ReadCloud Limited

CEO's Presentation to Annual General Meeting

23 November 2021

OVERVIEW

READCLOUD IS A MARKET LEADER IN DIGITAL CONTENT DELIVERY TO SCHOOLS IN AUSTRALIA

We deliver the school curriculum and VET-in-Schools content and assessments digitally

ReadCloud is a highly scalable SaaS platform and is integrated from publisher to student
Our product provides sophisticated collaborative learning tools and is well placed for both in-school and remote learning settings

We operate in a large and growing market

2,775 secondary schools with 1.6 million students
236,000 students yearly doing VET-in-Schools

OVERVIEW

FY21 Finances

$7.7m Revenue
$9.0m Pro-Forma Revenue
Underlying EBITDA positive for the first time
$6.3m Cash Balance

550 Schools

• 53% increase over FY20

116,000 Students and Teachers

56% increase in VET-in-School
21% increase in Direct Curriculum

$63 Average Revenue Per User

FY21 Highlights

FY21 FINANCIAL HIGHLIGHTS

The Group is well capitalised to pursue growth initiatives with a cash balance of $6.3 million as at 30 June 2021

* Lower rate of user growth - loss of Reseller school users, which have been replaced by higher margin direct full curriculum and VET-in-school users

Maiden full-year Underlying EBITDA profit of $15,552 for FY21 (FY20: Underlying EBITDA loss of $161,141)

3% increase in consolidated revenue to $7.69 million (FY20: $7.46 million)

43% increase in VET segment revenue to $3.32 million (FY20: $2.32 million)

Current annualised run rate of over $9.0 million pro-forma revenue for FY21 (assuming COSAMP and Ripponlea Institute were owned for all of FY21)

Update on the ReadCloud Platform

Continued investment in the ReadCloud platform further strengthens our competitive advantage

SaaS PLATFORM EXPANSION

ReadCloud VET Group

Teacher Approval Student Enrolment eBook Courses Teacher Marking Online Assessments Certificate Issue

ReadCloud Curriculum and Resellers

Integration to Publisher Portals, Reseller eCommerce and School Timetables

Cross platform eReading Apps Social Annotations

SaaS PLATFORM EXPANSION (CONT'D)

ReadCloud recently went live with its newly developed VET-In-Schools platform which offers an end-to-end digital process from:

VET Teachers online uploading their CV and credentials for approval
Teachers inviting students to enrol online
Students gaining access to their course materials as eBooks in the ReadCloud eReader and complete assessments online in the ReadCloud Hub
Teachers being able to mark the assessments online to complete the course and issue a Certificate

All of the above steps are underpinned by ReadCloud technology

The new VET-in-Schools platform provides an excellent opportunity to scale the offering to this market without having to substantially increase the number of staff

ReadCloud VET Group Platform ReadCloud Curriculum and Resellers

ReadCloud recently went live with a new quoting, onboarding and invoicing system for Direct Curriculum customers. This has greatly enhances the scalability of this business where more schools can be on-boarded with the same customer support team
During FY21, ReadCloud continued to invest in the Company's proprietary eReader platform to improve user experience and maintain a strong competitive advantage in regard to the platforms' future including some new local and international reseller and distribution opportunities

Launching the ReadCloud VET Group

READCLOUD VET GROUP

The ReadCloud VET Group is now the largest Private operator of VET-in-Schools in Australia by scope of courses offered

1What is theReadCloudVET Group?	•In FY21, ReadCloud acquired two VET-in-Schools RTOs, COSAMP and Ripponlea Institute•COSAMP is the number one supplier in the Music Industry vertical in VET-in-Schools and added 184 school customers•Ripponlea Institute is the number one supplier in the Applied Languages vertical in VET-in-Schools and added 70school customers•Combined with AIET, the ReadCloud VET Group services over 400 school customers and offer over 60 qualifications
2Platformsintegration andoperationalsynergies	•There is a strong sense of excitement in anticipation of a nationwide launch of the ReadCloud VET Group planned forearly 2022•By bringing many of the systems used by the three RTOs together and integrating the ReadCloud eReader for thedelivery of VET course materials, efficiencies are already being extracted•The previous owners of the three RTO's ReadCloud has acquired have integrated well and are all senior members ofthe ReadCloud VET Group. They remain highly motivated (and have large RCL shareholdings from the sale of theirbusinesses) and are fully behind the Company's strategy to accelerate growth
3Cross selling andacceleratinggrowth	•The cross selling of each RTO's services to the customers of the other RTOs presents a large growth opportunity•Of the three ReadCloud RTO's collective schools, 85% of those school customers use only one of ReadCloud's VETproviders (AIET, COSAMP or Ripponlea) in 2021•Cross selling has already happened this selling season and management expects the number of school customersusing more than one of ReadCloud's RTOs for 2022 will be substantially higher

1What is theReadCloudVET Group?

•In FY21, ReadCloud acquired two VET-in-Schools RTOs, COSAMP and Ripponlea Institute•COSAMP is the number one supplier in the Music Industry vertical in VET-in-Schools and added 184 school customers•Ripponlea Institute is the number one supplier in the Applied Languages vertical in VET-in-Schools and added 70school customers•Combined with AIET, the ReadCloud VET Group services over 400 school customers and offer over 60 qualifications

2Platformsintegration andoperationalsynergies

•There is a strong sense of excitement in anticipation of a nationwide launch of the ReadCloud VET Group planned forearly 2022•By bringing many of the systems used by the three RTOs together and integrating the ReadCloud eReader for thedelivery of VET course materials, efficiencies are already being extracted•The previous owners of the three RTO's ReadCloud has acquired have integrated well and are all senior members ofthe ReadCloud VET Group. They remain highly motivated (and have large RCL shareholdings from the sale of theirbusinesses) and are fully behind the Company's strategy to accelerate growth

3Cross selling andacceleratinggrowth

•The cross selling of each RTO's services to the customers of the other RTOs presents a large growth opportunity•Of the three ReadCloud RTO's collective schools, 85% of those school customers use only one of ReadCloud's VETproviders (AIET, COSAMP or Ripponlea) in 2021•Cross selling has already happened this selling season and management expects the number of school customersusing more than one of ReadCloud's RTOs for 2022 will be substantially higher

TRENDS IN THE VET-IN-SCHOOLS MARKET

Feedback from ReadCloud school customers

Schools prefer to deal with fewer RTOs as it reduces the administrative compliance burden

ReadCloud has already cross-sold its course offering for 2022 to a number of existing school customers of the three RTOs in the ReadCloud VET Group

Schools who are RTOs themselves are often finding it difficult to keep up with the regulatory changes and compliance demands

ReadCloud has already sold its Platform, eBooks and Assessments to a number of school customers that are RTOs themselves Recent data release from the National Centre of Vocational Training Research ("NCVER") which shows an increase in VET-In-Schools Enrolments of 30% for Private RTOs and a decline in all other categories over the last five years

Outlook – Accelerating Growth

OUTLOOK - ACCELERATING GROWTH

Leveraging the ReadCloud platform

The newly developed VET-in-Schools platform provides an excellent opportunity to scale the offering to this market without having to substantially increase the number of staff
The platform has been successfully offered to a number of schools who are RTO's themselves and management believes this trend will continue
Platform automation for the Direct Curriculum customers also provides improved scalability for quoting to and onboarding new schools with fewer staff

High retention rates, strong new business growth and cross selling

ReadCloud is seeing high retention rates at this stage with re-registration of existing schools still on-going during December/January 2022. Management is expecting to see a very small level of churn across the business
ReadCloud continue to see strong new business sales growth across all channels
A substantial cross selling opportunity exists over the coming years to deliver a wider range of courses to existing school customers who, in general, prefer to deal with fewer RTOs to reduce the administrative compliance burden

International interest

Global Victoria selected ReadCloud for participation in a number of Virtual Trade Expo across South East Asia and the UK
The learnings so far suggest that there may be a gap in certain overseas market for ReadCloud's Platform and in particular the ability to encrypt and protect publishers' eBooks
As such, ReadCloud is making an investment in exploring and quantifying a Distributor/Reseller model in a number of overseas markets

OUTLOOK - ACCELERATING GROWTH (CONT'D)

Direct Curriculum Customers

Continued organic growth in existing schools choosing to expand user numbers across year levels and increase the eBooks penetration rate
Continued cross selling of VET into Direct Curriculum Customers
Given COVID learnings to date, the outbound sales strategy implemented this year supported by dedicated sales staff actively managing numerous opportunities across each key market, has yielded a strong conversion of schools for the 2022 school year

Resellers Curriculum Customers

ReadCloud continues to partner with Resellers who offer a one-stop-shop solution to schools wanting a combination of eBooks and physical books/stationary and have recently signed up two new Resellers who both have large school customer bases
This provides a strong pathway to market for FY22 and beyond

• ReadCloud will continue to access further consolidation opportunities as management has a strong track record of successfully acquiring and growing businesses substantially

KEY INVESTMENT HIGHLIGHTS

ReadCloud is a market leader in digital content delivery to schools in Australia
Large market opportunity in Australia with an immediate target market of 2,775 secondary schools with 1.6 million students and 236,000 students yearly doing VET-in-Schools courses for Year 11 and 12
Growing strongly with over 116,000 users in over 550 schools
Strategically well positioned with VET-in-Schools, Direct and Reseller sales channels working well and partnerships with an increasing number of educational content publishers seeking a digital delivery solution
Highly scalable platform with improving operating margins as user numbers increase, leveraging fixed platform costs
Strong growth outlook with new school wins for the 2022 school year in all channels, an expanded sales pipeline and the recent appointment of new reseller partners
Management is confident that its strategy to accelerate growth through investment in organic marketing and business development will result in strong revenue growth in FY22
Experienced and motivated management team (with a combined equity ownership around 20%)

Appendix

FY21 FINANCIALS

Underlying EBITDA

($)	FY21	FY20	YOY
Sales and fee revenue	7,172,072	6,956,136	3%
Less publisher & bookseller fees	(3,050,995)	(3,891,795)	-22%
Margin after publisher & booksellerfees	4,121,077	3,064,341	34%
Add: Other revenue	515,304	500,096	3%
Less operating expenses:
Advertising and marketing	(114,172)	(115,831)	-1%
Employment expenses	(3,373,377)	(2,628,224)	28%
Legal & compliance	(87,033)	(143,465)	-39%
Professional services expenses	(391,871)	(301,014)	30%
Telephone, internet & data hosting	(90,364)	(80,811)	12%
Travel expenses	(92,059)	(136,713)	-33%
Other expenses	(470,527)	(315,720)	49%
Finance costs	(14,257)	(9,563)	49%
Total operating expenses	(4,633,660)	(3,731,341)	24%
Add: Net interest expense / (revenue)	12,833	5,764	123%
Underlying EBITDA*	15,553	(161,140)	N/A

Sales and fee revenue up 3% vs FY20:
- VET segment sales & fee revenue ↑ 44% (AIET revenue ↑ 12%, revenue contribution from COSAMP)
- Full-curriculum sales & fee revenue ↓ 17% (loss of lower margin Reseller and direct full-curriculum revenue)
Publisher and bookseller fees ↓ 22% reduced eBook sales due to:
- reduction in lower margin Reseller revenue
- greater use of proprietary VET course materials for delivery of VET programs
Operating expenses ↑ 24% (↑ $0.90 million) due to:
- employment costs ↑ 28% (↑ $0.75 million) as result of COSAMP and Ripponlea Institute acquisitions ($0.45 million) and investment in additional sales and marketing and operational staff
- investment in RTO compliance and quality systems (mainly reflected in increased professional services expenses); and
- 8 months and 1 month of operating costs for COSAMP and Ripponlea Institute respectively
EBITDA adjusted for Interest, Tax, Depreciation and Amortisation, Share-based payments, transaction costs incurred on the COSAMP and Ripponlea Institute acquisitions and one-off ASX fees. See Appendix A for reconciliation to statutory result.

FY21 FINANCIALS

Balance Sheet

$	Note	30-Jun-21	30-Jun-20
Cash and cash equivalents	1	6,295,556	3,387,609
Trade and other receivables		928,268	597,366
Prepayments		59,927	55,946
Total current assets		7,283,751	4,040,921
Property, plant & equipment		267,675	111,385
Intangibles	2	8,038,723	4,450,488
Right-of-use assets		300,603	290,143
Total non-current assets		8,607,001	4,852,016
Total assets		15,890,752	8,892,937
Trade and other payables		627,330	389,416
Borrowings	3	462,837	-
Other current liabilities	4	412,020	207,308
Employee entitlements (Current & NC)		330,050	179,994
Contingent consideration(Current & NC)	5	1,000,000	-
Lease Liabilities(Current & NC)		328,045	316,887
Total liabilities		3,160,282	1,093,604
Net assets		12,730,470	7,799,333

Notes

1. Strong cash position at year-end of $6.3m
1. Intangibles include capitalised software development ($2.27 m), goodwill ($5.4m) and other intangibles acquired as part of the AIET, COSAMP and Ripponlea Institute acquisitions
1. Represents a bank loan assumed with the Ripponlea Institute acquisition (repaid in full post year-end)
1. Includes contract liabilities (unearned revenue $0.30 million) and company tax payable in respect of COSAMP and Ripponlea Institute
1. Deferred consideration payable in ReadCloud shares to the vendors of COSAMP and Ripponlea Institute upon achievement of FY21 and FY22 revenue performance hurdles (any shares to be issued will be at greater of $0.40 and 30-day VWAP and these shares will be escrowed)

DISCLAIMER

This presentation has been prepared by ReadCloud Limited ("Readcloud"), based on information available as at the date of this presentation. The information in this presentation is provided in summary form and does not contain all information necessary to make an investment decision.

This presentation does not constitute an offer, invitation, solicitation or recommendation with respect to the purchase or sale of any security in ReadCloud, nor does it constitute financial product advice or take into account any individual's investment objectives, taxation situation, financial situation or needs. An investor must not act on the basis of any matter contained in this presentation but should make its own assessment of ReadCloud as part of its own investigations. Before making an investment decision, investors should consider the appropriateness of the information having regard to their own objectives, financial situation and needs, and seek legal, taxation and financial advice appropriate to their jurisdiction and circumstances. ReadCloud is not licensed to provide financial product advice in respect of ReadCloud securities or any other financial products.

Although reasonable care has been taken to ensure that the facts stated in this presentation are accurate and that the opinions expressed are fair and reasonable, no representation or warranty, express or implied, is made as to the fairness, accuracy, completeness or correctness of the information, opinions and conclusions contained in this presentation. To the maximum extent permitted by law, neither ReadCloud, nor any of its officers, directors, employees and agents, nor any other person, accepts any responsibility and liability for the content of this presentation including, without limitation, any liability arising from fault or negligence, for any loss arising from the use of or reliance on any of the information contained in this presentation or otherwise arising in connection with it.

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Forward looking statements

This presentation may contains certain forward looking statements that are based on ReadCloud's beliefs, assumptions and expectations and on information currently available to ReadCloud's management. Such forward looking statements involve known and unknown risks, uncertainties, and other factors which may cause the actual results or performance of ReadCloud to be materially different from the results or performance expressed or implied by such forward looking statements. Such forward looking statements are based on numerous assumptions regarding present and future business strategies and the political and economic environment in which they operate in the future, which are subject to change without notice. Past performance is not necessarily a guide to future performance and no representation or warranty is made as to the likelihood of achievement or reasonableness of any forward looking statements or other forecast. To the full extent permitted by law, ReadCloud and its directors, officers, employees, advisers, agents and intermediaries disclaim any obligation or undertaking to release any updates or revisions to information to reflect any change in any of the information contained in this presentation (including, but not limited to, any assumptions or expectations set out in the presentation).