READCLOUD LIMITED — Annual Report 2024

Nov 19, 2024

ReadCloud Limited Positive Operating Cashflow and FY25 Outlook FY24 Audited Annual Results

FY24 Financial Highlights

Executing with discipline into a deep pool of opportunity

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Up 15% Down 6% Up 146% Up 207% $1.43m
Sales & Fee Revenue Operating costs Underlying EBITDA Operating Cashflow Cash
$11.9m Restructured workforce $0.36m $0.41m Continued Debt Free
status
Organic growth in all The business is now closer Breakthrough +ve Breakthrough +ve
businesses to its customers underlying earnings from operating cashflow from Self-funded for working
$1.1m improvement $0.8 improvement capital requirements
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*Underlying EBITDA = earnings adjusted for Interest, Tax, Depreciation and Amortisation, Share-based payments, transaction costs incurred on acquisitions and restructuring costs.

FY24 Audited Annual Results

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Revenue Growth Trend

Organic Growth in all business lines

FY23 v FY24 Sales and Fee Revenue

$ 12 m $ 10 m $ 8 m $ 6 m $ 4 m $ 2 m $ 0 m FY23 FY24 eBooks VET-in-schools Industry Training

Drivers of Organic Growth

• Strong retention rate of 93% across eBooks and VET-in-schools

• Addition of new schools

• Strengthening market positioning driving inbound inquiries

• Heightened customer engagement driving referrals

• Differentiated by market leadership in technology, breadth of course options, multi state funding arrangements and customer service

FY24 Audited Annual Results

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FY24 Highlights

Significant turnaround with positive underlying earnings and positive operating cashflow. Effective cost control is in place. In FY24 operating costs reduced by 6% and supported 15% growth in Sales and Fee Revenue.

• eBooks VET-in-schools • Retention rate increased to 91% from 69% • 39 New schools successfully onboarded • 12 New Australian schools successfully onboarded • Engagement initiatives are bringing ReadCloudVET • Sales to 5 international schools closer to its customers • Australian International School Singapore signs for • Launch of training course pilot in Indonesia 3 years • Migration of school customers onto the

• • Brisbane School of Distance Education signs for 4 ReadCloudVET portal completed years • Rewrite and upgrade of proprietary Learning

• • New onboarding processes are supporting Materials for 11 Qualifications efficiencies, scalability, and improving customer experience

Industry Training

• Enrolments averaged 54 per month above target of 45 per month

• • Distinct transition into higher value courses and Qualifications

• • Meaningful Industry Partnerships established in the Childcare sector

• • Additional access to Government funding secured

FY24 Audited Annual Results

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ReadCloud’s Approach

We deliver educational technology, content, and training programs to Australian and International markets.

We enhance learning through an innovative platform, exceptional service, and tailored management solutions.

We strategically nurture our competitive advantages and are alive to transformative opportunities.

“Learn Better”

FY24 Audited Annual Results

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Key Offerings & Drivers of Success

Innovative Technology	Content & Materials	Reach & Distribution	Vocational Training
• Digital-first, publisher- agnostic eBook platform • Proprietary tech enabling global reach • Seamless eLearning tools designed for students and teachers	• Australian-owned tech and content IP • Industry-informed learning and assessments resources • Expertise in multi-publisher relationships and vocational training	• Efficient global distribution without increasing the cost base • Established channels in domestic and international markets • Multi-state funding valued by national clients	• Australia’s largest range of secondary school vocational training programs • Serving six states and territories • High-performing training organisations with above- average student satisfaction (91%, NCVER VET Student Outcomes)

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ReadCloud Delivers Quality Learning Opportunities

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Equity of Access

Providing equal access to learning resources and opportunities to all students including those in remote and regional locations

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Timely Resource Delivery

Ensuring the right books reach the right students at the right time

Vocational Pathways

Enabling access to a meaningful range of vocational pathways for students across Australia

Industry Engagement & Compliance

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Making training relevant and facilitating the achievement of industry compliance requirements

FY24 Audited Annual Results

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Driving Continuous Improvement through Customer Engagement

We embrace insights and feedback to strengthen our service offerings, focusing on the following areas:

Support Sessions

A dedicated team committed to supporting customers and ensuring seamless use of our products

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Personalised Customer Care

Regular visits to schools and academies, complemented by ongoing digital communication to maintain connections and effective relationships

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Informed Validation Process

Collaborating with schools and industry to ensure programs and materials effectively meet the needs of students, teaching staff and industry

Industry Engagement

Building strong relationships with key industry players, including major clients in the Early Childhood Education & Care sector and emerging publishers to enhance our offerings and expertise

FY24 Audited Annual Results

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The Problems We Help Solve

Access and Equity	Content Delivery and Learning Support	Ease and Efficiency	Compliance and Industry Support
• Ensuring equity of access to learning resources and opportunities through online EduTech platforms • Providing access to an extensive range of vocational pathways for young people	• Efficiently delivering relevant educational content to students – the right books to the right students on time • Supporting the Australian vocational training sector through professional development initiatives	• Removing training complexities for childcare operators • Reducing administrative burden on schools • Providing personalised eLearning management systems	• Facilitating the achievement of industry compliance requirements • Addressing national skills shortages by providing a breadth of vocational training opportunities

FY24 Audited Annual Results

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Service Sectors

eBooks for Schools & Students

A digital-first platform that aggregates eBooks from multiple publishers, enhances learning with collaborative tools, immersive reading features, and translation support for over 120 languages. By offering a safe, secure and interactive space for teachers and students, we simplify access to educational resources while reducing the administrative burden for schools.

Vocational Education and Training delivered to Secondary School Students

Delivering high-quality vocational training programs to secondary schools across Australia, building strong connections between schools and industry to ensure Trainers are well-informed and students are engaged with relevant content. Focused on students, we empower schools and teachers to implement vocational training through tailored support, flexible learning, and streamlined processes.

Vocational Education and Training Delivered to Industry

A valued and reliable training partner delivering nationally recognised accredited courses to industry clients and independent students in the Early Childhood Education and Care sector. Our learning solutions are relevant, flexible, innovative and relate directly to industry. Our processes and training methodology provide learners with a supportive, contemporary, and quality learning experience.

FY24 Audited Annual Results

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Key Services and What They Do

eBooks	eBooks	eBooks	eBooks	eBooks	eBooks
Services & solutions	Application	Problem solved	Benefits & competitive advantage	Pricing & scalability	Total Addressable Market
Provisioning Library Management Timetable Integration Student Tools Teaching Tools	Australian book hire schools International book list schools Distance Education	No more multiple logins for different publishers All students use the same version of the book Simplified book storage and transport	Reduces administrative burden Enhances student engagement Provides instant access to resources Fast and flexible support	Retail margin on books Software Fee	Australian schools k-12 International schools that teach in English (~14,000 schools)

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Key Services and What They Do

VET-in-schools

Services & solutions	Application	Problem solved	Benefits & competitive advantage	Pricing & scalability	Total Addressable Market
High-quality VET-in-Schools programs that address the evolving needs of industry and education Teacher Professional Development and resources	Auspicing agreements (our Registered Training Organisations provide the technology, materials, regulatory compliance and support for secondary schools to deliver vocational education and training on site) Professional Learning for Teachers & Trainers	RTO compliance Integrated online learning environment and simplified delivery Platform evolves to meet the demands of students and teachers Providing relevant, industry informed content to students	Students no longer need to travel to TAFE Wide range of product offerings and flexible start dates High-quality service with dedicated School Partnership Consultants Direct access to the Learning and Assessment team	Course fee Per student fee	Australian Secondary Schools ~250,000 students each year

FY24 Audited Annual Results

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Key Services and What They Do

Industry Training

Services & solutions	Application	Problem solved	Benefits & competitive advantage	Pricing & scalability	Total Addressable Market
Deliver nationally recognised accredited ECEC courses to individual students and industry clients	Delivery of Certificate III and Diploma programs to individual students and via trainee partnerships with industry clients	Meeting staff qualification compliance requirements Addressing the critical skills shortage by providing training opportunities in the growing ECEC sector	Managed service solutions, including compliance, assessment and rating support Multistate funding capabilities Strong industry connections and partnerships Proven expertise with 91% student satisfaction	Per student fee Trainee partnerships	Australian industry in Queensland, New South Wales, Victoria, and South Australia

FY24 Audited Annual Results

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Innovation and Customer Connection

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Comprehensive
Services and
enriched user
engagement
Technology for
teachers,
students and
schools
Access to leading
Publisher and
Proprietary Content for
comprehensive range
of subjects and
courses
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FY24 Audited Annual Results

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Organic Growth Horizon

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Demonstration of sustained organic revenue
growth at 15%
$ 18 m
$ 16 m
$ 14 m
$ 12 m
$ 10 m
$ 8 m
$ 6 m
$ 4 m
$ 2 m
$ 0 m
FY22 FY23 FY24 FY25 FY26
eBooks VET-in-schools Industry Training
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Core Growth Levers

eBooks

• Sales to schools

• New Australian schools

• New International schools

• Increased adoption within existing school customers

• • Entry into Booklist category

VET-in-schools

• Courses delivered in Secondary Schools

• More courses to existing school customers

• New schools

• Students enrolled in each Course

• Adding growth Qualifications to Scope of Registration

Industry Training

• Trainees/workers enrolling in courses, progressing to milestones and completing qualifications

• Self-funded students enrolling in courses

• Expansion in access to State based funding for Training (either in monetary value eg NSW or in enrolled places eg Victoria)

FY24 Audited Annual Results

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Growth Pathways

• FY25 Medium Term • Increase international school customers from existing 5 • Expand sales team and target NSW schools • Signing additional Australian Schools • Build a dedicated team to reach scale in international business using learnings from initial clients

• • Entry into Booklist category

• eBooks • Increase international school customers from existing 5 • Expand sales team and target NSW schools • Signing additional Australian Schools • Build a dedicated team to reach scale in international business using learnings from initial clients

• • Entry into Booklist category

• VET-in-schools • Uplift in VET courses per school • Adoption of Pathway programs in Years 9 and 10 • Introduction of new courses • Scan for roll up acquisitions in complimentary areas of focus • Expansion of product suite e.g. Teacher Professional Development Options and Resources-Only packages

• Industry Training • Investment in Business Development for Student • Extension of childcare/aged care training expertise into Acquisition secondary schools with bridging pathway to industry

• • Industry Partnerships • Strengthening of QLD/NSW/VIC funding arrangements

  • Adoption of Pathway programs in Years 9 and 10

  • • Scan for roll up acquisitions in complimentary areas of focus

FY24 Audited Annual Results

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FY24 Summary Profit and Loss

$’000	30-Sept-24	30-Sept-23	YOY
Sales and fee revenue	11,904	10,349	15%
Less publisher & bookseller fees	(3,974)	(3,619)	10%
Less trainer costs	(1,236)	(877)	41%
Less Cost of sales - Other	(129)	(52)	148%
Gross profit	6,564	5,800	13%
Add: Other revenue	365	356	2%
Less operating expenses:
Advertising and marketing	(122)	(99)	24%
Computer software	(187)	(154)	21%
Employment expenses	(5,263)	(5,678)	-7%
Legal & compliance	(100)	(98)	2%
Office expenses	(58)	(80)	-27%
Professional services expenses	(425)	(382)	11%
Telephone, internet & data hosting	(103)	(123)	-16%
Travel expenses	(86)	(172)	-50%
Other expenses	(187)	(139)	35%
Total operating expenses	(6,533)	(6,925)	-6%
Less interest revenue	(33)	(17)	99%
Underlying EBITDA*	363	(786)	146%

Notes

• Sales & Fee Revenue up 15%

• Operating expenses down 6%

• Employment expenses down 7%.

• Lower headcount heading into FY25

• Underlying EBITDA up 146%

FY24 Audited Annual Results

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Strong track record of revenue growth

Sales and Fee Revenue by business

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$ 12 m
$ 10 m
$ 8 m
$ 6 m
$ 4 m
$ 2 m
$ 0 m
FY21 FY22 FY23 FY24
eBooks VET-in-schools Industry Training
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FY24 Audited Annual Results

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Operating Expenses actively managed

Executing with discipline into a deep pool of opportunity

30% 35% 40% 45% 50% 55% 60% 65% 70% 75% 80%	FY21 FY22 FY23 FY24 Operating expenses as % of Sales and Fee Revenue
	Employment costs Non-employment costs

FY24 Audited Annual Results

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Solid Earnings Improvement

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Underlying EBITDA
FY21 FY22 FY23 FY24
600
400
200
-
(200)
(400)
(600)
(800)
(1,000)
$'000
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FY24 Audited Annual Results

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FY23 to FY24 Underlying EBITDA Earnings Bridge

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$'000
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FY24 Audited Annual Results

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Underlying Earnings Now Positive

Reconciliation of statutory loss to underlying EBITDA

$’000	30-Sept-24	30-Sept-23	YOY
Reported (statutory) net loss after tax	(1,019)	(2,252)	-%
Depreciation and amortisation	1,024	1,142	-10%
Fair value movement of contingent consideration	(1,788)	-	-
Impairment of goodwill	1,788	-	-
Loss on Disposal of Assets	-	96	-100%
Share-based payments	128	114	13%
Transaction costs incurred on business acquisitions	-	45	-100%
Restructuring costs	242	114	112%
Net interest (revenue) / expense	(0)	(34)	-100%
Income tax expense / (benefit)	(12)	(11)	14%
Underlying EBITDA	363	(786)	+146%

Notes

• Contingent consideration liability in respect of Southern Solutions acquisition remeasured from $1.79m to $0

• Impairment charge of $1.79m taken against value of goodwill relating to Southern Solutions as a matter of prudence (Note 9 in the FY24 Annual Report has full details)

FY24 Audited Annual Results

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Balance Sheet

$’000	$’000	$’000	$’000	$’000	30-Sept-24	30-Sep-23
Cash and cash equivalents					1,431	1,709
Trade and other receivables					978	1,154
Prepayments					115	112
Total current assets					2,524	2,975
Non	-current deposits				0	36
Property, plant & equipment					40	51
Intangibles					8,700	10,830
Right		-of	-use assets		69	189
Total non				-current assets	8,809	11,106
Total assets					11,333	14,081
Trade and other payables					1,119	1,001
Contract liabilities					823	869
Contingent consideration					0	1,763
Employee entitlements (Current & NC)					504	527
Lease Liabilities (Current & NC)					92	223
Deferred tax liability					15	27
Total liabilities					2,533	4,410
Net assets					8,780	9,671

Notes

• Maintaining a strong cash position

• Debt free

• Expiry of Contingent Consideration

FY24 Audited Annual Results

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Cashflow

$’000	30-Sept-24	30-Sept-23	YOY
Receipts from customers	12,042	10,690	13%
Payments to suppliers	-12,006	-11,564	4%
R&D tax incentive refund	333	424	-21%
Interest income	33	17	94%
Income tax refund / (paid)	12	47	-74%
Net cash from operating activities	414	-386	+207%
Payment for purchase of business (net of cash acquired)	0	-732	-100%
Payments for PP&E	-19	-19	0%
Software development	-523	-543	-4%
Purchase of intangible assets	-10	-25	-60%
Net cash used in investing activities	-552	-1,319	-58%
Repayment of lease liabilities (including interest)	-139	-160	-13%
Share issue transaction costs	0	-116	-100%
Proceeds from issue of shares (net of costs)	0	1,462	-100%
Repayment of borrowings	0	-240	-100%
Net cash used in financing activities	-139	946	-115%
Net increase in cash	-278	-758	-63%
Cash at the beginning of year	1,709	2,467	-31%
Cash at end of year	1,431	1,709	-16%

Notes

• Effective Working Capital Management

• Revenue growth converting to cash

• Cash generated from operating activities up 207%

FY24 Audited Annual Results

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FY25 Outlook and Targets

Management remains focussed on disciplined execution that unlocks operating leverage

Continuing organic revenue growth baseline target of 15%

Cost growth % targeted to be meaningfully lower than revenue growth %

Organic Growth Priorities FY25

• Growth in Australian School Customers

• Growth in International School Customers

• Consolidating market leadership in VET-in-schools in Australian Secondary Schools

• Ongoing engagement with Childcare Operators to reinforce growth in industry training

FY24 Audited Annual Results

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Investment Highlights

• Large addressable markets in education present a deep pool of opportunity

• Strong tailwinds – migration to online education and government recognition of the importance of vocational training

• School-based education businesses are resilient to geopolitical and economic shocks

• Market leading position in VET-in-schools

• Proprietary technology enables global reach with sales in 6 countries in FY24

• Operating leverage being unlocked by disciplined cost control and sustained revenue growth

• Exciting organic growth prospects support 15% CAGR baseline on a self-funded and BAU basis

• Optionality to accelerate growth via corporate transactions

• Sector ripe for consolidation

FY24 Audited Annual Results

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Corporate Snapshot

Corporate Snapshot	Corporate Snapshot
ASX Code: RCL
Share Price (19 November 2024)	$0.081
Market capitalisation (@ 8.1 cents)	$12.0m
Shares on issue	147.6m
Options on issue (unlisted)	14.4m
Current cash (30 September 2024)	$1.43m

Board & Management	Board & Management
Cristiano Nicolli	Non-Executive Chairman
Jonathan Isaacs	Non-Executive Director
Paul Collins	Non-Executive Director
Darren Hunter	Executive Director (CIO)
Lars Lindstrom	Executive Director (Founder)
Andrew Skelton	Chief Executive Officer
Luke Murphy	Chief Financial Officer & Co Sec

Substantial Shareholders	Substantial Shareholders
Board and management shareholdings*	22.6%
ThorneyGroup*	11.3%
Microequities Asset Management	9.1%
Lars Lindstrom	6.4%
Hunmar Holdings/Darren Hunter*	5.1%
Cyan Investment Management	4.2%
Top20	63.3%
*Includesindirectholdings

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FY24 Audited Annual Results

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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.

Forward looking statements

This presentation 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).

The information presented in this presentation is subject to change without notice and ReadCloud does not have any responsibility or obligation to inform you of any matter arising or coming to their notice, after the date of this presentation, which may affect any matter referred to in this presentation. Images are illustrative only.

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FY24 Audited Annual Results

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