for personal use only financial statements for the year ... · for personal use only financial...

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Arowana International Limited and its

Controlled Entities (formerly Intelligent Solar Limited and its Controlled Entities)

ABN 83 103 472 751

Financial Statements for the year ended 30 June 2013

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TABLE OF CONTENTS

Chairman’s Letter 3

Managing Directors’ Letter 4

Corporate Governance Statement 7

Directors’ Report 12

Auditors Independent Declaration 21

Consolidated Income Statement 22

Consolidated Statement of Comprehensive Income 23

Consolidated Statement of Financial Position 24

Consolidated Statement of Changes in Equity 25

Consolidated Statement of Cash Flows 26

Notes to Financial Statements 27

Directors’ Declaration 65

Independent Auditors Report 66

Additional Information for Listed Companies 68

Corporate Directory 70

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Arowana International Limited and its Controlled Entities (formerly Intelligent

Solar Limited and its controlled entities)

Chairman’s Letter

For the year ended 30 June 2013

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Dear Shareholders,

As Chairman of the Board of Directors, I am pleased to present to you the 2013 full year results for Arowana

International Limited (“AWN”). Prior to discussing the financial results I would like to briefly mention the key

achievements of AWN over what has been a successful transition year, culminating in the company’s ASX re-

quotation.

Key Achievements

• New Business Acquisition: As some shareholders may be aware the company was placed into

administration in July 2011 and subsequently recapitalised in February 2012 by a new Board of Directors

and management team. The new board and management team investigated a range of new business

opportunities which resulted in the successful acquisition of Arowana International Holdings Limited

(“AIHL”) in April 2013. This acquisition now forms the operating businesses of AWN.

• ASX Re-Quotation: AWN successfully re-quoted on the ASX in April 2013 following a $9m capital raising

and the acquisition of AIHL.

• Diversified Growth Businesses: AWN now has a growth oriented portfolio of businesses in the education,

diagnostic testing and training & events industries that all deliver strong cash flows across different

currencies. In addition, the Company has $20.6m of cash on hand to pursue organic and acquisition growth

opportunities.

Financial Performance

For the year ended 30 June 2013, AWN delivered consolidated revenue of $12.1m and a statutory profit after

tax attributable to equity holders of $1.8m. Given AIHL was only acquired in April 2013 these figures do not

represent a full year normalised basis of operations. However, they do provide an indication of the positive

earnings attributes of AWN’s business. As a result, the Board has resolved to declare an unfranked dividend of

0.85 cents per share expected to be paid on 25 October 2013. This represents an annualised yield of 9.2% from

the time AIHL was acquired to 30 June 2013 based on the recent share price of $0.40.

On behalf of the board, I would like to take this opportunity to thank all the staff and the management team

for their work in this important transitional year for AWN. The Board will continue to be involved in providing

guidance and support to the AWN team to ensure that the Company continues to focus on investing and

operating in a manner that provides increasing benefits for all of our stakeholders.

Equally as important, on behalf of the board, I would also like to thank our shareholders for their ongoing

support and patience throughout the positive transformation period of the Company over the last 12 months. I

look forward to sharing further news with you in the year ahead as AWN works to grow its existing businesses

and invest in new business opportunities.

David Malcolm Keefe

Chairman For

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Managing Director’s Letter


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Dear Shareholders,

It is with pleasure that I present to you the inaugural Arowana International Limited (“AWN”) annual report

following the Company’s transformation into an earnings and cash flow positive diversified holding company.

As the Chairman has already outlined it has been an eventful year for AWN and the recapitalisation and

acquisition of Arowana International Holdings Limited (“AIHL”) has provided the Company with solid

foundations for sustainable growth going forward. I would also like to take this opportunity to thank all our

stakeholders for their support of AWN over the past year.

Company Overview

Following on from the acquisition of AIHL, AWN now owns and operates the following business units:

• Education Division: This division is known as the Intueri Education Group (“Intueri”) and is one of New

Zealand’s leading vocational education providers to domestic New Zealand students and to international

students. Intueri offers courses around New Zealand across a wide range of industries including design and

arts, beauty and spa therapy, culinary design and hospitality management as well as hairdressing, make up

and commercial diver training. Intueri’s focus is to provide students with practical learning skills while also

ensuring courses deliver students a widely recognised qualification so that our graduates can find

employment in the fields they are most passionate about.

• Diagnostic Testing Division: This division comprises of Thermoscan Inspection Services (“Thermoscan”).

Based in Brisbane, Thermoscan provides non-destructive testing and condition monitoring services using

thermal imaging technology. Non-destructive testing is applied in a range of industries to detect

temperature changes in mechanical and electrical equipment which may indicate potential defects. The key

advantage of non-destructive testing is the potential to prevent and predict equipment failure.

• Events & Training Division: This division comprises of Key Media HRM which operates in Singapore and

provides training, professional development and information services to human resources professionals

and executives in the Asian region. The Key Media HRM’s flagship event is the HR Summit which is one of

leading conference events for the human resources sector in South East Asia.

Operations Review

Since the completion of the acquisition of AIHL on 4 April 2013, AWN’s management team has been focused on

the onboarding and integration of these businesses, particularly within the Intueri Group.

Education Division

The AWN management team has been focused on rapidly deploying its proprietary on boarding and integration

programme for the 5 separate education institutions that were acquired. The execution of this programme is

now on schedule following a slower than expected start due to delays in receiving various approvals following

the completion of the acquisitions. This programme encompasses both cost optimisation / efficiency initiatives

as well as tactical and strategic growth initiatives.

It is also important to note that it is the modus operandi of AWN management to invest significantly in both

opex and capex (across people, processes and systems) in the first year following acquisition, so as to ensure

the foundations are in place for sustainable growth over a rolling 5 to 10 year investment time frame. Most

importantly, the programme incorporates the roll out of initiatives to further improve the student experience

and student outcomes across all colleges within Intueri. For

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The slower than expected commencement of renewal works in Christchurch together with regulatory

uncertainty led to international student enrolment levels and revenue being lower than internal management

expectations from acquisition date to 30 June 2013. However, the regulatory uncertainty has since cleared and

could deliver a positive impact going forward (as it may result in more international students enrolling in 2 year

courses rather than a 1 year course).

Regulatory changes are a constant feature of operating in the education industry and this is a key reason for

acquiring and developing a diversified portfolio of courses and colleges. With respect to Christchurch, Intueri

has exposure via the Design and Arts College, which continues to face challenging circumstances (as are all

other education providers in Christchurch). AWN management has moved to mitigate the impact of this by

opening up a Design and Arts College Campus in Auckland, which is now taking enrolments.

Whilst group revenue for Intueri was lower than expected in the months leading up to 30 June 2013, this was

mitigated by savings from cost optimisation / efficiency initiatives as well as the impact of the approximately

10% appreciation of the New Zealand dollar against the Australian dollar since the acquisition of AIHL.

Training & Events Division

Since being acquired the performance of this division has been above management’s internal expectations. In

particular the financial performance of the HR Summit (HRM’s flagship event) was particularly strong and the

division delivered a record financial performance with strong margins and cash flow. In addition, the decline in

the Australian dollar by approximately 9% against the Singapore dollar has provided a further uplift.

Diagnostic Testing Division

Since being acquired the performance of this division has been significantly above management’s internal

expectations. This has been driven by better performance on both revenue and margin.

Financial Performance

AWN reported an audited statutory profit after tax of $1.8m for the year ended 30 June 2013. This result

should be considered together with the following information:

• AWN acquired all its current operating businesses on 4 April 2013 via the acquisition of AIHL.

• Earnings from AWN’s operating businesses are only included from 4 April 2013 onwards for the purpose of

calculating AWN’s statutory financial results.

• Prior to 4 April 2013 AWN had no operating divisions and a different capital structure and as a result there

are no meaningful numerical comparisons to prior period performance within this annual report.

• AWN’s statutory financial results also contain non-recurring costs related to the acquisition of AIHL, the

associated equity raising costs and the cost of re-quotation of AWN on the ASX.

As a result of the above factors AWN’s statutory financial results for the year ended 30 June 2013 does not

represent a normalised full year of operations. However, on a full year normalised basis, the earnings before

interest and tax of the company is in line with the prior financial year after normalising for the impact of non-

recurring transaction related expenses, growth related operating expenditure investment, ongoing cost

optimisation initiatives and the effects of the slower than anticipated rebuild across Christchurch (which

impacted on enrolments for Intueri).

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Future Strategy

The AWN team will continue to focus on its strategic objective of investing and operating businesses across a

targeted range of industries that provide a high return on invested capital (“ROIC”). In addition, we are also

assessing opportunities through the lens of return on invested time (“ROIT”), meaning investing and operating

decisions that maximise returns on time spent. In relation to the existing businesses, the divisional

management teams and the AWN enterprise office team are working closely to implement a number of growth

initiatives. These initiatives are designed to deliver a sustainable step change in the earnings and cash flow

growth profile of each business within AWN.

As at 30 June 2013 AWN had $20.6m of cash on hand. AWN is actively reviewing a number of value accretive

acquisitions for the company across Australia, New Zealand and Asia. In particular, we are seeing a number of

attractive opportunities in the Asian region where AWN can not only use its disciplined investment and

operational processes to create shareholder value but leverage its strong networks. As always, the AWN team

will continue to apply its disciplined forensic approach in assessing acquisition opportunities and will continue

to apply a long term mindset in all investment and operational activities.

Kevin Chin

Managing Director

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Corporate Governance Statement


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Arowana International Limited (the “Company” or “AWN” formerly known as Intelligent Solar Limited or “ISL”)

and its controlled entities (together “Group”) had in place the following corporate governance policies for the

entire financial year ended 30 June 2013.

Principle 1 – Lay solid foundation for management and oversight

Board Roles and Responsibilities

The Board formalised its roles and responsibilities into a Charter. The Board Charter defined the matters that

are reserved for the Board and those that the Board delegated to management.

In summary, the responsibilities of the Board included:

• Oversight of the Company, including its control and accountability systems;

• Setting the Company’s major goals including the strategies and financial objectives to be implemented by

management;

• Appointing, removing and controlling the Managing Director;

• Ratifying the appointment and, where appropriate, the removal of the Chief Financial Officer/Finance

Director and/or Company Secretary;

• Input into and final approval of management’s development of corporate strategy and performance

objectives;

• Reviewing and ratifying systems of risk management and internal compliance and control, codes of

conduct and legal compliance;

• Monitoring senior management’s performance and implementation of strategy, and ensuring that

appropriate resources are available (including review of succession planning);

• Approving and monitoring the progress of major capital expenditure, capital management, acquisitions

and divestitures;

• Approving and monitoring financial and other reporting; and

• Corporate governance.

The Board delegated responsibility to the Managing Director for:

• Developing and implementing corporate strategies and making recommendations on significant corporate

strategic initiatives;

• Maintaining an effective risk management framework and keeping the Board and market fully informed

about material risks;

• Developing the Group annual budget, recommending it to the Board for approval and managing day-to-

day operations within the budget;

• Managing day-to-day operations in accordance with standards for social and ethical practices which have

been set by the Board;

• Making recommendations for the appointment of key management personnel, determining terms of

appointment, evaluating performance, and developing and maintaining succession plans for key

management roles; and

• Approval of capital expenditure and business transactions within predetermined limits set by the Board.

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Performance Evaluation

The Board was responsible for approving the performance objectives and measures for the Managing Director

and assessing whether these objectives had been satisfied by the performance of the Managing Director during

the relevant period and in accordance with agreed terms of engagement.

The Managing Director was responsible for approving the performance objectives and measures of other

senior executives in consultation with the Board.

The Board has adopted an on-going, self-evaluation process to measure its own performance and the

performance of its committee.

The review process takes into consideration all of the Board’s key areas of responsibility and accountability and

is based on an amalgamation of factors including capability, skill levels, understanding of industry complexities,

risks and challenges, and value adding contributions to the overall management of the business.

Principle 2 – Structure of the Board to add value

At 30 June 2013, the Board comprised of 3 non-executive directors and 1 managing director. The Board

comprises of:

• David Malcolm Keefe – Chairman and Non-Executive Director

• Kevin Tser Fan Chin – Managing Director and Finance Director

• Paul Welch – Non Executive Director (resigned on 21 August 2013)

• Hon John Colinton Moore – Non Executive Director (Appointed on 19 Nov 2012)

Chairman

During the year the Chairman of the Board was Mr David Malcolm Keefe who is a non-executive director and is

considered an independent director. The Chairman and Managing Director have separate roles.

Nomination and Remuneration Committee

The Nomination & Remuneration Committee Charter was adopted by the current board of the Company during

year ended 30 June 2013 to provide the terms of reference for the Nomination & Remuneration Committee.

Principle 3 – Promote Ethical and Responsible Decision Making

Code of Conduct

A code of conduct was established. In summary, it provided that the directors and officers:

• Act honestly and in good faith and in the best interest of the Company;

• Use due care, skill and diligence in fulfilling their duties;

• Use the powers of their position for a proper purpose, in the interest of the Company;

• Will not misuse the Company’s information;

• Will not allow personal interests, or those of associates, conflict with the interest of the Company;

• Exercise independent judgement and actions;

• Maintain the confidentiality of Company information acquired by virtue of their position;

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• Will not engage in conduct likely to bring discredit to the Company; and

• Will act honestly, in good faith and in the best interest of the Company.

Share Trading Policy

The Company had a share trading policy regarding directors and employees trading in its securities. Directors,

officers and employees were subject to the Corporations Act 2001(Cth) restrictions in relation to applying for,

acquiring and disposing of securities in, or other relevant products of, the company (or procuring another

person to do so), if they are in possession of inside information.

Under the Trading Policy, directors, officer and employees of the Company were restricted from trading in the

Company’s securities during the period of one (1) month preceding the making of an announcement to the

market by the Company relating to:

• The Company’s Annual results;

• The Company’s Half Year results;

• The Chairman’s Address; and

any other material and / or price sensitive matters for which disclosure is required to be made by the Company

under the ASX Listing Rules or the Corporations Act.

Diversity

The Board adopted a diversity policy in March 2012, available upon request. Diversity includes, but is not

limited to, gender, age, ethnicity and cultural background. The Company is committed to diversity and

recognises the benefits arising from employee and board diversity and the importance of benefiting from all

available talent.

The Board is responsible for developing policies in relation to a corporate culture that supports diversity and

the implementation of measureable diversity objectives.

The Company’s strategies may include:

• Recruiting from a diverse range of candidates for all positions including senior executive roles and board

positions;

• Ensuring succession planning considers diversity;

• Mentoring and professional development programs;

• Networking opportunities;

• Pay equity to ensure equal pay for equal work across our workforce;

• Mentoring and support networks for women who return from maternity leave; and

• Training and awareness programs to foster a corporate culture that embraces and values diversity.

No women are currently represented on the Board.

Due to the current size, nature and scale of the Company’s activities the Board has not yet developed

objectives regarding gender diversity. As the size and scale of the Company grows the Board will set and aim to

achieve gender diversity objectives for director and senior executive positions as they become vacant and

appropriately qualified candidates become available.

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Principle 4 – Safeguard integrity in financial reporting

Audit and Risk Committee

The Company established an Audit Committee during the year ended 30 June 2013.

The role of the Audit & Risk Committee is to assist the Board in monitoring the processes and controls

associated with the financial reporting function that ensure the integrity of the Company’s financial

statements. Specifically, the audit committee oversees:

• The integrity of external financial reporting;

• The independence of the external auditor;

• Ensuring that the directors and senior management are provided with financial and non-financial

information that is of the high quality and relevant to the judgments to be made by them;

• Ensuring that controls are established and maintained in order to safeguard the Group’s financial and

physical resources;

• Ensuring that systems or procedures are in place so that the Group complies with relevant statutory and

regulatory requirements; and

• Assessing risks arising from the Group’s operations, and consider the adequacy of measures taken to

moderate those risks.

In accordance with the ASX’s Corporate Governance Principles and Recommendations, the Audit & Risk

Committee is comprised of a majority of independent directors. The Chairman of the Committee is The Hon.

John Moore, and members are Mr Malcolm Keefe and Mr Kent Kwan.

Principle 5 – Make timely and balanced disclosure

The Company had a disclosure policy regarding procedures relating to the notification of price sensitive

information to the ASX and the subsequent posting of announcements on the Company’s website.

Principle 6 – Respect the rights of shareholders

The Company has a shareholder communication policy which included:

• Dealing fairly, transparently and openly with both current and prospective shareholders;

• The use of available channels and cost effective technologies to reach shareholders who may be

geographically dispersed and in order to communicate promptly with all shareholders; and

• Facilitating participation in shareholders meetings and dealing promptly with shareholder enquiries.

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Principle 7 – Recognise and manage risk

The Board has established a risk oversight and framework policy. The Board is responsible for the oversight of

the Group’s risk.

The Managing Director is responsible for preparing the Group’s risk profile and establishing appropriate

systems and controls to minimise risk.

The Managing Director will report on the risk profile and the effectiveness of these systems and controls to the

Board of Directors at least annually.

The external auditors will be requested to report any internal control issues that are identified in the course of

review of the Group’s half-year results and the audit of the full year results.

The Managing Director will confirm annually in writing to the Board that:

• The integrity of the financial statements is based on a sound system of risk management including internal

compliance and control systems

The Group’s risk management including internal compliance and control systems is operating efficiently and

effectively in all material aspects.

Principle 8 – Remuneration Policies

The Company established a nomination and remuneration committee.

The remuneration policy has been discussed in the Remuneration Report. However, due to the relatively small

size of the Company and its operations, no meetings of the nomination and remuneration committee were

held during the year.

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Directors’ Report


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Your Directors present their report on Arowana International Limited (“Company”, or “AWN”) and its

controlled entities (or the “Group”) for the financial year ended 30 June 2013.

These financial statements are for year ended 30 June 2013. On 4 April 2013, the Company acquired all its

current operations via the acquisition of Arowana International Holdings Limited (“AIHL”). Earnings from the

operating businesses are only included from 4 April 2013 onwards for the purposes of calculating the

Company’s statutory results.

1. DIRECTORS

The names of directors in office at any time during or since the financial year are:

Name, qualification and

independence status

Experience, qualification, special responsibilities and other directorships

Mr David Malcolm Keefe

Chairman

Independent Non-Executive

Director

Malcolm was the former Chief Operating Officer of Corporate Express

Australia. The year prior to Malcolm joining Corporate Express Australia in

1999 its shares were trading as low as $0.23 (adjusted for a 2 for 1 share

split). During Malcolm’s tenure the shares had risen above $7.50. Prior to

this role, Malcolm was the Managing Director of Kalamazoo Australia Pty

Limited. Malcolm also has extensive international business experience

having worked in Hong Kong, the United Kingdom and Africa.

Malcolm holds a Bachelor of Science degree (Hon) from the University of

London.

Chairman of the Nomination and Remuneration Committee and member of

the Audit and Risk Committee

Chairman since Nov 2011

Other current directorships in a listed company: None

Previous directorships for the period FY10 to FY13 in a listed company:

None

Mr Kevin Tser Fah Chin

Managing Director and

Finance Director

Kevin is the founder of Arowana & Co., Arowana Partners Group and co-

founder of Arowana Capital and was responsible for the recapitalisation of

AWN. Kevin has extensive experience in “hands on” strategic and

operational management, private equity, leveraged buyouts of public

companies, mergers and acquisitions and capital raisings.

Kevin holds a Bachelor of Commerce degree from the University of New

South Wales where he was one of the inaugural University Co-Op Scholars

with the School of Banking and Finance. Kevin is a Fellow of FINSIA

(Financial Services Institute of Australia) where he also lectured for the

FINSIA Masters Degree course, Advanced Industrial Equity Analysis. Kevin

is a qualified Chartered Accountant.

Member of Nomination and Remuneration Committee

Managing Director and Finance Director since Nov 2011



None

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Directors’ Report


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2. COMPANY SECRETARY

Thomas Robert John Bloomfield

Thomas is an experienced Chartered Company Secretary and has acted for numerous ASX listed and unlisted

companies. He has experience working with and consulting to a range of international and domestic clients.

Thomas is currently General Manager of Corporate Secretarial Services at Boardroom Pty Limited. He was

appointed Company Secretary on 30 January 2012.

Name, qualification and

independence status

Experience, qualification, special responsibilities and other directorships

Hon. John Moore

Non-Executive Director

John was the former Federal Minister for Industry, Science and Tourism in

1996 and held that portfolio until 1998. In 1998, John assumed the role of

Federal Minister of Defence and held that portfolio until his retirement

from politics in 2001.

John holds a Bachelor of Commerce and Associate in Accountancy from the

University of Queensland.

Chairman of the Audit and Risk Committee and Member of Nomination

and Remuneration Committee

Director since Nov 2012

Other current directorships in a listed company: Herencia Resources Limited


None

Paul Welch

Non-Executive Director

Paul is a Tax Partner with PWC based in Sydney. Prior to this role, he was a

Tax Partner with RSM Bird Cameron, Baker Mackenzie and Deloitte.

Paul holds a Masters of Law (University of Technology, Sydney), a Masters

of Law and Legal Practice (University of Technology, Sydney), a Bachelor of

Commerce (University of Western Sydney) and is a Chartered Tax Advisor.

Director since Nov 2011

Resigned on 21 Aug 2013



None

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Directors’ Report


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3. DIRECTORS MEETINGS

The number of directors’ meetings (including meetings of committees of directors) and number of meetings

attended by each of the directors of the Company during the financial year are:

Board Meetings Audit and Risk Committee Nomination and

Remuneration Committee

Director Attended Held Attended Held Attended Held

Mr Malcolm Keefe 14 14 - - - -

Mr Kevin Chin 12 14 - - - -

Mr John Moore 9 11* - - - -

Mr Paul Welch 12 14 - - - -

* Meetings held since appointment as director

4. PRINCIPAL ACTIVITIES

The Group undertook no significant activities until the acquisition of the operating business via AIHL on 4 April

2013. Since the acquisition, the principal activities of the Group related to education, training and events and

diagnostic testing. Please refer to Managing Director’s letter for further information.

There were no other significant changes in the nature of the activities of the Group during the year.

5. OPERATING RESULTS

The consolidated profit before tax of the Group for the year ended 30 June 2013 was $2,192,096

(2012: Profit $418,226). The consolidated profit after tax of the Group for the year ended 30 June 2013 was

$1,752,201 (2012: Profit: $471,757).

6. DIVIDENDS PAID OR RECOMMENDED

No dividends were declared or paid during the year ended 30 June 2013 (2012: nil).

7. REVIEW OF OPERATIONS

Please refer to the Managing Directors’ letter within this Annual Report.

8. FINANCIAL POSITION

The net assets of the Group have increased by $41,639,993 (decreased in 2012: $3,859,497) from 30 June

2012.

The main changes in the financial position have resulted from the:

• The company recording a profit for the year of $1,752,201;

• Acquisition of AIHL and its underlying operating businesses which has resulted in goodwill of

$35,820,522;

• Increase in issued capital of $50,493,537 as a result of issue of share capital for cash and acquisition of

AIHL; and

• Borrowings of $18,038,957 utilised primarily by AIHL for acquisition of the education businesses.

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Directors’ Report


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9. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

The Company was renamed as Arowana International Limited on 4 April 2013 following the successful

acquisition of AIHL and its underlying operating businesses. The Company then re-commenced quotation on

the Australia Securities Exchange (“ASX”).

10. ENVIRONMENTAL ISSUES

The Group’s operations are not subject to environmental regulations.

11. EVENTS SUBSEQUENT TO REPORTING DATE

No matters or circumstances have arisen since the end of the financial year which significantly affected or may

significantly affect the operations of the Group and Company, the results of those operations, or the state of

affairs of the Group and Company in future financial years, except for the following:

• Declaration of dividend of 0.85 cents per share on 30 September 2013 payable on 25 October 2013.

• On 7 August 2013, Paul Welch tendered his resignation as a director of AWN, effective 21 August 2013.

12. LIKELY DEVELOPMENTS

Please refer to the Managing Directors’ letter within this Annual Report.

13. DIRECTORS INTERESTS

The relevant interest of each director in shares issued by the companies within the Group and other related

bodies corporate, as notified by the directors to the ASX in accordance with Sec 205G(1) of the Corporations Act

2001, at the date of this report is as follows:

Directors Ordinary shares

Mr Malcolm Keefe 1,262,500

Mr Kevin Chin 11,963,845

Mr John Moore 1,400,000

Mr Paul Welch -

* All the above shares are held by either the directors themselves or their related entities

14. PROCEEDINGS ON BEHALF OF COMPANY

No person has applied for leave of the Court to bring proceedings on behalf of the Company or 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 any part of those proceedings.

The Company was not a party to any such proceedings during the year.

15. OPTIONS

There were no options outstanding as at the date of this Report.

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Directors’ Report


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16. REMUNERATION REPORT - AUDITED

Remuneration Policy

The Nomination & Remuneration Committee Charter was adopted by the current board of the Company

following the release from external administration to provide the terms of reference for the Nomination &

Remuneration Committee.

The Nomination & Remuneration Committee’s objective is to assist the Board in fulfilling its responsibilities by

reviewing, advising and making recommendations to the Board on nomination and remuneration policies and

practices.

Remuneration focussed responsibilities of the Committee include determining and agreeing with the Board the

policy for the remuneration of the non-executive directors, the Managing Director and the executive team and

will review the ongoing appropriateness and relevance of the remuneration policy.

Further remuneration focussed responsibilities of the Nomination & Remuneration Committee include making

recommendations to the Board in relation to those executive incentive plans that require the approval of

shareholders. In making those recommendations the committee will have regard to the remuneration policy

and to the total cost of each plan.

Under the Nomination & Remuneration Committee Charter, where practicable, the Committee will comprise

solely of non-executive directors and have at least three members. New members will be proposed by the

Chairman and approved by the Board. The Committee is chaired by Mr Malcolm Keefe and members are Mr

John Moore and Mr Kevin Chin.

Remuneration Objectives

Key management personnel have authority and responsibility for planning, directing and controlling the

activities of the Group, including directors of the Company.

Compensation levels for key management personnel will incentivise management to maximise annual

dividends and also to maximise compounding growth of “cash on cash” returns and return on invested capital

of the Group (which in turn will result in long term capital growth and value creation). As a result, the Company

embraces and applies “lean enterprise” and “lean management” principles. The core objective of the “lean

enterprise” philosophy and approach is to eliminate unnecessary waste and inefficiency in an organisation

whilst preserving value to the stakeholders. The implications of this approach for the organisational structure

and compensation model of the Company are outlined as follows:

• Organisational structure: a flexible and agile model that promotes multi-tasking and self-sufficiency by

management and employees. This model eschews more conventional thinking than the formulaic

application of “template” organisational structures that “over demarcate” roles and responsibilities and

promote an “empire building” mindset. In practice, head office employees undertake several functional

roles (which would ordinarily be staffed by more than one employee at other companies with more

conventional structures); and

• Compensation structure: Compensation is heavily skewed towards performance based outcomes. All head

office employees will be paid below market salary rates to ensure fixed cost savings for the Company and

in keeping with the “lean enterprise” ethos. In addition, there will be a salary cap in place for the head

office employees. The salary cap will be reviewed by the Board as required to attract and retain

employees.

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However, to compensate for the above, the Board are currently considering the following employee incentive

schemes to be based on the principles described below.

• To incentivise employees to act as “owners” when assessing and purchasing businesses for the Company.

In particular, employees will be encouraged to acquire businesses at valuations that are as optimally low

and as value accretive to the company as possible; and

• To incentivise employees to operate the Company’s businesses such that they deliver financial and

operational outperformance over a long term investment horizon.

Fixed compensation

Fixed compensation consists of base compensation, as well as leave entitlements and employer contribution of

superannuation funds.

Compensation levels are reviewed annually by the Nomination and Remuneration committee through a

process that considers individual, segment and overall performance of the Group’s. In addition, external

consultants may provide analysis and advice to ensure the directors’ and senior executives’ compensation is

competitive in the market place. A senior executives’ compensation is also reviewed on promotion.

Performance linked compensation

Performance linked compensation includes both short-term and long-term incentives, and is designed to

reward executives for meeting or exceeding defined objectives. The Board are currently considering the

implementation of employee incentive schemes as performance linked compensation.

Managing Director’s service contract

Mr Kevin Chin, in the role as Managing Director (MD) and Finance Director (FD), has a contract of employment

executed on 2 July 2013 with the company. The contract specifies the duties and obligations to be fulfilled in

the role of a MD and FD. The contract provides for a 6 month notice period for termination and base

remuneration of $30,000 per year.

Non-Executive Directors

Directors’ base fees are presently up to $120,000 per annum.

Non-executive directors do not receive performance-related compensation.

Details of the nature and amount of each major element of remuneration of each director of the Company are

outlined in the table below.

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Arowana International Limited and its Controlled Entities (formerly Intelligent Solar Limited and its controlled entities)

Directors’ Report


18

Salary &

fees ($)

STI cash

bonus ($)

Non-

monetary

benefits ($) Total

Post- employment

Superannuation

benefits ($)

Share-based

payments Options

and rights ($) Total ($)

Directors

Non-executive directors

Mr Malcolm Keefe 2013 30,000 - - 30,000 - - 30,000

2012 17,500 - - 17,500 - - 17,500

Mr John Moore 2013 20,000 - - 20,000 - - 20,000

Mr Paul Welch 2013 30,000 - - 30,000 - - 30,000

2012 17,500 - - 17,500 - - 17,500

Sub-total 2013 80,000 - - 80,000 - - 80,000

2012 35,000 - - 35,000 - - 35,000

Executive directors

Mr Kevin Chin, MD and FD 2013 30,000 - - 30,000 - - 30,000

2012 17,500 - - 17,500 - - 17,500

Total directors’ remuneration 2013 110,000 - - 110,000 - - 110,000

2012 52,500 - - 52,500 - - 52,500

Key management personnel (KMP)

Mr Kent Kwan *, Executive Director 2013 28,333 - - 28,333 2,550 - 30,883

Mr Adam Berry **, CEO, Intueri Education Group 2013 41,518 - - 41,518 1,246 - 42,764

Total KMP remuneration 2013 69,851 - - 69,851 3,796 - 73,647

2012 - - - - - - -

Total remuneration 2013 179,851 - - 179,851 3,796 - 183,647

2012 52,500 - - 52,500 - - 52,500

* Includes remuneration from 1 May 2013 to 30 June 2013

** Includes remuneration from 4 April 2013 to 30 June 2013

Given the relative size of revenue and earnings contribution currently there are no designated key management personnel for HRM Asia and Thermoscan. Operating

personnel within all operating divisions consult with and report into head office personnel on key business decisions.

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Director’s Report


19

Company Secretarial Services

Tom Bloomfield who acts as the Company Secretary of the Company is employed by Boardroom Limited. The

Company paid Boardroom Limited $36,750 (2012:$17,500) to compensate for services provided by Tom in his

capacity as Company Secretary.

17. DIRECTORS’ AND AUDITOR’S INDEMNIFICATION

During the financial year the Company has given an indemnity or entered into an agreement to indemnify, or

paid or agreed to pay insurance premiums as follows:

The Company has paid premiums to insure all directors of the Company and officers of the Group against

liabilities for costs and expenses incurred by them in defending any legal proceedings arising out of their

conduct while acting in the capacity of director or officer of the Company, other than conduct involving a wilful

breach of duty in relation to the Company.

The amount of the premium was $3,222 (inclusive of GST).

18. NON-AUDIT SERVICES

During the year Lawler Hacketts Audit, the Group’s Lead Auditor, has performed certain other services in

addition to the audit and review of the financial statements.

The board has considered the non-audit services provided during the year by the auditor and is satisfied that

the provision of those non-audit services during the year by the auditor is compatible with, and did not

compromise, the auditor independence requirements of the Corporations Act 2001 for the following reasons:

• All non-audit services were subject to the corporate governance procedures adopted by the Group to

ensure they do not impact the integrity and objectivity of the auditor; and

• The non-audit services provided do not undermine the general principles relating to auditor

independence as set out in APES 110 Code of Ethics for Professional Accountants, as they did not involve

reviewing or auditing the auditor’s own work, acting in a management of decision making capacity for the

Group, acting as an advocate for the Group or jointly sharing risks and rewards.

Details of the amounts paid and payable to the auditors of the Group, Lawler Hacketts Audit, and its network

firms for audit and non-audit services provided during the year are set out below:

$

Services other than audit and review of financial statements

Preparation of Investigating Accountants Report 50,700

Due diligence 18,000

Audit and review of financial statements 58,000

Total paid to Lawler Hacketts Audit and its network firms 126,700

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Director’s Report


20

19. LEAD AUDITORS INDEPENDENCE DECLARATION

The Lead Auditor’s independence declaration is set out on page 21 and forms part of the Directors’ Report for

the year ended 30 June 2013.

Signed in accordance with a resolution of the Board of Directors.

Kevin Chin

Managing Director

Brisbane

30 September 2013

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AUDITOR’S INDEPENDENCE DECLARATION UNDER S.307C

OF THE CORPORATIONS ACT 2001

TO THE DIRECTORS OF

AROWANA INTERNATIONAL LIMITED

(formerly Intelligent Solar Limited)

I declare that, to the best of my knowledge and belief, during the year ended 30 June 2013,

there have been:

(a) No contraventions of the auditor independence requirements as set out in the

Corporations Act 2001 in relation to the audit, and

(b) No contraventions of any applicable code of professional conduct in relation to the

audit.

Lawler Hacketts Audit

Shaun Lindemann

Partner

Brisbane, 30 September 2013

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Consolidated Income Statement


22

Notes

Year ended 30

June 2013

$

Year ended 30

June 2012

$

Revenue 10,378,892 -

Other income 2 1,696,523 1,573,533

Total revenue 12,075,415 1,573,533

Cost of sales (2,141,879) -

Employee costs (3,898,294) (155,875)

Occupancy costs (1,307,652) (118,899)

Director fees (110,000) (52,500)

Marketing costs (168,796) (3,981)

Insurance costs (37,844) (4,855)

IT and communication costs (157,539) (22,468)

Travel costs (332,434) (28,223)

Interest expense (277,363) -

Depreciation (209,166) -

Administration Costs (1,242,352) (768,506)

Profit before income tax 3 2,192,096 418,226

Income tax benefit / (expense) 6 (439,895) 53,731

Profit attributable to equity holders of Arowana International

Limited 1,752,201 471,957

Earnings per share

Basic earnings per share (cents) 27 3.33 0.33

Diluted earnings per share (cents) 27 3.33 0.33

The above Consolidated Income Statement should be read in conjunction with the accompanying notes. For

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Consolidated Statement of Comprehensive Income


23

Notes

Year ended

30 June 2013

$

Year ended

30 June 2012

$

Profit attributable to equity holders of Arowana

International Limited

1,752,201 471,957

Other comprehensive income for the year

Items that may be reclassified to profit and loss

Exchange differences on translating foreign controlled

entities 1,148,940 -

Items that will not be reclassified to profit and loss

Fair value adjustment of equity (11,754,685) -

Other comprehensive income for the year, net of tax (11,315,255) -

Total comprehensive income attributable to equity holders

of Arowana International Limited (8,853,544) 471,957

The above Consolidated Statement of Comprehensive Income should be read in conjunction with the

accompanying notes.

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Consolidated Statement of Financial Position

As at 30 June 2013

24

Notes

As at

30 June 2013

$

As at

30 June 2012

$

ASSETS

Current assets

Cash and cash equivalents 8 20,610,541 1,143,197

Trade and other receivables 9 11,232,884 -

Other current assets 10 2,768,942 169,655

Total current assets 34,612,367 1,312,852

Non-current assets

Property, plant & equipment 11 6,337,605 -

Deferred tax asset 12 1,407,252 -

Intangible assets 13 35,820,522 -

Total non-current assets 43,565,379 -

Total assets 78,177,746 1,312,852

LIABILITIES

Current liabilities

Trade and other payables 14 6,012,443 381,355

Deferred income 15 10,438,853 -

Current tax liabilities 16 675,910 -

Provisions 17 454,066 13,973

Interest bearing liabilities 18 2,117,491 -

Total current liabilities 19,698,763 395,328

Non-current liabilities

Interest bearing liabilities 18 15,921,466 -

Deferred tax liability 19 - -

Total non-current liabilities 15,921,466 -

Total liabilities 35,620,229 395,328

Net assets 42,557,517 917,524

EQUITY

Issued capital 21 61,401,416 10,907,879

Reserves 22 (10,605,745) -

Retained losses 23 (8,238,154) (9,990,355)

Total equity attributable to equity holders of the Company 42,557,517 917,524

The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying

notes.

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Consolidated Statement of Changes in Equity


25

Issued

capital

$

General

reserve

$

Foreign

currency

translation

reserve

$

Retained

earnings

$

Total

$

Non-

controlling

interest

$

Total

equity

$

As at 1 July 2011 7,520,339 481,444 (10,902,835) (2,901,052) (40,921) (2,941,973)

NCI portion transferred to

RE upon subsidiary

deregistration

- - - (40,921) (40,921) 40,921

-

Reserves balance

transferred to RE - (481,444) - 481,444 - - -

Profit for the year - - - 471,957 471,957 - 471,957

Other comprehensive

income - - - - - - -

Total comprehensive income - - - 471,957 471,957 - 471,957

Transactions with owners in

their capacity as owners (net

of transaction costs and

taxes)

Issue of shares 3,387,540 - - - 3,387,540 - 3,387,540

As at 30 June 2012 10,907,879 - - (9,990,355) 917,524 - 917,524

As at 1 July 2012 10,907,879 - - (9,990,355) 917,524 - 917,524

Profit for the year - - - 1,752,201 1,752,201 - 1,752,201

Other comprehensive

income for the year - (11,754,685) 1,148,940 - (10,605,745) - (10,605,745)

Total comprehensive income - (11,754,685) 1,148,940 1,752,201 (8,853,544) - (8,853,544)

Transactions with owners in

their capacity as owners (net

of transaction costs and

taxes)

Issue of shares 50,493,537 - - - 50,493,537 - 50,493,537

As at 30 June 2013 61,401,416 (11,754,685) 1,148,940 (8,238,154) 42,557,517 - 42,557,517

The above Consolidated Statement of changes in Equity should be read in conjunction with the accompanying

notes.

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Consolidated Statement of Cash flows


26

Notes 30 June 2013

$

30 June 2012

$

Cash flows from operating activities

Receipts from customers 12,745,032 -

Payments to suppliers and employees (11,251,868) (1,691,373)

Interest received 132,887 26,493

Interest paid (277,363) -

Income tax paid (444,715) -

Net cash inflow / (outflow) from operating activities 23 903,973 (1,664,880)

Cash flows from investing activities

Net cash acquired on business acquisition 14,504,315 -

Purchase of property, plant & equipment (201,787) -

Proceeds from sale of property, plant & equipment 47,609 -

Net cash inflow / (outflow) from investing activities 14,350,137 -

Cash flows from financing activities

Proceeds from issue of equity securities 8,999,970 2,808,000

Payment of capital raising costs (694,314) -

Proceeds from borrowings 852,912 -

Repayment of borrowings (25,356) -

Settlement of pre-acquisition dividend and loan payable (4,133,101) -

Net cash inflow / (outflow) from financing activities 5,000,111 2,808,000

Net increase in cash and cash equivalents 20,254,221 1,143,120

Effect of the foreign currency translation (786,877) -

Cash and cash equivalents at the beginning of the year 1,143,197 77

Cash and cash equivalents at the end of the year 8 20,610,541 1,143,197

Non-cash financing activity

Acquisition of subsidiary by issuing equity instruments 41,979,587 -

Fair value adjustment of equity (11,754,685) -

The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.

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Notes to Financial Statements


27

1 Reporting entity

Arowana International Limited (the “Company”) is a company incorporated and domiciled in Australia. The

address of the Company’s registered office is Level 11, 110 Mary Street, Brisbane, QLD 4000. The financial

report includes financial statements for Arowana International Limited as a consolidated entity consisting of

Arowana International Limited and its controlled entities (together referred to as “Group”). The principal

accounting policies adopted in the preparation of the financial report are set out below. These policies have

been consistently applied to all the years presented, unless otherwise stated.

The separate financial statements of the parent entity, Arowana International Limited, have not been

presented within this financial report as permitted by the Corporations Act 2001.

2 Basis of preparation

(a) Statement of compliance

This consolidated financial statements are general purpose financial statements which have been prepared in

accordance with Australian Accounting Standards, other authoritative pronouncements of the Australian

Accounting Standards Board, Australian Accounting Interpretations and the Corporations Act 2001.

The Group is a for-profit entity for financial reporting purposes under Australian Accounting Standards.

The financial report of Arowana International Limited also complies with International Financial Reporting

Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

Except for cash flow information, the financial statements have been prepared on an accruals basis and are

based on historical costs, modified, where applicable, by the measurement at fair value of selected non-current

assets, financial assets and financial liabilities.

The preparation of financial statements in conformity with AIFRS requires the use of certain critical accounting

estimates. It also requires management to exercise its judgment in the process of applying the Group’s

accounting policies.

The financial statements were authorised for issue by the Board of Directors on 30 September 2013.

(b) Principles of consolidation

The consolidated financial statements incorporate the assets, liabilities and results of entities controlled by the

Company at the end of the reporting period. A controlled entity is any entity over which Arowana International

Limited has the power to govern the financial and operating policies so as to obtain benefits from the entity’s

activities. Control will generally exist when the parent owns, directly or indirectly through subsidiaries, more

than half of the voting power of an entity. In assessing the power to govern, the existence and effect of

holdings of actual and potential voting rights are also considered.

Where controlled entities have entered or left the Group during the year, the financial performance of those

entities are included only for the period of the year that they were controlled. A list of controlled entities is

contained in Note 30 to the financial statements.

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In preparing the consolidated financial statements, all inter-group balances and transactions between entities

in the Group have been eliminated on consolidation. Accounting policies of the controlled entities have been

changed where necessary to ensure consistency with those adopted by the parent entity.

Non-controlling interests, being the equity in a subsidiary not attributable, directly or indirectly, to a parent,

are shown separately within the Equity section of the Consolidated Statement of Financial Position and

Consolidated Statement of Comprehensive Income. The non-controlling interests in the net assets comprise

their interests at the date of the original business combination and their share of changes in equity since that

date.

(c) Business combination

Business combinations occur where an acquirer obtains control over one or more businesses.

A business combination is accounted for by applying the acquisition method, unless it is a combination involving

entities or businesses under common control. The business combination will be accounted for from the date

that control is attained, whereby the fair value of the identifiable assets acquired and liabilities (including

contingent liabilities) assumed is recognised (subject to certain limited exemptions).

When measuring the consideration transferred in the business combination, any asset or liability resulting from

a contingent consideration arrangement is also included. Subsequent to initial recognition, contingent

consideration classified as equity is not remeasured and its subsequent settlement is accounted for within

equity. Contingent consideration classified as an asset or liability is remeasured in each reporting period to fair

value, recognising any change to fair value in profit or loss, unless the change in value can be identified as

existing at acquisition date.

All transaction costs incurred in relation to business combinations are expensed to the Consolidated Income

Statement.

The acquisition of a business may result in the recognition of goodwill or a gain from a bargain purchase.

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.

(d) Foreign currency transactions and balances

(i) Functional and presentation currency

The functional currency of the controlled entities is measured using the currency of the primary economic

environment in which that entity operates. The Consolidated Financial Statements are presented in Australian

dollars which is the parent entity’s functional and presentation currency.

(ii) Transactions and balances

Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the

date of the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-

monetary items measured at historical cost continue to be carried at the exchange rate at the date of the

transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when

fair values were determined.

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Exchange differences arising on the translation of monetary items are recognised in the Consolidated

Statement of Comprehensive Income.

Exchange differences arising on the translation of non-monetary items are recognised directly in equity to the

extent that the gain or loss is directly recognised in equity; otherwise the exchange difference is recognised in

the Consolidated Statement of Comprehensive Income.

(iii) Group companies

The results and financial position of foreign operations (none of which has the currency of a hyperinflationary

economy) that have a functional currency different from the presentation currency are translated into the

presentation currency as follows:

• assets and liabilities for each Statement of Financial Position presented are translated at the closing rate at

the date of the balance sheet

• income and expenses for each Income Statement and Statement of Comprehensive Income are translated

at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the

rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of

the transactions); and

• all resulting exchange difference are recognised in other comprehensive income

On consolidation, exchange differences arising from the transaction of any net investment in foreign entities

and of borrowings are recognised in other comprehensive income. When a foreign operation is sold or any

borrowings forming part of the net investment are repaid, the associated exchange differences are reclassified

to profit or loss, as part of the gain or loss on sale.

Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and

liabilities of the foreign operation and translated at the closing rate.

(e) Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as

revenue are net of returns, trade allowances, rebates and amounts collected on behalf of third parties.

The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future

economic benefits will flow to the entity and specific criteria have been met for each of the Group’s activities

as described below. The amount of revenue is not considered to be reliably measurable until all contingencies

relating to the sale have been resolved. The Group bases its estimates on historical results, taking into

consideration the type of customer, the type of transaction and the specifics of each arrangement.

Revenue is recognised for the major business activities as follows:

(i) Provision of services

Revenue from the provision of services is recognised when services have been rendered to the customers

(ii) Sale of goods

Revenue from the sale of goods is recognised when a group entity sells a product to the customer.

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(iii) Interest income

Interest income is recognised on a time proportion basis using the effective interest method. When a

receivable is impaired, the Group reduces the carrying amount to its recoverable amount, being the estimated

future cash flow discounted at the original effective interest rate of the instrument, and continues unwinding

the discount as interest income. Interest income on impaired loans is recognised using the original effective

interest rate.

(f) Income tax

The income tax expense or benefit for the period is the tax payable on the current period’s taxable income

based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and

liabilities attributable to temporary differences and to unused tax losses.

Deferred income tax is provided in full, using the liability method, on temporary differences arising between

the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements.

However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability

in a transaction other than a business combination that at the time of the transaction affects neither

accounting nor taxable profit nor loss. Deferred income tax is determined using tax rates (and laws) that have

been enacted or substantially enacted by the reporting date and are expected to apply when the related

deferred income tax asset is realised or the deferred income tax liability is settled.

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.

Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount

and tax bases of investments in controlled entities where the parent entity is able to control the timing of the

reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable

future.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets

and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and

tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on

a net basis, or to realise the asset and settle the liability simultaneously.

Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised

directly in equity.

Given that the Group now operates in a number of foreign jurisdictions, a tax consolidated group has not been

formed.

(g) Leases

Leases of property, plant and equipment where the Group, as lessee, has substantially all the risks and rewards

of ownership are classified as finance leases. Finance leases are capitalised at the inception of the lease at the

fair value of the leased property or, if lower, the present value of the minimum lease payments. The

corresponding rental obligations, net of finance charges, are included in other short-term and long-term

payables. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to

the Consolidated Income Statement over the lease period so as to produce a constant periodic rate of interest

on the remaining balance of the liability for each period. The property, plant and equipment acquired under a

finance lease is depreciated over the asset’s useful life or over the shorter of the asset’s useful life and the

lease term if there is no reasonable certainty that the Group will obtain ownership at the end of the lease term.

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Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Group as

lessee are classified as operating leases. Payments made under operating leases (net of any incentives received

from the lessor) are charged to the consolidated statement of comprehensive income on a straight-line basis

over the period of the lease.

(h) 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.

Intangible assets are subsequently measured at cost less amortisation and any impairment. The gains or losses

recognised in profit and 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 intangibles are reviewed annually. Changes in the expected pattern of consumption or useful life are

accounted for prospectively by changing the amortisation method or period.

Goodwill

Where an entity or operation is acquired in a business combination, the identifiable net assets acquired are

measured at fair value. The excess of the fair value of the cost of acquisition over the fair value of the

identifiable net assets acquired is brought to account as goodwill. Goodwill is not amortised. Instead, goodwill

is tested for impairment annually and is carried at cost less accumulated impairment losses. Impairment losses

on goodwill are taken to the Consolidated Income Statement and are not subsequently reversed.

(i) 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 to sell 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.

(j) Cash and cash equivalents

For Consolidated Statement of Cash Flows presentation purposes, 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, and bank overdrafts. Bank overdrafts, if any, are shown within

borrowings in current liabilities on the Consolidated Statement of Financial Position.

(k) Trade receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the

effective interest method, less provision for impairment. Trade receivables are generally due for settlement

within 30 days.

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Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible

are written off by reducing the carrying amount directly. An allowance account (provision for impairment of

trade receivables) is used when there is objective evidence that the Group will not be able to collect all

amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor,

probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in

payments (more than 30 days overdue) are considered indicators that the trade receivable is impaired. The

amount of the impairment allowance is the difference between the asset’s carrying amount and the present

value of estimated future cash flows, discounted at the original effective interest rate. Cash flows relating to

short-term receivables are not discounted if the effect of discounting is immaterial.

The amount of the impairment loss is recognised in the Consolidated Income Statement within other expenses.

When a trade receivable for which an impairment allowance had been recognised becomes uncollectible in a

subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts

previously written off are credited against other expenses in the Consolidated Income Statement.

(l) Investments and other financial assets

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not

quoted in an active market. They are included in current assets, except for those with maturities greater than

12 months after the reporting date which are classified as non-current assets. Loans and receivables are

included in trade and other receivables in the Consolidated Statement of Financial Position.

Recognition and de-recognition

Regular purchases and sales of financial assets are recognised on trade-date - the date on which the Group

commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs

for all financial assets not carried at fair value through the Consolidated Income Statement. Financial assets

carried at fair value through profit or loss, are initially recognised at fair value and transaction costs are

expensed in the Consolidated Income Statement. Financial assets are derecognised when the rights to receive

cash flows from the financial assets have expired or have been transferred and the Group has transferred

substantially all the risks and rewards of ownership.

Subsequent measurement

Loans and receivables are carried at amortised cost using the effective interest method.

Impairment

The Group assesses at each balance date whether there is objective evidence that a financial asset or group of

financial assets is impaired.

(m) Property, plant and equipment

Recognition and measurement

Property, plant and equipment are stated at historical cost less accumulated depreciation and accumulated

impairment losses.

Cost includes expenditure that is directly attributable to the acquisition of the items. The carrying amount of

any component accounted for as a separate assets derecognised when replaced. All other repairs and

maintenance are charged to the Consolidated Income Statement during the reporting period in which they are

incurred.

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Any gain or loss on disposal of an item of property, plant and equipment (calculated as the difference between

the net proceeds from disposal and the carrying amount of the item) is recognised in the Consolidated Income

Statement.

Subsequent costs

Subsequent costs are capitalised only when it is probable that future economic benefits associated with the

expenditure will flow to the Group and the cost of the item can be measured reliably.

Depreciation

Items of property, plant and equipment are depreciated from the date that they are installed and ready for

use. Depreciation is calculated using the straight-line method to allocate their cost or re-valued amounts, net of

their residual values, over their estimated useful lives or, in the case of leasehold improvements and certain

leased plant and equipment, the shorter lease term.

The estimate useful lives for the current and comparative years of significant items of property, plant and

equipment are as follows:

• Leasehold improvements 8 - 10 years

• Plant and equipment 5 – 7 years

• Computer equipment 3 – 5 years

• Furniture and fixtures 8 – 10 years

• Motor vehicles 6 – 8 years

Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if

appropriate.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying

amount is greater than its estimated recoverable amount.

Any gain or loss on disposal of an item of property, plant and equipment (calculated as the difference between

the net proceeds from disposal and the carrying amount of the item) is recognised in the Consolidated Income

Statement.

(n) Trade and other payables

These amounts represent liabilities for goods and services provided to the Group prior to the end of financial

year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition.

(o) Borrowings

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently

measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the

redemption amount is recognised in the Consolidated Income Statement over the period of the borrowings

using the effective interest method. Fees paid on the establishment of loan facilities are recognised as

transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down.

In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is

probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity

services and amortised over the period of the facility to which it relates.

The fair value of the liability portion of a convertible bond is determined using a market interest rate for an

equivalent non-convertible bond. This amount is recorded as a liability on an amortised cost basis until

extinguished on conversion or maturity of the bonds. The remainder of the proceeds is allocated to the

conversion option. This is recognised and included in shareholders’ equity, net of income tax effects.

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Borrowings are removed from the Consolidated Statement of Financial Position when the obligation specified

in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial

liability that has been extinguished or transferred to another party and the consideration paid, including any

non-cash assets transferred or liabilities assumed, is recognised in other income or finance costs.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement

of the liability for at least 12 months after the reporting date.

(p) Borrowing costs

Borrowing costs incurred for the construction of any qualifying asset are capitalised during the period of time

that is required to complete and prepare the asset for its intended use or sale. Other borrowing costs are

expensed.

(q) Provisions

Provisions for legal claims, service warranties and make good obligations are recognised when the Group has a

present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will

be required to settle the obligation and the amount has been reliably estimated. Provisions are not recognised

for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is

determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood

of an outflow with respect to any one item included in the same class of obligations may be small.

Provisions are measured at the present value of management’s best estimate of the expenditure required to

settle the present obligation at the reporting date. The discount rate used to determine the present value

reflects current market assessments of the time value of money and the risks specific to the liability. The

increase in the provision due to the passage of time is recognised as interest expense.

(r) Employee benefits

Provision is made for the Company’s liability for employee benefits arising from services rendered by

employees to balance date. Employee benefits that are expected to be settled within one year have been

measured at the amounts expected to be paid when the liability is settled, plus related on-costs are measured

at the amounts expected to be paid when the liabilities are settled.

Employee benefits payable later than one year have been measured at the present value of the estimated

future cash outflows to be made for those benefits

Termination benefits

Termination benefits are payable when employment is terminated before the normal retirement date, or when

an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination

benefits when it is demonstrably committed to either terminating the employment of current employees

according to a detailed formal plan without possibility of withdrawal or providing termination benefits as a

result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after

reporting date are discounted to present value.

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(s) Share based payments

Equity-settled and cash-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. Cash-settled transactions are awards of cash for the exchange of

services, where the amount of cash is determined by reference to the share price.

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 consolidated entity 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 the Consolidated Income Statement 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 the consideration the terms and

conditions on which the award was granted. The cumulative charge to the Consolidated Income Statement

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 the Consolidated Income Statement. 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.

(t) Contributed equity

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. Incremental costs directly

attributable to the issue of new shares or options for the acquisition of a business are not included in the cost

of the acquisition as part of the purchase consideration.

If the entity reacquires its own equity instruments, for example as the result of a share buy-back, those

instruments are deducted from equity and the associated shares are cancelled. No gain or loss is recognised in

the profit or loss and the consideration paid including any directly attributable incremental costs (net of income

taxes) is recognised directly in equity.

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(u) Earnings per share

Basic earnings per share

Basic earnings per share is calculated by dividing:

• The profit attributable to equity holders of the Company, 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 year; and

- share consolidations during the 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 additional ordinary shares that would have been outstanding

assuming the conversion of all dilutive potential ordinary shares.

(v) Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is

not recoverable from the taxation authority. In this case it is recognised as part of the cost of 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 taxation authority is included with other receivables or payables in

the consolidated 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 taxation authority, are presented as

operating cash flows.

(w) Comparative Figures

When required by Accounting Standards, comparative figures have been adjusted to conform to changes in

presentation for the current financial year.

(x) New Accounting Standards for Application in future periods

In the current year, the consolidated entity has adopted all of the new and revised Standards and

Interpretations issued by the Australian Accounting Standards Board (“AASB”) that are relevant to its

operations and effective for annual reporting periods beginning on or after 1 July 2012.

The AASB has issued the following new and amended Accounting Standards and Interpretations that have

mandatory application dates for future reporting periods. The Group has decided not to early adopt any of the

new and amended pronouncements.

• AASB 9: Financial Instruments (December 2010) and AASB 2010–7: Amendments to Australian

Accounting Standards arising from AASB 9 (December 2010)

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• AASB 10: Consolidated Financial Statements, AASB 11: Joint Arrangements, AASB 12: Disclosure of

Interests in Other Entities, AASB 127: Separate Financial Statements (August 2011) and AASB 128:

Investments in Associates and Joint Ventures (August 2011) (as amended by AASB 2012–10:

Amendments to Australian Accounting Standards – Transition Guidance and Other Amendments), and

AASB 2011–7: Amendments to Australian Accounting Standards arising from the Consolidation and Joint

Arrangements Standards (applicable for annual reporting periods commencing on or after 1 January

2013)

• AASB 13: Fair Value Measurement and AASB 2011–8: Amendments to Australian Accounting Standards

arising from AASB 13 (applicable for annual reporting periods commencing on or after 1 January 2013)

• AASB 2011–4: Amendments to Australian Accounting Standards to Remove Individual Key Management

Personnel Disclosure Requirements (applicable for annual reporting periods beginning on or after 1 July

2013)

• AASB 119: Employee Benefits (September 2011) and AASB 2011–10: Amendments to Australian

Accounting Standards arising from AASB 119 (September 2011) (applicable for annual reporting periods

commencing on or after 1 January 2013)

• AASB 2012–2: Amendments to Australian Accounting Standards – Disclosures – Offsetting Financial

Assets and Financial Liabilities (applicable for annual reporting periods commencing on or after 1 January

2013)

• AASB 2012–3: Amendments to Australian Accounting Standards – Offsetting Financial Assets and

Financial Liabilities (applicable for annual reporting periods commencing on or after 1 January 2014)

• AASB 2012–5: Amendments to Australian Accounting Standards arising from Annual Improvements

2009–2011 (applicable for annual reporting periods commencing on or after 1 January 2013)

The Directors anticipate the adoption of these standards will have no material financial impact on the financial

statements of the Group.

(y) Critical Accounting Estimates & Judgements

Estimates and judgement are continually evaluated and are based on historical experience and other factors,

including expectations of future events that may have a financial impact on the entity and that are believed to

be reasonable under the circumstances.

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by

definition, seldom equal the related actual results. Estimates and judgements are continually evaluated and are

based on historical experience and various other factors, including expectations of future events, which are

believed to be reasonable under the circumstances.

The following estimates, assumptions and judgements have an inherent significant risk of potentially causing

material adjustments to the carrying amounts of assets and liabilities within the next financial year.

Impairment of goodwill

The Group tests whether intangible assets have suffered any impairment, in case of triggering events and at

least annually. The recoverable amounts of cash-generating units have been determined using, amongst other

instruments, value-in-use calculations. These calculations require the use of estimates. Based on these

impairment tests, impairment losses, if any, are identified. However, should the actual performance of these

cash-generating units become materially worse compared to the performance based on the estimates, possible

impairment losses could arise, or could deviate from the detected impairment losses. This impairment loss or

deviation could have a material effect on the carrying amounts of the intangible assets.

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Provisions

Due to the nature of provisions, a considerable part of their determination is based on estimates and/or

judgments, including assumptions concerning the future. The actual outcome of these uncertain factors may be

materially different from the estimates, causing differences with the estimated provisions. Hence, the

differences between actual outcomes and the recorded provisions can impact results over the periods

involved. The timing of outflow of resources to settle these obligations is subject to the same uncertain

factors.

Income taxes

The Group is subject to income taxes in numerous jurisdictions. Significant judgment is required in determining

the deferred tax asset on, amongst other items, tax losses carried-forward. There are many uncertain factors

that influence the amount of the tax losses carried-forward. The Group recognizes deferred tax assets on tax

losses carried-forward based on their best estimates. When the actual results are different from the amounts

that were initially estimated, such differences will impact the income tax in the Consolidated Income Statement

and the deferred tax assets and/or deferred tax liabilities in the period in which these deviations occur. The

Group has also identified a number of uncertain tax positions, which could lead to positive and/or negative

differences as well.

3. Other Revenue

Consolidated

2013

$

2012

$

Management fee (a)

916,667 -

Other income (b)

646,969 -

Interest income 132,887 26,493

Liabilities written-back (c)

- 1,547,040

Total other revenue 1,696,523 1,573,533

(a) Relates to fees charged to AIHL to recover operating costs in accordance with the cost recovery deed during the period

prior to acquisition

(b) Relates to disbursement income, salon income, sale of kits, uniforms, etc.

(c) Relates to write-back of trade payables, convertible note and other liabilities in accordance with the DOCA

4. Expenses

Profit before income tax includes the following specific expenses:

Administration and trustee fees - 97,280

DOCA related fees - 182,961

Due diligence fees 18,000 215,524

Rent 1,045,189 116,667

Research expenses 207,258 89,238

Loss on sale of fixed assets 83,051 -

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5. Segment Reporting

Identification of reportable operating segments

The Group is organised into the Enterprise Office and three operating segments: education, diagnostic testing

and training and events. 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. There is no aggregation of operating

segments.

Types of services

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

Enterprise Office – is the designated investment entity. Additionally, the Enterprise Office provides strategic,

operational, financial, human resources support to all other operating activities.

Education - the provision of education in the fields of design & arts, beauty & spa therapy, commercial diving,

hospitality, hotel & management, professional cookery & patisserie and hair & make up at a number of colleges

located in New Zealand, collectively known as the Intueri Education Group.

Diagnostic testing – the provision of non-destructive testing and condition monitoring using thermal imaging

technology.

Training and events – the provision of information services for HR professional including organising and

managing events.

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2013 Enterprise office Education Training & Events Diagnostic Testing Total

Intersegment

Eliminations Consolidated

$ $ $ $ $ $

Revenue

Sales to external customers - 7,360,217 2,250,300 768,376 10,378,893 10,378,893

Intersegment sales 686,340 - - - 686,340 (686,340) -

Total sales revenue 686,340 7,360,217 2,250,300 768,376 11,065,233 (686,340) 10,378,893

Interest revenue 112,223 18,978 35 1,650 132,886 132,886

Other income 1,356,282 207,142 - 212 1,563,636 1,536,636

Total revenue 2,154,845 7,586,337 2,250,335 770,238 12,761,755 12,075,415

Segment result (275,131) 1,932,591 839,187 181,977 2,678,624 2,678,624

Depreciation and

amortisation (4,194) (168,749) (4,213) (32,011) (209,166) (209,166)

Finance costs (7,836) (262,531) - (6,996) (277,363) (277,363)

Profit / (loss) before income

tax expense (287,161) 1,501,311 834,975 142,970 2,192,096 2,192,096

Income tax expense /

(benefit) (82,068) 429,529 74,230 18,204 439,895 439,895

Profit after income tax

expense 1,752,201 1,752,201

Segment Assets

Total assets 77,881,721 84,248,569 5,347,884 3,619,150 171,097,324

Elimination within segment (30,224,902) (16,623,203) (46,848,105)

Reportable segment assets 47,656,819 67,625,366 5,347,884 3,619,150 124,249,219 (46,071,473) 78,177,746

Reportable segment liabilities 8,296,138 33,964,694 889,385 766,160 43,916,377 (8,296,148) 35,620,229

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Geographical information

In presenting the information on the basis of geography, segment revenue is based on geographical location of the delivery of services and segment assets are based on

the geographical location of the assets.

New Zealand Singapore Australia Total

Intersegment

Eliminations Consolidated

$ $ $ $ $ $

Revenue 7,586,336 2,250,337 2,925,082 12,761,755 (686,340) 12,075,415

Segment assets

Total assets 67,624,686 1,721,696 105,957,438 175,303,820

Elimination within segment (49,935,500) (49,935,500)

Segment Assets 67,624,686 1,721,696 56,021,938 125,368,320 (47,190,574) 78,177,746

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2012

There were no reportable segment during year ended 30 June 2012.

Other Segment information

i. Segment revenue

Sales between segments are carried out at arm’s length and are eliminated on consolidation. The revenue from

external parties reported to the Board of Directors is measured in a manner consistent with that in the

Consolidated Income Statement. The revenue from external customers are derived from provision of services

associated with education, diagnostic testing and training and events.

The entity is domiciled in Australia. However, as none of the operating entities are domiciled in Australia there

is no revenue from external customers generated in Australia.

Segment revenue reconciles to total revenue as per Consolidated Income Statement as follows:

2013

$

Total segment revenue 11,065,232

Less: Intersegment eliminations (686,340)

Interest income 132,886

Other income 1,563,636

Total revenue as per Consolidated Income Statement 12,075,414

ii. Segment assets

The amounts provided to the Board of Directors with respect to total assets are measured in a manner

consistent with that of the Consolidated Statement of Financial Position. These assets are allocated based on

the operations of the segment and the physical location of the asset.

Reportable segments’ assets are reconciled to total assets as follows:

2013

$

Segment assets 124,249,149

Less: Intersegment eliminations (46,071,473)

Total assets as per Consolidated Statement of Financial Position 78,177,746

Segment assets are allocated to countries based on where the assets are located.

iii. Segment liabilities

The amounts provided to the Board of Directors with respect to total liabilities are measured in a manner

consistent with that of the Consolidated Statement of Financial Position. These assets are allocated based on

the operations of the segment.

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Reportable segments’ liabilities are reconciled to total liabilities as follows:

2013

$

Segment liabilities 43,916,377

Less: Intersegment eliminations (8,296,148)

Total liabilities as per Consolidated Statement of Financial Position 35,620,229

6. Business Combinations

On 4 April 2013, Arowana International Limited acquired 100% of the share capital of Arowana International

Holdings Limited (‘AIHL’).

The acquisition was pursuant to the constitution of AIHL which indicated that upon the delivery of an exercise

notice an agreement was established whereby the Company agreed to buy and each Class A Ordinary

shareholder of AIHL agreed to sell all of the Class A Ordinary Shares on issue on the Exchange Date, being 4

April 2013, in consideration for the issue of an equivalent number of shares in the Company.

The acquisition had the following effect on the Group’s assets and liabilities on acquisition:

Pre-acquisition

carrying amounts

Fair value

adjustment

Recognised values on

acquisition

Cash and cash equivalents 14,504,315 - 14,504,315

Intangible assets 34,082,679 - 34,082,679

Trade and other receivables 12,373,962 - 12,373,962

Other current assets 5,139,078 - 5,139,078

Fixed assets 6,194,619 - 6,194,619

Deferred tax assets 939,192 - 939,192

Trade and other payables (12,384,332) - (12,384,332)

Deferred income (12,402,538) - (12,402,538)

Income tax payable (441,107) - (441,107)

Provisions (569,565) - (569,565)

Interest bearing liabilities (17,211,401) - (17,211,401)

Net identifiable assets and liabilities 30,224,902 - 30,224,902

Consideration paid:

Consideration paid - equity swap at fair value (non-cash) 30,224,902

Total consideration 30,224,902

Goodwill on acquisition -

Cash acquired 14,504,315

Less consideration paid -

Net cash inflow 14,504,315

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The contribution of the above acquisition to Arowana International Limited’s profit after tax from ordinary

activities during the period was $1,979,246.

7. Income tax expense/(benefit)

Consolidated

2013

$

2012

$

(a) Income tax expense/(benefit)

Current tax 257,177 -

Deferred tax 182,718 (53,731)

439,895 (53,731)

(b) Deferred income tax (revenue) expense included in

income tax expense comprises:

Decrease / (increase) in deferred tax assets 182,718 -

(Decrease) / increase in deferred tax liabilities - (53,731)

182,718 (53,731)

(c) Numerical reconciliation of income tax expense to

prima facie tax payable:

Profit from continuing operations before income tax 2,192,096 418,226

Income tax expense calculated at statutory rates of 30%

657,629

125,468

Tax effect of amounts which are not deductible / (taxable) in

calculating taxable income:

Other assessable or non-deductible items (49,848) (562,547)

Deferred tax asset not recognised in respect of tax losses and

temporary differences

- 437,079

Differences in overseas tax rates (167,886) -

Prior year (over) / under - (53,731)

Income tax expense / (benefit) 439,895 (53,731)

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Consolidated

2013

$

2012

$

8. Cash and cash equivalents

Cash at bank and on hand 20,610,541 1,143,197

20,610,541 1,143,197

Cash at bank includes a 30 day term deposit of $13,086,382 with Commonwealth Bank of Australia.

9. Trade and other receivables

Trade debtors 969,555 -

Accrued income 10,263,329 -

11,232,884 -

Accrued income includes an amount of $10,133,268 held in public trust in relation to fees paid in advance by

students of the Intueri Group that will be received over the duration of the courses. Most of the trade debtors

have been outstanding for less than 60 days.

10. Other current assets

Prepayments 158,594 7,707

Deposits 41,250 41,250

GST receivable - 94,322

Retention in trust (a)

2,358,689

Other receivables 210,409 26,376

2,768,942 169,655

(a) Retention relates to amounts held in trust by vendor’s solicitors towards the acquisition of The Global Education

Group Limited, The Cut Above Academy Limited and New Zealand School of Outdoor Studies Limited.

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Consolidated

2013

$

2012

$

11. Property, plant and equipment

Leasehold improvements

Cost 7,241,184 -

Less: Accumulated depreciation (3,663,004) -

WDV 3,578,180 -

Plant & equipment

Cost 3,033,960 -


WDV 1,544,747 -

Leased assets

Cost 590,933 -

Less: Accumulated depreciation (216,458) -

WDV 374,475 -

Computer equipment

Cost 791,500 -


WDV 145,156 -

Furniture & fixtures

Cost 1,656,617 -


WDV 653,092 -

Motor vehicles

Cost 160,090 -


WDV 41,954 -

Total

Cost 13,474,284 -


WDV 6,337,605 -

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Consolidated

Leasehold

improvements Plant & equipment Leased assets

Computer

equipment

Furniture &

fixtures Motor vehicles Total

$ $ $ $ $ $ $

Year ended 30 June 2012

Balance as at 1 July 2011 - 129,773 452,441 - - - 582,214

Additions - - - - - - -

Disposals - (58,679) (400,694) - - - (459,373)

Depreciation charge - (31,058) (28,404) - - - (59,462)

Impairment charge - (40,036) (23,343) - - - (63,379)

Balance as at 30 June

2012

- - - - - - -

Year ended 30 June 2013

Balance as at 1 July 2012 - - - - - - -

Additions – via

acquisitions (WDV) 3,465,169 1,585,193 347,123 114,471 640,915 41,748 6,194,619

Additions 63,360 35,821 45,415 50,946 6,245 - 201,787

Depreciation charge (112,408) (35,354) (18,063) (24,997) (16,398) (1,946) (209,166)

Disposals (5,866) (116,491) - - (8,304) - (130,660)

Foreign exchange

movement 167,924 75,579 - 4,736 30,634 2,152 281,025

Balance as at 30 June

2013 3,578,180 1,544,748 374,475 145,156 653,092 41,954 6,337,605

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Consolidated

2013

$

2012

$

12. Deferred Tax Assets

Deferred tax assets 1,407,252 -

Deferred tax asset comprises the following:

Capital raising costs 617,287 -

Due diligence expenses 418,963 -

Other timing differences on expenses 371,002 -

Tax losses 73,475 -

1,407,252 -

Movement in deferred tax assets are as follows:

Balance at beginning of the year - -

Recognised during the year

- Addition through acquisition of AIHL 939,192 -

- Addition through equity related to equity transactions 285,342 -

- Addition credited through profit & loss 182,718 -

Balance at end of the year 1,407,252 -

13. Intangible Assets

Goodwill Development Other Total

$ $ $ $

As at 30 June 2012

Cost - 1,685,504 1,980 1,687,484

Accumulated impairment - (1,685,504) (1,980) (1,687,484)

Carrying value - - - -

Movement for the year ended 30 June 2012

Opening balance – carrying value - - - -

Additions - - - -

Disposals - - - -

Ending balance – carrying value - - - -

As at 30 June 2013

Cost 34,082,679 - - 34,082,679

Accumulated impairment - - - -

Impact of foreign exchange movement 1,737,843 - - 1,737,843

Carrying value 35,820,522 - - 35,820,522

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Goodwill Development Other Total

$ $ $ $

Movement for the year ended 30 June 2013

Opening balance – carrying value - - - -

Acquired as at 4 April 2013 34,082,679 - - 34,082,679

Disposals - - - -

Impact of foreign exchange movement 1,737,843 - - 1,737,843

Net book amount 35,820,522 - - 35,820,522

Goodwill can be allocated to the various cash generating units as follows:

Cash generating unit $

Education division

• Global Education Group Limited 10,928,469

• The Cut Above Academy Limited 5,161,334

• Elite International School of Spa & Beauty Therapies Limited 6,681,755

• Design and Arts College of New Zealand Limited 3,059,724

• New Zealand School of Outdoor Studies Limited 2,027,472

• NZSCDT Holdings Limited 746,200

28,604,954

Training and events division 3,262,812

Diagnostic division 2,214,913

34,082,679

Foreign exchange movement 1,737,843

Total Goodwill 35,820,522

Consolidated

2013

$

2012

$

14. Trade and Other Payables

Trade creditors 1,015,406 308,515

Accrued expenses 1,170,596 72,840

GST payable 183,984 -

Other payables (a)

3,642,457 -

6,012,443 381,355

(a) Other payables includes an amount of $2,358,689 held in trust by vendor’s solicitors towards the retention

amount in relation to the the acquisition of The Global Education Group Limited, The Cut Above Academy Limited

and New Zealand School of Outdoor Studies Limited.

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15. Deferred income

Deferred income 10,438,853 -

10,438,853 -

Deferred income includes an amount of $10,133,268 held in public trust in relation to fees paid in advance by students

of the Intueri Group that will be received over the duration of the courses.

16. Income tax payable

Income tax payable 675,910 -

675,910 -

Consolidated

2013

$

2012

$

17. Provisions

Employee entitlements 454,066 13,973

454,066 13,973

Employee entitlements relates to holiday pay accrual for the employees.

18. Interest Bearing Liabilities

This note provides information about the contractual terms of the Group’s interest bearing loans and borrowings,

which are measured at amortised cost.

Current

Lease liabilities (a)

127,347 -

Term loan (b)

1,990,144 -

2,117,491 -

Non-Current

Lease liabilities (a)

187,745 -

Term loan (b)

15,733,721 -

15,921,466 -

Total Interest Bearing Liabilities 18,038,957 -

(a) Finance leases are secured against the assets financed at Thermoscan Inspection Services Pty Limited.

(b) ANZ term debt is secured by a fixed and floating charge over the assets of Intueri Education Group Limited and its

subsidiaries.

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Consolidated

2013

$

2012

$

19. Deferred Tax Liabilities

Deferred tax liability - -

Movement in deferred tax liabilities is as follows:

Balance at beginning of the year - 53,731

Charged/(Credited) to profit & loss - (53,731)

Balance at end of the year - -

20. Financial instruments

Financial risk management

Overview

The Group has exposure to the following risks arising from financial instruments

• Credit risk

• Liquidity risk

• Market risk

This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives,

policies and processes for measuring and managing risk and the Group’s management of capital.

Risk management framework

The Company’s Board of Directors has overall responsibility for the establishment and oversight of the Group’s

risk management framework. The Group, through its training and management standards aims to develop a

disciplined and constructive control environment in which all employees understand their roles and

obligations.

Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails

to meet its contractual obligations, and arises principally from the Group’s receivables from customers.

The carrying amount of financial assets represent the maximum credit exposure. The maximum exposure to

credit risk at the end of the reporting period was as follows:

Note Carrying amount

2013 2012

Cash and cash equivalents 8 20,601,541 1,143,197

Trade and other receivables 9 11,232,884 -

Total 31,843,425 1,143,197

Cash and cash equivalents

The cash and cash equivalents are held with bank and financial institution counterparties which are rated AA-

by Fitch Ratings.

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Trade and other receivables

The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The

customer debts are monitored closely and proper processes are in place to ensure recoverability of receivables.

The Group establishes an allowance for impairment that represents an estimate of incurred losses in respect of

trade and other receivables. A majority of receivables relates to funds held by public trust on behalf of colleges.

The funds are released to the colleges over course delivery. The Public trust is a crown-owned trustee in New

Zealand.

Liquidity risk

Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its

financial liabilities that are settled by delivering cash or another financial asset. The Group’s approach to

management liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its

liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or

risking damage to the Group’s reputation.

The Group aims to maintain the level of its cash and cash equivalents at an amount in excess of expected cash

outflows on financial liabilities (other than trade payables) over the succeeding 60 days. The Group also

monitors the level of expected cash inflows on trade and other receivables together with expected cash

outflows on trade and other payables.

The following are the remaining contractual maturities at the end of the reporting period:

2 months or

less 2 – 12 months 1 – 3 years

More than 3

years Total

As at 30 June 2013

Trade debtors 693,393 276,162 - - 969,555

Trade creditors (946,295) (69,111) - - (1,015,406)

Lease liability (21,225) (106,123) (187,745) - ( 315,092)

Term loan - (1,990,144) (5,307,051) (10,426,670) (17,723,865)

274,127 (1,889,215) (5,494,796) (10,426,670) (18,084,808)

As at 30 June 2012

Trade debtors - - - - -

Trade creditors (308,516) - - - (308,516)

(308,516) - - - (308,516)

Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity

prices will affect the Group’s income or the value of its holdings of financial instruments. The objective of

market risk management is to manage and control market risk exposures within acceptable parameters, while

optimising returns.

Currency risk

The Group is exposed to currency risk on sales, purchases and borrowings that are denominated in a currency

other than the presentation currency of the Company. The borrowings are denominated in the functional

currency of the operating entity. This provides an economic hedge without derivatives being entered into. On

the basis of a cost benefit analysis no currency risks are currently hedged.

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The summary of quantitative data about the Group’s exposure to currency risk

NZD SGD

Assets 80,277,265 2,018,688

Liabilities 40,319,488 937,278

Net Assets 39,957,777 1,081,410

NPAT 1,290,745 884,874

The following significant exchange rates applied during the year

Average rate (a)

Reporting date spot

rate

2013 2013

NZD / AUD 1.20 1.19

SGD / AUD 1.24 1.17

(a) Average rate for the period 4 April 2013 to 30 June 2013

There was no foreign exchange exposure during year ended 30 June 2012 and for the period from 1 July 2012

to 3 April 2013.

Sensitivity analysis

A strengthening (weakening) of the AUD against NZD and SGD at 30 June 2013 would have affected the

measurement of financial instruments denominated in a foreign currency and increased (decreased) equity and

profit and loss by the amounts shown below. The analysis is based on foreign exchange rate variances that the

Group considered to be reasonably possible at the end of the reporting period. The analysis assumes that all

other variables, in particular interest rates, remain constant and ignores any impact of forecast sales and

expenses.

Equity Profit or loss *

Strengthening Weakening Strengthening Weakening

30 June 2013

AUD (5% movement) (1,653,904) 1,890,665 (78,025) 128,121

AUD (10% movement) (3,157,434) 3,859,086 (148,956) 182,058

* the profit and loss earnings in foreign currency were for the period 4 April 2013 to 30 June 2013

Interest risk

A majority of the Group’s borrowings are at a variable interest rate. Depending on market trends the Group

may consider a policy to fix a portion of its interest rate via an interest rate swap.

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Profile

At the end of the reporting period the interest rate profile of the Group’s interest-bearing financial instruments

as reported to the management of the Group was as follows:

Nominal amount

2013 2012

Variable rates instruments

Financial assets 16,221,374 1,143,197

Financial liabilities (17,723,865) -

Net financial assets / (liabilities) (1,502,491) 1,143,197

Cash flow sensitivity analysis for variable rate instruments

A change of 100 basis points interest rates at the end of the reporting period would have increased (decreased)

profit and loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign

currency rates, remain constant.

Profit or loss

2013 2012

Interest rate

Increase by 100 basis points (15,025) 11,432

Decrease by 100 basis points 15,025 (11,432)

Capital management

The board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market

confidence and to sustain future development of the business. The board of directors monitors the return on

capital as well as the level of dividends to ordinary shareholders.

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2013 2012

Shares Shares

21. Contributed Equity

Ordinary shares

Balance at beginning of the year 350,081,865 220,373,053

Consolidation (1:20) – 30 June 2013

Consolidation (1:7) – 30 June 2012

Shares post consolidation 17,504,093 31,481,865

Shares issued during the year

- For cash 25,714,200 300,000,000

- For acquisition of Arowana International Holdings Limited 119,941,537

- Conversion of convertible notes - 18,600,000

Fully paid ordinary shares 163,159,830 350,081,865

$ $

Balance at beginning of the year 10,907,879 7,520,339

Shares issued (private placement) - 2,808,000

Shares issued for cash 8,999,970 -

Shares issued for acquisition of Arowana International Holdings Limited

(equity swap)

41,979,587 -

Shares issued (conversion of convertible notes) - 579,540

Capital raising costs (net of taxes) (486,020) -

Total contributed equity 61,401,416 10,907,879

All ordinary shares are fully paid and rank equally with regard to the Company’s residual assets. The holders

of ordinary shares are entitled to receive dividends as declared from time to time, and are entitled to one

vote per share at meetings of the Company.

22. Reserves

Equity reserve (a)

(11,754,685) -

Foreign exchange reserve (b)

1,148,940 -

(10,605,745) -

(a) Equity reserve represents fair value adjustments of shares issued upon acquisition of AIHL on 4 April 2013.

(b) Foreign exchange reserve represents exchange differences arising on translation of foreign controlled

entities.

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23. Retained Earnings

Consolidated

2013

$

2012

$

Opening retained losses (9,990,355) (10,902,835)

Non-controlling interest portion transferred to retained earning upon

deregistration of the subsidiary

- (40,921)

Reserve balance transferred to retained earnings - 481,444

Net profit for the year 1,752,201 471,957

Closing retained losses (8,238,154) (9,990,355)

24. Cash flow Information

Reconciliation of the operating profit after tax to the Net cash flows

from operations:

Profit from ordinary activities after income tax 1,752,201 471,957

Cash flows excluded from profit attributable to operating activities

Add / (subtract) non-cash items:

Liabilities written-back - (784,477)

Depreciation 209,166 -

Loss on sale of fixed assets 83,051 -

Changes in assets and liabilities, net of the effects of purchase and

disposal of controlled entities:

Assets

(Increase) / decrease in trade and other receivables 1,113,843 -

(Increase) / decrease in other current assets 4,917,014 (75,332)

(Increase) / decrease in other deferred tax assets (186,291) -

Liabilities

Increase / (decrease) in trade payables (524,170) (965,104)

Increase / (decrease) in deferred income (1,963,685) -

Increase / (decrease) in income tax payable 161,328 -

Increase / (decrease) in provisions (129,472) (258,193)

Increase / (decrease) in other payables (4,529,012) (53,731)

Cash flow from operating activities 903,973 (1,664,880)

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25. Commitments and contingencies

Commitments

Operating Lease

At the end of the reporting period, the future minimum lease payments under non-cancellation operating

leases are payable as follows:

Consolidated

2013 2012

$ $

Less than one year 3,483,270 -

Between one and five years 10,421,951 -

More than five years 3,439,957 -

Total 17,345,178 -

The Group leases a number of premises under operating leases. The leases can run from a rolling one month

period to 9 years, with an option to renew the lease after the date.

Finance Lease

At the end of the reporting period, the finance lease commitments are as under

Consolidated

2013 2012

$ $

Gross payments

Less than one year 148,978 -

Between one and five years 199,488 -

More than five years - -

Total 348,466 -

Less: Unexpired interest (33,374) -

315,092

As presented in liabilities

Current 127,347 -

Non-current 187,745 -

315,092 -

The Group has a number of finance leases on motor vehicle and plant and equipment. The finance leases are

generally for a period of 36 to 48 months.

26. Capital commitments

There were no capital commitments as at balance date.

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27. Earnings Per Share

Consolidated

2013 2012

Cents Cents

Basic earnings per share attributable to the ordinary equity holders

of the Company

3.33 0.33

Diluted earnings per share attributable to the ordinary equity holders

of the Company

3.33 0.33

$ $

Profit attributable to the ordinary equity holders of the Company

used in calculating basic and diluted earnings per share

1,752,201 471,957

Numbers Numbers

Weighted average number of ordinary shares used as a denominator

in calculating basic earnings per share

52,621,127 144,955,837

Weighted average number of ordinary shares used as a denominator

in calculating diluted earnings per share

52,621,127 144,955,837

28. Contingent Assets and Liabilities

There were no contingent assets not provided for in the financial statements of the Group as at 30 June 2013.

Contingent liabilities not provided for in the financial statements of the Group as at 30 June 2013 comprised of

the following:

• Bank guarantees of $679,366 associated with various rental agreements

• Bank guarantee of $10,000 associated with a contract performance guarantee for BP Australia Pty Ltd

in relation to fuel cards

• Bank guarantee of $50,000 towards business credit card facility

29. Related Party Transactions

Key Management Personnel Compensation

Consolidated

2013

$

2012

$

Short-term employee benefits 179,851 52,500

Post-employment benefits 3,796 -

Other long term benefits - -

183,647 52,500

Individual directors and executive compensation disclosures

Information regarding individual directors and executives’ compensation and some equity instruments

disclosures as required by Corporations Regulation 2M.3.03 is provided in the remuneration report section of

the Directors’ Report. Apart from the details disclosed in this note, no director has entered into a material

contract with the Group since the end of the previous financial year and there were no material contracts

involving directors’ interests existing at year-end.

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Key Management Personnel Transactions

A number of key management persons, or their related parties, hold positions in other entities that result in

them having control or joint control over the financial and operating policies of those entities.

A number of these entities transacted with the Group during the year. The terms and conditions of the

transactions with key management personnel and their related parties were no more favourable than those

available, or which might reasonably be expected to be available, on similar transactions to non-key

management personnel related entities on an arm’s length basis.

The aggregate value of transactions relating to key management personnel and entities over which they have

control or joint control were as follows:

Expense transactions

Transaction 2013 2012

Key management person

Mr John Moore Director fees 20,000 -

Other related parties

Inisfree Holdings Pty Limited (a)

Director fees 30,000 17,500

Inisfree Holdings Pty Limited (a)

Consulting fees 90,000 62,500

Arowana Partners Group Pty Limited (b)



Research fees 176,500 87,500


Reimbursement of expenses (d)

270,637 -

Borneo Capital Pty Limited (a)

Rent 207,333 116,667

Borneo Capital Pty Limited (a)

Rental deposit - 41,250

Arowana Capital Pty Limited (a)

Rent and other expenses 63,600 -


Reimbursement of expenses (d)

129,100 -


Consulting fees - 17,100

RSM Bird Cameron Pty Limited (c)



Independent Experts Report 65,000 -


Tax consulting services 89,110 -


Other consulting services 12,500 -

Boardroom Pty Limited Company Secretarial fees 36,750 13,750

Total 1,250,530 391,267

(a) entity related to Mr. Malcolm Keefe

(b) entity related to Mr. Kevin Chin

(c) entity related to Mr. Paul Welch

(d) reimbursement of expenses relate to occupancy costs, salaries on charged, travel expenses, etc. The expenses have

been incurred by the supplier on behalf of the Company.

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Revenue transactions

Transaction 2013 2012

Other related parties

Arowana Capital Pty Limited Reimbursement of expenses **

156,361 -

Arowana International Holdings Limited Cost recovery fees 916,667 -

Arowana International Holdings Limited Reimbursement of expenses **

148,359 -

Arowana Partners Group Pty Limited Reimbursement of expenses **

17,151 -

Design & Arts College of New Zealand Limited Reimbursement of expenses ** 12,156 -

Elite International School of Beauty & Spa

Therapies Limited

Reimbursement of expenses ** 10,605 -

Intueri Education Group Limited Reimbursement of expenses ** 9,774 -

Thermoscan Inspection Services Pty Limited Reimbursement of expenses **

55,465 -

Total 1,326,568 -

** reimbursement of expenses relates to on charge of salaries, travel expenses, etc. the expenses have been incurred by

the Company on behalf of the related party.

Payables balance at balance date

The aggregate value of payables balance at balance date relating to key management personnel and entities

over which they have control or joint control were as follows:

2013 2012

Arowana Partners Group Pty Limited 19,211 238,379

Arowana Capital Pty Limited 13,684 19,515

RSM Bird Cameron Pty Limited - 2,750

Total 32,865 260,644

Receivables balance at balance date

The aggregate value of receivables balance at balance date relating to key management personnel and

entities over which they have control or joint control were as follows:

2013 2012

Arowana Partners Group Pty Limited 4,859 -

Arowana Capital Pty Limited 893 -

Total 5,752 -

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Movement in shares

The movement during the reporting period in the number of ordinary shares in the Company held, directly,

indirectly or beneficially, by each key management person, including their related parties, is as follows:

Held at 1 July 2011 Purchases a Sales Held at 30 June 2012

Directors

Mr Malcolm Keefe - 1,262,500 - 1,262,500

Mr Kevin Tser Fah Chin - 5,305,000 - 5,305,000

Mr Paul Welch - - - -

Total - 6,567,500 - 6,567,500

Held at 1 July 2012 Purchases b Sales Held at 30 June 2013

Directors

Mr Malcolm Keefe 1,262,500 - - 1,262,500

Mr Kevin Tser Fah Chin 5,305,000 6,658,845 - 11,963,845

Mr John Moore - 1,400,000 - 1,400,000

Mr Paul Welch - - - -

Total 6,567,500 8,058,845 - 14,626,345

a. For purposes of comparison, shares have been adjusted to reflect the impact of 1:7 share consolidation during year

ended 30 June 2012 and 1:20 during year ended 30 June 2013

b. For purposes of comparison, shares have been adjusted to reflect the impact of 1:7 share consolidation during year

ended 30 June 2012 and 1:20 during year ended 30 June 2013

No shares were granted to key management personnel during the reporting period as compensation in 2012 or

2013.

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30. Controlled Entities

Name of Entity

Country of

incorporation Class of shares

2013

%

2012

%

Parent entity

Arowana International Limited

Controlled entities of Arowana International

Limited

Intelligent Solar Energy Technology Pty Ltd Australia Ordinary 100 100

Arowana International Holdings Limited Australia Ordinary 100 -

Intueri Education Holdings Pty Limited Australia Ordinary 100 -

HRM Asia Holdings Pty Limited Australia Ordinary 100 -

Key Media Holdings Pty Limited Australia Ordinary 100 -

Key Media Pte Limited Singapore Ordinary 100 -

Key Media Hong Kong Limited Hong Kong Ordinary 100 -

Thermoscan Holdings Pty Limited Australia Ordinary 100 -

Thermoscan Inspection Services Pty Limited Australia Ordinary 100 -

Intueri Education Group Limited New Zealand Ordinary 100 -

D&A Education Holdings Limited New Zealand Ordinary 100 -

Elite Education Holdings Limited New Zealand Ordinary 100 -

NZSCDT Holdings Limited New Zealand Ordinary 100 -

Design and Arts College of New Zealand Limited New Zealand Ordinary 100 -

Elite International School of Beauty and Spa

Therapies Limited

New Zealand Ordinary 100 -

Global Education Group Limited New Zealand Ordinary 100 -

The Cut Above Academy Limited New Zealand Ordinary 100 -

NZ School of Outdoor Studies Limited New Zealand Ordinary 100 -

31. Events subsequent to reporting date

No matters or circumstances have arisen since the end of the financial year which significantly affected or may

significantly affect the operations of the consolidated entity and Company, the results of those operations, or

the state of affairs of the consolidated entity and Company in future financial years, except for the following:

• The Board has declared a dividend of 0.85 cents per share on 30 September 2013 payable on 25 October

2013.

• On 7 August 2013, Paul Welch tendered his resignation as a director of AWN, effective 21 August 2013

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32. Auditors’ remuneration

2013 2012

Services other than audit and review of financial statements

Preparation of Investigating Accountants Report 50,700 -

Due diligence 18,000 -

Audit and review of financial statements 58,000 15,000

Total paid to Lawler Hacketts Audit and its network firms 126,700 15,000

33. Deed of cross guarantee

Pursuant to ASIC Class Order 98/1418 (as amended) dated 13 August 1998, the wholly-owned subsidiaries

listed below are relieved from the Corporations Act 2001 requirements for preparation, audit and lodgement of

financial reports, and Directors’ reports.

It is a condition of the Class Order that the Company and each of the subsidiaries enter into a Deed of Cross

Guarantee. The effect of the Deed is that the Company guarantees to each creditor payment in full of any debt

in the event of winding up of any of the subsidiaries under certain provisions of the Corporations Act 2001. If a

winding up occurs under other provisions of the Act, the Company will only be liable in the event that after six

months any creditor has not been paid in full. The subsidiaries have also given similar guarantees in the event

that the Company is wound up.

The subsidiaries subject to the Deed are:

• Arowana International Holdings Limited

• Intueri Education Group Pty Limited

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34. Parent Entity Information

2013

$

2012

$

The following information has been extracted from the books and

records of the parent and has been prepared in accordance with

Australian Accounting Standards.

STATEMENT OF FINANCIAL POSITION

ASSETS

Current assets 9,103,524 2,660,409

Non-current assets 30,642,857 -

TOTAL ASSETS 39,746,381 2,660,409

LIABILITIES

Current liabilities 317,051 301,006

Non-current liabilities - -

TOTAL LIABILITIES 317,051 301,006

NET ASSETS 39,429,330 2,359,403

EQUITY

Issued capital 61,887,436 10,907,879

Capital raising costs (486,020) -

Retained earnings (10,217,401) (9,029,920)

Reserves (11,754,685) 481,444

TOTAL EQUITY 39,429,330 2,359,403

STATEMENT OF COMPREHENSIVE INCOME

Total profit / (loss) (227,046) 410,559

Total comprehensive income (227,046) 410,559

Guarantees

The Company has entered into a Deed of Cross Guarantee with its wholly owned subsidiaries. Please refer note

33 for further details. The Company has provided no other guarantee.

Contingent Assets and Liabilities

The Company has no contingent assets as at 30 June 2013.

The Company has a contingent liability relating to a bank guarantee of $50,000 provided in relation to

corporate credit card.

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Arowana International Limited and its Controlled Entities

Directors’ Declaration

65

The Directors of the Company declare that:

1. the Financial Statements comprising the Consolidated Statement of Comprehensive Income, Consolidated

Statement of Financial Position, Consolidated Statement of Cash Flows, Consolidated Statement of Changes

in Equity and accompanying Notes to the Financial Statements are in accordance with the Corporations Act

2001 and:

(a) comply with Accounting Standards, the Corporations Regulations 2001 and other mandatory

professional reporting requirements; and

(b) give a true and fair view of the consolidated entity’s financial position as at 30 June 2013 and of its

performance for the year ended on that date.

2. The Company has included in the notes to the financial statements an explicit and unreserved statement of

compliance with International Financial Reporting Standards.

3. There are reasonable grounds to believe that the company will be able to pay its debts as and when they

become due and payable.

4. The Directors have been given the declarations by the chief executive officer and the person performing

the chief financial officer function required by section 295A of the Corporations Act 2001 which states that:

(a) The financial records of the Company for the financial year have been properly maintained in

accordance with section 286 of the Corporations Act;

(b) the financial statements and notes for the financial year comply with the Accounting Standards;

and

(c) the financial statements and notes for the financial year give a true and fair value.

5. At the date of this declaration, there are reasonable grounds to believe that the members of the

extended closed group identified in Note 32 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.

This declaration is made in accordance with a resolution of the Board of Directors and is signed for and on

behalf of the directors by:

David Malcolm Keefe Kevin Tser Fah Chin

Chairman Managing Director

30 September 2013

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INDEPENDENT AUDITOR’S REPORT

TO THE MEMBERS OF AROWANA INTERNATIONAL LIMITED

(formerly Intelligent Solar Limited)

Report on the Financial Report

We have audited the accompanying financial report of Arowana International Limited

which comprises the consolidated statement of financial position as at 30 June 2013, the

consolidated statement of comprehensive income, the consolidated statement of changes

in equity and the consolidated statement of cash flows for the year then ended, notes

comprising a summary of significant accounting policies and other explanatory

information, and the Directors’ declaration of the consolidated entity comprising the

company and the entity it controlled at the year’s end or from time to time during the

financial year.

Directors’ Responsibility 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 is free from material

misstatement, whether due to fraud or error. In Note 2(a), the Directors also state, in

accordance with Accounting Standard AASB 101: Presentation of Financial Statements,

that the financial statements comply with International Financial Reporting Standards.

Auditor’s Responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We

conducted our audit in accordance with Australian Auditing Standards. Those standards

require that we comply with relevant ethical requirements relating to audit engagements

and plan and perform the audit to obtain reasonable assurance about whether the

financial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and

disclosures in the financial report. The procedures selected depend on the auditor’s

judgment, including the assessment of the risks of material misstatement of the financial

report, whether due to fraud or error. In making those risk assessments, the auditor

considers internal control relevant to the entity’s preparation and fair presentation of the

financial report 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 entity’s internal control. An audit also includes evaluating the appropriateness of

accounting policies used and the reasonableness of accounting estimates made by the

Directors, as well as evaluating the overall presentation of the financial report.

We believe that the audit evidence we have obtained is sufficient and appropriate to

provide a basis for our audit opinion.

Independence

In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.

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67

INDEPENDENT AUDITOR’S REPORT

TO THE MEMBERS OF AROWANA INTERNATIONAL LIMITED

(formerly Intelligent Solar Limited) (continued)

Opinion

In our opinion:

a) the financial report of Arowana International Limited is in accordance with theCorporations Act 2001, including:

i. giving a true and fair view of the consolidated entity’s financial position as

at 30 June 2013 and of their performance for the year ended on that date;and

ii. complying with Australian Accounting Standards and the CorporationsRegulations 2001; and

b) the financial report also complies with International Financial Reporting Standards

as disclosed in Note 2(a).

Report on the Remuneration Report

We have audited the Remuneration Report included in pages 16 to 19 of the Directors’

Report for the year ended 30 June 2013. 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.

Opinion

In our opinion the Remuneration Report of Arowana International Limited for the year

ended 30 June 2013, complies with section 300A of the Corporations Act 2001.


Shaun Lindemann

Partner

Brisbane, 30 September 2013

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Arowana International Limited and its Controlled Entities

Additional Information for Listed Companies

68

1 Shareholding

(a) Distribution of shareholders at 30 June 2013

Holdings Ranges Number of Shareholders Total Units %

1-1,000 418 72,805 0.05

1,001-5,000 48 116,743 0.07

5,001-10,000 63 490,032 0.30

10,001-100,000 561 20,840,830 12.77

100,001 and over 192 141,639,420 86.81

Total 1,282 163,159,830 100.00

(b) The number of shareholding held in less than marketable parcels is 466.

(c) The names of the substantial shareholders listed in the holding Company’s register at the

14th

September 2013 are:

Shareholder

Number of shares

2013

Number of shares

2012 *

AIA Investment Management Pty Ltd 14,142,859 -

UBS Wealth Management Australia Nominees Pty Ltd 10,166,152 -

Contemplator Pty Ltd <ARG Pension Fund A/c> 9,170,335 2,669,721

K&B Richards Pty Ltd <Richards Super Fund> 8,575,000 -

C F Foundation Group <Chin Family Superfund A/C> 5,305,000 5,305,000

* number of shares have been adjusted to reflect 1:20 consolidation during 2013

(d) Voting Rights

The consolidated entity has one class of ordinary shares with equal voting rights attached to them.

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Additional Information for Listed Companies

69

(e) Twenty largest shareholders

Holder Name Number of ordinary

fully paid shares

held

Percentage held of

listed ordinary

capital %

AIA INVESTMENT MANAGEMENT PTY LTD 14,142,859 8.67

UBS WEALTH MANAGEMENT AUSTRALIA NOMINEES PTY LTD 10,166,152 6.23

CONTEMPLATOR PTY LTD <ARG PENSION FUND A/C> 9,170,335 5.62

K&B RICHARDS PTY LTD <RICHARDS SUPER FUND A/C> 8,575,000 5.26

KNOWLEDGE TREE GROUP (NZ) HOLDINGS LIMITED 6,358,845 3.90

TRAOJ PTY LTD <THE TRAOJ A/C> 5,714,286 3.50

C F FOUNDATION GROUP <CHIN FAMILY SUPER FUND A/C> 5,305,000 3.25

RUMINATOR PTY LTD 4,285,000 2.63

MR. DUDLEY HOSKIN 3,575,000 2.19

ALOCHAN PTY LIMITED <SHARE A/C> 2,857,143 1.75

IMPULSIVE PTY LTD <DAWSON SUPER FUND A/C> 2,857,000 1.75

STITCHING PTY LTD <SSG SUPERANNUATION FUND A/C> 2,325,168 1.43

CLURNAME PTY LTD 2,260,000 1.39

ATKONE PTY LTD 2,135,000 1.31

NANDAROO PTY LTD 2,010,000 1.23

ABN AMRO CLEARING SYDNEY NOMINEES PTY LTD <CUSTODIAN A/C> 2,004,180 1.23

FUN SUPER PTY LTD <NICHOLAS WRIGHT S/FUND A/C> 2,000,000 1.23

PINTIA PTY LTD <THE PETER CURRY S/F A/C> 1,450,000 0.89

BORG ACQUISITIONS PTY LIMITED <BORG ACQUISITION A/C> 1,440,000 0.88

YARRAANDOO PTY LTD <YARRAANDOO SUPER FUND A/C> 1,430,000 0.8

Total for twenty largest shareholders 90,060,968 55.20

Total Issued Capital 163,159,830

2 The name of the company secretary is:

Mr Thomas Bloomfield

3 The address of the principal registered office in Australia is:

Level 11, 110 Mary Street, Brisbane, QLD 4000

Telephone: (07) 3182 3200

Fax: (07) 3182 3299

4 Registers of securities are held at the following address:

Boardroom Pty Limited

Level 7

207 Kent Street, Sydney NSW 2000

Telephone: 1300 737 760

Fax: 1300 653 459

Email: [email protected]

5 Australian Securities Exchange

The Company is currently listed on the Australian Securities Exchange.

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Corporate Directory

70

Arowana International Limited

ABN 83 103 472 751

Registered Office

Level 11, 110 Mary Street

Brisbane, QLD 4000

Telephone: (61 7) 3182 3200

Facsimile: (61 7) 3182 3299

Directors

Mr Malcolm Keefe (Non Executive Chairman)

Mr Kevin Tser Fah Chin (Managing Director)

Hon. John Moore (Non Executive Director)

Share Registry

Boardroom Limited

Level 7, 207 Kent Street

Sydney NSW 2000

Telephone 02 9290 9600

Facsimile 02 9279 0664

www.boardroomlimited.com.au

Auditor


Level 3, 549 Queen St,

Brisbane QLD 4000

www.lawlerhacketts.com.au

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