Top Education Group Ltd - Annual Report 2021

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TOP EDUCATION GROUP LTD 澳洲成峰高教集團有限公司

(Registered in New South Wales, Australia with limited liability)

(ACN 098 139 176)

(Stock code: 1752)

ANNOUNCEMENT OF ANNUAL RESULTS FOR THE YEAR ENDED 30 JUNE 2021

FINANCIAL HIGHLIGHTS

Revenue for the year was approximately AUD$24.8 million.
Gross profit was approximately AUD$11.0 million.
Gross profit margin for the year was approximately 44%.
The adjusted net profit for the year was approximately AUD$4.2 million[Note] .
Cash and cash equivalents as at 30 June 2021 was AUD$29.6 million.
The Board has resolved not to recommend any final dividend in respect of the year ended 30 June 2021.

Note:

The adjusted net profit is calculated as the net profit for the period, excluding the impact from certain expenses which are not indicative of the Group’s operating performance.

The Board is pleased to announce the audited consolidated annual results of the Group for the year ended 30 June 2021 together with the comparative figures for the corresponding period in 2020 as set out below:

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

For the year ended 30 June 2021

Notes REVENUE 4 Cost of sales Gross profit Interest income Other income and gains 4 Administrative expenses Advertising and marketing expenses Other operating expenses Finance costs 6 PROFIT BEFORE TAX 5 Income tax expense 7 PROFIT AND TOTAL COMPREHENSIVE INCOME FOR THE YEAR Attributable to: Owners of the Company Non-controlling interests EARNINGS PER SHARE ATTRIBUTABLE TO OWNERS OF THE COMPANY Basic earnings per share (AUD cents) 9 Diluted earnings per share (AUD cents) 9	2021 AUD$’000 24,845 (13,819) 11,026 60 1,755 (9,379) (2,134) (152) (850) 326 (143) 183 185 (2) 183 0.008 0.007	2020 AUD$’000 30,440 (14,996) 15,444 249 1,666 (8,870) (1,578) (91) (475) 6,345 (1,881) 4,464 4,355 109 4,464 0.176 0.168

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 June 2021

Notes NON-CURRENT ASSETS Property, plant and equipment 10 Intangible assets Right-of-use assets 11 Prepayments and deposits Goodwill 12 Deferred tax assets Total non-current assets CURRENT ASSETS Inventories Trade receivables 13 Prepayments, other receivables and other assets Tax receivable Cash and cash equivalents Total current assets CURRENT LIABILITIES Trade payables 14 Other payables and accruals Lease liabilities 11 Contract liabilities 15 Tax payable Total current liabilities NET CURRENT ASSETS TOTAL ASSETS LESS CURRENT LIABILITIES NON-CURRENT LIABILITIES Lease liabilities 11 Other payables and accruals Total non-current liabilities Net assets EQUITY Share capital Treasury shares Reserves Non-controlling interests Total equity	2021 AUD$’000 10,776 11,582 14,373 1,214 1,533 28 39,506 85 408 2,752 292 29,575 33,112 2,172 2,946 1,179 1,495 – 7,792 25,320 64,826 15,396 312 15,708 49,118 36,281 (2,236) 14,609 464 49,118	2020 AUD$’000 7,684 10,635 7,157 1,593 1,533 450 29,052 164 229 3,095 – 34,416 37,904 1,951 3,145 778 1,896 73 7,843 30,061 59,113 6,786 838 7,624 51,489 38,371 (2,236) 14,889 465 51,489

1. CORPORATE AND GROUP INFORMATION

The consolidated financial statements of Top Education Group Ltd (the “ Company ”), and its subsidiaries (collectively, the “ Group ”) for the year ended 30 June 2021 were authorised for issue in accordance with a resolution of the Directors on 24 September 2021.

Top Education Group Ltd is a limited liability company, incorporated on 2 October 2001 and domiciled in Australia. The registered office of the Company is located at Suite 1, Biomedical Building, 1 Central Avenue, Australian Technology Park, Eveleigh, New South Wales 2015, Sydney, Australia. The Company’s shares have been listed on the Main Board of the Stock Exchange since 11 May 2018.

The Group is principally engaged in providing private higher education services and English language courses in Australia. Further information on the nature of the operations and principal activities of the Group will be provided in the section headed “Report of the Directors” of the Group’s annual report for the year ended 30 June 2021. Information on other related party relationships of the Group will be provided in note 30 of the Group’s annual report for the year ended 30 June 2021.

Information about subsidiaries

Particulars of the Company’s principal subsidiaries are as follows:

	Place of	Issued	Percentage of equity	Percentage of equity
	incorporation/	ordinary/	attributable to the
	registration	registered	Company		Principal
Name	and business	share capital	Direct	Indirect	activities
Top Education Consulting (Beijing)	PRC/Mainland	Hong Kong	100	–	Provision of
Limited*	China	dollars (“HK$”)			education
		3,000,000			consulting
					services
Top Education Development Pty Ltd	Australia	AUD$100	100	–	Provision of
					and investments
					in education
					services
Scots English College Pty Ltd	Australia	AUD$550,000	85	–	Provision
					of English
					language courses

Top Education Consulting (Beijing) Limited is registered as a wholly-foreign-owned enterprise under PRC law.

2.1. BASIS OF PREPARATION

These consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (“ IFRSs ”) issued by the International Accounting Standards Board (the “ IASB ”) and the disclosure requirements of the Hong Kong Companies Ordinance. They have been prepared under the historical cost convention. These consolidated financial statements are presented in Australian dollars (“ AUD$ ”) and all values are rounded to the nearest thousand (“ AUD$’000 ”), except when otherwise indicated.

2.2. CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES

The Group has adopted the Conceptual Framework for Financial Reporting 2018 and the following new and revised IFRSs for the first time for the current year’s financial statements.

Amendments to IFRS 3 Definition of a Business Amendments to IFRS 9, IAS39 Interest Rate Benchmark Reform and IFRS 7 Amendments to IAS 1 and IAS 8 Definition of Material

The nature and impact of the Conceptual Framework for Financial Reporting 2018 and the revised IFRSs are described below:

(a) Conceptual Framework for Financial Reporting 2018 (the Conceptual Framework)

The Conceptual Framework sets out a comprehensive set of concepts for financial reporting and standard setting, and provides guidance for preparers of financial statements in developing consistent accounting policies and assistance to all parties to understand and interpret the standards. The Conceptual Framework includes new chapters on measurement and reporting financial performance, new guidance on the derecognition of assets and liabilities, and updated definitions and recognition criteria for assets and liabilities. It also clarifies the roles of stewardship, prudence, and measurement uncertainty in financial reporting. The Conceptual Framework is not a standard, and none of the concepts contained therein override the concepts or requirements in any standard. The Conceptual Framework did not have any significant impact on the financial position and performance of the Group.

(b) Amendments to IFRS 3

Amendments to IFRS 3 clarify and provide additional guidance on the definition of a business. The amendments clarify that for an integrated set of activities and assets to be considered a business, it must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output. A business can exist without including all of the inputs and processes needed to create outputs. The amendments remove the assessment of whether market participants are capable of acquiring the business and continue to produce outputs. Instead, the focus is on whether acquired inputs and acquired substantive processes together significantly contribute to the ability to create outputs. The amendments have also narrowed the definition of outputs to focus on goods or services provided to customers, investment income or other income from ordinary activities. Furthermore, the amendments provide guidance to assess whether an acquired process is substantive and introduce an optional fair value concentration test to permit a simplified assessment of whether an acquired set of activities and assets is not a business. The Group has applied the amendments prospectively to transactions or other events that occurred on or after 1 July 2020. The amendments did not have any impact on the financial position and performance of the Group.

(c) Amendments to IFRS9, IAS 39 and IFRS 7

Amendments to IFRS 9, IAS 39 and IFRS 7 address issues affecting financial reporting in the period before the replacement of an existing interest rate benchmark with an alternative risk-free rate (“ RFR ”). The amendments provide temporary reliefs which enable hedge accounting to continue during the period of uncertainty before the introduction of the alternative RFR. In addition, the amendments require companies to provide additional information to investors about their hedging relationships which are directly affected by these uncertainties. The amendments did not have any impact on the financial position and performance of the Group as the Group does not have any interest rate hedging relationships.

(d) Amendments to IAS 1 and IAS 8

Amendments to IAS 1 and IAS 8 provide a new definition of material. The new definition states that information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements. The amendments clarify that materiality will depend on the nature or magnitude of information, or both. The amendments did not have any significant impact on the financial position and performance of the Group.

3. OPERATING SEGMENT INFORMATION

The Group has identified the Chief Executive Officer (“ CEO ”) and the Board of Directors as the chief operating decision makers. The Group has only one reporting segment being the provision of private education services in Australia.

During the year, the Group operated within one geographical segment because all of its revenue was generated in Australia. All of the non-current assets of the Group are located in Australia. The non-current asset information is based on the assets’ location and excludes financial instruments and deferred tax assets.

The CEO and the Board of Directors as the chief operating decision makers examine the Group’s performance primarily based on the number of students and course fees earned.

No services provided to a single customer contributed 10% or more of the total revenue of the Group during the financial year.

4. REVENUE AND OTHER INCOME AND GAINS

An analysis of revenue is as follows:

Revenue from contracts with customers Course fee income Other service fee income Revenue from contracts with customers (i) Disaggregated revenue information Geographical markets Australia Timing of revenue recognition Course fee income recognised over time Others service fee income recognised over time	2021 AUD$’000 23,439 1,406 24,845 24,845 23,439 1,406 24,845	2020 AUD$’000 28,324 2,116
		30,440

		30,440

		28,324 2,116
		30,440

(ii) Performance obligations

Provision of private higher education services and English course services in Australia

The performance obligation is satisfied over time as services are rendered. The Group’s contracts with students for higher education programs are normally with duration of 0.5 year renewed up to total duration of 1 to 4 years depending on the education programs. The Group’s contracts with students for English courses are normally between 8 weeks and 20 weeks depending on the education programs. Tuition fees are determined and paid by the students before the start of each school term.

The transaction prices allocated to the remaining performance obligations (unsatisfied or partially unsatisfied) as at 30 June 2021 and 2020 are as follows:

		2021	2020
		AUD$’000	AUD$’000
Contract liabilities (Note	15)	1,495	1,896

Contract liabilities include short-term advances received to render education services. All the other remaining performance obligations are expected to be recognised within one year.

No revenue recognised during the year related to performance obligations that were satisfied in prior years.

Other income and gains Foreign exchange gains Remeasurement of contingent consideration Rent waiver Government grants (Note) Others	2021 AUD$’000 28 543 160 890 134 1,755	2020 AUD$’000 459 181 801 184 41
		1,666

Note: government grants represent temporary subsidies from government to support businesses during the economic downturn associated with COVID-19.

5. PROFIT BEFORE TAX

The Group’s profit before tax is arrived at after charging:

Notes Amortisation of intangible assets 16 Depreciation 10 Amortisation of right-of-use assets 11 Auditors’ remuneration Employee benefit expense (excluding directors’ and chief executive’s remuneration): Wages, salaries and other employee benefits Share-based payments Pension scheme contributions (defined contribution schemes) Less: Amount capitalised	2021 AUD$’000 1,774 1,075 1,994 250 7,675 1,267 631 (672) 8,901	2020 AUD$’000 1,372 608 2,144 270 9,538 1,074 808 (1,182)
		10,238

6. FINANCE COST

Interest on lease liabilities	2021 AUD$’000 850 850	2020 AUD$’000 475
		475

7. INCOME TAX

The Group is subject to income tax on profits arising in or derived from the jurisdiction in which the Group is domiciled and operates. Profits tax has been provided at the Group’s statutory tax rate of 26% for the year ended 30 June 2021, and 27.5% for the years ended 30 June 2020 on the estimated assessable profits.

No provision for Hong Kong profits tax has been made as the Group had no assessable profits derived from or earned in Hong Kong during the year.

Current – Elsewhere Charge for the year Underprovision for current tax of prior periods Deferred Total tax charge for the year	2021 AUD$’000 126 (99) 116 143	2020 AUD$’000 1,154 6 721
		1,881

A reconciliation of the tax expense applicable to profit before tax at the Group’s statutory tax rate (statutory tax rate for the jurisdiction in which the Group is domiciled) to the tax charge at the Group’s effective tax rate is as follows:

Profit before tax Tax at the Group’s statutory tax rate of 26% for 2021 and 27.5% for 2020 Expenses not deductible for tax Reduction in opening deferred taxes resulting from reduction in tax rate Others Tax charge at the Group’s effective rate DIVIDENDS Final – Nil (2020: HK0.3 cents) per ordinary share	2021 AUD$’000 % 326 85 26 93 28.5 64 19.6 (99) (30.4) 143 43.8	2020 AUD$’000 % 6,346 1,745 27.5 128 2.0 2 – 6 0.1 1,881 29.6 2021 2020 AUD$’000 AUD$’000 1,300 1,902	2020 AUD$’000 % 6,346 1,745 27.5 128 2.0 2 – 6 0.1 1,881 29.6 2021 2020 AUD$’000 AUD$’000 1,300 1,902
			29.6

			2020 AUD$’000 1,902

8. DIVIDENDS

During the year ended 30 June 2021, final dividends of HK0.3 cents per ordinary share in respect of the year ended 30 June 2020 was declared and paid to the owners of the Company.

9. EARNINGS PER SHARE ATTRIBUTABLE TO OWNERS OF THE COMPANY

The calculation of the basic earnings per share amount is based on the profit for the year attributable to owners of the Company of AUD$185,000 (2020: AUD$4,355,000) and the weighted average number of ordinary shares of 2,399,726,000 (2020: 2,479,549,000) on issue during the year.

The calculation of the diluted earnings per share amount is based on the profit for the year attributable to owners of the Company. The weighted average number of shares used in the calculation is the number of shares on issue during the year, as used in the basic earnings per share calculation, and the weighted average number of shares assumed to have been issued at no consideration on the deemed exercise or conversion of all dilutive potential shares into shares during the year.

The calculations of basic and diluted earnings per share are based on:

	2021	2020
	AUD$’000	AUD$’000
Earnings
Profit attributable to owners of the Company	185	4,355

Shares Weighted average number of shares in issue used in the basic earnings per share calculation Effect of dilution – weighted average number of shares: Performance rights and share options 10. PROPERTY, PLANT AND EQUIPMENT 30 June 2021 At 30 June 2020 and 1 July 2020: Cost Accumulated depreciation Net carrying amount At 1 July 2020, net of accumulated depreciation Additions Disposal Depreciation provided during the year At 30 June 2021, net of accumulated depreciation At 30 June 2021: Cost Accumulated depreciation Net carrying amount	Teacher reference books AUD$’000 317 (224) 93 93 23 – (38) 78 340 (262) 78	Number of shares 2021 2020 Ordinary shares Ordinary shares ’000 ’000 2,399,726 2,479,549 144,076 112,466 2,543,802 2,592,015 Plant and equipment Classroom and office equipment Total AUD$’000 AUD$’000 AUD$’000 2,509 6,549 9,375 (816) (651) (1,691) 1,693 5,898 7,684 1,693 5,898 7,684 531 3,768 4,322 – (155) (155) (292) (745) (1,075) 1,932 8,766 10,776 3,041 10,146 13,527 (1,109) (1,380) (2,751) 1,932 8,766 10,776

30 June 2020 At 30 June 2019 and 1 July 2019: Cost Accumulated depreciation Net carrying amount At 1 July 2019, net of accumulated depreciation Additions Acquisition of subsidiaries (note 16) Depreciation provided during the year At 30 June 2020, net of accumulated depreciation At 30 June 2020: Cost Accumulated depreciation Net carrying amount	Teacher reference books AUD$’000 286 (185) 101 101 31 – (39) 93 317 (224) 93	Plant and equipment AUD$’000 1,697 (484) 1,213 1,213 637 66 (223) 1,693 2,509 (816) 1,693	Classroom and office equipment AUD$’000 4,004 (295) 3,709 3,709 2,375 160 (346) 5,898 6,549 (651) 5,898	Total AUD$’000 5,987 (964) 5,023 5,023 3,043 226 (608) 7,684 9,375 (1,691) 7,684

11. LEASES

The Group as a lessee

The Group has lease contracts for items of office and buildings used in its operation. Leases of buildings generally have lease terms between 1 and 10 years.

(a) Right-of-use assets

The carrying amounts of the Group’s right-of-use assets and the movements during the year are as follows:

Right-of-use assets As at 1 July 2019 Additions Additions as a result of acquisition of a subsidiary Amortisation charge As at 30 June 2020 and 1 July 2020 Additions Amortisation charge As at 30 June 2021	Office premises AUD$’000 8,798 93 410 (2,144) 7,157 9,210 (1,994) 14,373	Total AUD$’000 8,798 93 410 (2,144) 7,157 9,210 (1,994) 14,373

(b) Lease liabilities

The carrying amount of lease liabilities and the movements during the year are as follows:

Carrying amount at 1 July New leases Additions as a result of acquisition of a subsidiary Accretion of interest recognised during the year Rent wavier due to COVID-19 Cash payment received due to COVID-19 Payments Carrying amount at 30 June Analysed into: Current portion Non-current portions	Lease liabilities 2021 2020 AUD$’000 AUD$’000 7,564 8,798 9,210 93 – 410 850 475 (159) (802) 200 – (1,090) (1,410) 16,575 7,564 1,179 778 15,396 6,786

(c) The amounts recognised in profit or loss in relation to leases are as follows:

Interest on lease liabilities Amortisation charge of right-of-use assets Expense relating to short-term leases with remaining lease terms ended on or before 30 June 2021 Expense relating to leases of low-value assets GOODWILL Cost: At 1 July Acquisition of subsidiaries (note 16) As at 30 June Accumulated impairment: At beginning and end of year Net carrying amount: At 1 July At 30 June	2021 AUD$’000 850 1,994 50 69 2,963 2021 AUD$’000 1,533 – 1,533 – 1,533 1,533	2020 AUD$’000 475 2,144 88 77
		2,784

		2020 AUD$’000 – 1,533
		1,533
		–
		– 1,533

12. GOODWILL

Impairment testing of goodwill

Goodwill acquired through business combination is allocated to the following cash-generating units for impairment testing:

Scots English College	2021 AUD$’000 1,533 1,533	2020 AUD$’000 1,533
		1,533

Cash-generating unit of Scots English College

The recoverable amount of the Scots English College Pty Ltd (“ SCOTS ”) cash-generating unit has been determined based on a value in use calculation using cash flow projections based on financial budgets covering a five-year period approved by senior management. The discount rate applied to the cash flow projections is 11%. The growth rate used to extrapolate the cash flows of SCOTS beyond the five-year period is 1%.

The following describes each key assumption on which management has based its cash flow projections to undertake impairment testing of goodwill:

Budgeted sales amounts – The budgeted sales amounts are based on the historical data and management’s expectation on the future market.

Budgeted gross margins – The basis used to determine the value assigned to the budgeted gross margins is the average gross margins achieved in the year immediately before the budget year, increased for expected efficiency improvements, and expected market development.

Long-term growth rate – The long-term growth rate is based on the historical data and management’s expectation on the future market.

Discount rate – The discount rate reflects specific risks relating to the relevant unit, which is determined using the capital asset pricing model with reference to the beta coefficient and debt ratio of certain publicly listed companies conducting business in the industry.

The values assigned to the key assumptions on market development of the cash-generating unit and the discount rate are consistent with external information sources.

13. TRADE RECEIVABLES

The Group’s students are required to pay tuition fees in advance for upcoming semesters. The outstanding receivables represent amounts related to students who have applied for the delayed payment of tuition fee. There is no fixed term for delayed payments. The Group seeks to maintain strict control over its outstanding receivables to minimise credit risk. Overdue balances are reviewed regularly by senior management. In view of the aforementioned and that the Group’s trade receivables relate to a large number of students, there is no significant concentration of credit risk. The Group does not hold any collateral or other credit enhancements over its trade receivable balances. Trade receivables are non-interest-bearing.

An aging analysis of the trade receivables as at the end of the reporting period, based on the transaction date is as follows:

Trade receivables Within 1 month 1 to 3 months	As at 30 June 2021 2020 AUD$’000 AUD$’000 408 229 408 229 As at 30 June 2021 2020 AUD$’000 AUD$’000 – – 408 229

The Group applies the simplified approach to provide for the expected credit losses prescribed by IFRS 9, which permits the use of the lifetime expected loss provision for all trade receivables. Trade receivables from students are considered to be credit-impaired when the students withdraw from the tuition programs and are assessed individually for lifetime ECL provision.

The Group assessed the expected losses on trade receivables from students grouped based on the ageing of the trade receivables, considering the historical default experience and forward-looking information, as appropriate. The Group uses debtors’ ageing to assess the impairment for students because these customers consist of a large number of students with common risk characteristics that are representative of the students’ abilities to pay all amounts due in accordance with the contractual terms. The loss rate applied is minimal. Generally, trade receivables are written off when the student withdraw from the tuition programs and are not subject to enforcement activity.

14. TRADE PAYABLES

An ageing analysis of the trade payables as at the end of the year, based on the payment due date, is as follows:

	2021	2020
	AUD$’000	AUD$’000
Over two months	2,172	1,951

15. CONTRACT LIABILITIES

Details of contract liabilities are as follows:

	2021	2020
	AUD$’000	AUD$’000
Short-term advances received from students
Course fees	1,495	1,896

Contract liabilities include short-term advances received from students in relation to the proportionate service not yet provided. The Group receives tuition fees from students in advance prior to the beginning of each academic term. Tuition fees are recognised proportionately over the relevant period of the applicable program.

16. ACQUISITIONS OF BUSINESSES

The Group did not acquire any businesses during the year ended 30 June 2021.

On 1 November 2019, the Group acquired an 85% interest in SCOTS. SCOTS is a private education institution established in Australia providing English language courses. The acquisition was made as part of the Group’s strategy to expand its international education network and increase market penetration. The purchase consideration for the acquisition was in the form of cash, with AUD$1,811,210 paid at the acquisition date, AUD$472,554 paid at the adjustment date, and the remaining AUD$1,267,796 estimated to be paid by 31 December 2021 subject to the below two earn out conditions being met:

(a) First earn out: if the financial year 2020 net profit after tax (“NPAT”) of SCOTS is AUD$1,000,000 or more, then the Group will pay 100% of the first earn out amount, being AUD$724,472; if the financial year 2020 NPAT of SCOTS is more than AUD$700,000 but less than AUD$1,000,000 and the aggregate of financial year 2020 NPAT plus the first half financial year 2021 NPAT is more than AUD$1,000,000, then the Group will pay 75% of the first earn out amount, being AUD$543,354.

(b) Second earn out: the Group will pay the second earn out amount, being AUD$543,354, within one month after SCOTS provides written evidence of its re-registration with the Australian Skill Quality Authority on or prior to 31 December 2022.

Due to the impact of COVID outbreak, neither of the first earn out conditions set out above have been met, therefore no first earn out amount was paid on the first earn out date, and hence the liability was taken to the income.

The fair values of the identifiable assets and liabilities of SCOTS as at the date of acquisition were as follows:

Property, plant and equipment Cash and bank balances Prepayments and other receivables Other payables and accruals Deferred tax asset Deferred tax liability Intangible assets Total identifiable net assets at fair value Non-controlling interests Goodwill on acquisition Satisfied by cash (for 85% shares)	Fair value recognised on acquisition AUD$’000 226 41 747 (820) 11 (730) 2,900 2,375 (356) 2,019 1,533 3,552

The Group incurred transaction costs of AUD$143,000 for this acquisition. These transaction costs have been expensed and are included in other expenses in the consolidated statement of profit or loss.

The goodwill recognised is primarily attributed to the assembled workforce of SCOTS, future market development and the expected business synergies arising from the acquisition, which is not separately recognised. The goodwill recognised is not expected to be deductible for income tax purposes.

The Group has elected to measure the non-controlling interests in SCOTS at the non-controlling interests’ proportionate share of SCOTS’ identifiable net assets.

An analysis of the cash flows in respect of the acquisition of SCOTS is as follows:

Cash consideration paid Cash and bank balances acquired Net outflow of cash and cash equivalents included in cash flows used in investing activities	AUD$’000 (2,284) 41 (2,243)

17. EVENTS AFTER THE REPORTING PERIOD

On 27 July 2021, SCOTS has been approved for a grant of AUD$149,500 from the Innovation Fund, which was established by the Australian Government Department of Education, Skills and Employment to support product innovation and investment in infrastructure, curriculum design, digital teaching solutions and staff expertise.

On 10 September 2021, Australian National Institute of Management and Commerce (“ IMC ”) has successfully applied and received approval for Commonwealth Grant Scheme funding of 684 short course places with a total funding of AUD$376,200.

MANAGEMENT DISCUSSION AND ANALYSIS

BUSINESS REVIEW

Introduction of the Group

As one of Australia’s primary and best-in-class private tertiary education providers, TOP has been nationally registered with Tertiary Education Quality and Standards Agency (“ TEQSA ”) since January 2012, and in May 2018 was also approved by TEQSA for Self-Accrediting Authority in the Broad Field of Education in Management and Commerce from AQF levels 5 to 9 including bachelor and master’s degree courses. TOP is one of only 9 institutes out of total 139 Australian higher education providers to be awarded this status. In this Broad Field, TOP’s Business School provides quality programs at both undergraduate and postgraduate levels. The relevant courses are also accredited by major professional bodies, such as ACCA, CPA Australia and CAANZ. The Company founded the very first Law School within a private higher education institute when both TEQSA and NSW LPAB officially accredited its degree program in Law.

In line with the core field of TOP’s higher education provision and the strategic development goal, TOP completed the process of registering the new trading name as Australian National Institute of Management and Commerce (“ IMC ”) with the relevant regulatory authorities in Australia and China.

PwC

PwC Nominees, as a nominee for PwC Australia, invested in the Company as a Shareholder in May 2016.

PwC Australia and the Company entered into an Alliance Agreement ceasing on 31 March 2023. Under the Alliance Agreement, PwC Australia provides services to the Company, which have assisted the Company to deliver initiatives including tertiary student career development and executive education programs including academic and non-academic courses in Australia, as well as designing ‘smart campus’ and digital education solutions. Prior to the expiry of the Alliance Agreement, the parties may agree to extend the term of the Alliance Agreement for a further period and may agree to vary its terms for the extension period.

Intelligent Education

Since 2020, to meet the demand for talents in the digital economy, TOP has cooperated with Alibaba Cloud, Fintech Australia, and other leading financial technology organisations to introduce digital technologies such as big data analysis, artificial intelligence, blockchain and financial technology into the programs. Through our own research and development, expert review and industry feedback, the Group has established a set of leading-edge courses with cross-industry innovation in Australia. It is the first set of digital innovative master’s programs accredited by the Association of International Accountants across Australia.

Accreditation

On 28 June 2020, TEQSA made the decision of extending TOP’s registration for an additional threeyear period until 5 March 2025 with an exemption from application renewal and TEQSA’s assessment. In the meantime, TOP’s accreditation of Master of Laws has also been extended from 23 October 2022 to 23 October 2025.

Operational Updates

TOP’s business operation had been impacted amid the pandemic due to various government restrictions across all areas during the Reporting Period. From an operational perspective the impact was primarily a decline in student enrolments compared to the year ended 30 June 2020, which resulted in a reduction in the total revenue and an increase in total expenses primarily emanating from the sudden shift of study mode from offline to online, as well as from the investment in promotion to retain competitiveness in the onshore market. However, the management team of the Group is actively managing the impact and risks arising from the pandemic by intensifying its efforts in exploring new markets for its business.

During the Reporting Period, the operations and goals following the strategies under the tremendous changes were developed as below:

Agility in Adapting to COVID-19 Challenges

A COVID-safe Campus

Since the pandemic happened in March 2020, the Group proactively donated Personal Protective Equipment to many international students within Australia and was the very first institute in Australian higher education sector to take the initiative of transitioning to online delivery of all courses. The Group understands how important it is to students and staff as well as to their family to feel safe and have a rewarding experience while living and studying in Australia. The Group has been putting the safety and wellbeing of its students and staff first, dealing with it as its highest priority and thus comprehensively enhancing public health protection on campus.

Cost Saving Initiatives

The Group has also initiated ongoing cost management measures including rationalising of campus and office property portfolio, employment expenses, and other administrative expenses. All executives of the Group reached a consensus to have their salary package frozen until the international students return.

Diversification of Student Portfolio

The Group has been continuously focusing on diversifying our students’ nationality mix, rather than being heavily dependent on recruiting international students from a single country/region.

The percentage of non-Chinese international students enrolled in the Reporting Period is approximately 63% of all international students, which increased by approximately 8% compared to the year ended 30 June 2020.

The number of international students from countries/regions like Vietnam, Brazil and Mongolia has seen the most significate increase, consistent with our feasibility study and analysis. The achievement of such diversification was the product of working with key agents to establish a local office, provision of COVID-19 Relief Support and offering special incentives to students, agents, and recruiting staff with background from the markets they represent for the Institutes to be more efficient on market expansion.

To respond to the outbreak of COVID-19, the Group has been seeking opportunities to appeal to the domestic market and has conducted market research to analyse current trends. The cutting-edge courses developed, and the digitalised technologies used under our innovative approach towards intelligent education represent the trend of higher education development in a digital economy, which would boost TOP’s competitive power in the higher education sector.

In addition, the Group has also been working on measures to relieve the financial stress of people willing to pursue their study during the pandemic by applying for available government funding. If successful, that will assist TOP in pivoting to and expanding in the domestic students’ market.

Students as the Centre of Our decision making

Historical-high Student Returning Rate

During the Reporting Period, TOP reached a historical high rate of students returning which benefits from the continuous provision of positive day-to-day experiences and motivation to our students. The management team was bent on providing students with services of the highest standard. Therefore, even with the uncertainty during the lockdown, TOP had managed to achieve the highest returning rate of current students with extra investment on enhancing their online learning experience.

Excellence on Student Services

The Group believes that caring, support, and connection are vital features to enhance the students’ sense of loyalty and belonging. During this challenging period, maintaining connections between the Institutes and students is a priority. Enriching students’ experience via various support channels is essential to help our students, particularly international students, adapt to the new environment and continue their study during and post COVID-19.

During the Reporting Period, the Group applied the following approaches (“ CMRF model ”) to implement the above. TOP aims to provide comprehensive support to our students. CMRF model consists of Communication, Monitoring, Resource, and Feedback. Through this model, TOP has successfully maintained a connection with most of our students.

C ommunication:

TOP has been maintaining a connection with students daily and weekly. Through two-way communication, we can identify students’ needs and help them solve their issues promptly.

M onitoring:

The Institutes have been closely working with the academic staff to monitor students’ academic performance to identify students with unsatisfactory performance and unusual behaviour such as missing class without notification. Once these students at risk are identified, we actively contact them and offer advice to facilitate their study.

R esource:

Based on the students’ needs and situation of COVID-19, TOP has been tailoring the content of the weekly newsletter to the students, including crucial days reminder, health information, student safety, mental health promotion, student welfare and wellbeing, and student activities. Special edition newsletters were also designed to increase student’s awareness of trending issues, such as cyber safety, spam prevention, adapting to online learning etc.

The Institutes have created a COVID-19 web page providing day-to-day support to help students to go through the challenges. We have also made online support modules available via student learning management system, including Student Experience Module and Mental Health Awareness Training Module. Students can access these resources 24/7.

The Group understands the significance of mental health for our students during the pandemic. The Institutes are aware that international students may not seek help due to cultural factors. Besides promoting mental health awareness in various ways as mentioned above, TOP also encouraged the students to communicate with us about their issues and concerns and offered them ongoing and personalised mental health support, for example free counselling services, mindfulness tips, and advice on coping with stress from COVID-19 and dealing with exams.

F eedback:

The Group understands that students’ needs may vary due to online learning. To ensure we can continuously provide quality learning and premium services to students, we always encourage them to provide feedback. The feedback is collected in various ways, such as from daily email communication, surveys, and phone interviews. The feedback is then distributed to the relevant department for analysis and strategy adjustment to improve the students’ experience.

Accounting Professional Year Program

TOP is an approved Accounting Professional Year Program (“ APYP ”) provider in consultation with CPA Australia, CAANZ, and the Institute of Public Accountants. TOP has been successfully delivering APYP which offers the unique combination of qualified trainers with real world business experience, and the highly focused classroom-based workplace readiness skills designed to prepare students for their professional life in Australia. During the Reporting Period, TOP was deemed compliant with the Accounting Professional Year regulations after the annual audit for APYP and will continue to provide high quality APYP services.

Intelligent-Digitalised Education

Smart-campus

The classrooms and offices at Bay 16, Locomotive Workshop were relocated to new premises at Bay 3, Locomotive Workshop in July 2020. The infrastructure of new premises is equipped with upgraded facilities and most cutting-edge digital technologies to lead an innovative pattern of education delivery method in Australia, adhering to the concept of Innovation towards Intelligent Education of the Group. The Group is committed to improving students’ learning experience and creating a campus that combines an industrial style and intelligent facilities.

Course Innovation

The Group has developed innovative short courses in high-demand areas to attract domestic students and professionals at work who seek to upgrade their qualifications in particular areas of interest. During the Reporting Period, short courses as Graduate Certificate of Data Analytics and Graduate Certificate of Digital Financial Technologies were newly introduced to the market.

TOP had also been developing cutting-edge and interdisciplinary programs along with its strategic plan, which integrates digitalisation elements including data analytics, artificial intelligence, FinTech and blockchain, to meet the requirements on the graduate attributes and career capability.

A Pilot Program of Establishing OMO Study Centre

Not only does the new campus provide the most cutting-edge facility to students within Australia, it also connects with our students overseas. In March 2021, the Group established the first study centre in China, which is a form of Online-Merge-Offline (OMO), a hybrid teaching model that combines online learning with offline tutoring to provide a physical learning space and support for students who cannot experience studying abroad during the pandemic. Online teaching incorporates the same educational resources as offline, covering a variety of advantages in terms of time, cost, and quality faculty. This helps international students to continue learning English and some professional courses even during the challenging time. Students can experience the same academic support and benefits of offline learning. This is not only a learning model amid the pandemic, but also a new, dynamic model to promote efficiency and resourcefulness and to sustain and scale in the post-pandemic era.

Centralised Student Management System

During the Reporting Period, the digitised student management system (“ SMS ”) had been fully implemented and assisted the Group in managing the students, staff, agents, and the campus.

SMS has provided a centralised datastore in that it manages all basic information that the Institutes need for smooth business operation. Also, it has enabled integration with third-party systems to act as a core system, and thus to convert a traditional offline business process to a centralised online process.

Such system facilitated for the Group the streamlining of the management processes, for example the enrolment of students, assessment of staff timetable, reporting to TEQSA for compliance reasons, and in doing that, helped mitigate the risks as well as increase the efficiency and accuracy of business operations during this challenging period.

Focus on Long-term Strategic Goals with High Quality Standard

During the Reporting Period, the Institutes kept on providing high-quality education and ensured that the students could still enjoy their entitlements with a full online course delivery. The innovation practices and strategies has also greatly enhanced TOP’s position of high standing in quality education and research in such cutting-edge disciplines together with the experts from world-class universities and research institutions. TOP will continuously retain and develop its research culture and activities, focusing on the research in cutting-edge and innovative disciplines.

On 27 April 2021, the updated Higher Education Standards Framework (Threshold Standards) 2021 was published on the Federal Register of Legislation with the new standard coming into effect on 1 July 2021.

Amongst all the changes, the most relevant to the Group’s strategy is the replacement of the six previous provider categories with four new categories. The University College category is in line with the Group’s strategy goal. The approaches for achieving the University College were considered and discussed, including developing course offerings that meet the future needs of students, employers, industries and communities, enhancing all-round learning and teaching, continuously improving student services to achieve outstanding student outcomes, collaborating with industry to offering innovative courses to contribute to the community, and building a conducive environment for academic staff to engage in scholarship activity.

Student Enrolments

For the year ended 30 June 2021, the total EFTSL of higher education services decreased by 7.5% comparing with the last financial year.

Bachelor of International Business(1) Bachelor of Applied Finance and Accounting(2) Bachelor of Laws Master of Professional Accounting Services(3) Master of International Business(4) Master of Business Administration(5) Others(6) Non-Award Unit Study Total	2021 177.8 117.0 26.9 297.8 70.2 330.1 22.0 152.6 1,194.4	2020 271.0 128.1 39.9 326.6 72.4 169.6 23.9 260.3
		1,291.8

Notes:

(1) This includes courses that are part of the same track, namely Associate Degree of Business and Diploma of Business.
(2) This includes courses that are part of the same track, namely Associate Degree of Applied Finance and Accounting and Diploma of Applied Finance and Accounting.
(3) This includes courses that are part of the same track, namely Master of Professional Accounting Services (formerly known as Master of Professional Accounting and Business), Graduate Diploma of Accounting and Graduate Certificate in Accounting. This also includes a small amount from students who enrolled in certain accounting units to fulfil academic requirements for membership with CPA Australia.
(4) This includes courses that are part of the same track, namely Master of Marketing and Public Relations, Graduate Diploma of Public Relations and Marketing, Graduate Diploma of International Business, and Graduate Certificate in Business Management.
(5) This includes courses that are part of the same track, namely Master of Business Administration, Graduate Certificate of Business and Graduate Diploma of Business Management.
(6) This includes all other postgraduate courses.

Tuition Fee

Annual tuition fee increases will be capped at 15% and increases over any three-year period will not exceed 30%. The tuition fee increase is determined by the school management teams subject to market conditions. During the Reporting Period, the tuition fee has been remained flat compared to 2020.

Course Name Diploma in Applied Finance and Accounting Associate Degree of Applied Finance and Accounting Bachelor of Applied Finance and Accounting Diploma of Business Associate Degree of Business Bachelor of International Business Graduate Certificate in Accounting Graduate Certificate in Business Management Graduate Certificate in Business Research Graduate Certificate in Business Graduate Certificate in Financial Planning Graduate Certificate in Financial Technologies Management Graduate Diploma of Accounting Graduate Diploma of International Business	International 2021 2020 AUD$ AUD$ 21,000 21,000 42,000 42,000 63,000 63,000 21,000 21,000 42,000 42,000 63,000 63,000 11,960 11,960 11,960 11,960 18,000 18,000 11,960 11,960 11,960 11,960 11,960 11,960 23,920 23,920 23,920 23,920	Domestic
		2021 2020 AUD$ AUD$ 17,000 17,000 34,000 34,000 51,000 51,000 15,000 15,000 30,000 30,000 45,000 45,000 8,500 8,500 8,500 8,500 10,000 10,000 8,500 8,500 8,500 8,500 8,500 8,500 17,000 17,000 17,000 17,000

Course Name Graduate Diploma of Marketing Graduate Diploma of Marketing and Public Relations Graduate Diploma of Business Administration Graduate Diploma of Financial Planning Graduate Diploma of Financial Technologies Management Master of International Business Master of Marketing and Public Relations Master of Professional Accounting Master of Accounting Practice Master of Professional Accounting Services (formerly known as Master of Professional Accounting and Business) Master of Business Research Master of Business Administration Master of Business Administration (Professional Accounting) Master of Business Administration (FinTech Management) Master of Financial Planning Master of Accounting Intelligence Master of Applied Financial Technology and Blockchain Bachelor of Laws Master of Laws	International 2021 2020 AUD$ AUD$ 23,920 23,920 23,920 23,920 23,000 23,000 23,920 23,920 23,920 23,920 35,880 35,880 35,880 35,880 35,880 35,880 35,880 35,880 47,840 47,840 72,000 72,000 46,000 46,000 46,000 46,000 46,000 46,000 47,840 47,840 47,840 47,840 47,840 47,840 80,000 80,000 20,000 20,000	Domestic
		2021 2020 AUD$ AUD$ 17,000 17,000 17,000 17,000 17,000 17,000 17,000 17,000 17,000 17,000 25,500 25,500 25,500 25,500 25,500 25,500 25,500 25,500 34,000 34,000 40,000 40,000 34,000 34,000 34,000 34,000 34,000 34,000 34,000 34,000 34,000 34,000 34,000 34,000 48,000 48,000 20,000 20,000

Outlook

The market environment is expected to remain equally challenging in the following year, with uncertainty in relation to vaccines roll-out, border reopening and regional policies.

The Group is prepared to respond to any ongoing challenges by continuing to maintain the financial viabilities by pioneering initiatives and employing capabilities developed to support organic growth and mitigate risks.

The Group will continue to focus on expanding business domestically with a greater investment on innovative curricula providing students with career opportunities to enhance future employability.

As of the date of this announcement, 684 Commonwealth Government Funded short course places have been approved for students to undertake our newly developed courses in digital financial technology, FinTech management and other business-related courses. These funded places will provide additional options for domestic students and the recently unemployed to engage in higher education across a wider range of fields, which will support TOP in offsetting the decline in international student enrolments caused by the border closure, to pivot its delivery to domestic students and offer opportunities for building a more diversified market.

The cost management measures will be ongoing across the business including employment expenses, lease expenses and other administrative expenses to strengthen our financial viability to survive and recover from this challenging period.

Meanwhile, the Group is actively seeking opportunities to establish more offshore study centres to minimise the impact of the pandemic and travel restrictions. Developing and providing more practical programs to students within the SAA scope will remain the Group’s goal, with dedication to ongoing development commitment to obtaining approval from the regulator of programs outside of the SAA scope such as programs in the field of information technology.

Attracting and retaining talents across different industries is a key component to survival amid the pandemic and vital to increasing the Group’s competitiveness. The Group will continue to implement performance-based rewards initiatives and encourage employees to undertake professional development to overcome unforeseen challenges or be better prepared and equipped once we have come out on the other side.

FINANCIAL REVIEW

Revenue

Revenue represents the value of services rendered during the Reporting Period. The Group derives revenue primarily from tuition fees.

The Group’s revenue decreased by approximately 18.4% from approximately AUD$30.4 million for the year ended 30 June 2020 to approximately AUD$24.8 million for the year ended 30 June 2021. A breakdown of revenue is shown below:

Course fee income Other service fee	2021 AUD$’000 23,439 1,406 24,845	2020 AUD$’000 28,324 2,116 30,440	Change % -17.2% -33.6%
			-18.4%

The decrease in revenue was primarily due to the decrease in the course fee and other service fee income affected by the outbreak of the COVID-19 pandemic.

Tuition fee contributed over 94.3% of the Group’s revenue while other service fee represented approximately 5.7% of the revenue.

Cost of Sales

Cost of revenue consists primarily of staff costs, depreciation and amortisation, office expenses, consultation and student related costs.

Cost of revenue decreased by approximately AUD$1.2 million, or 7.8%, from AUD$15.0 million for the year ended 30 June 2020 to AUD$13.8 million for the year ended 30 June 2021. This decrease in cost of revenue was mainly resulted from the net effect of the decrease in student related expenses and employee related expenses, and the increase in depreciation of property, plant and equipment and amortisation of intangible assets.

Gross Profit and Gross Profit Margin

Gross profit decreased by 28.6% from AUD$15.4 million for the year ended 30 June 2020 to AUD$11.0 million for the year ended 30 June 2021, and gross profit margin decreased from approximately 50.7% to approximately 44.4%, which was mainly due to the impact of the COVID-19 pandemic on course fee income.

Other Income

Other income increased by 5.3% from approximately AUD$1.67 million for the year ended 30 June 2020 to approximately AUD$1.76 million for the year ended 30 June 2021. The increase primarily resulted from the net effect of the decrease in foreign exchange gain and rent waiver, and the increase in government grants, remeasurement of contingent liabilities and other income.

Administrative Expenses

Administrative expenses primarily consist of the salaries and other benefits for general and administrative staff, office-related expenses, depreciation and public company expenses.

Administrative expenses increased by approximately 5.7% from approximately AUD$8.9 million for the year ended 30 June 2020 to AUD$9.4 million for the year ended 30 June 2021. This increase was mainly due to (i) the increase in rental related expenses due to a new lease entered during the reporting period, (ii) the increase in depreciation of property, plant and equipment, and (iii) the increase in employee share scheme expense.

Advertising and Marketing Expenses

Advertising and marketing expenses primarily consist of salaries and other benefits for recruitment and marketing staff, advertising expenses and student recruitment expenses.

Advertising and marketing expenses increased by approximately 35.2% from approximately AUD$1.6 million for the year ended 30 June 2020 to approximately AUD$2.1 million for the year ended 30 June 2021. The increase was primarily due to the increase in business promotions and employee expenses.

Finance Costs

Finance costs represent the interest expense on the lease liabilities.

Finance costs increased by approximately AUD$0.4 million from AUD$0.5 million for the year ended 30 June 2020 to approximately AUD$0.9 million for the year ended 30 June 2021. This increase was arising from lease liabilities due to a new lease entered during the reporting period.

Profit for the Year

As a result of the above factors and the impact of the COVID-19 pandemic, the net profit for the year of the Group decreased by approximately 95.9% from approximately AUD$4.5 million for the year ended 30 June 2020 to approximately AUD$0.2 million for the year ended 30 June 2021.

Adjusted net profit

The Group defines its adjusted net profit as its profit for the period after adjusting for those items which are not indicative of the Group’s operating performances. This is not a IFRSs measure, the Group has presented this item because the Group considers it an important supplemental measure of the Group’s operational performance used by the Group’s management as well as analysts or investors. The following table shows profit and adjusted net profit of the Group for the periods presented below:

Profit for the year from continuing operations Add: Non-cash leases interest and amortisation expenses due to adoption of IFRS 16 Acquisition cost Additional one-off expenses due to COVID-19 Covid-19 tuition fee support to students Additional online teaching and exam expenses under COVID-19 Donations Adjusted net profit	Year ended 30 June 2021 2020 AUD$’000 AUD$’000 183 4,464 1,776 1,210 – 143 79 91 1,865 – 177 – 73 – 4,154 5,908	Year ended 30 June 2021 2020 AUD$’000 AUD$’000 183 4,464 1,776 1,210 – 143 79 91 1,865 – 177 – 73 – 4,154 5,908
		5,908

Adjusted net profit for the year ended 30 June 2021 decreased by approximately AUD$1.7 million or approximately 29.1% as compared with the corresponding period in 2020.

Capital Expenditures

Our capital expenditures for the year ended 30 June 2021 were approximately AUD$4.3 million, consisted primarily of expenditures on (i) plant and equipment, (ii) classroom equipment and office and (iii) teachers reference books.

Liquidity, Financial Resources and Gearing Ratio

As at 30 June 2021, the Group had cash on hand of approximately AUD$29.6 million (30 June 2020: AUD$34.4 million) with no bank borrowings (30 June 2020: nil). During the year ended 30 June 2021, the Group financed our working capital requirements and capital expenditures principally through net cash inflows from operating activities and the net proceeds raised from the Listing.

As at 30 June 2021, the gearing ratio, which is calculated on the basis of total bank borrowing and total equity of the Group was 0% (30 June 2020: 0%).

Significant Investments, Acquisitions and Disposals

Other than disclosed in this announcement, there were no other significant investments held, material acquisitions or disposals of subsidiaries, associates and joint ventures during the year, nor any plan authorised by the Board for other material investments or additions of capital assets during the year ended 30 June 2021.

Foreign Exchange Risk Management

The functional currency of the Group is AUD. The majority of the Group’s revenue and expenditures are denominated in AUD, except those certain expenditures are denominated in HKD. As at 30 June 2021, certain bank balances and payables were denominated in USD and HKD. The Group did not use any financial instruments for hedging purposes. However, the management monitors foreign exchange exposure and will consider hedging significant foreign currency exposure when the need arises.

Charges on the Group’s Assets

There were no charges on the Group’s assets as at 30 June 2021 and 2020.

Contingent Liabilities

Details of the contingent purchase considerations relates to the acquisition of SCOTS are set out in Note 16 of the consolidated financial statements. As at 30 June 2021, the Group did not have any other significant contingent liabilities.

EVENTS AFTER THE REPORTING PERIOD

On 10 September 2021, IMC has successfully applied and received approval for Commonwealth Grant Scheme funding of 684 short course places with a total funding of AUD$376,200.

DIVIDEND

The Board does not recommend the payment of a final dividend to the Shareholders of the Company for the year ended 30 June 2021 (2020: HK0.3 cents per ordinary share).

ANNUAL GENERAL MEETING

The forthcoming AGM will be held on Thursday, 25 November 2021. A notice convening the AGM and all other relevant documents will be published and dispatched to the Shareholders.

CLOSURE OF REGISTER OF MEMBERS

For determining the entitlement to attend and vote at the forthcoming AGM to be held on Thursday, 25 November 2021, the register of members of the Company will be closed from Monday, 22 November 2021 to Thursday, 25 November 2021, both days inclusive, during which period no transfer of shares will be registered. In order to be eligible to attend and vote at the AGM, all duly completed and signed transfer forms accompanied by the relevant share certificates must be lodged with the Company’s share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited at Shops 1712 – 1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong for registration no later than 4:30 p.m. (Hong Kong time) on Friday, 19 November 2021.

PURCHASE, SALE OR REDEMPTION OF THE COMPANY’S LISTED SECURITIES

During the Reporting Period, the Company purchased a total of 38,930,000 Shares on the Stock Exchange at an aggregate consideration (before brokerage and expenses) of approximately HK$11,310,250. As at 30 June 2021, all the aforesaid repurchased Shares have been cancelled.

	Total
	number of	Highest price	Lowest price
	Shares	paid per	paid per	Aggregate
Month of repurchases	repurchased	Share	Share	consideration
		HK$	HK$	HK$
July 2020	10,000,000	0.300	0.270	2,825,200
August 2020	13,890,000	0.325	0.270	4,073,350
September 2020	930,000	0.300	0.285	271,900
October 2020	4,800,000	0.315	0.290	1,454,300
November 2020	2,530,000	0.310	0.285	749,350
December 2020	3,320,000	0.300	0.285	967,050
January 2021	3,460,000	0.295	0.270	969,100
February 2021	–	–	–	–
March 2021	–	–	–	–
April 2021	–	–	–	–
May 2021	–	–	–	–
June 2021	–	–	–	–

Save as disclosed above, neither the Company nor any of its subsidiaries purchased, sold or redeemed any Shares during the Reporting Period.

PRE-EMPTIVE RIGHTS

There are no provisions for pre-emptive rights under the Constitution, or under the Corporations Act, which would oblige the Company to offer new Shares on a pro-rata basis to existing Shareholders.

SUFFICIENCY OF PUBLIC FLOAT

Based on information that is publicly available to the Company and within the knowledge of the Directors, at least 25% of the Company’s total number of issued Shares are held by the public as at the date of this announcement.

USE OF NET PROCEEDS FROM THE COMPANY’S INITIAL PUBLIC OFFERING

Net proceeds from the Listing (including the over-allotment option and after deducting underwriting fee and relevant expenses) amounted to approximately HK$172 million or AUD$30 million. As at 30 June 2021, a total amount of approximately HK$107.9 million out of net proceeds had been used by the Group according to the allocation set out in the Prospectus.

Purpose Acquiring or investing in educational groups/institutions in the PRC and in Australia Developing “Intelligent Education”, which includes utilising digital education solutions for course contents, infrastructure of campuses and offices, and teaching and learning methods Upgrading TOP’s campus Expanding TOP’s campus locations Establishing virtual student experience centre Expanding TOP’s research and scholarship activities and professional development towards our strategic goal Expanding TOP’s marketing activities Working capital and general corporate purposes Total	Percentage to total amount 41.0% 27.8% 9.4% 5.5% 0.6% 3.1% 4.4% 8.2% 100.0%	Net proceeds HK$ (million) 70.4 47.8 16.1 9.5 1.0 5.3 7.6 14.0 171.7	Utilised Amount HK$ (million) 21.0 33.9 16.1 9.5 1.0 4.8 7.6 14.0 107.9	Unutilised amount Expected timeline for utilising the unutilised amount(1) HK$ (million) 49.4 by the end of 2022 13.9 by the end of 2022 – – – – – – 0.5 by the end of 2022 – – – – 63.8

Note:

(1) The expected timeline for utilising the remaining amount of proceeds is based on the best estimation made by the Group. It will be subject to change based on the current and future development of market and environment conditions.

CORPORATE GOVERNANCE PRACTICES

The Board is committed to achieving good corporate governance standards.

The Board believes that good corporate governance standards are essential in providing a framework for the Company to safeguard the interests of Shareholders, enhance corporate value, formulate its business strategies and policies, and enhance its transparency and accountability.

The Company is of the view that during the year ended 30 June 2021, the Company has complied with applicable code provisions of the CG Code as set out in Appendix 14 to the Listing Rules except code provisions A.2.1 as noted in the paragraph headed “Chairman and Chief Executive Officer”.

Chairperson and Chief Executive Officer

Pursuant to the code provision A.2.1 of the CG Code, the roles of the chairperson and the chief executive of the Company should be separate and should not be performed by the same individual.

The chairperson and CEO of the Company were both held by Dr. Minshen Zhu, who was the founder of the Company, for the period to 28 April 2021. Following the passing of Dr. Minshen Zhu, Ms. Sumeng Cao, an executive Director, was appointed as the Chairperson and Chief Executive Officer of the Company on 30 April 2021. The Board believes that the roles of both Chairperson and CEO vested in the same individual would enable our Company to achieve higher responsiveness, efficiency and effectiveness when formulating business strategies and executing business plans.

Furthermore, in view of Ms. Cao’s extensive industrial experience and significant role in the historical development of our Company, the Board believes that it is beneficial to the business prospects of our Company that Ms. Cao acts as both our Chairperson and CEO, and the balance of power and authority is sufficiently maintained by the operation of the Board, comprising the executive Directors, non-executive Directors, and independent non-executive Directors.

MODEL CODE FOR SECURITIES TRANSACTIONS

The Company has adopted the Model Code as the code of conduct regarding Directors’ securities transactions. Specific enquiry has been made by the Company with all Directors and the Directors have confirmed that they have complied with the Model Code throughout the Reporting Period.

The Company has also adopted the Model Code as the Employees Written Guidelines, to regulate the securities transactions of the relevant employees who are likely to be in possession of unpublished price-sensitive information of the Company. To the best knowledge of the Company, no incident of noncompliance of the Employees Written Guidelines by the relevant employees was noted by the Company.

AUDIT COMMITTEE AND REVIEW OF FINANCIAL INFORMATION

The Audit Committee consists of four independent non-executive Directors. The Audit Committee has reviewed the annual results of the Group for the year ended 30 June 2021, including the accounting principles and practices adopted by the Group.

The figures in respect of the Group’s consolidated statement of financial position, consolidated statement of profit or loss and other comprehensive income and the related notes thereto for the year ended 30 June 2021 as set out in the preliminary announcement have been agreed by the Group’s auditors, Ernst & Young, Recognised Public Interest Entity Auditor, to the amounts set out in the Group’s audited consolidated financial statements for the year. The work performed by Ernst & Young, Recognised Public Interest Entity Auditor, in this respect did not constitute an assurance engagement in accordance with International Standards on Auditing, International Standards on Review Engagements or International Standards on Assurance Engagements issued by the International Auditing and Assurance Standards Board and consequently, no assurance has been expressed by Ernst & Young on this preliminary announcement.

PUBLICATION OF ANNUAL RESULTS ANNOUNCEMENT AND ANNUAL REPORT

This annual results announcement is published on the website of the Stock Exchange at www.hkexnews.hk and on the website of the Company at www.top.edu.au. The annual report of the Company for the year ended 30 June 2021 containing all the information required by the Listing Rules will be dispatched to the Shareholders of the Company and published on the above websites in due course.

ACKNOWLEDGEMENT

On behalf of the Board, I would like to express my sincere gratitude to the Company’s management and staff members for their dedication and hard work and our Shareholders for their trust and support.

DEFINITIONS

“Academic Board” the academic board of our Institutes

“ACCA” Association of Chartered and Certified Accountants “AGM” annual general meeting of the Company “Alliance Agreement” the alliance agreement dated 27 May 2016 entered into between the Company and PwC Australia

“AQF” the Australian Qualifications Framework, which specifies the standards for educational qualifications in Australia
“ATP” the Australian Technology Park “AUD$” Australian dollars, the lawful currency of Australia

“Audit Committee”

the audit committee of the Board

“Australia” the Commonwealth of Australia “award” a qualification under levels 1 to 10 of the AQF “Billion Glory” Billion Glory Group Holdings Limited 兆隆集團控股有限公司, a company incorporated under the laws of Hong Kong with limited liability on 8 June 2016, which is wholly owned by Mr. Yang
“Board” the board of Directors “Business School” Sydney City School of Business, as the name adopted for the Company’s academic division covering higher education courses in the field of Management and Commerce
“CAANZ” Chartered Accountants Australia and New Zealand “CG Code” the Corporate Governance Code contained in Appendix 14 to the Listing Rules
“China” or “PRC” the People’s Republic of China, which, for the purpose of this announcement and for geographical reference only, except where the context requires, does not include Hong Kong, Macau and Taiwan
“Companies Ordinance” the Companies Ordinance (Chapter 622 of the Laws of Hong Kong), as amended, supplemented or otherwise modified from time to time
“Company”, “Institutes”, Top Education Group Ltd (ACN 098 139 176) 澳洲成峰高教集團有 “TOP”, “we”, “us” or 限公司, a public company registered in New South Wales, Australia “our” with limited liability on 2 October 2001 and trading as Top Education Institute as well as Australian National Institute of Management and Commerce
“Connected person(s)” has the meaning ascribed to it under the Listing Rules
“Connected transaction(s)” has the meaning ascribed to it under the Listing Rules
“controlling shareholder(s)” has the meaning given to it in the Listing Rules and, unless the context otherwise requires, refers to the controlling shareholder(s) of our Company, being the Controlling Shareholders Group
“Controlling Shareholders collectively, Dr. Zhu (deceased), Mr. Yang, Tristar United, Mr. Lee, Group” Mr. Wang and Billion Glory, being a group of six individuals and entities

“Corporations Act” the Corporations Act 2001 (Cth) of Australia, as amended, supplemented or otherwise modified from time to time, which is the principal legislation regulating companies in Australia

“Council” the Council of our Institutes “course” a program of study that will confer an award upon completion “CPA Australia” CPA Australia Ltd “CRICOS” the Commonwealth Register of Institutions and Courses for Overseas Students “Director(s)” the director(s) of the Company “Dr. Zhu” Dr. Minshen Zhu 祝敏申 (deceased), formerly an executive Director, the chairman of the Board, the chief executive officer and the appointed representative of the Controlling Shareholders Group

“EFTSL” equivalent full-time student load, which is a measurement of student enrolment at an institution calculated by dividing the total number of units taken by students in a given year by the average number of units a single full-time student should take in a year “Employee” (a) any employee (including without limitation any executive Director) of the Company;

(b) any non-executive Director (including independent non-executive Directors);
(c) any member of the Council; and
(d) any consultant of the Company,

excluding any employee who is resident in a place where the award of Awarded Shares and/or the vesting of Awarded Shares pursuant to the terms of the Scheme is not permitted under the laws or regulations of such place or where in the view of the Board or the Committee or the Trustee (as the case may be), compliance with applicable laws or regulations in such place makes it necessary or expedient to exclude such employee

“Group”

the Company, its subsidiaries and its consolidated affiliated entities from time to time

“higher education”	studies in pursuit of a qualification under levels 5 to 10 of the AQF,
	including a diploma, advanced diploma, associate degree, bachelor’s
	degree, graduate certificate, graduate diploma, master degree and
	doctoral degree
“Hong Kong” or “HK”	the Hong Kong Special Administrative Region of the PRC
“Hong Kong dollars” or	Hong Kong dollars, the lawful currency of Hong Kong
“HK$” or “HKD”
“IFRS”	International Financial Reporting Standards, as issued from time to
	time by the International Accounting Standards Board
“Law School”	Sydney City School of Law, as the name adopted for the Company to
	provide degree courses in law
“Listing”	the listing of our Shares on the Main Board of the Stock Exchange
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock Exchange, as
	amended, supplemented or otherwise modified from time to time
“Main Board”	the stock exchange (excluding the option market) operated by the Stock
	Exchange which is independent from and operated in parallel with
	GEM of the Stock Exchange
“Minsheng Development”	Minsheng Education Development Company Limited, a direct wholly-
	owned subsidiary of Minsheng Education Group
“Minsheng Education Group”	Minsheng Education Group Company Limited (民生教育集團有限公
	司, an exempted company incorporated in the Cayman Islands with
	limited liability on 13 December 2005, listed on the Main Board of the
	Stock Exchange on 22 March 2017 with Stock Code 1569
“Model Code”	Model Code for Securities Transactions by Directors of Listed Issuers
	contained in Appendix 10 to the Listing Rules
“Mr. Lee”	Amen Kwai Ping Lee李桂平, a non-executive Director and one of the
	members of the Controlling Shareholders Group
“Mr. Wang”	Xin Wang王新, one of the members of the Controlling Shareholders
	Group
“Mr. Yang”	Qingquan Yang楊清泉, one of the members of the Controlling
	Shareholders Group

“NSW LPAB”

the Legal Profession Admission Board, New South Wales

“pathway program”	a program by which students who complete certain required studies at
	one institution may become eligible to transfer to another institution to
	continue their studies and receive credit for work completed
“Prospectus”	the prospectus of the Company dated 27 April 2018
“PwC Australia”	The Australian partnership of PricewaterhouseCoopers (ABN
	52 780 433 757), Australia, a member of the global network of
	PricewaterhouseCoopers firms, each of which is a separate and
	independent legal entity
“PwC Nominees”	PricewaterhouseCoopers Nominees (A.C.T.) Pty Ltd (ACN 008 474
	397), a company registered in Australian Capital Territory, Australia
	with limited liability on 29 August 1969, which is owned as to 50%
	by PricewaterhouseCoopers Nominees (N.S.W.) Pty Ltd and 50% by
	PricewaterhouseCoopers Nominees (Victoria) Pty Ltd, a Shareholder
“Remuneration Committee”	the remuneration committee of the Board
“Reporting Period”	the period from 1 July 2020 to 30 June 2021
“SAA”	Self-Accrediting Authority
“SCDP”	the Student Career Development Program
“Securities and Futures	Securities and Futures Ordinance (Chapter 571 of the Laws of Hong
Ordinance” or “SFO”	Kong)
“Share(s)”	share(s) in the capital of the Company
“Shareholder(s)”	holder(s) of the Share(s)
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“TEQSA”	the Tertiary Education Quality and Standards Agency in Australia
	established under the Tertiary Education Quality and Standards Agency
	Act 2011
“Tristar United”	Tristar United Investment Limited, a company incorporated under the
	laws of New Zealand with limited liability on 12 November 2001, and
	is a Shareholder

“Trust Deed”

a trust deed dated 23 October 2018 entered into between the Company and the Trustee (as restated, supplemented and amended from time to time)

“Trustee” Pacific Custodians Pty Ltd (ACN 009 682 866) (which is independent of and not connected with the Company) and any additional or replacement trustees, being the trustee or trustees for the time being of the trusts declared in the Trust Deed

“US$” or “USD” United States dollars, the lawful currency of the United States

“Xinjiang Guoli” Xinjiang Guoli Minsheng Equity Investment Co., Ltd. (新疆國力民生股權投資有限公司), a company established under the laws of the PRC with limited liability on 6 November 2000, and is a substantial Shareholder

By order of the Board of Top Education Group Ltd Sumeng Cao Chairperson of the Board

Sydney, Australia, 24 September 2021

As at the date of this announcement, the executive Director is Ms. Sumeng Cao, the non-executive Directors are Mr. Amen Kwai Ping Lee, Mr. Thomas Richard Seymour (Mr. Kai Zhang as his alternate), Mr. Yi Dai and Mr. Edward Chiang and the independent non-executive Directors are Professor Weiping Wang, Professor Brian James Stoddart, Mr. Tianye Wang and Professor Steven Schwartz.