ReadCloud : December 2021 Quarterly Report and Appendix 4C

For personal use only

ASX Release

31 January 2022

Quarterly Activities Report & Appendix 4C

Highlights
•	Strong retention and recommitment of existing schools across the three sales
	channels (VET-in-Schools, Direct Curriculum and Reseller) for the 2022 school
•	year
•	New school wins across all three sales channels
	Most successful on-boarding season for both VET-In-Schools and the full-
	curriculum segment to date, further validating the investment in our core
•	platform and IP
	Well advanced for a major brand and marketing launch for the VET segment to
•	drive late 2022 and 2023 VET growth
	21% increase in cash receipts from customers in the December quarter (over the
•	prior year December quarter) to $1.12 million
	$4.08 million cash at 31 December 2021 (the low point in the Company's cash
	cycle), positioning the Company well for growth.

ReadCloud Limited ("ReadCloud" or "the Company") (ASX: RCL) is the leading provider of digital eLearning solutions to secondary schools and the Vocational Education and Training ("VET") sector in Australia. The Directors of ReadCloud are pleased to provide a quarterly update and cash flow statement for the December 2021 quarter.

Operational update

Management is pleased to report that school customer retention across all three sales channels has been very high for the 2022 school year.

We have had continued success in signing up new school customers across key segments in the December quarter, with new school customers also still being signed up in January 2022. We view this as a positive result, however, total school and user numbers for 2022 for the full-curriculum business will not be known with full certainty until the conclusion of the on-boarding season in the current quarter (and for the VET segment - post the 31 March enrolment deadline).

This is in line with the Board's decision to change the Financial Year end from 30 June to 30 September, to allow for the increased operational activity ReadCloud is experiencing in January and February to be processed and provide improved reporting metrics on school and student numbers in the Half Year results ending March 2022.

Readcloud Limited | 284 Bay Street, Brighton, Victoria, 3186

P [phone] | W www.readcloud.com

ABN 44 136 815 891

For personal use only

Operationally, ReadCloud is currently going through the most successful on-boarding season for the full-curriculum segment to date, capitalising on investments made in the core platform systems and processes in the last 12 months.

ReadCloud has made significant investments during 2021 to move vital technical infrastructure for its three wholly owned Registered Training Organisations on to one platform to further improve the end-user experience whilst ensuring the highest level of compliance.

We have already received positive feedback from customers coming on board the new ReadCloud VET Hub system.

Significant planning and investment in building the VET brand through a joint selling and marketing approach across the Group's three RTOs is providing confidence in our ability to win new customers and increase the cross selling of our courses. This will provide a potential growth opportunity for the backend of the year and especially into 2023.

New markets continue to be explored through distribution style business models leveraging off the core SaaS platform proving so effective in the current onboarding season/process.

Finance Update

ReadCloud's cash flow is highly seasonal in line with the school year cycle. The majority of the Company's cash receipts from customers are received in the quarters ending March and June.

Key points from the accompanying Appendix 4C Cash Flow Statement:

21% increase in cash receipts from customers in the December quarter (on the

• prior year December quarter) to $1.12 million

Readcloud Limited | 284 Bay Street, Brighton, Victoria, 3186

P [phone] | W www.readcloud.com

ABN 44 136 815 891

•

•

•

•

•

•

•

For personal use only

As in prior years, the vast majority of cash receipts from customers are expected to occur in the March and June quarters;

$0.29 million December quarter net cash outflow from operating activities (compared to a $0.33 million net cash outflow for the prior December quarter); Cost of sales for the December quarter was $229,000, mainly relating to full- curriculum eBook sales during the December quarter;

Staff costs for the December quarter were $1.09 million (in line with the September quarter);

Payments to related parties (item 6.1 of the attached Appendix 4C) consisted of remuneration paid to directors during the quarter;

Administration costs for the December quarter were $156,000 versus an average of $209,000 for the three quarters immediately prior to this period, reflecting continued tight management of overheads; and

ReadCloud received its FY21 Research and Development tax incentive refund ($396,000) in full in the December quarter.

ReadCloud had a cash balance of $4.08 million as at 31 December 2021 (December typically being the low point in the Company's cash cycle) and zero debt, positioning the Company well for growth. As noted above, ReadCloud's cash flows are highly seasonal, with the majority of cash receipts from customers for the year to be received in the March and June quarters each year.

The Company's Appendix 4C Cash Flow Statement accompanies this report.

This announcement is authorised for release to the market by the Board of Directors of ReadCloud Limited.

-Ends-

CONTACTS:

Investors & Media:

Luke Murphy, Chief Financial Officer

[phone]

About ReadCloud Limited

ReadCloud is the leading provider of eLearning software solutions, including eBooks, to Schools and the Vocational Education and Training (VET) sector in Australia. ReadCloud's proprietary eBook platform delivers digital content to students and teachers with extensive functionality, including the ability to make commentary in, and import third party content into eBooks.

Readcloud Limited | 284 Bay Street, Brighton, Victoria, 3186

P [phone] | W www.readcloud.com

ABN 44 136 815 891

For personal use only

Students and teachers can share notes, questions, videos and weblinks directly inside the eBooks turning the eBook into a place for discussion, collaboration and social learning, substantially improving learning outcomes.

ReadCloud sources content for its solutions from multiple publishers, delivering the full Australian school curriculum in digital form in all States, on one platform. In the Vocational Education and Training (VET) sector, ReadCloud provides over 60 digital VET courses and auspicing services to schools across Australia.

Readcloud Limited | 284 Bay Street, Brighton, Victoria, 3186

P [phone] | W www.readcloud.com

ABN 44 136 815 891

For personal use only

Rule 4.7B

Appendix 4C

Quarterly cash flow report for entities subject to Listing Rule 4.7B

Name of entity

ReadCloud Ltd
ABN	Quarter ended ("current quarter")
44 136 815 891	31 December 2021

Consolidated statement of cash flows	Current quarter	Year to date (3
			$A'000	months)
				$A'000
1.	Cash flows from operating activities
1.1	Receipts from customers	1,117	1,117
1.2	Payments for
	(a)	research and development	(134)	(134)
	(b) product manufacturing and operating	(229)	(229)
		costs
	(c)	advertising and marketing	(75)	(75)
	(d)	leased assets	(48)	(48)
	(e)	staff costs	(1,092)	(1,092)
	(f) administration and corporate costs	(156)	(156)
1.3	Dividends received (see note 3)
1.4	Interest received
1.5	Interest and other costs of finance paid
1.6	Income taxes paid	(70)	(70)
1.7	Government grants and tax incentives	396	396
1.8	Other (provide details if material)
1.9	Net cash from / (used in) operating	(291)	(291)
	activities
2.	Cash flows from investing activities
2.1	Payments to acquire or for:
	(a)	entities
	(b)	businesses
	(c) property, plant and equipment	(6)	(6)
	(d)	investments
	(e)	intellectual property	(97)	(97)
	(f) other non-current assets

ASX Listing Rules Appendix 4C (17/07/20)	Page 1
+ See chapter 19 of the ASX Listing Rules for defined terms.