PROSPECTUS

INITIAL PUBLIC OFFERING OF ORDINARY SHARES IN INTUERI EDUCATION

GROUP LIMITED
DATED 15 APRIL 2014 (AS AMENDED BY AN INSTRUMENT TO AMEND
DATED 6 MAY 2014)

Joint Lead Managers and Organising Participants

ADDITIONAL DISCLOSURE CONCERNING 28 APRIL 2014 INCIDENT AT NZSCDT

On Monday 28 April 2014, a student fatality occurred during an assessment dive being
conducted by NZSCDT at Lake Puketirini. The incident involved a foreign student.
The incident remains under investigation by the New Zealand Police, WorkSafe New
Zealand and the Australian Diver Accreditation Scheme (ADAS), the main accreditation
body for NZSCDTs training courses. NZSCDT is cooperating with all investigations. The
Board is also overseeing an internal investigation into the incident.
Since its establishment in 2000, NZSCDT has maintained an excellent safety record and
has met ADAS compliance standards, which ADAS audits on an annual basis. The incident
was the first fatality at NZSCDT, which conducts over 12,000 dives annually.
Based on initial internal investigations by NZSCDT and discussions to date with the
investigating authorities, the Company does not expect the incident to be found to be
attributable to any material breach of applicable policy or procedure by NZSCDT or its
staff. The final reports of WorkSafe New Zealand and ADAS are expected to be released
within the next six months. The Coroner may then determine whether or not to hold a
coronial inquiry into the cause and circumstances of the death.
NZSCDTs training courses resumed on Monday 5 May 2014. Based on discussions with its
international agents (responsible for sourcing international students), NZSCDT does not
believe that the incident will have a material negative effect on international student
demand for its courses. The Company also does not expect the incident to have a material
effect on NZSCDTs prospective financial performance. The Company has not made and
does not expect to make any adjustment or allowance to its forecast financial statements
as a result of the incident and the investigations.
The Company does not believe that the incident will have any impact on its other colleges.
Risks as a result of the incident
Investigations are ongoing by the New Zealand Police, WorkSafe New Zealand and the
Australian Diver Accreditation Scheme (ADAS) in relation to a 28 April 2014 student fatality
at Intueris NZSCDT college. If WorkSafe New Zealand makes any adverse finding against
NZSCDT or its staff, the range of outcomes may include:
an improvement notice requiring NZSCDT to modify the manner in which it
conducts its diving activities;
a prohibition notice requiring NZSCDT to cease some or all of its operations; and/or
Worksafe New Zealand could look to prosecute NZSCDT under the Health and
Safety in Employment Act 1992 which, if successful, could result in a maximum fine
of NZ$250,000 per breach. If there were any basis for WorkSafe New Zealand to
pursue a prosecution for reckless conduct, the potential maximum fine is
NZ$500,000. A court could also order that a reparation payment be made to the
family of the student concerned.
In an extreme scenario criminal charges could be brought against NZSCDT or its staff in
connection with the incident.

Based on initial internal investigations by NZSCDT and discussions to date with the
investigating authorities, the Company considers the possibility of any improvement notice,
prohibition notice or prosecution to be very unlikely. In the most adverse scenario,
NZSCDTs reputation could be materially adversely affected, which could reduce student
demand for NZSCDTs courses.
If ADAS makes adverse findings against NZSCDT or its staff, ADAS could withdraw or
downgrade its accreditation and/or disallow NZSCDT from delivering some or all of its
courses. Based on initial internal investigations by NZSCDT and discussions to date with
the investigating authorities, the Company considers the possibility of any such action by
ADAS to be very unlikely.

IMPORTANT INFORMATION
Important Notice
This document ("Prospectus") relates to the Offer by Intueri Education Group Holdings
Limited (Offeror) of ordinary shares in Intueri Education Group Limited (Company"). A
description of the Offer and the Shares is set out in Section 7 Details of the Offer.
This document is a prospectus for the purposes of the Securities Act and the Securities
Regulations and is prepared as at, and dated, 15 April 2014 (as amended by an Instrument
to amend dated 6 May 2014). All references in this Prospectus to this Prospectus are to
be read as this Prospectus, as amended and all references in this Prospectus to the
Prospectus are to be read as the Prospectus, as amended.
This Prospectus is an important document and should be read carefully before deciding
whether or not to invest in the Company.
No person is authorised to give any information or make any representation in connection
with this Offer which is not contained in this Prospectus, the Investment Statement or in
other communications from the directors of the Issuers. Any information or representation
not so contained may not be relied upon as having been authorised by the directors of the
Issuers or any other person referred to in this Prospectus.
If you are in any doubt as to any aspect of the Offer you should consult your financial or
legal adviser or an NZX Firm.
You should seek your own taxation advice on the implications of an investment in the
Shares.
No Guarantee
No person guarantees the Shares offered under this Prospectus. No person warrants or
guarantees the performance of Intueri, the Shares, or the repayment of capital or any
return on any investments made pursuant to this Prospectus.
Selling Restrictions
The Broker Firm Offer is being made to members of the public in New Zealand, the
Executive Offer is being made to Key Executives of Intueri and the Institutional Offer is
being made to selected Institutional Investors in New Zealand, Australia and certain other
jurisdictions.
No person may offer, sell (including resell) or deliver or invite any other person to so offer,
sell (including resell) or deliver any Shares or distribute any documents (including this
Prospectus) in relation to the Shares to any person outside New Zealand except in
accordance with all of the legal requirements of the relevant jurisdiction.
Unless otherwise agreed with the Issuers, any person or entity subscribing for Shares in
the Offer shall, by virtue of such subscription, be deemed to represent that he, she or it is
not in a jurisdiction which does not permit the making to him, her or it of an offer or
invitation of the kind described in this Prospectus, and is not acting for the account or
benefit of a person within such jurisdiction. None of the Issuers, the Promoters, the Joint
Lead Managers, the Registrar or any of their respective directors, officers, employees,
consultants, agents, partners or advisers accepts any liability or responsibility to determine
whether a person is able to participate in the Offer.

Registration
A copy of this Prospectus duly signed by or on behalf of the directors of the Issuers,
Arowana and each director of Arowana, and having endorsed thereon or attached thereto
copies of the documents required by section 41 of the Securities Act, has been delivered to
the Registrar of Financial Service Providers for registration in accordance with section 42 of
the Securities Act.
The documents required by section 41 of the Securities Act to be attached to the copy of
this Prospectus delivered to the Registrar of Financial Service Providers for registration are:
1

the report of the Auditor in respect of certain financial information included in this
Prospectus, as set out in this Prospectus;

the signed consent of the Auditor to the Auditors Report appearing in this
Prospectus;

the signed consent of the Investigating Accountant to the investigating accountants

report appearing in this Prospectus; and

copies of the material contracts referred to under the heading Material Contracts in
Section 8 Statutory Information.

Consideration Period
Pursuant to section 43C of the Securities Act, the Financial Markets Authority will be
notified once this Prospectus is registered with the Registrar of Financial Service Providers.
The Financial Markets Authority will have the opportunity to consider whether the
Prospectus: (a) complies with the Securities Act and the Securities Regulations; (b)
contains any material misdescription or error or any material matter that is not clearly
legible; or (c) is false or misleading as to a material particular or omits any material
particular. Nothing in this section or in any other provision of the Securities Act limits the
Financial Markets Authority's power to consider or reconsider these matters at any time.
The nature and extent of the consideration (if any) that the Financial Markets Authority
gives to this Prospectus is at the Financial Markets Authority's discretion.
Pursuant to section 43D of the Securities Act, no allotment of Shares may be made and no
Applications or subscriptions for Shares may be accepted during the Financial Markets
Authority's consideration period. The consideration period commences on the date this
Prospectus is registered and ends at the close of five working days after the date of
registration. The Financial Markets Authority may shorten the consideration period, or
extend it by no more than five additional working days.
Forward Looking Statements
This Prospectus contains certain statements which relate to the future including, in
particular, the information set out in Section 5.3 Prospective Financial Information.
Forward looking statements should be read together with the other information in this
Prospectus, including the risk factors in Section 6 What are my Risks? and the assumptions
and sensitivity analysis set out in Section 5.3 Prospective Financial Information.
Such forward looking statements are not a guarantee of future performance and involve
known and unknown risks, uncertainties, assumptions and other important factors, many
of which are beyond the control of Intueri and which may cause actual results,
performance or achievements of Intueri to differ materially from those expressed or
implied by such statements.

The Issuers and the Promoters disclaim any responsibility to update any such risk factors
or publicly announce the results of any revisions to any of the forward looking statements
contained in this Prospectus to reflect developments or events, except to the extent
required by the Securities Act, the Securities Regulations, the NZX Listing Rules, the ASX
Listing Rules or the Financial Reporting Act.
Given these uncertainties, you are cautioned not to place undue reliance on any forward
looking statements contained in this Prospectus. Under no circumstances should you
regard the inclusion of forward looking statements as a representation or warranty by the
Issuers, the Promoters or their respective directors or officers or any other person referred
to in this Prospectus with respect to the achievement of the results set out in any such
statement, or that the underlying assumptions used will in fact be realised.
Questions about the Offer
If you have any queries about the risk or suitability of an investment in the Shares you
should consult your financial adviser. If you have questions about the Offer you can call
0800 888 726 (New Zealand only) during the Offer period or visit
www.intuerishares.co.nz. If you wish to apply for Shares you must receive the
Investment Statement and make your Application on the Application Form attached to, or
accompanying, the Investment Statement.
Definitions
Terms used in this Prospectus have the specific meaning given to them in Section 11
Glossary (including certain industry specific terms with which you may not be familiar). If
you do not understand the technical terms used in this Prospectus, please refer to the
Glossary at the back of this document or consult a financial adviser.
Unless otherwise indicated, $ or NZ$ refers to New Zealand Dollars, A$ refers to Australian
Dollars and all references to times and dates are to times and dates in New Zealand.
This Prospectus refers to various legislation in force in New Zealand as at the date of this
Prospectus. You can view free of charge copies of any such legislation online at
www.legislation.govt.nz.

TABLE OF CONTENTS

SECTION 1: INVESTMENT OVERVIEW

1.1: Chairmans Letter

1.2: Intueri Snapshot

1.3: Offer at a Glance

10

SECTION 2: INVESTMENT HIGHLIGHTS

15

SECTION 3: INDUSTRY OVERVIEW

19

SECTION 4: BUSINESS OVERVIEW

27

4.1: Business Overview

27

4.2: Board of Directors

41

4.3: Senior Management

43

4.4: Corporate Governance

45

4.5: Executive Remuneration and Share Plans

49

4.6: Relationship between Arowana and the Company

52

SECTION 5: FINANCIAL INFORMATION

53

5.1: Introduction to Intueris Financial Information

53

5.2: Overview of Intueris Financial Information

55

5.3: Prospective Financial Information

68

5.4: Historical Financial Information

87

5.5: Statutory Auditors Report

204

SECTION 6: WHAT ARE MY RISKS?

207

SECTION 7: DETAILS OF THE OFFER

213

SECTION 8: STATUTORY INFORMATION

227

SECTION 9: NEW ZEALAND TAXATION IMPLICATIONS

244

SECTION 10: INFORMATION FOR AUSTRALIAN INSTITUTIONAL

INVESTORS

247

SECTION 11: GLOSSARY

263

SECTION 12: DIRECTORY

268

SECTION 1: INVESTMENT OVERVIEW

Section 1.1: Chairmans Letter
On behalf of the Board, it is my pleasure to invite you to become a shareholder in Intueri
Education Group Limited.
Intueri will, following its completion of the Quantum Acquisition scheduled for late May
2014, comprise three providers of vocational education - two in New Zealand (Intueri
Education and Quantum Education) and one in Australia (Online Courses Australia Group
or OCA, in which the Company has a 50% shareholding).
Both Intueri Education and Quantum Education are established Private Training
Establishment (PTE) groups in New Zealand, generating strong financial performance and
excellent student outcomes. OCA is an online-based institution, and the Companys 50%
ownership of this business provides Intueri with exposure to the fast growing Australian
vocational education sector as well as access to online expertise. The three businesses
have complementary student demographics, and will allow Intueri to more fully service
three key student markets: domestic, international and online. The Company also believes
that its greater scale will allow it to benefit from potential synergies and expanded
educational options for its students, assist in the development of better offshore networks,
and improve its capacity to make further acquisitions.
New Zealands PTE education sector represents an attractive investment proposition. The
sector has already undergone significant regulatory reform and provides Intueri with a
stable and highly visible earnings base. The increased focus on student successes and a
greater degree of contestable funding within the sector represent an opportunity for well
resourced, high-quality providers like Intueri - in addition to the high growth prospects for
the online and international student markets. With a national footprint and identity, and
sophisticated student management systems, the Board and executive team are confident
Intueri will be well positioned to take advantage of these opportunities.
This Prospectus contains important information about Intueri and this investment
opportunity. I encourage you to read the Prospectus and the Investment Statement
carefully and to consider Section 6 What are my Risks? before making your investment
decision.
The Board and executive team are excited about the future for the Company and look
forward to welcoming you as a shareholder.
Yours sincerely,
Chris Kelly
Independent Chairman

Section 1.2: Intueri Snapshot

Following completion of the Offer and the Quantum Acquisition1, Intueri will consist of two
of New Zealand's largest private vocational education businesses, Intueri Education and
Quantum Education.
All references to the business, operations and financial performance of Intueri in this
document are, unless otherwise noted, on a pro forma basis, assuming the
combination of Intueri Education, Quantum Education and a 50% shareholding in OCA
as at the relevant date.
Intueri will be New Zealands largest operator of PTEs on a domestic Equivalent Full Time
Student (EFTS) basis, having enrolled approximately 7,000 domestic and international
students at 26 New Zealand locations in 2013. Intueri also enrolled approximately 2,000
online students in 2013.
In New Zealand, Intueri delivers NZQA accredited qualifications across a broad spectrum of
subjects, to both domestic and international students. Intueri charges its domestic
students course fees (primarily funded by student loans), which are supplemented by
direct government funding of Intueri. International students are not government funded,
but provide an important and growing source of course fee revenue.
Intueri also has a 50% shareholding in Online Courses Australia Group (OCA), a rapidly
growing online education business headquartered in Australia. OCA offers a wide range of
online courses to students across Australia.

The Quantum Acquisition is scheduled to complete alongside the completion of the Offer. The Offer will
not proceed unless the Quantum Acquisition is completed. See Section 7 Details of the Offer for more
information.

Intueri's Colleges2

Further information concerning Intueris colleges can be found in Section 4.1 Business
Overview on page 27.

Enrolment numbers reflect Intueri Educations and Quantum Educations combined total number of
students for calendar 2013.

Timeline of Intueri's evolution3

Intueri is currently owned by Arowana International, an Australian conglomerate holding
company, and has been formed through the acquisition of several established colleges over
a number of years as illustrated in the timeline below.

The pro forma (as defined in Section 11 Glossary) information presented in this
Prospectus assumes all of Intueri's colleges, including the recent acquisition of a 50%
shareholding in OCA and the Quantum Acquisition, were owned from 1 January 2011 in
order to show the performance of the combined business on a comparable basis.

Rationale for the IPO

To fund the Quantum Acquisition, including associated transaction costs, fees for the
Offer, and to repay related-party loans, including those associated with the OCA
Acquisition, to the extent that existing cash cannot fund these repayments.
Arowana will sell part of its shareholding in the Company and reinvest the proceeds in
other long term investments.
To enhance Intueri's ability to pursue growth opportunities, including complementary
acquisitions within the PTE sector, through direct access to the capital markets.
To increase Intueris public profile as a tertiary education provider in New Zealand and
overseas.
To place majority ownership of Intueri in the hands of a more widely spread
shareholder base and to provide Intueri with an independent management team and
Board.

Acquisition dates refer to the timing of the acquisition by associated parties of Arowana International.
Acquisition dates for each entity by the Company can be found on page 55.

Section 1.3: Offer at a Glance

What is this?
References to key parties:
Company: Intueri Education Group Limited
Offeror:
Intueri Education Group Holdings Limited
Arowana:
Arowana International Limited
Selling
Shareholder:Intueri Education Holdings Pty Ltd

This is an initial public offering of ordinary shares in the Company by the Offeror.
The Offer comprises the Broker Firm Offer, the Institutional Offer and the Executive Offer.
Your decision whether or not to invest in Shares should be based on your consideration of
this Prospectus taken as a whole (and the Investment Statement) and not just this section,
which provides an overview of the Offer.
As with any investment, there are risks associated with an investment in the Shares.
Therefore, in particular you should consider the risk factors that could affect Intueris
performance described in Section 6 What are my Risks?
As explained in Section 7 Details of the Offer, the Offer will not proceed to completion
unless the Quantum Acquisition proceeds and Arowana shareholder approval is obtained.
How is the Offer structured?
The Company is currently 100% owned by the Selling Shareholder, a wholly-owned
subsidiary of Arowana. The Offer is being made for the reasons set out above in Section
1.2 Intueri Snapshot and in Section 7 Details of the Offer.
The Offer is being made by the Offeror, which will:
be issued $62.0 million of new Shares by the Company; and
acquire a portion of the Selling Shareholders existing Shares in the Company. The
exact number of Shares the Selling Shareholder will sell will be determined
following the bookbuild, but the Selling Shareholder intends4 to retain 15% to
25% of the Shares after the Offer.
The Offeror will then sell those Shares to investors under the Offer.
For more details of the Offer see Section 7 Details of the Offer.

The percentage retained could fall outside this range, with the consent of the Joint Lead Managers.

10

Key dates
Prospectus registered

15 April 2014

Bookbuild

7 May 2014

Pricing and Allocation

7 May 2014

Broker Firm Offer Opening Date

9.00am, 8 May 2014

Broker Firm Offer Closing Date

12.00pm (noon), 21 May

2014

Settlement for ASX listed Shares

21 May 2014

Expected dispatch of holding statements in Australia

22 May 2014

Settlement for NZX listed Shares

22 May 2014

Allotment for NZX and ASX listed Shares

22 May 2014

Expected commencement of trading on the NZX Main Board

and ASX

23 May 2014

Expected dispatch of holding statements in New Zealand and

any refund payments if required

26 May 2014

Expected payment of initial Dividend

March 2015

This timetable is indicative only. The Issuers reserve the right to amend these dates at
their discretion with the agreement of the Joint Lead Managers. The Offer may also be
withdrawn by the Issuers at any time before the allotment of Shares, at the Issuers sole
discretion.
Key Offer Details and Statistics
The following table highlights key Offer statistics and gives examples of the results of the
Offer depending on the percentage of total Shares the Selling Shareholder decides to
retain. The percentages shown below are illustrative only.5
If the Selling
Shareholder holds
25%

If the Selling
Shareholder holds
15%

Total number of Shares offered6

75 million

85 million

New Shares issued by the Company to fund

the Quantum Acquisition/repay related party
loans/meet transaction costs7

23 million to 28 million

Existing Shares to be sold by the Selling

Shareholder8

47 million to 52
million

57 million to 62
million

Ranges within each retention level are shown based on the lower and upper values of the Indicative
Price Range.

The sum of new Shares issued by the Company to the Offeror and existing Shares sold by the Selling
Shareholder to the Offeror.

The Company will issue $62.0 million of new Shares to the Offeror, being 23 million to 28 million new
Shares based on the Indicative Price Range. The proceeds of the new Shares will be used to pay for the
Quantum Acquisition and associated transaction costs, fees for the Offer, and to repay related-party
loans, including those associated with the OCA Acquisition.

11

Indicative Price Range9

$2.25 to $2.75 per Share

Total gross proceeds from the Offer10

$169 million to $206

million

$191 million to $234

million

Total number of Shares held by the Selling

Shareholder upon completion of the Offer11

25 million

15 million

Total number of Shares on issue upon

completion of the Offer

100 million

Implied market capitalisation12

$225 million to $275 million

Forecast Net Debt at 31 May 2014

$18 million

Implied enterprise value13

$243 million to $293 million

Key investment metrics

These metrics are provided to help you assess the value of the Company. The calculations
are explained in the table set out at the end of Section 11 Glossary under the heading
Additional Definitions for the Key Offer Statistics and Key Investment Metrics. For a
reconciliation of the non-GAAP measures EBITA and NPATA to GAAP measurements, please
see page 67.
Investors can use the ratios presented below to compare the value of Intueri with other
companies. These ratios are known as "earnings multiples", as they reflect the value of the
company as a multiple of its earnings.
Implied enterprise value / EBITA
This earnings multiple shows the ratio of the total implied value of the Company (the value
attributable to Shareholders, debt holders and non-controlling interests) to EBITA (a
measure of the earnings attributable to Shareholders, debt holders and non-controlling
interests). An enterprise value earnings multiple, such as implied enterprise value / EBITA,
is relevant for comparing the value of companies with different capital structures.
Implied market capitalisation / NPATA
This earnings multiple shows the ratio of the implied market capitalisation of the Company
(the value attributable to Shareholders) to NPATA (a measure of the earnings attributable
to Shareholders). A market capitalisation earnings multiple, such as implied market
8

The number of shares the Selling Shareholder will sell to the Offeror will depend on the Final Price and
the number of Shares in the Company that the Selling Shareholder decides to retain. Following the
determination of the Final Price but before the allotment by the Company to the Offeror of the new
Shares, the Company will undertake a Share split such that upon allotment by the Company to the
Offeror of the new Shares, the Company will have a total of 100 million Shares on issue.

The Indicative Price Range is indicative only and may be varied at any time by the Issuers without
further disclosure. The Final Price will be set on or about 7 May 2014 after the conclusion of the
bookbuild and may be within, above or below the Indicative Price Range.

10

Based on the Indicative Price Range and the total number of Shares sold by the Offeror.

11

The number of Shares in the Company that the Selling Shareholder decides to retain.

12

The implied market value of the equity of the Company, based on the Indicative Price Range.

13

The implied value of the Company, being the indicative market capitalisation and also prospective net
interest bearing debt.

12

capitalisation / NPATA, is relevant for comparing the value attributable to shareholders of

different companies.

FY2014PF

FY2015F

9.9x 11.9x

8.4x 10.1x

13.4x 16.4x

11.3x 13.9x

Implied cash Dividend yield

2.8% - 3.4%

4.7% - 5.7%

Implied gross Dividend yield15

3.9% - 4.7%

6.5% - 8.0%

14

Implied enterprise value / EBITA

Implied market capitalisation / NPATA

These metrics are shown based on the lower and upper values of the Indicative Price
Range.
Selected pro forma financial information
NZ$m, YE
FY2011PF
FY2012PF
Dec

FY2013PF

FY2014PF

FY2015F

Revenue

65.5

69.0

66.6

76.9

86.4

EBITA

18.7

20.6

21.5

25.4

30.1

EBITA after
Non
Controlling
Interest

18.8

20.6

21.3

24.6

28.8

NPATA

16.8

19.8

EPS (cps)

10.1

13.2

DPS (cps)

7.716

12.917

NPATA per
Share (cps)

16.8

19.8

Wherever prospective financial information appears in this Prospectus (including in the

selected pro forma financial information and key investment metrics presented in this
section) you should read that financial information together with the assumptions set out
in Section 5.3 Prospective Financial Information and also the risk factors set out in Section
6 What are my Risks? There is no guarantee that the results set out in the prospective
financial information will be achieved.

14

EBITA after exclusion of non-controlling interests is utilised in the calculation of

Implied enterprise value / EBITA.

15

Implied gross dividend yield calculated based on the declared dividend in each of FY2014PF and FY2015F
grossed up for imputation credits at the New Zealand corporate tax rate of 28%.

16

Dividend forecast to be paid in FY2015 in respect of the 7 month period ended 31 December 2014.

17

Dividend forecast to be paid in FY2015 and FY2016 in respect of the 12 month period ended 31
December 2015.

13

In order to assist readers to better understand Intueris financial performance, the

Company uses three non-GAAP financial measures being EBITDA, EBITA and NPATA, as
defined below. These measures should not be considered in isolation of, or as a substitute
for, NZ GAAP measures such as Net Profit and cash flow measures. For a reconciliation of
the non-GAAP measures to GAAP measurements, please see page 67.
EBITDA

EBITDA is earnings before interest, tax, depreciation and all

amortisation expenses.

EBITA and EBITA

after Non-Controlling
Interest

EBITA is earnings before interest, tax and amortisation of

identifiable acquisition related intangibles. It does however
include amortisation of capitalised course material development
costs and depreciation expenses to make it consistent with other
listed industry peers. EBITA after Non-Controlling Interest
deducts the proportionate share of EBITA for OCA that Intueri
does not own.

NPATA

NPATA represents Net Profit adjusted for the tax-effected

amortisation of acquisition related intangibles.

NPAT comparisons

NPAT is a GAAP measure. However, the trend in net profit after

tax is only included in this Prospectus in respect of FY2015F, as
FY2011PF, FY2012PF and FY2013PF do not have GAAP measures
that are comparable due to changes in capital structure.

14

SECTION 2: INVESTMENT HIGHLIGHTS

All references to the business, operations and financial performance of Intueri in this
document are, unless otherwise noted, on a pro forma basis, assuming the
combination of Intueri Education, Quantum Education and a 50% shareholding in OCA
as at the relevant date.
Largest New Zealand PTE group delivering high quality academic outcomes
Intueri will be the largest PTE group in New Zealand on a domestic EFTS basis,
operating from 26 locations across the country. In 2013, Intueri had 5,950 domestic
student enrolments (equivalent to 2,333 domestic EFTS) and 971 international student
enrolments.
Intueri has a number of long established colleges with strong reputations, delivering
high quality academic outcomes. Intueri's successful track record has contributed to
securing additional government funding and domestic student numbers in several of its
colleges in recent years.
An important factor in Intueri's academic outcomes is its control of course content and,
for its Quantum Education business, its sophisticated pastoral care and student
management system.
PTE groupings by domestic EFTS delivered (2012)
2,500
2,000

2,176
1,729

1,500
1,000

986

952

877

868

800

500

660

645

502

492

419

403

Source: Tertiary Education Commission, Intueri.

1. Intueri student numbers are presented on a pro forma basis, combining Intueri Education (1,238 EFTS)
and Quantum Education (938 EFTS).

Supportive regulatory and policy environment

New Zealand's PTE sector operates in a stable regulatory and funding policy
environment.
The long-term outlook for the New Zealand PTE sector is positive, in the Companys
view, driven by a supportive government policy framework, new targeted government
funding for Mori and Pasifika students and recent government initiatives to attract
international students to New Zealand. This is reflected in the increasing government

15

tuition funding for the PTE sector and increasing international student revenue,
illustrated in the charts below.
Refer to Section 3 Industry Overview for further discussion of the regulatory environment.

PTE government tuition funding18

250

CAGR: 6.4%

400
350

PTE international student revenue

343
303

311

200

250

NZ$m

NZ$m

300

200
150
100

150
100
50

132

156

185

198

209

204

2009

2010

2011

2012

50
0

0
2011

2012

2013

Source: Tertiary Education Commission, Ministry of

Education

2007

2008

Source: Tertiary Education Commission, Ministry

of Education

Intueri considers that its scale and track record of delivering successful academic
outcomes (demonstrated by its 88% course completion rate in 2012) put it in a strong
position to capture above average industry growth in the PTE sector for domestic
students. Following a decline in international student numbers due to changes in
government immigration policy, Intueris international student numbers have recovered
and are forecast to grow significantly in FY2014F and FY2015F. For more information
see page 71.
Intueris investment in OCA also gives it exposure to growing demand for vocational
training and online education in the Australian market.
Refer to Section 3 Industry Overview and Section 4 Business Overview for further
information.
Barriers to entry
The following regulatory factors make it difficult, in the Companys view, for new
entrants to become established in the PTE sector:
-

the NZQA approval, accreditation and registration process;

government funding requirements; and
ongoing compliance requirements.

As an established education business with significant scale, Intueri has the following
competitive advantages:
Track record and reputation: Intueri has a strong track record and reputation with
government regulators, students and international student recruitment agents,
18

Represents Student Achievement Component funding only (does not include other TEC tuition funding,
such as Youth Guarantee funding). Part of the increase in funding in 2013 was due a Government
initiative to equalize funding between public and private PTEs, which will be phased in over the next four
years. Once this initiative has been introduced, Intueri expects funding growth will revert back towards
its longer-term trend.

16

which is very important in securing government funding and critical for marketing
to prospective students.
International student marketing platform: Intueris size provides significant
economies of scale in marketing, including the ability to support continued
investment in international student recruitment and brand awareness.
Intueri considers that these factors should enable it to benefit from continuing
consolidation in a fragmented sector. Between 2002 and 2012, the number of registered
PTEs in New Zealand fell from 890 to 626.
Refer to Section 3 Industry Overview for further discussion of the regulatory environment.
Capital-light business model with high visibility of cashflows
Intueri operates an efficient, capital-light business model. Capital expenditure is
generally limited to college fit outs, refurbishments and IT and system upgrades.
-

Capital expenditure for FY2013PF was 1.9% of total FY2013PF revenue.

This low capital intensity model underpinned EBITA19 margins of 32.2% in 2013PF.

In New Zealand, tuition costs are paid upfront into the Public Trust system and
released progressively to Intueri in line with course delivery. As some of Intueris costs
are paid after course delivery this results in a favourable cash flow timing benefit.
As government funding is confirmed prior to the start of the academic and financial
year, and the peak enrolment period for students is in January, Intueri has a high
degree of earnings visibility early in the year.
-

For example, as at 31 March 2014, Intueri had secured almost 65% of its full year
revenue forecast for FY2014PF.

Refer to Section 5 Financial Information for further information.

Multiple earnings growth opportunities
To target strong earnings growth over the medium term, Intueri:
is pursuing identified
opportunities;

domestic

and international

student

revenue

growth

is exploring offshore partnerships to provide growth in student enrolments and

revenue;
is, through its 50% investment in OCA, accessing the rapidly growing online
education market, and plans to introduce online course delivery in New Zealand;
and
will explore further acquisitions in the fragmented PTE sector.
information on Intueris acquisition strategy see page 40.

For more

Refer to Section 4 Business Overview for further information.

Highly experienced local management team and Board
Intueri has assembled a highly experienced team to lead the business.
19

For a reconciliation of the non-GAAP measure EBITA to GAAP measurements, please see page 67.

17

Direct experience of the Board encompasses operational expertise in the PTE sector,
insight into the New Zealand regulatory framework, specific experience in international
student recruitment, knowledge of international student policy and financial
management.
Full biographies are available in Section 4 Business Overview.

18

SECTION 3: INDUSTRY OVERVIEW

This section describes relevant aspects of the New Zealand and Australian tertiary
education sectors in which Intueri operates.
The New Zealand tertiary education sector
The New Zealand tertiary education sector includes all post-secondary school learning
activities, including higher education, vocational training and foundation skills courses. The
sector plays an important role in raising New Zealand's productivity and competitiveness
by equipping individuals with the skills and qualifications needed to participate effectively
in the labour market. In addition, international students studying in the New Zealand
tertiary education system contribute significantly to GDP.
In 2012:
approximately 422,000 students were enrolled with tertiary study providers,
including approximately 48,000 international students; and
government funding to the sector was $4.2 billion, including $735 million for
vocational education.
Tertiary education providers
Tertiary education can be considered as a continuum from foundation education through
vocational training to higher education. Qualifications in the vocational sector are typically
shorter in length than most university courses, have a practical or trade focus and are
delivered by PTEs, Wananga, Institutes of Technology, Polytechnics and Industry Training
Organisations.
New Zealand tertiary education providers
Provider Type

Description

Universities

Universities are academically and research oriented and primarily

concerned with advanced learning and research. There are eight
Universities in New Zealand, all publicly owned. In 2012 universities
enrolled over 175,000 students (domestic and international).

Institutes of
Technology /
Polytechnics
("ITPs")

ITPs are mainly focused on vocational training at certificate and

diploma level, especially in trades and other applied areas. There are
18 ITPs in New Zealand, all publicly owned, enrolling approximately
152,000 students in 2012 (domestic and international).

19

Provider Type

Description

Private training
establishments
("PTEs")

PTEs primarily offer qualifications at the diploma and certificate level

and provide specific vocational training designed to lead to
employment or further tertiary study. The courses and qualifications
provided by the sector vary significantly. In most cases, PTEs are
either privately or community/trust owned. In 2012, approximately
69,500 students were enrolled with PTEs (domestic and international).

Wananga

Wananga provide Mori-centered tertiary education that supports

Mori language and culture and provides pathways for Mori learners
into other tertiary education institutes. In 2012, approximately
39,000 students were enrolled in Wananga (domestic and
international).

Industry training
organisations
("ITO")

ITOs are public bodies that provide curriculum and accreditation within
specific industries such as building. While they do not provide training
themselves, they set skills standards and carry out assessments. In
2012 there were approximately 139,000 industry trainees (domestic
and international).

The PTE sector

In 2012, the PTE sector comprised 626 registered PTEs, of which approximately half were
funded by the government. 198 received funding through the governments Student
Achievement Component funding scheme (SAC) administered by the Tertiary Education
Commission (TEC). SAC funding is Intueris primary source of direct government funding
and is discussed further in the PTE funding model section below. Intueri also receives
direct government funding via the Youth Guarantee scheme.
New Zealand 2012 PTE numbers
626 PTEs registered by New
Zealand Qualifications Authority
309 PTEs received
government funding
198 PTEs received
SAC Funding

PTEs are diverse in terms of scale and education offering, ranging from one or two person
businesses to large multi-site operations with significant staff and student numbers. The
sector is highly fragmented, and Intueri is one of only two providers that have more than
5% market share in domestic students (on an EFTS basis).
Although PTE enrolments are predominantly domestic (approximately 82% of the total in
2012), the percentage of international students is higher in PTEs than for the tertiary
education sector as a whole. International students are primarily concentrated in a small
number of institutions, including Intueri, with 68% of the 167 PTEs (excluding English
20

language schools) that enrolled international students in 2012 enrolling fewer than 50
international EFTS.
PTE regulation
PTEs operate in a highly regulated sector and are subject to significant compliance
requirements. Effective regulation is critical to maintaining the reputation and integrity of
the qualifications achieved by students and to ensure that students receive an excellent
educational experience.
The New Zealand Qualifications Authority (NZQA) is responsible for the oversight of PTEs.
To offer a nationally recognised qualification, a PTE must be registered and accredited by
NZQA, and its qualifications and courses must be NZQA approved. Within the New Zealand
Qualifications Framework, PTEs typically offer courses and qualifications at levels 1-6.
New Zealand Qualifications Framework
Level

Qualification Type

NZQA Knowledge Description

Certificates

Basic general and/or foundation knowledge

Certificates

Basic factual and/or operational knowledge of a field

of work or study

Certificates

Some operational and theoretical knowledge in a field

of work or study

Certificates

Broad operational and theoretical knowledge in a field

of work or study

Diplomas

Broad operational or technical and theoretical

knowledge within a specific field of work or study

Diplomas

Specialised technical or theoretical knowledge with

depth in a field of work or study

Bachelor's Degree;
Graduate Diploma &
Certificate

Specialised technical or theoretical knowledge with

depth in one or more fields of work or study

Postgraduate Diploma
/ Certificate; Bachelor
Honour's Degree

Advanced technical and/or theoretical knowledge in a

discipline or practice, involving a critical
understanding of the underpinning key principles

Master's Degree

Highly specialised knowledge, some of which is at the

forefront of knowledge, and a critical awareness of
issues in a field of study or practice

10

Doctoral Degree

Knowledge at the most advanced frontier of a field of

study or professional practice

Offered by Intueri

Source: NZQA
PTEs are subject to ongoing monitoring, through regular NZQA reviews that focus on
educational performance and self-assessment. NZQA rates PTEs on a category scale (from
21

1 to 4, with 1 being the highest) according to a range of factors, including student

outcomes. All but one of Intueris eight PTEs are currently rated category 1 or 2 institutions
(the exception being Elite, which is rated category 3).
PTE funding model
The PTE sector receives revenue for domestic students in the form of government funding
and student tuition fees. The current funding environment for domestic students is stable,
having been in place since 2005 without significant reform from either National or Labourled Governments. PTEs also generate revenue through international course fees.
PTE funding model

Tertiary Education
Commission (TEC)
Student loan for course
fees

MSD Studylink

Direct
funding

Funded PTE

International
students

Domestic students

Tertiary
course fees

Unfunded PTE

Tertiary
course fees

Direct government funding

Total direct government funding to the PTE sector was $343 million in 2013, including
tuition funding of $193 million. Government tuition funding has grown at a compound
annual growth rate of 4.9% since 2005.
Government PTE funding is managed by TEC.
Approved providers are eligible to enrol domestic students up to an agreed level of EFTS.
Some tolerance is provided for exceeding agreed EFTS levels (currently 5%). The provider
receives an agreed level of funding from TEC for each domestic EFTS, referred to as the
Student Achievement Component or SAC. In addition, TEC allows some PTEs (including a
number of Intueri PTEs) to enrol a greater number of EFTS than are SAC funded. For these
additional EFTS, the PTE will receive only the student course fees.
Funding is subject to review through an annual process. In Intueris experience, PTEs
generally receive a small annual uplift in SAC funding per EFTS (approximately 2%)
provided that the educational performance of the PTE exceeds minimum thresholds.
However, strong performing PTEs do have greater opportunity to increase their total EFTS
allocation level, with TEC allocating EFTS away from poor performing PTEs.

22

Domestic student course fees

PTEs also generate income through domestic student course fees. The price of domestic
courses is regulated through a maximum annual increase in fees which is set by TEC for
the sector each year. In recent years, this has been 4% and is designed to account for
cost inflation in course provision.
PTE students typically fund their course fees through the Studylink student loan scheme.
Studylink allows domestic students to borrow for their tuition costs in full and provides
assistance in meeting their living costs. In 2012, 72.6% of all domestic PTE student fees
were paid through Studylink, with 27,890 PTE attendees borrowing course fees, at an
average of $6,424 per borrower.
A tertiary institution must be NZQA accredited and receive SAC funding from TEC for the
relevant qualification in order for a domestic student to be able to access a student loan
from Studylink to fund their fees for the course. Student loans have been interest free
since 2005 (in most cases; an exception being if the borrower permanently leaves New
Zealand) and repayments are made as a percentage of income (above a minimum
threshold) once students move to full-time employment.
International student course fees
International student fee revenue was $204 million for PTEs in 2012, having grown at a
9.1% compound annual growth rate since 2007. In 2012, the total value of the
international non-university education market to New Zealands economy was $1.2 billion.
In contrast to domestic students, international students do not receive any New Zealand
government funding. Both student tuition fees and course numbers are uncapped.
Although PTEs do not receive government funding for international students, the courses
are still regulated by NZQA if the provider wishes to offer accredited programmes.
Payment mechanism
Direct government funding and all student fees are initially deposited into a trust account
(generally the Public Trust), with payments then made to PTEs throughout the year in line
with course delivery. PTEs are able to receive interest on the amounts held on their
behalf.
Barriers to entry
There are a number of features of the PTE sector that tend to limit the ability of new
participants to enter the market, prevent existing market participants from servicing
different market segments or limit the ability of these participants to compete effectively.
These factors include:
NZQA approval, accreditation and registration processes - for a PTE to legally offer
accredited courses in New Zealand, it must be approved, accredited and registered
with NZQA. NZQA will assess factors including proposed type of education and intended
outcomes, adequacy of staff, equipment and premises, the governing members, and
quality of management systems. In Intueris experience, this process typically takes a
new PTE at least 6 months to complete. In addition, any change of ownership of a PTE
must be approved by NZQA;
TEC funding requirements - to secure TEC funding, a PTE must typically be able to
demonstrate to TEC a track record of student achievement including course completion
outcomes. Funding does not flow automatically from NZQA registration. It can be
several years before an NZQA approved and accredited PTE is able to gain TEC funding.
23

Only a handful each year have been successful in doing so in recent years, and then
only to a limited amount;
Ongoing compliance requirements - both NZQA and TEC conduct regular compliance
checks. These include NZQAs regular audits and TECs annual funding review process.
Failure to meet compliance thresholds can result in removal of registration by NZQA
and/or loss of government funding from TEC;
Track record and reputation - a proven record of students achieving qualifications and
job outcomes is an important factor for PTEs in their domestic and international
marketing; and
International student marketing networks - strong relationships with international
student recruitment agencies are important for driving student numbers and in
Intueris experience are typically only developed over an extended period of time.
Key sector trends
Government policy settings
Government reform has been critical in shaping the PTE sector. PTE enrolments rose
significantly during the early 2000s following increased access to government funding and
light handed regulation. More recently, the policy focus has been on student outcomes
(course and qualification completion levels) across the tertiary sector as a whole. Relevant
reforms include:
The introduction of more stringent compliance requirements and the removal of
funding from poorly performing PTEs (the number of government funded PTEs fell from
335 to 309 between 2011 and 2013).
A shift towards greater equality and contestability of funding between providers, with
the intent of rewarding strongly performing PTEs (for example, approximately $70
million of SAC funding in respect of qualifications at levels one and two will be
contestable in 2015 and 2016).
An increase in funding for target demographics, for example Mori and Pasifika
students and those leaving school with limited qualifications.
International demand
Over the past decade, there has been a substantial rise in the global mobility of students.
New Zealand has benefited from this trend, and now attracts 1.7% (by enrolments) of the
global market for international tertiary education. In 2013, education was New Zealand's
fifth largest export industry, and the government has set a target of doubling the value of
the international student sector by 2025 (to $5 billion).
International demand reflects both the perceived quality of New Zealand PTE courses and
their relative affordability (influenced by factors including living costs, course costs and the
value of the New Zealand dollar). Intueris experience is that international students also
take into account immigration status, work rights, student support and safety when
deciding whether to travel to New Zealand for tertiary study.
Technological change
As the online delivery model has increasingly begun to rival traditional delivery channels,
education providers globally have been responding by moving to online engagement with
learners. Education providers that incorporate technology in their existing offerings should
have a competitive advantage in cutting costs and also expanding their revenue base by
attracting a more diverse clientele. Intueris investment in OCA will provide the technology
and capability to address this trend.

24

Australian VET sector

Overview
The Australian vocational education and training sector (VET) fills a similar niche to the
PTE sector in New Zealand and currently comprises approximately 5,000 providers. The
Australian National Centre for Vocational Educational Research estimates that the total size
of the sector was A$8.4 billion in 2012, 79% of which was government funded. In 2012
there were approximately 1.9 million students enrolled in government-subsidised courses
in the VET sector.
Regulatory and funding environment
Like the PTE sector in New Zealand, the Australian VET sector is subject to significant
regulation. In order to offer a nationally recognised qualification, a provider must become
a registered training organisation (RTO) through registration with the Australian Skills
Quality Authority (ASQA). RTOs are audited on a regular basis to ensure that training
delivery and assessment meets national requirements.
Government funding of the RTO sector is provided at both a Commonwealth (i.e. national)
and state/territory level. OCA currently has 12 courses that have what is known as VET
FEE-HELP accreditation, a Commonwealth accreditation which means students can borrow
the full amount of their course fees. The majority of OCAs forecast revenue is derived
from VET FEE-HELP accredited courses, although fee for service courses (for which no
government funding is provided at either the Commonwealth or state and territory level)
comprise a substantial portion of OCAs business.
Australian RTO funding model

State Government e.g.

Queensland Certificate
III Guarantee

Commonwealth
Government

Direct

Student loan for VET

funding

course fees
e.g. VET FEE-HELP

Registered Training
Organisation

VET course
fees

VET students

Key sector trends

Private providers within the VET sector have seen strong growth in student numbers and
funding. Intueri believes that key drivers of the increasing demand within the sector
include a government policy focus on addressing skills shortages, major changes to the
funding regime (as discussed above) and technological change in training delivery and
assessment.

25

Total VET industry funding

VET student enrolments (private VET

providers only)

Source: National Centre for Vocational Educational

Research

Source: National Centre for Vocational Educational

Research

26

SECTION 4: BUSINESS OVERVIEW

All references to the business, operations and financial performance of Intueri in this
document are, unless otherwise noted, on a pro forma basis, assuming the
combination of Intueri Education, Quantum Education and a 50% shareholding in OCA
as at the relevant date.

Section 4.1: Business Overview

Introduction
Following completion of the Quantum Acquisition (scheduled for late May 2014), Intueri will
offer 43 courses to domestic and international students from six colleges with campuses
located throughout New Zealand. Intueri will also hold a 50% shareholding in the fast
growing OCA business in Australia. In 2013, OCA offered 182 courses and enrolled 2,182
students via its online platform.
Overview of Student Segments
Intueri considers its business in three main student segments: domestic students in New
Zealand, international students in New Zealand and online students in Australia.
Domestic students are the core of Intueri's business. Due to regulatory factors (in
particular caps on student numbers and course fees) this part of the Intueri business is
the most stable, but management is targeting a number of opportunities for growth.
Intueri expects strong international student demand for its courses, in particular from
Asia. International student growth is not constrained by government funding caps.
The New Zealand Governments objective is to double the value of international
education to the economy by 2025. Intueri expects the governments policy framework
to facilitate growth in this area.
Online students account for a smaller proportion of Intueris revenue, but this segment
is growing rapidly following OCAs recent approval to participate in the VET FEE-HELP
programme. In addition to targeting strong organic growth in Australia, Intueri intends
to work with OCA to roll out OCAs courses, systems and processes in New Zealand,
introduce an online platform for Intueris other courses and develop potential online
joint ventures with universities.

27

Intueri's student enrolments

(FY2013PF)

Intueri's sources of revenue (FY2013PF)

3.6%
5.9%

24%

21.7%
11%
68.8%

65%

Domestic

Domestic

International

International

Online

Other

Online

Source: Intueri

Geographic presence
Intueri will have a presence throughout New Zealand and a strong focus on the Auckland
region. Intueri's focus on Auckland reflects the city's large share of New Zealands
population, and provides exposure to the fast growing Mori and Pasifika population.
Auckland is also an attractive destination for international students.
OCA is headquartered in Brisbane, Australia and operates as an online campus.

28

Intueri's national presence

Kerikeri

Kaitaia

New Lynn

Whangarei
Albany
Auckland
7

Manurewa
Huntly
2
Hamilton
Tokoroa

Manukau
Tauranga
Rotorua

Napier
Whanganui

Hastings

Wellington

Christchurch

29

Intueri training establishments overview

College

20

Courses
offered
(number)

Campuses

NZQA
Category20

2013
student
numbers
(enrolled)

Key competitors

Comments

Levels 3-6
9 courses

15 campuses
nationwide

4,628
99.0%
domestic
1.0%
international

Best Pacific
Institute of
Education
Avonmore Tertiary
Institute

Registered with NZQA in 2001

Offers courses in business and computing,
tourism and travel, counselling, culinary and
English
Delivers courses via a supported distance
learning model
Primarily services domestic students, with a
high proportion of Mori and Pasifika students
(66% in 2012)
A large proportion of Quantum Education's
students are 'second chance' learners

Level 5
5 courses

Auckland (2)

898
5.0%
domestic
95.0%
international

NZMA, Cornell
Institute of
Business &
Technology

Registered with NZQA in 2002

A leading provider of commercial cookery and
hospitality training in New Zealand
Courses offered include front of house
management, food and beverage management,
hotel and business management, culinary arts
and advanced baking and pastry
Caters primarily to international students
Recently expanded kitchen facilities which
provide students with an operational caf and
restaurant to obtain in-house practical work
experience

Levels 3-5
12 courses

Auckland

662
99.7%
domestic
0.3%
international

Servilles Academy

Registered with NZQA in 1992, to train

students for salons in Auckland
Provides a range of diverse courses, including
hairdressing, make-up, beauty and spa therapy
and special effects
High quality teaching facilities, including an inhouse salon located in the Auckland CBD

Levels 4-5
3 courses

Auckland (2)
Wellington
Hamilton

267
99.3%
domestic

International
College of Camille

Registered with NZQA in 1998, Intueri regards

Elite as the leading Beauty and Spa Therapy
college in New Zealand

For more information on PTE categories see the discussion on page 21.

30

College

Courses
offered
(number)

Campuses

NZQA
Category20

2013
student
numbers
(enrolled)
0.7%
international

Key competitors

Comments

Courses offered include beautician training,

body therapy, epilation and spa therapy
International recognition allows graduates to
work overseas
Strong industry relationships aiding
employment outcomes
Fully operational salons servicing customers for
students to gain practical experience

31

College

Courses
offered
(number)

Campuses

NZQA
Category20

2013
student
numbers
(enrolled)

Key competitors

Levels 3-7
8 courses

Christchurch
Auckland

236
98.3%
domestic
1.7%
international

Yoobee School of
Design, Whitecliffe
College of Arts &
Design

Registered with NZQA in 1991

Industry focussed courses offered in fine arts,
contemporary photography, graphic design and
interior design. Pathways available to
Bachelors degree (university) for selected
courses
The only South Island tertiary institution
dedicated to design and arts education
Impacted by Christchurch earthquakes but
forecast to return to pre earthquake funding
levels in 2014. Recently opened Auckland
campus

230
71.7%
domestic
28.3%
international

No direct
competitor in New
Zealand

Registered with NZQA in 1992

Provides internationally recognised Australian
Diver Accreditation Scheme (ADAS) certificates
(only dive school in Australasia offering Level 3
ADAS accreditation)
Unique ability in the New Zealand market to
provide year-round training due to inland lake
location
Graduates can access high paying offshore
work
Recently invested in new barge to double
capacity

N/A

2,182

Open Colleges
Seek Learning

50% shareholding held by Intueri

Founded in 2005
Conwal & Associates founded in 2005
Australian based provider of online education,
offering 182 courses
Fee for service vocational training with recent
approval to access the VET FEE-HELP student
loan programme for certain courses
Platinum e-learning division also licenses
content, learning resources, learning
management systems and content
development templates and tools to third
parties

Levels 4-6
6 courses

182
courses

Huntly

Online
(headquarters
in Brisbane)

Comments

32

College

Courses
offered
(number)

Campuses

NZQA
Category20

2013
student
numbers
(enrolled)

Key competitors

Comments

Students can enrol at any point during the year

and therefore have the flexibility to arrange
studies around other commitments

33

Domestic Students
Historically, Intueris domestic student business has provided relatively consistent financial
performance due to the regulated caps on student numbers and fees (see Section 3
Industry Overview under the heading Direct Government Funding for more details).
Intueri sees opportunities to achieve continued growth in its domestic business.
Key drivers of the domestic student business are summarised below. A number of these
factors are inter-related.
Demand for courses: This is influenced by the demand for graduates in different
industry sectors and course relevance. Intueri's diversification of courses and campus
locations means changes in one sector of the economy will not necessarily have a
material impact on Intueri. In addition, Intueri's colleges service several industries with
high levels of turnover (e.g. hairdressing), which Intueri considers provides protection
against changes in demand for particular qualifications.
Marketing and track record: Student referrals are an important marketing tool for
Intueri's domestic student business and are driven by past student success and job
outcomes. Other forms of marketing include career expos and events, traditional media
and social media. Intueri actively monitors the success of former students in gaining
employment and is able to use this information when marketing its courses.
Student outcomes: Course completion rates are a key metric in relation to securing
direct government funding. Intueri's internal processes and continuous improvement
and investment programme provide a number of points of difference which Intueri
believes lead to better student outcomes.
Long established brand: Intueris domestic college brands have been established for a
number of years. The most recently established college is NSIA (founded 13 years ago)
while the longest established college, Elite, was founded over 40 years ago. In Intueris
experience, a long established educational brand is important for attracting domestic
students.
Securing additional government funding: There are increasing opportunities for
providers to secure additional funding through new funding pools and a reallocation of
funding from poor to high performing PTEs.
Intueris pro forma New Zealand domestic student numbers (enrolments)
8,000
7,000
6,000
5,000
4,000
3,000

5,775

5,828

5,950

FY2011PF

FY2012PF

FY2013PF

6,574

6,737

FY2014PF

FY2015F

2,000

1,000
0

34

Intueri's strong student outcomes have enabled it to secure additional funding in FY2014PF
of $1.2m, including an increase in Youth Guarantee funding for Cut Above and an increase
in SAC funding for D&A. As a result of these increases, and a managed return of D&As
student enrolment numbers to their pre-earthquake levels in Christchurch, Intueri
forecasts domestic student enrolments to increase by 10.5% in FY2014PF.
International Students
Intueri enrolled 971 international students in 2013, representing approximately 3% of New
Zealand's international PTE student market. The majority of these students came from
China, India and South East Asia.
All of Intueri's New Zealand colleges enrol international students, but NSIA (which enrols
over 85% of Intueris international students in FY2013PF) and NZSCDT (the New Zealand
School of Commercial Diver Training) have the strongest international focus. Intueri's
international student business is not subject to caps on student numbers or course fees,
but does not receive government funding.
Key influencers of the performance of the international student business are detailed
below:
Quality and relevance of courses: Intueri believes that the reputation and relevance of
Intueri's colleges in international markets contribute to its success.
Affordability: Intueris experience is that the competitiveness of course and living costs
in New Zealand provide an offset against the effect of fluctuations in the New Zealand
dollar on its international student business.
Safety: Intueri believes New Zealand is perceived as a safe destination when compared
to key competitors.
Regulatory factors: The ability of international students to achieve a New Zealand work
visa through Intueri's programmes is of critical importance.
Long established marketing and agent network: Intueri has established relationships
with student recruitment agents in New Zealand and offshore. These networks have
been developed over a number of years, and received significant investment in 2013,
with a particular focus on the Indian and South East Asian markets.

35

Intueris pro forma New Zealand international student numbers (enrolments)

2,000
1,800
1,600
1,400
1,200
1,000

1,816

800
600

1,373
1,075

1,104

FY2011PF

FY2012PF

400

971

200
0
FY2013PF

FY2014PF

FY2015F

International student enrolments declined towards the end of 2012 and in 2013 due to two
policy changes: a change to NZQA English language approval requirements which impacted
NSIA (NSIA is no longer affected by this change, due to subsequent NZQA policy changes),
and a shift in visa policy by New Zealand Immigration which required students to study for
two years, rather than one year. The impact of these changes normalised in the second
half of 2013, and Intueri's enrolments were 33% higher than for the comparable period in
2012.
For discussion of forecast growth in international student numbers in 2014 and 2015, refer
to Section 5.3 Prospective Financial Information.
Online Students
Intueri provides an online offering through its 50% shareholding in OCA, which has two
Australian registered training organisations (RTOs), Online Courses Australia and Conwal
& Associates. Intueri has a controlling interest in OCA and through its board
representation, has an active influence on the strategy for the business in collaboration
with the founder shareholders. Conwal & Associates was established in 2005 as a
traditional fee for service training business with a strong presence in the government and
corporate sectors. In 2010, the emerging trend in online education led OCA to focus on
online course delivery. This included the development of more proprietary course content
and investment in customised student and learning management systems.
OCA's three key revenue channels are:
Accredited VET FEE-HELP courses: In September 2013, OCA received approval to
provide 12 courses that are eligible for VET FEE-HELP. These courses are all at the
diploma level or above, are longer and generate higher fees than fee for service
online courses. OCA has subsequently seen significantly increased uptake of these
course offerings, and expects them to generate most of OCAs revenue (estimated
to be 55% in FY2014).
Fee for service online courses: a diverse selection of offerings extending from
education support, fitness, counselling and resume writing, to basic computing

36

skills. The majority of these courses are owned by third parties and resold by
OCA.
Provision of services to other RTOs: OCA sells some courses to other RTOs and
provides content development and delivery platform licensing to TAFEs and other
RTOs.
Intueris pro forma online student numbers (enrolments)
3,500
3,000
2,500
2,000
1,500

2,846

1,000
1,491

1,837

3,113

2,182

500
0
FY2011PF

FY2012PF

FY2013PF

FY2014PF

FY2015F

Student outcomes
Intueri's average domestic student course completion rates in 2012 were 88%21. This
compares favourably to other New Zealand PTE providers. In addition to the quality of
Intueris course content and tutors, this reflects a focus on student management and
course design. Notably, Quantum Education achieved a 91% completion rate in 2012 from
a second chance learner student demographic that typically has worse than average
statistics, reflecting Quantum Educations sophisticated student management system and
supported distance learning model.

21

Averages in this section relate to 2012 and have been calculated on a weighted average basis, taking
into account number of students.

37

Intueris domestic student course completion rates (2012)

97%

100%

91%

90%

88%

87%

Intueri average: 88%

79%

80%

73% PTE sector: 81%

70%
60%
50%
40%
30%
20%
10%
0%
NZSCDT

Quantum

NSIA

Cut Above

D&A

Elite

Source: TEC

D&As 2012 completion rates were affected by the Christchurch earthquakes but are
beginning to recover and Intueri expects that this trend will continue.
Elite has recently implemented a number of measures to improve its course completion
rates, and is targeting an upgrade in its current category 3 NZQA status following a
scheduled review in June 2014.
Intueri's points of difference
Student management systems
Intueri employs a sophisticated proprietary "end-to-end" student management system at
its Quantum Education colleges. The system tracks a student's progression from initial
contact to final completion, and records tutor and administrative interactions, which assists
Intueri to monitor students and staff against key performance indicators, maximise course
and qualification completion rates and enhance the student learning experience. Intueri
believes the sophistication of this student management system is unique in the New
Zealand market.
OCAs student management system enables the business to track each students initial
contact, payment details and course progression. This system is used internally by OCA
and is also licensed to third parties.
Intueri intends to introduce these systems (or components of them) into its other colleges
where appropriate.
Supported distance learning model
Intueri also deploys a progressive distance learning model for students enrolled in
Quantum Educations courses. A combination of workshops and personalised one-on-one
tutoring allows students to learn at their own pace (within timeframe limits) and allows
tutors to focus on those students requiring the most attention (and is therefore particularly
suited to second chance learners) to increase course and qualification completion rates.

38

Intueri believes this model is also unique in the New Zealand market and intends to
replicate it within other colleges where appropriate.
Pathways to higher learning
Intueri has pathways in place to higher education for its students through partnerships
with degree-conferring tertiary education providers. Further pathways are currently being
developed. These pathways enable a student who has, for example, completed a diploma
at Intueri, to receive course credits for further study at a partner institution. Over the past
six months, Intueri has established pathway agreements with Auckland University of
Technology (AUT), Canberra University and the Blue Mountains Hotel School. Such
arrangements have the dual benefit of increasing the attractiveness of Intueri's courses for
students, while also providing a new potential revenue stream for Intueri through the
sharing of course fees.
Course development
Intueri owns the majority of the intellectual property in its core New Zealand curriculum.
In addition to reducing royalty costs payable to third party providers, a critical advantage
of this approach is the ability to move quickly to adapt course content to meet evolving
student and employer requirements, as well as shifts in government policy and funding
from time to time.
Growth strategy
Intueris management has identified the following key growth opportunities over the short
and medium-term.
Student enrolment growth
Domestic
The key levers that Intueri expects will drive growth in domestic student revenues include:
Increasing market share: Intueri expects high quality student outcomes will continue to
provide opportunities to secure contestable government funding (building on the
additional $1.2 million of funding gained in FY2014PF) and greater student numbers.
Internal 'staircasing': the combination of Quantum Education and Intueri Education
provides an opportunity to retain students within Intueri by 'staircasing' them from
lower level courses (typically offered by Quantum Education) to higher level courses in
other Intueri colleges.
Pathways to higher education: Intueri is working on additional higher education
pathways to enhance the appeal of its course portfolio to domestic students.
Improving yield and maximising course mix: Intueri is investigating the opportunity to
implement more sophisticated pricing strategies, such as introducing data analytical
tools and value based pricing to optimise yield and course mix.
While Intueri is confident that the levers above should allow it to grow its domestic student
business, prospective investors should have regard to the risk factors set out in Section 6
What are my Risks?
International
Intueri is implementing a number of strategies to grow international student enrolments,
such as hiring offshore recruiting staff in Indonesia and India, and running targeted
marketing campaigns. Intueri is also developing internationally recognised higher
education pathways and new courses specifically designed for international students. Most
colleges within the Group already offer two year level 5 courses, which are more attractive
to international students as they meet a key requirement of New Zealands visa regime.
39

Complementary acquisitions
The New Zealand PTE sector is highly fragmented. As New Zealand's largest PTE group
(by domestic EFTS), with access to capital from existing funding sources and through its
listing on the NZX Main Board and ASX, Intueri is well positioned to take advantage of
valuable consolidation opportunities.
Intueri will seek to acquire businesses that meet its internal qualification criteria and due
diligence processes. Intueri will focus on acquiring 100% or controlling positions in
businesses with leading brands that are complementary to Intueris current business
offering.
Online delivery
In addition to targeting strong organic growth in Australia, Intueri will investigate various
growth opportunities for OCA in the New Zealand market: offering OCAs current courses
to New Zealand residents who want to obtain an accredited Australian qualification;
possible replication of OCAs courses, systems and processes for New Zealand students
(subject to NZQA accreditation); possible use of OCAs online platform to allow Intueri to
offer it existing courses via a blend of online and face-to-face tuition; and the possible
development of online joint ventures with New Zealand universities who are yet to develop
credible online offerings.
Offshore partnerships
Over the longer term, Intueri believes that its high quality course offerings and
internationally recognised brands are capable of supporting an international presence.
Intueri intends to partner with or establish offshore campuses or feeder schools to expand
its addressable market by lowering the total cost for an international student to receive a
New Zealand education. Intueri is currently in the process of negotiating its first feeder
school agreement.

40

Section 4.2: Board of Directors

The Companys Board formally took office as Directors on 10 April 2014. None of the
Directors are directors of Arowana, although as noted below Craig McIntosh is Arowanas
Chief Financial Officer.
Chris KellyIndependent Chairman
Chris has strong ties to the education sector and is the current
Chancellor of Massey University in New Zealand.
Chris has significant governance and executive experience and
currently serves as the Chair of Kahne Animal Health and Beef +
Lamb New Zealand Genetics as well as director for the Crown
Irrigation Investment Company and Primary ITO.
Chris served as the Chief Executive at Landcorp Farming Limited
from 2001 to 2013 and before that held various roles at the New
Zealand Dairy Board.
Rob FacerChief Executive
Rob was formerly the Group General Manager for Intueri Education
Group.
He previously held non-executive director positions at both
Employment Focus Limited and Craigpine Timber Limited from 2012
to 2013.
Prior to his role at Intueri, Rob was CEO at the Professional Bar and
Restaurant School from 2012 to 2013 as well as the CEO at ABC
Development Learning Centres (NZ) Limited from 2010 to 2012.
Rob also held the position of General Manager at Elders in both
Australia and New Zealand from 2001 to 2009.
Rob received a Master of Business Administration from the University
of New England in 2005 and received a Certificate in Company
Direction and Board Governance from the Institute of Directors in
New Zealand in 2012.
Russell Woodard Non-executive Director
Russell has operated his own consultancy firm, Edintel, since 2009.
His consultancy experience includes a period as a sales and
marketing advisor to Intueri.
Russell has previously held a number of senior education marketing
roles within the PTE sector. From 2005 to 2008, Russell served as
Group Marketing Director to Think Education Group. He was the
Strategic Marketing Director at Navitas between 2002 and 2005.
Russell holds a Masters of Education Administration from the
University of New England and a Bachelor of Arts from the University
of Wollongong.

41

James Turner Independent Director

James is an education consultant with significant regulatory
experience. He has his own consulting firm, JT Associates.
James was a Principal Advisor / Group Manager for TEC from 2004 to
2011. From 1995 to 2004, James held a number of senior posts at
the Department for Education and Skills in the United Kingdom.
James is the current Chair of the Thorndon School Board of Trustees,
holding the role since 2009, and was a Board Member for Triathlon
New Zealand from 2011 to 2013.
James has an MBA from Cranfield School of Management. He
received a BSc (Honours) from the University of Sheffield in 1984.
Craig McIntosh Non-Executive Director
Craig is the Chief Financial Officer of Arowana.
Prior to joining Arowana in 2013, Craig was the Chief Financial and
Operating Officer (CFOO) of African Parks, the continents largest
manager of endangered national park systems. In that role, Craig
was a Director or Chair of seven different project and fundraising
boards.
Over his 25 year career, Craig has held various CFO and CEO / GM
roles in the financial services, tourism, property and internet sectors
in Australia as well as Africa.
Craig holds a Bachelor of Commerce with First Class Honours from
the University of Queensland and trained as a Chartered Accountant
in the Corporate Finance team of Coopers and Lybrand (now PWC) in
Sydney.

42

Section 4.3: Senior Management

The diagram below shows the senior management structure of Intueri.
The Companys CEO, Rob Facer, will continue in his role as leader of Intueri, having been
appointed Group General Manager of Intueri Education in 2013. Intueris management
team, which has to date operated independently under the supervision of the Board, will
continue largely unchanged following the Offer, with the only change being that Janet
Dalby will join Intueris senior management team through the Quantum Acquisition.

Chief Executive
Rob Facer

Chief Financial Officer

Managing Director, Quantum

Managing Director, OCA

Rod Marvin

Janet Dalby

Cheryl Brookes

Finance

Campus

Campus

Directors

Managers

Intueri Education Group

Intueri Education Group

IT

Intueri Education Group

Rob FacerChief Executive

See Rob's full biography under the heading "Board of Directors"
Janet DalbyManaging Director, Quantum Education Group
Janet has over 20 years' experience working in the education sector
in the UK and New Zealand and has been with Quantum Education
Group (where she is currently CEO) for nearly ten years.
She has been a training consultant for several large UK based
companies, including American Express and Virgin Atlantic.
Janet has also managed a successful private training school in the
UK, designing specialist courses in executive business, media and
tourism studies.
Janet has qualifications in Psychology, Business and Marketing, Adult
Education and HR as well as a degree in Fine Art.

43

Rod Marvin - Chief Financial Officer

Rod has over 20 years experience working as a senior finance
executive in New Zealand, Australia and the United Kingdom within
the consumer goods, manufacturing, forestry, tourism and
entertainment sectors.
His most recent role was Finance Director, Asia Pacific for Rayonier
Forest Resources, and prior to that he had senior finance roles with
SKYCITY and Amcor Packaging New Zealand.
Rod has also made successful private investments including a buyout
and eventual trade sale of Oxo Foods (a former Unilever subsidiary).
Rod has a Bachelor of Commerce (Accounting and Marketing) from
the University of Auckland and is a qualified Chartered Accountant
and Certified Practising Accountant.
Cheryl Brookes Managing Director, OCA
Cheryl is the co-founder and Managing Director of OCA. She joined
the education business in 2009 as Sales and Marketing Manager for
Conwal & Associates.
Cheryl has 7 years' experience running successful online businesses.
Prior to being involved in OCA, Cheryl owned a successful online
retail business and also worked in sales at a digital marketing agency
for pay per click and search engine optimisation services.
Cheryl has a Bachelors degree in Marketing from QUT.

44

Section 4.4: Corporate Governance

The Board is responsible for the overall corporate governance of Intueri, including adopting
appropriate policies and procedures and seeking to ensure Directors, management and
employees fulfil their functions effectively and responsibly. The Board believes that good
governance is based on a set of principles and behaviours that provide a clear basis for
Intueris everyday activities to ensure transparency, fairness and recognition of the
interests of our stakeholders.
The Board has endorsed the Corporate Governance Best Practice Code set out in the NZX
Listing Rules and the ASX Listing Rules and the ASX Corporate Governance Principles and
Recommendations. In addition, the Board has approved policies and practices which aim to
reflect best practice standards of governance in New Zealand and Australia.
As at the date of this Prospectus, there are 5 Directors: an independent Chair, 1 other
independent Director, 1 executive Director (the Chief Executive) and 2 non-executive
Directors. One of the non-executive Directors, Russell Woodard, previously provided
international marketing services (in his capacity as an independent contractor) to the
Company and certain of its constituent colleges, beginning in October 2012. Mr Woodard
ceased providing these services in January 2014. Since that time his involvement with the
Company has been limited to his role as a prospective director (and as of the date of this
Prospectus, a Director) of the Company. The Board anticipates that Mr Woodard should in
future be able to considered an independent Director under the NZX Listing Rules.
Roles and responsibilities
The Board has statutory responsibilities for the affairs and activities of Intueri, with
delegation to the Chief Executive and other management of Intueri.
The roles and responsibilities of the Board include:
Charting the direction, strategies and financial objectives of Intueri and monitoring
the implementation of those policies, strategies and financial objectives;
Monitoring compliance with regulatory requirements and ethical standards;
Risk management;
Appointing and reviewing the performance of the Chief Executive and the senior
management team; and
Protecting and enhancing the value of Intueris assets.
The Chief Executive and management are responsible for:
Developing and implementing company strategies and making recommendations on
specific strategic initiatives;
Management and implementation of policies and reporting procedures for
management strategy set out by the Board;
Formulation and implementation of policies and reporting procedures for
management;
Implementation of the delegated financial authority policy; and
The day to day management of Intueri.
The powers specifically reserved for the Board are:

45

Appointment of the Chief Executive and the senior management team and
determination of their terms and conditions, including remuneration;
Any matters in excess of discretions that it may have from time to time delegated to
the Chief Executive and management in relation to transactions, market risk limits
and expenditure;
Approvals of the budget and business plan, the acquisition, establishment, disposal
and cessation of any significant businesses of Intueri, and the issue of any securities
in Intueri; and
Review of Intueris performance against strategic objectives.
Board Charter
The Board has adopted a charter recording its commitment to achieving best-practice
corporate governance (Charter). The Charter describes the specific responsibilities,
values, principles and practices that underpin the role of Directors on the Board. The
Charter does not attempt to provide a complete record of all of the formal and informal
rules associated with the role of the Board and should be read in conjunction with the
Constitution and relevant laws, regulations, codes and guidelines.
Board Committees
The Board has 2 formally constituted committees. These committees will review and
analyse policies and strategies, usually developed by management, which are within their
terms of reference. They will examine proposals and, where appropriate, make
recommendations to the full Board. Committees will not take any action or make decisions
on behalf of the Board unless they are specifically mandated by prior Board authority to do
so.
The Audit and Risk Committee is chaired by James Turner and will be responsible for:
Assisting the Board in performing its oversight responsibilities in relation to financial
reporting and regulatory compliance;
Reviewing financial reporting processes, internal controls, the audit process and
Intueris process for monitoring legal and regulatory compliance; and
Assisting the Board in performing its oversight responsibilities in relation to the
identification, analysis and management of risks which may have a significant impact
on the performance of the company.
The audit committee also acts as a forum for communication between the Board and senior
financial management staff, and internal and external auditors where appropriate. It
meets with the external auditors as required during the year, and for at least part of that
meeting no employees will be present.
The current members of the Audit and Risk Committee are Chris Kelly and Craig McIntosh.
The Human Resources and Nominations Committee is chaired by James Turner and
will be responsible for:
Establishing the criteria for determining the suitability of potential Directors and
recommending persons suitable for appointment to the Board;
Considering all appointments at senior management level including contractual
conditions;

46

Monitoring outcomes of policy implementation at senior management level, including

incentive payments; and
Reviewing Intueris remuneration policy at least annually.
The current members of the Human Resources Committee are Chris Kelly and Russell
Woodard.
Policies and Procedures
Key policies and procedures adopted by the Board, which will be effective from Listing, are
as follows:
Code of Conduct: The Code of Conduct provides a set of guiding principles which
are to be observed by all Directors, executives and employees of Intueri and
addresses ethical standards in dealing with business associates, consultants,
advisers, regulators, competitors, employees and other stakeholders of the
Company.
Securities Trading Policy: Intueri has a Securities Trading Policy which details
Intueris policy on, and rules for, trading in securities of the Company (including the
Shares). The policy is additional to the legal prohibitions on insider trading in
Australia and New Zealand.
Diversity Policy: The Diversity Policy provides a framework for Intueri to set
measurable objectives for achieving diversity and sets out the procedures by which
the Board can report to progress of these objectives in order to achieve a diverse
and skilled workforce.
Continuous Disclosure Policy: The Board has adopted a Continuous Disclosure
Policy, which is designed to ensure compliance with continuous disclosure
obligations. This includes ensuring that Shareholders receive clear, concise and
effective information on a timely basis through the delivery of disclosures through
existing and emerging electronic means.
Dividend Policy
Dividends and other distributions with respect to the Shares are made only at the
discretion of the Board. The payment of Dividends is not guaranteed and Intueri's
Dividend policy may change. In determining Dividends payable to Shareholders, Intueri
will comply with the solvency test specified in the Companies Act.
Subject to the above, Intueri intends to make Dividend payments to shareholders so that
an average Dividend payout ratio of 60% to 70% of NPATA is maintained. Payment of
Dividends will be subject to the Boards consideration of:
Intueris working capital requirements and investment plan;
Intueris expected financial performance; and
The risks from short and medium-term economic, market and regulatory
conditions.
NPATA represents Net Profit adjusted for the tax-effected amortisation of acquisition
related intangibles.

47

Intueri intends to pay an interim Dividend in September, targeting 40% to 50% of the total
expected Dividend for the year, with the balance paid in March. The split will vary
according to actual and forecast NPATA.
It is the Boards intention to attach imputation credits to Dividends to the extent they are
available.
The first Dividend following the Offer is expected to be paid in March 2015, in relation to
FY2014F.
Director Interests
Director Remuneration
With the exception of the Chief Executive (whose remuneration is detailed in Section 4.5
Executive Remuneration and Share Plans, no Director is entitled to any remuneration from
Intueri except for Directors' fees and reasonable travelling, accommodation and other
expenses incurredin the course of performing duties or exercising powersas Directors.
The Selling Shareholder, as the sole Shareholder of the Company pre-listing, has approved
annual fees of $65,000 for each Director, $120,000 forthe Chairman and an additional
aggregate allowance of $20,000 for Board committee work. These fees take effect from the
date on which the Company's Shares are quoted on NZX. Prior to this, the Selling
Shareholder, as the sole Shareholder of the Company, agreed to the payment by the
Company of additional fees of up to $180,000 in the year beginning 1 January 2014 to
compensate Directors for additional work required in preparation for this Offer. The Chief
Executive Officer does not receive any fee in his capacity as a Director.
Director Shareholdings
Directors may apply for Shares under the Broker Firm Offer, in the same manner as may
any New Zealand investor. To the extent that any Directors acquire Shares those
acquisitions must be disclosed to the market as required by law.
In addition the Chief Executive may indirectly acquire Shares through the Executive Offer,
as detailed in Section 7 Details of the Offer.

48

Section 4.5: Executive Remuneration and Share Plans

Intueris remuneration strategy aims to attract, motivate and retain high calibre employees
at all levels, in turn driving performance and growth in shareholder value and returns.
Executive Remuneration
The Board will review the participants entitled to the executive remuneration (Key
Executives) described in this section on an annual basis. The Chief Executive, Chief
Financial Officer and the Managing Director of Quantum Education Group are currently
eligible. Key Executive total remuneration is currently made up of three components: fixed
remuneration, short term performance incentives and long-term performance incentives.
Short term performance incentives and long term performance incentives will be subject to
pre-determined performance and service conditions (excluding the Foundation Scheme).
The performance and service conditions for each will include a combination of group level
executive team performance and individual performance targets set to align the interests
of shareholders and executives with a combination of market and company specific
measures. The performance and service conditions for each Key Executive are set each
year by the Board.
Fixed remuneration
Fixed remuneration consists of base salary and benefits. Intueris policy is to pay fixed
remuneration commensurate with track record and experience taking into consideration
market measures.
After the completion of the Offer, the Key Executives will participate in a one off bonus
pool totalling $100,000. Payment of this pool to the Key Executives is not subject to any
conditions.
Short term performance incentives
The short term performance incentive is an annual at risk cash salary performance bonus
which is a specified percentage of each Key Executives base salary. The Key Executives
right to short term performance incentives will be conditional on the satisfaction of predetermined performance and service conditions, to be set each year by the Board.
Chief Executive Employment Agreement
The Company has entered into an employment agreement with Mr Robert Facer in relation
to his employment with the Company as Chief Executive. The Chief Executive receives an
annual fixed remuneration of $300,000 (gross). He is also eligible to receive an annual
short term incentive payment, subject to achievement of KPIs. The amount of such short
term incentive will be determined by the Company at its sole discretion (but may not
exceed 60% of the Chief Executives annual base salary).
The Chief Executive will also receive a one-off cash bonus of $50,000 (gross) upon the
successful listing of the Company on the NZX Main Board, as part of the $100,000 bonus
pool discussed above.
Once the Company is listed on the NZX Main Board, the Chief Executive will be entitled to
participate in the Executive LTI Plan, a description of which is set out below under the
heading Long-term performance incentives.
Mr Facer will be employed as Chief Executive until he resigns or his employment is
terminated in accordance with his employment agreement. The Chief Executive must
provide four months notice of his resignation. The Company may terminate the Chief
Executives employment where it has substantive reasons to do so (for example, on the
grounds of redundancy, serious misconduct or ill health which compromises Mr Facers

49

ability to perform his duties) and where it has followed due employment process. Where
the Company terminates the Chief Executives employment on notice, it must provide four
months notice of termination.
Mr Facer has also agreed to non-solicitation and non-inducement commitments (applying
to the Companys clients, suppliers, customers, employees, contractors and consultants)
for a period of six months after the termination of his employment.
Long-term performance incentives
Long-term performance incentives are at-risk benefits aligned to performance targets in
order to incentivise the enhancement of long-term shareholder value. The Company will
establish a Foundation Shares Scheme (Foundation Scheme) in conjunction with the
Offer and will, following listing, seek to establish an Annual Share Scheme (Annual
Scheme).
In the case of both the Foundation Scheme and, it is anticipated, the Annual Scheme
(following its implementation), where a Key Executive exercises a right to Shares under
the Foundation Scheme or the Annual Scheme, the trustee for the relevant scheme will
acquire the Shares on the Key Executives behalf and the Key Executive may elect to
receive an interest-free loan from Intueri to acquire the Shares. The loan must be repaid
within five years of the acquisition of the relevant Shares. Any outstanding balance of the
loan must be repaid immediately if the Key Executive ceases employment with the
Company (or its subsidiaries), or if the executive sells his or her Shares.
Each Key Executive will have the right to sell any Shares held on their behalf to the
Company at the original issue price, with those proceeds used to repay any loan.
Foundation Scheme
The Company will offer the Key Executives the right to purchase a total of $700,000 worth
of Shares at the Final Price (Founding Shares). If the right to purchase Founding Shares
is exercised by the Key Executives, these Shares will be purchased by the trustee of the
Foundation Scheme under the Executive Offer (a component of the Offer) and the trustee
will receive an allocation priority under the Offer for those Shares.
The Key Executives will be restricted from selling Founding Shares for a period of three
years following acquisition.
Annual Scheme
Following the establishment of the Annual Scheme after the Companys listing, it is
anticipated that, on an annual basis Key Executives will have a right (subject to the
overriding discretion of the Board) to acquire additional Shares (Annual Shares)
conditional on the satisfaction of pre-determined performance and service conditions.
If the right to purchase Annual Shares is exercised by a Key Executive, the Shares will be
acquired on the NZX by the trustee of the Annual Scheme.
The Key Executives will be restricted from selling Annual Shares acquired in the first year
of the Annual Scheme for a period of six months following acquisition.
The maximum dollar amount of Shares to be acquired to satisfy the Key Executives
entitlement in respect of the first year of the Annual Scheme (assuming the Key Executives
meet the service and performance conditions for that year) is $700,000. Those Shares and
the Founding Shares will represent less than 1% of the Shares on issue after this Offer.
The Annual Scheme will be reviewed on an annual basis by the Board.

50

The details of the Annual Scheme are, pending its implementation, subject to change.
Establishment of the Annual Scheme as currently formulated would require shareholder
approval or an NZX Listing Rules waiver, due to the fact that the Chief Executive is also a
Director.

51

Section 4.6: Relationship between Arowana and the Company

Following completion of the Offer and the listing of the Company on the NZX Main Board
and ASX, it is expected that Arowana will continue to hold (indirectly) between 15% and
25% of the Companys total shares22. Craig McIntosh, the Chief Financial Officer of
Arowana, will remain a Director (one of five, currently) of the Company. Mr. McIntosh will,
like all the Directors, owe fiduciary and other duties to the Company, which will not be
subject to his relationship with Arowana.
Arowanas expected post-Offer shareholding should not enable Arowana to control the
outcome of all resolutions put to Shareholders. However, given that Arowana is likely to be
the Companys largest shareholder in the immediate post-Offer period, Arowana could be
expected to exercise influence over the outcome of shareholder resolutions. The degree of
that influence will depend on the level of Arowanas final shareholding.
In particular, the passage of special resolutions of shareholders, which for passage require
the approval of 75% of the shares eligible to vote and voting on the resolution, may be
able to be blocked by Arowana, depending on the level of Arowanas Shareholding and the
participation of other Shareholders in voting on such resolutions. This form of potential
negative control could, among other things, enable Arowana to prevent Intueri from
undertaking major transactions (as that term is defined in the Companies Act).

22

The percentage retained could fall outside this range, with the consent of the Joint Lead Managers.

52

SECTION 5: FINANCIAL INFORMATION

This section should be read in conjunction with the risk factors set out in Section 6 What
are my Risks? and other information contained in this Prospectus.
If you do not understand the information in this section, you should consult a financial
adviser.

Section 5.1: Introduction to Intueris Financial Information

This Prospectus contains a detailed description and analysis of Intueris industry in Section
3 Industry Overview and business in Section 4 Business Overview. You are strongly
encouraged to read that detail, as well as Section 6 What are my Risks?
Certain information included in this section (including EBITDA, EBITA and NPATA) is nonGAAP financial information. You can find an explanation of why Intueri uses these
measures of financial performance later in this section. A reconciliation of the non-GAAP
measures to GAAP measurements is also included later in this section.
A summary of how Intueri makes money
The following provides a simplified overview of how Intueri makes money as an
introduction to assist in reading the detail in the rest of this section.
Intueris financial information reflects the performance of its business through which
Intueri seeks to:
generate revenue by delivering a range of tertiary level vocational courses and
qualifications to domestic, international and online students;
ensure Intueris courses and qualifications meet the criteria set by the NZQA and
the TEC to enable Intueri to maintain and increase its level of TEC funding; and
operate head office corporate services efficiently and with effective cost control.
Main factors driving performance and cash flows
The following factors can have a significant impact on financial performance and net cash
flows, but are not an exhaustive list of all relevant factors. This should be read in
conjunction with Explanation of trends in financial performance later in this section as
well as the Risks in Section 6 What are my Risks? of this Prospectus.
Domestic Students
Revenue is a function of domestic student enrolments, tuition fees and government
funding. Intueri is eligible to enrol domestic students up to an agreed level of EFTS and
receives an agreed level of funding from TEC for each domestic funded EFTS. The
allowance of domestic student EFTS and associated government funding can be increased
as outlined in Section 3 Industry Overview. In addition to government funding, domestic
students are also charged tuition fees. Tuition fees are regulated through maximum annual
increases which are set by TEC each year. Key factors driving domestic student demand
are the quality of Intueri qualifications and the perceived ability of Intueri qualifications to
lead to employment and/or further study. Intueris ability to deliver quality education
while utilising its allocated EFTS and achieving a greater number of enrolments per EFTS
utilised are important to growing domestic student profitability.
Intueri receives government funding monthly in advance and domestic tuition fees are
released by the Public Trust fortnightly in line with course delivery.

53

International Students
Revenue from international students is a function of enrolments and tuition fees, neither of
which are capped. Intueris ability to achieve tuition fee increases is subject to competitive
and economic dynamics. International student demand is influenced by various factors
including the quality of Intueri education and qualifications, the ability of these
qualifications to lead to employment and/or further study, as well as a range of political
and economic considerations such as student and post study New Zealand visa regulations
and the desirability of New Zealand as a study destination for international students.
International student fees are released by the Public Trust in line with course delivery.
Online and Australian students
Revenue from Intueris online business is a function of enrolments and course fees.
Intueris ability to increase course fees is not constrained by regulation but is subject to
competitive and economic dynamics. OCAs revenue is dependent on its government
recognition as an RTO and some of its courses being VET FEE-HELP accredited.
OCA receives tuition fees either up front or in line with course delivery (in relation to its
fee for service online courses), or on a monthly basis (in relation to VET FEE-HELP funding
received from the government).

54

Section 5.2: Overview of Intueris Financial Information

This section contains selected historical and prospective operational and financial
information for pro forma historical periods ended 31 December 2011, 31 December 2012
and 31 December 2013, and prospective periods ending 31 December 2014 (statutory and
pro forma) and 31 December 2015 (statutory). This selected information is provided in
addition to the financial information disclosure required under the Securities Regulations to
help readers understand the factors driving Intueris financial performance. References to
statutory financial information in this section are references to the financial information
required to be produced under the Securities Regulations.
The historical operational and financial information is presented on a pro forma
consolidated basis for the economic entity comprising Intueri Education Group Limited and
its Subsidiaries and Controlled Entities (Intueri), following the completion of the Quantum
Acquisition. Please see page 8 for a graphical representation of the principal businesses
that comprise Intueri. The entities that comprise Intueri, as it will be following the
completion of the Quantum Acquisition, are as follows:

Date
acquired/to
be acquired
by the
Company

Subsidiaries and controlled

entities

Ownership
interest

Country of
Incorporatio
n

The Cut Above Academy Limited

100%

NZ

22 February
2013

Elite Education Holdings Limited and its

controlled entities

100%

NZ

8 February
2013

D&A Education Holdings Limited and its

controlled entities

100%

NZ

8 February
2013

Global Education Group Limited

100%

NZ

12 February
2013

NZ School of Outdoor Studies Limited

100%

NZ

28 March 2013

NZSCDT Holdings Limited

100%

NZ

18 October
2012(1)

Commercial Diver Training Limited

100%

NZ

1 July 2013(2)

Intueri Materials Limited

100%

NZ

13 February
2014

Quantum Education Group Limited

100%

NZ

31 May 2014(3)

Quantum Education Group ES Limited

100%

NZ

31 May 2014(3)

Quantum Education Group QT Limited

100%

NZ

31 May 2014(3)

Online Courses Australia Group Pty

Limited

50%

Australia

31 March 2014

Online Courses Australia Pty Limited

50%

Australia

31 March 2014

Conwal & Associates Pty Limited

50%

Australia

31 March 2014

Platinum e-Learning Pty Limited

50%

Australia

31 March 2014

(1) Incorporation date; acquired assets from CDT Partnership on 28 March 2013.
(2) Incorporation date.
(3) Expected date of completion.

55

The historical and FY2014PF operational and financial information is presented on a pro
forma basis assuming a year end of 31 December for Intueri. The Companys balance date
is currently 30 June, but will be changed (together with its subsidiaries) to 31 December as
soon as practicable following completion of the Offer. All the businesses in the Group,
including Quantum Education and OCA, are assumed to have been owned from 1 January
2011 to show comparable pro forma financial performance in all the financial periods. The
pro forma financial information has been compiled using statutory financial information
where this aligns to a 31 December year end, and management accounts where the yearend was not 31 December. The following table illustrates the differing basis used in the
preparation of the statutory and pro forma financial information presented in this section:
PRO FORMA

STATUTORY

Periods

FY2011PF to FY2014PF

FY2014 (Statutory) and

FY2015 (Statutory)

Intueri Education

Assume all owned as at 1

January 2011

All businesses owned as at 1

January 2014

Quantum Education

Assume owned as at 1
January 2011

Assume acquired on 31 May

2014

OCA

Assume owned as at 1
January 2011

Acquired on 31 March 2014

Other pro forma

adjustments23

Adjustments detailed in the

table under Pro forma
Adjustments on page 65.

The pro forma financial information has been normalised to ensure historical periods are
comparable to the forecast financial information. The forecasts for FY2014F (Statutory) and
FY2015F (Statutory) are shown on an unadjusted basis as this reflects the basis on which
the Group will report its results for that financial year. Financial information below EBITA is
not shown in respect of FY2011PF, FY2012PF and FY2013PF in the overview of financial
performance as the capital structure and amortisation of acquired intangibles following the
completion of the Offer will be different and will not be strictly comparable to the historical
period.
While Intueri owns 50% of the OCA business, 100% of the revenue, expenses, assets and
liabilities is accounted for in the Intueri financial statements (with the 50% non-controlling
interest also noted) because Intueri is deemed to exercise control of OCA through a casting
vote mechanism that operates in the event of a deadlock.
The Intueri financial information has been prepared by the Directors of the Company.
BDOs statutory auditors report and investigating accountants report are each set out in
Section 5 Financial Information.
23

Other pro forma adjustments includes normalisation and other adjustments in accordance with
ISAE3420.

56

This section should be read in conjunction with the risk factors set out in Section 6 What
are my Risks?, Section 5.3 Prospective Financial Information, and other information
contained in this document.
The Financial Information is presented in New Zealand dollars and is rounded to the
nearest thousand dollars, which may result in some discrepancies between the sum of the
components and totals within tables, and also in certain percentage calculations.
New Zealand Dollar / Australian dollar exchange rate

NZ$/A$

FY2011

FY2012

FY2013

FY2014

FY2015

Historical

Historical

Historical

Forecast

Forecast

0.77

0.78

0.85

0.93

0.93

Overview of financial performance

12 months
ending 31
December
($000)

FY2011
PF

FY2012
PF

FY2013
PF

FY2014
(Statuto
ry)

FY2014
PF

FY2015
(Statuto
ry)

Forecast

Forecast

Forecast

Historical

Historical

Historical

Domestic Revenue

43,145

45,244

45,798

39,027

49,193

52,354

International
Revenue

18,260

18,150

14,479

18,248

18,573

22,459

Online Revenue

1,360

3,209

3,928

6,171

7,336

9,659

Other Revenue

2,769

2,372

2,401

1,687

1,847

1,941

Total revenue

65,535

68,975

66,606

65,133

76,949

86,413

10,615

9,609

9,290

11,066

12,206

14,440

Admin Expenses

5,036

5,688

4,681

4,167

4,401

4,571

Marketing
Expenses

1,987

2,788

2,984

2,143

3,016

3,500

Occupancy
Expenses

6,739

7,730

6,545

6,434

7,166

7,452

20,625

20,756

20,123

19,172

22,681

23,958

Total expenses

45,002

46,571

43,624

42,983

49,470

53,922

EBITDA

20,533

22,404

22,983

22,151

27,479

32,491

1,805

1,754

1,506

1,787

2,095

2,395

18,728

20,650

21,477

20,364

25,384

30,096

28.6%

29.9%

32.2%

31.3%

33.0%

34.8%

(7,102)

(9,287)

(9,287)

(998)

(998)

(997)

12,264

15,099

19,812

Cost of Sales

Personnel
Expenses

Depreciation and
Amortisation
EBITA
EBITA margin %
Amortisation of
Identifiable
Intangible Assets
Net Interest
Expense
Net Profit before
Tax

57

12 months
ending 31
December
($000)

FY2011
PF

FY2012
PF

FY2013
PF

Tax

FY2014
(Statuto
ry)

FY2015
(Statuto
ry)

FY2014
PF

(3,929)

(4,587)

(5,969)

8,335

10,512

13,843

NPAT attributable
to Non-Controlling
Interest

(411)

(381)

(691)

Net profit after

tax attributable
to Intueri
shareholders

7,924

10,131

13,152

Net Profit after

Tax

7.9

13.2

13.0

19.8

24

12.925

EPS (cps)
NPATA per Share
(cps)

7.7

DPS (cps)
Summary of non-GAAP items

22,151

27,479

32,491

1,787

2,095

2,395

20,364

25,384

30,096

Non-Controlling
Interest relating to
OCA

(736)

(779)

(1,252)

EBITA after NonControlling

Interest

19,628

24,605

28,844

(998)

(998)

(997)

(5,592)
13,037

(6,789)
16,817

(8,008)
19,838

EBITDA
Depreciation and
Amortisation
EBITA before
Non-Controlling
Interest

Net Interest
expense
Tax
NPATA

Overview of operational information

12 months ending
31 December

FY2011PF

FY2012PF

FY2013PF

FY2014P
F

Historical

Historical

Historical

Forecast

FY2015
(Statut
ory)
Forecast

Enrolments
24

Dividend forecast to be paid in FY2015 in respect of the 7 month period ended 31 December 2014.

25

Dividend forecast to be paid in FY2015 and FY2016 in respect of the 12 month period ended 31
December 2015.

58

12 months ending
31 December

FY2011PF

FY2012PF

FY2013PF

FY2014P
F

FY2015
(Statut
ory)

Domestic students

5,775

5,828

5,950

6,574

6,737

International
students

1,075

1,104

971

1,373

1,816

Online and
Australian students

1,491

1,837

2,182

2,846

3,113

Total

8,341

8,769

9,103

10,793

11,666

Domestic student
EFTS utilised

2,243

2,176

2,333

2,366

2,396

Domestic EFTS
capacity

2,331

2,332

2,355

2,418

2,418

96.2%

93.3%

99.1%

97.8%

99.1%

EFTS

% capacity usage

Explanation of trends in financial performance

The chart below summarises the movement in pro forma EBITA over the three years to 31
December 2013, the PFI for FY2014PF and the PFI for FY2015F. This chart allows for a
comparison of historical pro forma EBITA to that forecast in the prospective financial
information.
For FY2015F, the trend in net profit after tax a GAAP measure is also explained. This is
the only period in which such a comparison can be made on a meaningful basis, as
FY2011PF, FY2012PF and FY2013PF do not have GAAP measures that are comparable due
to changes in capital structure.

$m

Intueri EBITA trends

35
30.1

30
25.4
25
20

18.7

20.6

21.5

FY2012PF

FY2013PF

15
10
5
FY2011PF

FY2014PF

FY2015F

Below is a discussion of Intueris year on year EBITA performance on a pro forma basis for
FY2011PF to FY2014PF and for FY2015F.
Overview of FY2012PF EBITA and comparison to FY2011PF EBITA
EBITA increased 10.3% from $18.7 million to $20.6 million, primarily due to an increase in
total revenue by 5.2%, partially offset by an increase in total expenses of 3.5%.
59

The 5.2% increase in total revenue reflected:

a 4.9% increase in domestic student revenue, which was driven by a 0.9% increase
in the number of new domestic course enrolments (to 5,828 students) and ordinary
course fee increases. This 4.9% increase was despite a 22.1% reduction in D&A
student numbers owing to the 22 February 2011 Christchurch earthquake.
FY2012PF EBITA growth, excluding D&As losses, would have been 14.9%; and
a 135.9% increase in OCAs revenue which was driven by a 23.2% increase in
online student enrolments to 1,837 and a change in course mix to higher value
courses, following the commencement of OCAs online operations in 2011.
This revenue growth was achieved despite international student revenue declining by
0.6%. The decline in international student revenue was primarily due to changes to

student visas and to the Graduate Job Search visa and Graduate Work Experience visa
(Study to Work visas) in April 2012, which adversely affected enrolments in the second
half of the year and resulted in a 3.7% decline in NSIA revenue. Prior to April 2012, a
student was able to acquire a student visa by providing evidence of available funds of
$10,000 per annum and a Study to Work visa by completing a one year NZQA qualification
course at levels 4 to 6. In April 2012 these requirements changed such that international
students were required to provide evidence of $15,000 of available funds per annum, and
upon approval were only eligible for a Study for Work visa after studying for two years at
course levels 4 to 6. The additional requirements and regulatory uncertainty had a
negative impact on international student appetite for study in New Zealand and particularly
impacted NSIAs performance which enrolled in excess of 90% of Intueris total
international students in FY2012PF.
EBITA margins expanded from 28.6% to 29.9% due to:
Intueris ability to leverage its existing cost base to drive a 56% EBITA margin on
additional revenue generated (revenue increased $3.4 million and EBITA increased
$1.9 million); and
lower cost of sales from international student commission payments.
Overview of FY2013PF EBITA and comparison to FY2012PF EBITA
EBITA increased 4.0% from $20.6 million to $21.5 million despite a 3.4% ($2.4 million) fall
in revenue.
The decline in total revenue reflected a 20.2% ($3.7 million) reduction in international
student revenue caused by the change in visa requirements within FY2012PF (enrolments
have a lagged effect on revenue due to revenue being recognised over the life of the
course) and changes to the NZQA English approval process. The NZQA changed the English
language testing process such that Category 2 PTEs (including NSIA) were no longer able
to conduct the testing internally. An internal testing process is attractive to international
students as it is more cost effective, and as a result many international students chose
Category 1 providers in preference to Intueri (whose main enroller of international
students, NSIA, is Category 2), or were deterred from commencing study in New Zealand.
Following industry-wide lobbying, NZQA reverted to the previous model, in August 2013,
which allows for qualified Category 2 PTEs (including NSIA) to undertake this testing
internally.

60

The fall in international student revenue was offset by:

a 22.4% increase in online revenue, reflecting the development of new courses
which created new revenue streams;
a 1.2% increase in domestic revenue, driven by 2.1% growth in enrolments. This
growth was offset by lower average revenue per student due to a change in course
mix to shorter courses; and
a 6.3% reduction in expenses, which was underpinned by:
o

a 3.3% reduction in cost of sales (reflecting a lower cost to service the

reduced student numbers at NSIA and Elite International) and fewer
success-based commissions payable to agents as a result of a reduction in
international students; and

a 17.7% reduction in administration expenses attributable to cost

optimisation initiatives (e.g. consolidating suppliers, re-tendering service
contracts).

Overview of FY2014PF EBITA and comparison to FY2013PF EBITA

EBITA is forecast to increase 18.2% from $21.5 million to $25.4 million, primarily due to
revenue growth of 15.5%. This growth in revenue reflects:
International student revenue increasing 28.3% from $14.5 million to $18.6 million
due to:
o

a 37.6% increase in NSIA forecast international student enrolments

including a 20.9% increase in NSIAs 2H FY2013PF enrolments (revenue
recognised over the life of the course). The change to the two year (19
month) NSIA course format meant that most students enrolled from
FY2013PF have enrolled in a second year (additional 8 months) in order to
attain the equivalent NSIA qualification. The second year is new revenue
relative to previous years and is supported by 18.9% underlying growth in
new international enrolments. Second year students are forecast to
contribute approximately 64% of the international student revenue
increase; and

a 115.4% increase in NZSCDT international student enrolments, taking

advantage of new capacity following completion of the construction of a
second training barge in March 2014 (commissioned for use in early April
2014), which will see capacity for the dive school approximately double.

Domestic student revenue increasing by 7.4% from $45.8 million to $49.2 million
due to:
o

a 9.8% increase in total SAC and Youth Guarantee funding. For FY2014PF
this funding has been confirmed by TEC;

a 47.8% growth in D&A domestic student enrolments. The D&A enrolment

growth reflects a forecast rebound in student enrolments at the
Christchurch campus and the additional capacity provided by the Auckland

61

campus. D&A has had a strong start to 2014 with YTD February 2014
enrolments up 51.0% to 157 enrolments. The TECs commitment to
increase the D&A funding to pre-February earthquake level also contributes
to this growth;
o

a 10.1% increase in Quantum Education enrolments reflecting a more

experienced recruitment team and the implementation of new marketing
initiatives allowed for by more efficient usage of EFTS. Quantum Education
has had a strong start to the year, with February YTD enrolments up 20%
on the same period in FY2013PF; and

a 4.4% increase in Cut Above, NZSCDT and Elite enrolments due to

additional confirmed EFTS allocation capacity and improved usage of EFTS.

An 86.7% increase in online revenue reflecting forecast growth in enrolments in

higher value VET FEE-HELP courses.
The charts below provide a bridge between FY2013PF, FY2014PF and FY2015PF revenue.
FY2014 revenue bridge (FY2013PF to FY2014PF)
NZ$m
80.0
76.0
2.6

74.0
72.0

0.6

1.5

2.2

70.0
68.0

76.9

3.4

78.0

66.6

1.2

66.0
64.0
62.0
60.0
FY2013PF
revenue

Increase in
TEC funding

Increase in International International

domestic
rollover
new student
course fees
student
revenue
revenue
growth
growth

Online
revenue
growth

Other impacts

FY2014PF
revenue

62

FY2015 revenue bridge (FY2014PF to FY2015F)

NZ$m
88.0

2.3

86.0

86.4

Other impacts

FY2015F
revenue

1.7

84.0

2.2

82.0

2.7

80.0
78.0

0.1

0.4
76.9

76.0
74.0
72.0
FY2014PF
revenue

Increase in
TEC funding

Increase in International International

domestic
rollover
new student
course fees
student
revenue
revenue
growth
growth

Online
revenue
growth

Overview of FY2015F EBITA and comparison to FY2014PF EBITA

EBITA is forecast to increase 18.6% from $25.4 million to $30.1 million, primarily due to a
12.3% ($9.5 million) increase in revenue.
The 12.3% increase in total revenue is attributable to:
International revenue growth of 20.9%, reflecting a 32.2% forecast increase in
international student enrolments, driven by a second year impact of the two year
qualification at NSIA which leverages international student growth forecast to be
achieved in FY2014PF to provide a base in FY2015F, and a 10.0% increase in
commercial diving international student enrolments which reflects the full year
availability of additional capacity at the dive school;
Domestic revenue growth of 6.4%, resulting from course fee increases of between
3% to 4% across all New Zealand schools and a 2.5% increase in domestic
enrolments reflecting continued investment in marketing spend and refinement of
current marketing initiatives; and
a 31.7% increase in online revenue. This growth largely reflects continued
momentum of the VET FEE-HELP enrolment growth which is forecast to build
throughout FY2014PF.
Seasonality
In FY2014, Intueris pro forma H1 vs. H2 revenue and EBITA split is forecast to be 4246%/54-58% and 36%-40%/60-64% respectively. FY2014 seasonality is impacted by:
Ramp-up of online VET FEE-HELP enrolments which commenced in November
2013; and

63

International commissions being recognised upon student commencement whilst

revenue is recognised over the life of the course, leading to lower margins in 1H
when there are more international enrolments.
In FY2015, Intueris H1 vs. H2 revenue and EBITA split is forecast to be 48-52%/48-52%
and 46-50%/50-54% respectively. These FY2015 revenue and EBITA H1/H2 splits are not
impacted by any forecast one-off occurrences and are subsequently expected to be
indicative of an average year of operations.
Overview of consolidated Balance Sheet
As at 31 December
($000)

FY2013

31 May 14
(Completion)

FY2014F

FY2015F

Historical

Forecast

Forecast

Forecast

Total assets

63,838

149,748

156,045

145,986

Total liabilities

41,979

68,592

66,665

56,550

Net Assets

21,859

81,156

89,380

89,436

(16,474)

(21,311)

(7,788)

1,451

(16.5)

(21.3)

(7.8)

1.5

17,737

17,515

4,627

(3,980)

Net Tangible Assets

Net Tangible Assets per
share (cps)
Net debt

The balance sheet movement from FY2013PF to FY2014F reflects the forecast change in
Intueris assets, liabilities and equity following the Quantum Acquisition and the OCA
Acquisition. FY2013 is not presented on a pro forma basis, as pro forma comparisons are
not meaningful due to the revaluation of Quantum Education and OCA on acquisition. This
revaluation results in total acquisition intangibles attributable to OCA and Quantum
Education of $64.3 million (including tax assets) at the assumed completion date of 31 May
2014. In FY2014F and FY2015F, other changes in the balance sheet reflect the cash flows
generated by the business, capital expenditure, financing costs and Dividends as discussed
below, and amortisation of acquisition intangibles and associated deferred tax impacts. The
FY2014F and FY2015F net asset position reflects the assumption there is no impairment of
goodwill or intangibles.
Overview of consolidated Cash Flow
12 months ending 31 December ($000)

FY2014F

FY2015F

Statutory Forecast

Forecast

Net cash flow from operating activities

17,179

24,887

Net cash flow from investing activities

(65,043)

(1,479)

Net cash flow from financing activities

57,659

(24,837)

9,794

(1,430)

Net (decrease) / increase in cash

Net cash flow from operating activities generally reflects EBITDA less net interest and tax
payable for the year, with some movements in working capital. Net cash flow from
investing activities relates to spend on capital expenditure and performance related

64

payments in respect of the Quantum Acquisition and the OCA Acquisition. Net cash flow
from financing activities primarily relates to the raising of new equity and the repayment of
borrowings and Dividends.
Capital will be raised by the Company as part of the Offer in order to, among other things
fund the Quantum Acquisition, fees associated with the Offer and the Quantum Acquisition,
and the repayment of related-party loans (including those associated with the OCA
Acquisition). Capital raised under the Offer is expected to be $62.0 million. $0.9 million of
transaction fees will be recognised as expenses in FY2014F .
Dividends are forecast to be paid in March 2015 and September 2015 in respect of the
seven month period ending 31 December 2014 and the six month period ending 30 June
2015 respectively.
Pro forma Adjustments26
Detailed below are the Intueri pro forma adjustments that have been made to the pro
forma accounts.
12 months ending 31
December ($000)

FY2011PF

FY2012PF

FY2013PF

FY2014PF

Pro forma

Pro forma

Pro forma

Pro forma

EBITDA based on management

accounts

22,501

21,370

19,978

26,562

(917)

(692)

(740)

(1,706)

142

993

(672)

(262)

413

1,346

1,987

2,306

(20)

(143)

33

Add:
Normalised Corporate and
Governance costs27
Discontinued schools, courses &
services28
Alignment of accounting policies
29

Previous shareholder and related

personnel expenses30
Other normalisation
adjustments31
Acquisition costs32

26

552

Pro forma adjustments includes normalisation and other adjustments in accordance with ISAE3420.

27

Reflects the costs required to operate the Intueri Group on a basis comparable to the corporate and
governance costs included in the PFI.
28

Costs, profit and losses, relating to operating schools, services and courses that are discontinued
activities.
29

Alignment of accounting policies for revenue recognition, bad debts, rental incentives and changes in
accounting policy treatment for course development costs to be consistent with the accounting policies in
the PFI.
30

Costs that were incurred by companies in the Intueri Group pre acquisition while under ownership of
the previous shareholders that are no longer required to be incurred post-acquisition.
31

Other adjustments primarily comprising capital insurance proceeds.

32

Acquisition costs relating to the Quantum Acquisition and OCA Acquisition.

65

12 months ending 31
December ($000)

FY2011PF

FY2012PF

FY2013PF

Employee incentives33

Pro forma EBITDA

20,533

22,404

FY2014PF
365

22,983

27,479

Explanations of the non-GAAP financial information

Intueris financial statements have been prepared in accordance with NZ GAAP. As such,
they comply with NZ IFRS, as well as IFRS.
In order to assist readers of Intueris financial statements to better understand Intueris
financial performance, Intueri uses three non-GAAP financial measures being EBITDA,
EBITA and NPATA.
Because they are not defined by NZ GAAP, IFRS, or any other body of accounting
standards, Intueris calculation of these measures may differ from similarly titled measures
presented by other companies. These measures are intended to supplement the NZ GAAP
measures presented in Intueris financial information and not as a substitute for those
measures.
Caution should be exercised as other companies may calculate EBITDA, EBITA and NPATA
differently. EBITDA, EBITA and NPATA should not be considered in isolation of, or as a
substitute for, NZ GAAP measures such as Net Profit and cash flow measures.
EBITDA
EBITDA is earnings before interest, tax, depreciation and all amortisation expenses.
EBITDA is a non-GAAP profit measure that has been reported in historical pro forma
financial statements and therefore is shown in certain financial information presented in
this Prospectus. Intueri believes that EBITDA is a useful financial measure as it provides a
good indication of the cash flow generated from the operations of a business, before
taxation and financing costs and, as a frequently reported financial measure, may be used
as a point of comparison. Caution should be exercised when comparing EBITDA
measurements as other companies may calculate EBITDA differently.
EBITA and EBITA after Non-Controlling Interest
EBITA is earnings before interest, tax and amortisation of identifiable acquisition related
intangibles. It does however include amortisation of capitalised course material
development costs and depreciation expenses to make it consistent with other listed
industry peers. EBITA after Non-Controlling Interest deducts the proportionate share of
EBITA for OCA that Intueri does not own.
EBITA is a non-GAAP profit measure that has been reported in historical financial
statements and therefore is shown in certain financial information presented in this
Prospectus. This is the principal measure that Intueri considers in assessing the operating
performance of its businesses as it most closely approximates the operational profitability
of the core education business.

33

Costs associated with management and employee incentive scheme on successful listing of Intueri.

66

Intueri believes that EBITA provides a better comparison of operating performance with
other businesses than do NZ GAAP measures which include a deduction for the
amortisation of identifiable intangible assets, although caution should be exercised as other
companies may calculate EBITA differently.
NPATA
NPATA represents Net Profit adjusted for the tax-effected amortisation of acquisition
related intangibles. Intueri believes that this measure provides a better comparable
measure of its operating performance against other companies, although caution should be
exercised as other companies may calculate NPATA differently. NPATA is unconsolidated for
the non-controlling interest in OCA.
Reconciliation
12 months ending 31 December ($000)

FY2014F

FY2014PF

FY2015F

Forecast

Forecast

Forecast

EBITDA

22,151

27,479

32,491

Depreciation and Amortisation

(1,787)

(2,095)

(2,395)

EBITA before Non-Controlling Interest

20,364

25,384

30,096

(736)

(779)

(1,252)

19,627

24,605

28,844

(998)

(998)

(997)

(5,592)

(6,789)

(8,009)

13,037

16,817

19,838

(5,113)

(6,686)

(6,686)

7,924

10,131

13,152

Non-Controlling Interest relating to OCA

EBITA after Non-Controlling Interest
Net Interest expense
Tax
NPATA
Amortisation of identifiable intangible assets
NPAT

(1)

(1) The tax-effected amortisation of acquisition related intangibles.

67

Section 5.3: Prospective Financial Information

This section contains:
the basis of preparation for the PFI for Intueri, including the significant accounting
policies applied;
a description of the Boards best estimate of general and specific assumptions that
underpin the PFI contained in this Prospectus;
the PFI for Intueri, as required by clause 11(1)(c) of Schedule 1 of the Securities
Regulations to be included in the Prospectus, which includes consolidated
prospective comprehensive income statement, consolidated prospective statement
of financial position and consolidated statement of cash flow;
pro forma historical information and operation information to facilitate comparison
to the PFI;
an analysis of the sensitivity of PFI to changes in specific key assumptions; and
the Investigating Accountants Report.
Basis of preparation
The PFI, for the year ending 31 December 2014 (FY2014F) and for the year ending 31
December 2015 (FY2015F) has been prepared in accordance with the requirements of
FRS-42 Prospective Financial Statements, as required by the Securities Regulations,
specifically for the purpose of the Offer and may not be suitable for any other purpose.
The current reporting date of Intueri is 30 June and the PFI has been prepared to a
reporting date of 31 December being the date Intueri will change its year end to following
the Offer.
The PFI for FY2014F does not include any actual year to date results.
In addition to the PFI, the following financial information has been provided to assist
investors in understanding the PFI:
pro forma operational information for FY2011PF to FY2014PF, together with
forecast operational information for FY2015F;
pro forma Statement of Comprehensive Income for FY2014PF; and
Statement of Financial Position for FY2013,
each of which is set out in Section 5.2 Overview of Intueris Financial Information.
Where pro forma information is presented to facilitate comparison of financial performance
between years, it assumes all the businesses in the Group (including Quantum Education
and OCA) have been owned from 1 January 2011. This pro forma information has been
normalised to ensure historical periods are comparable to the forecast financial
information.
It should be noted that while Intueri owns only 50% of the OCA business, 100% of the
revenue, expenses, assets and liabilities is accounted for in the Intueri financial statements

68

(with the 50% non-controlling interest also noted) due to Intueri having de facto control of
OCA through a casting vote mechanism that operates in the event of a deadlock.
The PFI, including the assumptions underlying it, has been prepared by management and
approved by the Board. It is based on the Boards assessment of events and conditions
existing at the date of this Prospectus and the accounting policies and best estimate
assumptions set out under the heading General and Specific Assumptions below.
PFI by its nature involves risks and uncertainties, many of which are beyond the control of
Intueri. The Board believes that the PFI has been prepared with due care and attention,
and consider the best estimate assumptions, when taken as a whole, to be reasonable at
the time of preparing this Prospectus.
Actual results are likely to vary from the information presented as anticipated events and
results may not occur as expected, and the variations may be material. Accordingly,
neither the Directors nor any other person can provide any assurance that the consolidated
PFI will be achieved and investors are cautioned not to place undue reliance on the PFI.
There is no present intention to update the PFI or to publish PFI in the future, other than
as required by accounting standards. Intueri will present a comparison of the PFI with
actual financial results when reported in accordance with NZ GAAP and Regulation 44 of
the Securities Regulations.
The PFI is presented in New Zealand dollars and is rounded to the nearest thousand, which
may result in some discrepancies between the sum of components and totals within tables,
and also in certain percentage calculations.
The PFI includes items considered non-GAAP financial information, including three profit
measures other than Net Profit, being EBITDA, EBITA and NPATA as has been used in
historical financial statements and explained in Section 5.2 Overview of Intueris Financial
Information. Where non-GAAP financial information is reported there is a reference to
further information to help you interpret those terms.
The Directors are responsible for and have authorised for issue the PFI on 15 April 2014 for
use in this Prospectus. It is not intended to update the PFI subsequent to its presentation
at this date.
Accounting policies
The significant accounting policies applied to the preparation of the consolidated PFI are
set out in Intueri Education Group Limiteds audited financial statements for the period
ended 30 June 2013, which are included in Section 5.4 Historical Financial Information.
Currently there are no anticipated changes to accounting standards under NZ GAAP that
are expected to materially affect Intueri during the period to 31 December 2015. However,
any changes to NZ GAAP could necessitate changes in the accounting policies currently
adopted and any new or amended accounting standards, or interpretation, may affect the
actual financial results or financial position.
General and specific assumptions
A description of the Boards best estimate general and specific assumptions upon which the
consolidated PFI is based are summarised below, and should be read in conjunction with
the information set out in Section 6 What are my Risks?

69

General Assumptions
An overview of the New Zealand and Australian vocational education sectors, including the
regulatory environment, is provided in Section 3 Industry Overview. Set out below are the
general assumptions that have been adopted by the Board in preparing the PFI:
Competitive, legislative and regulatory environment: there will be no material
change in Intueris competitive, legislative or regulatory environment, specifically:
o

no material change to government funding of the New Zealand tertiary

education sector and of the Australian tertiary education sector; and

no material change to the regulation of the tertiary education sector in New

Zealand and Australia including the allocation of domestic EFTS in New
Zealand and permitted tolerance for exceeding this allocation in any year.

Economic conditions: there will be no material change in the general economic

environment or conditions in which Intueri operates.
Key staff and international student recruitment agents: there will be no material
change in existing contractual, business or operational relationships with Intueris
key staff and international student recruitment agents throughout the prospective
period. Relationships with key staff or international student recruitment agents,
should they cease, will be replaced by arrangements with other parties on similar
levels of activity and contractual terms.
Business acquisitions or disposals: there will be no material business acquisitions or
disposals by Intueri (other than completing the Quantum Acquisition).
New Zealand and international tax laws: there will be no material change in tax
laws applicable to Intueri.
Accounting standards: there will be no change in accounting standards or
accounting interpretations which would have a material effect on Intueri.
Specific assumptions in respect of the pro forma Prospective Financial
Information

Enrolments and EFTS overview

12 months ending
31 December

FY2011PF

FY2012PF

FY2013PF

FY2014P
F

FY2015
F

Historical

Historical

Historical

Forecast

Forecast

Enrolments
Domestic students

5,775

5,828

5,950

6,574

6,737

International
students

1,075

1,104

971

1,373

1,816

Online and
Australian students

1,491

1,837

2,182

2,846

3,113

Total

8,341

8,769

9,103

10,793

11,666

EFTS

70

12 months ending
31 December

FY2011PF

FY2012PF

FY2013PF

FY2014P
F

FY2015
F

Domestic student
EFTS utilisation

2,243

2,176

2,333

2,366

2,396

Domestic EFTS
capacity

2,331

2,332

2,355

2,418

2,418

96.2%

93.3%

99.1%

97.8%

99.1%

% capacity usage

FY2014PF revenue, operating expenses and EBITA

FY2014PF EBITA on a full year basis is forecast to increase by 18.2% (compared to
FY2013PF EBITA) to $25.4 million. This increase is underpinned by 15.5% revenue growth,
which is driven by a strong increase in international student enrolments. These
enrolments, which somewhat leverage the existing cost base, result in an increase in
EBITA margin from 32.2% to 33.0% (FY2013PF to FY2014PF).
On a statutory basis, FY2014F reflects a part year contribution from Quantum Education
and OCA and subsequently statutory FY2014F is not comparable to pro forma FY2013PF.
Quantum Education is included in the statutory forecast from 1 June 2014 and OCA is
included from 1 April 2014.
Revenue
Total revenue is forecast to increase 15.5% to $76.9 million in FY2014PF on a full year
basis from FY2013PF. The predominant factor behind this growth is a 41.4% forecast
increase in international enrolments versus FY2013PF. Following the change to NSIAs two
year (19 months) course format (from 11 months), students who would have previously
only completed a one year course with NSIA, enrol in a second year course (additional 8
months) which is now required to attain the equivalent NSIA qualification. The second year
revenue is new revenue relative to previous years. This is also supported by a recovery in
new international student enrolments, with new international enrolments (i.e. excluding
rollovers) increasing by 18.9% on FY2013PF corresponding enrolments.
Over 65% of FY2014PF revenue was secured as at 31 March 2014 as a result of: annual
TEC funding; unearned income which has been paid upfront for courses that have already
commenced (including revenue which would have been recognised from 1 January 2014 to
31 March 2014); and existing enrolments for courses which are yet to start.

71

$m

Build-up of forecast FY2014PF revenue as at 31 March 2014

60
50
18.2

40
30

49.6

13.3
20
10

18.1

Unearned income

TEC funding

Existing new FY2014PF

Enrolments

Confirmed revenue

A summary of further factors that are material drivers of Intueris forecast revenue growth
in FY2014PF on a full year basis, when compared to FY2013PF, is outlined below.
Domestic
Domestic student revenue (which comprises 63.9% of total revenue forecast in
FY2014PF on a full year basis) is forecast to increase by 7.4%. This incorporates a
9.8% increase in total SAC and Youth Guarantee funding which has been confirmed
by TEC and course fee increases which are generally between 3% and 4%. While
these increases are accompanied by the increases in enrolments noted below, some
changes in course mix (to lower fee courses) lead to a lower overall percentage
increase in revenue.
Domestic enrolments are forecast to increase 10.5%, underpinned by strong
growth in D&A domestic student enrolments (47.8%). The D&A enrolment growth
reflects a forecast rebound in student enrolments at the Christchurch campus and
the additional capacity provided by the Auckland campus. The TECs commitment to
increase D&A funding to the pre-February earthquake level also contributes to this
growth.
Quantum Education student enrolments are forecast to increase by 10.1% following
higher revenue received per EFTS utilised, the establishment of a recruitment team
and implementation of new marketing initiatives. Quantum Education has had a
strong start to the year with February FY2014PF YTD enrolments up 20% on the
same period in FY2013PF.
Domestic EFTS capacity has increased by 2.7% as a result of additional EFTS and
Youth Guarantee provided to D&A and The Cut Above Academy while capacity
usage is forecast to reduce 1.2 percentage points to 97.8% as a result of forecast
changes to course mix which are aimed at increasing revenue per EFTS.
International
As discussed above, NSIA is the key driver of international revenue growth in
FY2014PF. The growth in student enrolments is due to the second year rollover
students and an increase in the number of new students. NSIAs rollover students
are forecasted to contribute approximately 64% of total international student

72

revenue growth in FY2014PF. New student NSIA enrolments are forecast to

increase by 9.8% (to 809) and rollover student enrolments are forecast to increase
by 154.8% to 410. NSIA has had a strong start to the year with February FY2014PF
YTD enrolments up 57.1% compared to the same period in FY2013PF.
Commercial diving international student enrolments are forecast to increase by
115.4% following the entry into service of a second barge in April 2014 which will
double the capacity for the dive school and enable the enrolment of further
international students.
Online
OCA revenue is forecast to increase by 86.7% to $7.3 million due to a continuation
of growth experienced following its recent Australian Government accreditation to
deliver VET FEE-HELP courses (for more details see page 36) and the increasing
appeal of online vocational qualifications. Together these factors are forecast to
contribute to a 30.4% increase in student enrolments to 2,846. Revenue growth is
higher due to the commencement of VET FEE-HELP courses which are priced higher
than Fee-for-Service courses.
Other income
Other income primarily includes interest earned on Public Trust account balances
and commercial services income (e.g. salon services, restaurant income, student
kits and salon products). For FY2014PF on a full year basis, Public Trust interest is
assumed to accrue at 3%.
Operating expenses
Total expenses in FY2014PF are forecast to increase by 13.4% to $49.5 million. This
increase in expenses largely reflects the strong forecast growth in student enrolments
across Intueri.
On a statutory basis, FY2014F reflects a part year contribution from Quantum and OCA and
subsequently statutory FY2014F expenses are not comparable to FY2013PF. One off
expenses of $0.9 million relating to acquisition costs and the establishment of the
executive incentive scheme are included in the statutory FY2014F accounts.
Intueris forecast increase in FY2014PF expenses on a full year basis, when compared to
FY2013PF, for FY2014PF is outlined below.
Cost of sales
Cost of sales is forecast to increase by 31.4% to $12.2 million, reflecting the increase in
student enrolments forecast for FY2014PF and an increase in commissions paid to
international agents. Commissions range from 10% to 50% depending on the college and
course.
Administration
Administration expenses are forecast to reduce by 6.0% to $4.4 million as corporate
synergies from the Quantum Acquisition of $0.4 million more than offset CPI price
increases.
Marketing
Marketing expenses are forecast to increase by 1.1% to $3.0 million. This increase is due
to planned continued expansion of the marketing budget for OCA and Quantum which

73

offsets the 23% reduction in forecast marketing expenses for NSIA, Elite, NZSCDT, Design
& Arts and Cut Above as part of a change to the marketing strategy to see a more focused
advertising spend directed away from the traditionally more expensive print and radio.
Occupancy
Occupancy expenses are forecast to increase by 9.5% to $7.2 million. The increase reflects
a combination of price increases and the leasing of additional premises and floor space.
The Design & Arts Christchurch campus on Oxford Street was subject to a 26% rent
increase in November 2013 and undertook a new lease to establish an additional facility on
Acheron Street. Elite and NSIA have also increased floor space to support the forecast
increase in student enrolments.
Personnel
Personnel expenses are forecast to increase 12.7% to $22.7 million, primarily due to the
increase in tutor costs required in certain schools to cater for the increase in forecast
student enrolments.
FY2015F revenue, operating expenses and EBITA
FY2015F EBITA is forecast to increase from FY2014PF EBITA by 18.6% to $30.1 million.
This increase is underpinned by 12.3% revenue growth, over the same period, which is
driven by continued forecast increases in international student enrolments. These
enrolments, which somewhat leverage the existing cost base, drive an increase in EBITA
margin from 33.0% to 34.8% (FY2014PF to FY2015F).
Revenue
Revenue in FY2015F is forecast to increase from FY2014PF EBITA by 12.3% to $86.4
million. This revenue growth is underpinned by similar growth drivers to FY2014PF forecast
revenue, with forecast growth in NSIA international student enrolments again a significant
factor.
International student enrolments are forecast to grow, from FY2014PF forecast levels, by
32.2% in FY2015F. This forecast growth is partially driven by the second year impact of
the two year qualification at NSIA which leverages international student growth achieved in
FY2014PF to provide a base in FY2015F. It also reflects forecast growth in new student
enrolments forecast for FY2015F compared to FY2014PF, although the number of new (first
year) students forecast for NSIA for FY2015F is still below the level achieved in FY2011PF.
Intueri has also built-up capacity to meet this forecast student growth through the
establishment of new kitchens and classrooms at NSIA.
A summary of further factors that are drivers of Intueris FY2015F revenue growth, when
compared to FY2014PF, is outlined below.
Domestic
Course fee growth of 3% to 4% is forecast for the majority of courses, together
with a 3% increase in SAC and Youth Guarantee funding.
Quantum Education domestic enrolments are forecast to increase by 2.8%, driven
by greater enrolments per EFTS utilised and continued investment in marketing
spend and refinement of current marketing initiatives. Recently implemented
initiatives such as radio advertisements and college open days have led to

74

increased enrolments, with further refinements and optimisation to be undertaken

in FY2015.
Additional growth is expected through management of course mix to deliver higher
enrolments within EFTS allocated, allowing Intueri to generate higher revenue per
EFTS.
International
Commercial diving international student enrolments are forecast to grow by 10.0%
reflecting the full year availability of additional capacity at NZSCDT.
Cut Above, Elite and D&A international enrolments are forecast to grow by 46
enrolments to 57 international enrolments in FY2015F. This forecast growth reflects
strategic initiatives to market Intueri course offerings not already marketed in the
international domain (in particular, Cut Aboves Special Effects course) and to
increase international marketing of D&A.
Online
Online revenue is forecast to increase by 31.7% to $9.7 million. This growth largely
reflects continued momentum associated with VET FEE-HELP enrolments which are
forecast to build throughout FY2014.
Other income
For FY2015F interest is assumed to accrue on Public Trust balances at 3%.
FY2015 operating expenses
Relative to FY2014PF, total expenses in FY2015F are forecast to increase, from FY2014PF
total expenses, by 9.0% to $53.9 million. This increase in expenses largely reflects the
strong forecast growth in student enrolments across Intueri. A summary of the material
drivers behind Intueris forecast increase in expenses in FY2015F is outlined below.
Cost of sales
Cost of sales is forecast to increase by 18.3% to $14.4 million, reflecting both the variable
course costs associated with servicing increased students forecast for the year and an
increase in commission expenses in respect of the forecast increase in international
revenue.
Administration
Administration expenses are forecast to increase by 3.9% to $4.6 million. This larger than
CPI increase reflects a forecast increase in semi-variable costs such as printing which will
be incurred as a result of the forecast increase in student enrolments. Cost synergies of
$0.6 million are assumed for FY2015F.
Marketing
Marketing expenses are forecast to increase by 16.1% to $3.5 million as part of the
strategy to continue to target a higher concentration of international student enrolments.
Personnel
Personnel expenses are forecast to increase 5.6% to $24.0 million. This forecast increase
in employee costs is driven primarily by an increase in the cost of employing an increased
number of tutors as a result of the forecast increase in student enrolments and annual
salary increments.

75

Other expenses
Interest expense
Interest expense is forecast to be paid on outstanding debt balances at an average rate of
6.1% in FY2014PF and 6.9% in FY2015F, which is based on forecast three month bank bill
rates in the period and the margins included in Intueris banking facilities.
Foreign exchange
The New Zealand dollar to Australian dollar foreign exchange rate is assumed to be 0.93 in
FY2014PF and 0.93 in FY2015F.
Taxation
The income tax rate will be 28% and 30% on taxable profit in New Zealand and Australia
respectively, based on corporate tax rates.
Tax will be paid in the same financial year in which the profit is earned, with the exception
of some accruals in Intueri Education.
Dividends
Dividends will be declared and paid based on the current dividend policy. A detailed
description of Intueri's dividend policy is set out in Section 4.4 Corporate Governance.
Due to the timing of the Offer, no Dividends are forecast to be paid to shareholders in
FY2014F. Total Dividends paid to shareholders are forecast to be $13.8 million in FY2015,
comprised of $7.7 million in respect of the seven months to 31 December 2014 and $6.1
million in respect of the interim FY2015 period from 1 January 2015 to 30 June 2015.
Total Dividends declared for FY2014F are forecast to be $7.7 million (7.7 cents per Share),
in respect of the seven months to 31 December 2014. Due to the timing of the Offer there
will be no interim Dividend, and this amount will be paid as a final Dividend in March 2015.
Assuming a Dividend payout ratio of 65% of NPATA, total Dividends declared for FY2015
are forecast to be $12.9 million (12.9 cents per share). This is comprised of a 40-50%
interim Dividend payable in September 2015, with the balance paid as a final Dividend in
March 2016.
Dividends in the Prospective period are expected to carry full New Zealand imputation
credits and no Australian franking credits. Dividends may be subject to withholding tax at
the time of payment; this is not included in the above forecast. At the New Zealand
corporate tax rate of 28% (see Taxation above) the Dividends declared grossed up for
imputation credits are forecast to be $10.7 million (10.7 cents per share) for FY2014 and
$17.9 million (17.9 cents per share) for FY2015.
Capital expenditure, depreciation and amortisation
Maintenance capital expenditure is expected to be $1.1 million in FY2014PF and $1.5
million in FY2015F. These capital expenditure forecasts include OCA course development
costs of $0.2 million in FY2014PF and $0.2 million in FY2015F. An additional $2.0 million of
expansionary capital expenditure is to be borne in FY2014PF that includes capital
expenditure relating to the construction of a new barge for NZSCDT, and a new kitchen at
NSIA. This expansionary capital expenditure has been completed and fully paid for prior to
the Offer and is in addition to $0.9m of prepaid expansionary capital expenditure relating
to the barge and kitchen incurred in FY2013PF.

76

Historical rates of depreciation will apply to the asset base adjusted for forecast capital
expenditure. For kitchens and barges this assumes a 10 year life.
Acquisition related payments and funding
The total cost to Intueri of the Quantum Acquisition, the OCA Acquisition and the Offer,
including transaction fees, is expected to be $73.3 million (exact amount dependent on
performance of each business in relevant earn-out periods and fees incurred associated
with the transaction). Based on the Selling Shareholders maximum sell down,
approximately $9.0 million of this amount will be funded by the Selling Shareholder with
the remaining approximately $64.3 million attributable to Intueri. This cost will be partly
funded through capital raised as part of the Offer. $0.9 million of transaction fees will be
recognised as expenses.
Payments made related to acquisition activity in the FY2015F Prospective Statement of
Cashflow relate to the likely earn-out payment associated with the OCA Acquisition. This
payment is dependent on the FY2014 financial performance of OCA and the payment
included is based on the forecast performance of OCA within the PFI. This payment is
capped at $1.9 million.
Amortisation of intangibles
Acquired intangible assets have been recognised in accordance with NZ GAAP and includes
agent relationships, course materials, customer contracts, IT software, brand names, noncompete agreements, and intellectual property. Intangible assets, except for brand names
and goodwill, have been assessed as having a finite life. The cost of the finite life intangible
assets are amortised over the life of the assets on a straight line basis.
The average amortisation period is approximately seven years from the date of acquisition.
Intueri has forecast amortisation of $9.3 million for the FY2014PF and FY2015F years as a
result of the identified finite life intangible assets acquired through business combinations.
Cash and debt
Intueri is expected to have debt drawings of $18.9 million as at 31 May 2014. Intueris
debt facility is forecast to be voluntarily amortised reflecting forecast cash generation and
Intueris limited planned capital expenditure.
Intueri has an additional debt facility with undrawn capacity of approximately $20 million
which will be available to fund any capital expenditure opportunities which may arise and
which meet the investment criteria of the Board and management. Together with forecast
cash flow generation, Intueri believes that this provides capacity for acquisitions which
meet the Boards criteria of up to approximately a total of $30 million - $40 million.
Working capital items
Accrued income relates primarily to fee revenue held in a Public Trust account on behalf of
Intueri in respect of fees which have been paid in advance, but which have not yet been
earned. Similarly, deferred income is recognised as a liability in regard to these fees. These
items, by their nature, broadly offset one another.
Intueris New Zealand business is able to operate with negative working capital due to:
Government funding received in advance in equal monthly instalments

77

Public trust funds are released in line with course delivery

Salaries and wages (the biggest cost item 46.1% of FY2013PF expenses) are paid
fortnightly and monthly in arrears
Trade and other payables are generally paid monthly in arrears
The OCA business is driven by the requirement to generally pay commission to resellers on
enrolment before student fees are received in many cases. This creates a working capital
requirement of $1.0 million to $1.8 million. Intueri is forecast to have a net working capital
position of negative $1.7 million at 31 December 2014 and negative $2.9 million at 31
December 2015.

78

Consolidated Prospective Statement of Comprehensive Income

12 months ending 31 December ($000)

FY2014F

FY2014PF

FY2015F

Forecast

Forecast

Forecast

Domestic Revenue

39,027

49,193

52,354

International Revenue

18,248

18,573

22,459

Online Revenue

6,171

7,336

9,659

Other Revenue

1,687

1,847

1,941

Total revenue

65,133

76,949

86,413

11,066

12,206

14,440

Admin Expenses

4,167

4,401

4,571

Marketing Expenses

2,143

3,016

3,500

Occupancy Expenses

6,434

7,166

7,452

19,172

22,681

23,958

Total expenses

42,983

49,470

53,922

EBITDA

22,151

27,479

32,491

Depreciation and Amortisation

(1,787)

(2,095)

(2,395)

EBITA

20,364

25,384

30,096

31.3%

33.0%

34.8%

(7,102)

(9,287)

(9,287)

(998)

(998)

(997)

Net Profit before Tax

12,264

15,099

19,812

Tax

(3,929)

(4,587)

(5,969)

8,335

10,512

13,843

NPAT attributable to Non-Controlling Interest

(411)

(381)

(691)

Net profit after tax attributable to Intueri

shareholders

7,924

10,131

13,152

Cost of Sales

Personnel Expenses

EBITA margin %
Amortisation of Identifiable Intangible Assets
Net Interest Expense

Net Profit after Tax

EPS (cps)
NPATA per Share (cps)
DPS (cps)

7.9

13.2

13.0
7.734

19.8
12.935

Summary of non-GAAP items

EBITDA

22,151

27,479

32,491

Depreciation and Amortisation

(1,787)

(2,095)

(2,395)

(736)

(779)

(1,252)

19,628

24,605

28,844

(998)

(998)

(997)

Non-Controlling Interest relating to OCA

EBITA after Non-Controlling Interest
Net Interest expense
34

Dividend forecast to be paid in FY2015 in respect of the 7 month period ended 31 December 2014.

35

Dividend forecast to be paid in FY2015 and FY2016 in respect of the 12 month period ended 31
December 2015.

79

12 months ending 31 December ($000)

FY2014F

Tax

FY2014PF

(5,592)
13,037

NPATA

FY2015F

(6,789)
16,817

(8,009)
19,838

Consolidated Prospective Statement of Changes in Equity

12 months ending 31 December

FY2014F

FY2015F

Forecast

Forecast

Opening balance (1 January)

21,859

89,380

Net profit after tax for the period

8,335

13,843

Total comprehensive income for the

period

8,335

13,843

Transactions with shareholders

Contribution by new shareholders form
the issue of new share capital

61,987

Dividends paid to shareholders

(13,787)

IPO and listing costs charged against

equity

(2,802)

Closing balance (31 December)

89,380

89,436

Consolidated Prospective Statement of Financial Position

FY2013
As at 31 December

31 May
2014

FY2014F

FY2015F

Completion

Forecast

Forecast

Current assets

2,516

1,400

12,310

10,881

51

1,171

1,815

1,087

11,689

29,965

30,447

32,537

4,158

2,169

2,169

2,169

18,414

34,705

46,742

46,674

7,091

12,575

12,134

11,327

38,309

54,494

24

47,973

49,195
47,973

40,012
47,973

45,424

115,043

109,303

99,312

Bank debt

3,150

3,125

3,106

3,106

Accounts payable

5,194

4,186

5,293

5,691

Unearned income

11,263

29,879

30,341

32,465

Cash and cash equivalents

Accounts receivable
Accrued income
Other current assets
Total current assets
Non current assets
Property plant and equipment
Intangible assets
Goodwill
Total non current assets
Current liabilities

80

FY2013

31 May
2014

As at 31 December

FY2014F

FY2015F

514

514

514

514

20,121

37,705

39,254

41,776

17,103

15,790

13,831

3,795

4,756

15,097

13,580

10,979

Total non current liabilities

21,858

30,887

27,411

14,774

Net Assets

21,859

81,156

89,380

89,436

Parent Shareholder Equity

80,734

88,615

87,980

Non Controlling Interest

422

765

1,456

21,859

81,156

89,380

89,436

Other current liabilities

Total current liabilities
Non current liabilities
Bank debt
Other non current liabilities

Equity

Total equity

The balance sheet movement from FY2013 to FY2014 reflects the forecast change in
Intueris assets, liabilities and equity following the Quantum Acquisition and the OCA
Acquisition. FY2013 is not presented on a pro forma basis, as pro forma comparisons are
not meaningful due to the revaluation of Quantum Education and OCA on acquisition. This
revaluation results in intangibles and goodwill increasing to $102.4 million at the assumed
completion date of 31 May 2014. In FY2014F and FY2015F, other changes in the balance
sheet reflect the cash flows generated by the business, capital expenditure, financing costs
and Dividends as discussed below, and amortisation of the acquisition intangible and
associated deferred tax impacts. The FY2014F and FY2015F intangible asset and goodwill
position reflects the assumption there is no impairment of goodwill or intangibles.
Consolidated Prospective Statement of Cash Flow
12 months ending 31 December

FY2014F

FY2015F

Forecast

Forecast

Cash flows from operating activities

Receipts from students
Other income
Payments to employees and suppliers
Non-supplier payments

71,822

95,460

1,783

1,991

(46,779)

(58,144)

(4,541)

(6,195)

Income tax (paid) / received

(5,106)

(8,226)

Net cash flows from operating activities

17,179

24,887

Cash flows from investing activities

Payments made related to M&A
Purchase of property, plant and equipment
Net cash flows from investing activities

(62,214)
(2,829)

(1,479)

(65,043)

(1,479)

61,987

Cash flows from financing activities

Capital raised

81

12 months ending 31 December

FY2014F

FY2015F

Repayment of borrowings

(3,315)

(10,037)

Interest payments

(1,013)

(1,012)

(13,788)

57,659

(24,837)

Net (decrease) / increase in cash

9,794

(1,430)

Cash and cash equivalents at start of the period

2,516

12,310

12,310

10,881

Payment of dividend
Net cash flows from financing activities

Closing cash and cash equivalents at end of the

period

Sensitivity analysis
PFI is inherently subject to uncertainty and accordingly actual results are likely to vary
from PFI and this variation could be material. You can find a full description of assumptions
relating to the prospective financial information for FY2014PF, FY2014F and FY2015F on
page 70, along with a description of risks in Section 6 What are my Risks?. The sensitivity
analysis below is provided to assist you with assessing the potential effects of variations in
certain key assumptions (defined as those most likely to materially affect results).
The sensitivity for each assumption is not intended to be indicative or predictive of the
possible range of outcomes. Each movement in an assumption is calculated and presented
in isolation from possible movements in other assumptions (i.e. when the assumption is
sensitised, all other things remain equal). In reality, it is more likely that more than one
assumption may move giving rise to compounding or offsetting effects. Furthermore the
sensitivity modelled does not take into account that management action will be taken
which may potentially mitigate effects. Therefore care should be taken in interpreting the
sensitivity analysis. Sensitivities have been modelled to show the effect on forecast EBITA
in pro forma FY2014 and FY2015 for the following key specific assumptions:
Change in domestic enrolments (+ /- 5% in FY2014PF) and (+ /- 10% in FY2015F)
Reflecting an unanticipated change in domestic enrolments compared to what is in
the forecast (note: impacts from changes in FY2014PF enrolments are carried
through to changes in FY2015F). Revenue is recognised over the life of the course
therefore the impact from changes to enrolments in FY2014PF also impact FY2015F
in addition to the FY2015F enrolment sensitivity.
Change in international enrolments (+ /- 5% in FY2014PF) and (+ /- 10% in
FY2015F)
Reflecting an unanticipated change in international enrolments compared to what is
in the forecast (note: impacts from changes in FY2014PF enrolments are carried
through to changes in FY2015F). Revenue is recognised over the life of the course
therefore the impact from changes to enrolments in FY2014PF also impact FY2015F
in addition to the FY2015F enrolment sensitivity.
Change in VET FEE-HELP enrolments (+ / - 5%)

82

Reflecting an unanticipated change in VET FEE-HELP enrolments compared to what

is in the forecast (note: impacts from changes in FY2014PF enrolments are carried
through to changes in FY2015F)
Change in cost of sales (+ / - 5%)
Reflecting an unanticipated change in cost of sales compared to what is in the
forecast
Change in employee expenses (+ / - 5%)
Reflecting an unanticipated change in employee expenses compared to what is in
the forecast.

Sensitivity

Sensitivity
applied in
FY2014PF

Sensitivity
applied in
FY2015F

FY2014PF
impact on
forecast
EBITA ($m)

FY2015F
impact on
forecast
EBITA ($m)

Change in domestic
enrolments

+/- 5%

+/- 10%

+/- 1.3

+/- 3.2

Change in international
enrolments

+/- 5%

+/- 10%

+/- 0.4

+/- 1.3

+/- 10%

+/- 10%

+/- 0.2

+/- 0.3

Change in cost of sales

+/- 5%

+/- 5%

+/- 0.6

+/- 0.7

Change in employee
expenses

+/- 5%

+/- 5%

+/- 1.1

+/- 1.2

Change in VET FEE-HELP

enrolments

83

Tel: +64 9 379 2950

Fax: +64 9 303 2830
www.bdo.co.nz

Level 8
BDO Tower
120 Albert Street
PO Box 2219
Auckland 1140
New Zealand

15 April 2014
The Directors
Intueri Education Group Limited
100 Symonds Street
Grafton
Auckland 1010
INVESTIGATING ACCOUNTANTS REPORT ON PROSPECTIVE FINANCIAL INFORMATION
1.

Introduction

We have prepared this Investigating Accountants Report (the Report) on the prospective financial
information of Intueri Education Group Limited (the Company) and its subsidiaries assuming the
completion of the Quantum acquisition and OCA acquisition (together, Intueri) for inclusion in the
prospectus (Prospectus) to be dated on or about 15 April 2014 and to be issued by the Company in
respect of the Initial Public Offering of ordinary shares in Intueri Education Group Limited.
Expressions defined in the Prospectus have the same meaning in this Report.
2.

Scope

BDO Auckland has been requested to prepare this Report to cover the prospective financial
information:
The prospective financial information as set out in pages 68 to 83 of the Prospectus comprises:
Consolidated Prospective statement of comprehensive income of Intueri for the years ending 31
December 2014 and 31 December 2015;
Consolidated Prospective statement of financial position of Intueri as at 31 December 2014 and
31 December 2015;
Consolidated Prospective statement of changes in equity of Intueri for the years ending 31
December 2014 and 31 December 2015;
Consolidated Prospective statements of cash flow of Intueri for the years ending 31 December
2014 and 31 December 2015; and
Notes and assumptions to these consolidated prospective statement of comprehensive income,
changes in equity, financial position and cash flow (the Prospective Financial Information).
The Prospective Financial Information is based on the assumptions as outlined on pages 70 to 83 of
the Prospectus.
We disclaim any assumption of responsibility for any reliance on this Report or on the Prospective
Financial Information to which this Report relates for any purposes other than the purpose for which
it was prepared. This Report should be read in conjunction with the Prospectus.

BDO New Zealand Ltd, a New Zealand limited liability company, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the
international BDO network of independent member firms. BDO New Zealand is a national association of independent member firms which operate as separate legal
entities. For more info visit www.bdo.co.nz. BDO is the brand name for the BDO network and for each of the BDO Member Firms.

84

Intueri Education Group Limited

15 April 2014

3.

Directors Responsibility of the Prospective Financial information

Page 2

The Directors of the Group have prepared and are responsible for the preparation and presentation
of the Prospective Financial Information. The Directors are also responsible for the determination
of the best-estimate assumptions as set out on pages 70 to 83 of the Prospectus.
4.

Our Responsibility

Our responsibility is to express a conclusion on the Prospective Financial Information based on our
review.
We have conducted an independent review of the Prospective Financial Information in order to
state whether on the basis of the procedures described, anything has come to our attention that
would cause us to believe that:
a. The Directors best-estimate assumptions do not provide a reasonable basis for the preparation
of the Prospective Financial Information;
b. The Prospective Financial Information was not prepared on the basis of the best-estimate
assumptions;
c. The Prospective Financial Information is not presented fairly in accordance with the recognition
and measurement principles prescribed in New Zealand Financial Reporting Standards and other
mandatory professional reporting requirements in New Zealand, and the accounting policies
adopted by the Group disclosed in the annual financial statements of Intueri Education Group
Limited as at and for the year ended 30 June 2013 on pages 102 to 139 of the Prospectus; and
d. The Prospective Financial Information is unreasonable.
The Prospective Financial Information has been prepared by the Directors to provide investors with
a guide to the Groups potential future financial performance based upon the achievement of
certain economic, operating, developmental and trading assumptions about future events and
actions that have not yet occurred and may not necessarily occur. There is a considerable degree
of subjective judgement involved in the preparation of the Prospective Financial Information.
Actual results may vary materially from this Prospective Financial Information and the variation may
be materially positive or negative. Accordingly, investors should have regard to the Risk Factors set
out in the What are my Risks? section of the Prospectus.
Our review of the best estimate assumptions underlying the Prospective Financial Information was
conducted in accordance with International Standard on Assurance Engagements (New Zealand)
3000, issued by the council of the New Zealand Institute of Chartered Accountants, applicable to
assurance engagements other than audits or reviews of historical financial information.
Our procedures consisted primarily of enquiry and comparison and other such analytical review
procedures we considered necessary so as to form the conclusion set out below.
These procedures do not provide all the evidence that would be required in an audit, thus the level
of assurance provided is less than that given in an audit. We have not performed an audit and,
accordingly, we do not express an audit opinion on the Prospective Financial Information.

85

Intueri Education Group Limited

15 April 2014

5.

Review conclusion on Prospective Financial Information

Page 3

Based on our review of the Prospective Financial Information, which is not an audit, and based on
an investigation of the reasonableness of the Directors best-estimate assumptions giving rise to the
Prospective Financial Information, nothing has come to our attention which causes us to believe
that:
The Directors best-estimate assumptions do not provide a reasonable basis for the preparation
of the Prospective Financial Information;
The Prospective Financial Information was not prepared on the basis of the best-estimate
assumptions;
The Prospective Financial Information is not presented fairly in accordance with the recognition
and measurement principles prescribed in New Zealand Financial Reporting Standards and other
mandatory professional reporting requirements in New Zealand, and the accounting policies
adopted by the Group disclosed in the annual financial statements of Intueri Education Group
Limited as at and for the year ended 30 June 2013 on pages 102 to 139 of the Prospectus; and
The Prospective Financial Information is unreasonable.
The best-estimate assumptions, set out in pages 70 to 83 of the Prospectus, are subject to
significant uncertainties and contingencies often outside the control of the Group and the Directors.
If events do not occur as assumed, actual results achieved and distributions provided by the Group
may vary significantly from the Prospective Financial Information, as future events, by their very
nature, are not capable of independent substantiation.
6.

Independence or Disclosure of Interest

BDO Auckland does not have any pecuniary interests that could reasonably be regarded as being
capable of affecting its ability to give an unbiased conclusion in this matter. BDO Auckland,
provides audit and other services to the Group, and will receive a professional fee for the
preparation of this Report.
Yours faithfully
BDO Auckland

Simon Peacocke
Partner

86

Section 5.4: Historical Financial Information

Summary Historical Financial Statements
The following summary historical financial statements are presented in accordance with
clause 9 of Schedule 1 of the Securities Regulations 2009 for the issuer and certain of its
acquisitions which have occurred or will occur in the 2 years before the specified date.
All financial statements are presented in New Zealand dollars (NZ$). The amounts within
the financial statements have been rounded to the nearest thousand and may not add due
to rounding.
The summary financial statements have been prepared in accordance with New Zealand
Financial Reporting Standard No. 43, subject to the requirement of clause 9(4) of Schedule
1 of the Securities Regulations 2009. The summary financial statements have been
extracted from the relevant full financial statements.
The summary financial statements cannot be expected to provide as complete an
understanding as provided by the full financial statements. Copies of the full financial
statements can be requested from the Company.
Intueri Education Group Limited

Statement of Comprehensive Income

NZ$000

Revenue
Operating profit before financing costs
Financing costs
Profit before tax
Income tax benefit
Profit for the period attributable to the owners
Other comprehensive income
Income tax on other comprehensive income
Total comprehensive income for the period
attributable to the owners

Period from
incorporation
date to 30
Jun 2013

Six months
ended 31
Dec 2013

14,259
839
(389)
451
41
491
-

17,088
712
(611)
100
94
194
-

491

194

Statement of Financial Position

NZ$000

Total
Total
Total
Total
Total

current assets
non-current assets
current liabilities
non-current liabilities
equity

As at 30 Jun
2013

As at 31
Dec 2013

19,641
47,431
21,977
24,002
21,093

17,542
46,295
20,694
21,856
21,287

87

Statement of Changes in Equity

NZ$000

Opening equity
Comprehensive income for the period
Shares issues
Total equity
Represented by:
Share capital
Retained earnings

Period from
incorporation
date to 30
Jun 2013

Six
months
ended 31
Dec 2013

491
20,602
21,093

21,093
194
21,287

20,602
491
21,093

20,602
685
21,287

Statement of Cash Flows

NZ$000

Cash flows from operating activities

Cash flows from investing activities
Cash flows from financing activities
Movement in cash and cash equivalents

Period from
incorporation
date to 30
Jun 2013

Six months
ended 31
Dec 2013

1,879
(38,590)
41,207
4,495

841
(1,390)
(1,430)
(1,979)

The summary financial statements are those of Intueri Education Group Limited and its
subsidiaries (together Intueri Group). There are no consolidated historical statements for
the Group (except for period ended 30 June 2013 and 31 December 2013) as the Company
was incorporated on 17 September 2012 and acquired various subsidiaries during February
and March 2013.
The financial statements for 9 months ended 30 June 2013 and 6 months ended 31
December 2013 were prepared in accordance with New Zealand Generally Accepted
Accounting Practice, as appropriate for profit-oriented entities. The financial statements to
30 June 2013 comply with New Zealand equivalents to International Financial Reporting
Standards and other applicable Financial Reporting Standards. The financial statements to
31 December 2013 are interim financial statements prepared under NZ IAS 34 Interim
Financial Reporting.
The full financial statements to 30 June 2013 and 31 December 2013 are included in this
Prospectus.
The table below summarises the following for the historical financial statements:
-

Auditor name
Nature of auditors opinion
Date authorised for issue

88

Period

Auditor name

Nature of
Auditors opinion

Authorised for issue

by Directors

30 June 2013

BDO Auckland

Unqualified opinion

28 March 2014

31 December 2013

BDO Auckland

Unqualified opinion

28 March 2014

The Cut Above Academy Limited

Statement of Comprehensive Income

NZ$000

Revenue
Operating profit before financing costs
Financing costs
Profit before tax
Income tax expense
Profit for the period attributable to the
owners
Other comprehensive income
Income tax on other comprehensive
income
Total comprehensive income for the period
attributable to the owners

Year ended 31 December

2010
2011
2012

Six
months
ended 30
June
2013

7,886
1,146
(151)
995
(278)

7,751
653
(103)
550
(164)

8,316
978
(2)
976
(290)

4,233
996
(6)
990
(293)

717
-

387
-

686
-

697
-

717

387

686

697

Statement of Financial Position

NZ$000

As at 31 December
2010
2011

2012

As at 30
June
2013

Total
Total
Total
Total
Total

946
3,756
2,487
189
2,026

1,129
2,890
3,434
585

2,392
2,651
1,903
3,140

current assets
non-current assets
current liabilities
non-current liabilities
equity

1,270
3,494
2,276
75
2,413

Statement of Changes in Equity

89

Six
months
ended 30
June
2013

NZ$000

Year ended 31 December

2010
2011
2012

Opening equity
Comprehensive income for the
period
Shares issued
Dividend paid
Total equity

1,309

2,026

2,413

585

717
2,026

387
2,413

686
(2,514)
585

697
1,858
3,140

Represented by:
Share capital
Retained earnings

1
2,025

1
2,412

1
584

1,859
1,281

2,026

2,413

585

3,140

The financial statements of The Cut Above Academy Limited for year ended 31 December
2010, 31 December 2011 and 31 December 2012 and 6 month period ended 30 June 2013
have been prepared in accordance with NZ GAAP. They comply with approved financial
reporting standards (FRSs) and Statements of Standard Accounting Practices (SSAPs) as
appropriate for entities that qualify for and apply differential reporting concessions.
Cut Above qualifies for differential reporting exemptions as it has no public accountability
and is not large in terms of the criteria set out in the Differential Reporting Framework. All
available exemptions allowed under the Framework for Differential Reporting have been
adopted for year ended 31 December 2010, 31 December 2011 and 31 December 2012
and 6 month period ended 30 June 2013. From year ended 31 December 2012 onward,
Cut Above chose not to adopt the exemption relating to deferred tax. Cut Above is a
profit-oriented entity.
Due to reporting concessions available for the above years, Cut Above did not prepare
statements of cash flows.
With regard to the summary financial statements above for Cut Above, this Prospectus
does not contain summary financial statements for Cut Above for the accounting period
ended 31 December 2009 (the 2009 Summary Financials), as required under the
Securities Regulations.
The Issuers are exempted from this requirement by the Securities Act (Intueri Education
Group Limited) Exemption Notice 2014 (the Exemption Notice).
The 2009 Summary Financials are not available because, due to:
their age;
the fact that they were not audited or reviewed by independent accountants
at the time; and

90

the fact that Cut Above was not owned by the Company at the relevant time,
and the persons who were responsible for Cut Aboves management and
financial reporting at that time are unavailable,
the Companys view is that to include the 2009 Summary Financials would be potentially
misleading and, given their age, of limited relevance to investors.
Not including the 2009 Summary Financials will not have a material adverse effect on
subscribers for Shares.
The table below summarises the following for the historical financial statements:
-

Auditor name
Nature of auditors opinion
Date authorised for issue

Period

Auditor name

Nature of
Auditors opinion

31 December 2010

William Buck (NZ)

Qualified opinion

31 December 2011

William Buck (NZ)

Unqualified opinion

1 June 2012

31 December 2012

BDO Auckland

Unqualified opinion

20 March 2014

30 June 2013

Not applicable

Unaudited

(1)

(2)

Authorised for issue

by Directors
30 August 2011

28 March 2014

(1) The audit report in respect of 31 December 2010 financial statements was qualified
in respect of comparative financial statements for the year ended 31 December
2009, the opening balances as at 1 January 2010 and consequently the statement
of financial performance for year ended 31 December 2010.
(2) The financial results from acquisition on 22 February 2013 to 30 June 2013 were
consolidated in the Intueri Group financial statements to 30 June 2013 on which an
unqualified audit opinion was expressed by BDO Auckland. No audit opinion was
expressed on the individual financial statements.

Global Education Group Limited

Statement of Comprehensive Income
Year ended 31 March
2009
2010
2011

Revenue

15
months
2012
ended 30
June
2013

12,330

15,356

15,802 19,355

Operating profit before financing costs

2,988

3,999

3,626

3,447

4,473

Financing (costs) / income

Profit before tax

(71)
2,917

474
4,473

899
4,525

933
4,379

244
4,717

Income tax expense

Profit for the period attributable to the
owners

(878)

(1,344)

(1,360) (1,229)

(1,322)

2,039

3,130

3,165

3,150

20,395

3,395

91

Other comprehensive income

Income tax on other comprehensive income
Total comprehensive income for the
period attributable to the owners

2,039

3,130

3,165

3,150

3,395

Statement of Financial
Position
NZ$000

Total
Total
Total
Total
Total

current assets
non-current assets
current liabilities
non-current liabilities
equity

2009

1,957
9,711
1,557
4,794
5,316

2012

As at 30
June
2013

2,833
17,593
3,881
5,567
10,978

6,919
2,255
3,597
2,267
3,310

9,184
1,420
9,261
1,343

Year ended 31 March

2010
2011

2012

As at 31 March
2010
2011

3,815
9,863
2,263
3,602
7,813

Statement of Changes in
Equity
NZ$000

2009

15
months
ended 30
June
2013

Opening equity
Comprehensive income for the
period
Dividend paid
Total equity

3,278

5,316

7,813

10,978

3,310

2,039
5,316

3,130
(1,005)
7,813

3,165
10,978

3,150
(10,818)
3,310

3,395
(5,362)
1,343

Represented by:
Share capital
Retained earnings

75
5,241

75
7,738

75
10,903

75
3,235

75
1,268

5,316

7,813

10,978

3,310

1,343

The financial statements of Global Education Group Limited (GEG) for year ended 31
March 2009, 31 March 2010 and 31 March 2011 have been prepared in accordance with NZ
GAAP. They comply with approved Financial Reporting Standards (FRSs) and Statements
of Standard Accounting Practices (SSAPs) as appropriate for entities that qualify for and
apply differential reporting concessions. GEG qualifies for differential reporting exemptions
as it has no public accountability and there is no separation between the owners and the
governing body. All available exemptions allowed under the Framework for Differential
Reporting have been adopted for year ended 31 March 2009, 31 March 2010 and 31 March
2011.
The financial statements of GEG for the year ended 31 March 2012 and 15 month period
ended 30 June 2013 have been prepared in accordance with New Zealand Generally
Accepted Accounting Practice (NZ GAAP) and comply with the New Zealand equivalent to

92

International Financial Reporting Standards (NZ IFRS) and other applicable Financial
Reporting Standards, as appropriate for profit-oriented entities.
All available reporting exemptions allowed under the Framework for Differential Reporting
have been adopted.
Due to reporting concessions available for the above years, GEG did not prepare
statements of cash flows.
The table below summarises the following for the historical financial statements:
Auditor name
Nature of accountants/ auditors opinion
Date authorised for issue

Period

Auditor name

Nature of Accountants
/Auditors opinion

Authorised for issue

by Directors

31 March 2009

James Murray

Unqualified

7 July 2009

31 March 2010

James Murray

Unqualified

29 June 2010

31 March 2011

James Murray

Limited Review opinion

(1)

29 June 2011

31 March 2012

James Murray

Limited Review opinion

(1)

17 August 2012

30 June 2013

Not applicable

Unaudited

(2)

28 March 2014

(1) The financial statements were prepared specifically for the purpose of reporting to
NZQA in accordance with the NZQA requirements for Private Training
Establishments. The Financial Statement were reviewed in accordance with the
Review Engagement Standards issued by the New Zealand Society of Accountants.
Review conclusion
Based on a review, nothing has come to my attention that causes me to believe that
the accompanying special purpose financial statements do not give a true and fair
view.
(2) The financial results from acquisition on 12 February 2013 to 30 June 2013 were
consolidated in the Intueri Group financial statements to 30 June 2013 on which an
unqualified audit opinion was expressed by BDO Auckland. No audit opinion was
expressed on the individual financial statements.
Adoption of NZ IFRS
Year ended 31 March 2012
The Company adopted NZ IFRS for the first time for year ended 31 March 2012. There
have been changes in accounting policies in that the Company has adopted the NZ IFRS for
the first time when preparing these financial statements, however, there was no
measurement impact disclosed from adjustments made as a result of adoption of NZ IFRS.

93

Elite Education Holdings Limited

Statement of Comprehensive
Income
Elite International
2009

Elite Education
Holdings
Year ended 31 December
Six
2010
2011
2012
months
ended
30 June
2013

Revenue
Operating profit before financing
costs
Financing (costs)/income

5,691

6,328

6,032

5,638

2,958

1,399
(55)

1,959
(58)

1,369
11

891
(239)

443
(3)

Profit before tax

Income tax expense

1,343
(408)

1,901
(573)

1,380
(343)

653
(149)

440
(110)

936

1,328

1,037

503

329

Other comprehensive income

Income tax on other comprehensive

income

Total comprehensive income for the

period attributable to the owners

936

1,328

1,037

503

329

NZ$000

Profit for the period attributable to

the owners

Statement of Financial
Position
NZ$000

Elite International

2009

Total
Total
Total
Total
Total

current assets
non-current assets
current liabilities
non-current liabilities
equity

As at 31 December
2010
2011

831
2,776
1,804
1,035
767

1,081
2,548
2,186
882
561

1,267
2,371
1,339
(39)
2,338

Statement of Changes in
Equity
NZ$000

Elite International
Year ended 31 December

2009

2010

2011

Elite Education
Holdings
As at 30
June
2012
2013
1,458
8,021
6,454
3,025

2,812
8,097
3,000
164
7,745

Elite Education
Holdings

2012

Six
months
ended
30 June
2013

94

Opening equity
Comprehensive income for the
period
Shares issues
Dividend paid
Total equity
Represented by:
Share capital
Retained earnings

453

767

561

2,853

3,025

936
(621)
767

1,328
(1,534)
561

1,042
735
2,338

503
(332)
3,025

329
4,390
7,745

25
742
767

25
536
561

760
1,578
2,338

3,317
(292)
3,025

7,707
38
7,745

Elite International School of Beauty and Spa Therapies Limited (Elite International) was
acquired by Elite Education Holdings Limited (together Elite Group) on 1 June 2011.
Hence, the historical financial summaries are as under:
Period

Entities

Year ended 31 December 2009,

2010, 2011

Elite International School of Beauty and Spa

Therapies Limited

Year ended 31 December 2012

Elite Education Holdings Limited and its controlled

entities

6 months ended 30 June 2013

Elite Education Holdings Limited and its controlled

entities

The financial statements of Elite International for year ended 31 December 2009, 31
December 2010 and 31 December 2011 were prepared in accordance with NZ GAAP. They
comply with Financial Reporting Standards (FRSs) and Statements of Standard Accounting
Practices (SSAPs) as appropriate for entities that qualify for and apply differential reporting
concessions. Elite International is a profit-oriented entity.
Elite International qualifies for differential reporting exemptions as it has no public
accountability and is not large in terms of the criteria set out in the Differential Reporting
Framework. All available exemptions allowed under the Framework for Differential
Reporting have been adopted for years ended 31 December 2009, 31 December 2010 and
31 December 2011.
The financial statements of Elite Group for year ended 31 December 2012 and 6 month
period ended 30 June 2013 have been prepared in accordance with NZ GAAP and comply
with the NZ IFRS and other applicable Financial Reporting Standards, as appropriate for
profit-oriented entities.
For year ended 31 December 2012 and 6 month period ended 30 June 2013 all available
reporting exemptions allowed under the Framework for Differential Reporting have been
adopted, except for the exemptions relating to deferred tax and the exemption available in
NZ IAS 18 Revenue that permits qualifying entities to recognise revenue and expenses on
a GST inclusive basis.
Due to reporting concessions available for the above years, Elite International and Elite
Group did not prepare statements of cash flows.

95

The table below summarises the following for the historical financial statements:
-

Auditor name
Nature of auditors opinion
Date authorised for issue

Period

Auditor name

Nature of Auditors
opinion

Authorised for issue

by Directors

31 December
2009

Gilligan
Sheppard

Unqualified opinion

10 March 2010

31 December
2010

Gilligan
Sheppard

Unqualified opinion

10 March 2011

31 December
2011

Not Applicable

Unaudited

(1)

28 March 2014

31 December
2012

BDO Auckland

Unqualified opinion

30 June 2013

Not applicable

Unaudited

20 March 2014

(2)

28 March 2014

1. The financial results from acquisition in April 2011 to 31 December 2011 were
consolidated into the consolidated Elite Holdings Limited financial statements on
which an unqualified audit opinion was expressed by BDO Auckland. No audit
opinion was expressed on the individual accounts.

2. The financial statements to 30 June 2013 were consolidated in the Intueri Group
financial statements to 30 June 2013 on which an unqualified audit opinion was
expressed by BDO Auckland. No audit opinion was expressed on the individual
financial statements.

Quantum Education Group Limited

Statement of Comprehensive Income

NZ$000

Revenue
Operating profit before financing costs
Financing (costs)/income
Profit before tax
Income tax expense
Profit for the period attributable to the
owners
Other comprehensive income
Income tax on other comprehensive
income

2009

Year ended 31 December

2010
2011
2012

2013

29,443
3,337
(14)
3,323
(975)

24,249
2,916
(9)
2,906
(892)

27,030
3,158
(7)
3,476
(938)

27,585
3,190
(4)
3,187
(891)

28,018
3,060
3,060
(824)

2,348
-

2,015
-

2,538
-

2,296
-

2,236
-

96

Total comprehensive income for the

period attributable to the owners

2,348

2,015

2,538

2,296

2,236

Statement of Financial
Position
NZ$000

Total
Total
Total
Total
Total

current assets
non-current assets
current liabilities
non-current liabilities
equity

2009

As at 31 December
2010
2011
2012

4,501
5,526
6,601
32
3,394

3,803
6,680
5,074
5,409

2,754
7,597
2,404
7,947

2013

4,607
2,988
2,453
5,142

12,190
2,694
11,783
3,101

Year ended 31 December

2010
2011
2012

2013

Statement of Changes in
Equity
NZ$000

Opening equity
Comprehensive income for the
period
Dividend paid
Total equity
Represented by:
Share capital
Retained earnings

2009
4,935

3,394

5,409

7,947

5,511

2,348
(3,889)
3,394

2,015
5,409

2,538
7,947

2,296
(5,101)
5,142

2,236
(4,646)
3,101

2
3,392

2
5,407

2
7,945

2
5,140

2
3,099

3,394

5,409

7,947

5,142

3,101

The summary financial statements are those of Quantum Education Group Limited and its
subsidiaries (together Quantum Education Group). Quantum Education Group Limited
was formerly known as Auckland Business School (NSTC) Limited. The change of name
occurred on 3 August 2010.
Quantum Education Group comprises Quantum Education Group Limited and its
subsidiaries Quantum Education Group (QT) Limited (formerly Quantum Learnings (NZ)
Limited) and Quantum Education Group (ES) Limited (formerly EOS Computer Training
Limited).
The financial statements of Quantum Education Group for years ended 31 December 2009,
31 December 2010, 31 December 2011, 31 December 2012 and 31 December 2013 have
been prepared in accordance with New Zealand Generally Accepted Accounting Practice
(NZ GAAP) and comply with the New Zealand equivalent to International Financial
Reporting Standards (NZ IFRS) and other applicable Financial Reporting Standards, as
appropriate for profit-oriented entities. Quantum Education Group qualifies for differential
reporting as it is not publicly accountable and there is no separation between the owners
and the governing body. All available exemptions allowed under the framework for

97

Differential Reporting have been adopted except for the exemption available in NZ IAS 18
Revenue that permits qualifying entities to recognise revenue and expenses on a GST
inclusive basis.
Due to reporting concessions available for the above years, Quantum Education Group did
not prepare statements of cash flows.
The table below summarises the following for the historical financial statements:
-

Auditor name
Nature of accountants/auditors opinion
Date authorised for issue

Period

Auditor name

Nature of
Accountants/
Auditors opinion

Authorised for issue

by Directors

31 December
2009

Hayes Knight

Emphasis of matter

(1), (2)

31 March 2010

31 December
2010

Hayes Knight

Emphasis of matter

(1), (3)

31 March 2011

31 December
2011

Hayes Knight

Emphasis of matter

(1), (4)

28 March 2012

31 December
2012

Hayes Knight

Limited review opinion

31 December
2013

BDO Auckland

(1),

28 March 2013

(5)

Unqualified opinion

28 March 2014

(1) The financial statements for the years ended 31 December 2009, 31 December
2010, 31 December 2011 and 31 December 2012 have been reviewed in
accordance with the Statement of Review Engagement Standards as issued by the
New Zealand Institute of Chartered Accountants.
(2) The Accountants have drawn attention to Note 11 in the financial statements which
indicates the uncertain conditions regarding the recoverability of the loan to Mogul
International that may cast doubt about the Groups ability to continue as a going
concern. Other than the above, nothing has come to the attention of the
Accountants that causes to believe that the financial statements do not give a true
and fair view.
(3) The Accountants have drawn attention to Note 11 in the financial statements which
indicates the uncertain conditions regarding the recoverability of the loan to Mogul
International. In addition Note 9 highlights that the shareholders do not intend to
require repayment of their current accounts until the company has sufficient cash
flows. If these circumstances were to change it may cast doubt about the Groups
ability to continue as a going concern. Other than the above, nothing has come to
the attention of the Accountants that causes to believe that the financial statements
do not give a true and fair view.
(4) The Accountants have drawn attention to Note 11 in the financial statements which
indicates the uncertain conditions regarding the recoverability of the loan to Mogul
International.
(5) Nothing has come to the attention of the Accountants that causes to believe that
the financial statements do not give a true and fair view.

98

Restatement of historical financial statements

During the completion of the 31 December 2013 financial statements an adjustment was
made to account for accrued income for the period between the last receipt of monies from
the Public Trust and the year end. The impact on the 2012 financial statements was to
increase revenue by $301,000, increase tax expense by $84,000, increase current assets
by $589,000, increase current liabilities by $220,000 and increase equity by $369,000.
The full financial statements for the year ended 31 December 2013 are included in this
Prospectus.
Learntree

NZ$000
2009

Year ended 31 March

2010
2011
2012

2013

Revenue
Operating profit before financing costs
Financing (costs)/income

16,255
11,576
127

9,835
6,805
58

6,954
4,213
113

9,254
6,061
85

9,582
6,034
95

Profit before tax

Income tax expense

11,703
(3,515)

6,863
(2,065)

4,326
(1,305)

6,146
(1,727)

6,129
(1,723)

8,188

4,798

3,021

4,419

4,406

Other comprehensive income

Income tax on other comprehensive

income

Total comprehensive income for the

period attributable to the owners

8,188

4,798

3,021

4,419

4,406

2009

As at 31 March
2010
2011
2012

2013

6,075
1,696
4,446
3,325
94
3,419

5,616
647
2,479
3,784
(12)
3,772

3,945
542
947
3,540
3,540

2009

Year ended 31 March

2010
2011
2012

2013

2,130

3,272

3,877

Profit for the period attributable to the

owners

Statement of Financial Position

NZ$000

Total current assets

Total non-current assets
Total current liabilities
Total equity
Excluded (assets)/ liabilities
Adjusted equity

4,000
619
1,717
2,902
(36)
2,866

4,483
584
2,015
3,052
(17)
3,035

Statement of Changes in Equity

NZ$000

Opening equity

3,784

2,902

99

Comprehensive income for the

period
Distributions to owners
Excluded (assets)/ liabilities
Equity

8,188
(6,993)
94
3,419

4,798
(4,286)
(12)
3,772

3,021
(3,903)
(36)
2,866

4,419
(4,269)
(17)
3,035

4,406
(4,743)
3,540

Intueri has entered into a conditional sale and purchase agreement (SPA) to acquire the
business and certain assets/liabilities of Learntree Limited the Learntree Business.
The SPA defines the Learntree Business as the entire business of Learntree Limited and all
assets and liabilities except a minimal amount of fixed assets that are not required going
forward by Intueri (2013: $21,000) and any related party liabilities (2013: $3,000). The
above 2009-2012 financial summaries are based on the financial statements of Learntree
Limited and include an adjustment to reflect the excluded assets and liabilities and thus
illustrate the Learntree Business acquired.
The financial statements for 31 March 2013 are special purpose financial statements for
the Learntree Business. They were prepared in accordance with NZ GAAP. They comply
with Financial Reporting Standards (FRSs) and Statements of Standard Accounting
Practices (SSAPs) as appropriate for entities that qualify for and apply differential reporting
concessions.
The financial statements of Learntree Limited (formerly LearnKey NZ Limited) for years
ended 31 March 2009, 31 March 2010, 31 March 2011 and 31 March 2012 were prepared
in accordance with New Zealand Generally Accepted Accounting Practice (NZ GAAP). They
comply with Financial Reporting Standards (FRSs) and Statements of Standard Accounting
Practices (SSAPs) as appropriate for entities that qualify for and apply differential reporting
concessions.
With regard to the summary financial statements described above for the Learntree
Business, this Prospectus does not contain summary financial statements for the Learntree
Business for the accounting period ended 31 March 2014 (the 2014 Summary
Financials), as required under the Securities Regulations.
The Issuers are exempted from this requirement by the Securities Act (Intueri Education
Group Limited) Exemption Notice 2014 (the Exemption Notice).
The 2014 Summary Financials are not available because there has been insufficient time
between the end of the accounting period ended 31 March 2014, and the date of this
Prospectus (15 April 2014), to prepare the full year financial accounts needed to prepare
the 2014 Summary Financials.
In the absence of the 2014 Summary Financials, subscribers do not have the benefit of
summary financial statements for the Learntree Business for any period more recent than
the accounting period ended 31 March 2013. Subscribers are therefore not in a position to
assess the financial performance of the Learntree Business in the period since 31 March
2013 by reference to summary financial statements for the period after that date.
However, each of the Directors of the Company and the director of the Offeror confirm,
each in their opinion after due enquiry (including reviewing unaudited management
accounts), that none of:
the trading or profitability of the Learntree Business;

100

the value of the Learntree Business assets; or

the ability of the Learntree Business to pay its liabilities due within the next
12 months,
has materially and adversely changed during the period between the accounting period
ended 31 March 2013 and the date of this Prospectus (15 April 2014).
The Learntree Business and Learntree Limited qualify for differential reporting as they are
not publicly accountable and there is no separation between the owners and the governing
body. All available exemptions allowed under the Framework for Differential Reporting
have been adopted. They are profit oriented entities.
Due to reporting concessions available for the above years, the Learntree Business and
Learntree Limited did not prepare statements of cash flows.
The table below summarises the following for the historical financial statements:
-

Auditor name
Nature of auditors opinion
Date authorised for issue

Period

Auditor name

Nature of Auditors Authorised for issue by

opinion
Directors

31 March 2009

Not applicable

Unaudited

30 October 2009

31 March 2010

Not applicable

Unaudited

12 August 2010

31 March 2011

Not applicable

Unaudited

9 August 2011

31 March 2012

Not applicable

Unaudited

9 August 2012

31 March 2013

BDO Auckland

Unqualified opinion

28 March 2014

Key items in historical financial statements

During the completion of the 31 March 2013 special purpose financial statements it was
identified the 2011 financial year had understated revenue by $1,500,000 and net profit by
$842,000 as a result of not recognising an amount of deferred income. This error also
caused the 2012 financials to disclose net assets $842,000 lower than appropriate.
The full special purpose financial statements for the Learntree Business for the year ended
31 March 2013 are included in this Prospectus.

101

Intueri Education Group Limited and its

controlled entities
Annual Report
for the 9 month period ended 30 June 2013

102

Intueri Education Group Limited and its controlled entities

Table of Contents

Content

Page No

Directors Declaration

104

Company Directory

105

Independent Auditors Report

106

Statement of Comprehensive Income

108

Statement of Changes in Equity

110

Statement of Financial Position

111

Statement of Cash Flows

112

Notes to the Financial Statements

113

103

Intueri Education Group Limited and its controlled entities

Directors Declaration
In the opinion of the Directors of Intueri Education Group Limited (the Company), the financial statements
and notes, on pages 108 to 139:
comply with New Zealand generally accepted accounting practice and give a true and fair view of the
Consolidated Financial Position of the Company as at 30 June 2013 and the results of operations for the 9
month period ended on that date;
have been prepared using the appropriate accounting policies, which have been consistently applied and
supported by reasonable judgements and estimates.
The Directors believe that proper accounting records have been kept which enable, with reasonable accuracy,
the determination of the Consolidated Financial Position of the Company and facilitate compliance of the
financial statements with the Financial Reporting Act 1993.
The Directors consider that they have taken adequate steps to safeguard the assets of the Company and its
controlled entities, and to prevent and detect fraud and other irregularities. Internal control procedures are
also considered to be sufficient to provide reasonable assurance as to the integrity and reliability of the
financial statements.
The Board of Directors are pleased to present the financial statements of Intueri Education Group Limited and
its controlled entities for the 9 month period ended 30 June 2013 and the independent auditors report
thereon.
The shareholders have exercised their right under section 211(3) of the Companies Act 1993 and unanimously
agreed that this Annual Report need not comply with any of the paragraphs (a), and (e) to (j) of section 211
(1) and (2) of the Act.

Approved for and on behalf of the Board of Directors.

Kien Kwan

..
Glen Dobbie

Director
Date: 28 March 2014

Director
Date: 28 March 2014

104

Intueri Education Group Limited and its controlled entities

COMPANY DIRECTORY
Registered Office

100 Symonds Street, Grafton,

Auckland 1010, New Zealand

Directors

Kevin Tser Fah Chin (Appointed: 4 April 2013)

David Malcolm Keefe (Appointed: 4 April 2013)
John Colinton Moore (Appointed: 4 April 2013)
Kien Khan Kwan (Appointed: 4 April 2013)
Glen William Dobbie (Appointed: 18 July 2013)
Paul Welch (Appointed: 4 April 2013, Ceased: 21 August 2013)
Adam Berry (Appointed: 4 April 2013, Ceased: 8 August 2013)
Andrew Chou (Appointed: 17 September 2012: Ceased: 5 June 2013)

Company No:

4013538

Auditors

BDO Auckland
120 Albert Street, Auckland

Bankers

ANZ

Solicitors

Minter Ellison

Date of Formation

17 September 2012

Nature of Business

Investment in private training establishments

Shareholders

Intueri Education Holdings Pty Limited

105

Intueri Education Group Limited and its controlled entities

Independent Auditors Report
For the 9 month period ended 30 June 2013
BDO AUCKLAND

INDEPENDENT AUDITORS REPORT

TO THE SHAREHOLDERS OF
INTUERI EDUCATION GROUP LIMITED
Report on the Financial Statements
We have audited the financial statements of Intueri Education Group Limited (the Company) and
group on pages 108 to 139, which comprise the consolidated and separate statements of financial
position of Intueri Education Group Limited as at 30 June 2013, the consolidated and separate
statements of changes in equity and statements of comprehensive income for the 9 month period
then ended, and a summary of significant accounting policies and other explanatory information.
Directors Responsibility for the Financial Statements
The directors are responsible for the preparation of these financial statements in accordance with
generally accepted accounting practice in New Zealand and that give a true and fair view of the
matters to which they relate and for such internal control as the directors determine is necessary
to enable the preparation of financial statements that are free from material misstatement,
whether due to fraud or error.
Auditors Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We
conducted our audit in accordance with International Standards on Auditing (New Zealand). Those
standards require that we comply with ethical requirements and plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditors
judgement, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor considers
internal control relevant to the entitys preparation of financial statements that give a true and
fair view of the matters to which they relate 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 entitys internal control. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of accounting estimates, as well as evaluating
the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.
In addition to audit services, our firm provides other services in the areas of taxation and corporate
finance. We have no other relationship with, or interests in, Intueri Education Group Limited or
any of its subsidiaries.

106

Intueri Education Group Limited and its controlled entities

Independent Auditors Report
For the 9 month period ended 30 June 2013
BDO AUCKLAND

Opinion
In our opinion, the financial statements on pages 108 to 139:
comply with generally accepted accounting practice in New Zealand;
comply with International Financial Reporting Standards;
give a true and fair view of the financial position of Intueri Education Group Limited and the
Group as at 30 June 2013, and the financial performance of the Company and Group for the
period ended on that date.
Report on Other Legal and Regulatory Requirements
In accordance with the Financial Reporting Act 1993 we report that:
We have obtained all the information and explanations that we have required.
In our opinion, proper accounting records have been kept by Intueri Education Group Limited
as far as appears from our examination of those records.

BDO Auckland
28 March 2014
120 Albert Street
Auckland
New Zealand

107

Intueri Education Group Limited and its controlled entities

Statement of Comprehensive Income
For the 9 month period ended 30 June 2013

Note
Revenue
Other income
Total revenue

Company
2013

9,606,486
4,652,388
14,258,874

928,193
928,193

(3,819,161)
(4,298,868)
(1,732,334)
(300,362)
(51,429)
(192,341)
(174,612)
(1,797,898)
(1,052,604)

(52,227)
(2,356)
(44,497)
(593,340)

839,265

235,773

45,666
(434,421)
(388,755)

34,093
(436,086)
(401,993)

450,510
40,975
491,485

(166,220)
(166,220)

Other comprehensive income

Other comprehensive income for the period, net of tax

491,485

(166,220)

Cost of sales
Employee expenses
Occupancy expenses
Marketing expenses
Insurance costs
IT and communication costs
Travel costs
Depreciation and amortisation expenses
Administrative expenses

5
6

Group
2013

7
7

7
7

Operating profit before net finance costs

Finance income
Finance expense
Net finance cost
Profit / (loss) before income tax
Income tax benefit
Profit / (loss) for the period

Total comprehensive income for the period

8
8

10

The above statements should be read in conjunction with the notes to and forming part of the financial
statements

108

Intueri Education Group Limited and its controlled entities

Statement of Comprehensive Income
For the 9 month period ended 30 June 2013

Note
Profit / (loss) for the 9 month period attributable
to:
Owners of the Company
Profit / (loss) for the 9 month period
Total comprehensive income / (losses) for the
9 month period attributable to:
Owners of the Company
Total comprehensive income / (losses) for the
9 month period
Earnings per share attributable to the ordinary
equity holders of the parent
Basic (cents)
Diluted (cents)

13
13

Group
2013

Company
2013

491,485
491,485

(166,220)
(166,220)

491,485

(166,220)

491,485

(166,220)

4.67
4.67

The above statements should be read in conjunction with the notes to and forming part of the financial
statements

109

Intueri Education Group Limited and its controlled entities

Statement of Changes in Equity
For the 9 month period ended 30 June 2013
Share
Capital

Retained
earnings

Total
Equity

491,485

491,485

491,485

491,485

20,601,514

20,601,514

Total transactions with owners, recorded

directly in equity

20,601,514

20,601,514

Balance as at 30 June 2013

20,601,514

491,485

21,092,999

Share
Capital

Retained
earnings

Total
Equity

(166,220)
-

(166,220)
-

(166,220)

(166,220)

20,601,514

20,601,514

Total transactions with owners, recorded

directly in equity

20,601,514

20,601,514

Balance as at 30 June 2013

20,601,514

(166,220)

20,435,294

Group

Note

Total Comprehensive income for the 9 month

period
Opening balance
Profit for the period
Other comprehensive income
Total comprehensive income for the 9 month
period
Transactions with owners, recorded directly in
equity
Issue of shares

Parent

25

Note

Total comprehensive income for the 9 month

period
Loss for the period
Other comprehensive income
Total comprehensive income for the 9 month
period
Transactions with owners, recorded directly in
equity
Issue of shares

25

The above statements should be read in conjunction with the notes to and forming part of the financial
statements

110

Intueri Education Group Limited and its controlled entities

Statement of Financial Position
As at 30 June 2013
Group
2013

Company
2013

14
15
16

4,495,411
12,077,619
3,067,673
19,640,703

2,092,721
6,285
4,100,964
6,199,970

17
18
19
20

6,934,604
40,346,704
149,868
47,431,176
67,071,879

40,516,791
40,516,791
46,716,761

21
22
23
24

18,636,186
641,557
2,362,500
336,704
21,976,947

5,251,013
(9,546)
2,362,500
7,603,967

23
20

18,677,500
5,324,433
24,001,933
45,978,880

18,677,500
18,677,500
26,281,467

25

20,601,514
491,485
21,092,999
67,071,879

20,601,514
(166,220)
20,435,294
46,716,761

Note
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Other current assets
Total current assets
Non-current assets
Property, plant & equipment
Intangible assets
Investments
Deferred tax asset
Total non-current assets
Total assets
Liabilities
Current Liabilities
Trade and other payables
Income tax payable
Interest bearing loans
Employee benefits
Total current liabilities
Non-current liabilities
Interest bearing loans
Deferred tax liability
Total non-current liabilities
Total liabilities
Equity
Share capital
Retained earnings
Total equity
Total equity and liabilities
Approved for and on behalf of the board of directors.
________________________
Director
Date 28 March 2014

________________________
Director

The above statements should be read in conjunction with the notes to and forming part of the financial
statements
111

Intueri Education Group Limited and its controlled entities

Statement of Cash Flows
For the 9 month period ended 30 June 2013

Note
Cash flows from operating activities
Receipts from customers
Payments to suppliers
Payments to employees
Taxes paid
Interest received
Net cash inflow from operating activities

26

Cash flows from investing activities

Purchase of property, plant & equipment
Sale of property, plant & equipment
Payment for investment in shares
Payment for acquisition of business (net of cash received)
Net cash outflow from investing activities
Cash flows from financing activities
Proceeds from issue of shares
Proceeds from borrowings
Loans to related parties
Loans from related parties
Interest paid
Net cash inflow from financing activities
Cash increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Cash and cash equivalents at the end of the period

14

Group
2013

Company
2013

16,217,868
(10,349,696)
(3,503,362)
(531,736)
45,666

1,018,137
(389,040)
(52,227)
(59,507)
34,093

1,878,740

551,456

(83,276)
67,568
(38,574,714)
(38,590,422)

(39,736,928)
(39,736,928)

20,601,514
21,040,000
(434,421)
41,207,093

20,601,514
21,040,000
1,364,551
(1,291,786)
(436,086)
41,278,193

4,495,411

2,092,721

4,495,411

2,092,721

The above statements should be read in conjunction with the notes to and forming part of the financial
statements

112

Intueri Education Group Limited and its controlled entities

Notes to the Financial Statements
For the 9 month period ended 30 June 2013
1.
Reporting entity
Intueri Education Group Ltd (the Company) is a company incorporated and domiciled in New Zealand,
registered under the Companies Act 1993, and a reporting entity for the purposes of the Financial Reporting
Act 1993. The financial statements of the Company have been prepared in accordance with the Financial
Reporting Act 1993.
The Company was incorporated on 17 September 2012.
The Company and its subsidiaries comprise the Intueri Education Group (the Group).
The financial statements for the Company and consolidated financial statements for the Group are
presented for the 9 month period ended 30 June 2013, being the period from date of incorporation to
financial period end. There is no comparative period.
The Companys principal activity is investment in private training establishments and the Groups principal
activity is the provision of private training tuition.
2.

Basis of preparation

a.
Statement of compliance
The financial statements have been prepared in accordance with New Zealand Generally Accepted
Accounting Practice (NZ GAAP). They comply with New Zealand equivalents to International Financial
Reporting Standards and other applicable Financial Reporting Standards, as appropriate for profit oriented
entities.
b.
Basis of measurement
The financial statements are prepared on the historical cost basis. There are no material items in the
financial statements that are not measured on historical cost basis.
c.
Presentation currency
These financial statements are presented in New Zealand dollars ($) which is the Groups functional and
presentation currency, rounded to the nearest dollar.
d.
Use of estimates and judgements
The preparation of the financial statements in conformity with NZ IFRS requires management to make
judgements, estimates and assumptions that affect the application of accounting policies and the reporting
amounts of assets, liabilities, income and expenses. Actual results may differ from those estimates,
disclosed in the notes.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates
are recognised in the period in which the estimates are revised and in any future periods affected.
The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year are in relation to the fair value of intangible
assets identified as part of acquisitions made during the period. Details are given in note 4.

100092860/3201962.26

113

Intueri Education Group Limited and its controlled entities

Notes to the Financial Statements
For the 9 month period ended 30 June 2013
3.
Significant accounting policies
The accounting policies set out below have been applied consistently to all periods presented in these
financial statements and have been applied consistently by Group entities.
a.

Basis of consolidation

i.

Business combination

Business combinations are accounted for using the acquisition method as at the acquisition date, which is
the date on which control is transferred to the Group. Control is the power to govern the financial and
operating policies of an entity so as to obtain benefits from its activities. In assessing control, the Group
takes into consideration potential voting rights that currently are exercisable.
The Group measures goodwill at the acquisition date as:
the fair value of the consideration transferred; less
the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities
assumed.
When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.
Consideration transferred does not include amounts related to the settlement of pre-existing relationships.
Such amounts generally are recognised in profit or loss.
Transactions costs, other than those associated with the issue of debt or equity securities, that the Group
incurs in connection with a business combination are expensed as incurred.
Any contingent consideration payable is measured at fair value at the acquisition date. If the contingent
consideration is classified as equity, then it is not re-measured and settlement is accounted for within
equity. Otherwise, subsequent changes in the fair value of the contingent consideration are recognised in
profit or loss.
ii.

Subsidiaries

Investments in subsidiaries held by the Parent are accounted for at cost less any impairment in the separate
financial statements of the Parent Entity.
Subsidiaries are entities controlled by the Group. The financial statements of subsidiaries are included in
the consolidated financial statements from the date that control commences until the date that control
ceases.
iii.

Loss of control

On the loss of control, the Group derecognises the assets and liabilities of the subsidiary, any noncontrolling interests and the other components of equity related to the subsidiary. Any surplus or deficit
arising on the loss of control is recognised in profit or loss. If the Group retains any interest in the previous
subsidiary, then such interest is measured at fair value at the date that control is lost.
Subsequently it is accounted for as an equity-accounted investee or as an available-for-sale financial asset
depending on the level of influence retained.
iv.

Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group
transactions, are eliminated in preparing the consolidated financial statements.

114

Intueri Education Group Limited and its controlled entities

Notes to the Financial Statements
For the 9 month period ended 30 June 2013
3.

Significant accounting policies (continued)

b.

Foreign currency transactions

Transactions in foreign currencies are translated to the respective functional currencies of Group entities at
exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign
currencies at the reporting date are retranslated to the functional currency at the exchange rate at that
date. The foreign currency gain or loss on monetary items is the difference between amortised cost in the
functional currency at the beginning of the year, adjusted for effective interest and payments during the
year, and the amortised cost in foreign currency translated at the exchange rate at the end of the year.
Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are
retranslated to the functional currency at the exchange rate at the date that the fair value was determined.
Non-monetary items in a foreign currency that are measured based on historical costs are translated using
the exchange rate at the date of the transaction.
c.

Revenue

Provision of services
Revenue from the provision of services is recognised when services have been rendered to the customers.
Sale of goods
Revenue from the sale of goods in the course of ordinary activities is measured at the fair value of the
consideration received or receivable, net of returns, trade discounts and volume rebates. Revenue is
recognised when the significant risks and rewards of ownership have been transferred to the customer,
recovery of the consideration is probable, the associated costs and possible return of goods can be
estimated reliably, there is no continuing management involvement with the goods, and the amount of
revenue can be measured reliably.
Government grants
Government grants are recognised initially as deferred income at fair value when there is reasonable
assurance that they will be received and the Group will comply with the conditions associated with the
grant and are then recognised in profit or loss as other income on a systematic basis over the useful life of
the asset.
d.
Income tax
Tax expense comprises current and deferred tax. Current tax and deferred tax is recognised in profit or loss
except to the extent that it relates to a business combination, or items recognised directly in equity or in
other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax
rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect
of previous years. Current tax also includes any tax liability arising from the declaration of dividends.
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not
recognised for:
temporary differences on the initial recognition of assets or liabilities in a transaction that is not a
business combination and that affects neither accounting nor taxable profit or loss,
temporary differences arising on the initial recognition of goodwill; and
temporary differences related to investments in subsidiaries and jointly controlled entities to the
extent that it is probable that they will not reverse in the foreseeable future.

115

Intueri Education Group Limited and its controlled entities

Notes to the Financial Statements
For the 9 month period ended 30 June 2013
3.

Significant accounting policies (continued)

d.

Income tax (continued)

Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when
they reverse, using tax rates enacted or substantively enacted at the reporting date.
In determining the amount of current and deferred tax the Group takes into account the impact of
uncertain tax positions and whether additional taxes and interest may be due. The Group believes that its
accruals for tax liabilities are adequate for all open tax years based on its assessment of many factors,
including interpretations of tax law and prior experience. This assessment relies on estimates and
assumptions and may involve a series of judgements about future events. New information may become
available that causes the Group to change its judgement regarding the adequacy of existing tax liabilities;
such changes to tax liabilities will impact tax expense in the period that such a determination is made.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax
liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable
entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or
their tax assets and liabilities will be realised simultaneously.
A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences,
to the extent that it is probable that future taxable profits will be available against which they can be
utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no
longer probable that the related tax benefit will be realised.
e.

Property, plant & equipment

Recognition and measurement

Items of property, plant and equipment are stated at cost, less accumulated depreciation and impairment
losses. 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
profit or loss.
Depreciation
Depreciation is charged based on the cost of an asset less its residual value. Depreciation is charged to the
Statement of Comprehensive Income over the estimated useful lives of each component of an item of
property, plant and equipment. Leased assets are depreciated over a shorter of the lease term and their
useful lives unless it is reasonably certain that the Group will obtain ownership by the end of the lease term.
The following depreciation rates ranges have been used:
Plant and equipment

12.5%-50% diminishing value

Office equipment

15%-60% diminishing value

Furniture & fittings

15%-50% diminishing value

Leasehold improvements

4%-36% diminishing value

Motor Vehicles

27%-32% diminishing value

Computer Equipment

15%-60% diminishing value

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

116

Intueri Education Group Limited and its controlled entities

Notes to the Financial Statements
For the 9 month period ended 30 June 2013
3.

Significant accounting policies (continued)

f.

Intangible Assets

Goodwill
Goodwill represents amounts arising on acquisition of a business and is the difference between the cost of
acquisition and the fair value of the net identifiable assets acquired, see note 4.
Subsequent measurement
Goodwill is measured at cost less accumulated impairment losses. Goodwill is allocated to cash-generating
units and is not amortised but is reviewed at each balance date to determine whether there is any objective
evidence of impairment.
Research and development
Development activities involve a plan or design for the production of new or substantially improved
products and processes. Development expenditure is capitalised only if development costs can be
measured reliably, the product or process is technically and commercially feasible, future economic benefits
are probable, and the Group intends to and has sufficient resources to complete development and to use or
sell the asset. The expenditure capitalised includes the cost of materials, direct labour, overhead costs that
are directly attributable to preparing the asset for its intended use, and capitalised borrowing costs. Other
development expenditure is recognised in profit or loss as incurred.
Capitalised development expenditure is measured at cost less accumulated amortisation and accumulated
impairment losses.
Other intangible assets
Other intangible assets that are acquired by the Group and have finite and indefinite useful lives are
measured at cost less accumulated amortisation and accumulated impairment losses. Other intangible
assets have been amortised over their estimated useful lives:
Agent relationships

3 4 years

Course materials
Non-compete

5 years
3 5 years

Brand names

Indefinite life

Subsequent expenditure
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the
specific asset to which it relates. All other expenditure, including expenditure on internally generated
goodwill and brands, is recognised in profit or loss as incurred.
Amortisation
Except for goodwill and intangible assets that have indefinite lives or are not yet available for use,
intangible assets are amortised on a straight-line basis in profit or loss over their estimated useful lives,
from the date that they are available for use.
Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted if
appropriate.

117

Intueri Education Group Limited and its controlled entities

Notes to the Financial Statements
For the 9 month period ended 30 June 2013
3.

Significant accounting policies (continued)

g.

Leased assets

Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are
classified as finance leases. Upon initial recognition the leased asset is measured at an amount equal to the
lower of its fair value and the present value of the minimum lease payments. Subsequent to initial
recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.
Other leases are operating leases and are not recognised in the Groups statement of financial position.
h.

Financial Instruments

i)
Non-derivative financial assets
Non-derivative financial assets
The Group initially recognises loans and receivables on the date that they are originated. All other financial
assets (including assets designated at fair value through profit or loss) are recognised initially on the trade
date at which the Group becomes a party to the contractual provisions of the instrument.
The Group derecognises a financial asset when the contractual rights to the cash flows from the asset
expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially
all the risks and rewards of ownership of the financial asset are transferred. Any interest in transferred
financial assets that is created or retained by the Group is recognised as a separate asset or liability.
Financial assets and liabilities are offset and the net amount presented in the statement of financial
position when, and only when, the Group has a legal right to offset the amounts and intends either to settle
on a net basis or to realise the asset and settle the liability simultaneously.
The Group classifies non-derivative financial assets into the following categories: financial assets at fair
value through profit or loss, held-to-maturity financial assets, loans and receivables and available-for-sale
financial assets.
Trade and other receivables
Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an
active market. Such assets are recognised initially at fair value plus any directly attributable transaction
costs. Subsequent to initial recognition loans and receivables are measured at amortised cost using the
effective interest method, less any impairment losses.
Loans and receivables comprise cash and cash equivalents, trade and other receivables and loans to
subsidiaries and other related parties.

118

Intueri Education Group Limited and its controlled entities

Notes to the Financial Statements
For the 9 month period ended 30 June 2013
3.

Significant accounting policies (continued)

h.

Financial Instruments (continued)

ii)

Non-derivative financial liabilities

The Group initially recognises debt securities issued and subordinated liabilities on the date that they are
originated. All other financial liabilities (including liabilities designated at fair value through profit or loss)
are recognised initially on the trade date, which is the date that the Group becomes a party to the
contractual provisions of the instrument.
The Group derecognises a financial liability when its contractual obligations are discharged, cancelled or
expire.
The Group classifies non-derivative financial liabilities into the other financial liabilities category. Such
financial liabilities are recognised initially at fair value plus any directly attributable transaction costs.
Subsequent to initial recognition, these financial liabilities are measured at amortised cost using the
effective interest method.
Other financial liabilities comprise loans and borrowings, bank overdrafts, and trade and other payables.
Bank overdrafts that are repayable on demand and form an integral part of the Groups cash management
are included as a component of cash and cash equivalents for the purpose of the statement of cash flows.
iii)

Share capital

Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary
shares and share options are recognised as a deduction from equity, net of any tax effects.
i.

Impairment

i)

Non-derivative financial assets

A financial asset not carried at fair value through profit or loss is assessed at each reporting date to
determine whether there is objective evidence that it is impaired. A financial asset is impaired if there is
objective evidence of impairment as a result of one or more events that occurred after the initial
recognition of the asset, and that the loss event(s) had an impact on the estimated future cash flows of that
asset that can be estimated reliably.
Objective evidence that financial assets are impaired includes default or delinquency by a debtor,
restructuring of an amount due to the Group on terms that the Group would not consider otherwise,
indications that a debtor or issuer will enter bankruptcy, adverse changes in the payment status of
borrowers or issuers in the Group, economic conditions that correlate with defaults or the disappearance of
an active market for a security. In addition, for an investment in an equity security, a significant or
prolonged decline in its fair value below its cost is objective evidence of impairment.

119

Intueri Education Group Limited and its controlled entities

Notes to the Financial Statements
For the 9 month period ended 30 June 2013
3.

Significant accounting policies (continued)

i.

Impairment (continued)

i)

Non-derivative financial assets (continued)

Financial assets measured at amortised cost

The Group considers evidence of impairment for financial assets measured at amortised cost (loans and
receivables and held-to-maturity investment securities) at both a specific asset and collective level. All
individually significant assets are assessed for specific impairment. Those found not to be specifically
impaired are then collectively assessed for any impairment that has been incurred but not yet identified.
Assets that are not individually significant are collectively assessed for impairment by grouping together
assets with similar risk characteristics.
In assessing collective impairment the Group uses historical trends of the probability of default, the timing
of recoveries and the amount of loss incurred, adjusted for managements judgement as to whether current
economic and credit conditions are such that the actual losses are likely to be greater or less than suggested
by historical trends.
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference
between its carrying amount and the present value of the estimated future cash flows discounted at the
assets original effective interest rate. Losses are recognised in profit or loss and reflected in an allowance
account against loans and receivables or held-to-maturity investment securities. Interest on the impaired
asset continues to be recognised. When an event occurring after the impairment was recognised causes
the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or
loss.
ii)

Non-financial assets

The carrying amounts of the Groups non-financial assets, other than investment property and deferred tax
assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If
any such indication exists, then the assets recoverable amount is estimated. Goodwill and indefinite-lived
intangible assets are tested annually for impairment. An impairment loss is recognised if the carrying
amount of an asset or its related cash-generating unit (CGU) exceeds its estimated recoverable amount.
The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to
sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of the time value of money and the risks
specific to the asset or CGU. For the purpose of impairment testing, assets that cannot be tested
individually are grouped together into the smallest group of assets that generates cash inflows from
continuing use that are largely independent of the cash inflows of other assets or CGUs. Subject to an
operating segment ceiling test, CGUs to which goodwill has been allocated are aggregated so that the level
at which impairment testing is performed reflects the lowest level at which goodwill is monitored for
internal reporting purposes. Goodwill acquired in a business combination is allocated to groups of CGUs
that are expected to benefit from the synergies of the combination.
Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of CGUs are
allocated first to reduce the carrying amount of any goodwill allocated to the CGU (group of CGUs), and
then to reduce the carrying amounts of the other assets in the CGU (group of CGUs) on a pro rata basis.

120

Intueri Education Group Limited and its controlled entities

Notes to the Financial Statements
For the 9 month period ended 30 June 2013
3.

Significant accounting policies (continued)

i.

Impairment (continued)

ii)

Non-financial assets (continued)

An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed
only to the extent that the assets carrying amount does not exceed the carrying amount that would have
been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
j.

Determination of fair values

A number of the Groups accounting policies and disclosures require the determination of fair value, for
both financial and non-financial assets and liabilities. Fair values have been determined for measurement
and / or disclosure purposes based on the following methods. When applicable, further information about
the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.
Property, plant and equipment
The fair value of property, plant and equipment recognised as a result of a business combination is the
estimates amount for which a property could be exchanged on the date of acquisition between a willing
buyer and a willing seller in an arms length transaction after proper marketing wherein the parties had
each acted knowledgeably. The fair value of plant, equipment, fixtures and fittings is based on the market
approach and cost approaches using quoted market prices for similar items when available and depreciated
replacement cost when appropriate. Depreciated replacement cost reflects adjustments for physical
deterioration as well as functional and economic obsolescence.
k.

Employee benefits

Provision is made for the Companys 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.
l.

Provisions

A provision is recognised if, as a result of a past event, the Group has a present legal or constructive
obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be
required to settle the obligation. Provisions are determined by discounting the expected future cash flows
at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific
to the liability. The unwinding of the discount is recognised as a finance cost.
m.

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. Trade and other payables are initially recognised at fair value plus directly
attributable transaction costs and subsequently measured at amortised cost using the effective interest
method.

121

Intueri Education Group Limited and its controlled entities

Notes to the Financial Statements
For the 9 month period ended 30 June 2013
3.

Significant accounting policies (continued)

n.

Expenses

Operating lease payments

Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term
of the lease. Lease incentives received are recognised in the profit or loss over the lease term as an integral
part of the total lease expense.
Determining whether an arrangement contains a lease
At inception of an arrangement, the Group determines whether such an arrangement is or contains a lease.
This will be the case if the following two criteria are met:
the fulfilment of the arrangement is dependent on the use of a specific asset or assets; and
the arrangement contains a right to use the asset(s).
At inception or upon reassessment of the arrangement, the Group separates payments and other
consideration required by such an arrangement into those for the lease and those for other elements on
the basis of their relative fair values. If the Group concludes for a finance lease that it is impracticable to
separate the payments reliably, an asset and a liability are recognised at an amount equal to the fair value
of the underlying asset. Subsequently the liability is reduced as payments are made and an imputed finance
charge on the liability is recognised using the Groups incremental borrowing rate.
Finance income and expenses
Finance income comprises interest income, dividend income, and foreign currency gains. Interest income is
recognised as it accrues, using the effective interest method. Dividend income is recognised on the date
that the Companys right to receive payments is established.
Finance expenses comprise interest expense on borrowings, foreign currency losses and impairment losses
recognised on financial assets (except for trade receivables). All borrowing costs are recognised in profit or
loss using the effective interest method.
o.

Goods and services tax

All amounts are shown exclusive of Goods and Services Tax (GST), except for trade receivables and trade
payables that are stated inclusive of GST.

122

Intueri Education Group Limited and its controlled entities

Notes to the Financial Statements
For the 9 month period ended 30 June 2013
4.

Business Combinations

As part of its growth strategy and in line with investment criteria the Company has acquired control of the
following private training establishments by acquiring 100% of the shares and voting rights on the following
dates:
Companies / Assets acquired
Elite Education Holdings Limited and its
controlled entities
D&A Education Holdings Limited and its
controlled entities
Global Education Group Limited
The Cut Above Academy Limited
NZSCDT Holdings Limited (Assets acquired from
CDT Partnership on 28 March 2013)
NZ School of Outdoor Studies Limited

Description

Acquisition date

Investment in private training

establishment providing education
courses
Investment in private training
establishment providing education
courses
Private training establishment
providing education courses
Private training establishment
providing education courses
Renting equipment to private
training establishment
Private training establishment
providing education courses

8 February 2013

8 February 2013

12 February 2013
22 February 2013
28 March 2013
28 March 2013

The following summarises the major classes of consideration transferred, and the recognised amounts of
assets acquired and liabilities assumed for all the acquisition at their respective acquisition dates:

Total Consideration
Payable
Cash and cash equivalents

Elite

D&A

GEG

CA

NZSOS

NZSCDT
Holdings

Total

9,394,310

3,641,704

14,436,266

8,645,492

2,292,435

2,106,584

40,516,791

466,117

233,613

206,441

235,818

20,225

1,162,214

Other current assets

Identifiable intangible
assets

2,360,535

716,543

1,423,953

1,955,442

135,487

6,591,960

1,938,060

1,085,543

11,715,931

3,649,895

2,198,915

20,588,344

Plant and equipment

Trade creditors

1,192,808
(227,254)

940,638
(275,166)

1,394,841
(582,363)

2,541,009
(134,705)

(6,905)

1,177,640
-

7,246,936
(1,226,393)

(2,888,187)

(1,782,975)

(1,611,457)

(2,377,416)

(680,372)

(9,340,407)

Deferred tax liability

(542,657)

(303,952)

(3,252,460)

(1,021,971)

(615,696)

(5,736,736)

Net Assets Acquired

2,299,422

614,244

9,294,886

4,848,072

1,051,654

1,177,640

19,285,918

Goodwill on acquisition

7,094,888

3,027,460

5,141,380

3,797,420

1,240,781

928,944

21,230,873

Total intangibles

9,032,948

4,113,003

16,857,311

7,447,315

3,439,696

928,944

41,819,217

Other creditors

As of 30 June 2013, $779,863 of the consideration was still owing to the vendors (refer to Note 21).

123

Intueri Education Group Limited and its controlled entities

Notes to the Financial Statements
For the 9 month period ended 30 June 2013
4.

Business Combinations (continued)

All the assets and liabilities for the various companies acquired were measured under NZ IFRS at their
respective acquisition dates. Consolidation accounts are prepared under NZ IFRS and there is no impact on
the retained earnings on transition. Goodwill is tested for impairment at each reporting date. As the
Company was incorporated during the year and the acquisition done in the year; there are no comparatives
to be restated to NZ IFRS.
Goodwill represents that expected synergies from the merger of operations and intangible assets that do
not qualify for separate recognition e.g. assembled workforce.
A breakdown of various identifiable intangible assets and the key assumption used in estimated the fair
value of identifiable intangible assets are detailed at note 18.
The table below estimates the revenue and profit contribution of all of the acquisitions since their
respective acquisition dates and on the basis the all acquisitions occurred from the beginning of the
financial period.

Revenue and Other Income

EBIT

Since
acquisition

Since beginning of
the financial period

14,297,977

28,121,203

2,076,006

4,102,902

Group
For 9 months
ended 30 June
2013
5.

Revenue
Tuition fees

6.

Company
For 9 months
ended 30 June
2013

Other income
TEC and Youth Guarantee Funding
Management fees
Insurance claim
Other income

9,606,486
9,606,486

3,055,853
798,013
798,522
4,652,388

925,164
3,029
928,193

124

Intueri Education Group Limited and its controlled entities

Notes to the Financial Statements
For the 9 month period ended 30 June 2013

7.

Group
For 9 months
ended 30 June
2013

Company
For 9 months
ended 30 June
2013

299,138
3,883,233
116,497

1,231
49,511
1,485

1,460,650

34,405
75,638
6,650
488,228
110,987

1,607
75,854
291
488,228
10,178

62,100
13,649
5,403
2,454

8,400
-

Operating expenses before net financing costs

Employee expenses
Employee expenses include the following:
- ACC, training and recruitment costs
- Wages and salaries
- Kiwi saver
Occupancy costs
Rental expense
Administrative expenses
Administrative expenses include the following:
- Accountancy charges
- Bank fees
- Legal fees
- Management fees (Note 31)
- Consultancy
Independent auditors remuneration BDO Auckland
- Audit fees audit of financial statements
- Taxation services
- NZQA and Public trust attestation
- Expense reimbursements
Depreciation and amortisation
-

8.

Depreciation (Note 17)

Amortisation on identifiable intangible assets(Note 18)

325,385
1,472,513

Net finance costs

Interest income on bank deposits
Interest Loan

45,666
(434,421)
(388,755)

34,093
(436,086)
(401,993)

125

Intueri Education Group Limited and its controlled entities

Notes to the Financial Statements
For the 9 month period ended 30 June 2013
Group
For 9 months
ended 30 June
2013
9.

Company
For 9 months
ended 30 June
2013

Key management personnel compensation

Key management personnel are those persons having authority and responsibility for planning,
directing and controlling the activities of the Group, including the directors of the Company listed on
page 2 and the Financial Controller of the Company.
Salary
Other employment benefits

81,250
2,438
83,688

81,250
2,438
83,688

No long-term benefit plans were in place for key management personnel during period ended 30 June
2013.

10.

Income tax

a)

Income tax recognised in profit or loss and other

comprehensive income
Income tax recognised in profit and loss
Current tax
Deferred tax
Income tax expense/(benefit)

412,823
(453,798)
(40,975)

450,510

(166,220)

126,143
(165,500)
(1,618)
(40,975)

(46,542)
563
45,979
-

1,261,344
48,188
(39,321)
28,959
1,299,170

9,546
(8,831)
715

No income tax has been recognised in other comprehensive income

b)

Reconciliation of income tax expense

Profit / (loss) before income tax
Income tax using the Company tax rate (28%)
Permanent differences
Tax losses offset
Pre-acquisition adjustment
Income tax benefit

11.

Imputation Account
Opening balance
New Zealand tax payments, net of refunds
Resident withholding tax
Imputation debit due to breach of shareholder continuity
Other (debits)/credits
Closing balance

126

Intueri Education Group Limited and its controlled entities

Notes to the Financial Statements
For the 9 month period ended 30 June 2013
12.

Segment information

In accordance with NZ IRFS 8 Operating Segments, the Company has determined that it satisfies the criteria
to allow the reporting of one operating segment. This is based on the information received by the Board of
Directors to make resource allocation decisions, and on the basis that each of Intueris business channels
has similar economic and regulatory characteristics and similar services are provided. Intueri sole operating
segment is education services in New Zealand.
Group
2013
13.

Earnings per share

Basic earnings per share attributable to the ordinary equity
holders of the Company (cents)
Diluted earnings per share attributable to the ordinary equity
holders of the Company (cents)

4.67
4.67

Numerator
Profit attributable to the ordinary equity holders of the Company
used in calculating basic and diluted earnings per share

491,485

Denominator

14.

Weighted average number of ordinary shares used as a

denominator in calculating basic earnings per share (numbers)

10,528,445

Weighted average number of ordinary shares used as a

denominator in calculating diluted earnings per share (numbers)

10,528,445

Cash and cash equivalents

Bank balances
Petty cash

15.

4,492,419
2,992
4,495,411

2,092,721
2,092,721

48,416
12,029,203
12,077,619

6,285
6,285

Trade and other receivables

Trade receivables
Funds held in Public Trust

Funds held in Public Trust represent the unexpired portion of fees paid in advance by students that the
Group will receive over the duration of the course.

127

Intueri Education Group Limited and its controlled entities

Notes to the Financial Statements
For the 9 month period ended 30 June 2013

16.

Company
2013

134,003
63,183
2,800,000
70,487
3,067,673

6,135
1,291,786
2,800,000
3,043
4,100,964

Other current assets

Prepayments
Related party loans (Note 31)
Interest receivable
Retention in trust (a)
Other receivables

(a)

Group
2013

Retention in trust relates to amounts held in trust by vendors solicitors towards the acquisition of The Global
Education Group Limited, The Cut Above Academy Limited and New Zealand School of Outdoor Studies Limited.

17.

Property, plant and equipment

Group

Leasehold
improvements

Plant &
equipment

Computer
equipment

Office
equipment

Furniture
&
fixtures

Motor
vehicles

Total

8,890,981

2,937,568

464,050

828,767

1,252,480

246,630

14,620,476

19,650

33,918

10,010

1,507

7,329

72,414

(58,755)

(58,755)

8,910,631

2,971,486

474,060

830,274

1,259,809

187,875

14,634,135

4,364,034

1,048,700

437,291

541,959

787,211

194,951

7,374,146

245,526

79,461

5,260

18,199

31,808

3,886

384,140

(58,755)

(58,755)

4,609,560

1,128,161

442,551

560,158

819,019

140,082

7,699,531

4,301,071

1,843,325

31,509

270,116

440,790

47,793

6,934,604

Cost
Opening balance
Acquired through
business combination
Additions
Disposals
Balance as at 30
June 2013

Accumulated depreciation
Opening balance
Acquired through
business combination
Depreciation during
the period
Depreciation reversal
during the period
Balance as at 30
June 2013
Net book value as
at 30 June 2013

The Company does not own any property, plant and equipment.
Security
As at 30 June 2013, fixed assets are subject to a first mortgage to secure the ANZ term debt.

128

Intueri Education Group Limited and its controlled entities

Notes to the Financial Statements
For the 9 month period ended 30 June 2013
18.

Intangible assets

Group

Cost
Opening balance
Acquired through
business combinations
Balance as at 30 June
2013

Goodwill

Agents
relationships

Course
materials

Brand
names

Noncompete

Total

21,230,873

5,208,103

7,217,197

4,651,880

3,511,164

41,819,217

21,230,873

5,208,103

7,217,197

4,651,880

3,511,164

41,819,217

Accumulated amortisation and impairment

Opening balance
Amortisation for the
576,781
period
Balance as at 30 June
576,781
2013

Net book value as at

30 June 2013

21,230,873

4,631,322

516,559

379,173

1,472,513

516,559

379,173

1,472,513

6,700,638

4,651,880

3,131,991

40,346,704

The goodwill has been stated at gross carrying value. Goodwill represents the consideration paid for
acquisition of various entities (as listed in note 4) in excess of their respective net assets and identified
intangible assets. Goodwill represents the expected synergies from the merger of operations and intangible
assets that do not qualify for separate recognition e.g. assembled workforce. There was no impairment of
goodwill from date of acquisition to 30 June 2013.
Brand names have been estimated to have an infinite life due to the following:
The colleges acquired have been in existence for a period ranging from 12 years to 21 years and have
historically displayed a strong brand name and presence in the market; and
Intueri intends to continue using individual brand names for the purpose of marketing
The fair value of agent relationships and non-compete agreements were calculated using the excess
earnings method. Whereas the relief from royalty method was utilised in calculating the fair value of
course materials and brand names.
The following were the key assumptions in estimating the fair value of intangible assets:
Discount rate in the range of 9% to 10%
Contributory asset charges (after tax) in the range of 0.5% to 2.0%
Royalty stream in the range of 5% to 7%
Non-compete period based on the relevant agreements
EBITDA growth rate in the range of 3% to 5% in the next 5 years
Terminal EBITDA growth rate of 3%
There are no intangible assets at a Company level.

129

Intueri Education Group Limited and its controlled entities

Notes to the Financial Statements
For the 9 month period ended 30 June 2013

19.

Group
2013

Company
2013

9,394,310
3,641,704
14,436,266
8,645,492
2,292,435
2,106,584
40,516,791

Investments
Investment in Elite Education (8 Feb 2013)
Investment in Design and Arts College (8 Feb 2013)
Investment in Global Education Group (12 Feb 2013)
Investment in The Cut Above Academy (22 Feb 2013)
Investment in NZSOS (28 Feb 2013)
Investment in NZSCDT Holdings (18 Oct 2012)

The Group acquired 100% of the shares in the above subsidiaries on the dates noted alongside each.
20.

Deferred tax
Opening balance
Balance brought forward from acquisitions

Deferred tax on acquired identifiable intangible assets

(5,736,736)

Current period movement

Closing balance

453,798
(5,174,565)

56,801
49,807
43,260
149,868

(5,324,433)

1,085,780
1,790,631
11,940,782
2,800,000
239,130
779,863
18,636,186

209,867
96,732
2,800,000
779,863
1,364,551
5,251,013

Deferred tax assets are attributable to the following:

Accrued expenses
Payroll liabilities
Employee entitlement

Deferred tax liability is attributable to the following:

Identifiable intangible assets
21.

108,373

Trade and other payables

Trade creditors
Accruals
Income received in advance (a)
(b)
Retention payable
(c)
TEC clawback
Due to vendors of subsidiaries
Related party payables (Note 31)

(a) Income received in advance relates to amounts in Public Trust account (refer note 15). These amounts
will be recognised as revenue over the duration of the courses.
(b) Retention payable relates to amounts held in trust by vendors solicitors towards the acquisition of The
Global Education Group Limited, The Cut Above Academy Limited and New Zealand School of Outdoor
Studies Limited (refer note 16). Retention amount (subject to any claims) is payable to the vendors at
the end of the retention period.
(c) Relates to a probable TEC clawback liability for Elite International for the year ended 31 December
2012.
130

Intueri Education Group Limited and its controlled entities

Notes to the Financial Statements
For the 9 month period ended 30 June 2013

22.

Company
2013

641,557

(9,546)

2,362,500
18,677,500
21,040,000

2,362,500
18,677,500
21,040,000

Income tax payable

Income tax payable

23.

Group
2013

Interest-bearing loan
Current
Non-current

Interest-bearing loan relates to the term debt with ANZ. The loan is secured by a fixed and floating charge
over the assets of Intueri Education Group Limited and its subsidiaries. The term debt has a floating interest
rate of 5.85% as at 30 June 2013. The term debt is repayable from 1 October 2013 on a monthly repayment
of $262,500. The debt expires on 30 May 2016.

24.

Employee benefits
Holiday pay

25.

336,704

20,601,514

20,601,514

Share capital
Ordinary shares

At 30 June 2013, share capital comprised 20,601,514 authorised and issued ordinary shares. All issued
shares are fully paid and have no par value.
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, and rank equally with regard to the Companys
residual assets on winding up.

131

Intueri Education Group Limited and its controlled entities

Notes to the Financial Statements
For the 9 month period ended 30 June 2013

26.

Group
2013

Company
2013

491,485

(166,220)

325,385
1,472,513
434,421
(562,171)

436,086
-

(48,416)
(12,029,203)
(134,003)
(2,933,670)
(3,974,232)

(6,285)
(6,135)
(2,803,043)
-

1,257,575
11,940,782
641,557
336,704
4,660,013

313,360
2,783,693
-

1,878,740

551,456

Cash flow information

Reconciliation of the operating profit after tax to the net cash
flows from operations
Profit from ordinary activities after income tax
Add: Non-cash items and non-operating cash flow items
Depreciation
Amortisation
Interest expense
Deferred tax movement
Changes in assets and liabilities, net of the effects purchase of
controlled entities
Assets
(Increase)/decrease in trade debtors
(Increase)/decrease in accrued income
(Increase)/decrease in other receivables
(Increase)/decrease in other current assets
Effect of purchase of controlled entities
Liabilities
Increase/(decrease) in trade payables
Increase/(decrease) in deferred income
Increase/(decrease) in income tax payable
Increase/(decrease) in provisions
Increase/(decrease) in other payables
Cash flow from operating activities

132

Intueri Education Group Limited and its controlled entities

Notes to the Financial Statements
For the 9 month period ended 30 June 2013
27.

Financial instruments

Financial risk management

Overview
The Group has exposure to the following risks arising from financial instruments
Credit risk
Liquidity risk
Market risk
Capital management
This note presents information about the Groups exposure to each of the above risks, the Groups
objectives, policies and processes for measuring and managing risk and the Groups management of capital.
Risk management framework
The Companys Board of Directors has overall responsibility for the establishment and oversight of the
Groups 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 Groups receivables from customers.
The carrying amount of financial assets represent the maximum credit exposure. The maximum exposure to
credit risk as at 30 June 2013 was as follows:
Note

Carrying amount
Group

Company

Cash and cash equivalents

14

4,495,411

2,092,721

Trade and other receivables

15

12,077,619

6,285

16,573,030

2,099,006

Total

Cash and cash equivalents

The cash and cash equivalents are held with bank and financial institution counterparties which are rated
AA- by Fitch Ratings.
Trade and other receivables
The Groups 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.

133

Intueri Education Group Limited and its controlled entities

Notes to the Financial Statements
For the 9 month period ended 30 June 2013
27.

Financial instruments (continued)

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 Groups 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 Groups 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 as at 30 June 2013:
2 months or
less

2 12
months

1 3 years

More than 3
years

Total

(1,085,779)

Group
Trade debtors
Trade creditors
Term loan

(784,252)

(301,527)

(2,362,500)

(6,300,000)

(12,377,500)

(21,040,000)

(784,252)

(2,664,027)

(6,300,000)

(12,377,500)

(22,125,779)

(198,763)

(11,104)

(209,867)

(2,362,500)

(6,300,000)

(12,377,500)

(21,040,000)

(198,763)

(2,373,604)

(6,300,000)

(12,377,500)

(21,249,867)

Company
Trade debtors
Trade creditors
Term loan

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 Groups 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 Group has no investments or

134

Intueri Education Group Limited and its controlled entities

Notes to the Financial Statements
For the 9 month period ended 30 June 2013
borrowings in foreign currency. The Group has limited currency risk associated with certain operational
expenses.
27.

Financial instruments (continued)

Market risk (continued)

Interest rate risk
A majority of the Groups 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.
Profile
At the end of the reporting period the interest rate profile of the Groups interest-bearing financial
instruments as reported to the management of the Group was as follows:
Nominal amount
Group

Company

2,425,317

1,556,509

Financial liabilities

(21,040,000)

(21,040,000)

Net financial assets / (liabilities)

(18,614,683)

(19,483,491)

Variable rates instruments

Financial assets

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
Group

Company

Increase by 100 basis points

(62,049)

(64,945)

Decrease by 100 basis points

62,049

64,945

Interest rate

Capital management
The Boards 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 Group manages its capital to ensure that
entities in the Group will be able to continue as going concerns will maximising the return to shareholders.
The Board of Directors monitors the return on capital as well as the level of dividends to ordinary
shareholders. The Company is not subject to any externally imposed capital requirements.
The Groups policies in respect of capital management are reviewed regularly by the Board of Directors.

135

Intueri Education Group Limited and its controlled entities

Notes to the Financial Statements
For the 9 month period ended 30 June 2013
27.

Financial instruments (continued)

Capital management (continued)

The capital structure of the Group consists of net debt and equity of the Group. The borrowings were
entered during the year and the gearing ratio at balance date was as follows:
Group
2013
Debt

16,544,589

Equity

20,601,514

Debt to equity ratio

80.3%

Financial instruments classification

Group
Assets
Cash
Trade and other receivables
Other current assets
Total assets
Liabilities
Trade and other payables
Income tax payable
Provisions
Interest bearing loans
Deferred tax liability
Total liabilities
Company
Assets
Cash
Trade and other receivables
Other current assets
Total assets
Liabilities
Trade and other payables
Interest bearing loans
Total liabilities

Loans and
receivables

Liabilities at
amortised cost

Total carrying
amount

4,495,411
48,416
2,933,670
7,477,497

4,495,411
48,416
2,933,670
7,477,497

6,695,403
641,557
336,704
21,040,000
5,324,433
34,038,097

6,695,403
641,557
336,704
21,040,000
5,324,533
34,038,097

2,092,721
6,285
4,094,829
6,193,835

2,092,721
6,285
4,094,829
6,193,835

5,241,467
21,040,000
26,281,467

5,241,467
21,040,000
26,281,467

136

Intueri Education Group Limited and its controlled entities

Notes to the Financial Statements
For the 9 month period ended 30 June 2013

28.

Group
2013

Company
2013

4,030,065
12,255,295
4,083,574
20,368,934

Commitments

Operating leases
Non-cancellable operating leases are payable as follows:
Less than one year
Between one and five years
More than five years

During the period ended 30 June 2013, an amount of $1,468,094 was recognised as an expense in profit or
loss in respect of operating leases.
There are no other commitments.
29.

Contingent liabilities

There are no contingent liabilities.

30.

Subsequent events

a.

The Company incorporated a new subsidiary named Commercial Diver Training Limited on 1 July 2013.

b.

The Company incorporated a new subsidiary named Intueri Materials Limited on 13 February 2014.

c.

On 17 February 2014, Intueri signed a conditional agreement to purchase all the shares of Quantum
Education Group Limited and the business and assets of LearnTree Limited. The acquisition conditions
have different dates by which they must be satisfied for the acquisition to proceed, with the latest
being 30 June 2014. The price of the acquisition will be finalised via an earnings based formula and is
estimated to be in the range of $56m to $62m.

d.

On 3 March 2014, Intueri signed a conditional agreement to purchase a 50% controlling interest in
Online Courses Australia Pty Limited (OCA). The acquisition of OCA is expected to be completed by
31 March 2014 subject to fulfilment of number of conditions. The price of acquisition will be finalised
via an earnings based formula and will include an earnout component. The total acquisition price is
expected to be between A$2.25m and $4.0m. The upfront consideration will be A$2.25m while the
earnout component may be up to an additional A$1.75m.

137

Intueri Education Group Limited and its controlled entities

Notes to the Financial Statements
For the 9 month period ended 30 June 2013
31.
a.

Related parties
Parent and ultimate controlling entity
The immediate parent of Intueri Education Group Limited is Intueri Education Group Pty Limited, an
Australian privately owned entity. The ultimate controlling party is Arowana International Limited,
an Australian domiciled entity listed on the Australian Securities Exchange.

b.

NZSCDT Holdings Limited was incorporated on 18 October 2012.

c.

On 8 February 2013 the Company acquired all the shares of:

Elite Education Holdings Limited and its subsidiary Elite International School of Beauty and Spa
Therapies Limited; and
D&A Education Holdings Limited and its subsidiary Design and Arts College of New Zealand
Limited.

d.

On 12 February 2013 the Company acquired all the shares of Global Education Group Limited.

e.

On 22 February 2013 the Company acquired all the shares of The Cut Above Academy Limited.

f.

On 28 March 2013 the Company acquired all the shares of NZ School of Outdoor Studies Limited.

g.

Identity of related parties with whom material transactions have occurred:

Entity name
Intueri Education Group Pty Limited

Country of
incorporation
Australia

Arowana International Limited

Australia

Elite Education Holdings Limited

D&A Education Holdings Limited
Commercial Diver Training Limited
NZSCDT Holdings Limited
Design and Arts College of New
Zealand Limited
Elite International School of Beauty
and Spa Therapies Limited

NZ
NZ
NZ
NZ
NZ

Relationship
Immediate
parent
Ultimate
Holding
Company
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary

NZ

Subsidiary

Global Education Group Limited

NZ

Subsidiary

NZ School of Outdoor Studies Limited

NZ

Subsidiary

The Cut Above Academy Limited

NZ

Subsidiary

Activities
Funds received and advanced
Management fees

Funds received and advanced

Funds received and advanced
Funds received and advanced
Funds received and advanced
Funds received and advanced;
management fees
Funds received and advanced;
management fees
Funds received and advanced;
management fees
Funds received and advanced;
management fees
Funds received and advanced;
management fees

138

Intueri Education Group Limited and its controlled entities

Notes to the Financial Statements
For the 9 month period ended 30 June 2013
31.

Related parties (continued)

Total amounts receivable and payable to related parties are stated in notes 16 and 21 respectively. The
amounts outstanding are unsecured, and repayable on demand. No interest is payable or receivable on
amounts owing between the Company and its subsidiaries. No guarantees have been given or received.
Amounts owing between the NZ Group and its Australian parent and fellow company are commercial
transactions administered through Accounts Receivable and Payable sub-ledgers.
Transactions with related parties
Management fees of $488,228 were paid to Arowana International Limited (AWN). AWN invoiced
$24,106 towards expenses incurred by AWN on behalf of the Company. $184,690 was payable to AWN as at
30 June 2013.
The Company invoiced $3,226 to AWN towards expenses incurred by the Company on behalf of AWN.
$3,226 was receivable from AWN as at 30 June 2013.
Transactions with fellow subsidiaries
During the period, the Company raised invoices of $924,967 to fellow subsidiaries to recover operating
costs incurred by the Company. $3,059 was receivable by the Company from fellow subsidiaries as at 30
June 2013.

139

Intueri Education Group Limited and its

controlled entities
Condensed Interim Financial Statements
for the six months ended 31 December 2013

140

Intueri Education Group Limited and its controlled entities

Table of Contents

Content

Page No

Directors Declaration

142

Company Directory

143

Independent Auditors Report

144

Condensed Statement of Comprehensive Income

146

Condensed Statement of Changes in Equity

147

Condensed Statement of Financial Position

149

Condensed Statement of Cash Flows

150

Notes to the Financial Statements

151

141

Intueri Education Group Limited and its controlled entities

Directors Declaration

In the opinion of the Directors of Intueri Education Group Limited (the Company), the financial statements
and notes, on pages 146 to 159:
comply with New Zealand generally accepted accounting practice and give a true and fair view of the
Consolidated Financial Position of the Company as at 31 December 2013 and the results of operations for
the six months ended on that date;
have been prepared using the appropriate accounting policies, which have been consistently applied and
supported by reasonable judgements and estimates.
The Directors believe that proper accounting records have been kept which enable, with reasonable accuracy,
the determination of the Consolidated Financial Position of the Company and facilitate compliance of the
financial statements with IAS 34 Interim Financial Reporting.
The Directors consider that they have taken adequate steps to safeguard the assets of the Company and its
controlled entities, and to prevent and detect fraud and other irregularities. Internal control procedures are
also considered to be sufficient to provide reasonable assurance as to the integrity and reliability of the
financial statements.
The Board of Directors are pleased to present the condensed interim financial statements of Intueri Education
Group Limited and its controlled entities for six months ended 31 December 2013 and the independent
auditors report thereon.

Approved for and on behalf of the Board of Directors.

Kien Kwan

..
Glen Dobbie

Director

Director

Date: 28 March 2014

Date: 28 March 2014

142

Intueri Education Group Limited and its controlled entities

COMPANY DIRECTORY

Registered Office

100 Symonds Street, Grafton,

Auckland 1010, New Zealand

Directors

Kevin Tser Fah Chin (Appointed: 4 April 2013)

David Malcolm Keefe (Appointed: 4 April 2013)
John Colinton Moore (Appointed: 4 April 2013)
Kien Khan Kwan (Appointed: 4 April 2013)
Glen William Dobbie (Appointed: 18 July 2013)
Paul Welch (Appointed: 4 April 2013, Ceased: 21 August 2013)
Adam Berry (Appointed: 4 April 2013, Ceased: 8 August 2013)
Andrew Chou (Appointed: 17 September 2012: Ceased: 5 June 2013)

Company No:

4013538

Auditors

BDO Auckland
120 Albert Street, Auckland

Bankers

ANZ

Solicitors

Minter Ellison

Date of Formation

17 September 2012

Nature of Business

Investment in private training establishments

Shareholders

Intueri Education Holdings Pty Limited

143

Intueri Education Group Limited and its controlled entities

AUDITORS REPORT
BDO AUCKLAND

INDEPENDENT AUDITORS REPORT

TO THE SHAREHOLDERS OF

Biography

INTUERI EDUCATION GROUP LIMITED

Report on the Financial Statements

We have audited the condensed interim financial statements of Intueri Education Group Limited
(the Company) and its subsidiaries (together, the Group) on pages 146 to 159, which comprise
the condensed statement of financial position of the Company and the Group as at 31 December
2013, and the condensed statement of comprehensive income, condensed statement of changes in
equity and condensed statement of cash flows for the six month period then ended of the Company
and the Group, and a summary of significant accounting policies and other explanatory information.
Directors Responsibility for the Condensed Interim Financial Statements
The directors are responsible for the preparation of the condensed interim financial statements in
accordance with generally accepted accounting practice in New Zealand and that give a true and
fair view of the matters to which they relate, and for such internal control as the directors
determine is necessary to enable the preparation of condensed interim financial statements that
are free from material misstatement, whether due to fraud or error.
Auditors Responsibility
Our responsibility is to express an opinion on the condensed interim financial statements based on
our audit. We conducted our audit in accordance with International Standards on Auditing (New
Zealand). These auditing standards require that we comply with relevant ethical requirements and
plan and perform the audit to obtain reasonable assurance about whether the condensed interim
financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the condensed interim financial statements. The procedures selected, depend on our
judgement, including the assessment of the risks of material misstatement of the condensed
interim financial statements, whether due to fraud or error. In making those risk assessments, we
have considered the internal control relevant to the entitys preparation of the condensed interim
financial statements that give a true and fair view of the matters to which they relate 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 entitys internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of accounting
estimates, as well as evaluating the overall presentation of the condensed interim financial
statements.
We believe we have obtained sufficient and appropriate audit evidence to provide a basis for our
audit opinion.
In addition to audit services, our firm provides other services in the areas of taxation and corporate
finance. We have no other relationship, or interest in, Intueri Education Group Limited or any of its
subsidiaries.

144

Intueri Education Group Limited and its controlled entities

AUDITORS REPORT
BDO AUCKLAND

Opinion
In our opinion, the financial statements on pages 146 to 159:
comply with generally accepted accounting practice in New Zealand as it relates to interim
financial statements;
comply with IAS 34 Interim Financial Reporting; and
give a true and fair view of the matters to which they relate.

Biography

Report on Other Legal and Regulatory Requirements

In accordance with the Financial Reporting Act 1993, we report that:
We have obtained all the information and explanations that we have required.
In our opinion proper accounting records have been kept by the Group as far as appears from
our examination of those records.

BDO Auckland
28 March 2014
120 Albert Street
Auckland
New Zealand

145

Intueri Education Group Limited and its controlled entities

Condensed Statement of Comprehensive Income
For the six months ended 31 December 2013

Note
Revenue
Other income
Total revenue

Cost of sales
Employee expenses
Occupancy expenses
Marketing expenses
Insurance costs
IT and communication costs
Travel costs
Depreciation and amortisation expenses
Administrative expenses
Operating profit before net finance costs
Finance income
Finance expense
Net finance cost
Profit / (loss) before income tax
Income tax benefit
Profit / (loss) for the period attributable
to the owners of the Company
Other comprehensive income
Other comprehensive income for the period, net of
tax
Total comprehensive income for the period
attributable to the owners of the Company
Earnings per share attributable to the
ordinary equity holders of the parent
Basic (cents)
Diluted (cents)

6
6

Group
For six months
ended 31 Dec
2013

Company
For six months
ended 31 Dec
2013

Company
For period
ended 31
Dec 2012

11,659,896
5,428,217
17,088,113

1,662,581
1,662,581

(3,186,560)
(5,656,220)
(2,354,272)
(419,564)
(78,918)
(222,808)
(337,954)
(2,398,901)
(1,721,384)

(367,089)
(109,145)
(7,114)
(197,602)
(662)
(1,287,219)

(169)

711,532

(306,250)

(169)

30,957
(642,342)
(611,385)

18,667
(632,667)
(614,000)

10,198
(3)
10,195

100,147
94,129

(920,250)
13,234

10,026
-

194,276

(907,016)

10,026

194,276

(907,016)

10,026

0.94
0.94

The above statements should be read in conjunction with the notes to and forming part of the financial
statements

146

Intueri Education Group Limited and its controlled entities

Condensed Statement of Changes in Equity
For six months ended 31 December 2013
Share
Capital

Retained
earnings

Total
Equity

20,601,514

491,485

21,092,999

Comprehensive income for the period

Profit for the period
Other comprehensive income
Total comprehensive income for the period

194,276

194,276

194,276

194,276

Transactions with owners, recorded directly in

equity
Issue of shares

Total transactions with owners, recorded

directly in equity

20,601,514

685,761

21,287,275

Share
Capital

Retained
earnings

Total
Equity

20,601,514

(166,220)

20,435,294

(907,016)
-

(907,016)
-

(907,016)

(907,016)

20,601,514

(1,073,236)

19,528,278

Group

Note

Balance as at 1 July 2013

Balance as at 31 December 2013

Parent
Balance as at 1 July 2013
Comprehensive income for the period
Profit/(loss) for the period
Other comprehensive income
Total comprehensive income/(loss) for the
period
Transactions with owners, recorded directly in
equity
Issue of shares
Total transactions with owners, recorded
directly in equity
Balance as at 31 December 2013

Note

The above statements should be read in conjunction with the notes to and forming part of the financial
statements

147

Intueri Education Group Limited and its controlled entities

Condensed Statement of Changes in Equity
For six months ended 31 December 2013
Share
Capital

Retained
earnings

Total
Equity

Balance as at 1 July 2012

Comprehensive income for the period

Profit for the period
Other comprehensive income
Total comprehensive income for the period

10,026
10,026

10,026
10,026

Parent

Note

Transactions with owners, recorded directly in

equity
Issue of shares
Total transactions with owners, recorded
directly in equity

20,601,514

20,601,514

20,601,514

20,601,514

Balance as at 31 December 2012

20,601,514

10,026

20,611,540

148

Intueri Education Group Limited and its controlled entities

Condensed Statement of Financial Position
As at 31 December 2013
Group
31 Dec 2013

Group
30 June 2013

Company
31 Dec 2013

Company
30 June 2013

2,515,980
11,741,407
3,284,643
17,542,030

4,495,411
12,077,619
3,067,673
19,640,703

875,290
1,703,717
4,431,283
7,010,290

2,092,721
6,285
4,100,964
6,199,970

9
10
11

7,963,667
38,308,985
22,196
46,294,848
63,836,878

6,934,604
40,346,704
149,868
47,431,176
67,071,879

13,333
40,516,792
13,234
40,543,359
47,553,649

40,516,791
40,516,791
46,716,761

12

17,092,130
(62,783)

18,636,186
641,557

7,685,303
(14,771)

5,251,013
(9,546)

13

3,150,000
513,884
20,693,231

2,362,500
336,704
21,976,947

3,150,000
102,339
10,922,871

2,362,500
7,603,967

13
14

17,102,500
4,753,872
21,856,372
42,549,603

18,677,500
5,324,433
24,001,933
45,978,880

17,102,500
17,102,500
28,025,371

18,677,500
18,677,500
26,281,467

15

20,601,514
685,761
21,287,275
63,836,878

20,601,514
491,485
21,092,999
67,071,879

20,601,514
(1,073,236)
19,528,278
47,553,649

20,601,514
(166,220)
20,435,294
46,716,761

Note
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Other current assets
Total current assets
Non-current assets
Property, plant & equipment
Intangible assets
Investments
Deferred tax asset
Total non-current assets
Total assets
Liabilities
Current Liabilities
Trade and other payables
Income tax payable
Interest bearing loans
Employee benefits
Total current liabilities
Non-current liabilities
Interest bearing loans
Deferred tax liability
Total non-current liabilities
Total liabilities
Equity
Share capital
Retained earnings
Total equity
Total equity and liabilities

7
8

Approved for and on behalf of the board of directors.

_______________
Director
Date: 28 March 2014

________________________
Director

The above statements should be read in conjunction with the notes to and forming part of the financial
statements

149

Intueri Education Group Limited and its controlled entities

Condensed Statement of Cash Flows
For six months ended 31 December 2013
Group
For six months
ended 31 Dec
2013

Company
For six months
ended 31 Dec
2013

Company
For period
ended 31 Dec
2012

19,309,366
(10,249,987)
(5,943,630)
(1,053,100)
(1,252,614)
30,957

214,536
(2,128,906)
(264,750)
(5,226)
235,984
18,667

(169)
7,343

840,992

(1,929,695)

7,174

(1,494,733)
104,152
(1,390,581)

(13,995)
(13,995)

(787,500)
(642,342)

(787,500)
(293,876)
2,440,302
(632,667)

4,002,367
(3)

(1,429,842)

726,259

4,002,364

(1,979,431)

(1,217,431)

4,009,538

Cash and cash equivalents at the beginning of

the period

4,495,411

2,092,721

Cash and cash equivalents at the end of the

period

2,515,980

875,290

4,009,538

Note
Cash flows from operating activities
Receipts from customers
Payments to suppliers
Payments to employees
Income tax paid
Net GST paid
Interest received
Net cash inflow / (outflow) from operating
activities
Cash flows from investing activities
Purchase of property, plant & equipment
Sale of property, plant and equipment
Net cash outflow from investing activities
Cash flows from financing activities
Issue of shares
Repayment of borrowings
Loans to related parties
Loans from related parties
Interest paid
Net cash inflow / (outflow) from financing
activities
Cash increase / (decrease) in cash and cash
equivalents

The above statements should be read in conjunction with the notes to and forming part of the financial
statements

150

Intueri Education Group Limited and its controlled entities

Notes to the Financial Statements
For the six month period ended December 31 2013
1.
Reporting entity
Intueri Education Group Ltd (the Company) is a company incorporated and domiciled in New Zealand,
registered under the Companies Act 1993, and a reporting entity for the purposes of the Financial Reporting
Act 1993. The financial statements of the Company have been prepared in accordance with the Financial
Reporting Act 1993.
The Company and its subsidiaries comprise the Intueri Education Group (the Group).
The condensed interim financial statements for the Company and consolidated financial statements for the
Group are presented for six months ended 31 December 2013. The Company was incorporated on
17 September 2012 so the comparative period for the Company is for 3 months. There is no comparative
period for the Group as all the acquisitions were made during 2013.
The Companys principal activity is investment in private training establishments and the Groups principal
activity is the provision of private training tuition.
2.
Basis of preparation
The preparation of interim consolidated financial statements in compliance with IAS 34 requires the use of
certain critical accounting estimates. It also requires Group management to exercise judgment in applying
the Group's accounting policies. The areas where significant judgments and estimates have been made in
preparing the financial statements and their effect are disclosed in note 3.
The Group has applied the same accounting policies and methods of computation in its condensed interim
financial statements as in its financial statements for period ended 30 June 2013.
These financial statements do not include all the information required for a complete set of NZ IFRS
financial statements. However, selected explanatory notes are included to explain events and transactions
that are significant to an understanding of the changes in the Companys financial position and performance
since the last annual financial statements as at and for the period ended 30 June 2013.
3.
Use of estimates and judgements
There have been no material revisions to the nature and amounts of changes in estimates of amounts
reported in the financial statements for period ended 30 June 2013.

Group
For six months
ended 31 Dec
2013
4.

5.

Other income
TEC and Youth Guarantee Funding
Management fees
Other income

4,741,168
687,049
5,428,217

Company
For six months
ended 31 Dec
2013

Company
For period
ended 31 Dec
2012

1,591,787
70,794
1,662,581

Segment information
In accordance with NZ IRFS 8 Operating Segments, the Company has determined that it satisfies the
criteria to allow the reporting of one operating segment. This is based on the information received by
the Board of Directors to make resource allocation decisions, and on the basis that each of Intueris
151

Intueri Education Group Limited and its controlled entities

Notes to the Financial Statements
For the six month period ended December 31 2013
business channels has similar economic and regulatory characteristics and similar services are
provided. Intueri sole operating segment is education services in New Zealand.
Group
2013
6.

Earnings per share

Basic earnings per share attributable to the ordinary equity holders of the Company
(cents)
Diluted earnings per share attributable to the ordinary equity holders of the
Company (cents)
Numerator
Profit attributable to the ordinary equity holders of the Company used in calculating
basic and diluted earnings per share
Denominator
Weighted average number of ordinary shares used as a denominator in calculating
basic earnings per share (numbers)
Weighted average number of ordinary shares used as a denominator in calculating
diluted earnings per share (numbers)

7.

0.94
0.94

194,276

20,601,514

20,601,514

Group
31 Dec
2013

Group
30 June
2013

Company
31 Dec
2013

Company
30 June
2013

51,969
11,689,438
11,741,407

48,416
12,029,203
12,077,619

1,703,717
1,703,717

6,285
6,285

Trade and other receivables

Trade receivables
Funds held in Public Trust

Funds held in Public Trust represent the unexpired portion of fees paid in advance by students that the
Group will receive over the duration of the course.
8.

Other current assets

Prepayments
Related party loans (Note 17)
Interest receivable
(a)
Retention in trust
Other receivables

277,323
2,800,000
207,320
3,284,643

134,003
63,183
2,800,000
70,487
3,067,673

32,543
1,585,662
2,800,000
13,078
4,431,283

6,135
1,291,786
2,800,000
3,043
4,100,964

(b) Retention in trust relates to amounts held in trust by vendors solicitors towards the acquisition of The Global
Education Group Limited, The Cut Above Academy Limited and New Zealand School of Outdoor Studies Limited.

9.

Property, plant and equipment

Security
152

Intueri Education Group Limited and its controlled entities

Notes to the Financial Statements
For the six month period ended December 31 2013
Group

Leasehold
improvements

Plant &
equipment

Computer
equipment

Office
equipment

Furniture
& fixtures

Motor
vehicle

Total

8,831,103

3,416,454

464,050

349,561

1,316,421

246,630

14,624,219

Reclassification

59,878

(478,886)

479,206

(63,941)

(3,743)

Additions

19,650

33,918

10,010

1,507

7,329

72,414

Cost
Opening balance
Acquired through business
combination

Disposals

(58,755)

(58,755)

As at 30 June 2013

8,910,631

2,971,486

474,060

830,274

1,259,809

187,875

14,634,135

As at 1 July 2013

8,910,631
117,389

2,971,486
1,023,171

474,060
220,898

830,274
13,521

1,259,809
38,356

187,875
4,778

14,634,135
1,418,113

(104,152)

(104,152)

9,028,020

3,994,657

694,958

843,795

1,298,165

88,501

15,948,096

4,324,036

1,292,451

437,291

296,289

832,265

194,951

7,377,283

39,998

(243,751)

245,670

(45,054)

(3,137)

245,526

79,461

5,260

18,199

31,808

3,886

384,140

(58,755)

(58,755)

As at 30 June 2013

4,609,560

1,128,161

442,551

560,158

819,019

140,082

7,699,531

As at 1 July 2013
Depreciation during
the period
Depreciation reversal
during the period

4,609,560

1,128,161

442,551

560,158

819,019

140,082

7,699,531

199,793

87,708

26,840

17,053

32,153

2,135

365,682

(80,785)

(80,785)

As at 31 Dec 2013

4,809,353

1,215,869

469,391

577,211

851,172

61,432

7,984,428

As at 30 June 2013

4,301,071

1,843,325

31,509

270,116

440,790

47,793

6,934,604

As at 31 Dec 2013

4,218,667

2,778,788

225,567

266,584

446,993

27,069

7,963,667

Additions
Disposals
As at 31 Dec 2013

Accumulated depreciation
Opening balance
Acquired through business
combination
Reclassification
Depreciation during the
period
Depreciation reversal
during the period

Net book value

As at 31 December 2013, fixed assets are subject to a first mortgage to secure the ANZ term debt.

153

Intueri Education Group Limited and its controlled entities

Notes to the Financial Statements
For the six month period ended December 31 2013
9.

Property, plant and equipment (continued)

Company

Leasehold
improvements

Plant &
equipment

Computer
equipment

Office
equipment

Furniture
&
fixtures

Motor
vehicle

As at 1 July 2013

Additions

Disposals

As at 31 Dec 2013

As at 1 July 2013
Depreciation for
the period

Total

13,995

13,995

13,995

13,995

662

662

As at 31 Dec 2013

662

662

Net book value

13,333

13,333

Cost

Accumulated depreciation

The Company has no fixed assets as at 30 June 2013.

154

Intueri Education Group Limited and its controlled entities

Notes to the Financial Statements
For the six month period ended December 31 2013
10.

Intangible assets

Group

Goodwill

Agents
relationships

Course
materials

Brand
names

Noncompete

Total

21,230,873

5,208,103

7,217,197

4,651,880

3,511,164

41,819,217

21,230,873

5,208,103

7,217,197

4,651,880

3,511,164

41,819,217

21,230,873
21,230,873

5,208,103
5,208,103

7,217,197
7,217,197

4,651,880
4,651,880

3,511,164
3,511,164

41,819,217
41,819,217

Accumulated amortisation and impairment

Opening balance
Amortisation for the period
As at 30 June 2013
-

576,781
576,781

516,559
516,559

379,173
379,173

1,472,513
1,472,513

576,781
780,468
1,357,249

516,559
717,569
1,234,128

379,173
539,682
918,855

1,472,513
2,037,719
3,510,232

21,230,873
21,230,873

4,631,322
3,850,854

6,700,638
5,983,069

4,651,880
4,651,880

3,131,991
2,592,309

40,346,704
38,308,985

Cost
Opening balance
Acquired through business
combinations
As at 30 June 2013
As at 1 July 2013
Additions
As at 31 Dec 2013

As at 1 July 2013
Amortisation for the period
Impairment
As at 31 Dec 2013
Net book value
As at 30 June 2013
As at 31 Dec 2013

The goodwill has been stated at gross carrying value. Goodwill represents the consideration paid for
acquisition of various entities in excess of their respective net assets and identified intangible assets. There
was no impairment of goodwill during 6 months ended 31 December 2013.
Brand names have been estimated to have an infinite life due to the following:
- The colleges acquired have been in existence for a period ranging from 12 years to 21 years and have
historically displayed a strong brand name and presence in the market; and
- Intueri intends to continue using individual brand names for the purpose of marketing
The fair value of agent relationships and non-compete agreements were calculated using the excess
earnings method. Whereas the relief from royalty method was utilised in calculating the fair value of course
materials and brand names.
The following were the key assumptions in estimating the fair value of intangible assets:
Discount rate in the range of 9% to 10%
Contributory asset charges (after tax) in the range of 0.5% to 2.0%
Royalty stream in the range of 5% to 7%
Non-compete period based on the relevant agreements
EBITDA growth rate in the range of 3% to 5% in the next 5 years
Terminal EBITDA growth rate of 3%
There are no intangible assets at a Company level for the current and prior period.

155

Intueri Education Group Limited and its controlled entities

Notes to the Financial Statements
For the six month period ended December 31 2013

11.

Group
30 June
2013

Company
31 Dec
2013

Company
30 June
2013

9,394,310

9,394,310

3,641,704

3,641,704

14,436,266

14,436,266

8,645,492

8,645,492

2,292,435

2,292,435

2,106,584

2,106,584

40,516,792

40,516,791

1,473,362
1,317,032
11,262,606
2,800,000
239,130
17,092,130

1,085,780
1,790,631
11,940,782
2,800,000
239,130
779,863
18,636,186

767,872
312,578
2,800,000
3,804,853
7,685,303

209,867
96,732
2,800,000
779,863
1,364,551
5,251,013

Investments
Investment in Elite Education (acquisition
date: 8 Feb 2013)
Investment in Design and Arts College
(acquisition date: 8 Feb 2013)
Investment in Global Education Group
(acquisition date: 12 Feb 2013)
Investment in The Cut Above Academy
(acquisition date: 22 Feb 2013)
Investment in NZSOS (acquisition date: 28
March 2013)
Investment in NZSCDT Holdings
(incorporation date: 18 Oct 2012)
Investment in Commercial Diver Training
Limited (incorporation date: 1 July 2013)

12.

Group
31 Dec
2013

Trade and other payables

Trade creditors
Other payables
Income received in advance (a)
Retention payable (b)
TEC clawback (c)
Due to vendors of subsidiaries
Related party payables (Note 17)

(a) Income received in advance relates to amounts in Public Trust account (refer note 7). These amounts will be
recognised as revenue over the duration of the courses.
(b) Retention payable relates to amounts held in trust by vendors solicitors towards the acquisition of The Global
Education Group Limited, The Cut Above Academy Limited and New Zealand School of Outdoor Studies Limited
(refer note 8). Retention amount (subject to any claims) is payable to the vendors at the end of the retention
period.
(c) Relates to a probable TEC clawback liability for Elite International for the year ended 31 December 2012.

156

Intueri Education Group Limited and its controlled entities

Notes to the Financial Statements
For the six month period ended December 31 2013

13.

Group
31 Dec
2013

Group
30 June
2013

Company
31 Dec
2013

Company
30 June
2013

3,150,000
17,102,500
20,252,500

2,362,500
18,677,500
21,040,000

3,150,000
17,102,500
20,252,500

2,362,500
18,677,500
21,040,000

Interest-bearing loan
Current
Non-current

Interest-bearing loan relates to the term debt with ANZ. The loan is secured by a fixed and floating charge
over the assets of Intueri Education Group Limited and its subsidiaries. The term debt has a floating interest
rate of 5.85% as at 31 December 2013. The term debt is repaid on a monthly repayment of $262,500.
14.

Deferred tax liability

Opening balance
Current period movement

5,324,433
(570,561)
4,753,872

5,324,433
5,324,433

Deferred tax liabilities are attributable to identified intangible assets. The reversal of deferred tax liability of
$570,561 relates to tax reversal on amortisation of identified intangible assets of $2,037,719.
15.

Share capital
Ordinary shares

20,601,514

20,601,514

20,601,514

20,601,514

At 31 December 2013, share capital comprised 20,601,514 authorised and issued ordinary shares. All
issued shares are fully paid and have no par value.
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, and rank equally with regard to the Companys
residual assets on winding up.
16.

Contingent liabilities

There are no contingent liabilities.

157

Intueri Education Group Limited and its controlled entities

Notes to the Financial Statements
For the six month period ended December 31 2013
17.

Related parties

a.

Parent and ultimate controlling entity

The immediate parent of Intueri Education Group Limited is Intueri Education Group Pty Limited, an
Australian privately owned entity. The ultimate controlling party is Arowana International Limited,
an Australian domiciled entity listed on the Australian Securities Exchange.

b.

Commercial Diver Training Limited was incorporated on 1 July 2013.

c.

Identity of related parties with whom material transactions have occurred:

Entity name

Country of
incorporation

Intueri Education Group Pty Limited

Australia

Arowana International Limited

Australia

Elite Education Holdings Limited

D&A Education Holdings Limited
Commercial Diver Training Limited
NZSCDT Holdings Limited
Design and Arts College of New
Zealand Limited
Elite International School of Beauty
and Spa Therapies Limited
Global Education Group Limited

Relationship

Activities
Funds received and advanced

NZ
NZ
NZ
NZ
NZ

Immediate
parent
Ultimate Holding
Company
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary

NZ

Subsidiary

NZ

Subsidiary

NZ School of Outdoor Studies Limited

NZ

Subsidiary

The Cut Above Academy Limited

NZ

Subsidiary

Management fees
Funds received and advanced
Funds received and advanced
Funds received and advanced
Funds received and advanced
Funds received and advanced;
management fees
Funds received and advanced;
management fees
Funds received and advanced;
management fees
Funds received and advanced;
management fees
Funds received and advanced;
management fees

Total amounts receivable and payable to related parties are stated in notes 8 and 12 respectively. The
amounts outstanding are unsecured, and repayable on demand. No interest is payable or receivable on
amounts owing between the company and its subsidiaries. No guarantees have been given or received.
Amounts owing between the NZ Group and its Australian parent and fellow company are commercial
transactions administered through Accounts Receivable and Payable sub-ledgers.
Transactions with related parties
Management fees of $957,221 were paid to Arowana International Limited (AWN). AWN invoiced
$143,077 towards expenses incurred by AWN on behalf of the Company. $717,194 was payable to AWN as
at 31 December 2013 (30 June 2013 - $184,690).
The Company invoiced $29,991 to AWN towards expenses incurred by the Company on behalf of AWN.
$33,217 was receivable from AWN as at 31 December 2013 (30 June 2013 - $3,226).
Transactions with fellow subsidiaries
During the period, the Company raised invoices of $1,591,787 to fellow subsidiaries to recover operating
costs incurred by the Company. $1,670,500 was receivable by the Company from fellow subsidiaries as at
31 December 2013 (30 June 2013 - $3,059).

158

Intueri Education Group Limited and its controlled entities

Notes to the Financial Statements
For the six month period ended December 31 2013
18.
a.

Events post balance date

The Company incorporated a new subsidiary named Intueri Materials Limited on 13 February 2014.

b.

On 17 February 2014, Intueri signed a conditional agreement to purchase all the shares of Quantum
Education Group Limited and the business and assets of LearnTree Limited. The acquisition
conditions have different dates by which they must be satisfied for the acquisition to proceed, with
the latest being 30 June 2014. The price of the acquisition will be finalised via an earnings based
formula and is estimated to be in the range of $56m to $62m.

c.

On 3 March 2014, Intueri signed a conditional agreement to purchase a 50% controlling interest in
Online Courses Australia Pty Limited (OCA). The acquisition of OCA is expected to be completed by
31 March 2014 subject to fulfilment of number of conditions. The price of acquisition will be finalised
via an earnings based formula and will include an earn-out component. The total acquisition price is
expected to be between A$2.25m and $4.0m. The upfront consideration will be A$2.25m while the
earn-out component may be up to an additional A$1.75m.

159

QUANTUM EDUCATION GROUP LIMITED

ANNUAL REPORT
FOR THE YEAR ENDED 31 DECEMBER 2013

BUSINESS PROFILE....................................................................................................................... 161

DIRECTORS REPORT .................................................................................................................... 162
STATEMENT OF COMPREHENSIVE INCOME ........................................................................................ 163
STATEMENT OF CHANGES IN EQUITY ............................................................................................... 164
STATEMENT OF FINANCIAL POSITION ............................................................................................... 165
NOTES TO THE FINANCIAL STATEMENTS ........................................................................................... 166
INDEPENDENT AUDITOR'S REPORT .................................................................................................. 185

160

BUSINESS PROFILE
QUANTUM EDUCATION GROUP LIMITED

PAID UP CAPITAL:
REGISTERED OFFICE AND
BUSINESS ADDRESS:

2,000 shares

7A William Pickering Drive

Albany
Auckland

PRINCIPAL BUSINESS:

Private Training Provider

SHAREHOLDERS:

R Gordon
A J McLeod
L J W Day
J Clemons
C F Price

DIRECTORS:

R Gordon (Chairman)
A J McLeod
L J W Day

BANKERS:

ANZ Bank New Zealand Limited

Wairau Road
Glenfield

SOLICITORS:

Collins & May

Lower Hutt
Wellington

INDEPENDENT AUDITORS:

BDO Auckland

ACCOUNTANTS:

Munro Benge Chartered Accountants Limited

104 The Terrace
Wellington

520 shares
520 shares
520 shares
340 shares
100 shares

161

DIRECTORS REPORT
FOR THE YEAR ENDED 31 DECEMBER 2013

The Directors present their annual report including Financial Statements of the group for
the year ended 31 December 2013.

FINANCIAL RESULTS

Net profit after tax

GROUP

PARENT

2013

2012

2013

2012

$2,235,935

$2,512,679

$2,626,088

$2,840,321

The Directors consider the 12 months operations and the state of the companys affairs to
be satisfactory.
NATURE OF BUSINESS: The business of the company is training (computers, travel & tourism,
counselling, flight and culinary).
DIVIDENDS DECLARED: Net dividends of $4,645,793 were declared and paid to shareholder
current accounts for the year ended 31 December 2013. (2012: $3,400,848).
The shareholders have passed a resolution pursuant to section 211(3) of the Companies Act
1993 that the annual report of the company for the year ended 31 December 2013 need
not comply with any of paragraphs (a) and (e) to (j) of section 211(1) and 211(2) of the
Companies Act 1993.
AJ McLeod, R Gordon and LJW Day were the only Directors who held office during the year.

For and on behalf of the Board

Robert Gordon, Director

Alan John McLeod, Director

Date 28 March 2014
162

QUANTUM EDUCATION GROUP LIMITED

STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2013
GROUP
NOTE

28,018,177

2012
NZ$
(Restated)
27,886,473

25,877,434

2012
NZ$
(Restated)
25,312,729

Cost of Sales

9,558,699

9,765,752

8,892,106

8,991,437

GROSS MARGIN

18,459,478

18,120,721

16,985,328

16,321,292

2,622,242
15,102
1,681,244
1,597,685
8,951,145
532,424
-

2,460,175
10,926
1,661,266
1,595,774
8,317,866
582,960
3,958
-

2,217,000
11,052
1,595,379
1,109,689
7,399,036
531,874
1,056,418

1,963,840
8,476
1,554,238
1,141,583
6,771,918
580,675
3,958
879,124

15,399,842

14,632,925

13,920,448

12,903,812

3,059,636

3,487,796

3,064,880

3,417,480

823,701

975,117

438,792

577,159

2,235,935

2,512,679

2,626,088

2,840,321

2,235,935

2,512,679

2,626,088

2,840,321

REVENUE

Admin Costs
Academic Costs
Marketing Costs
Occupancy Costs
Personnel Costs
Other Expenses
Finance Costs
Subvention Expense
TOTAL EXPENSES
COMPREHENSIVE INCOME
BEFORE TAXATION

Income Tax Expense

2013
NZ$

PARENT
2013
NZ$

PROFIT FOR YEAR

ATTRIBUTABLE TO EQUITY
HOLDERS

OTHER COMPREHENSIVE
INCOME

TAX EXPENSE RELATING TO

OTHER COMPREHENSIVE
INCOME

OTHER COMPREHENSIVE
INCOME NET OF TAX
TOTAL COMPREHENSIVE
INCOME ATTRIBUTABLE TO
EQUITY HOLDERS

163

QUANTUM EDUCATION GROUP LIMITED

STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2013

NOTE

GROUP
2013
NZ$

PARENT

5,510,716

2012
NZ$
(Restated)
7,946,929

151,956

5,510,716

8,098,885

4,195,273

6,455,800

OTHER COMPREHENSIVE INCOME

TOTAL COMPREHENSIVE INCOME

2,235,935

2,512,679

2,626,088

2,840,321

(4,645,793)

(5,100,848)

(4,645,791)

(5,100,848)

3,100,858

5,510,716

2,175,570

4,195,273

EQUITY AT THE START OF THE PERIOD

PRIOR PERIOD ADJUSTMENT

23

RESTATED EQUITY

DISTRIBUTIONS TO OWNERS
EQUITY AT THE END OF THE PERIOD

17(a)

2013
NZ$
4,195,273

2012
NZ$
(Restated)
6,314,939
140,861

164

QUANTUM EDUCATION GROUP LIMITED

STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2013
GROUP
NOTE
CURRENT ASSETS
Cash & Cash Equivalents
Loans and Receivables
Funding Loans
Current Accounts
Income Tax Refund
Inventory
NON-CURRENT ASSETS
Property, Plant &
Equipment
Intangibles
Investments in
Subsidiaries

TOTAL ASSETS
CURRENT LIABILITIES
Trade Creditors
Other Creditors
Provisions
Current Accounts
Income Tax Payable

6
7
8
12

3,657,517
8,216,444
263,761
52,623
12,190,345

2012
NZ$
(Restated)
4,317,933
10,546,823
481,763
15,346,519

2,491,234

2,276,756

1,857,201

1,751,701

10
15

202,992
-

229,831
-

202,992
100,881

229,831
100,881

2,694,226

2,506,587

2,161,074

2,082,413

14,884,571

17,853,106

12,929,614

15,059,438

834,519
7,771,576
626,245
2,452,462
98,911
11,783,713

1,446,856
9,953,862
619,459
24,540
297,673
12,342,390

812,512
7,550,525
626,245
1,764,762
10,754,044

1,428,408
8,666,652
619,549
149,556
10,864,165

11,783,713

12,342,390

10,754,044

10,864,165

3,100,858

5,510,716

2,175,570

4,195,273

2,000
3,098,858
3,100,858

2,000
5,508,716
5,510,716

2,000
2,173,570
2,175,570

2,000
4,193,273
4,195,273

13
14
12

TOTAL LIABILITIES
NET ASSETS
SHAREHOLDERS FUNDS
Share Capital
Retained Earnings
TOTAL EQUITY

17
17(a)

2013
NZ$

PARENT
2013
NZ$
3,216,726
7,175,765
263,761
59,665
52,623
10,768,540

2012
NZ$
(Restated)
1,143,011
10,689,091
481,763
663,160
12,977,025

The Financial Statements have been authorised by the Directors:

Robert Gordon, Director

Date 28 March 2014

Alan John McLeod, Director

165

QUANTUM EDUCATION GROUP LIMITED

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
1.

SUMMARY OF ACCOUNTING POLICIES

Statement of Compliance
Quantum Education Group Limited is registered under the Companies Act 1993.The
company is a reporting entity for the purposes of the Financial Reporting Act 1993.
The financial statements have been prepared in accordance with the Financial
Reporting Act 1993. The principal business of the company is training (computers,
travel & tourism, counselling, flight and culinary).
The companys owners do not have the power to amend these financial statements
once they have been issued.
These financial statements have been prepared in accordance with generally
accepted accounting practice in New Zealand. They comply with the New Zealand
Equivalents to International Financial Reporting Standards (NZ IFRS) and other
applicable Financial Reporting Standards as appropriate to profit-orientated entities
that qualify for and apply differential reporting concessions. For this purpose the
company has designated itself as profit-orientated and is domiciled in New Zealand.
The financial statements were authorised for issue by the Directors on 28 March
2014
Measurement Base
The company follows the accounting principles recognised as appropriate for the
measurement and reporting of earnings and financial position on a historical cost
basis.
The Company and Group qualify for differential reporting exemptions as they are
not publicly accountable and there is no separation between the owners and the
governing body. The Company and Group have taken advantage of all available
differential reporting exemptions except for:
NZ IAS 18 Revenue Accounting for GST on an inclusive basis
Presentation Currency
The financial statements are presented in New Zealand dollars, rounded to the
nearest dollar.
SPECIFIC ACCOUNTING POLICIES
The following specific accounting policies have been adopted in the preparation and
presentation of the financial statements:

166

QUANTUM EDUCATION GROUP LIMITED

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013 (continued)
(a)

Consolidation
The Group financial statements are prepared by combining the financial
statements of all the entities that comprise the Group, being Quantum
Education Group Limited (the parent entity) and its subsidiaries Quantum
Education Group QT Limited and Quantum Education Group ES Limited.
Subsidiaries are entities over which the Group has the power to govern the
financial and operating policies so as to obtain benefits from their activities.
Consistent accounting policies are employed in the preparation and
presentation of the Group financial statements.
In preparing the Group financial statements, all intergroup transactions,
balances, income and expenses are eliminated in full. Investments in
subsidiaries are measured at cost less any impairment in the parent
company's financial statements.

(b)

(c)

Consistency of presentation
Except as detailed in note 23 below, these financial statements demonstrate
consistent presentation and classification for each annual reporting period.

Revenue Recognition
i. Operating Revenue
Revenue is recognised from student fees as the course progresses once the
student fee has been receipted by Public Trust.
Unearned income - Students who are not studying an NZQA course (mainly
Aviation students) can prepay fees directly to the group. These fees are not
required to be held within the student fee protection scheme. These fees
are shown as a Current Liability until the student begins their training.
Income is then apportioned to the amount of training the student has
completed and is recognised on this basis.

ii. Government Funding

Government Funding from TEC is recorded as revenue on a systematic basis
over the periods in which the entity recognises as expenses the related
costs. The group receives this revenue in twelve equal monthly payments.
TEC has agreed to an Investment Plan (which specifies the number of
students enrolled each year). If the group enrolled less than 97 percent of
the Investment Plan numbers, TEC may require some funding to be repaid.
An accrual for income in advance is made for an estimate of any amount in
this respect.
iii. Dividend and interest revenue
Dividend revenue from investments is recognised when the shareholders'
right to receive payment has been established. Interest revenue is
recognised using the effective interest method.

167

QUANTUM EDUCATION GROUP LIMITED

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013 (continued)
iv. Effective interest method
The effective interest method is a method of calculating the amortised cost
of a financial asset and of allocating interest income over the relevant
period. The effective interest rate is the rate that exactly discounts
estimated future cash receipts through the expected life of the financial
asset, or, where appropriate, a shorter period, to the net carrying amount of
the financial asset.
(d)

Property, Plant & Equipment

Property, plant & equipment are recognised at cost less accumulated
depreciation and any impairment losses. Depreciation has been calculated
using the maximum rates permitted by the Income Tax Act 2007. This
method is considered appropriate to the business. The rates used are
shown on the depreciation schedule forming part of the accounts.
Depreciation rates for each category are as follows:
Category
Classroom Equipment
Computers
Office Equipment
Motor Vehicles
Leasehold Improvements
Workshop Improvements
Furniture & Fittings
Buildings

Rate(s)
11.4% - 48%
48%
14.4% - 60%
11.4% - 26%
9% - 48%
11.4% - 39.6%
9% - 39.6%
4%

Method
DV
DV
DV
DV
DV
DV
DV
DV

The residual value of assets is assessed annually.

(e)

Borrowing costs
Borrowing costs are recognised as an expense using the effective interest
method.

(f)

Inventories
Inventories are valued at the lower of cost and net realisable value. Cost is
determined on a first-in, first-out basis and includes an appropriate portion
of fixed and variable overhead expenses. Net realisable value represents
the estimated selling price less all estimated costs of completion and costs
to be incurred in marketing, selling and distribution.

168

QUANTUM EDUCATION GROUP LIMITED

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013 (continued)
(g)

Financial Assets
Loans and receivables
All the companys financial instruments are initially recorded at cost and
subsequently carried at amortised cost using the effective interest method.
An estimate is made for doubtful debts based on a review of all outstanding
amounts at year-end. Bad debts are written off during the period in which
they are identified.
Cash and Cash Equivalents
Cash and cash equivalents are measured at their fair values.
Impairment of Financial Assets
Financial assets, other than those at fair value through profit or loss, are
assessed for indicators of impairment at each reporting date. Financial
assets are impaired where there is objective evidence that, as a result of one
or more events that occurred after the initial recognition of the financial
asset, the estimated future cash flows of the investment have been
impacted.
For financial assets carried at amortised cost, the amount of the impairment
is the difference between the asset's carrying amount and the present value
of the estimated future cash flows, discounted at the original effective
interest rate.
Impairment losses (and subsequent gains) for assets carried at amortised
cost excluding trade receivables are recognised through the profit and loss,
not exceeding the initial recognition value.

(h)

Income Tax
The taxes payable method has been adopted in accordance with differential
reporting. Income tax assessed for the current period is the amount
recognised as the income tax payable for the same period.

(i)

Leases
The company leases certain plant, office equipment, motor vehicles land &
buildings.
Operating lease payments, where the lessors effectively retain substantially
all the risks and benefits of ownership of the leased items, are included in
the determination of the operating results in equal instalments over the
lease term.

(j)

Intangibles
Intangibles are recorded at cost less accumulated amortisation and
impairment losses.

(k)

Investments
Investments are stated at cost less accumulated impairment losses.

169

QUANTUM EDUCATION GROUP LIMITED

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013 (continued)
(l)

Goods & Services Tax

The financial statements have been prepared on a GST exclusive basis,
except for receivables and payables which are presented inclusive of GST.

(m)

Financial Instruments
Financial Instruments are recognised in the balance sheet when the
company becomes party to a financial contract. They include cash and
cash equivalents, creditors and intercompany balances.
All the companys financial instruments are initially recorded at cost and
subsequently carried at amortised cost using the effective interest method.
Due allowance is made for impaired receivables (doubtful debts).

(n)

Accounts Payable
Payables represent liabilities for goods and services received prior to the end
of the financial year which are unpaid. Accounts Payable are recorded at the
amount of cash required to settle those liabilities. The amounts are
unsecured and are usually paid within 30 days of recognition.

(o)

Provisions
Provisions are recognised when the Group has a present obligation (legal or
constructive) as a result of a past event, the future sacrifice of economic
benefits is probable and the amount of the provision can be measured
reliably. The amount recognised as a provision is the best estimate of the
consideration required to settle the present obligation at reporting date,
taking into account the risks and uncertainties surrounding the obligation.
Where a provision is measured using the cash flows estimated to settle the
present obligation, its carrying amount is the present value of those cash
flows.

170

QUANTUM EDUCATION GROUP LIMITED

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013 (continued)
2.

REVENUE
GROUP
2013
NZ$
24,542,064
2,837,096
696
416,820
221,501
28,018,177

Operating Revenue
Government Funding
Dividend Income
Interest Income
Other Operating Revenue
TOTAL REVENUE

3.

PARENT
2012
NZ$
24,494,988
2,699,992
2,219
386,401
302,873
27,886,473

2013
NZ$
22,156,925
1,725,452
1,580,146
377,194
37,717
25,877,434

2012
NZ$
22,105,543
1,643,227
1,226,912
296,239
40,808
25,312,729

PROFIT BEFORE TAXATION

Note

GROUP
2013
NZ$

PARENT
2012
NZ$

2013
NZ$

2012
NZ$

PROFIT BEFORE TAXATION INCLUDES

Depreciation
11
Amortisation
11
Rental & Operating lease expense
Employee benefits
Salaries and Wages
Kiwisaver
Other Employee Benefits

581,543
26,839
1,159,210

501,625
17,199
1,156,691

476,650
26,839
867,569

450,680
17,199
885,371

7,458,721
108,649
33,248

6,827,010
67,744
32,000

6,234,015
108,649
33,248

5,594,103
67,744
32,000

171

QUANTUM EDUCATION GROUP LIMITED

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013 (continued)
4.

TAXATION
GROUP

Net profit before taxation

Add tax effect of non-deductible items
Add tax effect of temporary
differences
Taxable income
Tax expense at 28%
Less Imputation credits on net
dividends
Adjustment to prior period charge
Total Taxation Expense
5.

PARENT

2013
NZ$
3,059,637
5,759
(47,281)

2012
NZ$
3,487,796
1,299
(4,220)

2013
NZ$
3,064,880
619,022
(47,281)

2012
NZ$
3,417,480
524,973
(4,220)

3,018,115

3,484,875

3,636,621

3,938,233

845,072
(541)

975,765
(647)

1,018,254
(579,462)

1,102,705
(525,547)

(20,830)
823,701

975,117

438,792

577,159

IMPUTATION ACCOUNT
GROUP

Opening Balance
Plus
Income Tax Paid
RWT on Interest & dividends received
DWT on dividends
Imputation credits on dividends
received
Other
Less
Income Tax refunded
Imputation credits converted to
losses/other
Imputation credits on dividends paid
Prior period adjustment
Closing Balance at 31 December

PARENT

2013
NZ$
1,737,569

2012
NZ$
3,448,268

2013
NZ$
1,164,899

2012
NZ$
2,265,685

1,002,703
129,369
97
541

791,202
116,077
94
647

530,875
117,192
48
614,616

557,500
87,615
47
525,547

98

108,984
271

259,599
1,003

85,417
-

2,420,928
-

2,186,078
172,137

1,806,697

2,186,078
-

340,096

1,737,569

620,933

1,164,899

172

QUANTUM EDUCATION GROUP LIMITED

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2012 (continued)
6.

CASH & CASH EQUIVALENTS

GROUP

Bank Deposits
Call Accounts
TOTAL CASH & CASH EQUIVALENTS

2013
NZ$
458,156
3,199,361
3,657,517

PARENT
2012
NZ$
1,664,040
2,653,893
4,317,933

2013
NZ$
20,671
3,196,055
3,216,726

2012
NZ$
537,084
605,927
1,143,011

At the request of the Company, ANZ Bank New Zealand Limited has provided a
Letter of Credit in favour of ASB Bank Limited for the sum of $300,000. This letter is
to cover monthly payroll processing by Datacom. (2012: Letter of credit was
provided in the same instance for the same value).
7.

LOANS AND RECEIVABLES

Trade Receivables
Other Receivables
Intercompany Receivables
Prepayments

GROUP
2013
2012
NZ$
NZ$
4,677
82,139
8,129,480
10,350,425
82,287
111,259

PARENT
2013
2012
NZ$
NZ$
4,548
72,952
7,115,532
9,181,886
1,330,954
55,685
103,299

TOTAL LOANS AND RECEIVABLES

8,216,444

7,175,765 10,689,091

8.

10,546,823

FUNDING LOANS
GROUP

Mogul International Limited

Australia Blue Investments
Limited
Quantum Corporate Training
Limited
TOTAL FUNDING LOANS

2013
NZ$
2,620
233,317

PARENT
2012

2013

NZ$
175
459,057

NZ$
2,620
233,317

2012
NZ$
175
459,057

27,824

22,531

27,824

22,531

263,761

481,763

263,761

481,763

173

QUANTUM EDUCATION GROUP LIMITED

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013 (continued)
9.

PROPERTY, PLANT & EQUIPMENT

2013
NZ$

GROUP
COST
ACCD DEPN BOOK VALUE
Land and Buildings
547,404
128,779
418,625
Classroom Equipment
449,436
437,849
11,587
Computers
2,022,026 1,643,409
378,617
Leasehold Improvements 1,283,042
714,577
568,465
Workshop Equipment
79,089
12,158
66,931
Office Equipment
327,245
243,311
83,934
Furniture & Fittings
510,311
344,333
165,978
Motor vehicles
1,623,111
826,014
797,097
6,841,664 4,350,429 2,491,234

PARENT
COST
Land and Buildings
330,575
Classroom Equipment
337,987
Computers
1,707,084
Leasehold Improvements
730,162
Workshop Equipment
7,931
Office Equipment
192,443
Furniture & Fittings
335,164
Motor vehicles
1,606,853
5,248,198
10.

2013
NZ$
ACCD DEPN BOOK VALUE
86,120
244,455
330,866
7,122
1,342,921
364,163
430,167
299,995
7,870
61
159,800
32,643
210,544
124,620
822,710
784,143
3,390,998 1,857,201

COST
473,807
449,436
1,738,206
1,268,732
7,931
300,592
472,477
1,586,911
6,298,091

2012
NZ$
ACCD DEPN BOOK VALUE
128,779
345,028
434,358
15,078
1,461,988
276,218
658,340
610,392
7,859
72
215,236
85,356
319,776
152,701
795,000
791,911
4,021,336
2,276,756

COST
330,574
337,987
1,430,038
698,989
7,931
184,973
305,306
1,570,653
4,866,451

2012
NZ$
ACCD DEPN BOOK VALUE
86,120
244,454
329,065
8,922
1,164,928
265,110
399,249
299,740
7,859
72
141,354
43,619
192,999
112,307
793,176
777,477
3,114,750
1,751,701

INTANGIBLES
2013
NZ$

GROUP AND PARENT

Moodle Intangible
AIPC Fee
TOTAL INTANGIBLES

COST
180,814
96,393
277,207

ACCD
AMORT
26,019
48,196
74,215

2012
NZ$
WDV

COST

154,795
48,197
202,992

180,814
96,393
277,207

ACCD
AMORT
8,819
38,557
47,376

WDV
171,995
57,836
229,831

The company has paid the Australian Institute of Professional Counsellors a fee to deliver
courses exclusively in New Zealand. This fee is being amortised over a period of 10 years
being the exclusivity period.

174

The company has developed a student web portal (Moodle) for accessing online learning
and progress. These costs are being amortised over a period of 10 years being the
expected life of the software.

175

QUANTUM EDUCATION GROUP LIMITED

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013 (continued)
11.

DEPRECIATION & AMORTISATION

GROUP

Buildings
Classroom Equipment
Computers
Leasehold Improvements
Workshop Equipment
Office Equipment
Furniture & Fittings
Motor Vehicles
Aircraft Aviation Expense
TOTAL DEPRECIATION CHARGE
Moodle Intangible
AIPC
TOTAL AMORTISATION
12.

2013
NZ$

2012
NZ$

3,491
203,501
56,237
4,300
29,020
26,651
258,333
581,532

5,308
130,606
58,843
12
24,227
27,623
255,006

17,200
9,639
26,839

2013
NZ$

2012
NZ$
2,649
122,284
34,734
12
16,495
20,275
254,231

501,625

1,800
196,113
30,918
10
19,392
19,637
256,853
48,074
476,650

7,560
9,639
17,199

17,200
9,639
26,839

7,560
9,639
17,199

PARENT
2013
NZ$
(308,950)
4,199
(1,408,962)
(619,403)
(119,346)
687,700
(1,764,762)

2012
NZ$
59,106
5,994
(84,472)
(4,333)
(835)
687,700
663,160

450,680

CURRENT ACCOUNTS

John Clemons
Laurence Day
LCTL Ltd
Grange B Trust
Cheryl Price
QEG QT
TOTAL CURRENT ACCOUNTS
(LIABILITY)/ASSET
13.

PARENT

GROUP
2013
2012
NZ$
NZ$
(308,950)
59,106
4,199
5,994
(1,408,962)
(84,472)
(619,403)
(4,333)
(119,346)
(835)
(2,452,462)
(24,540)

TRADE AND OTHER PAYABLES

Accrued Expenses
GST
Interco Payable

Group
2013
NZ$
21,084
253,731
-

2012
NZ$
119,476
162,837
-

Parent
2013
NZ$
14,183
175,204
840,603

2012
NZ$
29,529
91,242
-

176

Income in Advance
Total Other Payables

7,496,761
7,771,576

9,671,549
9,953,862

6,520,535
7,550,525

8,545,881
8,666,652

QUANTUM EDUCATION GROUP LIMITED

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013 (continued)
14.

CURRENT PROVISIONS

Employee Benefits
15.

GROUP
2013
2012
NZ$
NZ$
626,245
619,459

PARENT
2013
2012
NZ$
NZ$
626,245
619,459

INVESTMENTS
The following subsidiaries are consolidated and have a 31 December 2013 balance
date and are 100% owned directly or indirectly.
ENTITY
Quantum Education Group ES Limited
Quantum Education Group QT Limited

NATURE
Training Service
Training Service

Auckland Business School (NSTC) Limited

Auckland Business School Limited
Christchurch Business School Limited
Culinary Institute of New Zealand Limited
EOS Business School Limited
Hamilton Business School Limited
Life Coaching Institute of New Zealand Limited
New Zealand Business School Limited
New Zealand Institute of Professional Counsellors Limited
QE Group Limited
Quantum Institute of Travel & Tourism Limited
Quantum Learning (New Zealand) Limited
Quantum Learning Group Limited
Tower Aviation Limited
Wellington Business School Limited
Wellington Regional Business School Limited
Whangarei Business School Limited

Non-trader
Non-trader
Non-trader
Non-trader
Non-trader
Non-trader
Non-trader
Non-trader
Non-trader
Non-trader
Non-trader
Non-trader
Non-trader
Non-trader
Non-trader
Non-trader
Non-trader

177

QUANTUM EDUCATION GROUP LIMITED

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013 (continued)
16.

RELATED PARTY TRANSACTIONS

The following items represent related party disclosures:
TRANSACTIONS
PAID /(RECEIVED)
DURING THE YEAR

BALANCE AT
PAYABLE/
(RECEIVABLE)
YEAR END

Specialist training courses

$10,178,479
and course materials
Payable on the 20th of the month following the date of invoice

$186,155

LCTL Ltd

Common shareholder/Directors
Management Fees
$358,800
th
TERMS
Payable on the 20 of the month following the date of invoice

$29,900

LCTL Ltd

Common Shareholder
Current Account
TERMS
Non-interest bearing and payable on demand

$1,408,962

Cheryl Price

Common Shareholder
Current Account
TERMS
Non-interest bearing and payable on demand

$119,346

John Clemons

Common Shareholder
Current Account
TERMS
Non-interest bearing and payable on demand

$308,950

Laurence Day

Common Shareholder
Current Account
TERMS
Non-interest bearing and payable on demand

$4,199

Grange B Trust

Common Shareholder
Current Account
TERMS
Non-interest bearing and payable on demand

$619,403

Geronimo Ltd

Common shareholder/Directors
Management Fees
$179,400
th
TERMS
Payable on the 20 of the month following the date of invoice

$14,950

TTT Ltd

Common shareholder/Directors
Management Fees
$102,000
TERMS
Payable on the 20th of the month following the date of invoice

$25,500

Quantum Corporate
Training Ltd

Common shareholder/Directors

ENTITY

RELATIONSHIP

Learntree Ltd

Common shareholder/Directors
TERMS

TERMS
Mogul International
Limited

($12,420)

($27,824)

Funding

($2,620)

Interest free and not repayable until the company reaches a profitable
position.

Common shareholder/Directors
TERMS

Management Fee

Administration charges from Quantum Education Group Limited

Common shareholder/Directors
TERMS

Australia Blue
Investments Ltd

NATURE OF TRANSACTION

Funding

($251,678)

($233,317)

Non-Interest bearing + payable on demand

178

QUANTUM EDUCATION GROUP LIMITED

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013 (continued)
17.

SHARE CAPITAL
2,000 ordinary shares have been issued and paid up. All shares have equal voting
rights and share equally in dividends and any surplus on winding up.

17(a). RETAINED EARNINGS

GROUP

Opening Balance
Prior Year Adjustment
Opening Balance
(Restated)
Dividends paid
Current year earnings

18.

PARENT

2013
NZ$
5,508,716
5,508,716

2012
NZ$
7,644,929
451,956
8,096,885

2013
NZ$
4,193,273
4,193,273

2012
NZ$
6,312,939
140,861
6,453,800

(4,645,793)
2,235,935
3,098,858

(5,100,848)
2,512,679
5,508,716

(4,645,791)
2,626,088
2,173,570

(5,100,848)
2,840,321
4,193,273

LEASE COMMITMENTS
GROUP
2013
NZ$

PARENT
2012
NZ$

2013
NZ$

2012
NZ$

Commitments under noncancellable operating leases:

Not later than 1 year
Later than 1 year and not
later than 5 years
Later than 5 years

435,268
423,952

668,514
735,903

258,313
202,759

476,464
309,693

TOTAL LEASE COMMITMENTS

859,220

1,404,417

461,072

786,157

19.

CONTINGENT ASSETS & LIABILITIES

There were no contingent assets or liabilities as at 31 December 2013 (2012: NIL).

20.

REGISTERED SECURITIES
Leasing Solutions Limited and Konica Minolta Business Solutions are the secured
party over a number of printers/copiers and all accessories.

179

QUANTUM EDUCATION GROUP LIMITED

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013 (continued)
21.

CAPITAL COMMITMENTS
The company had no capital commitments at reporting date. (2012: NIL).

22.

EVENTS AFTER REPORTING DATE

The shareholders of the Group and Company have entered into a conditional
agreement to sell the Company. If the contract becomes unconditional the
settlement will be May / June 2014.
Other than the foregoing there are no other significant events subsequent to the
balance date and up to the time of preparation of these financial statements that
materially affect the position as it existed at that date.

23.
a)

PRIOR PERIOD ADJUSTMENTS

In prior periods, the Company had excluded the unearned income held by the Public
Trust and the corresponding income received in advance from students. This has
been adjusted in 2012 financial year as follows:
i.

Restated the 2012 comparatives to recognise the correct amount of

unearned income from Public Trust and income received in advance from
students in the Statement of Financial Position as at 31 December 2013. The
impact of this adjustment was an increase of $9,671,549 (Group),
$8,545,881 (Parent), $9,671,549 (Group), $8,545,881 (Parent) respectively.

Balances affected by the restatement:

GROUP

Statement of Financial Position

Unearned income
Income in advance

31 December
2012 Previously
Reported
NZ$

Adjustment

NZ$

31 December
2012
Restated
NZ$

9,671,549
9,671,549

9,671,549
9,671,549

8,545,881
8,545,881

8,545,881
8,545,881

PARENT
Statement of Financial Position
Unearned income
Income in advance

180

QUANTUM EDUCATION GROUP LIMITED

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013 (continued)
23.
b)

PRIOR PERIOD ADJUSTMENTS (CONTINUED)

In the accounting periods 31 December 2012 and prior, the Group did not account
for accrued income for the period between the date of the last receipt of monies
from the Public Trust and the reporting date. This has been adjusted in the 2012
financial year as follows:
i.

Restated the 2012 opening retained earnings to reflect the adjustment of

under-recognition of revenue. The impact of this adjustment was an
increase in opening retained earnings by $151,956 (Group) and $140,861
(Parent) in the Statement of Changes in Equity and Statement of Financial
Position.

ii.

Restated the 2012 revenue and income tax expenses to reflect the
adjustment of under-recognition of revenue. The impact of this adjustment
was an increase in net profit after tax of $217,063 (Group) and $204,139
(Parent) in the Statement of Comprehensive Income and Changes in Equity.

iii.

Restated the 2012 comparatives to recognise the correct amount of Public

Trust receivable and GST payable in the Statement of Financial Position as at
31 December 2013. The impact of this adjustment was an increase of
$589,405 (Group), $551,042 (Parent), $76,879 (Group), and $71,875
(Parent), respectively.

Balances affected by the restatement:

GROUP

31 December
2012 Previously
Reported
NZ$

Adjustment

NZ$

31 December
2012
Restated
NZ$

27,584,997
890,704

301,476
84,413

27,886,473
975,117

Statement of Changes in Equity

Opening equity

7,946,929

151,956

8,098,885

Statement of Financial Position

Public Trust receivable
GST payable
Income tax payable
Retained earnings

88,958
154,166
7,944,929

589,405
76,879
143,507
369,019

589,405
165,837
297,673
5,508,716

Statement of Comprehensive Income

Revenue
Income tax expense

181

QUANTUM EDUCATION GROUP LIMITED

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013 (continued)
23.

PRIOR PERIOD ADJUSTMENTS (CONTINUED)

PARENT

31 December
2012 Previously
Reported
NZ$

Adjustment

NZ$

31 December
2012
Restated
NZ$

25,029,202
497,711

283,527
79,388

25,312,729
577,159

Statement of Changes in Equity

Opening equity

6,314,939

140,861

6,455,800

Statement of Financial Position

Public Trust receivable
GST payable
Income tax payable
Retained earnings

19,366
15,479
3,848,273

551,042
71,875
134,167
345,000

551,042
91,241
149,646
4,193,273

Statement of Comprehensive Income

Revenue
Income tax expense

24.
a)

FINANCIAL INSTRUMENTS
Capital Risk Management
The Group manages its capital to ensure that the entities in the Group will be able to
continue as a going concern while maximising the return to shareholders through
the optimisation of the debt and equity balance.
The Directors review the capital structure on a semi-annual basis. As part of this
review the Directors consider the cost of capital and the risks associated with each
class of capital. The Directors will balance the overall capital structure through the
payment of dividends, new share issues, and share buy backs as well as the issue of
new debt or the redemption of existing debt.
There are no externally imposed capital requirements on the Company or Group.

182

QUANTUM EDUCATION GROUP LIMITED

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013 (continued)
24.
b)

FINANCIAL INSTRUMENTS (CONTINUED)

Categories of Financial Assets and Financial Liabilities

GROUP
As at 31 December 2013
Assets
Cash and cash equivalents
Trade and other receivables

Total financial assets

Cash and
cash
equivalents

Financial
liabilities at
amortised cost

Loans and
receivables

3,657,517
3,657,517

TOTAL

3,657,517

82,373

82,373

82,373

3,739,890

Liabilities
Trade and other payables

834,519

834,519

Current account

2,452,462

2,452,462

Total financial liabilities

3,286,981

3,286,981

As at 31 December 2012
Assets
Cash and cash equivalents
Trade and other receivables

Total financial assets

4,317,933
4,317,933

4,317,933

177,610

177,610

177,610

4,495,543

Liabilities
Trade and other payables

1,446,856

1,446,856

Current account

24,540

24,540

Total financial liabilities

1,471,396

1,471,396

183

QUANTUM EDUCATION GROUP LIMITED

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013 (continued)
24.
b)

FINANCIAL INSTRUMENTS (CONTINUED)

Categories of Financial Assets and Financial Liabilities (continued)

PARENT
As at 31 December 2013
Assets
Cash and cash equivalents
Trade and other receivables

Total financial assets

Cash and
cash
equivalents
3,216,726
3,216,726

Financial
liabilities at
amortised cost

Loans and
receivables

TOTAL

3,216,726

71,210

71,210

71,210

3,287,936

Liabilities
Trade and other payables

812,512

812,512

Current account

1,764,762

1,764,762

Total financial liabilities

2,577,274

2,577,274

As at 31 December 2012
Assets
Cash and cash equivalents

1,143,011

Trade and other receivables

157,915

157,915

Current Accounts

663,160

663,160

821,075

1,964,086

Total financial assets

1,143,011

1,143,011

Liabilities
Trade and other payables

1,428,408

1,428,408

Total financial liabilities

1,428,408

1,428,408

184

BDO Auckland

INDEPENDENT AUDITORS REPORT

To the Shareholders of Quantum Education Group Limited
Report on the Financial Statements
We have audited the financial statements of Quantum Education Group Limited and its
Subsidiaries (the Group) and group on pages 163 to 184 which comprise the consolidated and
separate statements of financial position of the Group as at 31 December 2013, the consolidated
and separate statements of changes in equity, statements of comprehensive income for the year
then ended, and a summary of significant accounting policies and other explanatory information.
This report is made solely to the Companys shareholders, as a body, in accordance with Section
205(1) of the Companies Act 1993. Our audit has been undertaken so that we might state to the
Companys shareholders those matters we are required to state to them in an auditors report and
for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Companys shareholders as a body, for our
audit work, for this report, or for the opinion we have formed.
Directors Responsibility for the Financial Statements
The directors are responsible for the preparation of these financial statements in accordance
with generally accepted accounting practice in New Zealand and that give a true and fair view of
the matters to which they relate, and for such internal control as the directors determine is
necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
Auditors Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We
conducted our audit in accordance with International Standards on Auditing (New Zealand).
Those standards require that we comply with ethical requirements and plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free from
material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditors
judgement, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entitys preparation of financial statements that give a
true and fair view of the matters to which they relate 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 entitys internal control. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of accounting estimates, as
well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.
Other than in our capacity as auditor we have no relationship with, or interests in, the Group or
any of its subsidiaries.

185

BDO Auckland

Opinion
In our opinion, the financial statements on pages 163 to 184:
comply with generally accepted accounting practice in New Zealand;
give a true and fair view of the financial position of Quantum Education Group Limited and
the Group as at 31 December 2013 and the financial performance of the Company and
Group for the year ended on that date.
Report on Other Legal and Regulatory Requirements
In accordance with the Financial Reporting Act 1993 we report that:
We have obtained all the information and explanations that we have required.
In our opinion, proper accounting records have been kept by the Group as far as appears
from our examination of those records.

BDO Auckland
28 March 2014
Auckland
New Zealand

186

Learntree

CONTENTS PAGE
SPECIAL PURPOSE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2013

Page Number
Business Particulars
Special Purpose Statement of Financial Performance

188
189 - 191

Special Purpose Statement of Movements in Equity

192

Special Purpose Statement of Financial Position

193

Notes to the Special Purpose Financial Statements

194

Independent Auditors Report

204

100092860/3201962.26

187

Learntree
BUSINESS PARTICULARS
FOR THE YEAR ENDED 31 MARCH 2013

REGISTERED OFFICE:

31 Tongariro Street
Paraparaumu

NATURE OF BUSINESS:

Sale of computerised tutorial media

SHAREHOLDERS:

Shares Held
Alan McLeod
Latavinia McLeod
Robert Gordon
Richard Gordon
Laurence Day
Katrina Day
Stoneleigh Investment Trust
R & R Gordon Family Trust
Grange B Family Trust

DIRECTORS:

Alan McLeod
Robert Gordon
Laurence Day

BANKERS:

National Bank
Coastlands
Paraparaumu

SOLICITORS:

Lloyd Collins
44 Queens Drive
Lower Hutt

ACCOUNTANTS:

Munro Benge
104 The Terrace
Wellington

1
1
1
200
1
1
398
199
398

INDEPENDENT AUDITORS: BDO Auckland

120 Albert Street
Auckland

188

Learntree
SPECIAL PURPOSE STATEMENT OF FINANCIAL PERFORMANCE
FOR THE YEAR ENDED 31 MARCH 2013
NOTE

2013
$

2012
$

9,581,544

9,253,948

Less Cost of Goods Sold

Opening inventories
Purchases

48,545
2,029,785

45,008
2,149,539

Closing inventories

2,078,330
(85,223)

2,194,547
(48,545)

Cost of Goods Sold

1,993,107

2,146,002

Gross Profit

7,588,437

7,107,946

Income
Sales

The accompanying notes form part of these financial statements.

189

Learntree
SPECIAL PURPOSE STATEMENT OF FINANCIAL PERFORMANCE
FOR THE YEAR ENDED 31 MARCH 2013
NOTE
2013
$
Less Expenses
Accident compensation levy
Advertising
Bad debts
Bank charges
Computer maintenance
Consultancy
Depreciation
Entertainment - deductible
Entertainment non-deductible
Fringe benefit tax
General expenses
Insurance
Insurance replacement
IRD Penalties
Leasing costs
Legal fees deductible
Light and power
Loss/(profit) on disposal of assets
Motor vehicle expenses
Office & staff relocation
Office operating costs
Postage
Printing and stationery
Promotion and sponsorship
Rent
Rates
Repairs and maintenance
Salaries / Directors Fees
Staff expenses
Subscriptions
Telephone and tolls
Trade Shows & Conferences
Travel expenses

Surplus from operations

Add sundry income
Bad debts recovered
Interest received
Net surplus before interest & taxation

2012
$

2,215
5,806
0
1,470
10,702
4,367
19,329
6,924
7,952
6,684
6,298
12,125
15,807
0
12,200
0
7,323
0
23,363
0
3,224
727
9,312
7,603
0
5,238
5,018
1,323,774
14,385
2,488
13,422
9,280
17,760

2,738
12,604
0
1,493
12,583
0
37,619
8,106
9,289
6,843
8,684
10,469
12,776
0
18,109
0
8,632
(618)
23,333
0
3,270
2,124
6,610
6,397
0
4,926
3,829
771,595
11,602
2,364
16,552
8,546
36,720

1,554,796

1,047,195

6,033,641

6,060,751

0
94,704

0
86,632

6,128,345

6,147,383

The accompanying notes form part of these financial statements.

190

Learntree
SPECIAL PURPOSE STATEMENT OF FINANCIAL PERFORMANCE
FOR THE YEAR ENDED 31 MARCH 2013
NOTE

Less interest paid

Interest

Net surplus before taxation

Taxation expense

Net surplus

2013
$

2012
$

24

892

24

892

6,128,321

6,146,491

1,722,583

1,727,195

4,405,738

4,419,296

The accompanying notes form part of these financial statements.

191

Learntree
SPECIAL PURPOSE STATEMENT OF MOVEMENTS IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2013
NOTE

2013
$

2012
$

Net surplus

4,405,738

4,419,296

Total recognised revenue and expenses

4,405,738

4,419,296

(4,743,486)

(4,263,433)

Movements in equity for the year

(337,748)

155,863

Opening equity

3,877,355

3,721,492

$ 3,539,607

$3,877,355

Distributions to owners

Closing equity

The accompanying notes form part of these financial statements.

192

Learntree
SPECIAL PURPOSE STATEMENT OF FINANCIAL POSTION
AS AT 31 MARCH 2013
NOTE

2013
$

2012
$

2,078,865
1,780,759
85,223

2,333,450
1,874,877
48,545

3,944,847

4,256,872

542,009

555,186

542,009

555,186

4,486,856

4,812,058

468,536
478,713

582,586
352,117

TOTAL CURRENT LIABILITES

947,249

934,703

TOTAL LIABILITIES

947,249

934,703

NET ASSETS

3,539,607

3,877,355

TOTAL EQUITY

3,539,607

3,877,355

CURRENT ASSETS
Cash and bank accounts
Receivables
Inventories

4
5
6

TOTAL CURRENT ASSETS

NON-CURRENT ASSETS
Property, plant and equipment

TOTAL NON-CURRENT ASSETS

TOTAL ASSETS
CURRENT LIABILITIES
Payables and accruals
Taxation payable

8
3

For and on behalf of the Directors

___________________________
Alan McLeod
Director

Robert Gordon
Director

Date 28 March 2014

The accompanying notes form part of these financial statements.

193

Learntree
NOTES TO THE SPECIAL PURPOSE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2013

STATEMENT OF ACCOUNTING POLICIES

Reporting Equity
These special purpose financial statements are for the business that has been
conditionally sold by Learntree Limited to Intueri Materials Limited (IML)
Basis for Preparation
The financial statements have been prepared in accordance with generally accepted
accounting practice (GAAP) in New Zealand. They comply with approved Financial
Reporting Standards (FRSs) and Statement of Standard Accounting Practice
(SSAPs) as appropriate for entities that qualify for and apply differential reporting
concessions. They have been prepared in accordance with the sale and purchase
agreement with IML whereby certain assets and liabilities of Learntree Limited have
been excluded. The net of the excluded assets/liabilities has been treated as a
distribution to owners.
Differential Reporting
The entity qualifies for differential reporting as it is not publicly accountable and
there is no separation between owners and the governing body. The entity has
taken advantage of all available differential reporting exemptions.
The accounting principles recognised as appropriate for the measurement of
financial performance and position on a historical cost basis are followed by the
Company.
Specific Accounting Policies
The specific accounting policies used in the preparation of the financial statements
are as follows:
Revenue Recognition
Sales of goods are recognised when goods are delivered and title has passed.
Finance Income
Interest income is accrued on a time basis by reference to the principal outstanding
and at the effective interest rate applicable.

194

Learntree
NOTES TO THE SPECIAL PURPOSE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2013

Accounts Payables and Accruals

Payables represent liabilities for goods and services received prior to the end of the
financial year which are unpaid. Accounts Payable are recorded at the amount of
cash required to settle those liabilities. The amounts are unsecured and are usually
paid within 30 days of recognition.
Accounts Receivable
Accounts receivable are stated at their estimated realisable value after writing off
any debts considered uncollectible.
Inventories
All inventories are valued at the lower of cost and net realisable value. Cost is
calculated on the first-in-first-out basis.
Cost of work in progress and finished goods includes the cost of direct material,
direct labour and a proportion of the manufacturing overhead. These costs are
based on the normal operating capacity of the facilities, expended in putting the
inventories in their present location and condition.
Property, Plant and Equipment
Property, plant and equipment are recorded at historical cost less depreciation to
date. Where an item of property, plant and equipment is disposed of, the gain or
loss recognised in the statement of financial performance is calculated as the
difference between the sale price and the carrying value of the asset.
Depreciation
Depreciation has been calculated using the maximum rates permitted by the
Income Tax Act 1994.
Computer software
Computer equipment
Furniture and fittings
Motor vehicles
Office equipment
31 Tongariro Street

48.0% - 60.0% DV
48.0% DV
10.7% - 24.0% DV
18.0% - 36.0% DV
15.6% - 67.0% DV
4.0% DV

Goods and Services Tax

These financial statements have been prepared on a GST exclusive basis. Unpaid
GST at balance date is included in current liabilities. Receivables and payables are
disclosed inclusive of GST.

195

Learntree
NOTES TO THE SPECIAL PURPOSE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2013

Taxation
Income tax expense charged against the net surplus for the year is the estimated
total tax for the year, in accordance with the taxation return filed with the Inland
Revenue Department.
Employee Benefits
The provision for employee entitlements relates to employee benefits such as
accrued wages, bonuses, accrued holiday pay and long service leave.
Dividends
Dividends are recognised in the financial year in which they are authorised and
approved by the Board of Directors.
Operating Leases
Operating lease rentals are recognised evenly over the expected period of benefit
to the company.
Changes in Accounting Policies
There have been no changes in accounting policies during the year.

196

Learntree
NOTES TO THE SPECIAL PURPOSE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2013

2013
$

2012
$

9,581,544
94,704

9,253,948
86,632

9,676,248

9,340,580

6,128,321

6,146,491

Prima facie tax @ 28 cents

Add/(less)
Permanent differences

1,715,930

1,721,017

6,653

6,178

Taxation expense

1,722,583

1,727,195

The taxation expense comprises:

Current taxation

1,722,583

1,727,195

1,190,555
0
1,581,418
14,569
(1,835,400)

1,065,975
0
1,910,000
13,496
(1,798,916)

951,142

1,190,555

TOTAL INCOME

Sales
Interest Received

TAXATION

Taxation expense
Net surplus before taxation

Imputation credit account

Opening balance
Terminal tax paid
Provisional tax paid
Withholding tax paid
Attached to dividends paid
Income tax refunded

Closing balance

197

Learntree
NOTES TO THE SPECIAL PURPOSE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2013

47,498
1,578,878
707,074

2,078,865

2,333,450

1,780,759

1,874,877

1,780,759

1,874,877

85,223

48,545

INVENTORIES

Stock on hand
7

64,347
1,286,110
728,408

RECEIVABLES

Trade receivables

2012
$

CASH AND BANK ACCOUNTS

National Bank current account

National Bank call account
National Bank term investment

2013
$

PROPERTY, PLANT AND EQUIPMENT

2013
Depn
$

Cost
$

Accum
Depn
$

2013
Book Value
$

Computer equipment

47,919

5,661

40,839

7,080

Computer software

13,742

2,277

11,271

2,471

Furniture & fittings

84,203

5,910

48,504

35,699

33,875

5,082

22,804

11,071

566,985

398

81,296

485,689

746,724

19,329

204,715

542,009

Motor vehicle
Office equipment
31 Tongariro St

198

Learntree
NOTES TO THE SPECIAL PURPOSE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2013

2012
Depn
$

Cost
$

Accum
Depn
$

2012
Book Value
$

Computer equipment

44,795

8,197

35,177

9,618

Computer software

10,711

1,790

8,994

1,717

Furniture & fittings

84,203

6,981

42,594

41,609

33,876

7,832

17,722

16,155

566,985

12,820

80,898

486,087

740,570

37,619

185,384

555,186

Motor vehicle
Office equipment
31 Tongariro St

2012
$

337,384
20,587
32,158
0
78,407

406,475
91,800
13,705
0
70,606

468,536

582,586

PAYABLES AND ACCRUALS

Accruals and income in advance

Trade payables
IRD employee payables
Sundry payables
GST payable

2013
$

CAPITAL COMMITMENTS

There are no capital commitments (2012:$Nil).

199

Learntree
NOTES TO THE SPECIAL PURPOSE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2013

2013
$
10

2012
$

CONTINGENT LIABILITIES

There were no contingent liabilities as at 31 March 2013 (2012:$Nil)

11

OPERATING COMMITMENTS

Commitments in respect of operating leases:

Within one year

Between one & two years
Between two & five years
After five years

12

2013
$38,399
$38,399
$29,481
$Nil

2012
$38,399
$38,399
$67,879
$Nil

RELATED PARTIES
Related Party

Quantum Education Group Ltd

Nature of
Relationship
Common Shareholder

John McLeod
Stoneleigh Investment Trust
Prime Learning PTY Ltd
TTT Inc

Shareholder
Shareholder
Common Director
Common Shareholder

Cherylprice.co.nz Ltd

Common Shareholder

Learnkey Inc

Common Shareholder

Transaction
Sales and product
and same provider
Sales
Sales
Sales
Product & Service
Provider
Product & Service
Provider
Product & Service
Provider

200

Learntree
NOTES TO THE SPECIAL PURPOSE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2013

2013
$

2012
$

______________________________________________________________________
13

SUBSEQUENT EVENTS

The shareholders of Learntree Limited have entered into a conditional agreement to sell
the business and assets of the company. If the contract becomes unconditional the
settlement will be May / June 2014.
The following dividends have been paid to shareholders:
26 July 2013
25 November 2013
24 March 2013

$600,000
$600,000
$650,000

Other than the foregoing there are no other significant events subsequent to the balance
date and up to the time of preparation of these financial statements that materially affect
the position as it existed at that date.

201

Learntree
BDO Auckland

INDEPENDENT AUDITORS REPORT

TO THE SHAREHOLDERS OF
LEARNTREE LIMITED
Report on the Special Purpose Financial Statements
We have audited the special purpose financial statements of the Learntree business
(the Business) as defined by the Sale and Purchase Agreement (SPA) with Intueri
Materials Limited on pages 189 to 201. The special purpose financial statements
comprise the special purpose statement of financial position of the Business as at 31
March 2013, the special purpose statement of changes in equity, special purpose
statement of financial performance for the year then ended, and a summary of
significant accounting policies and other explanatory information.
Directors Responsibility for the Financial Statements
The directors are responsible for the preparation of these special purpose financial
statements of the business in accordance with generally accepted accounting practice
in New Zealand and that give a true and fair view of the matters to which they relate,
and for such internal control as the directors determine is necessary to enable the
preparation of these special purpose financial statements that are free from material
misstatement, whether due to fraud or error.
Auditors Responsibility
Our responsibility is to express an opinion on these special purpose financial statements
based on our audit. We conducted our audit in accordance with International Standards
on Auditing (New Zealand). Those standards require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable assurance about
whether the special purpose financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the special purpose financial statements. The procedures selected depend
on the auditors judgment, including the assessment of the risks of material
misstatement of the financial statements, whether due to fraud or error. In making those
risk assessments, the auditor considers internal control relevant to the entitys
preparation of financial statements that give a true and fair view of the matters to which
they relate 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 entitys internal control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates, as well as
evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our audit opinion.
Other than in our capacity as auditor we have no relationship with, or interests in the
Business or Learntree Limited.

202

Learntree
BDO Auckland

Opinion
In our opinion, the special purpose financial statements on pages 189 to 201:
comply with generally accepted accounting practice in New Zealand;
fairly present the financial position of the Business as at 31 March 2013, and its
financial performance for the year ended on that date.
Basis of accounting and restriction on distribution and use
Without modifying our opinion, we draw attention to the fact that the Special Purpose
Financial Statements are prepared for the purpose of reporting on the Learntree
Business of Learntree Limited as defined by the SPA. As a result, the Special Purpose
Financial Statements may not be suitable for another purpose. Our report is intended
solely for the shareholders of Learntree Limited and Intueri Materials Limited.

BDO Auckland
28 March 2014
Auckland
New Zealand

203

SECTION 5.5: STATUTORY AUDITORS REPORT

Tel: +64 9 379 2950
Fax: +64 9 303 2830
www.bdo.co.nz

Level 8
BDO Tower
120 Albert Street
PO Box 2219
Auckland 1140
New Zealand

15 April 2014
The Directors
Intueri Education Group Limited and Intueri Education Group Holdings Limited
100 Symonds Street
Grafton
AUCKLAND

Dear Directors
This report is issued in respect of the public offer of ordinary shares in Intueri Education
Group Limited (the Company), in terms of the offer document dated 15 April 2014.
This report is made solely to the directors of the company (the directors), in accordance
with clause 28 of Schedule 1 to the Securities Regulations 2009 (Schedule 1). Our work has
been undertaken so that we might state to the directors those matters we are required to
state to them in a report from the auditor and for no other purpose. To the fullest extent
permitted by law and subject to Section 61 of the Securities Act 1978, we do not accept or
assume responsibility to anyone other than the directors for this report, or for the opinions
we have formed.
Directors Responsibilities
The directors are responsible for the preparation and presentation of:
(a) financial statements as required by clause 23 of Schedule 1. The financial statements
provide information about the past financial performance and cash flows of the Company
and its subsidiaries (the Group) for the period ended 30 June 2013 and the Groups
financial position as at that date;
(b) interim financial statements as per clause 24 of Schedule 1 for the period ended
31 December 2013;
(c) the summary of financial statements as required by clauses 9, 12(2) and 12(3) of
Schedule 1; and
(d) the statutory prospective financial information of the Group for the years ending 31
December 2014 and 31 December 2015, including the assumptions on which the statutory
prospective financial information is based, as required by clause 11 of Schedule 1. The
statutory prospective financial information comprises the prospective consolidated
statement of financial position of the Group as at 31 December 2014 and 31 December
2015 and the prospective consolidated statement of comprehensive income, prospective
consolidated statement of changes in equity and prospective consolidated statement of
cash flow for the years then ending.
Auditors Responsibilities
We are responsible for:
(a) expressing an independent opinion on the financial statements of the Company and
Group as at 30 June 2013 and for the period ended on that date, prepared and presented
by the directors, and reporting our opinion in accordance with clause 28(1) of Schedule
1;
BDO New Zealand Ltd, a New Zealand limited liability company, is a member of BDO International Limited, a UK company limited by guarantee, and forms
part of the international BDO network of independent member firms. BDO New Zealand is a national association of independent member firms which operate
as separate legal entities. For more info visit www.bdo.co.nz.

204

BDO Auckland

(b) expressing an independent audit opinion on the interim financial statements of the
Company and Group as at 31 December 2013 and for the period ended on that date,
prepared and presented by the directors;
(c) reporting, in accordance with clause 28(1)(h) of Schedule 1, on the amounts included in
the summary of financial statements; and
(d) reporting, in accordance with clause 28(2) of Schedule 1, on the statutory prospective
financial information for the years ending 31 December 2014 and 31 December 2015.
This report has been prepared for inclusion in the Offer Document for the purpose of meeting
the requirements of clause 28 of Schedule 1. We disclaim any assumption of responsibility for
reliance on this report or the amounts included in the financial statements, the interim
financial statements, the summary of financial statements and the prospective financial
information for any purpose other than that for which they were prepared. In addition, we
take no responsibility for, nor do we report on, any part of the Offer Document not
mentioned in this report.
Independence
In addition to the audits, we have carried out assurance and taxation services for the Group
and have acted as the investigating accountant in respect of this public offer. Other than
these matters and the audit, we have no relationship with or interests in the Company and
Group.
Basis of Opinion
Our audit of financial statements for the period ended 30 June 2013 and the interim financial
statements for the period ended 31 December 2013 included examining, on a test basis,
evidence relevant to the amounts and disclosures in the financial statements. It also included
assessing:
(a) the significant estimates and judgements made by the directors in the preparation of the
financial statements and the interim financial statements; and
(b) whether the accounting policies are appropriate to the circumstances of the Group,
consistently applied and adequately disclosed.
We have conducted our audit in accordance with generally accepted auditing standards in
New Zealand. We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with sufficient evidence to
give reasonable assurance that the financial statements and interim financial statements are
free from material misstatements, whether caused by fraud or error. In forming our opinion
we also evaluated the overall adequacy of the presentation of the information in the financial
statements and the interim financial statements.
We have also undertaken procedures to provide reasonable assurance that the amounts in the
summary of financial statements, pursuant to clause 9 of Schedule 1, have been correctly
taken from financial statements.
In addition, we have examined the prospective financial information to confirm that, so far as
the accounting policies and calculations are concerned, they have been properly compiled on
the footing of the assumptions made or adopted by the directors of the Group. The
assumptions relate to future events. However, we are not in a position to, and do not
express an opinion on, these assumptions on a stand-alone basis.

205

BDO Auckland

Unqualified Opinion
We have obtained all the information and explanations we have required.
In our opinion:
(a) proper accounting records have been kept by the Group as far as appears from our
examination of those records; and
(b) the financial statements on pages 108 to 139 that are provided pursuant to clause 23 of
Schedule 1, and that are required to be audited:
(i)

subject to the Securities Regulations 2009, comply with generally accepted

accounting practice in New Zealand;

(ii) subject to the Securities Regulations 2009, comply with International Financial
Reporting Standards; and
(iii) give a true and fair view of the matters to which they relate;
(c) the interim financial statements on pages 146 to 159 that are provided pursuant to
clause 24 of Schedule 1:
(i)

comply with generally accepted accounting practice in New Zealand as it relates to

interim financial statements;

(ii) comply with International Financial Reporting Standards as it relates to interim

financial statements; and
(iii) give a true and fair view of the matters to which they relate;
(d) the amounts in the summary of financial statements, on pages 87 to 101 pursuant to
clause 9 of Schedule 1, have been correctly taken from the relevant financial
statements; and
(e) the statutory prospective financial information on pages 68 to 83 so far as the accounting
policies and calculations are concerned, have been properly compiled on the footing of
the assumptions made or adopted by the directors of the Company set out on pages 68 to
83 of this Offer Document and is presented on a basis consistent with the accounting
policies normally adopted by the Group.
Actual results are likely to be different from the statutory prospective financial
information since anticipated events frequently do not occur as expected and the
variation could be material. Accordingly, we express no opinion as to whether results
consistent with the prospective financial information will be achieved.
Our audits of the financial statements of the Group for the period ended 30 June 2013 and for
the six months ended 31 December 2013 were completed on 28 March 2014 and our
unmodified opinions were expressed as at those dates. We have not performed any
procedures in relation to the financial statements subsequent to 28 March 2014.
We completed our work for the purposes of this report on 15 April 2014 and our unqualified
opinion is expressed as at that date.
Yours faithfully

BDO Auckland
Auckland

206

SECTION 6: WHAT ARE MY RISKS?

If you do not understand the information in this section, you should consult a
financial or legal adviser.
Principal Risks for Shareholders
Your principal risk is that you may not be able to get back some or all of your original
investment or you may not receive the returns you expect. This could happen for a
number of reasons, for example if:
the price at which you are able to sell your Shares is less than the price you paid for
them;
you are unable to sell your Shares at all for instance, because there are not enough
buyers in the market;
the Company does not pay Dividends to the level you expected, or at all.
profits are variable and this can adversely affect the Dividend paid;

Intueris

Intueris operational and financial performance is worse than expected; or

the Company becomes insolvent and is placed in receivership or liquidation.
Any investment in the share market has risks associated with it, and this investment is no
exception. The key risks specific to Intueri and other general market risks are set out
below. These risks, were they to occur, could have a material adverse effect on Intueris
financial position or performance through reduced revenue, increased costs, reduced
cashflows, a decrease in student enrolments, damage to reputation or a combination of
these.
You should consider such risk factors together with the other information in this
Prospectus.
The risk factors set out below may not be the only ones faced by Intueri. There may be
additional risk factors of which Intueri is currently unaware, or that it currently deems not
material but which may subsequently become key risk factors for the business.
International student growth risk: Intueri's international student business is a
significant contributor to its forecast financial performance, with student enrolment
growth of 41.4% and 32.2% expected in 2014 and 2015 respectively. Several factors
represent a risk to achieving the expected demand for courses, including:
o

Marketing risk: Intueri has achieved recent success in the marketing of its
courses to international students through investment and increased focus.
However, if existing and new marketing strategies are not effective, whether
through increased competition, poor execution or some other reason, Intueri
could fail to achieve its international student enrolment targets.

Regulatory risk: The attractiveness of Intueri's courses to international students

can be significantly impacted by changes in New Zealand regulations, including
in particular the requirements for students to achieve a work visa. Changes to
visa requirements have had a material impact on Intueri's financial performance
historically.

207

International competitiveness risk: The New Zealand dollar may rise to levels
that make New Zealand a less affordable and attractive education destination
compared with other countries (including Australia, Canada, Singapore, Japan,
the United Kingdom and the United States). In addition, other countries could
change regulations in ways which would make them relatively more attractive
to international students than New Zealand, or more international students
could elect to study in their home market, reflecting the development of
competing tertiary institutions in those markets.

NSIA concentration risk: NSIA enrolled in excess of 85% of Intueris total

international students in FY2013PF.
A reduction in international student
demand for NSIAs courses could have a material adverse effect on Intueris
international student business as a whole, regardless of steady international
student demand for Intueris other courses.

New Zealand Government funding risk: A large proportion of the revenue forecast
to be received by Intueri will be dependent on funding from the New Zealand
Government. There is a risk that the New Zealand Government may change its funding
policies and provide less or different funding to Intueri, which could have a material
adverse impact on Intueris earnings and financial position. In particular:
o

TEC funding risk: TEC funding is renewed annually. There is no guarantee that
TEC will renew funding each year and TEC has discretion in relation to the PTEs
to which it will allocate funding and the amount of that funding. There is a risk
that some or all of such funding may not be renewed for the 2015 calendar year
(or subsequent years) including as a result of any changes to funding policy.
There is also a risk that one or more of the PTEs within Intueri may not achieve
the required performance or enrolment targets, or may otherwise fail to meet
funding conditions (in which case some or all of the TEC funding of that PTE
may need to be repaid).
The maximum number of student enrolments for PTEs that receive TEC funding
is regulated by TEC, and there is a risk that TEC may reduce the number of
approved enrolments (including approved levels of EFTS over and above those
that are SAC funded).

Student loan funding risk: Intueris earnings and financial position are highly
dependent on students who use a student loan to fund their course fees. There
is a risk that the eligibility criteria for student loans, or their current interest
free nature, may change so that students enrolled in Intueris courses are no
longer eligible for student loans or find the courses less attractive, and people
who would otherwise have chosen to fund their study by way of student loans
do not enrol in Intueris courses.

New Zealand regulatory risk: New Zealand Government bodies including the
Ministry of Education, Immigration New Zealand, NZQA and TEC may change existing
regulations or introduce new regulations that limit Intueris ability to deliver forecast
earnings, including regulations relating to course accreditation, and regulations which
adversely impact on the ability of international students to study in New Zealand, or
otherwise reduce the attractiveness of New Zealand as an education destination.
Local government authorities may also revoke or refuse to grant consents (such as
resource consents) necessary for the operation of Intueris courses. In this regard,
NZSCDT has consents in place from the Waikato District Council (as landowner) for the

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operation of its diving courses on Lake Puketirini. The Company has been advised that
NZSCDTs operations on Lake Puketirini also require resource use consent from the
Waikato Regional Council under the Resource Management Act 1991. The Company
considers the risk of not obtaining the consent is low, but failure to obtain the consent
could have a material adverse effect on NZSCDTs business.
NZQA approval risk: One or more of the PTEs within Intueri might lose NZQA
approvals due to non-compliance with regulatory requirements. In particular, there is
a risk that the PTEs might not achieve the required performance standards. Where
performance is significantly below the required standards, NZQA could revoke the
relevant PTEs registration or its programme approval and/or its accreditation to deliver
a programme. As a publicly-listed company, the Company could also lose NZQA
approvals due to coming under the control of a shareholder whom NZQA did not regard
as a fit and proper person to operate PTEs. This could occur, for example, as a result
of a takeover offer for the Company, although it could reasonably be expected that any
such takeover offer would be conditional on NZQA approval. The loss of NZQA
approval for one or more of Intueris PTEs could have a material adverse effect on
Intueris financial performance.
Domestic student demand risk: While Intueris domestic student business is
historically more stable than other parts of Intueri's overall business, Intueris financial
performance is affected by its success in attracting domestic students to its courses.
Key factors that create risks around achieving the expected domestic student demand
for courses include:
o

Reputational risk: Intueris brands and reputation are a key element in

attracting students to its courses. If an event causes a negative perception of
any of Intueris colleges, or Intueri fails to deliver high quality outcomes at its
colleges (in particular if this results in a loss of government funding), Intueri
could have difficulty attracting students.

Marketing risk: Intueri undertakes a number of marketing initiatives across its

businesses to attract students to its courses. While Intueris diversity of courses
provides some protection, if its marketing strategies are not effective Intueri
may not achieve its student enrolment targets.

Risks relating to OCA:

o

Expansion risk: The online and VET FEE-HELP divisions of OCA are relatively
new initiatives, with a short track record of financial results and achievement
against key performance indicators. Any forecasts of growth in revenue and
profitability are therefore inherently more uncertain than those which can be
made for a mature business, and are subject to OCA being able to adequately
manage the expansion of its staff and operating capacity to cope with planned
growth.

Regulatory risk: If the Commonwealth Government decides to reduce the

funding available to the VET FEE-HELP programme (which funds 55% of OCAs
forecast revenue for 2014), or if there are significant delays when reviewing
increased funding applications from RTOs under the programme, there could be
a material adverse impact on Intueris earnings and financial position. While
OCA currently holds the necessary RTO registrations, there is no guarantee that
these registrations will be retained into the future.

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Non-compliance risk:
Any non-compliance with ongoing conditions of
registration and any associated regulatory response may also have an adverse
impact on OCAs reputation, operations, future earnings and financial position.

Integration risk: Intueris future earnings are to some extent dependent on the
successful integration of the Quantum Education and OCA businesses with Intueris
existing business. This will involve a significant expansion of management
responsibilities and financial, operational and risk reporting functions. There is a risk
that integration may not proceed in accordance with expected timeframes, that the
costs of integration exceed expectations and/or that expected benefits, synergies or
cost savings are less than predicted.
Other Risks
Growth strategy execution risk: There is a risk that Intueri may not be able to
successfully execute some or all of the growth strategies outlined in Section 4.1
Business Overview. For example, Intueri may not be successful in achieving the
forecast growth in domestic or international student revenues, or expansion of the
online business. This risk may increase if Intueri fails to attract or retain the
qualified personnel required to execute the growth strategies.
Due diligence risk: Intueri and its advisors have performed certain pre-listing
due diligence in relation Intueri Education Group, Quantum Education Group and
OCA (and Intueri has the benefit of certain warranties and indemnities under the
agreements under which the individual businesses comprising Intueri were
acquired). There are risks that:
o

due diligence conducted has not identified issues that would have been
material to the decision by Intueri to acquire those businesses. A material
adverse issue which was not identified prior to completion of the relevant
acquisition could have an adverse impact on the financial performance or
operations of the relevant business and Intueri; and

in respect of the risks that were identified in due diligence that were
regarded as not sufficiently material or which could otherwise be mitigated,
the materiality of such risks may be higher than expected or the approach
taken by Intueri may be insufficient to mitigate such risks.

Personnel risk: Intueri relies to a significant extent on retaining certain key staff,
and on its ability to attract and retain skilled employees.
o

Loss of key executives: The loss of key executives, in particular the CEO
Rob Facer, the CFO Rod Marvin and the Quantum Education Group
Managing Director Janet Dalby, could have a material adverse effect on
Intueri.

Loss of other employees: The loss of other employees, in particular those

who possess deep experience in the vocational sector and have well
established relationships with key people in the sector, could have a
material adverse impact on Intueri.

Attracting and retaining staff: Intueri may require additional personnel

(including tutors, marketing staff and support staff) to support its planned
growth. Attracting and retaining qualified personnel may require increased

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expenditure by Intueri. Intueri may experience difficulty in attracting and

retaining the qualified personnel required to execute its growth strategy.
Information and Communications Technology Risk: Intueri relies on certain
information and communications technology (ICT) systems for the operation and
support functions of its business (including a range of proprietary and third party
software relating to key student monitoring and reporting systems). A material
failure of one of these systems could adversely affect Intueri. Intueris ICT systems
may be adversely affected by factors such as hardware or software faults, power
failures, computer viruses, misuse, external malicious interventions or data
corruption.
Change of control risk: Some of Intueris contracts (including leases of premises)
contain restrictions on any change of control in respect of the relevant company.
While the consent of counterparties to such contracts will be sought in relation to
the changes of control that will occur in connection with the Offer (including in
relation to the Quantum Acquisition), there is a risk that such consent may not be
able to be obtained (in which case the relevant contract may be able to be
terminated by the counterparty).
Litigation risk: Due to the nature of carrying on a service business in a highly
regulated industry, Intueri may be the subject of complaints from, or litigation or
investigations by, students, regulatory agencies or third parties alleging negligence,
breach of contract, breach of law and other grounds for liability. It is possible that
legal claims will be made against Intueri, and that Intueris insurance may not be
adequate to cover liabilities arising from any such claims. Any such claim, or the
publicity arising from it, could have a material adverse impact on Intueri. As of the
date of this Prospectus there are no pending legal proceedings or arbitrations that
may have a material adverse effect on Intueri.
Competition risk: The PTE industry in New Zealand and the VET industry in
Australia are both highly competitive. Competition is based on a range of factors
including the quality of training offered, the perceived reputation of the provider,
and the employment prospects of graduates from the provider. Any increase in
competition or deterioration in the competitive position of Intueri could have a
material adverse impact on Intueris earnings and financial position.
Debt covenant risks: Intueri will be subject to various covenants under its
banking facilities from time to time. Factors such as a decline in Intueris
operational and financial performance could lead to a breach of such banking
covenants, giving rise to enforcement rights by the lender (including, potentially,
the enforcement of security interests in respect of Intueris assets).
Trading in shares may not be liquid: There is currently no public market for the
Shares. Once the Shares are quoted on the NZX Main Board, there is no guarantee
that an active trading market for the Shares will develop. There may be relatively
few potential buyers or sellers of the Shares on the NZX Main Board at any time.
This may increase the volatility of the market price at which Shareholders are able
to sell their Shares. As a result, you may receive a market price for your Shares
that is less than the price that you paid for them.
Arowana shareholding: Arowana will be the ultimate owner of a significant
minority shareholding in Intueri after the Offer. This means that Arowana may be
able to somewhat influence the potential outcome of matters submitted to a vote of

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the Shareholders. The sale of Shares by Arowana in the future could also adversely
affect the market price of the Shares. Refer to Section 4.6 Relationship between
Arowana and the Company for more information.
General economic conditions: The operating and financial performance of
Intueri is influenced by a variety of general economic and business conditions in
New Zealand and Australia and global economic conditions generally. For example,
prolonged deterioration in general economic conditions may result in a sustained
decrease in business confidence, which could impact the demand for Intueris
graduates or result in a decrease in government funding.
Force majeure events: Events may occur within or outside Australia and New
Zealand that could impact on the world economy, the operations of Intueri and the
price of the Shares. These events include war, acts of terrorism, civil disturbance,
political intervention and natural events such as earthquakes, floods, fires and poor
weather.
Tax changes: Any change to the current rate of income tax or other taxes
imposed on Intueri in any jurisdiction where Intueri operates will impact on
Shareholder returns. Any changes to the current rates of relevant taxes applying to
individuals and other Shareholders will similarly impact on Shareholder returns. In
addition, any change in tax rules and tax arrangements between Australia and New
Zealand could have an adverse impact on the level of Dividend imputation.
Consequences of Insolvency
In the event of the insolvency of the Company, you will not be liable to pay any money to
any person. All creditors (secured and unsecured) of the Company will rank ahead of your
claim as a Shareholder in the Company, if the Company is liquidated. After all such
creditors have been paid, any remaining assets will be available for distribution among all
Shareholders who rank equally. Any distribution made on liquidation of the Company may
be less than the amount of your investment or you may not receive any amount.

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SECTION 7: DETAILS OF THE OFFER

The Offer
The Offer is an offer of ordinary shares in the Company, comprising both existing Shares
and new Shares to be issued by the Company. The Shares will be offered pursuant to the
Offer at the Final Price, to be determined by the Issuers, in consultation with the Joint Lead
Managers, following a bookbuild.
The Offer comprises the Broker Firm Offer, the Institutional Offer and the Executive Offer.
Members of the public wishing to subscribe for Shares must be allocated Shares by an NZX
Firm; there is no public pool under which you may subscribe for Shares.
All Shares will be issued at the Final Price and will be fully paid ordinary shares which rank
equally with each other and all existing Shares.
The Offer is made on the terms, and is subject to the conditions, set out in this Prospectus
and in the Investment Statement.
The Offer is conditional on the Quantum Acquisition becoming unconditional and
Arowana shareholder approval
Quantum Acquisition
You will not be allotted Shares unless, prior to allotment, the conditions to completion of
the Quantum Acquisition (other than the finance condition, discussed below) have been
satisfied or waived and the documents necessary to complete the Quantum Acquisition are
being held in escrow, such that the Quantum Acquisition will automatically be completed
upon payment of the Quantum Acquisition purchase price by the Company. It is a condition
of the Offer Management Agreement between, among others, the Company and the Joint
Lead Managers, that settlement of the Quantum Acquisition occur contemporaneously with
settlement of the Offer.
The principal conditions of the Quantum Acquisition which have not been satisfied or
waived as of the date of the Prospectus are:
Finance: The Quantum Acquisition is conditional on the Company arranging sufficient
finance to complete the transaction. The Offer, if successful, will allow the Company to
satisfy this condition.
Lease change of control consents: The Quantum Acquisition constitutes a change of
control event under most of Quantum Educations leases, requiring landlord consent.
Landlord consents are being progressively obtained. The Company does not regard the
need for landlord consent to be a material issue, based on the terms of the relevant
leases.
Material adverse change: The Quantum Acquisition is conditional on no material
adverse event (as defined in the sale and purchase agreement) occurring prior to
settlement.
The Company expects that the Quantum Acquisition will become unconditional (but for the
finance condition) on or prior to 6 May 2014 (the day prior to the Offer bookbuild), and
that settlement of the Quantum Acquisition will occur on or about 23 May 2014.
If the Quantum Acquisition has not become unconditional (but for the finance condition) by
30 May 2014, the Offer will be cancelled. This could occur, for example, because a

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condition to completion was not satisfied or waived by that date. In that circumstance
Application monies would be refunded to Applicants within 7 Business Days, without
interest.
Arowana shareholder approval
Completion of the Offer requires the approval of Arowanas shareholders. Approval is
required under the ASX Listing Rules, as Arowanas interest in the Company makes up a
large majority of Arowanas total assets.
The Arowana shareholder meeting to vote to approve the Offer is to be held on 16 May
2014. Approval of the resolution approving the Offer requires approval by a simple
majority of votes cast by eligible shareholders at the meeting.
Arowanas independent directors have recommended to Arowanas shareholders that they
vote to approve the Offer.
If the Offer is not approved by Arowana shareholders, the Offer will be cancelled. In that
circumstance Application monies would be refunded to Applicants within 7 Business Days,
without interest.
Structure of the Offer
The Offer comprises:
the Broker Firm Offer, which is only available to New Zealand resident retail investors
who have received an allocation from their NZX Firm;
the Institutional Offer, which consists of an invitation to bid for shares made to
Institutional Investors in New Zealand, Australia and certain other jurisdictions, who
will participate through the bookbuild; and
the Executive offer, under which the trustee of the Executive LTI Plan, on behalf of
participating executives, will be offered up to a maximum dollar amount of $700,000 of
Shares (representing approximately 0.25-0.31% of the Shares on issue in the
Company36).
Members of the public wishing to subscribe for Shares must be allocated Shares by an NZX
Firm; there is no public pool under which you may subscribe for Shares.
Allocations of Shares among the offers comprising the Offer, and among the Institutional
Investors and NZX firms bidding into the Offer bookbuild, will be determined by the Issuers
and the Joint Lead Managers. These determinations are expected to be made following the
close of the bookbuild process.
Further details of the Broker Firm Offer, the Institutional Offer and the Executive Offer can
be found below under the headings Broker Firm Offer, Institutional Offer and Executive
Offer.
Size of the Offer
The Offer is an offer of:
$62.0 million of new Shares (being 23 million to 28 million Shares based on the
Indicative Price Range) which are to be issued by the Company to the Offeror; and
36

Calculated at the mid point of the Indicative Offer Range.

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that number of Shares, which are to be transferred by the Selling Shareholder to the
Offeror, which will result in the Selling Shareholder holding the Final Percentage of the
Shares in the Company immediately following the completion of allotment of the
Shares under the Offer.
You can find more information on the determination of the Final Percentage below, under
the heading Determination of the Final Percentage.
The number of Shares that will be offered depends on the number of Shares the Selling
Shareholder transfers to the Offeror (for sale to investors). The Company will issue to the
Offeror that number of Shares which, when multiplied by the Final Price, equals (as nearly
as possible) $62.0 million. Following the determination of the Final Price (and therefore
the determination of the number of new Shares the Company will issue to the Offeror) but
before the allotment of the Shares, the Company will undertake a Share split of its existing
Shares such that upon allotment of the new Shares being issued by the Company to the
Offeror, the Company has a total of 100 million Shares on issue. The Selling Shareholder
will sell that number of Shares to the Offeror which will result in the Selling Shareholder
holding the Final Percentage (being the percentage of Shares the Selling Shareholder
decides to retain in the Company following completion of the Offer).
Based on there being $62 million of new Shares issued and the Selling Shareholder selling
down the range of Shares set out above at the Indicative Price Range, the gross proceeds
from the Offer will be $169 million to $234 million.
Determination of the Final Price
The Final Price for the Shares will be determined on or about 7 May 2014 following a
'bookbuild' managed by the Joint Lead Managers. The bookbuild is a process through which
information is collated about the demand for Shares by selected Institutional Investors
participating in the Institutional Offer, and NZX Firms seeking firm allocations in the Broker
Firm Offer, submitting bids for the number of Shares they wish to purchase or be allocated
at a range of prices. That information is then used to assist with the determination of the
pricing and allocation of Shares. The bookbuild will take place on 7 May 2014.
The Final Price will be determined by the Issuers in consultation with the Joint Lead
Managers and may be within, above or below the Indicative Price Range of $2.25 to $2.75
per Share. In determining the Final Price, consideration may be given to the following
factors (amongst others):
the level of demand for Shares in the bookbuild at various prices;
the desire for an orderly secondary market for the Shares; and
any other factors the Issuers consider relevant in meeting their objectives.
The Final Price is expected to be announced and posted on www.intuerishares.co.nz on or
about 7 May 2014.
Determination of the Final Percentage
Following the determination of the Final Price but before the allotment of the Shares, the
Company will undertake a Share split of its 21 million existing Shares such that upon
allotment of the new Shares to be issued by the Company to the Offeror, the Company will
have a total of 100 million Shares on issue.

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The Selling Shareholder intends to retain between 15% and 25% of the total number of
Shares on issue following completion of the Offer, and will determine the percentage it will
retain following the bookbuild in conjunction with the Joint Lead Managers (the Final
Percentage). However the percentage retained could fall outside this range, with the
consent of the Joint Lead Managers.
The Selling Shareholder will sell between 47 million and 62 million Shares, on a post Share
split basis, to the Offeror (based on the Indicative Price Range).
By way of example (based on the Indicative Price Range):
Final Percentage

Shares sold by the Selling

Shareholder

Value of Shares sold by

the Selling Shareholder

15%

57 million to 62 million

$129 million to $172 million

25%

47 million to 52 million

$107 million to $144 million

Purpose of the Offer

The purpose of the Offer is to:
fund the Quantum Acquisition, including associated transaction costs, fees for the
Offer, and to repay related-party loans, including those associated with the OCA
Acquisition, to the extent that existing cash cannot fund these repayments;
Arowana will sell part of its shareholding in the Company and reinvest the proceeds in
other long term investments;
enhance Intueri's ability to pursue growth opportunities, including complementary
acquisitions within the PTE sector, through direct access to the capital markets;
increase Intueris public profile as a tertiary education provider in New Zealand and
overseas; and
place majority ownership of Intueri in the hands of a more widely spread shareholder
base and to provide Intueri with an independent management team and Board.
Use of Proceeds
The Offeror intends to apply the proceeds from the Shares offered under the Offer to:
fund the subscription for the additional new Shares in the Company which are being
offered under the Offer; and
satisfy the cash consideration payable to the Selling Shareholder by the Offeror for the
acquisition of those Shares held by the Selling Shareholder which are being offered
under this Offer.
The proceeds received by the Offeror may not be used for any other purpose.
The proceeds received by the Company, net of costs, will be applied to fund the Quantum
Acquisition, including associated transaction costs, fees for the Offer, and to repay relatedparty loans, including those associated with the OCA Acquisition, to the extent that existing
cash cannot fund these repayments. The proceeds received by the Offeror may not be used
for any other purpose.

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Discretion Regarding the Offer

The Issuers reserve the right to withdraw the Offer at any time prior to the allotment of
Shares. If the Offer or any part of it is withdrawn then all Application amounts, or the
relevant Application amounts, will be refunded without interest no later than 7 Business
Days after the announcement of the decision to withdraw the Offer. Any such refund will
be made in the manner in which you elect any future Dividend payments to be paid.
The Issuers also reserve the right, with the agreement of the Joint Lead Managers, to close
the Offer or any part of it early, extend the Offer or any part of it, accept late Applications
either generally or in particular cases, reject any Application or allocate to any Applicant
fewer Shares than applied for.
Broker Firm Offer
Broker Firm Offer

Who may apply

The Broker Firm Offer is open to New Zealand resident clients of NZX
Firms. Applicants who are offered a firm allocation by an NZX Firm can
apply for Shares in the Broker Firm Offer. There is no public pool under
which you may subscribe for Shares.

Allocation under the

Broker Firm Offer

Allocations by NZX Firms under the Broker Firm Offer to their Applicant
clients will be determined by those NZX Firms. It will be a matter for the
NZX Firms to ensure that Applicant clients who have received an
allocation from them receive their shares.

How to apply

You may apply under the Broker Firm Offer by completing the Broker Firm
Offer Application Form at the back of the Investment Statement. By
making an Application, you declare that you were given a copy of the
Investment Statement, together with an Application Form.

Minimum and maximum

Application amount

Amounts will be determined by your broker. However, the minimum

Application amount will be $2,000 and in multiples of $100 Shares
thereafter.

How to pay

Broker Firm Offer Applicants should make payments in accordance with

the directions of the NZX Firm from whom you received an allocation.
You should ensure that sufficient funds are held in the relevant account(s)
to cover the amount of the cheque(s), bank draft(s) or direct debit
payment(s). If the amount of your cheque(s), bank draft(s) or direct debit
payment(s) for Application Monies (or the amount for which those
cheque(s), bank draft(s) or direct debit payment(s) clear in time for
allocation) is less than the amount of Shares applied for multiplied by the
Final Price, you may be taken to have applied for such lesser number of
Shares for which your cleared Application Monies will pay (and to have
specified that amount on your Application Form) or your Application may
be rejected.

Address for return of

Application Forms and
Application Monies

Broker Firm Offer Applicants should send their completed Application Form
and Application Monies to their broker in time to enable forwarding to the
Registrar by 12.00pm (noon) on the Closing Date.

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Broker Firm Offer

Closing Date for receipt

of Applications

The Broker Firm Offer opens at 9.00am on 8 May 2014 and is expected to
close at 12.00pm (noon) on 21 May 2014. The Issuers may elect to close
the Offer or any part of it early, extend the Offer or any part of it, or
accept late Applications either generally or in particular cases. The Offer
may be closed at any earlier date and time, without further notice. Your
broker may also impose an earlier closing date.

How to obtain a copy of

the Investment
Statement

Please contact your broker for instructions. You may also obtain a copy of
the Investment Statement and Broker Firm Offer Application Form by:
downloading a copy at www.intuerishares.co.nz; or
requesting a copy from the Registrar, Computershare Investor
Services Limited by calling 0800 888 726.
While you may obtain a copy of the Investment Statement and Broker
Firm Offer Application Form as set out above, your Application will not be
accepted under the Broker Firm Offer if it is not lodged through your
Broker.

Institutional Offer
The Institutional Offer comprises two parts:
an invitation to New Zealand and Australian-resident Institutional Investors; and
an invitation to Institutional Investors resident in certain jurisdictions outside New
Zealand and Australia,
both made under this Prospectus.
The Bookbuild Process and Indicative Price Range
The Institutional Offer will be conducted using a bookbuild process. A 'bookbuild' is the
term used in initial public offerings to refer to the process of collating demand for shares at
various prices from Institutional Investors and NZX Firms, who bid for shares. The
bookbuild process collates the demand of the parties that want shares, how many shares
will be sold and the prices at which applicants bid for shares. The information collated in
the bookbuild is then used to assist with the determination of the pricing and allocation of
shares. NZX Firms bid into the bookbuild in order to obtain a firm allocation which they
can offer to their clients.
Full details of how to participate, including bidding instructions, will be provided by the
Joint Lead Managers to invited participants in due course. Participants can bid into the
book for Shares only through the Joint Lead Managers. They may bid for Shares at specific
price(s). Participants may bid above, within or below the Indicative Price Range of $2.25
to $2.75 per Share. The Indicative Price Range may be varied at any time by the Issuers.
All successful participants will pay the Final Price for each Share allocated to them.
Allocation Policy under the Bookbuild
The allocation policy for NZX Firms participating in the Institutional Offer will be outlined in
the bidding instructions, which will be provided by the Joint Lead Managers to invited
participants in due course.

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The Issuers and the Joint Lead Managers will agree the allocation of Shares among
Institutional Investors that have bid for Shares under the Institutional Offer and among
NZX Firms that have bid for Shares under the Broker Firm Offer. There is no assurance
that any Institutional Investor participating in the Institutional Offer or any NZX Firm
participating in the Broker Firm Offer will be allocated any Shares or the number of Shares
for which it has bid. The allocation policy will be influenced, but not constrained, by factors
such as the price and number of Shares bid for by particular participants, the timeliness of
the bid and any other factors that the Issuers and the Joint Lead Managers consider
appropriate.
In making allocations regard will be had to the requirement that any shareholder with a
controlling interest in the Company must be a fit and proper person, in order for the
Companys PTEs to maintain their NZQA approvals. For more information see page 209.
Executive Offer
The trustee of the Executive LTI Plan, on behalf of participating executives who wish to
take up Shares under the Executive LTI Plan, will be offered up to a maximum dollar
amount of $700,000 of Shares (representing approximately 0.25-0.31% of the Shares on
issue in the Company37). These Shares will, if purchased, be for the purposes of the
Foundation Scheme, a component of the Executive LTI Plan. For more information see
page 49 of this Prospectus.
Listing and Quotation of Shares
NZX
The Company has applied to NZX to list Intueri, and to quote its Shares, on the NZX Main
Board. All of NZXs requirements relating to the application for listing and quotation that
can be complied with on or before the date of this Prospectus have been complied with.
However, NZX accepts no responsibility for any statement in this Prospectus. The NZX
Main Board is a registered market operated by NZX, which is a registered exchange
regulated under the Securities Markets Act. The Company's NZX stock code is IQE.
Initial quotation of the Shares on the NZX Main Board is expected to occur on 23 May
2014.
It is the responsibility of each Applicant to confirm its holding before trading in
Shares. Applicants who sell Shares before they receive an initial statement of
holding do so at their own risk. Applicants will be able to confirm their holding by
contacting their broker upon commencement of trading of the Shares on the NZX
Main Board or ASX. None of the Offeror, the Company, Arowana, the Joint Lead
Managers, the Registrar or any of their respective directors, officers or employees
accepts any liability or responsibility should any person attempt to sell or
otherwise deal with the Shares before a statement confirming allotment of
Shares is received.
ASX
An application will be made to ASX after the Investment Statement and this Prospectus
have been lodged with ASIC for the Company to be admitted to the official list of the ASX
and for quotation of the Shares on the ASX. It is anticipated that the ASX stock code for
the Company's Shares will be 'IQE'.
ASX takes no responsibility for the contents of this Prospectus or for the merits of the
investment to which this Prospectus relates. The fact that ASX may admit the Company to
37

Calculated at the mid point of the Indicative Offer Range.

219

the official list and quote the Shares on the ASX is not to be taken as an indication of the
merits, or as an endorsement by ASX, of Intueri or the Shares. The ASX is not a registered
market under the Securities Markets Act.
Failure to Achieve Listing
If admission to list on the NZX Main Board is denied or the Offer does not proceed for any
other reason, all Application amounts will be refunded in full without interest no later than
7 Business Days after announcement of the decision not to proceed. Failure to achieve
admission to list on the ASX will not, of itself, prevent the Offer from proceeding.
Offer Management Agreement
The Offeror, the Company, Arowana and the Joint Lead Managers have entered into an
Offer Management Agreement. Under the Offer Management Agreement, once the Final
Price has been determined, the Joint Lead Managers or their affiliates will be obliged,
subject to various terms and conditions, to provide settlement support in respect of
successful bids into the bookbuild under the Institutional Offer and the Broker Firm Offer in
respect of which Institutional Investors or NZX Firms have defaulted on their payment
obligations. The Offer Management Agreement sets out a number of circumstances under
which the Joint Lead Managers may terminate the Offer Management Agreement before
their settlement support obligations are triggered.
Escrow Arrangements
The Selling Shareholder has entered into an escrow arrangement with the Company under
which the Selling Shareholder has agreed not to sell or otherwise dispose of its existing
Shares which are not sold as part of the Offer until the first day after the Companys
preliminary announcement has been released to the market in respect of its financial
results for the period ending 31 December 2015, without the approval of the Directors who
are not interested in the decision (as that term is defined in the Companies Act), the
Company and NZX.
These restrictions do not apply, and therefore no approval is needed, for the Selling
Shareholder to grant a security interest in favour of a lender to the Selling Shareholder.
In addition: (a) the Selling Shareholder may transfer its escrowed shareholding to an
associated person (as that term is defined in the Listing Rules) with the consent of
Intueris Directors who are not interested in the decision (as that term is defined in the
Companies Act), provided that such associated person has agreed to be bound by the
escrow terms; and (b) the Selling Shareholder may accept any full or partial takeover offer
made in respect of its Shares under the Takeovers Code or similar scheme or arrangement.
An escrow is a restriction on sale, disposal, or encumbering of, or certain other dealings
in respect of, the securities concerned for the period of the escrow, subject to any
exceptions in the escrow arrangement concerned.
First right of refusal
Arowana has also agreed with the Company that if Arowana identifies a potential
opportunity to either establish, or acquire the shares in, or business of, a PTE in New
Zealand or an RTO in Australia, and Arowana wishes to pursue that opportunity, then until
the later of:
(a)

the date Arowana ceases to be the ultimate beneficial owner of not less than
15% of the total Shares in the Company; and

220

(b)

the date the directors of the Company do not include an officer, employee,
contractor or nominee of Arowana,

Arowana must notify the Company of the opportunity. If the Company wishes to pursue
the opportunity then, subject to certain conditions, the Company will have a 20 or 30 day
period of exclusivity (with respect to Arowana) in which to pursue the opportunity.
Following the expiry of this exclusivity period, Arowana is entitled to pursue the
opportunity without restriction.
Brokerage
No brokerage, commission or stamp duty is payable by Applicants under the Offer.
Selling Restrictions
The Broker Firm Offer is being made to members of the public in New Zealand, the
Executive Offer is being made to Key Executives of Intueri and the Institutional Offer is
being made to selected Institutional Investors in New Zealand, Australia and certain other
jurisdictions (not including the United States).
No person may offer, sell (including resell) or deliver or invite any other person to so offer,
sell (including resell) or deliver any Shares or distribute any documents (including this
Prospectus) in relation to the Shares to any person outside New Zealand except in
accordance with all of the legal requirements of the relevant jurisdiction.
Unless otherwise agreed with the Issuers, any person or entity subscribing for Shares in
the Offer shall, by virtue of such subscription, be deemed to represent that he, she or it is
not in a jurisdiction which does not permit the making to him, her or it of an offer or
invitation of the kind described in this Prospectus, and is not acting for the account or
benefit of a person within such jurisdiction. None of the Issuers, the Promoters, the Joint
Lead Managers, the Registrar or any of their respective directors, officers, employees,
consultants, agents, partners or advisers accepts any liability or responsibility to determine
whether a person is able to participate in the Offer.
The Shares have not been, and will not be, registered under the US Securities Act or the
securities laws of any state of the United States and may not be offered or sold in the
United States except in accordance with an exemption from, or in a transaction not subject
to, the registration requirements of the US Securities Act and any other applicable
securities laws.
Each Applicant in the Broker Firm Offer and the Executive Offer will be taken to have
represented, warranted and agreed as follows:

It understands that the Shares have not been, and will not be, registered under the
US Securities Act or the securities laws of any state of the United States and may not
be offered, sold or resold in the United States, except in a transaction exempt from,
or not subject to, registration under the US Securities Act and any other applicable
securities laws.

It is not in the United States and is not acting for the account or benefit of a person
in the United States.

It has not and will not send the Prospectus, the Investment Statement or any other
material relating to the Offer to any person in the United States.

221

It will not offer or sell the Shares in the United States or in any other jurisdiction
outside New Zealand and Australia except in transactions exempt from, or not
subject to, registration under the US Securities Act and in compliance with all
applicable laws in the jurisdiction in which Shares are offered and sold.

Each successful bidder under the Institutional Offer will be required to make certain
representations, warranties and covenants set out in the confirmation of allocation letter
distributed to it.
Hong Kong
WARNING: This Prospectus has not been, and will not be, registered as a prospectus under
the Companies Ordinance (Cap. 32) of Hong Kong (the "Companies Ordinance"), nor has it
been authorised by the Securities and Futures Commission in Hong Kong pursuant to the
Securities and Futures Ordinance (Cap. 571) of the Laws of Hong Kong (the "SFO"). No
action has been taken in Hong Kong to authorise or register this document or to permit the
distribution of this document or any documents issued in connection with it. Accordingly,
the Shares have not been and will not be offered or sold in Hong Kong other than to
"professional investors" (as defined in the SFO).
No advertisement, invitation or document relating to the Shares has been or will be issued,
or has been or will be in the possession of any person for the purpose of issue, in Hong
Kong or elsewhere that is directed at, or the contents of which are likely to be accessed or
read by, the public of Hong Kong (except if permitted to do so under the securities laws of
Hong Kong) other than with respect to Shares that are or are intended to be disposed of
only to persons outside Hong Kong or only to professional investors (as defined in the SFO
and any rules made under that ordinance). No person allotted Shares may sell, or offer to
sell, such securities in circumstances that amount to an offer to the public in Hong Kong
within six months following the date of issue of such securities.
The contents of this Prospectus have not been reviewed by any Hong Kong regulatory
authority. You are advised to exercise caution in relation to the offer. If you are in doubt
about any contents of this document, you should obtain independent professional advice.
Singapore
This Prospectus and any other materials relating to the Shares have not been, and will not
be, lodged or registered as a prospectus in Singapore with the Monetary Authority of
Singapore. Accordingly, this document and any other document or materials in connection
with the offer or sale, or invitation for subscription or purchase, of Shares, may not be
issued, circulated or distributed, nor may the Shares be offered or sold, or be made the
subject of an invitation for subscription or purchase, whether directly or indirectly, to
persons in Singapore except pursuant to and in accordance with exemptions in Subdivision
(4) Division 1, Part XIII of the Securities and Futures Act, Chapter 289 of Singapore (the
"SFA"), or as otherwise pursuant to, and in accordance with the conditions of any other
applicable provisions of the SFA.
This Prospectus has been given to you on the basis that you are (i) an "institutional
investor" (as defined in the SFA) or (ii) a "relevant person" (as defined in section 275(2) of
the SFA). In the event that you are not an investor falling within any of the categories set
out above, please return this document immediately. You may not forward or circulate this
document to any other person in Singapore.
Any offer is not made to you with a view to the Shares being subsequently offered for sale
to any other party. There are on-sale restrictions in Singapore that may be applicable to

222

investors who acquire Shares. As such, investors are advised to acquaint themselves with
the SFA provisions relating to resale restrictions in Singapore and comply accordingly.
European Economic Area - Belgium, Denmark, Germany, Liechtenstein,
Luxembourg, Netherlands and Spain
The information in the Prospectus and Investment Statement has each been prepared on
the basis that all offers of Shares will be made pursuant to an exemption under Directive
2003/71/EC (the "Prospectus Directive"), as amended and implemented in Member States
of the European Economic Area (each, a "Relevant Member State"), from the requirement
to produce a prospectus for offers of securities.
An offer to the public of the Shares has not been made, and may not be made, in a
Relevant Member State except pursuant to one of the following exemptions under the
Prospectus Directive as implemented in that Relevant Member State:

(a)

to any entity that is authorized or regulated to operate in the financial markets or

any other institutional investor whose main business is to invest in financial
instruments;

(b)

to any legal entity that satisfies two of the following three criteria: (i) balance
sheet total of at least 20,000,000; (ii) annual net turnover of at least
40,000,000 and (iii) own funds of at least 2,000,000 (as shown on its last
annual unconsolidated or consolidated financial statements);

(c)

to any person or entity who has requested to be treated as a professional client in

accordance with the EU Markets in Financial Instruments Directive (Directive
2004/39/EC, "MiFID"); or
to any person or entity who is recognized as an eligible counterparty in
accordance with Article 24 of the MiFID.

France
This Prospectus is not being distributed in the context of a public offering of financial
securities (offre au public de titres financiers) in France within the meaning of Article
L.411-1 of the French Monetary and Financial Code (Code montaire et financier) and
Articles 211-1 et seq. of the General Regulation of the French Autorit des marchs
financiers ("AMF"). The Shares have not been offered or sold and will not be offered or
sold, directly or indirectly, to the public in France.
This Prospectus and any other offering material relating to the Shares have not been, and
will not be, submitted to the AMF for approval in France and, accordingly, may not be
distributed (directly or indirectly) to the public in France. Such offers, sales and
distributions have been and shall only be made in France to qualified investors
(investisseurs qualifis) acting for their own account, as defined in and in accordance with
Articles L.411-2-II-2, D.411-1, L.533-16, L.533-20, D.533-11, D.533-13, D.744-1, D.7541 and D.764-1 of the French Monetary and Financial Code and any implementing
regulation.
Pursuant to Article 211-3 of the General Regulation of the AMF, investors in France are
informed that the Shares cannot be distributed (directly or indirectly) to the public by the
investors otherwise than in accordance with Articles L.411-1, L.411-2, L.412-1 and L.621-8
to L.621-8-3 of the French Monetary and Financial Code.
Ireland
The information in the Prospectus and/or the Investment Statement does not constitute a
prospectus under any Irish laws or regulations and neither the Prospectus nor the
Investment Statement has been filed with or approved by any Irish regulatory authority as
223

the information has not been prepared in the context of a public offering of securities in
Ireland within the meaning of the Irish Prospectus (Directive 2003/71/EC) Regulations
2005, as amended (the "Prospectus Regulations"). The Shares have not been offered or
sold, and will not be offered, sold or delivered directly or indirectly in Ireland by way of a
public offering, except to "qualified investors" as defined in Regulation 2(l1) of the
Prospectus Regulations.
Italy
The Offer in the Republic of Italy has not been registered with the Italian Securities and
Exchange Commission (the Commissione Nazionale per le Societ e la Borsa, or
"CONSOB") pursuant to the Italian securities legislation and, accordingly, no offering
material relating to the Shares may be distributed in Italy and the Shares may not be
offered or sold in Italy in a public offering within the meaning of Article 1.1(t) of Legislative
Decree No. 58 of 24 February 1998, as amended ("Decree No. 58"), other than:

(a)

to qualified investors (investitori qualificati), as defined in Article 100 of Decree

No. 58 by reference to Article 34-ter of CONSOB Regulation no. 11971 of May 14,
1999, as amended ("Regulation No. 11971"); and

(b)

in other circumstances that are exempt from the rules on public offering pursuant
to Article 100 of Decree No. 58 and Article 34-ter of Regulation No. 11971.

Any offer, sale or delivery of the Shares or distribution of any offer document relating to
the Shares in Italy (excluding placements where a qualified investor - as defined in
Regulation No. 11971 - solicits an offer from the issuer) under the paragraphs above must
be:

(c)

made by investment firms, banks or financial intermediaries permitted to conduct

such activities in Italy in accordance with Legislative Decree No. 385 of September
1, 1993 (as amended), Decree No. 58, CONSOB Regulation No. 16190 of October
29, 2007 (as amended) and any other applicable laws; and

(d)

in compliance with all relevant Italian securities, tax and exchange controls and
any other applicable laws.

Any subsequent distribution of the Shares in Italy must be made in compliance with the
public offering and prospectus requirement rules provided under Decree No. 58 and the
Regulation No. 11971, unless an exception from those rules applies. Failure to comply with
such rules may result in the sale of such Shares being declared null and void and in the
liability of the entity transferring the Shares for any damages suffered by the investors.
Norway
Neither the Prospectus nor the Investment Statement has been approved by, or registered
with, any Norwegian securities regulator under the Norwegian Securities Trading Act of
June 29, 2007. Accordingly, neither the Prospectus nor the Investment Statement shall be
deemed to constitute an offer to the public in Norway within the meaning of the Norwegian
Securities Trading Act.
The Shares may not be offered or sold, directly or indirectly, in Norway except to
"professional clients" (as defined in Norwegian Securities Regulation of 29 June 2007 no.
876 and including non-professional clients having met the criteria for being deemed to be
professional and for which an investment firm has waived the protection as nonprofessional in accordance with the procedures in this regulation).

224

Switzerland
The Shares may not be publicly offered in Switzerland and will not be listed on the SIX
Swiss Exchange ("SIX") or on any other stock exchange or regulated trading facility in
Switzerland. The Prospectus and the Investment Statement have been prepared without
regard to the disclosure standards for issuance prospectuses under art. 652a or art. 1156
of the Swiss Code of Obligations, the disclosure standards for listing prospectuses under
art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange or
regulated trading facility in Switzerland.
Neither the Prospectus nor the Investment Statement nor any other offering or marketing
material relating to the Shares may be publicly distributed or otherwise made publicly
available in Switzerland. The Shares will only be offered to regulated financial
intermediaries such as banks, securities dealers, insurance institutions and fund
management companies as well as institutional investors with professional treasury
operations.
Neither the Prospectus nor the Investment Statement nor any other offering or marketing
material relating to the Shares have been or will be filed with or approved by any Swiss
regulatory authority. In particular, neither the Prospectus nor the Investment Statement
will be filed with, and the offer of Shares will not be supervised by, the Swiss Financial
Market Supervisory Authority ("FINMA").
The Prospectus and the Investment Statement are personal to the recipient only and not
for general circulation in Switzerland.
United Kingdom
Neither the information in this Prospectus nor any other document relating to the offer has
been delivered for approval to the Financial Conduct Authority in the United Kingdom and
no prospectus (within the meaning of section 85 of the Financial Services and Markets Act
2000, as amended ("FSMA")) has been published or is intended to be published in respect
of the Shares. This document is issued on a confidential basis to "qualified investors"
(within the meaning of section 86(7) of FSMA) in the United Kingdom, and the Shares may
not be offered or sold in the United Kingdom by means of this document, any
accompanying letter or any other document, except in circumstances which do not require
the publication of a prospectus pursuant to section 86(1) FSMA. This document should not
be distributed, published or reproduced, in whole or in part, nor may its contents be
disclosed by recipients to any other person in the United Kingdom.
Any invitation or inducement to engage in investment activity (within the meaning of
section 21 of FSMA) received in connection with the issue or sale of the Shares has only
been communicated or caused to be communicated and will only be communicated or
caused to be communicated in the United Kingdom in circumstances in which section 21(1)
of FSMA does not apply to the Company or the Selling Shareholder.
In the United Kingdom, this Prospectus is being distributed only to, and is directed at,
persons (i) who have professional experience in matters relating to investments falling
within Article 19(5) (investment professionals) of the Financial Services and Markets Act
2000 (Financial Promotions) Order 2005 ("FPO"), (ii) who fall within the categories of
persons referred to in Article 49(2)(a) to (d) (high net worth companies, unincorporated
associations, etc.) of the FPO or (iii) to whom it may otherwise be lawfully communicated
(together "relevant persons"). The investments to which this document relates are
available only to, and any invitation, offer or agreement to purchase will be engaged in
only with, relevant persons. Any person who is not a relevant person should not act or rely
on this document or any of its contents.

225

226

SECTION 8: STATUTORY INFORMATION

The information in this section is included in accordance with the requirements of Schedule
1 to the Securities Regulations.
If you do not understand the information in this section, you should consult a
financial or legal adviser.
1

Main terms of the Offer

The issuer of the Shares is Intueri Education Group Limited. Its registered office is
set out in the Directory.
The securities being offered under this Offer are fully paid ordinary shares in the
Company. A fuller description of the Shares being offered is set out in Section 7
Details of the Offer.
The maximum number of Shares being offered under the Offer is 85 million (based
on the Indicative Price Range and the Selling Shareholder retaining 15% of the
Companys total Shares, as set out in Section 7 Details of the Offer).
The consideration to be paid for each Share is the Final Price.
An Indicative Price Range of $2.25 to $2.75 per Share has been set by the Issuers,
however the Issuers, in consultation with the Joint Lead Managers, may set the Final
Price within, above or below this range.
Following a bookbuild process in respect of the Institutional Offer and the Broker
Firm Offer, the Issuers, in consultation with the Joint Lead Managers, will set the
Final Price taking in to account various factors, including:
the level of demand for Shares in the bookbuild at various prices;
the desire for an orderly secondary market for the Shares; and
any other factors the Issuers consider relevant in meeting their objectives.
The Final Price is expected to be announced and posted on the website
www.intuerishares.co.nz on or about 7 May 2014.
Each Share gives the holder a right to:
attend and vote at a meeting of Shareholders, including the right to cast one
vote per Share on a poll on any resolution, such as a resolution to:
o

appoint or remove a director;

adopt, revoke or alter the Constitution;

approve a major transaction (as that term is defined in the

Companies Act);

approve the amalgamation of the Company under section 221 of the

Companies Act; or

227

place the Company in liquidation;

receive an equal share in any distribution, including Dividends, if any,

authorised by the Board and declared and paid by the Company in respect of
that Share;
receive an equal share with other Shareholders in the distribution of surplus
assets in any liquidation of the Company;
be sent certain information, including notices of meeting and company
reports sent to Shareholders generally; and
exercise the other rights conferred upon a Shareholder by the Companies Act
and the Constitution.
A Shareholder's ability to exercise these rights is subject to restrictions contained in
the Constitution, the NZX Listing Rules and the ASX Listing Rules.
2

Name and Address of Offeror

The offeror of the Shares is Intueri Education Group Holdings Limited. Its registered
office is set out in the Directory.
The net amount of consideration to be received by the Company in respect of the
Shares to be allotted to the Offeror is $62 million.

Details of Incorporation of the Issuer

The Company was incorporated in New Zealand on 17 September 2012 under the
Companies Act. The Companys registration number is 4013538.
You can inspect the public file relating to the Company maintained by the Companies
Office of the Ministry of Business, Innovation and Employment on its website at
www.business.govt.nz/companies.

Principal Subsidiaries of the Company

As at the date of this Prospectus, the principal subsidiaries of the Company (being a
subsidiary whose total tangible assets exceed 5% of the total tangible assets of
Intueri) were the following:
Name

Proportion of issued capital

owned by members of the
issuing group

D&A Education Holdings Limited

100%

Design and Arts College of New Zealand Limited

100%

Elite Education Holdings Limited

100%

Elite International School of Beauty and Spa

Therapies Limited

100%

NZSCDT Holdings Limited

100%

228

Global Education Group Limited

100%

The Cut Above Academy Limited

100%

Online Courses Australia Group Pty Limited

50%

Names, Addresses and Other Information

Directorate
The Directors of the Company, and the city, town or district in which their principal
residence is based as at the date of this Prospectus, are: Robert Charles Facer
(Auckland, New Zealand), Craig Douglas McIntosh (Burradoo, Australia), Russell
John Woodard (Stanwell Park, Australia), James Alexander Charles Turner
(Wellington, New Zealand) and Christopher Morton Kelly (Wellington, New Zealand).
You can contact the Directors at the registered office of the Company as set out in
the Directory.
Robert Charles Facer is the Chief Executive of the Company.
Promoters
Arowana International Limited is a Promoter of the Offer. Its registered office is set
out in the Directory.
The directors of Arowana International Limited and the city, town or district in which
their principal residence is based as at the date of this Prospectus, are: Kevin Tser
Fah Chin (Brisbane, Australia), David Malcolm Keefe (Sydney, Australia) and Hon
John Colinton Moore, (Mooloolaba, Australia).
Registrar
The share registrar of the Company is Computershare Investor Services Limited. The
contact address of the Registrar is set out in the Directory.
Auditor
The auditor of the Company is BDO Auckland. The contact address of the Auditor is
set out in the Directory.
Advisers
The names and addresses of the financial advisers to the Company and the solicitors
and other professional advisers who have been involved in the preparation of this
Prospectus are set out in the Directory.
Experts
BDO Auckland, Chartered Accountants, have given their consent and has not
withdrawn their consent before delivery of this Prospectus for registration under
section 41 of the Securities Act to the distribution of this Prospectus with the
inclusion of the Investigating Accountants Report in this Prospectus in the form and
context in which it is included. The address of BDO Auckland is set out in the
Directory.
Neither BDO Auckland nor any director, officer or employee of it, is or is intended to
be, a director, officer or employee of the Issuers. However, BDO Auckland has
provided, and may in the future provide, professional advisory services to the
Company.

229

Restrictions on Directors Powers

The Constitution incorporates by reference the requirements of the NZX Listing
Rules and the ASX Listing Rules and requires the Company to comply with the NZX
Listing Rules and the ASX Listing Rules for so long as the Shares are quoted on the
NZX Main Board and the ASX respectively. The principal restrictions on the powers
of the Board imposed by the Constitution (including the requirements of the NZX
Listing Rules and the ASX Listing Rules incorporated into the Constitution), the NZX
Listing Rules and the ASX Listing Rules (which will apply once the Shares are quoted
on the NZX Main Board and the ASX respectively) are that the Board may not:
issue or acquire any equity security except in accordance with the provisions of
the Companies Act, the Constitution, the NZX Listing Rules and the ASX Listing
Rules;
give financial assistance for the purpose of, or in connection with, the acquisition
of equity securities issued or to be issued by the Company, except in limited
circumstances and in accordance with the provisions of the Companies Act, the
Constitution, the NZX Listing Rules and the ASX Listing Rules;
cause the Company to enter into any transaction or series of linked or related
transactions to acquire, sell, lease, exchange or otherwise dispose of (otherwise
than by way of charge) assets of the Company which would change the essential
nature of the business of the Company in respect of which the gross value is in
excess of 50% of the average market capitalisation of the Company, without the
prior approval of Shareholders in accordance with the Constitution, the NZX
Listing Rules and the ASX Listing Rules; and
allow the Company to enter into certain material transactions with related
parties, a subsidiary, certain substantial holders of Shares, or any associates of
any of those persons, if those persons or their associates are, or are likely to
become, direct or indirect parties to the material transaction without the prior
approval of Shareholders in accordance with the Constitution, the NZX Listing
Rules and the ASX Listing Rules.
In addition, a Director may not vote on any matter in which he or she is interested,
unless permitted by the Companies Act and the NZSX Listing Rules and ASX Listing
Rules where he or she has complied with the relevant provisions and signed a
certificate in respect of the matter.
The Companies Act contains a number of other provisions that could have the effect,
in certain circumstances, of imposing restrictions on the powers of the Board. For
example, Directors cannot allow the Company to:
enter into any major transaction (as that term is defined in the Companies Act)
without the prior approval of a special resolution of Shareholders; or
take any action which affects the rights attached to the Shares without the prior
approval of a special resolution of each interest group (being a group of
Shareholders with similar or identical rights).
These provisions apply to any company registered under the Companies Act.

230

Substantial Equity Security Holders of Issuer

As of the date of this Prospectus, the Company is wholly-owned by the Selling
Shareholder. The Selling Shareholder does not guarantee, or undertake any liability
in respect of, the Shares being offered under the Offer.
Immediately after quotation of Shares on the NZX Main Board, substantial security
holder notices are expected to be given by the Selling Shareholder in respect of the
Final Percentage (as registered owner of Shares).
None of the persons named above guarantees, or undertakes any liability in respect
of, the Shares being offered under the Offer.

Description of the Activities of the Issuing Group

Since incorporation on 17 September 2012, the Company has acted as a holding
company for the Group. The principal activities of the Group, the issuing group for
the purposes of the Securities Regulations, are:
operating several PTE businesses; and
providing other vocational training services.
These activities are described in further detail in Section 4 Business Overview.
The principal assets of the Group are intellectual property (primarily in course
materials and in systems and software relating to the provision of vocational training
services) and plant and equipment. These assets are used in carrying out the
activities described above.
The Group owns, leases or licences these assets. Some of the assets are subject to
obligations in favour of another person that modify or restrict the Groups ability to
deal with them, as described under the heading Restrictions on the Issuing Group,
below.

Summary Financial Statements

Summary financial statements in respect of the Group for the accounting period
ended 30 June 2013 and the interim period ended 31 December 2013 (being all of
the completed accounting periods since the Companys incorporation) are set out in
Section 5.4 Historical Financial Information.

10

Prospects and Forecasts

Trading prospects of the Group, together with any material information that may be
relevant to those prospects are described generally in Section 4 Business Overview
and Section 5.2 Overview of Intueris Financial Information and Section 5.3
Prospective Financial Information.
Any special trade factors and risks which could materially affect the prospects of the
Group and which are not likely to be known or anticipated by the general public are
set out in Section 6 What are my Risks?.

11

Provisions Relating to Initial Flotations and Minimum Subscription

The plans of the Directors in respect of the Group during the 12 month period
commencing on the date of this Prospectus are described in Section 4 Business
Overview.

231

The source of finance required for these plans will be funds received from the issue
of new Shares pursuant to the Offer, operating cash flow, existing debt facilities,
working capital and other financial accommodation considered prudent and
appropriate by the Group during that 12 month period.
The proceeds of the Offer payable to the Company will be used to fund the Quantum
Acquisition, including associated transaction costs, fees for the Offer, and to repay
related-party loans, including those associated with the OCA Acquisition, to the
extent that existing cash cannot fund these repayments. The proceeds of the Offer
payable to the Selling Shareholder will be for the benefit of the Selling Shareholder
and will not be applied towards the Directors plans set out above.
A prospective statement of financial position, a prospective statement of financial
performance (referred to as a Statement of Comprehensive Income) and a
prospective statement of cash flows of the Group for the accounting periods ending
31 December 2014 and 31 December 2015 are set out in Section 5.3 Prospective
Financial Information.
For the purposes of section 37(2) of the Securities Act, the minimum amount that,
in the opinion of the Directors, must be raised in order to provide the sums required
to be provided in respect of:
the purchase price of any property which is to be defrayed in whole or in part
out of the proceeds of the Offer;
any preliminary expenses payable by the Company, and any commission payable
to any person in consideration of his or her agreeing to subscribe for, or his or
her procuring or agreeing to procure subscriptions for, Shares;
working capital; and
the repayment of any money borrowed by the Company in respect of any of the
foregoing matters,
is $62 million.
12

Acquisition of Business or Subsidiary

Significant historical acquisitions
The following members of the Group (the issuing group for the purposes of the
Securities Regulations) became subsidiaries of the Company in the 2 years
preceding 15 April 2014, where the consideration paid to acquire the relevant
subsidiary exceeded one-fifth of the total tangible assets shown in the condensed
statement of financial position of the Group for the 9-month period ended 30 June
2013 set out on pages 102-139:
The Cut Above Academy Limited, which carried on business as a PTE in the
course of the period from 15 April 2009 until 22 February 2013, being the date
on which it became a subsidiary of the Company;
Global Education Group Limited, which carried on business as a PTE in the
course of the period from 15 April 2009 until 12 February 2013, being the date
on which it became a subsidiary of the Company; and

232

Elite Education Holdings Limited, which carried on business as a PTE in the

course of the period from 15 April 2009 until 8 February 2013, being the date on
which it became a subsidiary of the Company.
Summary financial statements in tabular form for the above subsidiaries of the
Company are set out in Section 5.4 Historical Financial Information in respect of the
following periods:
The Cut Above Academy Limited: the financial periods ended 30 June 2013 and
31 December 2012, 2011 and 2010;
Global Education Group Limited: the financial periods ended 30 June 2013 and
31 March 2012, 2011, 2010 and 2009; and
Elite Education Holdings Limited and its controlled entities for the year ended 31
December 2012 and financial period ended 30 June 2013 and Elite International
School of Spa and Beauty Therapies Limited for the years ended 31 December
2009, 2010 and 2011.
Significant acquisitions referred to in the Prospectus
Quantum Education Group Limited
The Company has entered into a conditional sale and purchase agreement
(Quantum Agreement) to acquire 100% of the shares in Quantum Education Group
Limited.
The amount of consideration payable by the Company for the shares is $38,000,000,
subject to working capital and other adjustments.
The business carried on by Quantum Education Group Limited in the period from 15
April 2009 until 15 April 2014 was owning and operating PTEs (both itself and
through its subsidiaries Quantum Education Group (QT) Limited and Quantum
Education Group (ES) Limited).
Summary financial statements in tabular form for Quantum Education Group Limited
in respect of the financial years ended 31 December 2013, 2012, 2011, 2010 and
2009 are set out in Section 5.4 Historical Financial Information.
Audited financial statements for Quantum Education Group Limited for the financial
year ended 31 December 2013 are set out in Section 5.4 Historical Financial
Information.
Business of Learntree Limited
Intueri Materials Limited (being a member of the issuing group for the purposes of
the Securities Regulations) has entered into a conditional sale and purchase
agreement (Learntree Agreement) to acquire the business of Learntree Limited
(the Learntree Business).
The amount of consideration payable by Intueri Materials Limited for the Learntree
Business is $20,000,000, subject to working capital and other adjustments.
The business carried on by Learntree Limited in the period from 15 April 2009
until15 April 2014, to be acquired by Intueri Materials Limited from Learntree
Limited, related to the supply of course materials and support services to PTEs and

233

similar organisations, including those operated by Quantum Education Group

Limited.
Summary financial statements in tabular form for the Learntree Business in respect
of the financial years ended 31 March 2013, 2012, 2011, 2010 and 2009 are set out
in Section 5.4 Historical Financial Information, in accordance with the Securities Act
(Intueri Education Group Limited) Exemption Notice 2014.
Audited financial statements for the Learntree Business for the financial year ended
31 March 2013 are set out in Section 5.4 Historical Financial Information.
The Learntree Agreement, the Quantum Agreement and the agreements under
which the shares in The Cut Above Academy Limited, Global Education Group
Limited and Elite International Holdings Limited were acquired are each material
contracts in terms of clause 17 of schedule 1 of the Securities Regulations and are
discussed below under the heading Material Contracts.
13

Securities Paid up Otherwise than in Cash

On 8 February 2013, the Company issued 6,360,727 Shares to the Selling
Shareholder in exchange for ordinary shares in Elite Education Holdings Limited and
D&A Education Holdings Limited. The Shares were issued fully paid up.

14

Options to Subscribe for Securities of the Issuing Group

Not applicable.

15

Appointment and Removal of Directors

The Company is party to a listing agreement with NZX (a registered exchange) and
expects to be party to a listing agreement with ASX and the method by which
Directors may be appointed to or removed from, or otherwise vacate, office is the
same as that contained in the NZX Listing Rules and the ASX Listing Rules. No
person (other than the Shareholders of the Company in a general meeting, or the
Directors acting as a Board to fill a casual vacancy) has the right to appoint any
Director.
Each Director has the power to appoint any person (other than a fellow Director) as
an alternate Director, who may be any person not disqualified under the Companies
Act from holding the position of a director of a company and who is approved by a
majority of the other Directors.

16

Interested Persons
For the purposes of the information set out under this heading, specified person
means:
-

a Director or proposed Director of the Company, or an associated person of

any of them;

the Selling Shareholder or an associated person of the Selling Shareholder;

and

Arowana, each director of Arowana, or an associated person of any of them.

Except as described in Section 4.5 Executive Remuneration and Share Plans with
respect to the Chief Executive, Rob Facer, no specified person will be entitled to any
remuneration for services in respect of the Group or to recover expenses, other than

234

by way of directors fees, and reasonable travelling, accommodation and other

expenses incurred in the course performing duties or exercising powers as a
director. There is no dollar limit on the expenses that Directors are entitled to
recover from the Group. The annual total pool for Directors fees is $400,000. The
Company has granted its Directors an indemnity to the maximum extent permitted
by law and the Constitution. The Company intends to maintain insurance for its
Directors.
As at the date of this Prospectus, the Selling Shareholder is the sole shareholder of
the Company. Arowana is the ultimate parent company of the Selling Shareholder,
through its sole shareholding in the Selling Shareholders immediate parent
company, Arowana International Holdings Limited.
James Turner, a Director, was previously a consultant to the Company from
February 2012 to March 2014. In this capacity he spent one to two days per month
working with the Company on regulatory matters and providing industry advice to
the Companys board and management. Mr. Turners engagement with the Company
was undocumented. The income received by Mr. Turner in connection with the
engagement was a daily rate of between $750 and $1000.
Russell Woodard, a Director, was previously a consultant to the Company in the
period from October 2012 to January 2014. In this role he provided international
sales and marketing advice to the Company and its colleges. In exchange for these
services he was initially paid A$8,700 per month from October 2012 until August
2013, and then A$11,000 per month from August 2013 until January 2014.
The Selling Shareholder, as the sole shareholder of the Company since 20 December
2012, and Arowana, as the indirect parent of the Selling Shareholder, have a
material interest in the Company through the Shares in the Company held by the
Selling Shareholder.
Clause 16(3) of Schedule 1 to the Securities Regulations specifies that, if more than
10% of the value of the assets of the Company (calculated in accordance with
generally accepted accounting practice) was, at any time during the 2 years prior to
the date this Prospectus was registered with the Registrar of Financial Service
Providers, represented directly or indirectly by any securities of which any
associated person (as that term is defined in the Securities Act) of the Company,
any Promoter, any associated person of any Promoter, the Offeror or any associated
person of the Offeror, was the issuer, then a description of those securities must be
provided.
On 8 February 2013 the Company acquired Elite and D&A. Kevin Chin, chief
executive officer and director of Arowana, owned 39.7% of the ordinary shares in
Elite, and 34.5% of the ordinary shares in D&A, at the time of their acquisition by
the Company. Upon completion of the acquisition, the ordinary shares in Elite and
D&A previously held by Mr. Chin totalled approximately 30% of the value of the
Companys assets (calculated in accordance with generally accepted accounting
practice). The shares were acquired by the Company on arms-length terms.
Except as set out above, no specified person has, or has had at any time during the
five years preceding the date of this Prospectus, any direct or indirect material
interest in the Group, or in any contract or arrangement entered into on behalf or in
respect of the Group, that is material to either or both of the person who has the
interest and the Group.

235

17

Material Contracts
Members of the Group have entered into the following material contracts (not being
contracts entered into in the ordinary course of business) in the two years preceding
15 April 2014:
Quantum Agreement
On 16 February 2014, the Company (as purchaser) entered into an Agreement for
sale & purchase of shares in Quantum Education Group Limited and Quantum
Corporate Training Limited with the shareholders of Quantum Education Group
Limited and Quantum Corporate Training Limited (as vendors), Arowana
International Limited (as purchasers guarantor) and Quantum Education Group
Limited.
Pursuant to this agreement, the Company agreed to purchase all of the shares in
Quantum Corporate Training Limited and Quantum Education Group Limited, subject
to the satisfaction of certain conditions precedent.
Learntree Agreement
On 16 February 2014, Intueri Materials Limited (as purchaser) entered into an
Agreement for Sale and Purchase of Business with Learntree Limited (as vendor),
Arowana International Limited (as purchasers guarantor) and certain shareholders
of Learntree Limited (as vendors guarantors).
Pursuant to this agreement, Intueri Materials Limited agreed to purchase the
business and assets (other than certain excluded assets which were personally used
by the shareholders of Learntree Limited) of Learntree Limited, subject to the
satisfaction of certain conditions precedent.
Elite Agreement
On or about 8 February 2013, Arowana International Advisors Pty Limited (as
purchaser) entered into a Share Sale Agreement with the shareholders of Elite
Education Holdings Limited (as vendors).
Pursuant to this agreement, Arowana International Advisors Pty Limited (or its
nominee) agreed to purchase all of the shares in Elite Education Holdings Limited,
subject to the satisfaction of various conditions precedent. Arowana International
Advisors Pty Limited nominated the Company to purchase the shares.
Cut Above Agreement
On or about 31 October 2012, Arowana International Advisors Pty Limited (as
purchaser) entered into a Share Sale Agreement relating to shares in The Cut
Above Academy Limited with the shareholders of The Cut Above Academy Limited
(as vendors).
Pursuant to this agreement, Arowana International Advisors Pty Limited (or its
nominee) agreed to purchase all of the shares in The Cut Above Academy Limited,
subject to the satisfaction of various conditions precedent. Arowana International
Advisors Pty Limited nominated the Company to purchase the shares.
Global Education Group Agreement
On or about 21 September 2012, Arowana International Advisors Pty Limited (as
purchaser) entered into a Share Sale Agreement relating to shares in Global
Education Group Limited with the shareholders of Global Education Group Limited
(as vendors).

236

Pursuant to this agreement, Arowana International Advisors Pty Limited (or its
nominee) agreed to purchase all of the shares in Global Education Group Limited,
subject to the satisfaction of various conditions precedent. Arowana International
Advisors Pty Limited nominated the Company to purchase the shares.
Offer Management Agreement
On 15 April 2014, the Company, the Offeror, Arowana and the Joint Lead Managers
entered into the Offer Management Agreement, which sets out the obligations of the
Joint Lead Managers in relation to the operation of the Offer bookbuild and also in
relation to the provision of settlement support in certain circumstances described
below.
Under the Offer Management Agreement, the Joint Lead Managers commit to
conduct the bookbuild for the Offer. Once the Final Price has been determined, the
Joint Lead Managers or their affiliates will be obliged, subject to various terms and
conditions, to provide settlement support in respect of successful bids into the Offer
bookbuild under the Institutional Offer and the Broker Firm Offer, so that if those
bids are not paid for in cleared funds the Offeror may require the Joint Lead
Managers to pay for and be allocated the Shares instead.
The Joint Lead Managers may terminate the Offer Management Agreement (and
their settlement support obligations) in certain circumstances including, for example,
if a material adverse change (or any event which is likely to give rise to a material
adverse change) occurs in Intueri (financially or otherwise), or if an event occurs
which makes it illegal for the Joint Lead Managers to comply with the Offer
Management Agreement or to market, promote or settle the Offer.
The obligations of the Joint Lead Managers under the Offer Management Agreement
are subject to certain conditions. These conditions include, for example:
receipt by the Joint Lead Managers of various legal and accounting advice,
reports, opinions, comfort letters and other sign-offs arising from the due
diligence processes followed in respect of the Offer;
registration of this Prospectus;
receipt of Arowana shareholder approval for the Offer; and
all necessary regulatory approvals being granted (or, in certain cases, an
indication from the relevant regulator, that they will be).
Pursuant to the Offer Management Agreement, the Company and the Offeror have
granted an indemnity to the Joint Lead Managers (and certain persons related to the
Joint Lead Managers) in relation to losses which relate to or arise from the Offer
Management Agreement or the Offer, including losses resulting from a breach by the
Company or the Offeror of their respective obligations under the Offer Management
Agreement, any representation or warranty made or given by the Company or the
Offeror under the Offer Management Agreement being untrue or incorrect, or any
unlawful, negligent, reckless or deliberately wrongful act or omission by the
Company or the Offeror in relation to the Offer.
The Offer Management Agreement also sets out a number of representations,
warranties and undertakings given by Arowana, the Company and the Offeror to the

237

Joint Lead Managers, and by the Joint Lead Managers to the Company and the
Offeror customary for an offering of this nature.
Arowana guarantees the obligations of the Company and the Offeror under the Offer
Management Agreement (including any obligations to pay money), and indemnifies
the Joint Lead Managers in relation to losses arising from and incurred in connection
with a breach by the Company or the Offeror of their obligations under the Offer
Management Agreement. This guarantee only applies to specified obligations that
fall due for performance by the Company on or before settlement of the Offer.
The Company has agreed that, subject to certain exceptions, during the
period of 180 days from the settlement of the Offer, it will not, without the
prior written consent of the Joint Lead Managers allot or issue, issue or
grant any right or option in respect of an issue of, create any debt
obligation which may be convertible or exchangeable into or redeemable
by, or otherwise enter into an agreement entitling a person to the allotment
and issue of, in each case, Shares or other equity securities of the
Company.
Restricted Security Agreement
On 15 April 2014 2014, the Company and the Selling Shareholder entered into a
Restricted Security Agreement that provides that, for the period from the date on
which the Shares are first quoted on the NZX Main Board until the first day after the
date of the announcement to NZX of the preliminary financial announcement of the
Companys financial results in respect of the year ended 31 December 2015, the
Selling Shareholder will not dispose of any of its Shares, other than:
with the prior written consent of the non-interested Directors (as that term is
defined in the Companies Act), the Company and the NZX;
to an affiliate who enters into a restricted security agreement with the Company
for the balance of restricted period;
in connection with a takeover offer under the Takeovers Code or similar scheme
or arrangement; or
pursuant to the grant of a security interest in favour of a bona fide lender to the
Selling Shareholder.
Multi-Company Facility Agreement
On or about 21 December 2012, the Company, as borrower, and Arowana
International Holdings Limited, as surety, entered into a Multi-Company Facility
Agreement (ANZ Facility) with ANZ Bank New Zealand Limited.
Under the ANZ Facility the Company was provided with borrowing facilities totalling
$21,840,000, for the purposes of assisting with the purchase of certain of the
Companys now-subsidiaries, and for working capital.
The ANZ Facility is repayable by the Company in equal monthly instalments, with a
final payment of $11,852,000 being due on 30 May 2016.
The ANZ Facility is secured by a guarantee and indemnity supplied by Arowana
International Holdings Limited, and first-ranking security granted by the Company.

238

ANZ Formal Offer of Facilities to the Company

On 14 April 2014, ANZ Bank made a formal written offer to the Company to provide
the Company with two new loan facilities:
a $20,000,000 term loan facility, for the purpose of refinancing existing debt
funding, for a 3 year (interest only) term; and
a $20,000,000 acquisition funding facility, for a 12 month (interest only) term.
It is the Companys intention to accept the ANZ Banks offer of these facilities,
subject to the satisfactory negotiation of formal loan documentation.
Agreement for sale and purchase of and subscription for Shares in the
Company
The Company, the Offeror and the Selling Shareholder have entered into an
Agreement for sale and purchase of, and subscription for Shares in, the Company
dated 15 April 2014, under which the Offeror agrees to purchase certain Shares
from the Selling Shareholder and the Offeror agrees to subscribe for additional
Shares in the Company. The purchase and subscription will take place on or about
the Allotment Date, at the Final Price, and are being undertaken for the purpose of
offering these Shares under the Offer.
18

Pending Proceedings
Not applicable.

19

Preliminary and Issue Expenses

Issue expenses (including any potential discretionary fees payable to the Joint Lead
Managers, brokerage and commission fees, share registry expenses, legal fees,
audit and accounting fees, other professional consulting fees and employee
compensation specifically related to the Offer, advertising costs, printing costs and
postage and courier costs) relating to the Offer are estimated to amount to an
aggregate of approximately $12.5 million, assuming the maximum Offer size and a
Final Price at the top of the Indicative Price Range.
Arowana will pay a percentage of the costs of the arranger fee, manager fee, UBS
fee and any incentive fees payable to the Joint Lead Managers based on the number
of shares the Selling Shareholder sells in the Offer as a percentage of the total
number of Shares sold in the Offer. Based on the Selling Shareholders maximum
sell down this will be approximately $9.4 million.
Arowana has entered into an engagement agreement with the Joint Lead Managers
under which the Joint Lead Managers are entitled to receive the following fees:
an arranger fee of $1,000,000, to be shared equally by the Joint Lead Managers;
and
a management fee of 2.50% of the aggregate proceeds of all Shares sold under
the Offer, to be shared equally by the Joint Lead Managers
NZX Firms will be paid a brokerage fee of 1.5% of the gross proceeds in respect of
Shares allotted pursuant to valid Applications for a firm allocation in the Broker Firm
Offer. This brokerage fee will be payable by the Joint Lead Managers out of the
proceeds of the management fee.

239

In addition, the Company will, at its sole discretion, pay an incentive fee of up to
0.625% of the aggregate proceeds of all Shares under the Offer to each Joint Lead
Manager.
Separately, Arowana has entered into an engagement agreement with UBS New
Zealand Ltd (UBS) (one of the Joint Lead Managers), under which UBS is entitled
to receive a fee of $500,000 in consideration for advice and services provided by
UBS in relation to the Offer.
The Company did not incur any preliminary expenses, in terms of clause 19(2) of
Schedule 1 to the Securities Regulations.
20

Restrictions on Issuing Group

The restrictions on the Group making a distribution or borrowing that result from
any undertaking given, or contract or deed entered into, by a member of the Group,
are described in this section.
Multi-Company Facility Agreement
The Company is a party to the ANZ Facility and a Composite General Security Deed
with ANZ Bank New Zealand Limited, which include:
an undertaking by each member of the Group to ensure that the ratio which
Bank Debt bears to Group EBITDA (as those terms are defined in the ANZ
Facility) for the previous 12 months is no greater than 2.25 to 1 (stepping down
by 0.25 on 30 June 2014 and every 12 months thereafter) (Leverage Financial
Covenant). This ratio effectively acts as a cap on borrowings, and it may also be
that the assets of the Group are required to be retained rather than distributed
to ensure compliance with this undertaking;
an undertaking by each member of the Group to ensure that the ratio which
Group EBITDA bears to Group Interest Costs (as those terms are defined in the
ANZ Facility) is not less an 4.0 to 1 (Interest Coverage Covenant). The higher
the borrowings of the Group, the greater the Group Interest Costs will be. As a
result, this financial covenant indirectly restricts the ability of the Group to
borrow money;
if an Event of Default (as that term is defined in the Composite General Security
Deed) occurs, any distributions made must be applied towards repayment of the
ANZ Facility. If this occurred, the Group would be restricted from paying
distributions to Shareholders;
The Company is also subject to general company law restrictions (such as
satisfaction of the solvency test under the Companies Act) in relation to the payment
of Dividends, which operate as fetters on the ability to make distributions.
Other than these restrictions, there are no restrictions on the Group making a
distribution, or borrowing, being restrictions that result from any undertaking given,
or contract or deed entered into, by a member of the Group.

21

Other Terms of Offer and Securities

All of the terms of the Offer, and all the terms of the Shares, are set out in this
Prospectus, other than any terms implied by law or any terms set out in a document
that has been registered with a public official, is available for public inspection and is
referred to in this Prospectus.

240

22-23 Financial Statements

Audited financial statements for the 9 month accounting period ended 30 June 2013
are set out in Section 5.4 Historical Financial Information. The financial statements
comply with, and have been registered on 10 April 2014 under, the Financial
Reporting Act.
24

Additional Interim Financial Statements

Audited interim financial statements for the 6-month period ended 31 December
2013 are set out in Section 5.4 Historical Financial Information.

25

Places of Inspection of Documents

You may inspect (without charge) during the period of the Offer, during normal
business hours, the Constitution, copies of the material contracts referred to above
under the heading Material Contracts and copies of the financial statements
referred to above under the heading Financial Statements at the Companys
registered office as set out in the Directory. You may also inspect copies of those
documents at any time on the Companies Office website (without charge) at
www.business.govt.nz/companies.

26

Other Material Matters

Securities Act Exemption
The Issuers were granted, on 14 April 2014, the Securities Act (Intueri Education
Group Limited) Exemption Notice (Exemption Notice). The Exemption Notice,
among other things:
permits the Issuers to include prospective financial information for the Group for
the accounting periods ending 31 December 2014 and 31 December 2015,
instead of 30 June 2014 and 30 June 2015, on the basis that calendar-year
based prospective financial information better corresponds with the academic
year of the Company. This exemption is conditional on the Company changing
its balance dates from 30 June to 31 December as soon as practicable following
completion of the Offer;
permits the Issuers to not include summary historical financial statements for
Cut Above for the accounting period ended 31 December 2009, on the basis that
the available accounts for that year were not audited or reviewed and are
considered to be potentially unreliable; and
permits the issuers not to include summary historical financial statements for
Learntree for the accounting period ended 31 March 2014, on the basis that the
full financial statements for that accounting period are not yet available as of the
date of this Prospectus. The exemption is conditional on, among other things,
this Prospectus and the Investment Statement including a statement by the
Directors and the director of the Offeror to the effect that there has been no
material adverse change in the financial condition of Learntree since 31 March
2013.
ASX Listing Rule waivers and confirmations
The Company has applied to ASX for waivers and confirmations from the ASX Listing
Rules which are customary for a New Zealand company listed with both the NZX
Main Board and the ASX, and a waiver from Listing Rule 10.14 to allow the Company
to issue shares under its Executive LTI Plan to directors of the Company or their
associated people.

241

There are no other material matters relating to the Offer, other than those set out in
this Prospectus, the financial statements or in contracts entered into in the ordinary
course of business of a member of the Group
27

Directors Statement
The Directors of the Company, after due inquiry by them, are of the opinion that
none of the following have materially and adversely changed during the period
between 31 December 2013 and the date of registration of this Prospectus:
the trading or profitability of the Group;
the value of the Groups assets; or
the ability of the Group to pay its liabilities due within the next 12 months.

28

Auditors Report
The Auditors report required by clause 28 of Schedule 1 to the Securities
Regulations is set out in Section 5.5 Statutory Auditors Report. BDO Auckland has
a current transitional licence under the Auditor Regulation Act 2011 with registration
number AUD090. There are no restrictions or limitations on BDO Aucklands
registration.

242

29

Signatures required by the Securities Act

A copy of this Prospectus has been signed by each Director of the Company as
issuer, by the director of the Offeror as issuer and by each Promoter, being Arowana
and each director of Arowana (none of whom are directors of either Issuer).

243

SECTION 9: NEW ZEALAND TAXATION IMPLICATIONS

In this section, you refers to the person who acquires the Shares.
Tax will affect your return from the Shares.
The following comments are of a general nature. They are based on the law at the date of
this Offer Document and do not deal with your specific circumstances.
You should seek your own tax advice in relation to your Shares.
Are you tax resident in New Zealand?
Your tax residence will affect how New Zealand taxes apply to your return on the Shares.
If you are a natural person and you have:
a permanent place of abode in New Zealand; or
been present in New Zealand for more than 183 days in a 12 month period, and not
subsequently absent from New Zealand for more than 325 days in a 12 month period,
you will be a New Zealand tax resident.
A company is tax resident in New Zealand if it is incorporated in New Zealand, has its head
office or centre of management in New Zealand, or if its directors exercise control of the
company in New Zealand.
Generally Shares held by a trustee will be treated as held by a New Zealand resident for
withholding tax purposes if the trustee is New Zealand resident.
If you are also a tax resident in another country, the following summary applying to New
Zealand residents may not apply to you, and you should seek further tax advice.
Distributions
Distributions you receive from the Company will generally be taxable dividends for New
Zealand tax purposes. The Company may attach imputation tax credits to taxable
dividends, representing New Zealand income tax paid by the Company or its subsidiaries
on the distributed income. Some distributions you receive from the Company may not be
taxable dividends (for example, non-taxable bonus issues and certain returns of capital).
New Zealand tax implications for New Zealand tax resident Shareholders
The following is a summary of the New Zealand tax implications of investing in the Shares
if you are tax resident in New Zealand.
Dividends you receive on your Shares
The Company will generally be required to withhold resident withholding tax (RWT) from
taxable dividends it pays. Currently, the rate of RWT on a fully imputed dividend is
approximately 7% of the cash dividend. The Company will not withhold RWT from taxable
dividends you receive if you hold a current RWT exemption certificate that you have
produced to the Company before the dividend is paid to you.
If you do not have to file an income tax return, receiving taxable dividends from the
Company will not change that. If your tax rate is less than 33% receipt of taxable
dividends may entitle you to reduce your other tax liabilities, or get a refund of any RWT
on the dividends, by filing a tax return.
If you file a tax return, you must include in your taxable income not only the cash dividend
you receive, but also the imputation credits attached to, and RWT withheld from, your

244

Company dividend. The total amount included in your taxable income is referred to as the
gross Dividend. You will be able to use attached imputation credits and a credit for RWT
deducted to satisfy (or partially satisfy) your tax liability on the gross dividend. If the
attached imputation credits and RWT deducted exceed the amount of tax on the gross
dividend, your tax liability on other income you earn will be reduced as a result of receiving
the Company dividend.
Sale or disposal of Shares
Although New Zealand does not have a capital gains tax, there are instances where you
will be subject to New Zealand tax on gains you make on the sale or disposal of your
Shares. You must consider your individual circumstances to determine whether any gain
you make on the sale or disposal of your Shares is taxable. Generally, you will be subject
to tax on any gain arising from the sale or disposal of your Shares if you:
are in the business of dealing in shares;
acquire your Shares as part of a profit making undertaking or scheme; or
acquire your Shares with the dominant purpose of selling them.
If any of the above applies to you, your taxable gain (or tax deductible loss) will be the
difference between the cost of your Shares and the market value of the consideration you
receive for the Shares. If you have a taxable gain/(loss) you should include that gain/(loss)
in a tax return for the tax year in which the sale occurs and pay any tax owing in respect of
that gain at your marginal rate.
New Zealand tax implications for non-resident Shareholders
The following is a summary of the New Zealand tax implications of investing in the Shares
if you are not tax resident in New Zealand and hold less than 10% of the shares in the
Company.
Dividends you receive on your Shares
The Company will withhold non-resident withholding tax (NRWT) from dividends on your
Shares. A 15% rate of NRWT will apply:
to the extent the dividend is fully imputed; or
if you are resident in a country with which New Zealand has a Double Taxation
Agreement,
otherwise a 30% rate of NRWT will apply.
If the Company pays a fully imputed dividend, then the Company may pay you an
additional supplementary dividend to offset the NRWT on the dividend.
The NRWT withheld may entitle you to a tax credit in your home country.
Sale or disposal of Shares
Refer to the Sale or disposal of Shares section under the New Zealand tax implications
for New Zealand tax resident Shareholders heading above for a summary of the potential
application of New Zealand tax to any gain you derive on the sale or disposal of your
Shares.
New Zealand may not be entitled to tax any income you derive from the sale or disposal of
your Shares if you are resident in a country which has a Double Taxation Agreement with
New Zealand and do not have a permanent establishment in New Zealand.

245

No stamp duty or GST

New Zealand does not have stamp duty. New Zealand GST should not apply to your
investment in the Shares.

246

SECTION 10: INFORMATION FOR AUSTRALIAN INSTITUTIONAL

INVESTORS
IMPORTANT NOTICE
This section contains information for eligible Australian Institutional Investors (as defined
below). You should read all of this Prospectus and the Investment Statement before
deciding whether or not to purchase Shares in the Company.
1

Australian Institutional Offer

The Offer is being made in Australia only to selected investors who are
sophisticated or professional investors as respectively referred to in sections 708(8)
and 708(11) of the Corporations Act 2001 (Cth) of Australia (the Australian
Corporations Act).
No general public offer is being made in Australia.
The Institutional Offer in Australia consists of an invitation to Australian
Institutional Investors to bid for Shares. For further details see Section 7 Details of
the Offer.
For further details, refer to Section 7 Details of the Offer.

Offer Document
The Institutional Offer in Australia is being made under this Prospectus and the
Investment Statement and by relying on trans-Tasman mutual recognition under
Chapter 8 of the Australian Corporations Act and the Corporations Regulations 2001
(Cth) of Australia (the Australian Corporations Regulations).
This Additional Australian Information contains disclosure relevant to Australian
Institutional Investors and to comply with requirements for a recognised offer
under Chapter 8 of the Australian Corporations Act and the Australian Corporations
Regulations.
This Prospectus and the Investment Statement have been prepared to comply with
New Zealand regulatory requirements, which differ in some respects from
Australian regulatory requirements for an offer of shares. This Prospectus and the
Investment Statement are not, and do not purport to be, a prospectus or document
containing disclosure to investors for the purposes of, and do not contain all
information that would be required for a prospectus, product disclosure statement
or other disclosure document, under Part 6D.2 or Part 7.9 of the Australian
Corporations Act.

Important Information For Australian Investors

The following statements are required to be included in this document by Chapter 8
of the Australian Corporations Act and the Australian Corporations Regulations.
This Offer to Australian investors is a recognised offer made under Australian and
New Zealand law. In Australia, this is Chapter 8 of the Corporations Act 2001 (Cth)
and the Corporations Regulations 2001 (Cth). In New Zealand, this is Part 5 of the
Securities Act 1978 (New Zealand) and the Securities (Mutual Recognition of
Securities Offerings Australia) Regulations 2008 (New Zealand).
This Offer and the content of this Prospectus and the Investment Statement are
principally governed by New Zealand, rather than Australian, law. In the main, the

247

New Zealand Securities Act 1978 and the Securities Regulations 2009 (New
Zealand) set out how the Offer must be made.
There are differences in how securities and financial products are regulated under
New Zealand, as opposed to Australian, law. For example, the disclosure of fees for
managed investment schemes is different under New Zealand law.
The rights, remedies and compensation arrangements available to Australian
investors in New Zealand securities and financial products may differ from the
rights, remedies and compensation arrangements for Australian securities and
financial products.
Both the Australian and New Zealand securities regulators have enforcement
responsibilities in relation to this Offer. If you need to make a complaint about this
Offer, please contact the Australian Securities and Investments Commission. The
Australian and New Zealand regulators will work together to settle your complaint.
The taxation treatment of New Zealand securities and financial products is not the
same as that for Australian securities and products.
If you are uncertain about whether this investment is appropriate for you, you
should seek the advice of an appropriately qualified financial advisor.
The Offer may involve a currency exchange risk. The currency for the security or
financial product is in dollars that are not Australian dollars. The value of the
security or financial product will go up and down according to changes in the
exchange rate between those dollars and Australian dollars. These changes may be
significant.
If you receive any payments in relation to the security or financial product that are
not in Australian dollars, you may incur significant fees in having the funds credited
to a bank account in Australia in Australian dollars.
If the security or financial product is able to be traded on a financial market and
you wish to trade the security or financial product through that market, you will
have to make arrangements for a participant in that market to sell the security or
financial product on your behalf. If the financial market is a foreign market that is
not licensed in Australia (such as a securities market operated by NZX Limited
(NZX)) the way in which the market operates, the regulation of participants in
that market and the information available to you about the security or financial
product and trading may differ from Australian licensed markets.
4

Australian Securities And Investments Commission

A copy of the Prospectus and the Investment Statement was lodged with ASIC on
15 April 2014. ASIC accepts no responsibility for the contents of this Prospectus or
the Investment Statement or the merits of the investment to which this Prospectus
and the Investment Statement relate.

Stock Exchange Listings

Application has been made to NZX for permission to list the Company and to quote
the Shares on the NZX Main Board. All of NZXs requirements relating to the
application for listing and quotation that can be complied with on or before the date
of this Prospectus have been complied with. However, NZX accepts no
responsibility for any statement in this Prospectus or the Investment Statement.
Intueri's NZX stockcode will be "IQE".

248

An application will also be made to ASX after this Prospectus and the Investment
Statement have been lodged with ASIC for the Company to be admitted to the
official list of ASX and for the Shares to be quoted on ASX. The ASX Code for
Intueri's Shares will be "IQE". If and when the Company is admitted to the official
list of ASX, the ASX Listing Rules will apply to the Company (subject to any waivers
or rulings given from time to time by ASX).
The Company has applied for waivers and confirmations from the ASX Listing Rules
that are customary for a New Zealand company listed on both the NZX Main Board
and the ASX.
The Company has also applied for a waiver from ASX Listing Rule 10.14 to allow the
Company to issue shares under its Executive LTI Plan to directors of the Company
or their associated people. Under NZX Listing Rule 7.3.6, the Company can issue
shares under its Executive LTI Plan to directors or their associates provided that
their participation in the Executive LTI Plan has been determined by reference to
criteria applying to employees of the Company generally. The exemption from ASX
Listing Rule 10.14 is sought so that the Company's Executive LTI Plan is acceptable
for the purposes of the ASX Listing Rules.
ASX takes no responsibility for the contents of this Prospectus or the Investment
Statement or for the merits of the investment to which this Prospectus and the
Investment Statement relate. Admission to the official list of ASX and quotation of
the Shares on ASX are not guaranteed and are not to be taken as an indication of
the merits, or as an endorsement by ASX, of the Company or the Shares.
In accordance with the requirements of the ASX Listing Rules, the Directors of the
Company confirm that Intueri has sufficient working capital to carry out its stated
objectives.
6

Continuous Disclosure
Intueri will need to comply with the continuous disclosure rules of both the NZX
Listing Rules and the ASX Listing Rules (including as modified by waivers, rulings or
exemptions applicable to the Company or the Shares).
All information provided to NZX and ASX in accordance with the NZX Listing Rules
and the ASX Listing Rules will be available on the NZX and ASX websites.
For more information in relation to Intueri's continuous disclosure process, refer to
Section 4.4 Corporate Governance.

Risks
There are risks that are common to all investments in shares, there are risks that
are specific to an investment in the Shares, and there are risks that are specific to
the Company and its operations. The risks described or referred to below do not
purport to be a comprehensive statement of the risks associated with an
investment in the Company.
You should refer to the information set out in Section 6 What are my Risks? of this
Prospectus for a more extensive list of risks applicable to all investors who choose
to invest in the Company.
These risks mean that on the sale of a Share at any time or on a winding up of the
Company, an investor may receive less than the amount paid in respect of that
Share.

249

Liquidity and realisation risk

As disclosed in the information set out under the heading "Other Risks" in Section 6
What are my Risks? of this Prospectus, there can be no assurance that an active
trading market in Shares will develop or that the price of the Shares will increase.
The risk may be exacerbated for you if you wish to trade your Shares on ASX. It is
expected that the Shares will predominantly be traded on the NZX Main Board.
Accordingly, the volume of Shares traded, and therefore liquidity, on ASX might be
particularly low.
Foreign exchange risk
The Company proposes to pay dividends in New Zealand dollars. You may be
exposed to exchange rate risk for the conversion of dividends to Australian dollars
and may incur significant fees in having the funds credited to a bank account in
Australia in Australian dollars.
Consequences of Insolvency
If the Company becomes insolvent, you will not become liable to pay any money to
any person. If the Company is liquidated then all claims by its creditors will rank
ahead of any entitlement of Shareholders to any distribution. Each Share confers an
equal right to participate in any such distribution. Any distribution on Shares made
on liquidation of the Company may be less than the amount of your investment.
8

Selling Restrictions
This Prospectus and the Investment Statement do not constitute an offer of Shares
or invitation in any place in which, or to any person to whom, it would be unlawful
to make such an offer or invitation. Refer to the section titled "Selling Restrictions"
in Section 7 Details of the Offer of the Prospectus.
Each successful bidder under the Institutional Offer will be required to make certain
representations, warranties and covenants set out in the confirmation of allocation
letter distributed to it.

This Is Not Investment Advice. You Should Seek Your Own Financial Advice
The information provided in this Prospectus and the Investment Statement is not
financial product advice and has been prepared without taking into account the
investment objectives, financial circumstances or particular needs of any investor.
Investors should read the whole of this Prospectus and the Investment Statement
and consider all of the risk factors that could affect the performance of the
Company and other information concerning the Shares in light of their own
particular investment objectives, financial circumstances and particular needs
(including financial and taxation issues) before deciding whether to invest in the
Company.

10

Trading On ASX
It is expected that the Final Price will be announced on 7 May 2014 on the basis of
a bookbuild process to be undertaken on 7 May 2014.
Notifications to successful Applicants of their allotments under the Offer are
expected to be issued on the Allotment Date.
Following the allotment of the Shares, Shareholders on the Australian Share
Register will be sent an initial statement of holding that sets out the number of

250

Shares that have been allocated to them and provides details of the holder's
Shareholder's Holder Identification Number (HIN) for CHESS holders or
Shareholder Reference Number (SRN) for Company sponsored holders.
Shareholders will subsequently receive statements showing any changes to their
holding in the Company.
Initial quotation of the Shares on the NZX Main Board and ASX is expected to occur
on or about 23 May 2014.
The Institutional Offer may be terminated by the Joint Lead Managers invoking their
termination rights under the Offer Management Agreement, in the event that NZX
and/or ASX refuse to agree to quote the Shares on the NZX Main Board and ASX
respectively, or if completion does not occur under the Offer Management
Agreement. The Institutional Offer is conditional on the conditions outlined under
the heading The Offer is conditional on the Quantum Acquisition becoming
unconditional and Arowana shareholder approval in Section 7 Details of the Offer.
These conditions are expected to be satisfied on or prior to the Allotment Date. If
these conditions are not satisfied, the contracts formed on acceptance of bids in the
Institutional Offer will automatically be cancelled.
Bidders under the Institutional Offer in Australia should not attempt to sell their
Shares until they know whether, and how many, Shares have been allocated to
them. None of the Company, the Joint Lead Managers, any other person named in
this Prospectus, nor any of their respective directors, officers or employees accepts
any liability or responsibility should any person attempt to sell or otherwise deal
with Shares before statements confirming allotments of Shares are received by the
successful bidders under the Institutional Offer.
11

Selling Shares On ASX And CHESS

The Company will apply to participate in ASX's Clearing House Electronic Subregister System (CHESS) in accordance with the ASX Settlement Operating Rules.
CHESS is an automated transfer and settlement system for transactions in
securities quoted on ASX under which transfers are effected in a paperless form.
When the Shares become CHESS Approved Securities, holdings will be registered in
one of two sub-registers, an electronic CHESS subregister or the Company's issuer
sponsored subregister. The Shares of a Shareholder who is a participant in CHESS
or a person sponsored by a participant in CHESS will be registered on the CHESS
subregister. All Shares will be registered on the Company sponsored subregister.
Following the allotment of the Shares, any Shareholder who has elected to have
their Shares registered in CHESS will be sent an initial statement of holding that
sets out the number of Shares that have been allocated. This statement will also
provide details of the holder's or Shareholder's Holder Identification Number (HIN)
for CHESS holders or, where applicable, the Shareholder Reference Number (SRN)
for issuer sponsored holders. Shareholders will subsequently receive statements
showing any changes to their shareholding in the Company.

12

Differences Between Australian GAAP And NZ GAAP

The financial information provided in respect of the Company and each of its
subsidiaries in Section 5 Financial Information has been prepared applying NZ
GAAP.

251

All ongoing financial information prepared by the Company and provided directly to
Shareholders or to NZX or ASX will be prepared in accordance with the
requirements of NZ GAAP applicable at that time.
The Company has adopted certain accounting policies in connection with the
preparation of PFI in this Prospectus. Those policies are expected to be used in
future reporting periods and are described in Section 5.3 Prospective Financial
Information. To the extent that Australian generally accepted accounting principles
(Australian GAAP) would require different accounting policies, those differences
would not be material to the Company or its financial results.
There may be some presentation, disclosure and classification differences between
financial information prepared in accordance with NZ GAAP and financial
information prepared in accordance with Australian GAAP. For example, financial
information prepared in accordance with Australian GAAP might contain details of
director remuneration which would not be required under NZ GAAP. None of these
differences in presentation, disclosure or classification would be expected to change
the material financial results reported under NZ GAAP.
13

Applicable Law
Intueri Education Group Limited as a New Zealand company
The Company is a company incorporated in New Zealand and is principally
governed by New Zealand law, rather than Australian law. In Australia, it is
registered with ASIC as a foreign company. Its general corporate activities (apart
from any offering of securities in Australia) are not regulated by the Australian
Corporations Act or by ASIC but instead are regulated by the New Zealand
Companies Act, the New Zealand Financial Markets Authority, the Registrar of
Financial Service Providers and the Registrar of Companies.
Set out below is a table summarising key features of the laws that apply to the
Company as a New Zealand company (under New Zealand law, including as
modified by exemptions or waivers) compared with the laws that apply to
Australian publicly listed companies generally. It is important to note that this
summary does not purport to be a complete review of all matters of New Zealand
law applicable to the Company or all matters of Australian law applicable to
Australian publicly listed companies or to highlight all provisions that may differ
from the equivalent provisions in Australia.
Unless otherwise stated, the Australian Corporations Act provisions do not apply to
Intueri as a foreign company.

Transactions that
require shareholder
approval

New Zealand

Australia

Under the Companies Act, the

principal transactions or
actions requiring shareholder
approval include:

Under the Australian

Corporations Act, the principal
transactions or actions requiring
shareholder approval are
comparable to those under the
Companies Act. Shareholder
approval is also required for
certain transactions affecting
share capital (e.g., share
buybacks and share capital

adopting or altering
the constitution of the
company;

appointing or removing

252

New Zealand
a director or auditor;

in certain
circumstances, the
provision of financial
assistance for the
purpose of, or in
connection with, the
acquisition of shares;
major transactions
(being transactions
involving the
acquisition or
disposition of assets,
the acquisition of
rights or interests or
the incurring of
obligations or
liabilities, the value of
which is more than
half the value of the
company's total
assets);

amalgamations (other
than between the
company and its
wholly-owned
subsidiaries);

putting the company

into liquidation; and

changes to the rights

attached to shares.

Australia
reductions). Although there is
no shareholder approval
requirement for major
transactions, certain related
party transactions require
shareholder approval.
Shareholder approval is
required under the ASX Listing
Rules for.

increases in the total

amount of directors'
fees;

directors' termination
benefits in certain
circumstances;

certain transactions with

related parties;

certain issues of shares;

and

if a company proposes
to make a significant
change to the nature or
scale of its activities or
proposes to dispose of
its main undertaking.

The ASX Listing Rules will apply

to the Company when it is
admitted to the official list of
ASX.

In addition to the Companies

Act requirements listed above,
shareholder approval is
required under the NZX
Listing Rules for:

director remuneration;

certain transactions
with related parties;

certain issues of
shares;

in certain
circumstances, the
acquisition or
redemption of shares;

253

New Zealand
and

Shareholders' right to
request or requisition a
general meeting

Australia

certain acquisitions or
disposals of assets.

A special meeting of
shareholders must be called
by the board on the written
request of shareholders
holding shares carrying
together not less than 5% of
the voting rights entitled to be
exercised on the issue.

The Australian Corporations Act

contains a comparable right.
Directors must also call a
general meeting on the request
of at least 100 shareholders
who are entitled to vote at a
general meeting.
Shareholders with at least 5%
of the votes that may be cast at
the general meeting may also
call and arrange to hold a
general meeting at their own
expense.

Shareholders' right to
appoint proxies to
attend and vote at
meetings on their
behalf

A shareholder may exercise

the right to vote at a meeting
either by being present in
person or by proxy. A proxy is
entitled to attend and be
heard, and to vote, at a
meeting of shareholders as if
the proxy were the
shareholder.

The position is comparable

under the Australian
Corporations Act.

A proxy must be appointed by

notice in writing signed by or,
in the case of an electronic
notice, sent by the
shareholder to the company.
The notice of appointment
must state whether the
appointment is for a particular
meeting or a specified term.
Changes in the rights
attaching to shares

A company must not take

action that affects the rights
attached to shares unless that
action has been approved by a
special resolution of each
affected interest group. (An
"interest group" in relation to
an action or proposal affecting
the rights attached to shares
means a group of
shareholders whose affected
rights are identical and whose

The Australian Corporations Act

allows a company to set out in
its constitution the procedure
for varying or cancelling rights
attached to shares in a class of
shares.
If the company does not have a
constitution, or has a
constitution that does not set
out a procedure, the rights may

254

Shareholder protections
against oppressive
conduct

New Zealand

Australia

rights are affected by the

action or proposal in the same
way and who comprise the
holders of one or more classes
of shares in the company).

only be varied or cancelled by:

A shareholder or former
shareholder of a company (or
any other entitled person)
who considers that the affairs
of a company have been (or
are being, or are likely to be)
conducted in a manner that is
(or any act or acts of the
company have been, or are,
or are likely to be) oppressive,
unfairly discriminatory, or
unfairly prejudicial to him or
her in any capacity may apply
to the court for relief.

a special resolution
passed at a meeting for
a company with a share
capital of the class of
members holding shares
in the class; or

a written consent of
members with at least
75% of the votes in the
class.

Under the Australian

Corporations Act, shareholders
have statutory remedies for
oppressive or unfair conduct of
the company's affairs.
The court can make any order
as it sees appropriate.

The court may, if it thinks it is

just and equitable to do so,
make such orders as it thinks
fit
Shareholders' rights to
bring or intervene in
legal proceedings on
behalf of the Company

A court may, on the

application of a shareholder or
director of a company, grant
leave to that shareholder or
director to bring proceedings
in the name and on behalf of
the company or any related
company, or intervene in
proceedings to which the
company or any related
company is a party, for the
purpose of continuing,
defending or discontinuing the
proceedings on behalf of the
company or related company.

The Australian Corporations Act

permits a shareholder to apply
to the court for leave to bring
proceedings on behalf of the
company, or to intervene in
proceedings to which the
company is a party, for the
purpose of taking responsibility
on behalf of the company for
those proceedings, or for a
particular step in those
proceedings.

Leave may only be granted if

the court is satisfied that
either the company or related

The court must grant the

application if it is satisfied that:
it is probable that the
company will not itself
bring the proceedings,

255

New Zealand
company does not intend to
bring, diligently continue or
defend, or discontinue the
proceedings, or it is in the
interests of the company or
related company that the
conduct of the proceedings
should not be left to the
directors or to the
determination of the
shareholders as a whole.
No proceedings brought by a
shareholder or a director or in
which a shareholder or a
director intervenes with leave
of the court (as described
above) may be settled or
compromised or discontinued
without the approval of the
court.

Australia
or properly take
responsibility for them,
or for the steps in them;

the applicant is acting in

good faith;

it is in the best interests

of the company that the
applicant be granted
leave;

if the applicant is
applying for leave to
bring proceedings, there
is a serious question to
be tried; and

either at least 14 days

before making the
application, the
applicant gave written
notice to the company of
the intention to apply
for leave and of the
reasons for applying, or
the court considers it
appropriate to grant
leave.

Proceedings brought or
intervened in with leave must
not be discontinued,
compromised or settled without
the leave of the court.
"2 strikes" rule in
relation to
remuneration reports

There is no equivalent of a "2

strikes" rule in relation to
remuneration reports in New
Zealand. New Zealand
companies are not required to
publish remuneration reports
so shareholders necessarily
cannot vote on them.
There is, however, an
obligation to state in the
company's annual report, in
respect of each director or
former director of the
company, the total of the
remuneration and the value of
other benefits received by
that director or former

The Australian Corporations Act

requires that a company's
annual report must include a
report by the directors on the
company's remuneration
framework (called a
remuneration report).
A resolution must be put to
shareholders at each annual
general meeting of the
company's shareholders (AGM)
seeking approval for the
remuneration report. That
approval is advisory only,
however, if more than 25% of
shareholders vote against the
remuneration report at 2

256

Related party
transactions and
interests

New Zealand

Australia

director from the company

during the relevant accounting
period and, in respect of
employees or former
employees of the company
who received remuneration
and any other benefits in their
capacity as employees during
the relevant accounting
period, the value of which was
or exceeded NZ$100,000 per
annum, the number of such
employees, stated in brackets
of NZ$10,000.

consecutive AGMs (i.e., 2

strikes) an ordinary (50%)
resolution must be put to
shareholders at the second AGM
proposing that a further
meeting be held within 90 days
at which all of the directors who
approved the second
remuneration report must
resign and stand for re-election.

The Company must comply

with NZX Listing Rule
requirements in respect of
related party transactions,
except to the extent this
obligation is modified by
waivers or rulings granted by
NZX Regulation in respect of
the Company .

Under the Australian

Corporations Act, public
companies must obtain
shareholder approval before
giving a financial benefit to a
"related party" of the public
company unless an exemption
applies. The exemptions
include:

In particular, shareholder
approval is required for
material transactions between
a listed company and a
"related party". The definition
of related party catches a
number of persons, for
example, a director of a listed
company, or the holder of a
relevant interest in 10% or
more of a class of securities of
a listed company. A related
party who is a party to or a
beneficiary of a material
transaction (and its
associates) are prohibited
from voting in favour of a
resolution to approve that
transaction.

the arrangement is on
arm's length terms;

the benefit is reasonable

remuneration paid to an
officer or employee of
the company;

the benefit is a
reasonable indemnity or
insurance premium
given to an officer or
employee of the
company;

the value or amount of

the financial benefit
given to a related entity
is less or equal to an
amount prescribed by
the Australian
Corporations
Regulations;

the benefit is given to a

closely held subsidiary;

the benefit is given to all

shareholders and does

The Securities Markets Act

1988 requires a director or
officer of a public issuer who
has a "relevant interest" in a
public issuer to give notice of
this fact to NZX and to
disclose any such relevant
interest in the interests

257

New Zealand
register of the public issuer.
The Companies Act requires
companies to keep an
interests register, and this
register is often used for the
purposes of any disclosures by
directors or officers of any
such "relevant interests". The
companies' annual report
must state particulars of
entries in the interests
register made during the
accounting period.

Australia
not discriminate other
shareholders unfairly.
In addition, the Company will
be required to comply with ASX
Listing Rule requirements in
respect of related party
transactions. Unless an
exception applies, shareholder
approval is required for:

the acquisition of a
substantial asset from,
or disposal of a
substantial asset to,
among other persons, a
related party or a
person who, together
with their associates,
holds a relevant interest
in at least 10% of the
total votes attached to
the voting securities;

issuing or agreeing to
issue securities to
related parties;

increasing the total of

directors' payments;

certain directors'
termination benefits;
and

directors acquiring
securities under an
employee incentive
scheme.

The definition of related party

includes, among others, entities
that control the public company
and directors of the public
company and of the entity that
controls the public company.
Under the ASX Listing Rules,
the Company will also be
required to disclose the
notifiable interests of its
directors at prescribed times
and any changes to those
notifiable interests.

258

Disclosure of
substantial holdings

New Zealand

Australia

The Securities Markets Act

1988 requires every person
who is a "substantial security
holder" in a public issuer to
give notice to that public
issuer and NZX that they are
a substantial security holder.

The Australian Corporations Act

requires every person who is a
substantial holder to notify the
listed company and ASX that
they are a substantial holder
and to give prescribed
information in relation to their
holding if:

"Substantial security holder"

means, in relation to a public
issuer, a person who has a
relevant interest in 5% or
more of a class of listed voting
securities of that public issuer.
The substantial security holder
has ongoing disclosure
requirements to notify the
public issuer and NZX of
certain changes in the number
of voting securities in which
the substantial security holder
has a relevant interest or if
there is any change in the
nature of any relevant interest
in the relevant holding or
where that person ceases to
be a substantial security
holder.

the person begins to

have, or ceases to have,
a substantial holding in
the company or scheme;

the person has a

substantial holding in
the company or scheme
and there is a
movement of at least
1% in their holding; or

the person makes a

takeover bid for
securities of the
company.

A person has a substantial

holding if the total votes
attached to voting shares in the
company in which they or their
associates have relevant
interests is 5% or more of the
total number of votes attached
to voting shares in the
company, or the person has
made a takeover bid for voting
shares in the company and the
bid period has started and not
yet ended.
These provisions do not apply
to the Company as an entity
established outside Australia.
However, the Company will be
required to release to ASX any
substantial holder notices that
are released to NZX.

How takeovers are

regulated

The New Zealand position

under the Takeovers Code and
Securities Markets Act 1988 is
comparable to the Australian
position in relation to the

The Australian Corporations Act

prohibits a person from
acquiring a relevant interest in
issued voting shares in a listed
company if any person's voting
259

New Zealand

Australia

regulation of takeovers.

power in the company will

increase from 20% or below to
more than 20%, or from a
starting point that is above
20% and below 90%.

Substantial security holder

notice requirements apply to
relevant interests in 5% or
more of a company's listed
voting securities (as discussed
above under the heading
"Disclosure of substantial
holdings").
A 20% threshold applies
(under which a person is
prevented from increasing the
percentage of voting rights
held or controlled by them in
excess of that threshold or
from becoming the holder or
controller of an increased
percentage of voting rights if
they already hold or control
more than 20% of the voting
rights), subject to certain
"compliance options"
(including full and partial
offers, 5% creep over 12
months in the 50% to 90%
range, and acquisitions with
shareholder approval).

Exceptions to the prohibition

apply (e.g., acquisitions with
shareholder approval, 3% creep
over 6 months, rights issues
that satisfy prescribed
conditions).
Substantial holder notice
requirements apply (as
discussed above under the
heading "Disclosure of
substantial holdings").
Compulsory acquisitions are
permitted by persons who hold
90% or more of securities or
voting rights in a company.
The Australian takeovers
regime will not apply to the
Company as a foreign company.

Compulsory acquisitions are

permitted by persons who
hold or control 90% or more
of voting rights in a company.
Filing of documents

The Comany must prepare

and file the following
documents with the
Companies Office every year.

annual financial
statements as an
issuer under the
Financial Reporting Act
including the
statement of financial
position, statement of
financial performance,
statement of
cashflows, statement
of movements in
equity, statement of

As a foreign registered
company, the Company has
limited filing obligations. It is
required to file annual accounts
with ASIC (including the
balance sheet, cash flow
statement and profit and loss
statement for the last financial
year, as well as any other
documents required to be
prepared under New Zealand
law). ASIC must also be notified
of certain changes (e.g., the
appointment or resignation of
directors or changes to the
Company 's constitution).
Filing obligations applicable to
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New Zealand
accounting policies,
notes to the accounts
and an audit report);
and

Australia
Australian registered companies
will not apply to the Company
as a foreign company.

an annual return
required under the
Companies Act.

The Companies Office must

also be notified of certain
changes (e.g., the
appointment or resignation of
directors or changes to the
Company 's constitution).

Where it is noted that New Zealand law contains comparable provisions to those existing
under Australian law, and vice versa, it is emphasised that the summary table only
attempts to provide general guidance, and that the detailed provisions may contain
differences and may also be subject to differing interpretation by Australian and New
Zealand courts.
14

Australian Taxation
You should seek your own taxation advice on the implications of an investment in
the securities offered under this Prospectus and the Investment Statement. The
Prospectus contains information on New Zealand tax implications for non-resident
Shareholders, in Section 9 New Zealand Taxation Implications.

15

Privacy
If you apply for Shares, you will be asked to provide personal information to the
Company, the Registrar and their respective agents who will collect and hold the
personal information provided by you in connection with your Application at their
respective addresses shown in the Directory.
Personal information provided by you will be collected and used for:
(a)

the purposes of considering, processing and corresponding with you about

your Application;

(b)

managing and administering your holding of Shares, including sending you

information concerning the Company, your Shares and other matters the
Company considers may be of interest to you by virtue of your holding of
Shares;

(c)

conducting an audit or review of the activities contemplated above; and

(d)

sending you information about special offers for Shareholders in relation to

the Company's products and services.

Australian law requires some of the information to be collected in connection with

your Application.
Failure to provide the required personal information may mean that your
Application is not able to be processed efficiently, if at all.

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To do these things, the Company or the Registrar may disclose your personal
information to each other and their related companies, respective agents,
contractors or third party service providers to whom they outsource services such
as mailing and registry functions. For the avoidance of doubt, this includes
disclosures of your personal information to recipients located in New Zealand and
may include the Joint Lead Managers. The Company or the Registrar may also
disclose your personal information to ASX, NZX, other regulatory authorities, any
entities or persons acting on your behalf (such as your broker) or as otherwise
required by law.
If you become a Shareholder, your information may be used or disclosed from time
to time to facilitate dividend payments and corporate communications and for
compliance by the Company with legal and regulatory requirements.
Under the Australian Privacy Act 1988 (Cth), you may request access to your
personal information held by (or on behalf of) the Company, the Joint Lead
Managers and the Registrar. You can request access to your personal information
by telephoning or writing to the Company, the Joint Lead Managers, or the
Registrar using the details shown in the Directory of the Prospectus.
16

Definitions
Unless otherwise defined, capitalised terms in this Additional Australian Information
have the same meaning as in Section 11 Glossary.

17

Enquiries
If you have any questions about the Institutional Offer in Australia, you should
contact one of the Joint Lead Managers.
If you do not understand any part of this Prospectus or the Investment Statement,
or are in any doubt as to whether to invest in securities offered under this
Prospectus and the Investment Statement or not, it is recommended that you seek
professional guidance from your solicitor, accountant or other independent and
qualified professional adviser.

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SECTION 11: GLOSSARY

Allotment Date means the date on which Shares are allotted to successful Applicants,
which is expected to be 22 May 2014, unless varied by the Issuers.
Applicant means a person named as an applicant on an Application Form.
Application means an application to subscribe for Shares under the Offer.
Application Form means the form attached to, or accompanying, the Investment
Statement.
Arowana means Arowana International Limited (ASX: AWN).
Arowana Sophisticated Investor means an investor who was the registered owner of
ordinary shares in Arowana on 15 April 2014 and to whom offers or invitations in respect of
securities can be made without the need for a lodged prospectus (or other formality, other
than a formality which the Company is willing to comply with).
ASX means ASX Limited, or the financial market operated by ASX Limited, as the
context requires, also known as the Australian Securities Exchange.
ASX Listing Rules means the official listing rules of ASX.
Auditor means BDO Auckland.
Board means the board of directors of the Company.
Broker Firm Offer means the offer of Shares under this Prospectus to New Zealand
resident retail clients of NZX Firms who have received an allocation from their NZX Firm.
Business Day means a day on which the NZX Main Board is open for trading.
Closing Date means 12.00pm (noon) on 21 May 2014, unless varied by the Issuers.
Company means Intueri Education Group Limited.
Companies Act means the Companies Act 1993.
compound annual growth rate or CAGR means compound annual growth rate,
which is calculated by taking the nth root of the total percentage growth rate, where n is
the number of years in the period being considered. Put simply, a compound annual
growth rate is the year-over-year growth rate of a given number over a period of time.
Constitution means the constitution of the Company, as amended from time to time.
Cut Above means The Cut Above Academy Limited.
D&A means Design and Arts College of New Zealand.
Director means a director of the Company.
Dividend means a payment per share that a company makes to shareholders, usually
from its profits. The level of dividends that are paid by companies to their shareholders is
generally linked to how profitable the company is. A company is not obliged to pay
dividends.

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DPS means Dividend per Share shown in cents per share.

EBITA means earnings before interest, tax and amortisation of identifiable acquisition
related intangibles.
EBITDA means earnings before interest, tax, depreciation and all amortisation expenses.
EFTS means equivalent full time students.
Elite means The Elite School of Beauty and Spa Therapies.
EPS means earnings per Share, calculated as NPAT attributable to the parent
shareholders divided by the total number of Shares that will be on issue at completion of
the Offer (100,000,000 Shares).
Executive LTI Plan means the long-term incentive share plan offered to the Key
Executives, as described in Section 4.5 Executive Remuneration and Share Plans.
FIN means an alphanumeric identifier issued by NZX, the Company (as issuer) or the
Registrar, to a Shareholder who provides authority to access that Shareholders account
held by the Registrar.
Final Percentage means the percentage of the Shares which the Selling Shareholder
determines to hold in the Company following completion of the Offer and the allotment of
all Shares under the Offer, as determined by the Selling Shareholder following the
bookbuild.
Final Price means the price per Share at which the Shares will be allotted, expected to
be determined on or about 7 May 2014.
Financial Reporting Act means the Financial Reporting Act 1993 or the Financial
Reporting Act 2013, as applicable.
FY means a financial year.
FY2011PF means pro forma 12 months ended 31 December 2011.
FY2012PF means pro forma 12 months ended 31 December 2012.
FY2013PF means pro forma 12 months ended 31 December 2013.
FY2014PF means pro forma 12 months ending 31 December 2014.
FY2014F means forecast 12 months ending 31 December 2014.
FY2015F means forecast 12 months ending 31 December 2015.
Group means the Company and its subsidiaries.
IML means Intueri Materials Limited.
Institutional Offer means the offer of Shares to Institutional Investors as part of the
Offer.
Institutional Investor means an investor to whom offers or invitations in respect of
securities can be made without the need for a lodged prospectus (or other formality, other
than a formality which the Company is willing to comply with), including in New Zealand

264

persons to whom offers or invitations can be made without the need for a registered
prospectus under the Securities Act, and includes an Arowana Sophisticated Investor.
Indicative Price Range means $2.25 to $2.75 per Share.
Intueri means the Company and its subsidiaries, assuming the completion of the
Quantum Acquisition at the relevant time.
Intueri Education means the business of the Company as of the date of this Prospectus
(i.e. not including Quantum Education, but including the Companys 50% shareholding in
OCA).
Investigating Accountant means BDO Auckland.
Investment Statement means the investment statement in respect of the Offer.
Issuers means the Company and the Offeror.
ITO means Industry Training Organisations.
ITPs means Institutes of Technology and Polytechnics.
Joint Lead Manager and Organising Participant means each of Macquarie
Securities (NZ) Limited and UBS New Zealand Limited.
Key Executives means the Companys Chief Executive and Chief Financial Officer, and
the Managing Director of Quantum Education Group.
Net Profit means NPAT.
NPAT means net profit after tax.
NPATA means NPAT adjusted for the tax-effected amortisation of acquisition related
intangibles.
NSIA means the North Shore International Academy.
NZQA means New Zealand Qualifications Authority.
NZSCDT means the New Zealand School of Commercial Diver Training.
NZX means NZX Limited, also known as the New Zealand Stock Exchange.
NZX Firm means an entity designated as an NZX Firm under the Participant Rules of
NZX.
NZ GAAP or GAAP means New Zealand generally accepted accounting practice.
NZ IFRS means New Zealand equivalents to International Financial Reporting Standards.
NZX Listing Rules means the listing rules applying to the NZX Main Board as amended
from time to time.
NZX Main Board means the main board equity security market, operated by NZX.
OCA means Online Courses Australia Group Pty Limited, Online Courses Australia Pty
Limited, Conwal & Associates Pty Limited and Platinum e-Learning Pty Limited.
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OCA Acquisition means the acquisition by the Company of 50% of the shares in OCA,
which settled on 31 March 2014.
Offer means the offer of Shares under this Prospectus and the Investment Statement.
Offeror means Intueri Education Group Holdings Limited.
Offer Management Agreement means the agreement dated 15 April 2014 between
the Offeror, the Company, Arowana and the Joint Lead Managers, as described in Section 8
Statutory Information.
Opening Date means 8 May 2014.
PFI means the prospective financial information for Intueri set out in Section 5.3
Prospective Financial Information.
PTE means private training establishment.
pro forma means on a basis assuming the combination of Intueri Education and
Quantum Education, at the relevant time.
Promoters means Arowana and each director of Arowana.
Prospectus means this document, the prospectus in respect of the Offer.
Quantum Acquisition means the acquisition by the Company of all of the shares in
Quantum Education Group Limited and Quantum Corporate Training Limited and the
acquisition by IML of the business and assets of Learntree Limited.
Quantum Education means the business of Quantum Education Group and Learntree
Limited.
Quantum Education Group means Quantum Corporate Training Limited and Quantum
Education Group Limited and their respective subsidiaries.
Registrar means Computershare Investor Services Limited.
RTO means Registered Training Organisation.
SAC means Student Achievement Component.
Securities Act means the Securities Act 1978.
Securities Regulations means the Securities Regulations 2009.
Selling Shareholder means Intueri Education Holdings Pty Limited, a wholly-owned
indirect subsidiary of Arowana.
Share means an ordinary share of the Company.
Shareholder means a person for the time being entered on the register of the Company
either alone or jointly with others as the holder of a Share.
TAFE means a technical and further education institution.
TEC means Tertiary Education Commission.

266

VET means vocational education and training.

VET FEE-HELP is an Australian Commonwealth Government loan scheme that provides
assistance for tuition fees to eligible students studying higher-level VET courses at
approved VET providers.
Additional Definitions for the Key Offer Statistics and Key Investment Metrics
Implied market capitalisation

The number of Shares on issue following the

Offer multiplied by the Indicative Price
Range.

Prospective net debt

The forecast value of current and noncurrent bank debt less cash and cash
equivalents as at 31 May 2014.

Implied enterprise value

The indicative market capitalisation plus

prospective net debt at 31 May 2014.

Implied cash Dividend yield

DPS for the respective forecast financial

year divided by the Indicative Price Range.
Based on the cash cost to the Company, not
necessarily the cash received by investors
which will depend on individual investor tax
rates and the assumption that the investor
holds the Shares over the full year.

Implied gross Dividend yield

DPS for the respective prospective financial

year, grossed up for imputation credits
expected to be attached to the Dividend
(calculated at a tax rate of 28%)], divided
by the Indicative Price Range. This metric is
used to approximate the return to the
average investor on a pre-tax basis.

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SECTION 12: DIRECTORY

THE COMPANY
Intueri Education Group Limited
100 Symonds Street
Grafton
Auckland 1010
New Zealand
Phone: +64 9 442 3456
THE OFFEROR
Intueri Education Group Holdings Limited
100 Symonds Street
Grafton
Auckland 1010
New Zealand
Phone: +64 9 442 3456
LEGAL ADVISERS
Chapman Tripp
Level 35, ANZ Centre
23 Albert St
Auckland 1140
New Zealand
Phone: +64 9 357 9000
AUDITOR AND INVESTIGATING ACCOUNTANT
BDO Auckland
Level 8, 120 Albert Street
Auckland 1140
New Zealand
Phone: +64 9 379 2950
REGISTRAR
Computershare Investor Services Limited
Level 2, 159 Hurstmere Road
Takapuna
Auckland 0622
New Zealand
Phone: +64 9 488 8700
PROMOTER
Arowana International Limited
Level 11, 153 Walker St
North Sydney
NSW 2060
Australia
Phone: +61 2 8083 9800

268

JOINT LEAD MANAGERS

Macquarie Securities (NZ) Limited
Level 17, Lumley Centre
88 Shortland Street
Auckland 1010
New Zealand
Phone: +64 9 357 6931
UBS New Zealand Limited
Level 17, PWC Tower
188 Quay Street
Auckland 1010
New Zealand
Phone: +64 9 913 4800

269