NEXTED GROUP LIMITED — Interim / Quarterly Report 2019

Feb 28, 2019

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ICOLLEGE LIMITED ABN 75 105 012 066

2018 HALF-YEAR REPORT

ICOLLEGE LIMITED

ABN 75 105 012 066

Index:	Page
Corporate Directory	1
Report of the Directors	2
Auditor’s Independence Declaration	4
Condensed Consolidated Statement of Profit or Loss and	5
Other Comprehensive Income
Condensed Consolidated Statement of Financial Position	6
Condensed Consolidated Statement of Cash Flows	7
Condensed Consolidated Statement of Changes in Equity	8
Notes to the Financial Report	9
Directors’ Declaration	14
Independent Auditor’s Review Report	15

ICOLLEGE LIMITED

CORPORATE DIRECTORY

Directors

Mr Simon Tolhurst – Non-executive Chairman Mr Ashish Katta – Managing Director Mr Badri Gosavi – CFO & Non-executive Director

Company Secretary

Mr Stuart Usher

Registered Office

Suite 1 GF 437 Roberts Road SUBIACO WA 6008

Stock Exchange Listing

ASX Limited (Home branch - Perth, Western Australia) ASX Code: ICT

Auditor

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

Bankers

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

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

Share Registry

Link Market Services Limited Level 4, 152 St Georges Terrace PERTH WA 6000

1

ICOLLEGE LIMITED

REPORT OF THE DIRECTORS

The Directors of iCollege Limited present their report on iCollege Limited and its Controlled Entities (“the Company” or “iCollege” or “Consolidated Entity”) for the half-year ended 31 December 2018.

DIRECTORS

The Directors in office at the date of this report and at any time during the half-year are as follows. Directors were in office for the entire period unless otherwise stated.

Current Directors

Mr Simon Tolhurst – Non-executive Chairman

Mr Ashish Katta – Managing Director Mr Badri Gosavi – CFO & Executive Director

Past Directors

Mr Daniel Moore - Non-executive Director (Resigned 17 August 2018)

Company Secretary Mr Stuart Usher

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.

RESULTS AND REVIEW OF OPERATIONS AND CHANGES IN STATE OF AFFAIRS

The Company recorded a loss after tax for the half year ended 31 December 2018 of $339,120 (2017$609,246).

The half year ending December 2018 saw record revenue for the business of $3,461,749. This has been a significant turn-around for the business from the corresponding period of $888,744. There were also one-off nonrecurring costs such as legal fees of $439,312, which majority consisted of the settlement of the Walker litigation matter.

SUBSEQUENT EVENTS

There are no other matters or circumstances, other than disclosed elsewhere in this report, that has arisen since the end of the financial period, that has significantly affected, or may significantly affect, the operations of the Company, the results of those operations, or the state of affairs of the Company in future financial years.

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ICOLLEGE LIMITED

REPORT OF THE DIRECTORS

FUTURE DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS

Likely developments in the operations of the Consolidated Entity and the expected results of those operations in future financial years have not been included in this report as the inclusion of such information is likely to result in unreasonable prejudice to the company.

AUDITOR INDEPENDENCE DECLARATION

A copy of the auditor’s independence declarations as required under section 307C of the Corporations Act 2001 is included in this report, and can be found on page 4.

Signed in accordance with a resolution of the Directors.

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Ashish Katta Managing Director 28[th] February 2019 Brisbane, Queensland

3

To the Board of Directors

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

As lead audit partner for the review of the financial statements of iCollege Limited for the period ended 31 December 2018, I declare that to the best of my knowledge and belief, there have been no contraventions of:

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• the auditor independence requirements of the Corporations Act 2001 in relation to the review; and

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• any applicable code of professional conduct in relation to the review.

Yours faithfully

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BENTLEYS MARK DELAURENTIS CA
Chartered Accountants Partner
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Dated at Perth this 28[th] day of February 2019

ICOLLEGE LIMITED

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE HALF-YEAR ENDED 31 DECEMBER 2018

Note Revenues Revenue from customers Cost of sales Gross Profit Interest Revenue Expenses Compliance Consultant fees Depreciation and amortisation Directors fees Doubtful Debts Employment expenses Interest expense Gain on settlement of liability 3 Legal fees Marketing expenses Occupancy expenses Travel expenses 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 Income Earnings per share Basic profit/(loss) per share	Half Year Ended 31 December 2018 $ 3,461,749 (748,793) 2,712,956 136 (93,096) (218,681) (36,306) (76,418) (948) (2,187,781) (46,457) 1,500,000 (439,312) (113,104) (768,764) (169,178) (402,167) (3,052,212) (339,120) - (339,120) - (339,120) Cents per Share (0.07)	Half Year Ended 31 December 2017 $ 888,744 (122,944)
		765,800
		- (36,242) (209,019) (3,613) (66,000) (58,079) (508,333) (74,217) - (184,045) (4,962) (76,611) (21,922) (132,003)
		(1,375,046)
		(609,246) -
		(609,246) -
		(609,246) Cents per Share (0.31)

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

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ICOLLEGE LIMITED

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2018

Note ASSETS Current Assets Cash and cash equivalents Trade and other receivables 2 Other assets Total Current Assets Non-Current Assets Property, plant & equipment Intangible assets Total Non-Current Assets Total Assets LIABILITIES Current Liabilities Trade and other payables 3 Borrowings Current tax liabilities Short-term provisions Total Current Liabilities Non-Current Liabilities Deferred tax liabilities Total Non-Current Liabilities Total Liabilities Net Assets Equity Issued capital 4 Reserves Accumulated losses Total Equity	31 December 2018 $ 294,316 792,887 31,571 1,118,774 139,225 18,695,789 18,835,014 19,953,788 3,200,710 925,843 - 215,871 4,342,424 3,963,698 3,963,698 8,306,122 11,647,666 29,319,589 1,957,234 (19,629,157) 11,647,666	30 June 2018 $ 339,214 642,998 10,350
		992,562
		161,235 18,695,789
		18,857,024
		19,849,586
		4,682,009 1,293,537 6,854 167,855
		6,150,255
		3,963,698
		3,963,698
		10,113,953
		9,735,633
		27,278,641 1,747,029 (19,290,037)
		9,735,633

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

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ICOLLEGE LIMITED

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE HALF-YEAR ENDED 31 DECEMBER 2018

Cash flows from operating activities Receipts from customers Interest received Interest paid Payments to suppliers and employees Net cash flows used in operating activities Cash flows from investing activities Payments for property, plant & equipment Net cash flows used in investing activities Cash flows from financing activities Proceeds from loans Repayment of loans Proceeds from issue of shares 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	31 December 2018 $ 3,241,207 136 (46,457) (4,589,090) (1,394,204) (52,784) (52,784) 191,785 (557,695) 1,900,000 (132,000) 1,402,090 (44,898) 339,214 294,316	31 December 2017 $ 881,992 - - (954,214)
		(72,222)
		(1,133)
		(1,133)
		275,000 (150,000) - (5,000)
		120,000
		46,645 12,000
		58,645

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

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ICOLLEGE LIMITED

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE HALF-YEAR ENDED 31 DECEMBER 2018

At 1 July 2018 Total comprehensive loss for the period Transactions with owners in their capacity as owners: Issue of share capital Options Shares issued in lieu of services Costs of capital raising At 31 December 2018	Issued Capital Accumulated Losses Option Reserve Total Equity $ $ $ $ 27,278,641 (19,290,037) 1,747,029 9,735,633
	- (339,120) - (339,120) 2,200,000 - - 2,200,000 - 210,205 210,205 183,153 - - 183,153 (342,205) - - (342,205)
	29,319,589 (19,629,157) 1,957,234 11,647,666

At 1 July 2017 Total comprehensive loss for the period Transactions with owners in their capacity as owners: Costs of capital raising At 31 December 2017	11,066,741 (14,874,162) 1,040,330 (2,767,091)
	- (609,246) - (609,246)
	(5,000) - - (5,000)
	11,061,741 (15,483,408) 1,040,330 (3,381,337)

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

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ICOLLEGE LIMITED

CONDENSED NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 DECEMBER 2018

1. BASIS OF PREPARATION OF HALF-YEAR FINANCIAL REPORTS

Basis of Accounting

This general purpose financial report for the half-year reporting period ended 31 December 2018 has been prepared in accordance with Corporations Act 2001 and Australian Accounting Standards (including Australian Accounting Interpretations) and authoritative pronouncements of the Australian Accounting Standards Board.

This financial report has been prepared in accordance with the historical costs convention.

The functional currency and presentation currency of iCollege Limited is Australian dollars.

This half-year financial report does not include all the notes of the type normally included in annual financial reports and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the Company as the full financial reports.

The half-year financial report should be read in conjunction with the annual financial report for the year ended 30 June 2018 and any public announcements made by iCollege Limited during the half-year reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001. For the purpose of preparing the half-year financial statements, the half-year has been treated as a discrete reporting period.

Adoption of new and revised Accounting Standards

Accounting Standards that are mandatorily effective for the current reporting period

The Consolidated Entity has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (the AASB) that are relevant to its operations and effective for an accounting period that begins on or after 1 January 2018.

New and revised Standards and amendments thereof and Interpretations effective for the current year that are relevant to the Consolidated entity include:

• AASB 9 Financial Instruments and related amending Standards

• AASB 15 Revenue from Contracts with Customers and related amending Standards

• AASB 2016-5 Amendments to Australian Accounting Standards – Classification and Measurement of

• Share-based Payment Transactions

AASB 9 Financial Instruments and related amending Standards

In the current year, the Consolidated Entity has applied AASB 9 Financial Instruments (as amended) and the related consequential amendments to other Accounting Standards that are effective for an annual period that begins on or after 1 January 2018. The transition provisions of AASB 9 allow an entity not to restate comparatives however there was no material impact on adoption of the standard.

Additionally, the Consolidated Entity adopted consequential amendments to AASB 7 Financial Instruments: Disclosures.

In summary AASB 9 introduced new requirements for:

• The classification and measurement of financial assets and financial liabilities,

• Impairment of financial assets, and

• General hedge accounting.

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ICOLLEGE LIMITED

CONDENSED NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 DECEMBER 2018

1. BASIS OF PREPARATION OF HALF-YEAR FINANCIAL REPORTS

AASB 15 Revenue from Contracts with Customers and related amending Standards

In the current year, the Consolidated Entity has applied AASB 15 Revenue from Contracts with Customers (as amended) which is effective for an annual period that begins on or after 1 January 2018. AASB 15 introduced a 5- step approach to revenue recognition. Far more prescriptive guidance has been added in AASB 15 to deal with specific scenarios.

There was no material impact on adoption of the standard and no adjustment made to current or prior period amounts.

Going Concern

The financial report has been prepared on a going concern basis, which contemplates the continuity of normal business activity and the realisation of assets and the settlement of liabilities in the ordinary course of business.

The Consolidated Entity recorded a loss after tax for the half-year of $339,120 (2017: $609,246) and net cash outflows from operating activities of $1,394,204 (2017: $72,222). Included in the loss for the year was a gain on settlement of liability of $1,500,000 (refer note 3) (2017 nil).

The Consolidated Entity’s working capital deficiency, being current assets less current liabilities was $3,223,650 as at 31 December 2018 (2017: $5,157,693 deficiency). Included in the working capital deficit was unearned income of $747,946 (30 June 2018 $448,937).

The ability of the Consolidated Entity to continue as a going concern is principally dependent upon the following:

• Forecasted profitability of the companies within the Consolidated Entity including increasing the service offerings provided and expanding its geographical foot print;

• Directors Loan provided to the Consolidated Entity will not be called upon until the Consolidated Entity has sufficient cash flows and it is the intention to convert the loans into ordinary shares

• the ability of the Consolidated Entity to secure funds by raising capital from equity markets for working capital. Convertible note of $500,000 and $150,000 will be required to be settled in April 2019 and September 2019 respectively ; and

• The results of negotiations with creditors in extinguishing amounts currently payable

• Managing cash flows in line with available funds.

These conditions indicate a material uncertainty that may cast significant doubt about the ability of the Consolidated Entity to continue as a going concern. In the event the above matters are not achieved, the Consolidated Entity will be required to raise funds for working capital from debt or equity sources.

The directors have prepared a cash flow forecast, which indicates that the Consolidated Entity will have sufficient cash flows to meet all commitments and working capital requirements for the 12 month period from the date of signing this financial report. In particular:

• As at the date of this report, convertible note totalled $650,000. The convertible notes are not past due and the settlement is at the discretion of the holder. Should any of these convertible notes be required to be repaid in cash, additional funds will be required to be raised to settle any such amounts;

• Included in the forecast is an improvement in operations of core business units, which management expect to generate profitable operations within the next 12 months;

• The continued support of the Company’s creditors. At the date of the report there were no outstanding statutory demands made against the company; and

• Managing cash flows in line with available funds.

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ICOLLEGE LIMITED

CONDENSED NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 DECEMBER 2018

If the Company is unsuccessful in any of the above, it will be required to immediately raise funds for its working capital requirements and settlement of its debt instruments from debt or equity sources.

Based on the cash flow forecasts and other factors referred to above, the directors are satisfied that the going concern basis of preparation is appropriate. In particular, given the Consolidated Entity’s history of raising capital to date, the directors are confident of the Consolidated Entity’s ability to raise additional funds as and when they are required.

Should the Consolidated Entity be unable to continue as a going concern it may be required to realise its assets and extinguish its liabilities other than in the normal course of business and at amounts different to those stated in the financial statements. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or to the amount and classification of liabilities that might result should the Consolidated Entity be unable to continue as a going concern and meet its debts as and when they fall due.

2. TRADE AND OTHER RECEIVABLES

Current Trade receivables GST receivable Sundry and other receivables	31 December 2018 30 June 2018 $ $ 597,358 529,829 99,957 17,492 95,572 95,677
	792,887 642,998

3. TRADE AND OTHER PAYABLES

Current

Trade payables Sundry payables and accrued expenses Unearned revenue Short term loans Accrued interest on convertible notes Share subscriptions payable Consideration payable(1) Total current payables	31 December 2018 30 June 2018 $ $ 1,798,495 1,501,463 267,649 524,654 747,946 448,937 346,168 326,714 40,452 80,241 - 300,000 - 1,500,000
	3,200,710 4,682,009

(1) On 11 October 2018, the Company announced to ASX that the Supreme Court litigation with Walker Enterprises (Australia) Pty Ltd and Walker had been settled. The terms of settlement included the sale of Walker’s 6,666,667 shares to buyers nominated by iCollege through off-market transfers, with the proceeds of $385,000 (being the settlement sum) paid to Walker. On settlement of the case there was a gain on settlement of the liability of $1,500,000 in this 6 month period ended 31 December 2018.

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ICOLLEGE LIMITED

CONDENSED NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 DECEMBER 2018

4. CONTRIBUTED EQUITY

Number of Shares Summary of Movements: Issue Price 458,822,084 Opening balance 1 July 2018 44,000,000 Shares placement shares issued $0.05 1,624,637 Shares issued to Chairman for services as director $0.069 1,421,060Shares issued in lieu of services $0.05 - Costs of capital - 505,867,781 Closing balance at 31 December 2018	$ 27,278,641 2,200,000 112,100 71,053 (342,205)
	29,319,589

5. COMMITMENTS AND CONTINGENT ASSETS AND LIABILITIES

There have been no material changes to commitments or contingent assets/liabilities to those disclosed in the 30 June 2018 annual report other than the settlement of the Walker litigation which has been disclosed in note 3.

6. EVENTS OCCURING AFTER REPORTING DATE

There are no other matters or circumstances, other than disclosed elsewhere in this report, the financial statements or notes thereto, that has arisen since the end of the financial period, that has significantly affected, or may significantly affect, the operations of the Company, the results of those operations, or the state of affairs of the Company in future financial years.

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ICOLLEGE LIMITED

CONDENSED NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 DECEMBER 2018

7. SEGMENT INFORMATION

6 months ended 31 December 2018 Segment Income Revenue from customers Finance income Total income Segment Expenses Cost of goods sold Finance costs Depreciation and amortisation Gain on Settlement of Liability Net other costs Total Expenses Segment Loss before income tax 31 December 2018 Segment Assets and Liabilities Reportable segment assets Reportable segment liabilities Net assets/(deficiency) 6 months ended 31 December 2017 Segment Income Revenue from customers Finance income Total income Segment Expenses Cost of goods sold Finance costs Depreciation and amortisation Net other costs Total Expenses Segment Loss before income tax 30 June 2018 Segment Assets and Liabilities Reportable segment assets Reportable segment liabilities Net assets/(deficiency)	Financing Education Services Consolidated $ $ $ - 3,461,749 3,461,749 126 9 135
	126 3,461,758 3,461,884 - (748,793) (748,793) (27,932) (18,525) (46,457) (575) (35,730) (36,305) - 1,500,000 1,500,000 (859,060) (3,610,389) (4,469,449)
	(887,567) (2,913,437) (3,801,004)
	(887,441) 548,321 (339,120)
	18,461,402 1,492,386 19,953,788 (5,903,666) (2,402,456) (8,306,122)
	12,557,736 (910,070) 11,647,666
	Financing Education Services Consolidated $ $ $ - 888,744 888,744 - - -
	- 888,744 888,744 - (122,944) (122,944) (74,217) - (74,217) - (3,613) (3,613) (734,328) (562,888) (1,297,216)
	(808,545) (689,445) (1,497,990)
	(808,545) 199,299 (609,246)
	18,581,947 1,267,639 19,849,586 (8,423,374) (1,690,579) (10,113,953)
	(10,158,573) (422,940) 9,735,633

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ICOLLEGE LIMITED

CONDENSED NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 DECEMBER 2018

DIRECTORS’ DECLARATION

In accordance with a resolution of the Board of Directors, I state that:

In the opinion of the Directors:

• (a) the financial statements and notes of the Company are in accordance with the Corporations Act 2001, including:

• (i) giving a true and fair view of the Company’s financial position at 31 December 2018 and of its performance for the half-year ended on that date; and

• (ii) complying with Accounting Standard AASB 134 Interim Financial Reporting, the Corporations Regulations 2001 and other mandatory reporting requirements; and

• (b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

On behalf of the Board

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Ashish Katta Managing Director

28[th] February 2019 Brisbane, Queensland

14

Independent Auditor’s Review Report

To the Members of iCollege Limited

We have reviewed the accompanying financial report of iCollege Limited (“the Company”) and Controlled Entities (“the Consolidated Entity”) which comprises the condensed consolidated statement of financial position as at 31 December 2018 , the condensed consolidated statement of profit or loss and other comprehensive income, condensed consolidated statement of changes in equity and condensed consolidated statement of cash flows for the half year ended on that date, a statement of accounting policies, other selected explanatory notes and the directors’ declaration of the Consolidated Entity, comprising the Company and the entities it controlled during the period.

Directors Responsibility for the Financial Report

The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express a conclusion on the financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the Consolidated Entity’s financial position as at 31 December 2018 and its performance for the half year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 . As the auditor of the Consolidated Entity, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

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

Independent Auditor’s Review Report To the Members of iCollege Limited (Continued)

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Independence

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

Conclusion

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

• a. Giving a true and fair view of the Consolidated Entity’s financial position as at 31 December 2018 and of its performance for the period ended on that date; and

• b. Complying with Accounting Standard AASB 134: Interim Financial Reporting and Corporations Regulations 2001.

Material Uncertainty Related to Going Concern

We draw attention to Note 1 in the financial report, which indicates that the Consolidated Entity incurred a net loss of $339,120 during the half year ended 31 December 2018. As stated in Note 1, these events or conditions, along with other matters as set forth in Note 1, indicate that a material uncertainty exists that may cast significant doubt on the Consolidated Entity’s ability to continue as a going concern. Our conclusion is not modified in respect of this matter.

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BENTLEYS MARK DELAURENTIS CA Chartered Accountants Partner

Dated at Perth this 28[th] day of February 2019