ACUMENTIS GROUP LIMITED — Annual Report 2021

Jul 25, 2021

Acumentis Group Limited

A.C.N. 102 320 329

Results for announcement to the market

ASX Preliminary Final Report

Appendix 4E

30 June 2021

Lodged with the ASX under Listing Rule 4.3A

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ASX Announcement – Acumentis Group Limited (“Acumentis”) Full Year Results

Review of Operations

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Financial Results

The results for the year ended 30 June 2021 reflect the business continuing its rebuilding following the cyberattacks in 2019 with a 15% uplift in revenue from continuing operations to $43.6M.

Effective 1 April 2021, the Company acquired the business and assets of Saunders & Pitt, a Tasmanian based valuation business, which expanded the Company’s operations and added $410K to revenue.

The Company delivered an operating profit from continuing operations of $2.6M compared to an operating loss of $2.5M for the previous financial year reflecting a $5.1M turn-around.

The Company generated $5.5M from operating cashflows and $4.1M after payment of leases. This allowed the Company to retire a further $1.3M of term debt during the year.

As a result of the cessation of providing services under a material government contract, the customer relationship intangible asset and goodwill associated with that business line have been fully written down resulting in non-recurring, non-cash impairment charges of $11.9M.

Whilst the Company was successful in sub-letting its surplus leased office space in the Sydney CBD, the lower rental achieved resulted in a further impairment of the right of use asset of $131K.

The result for the year ended 30 June 2021 includes the following significant items:

Income
•	Government grants received	2,320,041
Expenses
•	Impairment of customer relationship intangible asset	10,000,000
•	Impairment of goodwill	1,904,038
•	Redundancy and termination costs	244,975
•	Cyber-attack non-recurring response costs	201,721
•	Impairment of right of use assets	131,083

Business Overview

As the Company completed its recovery from the 2019 cyber-attacks, it has achieved significant revenue growth via reinstatement of financial institution valuation panels, geographical expansion and diversification of services.

Based on year on year revenues, the Company has seen 15% growth in its residential valuations business, 64% growth in its commercial valuations business, 37% growth in its regional valuations business and 79% growth in its advisory service business. We anticipate further growth across these business lines through the coming financial year flowing from our continued investment in people, IT systems, marketing and geographic expansion.

The statutory services (government) business saw a decline of 14% and due to the cessation of providing services under a material government contract this business line has been restructured in June 2021 to reduce its cost base and focus on the provision of high quality services to existing and new Federal & State Government clients.

Effective 1 July 2021, the Company acquired the remaining 57.8% of Acumentis (WA) Holdings Pty Ltd, its Western Australian associated company and will consolidate the results of this business in FY2022. This business will add $7-8M of revenue to the consolidated results. The business is already tightly integrated utilising the same valuation management and IT systems and makes use of Acumentis’ shared services.

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ASX Announcement – Acumentis Group Limited (“Acumentis”) Full Year Results

Review of Operations

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Cash at Bank

Acumentis has maintained positive cash balances through the majority of the year ended 30 June 2021 and had $3.7M of available cash as at 30 June 2021. Taking into account term loans totalling $2.6M, Acumentis is in a net positive cash position and has access to a $1.7M overdraft facility.

Dividends

The board does not recommend a final dividend for the year ended 30 June 2021.

Outlook

With the acquisition “Saunders & Pitt” in Tasmania, the balance of Acumentis (WA) Holdings Pty Ltd, the continued geographic expansion in Southern NSW and regional Victoria and the establishment of sub-contract arrangements with Acumentis branded entities in South Australia and south west Western Australia, Acumentis is now able to provide services to its clients across the whole of Australia via a single wholly owned entity.

We continue to see high levels of demand for our services driven by buoyant lending activity for both new loans and refinancing. This is supported by historically low interest rates which we anticipate will remain low for the foreseeable future. We expect the strong property market to continue in the medium term and demand for our services to remain high. However, should the current COVID outbreaks continue for an extended period, then revenues could be adversely impacted.

With the geographical and services expansion, and the acquisition of the balance of our WA affiliate, we are well positioned to achieve ongoing revenue growth in FY2022. We are planning further significant investment to support the business growth and deliver future profitability.

We anticipate that our revenues will continue to grow through FY2022 towards our medium term expectation of $60M+ per annum. FY2022 operating margins are expected to be similar to FY2021 (before the one off impairment charges), however, profits are likely to be lower in the first half due to the ongoing investment in the business.

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Acumentis Group Limited and its Controlled Entities ACN 102 320 329

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Summary Results for the year ended 30 June 2021

The following is a summary of the financial results for the year ended 30 June 2021.

Results for announcement to the market

Results for announcement to the market
	Year ended 30 June 2021 $000s	Year ended 30 June 2020 $000s	Increase/ (Decrease) $000s	% Change
Revenue Continuing operations Businesses acquired during the year Government grant income		37,970 - 1,315	5,669 410 1,005	14.9% 100.0% 76.4%
	43,639
	410
	2,320
	46,369	39,285	7,084	18.0%
Profit before tax Continuing operations Businesses acquired during the year Acquisition costs expensed Impairment of intangibles Impairment of right of use assets		(2,532) - - - (497)	5,147 (106) (5) (11,904) 366	203.3% (100.0%) (100.0%) (100.0%) 73.6%
	2,615
	(106)
	(5)
	(11,904)
	(131)
	(9,531)	(3,029)	(6,502)	(214.7%)
Income tax benefit / (expense)	(157)	474	(631)	(133.1%)
Net (Loss) / Profit after tax from continuingoperations	(9,688)	(2,555)	(7,133)	(279.2%)

Comparison of Half-Year Profits	Comparison of Half-Year Profits	Current Period $000s	Previous Period $000s
Consolidated net (loss) / profit after tax attributable to members: reported for the 1stHalfyearlyreport		1,033	(3,454)
Consolidated net (loss) / profit after tax attributable to members reported for the 2ndHalfyear		(10,721)	899
Total		(9,688)	(2,555)
Dividends	Amount per security	Franked amount per security
Interim dividend	-	-
Final dividend	-	-
Dividend payment date Ex-dividend date Record date for determining entitlement to final dividend		n/a n/a n/a

Record date for determining entitlement to final dividend

Annual Report and Annual General Meeting

Acumentis expects to send its Annual Report and Notice of Annual General Meeting to shareholders during the week commencing 27 September 2021.

Acumentis expects to hold its 2021 Annual General Meeting as a virtual event on 28 October 2021.

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Acumentis Group Limited and its Controlled Entities ACN 102 320 329

Preliminary Consolidated Statement of Profit or Loss and Other Comprehensive Income for the Year Ended 30 June 2021

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Notes Revenue from rendering of services Government grant income Other income Total revenue Expenses from continuing operations Employment expenses Software, printing & stationery expenses Marketing expenses Communication expenses Insurance expenses Administration expenses Occupancy expenses Depreciation and amortisation expenses Impairment of right of use assets Impairment of intangible assets Other expenses from ordinary activities Results from operating activities Finance income Finance expense Share of net profit / (loss) of associates accounted for using the equity method 8 Loss before tax Income tax (expense) / benefit 4 Loss for the year attributable to owners of the parent Total other comprehensive income (net of tax) Total comprehensive loss for the year attributable to owners of the parent Basic earnings per share (cents per share) 2 Diluted earnings per share (cents per share) 2	30 June 2021 $000s 30 June 2020 $000s 44,043 36,666 2,320 1,315 4 1,304
	46,367 39,285
	31,732 29,122 2,494 2,694 486 374 682 710 2,402 2,271 1,060 1,418 575 771 2,072 2,078 131 497 11,904 - 2,398 1,817
	55,936 41,752
	(9,569) (2,467) 7 18 (329) (494) 360 (86)
	(9,531) (3,029) (157) 474
	(9,688) (2,555) - -
	(9,688) (2,555)
	(6.19) (1.76)
	(6.19) (1.76)

The above Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes.

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Acumentis Group Limited and its Controlled Entities ACN 102 320 329

Preliminary Consolidated Statement of Financial Position as at 30 June 2021

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Notes Current Assets Cash and cash equivalents Term deposits Trade and other receivables Other assets Total Current Assets Non-Current Assets Deferred tax assets Term deposits Property, plant & equipment 5 Right of use assets 6 Intangible assets 7 Investments accounted for using the equity method 8 Total Non-Current Assets Total Assets Current Liabilities Trade and other payables Borrowings 9 Lease liabilities 10 Current tax liabilities Employee benefits Total Current Liabilities Non-Current Liabilities Borrowings 9 Lease liabilities 10 Employee benefits Provisions Total Non-Current Liabilities Total Liabilities Net Assets Equity Contributed equity 11 Accumulated losses Other reserves 12 Total Equity	30 June 2021 $000s 30 June 2020 $000s 3,686 1,830 14 25 4,557 4,673 1,018 895
	9,275 7,423
	2,675 2,818 794 795 712 800 2,572 2,580 14,237 25,562 1,194 1,113
	22,184 33,668
	31,459 41,091
	3,232 2,196 1,300 1,300 1,279 1,158 - - 4,285 4,255
	10,096 8,909
	1,300 2,600 2,178 2,364 385 471 182 182
	4,045 5,617
	14,141 14,526
	17,318 26,565
	44,887 44,477 (27,600) (17,912) 31 -
	17,318 26,565

The above Statement of Financial Position should be read in conjunction with the accompanying notes.

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Acumentis Group Limited and its Controlled Entities ACN 102 320 329

Preliminary Consolidated Statement of Cashflows for the year ended 30 June 2021

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Notes Cash Flows from Operating Activities Receipts from customers Government grants received Payments to suppliers and employees Interest received Interest paid Dividends received Decrease in security deposits Income tax refund received / (paid) Net cash flows provided by Operating Activities Cash Flows from Investing Activities Purchase of property, plant & equipment Purchase of intangible assets Purchase of investments - Acquisition of associated entity - Acquisition of other unincorporated businesses 5 8 13 Net cash flows used in Investing Activities Cash Flows from Financing Activities Shares issued net of costs Borrowings received Repayment of borrowings Repayment of lease liabilities Dividends paid 11 Net cash flows used in Financing activities Net increase / (decrease) in cash held Cash at beginning of financial year Cash at end of financial year	30 June 2021 $000s 30 June 2020 $000s 48,455 2,320 (45,221) 7 (329) 279 12 - 41,483 629 (42,826) 18 (495) - 98 498
	5,523 (595)
	(363) (490) - (107) (324) (870) (628) -
	(960) (1,822)
	- - (1,300) (1,407) - 5,010 2,120 (3,469) (1,230) -
	(2,707) 2,431
	1,856 1,830 14 1,816
	3,686 1,830

The above Statement of Cash Flows should be read in conjunction with the accompanying notes.

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Acumentis Group Limited and its Controlled Entities ACN 102 320 329

Preliminary Statement of Changes in Equity for the Year Ended 30 June 2021

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Notes Consolidated Balance at 1 July 2019 Change in accounting policy Total comprehensive (loss) attributable to members of the parent entity Shares issued Dividends to shareholders Balance at 30 June 2020	Share Capital $000’s Retained Earnings $000’s Other Reserves $000’s Total Equity $000’s 39,293 (15,006) - 24,287 - (351) - (351) - (2,555) - (2,555) 5,184 - - 5,184 - - - -
	44,477 (17,912) - 26,565
Balance at 1 July 2020	44,477 (17,912) - 26,565
Total comprehensive income attributable to members of the parent entity	- (9,688) - (9,688)
Shares issued 11	410 - - 410
Share-based payment expense 12	- - 31 31
Dividends to shareholders	- - - -
Balance at 30 June 2021	44,887 (27,600) 31 17,318

The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.

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Acumentis Group Limited and its Controlled Entities ACN 102 320 329

Notes to the Preliminary Financial Statements for the Year Ended 30 June 2021

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1. Dividends

Final dividend resolved to be paid - Date the dividend is payable n/a Ex-dividend date n/a Record date n/a Last date for receipt of election notice to participate in the n/a dividend reinvestment plan

Interim dividend Final dividend Earnings Per Share Basic earnings per share Diluted earnings per share Weighted average number of shares used in the - calculation of basic EPS - calculation of diluted EPS	Current Year Prior Year - - - -
	- -
	30 June 2021 Cents 30 June 2020 Cents (6.19) (1.76) (6.19) (1.76) Number Number 156,499,848 144,844,867 156,499,848 144,844,869

1. Earnings Per Share

Whilst there are 2,500,000 options on issue as at 30 June 2021 (2020: 2,500,000), these are antidilutive, reducing the loss per share, and accordingly have not been included in the calculation of diluted EPS.

The amount used in the numerator in calculating basic and diluted EPS is the total comprehensive income attributable to owners of the parent reported in the Consolidated Statement of Profit or Loss and Other Comprehensive Income.

1. Net Tangible Asset Backing

Net tangible asset backing per share	30 June 2021 30 June 2020 $0.02 $0.01

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Acumentis Group Limited and its Controlled Entities ACN 102 320 329

Notes to the Preliminary Financial Statements for the Year Ended 30 June 2021

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4. Income Tax

Income tax expense / (credit) for the year consists of the following:

Loss from continuing operations before tax Prima facie income tax calculated at 26% (2020: 27.5%) Effect of non-deductible intangible impairment Effect of non-deductible expenses Effect of non-assessable Government grant income Effect of (non-assessable) / non-deductible share of (profits) / losses of associate Adjustments for prior years Restatement of future tax benefit: - from 26% to 30%1 - from 27.5% to 26%2 Net income tax expense / (benefit)	30 June 2021 $000s 30 June 2020 $000s (9,531) (3,029)
	(2,478) (833) 3,095 - 15 10 (13) (14) (94) 24
	525 (813) (12) 176 (356) - - 163
	157 (474)

1 - to reflect expected FY22 revenues exceeding $50M and the entity no longer qualifying for lower tax rate

2 - to reflect reduction in tax rate from 1 July 2020 for entities qualifying for lower tax rate

5. Property, plant & equipment

Property, plant & equipment
Cost Balance at 1 July 2019 Additions – cash Additions – non cash Disposals Balance at 30 June 2020	Office Equipment $000 Furniture and Fittings $000 Leasehold Improvements $000 Total $000 1,983 615 433 3,031 156 9 159 324 - - 54 54 - (3) (84) (87)
	2,139 621 562 3,322
Balance at 1 July 2020	2,139 621 562 3,322
Additions – cash	317 34 12 363
Disposals	(1,063) (81) (128) (1,272)
Balance at 30 June 2021	1,393 574 446 2,413
Accumulated Depreciation Balance at 1 July 2019 Depreciation charge for the year Disposals Balance at 30 June 2020	1,539 387 225 2,151 267 83 108 458 - (3) (84) (87)
	1,806 467 249 2,522
Balance at 1 July 2020	1,806 467 249 2,522
Depreciation charge for the year	246 65 86 397
Disposals	(1,047) (57) (114) (1,218)
Balance at 30 June 2021	1,005 475 221 1,701
Carrying Amounts 1 July 2019 30 June 2020	444 228 208 880 333 154 313 800
1 July 2020	333 154 313 800
30 June 2021	388 99 225 712

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Acumentis Group Limited and its Controlled Entities ACN 102 320 329

Notes to the Preliminary Financial Statements for the Year Ended 30 June 2021

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6. Right of Use Assets

Right of Use Assets
Cost Balance at 1 July 2019 Change of accounting policy Additions Disposals Balance at 30 June 2020	Buildings $000 Office Equipment $000 Total $000 - - - 6,794 142 6,936 62 - 62 (402) - (402)
	6,454 142 6,596
Balance at 1 July 2020	6,454 142 6,596
Additions	1,334 - 1,334
Acquisition of other unincorporated businesses	51 - 51
Disposals	(566) (142) (708)
Balance at 30 June 2021	7,273 - 7,273
Accumulated Depreciation Balance at 1 July 2019 Change of accounting policy Depreciation charge for the year Impairment charge Disposals Balance at 30 June 2020	- - - 2,719 61 2,780 1,091 48 1,139 497 - 497 (400) - (400)
	3,907 109 4,016
Balance at 1 July 2020	3,907 109 4,016
Acquisition of other unincorporated businesses	20 - 20
Depreciation charge for the year	1,184 33 1,217
Impairment charge	131 - 131
Disposals	(541) (142) (683)
Balance at 30 June 2021	4,701 - 4,701
Carrying Amounts 1 July 2019 30 June 2020	- - - 2,547 33 2,580
1 July 2020	2,547 33 2,580
30 June 2021	2,572 - 2,572

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Acumentis Group Limited and its Controlled Entities ACN 102 320 329

Notes to the Preliminary Financial Statements for the Year Ended 30 June 2021

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7. Intangible Assets

7. Intangible Assets
Goodwill Customer relationships Computer software Trademarks Movement in goodwill Balance at 1 July Acquisition of other unincorporated businesses Impairment charge Balance at 30 June Movement in customer relationships Balance at 1 July Impairment charge Balance at 30 June Movement in computer software Balance at 1 July Additions Amortisation Disposals Balance at 30 June Movement in trademarks Balance at 1 July Additions Disposals Balance at 30 June 8. Investments Accounted for Using the Equity Method Balance at 1 July Additional investment Share of net profit / (loss) of associates accounted for using the equity method Dividends received Balance at 30 June	30 June 2021 30 June 2020 $000s $000s 12,529 13,884 - 10,000 1,467 1,436 241 242
	14,237 25,562
	13,884 13,884 549 - (1,904) -
	12,529 13,884
	10,000 10,000 (10,000) -
	- 10,000
	1,436 1,247 490 617 (458) (428) (1) -
	1,467 1,436
	242 42 - 242 (1) (42)
	241 242
	30 June 2021 $’000 30 June 2020 $’000 1,113 571 - 628 360 (86) (279) -
	1,194 1,113

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Acumentis Group Limited and its Controlled Entities ACN 102 320 329

Notes to the Preliminary Financial Statements for the Year Ended 30 June 2021

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9. Borrowings

9. Borrowings
Current Bank loans Non-current Bank loans 10. Lease Liabilities Current Leases – right of use assets Non-Current Leases – right of use assets 11. Contributed Equity Issued and paid-up capital 159,005,153 (2020: 155,679,930) ordinary shares, fully paid Movements during the period: Proceeds from rights issue Share issue costs Net cash inflow Shares issued as part consideration for acquisition (note 12) Future tax benefit Net credit to equity 12. Other Reserves Share-based payments Balance at 1 July Performance rights expense Balance at 30 June	30 June 2021 $’000 30 June 2020 $’000 1,300 1,300
	1,300 2,600
	30 June 2021 $’000 30 June 2020 $’000 1,279 1,158
	2,178 2,364
	30 June 2021 $’000 30 June 2020 $’000 44,887 44,477
	- 5,644 - (634)
	- 5,010 410 - - 174
	410 5,184
	30 June 2021 $’000 30 June 2020 $’000 - - 31 -
	31 -

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Acumentis Group Limited and its Controlled Entities ACN 102 320 329

Notes to the Preliminary Financial Statements for the Year Ended 30 June 2021

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13. Acquisitions

Effective 31 March 2021, Acumentis Group Limited acquired the business and assets of Saunders & Pitt, an unincorporated valuation and advisory business in Tasmania. Details of the purchase consideration, the net assets acquired, and goodwill were as follows:

assets acquired, and goodwill were as follows:
Purchase consideration: Cash paid Ordinary shares issued (an additional $10,000 of shares were issued to settle advisor expenses) The assets and liabilities recognised as a result of the acquisition were as follows: Right of use assets – office leases Deferred tax assets Employee benefits Lease liabilities (right of use assets) Net identifiable assets acquired Goodwill Net cash outflow from acquisition Cash paid	2021 $000
	107
	400
	507
	31
	14
	(51)
	(36)
	(42)
	549
	507
	107

The goodwill is attributable to the workforce and the profitability of the acquired business. It will not be deductible for tax purposes.

14. Changes to accounting policies

There have been no changes in accounting policies in the current financial year.

15. Going Concern

The directors are satisfied that the going concern basis of preparation is appropriate and therefore the financial information does not include any adjustments relating to the recoverability or classification of recorded asset amounts or to the amounts or classification of liabilities that might be necessary should the company not be able to continue as a going concern.

16. Compliance Statement

This report is based on financial statements to which the following applies:

The financial statements have been The financial statements have been audited. subject to review. The financial statements are in the The financial statements have not process of being audited or subject yet been audited or reviewed. to review.

The Company has a formally constituted Audit Committee.

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