==> picture [172 x 46] intentionally omitted <==

ReadyTech Holdings Limited ABN 25 632 137 216

14 October 2021

2021 Annual Report

ReadyTech Holdings Limited (ASX: RDY) ( ReadyTech ) attaches a typeset version of the 2021 Annual Report.

There have been no changes to the version lodged with ASX on 24 August 2021, other than typesetting.

This announcement has been authorised for release to ASX by the Chief Financial Officer and Company Secretary of ReadyTech.

For more information please contact:

Nimesh Shah Chief Financial Officer E: [email protected] P: + 61 437 980 296

==> picture [582 x 49] intentionally omitted <==

ANNUAL REPORT 30 JUNE 2021

READYTECH HOLDINGS LIMITED ABN 25 632 137 216

==> picture [828 x 684] intentionally omitted <==

----- Start of picture text -----

CONTENTS
Chairman’s letter 4
6
Chief Executive Officer’s report
Corporate directory 9
Directors’ report 12
Auditor’s independence declaration 27
28
Statement of profit or loss and other comprehensive income
29
Statement of financial position
Statement of changes in equity 30
31
Statement of cash flows
32-73
Notes to the financial statements
Directors’ declaration 74
Independent auditor’s report to
the members of ReadyTech Holdings Limited 75-79
Shareholder information 80
----- End of picture text -----

NEXT GENERATION, PEOPLE-CENTRIC

SOFTWARE

Dear Shareholder,

It is with great pleasure that I introduce ReadyTech Holdings Limited’s second Annual Report.

Last year, I noted that the Group’s position as a provider of mission-critical software in its chosen markets had helped us navigate through an unprecedented global pandemic, while continuing to deliver strong growth and results for our investors.

In conditions that required educators and employers to rapidly reassess their digital readiness and accelerate transformation initiatives, ReadyTech was in a prime position to become a partner of choice for both new and existing customers.

In Financial Year 2021 (FY21) we continued to reap the rewards of delivering in this environment, strengthening our customer patronage and trust. Through the year, ReadyTech continued to demonstrate the foundational role our products play in helping our customer to be successful – including supporting them in areas such as online learning, digital employee onboarding and engagement, and more – proving that we have the right strategy and capabilities to deliver for them.

Our customers appreciate ReadyTech’s vertical focus which both delivers software specifically designed for their business, and enables them to readily configure and integrate with our flexible platforms.

TONY FAURE CHAIRMAN

The strength of the Group’s cloud Software-as-a-Service (SaaS) offering has also continued to attract new, higher value enterprise customers across our key vertical market segments. ReadyTech’s ongoing programs to upsell and cross-sell our technology products are delivering greater value to customers and, as a result, gaining a larger share of wallet. Our technology solutions are now helping more and more companies deliver better results across more vertical markets.

ReadyTech has strong future growth potential. In FY21, investors approved an expansion into the Government & Justice market with the acquisition of Open Office and McGirr Technologies. These are vertical markets with very similar characteristics to ReadyTech’s existing education and employment segments, and provide a great opportunity to add value to governments, courts and citizens as well as investors.

ReadyTech has also completed a rebrand that is representative of both our vibrant culture, and our core values which we are confident resonates with customers looking for technology leadership and passion that will guide them into the future.

The Board and I would like to thank shareholders for showing their continued support in ReadyTech. Having worked closely with the management team, I can vouch for the passion they demonstrate each and every day. Their genuine desire to build innovative, customercentric products that our customers love, and to make a difference in the markets we serve is clear – whether that is to the operations of their business customers, or to end users like students, employees, jobseekers, apprentices, citizens and beyond.

This year, ReadyTech has declared itself ready for anything. We recommend watching this space.

Yours sincerely,

MARC WASHBOURNE CEO

Dear Shareholder,

Being ready has always been important at ReadyTech. Not only is it reflected in our brand, it is also built into the fabric of the cloud-based, mission critical SaaS platforms we offer, our customer-centric approach to product development and customer service, and most importantly the culture of our teams. We’ve always had a clear vision on where our technology future lies – to not only lead trends in our markets and continue to innovate, but to also deliver continuous value, and win the business (and ultimately trust) of our customers.

I’m pleased to report that FY21 was a validation of our approach. Across our Education & Work Pathways and Workforce Solutions segments, our agile and next generation software has the become the enabling platform for customers accelerating digital transformation agendas as a result of COVID-19. From student experience transformation projects in education, to employers deepening engagement with their teams and empowering job seekers to enter the workforce, we are helping customers transform their services and adapt to a digital future.

This year we expanded into a new Government & Justice segment, opening further attractive markets ripe for digital transformation. With the acquisition of Open Office and McGirr Technologies (Open Office), we have added strong technology platforms to our suite, and a talented team ready to meet the opportunities for greater efficiency and an improved digital-first customer experience in the local government and justice sectors. ReadyTech’s shared capability in enterprise SaaS and our 365-strong team of ReadyTechers are now leading excellence and growth in multiple large verticals, servicing 4,600+ customers across Australia, and expanding into new geographies.

We are ready for a very bright future.

“

==> picture [48 x 34] intentionally omitted <==

We are ready for a very bright future.

==> picture [48 x 34] intentionally omitted <==

ANNUAL REPORT 30 JUNE 2021

FY21 results

ReadyTech achieved strong results in FY21:

• Revenue up 27.4% to $50.0 million (organic revenue up 15.1%)

Open Office contributing $4.8 million in FY21 o Customer revenue retention maintained at 96%

• Underlying EBITDA up 21.4% to $18.9 million

• Underlying NPAT up 36.9% to $6.2 million

• Non-recurring costs of $4.0 million

o Transaction and restructuring costs of $2.2 million

o Revaluation of contingent consideration of $1.8 million

Strategy update

ReadyTech’s FY21 results reflect the progress of our ambitious growth plans. A clearly articulated strategy for ReadyTech is attracting higher value enterprise customers across all segments. In the Education & Work Pathways and Workforce Solutions segments, we are seeing strong evidence of success with significant wins including Australia’s largest employment services provider, Max Solutions, Fedcap UK and Mental Health First Aid for Education & Work Pathways, and J.C. Dahlsen and PBT Transport for Workforce Solutions. It was also highly encouraging to see our new Government & Justice segment convert multiple enterprise opportunities within months of joining ReadyTech, including Legal Services Commission SA and Town of Claremont in WA.

Additionally, we have an expanded $19 million high conviction new business pipeline – with growing interest from new international markets. To fuel this growth, our enterprise offerings are supported by deeper investment in our go-to-market and delivery capabilities for larger technology buyers.

The cross-selling and upselling of new value via modules and products is performing well to complement new business growth, with average revenue per customer expanding 20.1% to $12.7K across ReadyTech. This additional value includes the development of a wider ecosystem of complementary technologies in our segments that customers both need and desire for success in their operations. One example is our Learning Management System (‘LMS’) which has seen us successfully launch a market-leading offering into the learning sector at a time when education providers are seeking new tools to augment online and hybrid learning capabilities. We continue to actively evaluate opportunities to extend our product footprint into adjacent and international markets.

Our growth strategy is paired with an equally strong focus on customer retention. ReadyTech has the benefit of offering ‘sticky’ products that our customers simply must have in order to operate effectively. However, it is a great customer experience and a focus on customer success, service and support that keeps customers loyal to ReadyTech over the longterm. In FY21, we were very pleased

to achieve 96% revenue retention. We have continued to listen closely to our customers, invest in our products to meet needs and act as a true technology partner that offers trusted, secure and scalable innovation. We continue to see that this customer-centric approach not only drives high retention, but also results in a delighted customer base who advocate for ReadyTech products and differentiate us from competitors.

Product-market fit is the cornerstone for SaaS company growth. ReadyTech continues to design and build tech for the unique characteristics and complexities of specific market verticals, while giving customers rapid onboarding journeys and deep flexibility via our highly configurable products. This gives us an advantage over competitors who offer more generic technology platforms. At the same time, we don’t limit ReadyTech to one market with our approach, allowing us to operate across multiple large and attractive markets. In FY21, we have continued to invest in and refine our core platform of shared capability in SaaS practices across the whole of ReadyTech, enabling us to leverage our collective IP and maximise resources.

Open Office acquisition driving new growth

In FY21 ReadyTech also completed the acquisition of Open Office – a business comprised of software servicing local and state governments, courts, tribunals and commissions – both locally and internationally. Forming ReadyTech’s new Government & Justice segment, the Open Office team has a shared vision with ReadyTech for the future of technology coupled with delivering a customer-centric approach. Together, we deliver trusted, customer-centric technology products that closely meet their specific, complex and localised needs.

We have made excellent progress in uniting Open Office’s experienced management team, wider staff, product set and practices with ReadyTech and are looking forward to further fortifying the product streams in the coming year to maximise their future potential. The acquisition also opened up a highly attractive addressable market, including 500+ local councils across Australia, large state government and global justice market opportunities.

With the global digitisation of government services, migration to cloud and SaaS expected to accelerate in these markets – and increasing community expectations for modern services – we believe this acquisition positions ReadyTech to deliver new waves of growth in the Government & Justice sectors, including further expansion into international markets.

ReadyTech’s investment in brand and reputation

Alongside these initiatives, ReadyTech also undertook a significant rebranding project in FY21 with the objective to evolve and elevate ReadyTech’s master brand and brand architecture while also underpinning our growth plans. The rebrand set out to drive stronger cohesion between our product brands and ultimately build upon our strong reputation, credibility and trust within the markets we operate

ANNUAL REPORT 30 JUNE 2021

ANNUAL REPORT

30 JUNE 2021

– all of which are critical factors for delivering ReadyTech’s enterprise strategy and increasing our ability to attract and retain large customers. Headlined by our bold aspiration to be ready for anything, ReadyTech’s new brand identity and positioning demonstrate that we are not only ready to cut through the complexity for our customers, but that we will also put people first, do the right thing and be a part of positive change in the process – energising our team for a new phase of both local and global growth.

Strategic vision for talent and culture

In FY21 we continued to invest in a high performance ReadyTecher culture. With the recruitment of our new Head of People and Culture, Jess Griffin, we have ‘doubled down’ on our strategy to support the ongoing recruitment, engagement, and retention of top talent at ReadyTech. Our vision for our people is inspired ReadyTechers doing the best work of their lives. This includes a focus on our talent attraction and acquisition efforts, enhancements to our ability to recruit high potential candidates, and embedding rewards, recognition and professional development programs into the end-to-end ReadyTecher employee journey. In this elevated war for talent, we are confident that we have a competitive employer proposition in the technology industry in Australia.

As our market’s demands and expectations change, our ability to attract higher value customers across our segments, gain a larger share of customer technology spend through delivering new value, and nurture existing customers with a great customer experience provides a solid foundation for the future. Our team’s ability to innovate also puts us in a strong leadership position in the technology race, ensuring we remain ready to creatively solve the many challenges that our customers will face in the years to come.

The combination of these factors and our readiness for the future has supported the compelling results included in this year’s Annual Report. At ReadyTech, we believe we’re ready for anything. And we thank you for supporting our mission and growth journey so far.

Yours sincerely,

==> picture [159 x 65] intentionally omitted <==

Ready for anything

ReadyTech is playing a mission-critical enabling role for customers in our chosen verticals at a time of significant challenge, disruption, and change. Powered by our inherent SaaS expertise, we continue to offer customers operating in complex

Marc Washbourne Chief Executive Officer 24 August 2021

environments the ability to manage non-negotiable activities such as operations and compliance with agile, cloud-first software platforms that help them undertake digital transformation and leave clunky legacy systems behind.

We live in the age of the customer, and in line with the consumer experience in banking, travel, retail, entertainment and leisure, we are bringing enterprise technology into a new era of user experience – maximising engagement and satisfaction while driving real business outcomes for customers.

ANNUAL REPORT 30 JUNE 2021

ReadyTech Holdings Limited Corporate directory 30 June 2021

Directors Tony Faure - Chairman and Independent Non-Executive Director Marc Washbourne - Chief Executive Officer Elizabeth Crouch - Independent Non-Executive Director Timothy Ebbeck - Independent Non-Executive Director Tom Matthews - Non-Executive Director Mark Summerhayes - Alternate Non-Executive Director to Tom Matthews

Company secretaries Nimesh Shah Melissa Jones Registered office Level 1, 35 Saunders St Pyrmont NSW 2009 Australia Ph: +61 2 9018 5525

ReadyTech Holdings Limited Directors' report

30 June 2021

The Directors present their report, together with the financial statements, on the consolidated entity ('Group' or 'ReadyTech') consisting of ReadyTech Holdings Limited ('Company' or 'parent entity') and the entities it controlled for the year ended 30 June 2021.

Directors

The following persons were Directors of ReadyTech Holdings Limited during the whole of the financial year and up to the date of this report, unless otherwise stated:

Tony Faure - Non-Executive Chairman Marc Washbourne - Chief Executive Officer Elizabeth Crouch - Non-Executive Director Timothy Ebbeck - Non-Executive Director Tom Matthews - Non-Executive Director

Mark Summerhayes - Alternate Non-Executive Director to Tom Matthews

Principal activities

Principal place of business Level 1, 35 Saunders St Pyrmont NSW 2009 Australia Ph: +61 2 9018 5525

Share register Link Market Services Limited Level 12, 680 George Street Sydney, NSW 2000 Australia Ph: 1300 554 474

During the financial year the principal continuing activities of the Group consisted of:

Education - market leading provider of student management system to vocational education and training, international and English Language and higher education providers;
Workforce Solutions - provider of payroll and employee management solutions from cloud-based technology to outsourcing of human resource function; and
Government and Justice - provider of case management software as a service solution to local governments, state governments and justice departments.

Dividends

There were no dividends paid, recommended or declared during the current financial year or previous financial period.

Review of operations

Auditor Deloitte Touche Tohmatsu Level 9, Grosvenor Place 225 George Street Sydney, NSW 2000, Australia Ph: +61 2 9322 7000

Stock exchange listing ReadyTech Holdings Limited shares are listed on the Australian Securities Exchange (ASX code: RDY)

Website www.readytech.com.au

Business objectives ReadyTech Holdings Limited has used cash and cash equivalents held at the time of listing, in a way consistent with its stated business objectives.

Corporate Governance Statement The Directors and management are committed to conducting the business of ReadyTech Holdings Limited in an ethical manner and in accordance with the highest standards of corporate governance. ReadyTech Holdings Limited has adopted and has complied with the ASX Corporate Governance Principles and Recommendations (Fourth Edition) (‘Recommendations’) to the extent appropriate to the size and nature of its operations.

The Corporate Governance Statement, which sets out the corporate governance practices that were in operation during the financial year and identifies and explains any Recommendations that have not been followed was approved by the Board of Directors at the same time as the Annual Report and can be found at https://investors.readytech.com.au

ReadyTech Holdings Limited (ASX:RDY), a leading provider of SaaS technology in the Education & Work Pathways, Workforce Solutions and Government & Justice markets, is pleased to announce its results for the year ended 30 June 2021 ('FY21') in which the Group continued to deliver strong growth and achieved earnings guidance.

Commenting on the FY21 result, ReadyTech’s CEO and Co-Founder, Marc Washbourne said:

“ReadyTech has delivered another strong and consistent year of revenue and earnings growth, which was achieved through both organic growth and the initial contribution of our Government & Justice vertical, following the successful integration of Open Office. Our performance is clear validation of our strategy and our vision to build a market-focused, mission critical software powerhouse.”

“The results reflect increasing recognition in the marketplace of ReadyTech’s expertise in next generation customer-centric SaaS solutions that streamline operations, improve user experience and meet the strict compliance and regulatory needs of the education, workforce, government and justice sectors. This is particularly true of the higher value end of the market, where have seen strong new business performance across all markets we serve, with an impressive list of new customers onboarded during the year. At the same time, we continued to successfully execute on upsell/cross-sell to our loyal customer base.”

“A strong top line and healthy profit margins have also allowed us to reinvest back in the business, supporting the longterm growth and earnings power of the Group. ReadyTech operates in multiple large addressable markets that are ripe for digital transformation – and we are listening very closely to the needs of customers and investing accordingly. Our continued reinvestment in research and development supports ReadyTech’s strong product-market fit, new roles in sales and marketing drive execution on go to market, and investment in customer onboarding contributes to the streamlining of operations as we scale.”

Strong revenue and earnings growth in Education & Work Pathways

Education & Work Pathways delivered 16.9% growth in revenue to $24.9 million, driven by a combination of new business, cross-sell and significant upgrades from existing customers.

New business is increasingly being by driven higher value and enterprise customers with average revenue per new customer increasing 42% to $38,800 (FY20: $27,200), and with market adoption of ReadyTech’s cloud solutions increasing across the education, training and back-to-work markets.

ANNUAL REPORT 30 JUNE 2021

ReadyTech Holdings Limited Directors' report 30 June 2021

Key customer wins during the year included an enterprise account with the Commonwealth Bank’s in-house registered training organisation ('RTO'), a private RTO National Business Institute ('NBI') and UK employment services provider, Fedcap Employment. The landmark Bendigo TAFE and Kangan Institute ('BKI TAFE') project is also progressing well with subscriptions being triggered and scope expanded to reflect additional requirements.

High growth in Workforce Solutions

Workforce Solutions grew revenue 13.3% to $20.3 million, with particular new business strength in the all-in-one workforce

management suite and significant upgrades from existing customers.

New customer wins are driven by the stand-up economy, including the targeted industry verticals of hospitality, manufacturing, aged care, agriculture and logistics. Strong uptake in the mid-to-enterprise market is evident in average revenue per new customer increasing 19.7% to $39,400. Notable wins during the year included beverage manufacturer De Bortoli, transport operator Tasco Petroleum and New Zealand grower Bostock, with customers attracted by ReadyTech’s all-in-one cloud offering and strength in mission-critical payroll.

Successful integration of Open Office

The strategic acquisition of Open Office during the year established ReadyTech’s third vertical of Government & Justice. ReadyTech’s FY21 results reflect the part year contribution of Open Office, which was $4.8 million in revenue and $1.7 million in EBITDA.

Significant changes in the state of affairs

On 6 November 2020, the Group issued 13,297,872 new fully paid ordinary shares to institutional investors to raise $25,000,000 (before transaction costs).

On 11 December 2020, the Group issued 702,922 performance rights to key management personnel as part of its long term incentives ('LTI') plan.

On 23 March 2021, the Group acquired 100% of the ordinary shares in Pentagon Holdco Pty Ltd (which owns Open Office Holdings Pty Ltd and McGirr Holdings Pty Ltd as well as other subsidiaries) for total consideration of $82,919,000.

On 21 April 2021, the Group issued 1,449,184 fully paid ordinary shares as part of a share purchase plan available to eligible investors, raising $2,724,466.

There were no other significant changes in the state of affairs of the Group during the financial year.

Matters subsequent to the end of the financial year

The consequences of the Coronavirus (COVID-19) pandemic are continuing to be felt around the world, and its impact on the Group, if any, has been reflected in its published results to date. Whilst it would appear that control measures and related government policies, including the roll out of the vaccine, have started to mitigate the risks caused by COVID-19, it is not possible at this time to state that the pandemic will not subsequently impact the Group's operations going forward. The Group now has experience in the swift implementation of business continuation processes should future lockdowns of the population occur, and these processes continue to evolve to minimise any operational disruption. Management continues to monitor the situation both locally and internationally.

No other matter or circumstance has arisen since 30 June 2021 that has significantly affected, or may significantly affect the Group's operations, the results of those operations, or the Group's state of affairs in future financial years.

Likely developments and expected results of operations

Information on likely developments in the operations of the Group and the expected results of operations have not been included in this report because the Directors believe it would be likely to result in unreasonable prejudice to the Group.

Environmental regulation

The Group is not subject to any significant environmental regulation under Australian Commonwealth or State law.

ReadyTech Holdings Limited Directors' report 30 June 2021

Information on Directors

Name: Tony Faure Title: Independent Non-Executive Chairman Qualifications: Experience and expertise:

Tony holds a Bachelor of Economics (hons) from the University of Sussex. Tony is a deeply experienced business leader with a career history that includes advising some of Australia’s leading technology and digital media companies.

A former CEO of both ninemsn and HomeScreen Entertainment, Tony was the launch Managing Director of Yahoo! Australia & NZ between 1997 and 2001. He is a respected board member and has previously been a board member at several companies, including Australian Independent Business Media (publisher of Business Spectator/Eureka Report), Junkee Media and iSelect, as well as a member of the Starlight Children’s Foundation Australia’s NSW Advisory Board.

Other current directorships:

Chairman of oOh!media Ltd (ASX: OML), PredictHQ Limited, Tidal Ventures Opportunity Fund

Former directorships (last 3 years): Special responsibilities: Committee Interests in shares: 341,804 ordinary shares

Stackla, Medical Media, Uno Homeloans

Member of the Audit and Risk Committee and Remuneration and Nomination Committee

Name: Marc Washbourne Title: Chief Executive Officer Qualifications: First-class degree (History), University of Leeds, UK. Company Directors Course, AICD Experience and expertise: Marc Washbourne is a founder of the ReadyTech business and was appointed CEO in 2006. A former software developer and original architect of the JobReady software, Marc brings to ReadyTech over 20 years of experience in technology for the education, employment and government sectors. Marc now heads up a global team people committed to the innovation and better technology for over 4,600 customers. Marc couples his strong technical background with a strategic vision for ReadyTech’s Software-as-a-Service ('SaaS') products and underpinning best practice approaches shared across the platforms.

Other current directorships: Former directorships (last 3 years): Special responsibilities: Interests in shares:

Year13, Digital Skills Organisation None None 4,059,414 ordinary shares

Name: Elizabeth Crouch AM Title: Independent Non-Executive Director Qualifications: Experience and expertise:

Elizabeth holds a Bachelor of Economics and a Master of Cyber Security. She is a Fellow of the Australian Institute of Company Directors.

Elizabeth is a seasoned non-executive Director with a career that includes executive experience in both the public and private sectors in Australia. Elizabeth is the Emeritus Deputy Chancellor of Macquarie University and held previous non-executive Director roles with Chandler Macleod Group, McGrath Estate Agents and Macquarie University Hospital. She chairs the Boards of the Sydney Children’s Hospital Network, the Customer Owned Banking Association and SGS Economics and Planning and is also on the Boards of Bingo Industries and the NSW Government’s Health Infrastructure and the NSW Institute of Sport.

Other current directorships: Former directorships (last 3 years): Special responsibilities:

Non-Executive Director of Bingo Industries Ltd (ASX: BIN) None

Special responsibilities: Chairman of the Audit and Risk Committee and a member of the Remuneration and Nomination Committee Interests in shares: 31,555 ordinary shares

ANNUAL REPORT 30 JUNE 2021

ReadyTech Holdings Limited Directors' report 30 June 2021

Name: Timothy Ebbeck Title: Independent Non-Executive Director Qualifications: Timothy holds a Bachelor of Economics, is a Fellow of CPA Australia, a Fellow of the Australian Institute of Management, a Graduate Member of the Australian Institute of Company Directors, and a Member of the Australian Computer Society. Experience and expertise: Timothy has over 30 years of board, executive, and advisory experience across a breadth of industries including technology, media, consulting, and finance.

Timothy’s executive experience includes roles as Chief Executive Officer at SAP (ANZ), Chief Commercial Officer of SAP (APJ), Managing Director of Oracle (ANZ) and Chief Commercial Officer of NBN Co, as well as Chief Financial Officer of Compaq (ANZ), Unisys (ANZ) and TMP Worldwide (APJ). His board roles have included being a non-executive Director for Tymlez Group Ltd (ASX:TYM), nonexecutive Director for Xpon Technologies Ltd, Independent Chairman of the The Yield Technology Solutions, and non-executive director positions with IXUP Limited, GeoOp Limited, Nvoi Limited, CPA Australia, Nextgen Distribution, and Insite Organisation.

He is presently principal of Ebbeck TIG Consulting and advisor to Surevision Global Pty Ltd and Helio Media Pty Ltd.

Other current directorships: Tymlez Group Ltd (ASX:TYM), Xpon Technologies Ltd, The Yield Technology Solutions Pty Ltd.

Former directorships (last 3 years): IXUP Limited (ASX: IXU), GeoOp Limited (NZE: GEO), Nextgen Distribution Pty Ltd, Nvoi Limited (ASX: NVO).

Special responsibilities: Chairman of the Remuneration and Nomination Committee and a member of the Audit and Risk Committee

ReadyTech Holdings Limited Directors' report 30 June 2021

Name: Mark Summerhayes Title: Alternate Non-Executive Director to Tom Matthews Qualifications: Mark holds a Master’s Degree in Economics from the University of Cambridge. Experience and expertise: After graduating from Cambridge University in 1987, Mark spent seven years at Bain & Company advising corporates on a mix of strategy, Mergers and Acquisitions ('M&A'), and operational improvement projects. He was based in London, Munich and Sydney. Mark led assignments for leading European players in the Fast-Moving Consumer Goods ('FMCG'), financial services, telecoms, healthcare and industrial sectors. In 1996 Mark co-founded SB Capital Partners, a private equity partnership, which was backed by Bain Capital, one of the leading US private equity firms. On the back of the success of this venture, Bain Capital subsequently launched its first dedicated European buy-out fund. In parallel to this activity, Mark assisted a wealthy Norwegian family build its own portfolio of private equity investments in both early and late stage situations and private equity funds. In 2001 Mark joined Smedvig Capital full time and as a Managing Director was one of the senior executives responsible for investing, managing and reporting on a diversified A$350 million private equity portfolio. Mark moved to Sydney in 2005 to join Pemba Capital Partners and co-led the spin out of the captive fund from Pemba in 2009 and then more recently co-led the $650 million fundraising (backed by HarbourVest and a group of other global and local LPs) which established the firm as one of the leaders in its segment in Australia and NZ. Other current directorships: Chairman of the Board at Coverforce and a Director of Ausreo, Instant Access, InteriorCo and ONCALL. Former directorships (last 3 years): None Special responsibilities: None Interests in shares: 519,000 ordinary shares

Interests in shares: 17,273 ordinary shares

Company secretaries

Name: Tom Matthews Title: Non-Executive Director Qualifications: Tom is a CFA charter holder, a member of the Sydney CFA Society and also has a Masters of Applied Finance and Investment from the Financial Services Institute of Australasia. In 2001, Tom was awarded a Bachelor of Sciences honours degree in Management Sciences from the London School of Economics.

Experience and expertise: Tom has over 18 years of experience in private equity, principal investment, investment banking and middle market advisory and valuations in both Australia and the UK.

A partner at leading private equity manager Pemba, Tom has led a number of transactions across Pemba’s areas of focus since 2015, including investments into HR3, JobReady, Marque Group, Open Office, ONCALL and RxMx. Tom has held a variety of senior roles prior to joining Pemba, including at private equity firm Sovereign Capital Partners in the UK, the Investment Banking Group of Macquarie Bank, and Deloitte Corporate Finance in both Sydney and London.

Other current directorships: Marque Group, ONCALL, RxMx Former directorships (last 3 years): None Special responsibilities: None Interests in shares: 34,590,926 ordinary shares

Marque Group, ONCALL, RxMx

Nimesh Shah and Melissa Jones are joint company secretaries.

Nimesh Shah has been the Chief Financial Officer of ReadyTech since August 2017 and was appointed Company Secretary on 28 March 2019. Nimesh has over 20 years’ experience as an executive in technology and online digital industries, utilising experience gained working across Australia and many parts of Asia. Nimesh was Global CFO for pioneering social networking site, Friendster, Inc. Nimesh was also Finance Director at Fairfax Digital Australia & New Zealand Pty Limited for seven years, playing an instrumental role in navigating the company into the world of online publishing and transaction businesses. Nimesh was also the Chief Financial Officer and Company Secretary of ASX-listed iSentia Group Limited, a position which he held until July 2017, where he played an instrumental role in transitioning iSentia to become a leading media intelligence organisation in Asia Pacific. Nimesh holds an MBA from the Australian Graduate School of Management and a Bachelor of Commerce with Merit from the University of New South Wales. Nimesh is also a member of Chartered Accountants Australia and New Zealand.

Melissa Jones is the General Manager of Company Matters, Link Group’s governance and company secretarial team. Melissa has over 15 years’ experience as a lawyer, company secretary and governance professional. Melissa is admitted as a Solicitor of the Supreme Court of New South Wales and holds a Bachelor of Laws (Honours).

Meetings of Directors

The number of meetings of the Company's Board of Directors ('the Board') held during the period ended 30 June 2021, and the number of meetings attended by each Director were:

				Nomination and	Nomination and
	Full	Board		Remuneration Committee		Audit and Risk	Committee
	Attended	Held		Attended	Held	Attended	Held
Tony Faure	16		16	2	2	4	4
Marc Washbourne*	16		16	2	2	4	4
Elizabeth Crouch	16		16	2	2	4	4
Timothy Ebbeck	16		16	2	2	4	4
Tom Matthews*	16		16	2	2	4	4
Mark Summerhayes	13		16	-	-	-	-

ANNUAL REPORT 30 JUNE 2021

ReadyTech Holdings Limited Directors' report 30 June 2021

ReadyTech Holdings Limited Directors' report 30 June 2021

Held: represents the number of meetings held during the time the Director held office.

Marc Washbourne and Tom Matthews attended four Audit and Risk Committee meetings and two Nomination and Remuneration Committee meetings as observers

Remuneration report (audited)

The remuneration report details the key management personnel remuneration arrangements for the Group, in accordance with the requirements of the Corporations Act 2001 and its Regulations.

Key management personnel ('KMP') are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including all Directors.

The remuneration report is set out under the following main headings:

Non-executive Directors' remuneration

Fees and payments to non-executive Directors reflect the demands and responsibilities of their role. Non-executive Directors' fees and payments are reviewed annually by the Nomination and Remuneration Committee. The Nomination and Remuneration Committee may, from time to time, receive advice from independent remuneration consultants to ensure non-executive Directors' fees and payments are appropriate and in line with the market. The Chairman's fees are determined independently to the fees of other non-executive Directors based on comparative roles in the external market. The Chairman is not present at any discussions relating to the determination of his own remuneration. Non-executive Directors are not entitled to participate in any employee incentive scheme established by the Company.

ASX listing rules require the aggregate non-executive Directors' remuneration be determined periodically by a general meeting. The most recent determination was disclosed in the Prospectus dated 29 March 2019, where the maximum annual aggregate remuneration is $750,000. For the financial year ended 30 June 2021, the fees payable to the current non-executive Directors (whether in cash or securities) will not exceed $600,000 in aggregate.

Principles used to determine the nature and amount of remuneration
Details of remuneration
Service agreements
Share-based compensation

The annual non-executive Directors’ fees currently agreed to be paid by the Company are inclusive of superannuation and are $150,000 to the Chairman and $70,000 (inclusive of superannuation) to each of the other Independent non-executive Directors and an additional fee of $10,000 for chairing board sub-committees.

Additional information
Additional disclosures relating to key management personnel

Principles used to determine the nature and amount of remuneration

The objective of the Group's executive reward framework is to ensure reward for performance is competitive and appropriate for the results delivered. The framework aligns executive reward with the achievement of strategic objectives and the creation of value for shareholders, and it is considered to conform to the market best practice for the delivery of reward. The Board of Directors ('the Board') ensures that executive reward satisfies the following key criteria for good governance practices:

Any non-executive Director who devotes special attention to the business of the Group or who performs services which, in the opinion of the Remuneration Committee, are outside the scope of ordinary duties of a Director, may be remunerated for the services (as determined by the Board) out of the funds of the Company. There are no retirement benefit schemes for Directors, other than statutory superannuation contributions.

Executive remuneration

The Group aims to reward executives based on their position and responsibility, with a level and mix of remuneration which has both fixed and variable components.

competitiveness and reasonableness
acceptability to shareholders
performance linkage / alignment of executive compensation
transparency

The executive remuneration and reward framework has four components:

(i) fixed remuneration consisting of base pay, non-monetary benefits and other remuneration such as superannuation; (ii) short-term incentives; and
(iii) long-term incentives.

The Nomination and Remuneration Committee is responsible for determining and reviewing remuneration arrangements for its Directors and executives. The performance of the Group depends on the quality of its Directors and executives. The remuneration philosophy is to attract, motivate and retain high performance and high quality personnel.

The combination of these comprises the executive's total remuneration.

(i) Fixed remuneration

The Nomination and Remuneration Committee has structured an executive remuneration framework that is market competitive and complementary to the incentives strategy of the Group.

The reward framework is designed to align executive reward to shareholders' interests. The Board has considered that it should seek to enhance shareholders' interests by:

having economic profit as a core component of plan design;
focusing on sustained growth in shareholder wealth, consisting of dividends and growth in share price, and delivering constant or increasing return on assets as well as focusing the executive on key non-financial drivers of value; and
● attracting and retaining high calibre executives.

Additionally, the reward framework seeks to enhance executives' interests by:

rewarding capability and experience;
reflecting competitive reward for contribution to growth in shareholder wealth; and
providing a clear structure for earning rewards.

In accordance with best practice corporate governance, the structure of non-executive Director and executive Director remuneration is separate.

Fixed remuneration, consisting of base salary, superannuation and non-monetary benefits, are reviewed annually by the Nomination and Remuneration Committee based on individual and business unit performance, the overall performance of the Group and comparable market remuneration.

Executives may receive their fixed remuneration in the form of cash or other fringe benefits (for example motor vehicle benefits) where it does not create any additional costs to the Group and provides additional value to the executive.

(ii) Short-term incentives

The Group currently provides certain members of its senior management team with annual short-term incentives ('STI') which become payable upon satisfaction of specified performance criteria. These incentives are set out in each KMP service agreement. Payment of STI's in any given year will be determined by the Company and will be conditional upon achievement of:

performance criteria tailored to each respective role (if any); and
the Group’s financial performance against criteria set by the Nomination and Remuneration Committee.

No STI will be payable if the performance criteria are not met by the relevant KMP with respect to his or her STI award.

The STI program is designed to align the targets of the business units with the performance hurdles of executives. STI payments are granted to executives based on specific annual targets and key performance indicators ('KPI's') being achieved. KPI's include profit contribution, customer satisfaction, leadership contribution and product management.

From time to time the Nomination and Remuneration Committee may, at their discretion, award bonuses to certain executives in recognition of work performed which are not linked to any specified performance criteria.

For KMP, the STI is maximum 40% of base salary with 70% based on Financial KPI and 30% on Personal KPI's.

ANNUAL REPORT 30 JUNE 2021

ReadyTech Holdings Limited Directors' report 30 June 2021

The Financials KPIs are based on achieving Group revenue and Group net profit after tax ('NPAT') targets.

(iii) Long-term incentives

The long-term incentives ('LTI') include long service leave and share-based payments. The Group implemented a LTI plan during the financial year ended 31 June 2021 where performance rights are awarded to executives over a period of three years based on long-term incentive measures. These include earnings per share ('EPS') targets and a total shareholder return ('TSR') targets relative to the S&P/ASX All Tech Index.

Group performance and link to remuneration

Remuneration for certain individuals is directly linked to the performance of the Group. A portion of cash bonus and incentive payments are dependent on defined earnings per share targets being met. The remaining portion of the cash bonus and incentive payments are at the discretion of the Nomination and Remuneration Committee.

Refer to the section 'Additional information' below for details of the earnings and total shareholders return for the last five years.

The Nomination and Remuneration Committee is of the opinion that the continued improved results can be attributed in part to the adoption of performance based compensation and is satisfied that this improvement will continue to increase shareholder wealth if maintained over the coming years.

Refer to the section 'Additional information' below for details of the earnings and total shareholders return for the last 4 years.

Use of remuneration consultants

The Group did not engage any remuneration consultants during the years ended 30 June 2021 and 30 June 2020.

Details of remuneration

Amounts of remuneration

Details of the remuneration of key management personnel of the Group are set out in the following tables.

The key management personnel of the Group consisted of the following Directors of ReadyTech Holdings Limited:

Tony Faure - Non-Executive Chairman
Marc Washbourne - Chief Executive Officer
Elizabeth Crouch - Non-Executive Director
Timothy Ebbeck - Non-Executive Director
Tom Matthews - Non-Executive Director
Mark Summerhayes - Alternate Non-Executive Director to Tom Matthews

And the following person:

Nimesh Shah - Chief Financial Officer

ANNUAL REPORT 30 JUNE 2021

ReadyTech Holdings Limited Directors' report 30 June 2021

Short-term benefits Post- employment benefits Long-term benefits Share- based payments Cash salary Cash Annual Super- Long service Equity- and fees bonus leave annuation leave settled Total 2021 $ $ $ $ $ $ $ Non-Executive Directors: Tony Faure 150,000 - - - - - 150,000 Elizabeth Crouch 69,996 - - - - - 69,996 Timothy Ebbeck 69,996 - - - - - 69,996 Executive Directors: Marc Washbourne 310,000 101,680 10,243 21,694 3,255 97,342 544,214 Other Key Management Personnel: Nimesh Shah 300,000 98,400 7,958 21,694 2,481 94,201 524,734 899,992 200,080 18,201 43,388 5,736 191,543 1,358,940 * Marc Washbourne and Nimesh Shah received cash bonuses approved by the Nomination and Remuneration Committee based on financial and personal KPIs. The amount presented excludes expense reimbursements of $259. Short-term benefits Post- employment benefits Long-term benefits Share- based payments Cash salary Cash Annual Super- Long service Equity- and fees bonus leave annuation leave settled Total 2020 $ $ $ $ $ $ $ Non-Executive Directors: Tony Faure 150,000 - - - - - 150,000 Elizabeth Crouch 69,996 - - - - - 69,996 Timothy Ebbeck 69,996 - - - - - 69,996 Executive Directors: Marc Washbourne 310,000 24,800 (719) 21,003 3,112 - 358,196 Other Key Management Personnel: Nimesh Shah 287,500 24,000 1,670 21,003 1,350 - 335,523 887,492 48,800 951 42,006 4,462 - 983,711	Short-term benefits Cash salary Cash Annual and fees bonus leave $ $ $ 150,000 - - 69,996 - - 69,996 - - 310,000 101,680 10,243 300,000 98,400 7,958	Short-term benefits Cash salary Cash Annual and fees bonus leave $ $ $ 150,000 - - 69,996 - - 69,996 - - 310,000 101,680 10,243 300,000 98,400 7,958	Short-term benefits Cash salary Cash Annual and fees bonus leave $ $ $ 150,000 - - 69,996 - - 69,996 - - 310,000 101,680 10,243 300,000 98,400 7,958	Post- employment benefits Super- annuation $ - - - 21,694 21,694	Long-term benefits Long service leave $ - - - 3,255 2,481	Share- based payments Equity- settled $ - - - 97,342 94,201	Total $ 150,000 69,996 69,996 544,214 524,734
	899,992	200,080	18,201	43,388	5,736	191,543	1,358,940
	887,492	48,800	951	42,006	4,462	-	983,711

Marc Washbourne and Nimesh Shah received cash bonuses approved by the Nomination and Remuneration Committee based on financial and personal KPIs.
Marc Washbourne and Nimesh Shah received cash bonuses which were approved by the Nomination and Remuneration Committee and were not linked to any performance criteria.
** The amount presented excludes expense reimbursements of $42.

ANNUAL REPORT 30 JUNE 2021

ReadyTech Holdings Limited Directors' report 30 June 2021

The proportion of remuneration linked to performance and the fixed proportion are as follows:

	Fixed remuneration	Fixed remuneration	At risk - STI	At risk - STI		At risk - LTI	At risk - LTI
Name	2021	2020	2021	2020		2021	2020
Non-Executive Directors:
Tony Faure	100%	100%		-	-		-	-
Elizabeth Crouch	100%	100%		-	-		-	-
Timothy Ebbeck	100%	100%		-	-		-	-
Executive Directors:
Marc Washbourne	62%	93%	20%		7%	18%		-
Other Key Management
Personnel:
Nimesh Shah	64%	93%	18%		7%	18%		-

The proportion of the cash bonus paid/payable or forfeited is as follows:

	Cash bonus	paid/payable	Cash	bonus forfeited
Name	2021	2020	2021	2020
Executive Directors:
Marc Washbourne	100%	100%		-	-
Other Key Management Personnel:
Nimesh Shah	100%	100%		-	-

ReadyTech Holdings Limited Directors' report

30 June 2021

There were no options over ordinary shares granted to or vested by Directors and other key management personnel as part of compensation during the year ended 30 June 2021.

Performance rights

The terms and conditions of each grant of performance rights over ordinary shares affecting remuneration of Directors and other key management personnel in this financial year or future reporting years are as follows:

			Fair value
	Vesting date and		per right
Grant date	exercisable date	Expiry date	at grant date
11/12/2020	30/06/2022	30/06/2022	$1.790
11/12/2020	30/06/2023	30/06/2023	$1.800

Performance rights are subject to an earnings per share ('EPS') hurdle (50% of grant value) and a relative total shareholder return ('TSR') hurdle which is compared against the S&P/ASX All Tech Index (50% of grant value).

Performance rights will be evaluated in two tranches. The first tranche, equivalent to 50% of the total grant value, will be evaluated two years from 1 July 2020 ('the beginning of the performance period'). The second tranche, also equivalent to 50% of the total grant value, will be evaluated three years from the beginning of the performance period.

Details of the performance hurdles are as follows:

EPS - if the compound annual growth rate of EPS is less than the target of 9%, no vesting will occur. If the target is met, 50% of rights will vest. In the event that the compound annual growth rate is between 10-14%, vesting will be pro-rated between 50-100%.
TSR - if the relative TSR of the company ranks at or above the 75th percentile, 100% of the rights will vest. In the event that the company ranks at the 50th percentile, 50% of the rights will vest. For any achievement between the 50th and 75th percentile, vesting will be pro-rated between 50-100%.

Service agreements

Remuneration and other terms of employment for key management personnel are formalised in service agreements. Details of these agreements are as follows:

The performance rights are not subject to an exercise price.

Performance rights granted carry no dividend or voting rights.

Name: Marc Washbourne Title: Chief Executive Officer Agreement commenced: 13 December 2016 Term of agreement: No fixed term Details: Base salary of $375,000 and 6 month notice period. Mr Washbourne’s employment contract provides for short term incentives. Upon the termination of Mr Washbourne’s employment contract, Mr Washbourne will be subject to post employment restraints for up to 12 months.

Name: Nimesh Shah Title: Chief Financial Officer Agreement commenced: 7 August 2017 Term of agreement: No fixed term Details: Base salary of $350,000 and 6 month notice period. Mr Shah’s employment contract provides for short term incentives. Upon the termination of Mr Shah's employment contract, Mr Shah will be subject to post employment restraints for up to 12 months.

Key management personnel have no entitlement to termination payments in the event of removal for misconduct.

Additional information

The earnings of the Group for the four years to 30 June 2021 are summarised below:

	2021	2020	2019	2018
	$'000	$'000	$'000	$'000
Sales revenue	50,027	39,254	32,711	25,626
Adjusted EBITDA*	18,884	14,954	13,013	8,668
Profit/(loss) after income tax	2,155	3,943	(1,490)	(5,201)

Earnings before interest, tax, depreciation, amortisation and other non-operating items.

The factors that are considered to affect total shareholders return ('TSR') are summarised below:

	2021	2020	2019	2018*
Share price at financial year end ($)	2.40	1.40	1.54	-
Basic earnings per share (cents per share)	2.37	4.93	(2.15)	(8.63)

Share-based compensation

Issue of shares

No share price as at the 30 June 2018 as the Company was not listed on the Australian Securities Exchange ('ASX') until 16 April 2019.

There were no shares issued to Directors and other key management personnel as part of compensation during the year ended 30 June 2021.

Options

There were no options over ordinary shares issued to Directors and other key management personnel as part of compensation that were outstanding as at 30 June 2021.

ANNUAL REPORT 30 JUNE 2021

ReadyTech Holdings Limited Directors' report 30 June 2021

Additional disclosures relating to key management personnel

Shareholding

The number of shares in the Company held during the financial year by each Director and other members of key management personnel of the Group, including their personally related parties, is set out below:

Ordinary shares Tony Faure Marc Washbourne Elizabeth Crouch Timothy Ebbeck Tom Matthews Mark Summerhayes Nimesh Shah	Balance at the start of the year 262,113 4,008,414 9,934 6,623 34,565,926 - 1,290,432	Received as part of remuneration - - - - - - -	Additions 79,691 51,000 21,621 10,650 25,000 519,000 77,729	Disposals/ other - - - - - - -	Balance at the end of the year 341,804 4,059,414 31,555 17,273 34,590,926 519,000 1,368,161
	40,143,442	-	784,691	-	40,928,133

ReadyTech Holdings Limited Directors' report 30 June 2021

Shares issued on the exercise of options

There were no ordinary shares of ReadyTech Holdings Limited issued on the exercise of options during the year ended 30 June 2021 and up to the date of this report.

Shares issued on the exercise of performance rights

There were no ordinary shares of ReadyTech Holdings Limited issued on the exercise of performance rights during the year ended 30 June 2021 and up to the date of this report.

Indemnity and insurance of officers

The Company has indemnified the Directors and executives of the Company for costs incurred, in their capacity as a Director or executive, for which they may be held personally liable, except where there is a lack of good faith.

During the financial year, the Company paid a premium in respect of a contract to insure the Directors and executives of the Company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium.

Indemnity and insurance of auditor

The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the Company or any related entity against a liability incurred by the auditor.

Performance rights holding

The number of performance rights over ordinary shares in the Company held during the financial year by each Director and other members of key management personnel of the Group, including their personally related parties, is set out below:

Performance rights over ordinary shares Marc Washbourne Nimesh Shah	Balance at the start of the year - -	Granted 173,630 168,029	Vested - -	Expired/ forfeited/ other - -	Balance at the end of the year 173,630 168,029
	-	341,659	-	-	341,659

During the financial year, the Company has not paid a premium in respect of a contract to insure the auditor of the Company or any related entity.

Proceedings on behalf of the Company

No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings.

Non-audit services

Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the auditor are outlined in note 29 to the financial statements.

Other transactions with key management personnel and their related parties

There was no transaction with key management personnel and their related parties during the financial year ended 30 June 2021 (2020: none).

The Directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or by another person or firm on the auditor's behalf), is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001.

This concludes the remuneration report, which has been audited.

Shares under option

There were no unissued ordinary shares of ReadyTech Holdings Limited under option outstanding at the date of this report.

Shares under performance rights

Unissued ordinary shares of ReadyTech Holdings Limited under performance rights at the date of this report are as follows:

Shares under performance rights Unissued ordinary shares of ReadyTech Holdings Limited under performance rights at the date of this follows:	report are as
Grant date Expiry date 11/12/2020 30/06/2022 11/12/2020 30/06/2023	Number under rights 351,462 351,460
	702,922

The Directors are of the opinion that the services as disclosed in note 29 to the financial statements do not compromise the external auditor's independence requirements of the Corporations Act 2001 for the following reasons:

all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity of the auditor; and
none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants (including Independence Standards) issued by the Accounting Professional and Ethical Standards Board, including reviewing or auditing the auditor's own work, acting in a management or decision-making capacity for the Company, acting as advocate for the Company or jointly sharing economic risks and rewards.

Officers of the Company who are former partners of Deloitte Touche Tohmatsu

There are no officers of the Company who are former partners of Deloitte Touche Tohmatsu.

Rounding of amounts

The Company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian Securities and Investments Commission, relating to 'rounding-off'. Amounts in this report have been rounded off in accordance with that Corporations Instrument to the nearest thousand dollars, or in certain cases, the nearest dollar.

The performance rights are not subject to an exercise price.

Auditor's independence declaration

No person entitled to exercise the performance rights had or has any right by virtue of the performance right to participate in any share issue of the Company or of any other body corporate.

A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out immediately after this Directors' report.

ANNUAL REPORT 30 JUNE 2021

ReadyTech Holdings Limited Directors' report 30 June 2021

This report is made in accordance with a resolution of Directors, pursuant to section 298(2)(a) of the Corporations Act 2001.

ANNUAL REPORT

30 JUNE 2021

Deloitte Touche Tohmatsu ABN 74 490 121 060 Grosvenor Place 225 George Street Sydney, NSW, 2000 Australia

Phone: +61 2 9322 7000 www.deloitte.com.au

On behalf of the Directors

==> picture [57 x 26] intentionally omitted <==

_________Tony Faure Chairman

24 August 2021 Sydney

The Directors

ReadyTech Holdings Limited Level 1

35 Saunders Street Pyrmont NSW 2009

24 August 2021

Dear Directors

Auditor’s Independence Declaration to ReadyTech Holdings Limited

In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of independence to the directors of ReadyTech Holdings Limited.

As lead audit partner for the audit of the financial report of ReadyTech Holdings Limited for the year ended 30 June 2021, I declare that to the best of my knowledge and belief, there have been no contraventions of:

(i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(ii) any applicable code of professional conduct in relation to the audit.

Yours faithfully

==> picture [129 x 16] intentionally omitted <==

DELOITTE TOUCHE TOHMATSU

==> picture [82 x 38] intentionally omitted <==

Joshua Tanchel Partner Chartered Accountants

Liability limited by a scheme approved under Professional Standards Legislation. Member of Deloitte Asia Pacific Limited and the Deloitte organisation.

ANNUAL REPORT 30 JUNE 2021

ReadyTech Holdings Limited Statement of profit or loss and other comprehensive income For the year ended 30 June 2021

Note Revenue from contracts with customers 5 Interest revenue calculated using the effective interest method Expenses Hosting and other direct costs Employee benefits expense Depreciation and amortisation expense Advertising and marketing expenses Consultancy and professional expenses Administration expenses Communication and IT expenses Occupancy costs Revaluation of contingent consideration Other expenses Finance costs 6 Profit before income tax expense Income tax expense 7 Profit after income tax expense for the year attributable to the owners of ReadyTech Holdings Limited Other comprehensive income Items that may be reclassified subsequently to profit or loss Foreign currency translation Other comprehensive income for the year, net of tax Total comprehensive income for the year attributable to the owners of ReadyTech Holdings Limited Basic earnings per share 41 Diluted earnings per share 41	Consolidated 2021 2020 $'000 $'000 50,027 39,254 3 14 (3,473) (2,836) (23,711) (17,349) (11,057) (9,375) (437) (467) (2,800) (800) (710) (591) (1,343) (1,047) (435) (365) (1,840) - (477) (845) (963) (920)	Consolidated 2021 2020 $'000 $'000 50,027 39,254 3 14 (3,473) (2,836) (23,711) (17,349) (11,057) (9,375) (437) (467) (2,800) (800) (710) (591) (1,343) (1,047) (435) (365) (1,840) - (477) (845) (963) (920)
	2,784 (629)	4,673 (730)
	2,155 (32)	3,943 (86)
	(32)	(86)
	2,123	3,857
	Cents 2.37 2.34	Cents 4.93 4.93

ReadyTech Holdings Limited Statement of financial position As at 30 June 2021

Note Assets Current assets Cash and cash equivalents 8 Trade and other receivables 9 Contract assets 10 Prepayments Total current assets Non-current assets Property, plant and equipment 11 Intangibles 12 Right-of-use assets 13 Contract costs 14 Deferred tax 7 Total non-current assets Total assets Liabilities Current liabilities Trade and other payables 15 Contract liabilities 16 Lease liabilities 17 Income tax payable 7 Employee benefits Contingent consideration 18 Total current liabilities Non-current liabilities Contract liabilities 19 Borrowings 20 Provisions 21 Lease liabilities 23 Employee benefits Contingent consideration 22 Total non-current liabilities Total liabilities Net assets Equity Issued capital 24 Reserves 25 Accumulated losses Total equity	Consolidated 2021 2020 $'000 $'000 11,995 9,214 7,141 4,536 1,445 - 1,024 720 21,605 14,470 928 1,016 140,698 62,607 2,404 2,818 1,362 540 2,593 4,399 147,985 71,380 169,590 85,850 7,058 3,890 16,725 11,741 996 828 2,487 1,709 4,803 2,603 12,488 4,096 44,557 24,867 549 214 30,917 25,000 62 61 1,654 2,310 433 331 16,320 - 49,935 27,916 94,492 52,783 75,098 33,067 159,095 119,581 (82,668) (83,030) (1,329) (3,484) 75,098 33,067
	21,605
	928 140,698 2,404 1,362 2,593
	147,985
	169,590
	7,058 16,725 996 2,487 4,803 12,488
	44,557
	549 30,917 62 1,654 433 16,320
	49,935
	94,492
	75,098
	159,095 (82,668) (1,329)
	75,098

The above statement of profit or loss and other comprehensive income should be read in conjunction with the

The above statement of financial position should be read in conjunction with the accompanying notes

accompanying notes

ANNUAL REPORT 30 JUNE 2021

ReadyTech Holdings Limited Statement of changes in equity For the year ended 30 June 2021


Consolidated Balance at 1 July 2019 Profit after income tax expense for the year Other comprehensive income for the year, net of tax Total comprehensive income for the year Balance at 30 June 2020 Consolidated Balance at 1 July 2020 Profit after income tax expense for the year Other comprehensive income for the year, net of tax Total comprehensive income for the year Transactions with owners in their capacity as owners: Contributions of equity, net of transaction costs (note 24) Share-based payments (note 38) Balance at 30 June 2021	Issued capital $'000 119,581 - -	Reserves $'000 (82,944) - (86)	Accumulated losses $'000 (7,427) 3,943 -	Total equity $'000 29,210 3,943 (86)
	-	(86)	3,943	3,857
	119,581	(83,030)	(3,484)	33,067
	Issued capital $'000 119,581 - -	Reserves $'000 (83,030) - (32)	Accumulated losses $'000 (3,484) 2,155 -	Total equity $'000 33,067 2,155 (32)
	- 39,514 -	(32) - 394	2,155 - -	2,123 39,514 394
	159,095	(82,668)	(1,329)	75,098

ReadyTech Holdings Limited Statement of cash flows For the year ended 30 June 2021

Note Cash flows from operating activities Receipts from customers (inclusive of GST) Payments to suppliers and employees (inclusive of GST) Interest received Interest and other finance costs paid Payment of acquisition costs Income taxes paid Net cash from operating activities 37 Cash flows from investing activities Payment for purchase of subsidiaries, net of cash acquired 35 Payment of contingent consideration 28 Final payments for prior period's subsidiary acquisition Payments for property, plant and equipment 11 Payments for intangibles 12 Proceeds from disposal of property, plant and equipment Net cash used in investing activities Cash flows from financing activities Proceeds from issue of shares 24 Proceeds from borrowings Share issue transaction costs Repayment of borrowings Repayment of lease liabilities Payment of bank guarantee Net cash from financing activities Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the financial year Cash and cash equivalents at the end of the financial year 8	Consolidated 2021 2020 $'000 $'000 59,748 43,767 (34,198) (27,587)	Consolidated 2021 2020 $'000 $'000 59,748 43,767 (34,198) (27,587)
	25,550 3 (963) (1,673) (3,421)	16,180 14 (920) (312) (1,211)
	19,496	13,751
	(40,301) - (2,408) (395) (5,739) 4	(5,426) (2,119) (756) (639) (4,329) -
	(48,839)	(13,269)
	27,724 15,000 (564) (9,000) (1,036) -	- 6,000 - (2,500) (612) (478)
	32,124	2,410
	2,781 9,214	2,892 6,322
	11,995	9,214

The above statement of cash flows should be read in conjunction with the accompanying notes

The above statement of changes in equity should be read in conjunction with the accompanying notes

ANNUAL REPORT 30 JUNE 2021

ReadyTech Holdings Limited Notes to the financial statements 30 June 2021

Note 1. General information

The financial statements cover ReadyTech Holdings Limited as a Group consisting of ReadyTech Holdings Limited ('Company or 'parent entity') and the entities it controlled at the end of, or during, the period (collectively referred to in these financial statements as the 'Group'). The financial statements are presented in Australian dollars, which is ReadyTech Holdings Limited's functional and presentation currency.

ReadyTech Holdings Limited is a listed public Company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is:

ReadyTech Holdings Limited Notes to the financial statements

30 June 2021

Note 2. Significant accounting policies (continued)

Historical cost convention

The financial statements have been prepared under the historical cost convention.

Critical accounting estimates

The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 3.

Level 1, 35 Saunders St

Pyrmont NSW 2009

Australia

A description of the nature of the Group's operations and its principal activities are included in the Directors' report, which is not part of the financial statements.

The financial statements were authorised for issue, in accordance with a resolution of Directors, on 24 August 2021. The Directors have the power to amend and reissue the financial statements.

Note 2. Significant accounting policies

Corporate/group reorganisation (prior year)

ReadyTech Holdings Limited was incorporated on 8 March 2019. On 16 April 2019 the shareholders of the Company undertook a corporate reorganisation, in which ReadyTech Holdings Limited acquired ReadyTech HoldCo Pty Limited and its subsidiaries ('existing Merged Group').

This corporate reorganisation did not represent a business combination in accordance with AASB 3 ‘Business Combination’. Instead the appropriate accounting treatment for recognising the new group structure is on the basis that the transaction is a form of capital reconstruction and group reorganisation. Accordingly the financial statements are a continuation of the existing Merged Group and as such:

The assets and liabilities recognised and measured are at carrying amounts of the existing Merged Group rather than at fair value
Shareholders' equity has come across at book value as at the date of the reorganisation;

The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

New or amended Accounting Standards and Interpretations adopted

The Group has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period.

Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.

Details of new Accounting Standards and Interpretations adopted during the year ended 30 June 2021 which are most relevant to the Group are provided below:

Conceptual Framework for Financial Reporting (Conceptual Framework)

The Group has adopted the revised Conceptual Framework from 1 January 2020. The Conceptual Framework contains new definition and recognition criteria as well as new guidance on measurement that affects several Accounting Standards, but it has not had a material impact on the Group's financial statements.

Deficiency of net current assets

The statement of financial position has a deficiency of net current assets of $22,952,000 (2020: $10,397,000) at the reporting date. The deficiency is mainly attributable to (i) contract liabilities of $16,725,000 disclosed in current liabilities, contract liabilities represents upfront payments received from customers on signed sales contracts which will not result in an outflow of cash within the next twelve months; (ii) an amount of $4,803,000 in relation to employee benefits is included in current liabilities, the majority of this liability is not expected to be settled in cash within the next twelve months.

In addition, there is a contingent consideration liability of $12,488,000 which is payable only if recurring revenue targets are met, consequently, this payable will be partially funded by the incremental operating cash flow to be generated from acquired businesses.

The Directors are satisfied that the Group will be able to meet its working capital requirements through the normal cyclical nature of receipts and payments and budgeted cash flows generated from operations.

Basis of preparation

These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') and the Corporations Act 2001, as appropriate for for-profit oriented entities. These financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board ('IASB').

No 'new' goodwill has been recognised as a result of the combination; and
The comparatives presented are those of the existing Merged Group.

Parent entity information

In accordance with the Corporations Act 2001, these financial statements present the results of the Group only. Supplementary information about the parent entity is disclosed in note 33.

Principles of consolidation

The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of ReadyTech Holdings Limited as at 30 June 2020 and the results of all subsidiaries for the period then ended.

Subsidiaries are all those entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.

Intercompany transactions, balances and unrealised gains on transactions between entities in the Group are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest, without the loss of control, is accounted for as an equity transaction, where the difference between the consideration transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity attributable to the parent.

Where the Group loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and noncontrolling interest in the subsidiary together with any cumulative translation differences recognised in equity. The Group recognises the fair value of the consideration received and the fair value of any investment retained together with any gain or loss in profit or loss.

Operating segments

Operating segments are presented using the 'management approach', where the information presented is on the same basis as the internal reports provided to the Chief Operating Decision Makers ('CODM'). The CODM is responsible for the allocation of resources to operating segments and assessing their performance.

ANNUAL REPORT 30 JUNE 2021

ReadyTech Holdings Limited Notes to the financial statements 30 June 2021

Note 2. Significant accounting policies (continued)

Foreign currency translation

The financial statements are presented in Australian dollars, which is ReadyTech Holdings Limited's functional and presentation currency.

Foreign currency transactions

Foreign currency transactions are translated into the entity's functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.

Foreign operations

The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the reporting date. The revenues and expenses of foreign operations are translated into Australian dollars using the average exchange rates, which approximate the rates at the dates of the transactions, for the period. All resulting foreign exchange differences are recognised in other comprehensive income through the foreign currency reserve in equity.

The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is disposed of.

Revenue

The principal activities of the Group during the year consisted of:

Education: provider of student management system to vocational education and training, international and English Language and higher education providers; and
Workforce Solutions: provider of payroll and employee management solutions from cloud-based technology to outsourcing of human resource function.
Government and Justice - provider of case management software as a service solution to local governments, state governments and justice departments.

ReadyTech Holdings Limited Notes to the financial statements 30 June 2021

Note 2. Significant accounting policies (continued)

Revenue from contracts with customers

The Group provides cloud based hosted student management systems software, and employee and payroll management software to its customers. Customers gain access to the use of the hosted Intellectual Property Software via licence subscription fees, which provide them access to the software over the licence fee term. The Group can provide subscription licences, hosting and implementation services within these contracts. The sale of software subscription licenses in conjunction with integration services (including hosting) is treated as a single performance obligation (‘software solution services’) as the licence, implementation and hosting are integrated services promised in the contract into an integrated bundle of services that represent the combined output for which the customer has contracted.

Revenue is recognised on the basis of stage of completion. ReadyTech determines stage of completion based on input method (time) under AASB 15. Fees billed in advance are recognised in the statement of financial position as contract liabilities and brought to account when the performance obligation has been satisfied.

(i) Off premise licences, implementation and hosting

ReadyTech has assessed and concluded that the performance obligations for the sale of software subscription licences, related installation and hosting services are not distinct. The Company assessed that the promise to the customer is provision of the software subscription licence that is integrated to the customers’ network and hosted by ReadyTech. Hence, under AASB 15, ReadyTech considers the sale of subscription licence, related installation and hosting service as a single performance obligation as the subscription licence, implementation and hosting are integrated services promised in the contract into an integrated bundle of services that represent the combined output for which the customer has contracted. The related installation and hosting should be bundled as one performance obligation and recognised over the period of the contract.

(ii) On-premise licences

Certain products are available to be purchased by the customer which allows immediate download. These products are not tailored for customer use throughout the duration of the contact and no maintenance / training services are included. There is optionality for customers to purchase additional support and maintenance. This is accounted for as a separate performance obligation and revenue is recognised over time.

Subscription, implementation and hosting revenue

Subscription, implementation and hosting revenue includes sales from cloud based solutions that provide customers with software, services, platforms and content such as Aussiepay, ePayroll, JobReady.Plus, JobReady.Live, HR3 Payroll, HR3 Human Resources, VETtrak Student Portal, VETtrak Trainer Portal, Zambion, HR3 Plus and Myprofiling. Subscription based revenue can either be hosted on the Group’s servers, or on premise, available to be purchased by the customer which allows immediate download.

Accordingly, the sale of a licence represents a right of use license that a customer obtains of an entity’s intellectual property, and revenue is recognised when the license transfers to the customer. For on premise licenses, this is assessed to be at the point of sale.

(iii) Training, consultancy and other revenue

Training, consultancy and other revenue is earned as the services are delivered as defined in the contract.

Training revenue

Training revenue includes assessment and behavioural intervention programs that deliver outcomes for government policy objectives – particularly with adult, youth and disabled unemployed initiatives.

Revenue Recognition

Under AASB 15, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e. when 'control’ of the goods or services underlying a particular performance obligation is transferred to the customer.

Revenue is recognised upon transfer of control of promised products and services to customers at an amount that reflects the consideration to which the Group is expected to be entitled in exchange for transferring goods or services to a customer. For each contract with a customer, the Group: identifies the contract with a customer; identifies the performance obligations in the contract; determines the transaction price which takes into account estimates of variable consideration and the time value of money; allocates the transaction price to the separate performance obligations on the basis of the relative stand-alone selling price of each distinct good or service to be delivered; and recognises revenue when or as each performance obligation is satisfied in a manner that depicts the transfer to the customer of the goods or services promised. Revenue is recognised net of allowances for returns and any taxes collected from customers, which are subsequently remitted to governmental authorities.

Contract balances

Timing of revenue recognition may differ from the timing of invoicing to customers. Receivables are recorded when revenue is recognised prior to invoicing, or deferred income when revenue is recognised subsequent to invoicing. For multi-year agreements, customers are generally invoiced at the beginning of the contract.

Contract liabilities comprise mainly of unearned revenue related to subscription licences, which are cloud based. Contract liabilities are generally invoiced at the beginning of each contract period.

Payment terms and conditions vary by contract type, although terms generally include a requirement of payment within 30 to 60 days. In instances where the timing of revenue recognition differs from the timing of invoicing, we have determined our contracts generally do not include a significant financing component. The primary purpose of our invoicing terms is to provide customers with simplified and predictable ways of purchasing our products and services, not to receive financing from our customers, such as invoicing at the beginning of a subscription term with revenue recognised using the output method (time) over the contract period, or to provide customers with financing.

Loss making contracts

A provision under AASB 137 is made for the difference between the expected cost of fulfilling a contract and the expected unearned portion of the transaction price where the forecast costs are greater than the forecast revenue.

ANNUAL REPORT 30 JUNE 2021

ReadyTech Holdings Limited Notes to the financial statements 30 June 2021

Note 2. Significant accounting policies (continued)

Variable consideration

Variable consideration within the transaction price, if any, reflects concessions provided to the customer such as additional licenses, discounts, rebates and refunds. Such estimates are determined using either the 'expected value' or 'most likely amount' method. The measurement of variable consideration is subject to a constraining principle whereby revenue will only be recognised to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur. The measurement constraint continues until the uncertainty associated with the variable consideration is subsequently resolved. Amounts received that are subject to the constraining principle are recognised as a refund liability.

Other income

Other income is recognised when it is received or when the right to receive payment is established. The revenue is measured at the transaction price agreed under the contract.

Interest income is recognised on a time proportionate basis that takes into account the effective yield on the financial asset.

Dividend income is recognised when the dividend is declared.

Government grants

Grants from the government are recognised at their fair value when there is reasonable assurance that the grant will be received and the Group will comply with all attached conditions. Government grants relating to costs are deferred and recognised in profit or loss over the period necessary to match them with the costs that they are intended to compensate.

Income tax

The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the applicable income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable.

Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for:

When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting nor taxable profits; or
When the taxable temporary difference is associated with interests in subsidiaries and the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable that there are future taxable profits available to recover the asset.

Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on either the same taxable entity or different taxable entities which intend to settle simultaneously.

ReadyTech Holdings Limited (the 'head entity') and its wholly-owned Australian subsidiaries have formed an income tax consolidated group under the tax consolidation regime. The head entity and each subsidiary in the tax consolidated group continue to account for their own current and deferred tax amounts. The tax consolidated group has applied the 'separate taxpayer within group' approach in determining the appropriate amount of taxes to allocate to members of the tax consolidated group.

In addition to its own current and deferred tax amounts, the head entity also recognises the current tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from each subsidiary in the tax consolidated group.

ReadyTech Holdings Limited Notes to the financial statements 30 June 2021

Note 2. Significant accounting policies (continued)

Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts receivable from or payable to other entities in the tax consolidated group. The tax funding arrangement ensures that the intercompany charge equals the current tax liability or benefit of each tax consolidated group member, resulting in neither a contribution by the head entity to the subsidiaries nor a distribution by the subsidiaries to the head entity.

Current and non-current classification

Assets and liabilities are presented in the statement of financial position based on current and non-current classification.

An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the Group's normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period. All other assets are classified as non-current.

A liability is classified as current when: it is either expected to be settled in the Group's normal operating cycle; it is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities are classified as non-current.

Deferred tax assets and liabilities are always classified as non-current.

Cash and cash equivalents

Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

Trade and other receivables

Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any allowance for expected credit losses. Trade receivables are generally due for settlement within 30 days.

The Group has applied the simplified approach to measuring expected credit losses, which uses a lifetime expected loss allowance. To measure the expected credit losses, trade receivables have been grouped based on days overdue.

Receivables from related parties and other receivables are recognised at amortised cost, less any provision for impairment.

Contract assets

Contract assets are recognised when the Group has transferred goods or services to the customer but where the Group is yet to establish an unconditional right to consideration. Contract assets are treated as financial assets for impairment purposes.

Property, plant and equipment

Property, plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Depreciation is calculated on a straight-line or diminishing value basis to write off the net cost of each item of property, plant and equipment (excluding land) over their expected useful lives as follows:

Leasehold improvements	3-5 years
Fixtures and fittings	3-10 years
Computer equipment	3-5 years
Office equipment	3-5 years

The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting

date.

Leasehold improvements are depreciated over the unexpired period of the lease or the estimated useful life of the assets, whichever is shorter.

ANNUAL REPORT 30 JUNE 2021

ReadyTech Holdings Limited Notes to the financial statements 30 June 2021

Note 2. Significant accounting policies (continued)

An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the Group. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss.

Right-of-use assets

A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the commencement date net of any lease incentives received, any initial direct costs incurred, and, except where included in the cost of inventories, an estimate of costs expected to be incurred for dismantling and removing the underlying asset, and restoring the site or asset.

Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful life of the asset, whichever is the shorter. Where the Group expects to obtain ownership of the leased asset at the end of the lease term, the depreciation is over its estimated useful life. Right-of use assets are subject to impairment or adjusted for any remeasurement of lease liabilities.

The Group has elected not to recognise a right-of-use asset and corresponding lease liability for short-term leases with terms of 12 months or less and leases of low-value assets. Lease payments on these assets are expensed to profit or loss as incurred.

Intangible assets

Intangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fair value at the date of the acquisition. Intangible assets acquired separately are initially recognised at cost. Indefinite life intangible assets are not amortised and are subsequently measured at cost less any impairment. Finite life intangible assets are subsequently measured at cost less amortisation and any impairment. The gains or losses recognised in profit or loss arising from the derecognition of intangible assets are measured as the difference between net disposal proceeds and the carrying amount of the intangible asset. The method and useful lives of finite life intangible assets are reviewed annually. Changes in the expected pattern of consumption or useful life are accounted for prospectively by changing the amortisation method or period.

Research costs are expensed in the period in which they are incurred.

Goodwill

Goodwill arises on the acquisition of a business. Goodwill is not amortised. Instead, goodwill is tested annually for impairment, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Impairment losses on goodwill are taken to profit or loss and are not subsequently reversed.

Patents and trademarks

Significant costs associated with patents and trademarks are capitalised as an asset. These costs are not subsequently amortised. Instead, patents and trademarks are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. They are carried at cost less accumulated impairment losses.

Customer relationships

Customer relationships acquired in a business combination are amortised on a straight-line basis over the period of their expected benefit, being their finite useful life between 9 and 14 years.

Software

An intangible asset arising from software development expenditure on an internal project is recognised only when the Group can demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or sale, its intention to complete and its ability to use or sell the asset, how the asset will generate future economic benefits, the availability of resources to complete the development and the ability to measure reliably the expenditure attributable to the intangible asset during its development. Following the initial recognition, the cost model is applied requiring the asset to be carried at cost less any accumulated amortisation and accumulated impairment losses. Significant costs associated with the acquisition of software or software internally developed is amortised on a straight-line basis over the period of its expected benefit, being a finite useful life of between 5 and 10 years. Amortisation commences when the asset is available for use, i.e. when it is in the location and condition necessary for it to be capable of operating in the manner intended by management.

ReadyTech Holdings Limited Notes to the financial statements 30 June 2021

Note 2. Significant accounting policies (continued)

Impairment of non-financial assets

Goodwill and other intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount.

Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-in-use is the present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to form a cash-generating unit.

Trade and other payables

These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year and which are unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted. The amounts are unsecured and are usually paid within 30 days of recognition.

Contract liabilities

Contract liabilities are recognised when a customer pays consideration, or when the Group recognises a receivable to reflect its unconditional right to consideration (whichever is earlier), before the Group has transferred the goods or provided the services to the customer. The liability is the Group's obligation to transfer goods or provide services to a customer from which it has received consideration.

Borrowings

Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They are subsequently measured at amortised cost using the effective interest method.

Lease liabilities

A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present value of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group's incremental borrowing rate. Lease payments comprise of fixed payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, amounts expected to be paid under residual value guarantees, exercise price of a purchase option when the exercise of the option is reasonably certain to occur, and any anticipated termination penalties.

The variable lease payments that do not depend on an index or a rate are expensed in the period in which they are incurred.

Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured if there is a change in the following: future lease payments arising from a change in an index or a rate used; residual guarantee; lease term; certainty of a purchase option and termination penalties. When a lease liability is remeasured, an adjustment is made to the corresponding right-of use asset, or to profit or loss if the carrying amount of the right-of-use asset is fully written down.

Finance costs

Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in the period in which they are incurred.

Provisions

Provisions are recognised when the Group has a present (legal or constructive) obligation as a result of a past event, it is probable the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. If the time value of money is material, provisions are discounted using a current pre-tax rate specific to the liability. The increase in the provision resulting from the passage of time is recognised as a finance cost.

ANNUAL REPORT 30 JUNE 2021

ReadyTech Holdings Limited Notes to the financial statements 30 June 2021

Note 2. Significant accounting policies (continued)

Employee benefits

Short-term employee benefits

Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be settled wholly within 12 months of the reporting date are measured at the amounts expected to be paid when the liabilities are settled.

Other long-term employee benefits

The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting date are measured at the present value of expected future payments to be made in respect of services provided by employees up to the reporting date. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on high quality corporate bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.

Defined contribution superannuation expense

ReadyTech Holdings Limited Notes to the financial statements 30 June 2021

Note 2. Significant accounting policies (continued)

If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award is treated as if they were a modification.

Fair value measurement

When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; and assumes that the transaction will take place either: in the principal market; or in the absence of a principal market, in the most advantageous market.

Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming they act in their economic best interests. For non-financial assets, the fair value measurement is based on its highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, are used, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

Contributions to defined contribution superannuation plans are expensed in the period in which they are incurred.

Share-based payments

Equity-settled share-based compensation benefits are provided to employees.

Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for the rendering of services.

The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined using either the Binomial or Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option, together with non-vesting conditions that do not determine whether the Group receives the services that entitle the employees to receive payment. No account is taken of any other vesting conditions.

The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less amounts already recognised in previous periods.

The cost of cash-settled transactions is initially, and at each reporting date until vested, determined by applying either the Binomial or Black-Scholes option pricing model, taking into consideration the terms and conditions on which the award was granted. The cumulative charge to profit or loss until settlement of the liability is calculated as follows:

during the vesting period, the liability at each reporting date is the fair value of the award at that date multiplied by the expired portion of the vesting period.
from the end of the vesting period until settlement of the award, the liability is the full fair value of the liability at the reporting date.

All changes in the liability are recognised in profit or loss. The ultimate cost of cash-settled transactions is the cash paid to settle the liability.

Market conditions are taken into consideration in determining fair value. Therefore any awards subject to market conditions are considered to vest irrespective of whether or not that market condition has been met, provided all other conditions are satisfied.

If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair value of the share-based compensation benefit as at the date of modification.

If the non-vesting condition is within the control of the Group or employee, the failure to satisfy the condition is treated as a cancellation. If the condition is not within the control of the Group or employee and is not satisfied during the vesting period, any remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited.

Assets and liabilities measured at fair value are classified into three levels, using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. Classifications are reviewed at each reporting date and transfers between levels are determined based on a reassessment of the lowest level of input that is significant to the fair value measurement.

For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is either not available or when the valuation is deemed to be significant. External valuers are selected based on market knowledge and reputation. Where there is a significant change in fair value of an asset or liability from one period to another, an analysis is undertaken, which includes a verification of the major inputs applied in the latest valuation and a comparison, where applicable, with external sources of data.

Issued capital

Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

Dividends

Dividends are recognised when declared during the financial year and no longer at the discretion of the Company.

Business combinations

The acquisition method of accounting is used to account for business combinations regardless of whether equity instruments or other assets are acquired.

The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity instruments issued or liabilities incurred by the acquirer to former owners of the acquiree and the amount of any non-controlling interest in the acquiree. For each business combination, the non-controlling interest in the acquiree is measured at either fair value or at the proportionate share of the acquiree's identifiable net assets. All acquisition costs are expensed as incurred to profit or loss.

On the acquisition of a business, the Group assesses the financial assets acquired and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic conditions, the Group's operating or accounting policies and other pertinent conditions in existence at the acquisition-date.

Where the business combination is achieved in stages, the Group remeasures its previously held equity interest in the acquiree at the acquisition-date fair value and the difference between the fair value and the previous carrying amount is recognised in profit or loss.

Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date fair value. Subsequent changes in the fair value of the contingent consideration classified as an asset or liability is recognised in profit or loss. Contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity.

ANNUAL REPORT 30 JUNE 2021

ReadyTech Holdings Limited Notes to the financial statements 30 June 2021

Note 2. Significant accounting policies (continued)

The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any non-controlling interest in the acquiree and the fair value of the consideration transferred and the fair value of any pre-existing investment in the acquiree is recognised as goodwill. If the consideration transferred and the pre-existing fair value is less than the fair value of the identifiable net assets acquired, being a bargain purchase to the acquirer, the difference is recognised as a gain directly in profit or loss by the acquirer on the acquisition-date, but only after a reassessment of the identification and measurement of the net assets acquired, the non-controlling interest in the acquiree, if any, the consideration transferred and the acquirer's previously held equity interest in the acquirer.

Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the provisional amounts recognised and also recognises additional assets or liabilities during the measurement period, based on new information obtained about the facts and circumstances that existed at the acquisition-date. The measurement period ends on either the earlier of (i) 12 months from the date of the acquisition or (ii) when the acquirer receives all the information possible to determine fair value.

Business combinations under common control

Common control transactions are specifically scoped out of AASB 3 'Business Combinations'. Common control transactions are accounted for in the consolidated financial statements prospectively from the date of obtaining the ownership interest. The Directors have elected to use existing book values of assets and liabilities of the entities subject to the business combination and record the difference between the purchase price paid by the Company and the existing book value of the entity acquired immediately prior to the business combination as a reserve. Where equity instruments are issued as part of the consideration, the value of the instruments is their market price as at the acquisition date. Transaction costs arising on the issue of equity instruments are recognised directly in equity.

ReadyTech Holdings Limited Notes to the financial statements 30 June 2021

Note 2. Significant accounting policies (continued)

New Accounting Standards and Interpretations not yet mandatory or early adopted

Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory, have not been early adopted by the Group for the annual reporting period ended 30 June 2021. The Group has not yet assessed the impact of these new or amended Accounting Standards and Interpretations.

Note 3. Critical accounting judgements, estimates and assumptions

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical experience and on other various factors, including expectations of future events, management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are discussed below.

Coronavirus (COVID-19) pandemic

Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic has had, or may have, on the Group based on known information. This consideration extends to the nature of the products and services offered, customers, supply chain, staffing and geographic regions in which the Group operates. Other than as addressed in specific notes, there does not currently appear to be either any significant impact upon the financial statements or any significant uncertainties with respect to events or conditions which may impact the Group unfavourably as at the reporting date or subsequently as a result of the Coronavirus (COVID-19) pandemic.

Earnings per share

Fair value measurement hierarchy

Basic earnings per share

Basic earnings per share is calculated by dividing the profit attributable to the owners of ReadyTech Holdings Limited, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year.

Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.

Goods and Services Tax ('GST') and other similar taxes

Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of the expense.

Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of financial position.

Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the tax authority, are presented as operating cash flows.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority.

Rounding of amounts

The Group is required to classify all assets and liabilities, measured at fair value, using a three level hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date; Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and Level 3: Unobservable inputs for the asset or liability. Considerable judgement is required to determine what is significant to fair value and therefore which category the asset or liability is placed in can be subjective.

The fair value of assets and liabilities classified as level 3 is determined by the use of valuation models. These include discounted cash flow analysis or the use of observable inputs that require significant adjustments based on unobservable inputs. Refer to note 28 for further information.

Estimation of useful lives of assets

The Group determines the estimated useful lives and related depreciation and amortisation charges for its property, plant and equipment and finite life intangible assets. The useful lives could change significantly as a result of technical innovations or some other event. The depreciation and amortisation charge will increase where the useful lives are less than previously estimated lives, or technically obsolete or non-strategic assets that have been abandoned or sold will be written off or written down.

Goodwill and other indefinite life intangible assets

The Group tests annually, or more frequently if events or changes in circumstances indicate impairment, whether goodwill and other indefinite life intangible assets have suffered any impairment, in accordance with the accounting policy stated in note 2. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations require the use of assumptions, including estimated discount rates based on the current cost of capital and growth rates of the estimated future cash flows. Refer to note 12 for further information.

Impairment of non-financial assets other than goodwill and other indefinite life intangible assets

The Group assesses impairment of non-financial assets other than goodwill and other indefinite life intangible assets at each reporting date by evaluating conditions specific to the Group and to the particular asset that may lead to impairment. If an impairment trigger exists, the recoverable amount of the asset is determined. This involves fair value less costs of disposal or value-in-use calculations, which incorporate a number of key estimates and assumptions.

ANNUAL REPORT 30 JUNE 2021

ReadyTech Holdings Limited Notes to the financial statements

30 June 2021

Note 3. Critical accounting judgements, estimates and assumptions (continued)

Recovery of deferred tax assets

Deferred tax assets are recognised for deductible temporary differences only if the Group considers it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

Contingent consideration

The contingent consideration liability is the difference between the total purchase consideration, usually on an acquisition of a business combination, and the amounts paid or settled up to the reporting date, discounted to net present value. The Group applies provisional accounting for any business combination. Any reassessment of the liability during the earlier of the finalisation of the provisional accounting or 12 months from acquisition-date is adjusted for retrospectively as part of the provisional accounting rules in accordance with AASB 3 'Business Combinations'. Thereafter, at each reporting date, the deferred consideration liability is reassessed against revised estimates and any increase or decrease in the net present value of the liability will result in a corresponding gain or loss to profit or loss. The increase in the liability resulting from the passage of time is recognised as a finance cost. Refer to note 35 for further information.

Business combinations

As discussed in note 2, business combinations are initially accounted for on a provisional basis. The fair value of assets acquired, liabilities and contingent liabilities assumed are initially estimated by the Group taking into consideration all available information at the reporting date. Fair value adjustments on the finalisation of the business combination accounting is retrospective, where applicable, to the period the combination occurred and may have an impact on the assets and liabilities, depreciation and amortisation reported. Refer to note 35 for further information.

Capitalised software development expenditure

Software development expenditure have been capitalised only when the Group can demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or sale. Key judgements are applied in considering costs to be capitalised which includes determining expenditures directly related to these activities and allocating overheads between those that are expensed and capitalised. In addition, costs are only capitalised that are expected to be recovered either through successful development or sale of the relevant software. To the extent that capitalised costs are determined not to be recoverable in the future, they will be written off in the period in which this determination is made.

Note 4. Operating segments

Identification of reportable operating segments

The Group is organised into three reportable operating segments: Education, Workforce Solutions, and Government and Justice. These operating segments are based on the internal reports that are reviewed and used by the Board of Directors (who are identified as the Chief Operating Decision Makers ('CODM')) in assessing performance and in determining the allocation of resources.

The CODM reviews adjusted EBITDA (earnings before interest, tax, depreciation and amortisation adjusted for non-cash and significant items). The accounting policies adopted for internal reporting to the CODM are consistent with those adopted in the financial statements.

EBITDA is a financial measure which is not prescribed by Australian Accounting Standards (‘AAS’) and represents the profit under AAS adjusted for non-specific non-cash and significant items. The Directors consider EBITDA to reflect the core earnings of the Group.

The information reported to the CODM is on a monthly basis.

ReadyTech Holdings Limited Notes to the financial statements 30 June 2021

Note 4. Operating segments (continued)

Types of products and services

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

mainly provides products and services to tertiary education providers. Core products are its cloud-based student management systems (SMS) and learning management systems (LMS) for education and training providers to manage the student lifecycle from student enrolment to course completion. ReadyTech also provides platforms to help state governments manage vocational education and training (VET) programs, software platforms for the pathways and back-to-work sector to manage apprentices and job seekers, and a competency assessment and skills profiling tools to track on-the-job training through a qualification; and
Education

Workforce Solutions

provides products and services to mid-sized company across various industries with payroll software, outsourced payroll services and human resource management (HRM) software solutions to employers to assist them with payroll and the management of their employees. HRM consists of human resource (HR) administration and talent management. HR administration involves employee records, workplace health and safety (WHS) and organisational structure.
Government and Justice
provides government and justice case management software as a service solutions to local governments, state governments and justice departments. Core products in asset management, property, licensing and compliance, finance, HR and payroll, customer management and courts and justice.

Refer to note 5 for disclosure of revenues from external customers for these principal products and services.

Intersegment transactions

No intersegment transactions were made during the year ended 30 June 2021 (30 June 2020: $nil).

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.

Major customers

During the years ended 30 June 2021 and 30 June 2020 no single customer contributed 10% or more to the Group's external revenue.

Operating segment information

Workforce Solutions $'000 20,288 2	Education $'000 24,901 -	Government and Justice $'000 4,838 1	Corporate $'000 - -	Total $'000 50,027 3
20,290	24,901	4,839	-	50,030
8,496	11,614	1,699	(2,925)	18,884 (2,243) (1,840) (11,057) 3 (963)

				2,784 (629)
				2,155

ANNUAL REPORT 30 JUNE 2021

ReadyTech Holdings Limited Notes to the financial statements 30 June 2021

Note 4. Operating segments (continued)

Government and Justice is a new operating segment during the financial year ended 30 June 2021. Refer note 35 for further information.

Workforce Solutions $'000 17,920 13	Education $'000 21,334 1	Government and Justice $'000 - -	Corporate $'000 - -	Total $'000 39,254 14
17,933	21,335	-	-	39,268
8,198	8,782	-	(2,026)	14,954 (9,375) 14 (920)

				4,673 (730)
				3,943

All assets and liabilities, including taxes are not allocated to the operating segments as they are managed on an overall group basis.

ReadyTech Holdings Limited Notes to the financial statements 30 June 2021

Note 6. Expenses

Note 6. Expenses
Profit before income tax includes the following specific expenses: Finance costs Interest and finance charges paid/payable on borrowings Interest charges on lease liability right-of-use asset Finance costs expensed Superannuation expense Defined contribution superannuation expense Impairment of receivables Impairment of receivables	Consolidated 2021 2020 $'000 $'000 861 880 102 40
	963	920
	1,939	1,478
	144	298

During the financial year ended 30 June 2021, the Group received $158,000 in payments from the Australian Government as part of its ‘Boosting Cash Flow for Employers’ scheme in response to the Coronavirus (‘COVID-19’) pandemic. These non-tax amounts have been netted off in the relevant expenses.

Note 7. Income tax

Note 5. Revenue from contracts with customers

Revenue from contracts with customers	Consolidated 2021 2020 $'000 $'000 50,027 39,254

Disaggregation of revenue

The disaggregation of revenue from contracts with customers is as follows:

Workforce Solutions $'000 18,041 2,247	Education $'000 21,518 3,383	Government and Justice $'000 3,738 1,100	Total $'000 43,297 6,730
20,288	24,901	4,838	50,027
Workforce Solutions $'000 16,204 1,716	Education $'000 18,888 2,446	Government and Justice $'000 - -	Total $'000 35,092 4,162
17,920	21,334	-	39,254

Income tax expense Current tax Deferred tax - origination and reversal of temporary differences Adjustment recognised for prior periods Adjustment for change in tax rate Aggregate income tax expense Deferred tax included in income tax expense comprises: Increase in deferred tax assets Numerical reconciliation of income tax expense and tax at the statutory rate Profit before income tax expense Tax at the statutory tax rate of 30% (2020: 27.5%) Tax effect amounts which are not deductible/(taxable) in calculating taxable income: Research and development expenses Research and development tax offset Other non-assessable items Other non-deductible expenditure Adjustment recognised for prior periods Change in corporate tax rate Income tax expense	Consolidated 2021 2020 $'000 $'000 4,043 2,812 (2,813) (1,805) (203) (277) (398) -	Consolidated 2021 2020 $'000 $'000 4,043 2,812 (2,813) (1,805) (203) (277) (398) -
	629	730
	(2,813)	(1,805)
	2,784	4,673
	835 717 (920) (47) 645	1,285 675 (945) (8) -
	1,230 (203) (398)	1,007 (277) -
	629	730

ANNUAL REPORT 30 JUNE 2021

ReadyTech Holdings Limited Notes to the financial statements 30 June 2021

Note 7. Income tax (continued)

Note 7. Income tax (continued)
Amounts credited directly to equity Deferred tax assets Deferred tax asset Deferred tax asset comprises temporary differences attributable to: Amounts recognised in profit or loss: Allowance for expected credit losses Labour capitalisation Contract liabilities Employee benefits Accrued expenses Software Borrowing costs Customer relationships Brand names IPO costs Right-of-use assets Lease liabilities Contract costs Other Deferred tax asset Movements: Opening balance Credited to profit or loss Credited to equity Additions through business combinations and common control transaction (note 35) Adjustment recognised for prior periods Change in tax rate Closing balance Income tax payable Income tax payable	Consolidated 2021 2020 $'000 $'000 (242) -
	Consolidated 2021 2020 $'000 $'000 88 61 1,714 1,178 5,122 3,288 1,247 809 906 344 1,734 1,123 - 50 (8,621) (3,950) (142) (131) 1,196 1,324 (721) (697) 795 864 (670) - (55) 136
	2,593	4,399
	4,399 2,813 242 (4,853) (406) 398	3,909 1,805 - (1,315) - -
	2,593	4,399
	Consolidated 2021 2020 $'000 $'000 2,487 1,709

As at 30 June 2021, the Group has capital losses totalling $2,996,023 (2020: $3,005,000) which have not been recognised in the statement of financial position as the recovery of this benefit is uncertain.

ReadyTech Holdings Limited Notes to the financial statements 30 June 2021

Note 7. Income tax (continued)

Change in corporate tax rate

The corporate tax rate applicable to base rate entities reduces from 27.5% to 26% for the 2020-21 income year and further reduces to 25% prospectively from the 2021-22 income year. In financial year 2020, the Group qualifies as a base rate entity as it has a turnover of less than $50 million and less than 80% of its assessable income is derived from base rate entity passive income. In financial year 2021, the Group no longer qualifies as a base rate entity as it has a turnover of more than $50 million and therefore full company tax rate of 30% applies. The Group has remeasured its deferred tax balances, and any unrecognised potential tax benefits arising from carried forward tax losses, based on the effective tax rate that is expected to apply in the year the temporary differences are expected to reverse or benefits from tax losses realised. The impact of the change in tax rate on deferred tax balances has been recognised as tax expense in profit or loss or as an adjustment to equity to the extent to which the deferred tax relates to items previously recognised outside profit or loss.

Note 8. Current assets - cash and cash equivalents

Cash at bank Cash on deposit Note 9. Current assets - trade and other receivables Trade receivables Less: Allowance for expected credit losses Other receivables Allowance for expected credit losses	Consolidated 2021 2020 $'000 $'000 11,853 9,210 142 4	Consolidated 2021 2020 $'000 $'000 11,853 9,210 142 4
	11,995	9,214
	Consolidated 2021 2020 $'000 $'000 7,209 3,612 (293) (221)
	6,916	3,391
	225	1,145
	7,141	4,536

The Group has recognised a loss of $144,000 in profit or loss in respect of impairment of receivables for the period ended 30 June 2021 (2020: $298,000).

The ageing of the receivables and allowance for expected credit losses provided for above are as follows:

Expected credit loss rate 2021 2020 Consolidated % % Not overdue 1.00% 1.00% 0 to 3 months overdue 1.00% 2.50% 3 to 6 months overdue 17.00% 30.00% Over 6 months overdue 48.00% 49.50%	Carrying amount 2021 2020 $'000 $'000 4,596 1,428 1,767 1,770 569 216 277 198	Carrying amount 2021 2020 $'000 $'000 4,596 1,428 1,767 1,770 569 216 277 198	Allowance for expected credit losses 2021 2020 $'000 $'000 44 14 18 44 98 65 133 98	Allowance for expected credit losses 2021 2020 $'000 $'000 44 14 18 44 98 65 133 98
	7,209	3,612	293	221

ANNUAL REPORT 30 JUNE 2021

ReadyTech Holdings Limited Notes to the financial statements

30 June 2021

Note 9. Current assets - trade and other receivables (continued)

Movements in the allowance for expected credit losses are as follows:

Movements in the allowance for expected credit losses are as follows:
Opening balance Additional provisions recognised Additions through business combinations Receivables written off during the year as uncollectable Closing balance Note 10. Current assets - contract assets Contract assets Reconciliation Reconciliation of the written down values at the beginning and end of the current and previous financial year are set out below: Opening balance Additions Closing balance	Consolidated 2021 2020 $'000 $'000 221 53 144 298 95 - (167) (130) 293 221 Consolidated 2021 2020 $'000 $'000 1,445 - - - 1,445 - 1,445 -
	- 1,445
	1,445

Note 10. Current assets - contract assets

Allowance for expected credit losses

The allowance for expected credit losses on contract assets for the year ended 30 June 2021 is $nil (2020: $nil).

ReadyTech Holdings Limited Notes to the financial statements 30 June 2021

Note 11. Non-current assets - property, plant and equipment

Leasehold improvements - at cost Less: Accumulated depreciation Fixtures and fittings - at cost Less: Accumulated depreciation Motor vehicles - at cost Less: Accumulated depreciation Computer equipment - at cost Less: Accumulated depreciation Office equipment - at cost Less: Accumulated depreciation	Consolidated 2021 2020 $'000 $'000 920 920 (557) (378)	Consolidated 2021 2020 $'000 $'000 920 920 (557) (378)
	363	542
	210 (67)	124 (31)
	143	93
	20 (11)	20 (6)
	9	14
	655 (336)	358 (148)
	319	210
	274 (180)	265 (108)
	94	157
	928	1,016

Reconciliations

Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:

Consolidated Balance at 1 July 2019 Additions Additions through business combinations (note 35) Disposals Depreciation expense Balance at 30 June 2020 Additions Disposals Write off of assets Depreciation expense Balance at 30 June 2021	Leasehold improve- ments $'000 314 347 - - (119)	Fixtures and fittings $'000 39 65 11 - (22)	Motor vehicles $'000 - - 28 - (14)	Computer equipment $'000 85 212 9 - (96)	Office equipment $'000 94 15 141 (1) (92)	Total $'000 532 639 189 (1) (343)
	542 - - - (179)	93 86 - (6) (30)	14 - - - (5)	210 297 - - (188)	157 12 (3) (1) (71)	1,016 395 (3) (7) (473)
	363	143	9	319	94	928

ANNUAL REPORT 30 JUNE 2021

ReadyTech Holdings Limited Notes to the financial statements 30 June 2021

Note 12. Non-current assets - intangibles

Goodwill - at cost Patents and trademarks - at cost Customer relationships - at cost Less: Accumulated amortisation Software - at cost Less: Accumulated amortisation	Consolidated 2021 2020 $'000 $'000 81,431 31,605	Consolidated 2021 2020 $'000 $'000 81,431 31,605
	474	475
	36,476 (7,740)	19,825 (5,463)
	28,736	14,362
	53,888 (23,831)	32,559 (16,394)
	30,057	16,165
	140,698	62,607

Reconciliations

Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:

Consolidated Balance at 1 July 2019 Additions Additions through business combinations (note 35) Exchange differences Amortisation expense Balance at 30 June 2020 Additions Additions through business combinations (note 35) Exchange differences Write off of assets Amortisation expense Balance at 30 June 2021	Goodwill $'000 22,767 - 8,872 (34) -	Patents and trademarks $'000 - - 477 (2) -	Customer relationships $'000 14,516 - 1,707 (3) (1,858)	Software $'000 15,635 4,329 2,524 15 (6,338)	Total $'000 52,918 4,329 13,580 (24) (8,196)
	31,605 - 49,842 (16) - -	475 - - (1) - -	14,362 - 16,653 (2) - (2,277)	16,165 5,739 15,591 (4) (1) (7,433)	62,607 5,739 82,086 (23) (1) (9,710)
	81,431	474	28,736	30,057	140,698

ReadyTech Holdings Limited Notes to the financial statements

30 June 2021

Note 12. Non-current assets - intangibles (continued)

Goodwill and the group of CGUs to which it belongs is tested annually for impairment or at the end of each reporting date where an indicator impairment exists.

The recoverable amount of the group of CGUs, which includes the carrying values of all intangibles, is determined based on value-in-use calculations using a five year discounted cash flow model, with a terminal value applied to the discounted cash flows after year five. This model incorporates the forecast to 30 June 2022 and extrapolated for a further four years using a steady growth rate.

The following table sets out the key assumptions used in the value-in-use calculations:

						EBITDA	EBITDA
						CAGR from	CAGR from
	Pre-tax discount	rate used	Terminal growth rate			FY22 to FY26	FY21 to FY25
	2021	2020	2021	2020		2021	2020
Groups of CGUs	%	%	%	%		%	%
Education	15%	17%		2%	1%	15.6%	16.9%
Workforce Solutions	15%	17%		2%	1%	22.1%	15.2%
Government and Justice	15%	-		3%	-	22.0%	-

Impairment testing results

No impairment existed at 30 June 2021. Based on the value-in-use calculation methodology and assumptions stated above, the carrying amount of each group of CGUs at balance date does not exceed its recoverable amount.

Impact of possible changes in assumptions

A reasonable possible change in assumptions would not cause the carrying amount of each group of CGUs to exceed its recoverable amount.

Note 13. Non-current assets - right-of-use assets

Note 13. Non-current assets - right-of-use assets
Land and buildings - right-of-use Less: Accumulated depreciation	Consolidated 2021 2020 $'000 $'000 4,645 3,875 (2,241) (1,057)
	2,404	2,818

The Group leases land and buildings for its offices under agreements of 5 years. At the inception of a lease management determines the non-cancellable period of a lease, including options to extend the lease if it is reasonably certain to exercise that option. The Group also leases plant and equipment under agreements of 3 years.

Impairment testing

Goodwill acquired through business combinations has been allocated to the following groups of cash generating units ('CGU'):

Education Workforce Solutions Government and Justice	Consolidated 2021 2020 $'000 $'000 18,276 18,276 13,313 13,329 49,842 -	Consolidated 2021 2020 $'000 $'000 18,276 18,276 13,313 13,329 49,842 -
	81,431	31,605

ANNUAL REPORT 30 JUNE 2021

ReadyTech Holdings Limited Notes to the financial statements 30 June 2021

Note 13. Non-current assets - right-of-use assets (continued)

Reconciliations

Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:

Consolidated Balance at 1 July 2019 Additions Depreciation expense Balance at 30 June 2020 Additions Additions through business combinations (note 35) Lease termination Lease modification Depreciation expense Balance at 30 June 2021 For other lease related disclosures refer to the following, refer: ● note 6 for details of interest on lease liabilities and other lease expenses;	Land and buildings - right-of-use $'000 2,046 1,608 (836)
	2,818 359 173 (60) (12) (874)
	2,404

note 17 and note 23 for details of lease liabilities at the beginning and end of the reporting period; and
consolidated statement of cash flows for repayment of lease liabilities.

Note 14. Non-current assets - contract costs

Costs to obtain contracts Contract fulfilment costs Note 15. Current liabilities - trade and other payables Trade payables Accrued expenses GST payable	Consolidated 2021 2020 $'000 $'000 413 351 949 189	Consolidated 2021 2020 $'000 $'000 413 351 949 189
	1,362	540
	Consolidated 2021 2020 $'000 $'000 1,695 185 3,880 2,050 1,483 1,655
	7,058	3,890

Note 15. Current liabilities - trade and other payables

Refer to note 27 for further information on financial instruments.

ReadyTech Holdings Limited Notes to the financial statements 30 June 2021

Note 16. Current liabilities - contract liabilities

Contract liabilities

Note 17. Current liabilities - lease liabilities

Lease liability Refer to note 27 for further information on financial instruments. Note 18. Current liabilities - contingent consideration Contingent consideration Refer to note 28 and note 35 for further details on contingent consideration. Note 19. Non-current liabilities - contract liabilities Contract liabilities Note 20. Non-current liabilities - borrowings Borrowings Less: establishment fees Refer to note 27 for further information on financial instruments. Total secured liabilities The total secured liabilities (current and non-current) are as follows:

Consolidated 2021 2020 $'000 $'000 16,725 11,741	Consolidated 2021 2020 $'000 $'000 16,725 11,741
Consolidated 2021 2020 $'000 $'000 996 828
Consolidated 2021 2020 $'000 $'000 12,488 4,096
Consolidated 2021 2020 $'000 $'000 549 214
Consolidated 2021 2020 $'000 $'000 31,000 25,000 (83) -
30,917	25,000

Consolidated 2021 2020 $'000 $'000 31,000 25,000

Borrowings

ANNUAL REPORT 30 JUNE 2021

ReadyTech Holdings Limited Notes to the financial statements 30 June 2021

Note 20. Non-current liabilities - borrowings (continued)

Assets pledged as security

Borrowings are secured over the assets of the Group.

Financing arrangements

Unrestricted access was available at the reporting date to the following lines of credit:

Total facilities Borrowings (Facility A) Borrowings (Facility B) Used at the reporting date Borrowings (Facility A) Borrowings (Facility B) Unused at the reporting date Borrowings (Facility A) Borrowings (Facility B)	Consolidated 2021 2020 $'000 $'000 23,000 21,500 14,500 6,000	Consolidated 2021 2020 $'000 $'000 23,000 21,500 14,500 6,000
	37,500	27,500
	23,000 8,000	21,500 3,500
	31,000	25,000
	- 6,500	- 2,500
	6,500	2,500

The Group has established two facilities, Facility A and Facility B:

Facility A - $23,000,000 (30 June 2020: $21,500,000) with an amortising loan term over 3 years and an interest rate set at BBSY plus a margin of 2.3% (30 June 2020: 2.4%) depending on the Net Leverage Ratio of the Group. As at 30 June 2021, $23,000,000 (30 June 2020: $21,500,000) of the total facility has been drawn down.
Facility B - $14,500,00 (30 June 2020: $6,000,000) with a bullet term repayment after 3 years and an interest rate set
at BBSY plus a margin of 2.3% (30 June 2020: 4.4%) depending on the Net Leverage Ratio of the Group. As at 30 June 2021, $8,000,000 (30 June 2020: $3,500,000) of the total facility has been drawn down.

Note 21. Non-current liabilities - provisions

==> picture [540 x 57] intentionally omitted <==

----- Start of picture text -----

Consolidated
2021 2020
$'000 $'000
Lease make good 62 61
----- End of picture text -----

Lease make good

The provision represents the present value of the estimated costs to make good the premises leased by the Group at the end of the respective lease terms.

Note 22. Non-current liabilities - Contingent consideration

==> picture [542 x 57] intentionally omitted <==

----- Start of picture text -----

Consolidated
2021 2020
$'000 $'000
Contingent consideration 16,320 -
----- End of picture text -----

Refer to note 28 and note 35 for further details on contingent consideration.

ReadyTech Holdings Limited Notes to the financial statements 30 June 2021

Note 23. Non-current liabilities - lease liabilities

Consolidated 2021 2020 $'000 $'000 Lease liability 1,654 2,310 Refer to note 27 for further information on financial instruments. Consolidated 2021 2020 $'000 $'000 Current (note 16) 996 828 Non-current 1,654 2,310 2,650 3,138

Refer to note 27 for further information on financial instruments.

Reconciliation

Reconciliation of lease liabilities (current and non-current) at the beginning and end of financial year are set out below:

Balance at start of the year Additions Lease termination Lease modification Additions through business combinations (note 35) Interest Repayment of lease liabilities Balance at end of the year Note 24. Equity - issued capital 2021 Shares Ordinary shares - fully paid 102,149,776 Movements in ordinary share capital Details Date Balance 1 July 2019 Balance 30 June 2020 Issue of shares 6 November 2020 Shares issued on acquisition of subsidiary 23 March 2021 Shares issued under Share Purchase Plan 21 April 2021 Less transaction costs (net of tax) Balance 30 June 2021	2021 Shares 102,149,776		Consolidated 2021 2020 $'000 $'000 3,138 2,196 336 1,554 (64) - (12) - 186 - 102 - (1,036) (612) 2,650 3,138 Consolidated 2020 2021 2020 Shares $'000 $'000 80,005,367 159,095 119,581 Shares Issue price $'000 80,005,367 119,581 80,005,367 119,581 13,297,872 $1.88 25,000 7,397,353 $1.67 12,354 1,449,184 $1.88 2,724 - $0.00 (564) 102,149,776 159,095	Consolidated 2021 2020 $'000 $'000 3,138 2,196 336 1,554 (64) - (12) - 186 - 102 - (1,036) (612) 2,650 3,138 Consolidated 2020 2021 2020 Shares $'000 $'000 80,005,367 159,095 119,581 Shares Issue price $'000 80,005,367 119,581 80,005,367 119,581 13,297,872 $1.88 25,000 7,397,353 $1.67 12,354 1,449,184 $1.88 2,724 - $0.00 (564) 102,149,776 159,095
			Shares 80,005,367	Issue price $1.88 $1.67 $1.88 $0.00
			80,005,367 13,297,872 7,397,353 1,449,184 -
			102,149,776

ANNUAL REPORT 30 JUNE 2021

ReadyTech Holdings Limited Notes to the financial statements 30 June 2021

Note 24. Equity - issued capital (continued)

Ordinary shares

Ordinary shares entitle the holder to participate in any dividends declared and any proceeds attributable to shareholders should the Company be wound up in proportions that consider both the number of shares held and the extent to which those shares are paid up. The fully paid ordinary shares have no par value and the Company does not have a limited amount of authorised capital.

ReadyTech Holdings Limited Notes to the financial statements 30 June 2021

Note 25. Equity - reserves (continued)

Reorganisation reserve

Reorganisation reserve is used to recognise the difference between the consideration paid and the historical values of assets and liabilities acquired, between ReadyTech Holdings Limited and the subsidiaries it acquired.

Movements in reserves

Movements in each class of reserve during the current and previous financial year are set out below:

On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote.

Share buy-back

There is no current on-market share buy-back.

Capital risk management

The Group's objectives when managing capital is to safeguard its ability to continue as a going concern, so that it can provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to reduce the cost of capital.

Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is calculated as total borrowings less cash and cash equivalents.

In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

The Group would look to raise capital when an opportunity to invest in a business or company was seen as value adding relative to the current Company's share price at the time of the investment. The Group is not actively pursuing additional investments in the short term as it continues to integrate and grow its existing businesses in order to maximise synergies.

The Group is subject to certain financing arrangements covenants and meeting these is given priority in all capital risk management decisions. There have been no events of default on the financing arrangements during the financial year.

Note 25. Equity - reserves

Note 25. Equity - reserves
Foreign currency reserve Share-based payments reserve Common control reserve Reorganisation reserve	Consolidated 2021 2020 $'000 $'000 (118) (86) 556 162 (10,058) (10,058) (73,048) (73,048)
	(82,668)	(83,030)

Consolidated Balance at 1 July 2019 Foreign currency translation Balance at 30 June 2020 Foreign currency translation Share-based payments Balance at 30 June 2021	Foreign currency $'000 - (86)	Share-based payments $'000 162 -	Common control $'000 (10,058) -	Reorgan- isation $'000 (73,048) -	Total $'000 (82,944) (86)
	(86) (32) -	162 - 394	(10,058) - -	(73,048) - -	(83,030) (32) 394
	(118)	556	(10,058)	(73,048)	(82,668)

Note 26. Equity - dividends

There were no dividends paid, recommended or declared during the current financial year or previous financial period.

Note 27. Financial instruments

Financial risk management objectives

The Group's activities expose it to a variety of financial risks: market risk (including foreign currency risk, price risk and interest rate risk), credit risk and liquidity risk. The Group's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group. The Group may use derivative financial instruments such as forward foreign exchange contracts to hedge certain risk exposures. The Group uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate, foreign exchange and other price risks and ageing analysis for credit risk.

Risk management is carried out by senior finance executives ('finance') under policies approved by the Board of Directors ('the Board'). These policies include identification and analysis of the risk exposure of the Group and appropriate procedures, controls and risk limits. Finance identifies, evaluates and hedges financial risks within the Group's operating units. Finance reports to the Board on a monthly basis.

Market risk

Foreign currency risk

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. It is also used to recognise gains and losses on hedges of the net investments in foreign operations.

Share-based payments reserve

The reserve is used to recognise the value of equity benefits provided to employees and Directors as part of their remuneration, and other parties as part of their compensation for services.

Common control reserve

Common control reserve is used to recognise the difference between the consideration paid and the historical values of assets and liabilities acquired, between entities under common control.

The Group undertakes certain transactions denominated in foreign currency and is exposed to foreign currency risk through foreign exchange rate fluctuations.

Foreign exchange risk arises from future commercial transactions and recognised financial assets and financial liabilities denominated in a currency that is not the entity's functional currency. The risk is measured using sensitivity analysis and cash flow forecasting.

The Group's foreign exchange risk is managed to ensure sufficient funds are available to meet foreign denominated financial commitments in a timely and cost-effective manner. The Group will continually monitor this risk and consider entering into forward foreign exchange, foreign currency swap and foreign currency option contracts if appropriate.

Creditors and debtors as at 30 June 2021 and 30 June 2020 were reviewed to assess currency risk at year end. The value of transactions denominated in a currency other than the functional currency of the respective subsidiary was insignificant and therefore the risk was determined as not being significant.

ANNUAL REPORT 30 JUNE 2021

ReadyTech Holdings Limited Notes to the financial statements 30 June 2021

Note 27. Financial instruments (continued)

Price risk

The Group is not exposed to any significant price risk.

Interest rate risk

The Group's main interest rate risk arises from long-term borrowings. Borrowings obtained at variable rates expose the Group to interest rate risk.

As at the reporting date, the Group had the following variable rate borrowings outstanding:

	2021		2020
	Weighted		Weighted
	average		average
	interest rate	Balance	interest rate	Balance
Consolidated	%	$'000	%	$'000
Borrowings	2.68%	31,000	2.84%	25,000
Net exposure to cash flow interest rate risk		31,000		25,000

An analysis by remaining contractual maturities in shown in 'liquidity and interest rate risk management' below.

For the Group the borrowings outstanding totalling $31,000,000 (2020: $25,000,000), are principal and interest payment loans. An increase/decrease in interest rates of 100 (2020: 100) basis points would have an adverse/favourable effect on loss before tax of $310,000 (2020: $250,000) per annum. The percentage change is based on the expected volatility of interest rates using market data and analysts forecasts.

Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group has a strict code of credit, including obtaining agency credit information, confirming references and setting appropriate credit limits. The Group obtains guarantees where appropriate to mitigate credit risk. 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 Group does not hold any collateral.

The Group has adopted a lifetime expected loss allowance in estimating expected credit losses to trade receivables through the use of a provisions matrix using fixed rates of credit loss provisioning. These provisions are considered representative across all customers of the Group based on recent sales experience, historical collection rates and forwardlooking information that is available. As disclosed in note 9, due to the Coronavirus (COVID-19) pandemic, the calculation of expected credit losses has been revised as at 30 June 2021 and rates have increased in each category up to 6 months overdue.

Generally, trade receivables are written off when there is no reasonable expectation of recovery. Indicators of this include the failure of a debtor to engage in a repayment plan, no active enforcement activity and a failure to make contractual payments for a period greater than 1 year.

ReadyTech Holdings Limited Notes to the financial statements 30 June 2021

Note 27. Financial instruments (continued)

Remaining contractual maturities

The following tables detail the Group'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.

1 year or less $'000 1,695 1,483 12,488 831 1,080	Between 1 and 2 years $'000 - - 16,320 831 894	Between 2 and 5 years $'000 - - - 31,419 850	Over 5 years $'000 - - - - -	Remaining contractual maturities $'000 1,695 1,483 28,808 33,081 2,824
17,577	18,045	32,269	-	67,891
1 year or less $'000 185 1,655 4,096 669 922	Between 1 and 2 years $'000 - - - 25,333 934	Between 2 and 5 years $'000 - - - - 1,503	Over 5 years $'000 - - - - -	Remaining contractual maturities $'000 185 1,655 4,096 26,002 3,359
7,527	26,267	1,503	-	35,297

The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed above.

Fair value of financial instruments

Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value.

Liquidity risk

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

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

ANNUAL REPORT 30 JUNE 2021

ReadyTech Holdings Limited Notes to the financial statements 30 June 2021

Note 28. Fair value measurement

Fair value hierarchy

The following tables detail the Group's assets and liabilities, measured or disclosed at fair value, using a three level hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly

Level 3: Unobservable inputs for the asset or liability

Level 1 $'000 -	Level 2 $'000 -	Level 3 $'000 28,808	Total $'000 28,808
-	-	28,808	28,808
Level 1 $'000 -	Level 2 $'000 -	Level 3 $'000 4,096	Total $'000 4,096
-	-	4,096	4,096

There were no transfers between levels during the financial year.

The carrying amounts of trade and other receivables and trade and other 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 liabilities.

ReadyTech Holdings Limited Notes to the financial statements 30 June 2021

Note 28. Fair value measurement (continued)

The level 3 unobservable inputs are as follows:

Description	Unobservable inputs	Range	Outcome
Contingent	Probability of achieving	to satisfy/not to satisfy	If key contracts specified as earn-out triggers
consideration	revenue targets and		are executed and the associated revenue
	probability of executing		targets are achieved 100% of the contingent
	new key contracts		consideration is payable/if revenue targets are
			not achieved no contingent consideration is
			payable

Note 29. Remuneration of auditors

During the financial year the following fees were paid or payable for services provided by Deloitte Touche Tohmatsu, the auditor of the Company:

Deloitte and related network firms Audit or review of the financial statements Other services Tax compliance Research and development tax services Other assurance services	Consolidated 2021 2020 $ $ 260,800 203,500	Consolidated 2021 2020 $ $ 260,800 203,500
	18,500 52,578 -	33,000 36,066 46,263
	71,078	115,329
	331,878	318,829

Valuation techniques for fair value measurements categorised within level 2 and level 3

Contingent consideration has been valued using a discounted cash flow model.

Level 3 assets and liabilities

Movements in level 3 assets and liabilities during the current and previous financial year are set out below:

Consolidated Balance at 1 July 2019 Additions Amounts paid Balance at 30 June 2020 Additions Revaluation of contingent consideration Amounts paid Balance at 30 June 2021	Contingent consideration $'000 756 6,215 (2,875)
	4,096 25,280 1,840 (2,408)
	28,808

Refer to note 35 for details of the contingent consideration arrangements arising from business combinations.

Note 30. Key management personnel disclosures

Compensation

The aggregate compensation made to Directors and other members of key management personnel of the Group is set out below:

Short-term employee benefits Post-employment benefits Long-term employment benefits Share-based payments	Consolidated 2021 2020 $ $ 1,118,273 937,243 43,388 42,006 5,736 4,462 191,543 -	Consolidated 2021 2020 $ $ 1,118,273 937,243 43,388 42,006 5,736 4,462 191,543 -
	1,358,940	983,711

Note 31. Contingent liabilities

The Group has given bank guarantees as at 30 June 2021 of $632,000 (2020: $949,000). The bank guarantees are for various office leases. No cash outflows are expected from the bank guarantees given by the Group.

ANNUAL REPORT 30 JUNE 2021

ReadyTech Holdings Limited Notes to the financial statements 30 June 2021

Note 32. Related party transactions

Parent entity

ReadyTech Holdings Limited is the parent entity.

Subsidiaries

Interests in subsidiaries are set out in note 34.

Key management personnel

Disclosures relating to key management personnel are set out in note 30 and the remuneration report included in the Directors' report.

ANNUAL REPORT 30 JUNE 2021

ReadyTech Holdings Limited Notes to the financial statements 30 June 2021

Note 33. Parent entity information (continued)

Contingent liabilities

The parent entity had no contingent liabilities as at 30 June 2021 and 30 June 2020.

Capital commitments - Property, plant and equipment

The parent entity had no capital commitments for property, plant and equipment as at 30 June 2021 and 30 June 2020.

Significant accounting policies

The accounting policies of the parent entity are consistent with those of the Group, as disclosed in note 2, except for the following:

Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.

Transactions with related parties

Pentagon Holdco Pty Ltd and its controlled entities was majority owned by Pemba Capital, a related party, prior to its acquisition by the Group. The impact of the acquisition is presented in the Business Combinations note (note 35).

Dividends received from subsidiaries are recognised as other income by the parent entity and its receipt may be an indicator of an impairment of the investment.

Note 34. Interests in subsidiaries

Receivable from and payable to related parties

There were no trade receivables from or trade payables to related parties at the current and previous reporting date.

The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policy described in note 2:

Loans to/from related parties

There were no loans to or from related parties at the current and previous reporting date.

Note 33. Parent entity information

Set out below is the supplementary information about the parent entity.

Statement of profit or loss and other comprehensive income

Loss after income tax Total comprehensive income Statement of financial position Total current assets Total assets Total current liabilities Total liabilities Equity Issued capital Share-based payments reserve Reorganisation reserve Accumulated losses Total equity	Parent 2021 2020 $'000 $'000 (679) (1,058)	Parent 2021 2020 $'000 $'000 (679) (1,058)
	(679)	(1,058)
	Parent 2021 2020 $'000 $'000 693 15,104
	70,222	29,857
	2,399	1,263
	2,399	1,263
	159,722 394 (89,471) (2,822)	120,208 - (89,471) (2,143)
	67,823	28,594

		Ownership	interest
	Principal place of business /	2021	2020
Name	Country of incorporation	%	%
ReadyTech HoldCo Pty Ltd	Australia	100.00%	100.00%
ReadyTech BidCo Pty Ltd	Australia	100.00%	100.00%
JobReady Tech Pty Ltd	Australia	100.00%	100.00%
Esher House Pty Ltd	Australia	100.00%	100.00%
Thymos Pty Ltd	Australia	100.00%	100.00%
VETtrak Pty Ltd	Australia	100.00%	100.00%
Rtoms Pty Ltd	Australia	100.00%	100.00%
Lirac HoldCo Pty Ltd	Australia	100.00%	100.00%
Lirac BidCo Pty Ltd	Australia	100.00%	100.00%
Australian Payroll Professionals Holdings Pty Ltd	Australia	100.00%	100.00%
HR3 Pty Ltd	Australia	100.00%	100.00%
eLearning Australia Pty Ltd	Australia	100.00%	100.00%
WageLink Australia Pty Ltd*	Australia	100.00%	100.00%
Zambion Limited*	New Zealand	100.00%	100.00%
Zambion Pty Ltd*	Australia	100.00%	100.00%
Pentagon HoldCo Pty Ltd**	Australia	100.00%	-
Pentagon BidCo Pty Ltd**	Australia	100.00%	-
Open Office Holdings Pty Ltd**	Australia	100.00%	-
McGirr Holdings Pty Ltd**	Australia	100.00%	-
McGirr Information Technology Pty Ltd**	Australia	100.00%	-
McGirr Technologies, Inc.**	Australia	100.00%	-

Acquired by the Group during the year-ended 30 June 2020. Refer to note 35.
** Acquired by the Group during the year-ended 30 June 2021. Refer to note 35.

Guarantees entered into by the parent entity in relation to the debts of its subsidiaries

The parent entity had no guarantees in relation to the debts of its subsidiaries as at 30 June 2021 and 30 June 2020.

ANNUAL REPORT 30 JUNE 2021

ReadyTech Holdings Limited Notes to the financial statements 30 June 2021

Note 35. Business combinations

Acquisition of Pentagon HoldCo Pty Ltd and its controlled entities

On 23 March 2021, the Group acquired 100% of the ordinary shares of Pentagon HoldCo Pty Ltd and its controlled entities for the total consideration transferred of $82,919,000. This is a Government software as a service ('SaaS') provider business and operates in the Government and Justice division of the Group. It was acquired to diversify into a new segment. The goodwill of $49,842,000 represents future growth. The acquired business contributed revenues of $4,838,000 and profit after tax of $1,574,000 to the Group for the period from 23 March 2021 to 30 June 2021. The values identified in relation to the acquisition of Pentagon HoldCo Pty Ltd are final as at 30 June 2021.

ReadyTech Holdings Limited Notes to the financial statements

30 June 2021

Note 35. Business combinations (continued)

As at 30 June 2021, recurring and total revenue targets related to the first tranche of contingent consideration have been met.

Acquisition of WageLink Australia Pty Ltd (prior year)

On 9 October 2019, the Group acquired 100% of the ordinary shares of WageLink Australia Pty Ltd for the total consideration transferred of $1,550,000. WageLink provides a range of payroll management services for small to medium sized business. The goodwill of $909,000 represents future growth of WageLink. The values identified in relation to the acquisition of WageLink Australia Pty Ltd are final as at 30 June 2020.

Details of the acquisition are as follows:

Cash and cash equivalents Trade receivables Other assets Right-of-use assets Customer relationships Software Trade and other payables Contract liabilities Provision for income tax Net deferred tax liability Employee benefits Lease liability Net assets acquired Goodwill Acquisition-date fair value of the total consideration transferred Representing: Cash paid or payable to vendor ReadyTech Holdings Limited shares issued to vendor Contingent consideration Acquisition costs expensed to profit or loss Cash used to acquire business, net of cash acquired: Acquisition-date fair value of the total consideration transferred Less: cash and cash equivalents Less: contingent consideration Less: shares issued by Company as part of consideration Net cash used	Fair value $'000 4,984 5,394 362 173 16,653 15,591 (894) (1,944) (523) (4,853) (1,680) (186)
	33,077 49,842
	82,919
	45,285 12,354 25,280
	82,919
	1,673
	82,919 (4,984) (25,280) (12,354)
	40,301

As part of the acquisition of Pentagon Holdco Pty Ltd and its controlled entities an amount of contingent consideration has been agreed. The contingent consideration is payable in three tranches, depending on total revenue and recurring revenue targets. The first and second tranche are payable in cash or ordinary shares and the third tranche is payable in cash. Refer to note 28 for further information.

Cash and cash equivalents Trade receivables Property, plant and equipment Customer relationships Trade payables and other payables Deferred tax liability Employee benefits Other provisions Net assets acquired Goodwill Acquisition-date fair value of the total consideration transferred Representing: Cash paid or payable to vendor Contingent consideration Acquisition costs expensed to profit or loss Cash used to acquire business, net of cash acquired: Acquisition-date fair value of the total consideration transferred Less: cash and cash equivalents Less: contingent consideration Net cash used	Fair value $'000 151 35 4 933 (5) (280) (134) (63)
	641 909
	1,550
	1,240 310
	1,550
	126
	1,550 (151) (310)
	1,089

As part of the acquisition of WageLink Pty Limited an amount of contingent consideration has been agreed, which is subject to WageLink meeting pre-determined revenue thresholds based on the last twelve months' revenue. Refer to note 28 for further information.

The amount of contingent consideration recognised of $310,000 is the maximum amount payable if the pre-determined revenue thresholds are met. If these thresholds are not met, then no amount is payable. Given the current performance of the business, it appears probable that the thresholds will be met and as such, contingent consideration of $310,000 has been recognised.

The amount of contingent consideration recognised represents the fair value as at the date of acquisition, if the relevant targets are met. If these targets are not met, then no amount is payable. As at 30 June 2021, the fair value of contingent consideration has increased to $27,120,492.

ANNUAL REPORT 30 JUNE 2021

ReadyTech Holdings Limited Notes to the financial statements 30 June 2021

Note 35. Business combinations (continued)

Acquisition of Zambion Limited and its controlled entities (prior year)

On 9 October 2019, the Group acquired 100% of the ordinary shares of Zambion Limited and its controlled entities ('Zambion') for the total consideration transferred of $10,317,000. Zambion develops and implements Software-as-aService ("SaaS") solutions for small to medium sized businesses to manage their workforce. The software product is a web and app based payroll, HR, time and attendance, leave management system that is compliant with Australia and New Zealand's tax, superannuation and fair work legislation. The goodwill of $7,963,000 represents technology and revenue synergies from cross-selling extended capability to ReadyTech’s existing client base as well as future growth. The values identified in relation to the acquisition of Zambion are final as at 30 June 2020.

Details of the acquisition are as follows:

Cash and cash equivalents Trade receivables Other current assets Property, plant and equipment Brand names and trademarks Customer relationships Software Trade and other payables Contract liabilities Provision for income tax Deferred tax liability Employee benefits Other provisions Net assets acquired Goodwill Acquisition-date fair value of the total consideration transferred Representing: Cash paid or payable to vendor Contingent consideration Acquisition costs expensed to profit or loss Cash used to acquire business, net of cash acquired: Acquisition-date fair value of the total consideration transferred Less: cash and cash equivalents Less: contingent consideration Net cash used	Fair value $'000 75 742 29 185 477 774 2,524 (255) (710) (139) (1,035) (106) (207)
	2,354 7,963
	10,317
	4,412 5,905
	10,317
	186
	10,317 (75) (5,905)
	4,337

As part of the acquisition of Zambion Limited an amount of contingent consideration has been agreed. The contingent consideration is payable in three amounts, dependent on recurring revenue growth targets. The Directors expect the contingent consideration to be paid out during the next 12 months. Refer to note 28 for further information.

The amount of contingent consideration recognised of $5,905,000 is the maximum amount payable if the recurring revenue growth targets are met. If these targets are not met, then no amount is payable. Given the current performance of the business, it appears probable that the thresholds will be met and as such, contingent consideration of $5,905,000 has been recognised.

ReadyTech Holdings Limited Notes to the financial statements 30 June 2021

Note 36. Deed of cross guarantee

The following entities are party to a deed of cross guarantee under which each Company guarantees the debts of the others:

ReadyTech HoldCo Pty Ltd ReadyTech BidCo Pty Ltd JobReady Tech Pty Ltd Esher House Pty Ltd Thymos Pty Ltd VETtrak Pty Ltd Rtoms Pty Ltd Lirac HoldCo Pty Ltd Lirac BidCo Pty Ltd Australian Payroll Professionals Holdings Pty Ltd HR3 Pty Ltd

eLearning Australia Pty Ltd WageLink Australia Pty Ltd Zambion Pty Ltd

By entering into the deed, the wholly-owned entities have been relieved from the requirement to prepare financial statements and Directors' report under Corporations Instrument 2016/785 issued by the Australian Securities and Investments Commission.

The above companies represent a 'Closed Group' for the purposes of the Corporations Instrument, and as there are no other parties to the deed of cross guarantee that are controlled by ReadyTech Holdings Limited, they also represent the 'Extended Closed Group'.

Set out below is a consolidated statement of profit or loss and other comprehensive income and statement of financial position of the 'Closed Group'.

Statement of profit or loss and other comprehensive income Revenue Interest revenue calculated using the effective interest method Hosting and other direct costs Employee benefits expense Depreciation and amortisation expense Advertising and marketing expenses Consultancy and professional expenses Administration expenses Communication and IT expenses Occupancy costs Revaluation of contingent consideration Other expenses Finance costs Profit before income tax expense Income tax expense Profit after income tax expense Other comprehensive income Foreign currency translation Other comprehensive income for the year, net of tax Total comprehensive income for the year	2021 $'000 42,464 2 (2,861) (19,786) (9,441) (423) (2,745) (663) (1,241) (409) (1,840) (561) (947)	2020 $'000 37,252 14 (2,792) (16,353) (8,871) (454) (798) (569) (927) (356) - (817) (919)
	1,549 (536)	4,410 (727)
	1,013 (10)	3,683 26
	(10)	26
	1,003	3,709

ANNUAL REPORT 30 JUNE 2021

ReadyTech Holdings Limited Notes to the financial statements

30 June 2021

Note 36. Deed of cross guarantee (continued)

Equity - accumulated losses Accumulated losses at the beginning of the financial year Profit after income tax expense Accumulated losses at the end of the financial year Statement of financial position Current assets Cash and cash equivalents Trade and other receivables Contract assets Prepayments Non-current assets Investments Property, plant and equipment Intangibles Right-of-use assets Contract costs Deferred tax Total assets Current liabilities Trade and other payables Contract liabilities Lease liabilities Income tax payable Employee benefits Contingent consideration Non-current liabilities Contract liabilities Borrowings Provisions Lease liabilities Employee benefits Contingent consideration Total liabilities Net assets Equity Issued capital Reserves Accumulated losses Total equity	2021 $'000 (3,519) 1,013	2020 $'000 (7,202) 3,683
	(2,506)	(3,519)
	2021 $'000 7,177 2,290 13 882	2020 $'000 8,768 4,228 - 706
	10,362	13,702
	93,235 787 49,148 2,026 1,362 8,475	10,316 881 52,823 2,727 540 5,429
	155,033	72,716
	165,395	86,418
	10,694 12,243 842 2,127 3,298 12,488	4,954 11,327 794 1,792 2,505 4,096
	41,692	25,468
	549 30,917 62 1,419 433 16,320	214 25,000 61 2,252 331 -
	49,700	27,858
	91,392	53,326
	74,003	33,092
	159,095 (82,586) (2,506)	119,581 (82,970) (3,519)
	74,003	33,092

ReadyTech Holdings Limited Notes to the financial statements 30 June 2021

Note 37. Reconciliation of profit after income tax to net cash from operating activities

Profit after income tax expense for the year Adjustments for: Depreciation and amortisation Write off of non-current assets Net loss/(gain) on disposal of property, plant and equipment Net fair value loss on financial assets Share-based payments Foreign exchange differences Change in operating assets and liabilities: Decrease in trade and other receivables Decrease/(increase) in deferred tax assets Increase in prepayments Increase in other operating assets Increase in trade and other payables Increase in contract liabilities Increase in provision for income tax Decrease in deferred tax liabilities Increase in employee benefits Decrease in other provisions Increase/(decrease) in other operating liabilities Net cash from operating activities	Consolidated 2021 2020 $'000 $'000 2,155 3,943 11,057 9,375 8 - (1) 1 1,840 - 394 - (9) (62) 2,789 193 1,806 (490) (304) (249) (1,905) (511) 2,191 569 3,375 395 255 1,324 (4,853) (1,315) 2,302 949 (1,679) (317) 75 (54)	Consolidated 2021 2020 $'000 $'000 2,155 3,943 11,057 9,375 8 - (1) 1 1,840 - 394 - (9) (62) 2,789 193 1,806 (490) (304) (249) (1,905) (511) 2,191 569 3,375 395 255 1,324 (4,853) (1,315) 2,302 949 (1,679) (317) 75 (54)
	19,496	13,751

Note 38. Share-based payments

On 11 December 2020, the Group issued 702,922 performance rights to key management personnel as part of its long term incentives ('LTI') plan. The LTI performance rights are subject to an earnings per share ('EPS') hurdle (50% of grant value) and a relative total shareholder return ('TSR') hurdle which is compared against the S&P/ASX All Tech Index (50% of grant value).

These LTI performance rights will be evaluated in two tranches. The first tranche, equivalent to 50% of the total grant value, will be evaluated two years from 1 July 2020 ('the beginning of the performance period'). The second tranche, also equivalent to 50% of the total grant value, will be evaluated three years from the beginning of the performance period.

If the compound annual growth rate of EPS is less than the target of 9%, no vesting will occur. If the target is met, 50% of rights will vest. In the event that the compound annual growth rate is between 10-14%, vesting will be pro-rated between 50-100%.

If the relative TSR of the Company ranks at or above the 75[th] percentile, 100% of the rights will vest. In the event that the Company ranks at the 50[th] percentile, 50% of the rights will vest. For any achievement between the 50[th] and 75[th] percentile, vesting will be pro-rated between 50-100%.

The performance rights are not subject to an exercise price.

ANNUAL REPORT 30 JUNE 2021

ReadyTech Holdings Limited Notes to the financial statements 30 June 2021

Note 38. Share-based payments (continued)

Set out below are summaries of options granted under the plan:

2021 Grant date Expiry date 11/12/2020 30/06/2022 11/12/2020 30/06/2023	Balance at the start of the year - -	Granted 351,462 351,460	Exercised - -	Expired/ forfeited/ other - -	Balance at the end of the year 351,462 351,460
	-	702,922	-	-	702,922

No performance rights are exercisable at the end of the financial year ended 30 June 2021.

The weighted average share price during the financial year was $1.90 (2020: $1.65).

The weighted average remaining contractual life of options outstanding at the end of the financial year was 1.5 years.

For the performance rights granted during the current financial year, the valuation model inputs used to determine the fair value at the grant date, are as follows:

value at the grant	date, are as follows:
		Share price	Expected	Dividend	Risk-free	Fair value
Grant date	Expiry date	at grant date	volatility	yield	interest rate	at grant date
11/12/2020 11/12/2020	30/06/2022 30/06/2023	$2.10 $2.10	47.00% 47.00%	2.12% 2.12%	0.09% 0.12%	$1.790 $1.800

Note 39. Non-cash investing and financing activities

Note 39. Non-cash investing and financing activities
Additions to the right-of-use assets Shares issued in relation to business combinations	Consolidated 2021 2020 $'000 $'000 359 - 12,354 -
	12,713	-

ReadyTech Holdings Limited Notes to the financial statements 30 June 2021

Note 41. Earnings per share

Note 41. Earnings per share
Profit after income tax attributable to the owners of ReadyTech Holdings Limited Weighted average number of ordinary shares used in calculating basic earnings per share Adjustments for calculation of diluted earnings per share: Options over ordinary shares Weighted average number of ordinary shares used in calculating diluted earnings per share Basic earnings per share Diluted earnings per share	Consolidated 2021 2020 $'000 $'000 2,155 3,943
	Number 90,887,774 1,220,548	Number 80,005,371 -
	92,108,322	80,005,371
	Cents 2.37 2.34	Cents 4.93 4.93

Note 42. Events after the reporting period

Note 40. Changes in liabilities arising from financing activities

Consolidated Balance at 1 July 2019 Net cash from/(used in) financing activities Additions Balance at 30 June 2020 Net cash from/(used in) financing activities Acquisition of leases Changes through business combinations (note 35) Other changes Balance at 30 June 2021	Borrowings $'000 21,500 3,500 -	Lease liability $'000 2,196 (612) 1,554	Total $'000 23,696 2,888 1,554
	25,000 6,000 - - (83)	3,138 (1,036) 336 186 26	28,138 4,964 336 186 (57)
	30,917	2,650	33,567

ANNUAL REPORT 30 JUNE 2021

30 JUNE 2021

ANNUAL REPORT

ReadyTech Holdings Limited Directors' declaration 30 June 2021

In the Directors' opinion:

the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements;

Deloitte Touche Tohmatsu ABN 74 490 121 060 Grosvenor Place 225 George Street Sydney, NSW, 2000 Australia Phone: +61 2 9322 7000 www.deloitte.com.au

the attached financial statements and notes comply with International Financial Reporting Standards as issued by the International Accounting Standards Board as described in note 2 to the financial statements;
the attached financial statements and notes give a true and fair view of the Group's financial position as at 30 June 2021 and of its performance for the financial year ended on that date;
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable; and
at the date of this declaration, there are reasonable grounds to believe that the members of the Extended Closed Group will be able to meet any obligations or liabilities to which they are, or may become, subject by virtue of the deed of cross guarantee described in note 36 to the financial statements.

The Directors have been given the declarations required by section 295A of the Corporations Act 2001.

Signed in accordance with a resolution of Directors made pursuant to section 295(5)(a) of the Corporations Act 2001.

On behalf of the Directors

Independent Auditor’s Report to the members of ReadyTech Holdings Limited

Report on the Audit of the Financial Report

Opinion

We have audited the financial report of ReadyTech Holdings Limited (the “Company”) and its subsidiaries (the “Group”) which comprises the consolidated statement of financial position as at 30 June 2021, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information, and the directors’ declaration.

In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001 , including:

Giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its financial performance for the year then ended; and

_________Tony Faure Chairman 24 August 2021 Sydney

Complying with Australian Accounting Standards and the Corporations Regulations 2001.

Basis for Opinion

We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.

We confirm that the independence declaration required by the Corporations Act 2001 , which has been given to the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report for the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

ANNUAL REPORT 30 JUNE 2021

ANNUAL REPORT

30 JUNE 2021

Key Audit Matter

How the scope of our audit responded to the Key Audit Matter

Acquisition of Pentagon Holdco Pty Ltd
and its subsidiaries including Open Office
and McGirr (collectively “Open Office”)
and associated fair values of acquired
balances
On 23 March 2021, the Group completed
the acquisition of Open Office for $82.92
million, resulting in goodwill of $49.84
million as disclosed in Notes 2 and 35.
This transaction falls under the scope of
AASB 3_Business Combinations_which
requires
significant
management
judgement in determining the fair value of
assets acquired, including intangible assets
which are inherently judgemental.
The valuation of goodwill, customer
relationship intangibles and contingent
liabilities requires management judgement
and can be affected by:
•
the likelihood of the Group being
awarded the Government Licensing
Project
•
the revenue growth assumptions in
determining the achievement of earn
out targets
The Group has elected to record the
acquisition related entries as final as at 30
June 2021.

Our procedures included, but were not limited to:
•
Completing a walkthrough of the acquisition process and
assessing the design and implementation of the key
controls addressing the risk;
•
Testing the opening balance sheet for the acquired
business;
•
Assessing the competence and objectivity of the
management’s experts;
•
Engaging our valuation specialists to assess the intangibles
valuation report, including attending a series of calls with
management and management’s experts to assess the
valuation methodology, key underlying assumptions and
understand subsequent adjustments made to the model;
•
Evaluating management’s assessment in relation to the
likelihood of securing the Government Licensing Project
through discussion with management, and corroborating
this assumption to correspondence with the relevant
government agency and Open Office’s sales pipeline.;
•
Assessing management’s assumption of time period
required to achieve the earn out targets and comparing the
assumptions against Open Office’s historical revenue
growth rates;
•
Performing an independent assessment of the time period
required to achieve the earn out revenue targets and
comparing against management’s assumptions;
•
Assessing the methodology used in allocating the
calculated goodwill to the Group’s identified cash-
generating unit (“CGU”)
We also assessed the appropriateness of the disclosures in Note
2 and Note 35 to the financial statements.

Key Audit Matter

How the scope of our audit responded to the Key Audit Matter

Capitalisation of internally generated
software
During the year, the Group capitalised
internal software development project
costs totalling $5.52 million as disclosed in
Notes 2 and 12. These projects were
predominantly
in
relation
to
the
development of the Group’s key platforms.
The costs mainly comprised of payroll
expenses.
The capitalisation of internally generated
software
costs
requires
significant
judgment due to the size of the internal
costs
capitalised
and
assessing
the
capitalisation amount from the payroll
costs for each engineer.
The Group’s judgements also included
whether
capitalised
costs
were
of
developmental rather than research and
administrative nature (which would result
in the costs being expensed rather than
capitalised) and whether costs, including
payroll costs, were directly attributable to
relevant projects.

Our procedures included, but were not limited to:
•
Assessing the nature of the projects against the
requirements of AASB 138_Intangible Assets_if the
capitalisation criteria have been met;
•
Assessing management’s movement schedule of capitalised
labour by agreeing the underlying salaries and expenses to
the respective payroll report;
•
Assessing the procedures applied by the Group to review
the rates applied to capitalise payroll costs;
•
On a sample basis, discussing with respective entity’s
software engineers to corroborate the roles and
responsibilities as assessed by management;
•
Assessing the percentage of salaries and expenses that
were capitalised; and
•
Recalculating the amortisation expense for the year which
relates to capitalised labour.
We also assessed the appropriateness of the disclosures in Note
2 and Note 12 to the financial statements.

ANNUAL REPORT 30 JUNE 2021

Other Information

The directors are responsible for the other information. The other information comprises the information included in the Group’s annual report for the year ended 30 June 2021 , but does not include the financial report and our auditor’s report thereon.

Our opinion on the financial report does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the Directors 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 internal 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.

In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Auditor’s Responsibilities for the Audit of the Financial Report

Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report.

As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial report. We are responsible for the direction, supervision and performance of the Group’s audit. We remain solely responsible for our audit opinion.

We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.

From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial report of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on the Remuneration Report

Opinion on the Remuneration Report

We have audited the Remuneration Report included on pages 12 to 18 of the Directors’ Report for the year ended 30 June 2021. In our opinion, the Remuneration Report of ReadyTech Holdings Limited, for the year ended 30 June 2021, complies with section 300A of the Corporations Act 2001.

Responsibilities

The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.

==> picture [152 x 19] intentionally omitted <==

DELOITTE TOUCHE TOHMATSU

==> picture [89 x 42] intentionally omitted <==

Joshua Tanchel Partner Chartered Accountants

Sydney, 24 August 2021

ANNUAL REPORT 30 JUNE 2021

ReadyTech Holdings Limited Shareholder information 30 June 2021

Voting rights

Ordinary shares : On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote.

There are currently 90,005 Class A Performance Shares and 90,005 Class B Performance Shares on issue. As set out in the Notice of Meeting and accompanying documents dated 15 February 2021 ( Notice ), prior to Blooming (as defined in the Notice) the holders will not be entitled to vote at any general meeting or class meeting of the Company except where a vote is required by law.

After Blooming, the holders will not be entitled to vote ay any general meeting or class meeting of the Company except in the following circumstances:

(i) on a proposal to reduce the share capital of the Company;
(ii) on a resolution to approve the terms of a buy-back agreement;
(iii) on a proposal that affects rights attached to the Class A Performance Shares;
(iv) on a proposal to wind up the Company;
(v) on a proposal for the disposal of the whole of the Company’s property, business and undertaking;
(vi) during the winding up of the Company.

Holders of performance rights have no voting rights.

The below information is current as at 28 July 2021.

Distribution of equity securities

Analysis of number of equity security holders (fully paid ordinary shares) by size of holding:

Range	Number of holders	% of holders	Number of securities	% of securities
1 to 1,000	729	28.58	429,914	0.42
1,001 to 5,000	955	37.44	2,534,742	2.48
5,001 to 10,000	380	14.90	2,888,707	2.83
10,001 to 100,000	439	17.21	11,214,713	10.98
100,001 and over	48	1.88	85,081,700	83.29
Total number of security holders	2,551	100.00	102,149,776	100.00
Holders holding less than a marketable parcel of shares*	42	1.65%	1,230	0.00

ReadyTech Holdings Limited Shareholder information 30 June 2021

Unquoted securities

Unquoted securities	Unquoted securities	Unquoted securities
Type of security			Number of holders		Number of securities
Class A Performance Shares			8		90,005
Class B Performance Shares			8		90,005
Performance Rights			4		702,922
Class A Performance Shares and Class B Performance Shares
Range	Number of holders	% of holders		Number of securities		% of securities
1 to 1,000	3	37.50		2,408 Class A Performance Shares 2,408 Class B Performance Shares		2.65
1,001 to 5,000	2	25.00		2,112 Class A Performance Shares 2,112 Class B Performance Shares		2.34
5,001 to 10,000	1	12.50		6,775 Class A Performance Shares 6,775 Class B Performance Shares		7.52
10,001 to 100,000	2	25.00		78,710 Class A Performance Shares 78,710 Class Be Performance Shares		87.45
100,001 and over	0	0		0		0
Total number of security holders	8	8		90,005 Class A Performance Shares 90,005 Class B Performance Shares		100.00
Performance Rights
Range	Number of holders	% of holders		Number of securities		% of securities
1 to 1,000	0	0		0		0
1,001 to 5,000	0	0		0		0
5,001 to 10,000	0	0		0		0
10,001 to 100,000	0	0		0		0
100,001 and over	4	100.00		702,922		100
Total number of security holders	4	4		702,922		100.00

*marketable parcel of shares calculated based on closing market price on 28 July 2021 of $2.36.

Restricted securities

6,002,762 shares are currently subject to voluntary escrow arrangements. The voluntary escrow period ends on the date 5 trading days after the released by the Company of its 30 June 2021 audited full year accounts.

On-market buy back

There is no current on-market buy back.

Total of quoted and restricted securities

Total of quoted and restricted securities
Ordinary shares not subject to voluntary escrow (quoted securities)	96,147,014
Ordinary shares subject to voluntary escrow (restricted securities)	6,002,762
Total number of shares	102,149,776

ANNUAL REPORT 30 JUNE 2021

ReadyTech Holdings Limited Shareholder information 30 June 2021

==> picture [104 x 69] intentionally omitted <==

Twenty largest quoted equity security holders

Twenty largest quoted equity security holders	Twenty largest quoted equity security holders	Twenty largest quoted equity security holders
No. Shareholder Number of shares % of issued equity
1 PEMBA CAPITAL PARTNERS FUND I GP PTY LTD 33,294,212 32.59
2 J P MORGAN NOMINEES AUSTRALIA PTY LIMITED 16,753,814 16.40
3 OPEN OFFICE PTY LTD 4,213,238 4.12
4 CITICORP NOMINEES PTY LIMITED 4,127,761 4.04
5 NATIONAL NOMINEES LIMITED 3,532,837 3.46
6 MARC RAYMOND WASHBOURNE 2,861,363 2.80
7 NANAYAKKARA HOLDINGS PTY LTD 2,236,905 2.19
8 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 1,830,705 1.79
9 CS THIRD NOMINEES PTY LIMITED 1,464,804 1.43
10 MALVERN AVENUE MANAGEMENT PTY LTD 1,305,509 1.28
11 SYCAMORE MANAGEMENT PTY LTD 1,280,190 1.25
12 WASHBOURNE GROUP PTY LTD 1,147,051 1.12
13 MARISH PTY LTD 878,646 0.86
14 ANKSH PTY LTD 860,288 0.84
15 DARREN COPPIN 843,545 0.83
16 PEMBA CAPITAL PARTNERS PTY LTD 841,731 0.82
17 BNP PARIBAS NOMINEES PTY LTD 687,186 0.67
18 LORD COPPIN OF MARLBOROUGH PTY LTD 435,000 0.43
19 NIMESH SHAH 430,144 0.42
20 PEMBA CAPITAL PARTNERS PTY LTD 403,668 0.40
Top 20 holders of Shares	79,428,597	77.76
Balance of Shares	22,721,179	22.24
Total Shares on issue	102,149,776	100.00

Substantial holders

Substantial holders
Shareholder	Date of notice	Number of shares	% of issued equity1
Microequities Asset Management Pty Ltd	11 November 2020	11,967,676	12.83%
The Pemba Entities2	27 November 2020	34,539,611	37%

1 Percentage of issued equity held as disclosed in the substantial holding notices provided to the Company.

2 Pemba Capital Partners Fund I Partnership LP, Pemba Capital Partners Pty Limited ACN 121 906 045 as trustee of The Pemba Capital Co-Investment Trust and Pemba Capital Partners Pty Ltd ACN 121 906 045 as trustee of The Lirac Trust (together, the Pemba Entities).

==> picture [184 x 41] intentionally omitted <==

To learn more, visit readytech.io

AI assistant

READYTECH HOLDINGS LIMITED — Annual Report 2021

65678_rns_2021-10-13_f0ee92c7-6527-428b-8689-cf4ef2580317.pdf

2021 Annual Report

ANNUAL REPORT 30 JUNE 2021

CONTENTS

SOFTWARE

TONY FAURE CHAIRMAN

MARC WASHBOURNE CEO

FY21 results

• Revenue up 27.4% to $50.0 million (organic revenue up 15.1%)

• Underlying EBITDA up 21.4% to $18.9 million

• Underlying NPAT up 36.9% to $6.2 million

• Non-recurring costs of $4.0 million

Strategy update

Open Office acquisition driving new growth

ReadyTech’s investment in brand and reputation

Strategic vision for talent and culture

Ready for anything

ReadyTech Holdings Limited Corporate directory 30 June 2021

ReadyTech Holdings Limited Directors' report

30 June 2021

Directors

Principal activities

Dividends

Review of operations

Strong revenue and earnings growth in Education & Work Pathways

ANNUAL REPORT 30 JUNE 2021

ReadyTech Holdings Limited Directors' report 30 June 2021

High growth in Workforce Solutions

Successful integration of Open Office

Significant changes in the state of affairs

Matters subsequent to the end of the financial year

Likely developments and expected results of operations

Environmental regulation

Information on Directors

ANNUAL REPORT 30 JUNE 2021

ReadyTech Holdings Limited Directors' report 30 June 2021

Company secretaries

Meetings of Directors

ReadyTech Holdings Limited Directors' report 30 June 2021

Remuneration report (audited)

Non-executive Directors' remuneration

Principles used to determine the nature and amount of remuneration

Executive remuneration

(i) Fixed remuneration

(ii) Short-term incentives

ANNUAL REPORT 30 JUNE 2021

ReadyTech Holdings Limited Directors' report 30 June 2021

(iii) Long-term incentives

Group performance and link to remuneration

Use of remuneration consultants

Details of remuneration

Amounts of remuneration

ANNUAL REPORT 30 JUNE 2021

ReadyTech Holdings Limited Directors' report 30 June 2021

ANNUAL REPORT 30 JUNE 2021

ReadyTech Holdings Limited Directors' report 30 June 2021

ReadyTech Holdings Limited Directors' report

30 June 2021

Performance rights

Service agreements

Additional information

Share-based compensation

Issue of shares

Options

ReadyTech Holdings Limited Directors' report 30 June 2021

Additional disclosures relating to key management personnel

Shareholding

ReadyTech Holdings Limited Directors' report 30 June 2021

Shares issued on the exercise of options

Shares issued on the exercise of performance rights

Indemnity and insurance of officers

Indemnity and insurance of auditor

Performance rights holding

Proceedings on behalf of the Company

Non-audit services

Other transactions with key management personnel and their related parties

This concludes the remuneration report, which has been audited.

Shares under option

READYTECH HOLDINGS LIMITED Annual Report 2021