JANISON EDUCATION GROUP LIMITED — Annual Report 2021

Aug 23, 2021

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. Investor Update

JAN.ASX

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Contents.

Overview FY21 Highlights FY21 Financial Results FY22 Outlook Horizon

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.
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. Market leader in digital assessments

• We operate in a large and growing market – school assessments .

• Our standardised assessment platform has been built in partnership over 10 years.

• Our assessment products are flagships in the market.

• Our assessment platform delivered 6m digital exams in 117 countries .

• exams.

• Our platform is the global benchmark for high-volume, high-stakes

• COVID has rapidly accelerated a permanent adoption of digital assessments.

6.5m+ 4.5m+ Digital Students assessments in FY21

117+ Countries

200K

Remote proctored exams

1998 Founded

160 Employees 50:50 gender

ASX +38% Listed 2017 FY21 revenue growth

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. Customers and products

Assessment Platform Products

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		PISA for	ICAS
		Schools	Assessments
	ARR (at 30 June 2021)	$3 million	$5 million
	School customers	2,500	1,000
	Parent customers	n/a	63,000
	Countries	15	6
	Horizon Target	$30+ million p.a.	$20+ million p.a.

	Assessment Platform ARR FY20 FY21 All Assessment Platform $8 million $10 million Select platform customers

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. How we grow

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Purpose Unlock the potential in every learner.

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Growth Drivers

$80-100m revenue horizon

1. PISA for Schools

Janison was founded by educators for educators with a vision of equitable access to education for all, no matter the circumstances. This commitment to ensuring no learner is disadvantaged remains the centre of our ethos and what we deliver.

Pinpointing learning gaps, stretching skillsets and tapping into learners’ unique problemsolving abilities can have life-changing consequences. We equip educators with the tools and data to enable this level of impact on every learner.

Full rollout across 90 countries with national roles in the US, UK and Australia serving 1,000 schools each.

2. ICAS Assessments

Continued international expansion delivering 1 million tests p.a.

3. Assessment Platform

New customer acquisition and existing customer expansion.

M&A

Acquisition of school assessments and opportunity for consolidation in the digital assessments industry.

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Why Janison?

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Proven track record of delivery at scale

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Agile products

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Unparalleled functionality

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Exam Integrity and Security

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FY21 . Highlights

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FY21 Highlights

• Janison accredited by the OECD as the national service provider of PISA for Schools in the UK and Australia

• First successful delivery of ICAS – 290,000 tests, $5m in new revenue

• Group revenue exceeds $30 million

• Gross Margin continues to increase with standardised assessment platform delivery and scale benefits

• Janison achieves workforce gender balance with 50% female population

$30m $18m OPERATING ASSESSMENT +117% +38% REVENUE ARR $23m 55% (ARR) ANNUALISED GROSS +9pps RECURRING REVENUE +75% MARGIN $23m $3m CASH ON HAND EBITDA +21% (NO DEBT) +109% 50% $16m ORGANIC ASSESSMENT +91% FEMALE +19% REVENUE WORKFORCE

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FY21 Full Year Revenue.

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+38%
Full Year Group Revenue Assessment ARR at 30 June
$30m +117%
$18.3m
$22m
$22m
$17m
$8.4m
$7.6m
$5.1m
June June June June
FY18 FY19 FY20 FY21
2018 2019 2020 2021
Assessment Platform & Products Learning Platform 1 Services
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1 Learning Platform revenue consists of corporate clients purchasing the Janison LMS (Learning Management System)

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FY21 Financials.

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Full year FY21 Income Statement.

	($m)	FY21	FY20	$ Growth	% Growth
	Platform Revenue	22.2	14.0	+8.2	+59%
	Services Revenue	8.0	7.9	+0.1	+1%
	Group Revenue	30.2	21.9	+8.3	+38%
	Cost of Sales Gross Profit GM%	13.5 16.7 55%	11.8 10.0 46%	+1.7 +6.6 +9pps	+14% +66%
	OperatingExpenses	13.7	7.5	+6.1	+81%
	EBITDA	3.0	2.5	+0.5	+21%
	EBITDA %	10%	11%	(1)pps
	Depreciation & Amortisation	4.4	1.9	+2.5	+134%
	Amortisation of Acquired IP	1.7	1.7	(0.0)	(0)%
	Share-based compensation	0.3	0.4	(0.1)	(29)%
	Interest, tax and other non-operating	(0.2)	0.6	(0.8)	(127)%
	NPAT	(3.2)	(2.2)	(1.1)	+49%
	NPAT-A*	(1.5)	(0.4)	(1.1)	+250%

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"NPAT-A" = Net Profit After Tax Adjusted for amortisation of acquired IP. Acquired IP includes the value attributed to client relationships at the time of the acquisition of LTC in April 2019 and the IP purchased with the acquisition of ICAS Assessments (formerly ‘Educational Assessments’) in June 2020. Client relationships are amortised over a 5-year period, other IP is amortised over 3 years.

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COMMENTARY ON FY21 INCOME STATEMENT

Revenue

• Group revenue expanded through the execution on Janison’s 3 growth drivers:

• PISA for Schools rollout – now in 15 countries (up 7 from FY20)

• ICAS growth – delivering $6m of new revenue in FY21

• Acquisition and expansion of assessment platform clients – FY21 saw the introduction of Chartered Accountants ANZ on to the Janison platform and the expansion of the NSW Dept. of Education with Check-In assessments, among many others.

Gross Margin

• The continued improvement in customer mix towards SaaS assessment clients and the reduction of custom software

• development has seen a continuation of gross margin expansion this year (see slide 13 for more details).

Opex

• Expansion in Opex in FY21 is driven by:

• The acquisition of ICAS Assessments which brought an operational team of 32 heads

• Increased investment in sales and marketing to support the 3 growth drivers and elevate Janison brand awareness

• Hiring completion of the executive leadership team roles

D&A

• Depreciation increased by $0.7m due to new lease depreciation from the addition of a Sydney headquarters office

• Increased expenditure in product development in FY20 and FY21

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. Gross Margin

COMMENTARY ON GROSS MARGIN

SALES MIX IMPROVEMENT

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HALF YEARLY GROSS PROFIT MARGIN – STRONG EXIT RATE FROM FY21
Gross Profit
57%
Gross Profit Margin 54%
47%
46%
43%
$8.6m
$8.1m
$5.4m
$5.2m
$4.9m
24%
$2.4m
1H 2H 1H 2H 1H 2H
FY19 FY19 FY20 FY20 FY21 FY21
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• Since FY19 Janison has directed the business towards a standardised but highly configurable assessment platform. The efficiency and scale benefits of acquiring more customers on to this platform and delivering more digital assessments each year is improving the mix of revenue and gross profit margin.

• We believe this trend will continue to deliver higher gross profit margins into the coming years as the business transitions further towards standardised recurring revenue customers and products, and offers less bespoke assessment software development.

INCREASED VOLUME OF ASSESSMENT PRODUCTS SOLD

• One of Janison’s 3 growth drivers is its suite of off-the-shelf school assessment products including the main ICAS competition. The questions are developed and designed inhouse by Janison’s world class item and test development team each year. As a digital assessment there is little variable cost associated with higher volumes therefore coupled with the fixed cost nature of the test development - the more tests sold each year, the more profitable it becomes.

• The ICAS competition has historically sold 1 million tests p.a before digitisation by its previous owner and pre-COVID-19. Janison sold 290,000 tests in FY21 and believes it can reach the original 1 million tests p.a. in the coming years through improved market conditions, better marketing efforts and greater international expansion.

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Full Year FY21 Cash Flow.

for the 12 months ending June

	($m)	FY21	FY20	$ Change	% Change
	Customer Receipts Payments to Suppliers Other(tax,interest and other) Operating Cash Flows	34.0 (29.2) (0.4) 4.4	29.4 (21.9) (0.0) 7.5	+4.6 (7.3) (0.4) (3.1)	+16% (33)% (2519)% (41)%
	Acquisition Costs	(0.1)	(3.5)	+3.5	+98%
	Product Development	(6.0)	(4.7)	(1.3)	(28)%
	Plant & Equipment Investing Cash Flows	(0.4) (6.5)	(0.2) (8.3)	(0.3) +1.9	(171)% +22%
	Proceeds from Capital Raise	14.9	6.7	+8.3	(124)%
	Release of Lease Liabilities Financing Cash Flows	(0.8) 14.1	(0.6) 6.1	(0.2) +8.1	(30)% (133)%
	FX Effect	(0.1)	(0.2)	+0.1	+65%
	NET CASH FLOW	12.0	5.1	+7.0	(137)%
	OpeningCash Balance	11.1	6.0	+5.1	+84%
	CLOSING CASH BALANCE	23.1	11.1	+12.0	+108%

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COMMENTARY ON FY21 CASH FLOW

Customer Receipts

• Janison receives prepayment for annual licence fees in Q4 which are held as Income In Advance and recognised as revenue over the following financial year (FY22).

• Janison also receives prepayment of the ICAS competition from parents and schools in Q4 of each financial year. This revenue will be recognised in FY22 over the window when the competition is sat by students (1H22).

Payments to Suppliers

• Payments to suppliers includes the cost to produce the ICAS assessment question bank for the following financial year. Costs incurred are held as a Prepayment and not expensed to the P&L. The costs are released in alignment with the revenue when the competition is sat in 1H22.

• Additional costs paid in FY21 include additional headcount acquired from the University of NSW Global for the acquisition of ICAS Assessments (32 heads), an expanded Sales & Marketing team to support growth, and additional heads to complete the executive leadership team i.e., Chief Revenue Officer, Head of People & Culture, Head of Product.

Product Development

• Janison continues to invest in its core Assessment platform functionality, design and security to maintain its market-leading position.

Proceeds from Capital Raise

• In June 2021 Janison raised $15m before costs in a private Placement at a price of $0.82 per Share. Subsequently in July 2021, Janison raised a further $3m before costs in a public Share Purchase Plan (SPP). Funds will be used to capitalise on the 3 core growth strategies, M&A, product development and working capital.

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FY22 Outlook.

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14

In FY22 we expect:

• Continued sales momentum and revenue growth through Janison’s identified key growth pillars

• Balanced 1H revenue with ICAS competition growth in Q2

• Further gross margin improvement through higher product volume scale benefit and assessment platform customer acquisition

• School lockdowns have the potential to delay revenue but also present opportunities for Janison Remote exams e.g., HSC Trials

• Further assess potential acquisition opportunities to enhance Janison’s offering and scale

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Horizon.

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Global EdTech market US$268B in 2021 and expanding rapidly

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Mobile & Advanced
Tech
Rise of B2C EdTech Personalised, unbundled,
Models social and gamified
driven by mobility, big
Students, parents
Digital Infrastructure
data, cloud and AI/ML.
and educators all
‘Catch-Up’
6% looking for support,
6% Short Term Surge,
Most schools at the
upskilling and direct
Long Term Transition
start of a long-term
outcomes.
Schools Rough start to digital maturity $404B
remote learning,
Post Secondary journey.
52% normalizing into $365B
Workforce
sustained, long-term
36% $327B
Pre-K digital integration.
$295B
$341B
$268B
$304B
$227B
Schools represent more than half
$272B
of the total Education market
$183B $247B
$223B
$203B
$183B
Post-COVID
Pre-COVID
2019 2020 2021 2022 2023 2024 2025
Total education spend $6.1T $5.4T $5.5T $6.0T $6.4T $6.8T $7.3T
Digital spend (‘EdTech’) $183B $227B $268B $295B $327B $365B $404B
EdTech share 3.1% 4.2% 4.8% 4.9% 5.1% 5.3% 5.5%
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Source: https://www.holoniq.com/notes/global-education-technology-market-to-reach-404b-by-2025/

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Market dynamics

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Government funding boost

Education expenditure is increasing globally to address learning lost through COVID.

Governments around the world are increasing funding for schools to regain lost learning time and identify student needs.

PISA for Schools is an eligible assessment under the US federal government funding initiatives.

Janison’s Check-In assessment is ideal for understanding learning gaps among students.

Technology Exam integrity & adoption delivery conditions

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94% of exam bodies say candidates’ academic performance improved after online assessment technologies were incorporated into the educational system

Schools have rushed to deliver remote exams without appropriate integrity

Many high-stakes exams have been temporarily replaced with open book unsupervised exams which lack exam integrity.

Schools are more equipped than ever to adopt digital assessments now that teachers are more familiar with technology and schools are expanding the infrastructure necessary to deliver digital exams on a large scale.

Janison’s assessment platform provides full identity validation and dishonest behaviour detection.

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. Key Revenue Growth Drivers

GROWTH DRIVERS

Janison’s 4 strategic growth drivers to reach $80-100m revenue horizon

1. PISA for Schools

Expanding into 30+ more countries as the IPP (platform provider) and securing 3,000 schools in the US, UK and Australia combined as the NSP (national service provider)

2. ICAS Assessments

Growing to 1 million ICAS assessments p.a. and a suite of new school assessment products

3. Assessment Platform Clients

Doubling existing revenue from $10m to $20m with the acquisition and expansion of assessment platform clients.

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Acquisitions & existing business units

Acquisition of assessment products and platform customers. Maintaining moderate growth in existing business.

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FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25
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. Gross Margin Expansion

Sales mix and product volumes driving margin improvement and scale benefits

55%

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46%
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35%

GROWTH DRIVERS

Sales Mix – Assessment Platform

• Historically Janison developed custom assessment platforms for government and large enterprises. As the market matured, Janison consolidated its Assessment functionality and IP into one standardised but highly configurable assessment platform – Janison Insights, since FY20.

• Through the efficiency and scale benefits of this transition Janison has seen significant improvement in Gross Profit margin and expects this trend to continue into the coming years.

Volume – Assessment Products

• Janison produces off-the-shelf school assessment products such as the annual ICAS competition and associated products and practice assessments.

FY19 FY20 FY21 FY22

FY23

FY24

FY25

• The cost to produce these products is predominantly fixed in nature, so as Janison continues to increase the volume of these assessment products sold each year it will increase its gross profit and profit margin.

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. Deep dive on customers and products

Assessment Platform Products

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		PISA for	ICAS
		Schools	Assessments
	ARR (at 30 June 2021)	$3 million	$5 million
	School customers	2,500	1,000
	Parent customers	n/a	63,000
	Countries	15	6
	Horizon Target	$30+ million p.a.	$20+ million p.a.

	Assessment Platform ARR FY20 FY21 All Assessment Platform $8 million $10 million

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PISA for Schools.

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. PISA for Schools: Big Picture Learning

$ 1.4m

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ARR in 6
weeks
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10 [%]
Market share in
Australia [1]
15
Countries
Enrolled
to-date
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• Providing educators with the best available evidence drawn from the best available data sets to inform best practices in their schools

• Unique, gold standard in international assessments for global benchmarking – providing evidence drawn from the best available data sets

• Blending cognitive and social emotional skills unlike any other assessment globally

• 5-year exclusive agreement to deliver PISA for School globally.

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1 10% of eligible schools in Australia – PISA for Schools tests 15-year-old students

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PISA for Schools Country Janison’s role Status Signed
Brazil Platform Provider Scheduled for 2021 June 2019
1,750 schools delivered in 2020, 2000 planned Nov
. Russia Platform Provider September 2019
progress 2021
Delivered in 2020/21 but impacted by school
USA National Service Provider October 2019
closures, preparing for growth in 2021/22
Portugal Platform Provider <200 schools delivered 2021 January 2020
Spain Platform Provider Scheduled for Oct 2021 January 2020
Pakistan Platform Provider Delayed until 2022 February 2020
Japan Platform Provider <200 schools delivered in 2021, scheduled for 2022 February 2020
Thailand Platform Provider <200 schools delivered 2021, scheduled for 2022 July 2020
Australia National Service Provider In progress, 200+ schools signed in six weeks March 2021
15
China Platform Provider Delivering 2021 & 2022 – 1,000+ schools March 2021
Countries
enrolled
6 England National Service Provider May 2021
N. Ireland National Service Provider
National Service May 2021
Provider rights Preparing for national roll-out
Scotland National Service Provider May 2021
Wales National Service Provider May 2021
Kazakhstan Platform Provider Testing scheduled for October 2021 May 2021
Investor Pack
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ICAS Assessments.

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ICAS – celebrating aspiration and ambition. Parents and students love ICAS

• Competition that gives students the opportunity to celebrate academic performance in a way that others celebrate achievement in sports or the arts.

• Independent, objective and contemporary.

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50%

Market share

• Draws on four decades of academic rigour and global level assessment experience.

• Janison acquired ICAS Assessments in June 2020 from UNSW Global, including a suite of four schools’ assessments for competition, diagnostic, formative and placement purposes.

90%

Gross Profit ARR[1]

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• 1 The cost to produce the ICAS competition each year is largely fixed in nature. The only variable incremental costs for any revenue above the cost to produce the test are marginal hosting costs and marking for certain subjects. Therefore, all incremental revenue generates approximately 90% gross margin.

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Assessment . Platform

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. Assessment platform

o Collection of sophisticated data not available with ‘pen and paper’

o In the hands of educators immediately

o Developed with time-poor teachers in mind o Easily integrated into existing school and accreditor systems

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1 www.mindlogicx.com/online-assessments-are-the-future-in-achieving-complete-digitization

. Platform Case Study: “Check-In"

NSW Department of Education and Janison co-developed an assessment called ‘Check-In’ to understand learning loss in school children as a result of COVID.

• Central to providing immediate data to pinpoint learning gaps to provide teachers with evidence for educational interventions.

• “

• • An enlightened approach to assessment ” – NSW Teachers Union

• “

• • Best quality data set of learning lost through COVID to date ” –

• Grattan Institute

• “

• • Check-In will contribute to the NSW Curriculum Overhaul ” –

• Education Minister Sarah Mitchell.

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Check-In
2021
Twice yearly in
years 3,4,5,6,7,8,9
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Q&A.

. Glossary

Abbreviation Description

Insights

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