==> picture [451 x 451] intentionally omitted <==

ProsPeCtus

Butn Limited ACN 644 182 883

For the Offer to issue 40 million Shares at an issue price of $0.50 per Share to raise $20 million

This Offer is fully underwritten by Canaccord Genuity (Australia) Limited.

IMPORTANT INFORMATION:

This is an important document and it should be read in its entirety. If after reading this Prospectus, you do not fully understand it or the rights attaching to the Shares offered by it, you should consult an accountant, solicitor or other professional adviser for assistance. The Shares offered by this Prospectus should be considered speculative.

Important Notices

offer

The Offer contained in this Prospectus is an invitation to acquire fully paid ordinary shares ( shares ) in Butn Limited ACN 644 182 883 ( Butn or Company ).

Lodgement and Listing

This Prospectus is dated 26 May 2021 ( Prospectus Date ) and a copy was lodged with the Australian Securities and Investments Commission ( AsIC ) on that date.

The Company will apply to ASX Limited ( AsX ) within 7 days after the Prospectus Date for admission of the Company to the official list of ASX and quotation of its Shares on ASX. None of ASIC, ASX or their officers take any responsibility for the content of this Prospectus or for the merits of the investment to which this Prospectus relates.

exposure Period

The Corporations Act prohibits the Company from processing Applications in the 7 day period after the date of Prospectus Lodgement ( exposure Period ). The Exposure Period may be extended by ASIC by up to a further 7 days. The purpose of the Exposure Period is to enable the Prospectus to be examined by market participants prior to the raising of funds. Applications received during the Exposure Period will not be processed until after the expiry of the Exposure Period. No preference will be conferred on any Applications received during the Exposure Period.

Note to Applicants

The information in this Prospectus is not financial product advice and does not take into account your investment objectives, financial situation or particular needs.

It is important that you read this Prospectus carefully and in its entirety before deciding whether to invest in the Company. In particular, you should consider the risk factors that could affect the performance of the Company. You should carefully consider these risks in light of your personal circumstances (including financial and tax issues) and seek professional guidance from your stockbroker, solicitor, accountant or other independent professional adviser before deciding whether to invest in Shares. Some of the key risk factors that should be considered by prospective investors

are set out in Section 5. There may be risk factors in addition to these that should be considered in light of your personal circumstances. You should also consider the assumptions underlying the historical financial information and the risk factors that could affect the Company’s business, financial condition and results of operations. No person named in this Prospectus, nor any other person guarantees the performance of the Company or the repayment of capital or any return on investment made pursuant to this Prospectus.

No offering where offering would be illegal

This Prospectus does not constitute an offer or invitation in any place in which, or to any person to whom, it would not be lawful to make such an offer or invitation. No action has been taken to register or qualify the Shares or the Offer, or to otherwise permit a public offering of the Shares in any jurisdiction outside Australia. The distribution of this Prospectus outside Australia may be restricted by law and persons who come into possession of this Prospectus outside Australia should seek advice on and observe any such restrictions. Any failure to comply with such restrictions may constitute a violation of applicable securities laws.

This Prospectus has been prepared for publication in Australia and may not be released or distributed in the United States. This Prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, securities in the United States. The Shares and Existing Shares have not been, and will not be, registered under the US Securities Act or the securities laws of any state of the United States, and may not be offered or sold in the United States, or to, or for the account or benefit of a US Person, except in a transaction exempt from the registration requirements of the US Securities Act and applicable United States state securities laws. The Offer is not being extended to any investor outside Australia, other than to institutional investors as part of the Offer. This Prospectus does not constitute an offer or invitation to potential investors to whom it would not be lawful to make such an offer or invitation.

For details of selling restrictions that apply to the Offer and the sale of Shares in certain jurisdictions outside of Australia, please refer to Section 10.11.

Financial information presentation

Section 4 sets out in detail the financial information referred to in this Prospectus. The basis of preparation of that information is set out in Section 4.

All financial amounts contained in this Prospectus are expressed in Australian dollars and rounded to the nearest $0.1 million unless otherwise stated. Any discrepancies between totals and sums of components in tables contained in this Prospectus are due to rounding.

Forward looking statements

Various statements in this Prospectus may be in the nature of forward looking statements, statements of current intentions, statements of opinion and predictions as to future events. You should be aware that such statements are not statements of fact and there can be no certainty of outcome in relation to the matters to which the statements relate.

Forward looking statements are subject to various inherent risks and uncertainties (many of which are outside the Company’s control) that could cause the Company’s actual results to differ materially from the results expressed or anticipated in these statements. As a result, forward looking statements should be read in conjunction with risk factors as set out in Section 5 and other information in this Prospectus.

suitability of investment and general risk factors

This Prospectus provides information to help investors decide whether they wish to invest in the Company. Before deciding to invest in the Company, potential investors should read this entire Prospectus, and in particular the technical information and the risk factors that could affect the future operations and activities of the Company. The Offer contained in this Prospectus does not take into account the investment objectives, financial situation and particular needs of individual investors. Please read the Application Form carefully. Professional advice should be sought before deciding to invest in any securities the subject of this Prospectus.

Butn Limited | Prospectus

Disclaimer

No person is authorised to give any information or to make any representation in connection with the Offer described in this Prospectus which is not contained in this Prospectus. Any information not so contained may not be relied upon as having been authorised by the Company, or any other person in connection with the Offer. You should rely only on information in this Prospectus.

It is expected that the Shares will be quoted on ASX initially on a deferred settlement basis. The Company, the Underwriter and the Share Registry disclaim all liability, whether in negligence or otherwise, to persons who trade Shares before receiving their holding statement.

obtaining a copy of this Prospectus

A paper copy of the Prospectus is available free of charge to any person in Australia by calling the Company Offer Information Line on 1800 451 641 (within Australia) or +61 1800 451 641 (outside Australia) from 8.30 am until 5.30 pm AEST Monday to Friday during the Offer Period.

This Prospectus is also available to Australian resident investors in electronic form at the Offer website, events.miraqle.com/butn-ipo. The Offer constituted by this Prospectus in electronic form is available only to Australian residents accessing the website from Australia. It is not available to persons in the United States. Persons who access the electronic version of this Prospectus should ensure that they download and read the entire Prospectus.

Applications for Shares may only be made on the appropriate Application Form attached to, or accompanying, this Prospectus in its paper copy form, or in its electronic form which must be downloaded in its entirety from events.miraqle.com/butn-ipo. By making an Application, you declare that you were given access to the Prospectus, together with an Application Form. The Corporations Act prohibits any person from passing the Application Form on to another person unless it is attached to, or accompanied by, this Prospectus in its paper copy form or the complete and unaltered electronic version of this Prospectus.

Defined terms and abbreviations

Privacy

By completing an Application Form, you are providing personal information to the Company, and the Share Registry, which is contracted by the Company to manage Applications. The Company, and the Share Registry on their behalf, collect, hold and use that personal information to process your Application, service your needs as a Shareholder, provide facilities and services that you request and carry out appropriate administration.

Once you become a Shareholder, the Corporations Act requires information about you (including your name, address and details of the Shares you hold) to be included in the Company’s public register. The information must continue to be included in the Company’s public register if you cease to be a Shareholder. If you do not provide all the information requested, your Application Form may not be able to be processed. The Company, and the Share Registry may disclose your personal information for purposes related to your investment to their agents and service providers as disclosed in the Company’s Privacy Policy or as otherwise authorised under the Privacy Act 1988 (Cth).

You may request access to your personal information held by or on behalf of the Company. You can request access to your personal information or obtain further information about the Company’s privacy practices by contacting the Share Registry or the Company. The Company aims to ensure that the personal information it retains about you is accurate, complete and up-to-date. To assist with this, please contact the Company or the Share Registry if any of the details you have provided change.

You can contact the Share Registry using the below contact information:

Call: 1300 554 474

Email: [email protected]

Mail:

Link Market Services Limited Locked Bag A14 Sydney South NSW 1235 Australia

In accordance with the requirements of the Corporations Act, information on the Shareholder register will be accessible by members of the public.

Photographs and diagrams

Photographs used in this Prospectus which do not have descriptions are for illustration only and should not be interpreted to mean that any person endorses this Prospectus or that assets shown in them are owned by the Company.

Diagrams used in this Prospectus are illustrative only and may not be drawn to scale. Unless otherwise stated, all data contained in graphs, charts and tables is based on information available as at the date of this Prospectus.

If you have any Questions

If after reading this Prospectus, you do not fully understand it or the rights attaching to the Shares offered by it, you should consult an accountant, solicitor or other professional adviser for assistance. The Company is unable to advise applicants on the suitability or otherwise of an investment in the Company.

this document is important and should be read in its entirety.

Defined terms and abbreviations used in this Prospectus are explained in Section 11. Unless otherwise stated or implied, references to times in this Prospectus are to AEST.

Key offer Information

the offer

Butn Limited ACN 644 182 883 (ASX code: BTN) is seeking to raise $20 million by the issue of 40 million Shares at an Offer Price of $0.50 per Share.

Following the Completion of the Offer the shareholding structure in the Company will be as follows:

Existing Shares on issue1	120 million
Shares offered under this Prospectus	40 million
Total number of Shares on Completion of the Offer2	160 million
Offer Price	$0.50
Gross proceeds from the Offer	$20 million
Indicative market capitalisation at the Offer Price3	$80 million

At the date of Listing there will also be 11,618,750 options on issue in the capital of the Company (see Sections 7.6 and 7.7 of this Prospectus for more detail), nor does it include any Shares issued to Butn’s employees under Butn’s Employee Incentive Plan (see Section 6.5(d) for details).
The percentage of Shares in the total share capital of the Company available at Listing for investors to freely trade in the public market (i.e. “free float”) will be at least 20% based on the $20 million raise.
This represents the Offer Price multiplied by the total number of Shares at Listing.

Indicative Key Dates[1]

Indicative Key Dates1
Prospectus lodged with ASIC	26 May 2021
Exposure Period	26 May 2021 – 2 June 2021
Opening Date	3 June 2021
Closing Date	9 June 2021
Expected date for allocation of Shares	16 June 2021
Holding Statements sent to Shareholders	17 June 2021
Expected date for quotation of the Company’s Shares on ASX	18 June 2021

The Directors reserve the right to vary the Offer dates and to extend or to close it at an earlier date. The above dates are indicative only and may change (in consultation with the Lead Manager). The Directors reserve the right to amend any and all of the above dates without notice to you including (subject to the ASX Listing Rules and the Corporations Act), to close the Offer early, to extend the Offer, to accept late Applications, either generally or in particular cases, or to withdraw the Offer before settlement. If the Offer is withdrawn before the issue of the Shares, then all Application monies will be refunded in full (without interest) as soon as practicable in accordance with the requirements of the Corporations Act.

Message from the Chairman

On behalf of the Directors, I am pleased to invite you to become an investor in Butn Limited ( Butn or the Company ).

Butn is a founder-led Australian business-to-business ( B2B ) funder innovating the way SMEs fund and grow their businesses. Butn focuses on transactional funding helping businesses through their working capital constraints, financing individual transactions leveraging the end debtor’s credit and offering a broad spectrum of near immediate funding options.

Butn is a proven performer having grown rapidly over the past five years during which it has funded over $500 million of originations. Butn delivered a 58% increase in originations and 47% increase in revenue in FY20. Butn’s differentiated transactional funding approach is complemented by demonstrated and rigorous credit and risk management processes.

Over the past two years Butn has developed a proprietary FinTech solution which digitises and automates the transactional funding process, integrating into third party platforms such as CRMs, marketplaces and B2B aggregators ( Platform Partners ). The FinTech solution allows for mass distribution and rapid scaling of Butn’s products to businesses in known, trusted environments where they are transacting, whilst maintaining a people light business model.

Butn launched its FinTech solution in December 2020 and today there are a number of Platform Partners offering Butn products to their end user base, with a growing pipeline of future potential Platform Partners. This includes MYOB Australia which in January 2021 entered into a multi-year partnership with Butn.

Butn successfully raised $12.5 million in FY21 through a $7.5 million pre-IPO raising round from Australian institutional and sophisticated investors, as well as a strategic investment of $5 million in the Company by MYOB Invest Co, a related body corporate of MYOB Australia. MYOB Invest Co has committed to invest a further $6.5 million under the Offer to hold 19.9% in Butn on Completion of the Offer.

The Directors believe Butn is strongly positioned to take advantage of the large and relatively underserved business funding market opportunity.

Butn’s initial public offering will raise $20 million (before costs) via the issue of 40 million Shares at an issue price of $0.50 per Share. The majority of the funds will be used to support the growth in Butn originations and its operations.

This Prospectus contains important information regarding the Offer as well as Butn’s financial position, operations, management team and future plans. The key risks associated with an investment in the Company are contained in Section 5, which should be considered in detail. I encourage you to read the Prospectus thoroughly and carefully before making any investment decision and consult with your independent professional adviser in connection with the Offer.

On behalf of the Directors, I invite you to consider the opportunity to invest in the Company and look forward to welcoming you as a Butn Shareholder.

Yours faithfully

==> picture [107 x 28] intentionally omitted <==

suzanne ewart Non-executive Chairman

Butn Limited | Prospectus

Message from the Co‑Founders

==> picture [231 x 336] intentionally omitted <==

We’ve been working together now for well over half a decade. As we continually expanded, offering our popular funding products to a broader range of SMEs across Australia we recognised that our foundational funding model was indeed delivering a distinctive form of financing. We referred to this as ‘transactional funding’.

We envisaged a world where a business can live and transact, all within an ecosystem familiar to them. Our resolve strengthened to scale up. We devoted time to whiteboarding, wireframing new workflows, and re-imagining easy access to funding for businesses.

We visualised Butn as the ultimate FinTech solution to supercharge our growth through mass digital origination and distribution. We determined that the days of “pounding the footpath” pursuing new customers would be over. Platform Partners were to be our new source of origination and distribution and now we could not only supercharge our business but at the same time those of our Platform Partners’ customers, providing each with the opportunity for funding at the click of a Butn .

Our established funding model, combined with our deep knowledge of credit and risk management, has enabled us to rapidly grow originations and to assist many businesses with cash flow funding. Our customised Butn FinTech Solution enables end users to access our suite of funding products

through these Platform Partner integrations. We are accelerating the on-boarding of new Platform Partners as demand for the Butn FinTech Solution increases with more visibility.

Our ongoing success and growth can be attributed to the culture we have instilled in the Company and to the accomplished and dedicated team who inhabits it each day. Each of us embodies our central focus – our customers, who rely on us for prompt cash flow funding. As we develop and introduce new initiatives and adopt continuous agile design principles, our Platform Partners and their customers will reap the benefits.

To accelerate our growth and opportunities we resolved to IPO. This will provide us with the capital to further extend our product suite and serve SMEs with funding at the click of a Butn , delivering us the capability to reach thousands of customers through our integrations with Platform Partners.

We invite you to read the Prospectus carefully before making your decision and look forward to welcoming you as an investor.

Yours faithfully

==> picture [115 x 36] intentionally omitted <==

==> picture [76 x 41] intentionally omitted <==

Walter rapoport and rael ross

Joint CEOs and Executive Directors

01 Investment overview

01. Investment overview

This section is a summary only of the information contained in this Prospectus. Investors should read and consider this Prospectus in its entirety before applying for Shares in the Company.

==> picture [485 x 540] intentionally omitted <==

----- Start of picture text -----

More
Topic Details information
A. Company overview
Who is the issuer The issuer of this Prospectus is Butn Limited ACN 644 182 883 Corporate
of this Prospectus? ( Butn or the Company ). Directory
Who is Butn? Butn is a founder-led Australian B2B funder innovating the section 3.1
way SMEs fund and grow their businesses.
What does Butn do? Butn focuses on B2B transactional funding – funding SME section 3.1
businesses through their working capital constraints by
financing individual transactions, leveraging the end
debtor’s credit.
What is Butn’s Butn started as a small business invoice financier led by Joint section 3.1
history? CEOs and then sole shareholders, Walter Rapoport and Rael
Ross. Walter and Rael amalgamated and consolidated four
factoring businesses to successfully grow and evolve
into Butn.
What industry does Butn operates in the financial services industry. section 3.1
Butn operate in?
Why is the offer The purpose of the Offer is to: section 7.4
being conducted? y grow Butn’s receivables book;
y invest in Butn’s core business model, access new markets
and continue product development, principally focused
on Butn’s growth objectives;
y achieve a listing on the ASX, broadening the Company’s
investor base and future access to capital; and
y repay the Related Party Loans.
B. Business overview
Why is Butn Typically, funders require SMEs to commit to minimum section 3.4
different to other volumes (e.g. a “whole of book” approach) or minimum
business funders? monthly facility fees as a prerequisite to providing financing.
Butn’s approach is to provide finance to its customers on a
transaction-by-transaction basis for a fixed fee per transaction.
----- End of picture text -----

01. Investment overview

==> picture [485 x 605] intentionally omitted <==

----- Start of picture text -----

More
Topic Details information
What is the Butn Butn’s FinTech Solution is an automated B2B transactional section
Fintech solution? funding tool developed by the Company that digitises and 3.4(b)
automates Butn’s transactional funding product suite and
its processes including customer on-boarding, credit and
risk assessment, funding and collections. Utilising Butn’s
internally developed credit and risk assessment measures,
Butn’s Fintech Solution enables businesses to obtain
transactional funding, often at the point of transaction,
following a quick one-time digital application and
approval process.
Butn’s FinTech Solution is built to integrate into third party
platforms including industry CRMs, marketplaces and
business aggregators, allowing for efficient wide-scale
distribution to potential business customers.
How does Butn The Company earns revenue by charging a fixed funding section 3.2
generate income? fee on each transaction funded. Historically the funding fee
has ranged between 2% and 5%. The funding fee is determined
by a combination of factors which include the credit worthiness
of the customer and debtor, the terms of the transaction
being funded, the industry sector and the specific funding
product used.
Funds advanced by Butn are typically repayable within 30-90
days. Butn’s fast-turning receivables book provides a strong
differential between the fee Butn charges and its funding costs.
Who are Butn’s Butn has diversified its customer base across a wide range section
customers? of industry sectors. 3.4(a)(iii)
Butn reaches its customers both directly and through
its various Platform Partners.
What is Butn’s The Butn FinTech Solution is deployed by integrating with section 3.6
relationship with its Platform Partners, who typically have hundreds, or in many
Platform Partners? cases, thousands of business users, interacting and transacting
on their platforms on a regular basis. Platform Partners are
able to offer Butn products to their end user base at the
point and time of business transaction.
Butn’s Platform Partners include MYOB Australia, which
also (via its related body corporate, MYOB Invest Co) made a
$5 million strategic investment in Butn in January 2021 and
has committed to invest a further $6.5 million under the
Offer to hold 19.9% in Butn on Completion of the Offer.
Integration of the Butn FinTech Solution with Platform
Partners enables Butn to access hundreds of thousands
of potential business customers with low customer
acquisition costs.
----- End of picture text -----

Butn Limited | Prospectus

==> picture [485 x 564] intentionally omitted <==

----- Start of picture text -----

More
Topic Details information
What is Butn’s Butn intends to rapidly scale through four key growth strategies: section 3.12
growth strategy
1. Platform Partner growth: Butn has a growing pipeline
of prospective Platform Partners and intends to rapidly
on-board new Platform Partners. Each Partner Platform
has the potential to deliver large numbers of business
customers and transaction volumes.
2. Build exposure and awareness: transactional funding
has relatively low awareness amongst SMEs. Marketing
resources will be allocated towards market education and
content creation, working collaboratively with Platform
Partners to increase awareness of this funding option
for their user base.
3. Product and technology innovation: product and
technology innovation has driven Butn’s historical growth
and will remain core to its future growth. A focus on
improving B2B funding, through new funding products
and technology innovations will broaden user access.
An increase in funding efficiency, whilst ensuring prudent
deployment of funds will continue with further investments
in people, technology, and processes as Butn continues
to scale.
4. International expansion and acquisition: some existing
and potential Platform Partners have a global footprint.
Once Butn has established itself within the Australian
market, it will look to replicate and expand overseas
in collaboration with Platform Partners or other funding
providers. Butn will also remain alert to acquisition
opportunities where they are considered to be
complementary to the business and progressing
Butn’s strategic aims.
How does Butn Butn’s receivables book is funded through an existing section 3.9
intend to fund $40 million corporate bond structure (through the issue
its operations? of Debt Notes).
To supplement this funding, Butn successfully raised
$12.5 million in FY21 through a pre-IPO Convertible Note offer
($7.5 million from institutional and wholesale investors and
$5.0 million from MYOB Invest Co, a related body corporate
of MYOB Australia).
It is intended that the majority of the funds from the Offer
will be used to grow Butn’s receivables book and facilitate the
rapid roll out of the Butn FinTech Solution to Platform Partners
to drive business growth.
----- End of picture text -----

01. Investment overview

==> picture [485 x 572] intentionally omitted <==

----- Start of picture text -----

More
Topic Details information
What are Butn’s Butn has a number of key business performance section 3.11
key business drivers including:
performance y increase in transaction volume and value through current
drivers?
channels and Platform Partners including its strategic
partnership with MYOB Australia;
y rapidly sign up and integrate new Platform Partners
using its early mover advantage;
y reduce the cost of capital, expanding margins;
y increase access to debt and equity to fund receivables
book growth;
y maintain strong credit and risk management processes
for low non-recoverable write offs;
y maintain a low and efficient cost base as the business
continues to scale;
y expand into overseas markets; and
y broaden the existing funding product suite.
C. Business highlights and key strengths
Proven performer y Butn has funded over $500 million of originations in the section 3.3
last five years
y History of growth with FY20 originations +58% reaching
$166 million and FY20 revenue +47% reaching $4.7 million
y EBITDA positive last three years, reaching $2.8 million
for FY20
sizeable market y SME funding in Australia is estimated to exceed $300 billion section 3.3
opportunity y Banks are tightening lending requirements, opening up
alternative funding opportunities
y B2B funding is relatively uncrowded, with Butn having
an early mover advantage
Demonstrated y Founder led, with deep industry knowledge section 3.3
credit and risk
y Historical non-recoverable write offs of under 0.03% of
management
cumulative originations over the past 5 years
y Senior management and credentialed Board appointed
in the past 12 months formalising governance and
corporate processes
----- End of picture text -----

Butn Limited | Prospectus

==> picture [485 x 592] intentionally omitted <==

----- Start of picture text -----

More
Topic Details information
Growth Platform y Recently launched the Butn FinTech Solution to leverage section 3.3
off and rapidly scale with Platform Partners
y MYOB Australia, with over 1 million business software
customers, has made a strategic investment and signed
a multi-year partnership
y Fast turning book (on average 6 times per year) with
funding fee of 2-5% per turn
y Opportunity over time to lower cost of funds and
expand margins
y Efficient cost structure for strong operating leverage
with scale
D. Key risks
strategic The Company’s future performance is dependent on its section 5.2(a)
execution risk ability to successfully scale its business, primarily by increasing
transaction volumes and the number of customers using its
financing products to drive revenue and profits.
There can be no assurance that the Company can
successfully achieve its strategic objectives, and any failure
to do so could adversely impact the Company’s financial
position and performance.
Failure to retain The Company’s revenue depends on its ability to retain and section 5.2(b)
existing customers attract new customers on commercially acceptable terms.
and attract new
Failure to retain existing customers or attract new customers
customers
on acceptable commercial terms could adversely impact the
Company’s financial position and performance.
Competition The Company faces direct competition from existing invoice section 5.2(c)
finance funders. In addition to direct competitors, the Company’s
products compete with alternative financial products such
as bank loans, lines of credit and asset finance products.
Systems and technologies in the financial technology sector
are continually changing, superseding existing offerings.
New competitors may enter the market with a novel offering
that could disrupt the Company’s business and growth strategy.
The Company’s success will depend in part on its ability to:
(i) offer transaction finance products that remain relevant;
and (ii) maintain the distribution capabilities required to ensure
those products reach the target market in a cost-effective way.
An increase in competition could adversely impact the
Company’s financial position and performance.
----- End of picture text -----

01. Investment overview

==> picture [485 x 546] intentionally omitted <==

----- Start of picture text -----

More
Topic Details information
Credit risk The Company is exposed to the risk of bad debts associated section 5.2(d)
with the payment obligations of its customers. The extent to
which this risk will impact the Company’s business depends
on (among other things):
y the capacity of the Company’s systems and processes to
properly assess the credit risk of a customer at the stage
of on-boarding and then ongoing at each transaction,
including the ability for the end debtor to make payment;
y the Company’s ability to obtain retention monies from
customers; and
y the extent to which a transaction is covered under the
Company’s insurance policy.
A failure to adequately assess and manage credit risk may
result in non-recoverable write offs, which could adversely
impact the Company’s financial position, performance
and reputation.
Fraud The Company is exposed to the risk of fraudulent behaviour section 5.2(e)
in connection with the financing products it offers.
A failure to adequately assess and manage fraud risk may
result in non-recoverable write offs, which could adversely
impact the Company’s financial position, performance
and reputation.
Loss of Platform The Company has begun to roll out its Butn FinTech Solution section 5.2(i)
Partnerships via third party Platform Partners. The use of third party Platform
Partners creates increased distribution potential and rapid
scaling by enabling Butn to introduce the Butn FinTech Solution
to each Platform Partner’s user base.
At present, the Company is not reliant on any single Platform
Partner and while at an early stage, this new distribution
channel is intended to grow significantly.
There can be no assurance that the current or new Platform
Partners will continue their relationship with the Company,
or if they continue, that these relationships will generate
material revenue. Furthermore, many of the Company’s
contracts with its Platform Partners can be terminated
on relatively short notice with the risk that one or more
Platform Partners move to a competitor or seek to develop
their own in house finance offering.
----- End of picture text -----

Butn Limited | Prospectus

==> picture [485 x 564] intentionally omitted <==

----- Start of picture text -----

More
Topic Details information
technology risk The Butn FinTech Solution uses and relies on integration with section 5.2(m)
third party systems and platforms. The continual provision of
services and products to customers via this channel depends
on the Company’s ability to successfully integrate across
various systems and platforms, including as those systems
and platforms evolve and develop over time. Any integration
failure could adversely impact the Company’s financial
position, performance and reputation.
Liquidity of shares Prior to the Offer there has been no public market for the section 5.3(a)
Shares. No assurance can be given that an active market
will develop in the Shares or that the Shares will trade at
or above the Offer Price after quotation of the Shares
on the Official List.
Fluctuations in The price of Shares may rise or fall depending upon a range section 5.3(b)
the price of shares of national and international market factors beyond the
Company’s control and/or which may be unrelated to the
Company’s operational performance.
Applicants who decide to sell their Shares may not receive
the entire amount of their original investment, with no
assurance that the price of the Shares will increase following
the Company’s listing.
The Shares carry no guarantee in respect of profitability,
dividends, return on capital, or the price at which they may
trade on the ASX.
General economic The general economic climate may affect the performance section 5.3(c)
conditions of the Company. Factors that could impact the economic
climate include (but are not limited to) the general level
of international and domestic economic activity, inflation,
unemployment rates, business sentiment, and interest rates.
These factors are beyond the control of the Company and
their impact cannot be predicted.
risk of In the future, the Company may elect to issue additional section 5.3(d)
shareholder Shares. While the Company will be subject to the constraints
dilution of the Listing Rules regarding the percentage of its capital
it is able to issue within a 12-month period (other than where
exceptions apply), Shareholders may be diluted as a result
of such issues of Shares, if they are unable to or choose not
to participate.
----- End of picture text -----

01. Investment overview

==> picture [485 x 422] intentionally omitted <==

----- Start of picture text -----

More
Topic Details information
CoVID‑19 The impact of COVID-19 on the Company is described in section 5.3(h)
Section 3.10. The future effects (and extent of such effects)
on Butn’s business arising from COVID-19 will depend on
future developments which are highly uncertain and cannot
be predicted, including (among others) the geographic
spread of the virus, the measures that may be taken by
various governmental authorities in response to contain any
outbreaks (such as quarantines and travel restrictions) and
the possible further impacts on the Australian economy,
as well as the global economy, all of which could have a
material adverse effect on the business, financial condition
and results of the Company.
other risks A number of other risks relating specifically to an investment sections
in Butn and generally to an investment in Shares are set out 5.2(g), 5.2(o),
in Section 5, including: 5.2(p), 5.2(q),
y Butn may experience unauthorised access to 5.2(r), 5.2(s),
5.2(t), 5.2(u),
confidential information;
and 5.3(e)
y Contractual and counterparty risk – there is no assurance
that all of Butn’s key contracts will be properly performed;
y Risk of litigation (e.g. contractual disputes, employment
matters or customer claims);
y Risk of compromise to Butn’s IP, or claims for infringement
of third party IP;
y Risks relating to the adequacy of Butn’s insurance
arrangements;
y Risk of departure of key personnel;
y Exposure to adverse macro-economic conditions; and
y Risk relating to tax laws and their interpretation.
----- End of picture text -----

Butn Limited | Prospectus

More information

==> picture [485 x 440] intentionally omitted <==

----- Start of picture text -----

Topic Details information
E. Key financial information
What is Butn’s The financial information presented below contains section 4
historical financial non-IFRS financial measures, defined further in Section 4.2.
performance? The information is intended as a summary only and should
be read in conjunction with the additional discussion of the
Financial Information set out in Section 4, including the basis
of preparation and presentation of Financial Information and
management discussion and analysis, as well as the key risks
set out in Section 5.
The Company’s historical financial performance has been
summarised in the table below:
Pro Pro
forma forma Statutory Annual Annual
Audited Audited Audited Change Change
FY19 to FY20 to
$’000s FY18 FY19 FY20 FY18 FY19
Total
originations 93,900 105,400 166,600 12% 58%
Revenue 2,275 3,231 4,737 42% 47%
EBITDA 1,067 1,549 2,759 45% 78%
Loss after
income tax
(expense)/
benefit (147) (186) (359)
Revenue Margin 2% 3% 3%
Bad debts %
of total
originations 0.0% 0.0% 0.1%
----- End of picture text -----

01. Investment overview

More information

==> picture [485 x 287] intentionally omitted <==

----- Start of picture text -----

Topic Details information
What is Butn’s section 4
Statutory Statutory
historical financial Reviewed Reviewed
performance?
continued
$’000s 1HFY20 1HFY21
Total originations 72,200 98,000
Revenue 2,397 2,413
EBITDA 1,016 577
Loss after income tax
(expense)/benefit (232) (1,179)
Revenue Margin 3% 2%
Bad debts % of total originations 0.0% 0.0%
Where can I find See Section 4 and the Independent Limited Assurance Report sections 4
financial information in Section 8. and 8
in relation to the
Company?
----- End of picture text -----

F. The Company’s Directors

==> picture [483 x 270] intentionally omitted <==

----- Start of picture text -----

||||
|---|---|---|
|Who are the|Directors|sections 6.1|
|directors and senior|Suzanne Ewart – Non-executive Director and Independent|and 6.2|
|management of|Chairman|
|the Company?|
|Rael Ross – Co-Founder, Joint CEO and Executive Director|
|Walter Rapoport – Co-Founder, Joint CEO and|
|Executive Director|
|Georg Chmiel – Non-executive Director|
|Mike Hirst – Non-executive Director|
|senior management|
|Rael Ross – Co-Founder, Joint CEO and Executive Director|
|Walter Rapoport – Co-Founder, Joint CEO and|
|Executive Director|
|Darryl Lasnitzki – Chief Financial Officer and Company Secretary|
|Mark Newstead – Chief Operating Officer|
|Abhinov Gulati – Chief Technical Officer|
|Simran Gambhir – Chief Information Officer|

----- End of picture text -----

Butn Limited | Prospectus

==> picture [485 x 586] intentionally omitted <==

----- Start of picture text -----

More
Topic Details information
What significant On Completion, the Directors and senior management sections 6.3,
benefits are payable personnel will hold the following interests: 6.4 and 6.5(c)
to Directors and
% interest
other persons held at
connected with Completion
the Company or (assuming
Shares in which $20 million
the offer and what the party has Options is raised
significant interests Relationship to an interest at held at under the
do they hold? Name the Company Completion Completion Offer)
Suzanne Chairman and 38,425 Shares 481,250 Less
Ewart Non-executive following than 1%
Director conversion
of Convertible
Notes
Consideration
paid – $10,000
Rael Ross Executive 36,191,572 [1] 1,300,000 22.6%
Director and
Joint CEO
Walter Executive 36,191,572 [2] 1,300,000 22.6%
Rapoport Director and
Joint CEO
Georg Non- N/A 306,250 Less
Chmiel executive than 1%
Director
Mike Hirst Non- 384,240 Shares 306,250 Less
executive following than 1%
Director conversion
of Convertible
Notes
Consideration
paid – $100,000 [3]
Darryl Chief 192,120 1,250,000 Less
Lasnitzki Financial (Convertible than 1%
Officer and Notes
Company converted
Secretary into ordinary
shares)
Consideration
paid – $50,000 [4]
Mark Chief – 546,875 Less
Newstead Operating than 1%
Officer
Abhinov Chief – 781,250 Less
Gulati Technology than 1%
Officer
Simran Chief – 546,875 Less
Gambhir Information than 1%
Officer
Lead Lead – 4,800,000 3%
Manager manager
and
underwriter
to the Offer
----- End of picture text -----*

01. Investment overview

==> picture [485 x 346] intentionally omitted <==

----- Start of picture text -----

More
Topic Details information
What significant The above does not take into account any New Shares the sections 6.3,
benefits are payable Directors or senior management personnel may acquire 6.4 and 6.5(c)
to Directors and under the Offer, nor does it include any Shares issued to
other persons Butn’s employees under Butn’s Employee Incentive Plan
connected with (see Section 6.5(d) for details) the exercise of any Options
the Company or issued under Butn’s Employee Incentive Plan (see Section
the offer and what 6.5(c) for details), or Lead Manager Options (see Section
significant interests 10.7(d) for details).
do they hold?
Directors are entitled to remuneration and fees on
continued
commercial terms.
Notes:
1. Shares held by Why K.
2. Shares held by Walrap.
3. 50,000 Convertible Notes held by a closely related party of
Mike Hirst to be converted into 192,120 Shares. Each of Mike
and his closely related party paid $1 for each Convertible
Note issued to them.
4. Convertible Notes held by a closely related party of
Darryl Lasnitzki.
Directors’ and senior managers’ interests and remuneration
are set out in more detail in Section 6.3, 6.4 and 6.5(c).
Advisers and other service providers are entitled to fees
for services as disclosed in Section 10.7.
----- End of picture text -----

Butn Limited | Prospectus

Topic Details

More information

==> picture [485 x 488] intentionally omitted <==

----- Start of picture text -----

G. Major Shareholders and related party transactions
Who are the major % section 10.3
shareholders and
(assuming
what are their Relationship Number Number $20 million
interests in the Name to Company of Shares of Options is raised)
Company on
Completion Why K Related 36,191,572 1,300,000 22.6%
of the offer? party of
Rael Ross
(Co-Founder
and Joint
CEO)
Walrap Related 36,191,572 1,300,000 22.6%
party of
Walter
Rapoport
(Co-Founder
and Joint
CEO)
MYOB Promoter 31,840,000 N/A 19.9%
Invest Co (holder of
over 10% of 18,798,943
Shares will be
the Shares
issued to MYOB
on issue
Invest Co on
post-IPO)
conversion of
the Convertible
Notes.
Included in
the 31,840,000
Shares to be
issued to MYOB
Invest Co, MYOB
Invest Co has
committed to
subscribe for
an additional
13,041,057
Shares under
the Offer.
Assuming that these Shareholders do not subscribe for Shares under
the Offer (other than MYOB Invest Co’s subscription under the Right of
First Refusal) and no Employee Incentive Plan Options or Lead Manager
Options have been exercised. These calculations also exclude any Shares
issued to Butn’s employees under Butn’s Employee Incentive Plan.
----- End of picture text -----

01. Investment overview

==> picture [485 x 534] intentionally omitted <==

----- Start of picture text -----

More
Topic Details information
Are there any AFC, a wholly owned subsidiary of Butn, has entered into loan section 6.4
significant related agreements with Walter Rapoport (current Joint CEO and
party transactions? Executive Director of Butn) and Why K Pty Ltd (a related entity
of Rael Ross, current Joint CEO and Executive Director of Butn)
( related Party Loans ). Pursuant to the Related Party Loans,
AFC has borrowed, in aggregate, approximately $3.8 million.
The amounts owing under the Related Party Loans:
y are secured by a general security interest over the
assets and undertakings of AFC;
y cannot be repaid unless and until the Company has Listed; and
y are capped at $4 million in aggregate.
It is intended that these loans will be repaid from the
proceeds of the Offer.
Additionally, a historical loan was previously advanced to
AFC by Action Funding (Aust) Pty Ltd (an external company
owned and controlled by the Co-Founders) in the amount
of approximately $820,000. The loan does not accrue interest,
is unsecured and is not repayable for 24 months after the date
of Listing.
H. Overview of the Offer
What is the offer? The Offer is an initial public offer of 40 million Shares at section 7.1
an Offer Price of $0.50 per Share. The amount to be raised
under this Prospectus is $20 million.
All Shares issued under to this Prospectus will be fully paid
and will rank equally in all respects with the Shares already
on issue.
What is the purpose The purpose of the Offer is to: section 7.4
of the offer?
y grow Butn’s receivables book;
y raise funds to invest in Butn’s core business model, access
new markets and continue product development, principally
focused on its growth objectives;
y achieve a listing on the ASX, broadening the Company’s
investor base and future access to capital; and
y repay the Related Party Loans.
----- End of picture text -----

Butn Limited | Prospectus

==> picture [485 x 638] intentionally omitted <==

----- Start of picture text -----

More
Topic Details information
What is the use of It is intended that the funds raised under this Offer will be section 7.4
Funds of the offer? $20 million – as summarised in the table below:
Use of Funds (million)
Funds to invest in Butn’s core business
model, access new markets and products $13.9
Repayment of Related Party Loans $3.8
Cash expenses associated with the Offer
(including GST) $2.3
total $20.0
Rounded
The above table does not reflect current cash (31/12/20: $18.4 million)
or cash inflows from revenue that will be generated by the Group in the
normal course of business.
The Board reserves the right to vary the use of funds, acting in the best
interests of Butn’s shareholders and as circumstances require.
How does the The Company’s principal sources of funds are cash on hand, section 3.9
Company expect to net cash raised from the Offer, existing debt facilities, and
fund its operations? cash flow generated by the business.
Subject to the qualifications set out in Section 5.2(f), the
Directors are of the view that on Completion of the capital
raising under this Prospectus, the Company will have
sufficient working capital to carry out its stated objectives
(as detailed in this Prospectus).
Who is eligible This Offer comprises: sections 7.13,
to participate y the Broker Firm offer – open to Australian resident retail 7.14, and 7.15
in the offer?
clients of Brokers who have received a firm allocation from
their Broker;
y the Institutional offer – an invitation to bid for Shares made
to Institutional Investors in Australia and in certain other
eligible jurisdictions; and
y the Priority offer – open to select investors nominated by
Butn in eligible jurisdictions, who receive a Priority Offer
invitation to acquire Shares under this Prospectus.
Is the offer The Offer is underwritten by Canaccord Genuity (Australia) section 10.6(a)
underwritten? Limited. The Company will pay underwriting fees and
disbursements as provided for under the Underwriting
Agreement.
Details of the Underwriting Agreement including circumstances
under which the Underwriter may terminate its obligations
are set out in Section 10.6(a).
----- End of picture text -----

01. Investment overview

==> picture [485 x 456] intentionally omitted <==

----- Start of picture text -----

More
Topic Details information
AsX listing Not later than 7 days after the date of this Prospectus, sections 7.12
application application will be made to the ASX for the Company to be and 7.21(a)
admitted to the Official List of the ASX and for the Official
Quotation of the Shares. The fact that the ASX may admit the
Company to its Official List is not to be taken in any way as an
indication of the value or merits of the Company or of the
Shares offered under this Prospectus.
Official Quotation, if granted, will commence as soon as
practicable after the issue of transaction holding Statements to
successful Applicants. If permission for quotation of the Shares
is not granted within 3 months after the date of this Prospectus,
all Application money will be refunded without interest.
How do I apply By completing and submitting a valid Application Form sections
for shares? accompanying this Prospectus, all Application money will 7.13(b), 7.14(a),
be held on trust in a separate bank account which has been and 7.15(b)
opened only for this purpose until the Shares are issued and
allotted under the Offer or the Application money is returned
to the unsuccessful Applicants.
Details relating to the process for applying for Shares under:
the Broker Firm Offer are set out in Section 7.13(b); the
Institutional Offer are set out in Section 7.14(a); and the
Priority Offer are set out in Section 7.15(b).
Can the offer The Company reserves the right not to proceed with the Key offer
be withdrawn? Offer at any time before the issue and transfer of Shares Information
to successful Applicants.
If the Offer does not proceed, Application monies will be
refunded (without interest).
When can Applications may be lodged at any time after the Opening section 7.12
applications Date until 5.00 pm (AEST) on the Closing Date.
be lodged?
----- End of picture text -----

Butn Limited | Prospectus

==> picture [485 x 561] intentionally omitted <==

----- Start of picture text -----

More
Topic Details information
What is the The Company reserves the right to authorise the issue of a sections
allocation policy? lesser number of Shares than those for which Application has 7.13(d), 7.14(b),
been made or to reject any Application. Where no issue or and 7.15(a)
allocation is made or the number of Shares issued is less than and 7.15(f)
the number applied for, surplus Application money will be
refunded without interest.
If an Application Form is not completed correctly, or if the
accompanying payment is for the wrong amount, it may still
be treated as valid. The Company’s decision as to whether
to treat an Application as valid, and how to construe, amend
or complete it, will be final. The Company’s decision on the
number of Shares to be allocated to an Applicant will also
be final.
Further detail in relation to the allocation policy for the:
y Broker Firm Offer are set out in Section 7.13(d);
y Institutional Offer are set out in Section 7.14(b); and
y Priority Offer are set out in Section 7.15(a) and 7.15(f).
When will I know if A holding statement confirming your allocation under section 7.12
my Application has the Offer will be sent to you if your Application is successful.
been successful? It is expected that initial holding statements will be
dispatched by post on or about 17 June 2021.
Are there any No brokerage, commission, stamp duty or any other costs section 7.12
additional costs are payable by Applicants on acquisition of the Shares under
payable by the the Offer.
Applicant?
Will I be paid Butn’s current intentions with respect to dividends are to section 4.8
dividends? reinvest cash flows into the business in order to maximise
growth opportunities. Accordingly, no dividends are expected
to be paid in the near term following Butn’s listing on the ASX.
The payment of a dividend by Butn, if any, is at the discretion
of the Directors and will be a function of a number of factors,
including the general business environment, the operating
results, cash flows and the financial condition of Butn, its
future funding requirements, capital management initiatives,
taxation considerations and any other factors (including legal
and regulatory considerations) the Directors consider relevant.
The Directors do not provide assurance of the future level of
dividends to be paid by Butn.
----- End of picture text -----

01. Investment overview

==> picture [485 x 233] intentionally omitted <==

----- Start of picture text -----

More
Topic Details information
What are the The tax treatment and consequences of the Offer will vary section 9
tax implications depending on the particular circumstances of the Applicant.
of investing in The Company accepts no liability or responsibility in relation
the shares? to any taxation consequences connected to the Offer.
Therefore, regarding the appropriate tax treatment that
applies to the Offer, it is the responsibility of any Applicant
who makes an Application to satisfy themselves by consulting
their own professional tax advisers prior to investing in
the Company.
Where can I find Further information can be obtained by reading this section 7.12
more information Prospectus in its entirety. For advice on the Offer you should
about this Prospectus speak to your stockbroker, accountant or other professional
or the offer? adviser. If you require assistance or additional copies of this
Prospectus please contact the Company on 1800 451 641
(within Australia) or on +61 1800 451 641 (outside Australia).
----- End of picture text -----

Butn Limited | Prospectus

02 Industry overview

02. Industry overview

Market Report

The Invoice Finance Market

April 2021

1. Introduction and background

Butn is a provider of business transactional funding to small and medium sized enterprises (SMEs) in Australia. Butn specifically provides transactional funding to SMEs using invoices as collateral (invoice finance) on an invoice-by-invoice basis. Butn has developed a financial technology (FinTech) solution that automates its transactional funding processes, thereby providing it with an accelerated sales channel by integrating with third-party Platform Partners who, in turn, make Butn’s business transactional funding products accessible to their own SME clients and end users.

Invoice finance (also referred to as debtor finance) is a business process in which a company finances its business operations using accounts receivable ( AR ) as collateral. The use of invoice finance allows a business to bridge the cash flow gap between incurring cash expenses which cannot be delayed (such as salaries, tax and payments to suppliers) and receipt of payments from customers. With invoice finance, the company transfers legal and/or beneficial ownership of AR to an invoice financier, who provides a cash advance (typically a high percentage of the invoice value), allowing the company immediate access to a significant portion of the cash from its AR. The invoice financier subsequently recovers the full invoiced amount from the end debtor when the invoice becomes due and payable.

Invoice finance is particularly appropriate for industries in which there are low bad debt ratios, where tangible products or services are sold on an invoice rather than cash basis, credit periods are fixed, and the risk of disputed invoices is low. Industries where use of invoice finance is common include wholesale, property and business services, manufacturing, automotive repair, construction and labour hire. High quality end debtors, such as insurance companies and large corporates that are unlikely to default, reduce risk around providing invoice finance.

Traditionally, the invoice finance process has required a high degree of manual administration. Accordingly, it has not been made widely available by industry participants (other than by FinTechs such as Butn) on a single invoice basis or to customers without sizeable AR ledgers. FinTechs such as Butn utilise technology to automate much of the invoice financing process and can profitably target smaller transaction amounts and smaller customers, where previously the processing costs may have made them unviable to service. Additionally, they provide enhanced user experiences for customers.

2. The SME market

2.1 Overview of SMEs in Australia

SMEs may be defined based on employment levels or turnover. The Australian Bureau of Statistics ( ABS ) defines SMEs as those enterprises with up to 200 employees. However, nonemploying businesses (micro businesses) are excluded from the definition used in this report, with SMEs defined as those enterprises with 1-199 employees.

Using this definition, in June 2020 there were 871,172 SMEs operating in Australia, representing 99.5% of all employing businesses, and 36% of all businesses including micro businesses. Over the

Butn Limited | Prospectus

Market Report

period since 2016, the number of operating SMEs has increased at 0.6% CAGR. Measured by annual turnover, the number of SMEs with revenue between $2 million and $10 million was 130,984 as at 30 June 2020.

Figure 1 : Number of SMEs, Australia, 2016 to 2020

==> picture [283 x 158] intentionally omitted <==

----- Start of picture text -----

885,000 880,550
880,000
873,668
875,000 871,172
870,000
864,333
865,000
860,000
855,000
849,153
850,000
845,000
840,000
835,000
830,000
2016 2017 2018 2019 2020
----- End of picture text -----

Source: ABS, 8165.0 - Counts of Australian Businesses, including entries and exits, June 2016 to June 2020. The figures in the table above represent the number of employing businesses with 1-199 employees as at 30 June each year

2.2 Business conditions and challenges for SMEs

Demand from SMEs for invoice finance is closely linked to trends in business performance, particularly cash flow, which itself is linked both to level of sales and to payment periods for invoices. Payment periods are dependent on both the payment terms offered, which in some cases can stretch up to 90 days or even longer, and failures by customers to pay within the specified payment terms. Over half of all invoices to small businesses are paid late, with the average payment date being 23 days over the payment term.[1] On average, the payment period for invoices to small businesses reached 49 days in October 2020.[2] Lengthy payment terms for SMEs, particularly from larger enterprises, are increasingly viewed as a significant issue, with the federal government announcing plans to establish a reporting framework covering the 3,000 largest businesses in Australia, requiring large businesses with over $100 million turnover to publish payment information on how they engage with small businesses.[3]

2.3 Impact of poor cash flow

Cash flow is critical for SMEs, and poor cash flow is the single most common cause of business failure. Overall, causes related to inadequate financing (including under-capitalisation, poor financial control, poor management of AR and inadequate cash flow) accounted for 47% of all business failures in FY2019.[4]

1 Xero small business insights, accessed from https://www.xero.com/small-business-insights/contributor-opinion-itstime-for-legislation-on-late-payments/

2 Scottish Pacific, SME Growth Index, November 2020

3 Department of Education, Skills and Employment, accessed from https://ministers.dese.gov.au/morrison/payingsmall-business-time

4 Australian Securities and Investment Commission (ASIC), Insolvency statistics, nominated causes of failure by industry

02. Industry overview

==> picture [365 x 232] intentionally omitted <==

----- Start of picture text -----

Market Report
________________
Figure 2 : Nominated cause of business failure, FY2019
Under
capitalisation
9%
Poor financial
Other control
21% 14%
Poor
Trading
management of
losses
AR
15% Inadequate
4%
cashflow
20%
Poor strategic
management
17%
----- End of picture text -----

Source: Australian Securities and Investment Commission (ASIC), Insolvency statistics, Table 3.1 - Initial external administrators' reports—Nominated causes of failure by industry (1 July 2018–30 June 2019)

2.4 Impact of COVID-19

The COVID-19 pandemic had an immediate impact from March 2020 onwards on most SMEs in Australia. By the third week of March 2020, 67% had seen an impact on their business, with 32% having already experienced a severe impact. SME confidence declined to its lowest level in over a decade.[5] By July 2020, 72% of small businesses and 84% of medium businesses were operating under modified conditions, with only 28% and 16% respectively continuing to work as normal. 47% of businesses had experienced reduced revenue over the previous month, with only 16% having seen an increase.[6]

In response to the dramatic downturn in business conditions, both the federal and state/territory governments introduced a series of short-term measures to support SMEs, particularly those with cash flow issues.

The impact of government support was largely positive for SMEs, and by November 2020 business confidence had improved significantly, with a doubling of the percentage of SMEs believing that the economy would be better when compared to the percentage in September 2020 (38% in November 2020 compared to 19% in September 2020).[7]

However, whilst government support measures have provided significant support to SMEs, these measures are all temporary in nature. Hence, the withdrawal of support measures such as JobKeeper (which was terminated on March 28[th] 2021) may negatively impact many SMEs, with over 80% of the SMEs accessing JobKeeper in November 2020 believing that its withdrawal would have a major or moderate impact on their business.[8]

5 Sensis Business Index, March 2020

6 Australian Bureau of Statistics, 5676.0.55.003 - Business Indicators, Business Impacts of COVID-19, July 2020

7 Sensis Business Index, September to November 2020

8 Sensis Business Index, September to November 2020

Butn Limited | Prospectus

Market Report

The COVID-19 pandemic caused a significant worsening in cash flow for many SMEs, with a survey in April 2020 indicating that 72% of businesses believed that COVID-19 was likely to result in reduced cash flow over the next 12 months.[9] Although the situation has improved subsequently, in February 2021, 30% of SMEs with up to 19 employees and 33% of SMEs with 20-199 employees still reported reduced cash flow as a factor significantly impacting their business. 42% of SMEs with up to 19 employees and 40% with 20-199 employees reported that their cash on hand could sustain business operations for less than three months.[10]

2.5 SME funding sources

2.5.1 Overview of business funding sources

SMEs typically rely on debt rather than equity financing to fund operations, generally lacking the scale to raise equity finance from capital markets, or being unwilling to cede partial ownership of their business. Overall, about 70% of SMEs utilise some form of debt funding, including credit cards. Excluding credit cards, other forms of debt funding are used by about 50% of SMEs, with overdrafts (24%) and long-term loans (15%) the most common.[11]

Additionally, equipment finance may be used by SMEs to finance purchases of specific items of equipment over a longer time period rather than paying upfront in cash. Equipment finance is used extensively for business vehicles, as well as for other forms of equipment and machinery.

Only around 1% of SMEs are currently utilising debtor finance. This is likely a result of several factors including:

Low awareness of invoice finance as a business finance option;[ 12]
Traditionally it has been difficult for SMEs to easily access invoice finance and funding;
Withdrawal from invoice finance by several major banks, removing this option from their business banking customers;
Most invoice funders primarily provide a funding facility on a whole-of-ledger basis (rather than an invoice-by-invoice basis) and only fund businesses that have a significant minimum AR ledger balance;
A possible perception that use of invoice finance may indicate business difficulties; and
Invoice finance is not relevant for non-invoice businesses, i.e. businesses that receive payment in full on delivery of a product or service.

The low penetration of debtor finance as a business funding tool suggests this funding option has significant capacity to grow, particularly in light of trends in SME lending described in Section 2.5.2

9 ABS, Business Indicators, Business Impacts of COVID-19, April 2020

10 ABS, Business Conditions and Sentiments, February 2021

11 Australian Bankers Association, the small business sector in Australia, 2016 12 Ibid

02. Industry overview

==> picture [365 x 514] intentionally omitted <==

----- Start of picture text -----

Market Report
________________
Figure 3 : Use of lending products by small businesses, 2016
35%
30%
30%
25% 24%
25%
20%
15% 14%
15%
8%
10%
5% 1%
0%
Source: Australian Bankers Association, the small business sector in Australia, 2016
The high use of credit cards and bank overdrafts/loans, as well as government loans and personal
savings, is confirmed by research from Sensis, indicating that these account for 69% of the
sources of funding that SMEs would consider, with equity capital raising 3% and other (which
includes invoice finance) only 1%. [13]
Figure 4 : Funding sources that SMEs would consider, November 2020
None Credit card
20% 16%
Other
1% Bank overdraft
10%
Government
loan
6%
Personal Bank loan
savings 15%
22%
Buy-now-pay- Equity capital
later raising
7% 3%
Percentage of Small Businesses
----- End of picture text -----

Source: Sensis Business Index, September to November, 2020

A significant proportion of bank lending to small businesses is secured, particularly by real estate, which can include residential property belonging to owners or directors, or commercial property.

13 Sensis Business Index, September to November, 2020

Butn Limited | Prospectus

Market Report

In December 2020, 48% of outstanding business financing to small businesses was residentiallysecured.[14] Based on research by the Reserve Bank of Australia ( RBA ), business owners are concerned with the collateral and personal guarantees they need to provide to obtain sufficient finance, and they find the process to obtain finance from banks lengthy and onerous.[15]

The main source of debt funding to SMEs is through the major banks that typically offer a range of SME lending products, including in some cases (typically to larger SMEs), invoice finance. A number of FinTechs have been launched in recent years that offer SME lending products, typically through an online platform, based either on balance sheet lending or peer-to-peer funding sources. Some non-bank specialists also offer specific funding types such as equipment finance or debtor finance.

A summary of the main debt funding sources available to SMEs is given below.

Table 1 : SME funding sources, 2021

Type	Pros		Cons
Credit card	Unsecured		Credit limit may be restricted
	Can offer interest-free periods		High interest on balances not paid
	May offer reward points or		in full
	other benefits		May not be usable for some
			business expenses e.g. salaries,
			rent
Overdraft	Easy to use		Higher interest than other funding
	Linked to existing business		sources
	account		Application process may	be
			onerous and lengthy
Term loan/line of	Lower rate of interest than		Generally, needs to be secured
credit	credit card or overdraft		against property
			Application process may	be
			onerous and lengthy
Equipment finance	Relatively low interest rate		Limited application only to specific
	Generally, does not	require	business use cases
	property security		Funding limited to effective life of
			equipment
			Secured against equipment
Debtor finance	Once approved, funds	can be	Generally, only available	to
(including invoice	accessed quickly		invoice-based businesses	in
finance)	Property security	and/or	specific sectors
	personal guarantee may be
	required
	May support the SME in AR
	managementprocess

Source: Frost & Sullivan, the Invoice Finance Market, 2021

2.5.2 Trends in SME lending

Whilst data on the value of lending to SMEs over time is not available, this can be inferred from data on business lending by facility size, with facilities of up to $2 million largely provided to SMEs. Using these parameters, between 2010 and 2019 the value of lending to SMEs increased by 39%, compared to an increase of 58% for lending to larger businesses. By September 2019, lending

14 RBA, D14 Lending to Business, Business Finance Outstanding by Business Size and Interest Rate Type 15 RBA, Access to Small Business Finance, 2018

02. Industry overview

Market Report

to SMEs accounted for 28% of all business lending, down from 36% in 2011 (more recent data is not available).[16] Following developments such as the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (Hayne Commission), major banks have tightened lending requirements, making it more difficult for SMEs to access bank funding. Regulatory capital requirements have tended to make banks focus on residential property loans, and in their business lending portfolio on loans to larger businesses.

Figure 5 : Bank lending to businesses by facility size, 2010 to 2019

==> picture [329 x 157] intentionally omitted <==

----- Start of picture text -----

800,000
700,000
600,000
500,000
400,000
Over $2 million
300,000
200,000 Up to $2 million
100,000
-
$ millions
Mar-2010 Nov-2010 Jul-2011 Mar-2012 Nov-2012 Jul-2013 Mar-2014 Nov-2014 Jul-2015 Mar-2016 Nov-2016 Jul-2017 Mar-2018 Nov-2018 Jul-2019
----- End of picture text -----

Source: Reserve Bank of Australia (RBA), d7.3, Bank Lending to Business – Total Credit Outstanding by Size and Sector. More recent data is not available.

Research by Sensis indicates that around one-quarter of SMEs reported that in November 2020 it was harder to obtain finance than two months earlier, and only 16% felt it was easier. Of those that applied for finance in the November 2020 quarter, 29% were unsuccessful.[17]

2.5.3 Use of FinTechs by SMEs

FinTechs offer products through digital channels that may compete with the offerings of major banks and other traditional financial services companies. Products offered by FinTechs are sometimes referred to as alternative financial services ( AFS ), and these increasingly provide an alternative solution for SMEs to the major banks. Access to business lending through AFS is growing at a high rate as more participants enter the market, and as SMEs become more aware of these options. Between 2013 and 2017 business lending through AFS increased from $13 million to $745 million, a CAGR of 176%.[18]

16 RBA, D7.3, Bank Lending to Business – Total Credit Outstanding by Size and Sector

17 Sensis Business Index, September to November, 2020

18 The Third Asia Pacific Region Alternative Finance Industry Report, 2018

Butn Limited | Prospectus

Market Report

==> picture [364 x 2] intentionally omitted <==

----- Start of picture text -----

________________
----- End of picture text -----

==> picture [331 x 177] intentionally omitted <==

----- Start of picture text -----

Figure 6 : AFS business lending, Australia, 2013 to 2017
800 745
700
600
500
400
282
300
200 157
100 51
13
0
2013 2014 2015 2016 2017
$ millions
----- End of picture text -----

Source: The Third Asia Pacific Region Alternative Finance Industry Report, 2018. Converted from US$ to $ at a constant exchange rate ($1=US$0.77)

3. Invoice finance services

Invoice financing is an alternative to traditional forms of short-term finance for businesses, such as bank overdrafts, bank loans, lines-of-credit and credit cards. It offers a number of advantages over these alternatives, as described in Section 3.3.

3.1 Types of invoice finance

There are two principal types of invoice finance - factoring and discounting. The overall invoice finance process is illustrated below.

Figure 7 : Invoice finance process

Source: Frost & Sullivan, the Invoice Finance Market, 2021

02. Industry overview

Market Report

Factoring involves a company assigning invoice(s) to a financier which takes ownership over the AR as collateral for providing a cash advance, typically 80+% of the invoice value. The financier takes responsibility for collection against the invoice(s), and the role of the financier is transparent to the debtor. Once the invoice is paid, the financier provides any remaining balance of the invoice value, less any service fees, to the customer.

Factoring includes recourse and non-recourse factoring. With recourse factoring, the customer has to “buy back” any invoices that the financier is unable to collect, meaning the customer rather than the debtor financier is ultimately responsible for the credit risk. With non-recourse factoring, the financier takes the risk of non-payment, although this may be limited to specific situations (e.g. where the debtor has declared bankruptcy).

Discounting works in a similar way, except that the role of the financier is not transparent to the debtor, as the company manages the collection process. Discounting is most appropriate for organisations which have the capability to manage their own AR process. As the financier is less involved in the servicing process, financier fees for discounting are lower than for factoring.

Globally, factoring is the most common form of invoice finance, accounting for an estimated 64% of industry turnover in 2019, with discounting at 22% (the balance being collections and reverse factoring).[19] The main features of factoring and discounting are summarised below.

Table 2 : Features of factoring and discounting

	Factoring	Discounting
	Assignment is transparent to debtor	Assignment is not transparent to debtor
	Invoice financier manages collection	Company manages collection
	Service fees higher	Service fees lower

Source: Frost & Sullivan, the Invoice Finance Market, 2021

Where either factoring or discounting is used, the invoice provides the security to the financier. However, in some cases property security or personal guarantees may be required. The financier may assume the credit risk (i.e. the risk of the invoice not being paid) in the case of non-recourse financing, with the service fees charged to the customer depending on the customer's individual risk assessment. Invoice finance may be provided on a “whole of ledger” or “spot” basis (i.e. either all invoices or only selected invoice(s) may be financed). Income for invoice financiers involves either, or a combination of, service/management fees and interest charged on funds drawn down.

Invoice finance can involve both domestic (i.e. where the customer and debtor are in the same country) and export (i.e. where the debtor is in a different country). Domestic invoice finance is the largest segment (81% of the global invoice finance market in 2019).[20] This is a result of the difficulty for financiers to assess credit risk for international transactions, and competition from export credit guarantee services provided by governments.

19 FCI annual review, 2020 20 Ibid

Butn Limited | Prospectus

Market Report

An emerging business model in the invoice finance industry is supplier finance (or reverse factoring) in which a financier funds early payment of invoices to suppliers on behalf of a customer in return for a fee from the supplier.

3.3 Advantages of invoice finance

From the customer’s perspective, invoice finance provides an alternative to other short-term forms of funding, which can include bank overdrafts, bank loans, use of credit cards, and business loans from business owners, friends, or family. In comparison with these alternatives, invoice finance offers a number of advantages to the business;

Speed – once a customer has been assessed and approved by a financier, the process for disbursement of funds is generally rapid, with customers often able to receive cash within 24 hours of application;
Security – with invoice finance, the AR provides the primary security to the financier. This makes it an appropriate funding option in situations where SME owners are unable or unwilling to pledge property as security. However, property or personal guarantees may be required from time to time;
Flexibility – invoice finance is generally more flexible than other forms of financing, for example without loan covenants that are a feature of bank lending. As businesses grow, they are also able to increase access to invoice finance by virtue of the increased size of their AR ledger without the need to apply for a facility increase. Hence the amount of funding accessed can easily be adjusted by the SME;
Improved focus – use of invoice finance can free SME business managers from activities related to AR collection, enabling them to focus on core business activities; and
Availability – many businesses may fall outside the lending criteria for banks or other mainstream lenders, for example by virtue of inadequate trading history or poor cash flow. Invoice financiers may be more willing to service these businesses, assessing the combined risk of both the debtor and the customer.

4. Invoice Finance Market

4.1 Market Size and Growth

4.1.1 Total SME finance

Invoice finance represents a relatively under-penetrated market within the broader business finance market. As at September 2020, total outstanding business loans to non-financial corporations totalled $941 billion.[21] Whist data specifically on business finance by size of company is not available, as described in Section 2.5.2, bank loans to businesses of up to $2 million totalled $283 billion in September 2019.[22] This total excludes other finance sources such as use of credit cards, with $59 billion transacted on commercial credit and charge cards in 2020.[23] Equipment finance is also not included, with around $40 billion financed in 2018-19.[24] The total business finance market in Australia therefore exceeds $1,000 billion (including loans, credit card transactions and equipment finance), with over $300 billion estimated to be specifically derived from SME finance.

21 RBA, E1, Household and Business Balance Sheets

22 RBA, D7.3, Bank Lending to Business – Total Credit Outstanding by Size and Sector

23 RBA, C1.2 Credit and Charge Cards – Original Series – Personal and Commercial Cards 24 WLY-2019-Australia

02. Industry overview

Market Report

4.1.2 Invoice finance

Total invoice finance turnover in Australia was $88 billion in 2019. Following the global financial crisis ( GFC ) of 2008-2009, the market experienced the exit of several major banks from the invoice finance market.[25][26] Between 2013 and 2019 the invoice finance market increased at 5.9% CAGR as specialist players have entered the market.

Figure 8 : Invoice finance market turnover, Australia, 1996 to 2019

==> picture [335 x 168] intentionally omitted <==

----- Start of picture text -----

100
90 86.2 87.6
80
69.3 68.5 71.1 70.1
70 65.1 65.9
58.7
60
50 46.0
40
30
20
10 3.9
0
1996 2006 2008 2010 2013 2014 2015 2016 2017 2018 2019
$ billions
----- End of picture text -----

Sources: Debtor and Invoice Finance Association of Australia and NZ (DIFA); FCI annual review, 2020, converted from € at average exchange rate for year

In 2019, the global invoice finance market turnover was estimated at €2,917 billion ($4,545 billion), giving Australia a 1.8% share of the global total, slightly ahead of Australia’s share of global GDP of around 1%.[27][28] Globally, the invoice finance market has grown at 5.5% CAGR between 2013 and 2019, with growth in Australia over the same period slightly higher at 5.9% CAGR.

4.1.3 Market drivers

A number of factors are acting to stimulate the invoice finance market in Australia:

Growth in SME sales – growth in total sales by SMEs provide an impetus to growth of invoice finance, as it offers an increased ledger of AR against which invoice finance can be offered. Over the period of 2016 to 2018, sales and service income for SMEs increased by 9.4%.[29] Improved cash flow, as enabled by invoice finance, can support SMEs to grow sales, with around 20% of SMEs reporting that they are unable to grow their business or take on more work as a result of poor cash flow.[30]

25 Australian Financial Review, accessed from https://www.afr.com/companies/financial-services/scotpac-maydominate-debt-factoring-if-cml-bid-succeeds-rival-20200106-p53p91

26 Australian Financial Review, accessed from https://www.afr.com/street-talk/peter-gammell-backed-octet-takesboq-s-debtor-finance-arm-20190901-p52mtp

27 FCI annual review, 2020. Converted to $ at the exchange rate as at 29 July 2020 28 IMF, World Economic Outlook, April 2020, GDP, current prices, international dollars 29 ABS, 8155.0 - Australian Industry, 2017-18, table 5. SMEs includes businesses with 5-199 employees 30 The Australian Small Business and Family Enterprise Ombudsman (ASBFEO), Review of payment terms, times and practices, 2019

Butn Limited | Prospectus

Market Report

Increased awareness of invoice finance – awareness of invoice finance among SMEs can often be quite low, with further potential for growth based on raising awareness. Globally, only 22% of SMEs have a high awareness of invoice finance.[31] At an individual country level, penetration of invoice finance can differ markedly. Although penetration of invoice finance in Australia is in line with the global average of 4.05%, Australia significantly lags several peer countries, suggesting further growth potential (penetration is measured as total invoice finance turnover/GDP).[32]

Figure 9 : Invoice finance penetration by country, 2019

==> picture [301 x 159] intentionally omitted <==

----- Start of picture text -----

16.0%
13.8%
14.0% 12.9%
12.5%
12.0%
10.0%
7.5%
8.0%
6.0% 4.8%
4.0%
2.0%
0.0%
Australia Germany UK Italy France
Percentage of GDP
Invoice Finance Turnover as
----- End of picture text -----

Sources: FCI annual review, 2020; IMF, World Economic Outlook, April 2020, GDP, current prices, international dollars. Invoice finance value converted to US$ at exchange rate as at 1/3/21

In addition, the proportion of SMEs that are looking to access non-bank funding sources is increasing, with many planning to borrow using a non-bank lender to fund growth, reaching 27% of SMEs in November 2020.[33]

Increased availability of alternative financing – the availability of alternative financing to major banks is being driven by developments in technology, making it easier for SMEs to access finance, as well as through government policies such as the Australian Business Securitisation Fund ( ABSF ), established in 2019, which will provide significant additional funding to smaller banks and non-bank lenders to on-lend to small businesses on more competitive terms.[34]

4.2 Competitive environment

4.2.1 Industry participants

Industry participants in SME finance can be segmented into banks, non-bank specialists such as invoice finance and equipment finance providers, and FinTechs offering technology-based platforms for SME finance, which can involve a range of financing models. Some of the main players in SME finance are listed below.

31 FCI annual review, 2020 32 Ibid 33 Scottish Pacific, SME Growth Index, April 2020 34 The Treasury, accessed from https://treasury.gov.au/small-business/absf

02. Industry overview

Market Report

==> picture [361 x 1] intentionally omitted <==

Table 3 : Main SME finance providers, 2021

Banks	Invoice Finance	FinTechs	Equipment Finance
	Specialists		Specialists
ANZ	Butn	Butn	Latitude Financial
CBA	Scottish Pacific	Prospa	Flexigroup
NAB	CML Group	Moula	Eclipx Group
Westpac	Octet	Timelio
Bank of Queensland		Waddle
Bendigo & Adelaide
Bank

Source: Frost & Sullivan, the Invoice Finance Market, 2021. List is not complete

4.2.2 Invoice finance participants

Historically, invoice financing has been a very manual process with industry participants having to deploy significant human resources to both acquiring customers and manual administration of factoring transactions. Accordingly, deriving economies of scale has been a challenge, with industry participants typically focused on the provision of factoring finance facilities on a wholeof-ledger basis (rather than single invoice financing) to customers with sizable AR ledgers.

Several major banks including NAB,[35] Westpac,[36] Bendigo Bank,[37] and HSBC[38] offer invoice finance services, primarily discounting, to their business banking customers.

Unlike banks, specialist invoice financiers derive a significant proportion of their revenue from factoring. The largest specialist invoice finance providers are Scottish Pacific and CML Group. Whilst these providers do some single invoice financing, each primarily focuses on the provision of factoring finance facilities on a whole-of-ledger basis to businesses with significant AR balances.

Smaller invoice finance participants include AR Cash Flow, Assetsecure, Moneytech, and Key Factors.

Supply chain finance specialist Octet entered the invoice finance sector through the acquisition of Bank of Queensland’s debtor and invoice finance business in 2019.[39]

The invoice finance sector has recently attracted entry from FinTechs that leverage technology to replace various aspects of the factoring process, thereby reducing the costs of serving customers. This enables customers to be addressed that have not to date been viable for most industry participants to service through traditional channels. In addition to Butn, FinTechs

35 NAB, accessed from https://www.nab.com.au/business/loans-and-finance/trade-and-invoice-finance/nab-invoicefinance 36 Westpac, accessed from https://www.westpac.com.au/business-banking/winfinance-info/ 37 Bendigo Bank, accessed from https://www.bendigobank.com.au/business/loans-and-finance/debtor-finance/ 38 HSBC, accessed from https://www.business.hsbc.com.au/en-au/investments/productfamily/receivables-finance 39 AFR, accessed from https://www.afr.com/street-talk/peter-gammell-backed-octet-takes-boq-s-debtor-finance-arm20190901-p52mtp

Butn Limited | Prospectus

Market Report

operating in the invoice finance space include TIM Finance, Skippr (acquired by CML in 2020), Waddle and Timelio.

5. Conclusion

The SME sector is a key part of the Australian economy, comprising over 870,000 employing businesses. Managing cashflow is critical to SMEs, representing the leading cause of business failures. At the same time bank lending is tightening, accelerating the growth opportunity for non-bank providers in the estimated $300 billion SME finance market.

Traditionally, SMEs have relied on bank overdrafts, bank loans, credit cards and loans from owners, friends and family to fund business requirements. However, use of invoice finance is growing given the advantages it can offer, including:

Speed;
Flexibility; and
Lower security requirements.

Additionally, invoice finance may be an option for SMEs otherwise unable to access alternative funding sources.

The Australian invoice finance market has grown significantly, reaching $88 billion in 2019.[40] Despite this rapid growth, invoice finance penetration still remains relatively low when compared to other funding options and similar peer countries. An increasing awareness of invoice financing and a greater shift towards non-bank funding options suggest the potential for significant future growth.

FinTechs such as Butn are able to deploy technology to automate much of the invoice financing process and can profitably target smaller customers, where previously processing costs may have made these SMEs unviable to service. Accordingly, invoice financing has the potential to attract a substantially larger share of the future SME funding mix.

Disclosure

This is an independent report prepared by Frost & Sullivan. Save for the preparation of this report and services rendered in connection with this report for which normal professional fees will be received, Frost & Sullivan has no interest in Butn Limited and no interest in the outcome of the IPO. Payment of these fees to Frost & Sullivan is not contingent on the outcome of the IPO. Frost & Sullivan has not and will not receive any other benefits (including any commissions) and there are no factors which may reasonably be assumed to have influenced the contents of this report nor which may be assumed to have provided bias or influence. Frost & Sullivan consents to the inclusion of this report in the Prospectus in the form and context in which it is included. As at the date of this report, this consent has not been withdrawn. Frost & Sullivan does not hold a

40 Debtor and Invoice Finance Association of Australia and NZ (DIFA); FCI annual review, 2020, converted from € at average exchange rate for year

02. Industry overview

Market Report

________________ dealer’s license or Financial Services License. This report does not constitute advice in respect of the IPO.

Butn Limited | Prospectus

==> picture [392 x 393] intentionally omitted <==

----- Start of picture text -----

03
Company
overview
----- End of picture text -----

03. Company overview

3.1 Background to Butn

Vision: Your money, today. Purpose: Clever business cashflow funding solutions at the click of a ‘Butn’. y Quick, one-time registration;

y Focus on business transactional funding (individual transactions);

y Leverage your customers’ credit; and

y For a small, fixed fee, Butn helps drive your business.

Butn is a founder-led Australian B2B funder innovating the way SMEs fund and grow their businesses.

Butn focuses on funding SME businesses through their working capital constraints by financing individual transactions, leveraging the end debtor’s credit. This approach has resonated with SMEs as an efficient way to access capital.

Starting as a small business invoice financier, the Company, led by its Co-Founders and then sole shareholders, Walter Rapoport and Rael Ross, amalgamated and consolidated four factoring businesses to successfully grow and evolve into Butn.

Over the past five years, Butn has grown rapidly, funding originations with an aggregate value of over $500 million. For FY20, there was a 58% increase in origination growth to $166 million, and 47% revenue growth to $4.7 million. Origination growth has continued in FY21.

Figure 3.1: FY20 key performance metrics of the business

==> picture [467 x 110] intentionally omitted <==

----- Start of picture text -----

$166m $4.7m $2.8m 0.03%
Originations Revenue EBITDA Cumulative
(up 58% on FY19) (up 47% on FY19) (up 78% on FY19) write-offs
(last 5 years)
----- End of picture text -----

The transactional funding approach benefits from being comprised of a high number of low amount, fast-turning receivables (turned over on average six times per year) often with large and/or rated corporates resulting in negligible historical non recoverable write offs (0.03% of cumulative originations over the past five years). Individual financed transaction amounts are small relative to Butn’s whole receivables book, and Butn’s fast-turning receivables book provides a strong differential between the fee Butn charges to its customers and its funding costs. The business model is also people light, providing strong operating leverage as the receivables book scales, including historical EBITDA positive results.

Over the past two years, Butn has developed its proprietary FinTech solution – the Butn FinTech Solution – digitising and automating customer on-boarding, credit and risk assessment, funding and collections processes, thereby transforming a previously manual and lengthy process that could take hours or days, into an automated one that can be completed in minutes.

Butn Limited | Prospectus

Built to integrate into the digital platforms of third parties including industry CRMs, marketplaces and business aggregators (each a Platform Partner ), the Butn FinTech Solution allows for mass distribution of Butn’s product suite to businesses in their known, trusted environments where they are already transacting. As an early mover, Butn is establishing strategic Platform Partnerships in the relatively underserved B2B alternative funding space.

In December 2020, the Group went live with its FinTech solution and commenced transacting with a number of Platform Partners across a range of industries, demonstrating the future growth potential for this distribution channel. The Group has already signed up several Platform Partners including MYOB Australia which (via its related body corporate, MYOB Invest Co) also made a $5 million strategic investment in Butn and which has committed to invest a further $6.5 million under the Offer to hold 19.9% in Butn on Completion of the Offer. The growing number of Platform Partners enables Butn to access hundreds of thousands of potential customers with low customer acquisition costs.

Over the past 12 months, Butn has made several senior management appointments including a Chief Financial Officer, Chief Operating Officer, Chief Technology Officer and Chief Information Officer. In addition, a formal Board of Directors was appointed in September 2020 with a majority of independent, strongly credentialed directors (please see Section 6 of this Prospectus for further details on Butn’s Board and management).

Butn is principally funded through an existing corporate bond structure (see Section 10.5(a) for further details). In addition, Butn successfully raised $12.5 million in FY21 through a pre-IPO Convertible Note offer ($7.5 million from institutional and wholesale investors and $5.0 million from MYOB Invest Co, a related body corporate of MYOB Australia). Butn intends to use the majority of the funds from this Offer to grow Butn’s receivables book and facilitate the rapid roll out of the Butn FinTech Solution to Platform Partners to drive business growth.

Figure 3.2: snapshot History of Butn

==> picture [471 x 249] intentionally omitted <==

----- Start of picture text -----

Jun 21
$20 million
IPO listing
on ASX to fund
Nov 20 next phase
2018 Upsized and of growth
oversubscribed
Conceptualised and
commenced Butn $7.5 million Pre IPO
fintech solution with institutional
architecture and cornerstone support Feb 21
development Platform partner
May 20
Commenced pipeline rapidly
2015 leadership hires growing
Purchase of (COO, CFO, CTO
Bendigo & Adelaide & CIO) taking place Jan 21
Bank automotive over 12 months $5.0 million Pre IPO
factoring book Nov 2018 Sep 20 stragetic investment &
Corporate bond 1 Butn Limited multi-year partnership
secured incorporated agreement with
MYOB Australia
2015 Jul-Nov 2019 Highly credentialed
Walter Rapoport Corporate bond 2 and majority Dec 20
and Rael Ross secured independent Board Initial Platform
come together appointed Partner transactions
as founders commenced
Pre 2020 2020 2021
----- End of picture text -----

03. Company overview

3.2 Business model

Butn earns revenue by charging a fixed funding fee on each transaction funded. Historically the funding fee for each transaction has ranged between 2% and 5% of the total amount funded. The funding fee is determined by a combination of factors which include the credit of the customer and debtor, the terms of the transaction, the industry sector and the specific funding product used.

The key benefits of Butn’s transaction funding model are:

(a) Butn’s fast-turning receivables book (on average six times per year) provides a strong differential between the Butn fee charged and its funding costs. As the receivables book continues to grow, Butn will seek to lower its cost of capital, increasing the future differential;
(b) with strong growth in its receivables book, Butn has diversified its customer base across a wide range of industry sectors; and
(c) individual financed transaction amounts are small relative to the whole receivables book, providing further diversification.

Figure 3.3: Business Performance last three years

Total Originations

==> picture [483 x 394] intentionally omitted <==

----- Start of picture text -----

166.6m
58%
12% 105.4m
93.9m
FY2018 FY2019 FY2020
Revenue
4.7m
47%
3.2m
42%
2.3m
FY2018 FY2019 FY2020
EBITDA
2.8m
78%
45% 1.5m
1.1m
FY2018 FY2019 FY2020
----- End of picture text -----

Butn Limited | Prospectus

Figure 3.4: outline of the Butn business model

==> picture [52 x 8] intentionally omitted <==

----- Start of picture text -----

Customers
----- End of picture text -----

==> picture [383 x 232] intentionally omitted <==

----- Start of picture text -----

…to access
thousands of
Butn integrates SMEs that require
with Platform Platform transaction
Partners… Partners funding
CRMs,
marketplaces
& business
aggregators
Butn earns revenue by
charging a funding fee on Butn provides
each transaction funded transaction funding by
(average 2%-5%) advancing funds due
Invoice issued
by customer
to Debtor
----- End of picture text -----

Butn’s business model is people light, providing strong operating leverage as its receivables book scales. Following a transitional period related to becoming a listed entity, with added costs and compliance structures, Butn expects operating costs as a percentage of revenue to continue to fall.

3.3 Business strengths

==> picture [72 x 295] intentionally omitted <==

Proven performer

y Butn has funded over $500 million of originations in the last five years
y History of growth with FY20 originations +58% reaching $166 million and FY20 Revenue +47% reaching $4.7 million
y EBITDA positive last three years, reaching $2.8 million for FY20

sizeable market opportunity

y SME funding in Australia is estimated to exceed $300 billion

y Banks are tightening lending requirements, opening up alternative funding opportunities

y Only 1% of SMEs currently access business transaction funding
y B2B funding is relatively uncrowded, with Butn having an early mover advantage

Demonstrated credit and risk management

y Founder led, with deep industry knowledge
y Historical non-recoverable write offs of under 0.03% of cumulative originations over the past 5 years
y Senior management and highly credentialed Board appointed in the past 12 months formalising governance and corporate processes

03. Company overview

==> picture [72 x 165] intentionally omitted <==

Growth Platform

y Recently launched Butn FinTech Solution to leverage off and rapidly scale with Platform Partners
y Several Platform Partners already on board – strong and growing pipeline of potential additional future Platform Partners
y MYOB Australia with over 1 million business software customers has made a strategic investment and signed a multi-year partnership
y Fast turning book (on average six times per year) with funding fee of 2-5% per turn
y Opportunity to lower cost of funds and expand margins over time
y Efficient cost base, providing strong operating leverage with scale

3.4 Butn Business

(a) Key features of Butn’s Business

(i) transaction‑by‑transaction approach

Butn has built its business on a differentiated approach to other business funders. Typically, funders require SMEs to commit to minimum volumes (e.g. a “whole of book” approach) or minimum monthly facility fees as a prerequisite to financing. Butn’s approach is to provide finance to its customers on a transaction-by-transaction basis for a fixed fee per transaction with maximum flexibility. Butn customers are not required to transact minimum volumes, nor pay a facility fee. They can utilise Butn regularly or as a one-off. Each transaction is assessed on its own merits, with particular reference to both the customer and end debtor credit.

The transaction-by-transaction approach has proven to be attractive to SMEs and larger businesses who demand flexibility in their funding arrangements.

(ii) Comprehensive product suite

Butn’s funding suite of products assists businesses in accelerating the availability of working capital and overcoming their cashflow pressures. To date, Butn has provided the core offerings described in Figure 3.5 below:

Butn Limited | Prospectus

Figure 3.5: Butn product overview (industry segmented)

				General	General
				business	business	Supply
	Direct		Third	(single	(whole book	chain	Building	Real
Products	insurance	Commercial	party	transaction)	funding)	finance	insurance	Estate
typical	Smash repairs	Smash repairs	Smash repairs	Sector agnostic	Sector agnostic	Sector agnostic	Building	Real estate
end user							insurance claims	agency
typical obligor	Insurance	Sector agnostic	Insurance	Sector agnostic	Sector agnostic	Sector agnostic	Insurance	Real Estate
	companies		companies				companies
Description	Standard	Standard	Standard	Standard	Standard	Payment to local	Standard	Early settlement
	factoring	factoring	factoring	factoring of single	factoring of	and foreign	factoring	of Real Estate
				or selective client	clients’ whole	suppliers of		agent
				invoices	debtors book	goods/services		commissions
Can fund	Up to 100%	Up to 100%	Up to 100%	Up to 100%	Up to 100%	100%	Up to 100%	Up to 100%
	of invoice value	of invoice value	of invoice value	of invoice value	of invoice value	of invoice value	of invoice value	of invoice value
	(less fee)	(less fee)	(less fee)	(less fee)	(less fee)	(fee added)	(less fee)	(less fee)
example	y Panel beater	y A panel beater	y Panel beater	y Client sells goods	y Manufacturer	y Client needs	y Construction	y Agent sells
	receives approval	receives approval	receives approval	to customer	sells goods to	funding to pay	company repairs	property and
	from insurance	from a	from insurance	on terms but	multiple retailers/	foreign supplier	damage relating	will receive
	company to	commercial	company to	requires short	distributors.	for goods. Butn	to claims	commission
	repair vehicle. y Sends invoice to Butn for factoring. y Butn pays factored amount directly to panel beater. y Insurer pays Butn value of invoice directly.	company to repair vehicle. y Sends invoice to Butn for factoring. y Butn pays factored amount directly to panel beater. y Commercial company pays Butn value of invoice directly.	repair vehicle for a third party claim. y Sends invoice to Butn for factoring. y Butn pays factored amount directly to Panel beater. y Insurer pays Butn value of invoice directly.	term cash flow. y Sends invoice to Butn for factoring. y Butn pays factored amount directly to client. y Customer pays Butn value of invoice directly.	y As invoices are raised they are sent to Butn for factoring in batches. y All obligors pay Butn directly.	pays foreign supplier on the back of a purchase order to ultimate obligor. y Once goods land, they are delivered to the client and proof of delivery is sent to Butn. y Butn factors the invoice and utilises proceeds to settle the	submitted to an insurance company. y Once approved by the insurance company, details are sent through to Butn for factoring. y Butn pays factored amount directly to construction company.	at settlement in 60 days. y On proof of transaction Butn pays the commission (less fee). y On settlement, the commission is redirected to Butn.
						SCF (supply chain finance) transaction (Butn factors the	y Insurer pays Butn value of invoice directly.
						invoice, deducts
						the SCF debt
						owing, and pays
						the balance to
						the client).
						y Client pays Butn
						directly (the
						customer of the
						client, the obligor,
						pays the factored
						invoice directly
						to Butn).

(iii) Broadening customer base

As a result of the 2015 acquisition of Bendigo and Adelaide Bank’s automotive factoring book, the automotive industry initially represented the Group’s core segment. Since then, Butn has broadened its customer base, targeting businesses across multiple industries, including fast moving consumer goods, food delivery and freight.

Through its deployed proprietary FinTech solution, Butn has integrated with Platform Partners including industry CRMs, marketplaces, and business aggregators, enabling mass distribution of the Butn suite of products. Over time, as more Platform Partners are on-boarded, Butn’s reach and customer base is expected to broaden.

(iv) efficient customer acquisition

Butn has historically utilised direct channels to drive customer acquisition. Its customer base has been generated mainly through customer referrals and organic growth, with limited broker referrals.

With the launch of the Butn FinTech Solution, Platform Partners can now offer Butn’s full suite of products to their business user base at the point of transaction with their customers. This provides Butn with a low cost, highly scalable customer acquisition model without the need for large increases in its sales staff.

03. Company overview

(v) Proven credit and risk assessment procedures

Butn has internally developed credit systems, measures and risk parameters which minimise the risk of default through non-payment or fraud. Butn has experienced historical non-recoverable write offs of under 0.03% of cumulative originations over the past 5 years. Similarly, historic customer fraud within the business has been virtually non-existent. There are a number of factors that the Company believes contribute to its low bad debt and fraud related losses including:

(A) Transaction‑by‑transaction funding

Transaction-by-transaction funding results in a highly diversified receivables book. Any single transaction funded represents a small fractional exposure of the overall receivables book. Additionally, the short-term nature of B2B transactional funding means that most receivables are settled in under 60 days.

(B) Credit and risk assessments

Butn conducts extensive and rigorous risk and credit assessments at the time of account establishment and then prior to providing funding for each transaction, assessing both the customer and the end debtor. Credit and risk assessments typically incorporate:

y Know Your Customer (‘KYC’) checks;
y Anti-Money Laundering and Counter-Terrorism Financing (‘AML/CTF’) checks;
y Verification of the identity of the customer and its directors/owners;
y Background checks on the customer and its directors/owners;
y Credit checks on the customer, its directors/owners as well as the end debtor under the business invoice being funded; and
y Bank account verification and analysis of trading history and behaviour.

(C) Loan recovery protection and measures

Butn has a number of loss protection and recovery measures including:

y Invoice assignment – effectively making Butn the counterparty to the business invoice and entitled to collect directly from the invoiced business;
y retention monies – in many instances, Butn provides upfront funding for less than the total invoice amount, the balance being withheld as additional protection against any default or recovery shortfall;
y recourse to the customer – in the first instance Butn is repaid by the end debtor. In the event of non-payment, there are various avenues of recourse that may be available depending in the circumstances. For example, Butn can seek to recover from its customer, by effectively selling back the invoice with a cash payment, via proceeds from a subsequent factored invoice or via retention monies withheld for that customer;
y PPsr – Butn typically registers a PPSR security interest over receivables in which it has an interest, and in many cases, Butn registers an ‘all-property’ interest over all of the customer’s assets (excluding real estate);
y security recourse – in addition to obtaining a PPSR registration, Butn often retains the right to register a caveat over real estate asset(s) of the customer (or its directors/owners); and
y Insurance coverage – some invoices funded are covered by insurance.

(D) Credit insurance

Butn maintains trade credit insurance to reduce risk. As part of a customer’s credit and risk assessment, a thorough analysis is conducted with relevant credit limits established and monitored ensuring appropriate coverage, complemented by additional security where required.

(E) Maintenance and monitoring

Butn management has daily operational KPIs to continually monitor the performance of its business and products. This includes transaction volumes and values with comparisons to prior comparable periods enabling trend and variance analysis. The Butn FinTech Solution can also trigger alerts and/or automated actions around customer and end debtor events, enabling a more efficient and effective collection process.

Butn Limited | Prospectus

(vi) operations

Butn’s head office is in Melbourne, Australia from which it provides an Australia-wide service.

Butn currently has approximately 15 full-time employees across its primary business locations. In the past 12 months senior management appointments have occurred including the appointment of a Chief Financial Officer, Chief Operating Officer, Chief Technology Officer and Chief Information Officer. In addition, a formal Board of Directors was appointed in September 2020 as part of a formalisation of the Group’s governance structures as the Company transitions to a listed entity.

As the business scales, it is expected additional staff appointments will be made.

The Company currently outsources part of its information and technology function to selected Australian providers under contractual agreements with intellectual property owned by and/or assigned to Butn or its related bodies corporate. This provides the flexibility to rapidly scale while Butn continues to build its inhouse capabilities.

(vii) technology

The Company’s digital solutions are built on a scalable technology stack and software architecture using proprietary software and technologies developed and built in-house or through its selected technology partners.

The extensible nature of the Company’s technology enables efficient integration with Platform Partners, who in turn can provide funding solutions to their users.

The Butn FinTech Solution digitises Butn’s funding approach, enabled through enterprise grade infrastructure combining scalability and security.

Butn invests in ongoing research and development, following an agile, scrum methodology with a focus on its customers, continued product enhancement and overall quality control.

(viii) Intellectual property

Butn owns or has arrangements in place assigning to Butn (or its related bodies corporate) ownership of, or providing for Butn’s right to use, all intellectual property rights in its operating platform and core products, including in material developed by third parties on Butn’s behalf.

(b) Butn Fintech solution

(i) overview of the Butn Fintech solution

In 2018, the Company commenced development of the Butn FinTech Solution and launched it to customers in December 2020.

The aim was to develop a digital origination and distribution solution, drawing on the business’s core transactional funding skills and knowledge of market dynamics, to provide an automated end-to-end business transaction funding tool for SMEs. Importantly, Butn wanted to ensure its FinTech solution was easily accessible to businesses via trusted third-party platforms including industry CRMs, marketplaces and business aggregators, where business customers are regularly transacting.

The Butn FinTech Solution, with its low customer acquisition cost via integration with Platform Partners, offers the potential for mass origination and distribution of its products in the familiar and trusted environment in which a business is already routinely transacting.

Today, there are a number of Platform Partners offering Butn products to their end user base. The Butn Platform Partner pipeline is strong with additional Platform Partners in discussions, currently integrating and/or readying for deployment.

In January 2021, MYOB Australia entered into a strategic partnership with Butn, whereby MYOB Australia agreed to provide its Butn X FinTech product for customisation and deployment across MYOB Australia’s business user base (refer to Section 10.6(b) below for further details).

03. Company overview

(ii) Key features of the Butn Fintech solution

The Butn FinTech Solution is an automated B2B transactional funding tool that digitises and automates Butn’s transactional funding product suite and its processes. It enables business customers to obtain transactional funding often at the point of transaction, by following a one-time digital application and approval process utilising Butn’s internally developed credit and risk assessment measures.

The solution includes the following key features:

y automates the transactional funding process (i.e. application establishment, credit assessment and funding process) to complete in minutes what previously typically required hours or days;
y the technology is industry agnostic and integrates with the platforms of third party B2B Platform Partners to provide a full suite of funding options in the ecosystems in which SME businesses transact;
y allows SMEs to obtain funding on a transaction-by-transaction basis, without seeking the services of traditional conduits such as banks and brokers; and
y has the capability to connect Butn to thousands of SMEs via third party Platform Partners, providing for wide-scale origination and attractive operating leverage.

(c) overview of the Butn Fintech product offerings

The Butn FinTech Solution currently offers the following suite of products:

y Butn X – a business invoice factoring product. Butn provides funding to the value of up to 100% of a debtor invoice (minus the Butn fee) ahead of the due date of the invoice. Butn subsequently receives payment of the amount advanced from the debtor on the due date for payment of the invoice;
y Butn Pay – a supply chain finance product enabling businesses to ‘Buy Now, Pay Later’. Butn pays the business’s supplier’s invoice, with the business repaying Butn (including a fee) in instalments over fixed future periods;
y Butn Now – this product works in a similar way to Butn X, but applies to advance payments on commissions for real estate agents and brokers. Butn pays the customer (e.g. the agent or broker) up to 100% of the value of the commission (minus the Butn fee), and subsequently receives payment of the commission on the due date;
y Butn Corp – enables large corporates to provide factoring to their suppliers. Suppliers can receive payment upfront from Butn (less a fee) with the corporate paying Butn in accordance with its usual payment terms; and
y Butn Plus – this is a product for short-term business loan referrals. Butn does not offer business loans but refers the request to a third party provider for a referral fee.

All products have and continue to be provided under Butn’s traditional business.

table 3.6: summary of Butn Fintech solution product offerings

Products	Butn X	Butn Pay	Butn Now	Butn Corp
typical end user	Seller of goods or services	Buyer of goods or services	Real estate agent	Suppliers to large corporates
			or finance broker
Description	Factoring	Buy now pay later (BNPL)	Early settlement of real estate agent/broker commissions	Early payment to suppliers of large corporates
Can fund	Up to 100% of invoice value	Up to 100% of invoice value	Up to 100% of invoice value	Up to 100% of invoice value
	(less fee)	(fee added)	(less fee)	(less fee)
term	Up to 90 days from invoice	Repayment via direct debit	Up to 90 days	Up to 90 days
		upto 8 weeks
example	y Seller [Butn’s customer] raises invoice for $1,000 (terms	y Buyer [Butn’s customer] wishes to purchase goods for $1,000	y Agency/Agent [Butn’s customer] will receive $20,000 property	y Supplier [Butn’s customer] delivers goods/services to large
	30 days net)	y Uses Butn Pay to pay Supplier	sale commission in 60 days	corporate on 60 day terms
	y Uses Butn X to receive funds immediately y Seller receives $850 (less fee) upfront y The end debtor pays Butn	y Supplier receives $1,000 y Buyer pays Butn $125 (plus fee) weekly for 8 weeks via direct debit	y Uses Butn Now to receive the $20,000 (less fee) immediately y On settlement, the commission is redirected to Butn	y Use Butn Corp to receive up to 100% of the invoice value (less fee) immediately y On payment terms, the full invoice value is paid to Butn
	directly on trading terms
	y Butn refunds Seller $150
	retention on receipt

Butn Limited | Prospectus

3.5 Value proposition for Butn’s Fintech solution

(a) Advantages for Platform Partners

y Platform Partners can now provide their user base with a broad range of B2B funding products, a competitive advantage to rival platforms;
y the Platform Partner retains its user base within the Platform’s ecosystem, without users having to leave the platform to access or source funding; and
y Butn pays the Platform Partner a hosting fee related to transactions funded via the Platform Partner’s platform.

(b) Advantages for business users/sMes

y access to a comprehensive suite of B2B funding products often at the point of transaction;
y simple, quick and largely automated on-boarding process;
y no facility fees, monthly fees, lock-ins or minimum transaction requirements; and
y ability to improve cash flow/working capital and drive business activity at ‘ the click of a Butn ’.

(c) Advantages for Butn

y highly scalable, low customer acquisition costs without the need for a large sales force;
y leverages off the relationship between the Platform Partner and its SME user base;
y embedded in the Platform Partner’s platform, and is often available to the end customer at the point of transaction;
y largely automated transaction processing – increases operating leverage and significantly reduces processing, administration and management; and
y potentially enhances credit and risk controls by digitising and automating Butn’s long-established and proven risk and credit measures, in conjunction with extracting relevant Platform Partner identification and transaction data. Any “red flag” applications/transactions that do not pass the automatic process are held for manual review and approval.

3.6 Platform Partners – case studies

The Butn FinTech Solution is deployed by integrating with Platform Partners that typically have hundreds, or in many cases, thousands of business users, interacting and transacting on their platforms on a regular basis. Set out below is a brief overview of some of Butn’s current Platform Partners and their relationship with Butn:

(a) MYoB Australia – strategic partnership

MYOB Australia is a leading provider of online business management solutions ranging from accounting, payroll, payments, tax, practice management, CRM, job costing, inventory, and is trusted by over a million businesses across Australia and New Zealand.

In January 2021, MYOB Australia entered into a strategic partnership whereby MYOB Australia agreed to provide Butn X, one of Butn’s transactional funding FinTech products for deployment to MYOB Australia’s business user base. As set out at Section 3.4(c) above, Butn X is a business invoice factoring product offering upfront funds up to the value of 100% of a debtor invoice (minus the Butn fee).

Since January 2021, MYOB Invest Co, a related body corporate of MYOB Australia, has:

(i) invested $5 million into Butn as part of the pre-IPO Convertible Note offer; and
(ii) has committed to invest a further $6.5 million to hold 19.9% in Butn on Completion of the Offer (as described in Section 10.6(c)(ii)).

For further details of the MYOB Strategic Partnership see Section 10.6(b) and 10.6(c).

03. Company overview

(b) ofload

Ofload is a digital platform for road freight that connects shippers with a market of over 10,000 carriers in Australia. Ofload has digitalised the road freight process, automating the road freight management process from quotation and booking, to real-time tracking and fulfilment. Ofload manages the typically complex freighting process and provides carriers and shippers with access to flexible transport capacity at market prices.

Ofload utilises Butn Pay (as set out at Section 3.4(c) above) to offer carriers immediate payment of invoices on job completion. This assists carriers with their working capital constraints.

(c) eAsI Australia

EASI is a food delivery platform with more than 25,000 restaurants available across 30+ cities in seven countries. Restaurants and delivery drivers that use the EASI platform are paid on a periodic basis.

By partnering up with Butn, EASI can reduce the payment cycle for their restaurants and driver partners. EASI utilises both Butn Pay to restaurants and Butn X to drivers (as set out at Section 3.4(c) above) enabling quicker access to cash flows for EASI’s partners so they in turn can reinvest in their businesses.

3.7 regulatory framework

Butn operates within the general legal framework common to software companies in particular laws governing intellectual property, data protection, privacy and proper business practices.

Butn is subject to Anti-Money Laundering/Counter Terrorism Financing Act and must comply with the ‘Unfair Contract Terms’ regime as set out in the Australian Consumer Law and the ASIC Act.

Butn does not hold an Australian Financial Services Licence – it is exempt from the requirement to hold such a licence as it does not provide a ‘financial service’ (within the meaning of Chapter 7 of the Corporations Act). Butn’s debt factoring services involve the provision of credit to businesses only (as opposed to consumer credit) and are expressly excluded from being defined as financial products. In addition, Butn is exempt in accordance with ASIC Corporations (Factoring Arrangements) Instrument 2017/794.

Other than those regulations that are applicable to business generally, Butn is not currently subject to other specific laws or regulations.

3.8 sales and marketing

Butn generates customer leads via multiple distribution channels including:

Platform	Butn is partnering with B2B Platform Partners across industry CRMs,
Partners	marketplaces and business aggregators, providing mass origination and
	distribution of Butn’s product suite to SME businesses in a known, trusted
	environment in which they are transacting regularly.
existing	Butn has grown organically through the provision of excellent customer
Customers	service and its comprehensive product offering. This has seen, and continues
	to see, customers expanding their use of Butn services and directly referring
	additional customers to Butn.
referrals	As awareness of Butn’s products increases, Butn will seek to utilise a broader
	referral network.
Direct sales	Outbound activity from Butn’s sales team.

Butn has historically grown through its direct network and existing customer referrals.

Butn Limited | Prospectus

The Butn FinTech Solution allows for a step change in growth and scalability. Butn is partnering with B2B Platform Partners across industry CRMs, marketplaces and business aggregators, efficiently targeting hundreds of thousands of potential customers in a known, trusted environment in which they are transacting regularly. To maximise this approach, Butn’s sales, marketing and account management teams will work collaboratively with Platform Partners, providing targeted marketing and support collateral to increase Butn’s product awareness and facilitate user activity.

3.9 sources of funding

Butn was initially funded by founder’s equity and loans.

In FY19 a corporate bond for $15 million was issued in the form of Debt Notes, followed in FY20 by a second Debt Note issue in the amount of $25 million. The Debt Notes were issued to meet receivables book growth and demand for the Butn suite of products. For further details on these Debt Notes see Section 10.5(a) of this Prospectus.

In November 2020, Butn successfully raised $7.5 million in a pre-IPO Convertible Note issue to institutional and sophisticated investors. For further details of the pre-IPO Convertible Notes see Sections 4.5(d) and 7.5 of this Prospectus.

In January 2021, MYOB Invest Co invested a further $5 million on the same terms as the pre-IPO Convertible Note, as part of its strategic partnership agreement. For further details of the MYOB Strategic Partnership see Section 10.6(b) of this Prospectus.

A significant component of the funds raised from this Offer will be allocated to support origination, distribution and receivables book growth. For further details of the proposed use of funds for the Offer see Section 7.4 of this Prospectus.

Butn reviews its sources of funding on an on-going basis with a view to reducing funding costs (and enhancing margins) whilst ensuring appropriate funding headroom and flexibility.

3.10 CoVID‑19

Butn has a history of origination growth and historical non-recoverable write offs of under 0.03% of cumulative originations over the past 5 years. Butn’s origination growth continued in the 2HFY20 and 1HFY21 without material negative impacts from COVID-19 or the associated broader downturn in the economy.

The fast-turning nature of Butn’s receivables book and regular monitoring enables Butn to increase exposure to sectors positively impacted by COVID-19 and, if prudent, scale back exposures to negatively impacted industries. This has seen some segment mix changes, which in turn have more recently impacted revenue margin compared to the period immediately preceding the COVID-19 pandemic.

In response to the evolving COVID-19 situation, Butn:

y continues to monitor the receivables book and where appropriate scale back origination in negatively impacted industries;
y maintains the ability to operate the business remotely;
y conducts reviews to determine the resources, technology and capital needed to support the business through an extended economic downturn; and
y prudently increased its expected credit loss allowance in June 2020 and again in December 2020. To date Butn has not seen a spike in bad debts, and those allowances remain unused.

3.11 Business performance drivers

Butn has a number of key business performance drivers including:

y increase in transaction volume and value through current channels and Platform Partners including the strategic partnership with MYOB Australia;
y rapidly sign up and integrate new Platform Partners using its early mover advantage;
y reduce the cost of capital, expanding margins;

03. Company overview

y increase access to debt and equity to fund growth in originations;
y maintain strong credit and risk management processes for low non-recoverable write offs;
y maintain a low and efficient cost base as the business continues to scale;
y expand into overseas markets; and
y broaden the existing funding product suite.

3.12 strategic growth plan

Butn intends to rapidly scale through four key growth strategies:

(a) Platform Partner growth

Butn has a growing pipeline of prospective Platform Partners and intends to rapidly on-board new Platform Partners. Each Platform Partner has the potential to deliver large numbers of business customers and transaction volumes, and in turn, create greater awareness and growth.

(b) Build exposure and awareness

Transactional funding has relatively low awareness amongst SMEs. Marketing resources will be allocated towards market education and content creation, working collaboratively with Platform Partners to increase awareness of this funding option for each Platform Partner’s user base.

(c) Product and technology innovation

Product and technology innovation has been a driver of Butn’s historical growth and will remain core to its future growth. A focus on improving B2B funding, through new funding products and technology innovations is expected to broaden user access. An increase in funding efficiency whilst ensuring prudent deployment of funds will continue with investments in people, technology, and processes as Butn continues to scale.

(d) International expansion and acquisition

Many existing and potential Platform Partners have a global footprint. Once Butn has established itself within the Australian market, it will look to replicate and expand overseas in collaboration with Platform Partners and/or other funding providers. Butn will also remain alert to acquisition opportunities, where they are considered to be complementary to the business and progressing Butn’s strategic aims.

Figure 3.7: Butn pillars of growth

==> picture [446 x 110] intentionally omitted <==

----- Start of picture text -----

Platform Partner Product and
growth technology
innovation
Build International
exposure & expansion
awareness & acquisition
----- End of picture text -----

Butn Limited | Prospectus

04 Financial Information

04. 56 Financial Information

4.1 Introduction

The financial information of Butn contained in this Section 4 includes historical financial information for the years ended FY18, FY19 and FY20 and for the six months ended 1HFY20 and 1HFY21 (collectively the Financial Information ) as summarised in Table 4.1 below.

table 4.1: overview of Butn Financial Information

	Statutory Financial Information	Pro Forma Financial Information
Historical	Statutory Historical Financial	Pro Forma Financial Information
Financial	Information comprises the:	comprises the:
Information	y Statutory Historical Income	y Pro Forma Historical Income
	Statements for FY20, 1HFY20 and	Statements for FY18 and FY19
	1HFY21 (together the Statutory	(together the Pro Forma Historical
	Historical Income Statements);	Income Statements); and
	y Statutory Historical Cash Flows	y Pro Forma Historical Cash Flows
	for FY20, 1HFY20 and 1HFY21	for FY18 and FY19 (together the
	(together the Statutory Historical	Pro Forma Historical Cash Flows).
	Cash Flows); and	The above information has been
	y Statutory Statement of Financial	audited by BDO Audit.
	Position as at 31 December 2020 (Statutory Historical Statement of Financial Position).	y Pro Forma Statement of Financial Position as at 31 December 2020 (Pro Forma Historical Statement
	The above information for FY20	of Financial Position).
	has been audited by BDO Audit.	This information has been reviewed
	The above information for 1HFY20,	by BDO Corporate Finance.
	1HFY21 and as at 31 December 2020
	has been reviewed by BDO Audit.

Also summarised in Section 4 are:

y the basis of preparation and presentation of the Financial Information (refer to Section 4.2);
y information regarding certain non-IFRS financial measures (refer to Section 4.2(c));
y a summary of key operating and financial metrics (refer to Section 4.3(b));
y management discussion and analysis of the Historical Financial Information (refer to Section 4.5);
y the pro forma adjustments to the Statutory Historical Statement of Financial Position (refer to Section 4.5(d));
y information regarding liquidity, capital resources and indebtedness (refer to Section 4.6);
y information regarding Butn’s contractual obligations, commitments and contingent liabilities (refer to Section 4.7); and
y a summary of Butn’s proposed dividend policy (refer to Section 4.8).

The information in this Section 4 should also be read in conjunction with the risk factors set out in Section 5, Butn’s significant accounting policies as set out in Appendix A, and the other information contained in this Prospectus.

All amounts disclosed in this Section 4 and the Appendices are presented in Butn’s functional currency, Australian Dollars, unless otherwise noted, and are rounded to the nearest thousand. Some numerical tables included in this Prospectus have been subject to rounding adjustments. Any differences between totals and sums of components in tables contained in this Prospectus are due to rounding.

Butn Limited | Prospectus

4.2 Basis of preparation and presentation of Financial Information

(a) overview and preparation and presentation of the Financial Information

The Financial Information included in this Prospectus is intended to present potential investors with information to assist them in understanding the historical financial performance, cash flow and financial position of Butn.

Butn (the company seeking admission to ASX) was incorporated on 9 September 2020. Prior to becoming the holding company of the ‘Butn’ Group of companies on 9 September 2020 it did not undertake any trading activities.

On 9 September 2020, the Group undertook an internal corporate restructure whereby the shareholders in Action Funding Group Pty Ltd ( AFG ) exchanged their shares in that company for shares in Butn in a “top hat restructure”. Prior to the restructure, AFG was the parent company of the Group, however the effect of the restructure was to interpose Butn as the new legal parent of the Group. While Butn became the legal parent of the Group, this did not result in a business combination for accounting purposes with the restructure accounted for as a capital reorganisation by Butn. Each shareholder’s proportionate interest in the Group was not altered as a result of the restructure. The financial statements of Butn present a continuation of the existing Group. Assets and liabilities are recorded at their existing values in the statement of financial position of Butn. The 1HFY21 Statutory Historical Income Statements and Statutory Historical Cash Flows present a continuation of the existing Statutory Historical Income Statements and Statutory Historical Cash Flows for AFG. As Butn was only incorporated in September 2020, financial information prior to this date is the consolidated financial information of AFG.

The Butn Group contains AFG, which from 1 July 2019, held various subsidiaries that together operate the business of the Group. AFG is the entity that has historically prepared consolidated financial statements for the Group.

As discussed in Section 4.2(b), the Statutory Historical Financial Information and Pro Forma Financial Information for FY18, FY19, and FY20 contained in Sections 4.3 and 4.4 has been derived from the consolidated financial statements of AFG, and in this context, references to Butn in this Section 4 of this Prospectus are references to AFG where the context requires.

The Statutory Financial Information contained in this Section 4 has been prepared in accordance with the recognition and measurement principles of Australian Accounting Standards ( AAs ) which are consistent with the International Financial Reporting Standards ( IFrs ) issued by the International Accounting Standards Board. The Financial Information and accompanying commentary presented in this Section has also been disclosed with consideration to regulatory guidance issued by ASIC.

The Pro Forma Historical Income Statements (contained in Section 4.3(a)) and Pro Forma Historical Cash Flow Statements (contained in Section 4.4) have been extracted from the special purpose financial statements of AFG. These special purpose financial statements have been prepared in accordance with the recognition and measurement requirements specified by AAS and interpretations issued by the Australian Accounting Standards Board ( AAsB ). The special purpose financial statements contain certain pro forma adjustments, which have been prepared in a manner consistent with AAS, adopting the pro forma assumption that the current structure of the Group (with Butn as the head company), was in place as at 1 July 2017. The Pro Forma Financial Information has been prepared solely for inclusion in this Prospectus and does not reflect the actual financial results and cash flows of Butn for the periods indicated. Butn believes that it provides useful information as it permits investors to examine what it considers to be the underlying financial performance and cash flows of the business presented on a consistent basis.

The Financial Information is presented in an abbreviated form insofar as it does not include all the presentation and disclosures, statements or comparative information required by IFRS or AIFRS applicable to annual financial reports prepared in accordance with the Corporations Act.

In addition to the Financial Information, Section 4.2(c) describes certain non-IFRS financial measures that are used to manage and report on Butn’s business that are not defined under or recognised by the AAS or IFRS.

The Directors are responsible for the preparation and presentation of the Financial Information.

04. Financial Information

The Statutory Historical Financial Information, Pro Forma Historical Income Statements and Pro Forma Historical Cash Flows (as set out in Sections 4.3(a) and 4.4) have been audited or reviewed by BDO Audit, in accordance with the AAS.

The Pro Forma Historical Statement of Financial Position (as set out in Section 4.5(d)) has been reviewed by BDO Corporate Finance, in accordance with the Australian Standard on Assurance Engagements ASAE 3450 Assurance Engagements involving Corporate Fundraisings and/or Prospective Financial Information, as stated in its Independent Limited Assurance Report. Investors should note the scope and limitations of the Independent Limited Assurance Report (contained in Section 8).

This Prospectus does not contain prospective financial information. Upon considering the requirements of ASIC Regulatory Guide 170, the Directors concluded that any prospective financial information would contain a broad range of potential outcomes and therefore its inclusion could be misleading.

Investors should note that past results are not a guarantee of future performance.

Butn will incur additional ongoing costs such as ASX listing fees, incremental costs for CEO and CFO salaries (including share-based payments), Director’s fees (including share-based payments) and other costs associated with being a listed company. These have not been included as pro forma adjustments within the Pro Forma Financial Information and are estimated by the Directors to be an incremental $1.6 million per annum to the costs incurred in FY20.

(b) Preparation of Historical Financial Information

As referred to in Section 4.2(a) the Statutory Historical Financial Information has been derived from the consolidated financial statements of the Group for FY20 and 1HFY21 (which includes comparative information for 1HFY20). The consolidated financial statements of the Group for FY20 were audited by BDO Audit in accordance with the AAS. BDO Audit has issued an unqualified audit opinion on the FY20 financial statements. The consolidated financial statements of the Group for 1HFY21 and the comparative 1HFY20 period were reviewed by BDO Audit in accordance with Auditing Standard on Review Engagements ASRE 2410. BDO Audit has issued an unqualified review conclusion on the 1HFY21 financial statements, which includes an unqualified review conclusion on the Statutory Historical Financial Information for 1HFY20.

Section 4.2(a) describes the internal restructure to establish Butn as the holding company of the Butn Group prior to the Prospectus Date. The Directors elected to account for the restructure as a capital reorganisation rather than as a business combination. As a result, the consolidated financial statements of Butn will present a continuation of the existing Group and the assets and liabilities will be recorded at their existing values in the Group’s financial statements. In adopting this approach, the Directors note that there is an alternative view that such a restructure could be accounted for as a business combination that follows the legal structure of Butn being the acquirer, which would have consequential impacts on the income statements and statement of financial position.

The Butn Group includes AFG, which held ownership of various subsidiaries that together operated the business of the Group from 1 July 2019 until 18 September 2020. In preparing the FY19 financial statements (which include comparative financial information for FY18), the Directors prepared a set of combined pro forma financial statements which combined or aggregated all the individual Group Company’s assets and liabilities as if all the entities in the Group were 100% owned by AFG from 1 July 2017 (even though they were legally owned by AFG from 1 July 2019). This aggregation does not meet the definition of a ‘group’ as defined by AASB 10 Consolidated Financial Statements. In all other respects the combined pro forma financial statements for FY19 (which contain comparatives for FY18) have been prepared in accordance with the recognition, measurement, classification and disclosure aspects of the AAS.

The consolidated financial statements for the Group for FY19 (which include comparative financial information for FY18) were audited by BDO Audit in accordance with the AAS. BDO Audit issued a qualified audit opinion on the comparative financial information for FY18, included within the FY19 financial statements. This qualification was on the basis that the corresponding figures for the year ending 30 June 2017 are unaudited.

The consolidated financial statements of the Group for FY19, FY20 and 1HFY21 will be lodged with ASX on Listing and will also be available on Butn’s website.

Butn Limited | Prospectus

The Pro Forma Historical Statement of Financial Position has been prepared solely for inclusion in this Prospectus. The Pro Forma Historical Statement of Financial Position has been derived from the Statutory Historical Financial Information adjusted for the effects of the following pro forma adjustments:

y the issuing of Convertible Notes to raise $5 million in January 2021;
y the conversion of Convertible Notes into Shares upon Completion of the Offer;
y the vesting of Options on Completion of the Offer;
y the Completion of the Offer to raise $17.7 million net of Offer costs;
y reclassification of Action Funding (Aust) Pty Ltd’s loan to AFC from current to non-current; and
y the repayment of the Related Party Loans to be funded from the net proceeds from the Offer.

(c) explanation of certain non‑IFrs and other financial measures

Butn uses certain measures to manage and report on its business that are not recognised under IFRS or the AAS. These measures are collectively referred in this Section 4 and under Regulatory Guide 230 Disclosing Non-IFRS Financial Information published by ASIC as “non-IFRS financial measures”. The principal non-IFRS financial measures that are referred to in this Prospectus are as follows:

y total originations is the gross transaction value undertaken with Butn’s customers over a defined period;
y revenue from customer s is the differential between total originations and cost of those originations being the net fee generated by Butn;
y revenue margin is revenue from customers as a percentage of total originations; and
y eBItDA is earnings before interest, tax, depreciation and amortisation expenses.

Although Butn believes that these measures provide useful information about the financial performance of the business, they should be considered as supplements to the income statement measures that have been presented in accordance with the AAS and not as a replacement for them. As these non-IFRS financial measures are not based on IFRS (or the AAS), they do not have standard definitions, and the way Butn calculates these measures may differ from similarly titled measures used by other companies. Investors and readers of this Prospectus should therefore not place undue reliance on these non-IFRS financial measures.

04. Financial Information

4.3 Historical Income statements

(a) Pro Forma Historical Income statements and statutory Historical Income statements

table 4.2 sets out Butn’s Pro Forma Historical Income statements and statutory Historical Income statements for FY18, FY19 and FY20.

==> picture [485 x 50] intentionally omitted <==

----- Start of picture text -----

Pro forma Pro forma Statutory
Audited Audited Audited
$’000s FY18 FY19 FY20
----- End of picture text -----

revenue	2,275	3,231	4,737
expenses
Employment expense	(679)	(750)	(596)
Other expenses	(473)	(923)	(1,358)
Occupancy	(56)	(9)	(24)
eBItDA	1,067	1,549	2,759
Interest revenue	0	12	16
Finance costs	(950)	(1,322)	(2,730)
Depreciation and amortisation expense	(241)	(372)	(477)
Loss before income tax (expense)/benefit	(124)	(134)	(431)
Income tax (expense)/benefit	(24)	(53)	72
Loss after income tax (expense)/benefit	(147)	(186)	(359)

table 4.3 sets out Butn’s statutory Historical Income statements for 1HFY20 and 1HFY21.

==> picture [485 x 49] intentionally omitted <==

----- Start of picture text -----

Statutory Statutory
Reviewed Reviewed
$’000s 1HFY20 1HFY21
----- End of picture text -----

revenue	2,397	2,413
expenses
Employment expense	(471)	(675)
Other expenses	(903)	(1,125)
Occupancy	(8)	(36)
eBItDA	1,016	577
Interest revenue	11	4
Finance costs	(1,073)	(1,861)
Depreciation and amortisation expense	(174)	(258)
Loss before income tax (expense)/benefit	(220)	(1,539)
Income tax (expense)/benefit	(12)	360
Loss after income tax (expense)/benefit	(232)	(1,179)

Butn Limited | Prospectus

(b) Key operating metrics

table 4.4 summarises Butn’s key historical operating metrics for FY18, FY19 and FY20.

==> picture [485 x 39] intentionally omitted <==

----- Start of picture text -----

Pro forma Pro forma Statutory
$’000s FY18 FY19 FY20
----- End of picture text -----

Total originations	93,900	105,400	166,600
Revenue from customers	2,275	3,231	4,652
Revenue margin	2%	3%	3%
Bad debts written off	10	–	110
Bad debts written off as a percent of total originations	0.0%	0.0%	0.1%
EBITDA	1,067	1,549	2,759

table 4.5 summarises Butn’s key historical operating metrics for 1HFY20 and 1HFY21.

==> picture [485 x 38] intentionally omitted <==

----- Start of picture text -----

Statutory Statutory
$’000s 1HFY20 1HFY21
----- End of picture text -----

Total originations	72,200	98,000
Revenue from customers	2,397	2,280
Revenue margin	3%	2%
Bad debts written off	–	–
Bad debts written off as a percent of total originations	–	–
EBITDA	1,015	577

04. Financial Information

4.4 Pro Forma Historical statements of Cash Flows and statutory Historical statement of Cash Flows

table 4.6 sets out Butn’s Pro Forma Historical Cash Flows and the statutory Historical Cash Flows for FY18, FY19 and FY20.

==> picture [485 x 49] intentionally omitted <==

----- Start of picture text -----

Pro forma Pro forma Statutory
Audited Audited Audited
$’000s FY18 FY19 FY20
----- End of picture text -----

Cash flows from operating activities
Receipts from customer receivables	94,499	98,715	154,413
Payments to customers	(91,398)	(100,715)	(164,519)
Payments to suppliers and employees	(1,694)	(1,635)	(1,514)
Interest paid	(247)	(909)	(2,211)
Interest received	0	12	16
Other receipts	–	–	59
Taxes paid	(90)	(52)	(36)
Net cash provided by/(used in) operating activities	1,069	(4,584)	(13,792)
Cash flows from investing activities
Purchase of property and equipment	(15)	(2)	(0)
Payments for intangible assets	–	–	(1,287)
Net cash flows used in investing activities	(15)	(2)	(1,288)
Cash flows from financing activities
Proceeds from borrowings	7,558	14,250	24,646
Repayment of borrowings	(6,020)	(10,130)	(1,793)
Net cash provided by financing activities	1,537	4,120	22,853
Net increase (decrease) in cash and cash equivalents	2,592	(466)	7,773

Butn Limited | Prospectus

table 4.7 sets out Butn’s statutory Historical Cash Flows for 1HFY20 and 1HFY21.

==> picture [485 x 48] intentionally omitted <==

----- Start of picture text -----

Statutory Statutory
Reviewed Reviewed
$’000s 1HFY20 1HFY21
----- End of picture text -----

Cash flows from operating activities
Receipts from customer receivables	61,699	103,555
Payments to customers	(72,379)	(97,511)
Payments to suppliers and employees	(1,320)	(1,721)
Interest paid	(917)	(1,606)
Interest received	11	4
Taxes paid	(14)	–
Net cash provided by/(used in) operating activities	(12,920)	2,721
Cash flows from investing activities
Purchase of property and equipment	(0)	–
Payments for intangibles	(27)	(971)
Net cash flows used in investing activities	(27)	(971)
Cash flows from financing activities
Proceeds from borrowings	23,750	–
Proceeds from Convertible Notes	–	7,500
Repayment of borrowings	(128)	(207)
Transaction costs on borrowings	(149)	–
Transaction costs on Convertible Notes	–	(495)
Net cash provided by financing activities	23,473	6,798
Net increase in cash and cash equivalents	10,526	8,549

04. Financial Information

4.5 Management discussion and analysis of the Historical Financial Information

This Section 4.5 is a discussion of key factors that affected Butn’s operations and relative financial performance over FY18 to 1HFY21.

The discussion of these general factors is intended to provide a summary only and does not detail all factors that affected Butn’s historical operating and financial performance, or everything that may affect Butn’s operations and financial performance in the future.

(a) revenue

(i) revenue from customers

Revenue from customers is the differential between total originations and cost of those originations being the net fee generated by Butn over a defined period.

As Butn has only recently launched its FinTech solution (described in Section 3 of this Prospectus), and all revenue in the period FY18, FY19 and FY20 and the vast majority of 1HFY21 was derived from the traditional business.

Annual revenue from customers grew 42% from $2,275,000 in FY18 to $3,231,000 in FY19 and a further 44% to $4,652,000 in FY20. The revenue growth follows the growth in total originations which grew from $93,900,000 in FY18 to $105,400,000 in FY19 and $166,600,000 in FY20. This growth reflected the underlying customer demand and the availability of funding following the issuance of corporate bonds in FY19 and a further issuance in FY20.

Six-monthly revenue from customers declined 5% from $2,397,000 in 1HFY20 to $2,280,000 in 1HFY21, despite a 36% increase in total originations during that period.

In addition to origination volume, Butn’s revenue from customers is a factor of amongst other things, product and industry mix, duration of transaction and customer specific parameters. To assess these factors globally, an overall revenue margin is monitored.

Revenue margin in FY18 was 2%, increasing to 3% in FY19 and FY20, and was 2% in 1HFY21. The improvement in revenue margin in FY19 and FY20 reflected a change in product mix towards higher returning categories such as smash repair, supply chain finance and real estate. The more recent decline reflects the effects of COVID-19 with a greater impact to higher margin segments and increased price competition in the market as businesses navigated through the pandemic.

(ii) other revenue

Other revenue in FY20 was $86,000 and $133,000 in 1HFY21, principally comprising government grants. Other revenue was not present in FY18 or FY19.

(b) expenses

Butn expenses comprise various operating expenses, finance costs, depreciation, and amortisation with details of material expenses set out below:

(i) employment expenses

Annual employment expenses grew from $679,000 in FY18 to $750,000 in FY19 and then declined to $596,000 in FY20. The decline in FY20 is principally as a result of $182,000 costs capitalised to Intangibles as part of the Butn FinTech Solution development.

Six monthly employment expenses grew from $471,000 in 1HFY20 to $675,000 in 1HFY21, reflecting 1HFY21 costs for senior management and Board of Director appointments as part of Butn’s transition to a listed entity. These costs were not present in 1HFY20. Section 4.2(a) outlines the Directors’ estimate of the increased costs associated with being a listed entity.

Over time as the business scales, it is expected that these operating expenses should decline as a percentage of Butn’s revenue.

Butn Limited | Prospectus

(ii) other expenses

(ii) other expenses
	Pro forma	Pro forma	Statutory
$’000s	FY18	FY19	FY20
Bad debts	10	–	110
Allowance for expected credit losses	–	–	215
Consulting fees	164	285	227
Insurance	13	88	142
Legal fees	59	197	263
Other	227	353	401
		Statutory	Statutory
$’000s		1HFY20	1HFY21
Bad debts		–	–
Allowance for expected credit losses		–	65
Consulting fees		28	249
Insurance		66	168
Legal fees		174	149
Other		635	493

To date, Butn has incurred limited bad debts, particularly when viewed as a percentage of originations. Butn attempts to minimise such losses through its credit and risk management, monitoring its performance against total originations over time and in the context of the broader economic environment in which it operates. As part of this assessment Butn recognised an allowance for expected credit losses in FY20 of $215,000 and a further increase of $65,000 in 1HFY21, none of which was utilised to the end of 1HFY21.

Butn utilises various contractors and legal providers to supplement its employee base and accesses specialist skills where required. These costs are ad hoc in nature and dependent on the work undertaken. Insurance costs have increased in line with the growing scale of the business with particular reference to total originations.

Over time as the business scales, it is expected these operating expenses should decline as a percentage of Butn’s revenue.

(iii) Finance costs

Butn has used its current funding structure, principally fixed interest corporate bonds (referred to in this Prospectus as “Debt Notes”) to facilitate origination growth and meet cash flow funding requirements (see Section 10.5(a) for details in relation to the Debt Notes). Given the fixed nature of the Debt Notes, interest is incurred from the date of issue, even if the funds are not fully deployed (negative carry). As such, while there remains a relationship between total originations and financing costs, the relationship is not directly proportional.

Annual finance costs grew from $950,000 in FY18 to $1,322,000 in FY19 and to $2,730,000 in FY20. Six-monthly finance costs grew from $1,073,000 in 1HFY20 to $1,861,000 in 1HFY21. These increases reflect the timing of the 2 tranches of Debt Notes (tranche 1 issued in November 2018, tranche 2 partially issued in July 2019 and the balance issued in November 2019) and the associated interest expense, which as an example was present for the full 1HFY21 period, but not in the prior comparable period. In addition, Butn expensed the fair value movement and transaction costs on the embedded derivative associated with the Convertible Notes issued in 1HFY21.

04. Financial Information

Butn intends to secure debt facilities that are more flexible and have a lower cost in the future. To assess the underlying performance of the business before the current funding structure, Butn monitors EBITDA performance.

(iv) Depreciation and amortisation

Depreciation and amortisation principally represents the amortisation of Butn’s Intellectual Property and upfront borrowing costs, as well as depreciation of plant and equipment over their estimated useful lives as set out in Butn’s accounting policies.

Butn has only recently launched its FinTech solution, with no amortisation in the historical period FY18 to 1HFY21.

(c) Cash Flows

(i) Cash flows from operating activities

Annual cash flows from operating activities was $1,069,000 in FY18 declining to ($4,584,000) in FY19 and to ($13,792,000) in FY20.

The principal reason for this was the growth in total originations which grew from $93,900,000 in FY18 to $105,400,000 in FY19 and $166,600,000 in FY20 reflecting underlying customer demand and the availability of funding following the issuance of Debt Notes in FY19 and a further issuance in FY20. This growth saw receivables grow from $10,091,000 in FY18 to $15,046,000 in FY19 and $28,966,000 in FY20. Associated with this business growth and the funding structure in place, interest paid increased from $247,000 in FY18 to $2,211,000 in FY20.

Other cash flows from operating activities were stable or relatively low value through the period.

Six-monthly cash flows from operating activities was ($12,919,000) in 1HFY20 increasing to $2,721,000 in 1HFY21. This was mainly as a result of a focused effort to reduce outstanding receivables prudently as a mitigant to potential COVID-19 impacts, compared with the aggressive growth of the Group’s receivables book in the prior comparable period. Interest paid in 1HFY21 was $1,606,000 compared with $917,000 in 1HFY20, with the increase related to the timing of the Debt Notes issued described in Section 4.5(b)(iii) above.

(ii) Cash flows from investing activities

The main cash flow from investing activities in the period was Butn’s FinTech solution investment in FY20 of $1,287,000 and a further $971,000 in 1HFY21, which has been capitalised to the balance sheet as an intangible asset.

Other cash flows from investing activities were stable or relatively low value throughout the period.

(iii) Cash flows from financing activities

Cash flow from financing activities related to the funding shift from short term receivables book borrowings to Debt Notes in FY19 and a further tranche in FY20. This was to fund the origination and receivables growth described in Section 4.5(c)(i) with the balance reflected in cash and cash equivalents. In 1HFY21 Butn issued $7,500,000 of Convertible Notes with $495,000 of related transaction costs.

(d) statutory Historical statement of Financial Position and Pro Forma Historical statement of Financial Position

Table 4.8 sets out the Statutory Historical Statement of Financial Position and the pro forma adjustments that have been made to prepare the Pro Forma Historical Statement of Financial Position for Butn. These adjustments take into account the effect of the Offer Proceeds, transaction costs, the issuing of the Convertible Notes and subsequent conversion to equity and the Related Party Loans as if they had occurred as at 31 December 2020. The Pro Forma Historical Statement of Financial Position is provided for illustrative purposes only and is not represented as being necessarily indicative of Butn’s view of its financial position upon Completion or at a future date.

Butn Limited | Prospectus

table 4.8: statutory Historical statement of Financial Position and Pro Forma statement of Financial Position

of Financial Position
		Convertible		Issue of	Impact of	Pro Forma
$’000s	31-Dec-20	Notes1	Loans2	options3	the Offer4	31-Dec-20
Assets
Cash and cash equivalents	18,472	5,000	(3,765)	–	18,070	37,777
Trade and other receivables	25,534	–	–	–	–	25,534
Other	619	–	–	–	(359)	260
total current assets	44,625	5,000	(3,765)	–	17,711	63,571
Intangibles	4,470	–	–	–	–	4,470
Deferred tax	619	–	–	–	–	619
total non‑current assets	5,089	–	–	–	–	5,089
total assets	49,714	5,000	(3,765)	–	17,711	68,660
Liabilities
Trade and other payables	722	–	–	–	–	722
Borrowings and
embedded derivatives	2,895	(2,000)	(821)	–	–	74
Income tax	33	–	–	–	–	33
Provisions	173	–	–	–	–	173
Other	927	–	–	–	–	927
total current liabilities	4,749	(2,000)	(821)	–	–	1,928
Borrowings	41,765	–	(2,945)	–	–	38,821
Provisions	32	–	–	–	–	32
total non‑current liabilities	41,797	–	(2,945)	–	–	38,853
total liabilities	46,546	(2,000)	(3,765)	–	–	40,781
Net assets	3,168	7,000	–	–	17,711	27,879
equity
Issued capital	5,254	7,500	–	–	17,990	30,744
Share based payments
reserve	–	–	–	404	507	911
Capital reconstruction reserve	(548)	–	–	–	–	(548)
Accumulated losses	(1,538)	(500)	–	(404)	(786)	(3,228)
total equity	3,168	7,000	–	–	17,711	27,879

04. Financial Information

Notes:

Convertible Notes: in January 2021 the Group issued $5.0 million of Convertible Notes on the same terms as Convertible Notes on issue as at 31 December 2020. On recognition, the Convertible Notes include an embedded derivative liability of $1.7 million, which is subsequently converted to equity on IPO (see below). As all Convertible Notes on issue convert to Shares in Butn on Completion of the Offer, the associated embedded derivative liabilities are subsequently reclassified to equity. Prior to conversion of the embedded derivative associated to the Convertible Notes on issue prior to 31 December 2020, a revaluation has taken place to reflect the fair value of the embedded derivative at Completion of the Offer, resulting in a $0.5 million increase in accumulated losses.
Loans: the Group has loans to entities associated with existing shareholders totalling $3.8 million (the related Party Loans ). The Related Party Loans will be repaid out of proceeds of the Offer, reducing non-current borrowings and cash and cash equivalents by $3.8 million. The Group also formalised the terms of a $0.8 million loan payable to Action Funding (Aust) Pty Ltd, resulting in the loan being reclassified as non-current. Further details on these related party transactions are described in Section 6.4.
Issues of options: at the time of Listing, Butn will have issued Options to various employees of the Group. One third of the Options on issue vest on IPO, which has resulted in the fair value of these Options being expensed through retained earnings. Further details of the Options issued subsequent to 31 December 2020 are presented in Section 6.5(c).
Impact of the offer: issued capital will increase by $20.0 million as a result of issuing 40 million new Shares under the Offer. This is partially offset by the transaction costs directly attributable to the issue of new Shares of $2.0 million, being $1.5 million cash settled Offer costs, and $0.5 million equity settled Offer costs. Cash and cash equivalents will increase by $18.1 million (prior to the repayment of the Related Party Loans described above), which includes an additional $0.8 million of cash settled IPO transaction costs which are expensed through accumulated losses. Approximately $0.4 million of the $2.3 million cash settled costs related to the Offer had been incurred as at 31 December 2020 and was recorded as a deferred asset at that date.

4.6 Liquidity, capital resources and indebtedness

Following Completion, Butn’s principal sources of funds are expected to be cash on hand, net cash raised from the Offer and existing debt facilities. Butn’s main use of cash is to fund originations, operations, working capital, capital expenditure and to support Butn’s growth initiatives. Historical capital expenditure and working capital trends are described in Section 4.5(c). Following Completion, Butn expects that it will have sufficient cash to meet its operational and working capital requirements and stated business objectives. Butn’s ability to generate sufficient cash depends on its future performance which, to a certain extent, is subject to a number of factors beyond Butn’s control, including general economic, financial and competitive conditions. Over time, Butn may seek additional funding from a range of sources to diversify its funding base and to fund future growth in originations.

4.7 Contingent liabilities Butn has no material contractual obligations, commitments and contingent liabilities as at 31 December 2020.

4.8 Dividend policy

Butn’s current dividend intention is to reinvest cash flows into the business in order to maximise growth opportunities. Accordingly, no dividends are expected to be paid in the near term following Butn’s listing on the ASX.

The payment of a dividend by Butn, if any, is at the discretion of the Directors and will be a function of a number of factors, including general business environment, the operating results, cash flows and the financial condition of Butn, its future funding requirements, capital management initiatives, taxation consideration and any other factors (including legal and regulatory considerations) the Directors consider relevant. The Directors do not provide assurance of the future level of dividends to be paid by Butn.

Butn Limited | Prospectus

05 risk Factors

05. risk Factors

This Section 5 identifies some, but not all, of the major risks associated with an investment in the Company. The Company is subject to risk factors that are specific to its business activities and risks that are more general in nature. The selection of risks presented in this Section has been based on an assessment of the probability of the risk occurring and the impact of the risk if it did occur. This assessment was based on the knowledge of the Directors at the date of this Prospectus and no guarantee or assurance can be made that the importance of risks will not change or that other risks will not emerge.

If any of these risks eventuate, they, or a combination of them, could have a material adverse effect on the business, its financial position, operating and financial performance, its growth and the price and/or value of its Shares. Many of the risks are outside the control of the Company, its Directors and senior management.

Before applying for Shares, potential Applicants should read the whole of this Prospectus to fully appreciate such matters and the manner in which the Company intends to operate. Potential Applicants should fully consider whether the Shares are a suitable investment with respect to their own financial circumstances, investment objectives and particular needs (including any financial and taxation issues). There can be no guarantee that the Company will achieve its stated objectives.

If a potential Applicant does not understand any part of the Prospectus or is unsure whether to invest in the Company, they should seek independent professional advice from their stockbroker, accountant, financial adviser, lawyer or other independent professional advisor before applying for Shares.

5.1 speculative nature of investment

Any potential investor should be aware that subscribing for Shares involves various risks. The Shares to be issued pursuant to the Prospectus carry no guarantee with respect to the payment of dividends, returns of capital or the market value of those Shares. An investment in Shares of the Company should therefore be considered speculative.

5.2 Business risks associated with the Company

(a) strategic execution risk

The Company’s future performance is dependent on its ability to successfully scale its business, primarily by increasing transaction volumes and the number of customers using its financing products to drive revenue and profits. Establishing, expanding and then maintaining brand success will be important in growing the business in a competitive market. The Company’s growth strategy includes (among other things) introducing new technologies, products, Platform Partners, services and markets. These initiatives may cause the Company to incur additional cost without delivering the planned outcomes. There can be no assurance that the Company can successfully achieve its strategic objectives, and any failure to do so could adversely impact the Company’s financial position and performance.

(b) Failure to retain existing customers and attract new customers

The Company’s revenue depends on its ability to retain and attract new customers on commercially acceptable terms, which may be impacted by a number of factors including, but not limited to:

(i) cost-effectiveness and pricing of the Company’s service offering;
(ii) the Company’s reputation and functionality of its technology/product capabilities;
(iii) the strength and quality of its Platform Partners and the continuance of those relationships, including the success in promoting the Company’s products to their respective customer bases;
(iv) the entrance of competing products and services in the market;
(v) the ability to secure funding, at competitive rates and terms;
(vi) the ability to anticipate and quickly respond to changing technology, opportunities, laws, regulatory requirements and industry compliance standards; and
(vii) customer acceptance and confidence in the integrity of the Company’s technology and digital product suite.

Failure to retain existing customers or attract new customers on acceptable commercial terms could adversely impact the Company’s financial position and performance.

Butn Limited | Prospectus

(c) Competition

The Company faces direct competition from existing invoice finance funders. In addition to direct competitors, the Company’s products compete with alternative financial products such as bank loans, lines of credit, credit cards and asset finance products.

Traditional banks and non-bank lenders may already offer, or decide to offer, comparable products. Outside of the finance industry, there are other businesses that may enter the business transaction funding market.

Systems and technologies in the financial technology sector are continually changing, superseding existing offerings. New competitors may enter the market with a novel offering that could disrupt the Company’s business and growth strategy. The Company’s success will depend in part on its ability to (i) offer transaction finance products that remain relevant and (ii) maintain the distribution capabilities required to ensure those products reach the target market in a cost effective way.

The level of current and future competition may result in one or more of the following for the Company:

(i) loss of customers;
(ii) lower margins;
(iii) fewer transactions, leading to less revenue and cash flow;
(iv) an increase in marketing and advertising expenses, resulting in lower operating profits; and
(v) an increase in the acquisition costs of customers.

An increase in competition could adversely impact the Company’s financial position and performance.

(d) Credit risk

The Company is exposed to the risk of bad debts associated with the payment obligations of its customers and/or the end debtor under any invoice financed by the Company. The extent to which this risk will impact the Company’s business depends on:

(i) the capacity of the Company’s systems and processes to properly assess the credit risk of a customer at the stage of on-boarding and then ongoing at each transaction, including the ability for the end debtor to make payment;
(ii) the Company’s ability to obtain retention monies from customers; and
(iii) the extent to which a transaction is covered under the Company’s insurance policy.

While historical non-recoverable write offs have been low, as operations scale across a wider customer base through different distribution channels and changing economic conditions, continuous enhancements to credit approval processes may be required. A failure to adequately assess and manage credit risk may result in losses, which could adversely impact the Company’s financial position, performance and reputation.

(e) Fraud and conduct risk

The Company is exposed to the risk of fraudulent behaviour in connection with the financing products it offers. While the Company’s internal controls and processes have resulted in minimal historical non-recoverable write offs, as operations scale across a wider customer base, through different distribution channels and changing economic conditions, continuous enhancements to fraud prevention processes may be required. A failure to adequately assess and manage fraud risk may result in losses, which could adversely impact the Company’s financial position, performance and reputation.

Additionally, the Company is exposed to risks caused by human error with employees and other parties potentially not carrying out their roles and responsibilities as they should, which could adversely impact the Company’s financial position, performance and reputation.

05. risk Factors

(f) sufficiency of funding

The Company’s business model is reliant on its ability to secure funding through a combination of debt and equity.

The intended use of funds set out in Section 7.4 is based on the Company’s current best estimation of cash flow projections and estimated expenditures to carry out its stated objectives. The Company may need to raise additional funds from time to time to grow its receivables book and finance its operations.

There are various factors that could influence the Company’s liquidity, many of which are outside of the Company’s control. There is no assurance that the Company will be able to raise additional equity or that existing or future debt facilities will continue to be available, and on terms that are commercially acceptable.

The Company’s ability to provide funding to customers on favourable terms depends, in turn, on its ability to access funding and the terms on which such funding is obtained.

The Company may not be able to extend the financing term or increase the funding capacity of its facilities beyond their existing terms and/or, when renegotiating an extension or increase, may not be able to do so on the same or more favourable terms. In addition, the Company may not be able to enter into new facilities or other funding arrangements (including as part of a refinancing) sufficient to meet its business requirements. This could impact the Company’s ability to provide new funding to customers or provide new funding on competitive terms.

The ability to access funding could impact the viability of the Company, its ability to service customers, maintain contractual obligations and avoid reputational damage.

(g) reliance on key personnel

The Company relies on a number of senior management and technical personnel with specialised skills, particularly in the fields of technology (for the purposes of ongoing development and operation of the Butn FinTech Solution), and risk (for assessing the credit risk of current and prospective customers).

The Company’s ability to effectively execute its growth strategy depends in part on retaining and attracting suitably qualified personnel in suitable geographies, as well as providing its personnel with proper training and resources. The loss of key personnel, or any delay in their replacement; or the failure of the Company to properly train and develop its personnel could adversely impact the Company’s financial position and performance.

(h) reliance on third parties

The Company has partnered with a number of third party providers to deliver reliable, scalable services to its customers. Services provided by third parties to the Company include, but are not limited to, identification verification, credit checking services, application development, platform integration and support, payment processing and infrastructure support.

There is a risk that a third party provider may deliver a service below the expected standard, or there may be a disruption or failure to the services provided.

Any service failure, delay in resolving the failure or replacing the service, could adversely impact the Company’s financial position, performance and reputation.

(i) Loss of platform partnerships

The Company is rolling out its Butn FinTech Solution via third party Platform Partners. The use of third party Platform Partners creates increased distribution potential and rapid scaling by enabling Butn to introduce the Butn FinTech Solution to each Platform Partner’s user base.

At present, the Company is not reliant on any single Platform Partner and while at an early stage, this new distribution channel is intended to grow significantly. There can be no assurance that the current or new Platform Partners will continue their relationship with the Company, or if they continue, that these relationships will generate material revenue. Furthermore, the Company’s contracts with its Platform Partners can be terminated on relatively short notice with the risk that one or more Platform Partners move to a competitor or seek to develop their own in house finance offering.

Butn Limited | Prospectus

(j) Compliance with laws and regulations

The Company operates in the financial services industry, providing products and services for businesses. Currently, the vast majority of Butn’s financing transactions occur in Australia with Australian customers. Butn also operates in New Zealand (although its current New Zealand operations are limited) and may in the future seek to establish itself in other jurisdictions.

As noted in Section 3.7, the Company is subject to the Anti-Money Laundering/Counter Terrorism Financing Act, as well as the Privacy Law in relation to its customers. The Company’s contracts with its customers must also comply with the Unfair Contract Terms regime as set out in the Australian Consumer Law and the ASIC Act. Outside of this, the Company is not currently subject to other specific laws or regulations other than those applicable to business generally.

There is a risk that current or changed legal, regulatory, or licensing requirements, and industry compliance standards, whether in jurisdictions where the Company currently operates or new jurisdictions entered into in the future, may make it uneconomic for the Company to operate, or to expand in line with its growth strategy. In addition, if the Company fails to comply with applicable laws, regulations and industry compliance standards, it may face: increased compliance costs, cessation of certain business activities or the ability to operate entirely, litigation, regulatory investigation, sanctions, significant fines and/or material reputational damage.

(k) Brand development and reputational risk

The Company’s reputation and brand is important in retaining existing and attracting new customers, as well as managing relationships with Platform Partners, debt funders, service providers, employees and other stakeholders.

The Company’s brand and reputation could be jeopardised if it fails to maintain quality products or services, or if the Company, or the third parties with whom it engages with in business, fail to comply with regulations or accepted business practices. Additionally, any significant disruptions to the Butn FinTech Solution could cause customers, Platform Partners and investors to lose confidence in that service or in the Company.

If damage were to occur to the reputation of the Company (or to the third parties with whom it engaged with in business), this may reduce demand for the Company’s product offering, which in turn could adversely impact the Company’s financial position and performance.

(l) Disruption or failure of key business processes

The Company relies on execution of various business processes by it and third parties, particularly at time of customer on-boarding and processing of ongoing transactions.

Key business processes could be disrupted by many events, including system failures, service outages, corruption of information, cyberattacks, as well as natural disasters, fire or other events of force majeure.

Any major disruption could harm the Company’s ability to properly service its customers and operate its business, which could adversely impact the Company’s financial position, performance and reputation.

In addition, the Butn FinTech Solution is at a relatively early stage of operation. There is a risk that the Butn FinTech Solution (or any Platform Partners) may be unable to cope with large increases in customer applications and/or transaction volumes. Alternatively, errors or omissions may occur in the Butn FinTech Solution (or any Platform Partner) which may affect the performance of certain tasks and transactions. Events of this type could adversely impact the Company’s financial position, performance and reputation.

(m) technology risk

The Butn FinTech Solution uses and relies on integration with third party systems and platforms. The continual provision of services and products to customers via this channel depends on the Company’s ability to successfully integrate across various systems and platforms, including as those systems and platforms evolve and develop over time. Any integration failure could adversely impact the Company’s financial position, performance and reputation.

The Company also relies on payment gateways, banking and financial institutions as part of its settlement and collection processes as well as communication networks. Any failures to such platforms, technologies or networks could adversely impact the Company’s financial position, performance and reputation.

05. risk Factors

(n) Industry concentration

The Company’s historical customer base has predominantly operated in the fast moving consumer goods and automotive sectors, with customers from those sectors comprising the majority of historical revenue. This sector concentration means the Company’s success is potentially affected by the success of specific industries – accordingly, economic conditions or other factors that negatively impact those specific industries may ultimately have an adverse impact on the Company’s financial position and performance (for example, due to an increase in bad debts from affected industry customers, or a reduction in number or scope of transactions from the affected industry).

(o) Loss and theft of data/failure to implement secure date controls

Through the ordinary course of business, the Company collects a wide range of confidential data. The Company’s business could be materially disrupted or compromised by privacy or data security breaches. This could occur through theft, unauthorised access (e.g. hacking), unauthorised disclosure of confidential customer information (including exploitation of data) or loss of information.

There is a risk that the measures taken by the Company may not be sufficient to detect or prevent unauthorised access to, or disclosure of, such confidential information or the operational disruption thereof. Any breach or failure to protect confidential information may adversely impact the Company’s financial position, performance and reputation.

(p) Contractual and counterparty risk

The Company is party to numerous contracts, with material contracts described in Sections 10.5 and 10.6.

There is no assurance that all contracts will be properly and fully performed by the contracting parties. Termination of a material contract, may mean that the Company will not realise the full benefit of the contract, which may adversely affect its growth prospects, operating results and/or financial performance. Additionally, where a material contract is terminated, there is no guarantee that a suitable replacement will be entered into on equivalent or more favourable terms.

(q) Litigation

The Company is exposed to potential legal and other claims or disputes in the course of its business, including contractual disputes, employment matters and customer claims. There is also a risk that the Company may have disputes with its service providers, funders, Platform Partners or other third parties which may adversely affect its growth prospects, operating results and/or financial performance.

The Group is subject to a small number of debt collection disputes (of the type that occasionally arise in the ordinary course of the Group’s business) as set out in Section 10.12.

Even if the Company is ultimately successful in defending any dispute, there is a risk that such litigation, claims and disputes could materially and adversely impact the Company’s operating and financial performance due to the cost of settling such claims, and affect its reputation.

(r) IP may be compromised or lost

The Company has developed a proprietary technology solution, being the Butn FinTech Solution, which is an important part of the business’s growth strategy. The Company relies on legal protections provided by a combination of copyright, trade secrecy laws, confidentiality obligations on employees and third parties and other IP rights.

The protective measures that the Company has adopted may not provide adequate protection for its proprietary information. The Company cannot be certain that others will not independently develop the same or similar products on their own, or that the Company will be able to meaningfully protect its IP and unpatented know-how. If the Company’s IP is compromised or lost, this could adversely impact the Company’s financial position, performance and/or reputation.

Butn Limited | Prospectus

(s) Infringement of third party IP

If a third party accuses the Company of infringing its IP rights or commences litigation against the Company, the Company may incur significant costs in defending the action, whether or not it ultimately prevails.

In addition, parties making claims against the Company may be able to obtain injunctive or other equitable relief that could prevent the Company from further developing or commercialising its technologies, products and/or services. In the event of a successful claim of IP infringement against the Company, the Company may be required to pay damages and obtain one or more licenses from the prevailing third party. If it is not able to obtain these licenses at a reasonable cost, if at all, it could encounter delays in delivering technologies, products and/or services, and suffer loss of substantial resources while it attempts to develop alternative offerings.

(t) Insurance risks

While the Company seeks to maintain insurance in accordance with industry practice to insure against the risks it considers appropriate, no assurance can be given as to its ability to obtain such insurance coverage in the future at reasonable rates or that any coverage arranged will be adequate and available to cover any and all potential claims. The occurrence of an event that is not covered or fully covered by insurance could have a material adverse effect on the business, financial condition and results of the Company.

(u) exposure to adverse macro‑economic conditions

The Company’s business depends on transacting with SMEs, which is in turn affected by such macroeconomic conditions as unemployment, interest rates, customer confidence, economic recessions, downturns or extended periods of uncertainty or volatility, which may adversely impact the Company’s financial position and performance.

5.3 General risks

(a) Liquidity of shares

Prior to the Offer, there has been no public market for the Shares. No assurance can be given that an active market will develop in the Shares or that the Shares will trade at or above the Offer Price after quotation of the Shares on the Official List.

Following Completion of the Offer, the Escrowed Shareholders will hold approximately 59% of the Shares. The absence of any sale of Shares by the Escrowed Shareholders during this period may cause, or at least contribute to, limited liquidity in the market for the Shares. This could affect the prevailing market price at which Shareholders are able to sell their Shares.

Following release from escrow, Shares held by the Escrowed Shareholders will be able to be freely traded on the ASX. A significant sale of Shares by an Escrowed Shareholder, or the perception that such sale has occurred or might occur, could adversely affect the price of Shares.

(b) Fluctuations in the price of shares

The price of Shares may rise or fall depending upon a range of national and international market factors beyond the Company’s control and/or which may be unrelated to the Company’s operational performance. These include:

(i) share price including movements on international stock markets;
(ii) economic conditions and general economic outlook;
(iii) interest rates and exchange rates;
(iv) inflation rates;
(v) government taxation and royalties;
(vi) legislation, monetary and other policy changes; and
(vii) general investors’ perceptions.

Neither the Company nor its Directors have control over these factors.

05. risk Factors

Applicants who decide to sell their Shares may not receive the entire amount of their original investment, with no assurance that the price of the Shares will increase following the Company’s listing.

The Shares carry no guarantee in respect of profitability, dividends, return on capital, or the price at which they may trade on the ASX.

(c) General economic conditions

The general economic climate may affect the performance of the Company. These factors include the general level of international and domestic economic activity, inflation, unemployment rates, business sentiment, and interest rates. These factors are beyond the control of the Company and their impact cannot be predicted.

(d) risk of shareholder dilution

In the future, the Company may elect to issue additional Shares. While the Company will be subject to the constraints of the Listing Rules regarding the percentage of its capital it is able to issue within a 12-month period (other than where exceptions apply), Shareholders may be diluted as a result of such issues of Shares, if they are unable to or choose not to participate.

(e) taxation laws and their interpretation

Taxation laws are subject to change periodically as is their interpretation by the relevant courts and tax revenue authorities. Changes in tax law or changes in the way tax laws are interpreted may impact the level of tax that the Company is required to pay, Shareholder returns, the level of dividend imputation or franking or the tax treatment of a Shareholder’s investment.

Additionally, tax authorities may review the tax treatment of transactions entered into by the Company. Any actual or alleged failure to comply with, or any change in the application or interpretation of, tax rules applied in respect of such transactions, may increase the Company’s tax liabilities or expose it to legal, regulatory or other actions.

The tax considerations of investing in the Shares may differ for each Shareholder. Each prospective investor is encouraged to seek professional tax advice in connection with any investment in the Company.

(f) Australian Accounting standards and their interpretation

The AAS are determined by the AASB and are not within the control of the Company and its Directors. The AASB may, from time to time, introduce new or refined AAS, which may affect the future measurement and recognition of key income statement and balance sheet items. There is also a risk that interpretations of existing AAS, including those relating to the measurement and recognition of key statements of profit and loss and balance sheet items, may differ. Changes to AAS or changes to the interpretation of those standards could materially adversely impact the reported financial performance and position of the Company.

(g) Government actions, force majeure and other events

Events may occur within or outside of Australia that could impact upon the Australian economy or the economy of each territory in which the Company currently operates or intends to operate in, the Company’s operations or the price of the Shares. These events include but are not limited to acts of terrorism, an outbreak of international hostilities, fires, floods, earthquakes, labour strikes, civil wars, natural disasters, outbreaks of disease or other natural or man-made events or occurrences that can have an adverse effect on the demand for the Company’s products and its ability to conduct business.

Butn Limited | Prospectus

(h) CoVID‑19

In recent times, the COVID-19 pandemic has raised concerns about the vulnerability of credit markets and the economy in general. The impact of COVID-19 on the Company is described in Section 3.10. Notwithstanding the above, the future effects (and extent of such effects) on Butn’s business arising from COVID-19 will depend on future developments which are highly uncertain and cannot be predicted, including the geographic spread of the virus, the overall severity of the disease, the duration of any outbreak, the measures that may be taken by various governmental authorities in response to an outbreak (such as quarantines and travel restrictions) and the possible further impacts on the Australian economy, as well as the global economy which could have a material adverse effect on the business, financial condition and results of the Company.

5.4 Prospective information

No assurance as to prospective information in relation to the Company can be given as it is dependent on successful product or service development, future earnings and the working capital requirements of the Company.

There can be no guarantee that the assumptions on which the future performance and development strategies of the Board, or those upon which the Company bases its decisions to proceed, will ultimately prove to be valid or accurate. The future performance and development strategies depend on various factors many of which are outside the control of the Company.

5.5 Concluding comment

The above list of risk factors ought not to be taken as an exhaustive list of the risks faced by the Company or by investors in the Company. The above factors, and others not specifically referred to above, may in the future materially affect the financial performance of the Company and the value of the Shares offered under this Prospectus. Therefore, the Shares to be issued pursuant to this Prospectus carry no guarantee with respect to the payment of dividends, returns of capital or the market value of those Shares. Investment in the Company must be regarded as speculative and neither the Company nor any of its Directors or any other party associated with the preparation of this Prospectus guarantees that any specific objectives of the Company will be achieved or that any particular performance of the Company or of the Shares, including those offered by this Prospectus, will be achieved.

06 Board, Management and Corporate Governance

06. Board, Management and Corporate Governance

6.1 Board of directors

The Board comprises an Independent Chairman, three Non-executive Directors (including the Chairman) and two Executive Directors.

==> picture [83 x 513] intentionally omitted <==

suzanne ewart

Non‑executive Director and Independent Chairman

Suzanne was appointed as a Non-executive Director and Independent Chairman of Butn in September 2020.

Suzanne has served as chair, director and senior business leader for various organisations, specialising in chairing audit, risk, finance and remuneration committees. She has served on a number of boards in the financial services, technology, health, infrastructure and education sectors with expansive corporate governance and leadership skills drawn from many years of experience in major global businesses. With a strong background in treasury, finance, strategy, mergers and acquisitions, divestment and initial public offerings (in organisations including Fosters’ Group, NAB, Telstra, BTR, Pacific Dunlop and Woodside Petroleum) together with strategic placements in executive level roles, Suzanne has experience in some of Australia’s major ASX listed corporations. She has operated successfully within highly regulated environments, requiring considered stakeholder collaboration to achieve sustainable results.

Suzanne currently serves on the board of Dexus Wholesale Funds Ltd and also chairs a Bendigo Community Bank. Suzanne has served on a number of other boards including as chair of .au Domain Administration Ltd, Box Hill Institute Group, Peter MacCallum Cancer Centre and Cell Therapies and as a director of Treasury Corporation Victoria and TT Line Pty Ltd.

rael ross

Co‑Founder, Joint CEO and Executive Director

Rael co-founded the Group and was appointed Executive Director and Joint Chief Executive Officer of Butn in September 2020.

Understanding the need for technology to enable financing and digital distribution as companies seek access to finance, Rael co-founded Butn with Walter Rapoport. With over 15 years’ experience in financial services, technology and business, Rael has driven the establishment of the Butn FinTech Solution.

Rael has created, developed and executed technology and digital projects through several businesses. Rael co-founded what is today known as Tsikot.com, one of the leading online automotive platforms and the largest online automotive forum in the Philippines.

As a qualified accountant, Rael has worked in private practice, the not-for-profit sector and for ‘Big 4’ accounting firms.

Rael was awarded a full scholarship at Monash University, where he completed a Bachelor of Accounting. In 2020, Rael was awarded Australian Young Entrepreneur across multiple categories.

06. Board, Management and Corporate Governance

==> picture [83 x 529] intentionally omitted <==

Walter rapoport

Co‑Founder, Joint CEO and Executive Director

Walter co-founded the Group and was appointed Executive Director and Joint Chief Executive Officer of Butn in September 2020.

His career spans economics research and more than 25 years as the founder and CEO of a knitwear manufacturing company supplying Australia’s largest retailers, including a period as a licensee to Pierre Cardin.

Understanding the importance for SMEs to have access to cash flow and capital, he co-founded Butn with Rael Ross.

Walter has a proven ability to lead high performing teams throughout his career in manufacturing, finance, sales and marketing. He has vast experience in identifying, developing, and executing innovative receivables funding solutions and adapting products to digital transformations.

Walter serves as chairman of the Multicultural Chambers of Commerce Group and chairs the Grampians Regional Advisory Council.

Walter graduated from Monash University with a Bachelor of Economics.

Georg Chmiel

Non‑executive Director

Georg was appointed as a Non-executive Director of Butn in September 2020.

Georg is currently the executive chairman of Juwai IQI Holdings, one of Asia’s largest property tech companies and chairman of iCarAsia (ASX:ICQ). Georg is also non-executive director of Centrepoint Alliance (ASX:CAF) and the PropTech Group (ASX:PTG) (the leading real estate office company for Australia and New Zealand).

Georg was previously managing director and chief executive officer of the iProperty Group (ASX:IPP) before it was sold to REA Group (ASX:REA) for over US$500m, later holding the position of chief financial officer and general manager (international) at REA Group. Georg was also previously non-executive director of Mitula Group (ASX:MUA) before it was acquired by Lifull (2120:Tokyo) and managing director of LJ Hooker Group with 700 offices across ten countries.

Georg has over 25 years of experience in the real estate and online industry, working for companies such as Deutsche Bank and McKinsey & Company.

Georg is the 2021 recipient of the Impact Lifetime Achievement Award for Property Excellence in Malaysia, winner of the C-Suite Leadership Excellence Award in 2020, the Asia Pacific Entrepreneurship Award in 2016 and the Top Outstanding Leaders Asia Award in 2015. He is a Certified Practicing Accountant and member of the American Institute of Certified Public Accountants. Georg is also a fellow of the Australian Institute of Company Directors and holds an MBA (INSEAD, France) and a computer science degree (TU Munich, Germany).

Butn Limited | Prospectus

==> picture [83 x 224] intentionally omitted <==

Mike Hirst

Non‑executive Director

Mike was appointed as a Non-executive Director of Butn in September 2020.

Mike is a retired career banker who has worked across most areas of the banking industry and has extensive experience in retail banking, balance sheet management, financial markets and strategy. After 9 years in the role of managing director and chief executive officer of Bendigo and Adelaide Bank, Mike retired in July 2018.

Mike currently serves on a number of listed and not for profit boards including GMHBA, health.com.au, AMCIL and Racing Victoria where he is deputy chairman. Mike is an honorary member of the Business Council of Australia and a Commissioner of the Federal Government’s National COVID-19 Commission Advisory Board.

Mike was previously deputy chairman of Treasury Corporation of Victoria and the Australian Banking Association. He was also a director of Rural Bank, Sandhurst Trustees, Colonial First State Fund Managers, Barwon Health and Austraclear Limited. During the Global Financial Crisis, Mike was appointed to the Federal Government’s Financial Sector Advisory Council and remained a member until his retirement.

Each Director has confirmed to the Company that he or she anticipates being available to perform his or her duties, without constraint having regard to their other commitments.

In accordance with the ASX Corporate Governance Principles and Recommendations (4th edition) ( AsX recommendations ), the Board considers an Independent Director to be a Non-executive Director who is not a member of the Company’s management and who is free of a business or other relationship that could materially interfere with, or could reasonably be perceived to materially interfere with, the independent exercise of their judgement. The Company’s Board Charter (as described in Section 6.8) sets out the factors to be considered in determining independence of Directors in accordance with ASX Recommendations. The Board will review the independence of each Director in light of interests disclosed to the Board from time to time. In assessing independence, the Board will have regard to the ASX Recommendations.

The Board considers that each of Suzanne Ewart, Georg Chmiel and Mike Hirst are Independent Directors.

06. Board, Management and Corporate Governance

6.2 Management team

==> picture [83 x 618] intentionally omitted <==

Walter rapoport

Co‑Founder, Joint‑CEO and Executive Director

Biography set out at Section 6.1(c) above.

rael ross

Co‑Founder, Joint‑CEO and Executive Director

Biography set out at Section 6.1(b) above.

Darryl Lasnitzki

Chief Financial Officer and Company Secretary

Darryl joined the Group as its Chief Financial Officer and Company Secretary in August 2020.

He has over 20 years of experience in assurance, financial advisory and senior finance roles across various entrepreneurial, fast growing businesses.

Darryl was previously chief financial officer and company secretary of Nuchev Limited (ASX:NUC), building the business from conceptual start-up to its ASX listing in 2019. Prior to that Darryl held a number of senior roles including group financial controller of Saracen Mineral Holdings Limited (ASX:SAR), as it transitioned from micro explorer to an ASX200 gold producer.

Darryl is a Chartered Accountant, holds a Graduate Diploma in Applied Corporate Governance and a Bachelor of Commerce from Monash University.

He is a member of the Institute of Australian Chartered Accountants and Fellow of the Governance Institute of Australia.

Mark Newstead

Chief Operating Officer

Mark joined the Group as Chief Operating Officer in February 2020.

He is a corporate advisory professional with 15 years of experience. In particular, Mark has extensive experience in financial analysis with a focus on credit and business risk.

Prior to Butn, Mark joined a diversified financial services business as the first employee in an entrepreneurial team that grew the company into a $100m turnover organisation. Mark spent many years in the SME/corporate lending space as head of credit as well as within various operational roles.

Mark graduated from the University of the Witwatersrand, South Africa with a Bachelor of Commerce including Honours in Business Finance.

Butn Limited | Prospectus

==> picture [83 x 331] intentionally omitted <==

Abhinov Gulati

Chief Technical Officer

Abhinov joined Butn as Chief Technical Officer in January 2021.

Abhinov is a specialist in design, architecture and rapid development of software solutions and mobile technologies. He has over 15 years’ experience in delivering software solutions, using web and mobile technologies and delivering solutions from the ground up, from discovery to delivery.

Abhinov was previously IT director at Ganemo Group, taking several complex platforms from ideation to market, accelerating their growth and conducting technology audits for growth companies and acquisitions.

Abhinov holds a Bachelor of Software Engineering from the University of New South Wales.

simran Gambhir

Chief Information Officer

Simran joined the Group as Chief Information Officer in January 2021.

Simran was the chief technology officer of Flybuys, Stone & Chalk and News Interactive (a subsidiary of News Corp Ltd). He also brings experience as a technology advisor to major investment banks, venture capital funds and has been an investor in numerous successful start-ups.

Simran graduated from the University of New South Wales with a Bachelor of Science (Computer Science) and is currently completing a Masters in Cyber Security (Advanced Tradecraft) through the Australian Defence Force Academy.

6.3 Directors and senior management shareholding, remuneration and interests

This Section sets out the nature and extent of the interests and fees of certain persons involved in the Offer. Other than as set out below or elsewhere in this Prospectus, no:

y Director or proposed Director of the Company;
y person named in this Prospectus and who has performed a function in a professional, advisory or other capacity in connection with the preparation or distribution of this Prospectus; or
y promoter of the Company,

holds at the Prospectus Date, or has held in the two years before the Prospectus Date, an interest in:

y the formation or promotion of the Company;
y property acquired or proposed to be acquired by the Company in connection with its formation or promotion, or in connection with the Offer; or
y the Offer,

and no amount (whether in cash, shares or otherwise) has been paid or agreed to be paid, nor has any benefit been given or agreed to be given, to any such persons for services in connection with the formation or promotion of the Company or the Offer or to any Director or proposed Director to induce them to become, or qualify as, a Director.

06. Board, Management and Corporate Governance

(a) summary of Directors’ interests

Set out below are details of the interests of the Directors in the Shares and other securities of the Company immediately prior to lodgement of the Prospectus with the ASIC for registration. Interests include those held directly and indirectly.

The Directors are not required under the Constitution of the Company to hold any Shares in order to qualify as Directors.

					% interest held
					at Completion
			Shares in which		(assuming
			the director has	Options	$20 million is
		Annual	an interest at	held at	raised under
Name	Position	Remuneration	Completion	Completion	the Offer)*
Suzanne Ewart	Chairman and	$110,000	38,425	481,250	Less than 1%
	Non-executive	(excluding	Shares following
	Director	superannuation)	conversion of
			Convertible Notes
Rael Ross	Executive	$260,000	36,191,572	1,300,000	22.6%
	Director and	(excluding
	Joint CEO	superannuation)
Walter Rapoport	Executive	$260,000	36,191,572	1,300,000	22.6%
	Director and	(excluding
	Joint CEO	superannuation)
Georg Chmiel	Non-executive	$70,000	N/A	306,250	Less than 1%
	Director	(excluding
		superannuation)
Mike Hirst	Non-executive	$70,000	384,240	306,250	Less than 1%
	Director	(excluding	Shares following
		superannuation)	conversion of
			Convertible Notes
			(held by Mike Hirst
			and a closely related
			party of Mike Hirst)

The above does not take into account any New Shares the Directors may acquire under the Offer, nor does it include any Shares issued to Butn’s employees under Butn’s Employee Incentive Plan (see Section 6.5(d) for details), the exercise of any Options issued under Butn’s Employee Incentive Plan (see Section 6.5(c) for details), or Lead Manager Options (see Section 10.7(d) for details).

Details in relation to the Options are set out at Section 6.5(c) below.

(b) Directors’ remuneration

(i) rael ross – Joint Ceo and executive Director

Rael is the Joint CEO and Executive Director of Butn. The principal terms of his employment agreement are as follows:

y Rael is entitled to receive an:
(A) annual base salary of $260,000 (exclusive of superannuation);
(B) STI award paid in cash up to 20% of base annual salary inclusive of superannuation, subject to performance criteria; and
(C) LTI award in the form of up to 1,300,000 Options (on the terms described in Section 6.5(c) below).

Butn Limited | Prospectus

y Rael’s employment agreement includes:
(A) provisions protecting the Company’s confidential information and intellectual property; and
(B) a non-competition undertaking pursuant to which Rael agrees that he will not, during the term of his engagement and for a period of 6 months thereafter, compete with the Company’s business.
y Rael may terminate the agreement by giving Butn 6 months’ written notice.
y Butn may terminate the agreement:
(A) by giving 6 months’ written notice to Rael or, by making payment in lieu of the whole (or part of the) notice period; or
(B) if there are grounds for summary dismissal (such as serious misconduct or fraud), without notice.

(ii) Walter rapoport – Joint Ceo and executive Director

Walter is the Joint CEO and Executive Director of Butn. The principal terms of his employment agreement are as follows:

y Walter is entitled to receive an:
(A) annual base salary of $260,000 (exclusive of superannuation);
(B) STI award paid in cash up to 20% of base annual salary inclusive of superannuation, subject to performance criteria; and
(C) LTI award in the form of up to 1,300,000 Options (on the terms described in Section 6.5(c) below).
y Walter’s employment agreement includes:
(A) provisions protecting the Company’s confidential information and intellectual property; and
(B) a non-competition undertaking pursuant to which Walter agrees that he will not, during the term of his engagement and for a period of 6 months thereafter, compete with the Company’s business.
y Walter may terminate the agreement by giving Butn 6 months’ written notice.
y Butn may terminate the agreement:
(A) by giving 6 months’ written notice to Walter or, by making payment in lieu of the whole (or part of the) notice period; or
(B) if there are grounds for summary dismissal (such as serious misconduct or fraud), without notice.

(c) Non‑executive Director remuneration

Under the Company’s Constitution, the Company’s Non-executive Directors are entitled to be paid for their services as Directors, such annual fees as the Directors determine, provided the annual fees do not exceed in aggregate the maximum sum that is from time to time approved by the Shareholders in a general meeting in accordance with the Listing Rules. This sum does not include remuneration in the form of share, option or other equity plans separately approved by the Shareholders in a general meeting.

For the purposes of the Constitution and the ASX Listing Rules, the Company has set a cap of $400,000.

The Company has entered into appointment letters with each Non-executive Director on the following key terms:

y Suzanne Ewart will receive an annual remuneration of $110,000 (exclusive of superannuation);
y Mike Hirst will receive an annual remuneration of $70,000 (exclusive of superannuation); and
y Georg Chmiel will receive an annual remuneration of $70,000 (exclusive of superannuation);

the appointment shall cease if the Non-executive Director:

y resigns;
y is disqualified under the Corporations Act or the Constitution from being a company director; or
y is removed as a director in accordance with the Corporations Act or the Constitution.

06. Board, Management and Corporate Governance

Pursuant to the terms of these agreements, each Non-executive Director will be expected to exercise duties of care and diligence, good faith, proper use of position and proper use of information as well as the fiduciary duties imposed by applicable law. A Non-executive Director will attend Board meetings and may also serve as a member of the Audit and Risk Committee, Nomination and Remuneration Committee, or any other committee established by the Board.

Each Non-executive Director will be entitled to be reimbursed reasonable expenses incurred in performing their duties, including the cost of attending Board meetings, travel, accommodation and entertainment where agreed to by the Board.

(d) Directors’ deeds of indemnity, insurance and access

The Company has entered into deeds of indemnity, insurance and access with each of its Directors. The key features of these deeds may be summarised as follows:

y to the extent permitted by law, the Company indemnifies each of the Directors against any:
(A) liability incurred by the Director as an officer or former officer of the Company or any other Group Company; and
(B) legal costs reasonably incurred as a result of the Director defending an action for any liability incurred by the Director as an officer or former officer of the Company or any other Group Company;
y the Company must maintain appropriate insurance cover in favour of the Director for the period beginning on the date the applicable deed is signed and ending on the later of:
(A) 7 years after the Director ceases to be an officer of a Group Company; and
(B) where a claim to which an indemnity in the deed applies has commenced in the 7 year period referred to above, the date on which the claim is either settled or withdrawn, resolved by a final and binding decision of the courts, or statute barred,

( Access Period ); and

y the Director, during the Access Period, may inspect any books and records of the Company for the period during which the Director was a director of a Group Company, unless providing access to the Director:
(A) would materially prejudice the interests of the Group Company; or
(B) may result in a loss of privilege on the part of any Group Company.

(e) senior Management’s interests and remuneration

(i) rael ross – Joint Ceo and executive Director

See Section 6.3(b)(i) above.

(ii) Walter rapoport – Joint Ceo and executive Director

See Section 6.3(b)(ii) above.

(iii) Darryl Lasnitzki – Chief Financial officer and Company secretary

Darryl is the Chief Financial Officer and Company Secretary of Butn. The principal terms of his employment agreement are as follows:

y Darryl is entitled to receive an:
(A) annual base salary of $250,000 (exclusive of superannuation), which will be reviewed annually;
(B) STI award paid in cash up to 20% of base annual salary inclusive of superannuation, subject to performance criteria; and
(C) LTI award in the form of up to 1,250,000 Options (on the terms described in Section 6.5(c) below).

Butn Limited | Prospectus

y Darryl’s employment agreement includes:
(A) provisions protecting the Company’s confidential information and intellectual property; and
(B) a non-competition undertaking pursuant to which Darryl agrees that he will not, during the term of his engagement and for a period of 6 months thereafter, compete with the Company’s business.
y Darryl may terminate the agreement by giving Butn 3 months’ written notice.
y Butn may terminate the agreement:
(A) by giving 3 months’ written notice to Darryl or, by making payment in lieu of the whole (or part of the) notice period; or
(B) if there are grounds for summary dismissal (such as serious misconduct or fraud), without notice.

6.4 related party transactions

AFC, a wholly owned subsidiary of Butn, has entered into loan agreements with Walter Rapoport (current Joint CEO and Executive Director of Butn) and Why K Pty Ltd (a related entity of Rael Ross, current Joint CEO and Executive Director of Butn) ( related Party Loans ). Pursuant to the Related Party Loans, AFC has borrowed, in aggregate, approximately $3.8 million.

The amounts owing under the Related Party Loans:

(a) are secured by a general security interest over the assets and undertakings of AFC; and
(b) cannot be repaid unless and until the Company has Listed; and
(c) are capped at $4 million in aggregate.

It is intended that these loans will be repaid from the proceeds of the Offer.

All future related party arrangements (if any) will be determined by the Board and reviewed by the Company’s Audit and Risk Committee in accordance with the Company’s Corporate Governance Policy and the Corporations Act, having regard to and, where required, all requisite approvals, including but not limited to, shareholder approval where required.

Additionally, a historical loan was previously advanced to AFC by Action Funding (Aust) Pty Ltd (an external company owned and controlled by the Co-Founders) in the amount of approximately $820,000. The loan does not accrue interest, is unsecured and is not repayable for 24 months after the date of Listing.

6.5 employee share/option Plan

(a) Background

The EIP was adopted by a resolution of shareholders on 18 September 2020 to provide ongoing incentives to any full time or part time employee of the Company or any of its subsidiaries (including a Director or company secretary of the Company or its subsidiaries who holds salaried employment with the Company or its subsidiaries on a full or part time basis), or a consultant, who is determined by the Board to be eligible to receive grants of Options under the EIP ( eligible Participants ).

(b) Key terms

(i) employee rights

Under the EIP, the Company may offer or issue to Eligible Participants, the following Employee Rights:

(A) performance rights : a right to be issued or provided with a Share at nil issue price on specific vesting conditions being achieved;
(B) options: a right to be issued or provided with a Share on payment of an exercise price and which can only be exercised if specific vesting conditions are achieved;
(C) loan shares: Shares issued subject to a limited recourse loan and at nil interest rate, subject to specific vesting conditions;

06. Board, Management and Corporate Governance

(D) deferred share awards : Shares issued to Eligible Participants:
y who elect to receive Shares in lieu of any wages, salary, director’s fees, or other remuneration; or
y by the Company in its discretion, in addition to their wages, salary and remuneration, or in lieu of any discretionary cash bonus or other incentive payment; or
(E) exempt share awards: Shares issued for no consideration or at an issue price which is a discount to the market price with the intention that up to $1,000 (or such other amount which is exempted from tax under the Income Tax Assessment Act 1936 (Cth) or the Income Tax Assessment Act 1997 (Cth) from time to time) of the total value or discount received by each employee will be exempt from tax.

(ii) eligible employees

Employee Rights may be granted at the discretion of the Board to any person who is an Eligible Participant.

(iii) Price

The Board has discretion to determine the issue price and/or exercise price for the Employee Rights.

(iv) Vesting and exercise of employee rights

The Employee Rights held by a participant will vest in and become exercisable by that participant upon the satisfaction of any vesting conditions specified in the offer and in accordance with the rules of the EIP. Vesting conditions may be waived at the discretion of the Board.

(v) Change of control

In the event a takeover bid is made to acquire all of the Shares on issue, or a scheme of arrangement, selective capital reduction or other transaction is initiated which has an effect similar to a full takeover bid, the Board may waive unsatisfied vesting conditions in relation to some or all Employee Rights. Further, if a takeover bid is made to acquire all of the Shares on issue, participants may accept the takeover bid in respect of any Employee Rights (other than exempt share awards) which they hold notwithstanding the restriction period in respect of those Employee Rights has not expired.

(vi) Claw Back

If any vesting conditions of an Employee Right are mistakenly waived or deemed satisfied when in fact they were not satisfied, then in accordance with the terms of the EIP, the Board may determine that the relevant Employee Rights expire (if not yet exercised), or it may otherwise recover from the participant some or all Shares issued upon exercise of the Employee Rights or any proceeds received from the sale of those shares.

(vii) Variation of share capital

If prior to the exercise of an Employee Right, the Company undergoes a reorganisation of capital or bonus issue, the terms of the Employee Rights will be changed to the extent necessary to comply with the Listing Rules.

Butn Limited | Prospectus

(c) employee options

As at the date of Listing, the Company will have on issue 6,818,750 Options (excluding the Lead Manager Options, which will be issued on Completion of the Offer), issued pursuant to the EIP as follows:

				Options as a %
				of market cap
			Number	on issue as at
#	Participant	Position	of Options	the Listing Date
1.	Suzanne Ewart	Independent Chairman and
		Non-executive Director	481,250	Less than 1%
2.	Rael Ross	Joint CEO and Executive Director	1,300,000	Less than 1%
3.	Walter Rapoport	Joint CEO and Executive Director	1,300,000	Less than 1%
4.	Georg Chmiel	Independent Non-executive Director	306,250	Less than 1%
5.	Mike Hirst	Independent Non-executive Director	306,250	Less than 1%
6.	Darryl Lasnitzki	Chief Financial Officer and Company Secretary	1,250,000	Less than 1%
7.	Mark Newstead	Chief Operating Officer	546,875	Less than 1%
8.	Abhinov Gulati	Chief Technology Officer	781,250	Less than 1%
9.	Simran Gambhir	Chief Information Officer	546,875	Less than 1%
	total		6,818,750

Each of the Options issued:

(i) will have an exercise price of $0.50 being the Offer Price for the Shares issued under this Prospectus;
(ii) will expire 5 years after the date of grant if not exercised;
(iii) subject to the vesting conditions noted below, can be exercised at any time after the date of issue until the expiry date; and
(iv) will vest in three equal tranches as follows:
(A) the first tranche vests on the date that the Company is Listed;
(B) the second tranche vests 12 months after the Listing Date; and
(C) the third tranche vests 24 months after the Listing Date.

If the Optionholder ceases to be employed/engaged by the Company (i) for cause (e.g. due to fraud or misconduct) or (ii) because they resign prior to the relevant vesting date, all of the Optionholder’s Options will lapse at the discretion of the Board. Where the Optionholder ceases to be employed/engaged by the Company for any other reason, the Optionholder will be permitted to retain some or all of their Options at the discretion of the Board (the number of Options to be retained will depend on the date the Optionholder’s engagement with the Company ceases).

(d) exempt share award

The Company will also issue 2,000 Shares to each employee (including senior management but excluding Directors) for nil consideration at a value of $1,000 as an exempt share award. The number of Shares to be issued to each employee will be calculated by dividing $1,000 by the Offer Price.

Shares or Options issued under the EIP may also be subject to escrow restrictions as described in Section 7.18.

06. Board, Management and Corporate Governance

6.6 Legal or disciplinary action

No Director or member of senior management (or company that the person was a director of at the relevant time) has, in the 10 year period ending on the date of this Prospectus, had any legal or disciplinary action against them that is relevant to their role in the Company and a potential investor’s decision to apply for Shares.

6.7 Insolvent companies

No Director or member of senior management has been an officer of a company that entered into a form of external administration because of insolvency while they were an officer of the company or within 12 months of them ceasing to be an officer of the company.

6.8 Corporate Governance

(a) overview

The Directors are responsible for approving and authorising the strategic direction of the Company, the identification and implementation of corporate policies and goals, and monitoring of the business and affairs of Butn on behalf of its members. The Company is cognisant of the ASX Recommendations as published by ASX Corporate Governance Council and acknowledges that the eight principles set out in that document are fundamental to good corporate governance.

The Board believes that the structure of the Company, its management and business practices provide a basis of governance which meets the essential corporate governance principles articulated by ASX in that publication.

(b) Committees

One of the key objectives of the Board is to ensure timely, transparent and accurate communication with all members and compliance with all regulatory requirements (including its ASX continuous disclosure requirements once Listed). To this end the Board has formally adopted a Corporate Governance Policy for the Company.

Under this Corporate Governance Policy, the Board has established:

y an Audit and Risk Committee:
whose primary function is to provide additional assurance regarding the quality and reliability of financial information used by the Board and financial information provided by the Company pursuant to its statutory reporting requirements, including by (among other things):
- » assessing the veracity of financial information prepared by the Company;
- » assessing information from auditors that affect the quality of financial reports;
- » requesting independent opinions from external auditors about the appropriateness of accounting principles used and the clarity of the financial disclosure practices used or proposed to be used as put forward by management;
- » assessing the management of non-financial information in documents (both public and internal) to ensure the information does not conflict inappropriately with the financial statements and other documents, as well as assessing internal control systems covering information releases that have the potential to reflect negatively on the Company’s conduct; and
- » reviewing management’s processes for ensuring compliance with laws, regulations and other requirements (including the Australian Accounting Standards, the Corporations Act, the ASX Listing Rules and the ASX Operating Rules) relating to the external reporting of financial and non-financial information.

The Company will adhere to the recommendations in the ASX Recommendations concerning the composition and conduct of the Audit and Risk Committee.

The Audit and Risk Committee will comprise Non-executive Directors Georg Chmiel (Committee Chair), Suzanne Ewart and Mike Hirst.

Butn Limited | Prospectus

y a Nomination and Remuneration Committee:
whose primary role is to assist the Board in fulfilling its responsibilities for corporate governance and overseeing the Company’s nomination and remuneration policies and practices, including by (among other things):
- » reviewing and recommending remuneration packages and policies related to the Directors and senior executives;
- » reviewing the composition of the Board to ensure that the Board has an appropriate mix of expertise and experience and to assess and review the performance of the Directors of the Company; and
- » reviewing and reporting to the Board on matters concerning executives’ and Directors’ remuneration.

The Company will adhere to the recommendations in the ASX Recommendations concerning the composition and operation of the Nomination and Remuneration Committee.

The Nomination and Remuneration Committee will comprise Non-executive Directors Mike Hirst (Committee Chair), Georg Chmiel and Suzanne Ewart.

(c) Internal audit

Recommendation 7.3 of the ASX Recommendations provides that a listed entity should disclose:

y if it has an internal audit function, how the function is structured and what role it performs; or
y if it does not have an internal audit function, that fact and the processes it employs for evaluating and continually improving the effectiveness of its governance, risk management and internal control processes.

Butn does not have, nor does it currently intend to implement an internal audit function. Butn’s Audit and Risk Committee will be responsible for evaluating and continually improving the effectiveness of Butn’s governance, risk management and internal control processes, cognizant of the size, stage, and scope of the Company’s activities.

(d) Policies and charters

Incorporated into the Company’s Corporate Governance Policy, which can be found on the Company’s website at butn.co, the Board has adopted the following policies and charters, each of which comply with the ASX Recommendations.

Board charter

The Company’s Corporate Governance Policy sets out a ‘Primary Board Charter’ which outlines both the respective roles and responsibilities of its board and management (and those expressly reserved to the board or delegated to management).

In general, the Board assumes (amongst others) the following responsibilities:

y the appointment and replacement of Directors and senior executives of the Company and determining the terms and conditions of their engagement;
y overseeing management in its implementation of the Company’s strategic objectives, instilling of the Company’s values and performance generally;
y reviewing risk management, governance and internal compliance processes and policies;
y overseeing the Company’s process for making timely and balanced disclosure of all material information concerning the entity that a reasonable person would expect to have a material effect on the price or value of the Company’s securities;
y approving and monitoring the budget and the adequacy and integrity of financial and other reporting;
y approving the annual and half yearly accounts;

06. Board, Management and Corporate Governance

y approving the issue of any shares, options, equity securities or other financial instruments in the Company (subject to compliance with the ASX Listing Rules and the Constitution); and
y recommending to Shareholders the appointment of the external auditor as and when their appointment or re-appointment is required to be approved by them.

Disclosure Policy

Once Listed, the Company will be required to comply with the continuous disclosure requirements of the ASX Listing Rules. Subject to the exceptions contained in the ASX Listing Rules, the Company will be required to immediately disclose to the ASX any information concerning the Company which is not generally available and which, if it was made available, a reasonable person would expect to have a material effect on the price or value of the Company’s securities, once the Company becomes aware of such information.

The Company has adopted a Continuous Disclosure Policy to take effect from Listing, which establishes procedures to ensure that Directors and senior management are aware of, and fulfil their obligations in relation to continuous disclosure, including the timely, full and accurate disclosure of material price-sensitive information when required. The Continuous Disclosure Policy also sets out procedures for communicating with Shareholders, the media and the market.

shareholder Communication Policy

The ASX Recommendations provide that a listed entity should have an investor relations program that facilitates effective two-way communication with investors. To the end, the Company has established a Shareholder Communications Policy, comprising a set of strategies designed to promote effective communication with investors. These strategies include (among others):

y Shareholder meetings are structured to provide effective communication to Shareholders and allow reasonable opportunity for informed shareholder participation;
y the Company’s external auditor attends each annual general meeting of the Company and is available to respond to Shareholder questions in relation to any audit related questions;
y the Company will look to provide other forms of attending a meeting (e.g. dialling in or through other digital means) where Shareholders cannot attend meetings in person;
y the Company’s annual report is available to each Shareholder; and
y the Company posts on the ‘Corporate Governance’ section of its website and keeps posted for a reasonable period all of its relevant corporate governance information.

securities trading Policy

The Board has adopted a policy that sets out the parameters which key management personnel (that is, any person who has authority and responsibility for planning, directing and controlling the activities of the Company, directly or indirectly, including any director (whether executive or otherwise), the CEO of the Company and other relevant senior executives) must adhere to in relation to the sale and purchase of securities in the Company.

The policy provides (among other things) that trading in the Company’s securities is not permitted in the period leading up to the publication of the Company’s yearly and half-yearly results. In particular, trading is prohibited in the following closed periods:

y from 1 July until one day after the release of the Company’s full year results;
y from 1 January until one day after the release of the Company’s half year results; and
y any other period as determined by the Board from time to time.

Additionally, the policy provides that at all times, key management personnel and their closely related parties are strictly prohibited from trading in derivatives, or engaging in short-term trading, short selling or other secured financing arrangements (including but not limited to margin lending) in relation to the Company and/or the Company’s securities.

Butn Limited | Prospectus

Code of Conduct

The Company considers that maintaining integrity and ethical standards in all of its activities is a high priority. To ensure its high standards for integrity and ethics are maintained, the Board has adopted a formal Code of Conduct.

The key obligations under the code are to:

y act in accordance with the Company’s values and corporate goals;
y act in the best interests of the Company;
y act honestly, ethically, responsibly and with high standards of personal integrity;
y comply with all laws and regulations that are applicable to the Company and its operations;
y treat fellow colleagues with respect and not engage in bullying, harassment or discrimination;
y disclose and deal appropriately with any conflicts between their personal interests and their duties as a director, senior executive, key management personnel, officer or employee of the Company; and
y not take advantage of the property or information of the Company or its customers for personal gain or to cause detriment to the Company or its customers.

Diversity Charter

The Board values diversity and recognises the benefits it can bring to the organisation’s ability to achieve its corporate objectives. Accordingly, the Company has set in place a Diversity Charter. This Charter outlines the Company’s diversity objectives in relation to gender, age, cultural background and ethnicity. The Board may establish measurable objectives for achieving diversity, and is responsible for assessing annually both the objectives, and the Company’s progress in achieving them.

Whistleblower Protection Policy

The Company is committed to creating a working environment in which its personnel are encouraged to raise any matters of concern in good faith without fear of retribution.

The Company has therefore adopted a Whistleblower Protection Policy to provide its personnel with a mechanism for addressing any concerns about the Company’s operations and activities.

The Whistleblower Protection Policy:

y establishes a process for whistleblowers to raise their concerns without fear of adverse consequences;
y outlines the legal protections for whistleblowers;
y specifies the circumstances in which matters may be disclosed in accordance with the policy, for example where conduct of the Company, its related bodies corporate or personnel:
constitutes misconduct including unethical, illegal, dishonest, fraudulent or corrupt conduct or constitutes improper state of affairs or circumstances;
amounts to a breach of certain laws; or
represents a danger to the public or the financial system; and
y specifies the circumstances in which matters may not be disclosed under the policy. In particular, matters that have implications for the Company’s personnel personally, but do not have significant implications for the Company are not captured by the Whistleblower Policy.

06. Board, Management and Corporate Governance

Anti‑bribery and Corruption Policy

Through its Anti-bribery and Corruption Policy, the Company outlines its expectations for its personnel to adopt a zero-tolerance approach to bribery and corruption.

The Anti-bribery and Corruption Policy stipulates the:

y responsibilities of the Company’s personnel, including in their dealings with, and through, any third parties;
y types of conduct that are prohibited by the policy, including providing, offering or promising a bribe, using false or fraudulent documents, or intentionally and improperly destroying documents or financial records without the prior written consent of the Company;
y consequences of breaching the policy; and
y Company’s procedures in implementing and monitoring compliance.

(e) AsX recommendations

While the ASX Recommendations are not compulsory, the Company will and in accordance with ASX Listing Rule 4.10, advise the market whether it meets the ASX Recommendations and if not, state why not.

The Company intends to be compliant with the ASX Recommendations from the time of its Listing.

The Company intends to keep its Shareholders up to date on all material information through its website (butn.co) and/or the ASX platform under its ASX ticker code BTN.

Butn Limited | Prospectus

07 Details of the offer

07. 96 Details of the offer

7.1 the offer

The Company is undertaking an Offer of 40 million Shares at $0.50 per Share to raise $20 million before costs. The Shares issued under this Prospectus will represent approximately 25% of Shares on issue upon Completion of the Offer.

The Offer is made subject to the terms and conditions set out in this Prospectus. All Shares will rank equally with each other.

Please refer to the Key Offer Information Section for the Opening Date and Closing Dates for the Offer, and refer to Sections 7.13(b), 7.14(a), and 7.15(b) for details on how to apply for Shares under the Offer.

7.2 structure of the offer

This Offer comprises the:

(a) Broker Firm offer – open to Australian resident retail clients of Brokers who have received a firm allocation for their Broker;
(b) Institutional offer – an invitation to bid for Shares made to Institutional Investors in Australia and in certain other eligible jurisdictions; and
(c) Priority offer – open to select investors nominated by Butn in eligible jurisdictions, who receive a Priority Offer invitation to acquire Shares under this Prospectus.

No general public offer for Shares will be made under this Prospectus.

Details of Broker Firm Offer and the allocation policy under it are described in Section 7.13.

Details of the Institutional Offer and the allocation policy under it are described in Section 7.14.

Details of the Priority Offer and the allocation policy under it are described in Section 7.15.

The allocation of Shares between the Broker Firm Offer, Institutional Offer and the Priority Offer will be determined by the Lead Manager in agreement with the Company having regard to the allocation policies described above.

The Offer has been fully underwritten by the Lead Manager. A summary of the Underwriting Agreement, including the events which would entitle the Lead Manager to terminate the Underwriting Agreement, are set out in Section 10.6(a).

7.3 Important dates

The key dates, including details of the Offer Period, are set out in the Key Offer Information Section of this Prospectus.

The Company reserves the right to close any of the Offers early, extend the Offer Closing Date for any Offer or accept late Applications without notifying any recipients of this Prospectus or any Applicants. Any change to the Offer Closing Date (including if closed early or extended) will have a consequential effect on the date for the issue of the Shares. No Shares will be issued or transferred on the basis of this Prospectus later than 13 months after the date of this Prospectus.

Butn Limited | Prospectus

7.4 Purpose of the offer and use of funds

The purpose of the Offer is to raise funds to:

(a) achieve a listing on the ASX, broadening the Company’s investor base and future access to capital;
(b) invest in Butn’s core business model, access new markets and continue product development, principally focused on its growth objectives; and
(c) repay the Related Party Loans (see Section 6.4 for details).

Subject to the qualifications noted in Section 5.2(f) of this Prospectus, the Directors are satisfied that following the successful close of the Offer and from the application of existing funds, the Company will have sufficient working capital to meet its stated objectives.

The following table shows the proposed application of funds raised as part of the Offer:

		Use of funds
Item		(million)*
Funds to invest in Butn’s core business model, access new markets and products including:		$13.9
(a) Receivables book growth, working capital & corporate administration approximately
$9.0 million
(b) Marketing, sales and brand development approximately $2.4 million
(c) Platform and product development approximately $2.5 million
Repayment of Related Party Loans		$3.8
Cash expenses associated with the Offer (including GST)		$2.3
total		$20.0

Rounded

Notes:

The above table does not reflect current cash (31/12/20: $18.4 million) or cash inflows from revenue that will be generated by the Group in the normal course of business.

The Board reserves the right to vary the use of funds, acting in the best interests of Butn’s shareholders and as circumstances require.

7.5 shares to Convertible Noteholders

The Company has raised capital for working capital purposes and in order to finance the IPO in the form of the Convertible Notes, totalling $12.5 million (before transaction costs).

The Company will issue 47,616,856 Shares to the Noteholders with respect to the conversion of the Convertible Notes.

07. Details of the offer

7.6 employee Incentive Plan

As at the date of Listing, the Company will have on issue 6,818,750 Options (excluding the Lead Manager Options, which will be issued on Completion of the Offer), all of which were issued pursuant to the EIP.

A summary of the terms of the Options, and the parties to whom they were issued is set out in Section 6.5(c) of this Prospectus.

The Company will also issue 2,000 Shares to each employee at a value of $1,000 as an exempt share award (see Section 6.5(d) of this Prospectus for details).

7.7 Lead Manager options

On Completion of the Offer, the Company will issue to the Lead Manager (or nominated holding entity) 4,800,000 Lead Manager Options. The Shares subject to these Options, if exercised, would equate to approximately 3% of the market capitalisation of the Company following the Completion of the Offer.

A summary of the entitlements of the Lead Manager is set out in Section 10.7(d).

7.8 substantial shareholders

As at the date of this Prospectus, the Company has 72,383,144 Shares on issue, of which 36,191,572 are held by Why K Pty Ltd as trustee for the Rael Ross Family Trust ( Why K ) and 36,191,572 are held by Walrap Nominees Pty Ltd as trustee for the Walter Rapoport Family Trust ( Walrap ).

Rael Ross holds a beneficial interest in Why K, while Walter Rapoport holds a beneficial interest in Walrap.

This shareholding will constitute 45.2% of the Company’s share capital following the successful Completion of the Offer (assuming that $20 million is raised under the Offer but that no options issued by Butn are exercised).

Those Shareholders holding or controlling 5% or more of the securities on issue following Completion of the Offer are set out below:

					% (assuming
	Relationship		Number	Number	the $20 million
Name	to Company		of Shares	of Options	is raised)*
Why K	Related party of		36,191,572	1,300,000	22.6%
	Rael Ross (Co-Founder
	and Joint CEO)
Walrap	Related party of		36,191,572	1,300,000	22.6%
	Walter Rapoport
	(Co-Founder and
	Joint CEO)
MYOB Invest Co	Promoter (holder of		31,840,000*	N/A	19.9%
	over 10% of the Shares
	on issue post-IPO	*18,798,943 Shares will be issued to MYOB
			Invest Co on
			conversion of the
			Convertible Notes.
			Included in the
			31,840,000 Shares to
			be issued to MYOB
			Invest Co, MYOB
			Invest Co has agreed
			to subscribe for an
			additional 13,041,057
			Shares under
			the Offer.

Assuming that these Shareholders do not subscribe for Shares under the Offer (other than in relation to MYOB Invest Co’s subscription under the Right of First Refusal) and no options issued by Butn (as detailed in this Prospectus) have been exercised. These calculations also exclude any Shares issued to Butn’s employees under Butn’s Employee Incentive Plan (see Section 6.5(d) for details).

Butn Limited | Prospectus

The Company will announce to the ASX details of its top 20 Shareholders (following Completion of the Offer) prior to the Shares commencing trading on ASX.

7.9 Corporate structure of Butn

The diagram below represents the Group’s corporate structure at the date of this Prospectus.

==> picture [471 x 223] intentionally omitted <==

----- Start of picture text -----

Butn Limited
ACN 644 182 883
( Butn )
100%
Action Funding Group
Pty Ltd
ACN 626 253 263
( AFG )
100% 100% 100% 100%
Australian Factoring Faultless Recovery
Action Funding Pty Ltd Butn IP Pty Ltd
ACN 607 725 557 Company Pty Ltd ACN 630 296 169 Services Pty Ltd
ACN 166 764 978 ACN 612 935 065
( AF1 ) ( Butn IP )
( AFC ) ( Faultless )
91% 91% 100%
New Zealand Factoring
AMAL Trustees Pty Ltd AMAL Trustees Pty Ltd
ACN 609 737 064 as trustee ACN 609 737 064 as trustee Company Limited
NZBN 94290470059
for the AFC 2018-1 Trust for the AFC 2019-1 Trust
( NZFC )
----- End of picture text -----

The key functions of the entities within the Group are as follows:

(a) Butn Limited (‘Butn’) is the parent company of the Group.
(b) Action Funding Group Pty Ltd (‘AFG’) is the previous parent company of the Group.
(c) Australian Factoring Company Pty Ltd (‘AFC’) is the current operating entity of the Group – this is the entity through which the Group conducts its financing transactions.
(d) Butn IP Pty Ltd (‘Butn IP’) is the holding company for Butn’s intellectual property.
(e) Faultless Recovery Services Pty Ltd (‘Faultless’) is the entity through which the Group undertakes debt recovery activities.
(f) The AFC 2018-1 Trust and the AFC 2019-1 Trust were established to issue Debt Notes to fund the purchase of Trust Receivables (see Section 10.5 for further information).
(g) New Zealand Factoring Company Ltd (‘NZFC’) is the entity through which the Group undertakes its New Zealand operations (at present, the Group’s New Zealand operations are negligible).
(h) Action Funding Pty Ltd (‘AF1’) is currently dormant.

7.10 Pro forma historical and consolidated balance sheet

Butn’s pro forma balance sheet following Completion of the Offer, including details of the pro forma adjustments, is set out in Section 4 of this Prospectus.

7.11 Control

The Directors do not expect any Shareholder to control Butn (within the meaning of Section 50AA of the Corporations Act) on Completion of the Offer.

100

07. Details of the offer

7.12 terms and conditions of the offer

Topic	Summary
What is the type of security being offered?	Ordinary, fully paid Shares in Butn.
What are the rights and liabilities attached to the securities being offered?	A description of the Shares, including the rights and liabilities attaching to them, is set out in Section 10.4.
What is the consideration payable for the shares?	The Offer Price is $0.50 per Share.
What are the cash proceeds to be raised?	Up to $20 million (before costs and expenses).
What is the minimum and maximum Application size under the Broker Firm offer and the Priority offer?	Broker Firm offer Applications for Shares under the Broker Firm Offer must be for a minimum of 4,000 Shares and thereafter in multiples of 1,000 Shares and payment for the Shares must be made in full at the issue price of $0.50 per Share. There is no maximum number of value of Shares that may be applied for under the Offer. Priority offer Applications must be for a minimum of 4,000 Shares. Applications in excess of the minimum number of Shares must be in multiples of 1,000 Shares. There is no maximum amount that may be applied for under the Priority Offer.
Is the offer underwritten?	Yes. The Lead Manager has fully underwritten the Offer pursuant to the Underwriting Agreement. Details are provided in Section 10.6(a).
What is the allocation policy?	The allocation of Shares between the Broker Firm Offer, the Institutional Offer and the Priority Offer will be determined by agreement between the Company and the Lead Manager, having regard to the policies described in Sections 7.13(d), 7.14(b), and 7.15(a).
When will I receive confirmation whether my Application has been successful?	It is expected that initial holding statements will be mailed by standard post on or about 17 June 2021.

Butn Limited | Prospectus

101

Topic	Summary
Will the shares be quoted?	The Company will apply for admission to the Official List of the ASX and quotation of Shares on ASX under the code “BTN”. Completion of the Offer is conditional on the ASX approving this application. If approval is not given within three months after such application is made (or any longer period permitted by law), the Offer will be withdrawn and all Application Monies received will be refunded without interest as soon as practicable. The Company will be required to comply with the ASX Listing Rules, subject to any waivers obtained by the Company from time to time. ASX takes no responsibility for this Prospectus or the investment to which it relates. The fact that ASX may admit the Company to the Official List is not to be taken as an indication of the merits of the Company or the Shares offered for subscription.
When are the shares expected to commence trading?	It is expected that trading of the Shares on the ASX will commence on 18 June 2021. It is the responsibility of each Applicant to confirm their holding before trading in Shares. Applicants who sell Shares before they receive an initial statement of holding do so at their own risk. The Company, the Share Registry and the Lead Manager disclaim all liability, whether in negligence or otherwise, to persons who sell Shares before receiving their initial statement of holding, even if such person received confirmation of allocation from the Share Registry, by a Broker or otherwise.
Are there any escrow arrangements?	Yes. Details are provided in Section 7.18 below.
Are there any taxation considerations?	Yes. Please refer to Section 9 and note it is recommended that all potential investors consult their own independent tax advisers regarding the income tax (including capital gains tax), stamp duty and GST consequences of acquiring, owning and disposing of Shares, having regard to their specific circumstances.
Has any AsIC relief or AsX waiver or confirmation been sought, obtained or relied on?	Yes. Details are provided in Sections 7.19 and 7.20.
Are there any brokerage, commission or stamp duty considerations?	No brokerage, commission or stamp duty is payable by Applicants on acquisition of Shares under the Offer.

102

07. Details of the offer

Topic	Summary
What should I do	Enquiries in relation to this Prospectus may be directed to the Share Registry
with any enquiries?	on 1800 451 641 (toll free within Australia) or +61 1800 451 641 (outside Australia)
	from 8.30 am until 5.30 pm (AEST) Monday to Friday.
	Enquiries in relation to the Broker Firm Offer should be directed to your Broker.
	If you are unclear in relation to any matter or are uncertain as to whether
	the Company is a suitable investment for you, you should seek professional
	guidance from your stockbroker, solicitor, accountant, financial adviser or
	other independent professional adviser before deciding whether to invest.

7.13 Broker Firm offer

(a) Who may apply?

The Broker Firm Offer is open to persons who have received a firm allocation of Shares from their Broker and who have a registered address in Australia. If you have received a firm allocation of Shares from your Broker, you will be treated as an Applicant in respect of that allocation. You should contact your Broker to determine whether you can receive an allocation of Shares from them under the Broker Firm Offer.

The Broker Firm Offer is not open to persons in the United States.

(b) How to apply

Applications for Shares under the Broker Firm Offer must be made using the appropriate Application Form. If you are an investor applying under the Broker Firm Offer, you should complete and lodge your Application Form and Application Monies with the Broker from whom you received your firm allocation of Shares. Applicants under the Broker Firm Offer must not be sent to the Share Registry.

Applications for Shares under the Broker Firm Offer must be for a minimum of 4,000 Shares and thereafter in multiples of 1,000 Shares and payment for the Shares must be made in full at the issue price of $0.50 per Share. The Company and Lead Manager reserve the right to aggregate any Applications which they believe are multiple applications from the same person, or to reject or scale back any Applications.

There is no maximum number of value of Shares that may be applied for under the Offer. However, the Company and the Lead Manager reserve the right to close the Offer early or extend the Offer, and may amend or waive the Offer Application procedures in their discretion (subject to the applicable laws).

By submitting an Application, you declare that you were given access to this Prospectus, together with an Application Form.

Under the Corporations Act, a person must not pass an Application Form to another person unless it is attached to, or accompanied by, a hard copy of this Prospectus or the complete and unaltered electronic version of this Prospectus.

Neither the Company, the Lead Manager, nor the Share Registry takes any responsibility for any acts or omissions of your Broker in connection with an Application.

(c) How to pay

Applicants under the Broker Firm Offer must pay their Application Monies in accordance with instructions received from their Broker.

(d) Broker Firm allocation policy

The allocation of firm stock to Brokers has been determined by agreement between the Company and the Lead Manager. Shares which have been allocated to Brokers for allocation to their Australian resident retail clients will be issued to the Applicants who have received a valid allocation of Shares from those Brokers (subject to the right of the Company and the Lead Manager to reject or scale back Applications). It will be a matter for those Brokers how they allocate Shares among their retail clients and they (and not the Company or the Lead Manager) will be responsible for ensuring that retail clients, who have received an allocation of Shares from them, receive the relevant Shares.

Butn Limited | Prospectus

103

(e) Application Monies

Application Monies received under the Broker Firm Offer will be held in a special purpose account until Shares are issued or transferred to successful Applicants. Applicants under the Broker Firm Offer whose Applications are not accepted, or who are allocated a lesser dollar amount of Shares than the amount applied for, will be mailed (or otherwise in the Company’s discretion provided with) a refund (without interest) of all or part of their Application Monies, as applicable. No refunds pursuant solely to rounding will be provided. Interest will not be paid on any Application Monies refunded and any interest earned on Application Monies pending the allocation or refund will be retained by the Company.

(f) Announcement of final allocations in Broker Firm offer

Applicants in the Broker Firm Offer will be able to confirm their allocation through the Broker from whom they received their allocation.

7.14 Institutional offer

(a) Invitation to bid

The Institutional Offer is an invitation by the Lead Manager to Australian resident Institutional Investors and other eligible Institutional Investors in jurisdictions outside the US to bid for Shares, made under this Prospectus. The Lead Manager separately advised Institutional Investors of the Application procedures for the Institutional Offer.

(b) Institutional offer allocation policy

The allocation of Shares between the Institutional Offer and the Broker Firm Offer will be determined by agreement between the Company and the Lead Manager. The Lead Manager, in consultation with the Company, determined the basis of allocation of Shares among Institutional Investors. Participants in the Institutional Offer have been advised of their allocation of Shares, if any, by the Lead Manager.

The allocation policy was influenced by the following factors:

(i) the number of Shares bid for by particular bidders;
(ii) the timeliness of the bid by particular bidders;
(iii) the Company’s desire for an informed and active trading market following Listing on ASX;
(iv) the Company’s desire to establish a wide spread of institutional Shareholders;
(vi) overall levels of demand under the Broker Firm Offer and Institutional Offer;
(vi) the size and type of funds under management of particular bidders;
(vii) the likelihood that particular bidders will be long term Shareholders; and
(viii) any other factors that the Company and the Lead Manager considered appropriate.

7.15 Priority offer

(a) Who may apply?

The Priority Offer is open to select investors nominated by the Company in eligible jurisdictions who have received a Priority Offer invitation to acquire Shares under this Prospectus. If you are a Priority Offer Applicant, you will receive a personalised invitation to apply for Shares in the Priority Offer.

(b) How to apply

If you have received a personalised invitation to apply for Shares under the Priority Offer and you wish to apply, you must do so in accordance with the instructions provided in your personalised invitation.

Recipients of the Priority Offer invitation should read the separate Offer letter and this Prospectus carefully and in their entirety before deciding whether to apply under the Priority Offer. If you are unclear in relation to any matter or are uncertain as to whether Shares are a suitable investment for you, you should seek professional guidance from your accountant, financial adviser, stockbroker, lawyer or other professional adviser before deciding whether to invest.

104

07. Details of the offer

To apply under the Priority Offer, you must complete the online ‘Priority Offer Application Form’ in accordance with the instructions provided in your Priority Offer invitation and on the website containing the Application Form.

By making an Application, you declare that you were given access to this Prospectus together with an Application Form.

Applications must be received by no later than 5.00 pm (AEST) on 9 June 2021 and it is your responsibility to ensure that this occurs.

(c) Is there a minimum or maximum Application size?

Applications must be for a minimum of 4,000 Shares. Applications in excess of the minimum number of Shares must be in multiples of 1,000 Shares.

There is no maximum amount that may be applied for under the Priority Offer. However, there is no assurance that any Applicant will be allocated any Shares, or the number of Shares for which the Applicant applied.

(d) How to pay

Applicants under the Priority Offer must pay their Application Monies in accordance with the instructions for electronic payment on the online Application Form.

Payment must be made in Australian dollars and via Bpay[®] , and must otherwise be made in accordance with the instructions provided on your personalised invitation. Application Monies must be received by the Share Registry by 5:00pm (AEST) on 9 June 2021. It is your responsibility to ensure that your Bpay[®] payment is received by the Share Registry by no later than 5:00pm (AEST) on 9 June 2021. You should be aware that your financial institution may implement earlier cut-off times with regard to electronic payment, and you should therefore take this into consideration when making payment.

(e) Application Monies

Application Monies received under the Priority Offer will be held in a special purpose account until Shares are issued or transferred to successful Applicants. Applicants under the Priority Offer whose Applications are not accepted, or who are allocated a lesser dollar amount of Shares than the amount applied for, will be mailed (or otherwise in the Company’s discretion provided with) a refund (without interest) of all or part of their Application Monies, as applicable. No refunds pursuant solely to rounding will be provided. Interest will not be paid on any Application Monies refunded and any interest earned on Application Monies pending the allocation or refund will be retained by the Company.

(f) How do I confirm my allocation?

Applicants in the Priority Offer will be able to call the Butn IPO Offer Information Line on 1800 451 641 (within Australia) or +61 1800 451 641 (outside Australia, from 8.30 am to 5.30 pm (AEST)), Monday to Friday (excluding public holidays) to confirm their allocation from the Allotment Date.

If you sell Shares before receiving a holding statement, you do so at your own risk, even if you obtained details of your holding from the Butn IPO Offer Information Line.

7.16 restrictions on distribution

Each Applicant in the Offer, including the Broker Firm Offer, Institutional Offer and Priority Offer will be taken to have represented, warranted and agreed as follows:

(a) it understands that the Shares have not been, and will not be, registered under the US Securities Act or the securities laws of any state of the US and may not be offered, sold or resold in the US;
(b) it is not in the US;

Butn Limited | Prospectus

105

(c) it has not and will not send the Prospectus or any other material relating to the Offer to any person in the US; and
(d) it will not offer or sell the Shares in the US or in any other jurisdiction outside Australia.

7.17 Acknowledgements

Each Applicant under each Offer will be required to make certain representations, warranties and covenants set out in the confirmation of allocation letter distributed to it.

Additionally, each Applicant under the Offer will be deemed to have:

(a) agreed to become a member of the Company and to be bound by the terms of the Constitution and the terms and conditions of the Offer;
(b) acknowledged having personally received a printed or electronic copy of the Prospectus (and any supplementary or replacement prospectus) accompanying the Application Form and having read them all in full;
(c) declared that all details and statements in their Application Form are complete and accurate;
(d) declared that the Applicant(s), if a natural person, is/are over 18 years of age;
(e) acknowledged that once the Company receives an Application Form it may not be withdrawn;
(f) applied for the number of Shares at the Australian dollar amount shown on the front of the Application Form;
(g) agreed to being allocated and issued the number of Shares applied for (or a lower number allocated in a way described in this Prospectus), or no Shares at all;
(h) authorised the Company and the Lead Manager and their respective Officers or agents, to do anything on behalf of the Applicant(s) necessary for Shares to be allocated to the Applicant(s), including to act on instructions received by the Share Registry upon using the contact details in the Application Form;
(i) acknowledged that, in some circumstances, the Company may not pay dividends;
(j) acknowledged that any dividends paid by the Company may be unfranked or only partially franked and that the unfranked portion of any such dividends may not attach conduit foreign income;
(k) acknowledged that the information contained in this Prospectus (or any Supplementary Prospectus) is not investment advice or taxation advice or a recommendation that Shares are suitable for the Applicant(s), given the investment objectives, financial situation or particular needs of the Applicant(s); and
(l) declared that the Applicant(s) is/are a resident of Australia and are not acting for the account or benefit of any person in the United States or any other foreign person (except as applicable to the Institutional Offer, or if they are an overseas Applicant, they are in full compliance with all laws of any country relevant to their Application).

7.18 restricted securities

Subject to the Company being admitted to the Official List, certain securities on issue in the Company prior to the Offer will be classified by ASX as restricted securities and will be required to be held in escrow for up to 24 months from the date of Listing.

No Shares issued under the Offer are subject to escrow. However, certain Shares and other securities held by seed investors, related parties of the Company and promoters will be subject to ASX imposed escrow for a period of up to 24 months following Listing.

The Lead Manager Options issued to the Lead Manager will also be subject to ASX imposed escrow for a period of up to 24 months following the date of issue.

During the period in which these securities are prohibited from being transferred, trading in Shares may be less liquid which may impact on the ability of a Shareholder to dispose of his or her Shares in a timely manner.

The Company will announce to the ASX full details (quantity and duration) of the Securities required to be held in escrow prior to the Shares commencing trading on ASX.

106

07. Details of the offer

The table below sets out the periods during which certain Shareholders will be restricted from dealing in their securities pursuant to ASX restrictions following Completion of the Offer.

Escrowed	Type of Escrow			Escrowed
party	Condition	Escrow Period	Escrowed Shares	Options
Suzanne Ewart	ASX imposed	24 months from IPO	18,425	481,250
Rael Ross	ASX imposed	24 months from IPO	36,191,572	1,300,000
			– held by Why K
			(related party of
			Rael Ross)
Walter Rapoport	ASX imposed	24 months from IPO	36,191,572	1,300,000
			– held by Walrap
			(related party of
			Walter Rapoport)
Mike Hirst	ASX imposed	24 months from IPO	184,240*	306,250
			*92,120 Escrowed Shares
			held by a closely related
			party of Mike Hirst.
Georg Chmiel	ASX imposed	24 months from IPO	–	306,250
Elkay Investments	ASX imposed	24 months from IPO	276,358	–
Pty Ltd (related
party of Rael Ross,
Co-Founder and
Executive Director)
MYOB Invest Co	ASX imposed	24 months from IPO	8,798,943	–
Lead Manager	ASX imposed	24 months from IPO	–	4,800,000
Other Shareholders	ASX imposed	12 months from the	13,338,890	–
		date of issue
total			95,000,000	8,493,750

Notes:

The ASX will make a final determination of the mandatory escrow to be applied to Shares and Options, which may differ from the arrangements set out in this Prospectus.

Butn Limited | Prospectus

107

7.19 AsIC relief

ASIC has indicated that it will grant the Company relief under section 741(1)(b) of the Corporations Act from the application of section 707(3) of the Corporations Act to permit the “on-sale” of certain Shares offered other than under this Prospectus.

7.20 AsX waivers

ASX has given the Company ‘in principle’ advice that it will likely provide the waivers described below on receipt of the Company’s application for Listing:

(a) A waiver from the requirements of Listing Rule 1.1, Condition 10 and Appendix 9B, Item 2 of the Listing Rules, in respect of Convertible Notes issued to parties that are not promoters, related parties or associates of related parties or promoters, such that the relevant escrow period for the Shares issued on conversion of those Convertible Notes, begins on the date on which the Convertible Notes were issued, rather than the date on which they convert into Shares.
(b) Prior to the corporate restructure of the Group referred to in Section 4.2(a) of this Prospectus, AFG was the holding company of the Group. As part of the process of establishing AFG as the holding Company of the Group (which occurred on 1 July 2019), AFG purchased the shares on issue in the other Group Companies for cash consideration from Why K and Walrap (both of which are related parties of Butn) ( Prior Acquisitions ). Notwithstanding the value of each Prior Acquisition was minimal (the value of each transaction was $100 or less), the act of AFG paying cash to acquire the other Group Companies contravenes Listing Rule 1.1, Condition 11(a). Listing Rule 1.1, Condition 11(a) requires that certain classes of assets acquired by a company applying to be Listed from a related party must be acquired for shares in that company (and not cash). ASX has indicated that it will grant Butn a waiver from compliance with Listing Rule 1.1, Condition 11(a) in relation to the Prior Acquisitions.
(c) As explained in Section 4.2(b) of this Prospectus, in preparing the Group’s FY19 financial statements (which include comparative financial information for FY18) the Directors prepared a set of combined pro forma financial statements which combined or aggregated all the assets and liabilities of the individual legal entities in the Group, as if all the entities were 100% owned by AFG from 1 July 2017 (even though they were legally owned by AFG from 1 July 2019) ( Pro Forma Model ). ASX has indicated it will permit Butn to adopt the Pro Forma Model in its FY19 financial statements submitted as part of its Listing application, provided that the financial statements provided by the Group as part of its application for Listing otherwise comply with all applicable measurements and recognition standards required pursuant to Listing Rule 1.3.5.

7.21 AsX listing, registers and holding statements, deferred settlement trading

(a) Application to AsX for listing and quotation of shares

The Company will apply to the ASX for admission to the Official List and quotation of the Shares on the ASX (which is expected to be under the code ‘BTN’).

ASX takes no responsibility for this Prospectus or the investment to which it relates. The fact that the ASX may admit the Company to the Official List is not to be taken as an indication of the merits of the Company or the Shares offered for subscription under this Prospectus.

If permission is not granted for the official quotation of the Shares on the ASX within three months after such application is made (or any later date permitted by law), all application monies received by the Company will be refunded without interest as soon as practicable.

Subject to certain conditions (including any waivers obtained by the Company from time to time), the Company will be required to comply with the ASX Listing Rules.

108

07. Details of the offer

(b) CHess and issuer sponsor holdings

The Company will apply to participate in the ASX’s Clearing House Electronic Sub-register System ( CHess ) and will comply with the ASX Listing Rules and the ASX Settlement and Operating Rules. CHESS is an electronic transfer and settlement system for transactions in securities quoted on the ASX under which transfers are effected in an electronic form.

When the Shares become approved financial products (as defined in the ASX Settlement and Operating Rules), holdings will be registered in one of two sub-registers, being an electronic CHESS sub-register or an issuer sponsored sub-register. For all successful Applicants, the Shares of a Shareholder who is a participant in CHESS or a Shareholder sponsored by a participant in CHESS will be registered on the CHESS sub-register. All other Shares will be registered on the issuer sponsored sub-register.

Following Completion of the Offer, Shareholders will be sent a holding statement that sets out the number of Shares that have been allocated to them. This statement will also provide details of a Shareholder’s Holder Identification Number ( HIN ) for CHESS holders or, where applicable, the Shareholder Reference Number ( srN ) of issuer sponsored holders. Shareholders will subsequently receive statements showing any changes to their holding. Certificates will not be issued.

Shareholders will receive subsequent statements during the first week of the following month if there has been a change to their holding on the register and as otherwise required under the ASX Listing Rules. Additional statements may be requested at any other time either directly through the Shareholder’s sponsoring broker in the case of a holding on the CHESS sub-register or through the Share Registry in the case of a holding on the issuer sponsored sub-register. The Company and the Share Registry may charge a fee for these additional issuer sponsored statements.

(c) Deferred settlement trading and selling shares on market

It is expected that trading of the Shares on the ASX (on a deferred settlement basis) will commence on or about 18 June 2021.

It is the responsibility of each person who trades in Shares to confirm their holding before trading in Shares. If you sell Shares before receiving a holding statement, you do so at your own risk. The Company, the Share Registry and the Lead Manager disclaim all liability, whether in negligence or otherwise, if you sell Shares before receiving your holding statement, even if you obtained details of your holding from the Share Registry or confirmed your firm allocation through a Broker.

Butn Limited | Prospectus

109

08 Independent Limited Assurance report

110

Tel: +61 3 9603 1700 Fax: +61 3 9602 3870 www.bdo.com.au

Collins Square, Tower 4 Level 18, 727 Collins Street Melbourne VIC 3008 GPO Box 5099 AUSTRALIA

The Directors Butn Limited Suite 10, 229 Balaclava Road Caulfield North VIC 3161 26 May 2021

Dear Directors

INDEPENDENT LIMITED ASSURANCE REPORT

Introduction

BDO Corporate Finance (East Coast) Pty Ltd ( “BDO” ) has been engaged by Butn Limited ( “Butn” or “the Company” ) to prepare this Independent Limited Assurance Report ( “Report” ) for inclusion in a prospectus proposed to be issued, in relation to the Initial Public Offering of shares in the Company, on or about 26 May 2021 ( “Prospectus” ) and listing on the Australian Securities Exchange ( “the Offer” ). Unless stated otherwise in this Report, expressions defined in the Prospectus have the same meaning in this Report.

This Report has been prepared for inclusion in the Prospectus. We disclaim any assumption of responsibility for any reliance on this Report or on the financial information to which it relates for any purpose other than that for which it was prepared.

Scope

You have requested BDO to perform a limited assurance engagement in relation to the financial information described below and disclosed in the Prospectus.

The financial information is presented in the Prospectus in an abbreviated form, insofar as it does not include all of the presentation and disclosures required by International Financial Reporting Standards ( “IFRS” ) or Australian equivalents to International Financial Reporting Standards ( “AIFRS” ) and other mandatory professional reporting requirements applicable to general purpose financial reports prepared in accordance with the Corporations Act 2001.

Our limited assurance engagement has not been carried out in accordance with auditing or other standards and practices generally accepted in any jurisdiction other than Australia and accordingly should not be relied upon as if it had been carried out in accordance with those standards and practices.

Scope of Review of the pro forma historical financial information

You have requested BDO to review the following pro forma historical financial information to be included in the Prospectus:

the pro forma statement of financial position as at 31 December 2020 (the “Pro Forma Historical Statement of Financial Position” ).

BDO Corporate Finance (East Coast) Pty Ltd ABN 70 050 038 170 AFS Licence No. 247 420 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Corporate Finance (East Coast) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms.Liability limited by a scheme approved under Professional Standards Legislation, other than for the acts or omissions of financial services licensees.

Butn Limited | Prospectus

111

The Pro Forma Historical Statement of Financial Position has been derived from the statutory historical financial information of Butn, after adjusting for the effects of pro forma adjustments described in section 4.5(d) of the Prospectus. The stated basis of preparation is the recognition and measurement principles contained in AIFRS applied to the statutory historical financial information and the event(s) or transaction(s) to which the pro forma adjustments relate, as described in section 4 of the Prospectus, as if those event(s) or transaction(s) had occurred as at the date of the historical financial information. Due to its nature, the Pro Forma Historical Statement of Financial Position does not represent the Company’s actual or prospective financial position.

The statutory historical financial information has been prepared in accordance with the stated basis of preparation, being the recognition and measurement principles contained in AIFRS and the Company’s adopted accounting policies. The statutory historical financial information used to derive the Pro Forma Statement of Financial Position has been extracted from the financial statements of Butn for the six month period ended 31 December 2020 which were reviewed by BDO Audit Pty Ltd (BDO Audit). BDO Audit issued an unqualified review conclusion on these financial statements.

Directors’ Responsibility

The directors of Butn are responsible for the preparation and presentation of the Pro Forma Historical Statement of Financial Position, including the selection and determination of pro forma adjustments made to the statutory historical financial information and included in the Pro Forma Historical Statement of Financial Position. This includes responsibility for such internal controls as the directors determine are necessary to enable the preparation of the statutory historical financial information and Pro Forma Historical Statement of Financial Position that are free from material misstatement, whether due to fraud or error.

Our Responsibility

Our responsibility is to express a limited assurance conclusion on the financial information, based on our limited assurance engagement. We have conducted our engagement in accordance with the Standard on Assurance Engagement ASAE 3450 Assurance Engagements involving Corporate Fundraisings and/or Prospective Financial Information .

The procedures we performed were based on our professional judgement and included consideration of work papers, accounting records and other documents, including those dealing with the derivation of the Financial Information of Butn from its audited financial statements for the years ended 30 June 2018, 30 June 2019 and 30 June 2020 and its reviewed financial statements for the six months ended 31 December 2020.

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

Our engagement did not involve updating, re-issuing any previously issued audit, or limited assurance reports on any financial information used as a source of the financial information.

08. Independent Limited Assurance report

112

Review Statement on the Pro Forma Historical Statement of Financial Position

Based on our limited assurance engagement, which is not an audit, nothing has come to our attention that causes us to believe that the Pro Forma Historical Statement of Financial Position as described in section 4 of the Prospectus, is not presented fairly, in all material respects, in accordance with the stated basis of preparation, as described in section 4 of the Prospectus.

Subsequent Events

Apart from the matters dealt with in this Report, and having regard to the scope of this Report and the information provided by the Directors, to the best of our knowledge and belief no material transaction or event outside of the ordinary business of the Company not described in the Prospectus, has come to our attention that would require comment on, or adjustment to, the information referred to in our Report or that would cause such information to be misleading or deceptive.

Independence

BDO is a member of BDO International Ltd. BDO does not have any interest in the outcome of the proposed IPO other than in connection with the preparation of this Report and participation in due diligence procedures, for which professional fees will be received.

General Advice Warning

This Report has been prepared, and included in the Prospectus, to provide investors with general information only and does not take into account the objectives, financial situation or needs of any specific investor. It is not intended to be a substitute for professional advice and potential investors should not make specific investment decisions in reliance on the information contained in this Report. Before acting or relying on any information, potential investors should consider whether it is appropriate for their objectives, financial situation or needs.

Without modifying our conclusions, we draw attention to the Prospectus, which describes the purpose of the financial information, being for inclusion in the Prospectus. As a result, the financial information may not be suitable for use for another purpose.

BDO has consented to the inclusion of this Report in the Prospectus in the form and context in which it is included. At the date of this Report this consent has not been withdrawn. However, BDO has not authorised the issue of the Prospectus. Accordingly, BDO makes no representation regarding, and takes no responsibility for, any other statements or material in or omissions from the Prospectus.

Butn Limited | Prospectus

113

Financial Services Guide

Our Financial Services Guide follows this Report. This guide is designed to assist retail clients in their use of any general financial product advice in our Report.

Yours faithfully

Mark Schiavello

Authorised Representative

114

08. Independent Limited Assurance report

Tel: +61 3 9603 1700 Fax: +61 3 9602 3870 www.bdo.com.au

Collins Square, Tower Four Level 18, 727 Collins Street Melbourne VIC 3008 GPO Box 5099 Melbourne VIC 3001 Australia

FINANCIAL SERVICES GUIDE

Dated: 26 May 2021

This Financial Services Guide (‘ FSG’ ) helps you decide whether to use any of the financial services offered by BDO Corporate Finance (East Coast) Pty Ltd (‘ BDO Corporate Finance, we, us, our’).

The FSG includes information about:

Who we are and how we can be contacted;
The services we are authorised to provide under our Australian Financial Services Licence, Licence No: 247420
Remuneration that we and/or our staff and any associates receive in connection with the financial services
Any relevant associations or relationships we have
Our complaints handling procedures and how you may access them.

FINANCIAL SERVICES WE ARE LICENSED TO PROVIDE

We hold an Australian Financial Services Licence which authorises us to provide financial product advice to retail and wholesale clients about securities and certain derivatives (limited to old law securities, options contracts and warrants). We can also arrange for customers to deal in securities, in some circumstances. Whilst we are authorised to provide personal and general advice to retail and wholesale clients, we only provide general advice to retail clients.

Any general advice we provide is provided on our own behalf, as a financial services licensee.

GENERAL FINANCIAL PRODUCT ADVICE

Our general advice is typically included in written reports. In those reports, we provide general financial product advice that is prepared without taking into account your personal objectives, financial situation or needs. You should consider the appropriateness of the general advice having regard to your own objectives, financial situation and needs before you act on the advice. Where the advice relates to the acquisition or possible acquisition of a financial product, you should also obtain a product disclosure statement relating to the product and consider that statement before making any decision about whether to acquire the product.

FEES, COMMISSIONS AND OTHER BENEFITS THAT WE MAY RECEIVE

We charge fees for providing reports. These fees are negotiated and agreed to with the person who engages us to provide the report. Fees will be agreed on an hourly basis or as a fixed amount depending on the terms of the agreement. In this instance, the Company has agreed to pay us $105,000 for preparing the Report.

Except for the fees referred to above, neither BDO Corporate Finance, nor any of its directors, employees or related entities, receive any pecuniary benefit or other benefit, directly or indirectly, for or in connection with the provision of general advice.

All our employees receive a salary. Our employees are eligible for bonuses based on overall company performance but not directly in connection with any engagement for the provision of a report.

REFERRALS

We do not pay commissions or provide any other benefits to any person for referring customers to us in connection with the reports that we are licensed to provide.

ASSOCIATIONS AND RELATIONSHIPS

BDO Corporate Finance is a member firm of the BDO network in Australia, a national association of separate entities (each of which has appointed BDO (Australia) Limited ACN 050 110 275 to represent it in BDO International). The general financial product advice in our report is provided by BDO Corporate Finance and not by BDO or its related entities. BDO and its related entities provide services primarily in the areas of audit, tax, consulting and financial advisory services.

We do not have any formal associations or relationships with any entities that are issuers of financial products. However, you should note that we and BDO (and its related entities) might from time to time provide professional services to financial product issuers in the ordinary course of business.

COMPLAINTS RESOLUTION

Internal Complaints Resolution Process

As the holder of an Australian Financial Services Licence, we are required to have a system for handling complaints from persons to whom we provide financial product advice. Complaints can be in writing, addressed to the Complaints Officer, BDO Corporate Finance, Level 11, 1 Margaret St, Sydney NSW 2001 or by telephone or email, using the contact details at the top of this FSG.

When we receive a complaint we will record the complaint, acknowledge receipt of the complaint within 15 days and investigate the issues raised. As soon as practical, and not more than 45 days after receiving the written complaint, we will advise the complainant in writing of our determination.

Referral to External Dispute Resolution Scheme

If a complaint relating to general advice to a retail client is not satisfied with the outcome of the above process, or our determination, has the right to refer the matter to the Australian Financial Complaints Authority ( AFCA ). AFCA is an independent company that has been established to impartially resolve disputes between consumers and participating financial services providers.

BDO Corporate Finance is a member of AFCA (Member Number 11843).

Further details about AFCA are available at the AFCA website www.afca.org.au or by contacting them directly via the details set out below.

Australian Financial Complaints Authority GPO Box 3 MELBOURNE VIC 3001 Toll free: 1800 931 678 Email: [email protected]

COMPENSATION ARRANGEMENTS

BDO Corporate Finance and its related entities hold Professional Indemnity insurance for the purpose of compensating retail clients for loss or damage suffered because of breaches of relevant obligations by BDO Corporate Finance or its representatives under Chapter 7 of the Corporations Act 2001. These arrangements and the level of cover held by BDO Corporate Finance satisfy the requirements of section 912B of the Corporations Act 2001.

CONTACT DETAILS

You may provide us with instructions using the details set out at the top of this FSG or by emailing - [email protected]

BDO Corporate Finance (East Coast) Pty Ltd ABN 70 050 038 170 AFS Licence No. 247 420 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Corporate Finance (East Coast) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation.

Butn Limited | Prospectus

115

09 taxation

116

09. taxation

9.1 taxation treatment of the Acquisition of shares

The IPO involves the acquisition of Shares which will constitute an equity interest for Australian tax purposes. There are no immediate income tax consequences to the acquirer on the acquisition of equity interests.

9.2 taxation treatment of Dividends

The treatment of the dividends which may be paid to investors whilst holding shares will vary depending on whether or not the investor is an Australian resident or a non-resident Shareholder. The taxation treatment will also vary depending on the extent to which any dividends are franked.

(a) Dividends received by Australian resident Investors

Dividends received by Australian resident investors will be assessable income for Australian tax purposes. Generally, both the amount of the cash dividend received and an amount equal to the franking credits attached to a franked dividend must be included in assessable income in the year of receipt. An Australian resident shareholder would then be entitled to a franking offset against the income tax on this assessable dividend income. However, it is important to note that securities must be held ‘at risk’ for a period of 45 days, in order for any investor to be able to claim an offset for franking credits.

The level of franking credits attached to such dividends will depend on the level of franking credits generated and available to the Company, through the payment by it of Australian company tax.

The tax treatment in respect of the dividends from ordinary shares will vary depending on the nature of the investor, as follows:

Individual Investors

An individual receiving a dividend that is unfranked will include the amount of the dividend in their assessable income, with tax being paid at the individual’s marginal rate of tax.

Where the dividend is fully or partly franked, the individual’s assessable income is grossed up to include the franking credit attaching to the dividend. The individual should then be entitled to a tax offset equal to the amount of the franking credit.

Where the individual’s marginal rate of tax is greater than the applicable corporate tax rate (which is currently 30%, unless the company qualifies for the lower base rate entity tax rate of 26.0% for the income year ended 30 June 2021 and 25.0% for the income year ended 30 June 2022), further tax will be payable on the grossed up dividend. This is commonly referred to as “top-up tax”.

Where the individual’s marginal rate of tax is less than the applicable corporate tax rate, a tax offset is available to reduce tax payable on other income or alternatively results in a refund of the excess franking credits.

Corporate Investors

A corporate investor receiving an unfranked dividend will pay tax on this dividend (net of any allowable deductions) at the applicable corporate tax rate (which is currently 30%, unless the company qualifies for the lower base rate entity tax rate of 26.0% or reducing to 25.0%).

Where dividends are franked, the corporate investor will be entitled to offset the franking credit against its tax liability for the year. To the extent that the franking credit exceeds the corporate investor’s tax liability, the excess can be converted into a carry forward loss and offset against future taxable profits (subject to the loss testing rules for companies). Generally a corporate investor cannot receive a refund of franking credits (noting there are limited exceptions for certain entities).

Further, the franked dividend may give rise to a franking credit in the corporate investor’s franking account.

Butn Limited | Prospectus

117

Complying superannuation Funds

Complying superannuation funds (which includes self-managed superannuation funds) are assessable on the dividend and gross up the franked dividend in the same way as individuals and corporate investors.

A complying superannuation fund investor receiving an unfranked dividend will pay tax on this dividend (net of any allowable deductions) at the rate of 15% (current, as at the date of this Prospectus).

Where dividends are franked, the complying superannuation fund investor will include in its assessable income the amount of dividend received and the amount of any franking credits attached to that dividend. The complying superannuation fund tax rate of 15% is then applied to the grossed up dividend. The franking credit is available to offset tax payable on other income of the complying superannuation fund or alternatively results in a refund of the excess franking credits

trusts and partnerships

Investors who are trustees (other than trustees of complying superannuation funds) or partnerships should include the franking credit in determining the net income of the trust or partnership. The relevant beneficiary or partner may be entitled to a share of the tax offset equal to the beneficiary’s or partner’s share of the net income of the trust or partnership.

(b) Dividends received by Non‑resident Investors

The taxation treatment of dividends received by non-resident investors will depend on whether the dividends paid are franked or unfranked.

Franked Dividends

Non-resident investors will not be subject to Australian withholding tax on that part of the dividend that is fully franked.

However, non-resident investors may be subject to income tax on the receipt of such dividends in their local jurisdictions.

unfranked Dividends

It may be necessary for the Company to withhold tax from unfranked dividends paid to non-resident Shareholders and remit the tax to the ATO. Where unfranked dividends are paid to non-resident Shareholders, and the unfranked dividend is not declared to be “conduit foreign income”, dividend withholding taxes must be deducted from the gross dividends paid.

The withholding tax rate on the payment of unfranked dividends per Australia’s domestic income tax law is 30%. However, where the investor is resident of a country which Australia has entered into a double tax treaty with, then the rate at which withholding tax is applied will generally be lower, typically ranging from nil to 15%.

Again, non-resident investors may still be subject to income tax on the receipt of such dividends in their local jurisdictions but may be entitled to a credit for the Australian withholding tax applied.

9.3 taxation treatment of Disposal of shares

As noted above, the following overview of Australian tax implications associated with the disposal of Shares is confined to investors who hold their shares on capital account.

(a) Disposal of shares by Australian resident Investors

The disposal of a Share by an investor will give rise to a CGT event where the investor holds their Share on capital account. Australian tax resident investors will:

y make a capital gain where the capital proceeds received on the disposal of the Share exceed the cost base of the Share, or
y make a capital loss where the capital proceeds received on the disposal of the Share are less than the reduced cost base of the Share.

118

09. taxation

The capital proceeds will generally be equal to the amount received for the disposal of the Share. Broadly, the cost base and reduced cost base (subject to modifications) of a Share will be equal to the Issue Price of the Share plus any incidental costs of acquisition and disposal (such as brokerage).

If an investor is an individual or complying superannuation entity and has held the Share for at least 12 months or more before disposal of the Share, the Shareholder will generally be entitled to a “CGT discount” for any capital gain made on the disposal of the Share. Where the CGT discount applies, any capital gain arising (after applying any available capital losses) may be reduced by:

y 50% in the case of individuals, or
y one-third in the case of complying superannuation entities.

Investors that are companies are not entitled to a CGT discount.

Any resulting net capital gain is included in an investor’s assessable income.

Where the disposal results in a net capital loss and the investor has no remaining capital gains to offset, the capital loss is carried forward and may be available to be offset against capital gains in future years (subject to the satisfaction of any applicable loss recoupment rules). Capital losses cannot be used to reduce ordinary assessable income (only capital gains).

(b) Disposal of shares by Non‑resident Investors

Generally, for Australian income tax purposes, non-resident shareholders can disregard the capital gain or capital loss arising from the disposal of shares in Australian resident companies under Division 855 of the ITAA 1997.

Notwithstanding the above comments, certain non-resident shareholders will still be subject to Australian CGT where the Shares constitute Taxable Australian Property ( tAP ). Broadly, the Shares should only constitute TAP if both of the following requirements are satisfied:

y the investor (together with any associates) holds an interest of at least 10% of the Shares in the Company at the time of the disposal, or for a 12 month period in the 24 months preceding the disposal; and
y more than 50% of the market value of the Company’s assets is comprised of Australian real property interests.

Based on the understanding that the Company does not hold a significant amount of Australian real property interests, any capital gain or loss arising to a non-resident investor on disposal of the Shares is not expected to relate to TAP and should therefore be disregarded. However, this would need to be assessed at the time of disposal.

9.4 Quotation of tax File Number

It is not compulsory for Australian resident Shareholders to provide the Company with details of their Tax File Number ( tFN ) or Australian Business Number ( ABN ). However, a failure to quote a TFN or ABN (or proof of exemption) to a public company will result in the company being required to withhold and remit tax at the top marginal rate (currently 45% plus 2% Medicare levy) from unfranked dividends paid to the relevant Australian resident Shareholder. The amount withheld in these circumstances should be available as a credit against the investor’s tax liability.

9.5 Goods & services tax (Gst)

No GST is applicable to the issue or transfer of the Shares given that, under current law, shares in a company are an input-taxed financial supply for GST purposes. However, investors may incur GST on costs that relate to their participation in the proposed offer and should seek their own independent advice in relation to the GST implications.

Butn Limited | Prospectus

119

9.6 stamp Duty

On the basis that the Company is not a landholder for stamp duty purposes in any Australian jurisdiction, no stamp duty should be payable by investors on acquisition of the Shares.

9.7 temporary Loss Carry Back tax offset

A company that has a tax loss in any one or more of the 2019-2020, 2020-21 or 2021-22 income years may (subject to meeting the relevant conditions) choose to carry back the whole or part of the tax loss against its previously taxed profits for the 2018-19, 2019-20 or 2020-21 income years.

Conceptually, the loss is carried back to reduce the earlier profit and the corresponding reduction in tax is refunded to the company. Eligible companies may elect to receive a tax refund when they lodge their 2020-21 and 2021-22 income tax returns.

The choice to claim a loss carry back tax offset is an alternative to carrying tax losses forward as a deduction for future income years. Only tax losses (and not capital losses) can be carried back.

120

10 Additional Information

121

10. Additional Information

10.1 Company information

The Company was incorporated on 9 September 2020 under the Corporations Act as a public company limited by shares.

The Company is and will be subject to tax at the Australian corporate rate on its taxable income. The Company’s financial year ends on 30 June annually.

10.2 share capital structure

Following the Completion of the Offer the shareholding structure in the Company will be as follows:

		%
	Number of	ownership
Category*	Shares	interest
Existing Shares on issue	120 million	75%
New Shares offered under this Prospectus	40 million	25%
Total number of Shares on issue on Completion of the Offer	160 million	100%

At the date of Listing, the Company will have 11,618,750 options on issue. The rights attaching to such options are described in Sections 6.5(c) and 10.7(d) of this Prospectus.

10.3 Major shareholders

Details of Shareholders who hold 5% or more of the Shares on issue as at the date of this Prospectus, and who will hold more than 5% after Completion of the Offer, are set out below.

				% (assuming
		Number	Number	$20 million
Name	Relationship to Company	of Shares	of Options	is raised)*
	Related party of Rael Ross
Why K	(Co-Founder and Joint CEO)	36,191,572	1,300,000	22.6%
	Related party of Walter Rapoport
Walrap	(Co-Founder and Joint CEO)	36,191,572	1,300,000	22.6%
		31,840,000*
		*18,798,943 Shares will
		be issued to MYOB
		Invest Co on
		conversion of the
		Convertible Notes.
		Included in the
		31,840,000 Shares to
		be issued to MYOB
		Invest Co, MYOB
		Invest Co has agreed
		to subscribe for an
	Promoter (holder of over 10% of	additional 13,041,057 Shares under
MYOB Invest Co	the Shares on issue post-IPO)	the Offer.	N/A	19.9%

Assuming that these Shareholders do not subscribe for Shares under the Offer (other than MYOB Invest Co’s subscription under the Right of First Refusal) and no Employee Incentive Plan Options or Lead Manager Options have been exercised. These calculations also exclude any Shares issued to Butn’s employees under Butn’s Employee Incentive Plan (see Section 6.5(d) for details).

122

10. Additional Information

10.4 Company’s Constitution

The Shares offered under this Prospectus are fully paid ordinary shares in the capital of the Company. A summary of the more significant rights attaching to the Shares is set out below. This summary is not exhaustive nor does it constitute a definitive statement of the rights and liabilities of the Company’s Shareholders.

y ranking – The Shares will be ordinary shares and will rank equally in all respects with the ordinary shares in the Company on issue prior to the date of this Prospectus.
y reports and notices – Shareholders are entitled to receive all notices, reports, accounts and other documents required to be furnished to Shareholders under the Constitution of the Company and the Corporations Act.
y General meetings – Shareholders are entitled to receive at least 28 days’ notice of a general meeting and subject to any preferential or special rights attaching to any shares that may be issued by the Company in the future, Shareholders are entitled to be present in person, or by proxy, attorney or representative to speak and to vote at general meetings of the Company. Shareholders may requisition general meetings in accordance with the Corporations Act and the Constitution of the Company.
y Voting – At a general meeting of the Company every ordinary Shareholder present in person, or by proxy, attorney or representative shall on a show of hands have one vote and upon a poll every Shareholder present in person or by proxy, attorney or representative has one vote for every share held.
y Directors – appointment and removal – Under the Constitution, there must be at least three Directors, at least two of whom must ordinarily reside in Australia, or such greater number not exceeding seven as the Directors think fit, in office at all times. Directors are elected, re-elected or removed at general meetings of the Company.

No Director (excluding the Co-Founders and any Managing Director) may hold office without re-election beyond the third annual general meeting following the meeting at which the Director was last elected or re-elected. While the Co-Founders remain joint Managing Directors, only one of them is entitled not to be subject to re-election.

The Board may also appoint any eligible person to be a Director, either to fill a casual vacancy on the Board or as an addition to the existing Directors, who will then hold office until the conclusion of the next annual general meeting of the Company following that eligible person’s appointment.

y Directors – remuneration – Under the Constitution, the Board may decide the remuneration to which each Director is entitled to be paid for his or her services as a Director, provided the annual fees payable to Non-executive Directors do not exceed in aggregate the maximum sum that is from time to time approved by Shareholders in a general meeting in accordance with the Listing Rules.

Remuneration payable by the Company to the Co-Founders and any Managing Director, if there is a Managing Director appointed (which Directors’ remuneration does not reduce the maximum sum that is available to be paid to Non-executive Directors) and any other executive Directors may be by way of salary, bonuses, or any other elements but must not include a commission on, or percentage of operating revenue.

Directors are entitled to be paid or reimbursed for all travelling and other expenses properly incurred by them in attending and returning from any meeting of the Directors, any meeting of any committee of the Directors, any general meeting of the Company or otherwise in connection with the business of the Company.

y reduction of capital – Subject to the Corporations Act and Listing Rules, the Company may resolve to reduce its share capital by any lawful manner as the Directors or shareholders may approve.
y Winding up – Shareholders will be entitled in a winding up to share in any surplus assets of the Company in proportion to the capital paid up, or which ought to have been paid up, at the commencement of the winding up on the shares held by them respectively.
y transfer of shares – Shares in the Company may be transferred in any form authorised by the Corporations Act or approved by the Directors and in the manner prescribed by the Constitution of the Company, the Corporations Act, the Listing Rules or the ASX Settlement and Operating Rules. The Directors may subject to the Listing Rules and the ASX Settlement and Operating Rules, request an ASX approved clearing and settlement facility to apply a holding lock to prevent any transfer of shares.

Butn Limited | Prospectus

123

The Directors may refuse to register a paper based transfer of a share in particular circumstances, including where:

the Company has a lien on the Shares the subject of the transfer;
the Company is served with a court order that restricts the relevant Shareholder’s capacity to transfer the Shares;
registration of the transfer may breach a law and ASX has agreed in writing to the application of a holding lock (which must not breach an ASX Settlement and Operating Rule) or that the Company may refuse to register a transfer;
this Constitution or the Listing Rules permits them to do so; or
the Shareholder has agreed in writing to the application of a holding lock (which must not breach an ASX Settlement and Operating Rule) or that the Company may refuse to register a paper-based transfer.
y Issue of further shares – The Directors control the allotment, issue, grant of options in respect of and disposal of shares. Subject to restrictions on the allotment of shares and grant of options to Directors or their associates and the Corporations Act, the Directors may allot, grant options or otherwise dispose of shares on such terms and conditions as they see fit.
y takeover approval provisions – Any proportional takeover scheme must be approved by those Shareholders holding shares included in the class of shares in respect of which the offer to acquire those shares was first made. The registration of the transfer of any shares following the acceptance of an offer made under a scheme is prohibited until that scheme is approved by the relevant Shareholders.
y Application of Listing rules – On admission to the Official List of the ASX then, despite anything in the Constitution of the Company, if the Listing Rules prohibit an act being done, the act must not be done. Nothing in the Constitution prevents an act being done that the Listing Rules require to be done. If the Listing Rules require an act to be done or not to be done, authority is given for that act to be done or not to be done (as the case may be). If the Listing Rules require a Constitution to contain a provision or not to contain a provision, the Constitution is deemed to contain that provision or not to contain that provision (as the case may be). If a provision of the Constitution is or becomes inconsistent with the Listing Rules, the Constitution is deemed not to contain that provision to the extent of that inconsistency.

10.5 Material Contracts – the Company’s funding arrangements

(a) AFC trusts

(i) trust structure and operation

Overview

The AFC 2018-1 and AFC 2019-1 Trusts (each an AFC trust and together the AFC trusts ) were established to fund AFC’s business financing transactions. AMAL Trustees Pty Ltd ABN 98 609 737 064 is the trustee of each AFC Trust ( trustee ) and is a professional trustee, independent of the Group.

This receivables funding model is generally described below:

(A) AFC purchases receivables ( trust receivables ) from its customers but requires funding to pay the relevant purchase price;
(B) AFC on-sells the Trust Receivables to the Trustee;
(C) the Trustee issues asset-backed notes ( Debt Notes ) to private investors ( Noteholders ), in order to fund the acquisition of the Trust Receivables from AFC. The Debt Notes are issued on a limited recourse basis, such that the Noteholders’ recourse to recover the amounts owing is in almost all cases limited to (i) the assets of the relevant AFC Trust and any related security attaching to the Trust Receivables; and (ii) any amounts received from AFC from the relevant debtor arising from the Trust Receivable; and
(D) AFC uses the funds received from the Trustee to pay its customers for the Trust Receivables it has acquired from them.
In addition to the above, AFC also acts as the manager of the AFC Trusts and otherwise provides certain services to assist the Trustee in the administration of each AFC Trust.

124

10. Additional Information

(ii) AFC trust Documents

This receivables funding arrangement is governed by a series of documents (together the AFC trust Documents ). The three key AFC Trust Documents are described below:

trust Deed: among other things, the Trust Deed establishes the relevant AFC Trust and sets out the basis upon which the AFC Trust’s income and assets are to be distributed. AFC is a majority unitholder of each AFC Trust (see Section 10.5(a)(ix) below for further details).

Management Deed: AFC is appointed as ‘Manager’ of each AFC Trust pursuant to a Management Deed. AFC’s role as Manager is to manage and direct the Trustee in carrying on the business of each AFC Trust, such as the issuing of Debt Notes, and all other day-to-day business of the AFC Trust which business includes the collection of the Trust Receivables and internal distribution of payments.

AFC may receive fees in exchange for providing these services on terms agreed between the Trustee and AFC from time to time.

Note Deed Poll: the Debt Notes are issued pursuant to a Note Deed Poll. This document also sets out such items as the interest rate applicable to each class of Debt Note on issue, and the basis upon which the Debt Notes are to be redeemed.

(iii) the Debt Notes

The Debt Notes issued under each AFC Trust have been issued pursuant to the Note Deed Poll in three classes: Class A, Class B and Class C.

Class A Notes attract a lower interest rate (before the ‘Call Option Date’ (defined in Section 10.5(a)(v) below), 8% per annum and after the Call Option Date, 12% per annum), versus the interest on Class B Notes (before the Call Option Date, 12% per annum and after the Call Option Date, 16% per annum).

No interest accrues on the Class C Notes. The Class C Notes are 100% owned by AFC and are primarily issued to maintain the capital adequacy requirements of each AFC Trust, as detailed in Section 10.5(a)(vi) below.

The income received by each AFC Trust (after accounting for various expenses of the AFC Trust, including fees to be paid to the Trustee, Security Trustee, Manager and others), and applicable taxes are applied at agreed intervals toward repayment of accrued interest owing to the Noteholders. The principal owing on the Debt Notes is repaid from any remaining funds held by the AFC Trust, after the payment of taxes, expenses and interest payments.

The amounts owing under the Debt Notes are paid in the following order of priority:

(A) moneys owing under the Class A Notes; then
(B) moneys owing under the Class B Notes; then
(C) moneys owing under the Class C Notes.

The profits and losses of each AFC Trust are calculated at regular agreed intervals (each interval being a Collection Period ).

(iv) security

The Debt Notes are secured by:

(A) a general security interest over all of the assets and undertakings of the AFC Trust; and
(B) a security interest over any moneys received by AFC in payment of Trust Receivables purchased by the Trustee.

If an event of default occurs (for example the debtor the subject of a Trust Receivable does not pay the amounts owed) the Security Trustee’s has recourse to recover the amounts owing by taking enforcement action over (i) the property of the relevant AFC Trust and any related security attaching to the Trust Receivables; and (ii) any amounts received from AFC from the relevant debtor arising from the Trust Receivable.

Butn Limited | Prospectus

125

(v) Funding

The table below sets out the amounts owing to the Noteholders, and the maturity dates for the Debt Notes on issue.

Item	AFC 2018-1 Trust	AFC 2019-1 Trust
Total amount owing to	$15 million	$25 million
Noteholders
Maturity Date (the date on	29 October 2022	1 July 2023
which the Debt Notes must
be redeemed)	(however, the Debt Notes may be redeemed on 29 October 2021 (Call	(however, the Debt Notes may be redeemed on 1 July 22 (Call option
	option Date) at the election of AFC)	Date) at the election of AFC)

The Debt Notes may be redeemed earlier than the Call Option Date (at AFC’s election) where redemption is required (i) for taxation reasons; or (ii) (Under the AFC Trust Documents for the AFC 2019-1 Trust only) where a government agency imposes, or indicates it will impose, prohibitions or significant restrictions on upfront broker commissions.

(vi) Capital adequacy requirements

The amount of principal owing under a Debt Note, less deductions for losses accrued by the Trustee over previous Collection Periods is known as the Invested Amount .

At the end of each financial quarter, AFC (as the Manager) must calculate the amount of available principal to be paid to the Class B Noteholders. If:

(A) the amount of available principal to be paid to the Class B Noteholders is less than the Invested Amount for the relevant Class B Note; or
(B) the amount of principal to be paid to the Class C Noteholders is less than 2.5% of the aggregate Invested Amount of all Debt Notes,

AFC must subscribe for additional Class C Notes with an aggregate Invested Amount so that following such subscription, the aggregate principal amount outstanding in relation to the Class C Notes is not less than 5% of the Invested Amount of all Debt Notes.

As at 31 December 2020 there were Class C Notes on issue in: (i) the AFC 2018-1 Trust with an aggregate value of $750,000 and (ii) the AFC 2019-1 Trust with an aggregate value of $1,250,000.

(vii) eligibility Criteria

Eligible Trust Receivable

At the time of selling a Trust Receivable to the Trustee, AFC gives representations to the Trustee that the Trust Receivable is an Eligible Trust Receivable. A Trust Receivable is an Eligible Trust Receivable if it meets a set of specified criteria, which include (among others):

(A) the Trust Receivable is not in arrears; and
(B) the Trust Receivable is not subject to any material dispute, litigation or claim.

If AFC or the Trustee becomes aware that a Trust Receivable ceases to be an Eligible Trust Receivable after the Trustee agrees to purchase it and within 120 days of the date of sale to the AFC Trust, AFC must take steps to reinstate the Trust Receivable as an Eligible Trust Receivable. If the Trust Receivable cannot be reinstated within the period stipulated in the AFC Trust Documents, AFC must buy back the Trust Receivable from the Trustee, together with any accrued and unpaid interest.

Pool Parameters

In addition to the representations and warranties set out in the AFC Trust Documents relating to Eligible Trust Receivables, under the AFC Trust Documents for the AFC 2019-1 Trust, the Seller represents and warrants to the Trustee that:

(A) no breach of the ‘Pool Parameters’ (as defined below) would result from; or

126

10. Additional Information

(B) any subsisting breach of the Pool Parameters would be improved by,

the acquisition by the Trustee of the relevant Trust Receivables.

The Pool Parameters are a set of criteria for measuring the level of risk for the pool of purchased Trust Receivables. Risk is measured by reference to the outstanding balance of the Trust Receivables at the time of assessment. If the outstanding balance of the Trust Receivables exceeds certain specified levels, this will be a breach of the Pool Parameters.

(viii) events of Default

If an ‘Event of Default’ occurs, enforcement action can be taken over the assets provided as security. The Security Trustee is also permitted to demand immediate payment of the amounts owing to the Noteholders under the AFC Trust Documents.

For so long as an Event of Default is subsisting, the Trustee is precluded from purchasing any further Trust Receivables.

Events of Default include (among others):

(A) the Trustee failing to perform an obligation under the AFC Trust Documents within the required time;
(B) breaches of representations, warranties or undertakings by AFC, the Trustee or the Security Trustee;
(C) a breach of the capital adequacy requirements referred to at Section 10.5(a)(vi); and
(D) a breach of the Pool Parameters occurs and is subsisting for at least 135 consecutive days.

(ix) the trust Deed

Each AFC Trust is established under a Trust Deed.

Trust Ownership

AFC is the majority Unitholder in each AFC Trust and the Trust Deed sets out AFC’s entitlement to receive distributions of the AFC Trust’s income.

Ownership of the Trust is divided into Units, being 1 Participation Unit and 10 Residual Units.

Of the 10 Residual Units on issue, AFC hold 9 units in each of the AFC 2018-1 Trust and the AFC 2019-1 Trust. The other Residual Units are held by Denarke Pty Ltd ACN 002 424 384 ( Denarke ). Denarke is not a related party of the Group.

AFC is the ‘Manager’ of the AFC Trusts, as well as ‘Servicer’ with respect to the Trust Receivables.

Further, AFC is a majority unitholder of each AFC Trust, and holds 100% of the ‘Class C’ Notes on issue.

Participation Unitholder

The Participation Unit entitles AFC to any income of the AFC Trusts, after deducting (i) various expenses of the AFC Trust, including fees to be paid to the Trustee, Security Trustee, Manager, Trustee and others; (ii) taxes; and (iii) interest and principal owing to the Noteholders.

Residual Unitholder

When the Trust ends, the Residual Unitholders are entitled to repayment of any part of the subscription price of each Residual Unit and any residual Trust Assets (less any amounts paid to the Participation Unitholder).

Fee

The Trustee is entitled to be paid a fee for performing its obligations under the Trust Deed at the times and in the amounts as agreed between the Trustee and AFC from time to time.

Butn Limited | Prospectus

127

10.6 operational agreements

(a) underwriting Agreement

(i) overview

The Company and the Lead Manager have entered into an Underwriting Agreement, under which the Company appoints the Lead Manager (on an exclusive basis) to:

(A) underwrite the subscription for the number of Shares offered under this Prospectus for which valid applications are not received; and
(B) act as bookrunner and lead manager to the Offer.

(ii) Commissions, fees and expenses

The fees and expenses to which the Lead Manager is entitled pursuant to its engagement as lead manager and underwriter are set out at Section 10.7(d) of this Prospectus.

(iii) Conditions

The Lead Manager’s obligations under the Underwriting Agreement are conditional on certain conditions precedent, being satisfied or waived – these conditions are market standard for a transaction of this nature.

(iv) termination events – unqualified

If any of the following events occur at any time from the date of execution or the Underwriting Agreement until 4.00 pm on the date for Completion of the Offer, as set out in the Timetable (or such earlier time as specified below), the Underwriter may, by notice given to the Company, terminate its obligations under the Underwriting Agreement:

(A) ( Prospectus ) a statement in this Prospectus is or becomes misleading or deceptive or is likely to mislead or deceive, or a matter required to be included is omitted from this Prospectus;
(B) ( new circumstances ) an event or circumstance arises after this Prospectus is lodged with ASIC that would have been required to be included in this Prospectus if it had arisen before lodgement and that is materially adverse from the point of view of any investor;

(C) ( supplementary Prospectus ) the Company:

y issues or, in the reasonable opinion of the Lead Manager, is required to issue a Supplementary Prospectus, in each case, to comply with section 719 of the Corporations Act and fails to lodge a Supplementary Prospectus; or
y lodges a Supplementary Prospectus with ASIC without approval by the Lead Manager in circumstances where the Company: (i) forms the view that it must; or (ii) becomes aware of any matter that would require it to, lodge a Supplementary Prospectus; or
y if the Company fails to notify the Lead Manager that an event contemplated by the above paragraph (B) has occurred, within the time for notification set out in the Underwriting Agreement;
(D) ( market fall ) at any time the S&P/ASX 300 Index falls to a level that is 90% or less of the level as at the close of trading on the last trading day before the date of the Underwriting Agreement and is at or below that level at the close of trading:
y for any given business day during any time after the date of the Underwriting Agreement; or
y on the Business Day immediately prior to the date for Completion of the Offer as set out in the Timetable;
(E) ( restriction Deed ) any Restriction Deed is withdrawn, varied, terminated, rescinded, altered or amended, breached or failed to be complied with;
(F) ( future matters ) any statement or estimate in this Prospectus that relates to a future matter is, in the reasonable opinion of the Lead Manager, unlikely to be met in the projected time;

128

10. Additional Information

(G) ( fraud ) the Company or any of its respective directors or officers (as those terms are defined in the Corporations Act) engage, or have engaged since the date of the Underwriting Agreement, in any fraudulent conduct or activity whether or not in connection with the Offer;
(H) ( listing and quotation ) approval is refused or not granted, or approval is granted subject to conditions other than customary conditions, to:
y the Company’s Listing on or before the ‘Listing Approval Date’ (being the date specified as such in the Timetable); or
y the quotation of the Shares, on ASX or for the Shares, to be traded through CHESS on or before the Issue Date,

or if granted, the approval is subsequently withdrawn, qualified (other than by customary conditions) or withheld;

(I) ( notifications ) any of the following notifications are made:
y ASIC issues an order (including an interim order) under section 739 of the Corporations Act;
y ASIC holds a hearing under section 739(2) of the Corporations Act;
y an application is made by ASIC for an order under Part 9.5 of the Corporations Act in relation to the Offer or an Offer Document or ASIC commences any investigation or hearing under Part 3 of the ASIC Act in relation to the Offer or an Offer Document;
y any person (other than the Lead Manager) who has previously consented to the inclusion of its name in an Offer Document withdraws that consent; or
y any person (other than the Lead Manager) gives a notice under section 730 of the Corporations Act in relation to an Offer Document;
(J) ( certificate not provided ) the Company does not provide a Closing Certificate as and when required by the Underwriting Agreement;
(K) ( lodgement ) the Company fails to lodge this Prospectus by the ‘Lodgement Date’ (being the date specified as such in the Timetable);
(L) ( withdrawal ) the Company withdraws this Prospectus or the Offer (or any part of the Offer), or indicates that it does not intend to proceed with the Offer (or any part of it);
(M) ( repayment ) any circumstance arises after lodgement of this Prospectus with ASIC that results in the Company either repaying any money received from Applicants under the Offer or offering applicants under the Offer an opportunity to withdraw their Application for Shares under the Offer (Offer Shares) and be repaid their Application Monies;
(N) ( insolvency events ) an entity within the Group becomes insolvent, or there is an act or omission which is likely to result in a Group member becoming insolvent;
(O) ( timetable ) an event specified in the Timetable up to and including the date for Completion (as set out in the Timetable) is delayed by more than two business days (other than any delay agreed between the Company and the Lead Manager or a delay as a result of an extension of the exposure period by ASIC, in each case in accordance with the terms of the Underwriting Agreement);
(P) ( unable to issue offer shares ) the Company is prevented from allotting and issuing the Offer Shares within the time required by this Prospectus, the Listing Rules, by applicable laws, an order of a court of competent jurisdiction or a governmental authority;
(Q) ( certificate incorrect ) a statement in any Closing Certificate is false, misleading, inaccurate or untrue or incorrect;
(R) ( change to the Company ) the Company:
y other than under the Offer or as otherwise permitted under the Underwriting Agreement, alters the issued capital of the Company or another Group Company; or
y disposes or attempts to dispose of a substantial part (directly or indirectly) of the business or property of the Company or a Group Company,

without the prior written consent of the Lead Manager;

Butn Limited | Prospectus

129

(S) ( regulatory approvals ) if a regulatory body or government agency withdraws, revokes or amends any regulatory approvals required for the Company to perform its obligations under the Underwriting Agreement or to carry out the transactions contemplated by this Prospectus;
(T) ( change in management ) a change in the Chief Executive Officer, Chief Financial Officer or board of directors of the Company occurs;
(U) ( Material Contracts ) if any of the obligations of the relevant parties under any of the Company’s key contracts (as outlined in Section 10.5 of this Prospectus) are not capable of being performed in accordance with their terms (in the reasonable opinion of the Lead Manager) or if all or any part of any of the key contracts:
y is terminated, withdrawn, rescinded, avoided or repudiated;
y is altered, amended or varied without the consent of the Lead Manager (acting reasonably);
y is breached, or there is a failure by a party to comply;
y ceases to have effect, otherwise than in accordance with its terms; or
y is or becomes void, voidable, illegal, invalid or unenforceable (other than by reason only of a party waiving any of its rights) or capable of being terminated, withdrawn, rescinded, avoided or withdrawn or of limited force and affect, or its performance is or becomes illegal;
(V) ( prosecution ) any of the following occur:
y a director or proposed director of the Company named in this Prospectus is charged with an indictable offence;
y any governmental agency charges or commences any court proceedings or public action against the Company or any of its directors in their capacity as a director of the Company, or announces that it intends to take action; or
y any director or any proposed director of the Company named in this Prospectus is disqualified from managing a corporation under Part 2D.6 of the Corporations Act; and
(W) ( strategic investment ) MYOB Invest Co does not settle, and pay the Offer Price in cleared funds, in respect of that number of Shares which will result in MYOB Invest Co holding 19.9% of the issued Shares in the Company immediately following Completion of the Offer, by 4 pm on the date that is four business days prior to the Closing Date.

(v) termination subject to materiality

The Lead Manager may terminate the Underwriting Agreement, by notice to the Company, at any time after the date of the Underwriting Agreement until 5.00 pm on the date for Completion of the Offer under the Timetable (or such earlier time as specified below) if any of the following events occur and the Underwriter has reasonable grounds to believe that the event: (i) has or is likely to have a materially adverse effect on (A) the success, settlement or marketing of the Offer or on the ability of the Lead Manager to market or promote or settle the Offer or on the likely price at which the Offer Shares will trade on ASX, or (B) the willingness of investors to subscribe for the Offer Shares; or (ii) will, or is likely to, give rise to a liability of the Lead Manager under, or give rise to, or result in, a contravention by the Lead Manager or its affiliates or the Lead Manager or its affiliates being involved in a contravention of, any applicable law:

(A) ( other disclosures ) a statement in the Offer Documents (other than this Prospectus) or Public Information is or becomes misleading or deceptive or is likely to mislead or deceive, or a matter required to be included is omitted from such an Offer Document (including without limitation, having regard to the provisions of Part 6D.2 of the Corporations Act);
(B) ( force majeure ) there is an event or occurrence, including any statute, order, rule, regulation, directive or request of any governmental agency which makes it illegal for the Lead Manager to satisfy an obligation under the Underwriting Agreement, or makes it impractical or inadvisable (in the reasonable opinion of a Lead Manager) to market, promote or settle the Offer;
(C) ( due diligence ) any information supplied by or on behalf of the Company to the Lead Manager in relation to the Group or the Offer is (or is likely to), or becomes (or becomes likely to be), misleading or deceptive, including by way of omission and is not updated in a timely manner;

130

10. Additional Information

(D) ( adverse change ) any adverse change occurs in the assets, liabilities, financial position or performance, profits, losses or prospects of the Group;
(E) ( change of law ) there is introduced, or there is a public announcement of a proposal to introduce, into the Parliament of Australia or any State or Territory of Australia a new law, or any Commonwealth or State authority, including ASIC, adopts or announces a proposal to adopt a new policy (other than a law or policy (whether in draft or otherwise) which has been announced before the date of the Underwriting Agreement);
(F) ( breach of laws ) there is a contravention by the Company or any member of the Group of the Corporations Act, the Competition and Consumer Act 2010 (Cth), ASIC Act (any regulations under those acts), its Constitution or any of the Listing Rules;
(G) ( compliance with law ) any of the Offer Documents or any aspect of the Offer does not comply with the Corporations Act (and all regulations under that Act), the Constitution, the Listing Rules or any other applicable law or regulation;
(H) ( licences ) any licence, permit, authorisation or consent held by a Group Company that is necessary to conduct its business is revoked, withdrawn, rescinded, breached, terminated, altered or amended (other than with the consent of the Lead Manager);
(I) ( encumbrance ) other than as disclosed in this Prospectus, the Company creates or agrees to create an encumbrance over the whole or a substantial part of its business or property;
(J) ( representations and warranties ) a representation, warranty or undertaking or obligation contained in the Underwriting Agreement on the part of the Company is breached, becomes not true or correct or is not performed;
(K) ( breach ) the Company defaults on any of its obligations under the Underwriting Agreement;
(L) ( constitutional documents ) the Company varies any term of its Constitution without the prior written consent of the Lead Manager;
(M) ( legal proceedings ) legal proceedings (other than in the ordinary course of business) against a Group Company or against any director of a Group Company in that capacity is commenced or threatened or any regulatory body or government agency commences or threatens any enquiry or public action against a Group Company;
(N) ( hostilities ) hostilities not presently existing commence (whether war has been declared or not) or an escalation in existing hostilities occurs (whether war has been declared or not) involving Australia, or a major terrorist act is perpetrated or material diplomatic, military, commercial or political establishment of that country; or
(O) ( disruption in financial markets ) any of the following occurs:
y a general moratorium on commercial banking activities in Australia, is declared by the relevant central banking authority, or there is a disruption in commercial banking or security settlement or clearance services in that country; or
y trading in all securities quoted or listed on ASX is suspended or limited in a material respect for 1 day (or a substantial part of one day) on which that exchange is open for trading.

(vi) representations and warranties, undertakings and other terms

The Company gives certain standard representations, warranties and undertakings to the Underwriter.

The representations and warranties given by the Company include, but are not limited to, matters such as power and authorisations, compliance with applicable laws, documents issued or published by or on behalf of the Company in respect of each Offer, the conduct of each Offer and the due diligence process, litigation, material contracts, insolvency and working capital.

The Company provides undertakings under the Underwriting Agreement which include, but are not limited to, notifications of breach of any warranty or undertaking given by it under the Underwriting Agreement, or the occurrence of a termination event, or the non-satisfaction of any condition.

Butn Limited | Prospectus

131

(vii) Indemnity

Unless certain limited exceptions apply (such as fraud, gross negligence or wilful misconduct), the Company indemnifies the Lead Manager and various affiliates of the Lead Manager ( Indemnified Parties ), from and against losses directly suffered or incurred by the Indemnified Parties in connection with the Offer or the appointment of the Lead Manager.

(b) Partnership Agreement with MYoB Australia

(i) overview

Butn has entered into an agreement with MYOB Australia to provide bespoke financing options to MYOB Australia customers ( Partnership Agreement ). MYOB Australia is a leading provider of online business management solutions including accounting, tax and business services software.

Under the Partnership Agreement, Butn is required to customise and implement its invoice factoring service (known as Butn X) and to provide MYOB Australia with a co-branded version ( Powered Product ). The Powered Product is to be integrated with MYOB Australia products and made available to MYOB Australia customers.

The income, after certain adjustments, in relation to the Powered Product is to be shared between Butn and MYOB Australia. Butn retains ownership of the intellectual property rights in the Powered Product. MYOB Australia customers remain MYOB Australia customers and any customer data belongs to MYOB Australia. Butn is entitled to use this data only to develop, implement and provide the Powered Product to those customers who have applied to receive the Powered Product and on an anonymised and aggregated basis to inform Butn’s credit risk assessment of a customer.

(ii) structure

The Partnership Agreement is structured in two phases:

(A) The build phase, where Butn and MYOB Australia collaboratively customise and implement the Powered Product. The Powered Product is subject to acceptance testing by MYOB Australia. This phase also includes Butn’s development and MYOB’s approval of Butn policies relevant to the Powered Product.
(B) The run phase, where the Powered Product is offered to MYOB Australia customers. The Powered Product is to be provided in accordance with agreed service levels set out in the Partnership Agreement and service credits may apply if Butn fails to do so.

The Partnership Agreement sets out in detail the responsibilities of the parties in each phase.

(iii) Financials

Each party is liable for its own costs incurred in complying with its obligations under the Partnership Agreement. Butn is therefore principally responsible for the costs of developing, implementing and operating the Powered Product.

Butn will receive any income from MYOB Australia customers in relation to the Powered Product. Butn is required to pay a share of the adjusted income to MYOB Australia on a monthly basis. The adjusted income is the gross revenue received by Butn in relation to the Powered Product, less the following amounts:

(A) the aggregate of all costs of on-boarding, originating and maintaining customers;
(B) the total cost of funds including directly related fees; and
(C) gross losses due to credit defaults (less any recoveries).

MYOB Australia may be entitled to bonuses if agreed total transaction and/or new account targets are exceeded.

132

10. Additional Information

(iv) Warranties and liability

The Partnership Agreement includes standard representations, warranties and undertakings from each party to the other. These relate to each party’s expertise, required consents and licences, outstanding claims, compliance with applicable laws and infringement of third party intellectual property rights. Butn also provides warranties relating to the Powered Product’s compliance with the specifications set out in the Partnership Agreement.

Each party provides the other with an indemnity against third party intellectual property claims relating to the materials provided by it. Butn also indemnifies MYOB Australia against customer claims which arise out of or are connected to a breach of the Partnership Agreement by Butn and in relation to any breach of the confidentiality and security requirements in the Partnership Agreement.

The Partnership Agreement provides for an exclusion of consequential loss and provides a cap on other liability. No cap on liability applies to acts or omissions of fraud, dishonesty, intentional or wilful breach, personal injury claims, loss or damage to tangible property or the intellectual property indemnities.

(v) term and termination

The Partnership Agreement continues for 3 years after the launch date. It extends for:

(A) one further renewal term of 2 years unless MYOB Australia provides notice that it does not wish the Partnership Agreement to extend; and
(B) on expiry of the first renewal term, for further successive renewal terms of one year unless either party provides notice that it does not wish to renew.

Either party is entitled to terminate the agreement for the material breach of the other party or if the other party becomes subject to an insolvency event. MYOB Australia is also entitled to terminate the Partnership Agreement:

(A) if acceptance testing is not achieved;
(B) in the event of material service level failures;
(C) in the case of an extended force majeure event; or
(D) in the event Butn undergoes a change of control and the person gaining control is either a competitor of MYOB Australia, an entity that does not have sufficient financial or operational capability to perform the Partnership Agreement, or an entity that refuses to fulfil its commitment in writing to MYOB Australia.

(c) MYoB option Deed

(i) MYoB Invest Co Investment

MYOB Invest Co agreed to invest $5 million as part of the pre-IPO Convertible Note offer in January 2021.

(ii) right of First refusal

Butn has entered into an option deed ( MYoB option Deed ) with MYOB Invest Co under which MYOB Invest Co is entitled to subscribe for such number of Shares (at the Offer Price) so that, on Completion of the Offer, MYOB Invest Co will hold 19.9% of the Shares on issue in Butn ( right of First refusal ). MYOB Invest Co has agreed to take up its full entitlement under the Right of First Refusal, subject to FIRB approval, (such that, at Completion of the Offer, MYOB Invest Co will hold 19.9% of the Shares on issue in Butn).

(iii) other MYoB rights

If Butn conducts a capital raising (prior to and including under a Listing) it must offer MYOB Invest Co the right to subscribe for further securities (subject to FIRB approval). On the admission of the Company to the Official List, this right will lapse permanently.

While MYOB Invest Co holds at least 15% of the Shares, it may appoint a director to the Board ( MYoB Nominee ).

Butn Limited | Prospectus

133

(d) Integration agreements

summary

As described in Section 3.6 of this Prospectus, Butn has entered into a series of Integration Agreements with various Platform Partners. Under the Integration Agreements, each Platform Partner agrees to integrate the Butn Now, Butn Pay and/or Butn X products into its platform so that end users are able to access them.

Each Integration Agreement contains terms that are typical for an agreement of this nature including provisions relating to the protection of (i) sensitive customer information; and (ii) confidential information of the counterparty, as well as warranties and indemnities.

termination

Either party may terminate the agreement for convenience on relatively short notice, with the exception of Butn’s Integration Agreement with EASI Australia Pty Ltd (see Section 3.6(c) for details), which cannot be terminated other than for cause for the first 2 years.

exclusivity

Under certain (but not all) Integration Agreements, while the agreement is on foot, Butn is not able to solicit or accept business from an end user that the Platform Partner introduced to Butn, or from a counterparty that the end user introduced to Butn, without the Platform Partner’s prior consent.

Limitation of liability

Liability of Butn and each Platform Partner is excluded for indirect or consequential loss, subject to various exceptions, such as wilful misconduct, theft or fraud.

(e) 8squad Agreement

summary

Butn IP has entered into an agreement with 8Squad Pty Ltd ACN 633 218 318 ( 8squad ) whereby 8Squad provides Butn with outsourced IT development, technical and support services ( 8squad Agreement ). This arrangement allows for rapid resource scaling as and when needed by Butn.

term and termination

The 8Squad Agreement was renewed for a further 12 months from December 2020. 8Squad cannot terminate without cause, while Butn can terminate for convenience with limited notice.

expenditure and variation

This engagement is a time and materials based operational support and development engagement.

Butn can vary the amount of work required at any time (subject to Butn paying certain costs relating to resources it no longer requires in the event less than a stipulated notice period is provided).

IP and confidentiality

The 8Squad Agreement contains obligations on 8Squad to treat Butn information as confidential. Butn IP and 8Squad have also entered into a deed of assignment of intellectual property, which provides that any intellectual property created by 8Squad under the 8Squad Agreement is assigned to Butn IP.

134

10. Additional Information

10.7 Interests of experts

(a) Interests

Except as disclosed in this Prospectus:

(i) no expert, or firm in which any expert is a partner, has any interest that existed when a copy of the Prospectus was lodged with the ASIC for registration, nor had any such interest within 2 years before lodgement of the Prospectus for registration, in the promotion of the Company or has received or is entitled to receive any sum for services rendered by the expert or the firm in connection with the promotion or formation of the Company, or in any property proposed to be acquired by the Company in connection with the promotion or formation; and
(ii) no amounts have been paid or agreed to be paid to any expert, or any firm in which any expert is a partner, for services rendered in connection with the promotion or formation of the Company.

(b) BDo Corporate Finance (east Coast) Pty Limited – Investigating Accountant

In accordance with the terms of its engagement, BDO Corporate Finance (East Coast) Pty Limited ( BDo Corporate Finance ) has prepared its Independent Limited Assurance Report which forms part of this Prospectus. In aggregate, BDO Corporate Finance, as Investigating Accountant for the Company, will be paid $105,000 (plus GST) for services provided in connection with this Offer and may receive further payments in accordance with its normal time based charges.

(c) K&L Gates – Australia legal advisers

In accordance with the terms of its engagement, K&L Gates as Australian Legal Advisers for the Company will be paid $273,000 (plus disbursements and GST) for services provided in connection with this Offer and may receive further payments in accordance with its normal time based charges.

(d) Canaccord Genuity (Australia) Limited – underwriter and Lead Manager

In accordance with the terms of its engagement, the Company has agreed to pay Canaccord Genuity (Australia) Limited ( Canaccord or Lead Manager ) as the Lead Manager the following fees and other associated costs (all amounts below are excluding GST):

(i) a retainer of $50,000 (rebateable against the Management Fee);
(ii) the following additional fees:
(A) a management fee of 2.0% of the Offer Proceeds;
(B) a capital raising fee of 3.5% of the Offer Proceeds; and
(C) an underwriting fee of 0.5% of the Offer Proceeds.

Canaccord is also entitled to be reimbursed for reasonable out of pocket expenses incurred by the Lead Manager in connection with the Offer, as well as reasonable fees and disbursements of the Lead Manager’s legal advisers (up to a maximum of $30,000, unless otherwise approved by the Company in advance).

Additionally, at the time of settlement of the Offer, the Company has agreed to issue to the Lead Manager an unquoted options package equal to 3.0% of the fully-diluted shares outstanding in the Company at Completion of the Offer, consisting of:

(i) a number of options equal to 1.0% of the Company’s post-Offer fully-diluted shares in Butn outstanding, exercisable at a 20% premium to the Offer Price on or before a date that is three years from the date of issue;
(ii) a number of options equal to 1.0% of the Company’s post-Offer fully-diluted shares in Butn outstanding, exercisable at a 40% premium to the Offer Price on or before the date that is three years from the date of issue; and
(iii) a number of options equal to 1.0% of the Company’s post-Offer fully-diluted shares in Butn outstanding, exercisable at a 60% premium to the Offer Price on or before a date three years from the date of issue,

( Lead Manager options ).

Butn Limited | Prospectus

135

(e) Frost & sullivan Australia Pty Ltd

In accordance with the terms of its engagement, Frost & Sullivan Australia Pty Ltd ( Frost & sullivan ) as industry expert engaged to provide an independent market report for the Company will be paid $17,500 (plus GST) for services provided in connection with this Offer.

10.8 Consents of experts

(a) BDo Corporate Finance – Investigating Accountant

BDO Corporate Finance has given and not withdrawn its written consent to being named as Investigating Accountant for the Company in the Prospectus in the form and context in which it is named and the issue of the Prospectus with its Independent Limited Assurance Report dated 26 May 2021 in the form and context in which it is included and to all references to that report in the Prospectus in the form and context in which those references are included.

BDO Corporate Finance has only participated in the preparation of the Prospectus to the extent of preparing its Independent Limited Assurance Report. BDO Corporate Finance was not involved in the preparation of any other part of the Prospectus and did not authorise or cause the issue of any other part of the Prospectus.

Except as provided above BDO Corporate Finance does not make, or purport to make, any statement in this Prospectus and is not aware of any statement in this Prospectus which purports to be based on a statement made by it and makes no representation, expressed or implied, regarding and takes no responsibility for any statement in or omissions from this Prospectus.

(b) BDo Audit – Auditor

BDO Audit has given and not withdrawn its written consent to being named as Auditor for the Company in the Prospectus in the form and context in which it is named.

BDO Audit was not involved in the preparation of any part of the Prospectus and did not authorise or cause the issue of any other part of the Prospectus.

BDO Audit does not make, or purport to make, any statement in this Prospectus and is not aware of any statement in this Prospectus which purports to be based on a statement made by it and makes no representation, expressed or implied, regarding and takes no responsibility for any statement in or omissions from this Prospectus.

(c) K&L Gates – Legal Adviser

K&L Gates has given and not withdrawn its written consent to be named in this Prospectus as Australian Legal Advisers to the Company in the form and context in which it is so named. K&L Gates does not make, or purport to make, any statement in this Prospectus and is not aware of any statement in this Prospectus which purports to be based on a statement made by it and makes no representation, expressed or implied, regarding and takes no responsibility for, any statements in or omissions from this Prospectus.

(d) Link Market services Ltd – share registry

Link Market Services Ltd ( Link ) has given and not withdrawn its written consent to be named in this Prospectus as the Share Registry to the Company in the form and context in which it is so named.

Link was not involved in the preparation of any part of the Prospectus and did not authorise or cause the issue of any other part of the Prospectus.

Link does not make, or purport to make, any statement in this Prospectus and is not aware of any statement in this Prospectus which purports to be based on a statement made by it and makes no representation, expressed or implied, regarding and takes no responsibility for, any statements in or omissions from this Prospectus.

(e) Canaccord – underwriter and Lead Manager

Canaccord has given, and at the time of lodgement of this Prospectus, has not withdrawn its consent to be named as Underwriter and Lead Manager to the offer of securities under this Prospectus, in the form and context in which it is named.

136

10. Additional Information

Canaccord does not make, or purport to make, any statement or representation in this Prospectus or any statement on which a statement made in this Prospectus is based, and makes no representation, expressed or implied, regarding and takes no responsibility for, any statements in or omissions from this Prospectus.

(f) Frost & sullivan

Frost & Sullivan has given, and at the time of lodgement of this Prospectus, has not withdrawn its consent to be named as Independent Expert to the offer of securities under this Prospectus, in the form and context in which it is named.

Frost & Sullivan has only participated in the preparation of the Prospectus to the extent of preparing its Independent Expert’s Report. Frost & Sullivan was not involved in the preparation of any other part of the Prospectus and did not authorise or cause the issue of any other part of the Prospectus.

Except as provided above, Frost & Sullivan does not make, or purport to make, any statement in this Prospectus and is not aware of any statement in this Prospectus which purports to be based on a statement made by it and makes no representation, expressed or implied, regarding and takes no responsibility for, any statements in or omissions from this Prospectus.

10.9 electronic Prospectus

Chapter 6D of the Corporations Act permits the Company to issue this Prospectus electronically. If you have received an electronic version of this Prospectus, please make sure that you have received the entire Prospectus accompanied by the Application Form. If you have not, please contact the Share Registry and the Share Registry will send to you a further electronic copy of the Prospectus. Butn has the right to refuse to accept an Application Form from an Applicant if it has reason to believe that when that person was given access to the electronic Application Form, it was not provided together with the electronic Prospectus and any relevant supplementary or replacement prospectus, or that any of those documents were incomplete or altered. In those circumstances, the Application monies received will be dealt with in accordance with section 722 of the Corporations Act.

10.10 Costs of the offer

If the Offer proceeds, the total estimated costs of the Offer, including legal fees incurred, registration fees, fees for other advisers, prospectus design, printing and advertising expenses and other miscellaneous expenses, will be approximately $2.8 million. These costs have been, or will be, borne by the Company from the proceeds of the Offer.

10.11 Notices to foreign investors

(a) Important notice to Hong Kong investors

This document has not been, and will not be, registered as a prospectus under the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) of Hong Kong, nor has it been authorised by the Securities and Futures Commission in Hong Kong pursuant to the Securities and Futures Ordinance (Cap. 571) of the Laws of Hong Kong (the “SFO”). No action has been taken in Hong Kong to authorise or register this document or to permit the distribution of this document or any documents issued in connection with it. Accordingly, the Shares have not been and will not be offered or sold in Hong Kong other than to “professional investors” (as defined in the SFO and any rules made under that ordinance).

No advertisement, invitation or document relating to the Shares has been or will be issued, or has been or will be in the possession of any person for the purpose of issue, in Hong Kong or elsewhere that is directed at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to Shares that are or are intended to be disposed of only to persons outside Hong Kong or only to professional investors. No person allotted Shares may sell, or offer to sell, such securities in circumstances that amount to an offer to the public in Hong Kong within six months following the date of issue of such securities.

The contents of this document have not been reviewed by any Hong Kong regulatory authority. You are advised to exercise caution in relation to the offer. If you are in doubt about any contents of this document, you should obtain independent professional advice.

Butn Limited | Prospectus

137

(b) Important notice to singapore investors

This document and any other materials relating to the Shares have not been, and will not be, lodged or registered as a prospectus in Singapore with the Monetary Authority of Singapore. Accordingly, this document and any other document or materials in connection with the offer or sale, or invitation for subscription or purchase, of Shares, may not be issued, circulated or distributed, nor may the Shares be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore except pursuant to and in accordance with exemptions in Subdivision (4) Division 1, Part XIII of the Securities and Futures Act, Chapter 289 of Singapore (the “SFA”), or as otherwise pursuant to, and in accordance with the conditions of any other applicable provisions of the SFA.

This document has been given to you on the basis that you are (i) an existing holder of the Company’s shares, (ii) an “institutional investor” (as defined in the SFA) or (iii) an “accredited investor” (as defined in the SFA). In the event that you are not an investor falling within any of the categories set out above, please return this document immediately. You may not forward or circulate this document to any other person in Singapore.

Any offer is not made to you with a view to the Shares being subsequently offered for sale to any other party. There are on-sale restrictions in Singapore that may be applicable to investors who acquire Shares. As such, investors are advised to acquaint themselves with the SFA provisions relating to resale restrictions in Singapore and comply accordingly.

(c) Important notice to New Zealand investors

This document has not been registered, filed with or approved by any New Zealand regulatory authority under the Financial Markets Conduct Act 2013 (the “FMC Act”). The Shares are not being offered or sold in New Zealand (or allotted with a view to being offered for sale in New Zealand) other than to a person who:

(i) is an investment business within the meaning of clause 37 of Schedule 1 of the FMC Act;
(ii) meets the investment activity criteria specified in clause 38 of Schedule 1 of the FMC Act;
(iii) is large within the meaning of clause 39 of Schedule 1 of the FMC Act;
(iv) is a government agency within the meaning of clause 40 of Schedule 1 of the FMC Act; or
(v) is an eligible investor within the meaning of clause 41 of Schedule 1 of the FMC Act.

(d) Important notice to uK investors

Neither this Prospectus nor any other document relating to the Offer has been delivered for approval to the Financial Conduct Authority in the United Kingdom and no prospectus (within the meaning of section 85 of the Financial Services and Markets Act 2000 , as amended ( FsMA )) has been published or is intended to be published in respect of the Shares.

This Prospectus is issued on a confidential basis to ‘qualified investors’ (within the meaning of Article 2(e) of the UK Prospectus Regulation) in the United Kingdom, and the Shares may not be offered or sold in the United Kingdom by means of this Prospectus, any accompanying letter or any other document, except in circumstances that do not require the publication of a prospectus pursuant to section 86(1) of the FSMA. This Prospectus should not be distributed, published or reproduced, in whole or in part, nor may its contents be disclosed by recipients to any other person in the United Kingdom.

Any invitation or inducement to engage in investment activity (within the meaning of section 21 of the FSMA) received in connection with the issue or sale of the Shares, has only been communicated or caused to be communicated and will only be communicated or caused to be communicated in the United Kingdom in circumstances in which section 21(1) of the FSMA does not apply to the Company.

In the United Kingdom, this Prospectus is being distributed only to, and is directed at, persons: (i) who have professional experience in matters relating to investments falling within Article 19(5) (investment professionals) of the Financial Services and Markets Act 2000 (Financial Promotions) Order 2005 ( FPo ), (ii) who fall within the categories of persons referred to in Article 49(2)(a) to (d) (high net worth companies, unincorporated associations, etc.) of the FPO or (iii) to whom it may otherwise be lawfully communicated (together ‘relevant persons’). The investments to which this document relates are available only to, and any offer or agreement to purchase will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents.

138

10. Additional Information

10.12 Legal proceedings

The Group may, from time to time, be party to litigation and other claims and disputes incidental to the conduct of its business, including employment disputes, contractual disputes, indemnity claims and occupational and personal claims. Such litigation, claims and disputes, including the costs of settling claims and operational impacts, may materially adversely affect the Company’s business, operating and financial performance.

AFC is the claimant (i.e. the party making the claim) in three separate actions on foot, with claims totalling approximately $710,000.

10.13 Governing law

This Prospectus and the contracts that arise from the acceptance of Applications are governed by the law applicable in Victoria and each Applicant submits to the exclusive jurisdiction of the courts of Victoria.

10.14 Directors’ responsibility statement

The Directors of the Company state that for the purposes of section 731 of the Corporations Act, they have made all enquiries that were reasonable in the circumstances and have reasonable grounds to believe that any statements by them in this Prospectus are true and not misleading or deceptive, and that with respect to any other statements made in this Prospectus by persons other than the Directors, the Directors have made reasonable enquiries and have reasonable grounds to believe that persons making the statement or statements were competent to make such statements, those persons have given the consent required by section 716(2) of the Corporations Act and have not withdrawn that consent before lodgement of this Prospectus with ASIC.

Each Director consents to the lodgement of this Prospectus with ASIC, and has not withdrawn that consent prior to this Prospectus being lodged.

This Prospectus is prepared on the basis that:

(a) certain matters may be reasonably expected to be known to professional advisers of the kind with whom Applicants may reasonably be expected to consult; and
(b) information is known to Applicants or their professional advisers by virtue of any legislation or laws of any State or Territory of Australia or the Commonwealth of Australia.

10.15 Authorisation

This Prospectus is issued by the authority of the Board of the Company.

Dated: 26 May 2021

==> picture [76 x 41] intentionally omitted <==

==> picture [115 x 36] intentionally omitted <==

rael ross and Walter rapoport Joint CEO and Executive Directors Butn Limited

Butn Limited | Prospectus

139

Glossary[11]

11. 140 Glossary

Unless the context requires otherwise:

(a) terms defined in the independent experts’ reports included in this Prospectus have the same meaning when used throughout this Prospectus; and
(b) each term below has the meaning set out below, unless this is inconsistent with the context in which the expression is used.

==> picture [483 x 578] intentionally omitted <==

----- Start of picture text -----

|||||
|---|---|---|---|
|$|means Australian dollars.|
|1HFY20|means the first half of FY20.|
|1HFY21|means the first half of FY21.|
|8squad|means 8Squad Pty Ltd ACN 633 218 318.|
|8squad Agreement|means the services agreement entered into between 8Squad and Butn IP,|
|a wholly owned subsidiary of the Company, as described in Section 10.6(e)|
|of this Prospectus.|
|AAs|means the Australian Accounting Standards.|
|AAsB|means the Australian Accounting Standards Board.|
|Aest|means Australian Eastern Standard Time.|
|AFC 2018‑1 trust|means the trust of that name for which the Trustee is trustee.|
|AFC 2019‑1 trust|means the trust of that name for which the Trustee is trustee.|
|AFC|means Australian Factoring Company Pty Ltd, being a wholly owned|
|subsidiary of the Company.|
|AFC trust|means either the AFC 2018-1 Trust or the AFC 2019-1 Trust and|AFC trusts|
|means both of them.|
|AFC trust Documents|means those documents entered into by the Group and the AFC Trustee|
|as set out in Section 10.5(a)(ii) of this Prospectus.|
|AIFrs|means Australian equivalents to IFRS.|
|AMAL|or|trustee|means AMAL Trustees Pty Ltd ABN 98 609 737 064.|
|Applicant|means a person who makes an application for Shares.|
|Application|means an application for Shares under this Prospectus made by an|
|Applicant under an Application Form.|
|Application Form|means the form accompanying or attached to this Prospectus by which|
|an Applicant may apply for Shares under the Offer.|
|Application Monies|means amounts received in dollars by the Company from Application|
|for Shares under this Prospectus.|
|Ar|means accounts receivable.|
|AsIC|means the Australian Securities and Investments Commission.|
|AsIC Act|means the|Australian Securities and Investments Commission|
|Act 2001|(Cth).|
|AsX|means the ASX Limited ACN 008 624 691 or the Australian Securities|
|Exchange as the context requires.|
|AsX Listing rules|means the official listing rules of the ASX.|
|AsX operating rules|means the official operating rules of the ASX.|
|AsX recommendations|means the ASX Corporate Governance Principles and Recommendations|
|(4th edition).|
|AsX settlement and|means the rules established under the Corporations Act for settlement of|
|operating rules|transactions of securities of a company for which Clearing House Electronic|
|Sub-Register System (CHESS) approval has been given.|

----- End of picture text -----

Butn Limited | Prospectus

141

==> picture [483 x 644] intentionally omitted <==

----- Start of picture text -----

|||||
|---|---|---|---|
|B2B|means business to business.|
|Board|means the board of Directors of the Company.|
|Broker|means any ASX participating organisation selected by the Lead Manager|
|to act as a broker to the Offer.|
|Broker Firm offer|means the offer of Shares under this Prospectus to Australian resident|
|clients of Brokers who have received a firm allocation from their Broker.|
|Business Day|means a day that is not a Saturday or Sunday or a public holiday|
|in Victoria, Australia.|
|Butn, Butn Limited|means Butn Limited ACN 644 182 883.|
|or|Company|
|Butn Fintech solution|means Butn’s proprietary solution as described in Section 3.4(b)|
|of this Prospectus.|
|Butn IP|means Butn IP Pty Ltd ACN 630 296 169.|
|Butn Now|means the ‘Butn Now’ product as described on the Company’s website.|
|Butn Pay|means the ‘Butn Pay’ product as described on the Company’s website.|
|Butn X|means the ‘Butn X’ product as described on the Company’s website.|
|CAGr|means compound annual growth rate.|
|Call option Date|means:|
|(a) in respect of the AFC 2018-1 Trust, 29 October 2021; and|
|(b) in respect of the AFC 2019-1 Trust, 1 July 2022.|
|Chairman|means the appointed chairman of the Board which, as at the Prospectus|
|Date is Suzanne Ewart.|
|CHess|means the Clearing House Electronic Sub-register System.|
|Class A Note|means a ‘Class A’ Note issued under the AFC Trust Documents.|
|Class B Note|means a ‘Class B’ Note issued under the AFC Trust Documents.|
|Class C Note|means a ‘Class C’ Note issued under the AFC Trust Documents.|
|Closing Date|means the date on which the Offer closes, which is set out in the|
|“Key Offer Information” Section and may be varied by the Company.|
|Closing Certificate|means a certificate issued by the Company to the Lead Manager in|
|accordance with the Underwriting Agreement, confirming (among other|
|things) that the conditions precedent to the Lead Manager underwriting|
|the Offer have been fulfilled.|
|Co‑Founders|means each of Rael Ross and Walter Rapoport.|
|Collection Period|has the meaning|given in Section 10.5(a)(iii) of this Prospectus.|
|Completion|means completion in respect of the allotment and issue of Shares|
|under this Prospectus.|
|Constitution|means the constitution of the Company.|
|Convertible Notes|means convertible notes issued by Butn, on the terms described|
|in Sections 4.5(d) and 7.5 of this Prospectus.|
|Corporations Act|means the|Corporations Act 2001|(Cth).|
|CrMs|means customer relationship management technology|providers.|
|Debt Note|means each debt note issued under the AFC Trust Documents,|
|as described in Section 10.5(a).|
|Directors|means the directors of Butn as at the date of this Prospectus.|

----- End of picture text -----

142

11. Glossary

==> picture [483 x 634] intentionally omitted <==

----- Start of picture text -----

|||||
|---|---|---|---|
|eBItDA|means earnings before interest, tax, depreciation and amortisation expenses.|
|eligible Participants|has the meaning|given in Section 6.5 of this Prospectus.|
|employee Incentive|means Butn’s employee incentive plan as detailed in Section 6.5|
|Plan|or|eIP|of this Prospectus.|
|employee rights|means rights granted to Eligible Participants under the EIP, as described|
|in Section 6.5(b)(i).|
|escrowed shareholder|means each of Butn’s Existing Shareholders that have entered into|
|a restriction agreement or voluntary escrow deed with the Company|
|in relation to their Shares (with the exception of those Shares acquired|
|under the Offer.|
|event of Default|has the meaning|given in the AFC Trust Documents (as the context requires).|
|executive Director|means a Director that is part of Butn’s management.|
|existing shares|means the issued Shares immediately prior to the allotment of Shares|
|under the Offer.|
|exposure Period|means the period of 7 days (or 14 days if extended by ASIC) after the|
|lodgement of the Prospectus with the ASIC during which the Company|
|may not accept Applications.|
|Financial Information|has the meaning|given in Section 4.1 of this Prospectus.|
|Fintech|means financial technology or a financial technology service provider|
|(as the context requires).|
|FIrB|means the Foreign Investment Review Board.|
|FY18|means the financial year ended 30 June 2018.|
|FY19|means the financial year ended 30 June 2019.|
|FY20|means the financial year ended 30 June 2020.|
|FY21|means the financial year ended 30 June 2021.|
|FY22|means the financial year ended 30 June 2022.|
|Group|means Butn and its subsidiaries.|
|Group Company|means any company in the Group.|
|IFrs|means the International Financial Reporting Standards.|
|Independent|means, in relation to a Director, that Director being ‘independent’|
|within the meaning of the ASX Recommendations.|
|Institutional Investor|means investors who are:|
|(a) in Australia who is either a ‘professional investor’ or ‘sophisticated|
|investor’ under sections 708(11) and 708(8) of the Corporations Act; and|
|(b) in certain other jurisdictions to whom offers or invitations of Shares|
|can lawfully be made without the need for a lodged or registered|
|prospectus or other form of disclosure document or filing with, or|
|approval by, any governmental agency (except one with which the|
|Company is willing in its discretion to comply).|
|IP|means intellectual property, or intellectual property rights, as the|
|context requires.|
|IPo, Listing|or|Listed|means the admission of the Shares to quotation on the ASX in accordance|
|with ASX Listing Rules.|
|Lead Manager|means Canaccord Genuity (Australia) Limited ACN 075 071 466.|
|or|underwriter|

----- End of picture text -----

Butn Limited | Prospectus

143

==> picture [483 x 614] intentionally omitted <==

----- Start of picture text -----

||||
|---|---|---|
|Lead Manager options|means those options issued to the Lead Manager as described|
|in Section 10.7(d) of this Prospectus.|
|LtI|means long term incentive.|
|Management Deed|means the deed of that name under which AFC is appointed as ‘Servicer’|
|under the AFC Trust Documents as described in Section 10.5(a)(ii).|
|Managing Director|means a person who, for the time being, has been duly appointed|
|and holds office as a Managing Director.|
|MYoB Australia|means MYOB Australia Pty Ltd ACN 086 760 198.|
|MYoB Invest Co|means MYOB Invest Co Pty Ltd ACN 630 727 552.|
|MYoB Nominee|has the meaning|given in Section 10.6(c)(ii) of this Prospectus.|
|MYoB option Deed|has the meaning|given in Section 10.6(c)(ii) of this Prospectus.|
|MYoB strategic|means the partnership arrangement between Butn and MYOB|
|Partnership|Australia and MYOB Invest Co as set out in Sections 10.6(b) and 10.6(c)|
|of this Prospectus.|
|Non‑executive Director|means a Director that is not part of Butn’s management.|
|Note Deed Poll|means the document of that name as described in Section 10.5(a)(ii)|
|of this Prospectus.|
|offer|means the offer of up to 40 million ordinary Shares under this Prospectus|
|and includes the Broker Firm Offer, Institutional Offer and Priority Offer.|
|offer Documents|means the following documents issued or published by, or on behalf|
|of the Company in respect of or relating to the Offer, and in a form|
|approved by the Lead Manager:|
|(a) the Pathfinder and any document which supplements or replaces|
|the Pathfinder (including any addendum to the Pathfinder);|
|(b) this Prospectus, any Application Form and any Supplementary Prospectus;|
|(c) any cover email, including an appropriate cautionary legend, sent to|
|eligible Institutional Investors with a link to or attaching the Pathfinder|
|in connection with the Institutional Offer and bookbuild for the Offer; and|
|(d) any investor presentation or marketing presentation and/or ASX|
|announcement used in connection with the Institutional Offer or the|
|Broker Firm Offer (including any addendum to those presentations and|
|any draft of such documents used for roadshow purposes prior to the|
|Lodgement Date).|
|offer Price|means $0.50 per Share.|
|offer Proceeds|means the number of Offer Shares to be issued under the Offer multiplied|
|by the Offer Price.|
|official List|means the official list of the ASX.|
|official Quotation|means official quotation of the Shares on the Official List.|
|opening Date|means the date the Offer opens, which is set out in the|
|“Key Offer Information” Section and may be varied by the Company.|
|option|means an option issued under the EIP or Lead Manager Option, as applicable.|
|optionholder|means the holder of an Option issued under the EIP.|
|Participation unit|means the unit of that class issued under the Trust Deed and Participation|
|Unitholder has a corresponding meaning.|

----- End of picture text -----

144

11. Glossary

==> picture [483 x 642] intentionally omitted <==

----- Start of picture text -----

||||
|---|---|---|
|Partners|means:|
|(a) each Platform Partner; and/or|
|(b) those entities that the Group has partnered with to develop|
|complementary services and/or products that can be offered|
|to Butn’s customers;|
|Partnership Agreement|has the meaning|given in Section 10.6(b)(i) of this Prospectus.|
|Pathfinder|means a draft Prospectus for the Offer dated 18 May 2021 that has been|
|provided to Institutional Investors, co-lead managers, co-managers and|
|Brokers for the purposes of the Institutional Offer roadshow and bookbuild|
|and the Broker Firm Offer (and, where the context permits, includes any|
|document which supplements or replaces the Pathfinder (including any|
|addendum to the Pathfinder)).|
|Platform Partner|has the meaning given in Section 3.1 of this Prospectus and Platform|
|Partnership has a corresponding meaning.|
|Powered Product|has the meaning|given in Section 10.6(b)(i) of this Prospectus.|
|PPsr|means the Australian Personal Property Securities Register governed|
|by the|Personal Property Securities Act 2009|(Cth).|
|Priority offer|means the offer of Shares under this Prospectus to select investors|
|nominated by Butn in eligible jurisdictions, who receive a ‘Priority Offer’|
|invitation to acquire Shares under this Prospectus, as described in|
|Section 7.15 of this Prospectus.|
|Pro Forma Financial|means the Financial Information described as such in Table 4.1|
|Information|of Section 4.1 of this Prospectus.|
|Pro Forma Historical|means the Financial Information described as such in Section 4.3(a)|
|Income statements|of this Prospectus.|
|Pro Forma Historical|means the Financial Information described as such in Section 4.4|
|statements of Cash Flows|of this Prospectus.|
|Pro Forma Historical|means Financial Information described as such in Section 4.5(d)|
|statement of Financial|of this Prospectus.|
|Position|
|Prospectus|means this prospectus as modified or varied by any supplementary|
|prospectus made by the Company and lodged with ASIC from time to time.|
|Public Information|means public and other media statements made by, or on behalf of the|
|Company in relation to the business or affairs of the Company or the Offer|
|(other than the Offer Documents).|
|residual unit|means the unit of the class issued under the Trust Deed and|residual|
|unitholder|has a corresponding meaning.|
|restriction Deed|means the voluntary and mandatory restrictions deeds to be entered|
|into by each Escrowed Shareholder and any controllers and other parties|
|identified in those deeds (in a form and substance acceptable to the Lead|
|Manager and, if applicable, which are in accordance with the requirements|
|of the Listing Rules).|
|right of First refusal|has the meaning|given in section 10.6(c)(ii) of this Prospectus.|
|security trustee|means AMAL Security Services Pty Ltd ABN 48 609 790 758, being the|
|security trustee appointed under the Security Trust Deed.|
|share|means a share in the issued capital of the Company.|
|shareholder|means a person who holds Shares.|
|share registry|means Link Market Services Limited.|

----- End of picture text -----

Butn Limited | Prospectus

145

==> picture [483 x 461] intentionally omitted <==

----- Start of picture text -----

|||
|---|---|
|sMe|means a small to medium sized enterprise.|
|statutory Financial|means the Financial Information described as such in Table 4.1|
|Information|of Section 4.1 of this Prospectus.|
|statutory Historical|means the Financial Information described as such in Section 4.3(a)|
|Income statements|of this Prospectus.|
|statutory Historical|means the Statutory Historical Income Statements and Statutory|
|Financial Information|Historical Statement of Cash Flows.|
|statutory Historical|means the Financial Information described as such in Section 4.4|
|statement of Cash Flows|of this Prospectus.|
|statutory Historical|means the Financial Information described as such in Section 4.5(d)|
|statement of|of this Prospectus.|
|Financial Position|
|stI|means short term incentive.|
|supplementary|means any supplementary or replacement prospectus supplementary to|
|Prospectus|or replacing any existing Prospectus prepared or required to be prepared|
|and lodged by the Company with ASIC in connection with the Offer.|
|timetable|means the timetable for the Offer agreed between the Company|
|and the Lead Manager pursuant to the Underwriting Agreement.|
|trust Assets|means in respect of each AFC Trust, the assets held by that trust.|
|trust Deed|means the trust deed for the AFC 2018-1 Trust or AFC 2019-1 Trust|
|(as applicable).|
|trust receivable|means a receivable purchased by an AFC Trust pursuant to the AFC|
|Trust Documents.|
|underwriting|means the underwriting agreement described in Section 10.6(a)|
|Agreement|of this Prospectus.|
|use of Funds|means the anticipated expenditures to be incurred by the Company|
|and funded by the capital raising under this Prospectus as detailed|
|in Section 7.4.|
|us securities Act|means the Securities Act of 1933, as amended from time to time,|
|and the rules and regulations established under that act.|
|Walrap|means Walrap Nominees Pty Ltd ACN 604 844 993 as trustee for the|
|Walter Rapoport Family Trust.|
|Why K|means Why K Pty Ltd ACN 150 151 723 as trustee for the Rael Ross|
|Family Trust.|

----- End of picture text -----

146

APPeNDIX A summary of Key Accounting Policies

147

Appendix A. summary of Key Accounting Policies

1. Introduction

The principal accounting policies adopted in the preparation of the Financial Information included in Section 4 of this Prospectus are set out below and have been consistently applied unless stated otherwise. These accounting policies are consistent with those applied within the general purpose financial statements of the consolidated entity for the financial year ended 30 June 2020, which were audited in line with Australian Auditing Standards and the general purpose financial statements for the half-year ended 31 December 2020 which were reviewed in line with Australian Auditing Standards.

2. Basis of measurement

The Financial Information has been prepared on a going concern basis, using an accrual basis and under the historical cost convention except for, where applicable, the revaluation of financial assets and liabilities at fair value through profit or loss, financial assets at fair value through other comprehensive income and derivative financial instruments.

3. Basis of consolidation

The consolidated Financial Information incorporate the assets, liabilities and results of the consolidated entity and all subsidiaries. Subsidiaries are those entities over which the consolidated entity has control. The consolidated entity controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the consolidated entity. They are de-consolidated from the date that control ceases. Intercompany transactions, balances and unrealised gains on transactions between entities are eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the consolidated entity.

As noted in Section 4, the Pro Forma Historical Income Statements and the Pro Forma Historical Cash Flows have been extracted from the special purpose financial statements of Action Funding Group Pty Ltd. The special purpose financial statements contain certain pro forma adjustments, which have been prepared in a manner consistent with AAS in order to illustrate the current structure of the consolidated entity as if it were in place from 1 July 2017.

4. Current and non‑current classification

Assets and liabilities are presented in the statement of financial position based on current and non-current classification.

An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the consolidated entity’s normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period. All other assets are classified as non-current.

A liability is classified as current when: it is either expected to be settled in the consolidated entity’s normal operating cycle; it is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities are classified as non-current.

5. revenue recognition

Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed in revenue are net of returns, allowances, rebates and amount collected on behalf of third parties. The consolidated entity recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the consolidated entity and specific criteria have been met for each of the consolidated entity’s activities.

148

Appendix A. summary of Key Accounting Policies

Revenue is recognised for the major business activities as follows:

(a) revenue from customers

Revenue from customers is recognised using the application of the credit adjusted effective interest rate ( eIr ) to the amortised cost of the purchased debt ledgers or transactions under AASB 9 Financial Instruments. Revenue is shown net of any adjustments to the carrying amount of purchased debt ledgers or transactions as result of changes in estimated cash flows. The EIR is the rate that discounts estimated future cash receipts of the purchased debt ledgers or transactions to the net carrying amounts (i.e. the price paid to acquire the asset). Revenue from rendering services is recognised to the extent that the performance obligation has been met, revenue benefits are expected to flow to the consolidated entity and the revenue can be reliably measured. Money received in advance is deferred and recognised as a deferred revenue liability.

Variable consideration within the transaction price, if any, reflects concessions provided to the customer such as discounts, rebates and refunds, any potential bonuses receivable from the customer and any other contingent events. Such estimates are determined using either the ‘expected value’ or ‘most likely amount’ method. The measurement of variable consideration is subject to a constraining principle whereby revenue will only be recognised to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur. The measurement constraint continues until the uncertainty associated with the variable consideration is subsequently resolved. Amounts received that are subject to the constraining principle are recognised as a refund liability.

(b) Interest

Interest revenue is recognised as interest accrues using the effective interest method.

(c) other revenue

Other revenue is recognised under AASB 15 Revenue. The standard requires entities to exercise judgement, taking into consideration relevant facts and circumstances when applying each step of the model to contracts with customers. The standard also specifies the accounting for incremental costs of obtaining a contract and costs directly related to fulfilling a contract. The consolidated entity has concluded that other revenue streams have one performance obligation and should be recognised at the point in time when the service to the customer is complete.

(d) Government grants

Government grants are recognised where there is reasonable assurance that the grant will be received and all attached conditions will be complied with. When the grant relates to an expense item, it is recognised as income on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed.

R&D tax incentives received or receivable are accounted for under AASB 120 Government Grants as other income, unless related to capitalised expenditure in which case it is offset against the asset and realised through a lower amortisation charge across the asset’s useful life.

6. Income tax

The income tax expense or benefit for the period is the tax payable on that period’s taxable income based on the applicable income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable.

Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted.

Butn Limited | Prospectus

149

7. Goods and services tax (Gst)

Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of the expense.

Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of financial position.

Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the tax authority, are presented as operating cash flows.

8. Cash and cash equivalents

Cash and cash equivalents include cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities 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.

9. trade and other receivables

Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any allowance for expected credit losses. Trade receivables are generally due for settlement between 30 to 90 days.

The consolidated entity has applied the simplified approach to measuring expected credit losses, which uses a lifetime expected loss allowance. To measure the expected credit losses, trade receivables have been grouped based on days overdue.

Other receivables are recognised at amortised cost, less any allowance for expected credit losses.

10. Property, plant and equipment

Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and equipment (excluding land) over their expected useful lives. The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date. An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the consolidated entity. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss.

11. right‑of‑use assets

A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the commencement date net of any lease incentives received, any initial direct costs incurred, and, except where included in the cost of inventories, an estimate of costs expected to be incurred for dismantling and removing the underlying asset, and restoring the site or asset. Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful life of the asset, whichever is the shorter.

The consolidated entity has elected not to recognise a right-of-use asset and corresponding lease liability for short-term leases with terms of 12 months or less and leases of low-value assets. Lease payments on these assets are expensed to profit or loss as incurred.

150

Appendix A. summary of Key Accounting Policies

12. Intangible assets

Intangible assets acquired are initially recognised at cost. Indefinite life intangible assets are not amortised and are subsequently measured at cost less any impairment. Finite life intangible assets are subsequently measured at cost less amortisation and any impairment. The gains or losses recognised in profit or loss arising from the derecognition of intangible assets are measured as the difference between net disposal proceeds and the carrying amount of the intangible asset. The method and useful lives of finite life intangible assets are reviewed annually. Changes in the expected pattern of consumption or useful life are accounted for prospectively by changing the amortisation method or period.

(a) Intellectual property

Significant costs associated with intellectual property are deferred until commercialisation and then amortised on a straight-line basis over the period of their expected benefit, being their estimated finite life of 5 years.

(b) Borrowing costs

Costs in relation to borrowings are capitalised as an asset and amortised on a straight-line basis over the period of the finance arrangement.

(c) Customer list

Significant costs associated with customer list acquisitions are deferred and amortised on a straight-line basis over the period of their expected benefit, being their estimated finite life of 15 years.

(d) Impairment of non‑financial assets

Goodwill and other intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount.

Recoverable amount is the higher of an asset’s fair value less costs of disposal and value-in-use. The value-in-use is the present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to form a cash-generating unit.

13. trade and other payables

These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of the financial period and which are unpaid. Due to their short-term nature they are measured at cost and are not discounted. The amounts are unsecured and are usually paid within 30 days of recognition.

14. Borrowings

Loans and borrowings are initially recognised at the fair value of the consideration received. They are subsequently measured at amortised cost using the effective interest method.

15. Lease liabilities

A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present value of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the consolidated entity’s incremental borrowing rate. Lease liabilities are measured at amortised cost using the effective interest method.

Butn Limited | Prospectus

151

16. Finance costs

Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in the period in which they are incurred.

17. Provisions

Provisions are recognised when the consolidated entity has a present (legal or constructive) obligation as a result of a past event, it is probable the consolidated entity will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation.

18. employee benefits

(a) short‑term employee benefits

Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be settled wholly within 12 months of the reporting date are measured at the amounts expected to be paid when the liabilities are settled.

(b) other long‑term employee benefits

The liability for employee benefits not expected to be settled within 12 months of the reporting date are measured at the present value of expected future payments to be made in respect of services provided by employees up to the reporting date. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on high quality corporate bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.

19. Fair value measurement

When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; and assumes that the transaction will take place either: in the principal market; or in the absence of a principal market, in the most advantageous market. Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming they act in their economic best interests. For non-financial assets, the fair value measurement is based on its highest and best use.

20. Issued capital

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, from the proceeds.

21. share‑based payments

The cost of equity-settled share-based transactions to employees and others is determined by the fair value at the date when the grant is made using an appropriate valuation model. The fair value determined at the grant date of the equity-settled share-based payments is expensed over the vesting period, based on the consolidated entity’s estimate of equity instruments that will eventually vest, with a corresponding increase in equity. The impact of the revision of the original estimates, if any, is recognised in the profit and loss such that the cumulative expense reflects the revised estimate and actual instruments that vest, with the corresponding adjustment to the share-based payment reserve.

152

Appendix A. summary of Key Accounting Policies

22. New accounting standards

The consolidated entity applied AASB 9 Financial Instruments and AASB 15 Revenue from Contracts with Customers for the first time commencing from 1 July 2017. The consolidated entity applied AASB 16 Leases for the first time from 1 July 2018, recognising Right of use assets and Lease liabilities respectively.

The consolidated entity has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (‘AASB’) that are mandatory for the current reporting period.

Any new or amended Accounting Standards or Interpretations that are not yet mandatory as at the date of the Pro Forma Historical Statement of Financial Position have not been adopted.

Butn Limited | Prospectus

Corporate Directory

Directors

Suzanne Ewart – Non-executive Director and Independent Chairman

Rael Ross – Executive Director Walter Rapoport – Executive Director Georg Chmiel – Non-executive Director Michael (Mike) Hirst – Non-executive Director

AI assistant

BUTN LIMITED — Capital/Financing Update 2021

64580_rns_2021-07-01_647637b8-10e8-4861-9b72-8eafef2a5fda.pdf

ProsPeCtus

Important Notices

offer

Lodgement and Listing

exposure Period

Note to Applicants

No offering where offering would be illegal

Financial information presentation

Forward looking statements

suitability of investment and general risk factors

Disclaimer

obtaining a copy of this Prospectus

Defined terms and abbreviations

Privacy

Photographs and diagrams

If you have any Questions

Key offer Information

the offer

Indicative Key Dates[1]

Message from the Chairman

Message from the Co‑Founders

01. Investment overview

01. Investment overview

01. Investment overview

01. Investment overview

01. Investment overview

More information

01. Investment overview

F. The Company’s Directors

01. Investment overview

Topic Details

More information

01. Investment overview

01. Investment overview

01. Investment overview

02 Industry overview

Market Report

The Invoice Finance Market

April 2021

1. Introduction and background

2. The SME market

2.1 Overview of SMEs in Australia

Market Report

2.2 Business conditions and challenges for SMEs

2.3 Impact of poor cash flow

02. Industry overview

2.4 Impact of COVID-19

Market Report

2.5 SME funding sources

2.5.1 Overview of business funding sources

02. Industry overview

Market Report

2.5.2 Trends in SME lending

Market Report

2.5.3 Use of FinTechs by SMEs

Market Report

3. Invoice finance services

3.1 Types of invoice finance

Market Report

Market Report

3.3 Advantages of invoice finance

4. Invoice Finance Market

4.1 Market Size and Growth

4.1.1 Total SME finance

Market Report

4.1.2 Invoice finance

4.1.3 Market drivers

Market Report

4.2 Competitive environment

4.2.1 Industry participants

Market Report

4.2.2 Invoice finance participants

Market Report

5. Conclusion

Disclosure

02. Industry overview

Market Report

BUTN LIMITED Capital/Financing Update 2021