658,684). Total carried forward capital losses as at 30 June 2023 amount to $Nil (30 June 2022: $Nil). c) Deferred tax Accrued expenses Superannuation payable Provision for leave balance Provision for impairment of receivables Provision for re-credits Plant and Equipment under lease Other foreign entity deferrals Deferred tax benefit Net deferred tax assets Reconciliation of net deferred tax asset / (liability) As of 1 July Opening balance adjustment Tax income during the period recognised in profit or loss As at 30 June Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Consolidated statement of financial position Consolidated statement of profit or loss 2023 $ 2022 $ 2023 $ 2022 $ 124,477 17,344 135,866 13,500 - 40,345 3,574 553,849 16,873 100,004 13,500 23,717 67,033 (6,983) 335,106 767,993 429,372 (471) (35,862) - 23,717 26,688 (10,473) 432,971 2023 $ 767,993 84 (432,971) 335,106 (46,147) 4,476 13,746 67,800 - 27,704 (4,426) 63,153 2022 $ 830,838 308 (63,153) 767,993 Page 57 of 96 Notes to the Financial Statements for the Year Ended 30 June 2023 continued Note 7 Trade and Other Receivables CURRENT Receivables from contracts with customers Allowances for expected credit losses Other receivables Total current trade and other receivables Note 7(a) Consolidated Group 2023 2022 $ $ 21,884,971 (21,048,710) 836,261 102,763 939,024 21,915,400 (21,022,645) 892,755 119,956 1,012,711 Trade receivables includes an amount of $20,977,645, representing a portion of a total reconciliation payment of $28,969,145 receivable from the Commonwealth Government Department of Education and Training (DET) for services performed prior to 30 June 2017. The difference of $7,991,500 was impaired in an earlier period, which should not be taken as an assertion by the Group that the Group is not entitled to this amount. The expected loss rate for this balance (refer below) has been set at 100% considering the uncertain circumstances with regard to the reconciliation payment. The loss allowance will be re-assessed as the matter progresses and does not in any way alter the belief of the Board and Management that the Group is entitled to the full reconciliation amount of $28,969,145 in full and that the monies are legitimately due and payable under the relevant legislation as it then applied. a) Allowance for expected credit losses As described in note 1a(g), the Group applies the simplified expected credit loss model prescribed in AASB 9 to determine an allowance for expected credit losses on its receivables from contracts with customers (trade receivables) and contract assets. To measure the expected credit losses, trade receivables and contract assets have been grouped based on shared credit risk characteristics and the days past due. The contract assets have substantially the same risk characteristics as the trade receivables for the same types of contracts. The Group has therefore concluded that the expected loss rates for trade receivables are a reasonable approximation of the loss rates for the contract assets. The expected loss rates are based on the payment profiles for credit sales over a period of 3 years before 30 June 2023 and 30 June 2022 respectively and the corresponding historical credit losses experienced within this period. The historical loss rates are adjusted to reflect current and forward-looking macroeconomic factors affecting the ability of the customers to settle the receivables. The Group identifies GDP growth conditions to be the most relevant factor and accordingly adjusts the historical loss rates based on the expected change in this factor. Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 58 of 96 Notes to the Financial Statements for the Year Ended 30 June 2023 continued Note 7 Trade and Other Receivables continued The tables below show the calculation of the expected credit loss provision at both 30 June 2023 and 30 June 2022. Consolidated Group 30 June 2023 Expected credit loss rate Estimated total gross carrying Expected credit loss 30 June 2022 Expected credit loss rate Estimated total gross carrying Expected credit loss Total 21,884,971 21,048,710 21,915,400 21,022,645 Trade receivables - Days past due 31-60 days 0-30 days 61-90 days +91 days Discontinued Operation 2.0% 529,031 10,400 1.5% 418,568 6,476 4.0% 48,852 1,967 2.9% 175,091 5,158 14.0% 26,855 3,751 18.5% 21,280,233 21,032,592 - 6.3% 33,405 2,101 14.3% 310,691 31,265 20,977,645 20,977,645 The closing loss allowances for receivables from contracts with customers and contract assets as at 30 June 2023 reconcile to the opening loss allowances as follows: Movement in the provision for impairment Opening balance – calculated under AASB 9 Increase/(reversal) of loss allowance recognised in profit or loss Amounts written off Foreign Exchange movement Closing Balance Consolidated Group 2023 2022 $ $ 21,022,645 26,065 - - 21,048,710 21,248,645 (226,000) - - 21,022,645 Other receivables are excluded from the above analysis as these represent balances due from taxation authorities for which the expected loss rate is 0%. b) Fair value and credit risk Due to the short-term nature of these receivables, their carrying value is assumed to approximate their fair value. The maximum exposure to credit risk is the fair value of receivables. Collateral is not held as security, nor is it the Group’s policy to transfer (on-sell) receivables to special purpose entities. At 30 June 2023, Group receivables, before allowance for expected credit losses, included one customer that owed $20,977,645 (as noted above). c) Foreign exchange and interest rate risk Detail regarding foreign exchange and interest rate risk exposure is disclosed in note 26. Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 59 of 96 Notes to the Financial Statements for the Year Ended 30 June 2023 continued Note 8 Contract Assets Accrued revenue Note 9 Property, Plant and Equipment Plant and equipment Leasehold improvements At cost Accumulated depreciation and impairment Net carrying amount - leasehold improvements Capital works in progress At cost Computer equipment At cost Accumulated depreciation Net carrying amount - computers Furniture and fittings At cost Accumulated depreciation Net carrying amount - furniture and fittings Vehicles At cost Accumulated depreciation Net carrying amount - vehicles Total property, plant and equipment Consolidated Group 2023 2022 $ $ 32,551 10,353 Consolidated Group 2023 2022 $ $ 8,172,003 (7,206,676) 965,327 7,893,709 (6,632,099) 1,261,610 1,893,206 1,758,687 802,142 (775,212) 26,930 790,931 (735,491) 55,440 2,215,118 (2,175,941) 39,177 2,146,643 (2,089,423) 57,220 241,227 (241,227) - 235,039 (217,062) 17,977 2,924,640 3,150,934 Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 60 of 96 Notes to the Financial Statements for the Year Ended 30 June 2023 continued Note 9 Property, Plant and Equipment continued (a) Movements in Carrying Amounts Movements in carrying amounts for each class of property, plant and equipment between the beginning and the end of the current financial year: Consolidated Group: Balance at 30 June 2021 Additions Disposals Depreciation expense Exchange rate differences Balance at 30 June 2022 Additions Disposals Depreciation expense Impairment expense Exchange rate differences Balance at 30 June 2023 Leasehold Capital Works Improvements in Progress Computers $ $ $ Furniture & Fittings $ Vehicles $ 1,676,483 3,779 - (379,121) (39,531) 1,261,610 50,761 - (371,862) - 24,818 965,327 1,816,337 2,536 - - (60,186) 1,758,687 82,140 - - - 52,379 1,893,206 93,933 9,182 (5,376) (43,463) 1,164 55,440 10,363 - (38,873) - - 26,930 93,827 8,771 - (44,933) (445) 57,220 8,834 - (27,682) - 805 39,177 50,467 - - (31,448) (1,042) 17,977 - - (17,852) - (125) - Total $ 3,731,047 24,268 (5,376) (498,965) (100,040) 3,150,934 152,098 - (456,269) - 77,877 2,924,640 Note 10 Intangible Assets Non-Current Goodwill Net carrying value Training licences and course material Cost Accumulated amortisation and impairment Net carrying value Customer contracts Cost Accumulated amortisation Net carrying value Software development Cost Accumulated amortisation Net carrying value Total intangible assets Consolidated Group 2023 2022 $ $ - - 626,136 (624,076) 2,060 1,613,191 (1,611,157) 2,034 1,615,542 (1,615,542) 1,615,542 (1,615,542) - - 115,745 (115,745) - 115,745 (115,745) - 2,060 2,034 Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 61 of 96 Notes to the Financial Statements for the Year Ended 30 June 2023 continued Note 10 Intangible Assets continued (a) Reconciliation of carrying amounts at the beginning and end of the period Movements in carrying amounts for each class of intangible between the beginning and the end of the current financial year: (a) Reconciliation of carrying amounts at the beginning and end of the period Movements in carrying amounts for each class of property, plant and equipment between the beginning and the end of the current financial year. Consolidated Group: Balance at 30 June 2021 Amortisation expense Impairment expense Exchange rate differences Balance at 30 June 2022 Additions Amortisation expense Balance at June 2023 Goodwill $ 441,015 - (441,015) - - - - - Training Licences Courses $ 3,989 (2,004) - 49 2,034 1,140 (1,114) 2,060 Total $ 445,004 (2,004) (441,015) 49 2,034 1,140 (1,114) 2,060 Note 11 Impairment Testing An impairment expense is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. The recoverable amount of property, plant and equipment and intangible assets is based on value-in- use calculations. Value-in-use is calculated based on the present value of future cash flow projections over a five-year period including a terminal value calculation. The Group’s cash generating units are as follows: - Site Skills Training - International - Tertiary Education - Energy Services As a result of the sale of Site Group Holdings Pty Ltd, the Group no longer recognises Clark Property Development as a cash generating unit. Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 62 of 96 Notes to the Financial Statements for the Year Ended 30 June 2023 continued Note 11 Impairment Testing continued Due to current economic conditions, the Group sought to reassess the impairment of property, plant and equipment and intangible balances of all CGUs. As a result of the testing, there have been no impairment charges for the period. Site Skills Training – International cash-generating unit The recoverable amount of the Site Skills Training – International CGU of $3,874,247 as at 30 June 2023 ($3,888,164 as at 30 June 2022) has been determined based on the cash generating unit’s value in use calculation using projected cash flows from financial budgets covering a 5-year period. Key inputs into the impairment model included a pre-tax discount rate of 15.49% (2022: 15.49%), annual revenue growth rate over the 5-year forecast period of 10-122% (2022: 10-24%), annual EBITDA margins of 15-19% (2022: 11-20%) and a terminal growth rate of 0% (2022: 0%). As a result of this analysis, management did not recognise an impairment charge (2022: No impairment charge). Tertiary Education cash-generating unit The recoverable amount of the Tertiary Education CGU of $1,695,145 as at 30 June 2023 ($1,053,834 as at 30 June 2022) has been determined based on the cash generating unit’s value in use calculation using projected cash flows from financial budgets covering a 5-year period. Key inputs into the impairment model included a pre-tax discount rate of 17.14% (2022: 17.14%), annual revenue growth rate over the 5-year forecast period of 10%-32% (2022: 0%-10%), annual EBITDA margins of 3-11% (2022: 2-13%), and a terminal growth rate of 0% (2022:0%). As a result of this analysis, management did not recognise an impairment charge (2022: $441,015 impairment charge). Energy Services cash-generating unit The recoverable amount of the Energy Services CGU remains $nil as at 30 June 2023 ($Nil as at 30 June 2022). Sensitivity to changes in assumptions. The calculation of value in use for the cash generating units is most sensitive to changes in the following assumptions: - Revenue growth - Gross Margins - Discount rates Revenue growth Revenue growth is based on the specific circumstances of each CGU. A decrease in demand can lead to a decline in revenue growth. A decrease in the annual revenue growth rate by 2.0% (2022: 2.5%) would result in an impairment to the Site Skills Training – International. A decrease in the rate by 7% (2022: 1.5%) would result in an impairment to the Tertiary Education CGU. Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 63 of 96 Notes to the Financial Statements for the Year Ended 30 June 2023 continued Note 11 Impairment Testing continued Gross Margins Gross margins are assumed to be maintained at historical levels. A decrease in demand can lead to a decline in the gross margin. A decrease in the gross margin by 2.0% (2022: 2.5%) would result in an impairment to the Site Skills Training – International CGU. A decrease in the rate by 4.0% (2022: 1.5%) would result in an impairment to the Tertiary Education CGU. Discount rates The discount rate calculation is based on the specific circumstances of each CGU and is derived from its weighted average cost of capital (WACC). A rise in the discount rate to 19.71% (2022: 19.52% would result in an impairment to the Site Skills Training – International CGU. A rise in the discount rate to 29.15% (2022: 19.85%) would result in an impairment to the Tertiary CGU. Note 12 Right-of-Use Assets and Lease Liabilities Leased assets Right-of-use assets Buildings under lease arrangements At cost Accumulated depreciation and impairment Land under lease arrangements At cost Accumulated depreciation Vehicles under lease arrangements At cost Accumulated depreciation Consolidated Group 2023 $ 2022 $ 3,250,741 2,864,607 (2,370,657) (2,019,621) 880,084 844,986 - - - 45,599 (45,599) - 3,488,166 (675,327) 2,812,839 45,599 (45,599) - Total carrying amount of leased assets 880,084 3,657,825 Lease terms are negotiated on an individual basis and contain a range of terms and conditions. In the comparative year, leased assets included the 300,000m2 Clark Property (Land). The asset was transferred out in November 2023 as part of the sale of SGH (refer note 28). Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 64 of 96 Notes to the Financial Statements for the Year Ended 30 June 2023 continued Note 12 Right-of-Use Assets and Lease Liabilities continued Movements in carrying amounts for each class of right-of-use asset between the beginning and the end of the current financial year are as follows: Land $ Buildings Motor Vehicles $ $ Balance at 30 June 2021 3,147,234 1,105,714 - (234,736) - (99,659) 2,812,839 - (105,815) (2,795,748) 88,724 - 391,771 (620,808) (28,276) (3,415) 844,986 607,497 (583,711) - 11,312 880,084 Additions Depreciation Impairment loss Exchange rate differences Balance at 30 June 2022 Additions Depreciation Transfers (out) - sale of subsidiary Exchange rate differences Balance at 30 June 2023 Lease liabilities Lease liabilities - current Land Buildings Motor vehicles Lease liabilities - non-current Land Buildings Total $ 4,259,408 391,771 (862,004) (28,276) (103,074) 3,657,825 607,497 (689,526) (2,795,748) 100,036 880,084 6,460 - (6,460) - - - - - - - - Consolidated Group 2023 $ 2022 $ - 487,720 860 191,528 860,118 10,994 488,580 1,062,640 - 574,496 574,496 5,973,047 433,243 6,406,290 Total carrying amount of lease liabilities 1,063,076 7,468,930 Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 65 of 96 Notes to the Financial Statements for the Year Ended 30 June 2023 continued Note 12 Right-of-Use Assets and Lease Liabilities continued Movements in lease liabilities for each class of right-of-use asset between the beginning and the end of the current financial year are as follows: Land $ Buildings Motor Vehicles $ $ Total $ Balance at 30 June 2021 5,855,558 1,665,855 Additions Lease repayments Interest Exchange rate differences Balance at 30 June 2022 Additions Lease repayments Interest Transfers (out) - sale of subsidiary Exchange rate differences Balance at 30 June 2023 - (801,716) 587,612 523,121 6,164,575 - 391,771 (921,712) 145,322 12,125 1,293,361 607,497 21,591 - 7,543,004 391,771 (10,597) (1,734,025) - - 10,994 - 732,934 535,246 7,468,930 607,497 (334,389) (1,085,248) (10,343) (1,429,980) 260,626 (6,503,486) 412,674 - 102,083 - 144,523 1,062,216 209 - - 362,918 (6,503,486) 557,197 860 1,063,076 In addition to the depreciation and interest disclosed above, the Group recognised the following expenses relating to leases: 2023 $ 2022 $ Expense relating to leases of 12-months or less (for which a lease asset and lease liability has not been recognised) Expense relating to leases of low value assets (for which a lease asset and lease liability has not been recognised) (12,000) (8,000) (73,871) (76,207) The total cash outflow for leases for the year ended 30 June 2023 was $1,489,503 (2022: $1,892,312). Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 66 of 96 Notes to the Financial Statements for the Year Ended 30 June 2023 continued Note 13 Trade and Other Payables Current Unsecured liabilities Trade payables Employee related payables Accruals Other payables Total trade and other payables Non-current Unsecured liabilities Trade payables Accruals Total trade and other payables Consolidated Group 2023 2022 $ $ 1,064,407 1,484,716 722,192 95,059 3,366,374 4,095,583 2,248,607 1,870,699 210,954 8,425,843 Consolidated Group 2023 2022 $ $ 4,581,310 1,013,773 5,595,083 4,581,310 1,013,773 5,595,083 Non-current trade payables and accruals balances include commission payable to agents on receipt of the reconciliation payment receivable from the DET (see note 7). The non-current accruals account also includes $475,352 representing executive STI bonuses payable on receipt of the reconciliation payment receivable from the DET. Amounts have been classified as non-current as the Group has no contractual obligation to settle the liabilities unless payment of the outstanding receivable due from the Commonwealth Government as per note 7 is received. Although the Group intends to pursue recovery of the outstanding receivable in full, as such recovery action is at the discretion of the Group, the directors are satisfied that an unconditional right of deferral exists for the liabilities until such time as the debtor is received. (a) Fair value Due to the short-term nature of these payables, their carrying value is assumed to approximate their fair value. (b) Related party payables For terms and conditions relating to related party payables refer to note 21. (c) Interest rate, foreign exchange and liquidity risk Information regarding interest rate, foreign exchange and liquidity risk exposure is set out in note 26. Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 67 of 96 Notes to the Financial Statements for the Year Ended 30 June 2023 continued Note 14 Contract Balances The amount of the contract liability recognised at the beginning of the period was recognised as revenue during the 2023 year. All contract liabilities outstanding at 30 June 2023 are expected to be recognised as revenue within the next twelve months. Unearned revenue At 1 July 2021 Deferred during the year Released to statement of profit or loss At 30 June 2022 Note 15 Interest Bearing Debt Current financial liabilities Secured loans due within 12 months Unsecured related party loans - current Consolidated Group 2023 2022 $ $ 48,945 43,305 Consolidated Group 2023 2022 $ $ 43,305 372,376 (366,736) 48,945 88,113 569,536 (614,344) 43,305 Consolidated Group 2023 $ - - - 2022 $ 2,869,893 7,642,015 10,511,908 All current financial liabilities were paid in full as part of the sale of SGH (note 28) and share rights issue in May 2023 (note 18). Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 68 of 96 Notes to the Financial Statements for the Year Ended 30 June 2023 continued Note 16 Provisions Current Employee - annual leave Provision for long service leave Other Non-current Provision for long service leave Provision for pension liability Pension Liability Consolidated Group 2023 2022 $ $ 265,477 134,619 105,514 505,610 194,122 - 104,902 299,024 Consolidated Group 2023 2022 $ $ 52,791 50,136 102,927 139,225 93,257 232,482 The Group has an obligation in the Philippines to provide for the retirement obligations of staff after 5 years of service should that person reach retirement age. The defined benefit plan is unfunded and covers the majority of permanent employees. The tables below summarise the amount of the defined benefit liability recognised in the statement of financial position and components of defined benefit expense and remeasurement losses on the defined benefit liability recognised in the statement of profit or loss and other comprehensive loss for the current and comparative period. Movement in the defined benefit liability is as follows: Balance at beginning of the year Defined benefits expense Benefits paid Transfers out Remeasurement of losses recognised in other comprehensive income Balance at end of the year The defined benefit expense is as follows: Current service cost Interest cost 2023 $ 2022 $ 93,257 8,483 (1,526) (45,256) (4,822) 50,136 150,617 31,386 (44,301) - (44,445) 93,257 2023 $ 2022 $ 6,028 2,455 8,483 25,671 5,715 31,386 Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 69 of 96 Notes to the Financial Statements for the Year Ended 30 June 2023 continued Note 16 Provisions continued The remeasurement of losses in the defined benefit liability is as follows: Actuarial losses due to: Changes in financial assumptions Experience adjustments Movements in the present value of the defined benefit obligation are as follows: Present value of the defined benefit obligation at the beginning of the year Current service cost Benefits paid Actuarial losses Interest cost Settlement loss Transfers out Present value of defined benefits obligation at end of year 2023 $ 2022 $ (5,371) 549 (4,822) (14,127) (30,318) (44,445) 2023 $ 2022 $ 93,257 6,028 (1,526) (4,822) 2,455 - (45,256) 50,136 150,617 25,671 (44,301) (44,445) 5,715 - - 93,257 The weighted average duration of the defined benefits liability is 8.9 years and 6.9 years as at 30 June 2023 and 2022, respectively. As at 30 June 2023, the undiscounted benefits payments within 10 years amounted to $66,283 (2022: $179,625). Shown below is the maturity analysis of the undiscounted benefit payments as at 30 June: Financial Year 1 2 3 4 5 6 -10 Expected benefits payments 2023 $ Expected benefits payments 2022 $ 615 774 965 10,339 12,287 41,303 3,390 1,887 2,509 108,145 11,536 52,158 The principal actuarial assumptions used in determining the defined benefits liability for the retirement plan are shown below: Discount rate Salary increase rate 2023 6.26% 5.00% 2022 6.90% 5.00% Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 70 of 96 Notes to the Financial Statements for the Year Ended 30 June 2023 continued Note 16 Provisions continued The sensitivity analysis below has been determined based on reasonably possible changes of each significant actuarial assumption on the defined benefit liability as at the end of the reporting period, assuming all other actuarial assumptions were held constant. The sensitivity analysis may not be representative of the actual change in the defined benefit obligation as it is unlikely that changes in assumptions would occur in isolation from one another: Actuarial assumption Discount Salary increase rate 2023 2022 Increase/ decrease in actuarial Effect on defined benefit liability Increase/ decrease in actuarial Effect on defined benefit liability 1% -1% 1% -1% (4,175) 4,714 4,726 (4,261) 1% -1% 1% -1% (6,009) 6,798 6,860 (6,166) Note 17 Financial Liabilities at Fair Value Through Profit or Loss The carrying values of all financial instruments approximate their fair values at end of reporting period. Current Derivative Liabiliity Consolidated Group 2023 2022 $ $ 3,530 8,585 The derivative liability balance represents the fair value of the 41,666,667 options issued as part of the financing agreement with Lucerne Investment Partners (Lucerne), Aligned Capital & Armada Trading. These options have an exercise price of $0.03 per share. The above derivatives are valued using a Black Scholes model and are carried at fair value. The following amounts were recognised in profit or loss in relation to derivatives: Fair value gain / (loss) on options valued as part of the financing agreement with investors Fair value gain / (loss) on conversion feature of the loan with Punta Properties inc 2023 $ 2022 $ 5,055 158,213 - 5,055 94,245 252,458 Proposed Options In March 2023, the Group announced the proposed issue of options as follows: - - - 125,000,000 options to Lucerne Finance exercisable at $0.003 each, expiring 31 December 2024. 75,000,000 options to Armada Trading exercisable at $0.003 each, expiring 2 March 2026 125,000,000 options to March 2023 share placement participants. The terms include an issue price of $0.003 each with an attached option issued on a 1 for 2 basis exercisable at 0.006 for up to 2 years from the date of issue Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 71 of 96 Notes to the Financial Statements for the Year Ended 30 June 2023 continued Note 17 Financial Liabilities at Fair Value Through Profit or Loss continued - 43,374,837 options to the lead manager of the entitlement offer Reach financial as part of their mandate letter. They are entitled to 1 option for every 30 new shares exercisable for 2 years at $0.006 each. The options are subject to shareholder approval and will be valued at the date of issue. Note 18 Issued Capital 2,603,606,215 fully paid ordinary shares; 1,116,000 partly paid ordinary shares (2022: 842,361,127 fully paid ordinary shares; 1,116,000 partly paid ordinary shares) Cost of capital raising (a) Ordinary Shares 30 June 2021 & 30 June 2022 share capital Share issue - 03 August 2022 Share issue - 08 March 2023 Share issue - 03 May 2023 Share issue - 10 May 2023 Share issue - 19 May 2023 Share issue - 09 June 2023 Transaction costs relating to capital raising 30 June 2023 share capital Consolidated Group 2023 $ 2022 $ 91,558,773 86,170,038 (2,754,252) 88,804,521 (2,450,498) 83,719,540 No. Shares $ 842,361,127 210,000,000 250,000,000 53,091,217 680,242,217 433,333,324 134,578,330 2,603,606,215 83,719,540 735,000 750,000 159,274 2,040,726 1,300,000 403,735 (303,754) 88,804,521 On 3 August 2022 – the Company issued 210,000,000 shares under a placement to sophisticated and professional investors at a price of $0.0035 per share. On 8 March 2023 – the Company issued 250,000,000 shares under a placement to sophisticated and professional investors at a price of $0.003 per share. On 3 May 2023 – the Company issued 53,091,217 shares to sophisticated and professional investors under a non-renounceable pro-rata Entitlement Offer of one (1) New Share for every one (1) Share at a price of $0.003 per share. On 10 May 2023 – the Company issued 680,242,217 shares to sophisticated and professional investors under a non-renounceable pro-rata Entitlement Offer of one (1) New Share for every one (1) Share at a price of $0.003 per share. On 19 May 2023 – the Company issued 433,333,324 shares to sophisticated and professional investors under a non-renounceable pro-rata Entitlement Offer of one (1) New Share for every one (1) Share at a price of $0.003 per share. On 19 May 2023 – the Company issued 134,578,330 shares to sophisticated and professional investors under a non-renounceable pro-rata Entitlement Offer of one (1) New Share for every one (1) Share at a price of $0.003 per share. Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 72 of 96 Notes to the Financial Statements for the Year Ended 30 June 2023 continued Note 18 Issued Capital continued b) Options i. ii. For information relating to the Site Group International Limited employee option plan, including details of options issued, exercised and lapsed during the financial year and the options outstanding at year-end. Refer to Note 20: Share-based Payments. During 2023 and 2022, no options were issued to key management personnel. c) Capital management Management control the capital of the Group in order to ensure that the Group can fund its operations and continue as a going concern. There are no externally imposed capital requirements. Management effectively manages the Group’s capital by assessing the Group's financial risks and adjusting its capital structure in response to changes in these risks and in the market. During 2023 and 2022, the Group did not pay any dividends. Note 19 Accumulated Losses and Reserves (a) Movement in accumulated losses and reserves Consolidated Group 2023 2022 $ $ Balance 1 July Net (loss) / profit for the period Other comprehensive income / (loss) Balance 30 June (b) Other reserves At 30 June 2021 Foreign currency translation Share based payment At 30 June 2022 Foreign currency translation Share based payment At 30 June 2023 (108,172,376) 19,220,287 (100,961,979) (7,254,842) 4,822 44,445 (108,172,376) (88,947,267) Consolidated Group Share based payments $ Foreign currency translation $ 1,538,362 1,157,277 2,695,639 4,593 4,593 Total $ - - 1,538,362 1,161,870 2,700,232 9,894 9,894 1,538,362 1,171,764 2,710,126 - - - - - - Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 73 of 96 Notes to the Financial Statements for the Year Ended 30 June 2023 continued Note 19 Accumulated Losses and Reserves continued (c) Nature and purpose of reserves Foreign currency translation reserve The foreign currency translation reserve records exchange differences arising on translation of a foreign controlled subsidiary. Share based payments reserve The share based payments reserve is used to record the value of share based payments provided to employees, including KMP, as part of their remuneration. Refer to note 20 for further details. Note 20 Share Based Payments The expense recognised for services received during the year is shown in the table below: Share options expense Expense/(write back) arising from equity-settled share-based payments Employee services Expense arising from the amortisation of employee sign on and bonus shares Expense arising from the amortisation of the employee share plan Total expense arising from share based payment transactions Consolidated Group 2023 2022 $ $ - - - - - - - - (a) Employee share plan In November 2011 the Shareholders approved the establishment of an Employee Share Plan that would enable employees, directors and eligible associates to subscribe for shares in the Company. Under the terms of the plan an eligible person is offered shares in the Company at a price determined by the board with a corresponding interest free loan to assist the person to subscribe for the shares. The shares are escrowed in two tranches with 50% being escrowed for a minimum of 12 months and 50% being escrowed for a minimum of 24 months. Subsequent to these minimum restriction periods, the shares are available for release from escrow (i.e. a vested and exercisable option) on the repayment of the loan, and subject to continuation of employment (including acting as an associate or director) at the time of repayment. For accounting purposes these shares are treated as if these were share options, as whilst the shares have been issued to the employee their rights to access the shares are subject to both a time based requirement (continued employment to escrow dates) and valuation uncertainty (share price exceeds issue price at date of escrow release). Accordingly, shares issued under the plan are valued using a Black Scholes Option Valuation model with the expense being recognised over the escrow period as a share based payment. Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 74 of 96 Notes to the Financial Statements for the Year Ended 30 June 2023 continued Note 20 Share Based Payments continued A summary of shares issued under the plan are below: 2023 No. of shares 2023 Weighted average exercise price 2022 No. of shares 2022 Weighted average exercise price Outstanding at the beginning of the period 7,450,000 $0.04 7,450,000 $0.04 Granted during the period Exercised during the period Expired during the period - - - - - - - - - - - - Outstanding at the end of the period Exercisable (vested) at the end of the period 7,450,000 7,450,000 $0.04 $0.04 7,450,000 7,450,000 $0.04 $0.04 The outstanding shares noted above were issued under the plan on 8 March 2019 had the following terms: Agreement date 29 March 2018 Issued 8 March 2019 Tranche 1 escrowed for 12 months to 29 March 2019 Tranche 2 escrowed for 24 months to 29 March 2020 3,850,000 3,850,000 $24,357 $0.040 $0.036 52.25% 2.60% 0% $37,378 $0.040 $0.036 52.25% 2.60% 0% 12 months 24 months Employee Share Plan Number of shares issued Fair value Price paid per share Market price of shares at grant date Expected volatility Risk free interest rate Dividend yield Escrow period of shares (b) Employee sign-on and bonus shares From time to time the Group issues shares to employees as an incentive for accepting employment with the Group. Shares are issued at the volume weighted average price (VWAP) of the Group’s stock trading for the period prior to issuance. Shares are subject to escrow periods which vary depending on the contracts with the employee, and the value of the shares is recognised as an expense over the escrow period subject to continuing employment with the Group. No such shares have been issued in either the current or comparative financial years. (c) Share-based payments to service providers No share-based payment arrangements were entered into with service providers in the current or prior period. Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 75 of 96 Notes to the Financial Statements for the Year Ended 30 June 2023 continued Note 21 Related Party Transactions (a) The Group's main related parties are as follows: i. ii. Entities exercising control over the Group: The ultimate parent entity, which exercises control over the Group, is Site Group International Limited which is incorporated in Australia. Key Management Personnel: Any person(s) having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any director (whether executive or otherwise) of that entity are considered key management personnel. For details of disclosures relating to remuneration of key management personnel, refer to Note 23. (b) Transactions with related parties Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated. On 23 November 2022, as part of the sale of Site Group Holdings Pty Ltd, outstanding payments for services rendered including an incentive fee owing to Punta Properties were paid in full (refer note 28). (c) Amounts outstanding from related parties As disclosed in the remuneration report, Directors and key management personnel participate in the employee share plan whereby they are offered shares in the Company with a corresponding interest free loan. The loan from the Company must be repaid prior to the shares being sold or transferred by the employee. During the 2023 and 2022 there were no shares issued to directors or key management personnel. (d) Other transactions with related parties During the current and comparative period, the Group made use of unsecured loan facilities with Non- Executive Directors and their related parties, as follows: Punta Properties Inc. On 21 June 2018, the Group announced a financing facility of US$4million with Punta Properties, a company associated with Non-executive Director, Nicasio Alcantara. Repayment of funds drawn under the facility was to be via cash or equity to be issued at the last issue price of 4 cents per share subject to approval of shareholders. Settlement of the outstanding loan balance was expected to occur following a project realisation on the Clark property. The potential settlement of the loan balance (which is variable, based on the loan being denominated in a currency other than the Group’s functional currency of Australian dollars) through issuance of shares represents an embedded derivative liability (see note 15). On 23 November 2022, as part of the sale of Site Group Holdings Pty Ltd, the finance facility was repaid in full (Punta conversion amount) via the issue of equity in SGH. Movements in the financing facility during the period were as follows: Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 76 of 96 Notes to the Financial Statements for the Year Ended 30 June 2023 continued Note 21 Related Party Transactions continued Opening Balance Drawdowns Interest accrued during the year Foreign Currency movement Repayment of loan in full (via the issue of equity in SGH - refer Note 28) Closing Balance 2023 $ 7,642,015 - 291,402 445,032 (8,378,449) 2022 $ 5,234,958 1,366,092 458,128 582,837 - - 7,642,015 Note 22 Controlled Entities Subsidiaries of Site Group International Limited: Site Group Holdings Pty Ltd Site Education Australia Pty Ltd Site WorkReady Pty Ltd Study Corp Australia Pty Ltd (Formerly Site Labourhire Pty Ltd ) Site Skills Group Pty Ltd Site Skills Academy Pty Ltd Site WorkReady (Philippines) Pty Ltd Axis Training Group Pty Ltd Romea Consulting Pty Ltd Site Group international Pte Ltd Competent Project Management Sdn Bhd Productivity Partners Pty Ltd Wild Geese International Pty Ltd Site Institute Pty Ltd (Formerly Innovium Pty Ltd) Principle activities Country of Incorporation Percentage Owned (%)* 2023 2022 Holding company Holding company Labour services Holding company Education and training Education and training Holding company Education and training Education and training Competency development Competency development Education and training Oil & Gas consultancy Education and training Australia Australia Australia Australia Australia Australia Australia Australia Australia Singapore Malaysia Australia Australia Australia 0%1 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% * Percentage of voting power is in proportion to ownership 1 Refer Note 29 Note 23 Interests of Key Management Personnel (KMP) 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 for the year ended 30 June 2023. The totals of remuneration paid to KMP of the Group during the year are as follows: Short-term employee benefits Post-employment benefits Other long term benefits Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Consolidated Group 2023 2022 $ $ 982,870 978,699 28,663 50,214 5,785 20,728 1,017,318 1,049,641 Page 77 of 96 Notes to the Financial Statements for the Year Ended 30 June 2023 continued Note 24 Discontinued Operations In December 2016, the Group publicly announced the closure of Productivity Partners Pty Ltd’s business, and as a result was classified as a discontinued operation. The company is no longer included in the ‘Tertiary Education’ segment of the segment note. In April 2021, the Group sold its Site Skills Training – Domestic business to Competency Training Pty Ltd, a subsidiary of Verbrec Ltd (ASX: VBC). The sale of the business is reported in the prior period as discontinued operations. On 7 March 2022, the Group announced a transaction involving the sale of its subsidiary Site Group Holdings Pty Ltd ACN 121 485 729 (SGH). The sale was finalised on 23 November 2022 with the Group retaining a 38.4% interest in SGH, and an Investor Group holding the balance of 61.6%. The Group has determined that it no longer controls SGH and it is deconsolidated from that date. As a result, the SGH operations have been classified as discontinued and the company is no longer included in the ‘SST International’ segment of the segment note. Financial information relating to the discontinued operations is set out below. Financial performance information Revenue Expenses Profit / (loss) before income tax Income tax expense Profit / (loss) after income tax of discontinued operations Gain / (loss) on sale of business after income tax Gain / (loss) on sale of subsidairy after income tax Profit / (loss) from discontinued operations There is no other comprehensive income in the discontinued operations. The net cash flows incurred by discontinued operations are as follows. Operating Investing Financing Net cash outflow 2023 $ 3,214 (1,121,383) (1,118,169) (318,974) (1,437,143) - 24,555,982 23,118,839 2022 $ 7,358 (2,221,239) (2,213,881) (70,753) (2,284,634) (121,184) - (2,405,818) 2023 $ (284,513) (55,586) - (340,099) 2022 $ (713,109) (171,776) - (884,885) Earn out clause – Sale of Site Skills Training – Domestic In the event Competency Training Pty Ltd achieves certain revenue target post settlement for the periods ended 30 June 2022 and 30 June 2023 as specified in an ‘earn out’ clause in the sale agreement, additional cash consideration of up to $2,500,000 will be receivable. At the time of sale, the fair value of the consideration was determined to be $1,504,269 and was recognised as a financial asset at fair value through profit or loss. For the period ended 30 June 2022, the Group received $605,789 from Competency Training Pty Ltd as additional cash consideration. Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 78 of 96 Notes to the Financial Statements for the Year Ended 30 June 2023 continued Note 24 Discontinued Operations continued At 30 June 2023, the fair value for second ‘earn out period’ was determined as a level 3 measurement with unobservable inputs of a risk adjusted discount rate of 14.93% and expected cash inflows of $777,297. Note 25 Cash Flow Information Reconciliation of net (loss) / profit after tax to net cash flows from operations Profit / Loss after income tax expense Non cash items Depreciation and amortisation Impairment loss Net exchange diifferences Bad debts Fair value gain on derivatives Fair value gain on financial assets Interest accrued Net (profit) / loss on sale of plant & equipment Net (profit) / loss on sale of Subsidiary Change in assets and liabilities Decrease in receivables Decrease in contract assets Decrease in inventory Decrease in prepayments Decrease / (Increase) in deferred tax assets Decrease / (Increase) in other assets Increase / (Decrease) in payables and accruals Increase / (Decrease) in contract liabilities Increase / (Decrease) in provisions Increase / (Decrease) in current tax liabilities Net cash used in operating activities Consolidated Group 2023 $ 2022 $ 19,550,960 (7,254,842) 1,041,094 1,362,973 25,914 326,258 (31,153) 469,291 1,437,763 (206,544) (5,055) (252,458) (7,365,575) (121,184) 200,259 676,465 - (12,543,455) 1,199,247 - - (3,888,536) 74,841 (22,198) 3,739 (10,435) 102,215 - 176,986 30,649 2,283 73,461 63,162 - (5,059,469) 2,034,544 5,640 77,031 (2,598) (46,870) (135,431) (8,349) (3,631,987) (1,698,101) Non-cash investing and financing activities disclosed in other notes are: • acquisition of right-of-use assets – note 12. • deferred settlement of part proceeds of the sale of the Site Skills Training – Domestic business – note 24 • options issued as part of financing arrangements to existing investors – note 17. Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 79 of 96 Notes to the Financial Statements for the Year Ended 30 June 2023 continued Note 26 Financial Risk Management The totals for each category of financial instruments as detailed in the accounting policies to these financial statements, are as follows: Financial assets Cash and cash equivalents Loans and receivables Financial assets at fair value through profit or loss Other non-current financial assets Total financial assets Financial liabilities Current — Trade and other payables — Interest bearing debt — Lease liabilities — Financial liabilities at fair value through profit or loss Non-current — Trade and other payables — Interest bearing debt — Lease liabilities — Financial liabilities at fair value through profit or loss Total financial liabilities (a) Liquidity Risk Note Consolidated Group 2023 2022 $ $ 7 24 13 15 12 17 13 15 12 17 267,936 939,024 777,297 241,841 2,226,098 139,287 1,012,711 1,383,085 16,435 2,551,518 3,366,374 8,425,843 - 488,580 3,530 10,511,908 1,062,640 8,585 5,595,083 5,595,083 - - 574,496 6,406,290 - - 10,028,063 32,010,349 The tables below reflect an undiscounted contractual maturity analysis for financial liabilities. Cash flows realised from financial assets reflect management’s expectation as to the timing of realisation. Actual timing may therefore differ from that disclosed. The timing of cash flows presented in the table to settle financial liabilities, reflect the earliest contractual settlement dates and do not reflect management’s expectations that banking facilities will be rolled forward. Within 1 Year 1 to 5 Years Over 5 Years Total 2023 $ 2022 $ 2023 $ 2022 $ 2023 $ 2022 $ 2023 $ 2022 $ Financial liabilities due for payment Trade and other payables Interest bearing debt - Principal - Interest - Principal - Interest Lease liabilities Other financial liabilities Total expected outflows 3,366,374 - - 488,580 72,477 3,530 3,930,961 8,425,843 8,502,850 2,009,057 1,062,640 593,984 8,585 20,602,959 5,595,083 5,595,083 - - - - 574,496 214,071 - 1,431,266 3,113,948 - 6,383,650 10,140,297 Financial assets - cash flows realisable Cash and cash equivalents Loans and receivables Financial assets at fair value through profit or loss Other non-current financial assets Net (outflow) / inflow 267,936 939,024 777,297 - 139,287 1,012,711 600,000 - 1,984,257 (1,946,704) 1,751,998 (18,850,961) - - - 241,841 241,841 (6,141,809) - - 783,085 16,435 799,520 (9,340,777) - - - - - - - - - - - - - - - - 8,961,457 - - 4,975,024 1,236,068 - 6,211,092 1,063,076 286,548 3,530 10,314,611 14,020,926 8,502,850 2,009,057 7,468,930 4,944,000 8,585 36,954,348 - - - - - 6,211,092 267,936 939,024 777,297 241,841 2,226,098 (8,088,513) 139,287 1,012,711 1,383,085 16,435 2,551,518 (34,402,830) Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 80 of 96 Notes to the Financial Statements for the Year Ended 30 June 2023 continued Note 26 Financial Risk Management continued The outflow indicated above within 1 year will be funded through cash inflows from the projected growth of the Site Skills Training International operations, particularly in the Kingdom of Saudi Arabia (KSA). The outflow in subsequent years is partly attributable to financial liabilities which will only require settlement where a corresponding inflow of economic benefits is received in settlement of fully impaired receivables, as disclosed in note 7. (i) Financing arrangements During the comparative year, the Group had access to the following undrawn loan facility. Expiring beyond one year (unsecured reated party loans) Consolidated Group 2023 2022 $ $ 145,458 - The loan facility with Punta Properties was settled in full on 24 November 2022. (b) Interest rate risk The Group's exposure to market interest rates relates primarily to the Group's holding of cash as borrowings are under fixed interest agreements. The following table depicts the sensitivity of the Group’s results to reasonably possible changes in interest rates. Financial assets Cash and cash equivalents Consolidated Group 2023 2022 $ $ 139,287 267,936 Post Tax Profit higher / (lower) Other Comprehensive Income higher / (lower) 2023 $ 1,876 (938) 2022 $ 975 (488) 2023 $ - - 2022 $ - - Consolidated 1% (100 basis points) - .5% (50 basis points) (c) Foreign currency risk Foreign currency risk is the risk that the fair value of the future cash flows of a financial instrument will fluctuate because of change in foreign exchange rate. The Group is exposed to foreign currency risk on cash balances held in US Dollars (USD). At 30 June 2023 the Group had total cash and cash equivalents denominated in USD of $137,993 (2022: USD $24,503). Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 81 of 96 Notes to the Financial Statements for the Year Ended 30 June 2023 continued Note 26 Financial Risk Management continued 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. Post Tax Profit higher / (lower) 2023 $ 2022 $ Other Comprehensive Income higher / (lower) 2023 $ 2022 $ 25,590 (18,914) 4,399 (3,252) - - - - Consolidated USD Rate+15% USD Rate-15% (d) Price risk The Group is not materially exposed to price risk. (e) Credit risk Credit risk arises from the financial assets of the Group, which comprise cash and short-term deposits, receivables from contracts with customers, other receivables, and quoted and unquoted financial instruments. The Group’s exposure to credit risk arises from potential default of the counterparty, with a maximum exposure equal to the carrying amount of the financial assets (as outlined in each applicable note). Credit risk is managed on a group basis. For banks and financial institutions, only those with a long operating history and with a minimum rating of ‘A’ are accepted. The Group does not hold any credit derivatives to offset its credit exposure. The Group trades only with recognised, creditworthy third parties, and as such collateral is not requested nor is it the Group’s policy to securitise its receivables from contracts with customers and other receivables. In addition, receivable balances are monitored on an ongoing basis with the result that the Group’s experience of bad debts has not been significant. The group determines an allowance for expected credit losses at each reporting date. Details of this allowance and the basis on which it has been determined are outlined in note 7. Note 27 Auditors Remuneration Remuneration of Pitcher Partners as current auditor of the parent entity for: — auditing or reviewing the financial report — taxation services Remuneration of entities affiliated with Pitcher Partners for: — auditing or reviewing the financial statements of subsidiaries Remuneration of other auditors of subsidiaries for: — auditing or reviewing the financial statements of subsidiaries — taxation services Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Consolidated Group 2023 2022 $ $ 117,000 12,000 116,500 12,000 17,429 11,107 11,332 13,462 24,794 11,452 7,581 19,033 Page 82 of 96 Notes to the Financial Statements for the Year Ended 30 June 2023 continued Note 28 Sale of Subsidiary On 7 March 2022, the Group announced a transaction involving the sale of its subsidiary Site Group Holdings Pty Ltd ACN 121 485 729 (SGH). The sale was finalised on 23 November 2022 with the Group retaining a 38.4% interest in SGH, and an Investor Group holding the balance of 61.6%. The Group has determined that it no longer controls SGH and it is deconsolidated from that date. The Group considers its investment as an associate and is equity accounted from that date. Background & Financial information SGH is the holder of a long-term lease at Clark Freeport Zone in the Philippines consisting of 30.7136 hectares. At the date of sale, SGH was utilising only a small part of the site the subject of the Clark Lease for its training and competency assurance services operations. The financial performance of SGH from 1 July 2022 to the date of completion of the sale (23 November 2022) is presented below: Income Revenue from contracts with customers Interest income Gain on intercompany debt forgiveness Total income Expenses Profit before tax from continuing operations Income tax expense Profit for the period from continuing operations $ 1,043,776 5,157 3,044,320 4,093,253 (2,123,894) 1,969,359 11,699 1,981,058 On 23 November 2022, in accordance with the terms of the sale, the assets and liabilities of the training and competency assurance services business (Site Skills Training International) were transferred from SGH to a new company owned by the Group. Following the transfer, the carrying value of the net liabilities in SGH as at the date of sale (23 November 2022) were as follows: ASSETS Cash and cash equivalents Right-of-use assets Security deposits TOTAL ASSETS LIABILITIES Lease liabilities - Current Lease liabilities - Non-current TOTAL LIABILITIES NET LIABILITIES Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 23-Nov-22 $ 376,735 2,577,376 210,721 3,164,832 93,870 6,217,735 6,311,605 (3,146,773) Page 83 of 96 Notes to the Financial Statements for the Year Ended 30 June 2023 continued Note 28 Sale of Subsidiary continued Transaction details Consideration totalling $15,055,164 (US$10.05m) was provided through a combination of cash and the partial conversion of debt owed by the Group to some members of the Investor Group. Calculation of the gain on sale is presented below: Consideration received Cash Debt conversion amount Total disposal consideration Carrying value of (net assets) / liabilities deconsolidated Fair value of equity interest retained Gain on sale before income tax Income tax Gain on sale after tax $ 3,000,240 12,054,924 15,055,164 3,146,773 6,354,045 24,555,982 - 24,555,982 A breakdown of the consideration received and the Investor Group holding balance (61.6%) is provided below: Investor Group Punta Properties Armada Trading Pty Ltd Wayburn Holdings Pty Ltd Lucerne Finance Pty Ltd Llwyn Pty Ltd ATF Llwyn York Trust & Llwyn Wentbridge Trust Total Consideration Received % share of SGH Cash Debt conversion 44.6% 11,004,924 9.8% 2.6% 1.9% 2.6% 600,000 61.6% 12,054,924 3,000,240 600,000 450,000 2,400,240 - - - - - The Punta Properties and Wayburn Holdings debt conversion amounts included outstanding payments for services rendered and reimbursement for costs paid on behalf of the Group. A breakdown of the debt conversion amounts are presented below: Repayment of loan in full (Note 21) Incentive Fee* Other fees & charges for services rendered Punta Properties $ 8,378,449 316,260 2,310,215 11,004,924 Wayburn Holdings $ - 103,194 496,806 600,000 * The incentive fee has been classified under legal, accounting, and other professional fees – refer to Note 5 The fair value of the equity interest retained by the Group (38.4%) is based on the independent valuation disclosed in the Independent Expert’s Report prepared by Advisory Partner Connect Pty Ltd. Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 84 of 96 Notes to the Financial Statements for the Year Ended 30 June 2023 continued Note 28 Sale of Subsidiary continued The Group’s share of net loss in SGH for the period 24 November 2022 to 30 June 2023 totalled $178,948 and was accounted for using the equity accounting method. At 30 June 2023 the fair value of equity interest retained by the Group was as follows: 6,354,045 Initial Fair value on date of sale 225,406 Investment contribution Share of net loss (178,948) Closing investment value 30/06/2023 6,400,503 Note 29 Events after the Reporting Period Other than as noted elsewhere in this report there has been no other significant events post balance date. Note 30 Parent Company Information The following information has been extracted from the books and records of the parent, Site Group International Limited, and has been prepared in accordance with the Accounting Standards. Statement of Financial Position Assets Current assets Non-current assets Total Assets Liabilities Current liabilities Non-current liabilities Total liabilities Net Assets (Liabilities) Equity Issued capital Accumulated losses Share based payments reserve Total Equity/ (Deficiency of Equity) Statement of Comprehensive Income Total loss of the parent entity Total comprehensive loss of the parent 2023 $ 2022 $ 2,157,068 10,694,504 12,851,572 1,012,963 6,232,537 7,245,500 1,779,944 140,446 1,920,390 6,255,118 8,002,326 14,257,444 10,931,182 (7,011,944) 78,331,799 (68,788,015) 1,387,398 10,931,182 73,246,818 (81,682,455) 1,423,693 (7,011,944) 3,865,162 3,865,162 (28,244,515) (28,244,515) The Parent entity has no commitments to purchase property, plant and equipment and has no contingent liabilities. Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 85 of 96 Notes to the Financial Statements for the Year Ended 30 June 2023 continued Note 31 Contingencies Legal claim contingency As noted in the Directors report, the ACCC has commenced civil proceedings against Site, Productivity Partners and two former executives in relation to enrolment practices of Productivity Partners. An estimate of the financial effect of the matter has not been disclosed as it is not yet practicable to determine such an estimate, having regard to the timing of proceedings and the prevailing uncertainty surrounding the outcome of these proceedings. The case was heard in June 2020 and after an initial adverse finding on 2 July 2021, this decision was appealed in May 2022. Following a 2-1 majority adverse decision the company received in April 2023, Site proceeded to seek leave to appeal the decision on 5 May 2023. Notes to the Financial Statements for the Year Ended 30 June 2023 continued Note 32 Company Details The registered office of the company is: Site Group International Limited Level 2, 488 Queen Street, Brisbane Qld 4000 The principal places of business are: Site Skills Training – International: • Centennial Road, Clark Freeport Zone, Pampanga, Philippines 2023 Competent Project Management • 112, Robinson Road #8-01, Singapore 068909 • 17G, Jalan Hijauan 3, Horizon Hills, 79100 Nusajaya, Johor Site Institute Pty Limited • Level 2 & 3, 488 Queen Street, Brisbane QLD 4000 • 2/855 Boundary Road, Coopers Plains QLD 4108 Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 86 of 96 Directors' Declaration In accordance with a resolution of the directors of Site Group International Limited, I state that: 1. In the opinion of directors: a) the financial statements and notes of Site Group International Limited for the financial year ended 30 June 2023 are in accordance with the Corporations Act 2001, including: i. ii. giving a true and fair view of the Group’s financial position as at 30 June 2023 and of its performance for the year ended on that date; and comply with Accounting Standards and the Corporations Regulations 2001; and b) the financial statements and notes also comply with International Financial Reporting Standards as disclosed in Note 1a (a); and c) subject to the matters discussed in Note 1a (b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. 2. This declaration has been made after receiving the declarations required to be made to the directors by the chief executive officer and chief financial officer in accordance with section 295A of the Corporations Act 2001 for the financial year ended 30 June 2023. On behalf of the Board Craig Dawson Director Brisbane, 31 August 2023 Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 87 of 96 Independent Auditor’s Report to the Members of Site Group International Limited Report on the Audit of the Financial Report Opinion Level 38, 345 Queen Street Brisbane, QLD 4000 Postal address GPO Box 1144 Brisbane, QLD 4001 p. +61 7 3222 8444 We have audited the financial report of Site Group International Limited (“the Company”) and its controlled entities (“the Group”), which comprises the consolidated statement of financial position as at 30 June 2023, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, notes to the 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) (b) giving a true and fair view of the Group’s financial position as at 30 June 2023 and of its financial performance for the year then ended; and complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for Opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) “the Code” that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Material Uncertainty Related to Going Concern We draw attention to Note 1a(b) “Going Concern” in the Financial Report. The conditions disclosed in Note 1a(b) indicate a material uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going concern and, therefore, whether it will realise its assets and discharge its liabilities in the normal course of business, and at the amount stated in the Financial Report. 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 of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Brisbane Sydney Newcastle Melbourne Adelaide Perth Pitcher Partners is an association of independent firms. An Independent Queensland Partnership ABN 84 797 724 539. Liability limited by a scheme approved under Professional Standards Legislation. Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities. pitcher.com.au NIGEL FISCHER MARK NICHOLSON PETER CAMENZULI JASON EVANS KYLIE LAMPRECHT NORMAN THURECHT BRETT HEADRICK WARWICK FACE COLE WILKINSON SIMON CHUN JEREMY JONES TOM SPLATT JAMES FIELD DANIEL COLWELL ROBYN COOPER FELICITY CRIMSTON CHERYL MASON KIERAN WALLIS MURRAY GRAHAM ANDREW ROBIN KAREN LEVINE EDWARD FLETCHER ROBERT HUGHES Key Audit Matter Impairment testing of Cash-Generating Units (“CGUs”) Refer to Note 1b and Note 11 AASB 136 Impairment of Assets requires the Group to undertake an annual impairment assessment for all cash-generating units (“CGUs”) to which goodwill or intangible assets with an indefinite useful life are allocated. Further, an impairment assessment is required to be completed for all other assets where indicators of impairment are present.   During the year, no impairment expense was recorded by the Group against the assets in all CGUs. Impairment testing of the Group’s CGUs is a key audit matter due to the current operations of the Group and the ability to generate required revenue growth and produce sustainable operating cashflows.     How our audit addressed the key audit matter Our procedures included, amongst others:  Obtaining an understanding of the controls over the valuation of non-current assets, and evaluating the design and implementation of those controls; Checking the mathematical accuracy of the Board approved FY24 cash flow forecasts and methodology of the impairment model; Confirming consistency of the impairment testing calculations and inputs applied by the Group with the requirements of AASB 136; Assessing the key assumptions within the impairment testing calculations including forecast cash flows, growth rates, discount rates and terminal values; Applying our knowledge of the business and corroborated our work with external information where possible; Performing sensitivity analysis in respect of the key assumptions and assessing the potential impact of reasonably possible change to those assumptions; and Assessing the adequacy of disclosures. Fair Value of Contingent Consideration Refer Note 24 On 12 April 2021, the Group sold its interest in the Site Skills Training – Domestic business to Verbrec Ltd for cash consideration comprising: • • $1,439,189 of upfront cash; A further $500,000 in cash subject to the descoping of the RTO designation; A milestone payment of $1,000,000 in cash post 30 June 22 (FY22) if revenue exceeds $18,000,000 (pro-rata above $12,000,000); A final milestone payment of $1,500,000 in cash post 30 June 23 (FY23) if revenue exceeds $20,000,000 (pro-rata above $12,000,000). • • As at 30 June 2023, the Group valued the FY23 contingent consideration at $777,297 (2022: $783,085). The fair value of the contingent consideration was a key audit matter given its financial significance to the Group’s financial statements and cash flow forecast, and the complexity associated with estimating the fair value of the contingent consideration components. We performed the following procedures, amongst others, in relation to this key audit matter:  Obtaining an understanding of the controls over the valuation of the contingent consideration, and evaluating the design and implementation of those controls; Checking the mathematical accuracy of the valuation model; Obtained and read the Sale and Purchase Agreement to develop an understanding of the contractual terms of the transaction; Compared the amount of cash received to date to the relevant bank statements and settlement reconciliation; Evaluated the appropriateness of the methodology and significant assumptions used by the Group to develop the fair value estimate for the contingent consideration including the discount rate and probability of achieving the earnout revenue targets; and Considered the reasonableness of the related disclosures in line with the requirements of Australian Accounting Standards.      Pitcher Partners is an association of independent firms. An Independent Queensland Partnership ABN 84 797 724 539. Liability limited by a scheme approved under Professional Standards Legislation. Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities. 2 Sale of subsidiary – Site Group Holdings Refer Note 28 The sale of 61.6% of Site Group Holdings and subsequent recognition of the remaining equity accounted interest is a key audit matter due to: • the sale being significant to the understanding of the financial performance and financial position of the Group; the size of the gain on sale of discontinued operations; and the estimation involved in determining the fair value of the disposal and subsequent equity accounted investment. • • These factors and the complexity of the disposal accounting and subsequent equity accounted investment required significant audit effort and involvement of senior audit team members in assessing this key audit matter. Our procedures included:  Reviewing the terms of the underlying transaction agreements to understand the terms and conditions of the disposal;    Evaluated the substance of the sale using the terms and conditions of the underlying transaction agreements against the criteria for discontinued operations in the accounting standards; Assessed if the purchase consideration recognised by the Group had been recognised in accordance with the terms and conditions of the underlying transaction agreements and the requirements of the accounting standards; Assessed whether the Group accurately determined the value of assets and liabilities derecognised as at the date of sale and whether the operating result to the point of sale was correctly recorded;  Checked the gain on sale of discontinued operations by re-performing a comparison of the carrying value of the attributed disposal assets and liabilities from the trial balance amounts to the consideration recognised;    Engaged the assistance of our taxation specialists and evaluated the associated tax implications of the sale against the requirements of the tax legislation; Evaluated the disclosures including the presentation as a discontinued operation against the requirements of the accounting standards, challenging the inclusion or not of amounts using their features and their role in the continuing business; Assessing the calculation of the subsequently recognised equity accounted investment and reviewed the share of the loss captured within the continuing operations of the Group. Other Information The directors are responsible for the other information. The other information comprises the information included in the Group’s annual report for the year ended 30 June 2023, but does not include the financial report and our auditor’s report thereon. Pitcher Partners is an association of independent firms. An Independent Queensland Partnership ABN 84 797 724 539. Liability limited by a scheme approved under Professional Standards Legislation. Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities. 3 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. Responsibilities of the Directors for the Financial Report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Auditor’s Responsibilities for the Audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:  Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.  Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.  Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.  Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.  Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation.  Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial report. We are Pitcher Partners is an association of independent firms. An Independent Queensland Partnership ABN 84 797 724 539. Liability limited by a scheme approved under Professional Standards Legislation. Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities. 4 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 Opinion on the Remuneration Report We have audited the Remuneration Report included on pages 16 to 22 of the directors’ report for the year ended 30 June 2023. In our opinion, the Remuneration Report of Site Group International Limited for the year ended 30 June 2023 complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. PITCHER PARTNERS JASON EVANS Partner Brisbane, Queensland 31 August 2023 Pitcher Partners is an association of independent firms. An Independent Queensland Partnership ABN 84 797 724 539. Liability limited by a scheme approved under Professional Standards Legislation. Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities. 5 Shareholder Information 1 Twenty Largest Shareholders (i) Ordinary shares inclusive of escrowed ordinary shares As at 25 August 2023, there are 2,595,040,215 ordinary shares and an additional 7,450,000 ordinary shares subject to escrow restrictions. The names of the twenty largest holders of ordinary shares including the ordinary shares in escrow are listed below: Name No. of Ordinary Shares Held % of Issued Capital NATIONAL NOMINEES LIMITED ARMADA TRADING PTY LIMITED LUCERNE SAF PTY LTD ALTOR CAPITAL MANAGEMENT PTY LTD WAYBURN HOLDINGS PTY LTD MR VERNON ALAN WILLS MR VERNON ALAN WILLS + MS JILLAINE PATRICE WILLS HOOKED SCARF PTY LTD BOND STREET CUSTODIANS LIMITED MR DAVID FREDERICK OAKLEY MR VERNON ALAN WILLS + MS JILLAINE PATRICE WILLS MRS JILLAINE PATRICE WILLS + MR VERNON ALAN WILLS MR PETER JOHN JONES MGL CORP PTY LTD MR GARY LINTON + MRS CHERYL LINTON 38 PTY LTD KINSEY LACHLAN NICHOLAS COTTON MS LESLEY ANNE STARKY AEI AUSTRALIA PTY LTD MR CLIVE ANDERSON COLVILLE STEELE + MRS JILLIAN LOUISE STEELE 290,000,000 199,166,666 166,666,666 100,000,000 100,000,000 100,000,000 70,522,330 66,666,666 50,000,000 46,666,666 44,140,703 43,594,263 39,940,587 32,985,858 31,200,000 30,888,890 28,745,000 28,666,666 27,000,000 26,166,666 11.14 7.65 6.40 3.84 3.84 3.84 2.71 2.56 1.92 1.79 1.70 1.68 1.53 1.27 1.20 1.19 1.10 1.10 1.04 1.01 (ii) Ordinary shares The names of the twenty largest holders of fully paid ordinary shares are listed below: Name NATIONAL NOMINEES LIMITED ARMADA TRADING PTY LIMITED LUCERNE SAF PTY LTD ALTOR CAPITAL MANAGEMENT PTY LTD WAYBURN HOLDINGS PTY LTD MR VERNON ALAN WILLS No. of Ordinary Shares Held % of fully paid shares 290,000,000 199,166,666 166,666,666 100,000,000 100,000,000 100,000,000 11.18 7.67 6.42 3.85 3.85 3.85 Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 93 of 96 Shareholder Information continued Name MR VERNON ALAN WILLS + MS JILLAINE PATRICE WILLS HOOKED SCARF PTY LTD BOND STREET CUSTODIANS LIMITED MR DAVID FREDERICK OAKLEY MR VERNON ALAN WILLS + MS JILLAINE PATRICE WILLS MRS JILLAINE PATRICE WILLS + MR VERNON ALAN WILLS MR PETER JOHN JONES MGL CORP PTY LTD MR GARY LINTON + MRS CHERYL LINTON 38 PTY LTD KINSEY LACHLAN NICHOLAS COTTON MS LESLEY ANNE STARKY AEI AUSTRALIA PTY LTD MR CLIVE ANDERSON COLVILLE STEELE + MRS JILLIAN LOUISE STEELE No. of Ordinary Shares Held % of fully paid shares 70,522,330 2.72 66,666,666 50,000,000 46,666,666 44,140,703 43,594,263 39,940,587 32,985,858 31,200,000 30,888,890 28,745,000 28,666,666 27,000,000 26,166,666 2.57 1.93 1.80 1.70 1.68 1.54 1.27 1.20 1.19 1.11 1.10 1.04 1.01 (iii) Escrowed shares The names of the top twenty holders of the escrowed shares are listed below: Name No. of Escrowed Shares Held % of escrowed shares CRAIG ANTHONY DAWSON 1,000,000 BRETT MCPHEE ISMAIL TAHIR NOEL CHENEY MICHAEL WALLACE MIKE COSTELLOE NEIL COSTELLOE SUDHHER GOVINDPILLAI SHAAGUL HAMEETH MR JARROD PETER BELCHER MS KATIE HURSE MR JAMIE VERNON WILLS JASON ANFIELD SITI SUZANA BT BASRI JAYSHEN RAMANAH MR BERESFORD PAUL ROBERTSON CHRISTOPHER LAMBERT MOHAMMED AKBERY RODNEY ANDERSON AARON BANDHOLZ 750,000 600,000 500,000 500,000 400,000 400,000 400,000 400,000 300,000 300,000 300,000 250,000 250,000 250,000 250,000 100,000 50,000 50,000 50,000 13.42 10.07 8.05 6.71 6.71 5.37 5.37 5.37 5.37 4.03 4.03 4.03 3.36 3.36 3.36 3.36 1.34 0.67 0.67 0.67 Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 94 of 96 Shareholder Information continued (iii) Partly paid shares There are 1,116,000 partly paid shares, paid to $0.01, held by eight individual shareholders. $0.24 per share may be called up in the event of winding up the company. The names of the holders are listed below: Name BARON INVESTMENTS PTY LIMITED BARON NOMINEES PTY LTD QUEVY HOLDINGS PTY LTD M B HUNNIFORD ESTATE LATE PETER GAME ESTATE LATE PETER AYLWARD GAME P C TOOMEY R TOOMEY Total of partly paid shares issued (iv) Unquoted equity securities No of partly paid shares held % of Partly Paid Shares 488,376 400,000 195,624 24,000 2,000 2,000 2,000 2,000 1,116,000 43.76% 35.84% 17.53% 2.15% 0.18% 0.18% 0.18% 0.18% 100% There are 41,666,667 options issued in conjunction with loan facilities to 7 investors. 2 Distribution of Equity Securities Analysis of numbers of holders by size of holding: (i) Fully paid ordinary shares Distribution Number of Holders Number of Shares 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 Greater than 100,000 Totals 83 53 67 178 435 816 41,453 149,850 598,134 8,940,613 2,592,760,165 2,602,490,215 (ii) Partly paid shares, paid to $0.01 Distribution Number of Holders Number of Shares 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 Greater than 100,000 Totals - 4 - 1 3 8 - 8,000 - 24,000 1,084,000 1,116,000 Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 95 of 96 Shareholder Information continued (iii) Escrowed ordinary shares Distribution Number of Holders Number of Shares 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 Greater than 100,000 Totals (iv) Unmarketable parcels - - - - - - 15 600,000 16 31 6,850,000 7,450,000 Minimum parcel size Holders Shares Minimum $500 parcel at $0.003 per share 166,667 422 15,146,476 3 Voting Rights The voting rights attaching to each class of equity securities are set out below: Ordinary shares: Subject to any rights or restrictions for the time being attached to any class of shares, at a meeting of shareholders each shareholder entitled to vote may vote in person or by proxy or attorney or, being a corporation, by representative duly authorised under the Corporations Law, and has one vote on a show of hands and one vote per fully paid share on a poll. 4 Substantial Shareholders Substantial shareholder notices lodged with the Company: Substantial Shareholder Number of Shares Mr Vernon Alan Wills, Ms Jillaine Patrice Wills and Wayburn Holdings Pty Ltd EGP Capital Pty Ltd Armada Trading Pty Ltd Lucerne SAF Pty Ltd 360,062,296 290,000,000 199,166,666 166,666,666 Site Group International Limited and Controlled Entities Financial Year Ended 30 June 2023 Page 96 of 96 

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