APPEN LIMITED - Interim / Quarterly Report 2016

Appen Limited Appendix 4D Half-year report

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1. Company details

Name of entity: Appen Limited ABN: 60 138 878 298 Reporting period: For the half-year ended 30 June 2016 Previous period: For the half-year ended 30 June 2015

2. Results for announcement to the market

2. Results for announcement to the market
			$'000
Revenues from ordinary activities	up	49.1% to	53,441
Profit from ordinary activities after tax attributable to the owners of Appen
Limited	up	102.0% to	5,409
Profit for the half-year attributable to the owners of Appen Limited	up	102.0% to	5,409
Dividends
			Franked
		Amount per	amount per
		security	security
		Cents	Cents
Interim dividend for the year ended 31 December 2016		2.00	2.00

Interim dividend for the year ended 31 December 2016

On 26 August 2016, the Company declared an interim dividend, fully franked. The record date for determining entitlements to the dividend is 2 September 2016.

Comments

The profit for the Group after providing for income tax amounted to $5,409,000 (30 June 2015: $2,678,000).

Refer to the 'Review of Operations' section in the Directors' report attached for further explanation of the results.

3. Net tangible assets

Net tangible assets per ordinary security	Reporting period Cents 21.08	Previous period Cents 12.82

4. Control gained over entities

Not applicable.

5. Loss of control over entities

Not applicable.

Appen Limited Appendix 4D Half-year report

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6. Dividends

Current period

Current period
					Franked
				Amount per	amount per
				security	security
				Cents	Cents
Interim dividend for the year ended	31	December	2016	2.00	2.00

On 26 August 2016, the Company declared an interim dividend, fully franked. The record date for determining entitlements to the dividend is 2 September 2016.

to the dividend is 2 September 2016.
Previous period
		Franked
	Amount per	amount per
	security	security
	Cents	Cents
Interim dividend for the year ended 31 December 2015	1.20	1.20

7. Dividend reinvestment plans

Not applicable.

8. Details of associates and joint venture entities

Not applicable.

9. Foreign entities

Details of origin of accounting standards used in compiling the report:

Not applicable.

10. Audit qualification or review

Details of audit/review dispute or qualification (if any):

The financial statements were subject to a review by the auditors and the review report is attached as part of the Interim Report.

Appen Limited Appendix 4D Half-year report

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11. Attachments

Details of attachments (if any):

The Interim Report of Appen Limited for the half-year ended 30 June 2016 is attached.

12. Signed

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Signed _________

Date: 26 August 2016

Mark Brayan Managing Director Sydney

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Appen Limited ABN 60 138 878 298

Interim Report - 30 June 2016

Appen Limited
Contents
30 June 2016
Corporate directory	2
Directors' report	3
Auditor's independence declaration	6
Consolidated statement of profit or loss and other comprehensive income	7
Consolidated statement of financial position	8
Consolidated statement of changes in equity	9
Consolidated statement of cash flows	10
Notes to the consolidated financial statements	11
Directors' declaration	16
Independent auditor's review report to the members of Appen Limited	17

Appen Limited Corporate directory 30 June 2016

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Appen Limited Corporate directory 30 June 2016
Directors	Christopher Charles Vonwiller - Chairman
	Mark Ronald Brayan – Managing Director and Chief Executive Officer
	Stephen John Hasker
	Robin Jane Low
	William Robert Pulver
	Jeremy Andrew Samuel
	Deena Robyn Shiff
Company secretary	Leanne Ralph
Registered office	Level 6
	9 Help Street
	Chatswood NSW 2067
	Tel: 02 9468 6300
Share register	Link Market Services Limited
	Level 12
	680 George Street
	Sydney NSW 2000
	Telephone: 1300 554 474
	Facsimile: 02 9287 0303
Auditor	KPMG
	Level 38, Tower 3
	300 Barangaroo Avenue
	Sydney NSW 2000
Solicitors	Norton Rose Fulbright Australia
	Level 18, Grosvenor Place
	225 George Street
	Sydney NSW 2000
Stock exchange listing	Appen Limited shares are listed on the Australian Securities Exchange (ASX code:
	APX)
Website	www.appen.com

Appen Limited Directors' report 30 June 2016

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The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the 'Group' or 'Appen') consisting of Appen Limited (referred to hereafter as the 'Company' or 'parent entity') and the entities it controlled at the end of, or during, the half-year ended 30 June 2016.

Directors

The following persons were directors of Appen Limited during the whole of the financial half-year and up to the date of this report, unless otherwise stated:

Christopher Charles Vonwiller - Chairman Mark Ronald Brayan Stephen John Hasker Robin Jane Low William Robert Pulver Jeremy Andrew Samuel Deena Robyn Shiff

Principal activities

During the financial half-year the principal continuing activities of the Group consisted of the provision of data solutions and services for global technology companies and government agencies.

Appen operates through two operating divisions being:

Content Relevance which provides annotated data used in search technology (embedded in web, e-commerce and social engagement) for improving relevance and accuracy of search results; and
Language Resources which provides data used in speech recognisers, machine translation, speech synthesisers and other machine-learning technologies resulting in more engaging and fluent devices including internet-connected devices, in-car automotive systems and speech-enabled consumer electronics.

Supporting both divisions is a global on-demand workforce providing customers with very flexible in-country linguistic and cultural expertise in support of large global initiatives covering 130 countries and 180 languages.

Dividends

Dividends paid during the financial half-year were as follows:

Dividends paid out of the profits reserve for the year ended 31 December 2015 of 3.0 cents per ordinary share	Group 30 Jun 2016 30 Jun 2015 $'000 $'000 2,909 -

Dividend declared

On 26 August 2016, the Company declared an interim dividend for the half year ended 30 June 2016 of 2.0 cents per share, fully franked. The dividend is to be paid out of the profits reserve. The record date for determining entitlements to the dividend is 2 September 2016. The financial effect of these dividends has not been brought to account in the financial statements for the period ended 30 June 2016 and will be recognised in subsequent financial reports.

Appen Limited Directors' report 30 June 2016

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Review of operations

The profit for the Group after providing for income tax amounted to $5,409,000 (30 June 2015: $2,678,000).

Financial performance

30 Jun 2016 $'000 18,434 34,975 32	30 Jun 2015 $'000 13,064 22,740 34	Percentage change % 41% 54%	Percentage change constant currency % 34% 45%
53,441	35,838	49%	41%
5,409 2,818 4	2,678 1,481 (5)	102% 90% (180%)	63%
8,231 617	4,154 689	98% (10%)	71%
8,848 -	4,843 214	83%	59%
8,848	5,057	75%	52%
16.6% 16.6% 40.4% 17.3%	13.5% 14.1% 37.1% 16.4%

EBIT is defined as earnings before tax and interest
** EBITDA is EBIT before depreciation and amortisation

Total revenue for the period ended 30 June 2016 was $53,441,000 compared to prior period revenue of $35,838,000. The drivers behind this change in revenue were:

The Language Resources division recorded a 41% increase in revenue over the prior year, driven mainly by increased demand for transcription and data collection services. After adjusting for foreign exchange movements, the growth was 34%, which was significant given the high level of prior year growth; and
The Content Relevance division delivered a 54% increase in revenue over the prior year. This was largely driven by increased demand for data enhancement services from the social media vertical. After adjusting for foreign exchange movements, the annual growth was 45%.

The Company reported adjusted EBITDA of $8,848,000 for the half year period to 30 June 2016, representing an 83% increase over the prior corresponding period. The Language Resources division increased return on sales from 37% to 40%, due to a favourable project mix towards higher margin transcription and data collection projects. The Content Relevance division return on sales increased to 17% from 16%, due to operational efficiencies offsetting the increasing impact of volume-base price discounts.

Adjusted EBITDA for the first half period rose 75% from $5,057,000 to $8,848,000. This resulted from the strong revenue increase in both sectors and the subsequent delivery of services at scale, via a streamlined operating model delivering cost efficiency and economies. This is evidenced by overall expenses for the first half period comprising 83% of revenue as compared to 87% for the prior corresponding period. After adjusting for foreign exchange movements, the annual adjusted EBITDA growth was 52%.

Appen Limited Directors' report 30 June 2016

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Significant changes in the state of affairs

There were no significant changes in the state of affairs of the Group during the financial half-year.

Rounding of amounts

The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191, issued by the Australian Securities and Investments Commission, relating to 'rounding-off'. Amounts in this report have been rounded off in accordance with the Corporations Instrument to the nearest thousand dollars, or in certain cases, the nearest dollar.

Auditor's independence declaration

A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out immediately after this directors' report.

This report is made in accordance with a resolution of directors, pursuant to section 306(3)(a) of the Corporations Act 2001.

On behalf of the directors

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_________ Christopher Vonwiller Director

26 August 2016 Sydney

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Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001

To: the directors of Appen Limited

I declare that, to the best of my knowledge and belief, in relation to the review for the half-year ended 30 June 2016 there have been:

(i) no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the review; and
(ii) no contraventions of any applicable code of professional conduct in relation to the review.

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KPMG

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Tony Nimac Partner

Sydney 26 August 2016

KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.

Liability limited by a scheme approved under Profession Standards Legislation.

Appen Limited Consolidated statement of profit or loss and other comprehensive income For the half-year ended 30 June 2016

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Note Revenue 3 Expenses Services purchased - data collection Employee benefits expense Depreciation and amortisation expense Impairment of assets Travel expense Professional fees Rental expense Communication expense Other expenses Finance costs and foreign exchange 3 Profit before income tax expense Income tax expense Profit after income tax expense for the half-year attributable to the owners of Appen Limited Other comprehensive income Items that may be reclassified subsequently to profit or loss Foreign currency translation Other comprehensive income for the half-year, net of tax Total comprehensive income for the half-year attributable to the owners of Appen Limited Basic earnings per share 9 Diluted earnings per share 9	Group 30 Jun 2016 30 Jun 2015 $'000 $'000 53,441 35,838 (28,443) (18,098) (12,303) (10,069) (617) (689) (107) (37) (564) (448) (911) (378) (249) (246) (167) (141) (1,459) (1,281) (394) (292)	Group 30 Jun 2016 30 Jun 2015 $'000 $'000 53,441 35,838 (28,443) (18,098) (12,303) (10,069) (617) (689) (107) (37) (564) (448) (911) (378) (249) (246) (167) (141) (1,459) (1,281) (394) (292)
	8,227 (2,818)	4,159 (1,481)
	5,409 (419)	2,678 704
	(419)	704
	4,990	3,382
	Cents 5.59 5.46	Cents 2.81 2.78

The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes

Appen Limited Consolidated statement of financial position As at 30 June 2016

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Note Assets Current assets Cash and cash equivalents Trade and other receivables 4 Derivative financial instruments Prepayments Total current assets Non-current assets Property, plant and equipment Intangibles Other Total non-current assets Total assets Liabilities Current liabilities Trade and other payables 5 Derivative financial instruments Income tax Provisions Revenue received in advance Total current liabilities Non-current liabilities Borrowings Deferred tax Provisions Total non-current liabilities Total liabilities Net assets Equity Issued capital 6 Reserves Accumulated losses Total equity	Group 30 Jun 2016 31 Dec 2015 $'000 $'000 13,069 12,725 18,508 17,278 45 - 301 285	Group 30 Jun 2016 31 Dec 2015 $'000 $'000 13,069 12,725 18,508 17,278 45 - 301 285
	31,923	30,288
	392 10,840 12	379 11,342 8
	11,244	11,729
	43,167	42,017
	8,009 - 306 967 146	8,829 86 1,376 777 409
	9,428	11,477
	7 2,044 385	8 1,496 378
	2,436	1,882
	11,864	13,359
	31,303	28,658
	19,473 15,700 (3,870)	19,077 13,451 (3,870)
	31,303	28,658

The above consolidated statement of financial position should be read in conjunction with the accompanying notes

Appen Limited Consolidated statement of changes in equity For the half-year ended 30 June 2016

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Issued capital $'000 18,476 - -	Reserves $'000 5,043 - 704	Accumulated losses $'000 (3,870) 2,678 -	Total equity $'000 19,649 2,678 704
- 601 - - -	704 - 2,678 (233) 101	2,678 - (2,678) - -	3,382 601 - (233) 101
19,077	8,293	(3,870)	23,500
Issued capital $'000 19,077 - -	Reserves $'000 13,451 - (419)	Accumulated losses $'000 (3,870) 5,409 -	Total equity $'000 28,658 5,409 (419)
- 396 - - -	(419) - 5,409 168 (2,909)	5,409 - (5,409) - -	4,990 396 - 168 (2,909)
19,473	15,700	(3,870)	31,303

Reclassification

Accumulated losses in the current and prior year have been split between accumulated losses and a profit reserve. As a result the 30 June 2015 balance has been reclassified for this new treatment.

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes

Appen Limited Consolidated statement of cash flows For the half-year ended 30 June 2016

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Appen Limited Consolidated statement of cash flows For the half-year ended 30 June 2016
Note Cash flows from operating activities Receipts from customers (inclusive of GST) Payments to suppliers and employees (inclusive of GST) Interest received Interest and other finance costs paid Income taxes paid Net cash from/(used in) operating activities Cash flows from investing activities Payments for property, plant and equipment Payments for intangibles Net cash used in investing activities Cash flows from financing activities Proceeds from issue of ordinary shares 6 Dividends paid 7 Net cash (used in)/from financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the financial half-year Effects of exchange rate changes on cash and cash equivalents Cash and cash equivalents at the end of the financial half-year	Group 30 Jun 2016 30 Jun 2015 $'000 $'000 50,738 27,379 (44,048) (30,571)
	6,690 2 (8) (3,171)	(3,192) 8 (3) (782)
	3,513	(3,969)
	(180) (178)	(111) (136)
	(358)	(247)
	396 (2,909)	601 -
	(2,513)	601
	642 12,725 (298)	(3,615) 8,649 162
	13,069	5,196

The above consolidated statement of cash flows should be read in conjunction with the accompanying notes

Appen Limited Notes to the consolidated financial statements 30 June 2016

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Note 1. General information

The financial statements cover Appen Limited as a Group consisting of Appen Limited (the 'Company') and the entities it controlled at the end of, or during, the half-year (collectively referred to as the 'Group'). The financial statements are presented in Australian dollars, which is Appen Limited's functional and presentation currency.

Appen Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is:

Level 6 9 Help Street Chatswood NSW 2067

A description of the nature of the Group's operations and its principal activities are included in the directors' report, which is not part of the financial statements.

The financial statements were authorised for issue, in accordance with a resolution of directors, on 26 August 2016.

Note 2. Significant accounting policies

These general purpose financial statements for the interim half-year reporting period ended 30 June 2016 have been prepared in accordance with Australian Accounting Standard AASB 134 'Interim Financial Reporting' and the Corporations Act 2001, as appropriate for for-profit oriented entities. Compliance with AASB 134 ensures compliance with International Financial Reporting Standard IAS 34 'Interim Financial Reporting'.

These general purpose financial statements do not include all the notes of the type normally included in annual financial statements. Accordingly, these financial statements are to be read in conjunction with the annual report for the year ended 31 December 2015 and any public announcements made by the Company during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001.

The principal accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period, unless otherwise stated.

New, revised or amending Accounting Standards and Interpretations adopted

The Group has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period.

The adoption of these Accounting Standards and Interpretations did not have any significant impact on the financial performance or position of the Group during the financial half-year ended 30 June 2016 and are not expected to have any significant impact for the full financial year ending 31 December 2016.

Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.

Note 3. Operating segments

Identification of reportable operating segments

The Group is organised into two operating segments: Content Relevance and Language Resources. These operating segments are based on the internal reports that are reviewed and used by the Group's Chief Executive Officer ('CEO'), who is identified as the Chief Operating Decision Maker, in assessing performance and in determining the allocation of resources. There is no aggregation of operating segments.

The CEO reviews a set of financial reports which covers EBITDA (earnings before interest, tax, depreciation and amortisation), revenue and operating segment reports on a monthly basis. The accounting policies adopted for internal reporting to the CEO are consistent with those adopted in the financial statements.

Intersegment transactions

Intersegment transactions were made at market rates. Intersegment transactions are eliminated on consolidation.

Appen Limited Notes to the consolidated financial statements 30 June 2016

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Note 3. Operating segments (continued)

Intersegment receivables, payables and loans

Intersegment loans are initially recognised at the consideration received. Intersegment loans receivable and loans payable that earn or incur non-market interest are not adjusted to fair value based on market interest rates. Intersegment loans are eliminated on consolidation.

Major customers

During the financial half-year ended 30 June 2016 approximately 83% (30 June 2015: 79%) of the Group's external revenue was derived from sales to 5 major customers.

Operating segment information

Content Relevance $'000 34,975 - -	Language Resources $'000 18,434 - -	Other segments $'000 - 28 4	Total $'000 53,409 28 4
34,975	18,434	32	53,441
6,061	7,446	(463)	13,044 (3,810) (386) (617) (4)
Content Relevance $'000 22,740 - -	Language Resources $'000 13,064 - -	Other segments $'000 - 26 8
			8,227 (2,818)
			5,409
			Total $'000 35,804 26 8
22,740	13,064	34	35,838
3,733	4,845	(332)	8,246 (3,115) (288) (689) 5.

			4,159 (1,481)
			2,678

Segment profit for content relevance and language resources has been restated to reflect revised divisional allocation methodology effected in 2015. There is no change to total revenue and profit.

Appen Limited Notes to the consolidated financial statements 30 June 2016

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Note 3. Operating segments (continued)

Geographical information

Services revenue 30 Jun 2016 30 Jun 2015 $'000 $'000 16,810 10,883 36,599 24,921	Services revenue 30 Jun 2016 30 Jun 2015 $'000 $'000 16,810 10,883 36,599 24,921	Geographical non-current assets 30 Jun 2016 31 Dec 2015 $'000 $'000 625 418 10,619 11,311	Geographical non-current assets 30 Jun 2016 31 Dec 2015 $'000 $'000 625 418 10,619 11,311
53,409	35,804	11,244	11,729
		Group 30 Jun 2016 31 Dec 2015 $'000 $'000 11,461 12,618 (122) (34)
		11,339	12,584
		64 7,070 35	235 4,407 52
		18,508	17,278

Note 4. Current assets - trade and other receivables

Note 5. Current liabilities - trade and other payables

Note 5. Current liabilities - trade and other payables
Trade payables VAT payable Other payables and accrued expenses Note 6. Equity - issued capital Ordinary shares - fully paid	30 Jun 2016 Shares 97,098,607	Group 30 Jun 2016 31 Dec 2015 $'000 $'000 1,043 3,417 144 197 6,822 5,215 8,009 8,829 Group 31 Dec 2015 30 Jun 2016 31 Dec 2015 Shares $'000 $'000 96,280,001 19,473 19,077	Group 30 Jun 2016 31 Dec 2015 $'000 $'000 1,043 3,417 144 197 6,822 5,215
			8,009	8,829
				31 Dec 2015 $'000 19,077

Note 6. Equity - issued capital

Appen Limited Notes to the consolidated financial statements 30 June 2016

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Note 6. Equity - issued capital (continued)

Movements in ordinary share capital

Details Date Balance 1 January 2016 Issue of shares on exercise of options 1 March 2016 Issue of shares on exercise of options 1 March 2016 Issue of shares on exercise of options 1 March 2016 Issue of shares on exercise of options 1 March 2016 Issue of shares on exercise of options 1 March 2016 Issue of shares on exercise of options 16 March 2016 Issue of shares on exercise of options 8 June 2016 Balance 30 June 2016	Shares Issue price 96,280,001 51,125 $0.412 112,475 $0.432 112,475 $0.489 51,125 $0.494 358,593 $0.500 26,563 $0.500 106,250 $0.500 97,098,607	$'000 19,077 21 49 55 26 179 13 53 19,473

Note 7. Equity - dividends

Dividends paid during the financial half-year were as follows:

Dividends paid out of the profits reserve for the year ended 31 December 2015 of 3.0 cents per ordinary share	Group 30 Jun 2016 30 Jun 2015 $'000 $'000 2,909 -

Dividend declared

Note 8. Contingent liabilities

The Group has given bank guarantees as at 30 June 2016 of $122,000 (31 December 2015: $122,000) to various landlords.

Note 9. Earnings per share

Profit after income tax attributable to the owners of Appen Limited Weighted average number of ordinary shares used in calculating basic earnings per share Adjustments for calculation of diluted earnings per share: Options and rights over ordinary shares Weighted average number of ordinary shares used in calculating diluted earnings per share Basic earnings per share Diluted earnings per share	Group 30 Jun 2016 30 Jun 2015 $'000 $'000 5,409 2,678	Group 30 Jun 2016 30 Jun 2015 $'000 $'000 5,409 2,678
	Number 96,769,131 2,233,029	Number 95,335,310 841,328
	99,002,160	96,176,638
	Cents 5.59 5.46	Cents 2.81 2.78

Appen Limited Notes to the consolidated financial statements 30 June 2016

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Note 10. Events after the reporting period

Apart from the dividend declared as disclosed in note 7, no other matter or circumstance has arisen since 30 June 2016 that has significantly affected, or may significantly affect the Group's operations, the results of those operations, or the Group's state of affairs in future financial years.

Appen Limited Directors' declaration 30 June 2016

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In the directors' opinion:

the attached financial statements and notes comply with the Corporations Act 2001, Australian Accounting Standard AASB 134 'Interim Financial Reporting', the Corporations Regulations 2001 and other mandatory professional reporting requirements;
the attached financial statements and notes give a true and fair view of the Group's financial position as at 30 June 2016 and of its performance for the financial half-year ended on that date; and
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

Signed in accordance with a resolution of directors made pursuant to section 303(5)(a) of the Corporations Act 2001.

On behalf of the directors

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_________ Christopher Vonwiller Director 26 August 2016 Sydney

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Independent auditor’s review report to the members of Appen Limited

Report on the financial report

We have reviewed the accompanying interim financial report of Appen Limited, which comprises the consolidated statement of financial position as at 30 June 2016, consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the interim period ended on that date, notes 1 to 10 comprising a summary of significant accounting policies and other explanatory information and the directors’ declaration of the Group comprising the company and the entities it controlled at the half-year’s end or from time to time during the interim period.

Directors’ responsibility for the interim financial report

The directors of the company are responsible for the preparation of the interim 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 interim financial report that is free from material misstatement, whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express a conclusion on the interim financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the interim financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the Group’s financial position as at 30 June 2016 and its performance for the half-year ended on that date; and complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 . As auditor of Appen Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of an interim financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001 .

KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.

Liability limited by a scheme approved under Profession Standards Legislation.

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Independent auditor’s review report to the members of Appen Limited (continued)

Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the interim financial report of Appen Limited is not in accordance with the Corporations Act 2001 , including:

(a) giving a true and fair view of the Group’s financial position as at 30 June 2016 and of its performance for the interim period ended on that date; and

(b) complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 .

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KPMG

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Tony Nimac Partner

Sydney

26 August 2016

AI assistant

APPEN LIMITED — Interim / Quarterly Report 2016

64403_rns_2016-08-25_520be7b5-d6b0-4201-b6cd-c55d74aaa254.pdf

Appen Limited Appendix 4D Half-year report

1. Company details

2. Results for announcement to the market

Comments

3. Net tangible assets

4. Control gained over entities

5. Loss of control over entities

6. Dividends

7. Dividend reinvestment plans

8. Details of associates and joint venture entities

9. Foreign entities

10. Audit qualification or review

11. Attachments

Details of attachments (if any):

12. Signed

Appen Limited ABN 60 138 878 298

Directors

Principal activities

Dividends

Dividend declared

Review of operations

Financial performance

Appen Limited Directors' report 30 June 2016

Significant changes in the state of affairs

Rounding of amounts

Auditor's independence declaration

Appen Limited Consolidated statement of profit or loss and other comprehensive income For the half-year ended 30 June 2016

Appen Limited Consolidated statement of changes in equity For the half-year ended 30 June 2016

Reclassification

Appen Limited Consolidated statement of cash flows For the half-year ended 30 June 2016

Note 1. General information

Note 2. Significant accounting policies

New, revised or amending Accounting Standards and Interpretations adopted

Note 3. Operating segments

Identification of reportable operating segments

Intersegment transactions

Note 3. Operating segments (continued)

Intersegment receivables, payables and loans

Major customers

Operating segment information

Note 3. Operating segments (continued)

Geographical information

Note 4. Current assets - trade and other receivables

Note 5. Current liabilities - trade and other payables

Note 6. Equity - issued capital

Note 6. Equity - issued capital (continued)

Movements in ordinary share capital

Note 7. Equity - dividends

Dividend declared

Note 8. Contingent liabilities

Note 9. Earnings per share

Note 10. Events after the reporting period

Independent auditor’s review report to the members of Appen Limited

Report on the financial report

Directors’ responsibility for the interim financial report

Auditor’s responsibility

Independence

Independent auditor’s review report to the members of Appen Limited (continued)

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APPEN LIMITED Interim / Quarterly Report 2016