NEXTED GROUP LIMITED — Annual Report 2018

Sep 2, 2018

ABN 75 105 012 066

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ICOLLEGE LIMITED

ASX Appendix 4E (rule 4.3A)

Preliminary final report for the year ended 30 June 2018

Details of the reporting period and the previous corresponding period

Reporting Period: 30 June 2018 Previous Corresponding Period: 30 June 2017

Results for announcement to the market

(All comparisons to year ended 30 June 2017)

	$A’000	Up/Down	% Movement
Revenue from ordinary activities	3,119	up	52%
Revenue from ordinary activities excluding interest income	3,109	up	52%
Loss from ordinary activities after tax	(3,281)	up	0.38%
Loss attributable to members	(3,281)	up	0.38%

		Franked amount per
Dividends	Amount per share	share
Interim dividend	N/A	N/A
Final dividend	N/A	N/A
Record date for determining entitlements to dividends		N/A

Brief explanation of any figures reported above necessary to enable the figures to be understood Refer to ASX Announcement and attached Review and Results of Operations

Net tangible assets backing	30 June 2017	30 June 2017
Net tangible assets/(liability) per security	(1.7) cents	(1.41) cents
Net asset backing per security	2.4 cents	(1.41) cents

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Control gained or lost over entities having material effect

Controlgained or lost over entities having material effect
Name of entity	Manthano Limited
Date of acquisition	12 February2018
Contribution of the controlled entity (or group of entities) to the profit/(loss) from ordinary activities during the period, from the date of gainingor losingcontrol	($811,024)
Profit (loss) from ordinary activities of the controlled entity (or group of entities) for the whole of the previous corresponding period	N/A
Contribution to consolidated profit/(loss) from ordinary activities from acquisition date	($811,024)

Description of acquisition:

Manthano is a vocational education and training organisation that provides both accredited and non-accredited training solutions to existing workers, job seekers and school leavers throughout Australia and abroad. The training that is delivered by Manthano and its two registered training organisations is targeted at individuals seeking essential skills and knowledge required to gain employment across a range of industry sectors including health and fitness, community services and business. Manthano is working closely with a number of community based organisations and overseas to increase opportunities for graduates to secure meaningful employment.

Material interest in entities which are not controlled entities

The consolidated entity has an interest (that is material to it) in the following entities: Nil

Compliance Statement

The preliminary final report has been prepared based on the 30 June 2018 accounts which are in the process of being audited by an independent Audit Firm in accordance with the requirements of s302 of the Corporations Act 2001 .

• Attachments forming part of Appendix 4E: 1. Financial Report

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Signed:______ Stuart Usher Company Secretary

Date: 31 August 2018

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ICOLLEGE LIMITED ABN 75 105 012 066

PRELIMINARY FINAL FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2018

ICOLLEGE LIMITED

ABN 75 105 012 066

Index:	Page
Corporate Directory	1
Review and Results of Operations	2
Consolidated Statement of Profit or Loss and Other Comprehensive Income	4
Consolidated Statement of Financial Position	5
Consolidated Statement of Cash Flows	6
Consolidated Statement of Changes in Equity	7
Condensed Notes to the Financial Statements	8

ICOLLEGE LIMITED

CORPORATE DIRECTORY

Directors

Home Stock Exchange

Mr Simon Tolhurst – Non-Executive Chairman Mr Ashish Katta - Managing Director Mr Badri Gosavi – Executive Director

Australian Securities Exchange Limited Level 40 Central Park 152-158 St George’s Terrace PERTH WA 6000

ASX Code: ICT (Ordinary Shares) ICT0, ICTOB (Options)

Company Secretary

Auditor

Mr Stuart Usher

Bentleys Audit & Corporate (WA) Pty Ltd Level 3, 216 St Georges Terrace PERTH WA 6000

Registered Office

Bankers

Suite 1 GF 437 Roberts Road SUBIACO WA 6008

Commonwealth Bank Limited Ground Floor, 50 St Georges Terrace PERTH WA 6000

Telephone: + 61 8 6380 2555 Facsimile: + 61 8 9381 1122

Solicitors

Share Registry

Andrew Lindfoot Suite 5, 531 Hay Street, Subiaco, Western Australia

Link Market Services Limited Level 12, QV1 Building 250 St Georges Terrace PERTH WA 6000

1

PRINCIPAL ACTIVITIES

iCollege Limited comprises of seven businesses which deliver accredited and non-accredited vocational education and training solutions throughout Australia and internationally. iCollege currently has five registered training organisations (RTO’s) based in Australia, an internationally recognised training provider based in Singapore and an international student recruitment agency.

The iCollege training scope assists people looking to develop essential skills and knowledge required to gain employment or advance their careers across a range of industry sectors including construction, nursing, disability, hospitality, business, English language and health & fitness.

iCollege is approved to train both domestic and international students throughout Australia. iCollege currently provides training to a range of existing workers, job seekers and school leavers throughout our seven campuses in Sydney, Brisbane, Gold Coast, Perth, Adelaide and Canberra.

Our mission is to give students a flexible and more engaging learning experience. Quite simply iCollege provides the pathway for individuals to realise success in their chosen field.

REVIEW OF OPERATIONS AND RESULTS

The Company recorded a loss after tax for the year ended 30 June 2018 of $3,281,246 (2017: $3,268,758).

The financial year ended 30 June 2018, saw iCollege engage with Manthano Limited with the first half of the year dedicated to an in-depth due diligence program leading to the Acquisition of Manthano in February 2018. The second half of the year saw the integration of Manthano assets into the broader iCollege Group. This integration process unearthed several significant growth opportunities and has set a solid foundation for iCollege to continue to capitalise on the growth and solid revenue numbers reported in Q3 and Q4. 2017/18 has seen the restructure of the iCollege board with the new members highlighting the following midterm strategic objectives which have been strictly adhered to by the executive:

• Ensuring financially responsible decisions are made for the company;

• Pursue vertical integration, providing control of supply chain and educational outcomes;

• Deliver training using up to date and relevant delivery methods;

• Develop appropriate Government and industry relationships; and

• • Increasing on-shore demand through international delivery.

The following initiatives have been announced to the market and are progressing to the point where they provide additional revenue streams or cost savings to the business:

• ➢ In February 2018, the Manthano acquisition was completed in line with all terms outlined in the Share Sale Agreement, this acquisition included two additional Registered Training Organisations and one Internationally Accredited Oil and Gas specialist training business.

• ➢ In April 2018, the company replaced an existing convertible note allocating the instrument to a sophisticated investor on improved commercial terms.

• ➢ iCollege signed a Memorandum of Understanding with Birla Edutech which is part of the Yash Birla Group. The Birlas are one of the oldest Business families in India and have been in operation since 1887 AD for the establishment of a Hospitality Centre of Excellence and additional vocational training opportunities, In August 2018 this agreement was finalised with the signing of a binding Joint Venture Agreement. The initial centre will be based in New Delhi with additional opportunities being investigated.

• ➢ In line with “increasing on-shore demand through international delivery” iCollege signed a binding HOA to establish iStudy Australia (India), an international student recruitment arm designed to begin the vertical integration of student acquisition lessening the burden of commissions paid to third party agents. iCollege is now in the process of expanding Indian operations and looking to establish iStudy Australia offices in Malaysia and China.

• ➢ iCollege welcomed Mr. Badri Gosavi into the business as an Executive Director and full time CFO. Badri brings with him significant experience and has already streamlined the accounting functions of all operating entities.

• ➢ May 2018 saw iCollege successfully apply to the Department of Home Affairs as a sponsor organisation under the 407 Visa subclass. This allows iCollege to provide structured training plans and instruction to suitable overseas graduates and professionals allowing them to complete 12 – 24 months on the job training programs.

• ➢ In June 2018, iCollege (through Sero Institute) applied for and was granted an increase in its existing CRICOS places. This increase saw the number of places increased from 450 to 1450 and included the addition of a Perth Campus which will become active in September 2018.

• ➢ Finally, iCollege successfully completed a share placement to Sophisticated investors in July 2018. This placement was oversubscribed and saw the company raise $2M after costs seeing the company well-funded and, in the position to aggressively pursue growth initiatives.

• ➢ Importantly, the last quarter of 2017/18 saw iCollege report the highest ever quarterly revenue achieved by the business. The board of iCollege expect this trend to continue and are confident of reporting growth quarter on quarter during the 2018/19 FY.

The board and executive of iCollege are excited by the growth initiatives that have been established through 2017/18 and look forward to reporting on their continuing success throughout the current 2019 FY.

3

ICOLLEGE LIMITED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED 30 JUNE 2018

Note Revenues Revenue from customers Cost of sales Gross Profit Interest Revenue Expenses Audit and tax expenses Compliance Consultant fees Depreciation and amortisation Directors fees Doubtful debts Employee expenses Finance costs Intangible asset impairment Legal expenses Marketing/Sponsorships expenses Occupancy expenses Share based payments Travel and accommodation Other expenses Total expenses Profit/(loss) before Income Tax Income tax benefit Profit/(loss) after income tax attributable to members of iCollege Limited Other comprehensive income Total comprehensive profit/(loss) attributable to members of iCollege Limited Earnings/(loss) per share Basic Earnings/(loss) per share	30 June 2018 $ 3,108,910 (766,781) 2,342,129 9,996 (30,000) (94,257) (356,817) (98,093) (130,000) (84,984 (1,974,207) (853,569) - (307,807) (31,007) (639,657) (515,400) (142,086) (375,487) (5,633,371) (3,281,246) - (3,281,246) - (3,281,246) Cents per Share (1.11)	30 June 2017 $ 2,041,838 (817,756)
		1,224,082 792 (118,203) (130,469) (727,156) (33,357) (120,166) (73,810) (1,003,951) (146,733) (1,157,257) (198,901) (147,294) (153,025) (133,000) (294,198) (304,396)
		(4,741,916)
		(3,517,042) 248,284
		(3,268,758) -
		(3,268,758)
		Cents per Share (2.11)

The Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the notes to the financial statements.

4

ICOLLEGE LIMITED

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2018

Note ASSETS Current Assets Cash and cash equivalents Trade and other receivables Other assets Total Current Assets Non-Current Assets Property, plant & equipment Intangible assets 3` Total Non-Current Assets Total Assets LIABILITIES Current Liabilities Trade and other payables 2 Convertible notes Borrowings Current tax liabilities Short-term provisions Total Current Liabilities Non-Current Liabilities Borrowings Deferred tax liabilities Total Non-Current Liabilities Total Liabilities Net Assets/(Deficiency) Equity Issued capital Reserves Accumulated losses Total Equity	30 June 2018 $ 339,214 830,821 10,350 1,180,385 190,118 18,876,026 19,066,144 20,246,529 4,071,777 650,000 125,000 6,854 123,754 4,977,385 469,373 3,929,509 4,398,882 9,376,267 10,870,262 27,278,641 1,747,029 (18,155,408) 10,870,262	30 June 2017 $ 12,000 314,128 23,013
		349,141
		33,845 -
		33,845
		382,986
		2,472,745 650,000 - - 27,332
		3,150,077
		- -
		-
		3,150,077
		(2,767,091)
		11,066,741 1,040,330 (14,874,162)
		(2,767,091)

The Consolidated Statement of Financial Position should be read in conjunction with the notes to the financial statements.

5

ICOLLEGE LIMITED

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 30 JUNE 2018

Note Cash flows from operating activities Receipts from customers Interest received Finance costs Payments to suppliers and employees Net cash flows used in operating activities Cash flows from investing activities Net cashflow from acquisition of subsidiaries Deferred consideration from acquisition of a subsidiary Payments for plant and equipment Net cash flows used in and from investing activities Cash flows from financing activities Proceeds from borrowings Repayment of borrowings Proceeds from issue of shares and options Proceeds from share issues received in advance Payment of share issue costs Net cash flows provided by financing activities Net increase/(decrease) in cash and cash equivalents held Add opening cash and cash equivalents brought forward Closing cash and cash equivalents carried forward	Year ended 30 June 2018 $ 2,847,385 9,996 (146,871) (3,344,502) (633,992) 722,800 (250,000) (8,968) 463,832 1,044,865 (842,491) - 300,000 (5,000) 497,374 327,214 12,000 339,214	Year ended 30 June 2017 $ 1,990,294 792 (289,936) (4,130,591)
		(2,429,441)
		(79,968) - -
		(79,968)
		150,000 (1,500,000) 4,330,775 - (479,709)
		2,501,066
		(8,343) 20,343
		12,000

The Consolidated Statement of Cash Flows should be read in conjunction with the notes to the financial statements.

6

ICOLLEGE LIMITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 JUNE 2018

At 1 July 2017 Total comprehensive loss for the period Transactions with owners in their capacity as owners: Issue of share capital Share based payment Options Shares issued in lieu of services Costs of capital raising At 30 June 2018 At 1 July 2016 Total comprehensive loss for the period Transactions with owners in their capacity as owners: Issue of share capital Share based payment Shares issued in lieu of services Costs of capital raising At 30 June 2017	Issued Capital Accumulated Losses Share based payments Reserve Total Equity $ $ $ $ 11,066,741 (14,874,162) 1,040,330 (2,767,091)
	(3,281,246) - (3,281,246) 15,701,500 - - 15,701,500 515,400 - - 515,400 - - 706,699 706,699 - - - - (5,000) - - (5,000)
	27,278,641 (18,155,408) 1,747,029 10,870,262
	7,082,674 (11,605,404) 1,040,330 (3,482,400)
	- (3,268,758) - (3,268,758) 4,330,775 - - 4,330,775 128,000 - - 128,000 5,000 - - 5,000 (479,708) - - (479,708)
	11,066,741 (14,874,162) 1,040,330 (2,767,091)

The Consolidated Statement of Changes in Equity should be read in conjunction with the notes to the financial statements.

7

ICOLLEGE LIMITED

CONDENSED NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2018

1. BASIS OF PREPARATION

This preliminary final report has been prepared in accordance with ASX Listing Rule 4.3A and the disclosure requirements of ASX Appendix 4E

2. TRADE CREDITORS AND PAYABLES

Included in trade creditors and payables in 2018 and 2017 is an amount that represents deferred consideration on previously completed business combinations of $1,500,000 for the remaining consideration payable for the acquisition of Management Institute of Australia Pty Ltd (MIA) which settled on 1 April 2015. After an intensive and thorough review of MIA operations the iCollege Executive have discovered a number of inconsistencies with what was portrayed of the business prior to its acquisition. The board has taken the view that additional payments to the vendor of MIA are not justifiable given the inconsistencies discovered and has proposed that a formal mediation be held promptly to resolve these issues. Until that time any further payments and release of any shares currently held in escrow will be suspended.

3. BUSINESS COMBINATION

(i) ACQUISTION OF MANTHANO LTD

On 12 February 2018, iCollege Ltd acquired 100% of the ordinary share capital and voting rights in Manthano Ltd.

(a) Acquisition Consideration

As consideration for the issued capital of Manthano Ltd, iCollege Ltd paid by the issue of 250,000,000 Consideration Shares valued at the date of acquisition to be $15,250,000.

(b) Fair value of consideration transferred

Under the principles of AASB 3, the assets and liabilities of Manthano Ltd are measured at fair value on the date of acquisition.

(c) Intangible assets

Provisionally accounted for intangible assets are calculated as the difference between the fair value of consideration transferred less the fair value of the identified net assets of Manthano Ltd. Details of the transaction are as follows:

Consideration Consideration Shares Fair value of assets and liabilities held at acquisition date: Cash Trade and other receivables Plant and equipment Trade and other payables Employee provisions Borrowings Deferred tax liability Fair value of identifiable assets and liabilities assumed Provisionally accounted for intangible assets		Fair Value $ 15,250,000
		722,800 524,363 245,398 (627,937) (70,057) (491,084) (3,929,509)
		(3,626,026)
		18,876,026

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ICOLLEGE LIMITED

CONDENSED NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2018

4. EVENTS OCCURING AFTER REPORTING DATE

No other matter or circumstance has arisen since 30 June 2018 that has significantly affected or may significantly affect the operations of the Consolidated Entity, the results of those operations or the state of affairs of the Consolidated Entity, in subsequent financial year.

5. AUDIT STATUS

This report is based on accounts that are in the process of being audited.

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