READCLOUD LIMITED — Interim / Quarterly Report 2018

Feb 27, 2018

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ReadCloud Limited

Chairman’s letter

Dear fellow shareholders,

I am pleased to present ReadCloud Limited’s (ASX:RCL, RCLO) first auditor reviewed financial report as a listed company.

This begins an exciting new era for the company as we embark on a growth strategy through further platform development and a concentrated sales effort with the planned employment of additional specialist sales resources and approaches to accelerate ReadCloud’s penetration of the secondary school market in the first instance.

We have had a successful half year to 31 December 2017 (as an unlisted company) with Total Revenue of $1,185,683 (1H17: $548,549), a more than double increase of $637,134, and an underlying EBITDA of $336,349. Below is shown the details of the underlying EBITDA reconciled to the statutory position:

Underlying EBITDA	31 Dec 2017
Loss after income tax for the half-year attributable to the Owners of ReadCloud Limited	(95,559)
Add: Share Based Payments	208,585
Add: Amortisation & Depreciation	102,984
Add: IPO Costs	121,157
Less: Interest Income	(818)
UnderlyingEBITDA*	336,349

* EBITDA is a financial measure which is not prescribed by Australian Accounting Standards (‘AAS’) and represents the profit under AAS adjusted for depreciation, amortisation, interest and tax.

Factoring in IPO costs, share plan expenses and depreciation the Company has delivered a net loss after tax of $95,559 for the half year to 31 December 2017.

Further H1 FY18 highlights for the Company include:

• A substantial increase in the direct school channel sales;

• Securing new publisher distribution agreements;

• Solid growth in new schools coming through resellers;

• An increased user and eBook penetration in existing schools;

• Schools committed to using the ReadCloud platform for 2018 grew to 68 as at 31 January 2018.

Both revenue and user numbers are tracking slightly ahead of budget representing nearly a doubling of contracted users over school year 2017. The Company is working with schools that have recently on-boarded on ReadCloud’s digital eLearning platform and expects to confirm total contracted user numbers in the coming weeks once the school enrolments are finalised.

The company has a strong pipeline of schools and expects to on-board additional schools and users during the current half year.

I look forward to your continued support.

Yours faithfully,

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Paul Collins Chairman 27 February 2018