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NEXTED GROUP LIMITED Annual Report 2024

Aug 28, 2024

65463_rns_2024-08-28_49058ee4-7e78-4e37-a9cd-dfb98c660fab.pdf

Annual Report

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ASX RELEASE

29 AUGUST 2024

FY24 PRELIMINARY FINAL REPORT

NextEd Group Limited ( ASX:NXD ) ( NextEd or the Company) provides its Preliminary Final Report for the year ended 30 June 2024 (FY24).

Financial results for FY24 included:

  • Record revenue of $111.4 million, 8.9% higher than the previous corresponding period (pcp) (FY23: $102.2 million);

  • EBITDA of $15.0 million, 10% lower than pcp (FY23: $16.7 million);

  • Net profit after tax adjusted for impairments, the impact of acquired intangibles and lease costs incurred pre-revenue generation (‘NPAT(A) adjusted’) of $0.2 million, $5.8 million lower than pcp (FY23: $6.0 million);

  • Operating cash flows of $1.7 million, $23.5 million lower than pcp (FY23: $25.2 million);

  • Cash at bank as at 30 June 2024 of $19.3 million (30 June 2023: $40.2 million); and

  • Contract liabilities (deferred revenue) balance at 30 June 2024 of $32.5 million, a decrease of 25% against the pcp (30 June 2023: $43.5 million).

An impairment charge of $28.9 million was recognised in FY24 against intangible assets including goodwill, brand names and training materials in the Technology & Design, International Vocational and Go Study segments. These non-cash charges are a direct result of future uncertainty created by recent Federal Government actions to reduce international student numbers.

FY24 results presentation

An FY24 results presentation will be separately released to ASX to accompany the FY24 Preliminary Final Report. NextEd invites investors to attend a webinar today at 10:30am (AEST) to discuss the results being hosted by NextEd’s Chief Executive Officer, Glenn Elith, and Chief Financial Officer, Michael Fahey.

Webinar registration URL : https://us06web.zoom.us/webinar/register/WN_KROW2UDuTQ69_8v8xjBg-Q

The results presentation webinar will be live streamed via the above URL and will also be recorded and made available shortly after the presentation on:

  • NextEd Group’s website: https://nexted.com.au/investor centre/

This announcement has been approved by the Board of NextEd Group Limited.

For further information

Glenn Elith Lisa Jones Chief Executive Officer Company Secretary [email protected] [email protected]

1

Registered Address: Level 2, 7 Kelly Street, Ultimo, NSW, 2007

Phone: 02 8355 3820

ABN: 75 105 012 066

nexted.com.au

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APPENDIX 4E

FOR THE YEAR ENDED 30 JUNE 2024

1 REPORTING PERIOD
Report for the period ended: Year ended 30 June 2024
Previous corresponding period: Year ended 30 June 2023
2 RESULTS FOR ANNOUNCEMENT TO THE
MARKET		 Year ended
30 June 2024
$’000		 Year ended
30 June 2023
$’000		 Change
%
2.1 Revenues from ordinary activities 111,367 102,220 8.9% increase
Profit / (loss) from ordinary activities after
2.2 tax attributable to members (31,231) 3,608 965.7% decrease
2.3 Total comprehensive income / (loss)
attributable to members of the parent entity		 (31,314) 3,604 968.8% decrease
Amount per Franked amount
security per security
2.4 Dividends ¢ %
Interim dividend Nil n/a
Final dividend Nil n/a
2.5 Record date for determining entitlements to the dividend n/a
Year ended Year ended
30 June 2024 30 June 2023
$’000 $’000
3 Earnings / (losses) for the period attributable to
parent entity		 owners of the (31,231) 3,608
Net assets 34,624 65,438
Less: intangible assets (31,800) (63,330)
Add: deferred tax liabilities 2,965 4,294
Net tangible assets 5,789 6,402
Number Number
Fully paid ordinary shares 221,116,114 219,376,773
¢ ¢
Net tangible assets backing per share 2.62 2.92

Net tangible assets are defined as net assets less intangible assets and liabilities. For the purposes of the net tangible assets calculation, right-of-use assets are considered tangible assets.

1

APPENDIX 4E (continued)

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FOR THE YEAR ENDED 30 JUNE 2024

Date
payable		 Amount
per
security		 Franked
amount per
security
4. Dividends ¢ %
Interim dividend N/A Nil N/A
Final dividend N/A Nil N/A

  1. Dividends and returns to shareholders including distributions and buy backs

  2. Nil

  3. The financial information provided in this Preliminary Final Report (Appendix 4E) is based on the Preliminary Financial Report for the year ended 30 June 2024 (attached). The Preliminary Financial Report does not include all of the Notes which are included in an annual financial report. Accordingly, this Preliminary Final Report is to be read in conjunction with the annual financial report for the year ended 30 June 2023 and any public announcements made by the Company during the reporting period in meeting its continuous disclosure requirements as set out in the Corporations Act 2001.

  4. The financial statements for the year ended 30 June 2024 are in the process of being audited, and no material adjustments or qualifications are expected.

  5. Commentary on results.

Operating and financial review

The Company operates businesses which deliver accredited and non-accredited English language, vocational education and higher education courses. It also operates an education recruitment agency business providing services to international students seeking to undertake tertiary studies in Australia. The Company’s broad and diverse mix of domestic and international students undertake their studies either online or at one of its 8 campuses located in major metropolitan cities across Australia. In addition to this, some students are supported through work placements and internships to complement their learning experiences and enhance their learning outcomes.

Financial performance

Year ended Year ended
30 June 2024 30 June 2023
$’000 $’000
Revenue 111,367 102,220
EBITDA before intangible impairment 14,960 16,674
EBITDA after intangible impairment (13,965) 16,674
Net (loss) / profit after tax (31,231) 3,608
Net profit after tax adjusted 161 6,013
Cash flows from operations 1,708 25,180

2

APPENDIX 4E (continued)

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FOR THE YEAR ENDED 30 JUNE 2024

Operating and financial performance

The Company made numerous strategic investments in the reporting period, including:

Courses :

  • Launching 3 high demand international student vocational healthcare courses (aged care, individual support and community services) in March 2024;

  • Building international student numbers undertaking hospitality courses, which grew to over 1,000 students at 30 June 2024 (30 June 2023: 623); and

  • Receiving exclusive regulatory approval for a period of 5 years for an internally developed Diploma of e- Commerce qualification, with first student intakes expected in late 2024.

Campuses:

  • Expanding its Melbourne campus in August 2023 by adding 12 additional classrooms and an industrial teaching kitchen;

  • Expanding its Brisbane campus in December 2023 by adding 13 additional classrooms;

  • Launching a substantial Adelaide campus in December 2023 for domestic students, obtaining CRICOS accreditation, and using those new facilities to launch international student operations in Adelaide in April 2024; and

  • Launching a substantial new Gold Coast campus in April 2024 to access the attractive Gold Coast market.

The campus expansion program is now complete and NextEd will cease further geographic expansion investments until at least FY26.

Capital management:

  • Refinancing bank guarantee facilities with the Commonwealth Bank of Australia to release approximately $9 million of cash previously recognised as a non-current asset to secure bank guarantees over leased premises.

Financial results for the year ended 30 June 2024 (FY24) included:

  • Record revenue of $111.4 million, 8.9% higher than the previous corresponding period (pcp) (FY23: $102.2 million);

  • EBITDA of $15.0 million, 10% lower than pcp (FY23: $16.7 million);

  • Reducing 2H24 operating costs by $1.9 million compared to 1H24 in response to government actions to reduce international student numbers. The full benefit of the cost reduction actions is expected to be realised in FY25 as part of the previously announced targeted $5.0 million reduction in operating costs;

  • Net profit after tax adjusted for impairments, the impact of acquired intangibles and lease costs incurred prerevenue generation (‘NPAT(A) adjusted’) of $0.2 million, $5.8 million lower than pcp (FY23: $6.0 million);

  • Operating cash flows of $1.7 million, $23.5 million lower than pcp (FY23: $25.2 million).

  • Operating cash flows in 2H24 were positive $3.6 million, a $5.5 million improvement over the previous half year (1H24: cash outflow of $1.9 million);

  • Cash at bank as at 30 June 2024 of $19.3 million (30 June 2023: $40.2 million);

  • Contract liabilities (deferred revenue) balance at 30 June 2024 of $32.5 million, a decrease of 25% against the pcp (30 June 2023: $43.5 million). The decrease in contract liabilities occurred in 1H24 (31 December 2023 $29.5 million), with contract liabilities increasing in 2H24 by $3.0 million as international vocational (nonEnglish language) student numbers subsequently increased;

  • An impairment charge of $28.9 million on intangible assets including goodwill, brand names and training materials in the International Vocational, Technology & Design and Go Study segments. These non-cash charges are as a direct result of recent Federal Government actions to reduce international student numbers.

3

APPENDIX 4E (continued)

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FOR THE YEAR ENDED 30 JUNE 2024

Further details are included in the outlook section of this operating and financial review.

Revenue

FY24 revenues increased by $9.1 million vs pcp with growth achieved in the International Vocational segment (14.9% vs pcp), Go Study segment (14.3% vs pcp) and the Domestic Vocational segment (5.2% vs pcp).

Federal Government actions to reduce international student numbers impacted revenues in 2H24, resulting in revenue declining by 11% to $52.2 million vs pcp (2H23: $58.6 million).

EBITDA

FY24 EBITDA decreased by $1.7 million or 10% vs pcp, to $15.0 million. The decline in revenue in 2H24 was partially mitigated by a reduction in operating costs. Operating costs in 2H24 reduced by $1.9 million vs 1H24.

Cash flows and balance sheet

FY24 operating cash flows were $1.7 million, a decrease of $23.5 million vs pcp (FY23: $25.2 million). Tuition fees from international students are usually paid for a study period (term/semester) in advance and are recognised in revenue as the student progresses through their course. The rapid growth in operating cash flows in previous periods was due to the rapid growth in new secured student enrolments. This has reduced as student numbers have declined due to recent federal government actions.

Operating cash flows in 2H24 were $3.6 million, $5.5 million higher than 1H24 ($1.9 million outflow) due to cost reductions and higher student tuition collections.

Investing cash outflows in FY24 were $11.4 million, with $10.9 million invested in the fitting out of new campus facilities. This included $1.5 million in Brisbane, $1.4million in Melbourne, $0.6 million in Sydney, $2.1 million in Adelaide and $5.3 million in the Gold Coast. The campus expansion program is now complete and NextEd will cease further geographic expansion investments until at least FY26.

As at 30 June 2024 cash on hand (including term deposits) was $19.3 million (30 June 2023: $40.2 million).

Contract liabilities (deferred revenue) balance at 30 June 2024 was $32.5 million, a decrease of 25% against the pcp (30 June 2023: $43.5 million). The decrease in contract liabilities occurred in 1H24 (31 December 2023: $29.5 million), with contract liabilities increasing in 2H24 by $3.0 million as international vocational (non-English language) student numbers increased.

4

APPENDIX 4E (continued)

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FOR THE YEAR ENDED 30 JUNE 2024

Segment results

International Vocational segment

  • International Vocational segment revenues in FY24 were $85.8 million, an increase of $11.1 million or 14.9% against pcp (FY23: $74.7 million). Vocational course revenues grew 15% in 2H24 vs pcp and driven by newly launched courses in Hospitality and Healthcare. Vocational course revenue in 2H24 made up 27% of segment revenues, up from 17% in 1H24.

  • FY24 EBITDA of $20.6 million, an increase of $1.3 million or 6% against pcp (FY23: $19.4 million).

Technology & Design segment

  • Technology & Design segment revenues in FY24 were $12.4 million, a decline of $3.1 million or 20% against pcp (FY23: $15.4 million). Revenues in FY24 were impacted by some international students dropping out of their course to move to different lower priced vocational courses delivered by other training organisations, and new international student enrolments being constrained due to government tightening of student visa approvals.

  • FY24 EBITDA of $1.4 million declined $2.4 million against pcp (FY23: $3.8 million), due to the decline in revenue.

Domestic Vocational segment

  • Domestic Vocational segment revenues in FY24 were $8.6 million, an increase of $0.4 million or 5.2% against pcp (FY23: $8.2 million).

  • Revenues in 2H24 were $4.8 million, an increase of 37.9% against pcp (2H23: $3.5 million) as processes to improve student progressions gained traction.

  • FY24 EBITDA of $1.9 million was flat against pcp (FY23: $1.9 million). EBITDA in 2H24 of $1.2 million increased 198.8% against pcp (2H23: $0.4 million) as a result of higher revenues and other operational improvements.

Go Study segment

  • Go Study segment revenues in FY24 were $5.9 million, an increase of $0.8 million or 14.3% against pcp (FY23: $5.1 million). Onshore student recruitment offices contributed approximately 60% of revenues being slightly higher than the pcp (FY23: 57%) as onshore students sought to extend their studies.

  • FY24 EBITDA of $0.6 million increased $0.8 million against pcp (FY23: EBITDA loss of $0.2 million) as a result of higher revenues and cost management actions.

Future outlook

The tertiary education industry in which the Company operates is dynamic and subject to constant regulatory change.

Recent Federal Government actions to reduce net migration by limiting the numbers of international students that can study in Australia is having a material impact on the Company and the entire sector.

On 27 August 2024, the Federal Government announced that, subject to the passage of legislation before the Parliament, it will set a National Planning Level (NPL) for new international student commencements of 270,000 for calendar year 2025. The NPL is divided between the higher education and vocational education and training (VET) sectors at a provider level.

Certain students, including those undertaking standalone English language courses, are excluded from the NPL.

5

APPENDIX 4E (continued)

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FOR THE YEAR ENDED 30 JUNE 2024

Implementation of the NPL is subject to a Senate Committee report in early September before determining whether any amendments will be required prior to seeking to pass into legislation.

Individual providers will be advised of the indicative limit on the number of new international student commencements that they can accept for 2025. Information received by the consolidated entity to date is incomplete and the impact of the NPL is therefore not yet able to be determined.

The Company has positioned the business for tighter immigration policy and continues to take pro-active steps to reduce its cost base, to minimise capital expenditure, and to seek additional revenue opportunities including by growing its domestic student businesses.

Non-IFRS information

The Company uses certain measures to manage and report on its business that are not recognised under Australian Accounting Standards (‘AAS’). These measures are collectively referred to as non-IFRS financial measures. Although the Company believes these measures provide useful information about the financial performance of the Company, they should be considered as supplemental to the measures calculated in accordance with AAS and not as a replacement for them. Because these non-IFRS financial measures are not based on AAS, they do not have standard definitions, and the way the Company calculates these measures may differ from similarly titled measures used by other companies. These measures have not been independently audited or reviewed.

The non-IFRS measures used by the Company include EBITDA and adjusted net profit after tax (‘NPAT(A) adjusted’).

EBITDA is earnings before interest, tax, depreciation and amortisation. NPAT(A) adjusted is calculated as the net profit after tax adjusted for the after-tax impact of amortisation associated with acquired intangible assets, impairment costs and interest and depreciation expenses for leased premises undergoing fit out prior to any revenue generation.

Reconciliations between EBITDA and profit after income tax, and net profit after tax and NPAT(A) adjusted for the year ended 30 June 2024 are noted below.

6

APPENDIX 4E (continued)

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FOR THE YEAR ENDED 30 JUNE 2024

EBITDA reconciliation

EBITDA reconciliation
Net profit / (loss) after tax
Add back:
Depreciation & amortisation
Finance costs net of interest income
Impairment of intangible assets
Less:
Income tax benefit
EBITDA before impairment of intangibles		 Year ended
30 June 2024
$’000
Year ended
30 June 2023
$’000
(31,231)
3,608
15,052
11,986
3,533
1,772
28,925
-
(1,319)
(692)
14,960
16,674

NPAT(A) adjusted reconciliation

Net profit / (loss) after tax
Add back:
Amortisation of acquired intangible assets
Pre-revenue generation lease costs
Impairment of intangible assets
Less:
Income tax on acquired intangibles and impairment
Net profit after tax adjusted		 Year ended
30 June 2024
$’000
Year ended
30 June 2023
$’000
(31,231)
3,608
2,601
2,652
1,194
548
28,925
-
(1,328)
(795)
161
6,013

7

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NextEd Group Limited and its Controlled Entities ABN 75 105 012 066

Preliminary Financial Report for the Year Ended 30 June 2024

8

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CORPORATE DIRECTORY

Directors

Catherine (Cass) O’Connor - Independent non-executive chair Simon Tolhurst – Independent non-executive director William Deane – Independent non-executive director Sandra Hook – Independent non-executive director

Company Secretary Lisa Jones

Registered Office Level 2, 7 Kelly Street Ultimo NSW 2007 Telephone: +61 (02) 8355 3820 Email: [email protected] Website: www.nexted.com.au

Auditor Pitcher Partners Sydney Level 16, Tower 2 Darling Park 201 Sussex Street Sydney NSW 2000 Telephone: +61 (02) 9221 2099

Share Registry Link Market Services Limited Locked Bag A14 Sydney South NSW 1235 Telephone: 1300 554 474 Fax: +61 (02) 9287 0303 Email: [email protected] Website: www.linkmarketservices.com.au

Securities Exchange ASX Code: NXD Australian Securities Exchange Level 40, Central Park 152-158 St Georges Terrace Perth WA 6000 Telephone: 131 ASX (131 279) – within Australia Telephone: +61 (02) 9338 0000 Website: www.asx.com.au

Registrations Numbers ACN: 105 012 066 ABN: 75 105 012 066

9

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CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED 30 JUNE 2024

Note 30 June 2024
$’000
30 June 2023
$’000
Revenue from continuing operations
2a
Cost of sales
Gross profit
Other income
2b
Interest revenue
2b
Salaries and employee benefits expense
Depreciation and amortisation expense
4
Impairment of intangible assets
11
Impairment of receivables
Property and occupancy costs
Professional and consulting fees
Marketing expenses
Public company related costs
Other expenses
Finance costs
4
(Loss) / profit before tax
Income tax benefit
5
Net (loss) / profit for the year
Other comprehensive loss for the year net of tax
Total comprehensive (loss) / income attributable to
members of the parent entity
Earnings per share:
Basic (loss) / profit per share (cents per share)
27
Diluted (loss) / profit per share (cents per share)
27		 111,367
102,220
(54,088)
(45,352)
57,279
56,868
37
37
850
833
(26,720)
(24,573)
(15,052)
(11,986)
(28,925)
-
(1,266)
(1,860)
(4,900)
(1,021)
(4,514)
(1,229)
(3,478)
(3,729)
(1,278)
(1,037)
(3,693)
(3,289)
(4,383)
(2,605)
(32,550)
2,916
1,319
692
(31,231)
3,608
(83)
(4)
(31,314)
3,604
(14.11)
1.65
(14.11)
1.61

The consolidated statement of profit or loss and other comprehensive income is to be read in conjunction with the accompanying notes.

10

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

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AS AT 30 JUNE 2024

Note 30 June 2024
$’000
30 June 2023
$’000
Current assets
Cash and cash equivalents
6
Trade receivables
7a
Inventories
Prepayments and other assets
8a
Total current assets
Non-current assets
Trade receivables
7b
Property, plant and equipment
9
Right-of-use asset
10
Intangible assets
11
Prepayments and other assets
8b
Total non-current assets
Total assets
Current liabilities
Trade and other payables
12
Contract liabilities
13a
Lease liabilities
Employee benefits
14a
16a
Provisions
15a
Total current liabilities
Non-current liabilities
Contract liabilities
13b
Deferred tax liabilities
Employee benefits
Provisions
17
16b
15b
Lease liabilities
14b
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
18
Reserves
19
Accumulated losses
Total equity		 19,343
30,264
14,972
7,118
110
341
6,742
12,280
41,167
50,003
2,179
445
17,628
9,696
41,510
38,665
31,800
63,330
-
9,931
93,117
122,067
134,284
172,070
10,367
9,802
30,330
43,101
7,472
2,323
5,996
2,179
203
194
50,695
61,272
2,179
445
2,965
258
3,164
4,294
207
2,570
40,399
37,844
48,965
45,360
99,660
106,632
34,624
65,438
103,115
102,657
40
3,154
(68,531)
(40,373)
34,624
65,438

The consolidated statement of financial position is to be read in conjunction with the accompanying notes.

11

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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 JUNE 2024

Note Contributed
equity
Accumulated
losses
Share-
based
payments
reserve
Foreign
currency
translation
reserve
Total
equity
$’000
$’000
$’000
$’000
$’000
Balance at 1 July 2023
Loss for the year
Other comprehensive loss for
the year
Total comprehensive loss for
the year
Transactions with owners
Options exercised
18
Expired options transfer
19
Options issued in FY23
18
Share buyback FY24
18
Balance as at 30 June 2024		 102,657
(40,373)
3,115
39
65,438
-
(31,231)
-
-
(31,231)
-
-
-
(83)
(83)
-
(31,231)
-
(83)
(31,314)
605
-
-
-
605
-
3,073
(3,073)
-
-
-
-
42
-
42
(147)
-
-
-
(147)
103,115
(68,531)
84
(44)
34,624
Contributed
equity
Accumulated
losses
Share-
based
payments
reserve
Foreign
currency
translation
reserve
Total
equity
$’000
$’000
$’000
$’000
$’000
Balance at 1 July 2022
Profit for the year
Other comprehensive income
for the year
Total comprehensive income
/ (loss) for the year
Transactions with owners
Options exercised
18
Options issued in FY23
18
Balance as at 30 June 2023		 102,427
(43,981)
3,079
43
61,568
-
3,608
-
-
3,608
-
-
-
(4)
(4)
-
3,608
-
(4)
3,604
230
-
-
230
-
-
36
-
36
102,657
(40,373)
3,115
39
65,438

The consolidated statement of changes in equity is to be read in conjunction with the accompanying notes.

12

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CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 30 JUNE 2024

Note 30 June
2024
$’000
30 June 2023
$’000
Cash flows from operating activities
Receipts from customers
Receipts from government grants
2(b)
Interest received
Payment to suppliers and employees
Net cash from operating activities
Cash flows from investing activities
Payments for property, plant and equipment
Payments for intangibles
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares
Repayment of borrowings
Receipts from / (payments for) release of funds supporting bank
guarantees
Repayment of lease liabilities – interest component
Repayment of lease liabilities – principal component
Net cash used in financing activities
Net (decrease) / increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
6		 89,412
110,005
37
37
850
827
(88,591)
(85,689)
1,708
25,180
(10,935)
(5,313)
(476)
(833)
(11,411)
(6,146)
458
225
-
(362)
9,932
(6,881)
(4,383)
(7,225)
(2,600)
(6,313)
(1,218)
(15,931)
(10,921)
3,103
30,264
27,161
19,343
30,264

The consolidated statement of cash flows is to be read in conjunction with the accompanying notes.

13

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

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FOR THE YEAR ENDED 30 JUNE 2024

NOTE 1. BASIS OF PREPARATION

1.1 Reporting entity

The Preliminary Financial Report covers NextEd Group Limited (NextEd or the Company) and its controlled entities (the consolidated entity). NextEd is a for profit company limited by shares whose shares are publicly traded on the Australian Securities Exchange (ASX) . The Company operates businesses which deliver accredited and non-accredited English language, vocational education and higher education courses. It also operates an education recruitment agency business providing services to international students seeking to undertake tertiary studies in Australia.

1.2 Basis of preparation

The Preliminary Financial Report has been prepared on the historical cost and accrual basis except where otherwise stated.

This Preliminary Financial Report does not include all the Notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual financial report for the year ended 30 June 2023 and any public announcements made by the Company during the reporting period in accordance with continuous disclosure requirements of the Corporations Act 2001.

1.3 Adoption of new and revised Accounting Standards

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

1.4 Going concern

The Preliminary Financial Report has been prepared on the going concern basis, which contemplates the continuity of normal business activity and the realization of assets and settlement of liabilities in the ordinary course of business.

The consolidated entity has generated $1.7 million in operating cash flow during the year. As at 30 June 2024, the consolidated entity held $19.3 million of cash and cash equivalents and has no financial debt.

13

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

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FOR THE YEAR ENDED 30 JUNE 2024

NOTE 2 REVENUE AND OTHER INCOME

OTE 2 REVENUE AND OTHER INCOME
a. Revenue
Tuition related revenue
Commission revenue
Revenue from contracts with customers
Geographical regions
Australia
Europe
South America
Timing of revenue recognition
Services transferred at a point in time
Services transferred over time
b. Other income
Export market development grant
Interest income		 30 June 2024
$’000		 30 June 2023
$’000
106,830
4,537		 98,304
3,916
111,367 102,220
111,367
109,747
1,218
402
111,367
4,537
106,830
111,367
37
850		 102,220
100,821
1,092
307
102,220
3,916
98,304
102,220
37
833
887 870

14

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

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FOR THE YEAR ENDED 30 JUNE 2024

NOTE 3. OPERATING SEGMENTS

Identification of reportable operating segments

The consolidated entity is organised into four operating segments: Technology & Design, International Vocational, Go Study and Domestic Vocational. These operating segments are based on the internal reports that are reviewed and used by the Chief Executive Officer who is identified as the Chief Operating Decision Maker (‘CODM’) in the assessing of performance and in determining the allocation of resources. There is no aggregation of operating segments.

The CODM reviews both earnings before interest, tax, depreciation, and amortisation (‘EBITDA’) and profit before income tax. The information reported to the CODM is on at least a monthly basis.

15

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

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FOR THE YEAR ENDED 30 JUNE 2024

Types of products and services

The principal products and services of each of these operating segments are as follows:

International Vocational A provider of English Language Intensive Courses for Overseas Students (‘ELICOS’), and Vocational Education and Training (‘VET’) courses in Business, Leadership and Management, Project Management, Marketing and Communication, Commercial Cookery, Hospitality, Healthcare and Community Services for overseas students. Technology & Design A provider of face-to-face and online courses in information technology, digital design, interactive multimedia, computer coding, digital marketing, games and apps programming, digital filmmaking, and interior design. Domestic Vocational A provider of vocational courses to domestic students in Commercial Cookery, Hospitality, Business, Community Services, Healthcare, Construction and Information Technology.

Go Study An international student advisory recruitment agency with offices in Australia (Sydney, Melbourne, Brisbane, Gold Coast, Perth), Europe (Spain, France, Italy) and South America (Chile, Mexico).

Intersegment transactions

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

Intersegment receivables, payables and loans

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

16

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 30 JUNE 2024

International Technology Domestic Go Corporate /
Vocational & Design Vocational Study unallocated Total
12 months ended 30 June 2024 $’000 $’000 $’000 $’000 $’000 $’000
Revenue from customers 85,849 12,354 8,647 4,517 - 111,367
Intersegment revenue - - - 1,348 (1,348) -
Total sales revenue 85,849 12,354 8,647 5,865 (1,348) 111,367
Agent commissions (22,094) (848) (450) - 1,348 (22,044)
Education expenses (26,901) (3,095) (2,048) - - (32,044)
Cost of sales (48,995) (3,943) (2,498) - 1,348 (54,088)
Gross margin 36,854 8,411 6,149 5,865 - 57,279
Operating costs (16,209) (7,035) (4,267) (5,302) (9,543) (42,356)
Government grants - - - 37 - 37
EBITDA before impairment 20,645 1,376 1,882 600 (9,543) 14,960
Impairment of intangible assets (5,000) (19,855) - (4,070) - (28,925)
EBITDA after impairment 15,645 (18,479) 1,882 (3,470) (9,543) (13,965)
Depreciation & amortisation (7,605) (2,347) (440) (219) (4,441) (15,052)
EBIT 8,040 (20,826) 1,442 (3,689) (13,984) (29,017)
Net finance expenses - - - - (3,533) (3,533)
Profit / (loss) before tax 8,040 (20,826) 1,442 (3,689) (17,517) (32,550)
Income tax benefit - - - - 1,319 1,319
Net profit / (loss) after tax 8,040 (20,826) 1,442 (3,689) (16,198) (31,231)
Gross margin % 42.9 68.1 71.1 100.0 51.4
EBITDA margin before impairment % 24.0 11.1 21.8 10.2 13.4

17

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

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FOR THE YEAR ENDED 30 JUNE 2024

NOTE 3. OPERATING SEGMENTS (continued)

OTE 3. OPERATING SEGMENTS (continued)
12 months ended 30 June 2023
Revenue from customers
Intersegment revenue
Total sales revenue
Agent commissions
Education expenses
Cost of sales
Gross margin
Operating costs
Government grants
EBITDA
Depreciation & amortisation
EBIT
Net finance expenses
Profit / (loss) before tax
Income tax benefit
Net profit / (loss) after tax
Gross margin %
EBITDA margin %		 International
Vocational
Technology
& Design
Domestic
Vocational
Go
Study
Corporate /
unallocated
Total
$’000
$’000
$’000
$’000
$’000
$’000
74,720
15,446
8,218
3,836
-
102,220
-
-
-
1,297
(1,297)
-
74,720
15,446
8,218
5,133
(1,297)
102,220
(19,716)
(1,108)
-
-
1,297
(19,527)
(20,874)
(3,211)
(1,740)
-
-
(25,825)
(40,590)
(4,319)
(1,740)
-
1,297
(45,352)
34,130
11,127
6,478
5,133
-
56,868
(14,740)
(7,371)
(4,547)
(5,321)
(8,252)
(40,231)
-
-
-
37
-
37
19,390
3,756
1,931
(151)
(8,252)
16,674
(5,271)
(2,374)
(311)
(243)
(3,787)
(11,986)
14,119
1,382
1,620
(394)
(12,039)
4,688
-
-
-
-
(1,772)
(1,772)
14,119
1,382
1,620
(394)
(13,811)
2,916
-
-
-
-
692
692
14,119
1,382
1,620
(394)
(13,119)
3,608
45.7
72.0
78.8
100.0
55.6
26.0
24.3
23.5
(2.9)
16.3

18

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

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FOR THE YEAR ENDED 30 JUNE 2024

NOTE 4. EXPENSES

OTE 4. EXPENSES
Profit / (loss) before tax includes the following specific
expenses:
Depreciation
Leasehold improvements
Plant and equipment
Land and buildings right-of-use assets
Office equipment right-of-use assets
Amortisation
Licensed operations1
Course materials
Training materials1
Agent relationships1
Total depreciation and amortisation
Impairment
Goodwill
Other intangible assets
Total impairment
Finance costs
Movement in the present value of provisions
Interest and finance charges paid/payable on lease liabilities
Other interest charges
Finance costs expensed
Leases
Short-term lease payments
Low-value assets lease payments
Total short term and low value lease payments
Superannuation expense
Defined contribution superannuation expense		 30 June 2024
$’000
30 June 2023
$’000
2,098
1,268
905
732
8,962
6,912
6
12
616
667
480
410
1,142
1,142
843
843
15,052
11,986
22,900
-
6,025
-
28,925
-
224
(76)
4,159
2,676
-
5
4,383
2,605
1,045
1,405
182
131
1,227
1,536
4,900
4,014

1Amortisation of acquired intangibles

2,601 2,652

19

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 30 JUNE 2024

NOTE 5. INCOME TAX

a. Income tax benefit
Deferred tax expense
Current tax expense
b. Reconciliation of income tax expense to prima facie tax payable

The prima facie tax payable / (benefit) on profit / (loss) from ordinary
activities before income tax in reconciled to the income tax expense as
follows:
Accounting profit / (loss) before tax
Prima facie tax on operating profit / (loss) at 30% (2023: 30%)
Add / (less) tax effect of:
▪
Other non-deductible expenses
▪
Impact from change in tax rate on opening balance of deferred
tax liabilities (‘DTLs')
▪
Recognition of previously unrecognised DTAs for prior year tax
losses
▪
Utilisation of prior year losses for which DTAs were not
recognised
▪
Other temporary differences not recognised
Income tax (benefit) / expense attributable to operating loss
. Weighted average effective tax rate
The applicable weighted average effective tax rate attributable to
operating profit is as follows:
The tax rates used in the above reconciliations is the corporate tax rate of
30% payable by the Australian corporate entity on taxable profits under
Australian tax law. The tax rate used in the previous reporting period was
30%.
Current tax assets
Income tax receivable
d. Franking credits available for use in subsequent reporting periods
e. Current tax liabilities
Income tax payable		 2024
$000’s
2023
$000’s
(2,971)
(1,233)
1,652
541
(1,319)
(692)
(32,550)
2,916
(9,765)
875
7,972
39
1,006
1,006
(1,006)
(1,006)
(1,652)
(541)
2,126
(1,065)
(1,319)
(692)
%
%
30%
30%
-
-
1,506
1,506
-
-

b. Reconciliation of income tax expense to prima facie tax payable

c. Weighted average effective tax rate

20

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 30 JUNE 2024

NOTE 6. CASH AND CASH EQUIVALENTS

OTE 6. CASH AND CASH EQUIVALENTS
Cash at bank
Term deposits with less than 90-day maturities		 30 June 2024
30 June 2023
$’000
$’000
12,936
12,206
6,407
18,058
19,343
30,264

NOTE 7. TRADE AND OTHER RECEIVABLES

Trade receivables
Less: allowance for expected credit losses
a. Current
b. Non-current
Total trade receivables
Allowance for expected credit losses
Opening balance
Additional provisions recognised
Receivable written off during the year as uncollectable
Closing balance		 30 June 2024
30 June 2023
$’000
$’000
17,711
8,970
(560)
(1,407)
17,151
7,563
30 June 2024
30 June 2023
$’000
$’000
14,972
7,118
2,179
445
17,151
7,563
30 June 2024
30 June 2023
$’000
$’000
(1,407)
(1,240)
(1,266)
(1,860)
2,113
1,693
(560)
(1,407)

For detailed movement of receivables and expected credit loss per ageing group please refer to Note 20 Financial Instruments.

21

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

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FOR THE YEAR ENDED 30 JUNE 2024

NOTE 8. PREPAYMENTS AND OTHER ASSETS

OTE 8. PREPAYMENTS AND OTHER ASSETS
a. Current
Security deposits
Prepayments
Deferred agent costs
Other current assets
b. Non-current
Bank guarantees and term deposits
Total prepayment and other assets		 30 June 2024
30 June 2023
$’000
$’000
378
500
655
947
4,112
9,494
1,597
1,339
6,742
12,280
-
9,931
-
9,931
6,742
22,211

NOTE 9. PROPERTY, PLANT, AND EQUIPMENT

Leasehold improvements
Accumulated depreciation
Plant and equipment
Accumulated depreciation
Computer equipment
Accumulated depreciation
Motor vehicles
Accumulated depreciation
Assets under construction – at cost*
Total property, plant, and equipment		 30 June 2024
30 June 2023
$’000
$’000
14,874
6,392
(4,136)
(2,038)
10,738
4,354
2,704
2,136
(1,529)
(1,177)
1,175
959
2,126
1,731
(1,239)
(695)
887
1,036
138
138
(103)
(94)
35
44
4,793
3,303
17,628
9,696

Assets under construction relate primarily to the new Southport campus and will be capitalised in early FY25.

22

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 30 JUNE 2024

Movements in carrying amounts

Carrying amount at 1 July
2023
Additions
Transfers in & (out)
Depreciation expense
Carrying amount at 30 June
2024
Carrying amount at 1 July
2022
Additions / (disposals)
Transfers in & (out)
Depreciation expense
Carrying amount at 30 June
2023		 Leasehold
improvements
Plant and
equipment
Computer
equipment
Motor
vehicles
Assets
under
construction
Total
$’000
$’000
$’000
$’000
$’000
$’000
4,354
959
1,036
44
3,303
9,696
5,410
568
395
-
4,562
10,935
3,072
-
-
-
(3,072)
-
(2,098)
(352)
(544)
(9)
-
(3,003)
10,738
1,175
887
35
4,793
17,628
3,067
1,009
594
177
1,536
6,383
1,605
278
822
(109)
2,717
5,313
950
-
-
-
(950)
-
(1,268)
(328)
(380)
(24)
-
(2,000)
4,354
959
1,036
44
3,303
9,696

NOTE 10. RIGHT-OF-USE ASSETS

OTE 10. RIGHT-OF-USE ASSETS
Non-current assets
Land and buildings – right-of-use
Less: accumulated depreciation
Office equipment – right-of-use
Less: accumulated depreciation		 30 June 2024
30 June 2023
$’000
$’000
63,208
(21,698)
51,395
(12,736)
41,510
38,659
26
26
(26)
(20)
-
6
41,510
38,665

Additions to the right-of-use assets during the year are comprised of new leases as well as lease extensions and modifications.

The consolidated entity leases premises for its offices and campuses under commercial lease agreements of between one and seven years, and in most cases with an option clause to extend. The leases have various escalation clauses. Whilst option clauses provide lease term certainty, the terms of the lease are usually renegotiated at the time of renewal.

23

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

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FOR THE YEAR ENDED 30 JUNE 2024

NOTE 11. INTANGIBLE ASSETS

OTE 11. INTANGIBLE ASSETS
Non-current
Goodwill
Goodwill
Less: impairment
Licensed operations
Licenced operations – at cost
Less: accumulated amortisation
Course materials
Copyrights – at cost
Less: accumulated amortisation
Work in progress
Brand name
Brand names – at cost
Less: impairment
Training materials
Training materials – at cost
Less: accumulated amortisation
Less: impairment
Agent relationships
Agent relationships – at cost
Less: accumulated amortisation
Less: impairment
Total intangible assets		 30 June 2024
30 June 2023
$’000
$’000
38,747
38,747
(22,900)
-
15,847
38,747
4,670
4,670
(4,287)
(3,671)
383
999
1,405
1,050
(899)
(419)
560
439
1,066
1,070
9,562
9,562
(3,676)
-
5,886
9,562
7,993
7,993
(3,140)
(1,998)
(2,155)
-
2,698
5,995
8,432
8,432
(2,318)
(1,475)
(194)
-
5,920
6,957
31,800
63,330

24

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 30 JUNE 2024

Movements in carrying amounts

Carrying amount at 1
July 2023
Additions
Amortisation expense
Impairment expense
Carrying amount at 30
June 2024
Carrying amount at 1
July 2022
Additions
Amortisation expense
Carrying amount at 30
June 2023		 Goodwill
Licensed
operation
Course
material
Brand
name
Training
material
Agent
relationships
Total
$’000
$’000
$’000
$’000
$’000
$’000
$’000
38,747
999
1,070
9,562
5,995
6,957
63,330
-
-
476
-
-
-
476
-
(616)
(480)
-
(1,142)
(843)
(3,081)
(22,900)
-
-
(3,676)
(2,155)
(194)
(28,925)
15,847
383
1,066
5,886
2,698
5,920
31,800
38,747
1,666
647
9,562
7,137
7,800
65,559
-
-
833
-
-
-
833
-
(667)
(410)
-
(1,142)
(843)
(3,062)
38,747
999
1,070
9,562
5,995
6,957
63,330

Impairment testing of goodwill and other intangible assets

Recent Federal Government actions to reduce net migration including through limiting the numbers of international students that can study in Australia is having a material impact on the consolidated entity and the entire sector. Recent policy announcements that lack detail, including the potential for ‘capping’ of international student numbers, creates uncertainty and makes future planning challenging.

Refer also to Note 31.

The consolidated entity has undertaken detailed impairment testing, and the results are set out below:

Goodwill and intangible assets

Goodwill is monitored by management at cash-generating unit ('CGU') levels, which are the operating segments identified in note 3 and are the smallest group of the consolidated entity's assets that have individually identifiable cashflows. Goodwill recorded in the Corporate segment has been allocated to the CGU’s for the purposes of impairment testing.

The allocation of the carrying value of goodwill and other intangible assets prior to any impairment and used for impairment testing for each CGU is as follows:

25

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 30 JUNE 2024

Goodwill
Licensed operations
Course materials
Brand names
Training materials
Agent relationships
Carrying amount at 30
June 2024		 International
Vocational
Technology
& Design
Go
Study
Domestic
Vocational
Consolidated
$’000
$’000
$’000
$’000
$’000
19,706
14,314
3,586
1,141
38,747
-
-
-
383
383
186
594
-
286
1,066
5,886
3,192
484
-
9,562
2,698
2,155
-
-
4,853
5,920
194
-
-
6,114
34,396
20,449
4,070
1,810
60,725

Impairment testing of intangible assets

The recoverable amount of the consolidated entity’s intangible assets has been determined by applying a value in use calculation using a discounted cash flow (DCF) model, based on a 5-year projection reviewed by the Board, along with a terminal value in year 5. Modeling has been performed for each of the CGU’s.

The following key assumptions were used in the discounted cash flow model:

  • Pre-tax discount rate of 19.1% for all CGU’s including 4% to account for industry uncertainty and specific company risk in calculating the Company’s cost of equity (FY23: 11%)

  • Trading reflective of the current difficult business environment due to the Federal Government actions to reduce net migration including through limiting the numbers of international students that can study in Australia

  • Terminal growth rate of 2% for International Vocational, Technology & Design, Domestic Vocational and Go Study (FY23: 2%)

26

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 30 JUNE 2024

Results of impairment testing

Consolidated summary of impairment testing

The following table summarises the impairments recognised as a result of the impairment testing:

Goodwill
Brand names
Training materials
Agent relationships
Carrying amount at 30
June 2024		 International
Vocational
Technology
& Design
Go
Study
Domestic
Vocational
Consolidated
$’000
$’000
$’000
$’000
$’000
5,000
14,314
3,586
-
22,900
-
3,192
484
-
3,676
-
2,155
-
-
2,155
-
194
-
-
194
5,000
19,855
4,070
-
28,925

NOTE 12. TRADE AND OTHER PAYABLES

OTE 12. TRADE AND OTHER PAYABLES
Current
Trade payables
Payroll accruals
Accrued expenses
Customer advances
Other payables		 30 June 2024
30 June 2023
$’000
$’000
2,964
3,255
2,308
2,257
3,650
3,433
448
544
997
313
10,367
9,802

NOTE 13. CONTRACT LIABILITIES

Contract liabilities from contracts with customers

30 June 2024 30 June 2023
$’000 $’000
32,509 43,546

27

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 30 JUNE 2024

Tuition related performance obligations

The aggregate amount of the transaction price allocated to tuition related services, which are paid in advance or due for payment and are yet to be delivered at balance date was $32,509,000 as at 30 June 2024 (30 June 2023: $43,546,000) and is expected to be recognised as revenue in future periods.

The duration of study is used to measure the progress of the performance obligation to determine how much revenue should be recognised, and that revenue is recognised as the performance obligation is satisfied.

The ageing of the expected performance obligation of contract liabilities are as follows:

Contract liabilities from contracts with customers
a. Current
b. Non-current
Total contract liabilities		 30 June 2024
30 June 2023
$’000
$’000
30,330
43,101
2,179
445
32,509
43,546

Contract liabilities relate to tuition fees in relation to domestic and international students where an agreement has been signed and a payment plan is in place with students for studies which are expected to be undertaken after the balance date. The amount of consideration received / receivable has not been adjusted for the effects of a significant financing component, as at contract inception, the period between when the services are expected to be provided and when payments are received is less than 12 months.

In addition, for students currently enrolled in a course and with a contract in place, $35,900,000 (30 June 2023: $28,771,000) will be invoiced and become payable by the students in future periods.

NOTE 14. LEASE LIABILITIES

OTE 14. LEASE LIABILITIES
a. Current
b. Non-current
Total lease liabilities		 30 June 2024
30 June 2023
$’000
$’000
7,472
5,996
40,399
37,844
47,871
43,840

The remaining contractual maturities of lease liabilities is outlined below.

28

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 30 JUNE 2024
Average
interest rate
%
2024
Undiscounted lease
payments
8.83%
2023
Undiscounted lease
payments
8.19%		 Less than
1 year
Between 1 year
and 2 years
Between 2 years
and 7 years
Total contractual
maturity
$’000
$’000
$’000
$’000
11,172
11,349
37,915
60,436
9,682
9,113
36,238
55,033

Remaining contractual maturities of lease liabilities belong to land and building leases with an average implicit interest rate of 8.83% (FY23: 8.19%).

NOTE 15. PROVISIONS

NOTE 15. PROVISIONS
a. Current
b. Non-current
Total provisions for make good
Movements in provisions:		 30 June 2024
30 June 2023
$’000
$’000
203
194
3,164
2,570
3,367
2,764
ovements in provisions:
Carrying amount at 1 July 2023
Additional provisions recognised
Payments and amounts written back
Carrying amount at 30 June 2024		 Lease make good
$’000
2,764
603
-
3,367

29

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

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FOR THE YEAR ENDED 30 JUNE 2024

NOTE 16. EMPLOYEE PROVISIONS

OTE 16. EMPLOYEE PROVISIONS
a. Current
Provision for annual leave
Provision for long service leave
b. Non-current
Provision for long service leave		 30 June 2024
30 June 2023
$’000
$’000
1,777
1,729
546
450
2,323
2,179
258
207
2,581
2,386

30

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

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FOR THE YEAR ENDED 30 JUNE 2024

NOTE 17. DEFERRED TAXATION

Balances

At 30 June 2024, the consolidated entity has unused tax losses of $24,979,155 (30 June 2023: $26,281,000) available for offset against future profits.

There was a deferred tax asset of $1,005,620 recognised in respect of these losses in the prior year. Net deferred tax assets of $11,635,830 remain unrecognised as it is not considered probable that there will be sufficient future taxable profits available to recover this amount.

a. Deferred tax assets
Tax losses
Provisions and accruals
Section 40-880 costs
Set-off deferred tax liabilities
Deferred tax assets
Less deferred tax assets not recognised
Deferred tax assets
b. Deferred tax liabilities
Intangible assets
Impairment
Prepayments
Other
Set-off deferred tax liabilities
Deferred tax liabilities
Net deferred tax liability
c. Tax losses and deductible temporary differences
Unused tax losses and deductible temporary differences for
which no deferred tax asset has been recognised, that may be
utilised to offset tax liabilities:
Opening balances
Other adjustments
Tax losses recognised/(utilised) during the year
Closing balances		 2024
$
2023
$
7,494
8,890
4,818
4,043
584
998
12,896
13,931
(1,260)
(2,901)
11,636
11,030
(10,630)
(10,024)
1,006
1,006
4,686
5,300
(705)
-
1,234
2,848
16
53
5,231
8,201
(1,260)
(2,901)
3,971
5,300
2,965
4,294
26,281
28,371
4,205
3,065
(5,507)
(5,155)
24,979
26,281

31

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

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FOR THE YEAR ENDED 30 JUNE 2024

NOTE 18. ISSUED CAPITAL

OTE 18. ISSUED CAPITAL
Fully paid ordinary shares at no
par value
a. Ordinary shares
At the beginning of the year
Shares issued during the
period/year:
Options exercised at $0.25 10
July 2023
Options exercised at $0.75 14
November 2023
On market share buy-back 2
January 2024
On market share buy-back 29
February 2024
On market share buy-back 8
March 2024
On market share buy-back 11
March 2024
Options exercised at $0.75 15
December 2022
Options exercised at $0.75 09
March 2023
Options exercised at $0.75 13
March 2023
At reporting date		 12 months to
30 June 2024
12 months to
30 June 2023
12 months to
30 June 2024
12 months to
30 June 2023
No.
No.
$’000
$’000
221,116,114
219,376,773
103,115
102,657
219,376,773
219,076,773
102,657
102,427
2,000,000
500
140,000
105
(22,493)
(16)
(146,003)
(45)
(105,758)
(39)
(126,405)
(47)
80,000
65
120,000
90
100,000
75
221,116,114
219,376,773
103,115
102,657

32

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 30 JUNE 2024

a. Options
Options
At the beginning of the year
Options issued / (exercised)
during the year:
Exercised
Exercised price: $0.75
Expiry date: 09/11/2023
Expiry date: 09/11/2023
Expiry date: 09/11/2023
Exercised price: $0.25
Expiry date: 10/07/2023
Expired
Exercise price: $0.75
Expiry date: 09/11/2023
Issued to directors
Exercise price: $1.40
Expiry dates: 15/12/2028
Expiry dates: 15/12/2029
Expiry dates: 15/12/2030
At reporting date		 12 months to
30 June 2024
12 months to
30 June 2023
12 months to
30 June 2024
12 months to
30 June 2023
No.
No.
$’000
$’000
5,410,717
5,400,000
3,115
3,079
(140,000)
(80,000)
(1)
(120,000)
(2)
(100,000)
(2)
(2,000,000)
(2,960,000)
(3,073)
103,571
9
9
103,571
15
15
103,575
18
17
310,717
5,410,717
84
3,115

Details of capital management are disclosed in Note 20.

NOTE 19. RESERVES

OTE 19. RESERVES
Foreign currency reserve
Share-based payments reserve		 30 June 2024
$’000
30 June 2023
$’000
(44)
39
84
3,115
40
3,154

Foreign currency reserve

The reserve is used to recognise exchange differences arising from the translation of the financial statements of foreign operations to Australian dollars.

Share-based payments reserve

The reserve is used to recognise equity-settled share-based payment transactions. The Company provides benefits to employees (including directors) the consolidated entity in the form of share-based payment transactions, whereby services are rendered in exchange for shares, options or rights over shares.

33

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 30 JUNE 2024

$3,073,000 have been transferred from the Share Based Payment Reserve to Accumulated losses on expiry of share options.

NOTE 20. FINANCIAL INSTRUMENTS

Interest rate risks at the reporting date, the consolidated entity had the following cash and cash equivalents and term deposits:

Weighted
average interest
rate
Consolidated – 2024
%
Interest bearing – fixed rate
Cash and cash equivalents (note 6)
3.21%
Term deposit – restricted cash
--
Net exposure to cash flow interest
rate risk		 2024
Weighted
average
interest rate
$’000
%
19,343
3.17%
-
3.77%
19,343		 2023
$’000
30,264
9,931
40,195

Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the consolidated entity. The maximum exposure to credit risk at the reporting date to recognised financial assets is the carrying amount, net of any provisions for impairment of those assets, as disclosed in the statement of financial position and notes to the financial statements. The consolidated entity does not hold any collateral.

Impairment losses

Impairment losses are recorded against receivables unless the consolidated entity is satisfied that no recovery of the amount owing is possible; at that point the amount is considered irrecoverable and is written off against the financial asset directly. The ageing of the consolidated entity’s trade receivables at reporting date was as follows:

2024
Trade receivables
Not yet due
Past due up to 30 days
Past due 31 days to 60 days
Past due 61 days to 90 days
Past due over 90 days		 Gross
Impaired
Net
Past due but not
impaired
$ $ $ $ 14,892
(1)
14,891
-
1,066
(8)
1,058
1,058
511
(111)
400
400
332
(97)
235
235
910
(343)
567
567
17,711
(560)
17,151
2,260

34

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 30 JUNE 2024
2023
Trade receivables
Not yet due
Past due up to 30 days
Past due 31 days to 60 days
Past due 61 days to 90 days
Past due over 90 days		 Gross
Impaired
Net
Past due but not
impaired
$ $ $ $ 4,838
(1)
4,837
-
1,119
(19)
1,100
1,100
776
(279)
497
497
567
(245)
322
322
1,670
(863)
807
807
8,970
(1,407)
7,563
2,726

Liquidity risk

Vigilant liquidity risk management requires the consolidated entity to maintain sufficient liquid assets (mainly cash and cash equivalents) and to be able to pay debts as and when they become due and payable.

The consolidated entity manages liquidity risk by maintaining adequate cash reserves and by continuously monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and liabilities.

The following tables detail the consolidated entity’s remaining contractual maturity for its financial instrument liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining contractual maturities and therefore these totals may differ from their carrying amount in the statement of financial position.

Consolidated - 2024
Non-derivatives
Non-interest bearing
Trade payables
Other payables
Payroll accruals
Total non-derivatives		 Less than
1 Year
Between 1 year
and 2 years
Between 2 years
and 7 years
Remaining contractual
maturities
$’000
$’000
$’000
$’000
2,964
-
-
2,964
5,095
-
-
5,095
2,308
-
-
2,308
10,367
-
-
10,367

35

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 30 JUNE 2024

Consolidated - 2023
Non-derivatives
Non-interest bearing
Trade payables
Other payables
Payroll accruals
Total non-derivatives		 Less than 1
year
Between 1 and
2 years
Between 2 and 7
years
Remaining contractual
maturities
$’000
$’000
$’000
$’000
3,255
-
-
3,255
4,290
-
-
4,290
2,257
-
-
2,257
9,802
-
-
9,802

The cash flows in the maturity analysis above are not expected to occur significantly earlier than disclosed. Contractual maturities related to lease liabilities are disclosed in Note 14.

Fair value of financial instruments

Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value. The carrying amounts of trade receivables and trade payables are assumed to approximate their fair values due to their short-term nature. The fair value of financial liabilities is estimated by discounting the remaining contractual maturities at the current market interest rate that is available for similar financial instruments.

Capital management

Capital

The Company manages its capital to ensure the consolidated entity will be able to continue as a going concern.

The capital structure of the consolidated entity consists of cash and cash equivalents and equity attributable to equity holders of the parent, comprising issued capital, reserves and accumulated losses. None of the entities in the consolidated entity are subject to externally imposed capital requirements.

Operating cash flows are used to maintain and expand operations, as well as to make routine expenditures such as tax and general administrative outgoings. Gearing levels are reviewed by the Board on a regular basis in line with target gearing ratio, the cost of capital and the risks associated with each class of capital.

36

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 30 JUNE 2024

Working capital Note 30 June 2024
$’000		 30 June 2024
$’000		 30 June 2023
$’000
The working capital position of the consolidated entity was as follows:
Cash and cash equivalents 6 19,343 30,264
Trade receivables 7 17,151 7,563
Inventories 110 341
Other current assets 8 6,742 12,280
Trade and other payables 12 (10,367) (9,802)
Leases 15 (7,472) (5,996)
Employee benefits 17 (2,323) (2,179)
Current provisions 16 (203) (194)
Working capital position 22,981 32,277

37

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

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FOR THE YEAR ENDED 30 JUNE 2024

NOTE 21. INTEREST IN SUBSIDIARIES

The subsidiaries listed below have share capital consisting solely of ordinary shares which are held directly by the consolidated entity and the proportion of ownership interest held equals the voting rights held by the consolidated entity. Investments in subsidiaries are accounted for at cost. Each subsidiary’s country of incorporation is also its principal place of business:

Ownership Ownership
interest
Place of
Name Principal Activity incorporation 2024 2023
and operation
RedHill Education Pty Ltd1 Educational Services Australia 100% 100%
Go Study Australia Pty Ltd2 Student Recruitment Australia 100% 100%
Academy of Interactive Technology Pty Ltd2 Educational Services Australia 100% 100%
International School of Colour and Design Pty Ltd2 Educational Services Australia 100% 100%
Greenwich College Pty Ltd2 Educational Services Australia 100% 100%
Go Study Australia Intercambio Cultural Ltda3 Student Recruitment Brazil 100% 100%
Go Study Australia S.A.C.3 Student Recruitment Peru 100% 100%
Go Study Australia Sociedad Limitada4 Student Recruitment Spain 100% 100%
Go Study Colombia SAS4 Student Recruitment Colombia 100% 100%
Go Study France4 Student Recruitment France 100% -
iCollege International Pty Ltd5 Educational Services Australia 100% 100%
Management Institute of Australia Pty Ltd6 Educational Services Australia N/A 100%
Management Institute of Australia No.1 Pty Ltd6 Educational Services Australia N/A 100%
Management Institute of Australia No.2 Pty Ltd6 Educational Services Australia N/A 100%
Celtic Training & Consultancy Pty Ltd Educational Services Australia 100% 100%
Brisbane Career College Pty Ltd Educational Services Australia 100% 100%
Capital Training Institute Pty Ltd Educational Services Australia 100% 100%

  1. Converted from Redhill Education Limited to Redhill Education Pty Ltd in the reporting period

  2. 100% owned by Redhill Education Ltd

  3. 75% owned by Go Study Australia Pty Ltd and 25% owned by Redhill Education Pty Ltd

  4. 100% owned by Go Study Australia Pty Ltd

  5. Company in liquidation and was deregistered on 24 July 2024

  6. These entities were liquidated during the year

38

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

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FOR THE YEAR ENDED 30 JUNE 2024

NOTE 22. DEED OF CROSS GUARANTEE

Pursuant to ASIC Corporations (Wholly-owned Companies) Instrument, the wholly-owned subsidiaries as mentioned below are relieved from the Corporation Act 2001 requirements for preparation, audit, and lodgement of financial reports and directors’ report.

As a condition of the Instrument, NextEd Group Limited and its subsidiaries (closed group) entered into a Deed of Cross Guarantee. The effect of the Deed is that NextEd Group has guaranteed to pay any deficiency in the event of the winding up of any of those subsidiaries.

Those subsidiaries have also given a similar guarantee in the event that NextEd Group is wound up.

The deed was executed on 15 June 2022.

The subsidiaries subject to the Deed at the end of the reporting period are:

  • NextEd Group Limited

  • Brisbane Career College Pty Ltd

  • Capital Training Institute Pty Ltd

  • Celtic Training & Consultancy Pty Ltd

  • RedHill Education Limited

  • Academy of Interactive Technology Pty Limited

  • Greenwich College Pty Limited

  • International School of Colour and Design Pty Limited

  • Go Study Australia Pty Limited

The above companies represent a ‘closed group’ for the purposes of the Instrument.

Set out below is a consolidated statement of profit and loss and other comprehensive income and statement of financial position of the ‘closed group’.

39

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 30 JUNE 2024

Statement of profit or loss and other comprehensive income

30 June 2024
$’000
30 June 2023
$’000
Revenue from continuing operations
Cost of sales
Gross profit
Other income
Interest revenue
Salaries and employee benefits expense
Depreciation and amortisation expense
Impairment of assets
Impairment of receivables
Property and occupancy costs
Professional and consulting fees
Marketing expenses
Public company related costs
Other expenses
Finance costs
(Loss) / profit before tax
Income tax benefit
Net profit / (loss) for the year
Total comprehensive income attributable to members of the
parent entity
Equity – accumulated losses
Accumulated losses at the beginning of the financial year
Profit / (loss) after income tax expense for the year
Transfer from share based payment reserve
Accumulated losses at the end of the financial year		 109,020
100,001
(54,088)
(45,352)
54,932
54,649
37
37
850
833
(25,060)
(22,826)
(15,048)
(11,982)
(28,925)
-
(1,266)
(1,860)
(4,802)
(4,434)
(968)
(1,184)
(3,178)
(3,462)
(1,278)
(1,037)
(3,560)
(3,197)
(4,383)
(2,606)
(32,649)
2,931
1,328
752
(31,321)
3,683
(31,321)
3,683
30 June 2024
30 June 2023
$’000
$’000
(40,242)
(43,925)
(31,321)
3,683
3,073
-
(68,490)
(40,242)

40

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 30 JUNE 2024

Statement of financial position as at 30 June 2024

30 June 2024
$’000
30 June 2023
$’000
Current assets
Cash and cash equivalents
Trade receivables
Inventories
Prepayments and other assets
Total current assets
Non-current assets
Trade receivables
Property, plant and equipment
Right-of-use asset
Intangible assets
Prepayments and other assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Contract liabilities
Lease liabilities
Provisions
Employee benefits
Total current liabilities
Non-current liabilities
Contract liabilities
Deferred tax liabilities
Employee benefits
Provisions
Lease liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity		 19,424
30,283
14,779
7,080
110
341
6,723
12,235
41,036
49,939
2,179
445
17,643
9,706
41,510
38,665
31,800
63,330
-
9,931
93,132
122,077
134,168
172,016
10,255
9,631
30,330
43,101
7,472
5,996
203
194
2,315
2,202
50,575
61,124
2,179
445
2,965
4,294
258
207
3,164
2,570
40,399
37,844
48,965
45,360
99,540
106,484
34,628
65,532
103,115
102,657
3
3,117
(68,490)
(40,242)
34,628
65,532

41

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

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FOR THE YEAR ENDED 30 JUNE 2024

NOTE 23. RECONCILIATION OF PROFIT/(LOSS) AFTER INCOME TAX TO NET CASH FROM OPERATING ACTIVITIES

CTIVITIES
Profit / (loss) after income tax expense for the year
Adjustment for:
Depreciation and amortisation
Convertible note conversion
Share-based payments
Impairment of non-current assets
Non-cash finance costs
Other non-cash items
Changes in operating assets and liabilities:
Increase in trade receivables
Decrease / (increase) in prepayments
Decrease / (increase) in other operating assets
Decrease in trade and other payables
(Decrease) / increase in contract liabilities
Increase in provision for income tax
Increase in employee benefits
Decrease in other provisions
Net cash from operating activities		 30 June 2024
$’000
30 June 2023
$’000
(31,231)
3,608
15,052
11,986
-
5
42
36
28,925
-
4,383
2,600
-
(35)
(9,588)
(263)
292
(404)
5,477
(4,673)
(718)
(332)
(11,037)
12,893
-
19
195
40
(84)
(300)
1,708
25,180

42

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 30 JUNE 2024

NOTE 24. CHANGES IN LIABILITIES ARISING FROM FINANCING ACTIVITIES

Lease liabilities
Opening balance
Net cash from financing activities
New leases and lease extensions*
Finance costs
Closing balance		 30 June 2024
$’000
30 June 2023
$’000
43,840
21,023
(11,608)
(8,913)
11,256
29,130
4,383
2,600
47,871
43,840

*the only non-cash financing and investing activity for the consolidated entity for the financial year.

Other borrowings
Opening balance
Repayment of borrowings
Acquisition / (disposal) of motor vehicles
Closing balance		 30 June 2024
$’000
30 June 2023
$’000
-
362
-
(227)
-
(135)
-
-

NOTE 25. RELATED PARTY TRANSACTIONS

Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated.

Balances and transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and are not disclosed in this note. Details of transactions between the consolidated entity and other related parties are disclosed below.

NOTE 26. AUDITOR’S REMUNERATION

Pitcher Partners Sydney Partnership (Pitcher Partners) has been appointed as auditor of the Company, with effect from 1 June 2023. This appointment follows the resignation of Hall Chadwick WA Audit Pty Ltd (Hall Chadwick). The following fees were paid or payable for services provided by the auditors.

Remuneration of the auditor for auditing or reviewing the financial reports:

Audit services - Hall Chadwick
Audit services - Pitcher Partners		 30 June 2024
30 June 2023
$’000
$’000
-
31
231
152
231
183

43

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 30 JUNE 2024

NOTE 27. EARNINGS PER SHARE (EPS)

Reconciliation of earnings to profit or loss
Profit / (loss) for the year
Profit / (loss) used in the calculation of basic and
diluted EPS
Weighted average number of ordinary shares
outstanding during the year used in calculation of
basic EPS
Weighted average number of ordinary shares
outstanding during the year used in calculation of
diluted EPS
Earnings per share
Basic EPS (cents per share)
Diluted EPS (cents per share)		 30 June 2024
$’000
30 June 2023
$’000
(31,231)
3,608
(31,231)
3,608
30 June 2024
No.
30 June 2023
No.
221,283,928
218,586,754
221,283,928
223,919,278
30 June 2024
30 June 2023
(14.11)
1.65
(14.11)
1.61

As at 30 June 2024, the consolidated entity has unissued shares under options 310,717 (30 June 2023: 5,410,717). During the year ended 30 June 2024, the consolidated entity’s unissued shares under option were non-dilutive. Refer to Note 19 (a) for further details.

NOTE 28. SHARE-BASED PAYMENTS

OTE 28. SHARE-BASED PAYMENTS
30 June 2024 30 June 2023
$’000 $’000
Share-based payments:
Recognised in director costs 42 41
42 41

44

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

FOR THE YEAR ENDED 30 JUNE 2024

Share-based payment arrangements in effect during the year

a. Unlisted options

The Company had issued options in prior financial years with terms and summaries below:

Number under option Date of expiry Exercise price Vesting terms
2,000,000
10 Jul 2023
$0.25
Immediately upon issue
3,400,000
9 Nov 2023
$0.75
Immediately upon issue

b. Director options

The Company had issued options in the prior financial year with terms and summaries below:

Grant date Expiry date Share
price
at
grant
date		 Exercise
price		 Expected
volatility		 Number
of
options
issued		 Dividend
yield		 Risk-
free
interest
rate		 Fair value at grant
date
15/12/2022 31/12/2028
$1.150
$1.400
75.20%
103,571
Nil
3.00%
$0.2719
15/12/2022 31/12/2029
$1.150
$1.400
75.20%
103,571
Nil
3.00%
$0.4195
15/12/2022 31/12/2030
$1.150
$1.400
75.20%
103,575
Nil
3.00%
$0.5263

Movement in share-based payment arrangements during the period

A summary of the movements of all Company options issued as share-based payments is as follows:

2024 2024 2023 2023
Number of
options		 Weighted
average exercise
price		 Number
of options		 Weighted
average exercise
price
$ $
Outstanding at the beginning of the year
Granted
Expiry: 15/12/2028
Expiry: 15/12/2029
Expiry: 15/12/2030
Exercised
Expiry date: 09/11/2023
Exercised price: $0.75
Expiry date: 10/07/2023
Exercised price: $0.25
Expired
Expiry date: 09/11/2023
Exercise price: $0.75
Outstanding at year-end
Exercisable at year-end		 5,410,717
5,400,000
103,571
1.40
103,571
1.40
103,575
1.40
(140,000)
0.75
(300,000)
0.75
(2,000,000)
0.25
(2,960,000)
0.75
310,717
0.80
5,410,717
1.08
103,571
1.40
5,100,000
1.08

The weighted average remaining contractual life of options outstanding at the end of the financial year was 5 years (FY23: 3.6 year).

45

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

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FOR THE YEAR ENDED 30 JUNE 2024

NOTE 29. CONTINGENT LIABILITIES

The consolidated entity has given bank guarantees as at 30 June 2024 of $8,682,752 (30 June 2023: $7,135,923) to various lessors.

The consolidated entity has bank facilities with several leading Australian banks totalling $16,233,171 of which $8,682,752 has been utilised as at 30 June 2024.

NOTE 30. COMMITMENTS

The consolidated entity is committed to incur capital expenditure of approximately $183,000 in relation to campus expansion project across 56 Nerang Street Southport, Queensland and 72 Mary Street Surry Hills, NSW. The expenditure is expected to be settled in the FY25 financial year.

NOTE 31. EVENTS SUBSEQUENT TO REPORTING DATE

On 27 August 2024, the Federal Government announced that, subject to the passage of legislation before the Parliament, it will set a National Planning Level (NPL) for new international student commencements of 270,000 for calendar year 2025.

The NPL is divided between the higher education and vocational education and training (VET) sectors at a provider level.

Certain students, including those undertaking standalone English language courses, are excluded from the NPL.

Implementation of the NPL is subject to a Senate Committee report in early September before determining whether any amendments will be required prior to seeking to pass into legislation.

Individual providers will be advised of the indicative limit on the number of new international student commencements that they can accept for 2025. Information received by the consolidated entity to date is incomplete and the impact of the NPL is therefore not yet able to be determined.

Apart from the matters noted above, there has been no additional matter or circumstance that has arisen after balance sheet date 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 future reporting periods.

46

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