IDP Education Limited

Equities

IEL

AU000000IEL5

Professional & Business Education

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IDP Education : Appendix 4E and Financial Report for FY20Opens in a new Window

August 19, 2020 at 06:33 pm EDT

IDP EDUCATION LIMITED

ABN 59 117 676 463

Financial Report

For the year ended 30 June 2020

Appendix 4E

IDP EDUCATION LIMITED

ABN 59 117 676 463

Year ended 30 June 2020

Results for Announcement to the Market

Revenue from ordinary activities

Net profit for the year attributable to the owners of IDP Education Limited

30 June 2020	30 June 2019	Movement	Movement
$'000	$'000	$'000	%
587,106	598,136	(11,030)	(1.8%)
67,873	66,627	1,246	1.9%

Dividends	Amount per	Franked amount per
	ordinary share	ordinary share
	cents	cents
FY19 final dividend paid	7.50	3.38
FY20 interim dividend payable	16.50	2.81
FY20 final dividend (declared after balance date)*	-	-
Record date for determining entitlements to the FY20 interim dividends		6 March 2020
FY20 interim dividend payment date		24 September 2020

*IDP's Board of Directors has decided not to declare a full year dividend. The interim dividend that was deferred in March will be paid on 24 September 2020.

Net tangible assets per ordinary share	30 June 2020	30 June 2019
	cents	cents
Net tangible assets per share	92.94	6.50
Net assets per share	141.29	60.63

Net tangible assets are defined as the net assets less intangible assets and capitalised development costs.

A significant proportion of the Group's assets are intangible in nature totalling $134.6m, including software, goodwill, identifiable intangible assets relating to businesses acquired and capitalised development costs. These assets are excluded from the calculation of net tangible assets per share.

Other information required by Listing Rule 4.3A

The remainder of information requiring disclosure to comply with Listing Rule 4.3A is contained in the Financial Report (which includes the Directors' report).

Contents
Directors' report.........................................................................................................................................................................	3
Remuneration Report......................................................................................................................................................	20
Auditor's independence declaration ......................................................................................................................................	39
Financial report ........................................................................................................................................................................	40
Directors' declaration ..............................................................................................................................................................	94
Independent auditor's report ..................................................................................................................................................	95

Directors' Report

Directors' report

The Directors of IDP Education Limited, present the financial report of IDP Education Limited (the Company) and its controlled entities (the Group or IDP) for the financial year ended 30 June 2020.

Operating and financial review

Introduction

A summary of IDP Education's consolidated financial results for the year ending 30 June 2020 ("FY20") is set out below. The financial performance of the company for the first nine months of the year was strong but was then impacted by COVID-19 in the last quarter. As a result, revenue declined compared to FY19 by 1.8%, but actions taken by the company reduced overheads delivering an increase in EBIT of 11% and an increase in NPAT of 2.3% compared to FY19.

Summary Financials (A$m)

										Growth#
				FY20 Statutory		FY20		FY19 Statutory
		Unit						$m	%
			Post AASB16**		Pre AASB16**		Pre AASB16**


Total Revenue	A$m	587.1	587.1	598.1			-11.0	-1.8%
Gross Profit		A$m	345.2		342.6	334.1	11.1	3.3%
EBIT		A$m	107.8		107.3	97.1	10.6	11.0%
NPAT		A$m	67.8		71.5	66.3	1.5	2.3%
NPAT (Adjusted) *		A$m	70.4		74.1	68.7	1.6	2.4%
EPS		cents	26.1		27.5	26.3	-0.2	-0.7%
EPS (Adjusted) *		cents	27.1		28.5	27.2	-0.1	-0.3%
Debt		A$m	59.8		59.8	60.5	-0.7	-1.1%

Adjusted NPAT and earnings per share excludes acquired intangible amortisation.

The Directors believe these adjustments and other non-IFRS measures included in this report are relevant and useful in measuring the financial performance of the company. Later in the report the Directors also present "underlying" financial measures which remove the impact of foreign exchange movements during the year. The Directors believe that these "adjusted" and "underlying" metrics provide the best measure to assess the performance of the Group by excluding the impact of currency movements, non-cash intangible asset amortisation generated from business combinations from the reported IFRS measures.

The Group has adopted the new lease accounting standard, AASB 16 Lease from 1 July 2019. The impact to FY20 from the adoption of the new accounting standard is outlined above. The FY19 comparatives were under the previous lease accounting standard AASB 117 and have not been restated as permitted by the standard.

Growth is calculated by comparing the FY20 statutory results (post AASB16) to the FY19 statutory results which have not been restated and are therefore presented on a pre AASB16 basis.

Directors' Report

Review of Operations

IDP has a global footprint and a diversified business model across its four business lines. As a result, the aggregate performance of the company for any given year is driven by a large number of variables across many countries. This report provides a high-level summary of the highlights and key drivers during the year.

The performance of IDP Education in the first nine months of FY20 was strong with revenue growth of 19.2% compared to the same period in FY19 representing a continuation of the strong organic growth that the company has been experiencing over the past eight years. However the financial impact of COVID-19 on the business was evident from the end of March and revenue declined by 64% in the last quarter compared to the same period in FY19 leading to an overall decline in revenue of 1.8% for the full year.

COVID-19 and the resulting travel bans and lockdowns in both source and destination countries severely impacted the international education industry during the last quarter of FY20. International mobility effectively ceased which restricted the ability of students to commence their overseas studies and created uncertainty for future students who were considering enrolments during 2020. IELTS testing was also impacted with lockdowns and social distancing measures forcing the closure of testing centres throughout most of IDP's network.

IDP's largest destination (by volume), Australia, was the first to be impacted following the imposition by the Government of a travel ban from 1 February 2020 for all foreign nationals that had been in China in the previous 14 days. This impacted the ability of many Chinese students who were due to commence their courses in semester one. The extension of the travel ban to all non-citizens on 19 March effectively closed the borders to international students and significantly reduced the volume of students for the second semester intake.

IDP's other study destinations have also been impacted but the timing of the main intakes in the northern hemisphere softened the financial impact during FY20. IDP had achieved strong volume growth to the UK and Canada for semester one (September/October 19) which was reflected in the company's first half results. Volumes for the smaller intakes in the second half were also above last year as students were able to commence studies before travel bans were imposed. COVID-19 has however impacted IDP's ability to finalise enrolments for the autumn intake in the northern hemisphere which was a drag on the performance of the company during the last quarter of FY20.

Whilst a smaller destination for IDP, the USA also recorded a solid increase in student volumes during the first half of FY20. Sentiment towards the US as an international education destination however remains mixed. Concerns over the openness of the country and safety for international students continue to impact aggregate demand.

IDP Education's English language testing business continued to see strong momentum through the first nine months of the year with the demand for IELTS tests being driven by international students, workers and migrants who were seeking to travel to the main English speaking countries. The imposition by governments of physical lockdowns forced the closure of IELTS testing centres in many countries which significantly reduced IDP's English language testing revenue. IDP's biggest testing country, India entered a lockdown on 24 March which remained largely in place throughout the remainder of the financial year.

Despite the impacts from COVID-19, the Group has sufficient cash reserves to meet any obligations or liabilities as and when they become due and payable.

IDP Education views and manages its business on a geographic basis. Country and regional management are responsible for all activities in their geographic region across each of the company's key products (Student Placement, English Language Testing, English Language Teaching and Digital Marketing and Events). As a result, the company's key reporting segments comprise geographic regions. The sections below discuss the company's results across its three geographic regions.

Directors' Report

Asia

The table below shows the company's results across its Asian region which includes the following countries: Bangladesh, Cambodia, China, Hong Kong, India, Indonesia, Japan, Laos, Malaysia, Mauritius, Nepal, Philippines, Singapore, South Korea, Sri Lanka, Taiwan, Thailand and Vietnam.

Asia Segment - Financial Summary

									Growth
				FY20		FY19
		Unit		$m	%
			Statutory		Statutory


Total Revenue	A$m	389.2	391.8		-2.6	-0.7%
EBIT		A$m	127.1	113.6			13.6	12.0%
EBIT Margin	%	33%	29%
% of Total Group Revenue	%	66%	65%
% of Total Group EBIT (Excl
Corporate Overheads)	%	76%	73%

Asia total revenue declined marginally by 0.7% the first decline in 10 years but posted a solid year of growth in EBIT of 12% and continued to be a key driver of the company's profitability with 76% of group EBIT (excluding corporate overhead) coming from the region. The region includes both India and China which are the key engines of growth for the international education industry more broadly.

In India, IDP performed well during the year achieving growth in revenue relative to FY19. The performance of India benefited from strong student demand for placement into higher education courses to the UK and Canada with Multi-destination revenue growing 80%. Australian Student Placement and IDP IELTS volume growth in the second half was impacted by COVID-19 and the result was a full year decline in Indian revenues from Australian student placement and IELTS.

In China, IDP revenue declined slightly with an increase in student placement revenue to the UK, offset by a decline in revenue from Australian student placement. IDP's license fees from the British Council related to the distribution of IELTS in China also declined after the British Council's testing operations were suspended from February due to COVID-19.

Outside of India and China, IDP's performance in Asia had revenue growth in Cambodia, Japan, Sri Lanka Bangladesh and Thailand. In Cambodia, student placement and English language teaching were solid contributors to growth, while in Japan and Thailand IELTS was the driver of the growth and in Sri Lanka, and Bangladesh growth came from both student placement and

IELTS.

Offsetting this growth, revenue declined in Hong Kong, Taiwan, Vietnam, Nepal, and Singapore. The decline in these countries related to Australian student placement revenue and IELTS revenue in the last quarter due to COVID-19 lockdowns and travel restrictions.

EBIT growth of 12% was a result of the strong performance of the business in the first half and then management of expenses as revenue declined in the last quarter with expenses declining for the full year, with the majority of that reduction in expense being realised in the last quarter.

Directors' Report

Australasia

The table below shows the company's results across its Australasian region which includes the following countries: Australia, Fiji, New Caledonia and New Zealand.

Australasia Segment - Financial Summary

									Growth
				FY20		FY19
		Unit		$m	%
			Statutory		Statutory


Total Revenue	A$m	57.4	63.3		-5.9	-9.3%
EBIT		A$m	9.7	12.2			-2.5	-20.6%
EBIT Margin	%	17%	19%
% of Total Group Revenue	%	10%	11%
% of Total Group EBIT (Excl
Corporate Overheads)	%	6%	8%

The Australasian segment revenue decline was a result of lower IELTS volumes across the region, primarily due to COVID-19. There was a small 1% revenue increase in the first half as strong student placement revenue offset the decline in IELTS revenue. The second half saw a continuation of that trend with growth in onshore student placement offsetting a decline in IELTS testing due to lock-downs and social distancing measures.

The decline in EBIT of 20.6% was primarily a result of the IELTS revenue decline with expenses primarily related to the student placement business were only marginally reduced as student placement onshore had revenue growth of 12%.

Rest of World

The table below shows the company's results across the Rest of World region which includes: Argentina, Azerbaijan, Bahrain, Brazil, Canada, Chile, Colombia, Cyprus, Ecuador, Egypt, Germany, Greece, Iran, Ireland, Italy, Jordan, Kazakhstan, Kuwait, Lebanon, Mexico, Nigeria, Oman, Pakistan, Peru, Poland, Qatar, Romania, Russia, Saudi Arabia, Spain, Switzerland, Turkey, Ukraine, Uzbekistan, the United Arab Emirates ("UAE"), the United Kingdom, and the United States of America.

Rest of World Segment - Financial Summary

									Growth
				FY20		FY19
		Unit		$m	%
			Statutory		Statutory


Total Revenue	A$m	140.5	143.1		-2.5	-1.8%
EBIT		A$m	29.4	30.1			-0.7	-2.3%
EBIT Margin	%	21%	21%
% of Total Group Revenue	%	24%	24%
% of Total Group EBIT (Excl
Corporate Overheads)	%	18%	19%

The Rest of World recorded a small decline in both revenue and EBIT with declines in revenue in Canada and the Middle East, offset by strong revenue growth in Nigeria and smaller digital marketing revenue growth in the UK and USA.

Canada's revenue decline was due to lower IELTS testing volumes in the last quarter, with that offset a little due to onshore student placement revenue growing strongly off a low base.

The Middle East is primarily an IELTS market with IELTS making up 80% of the revenue. After a very strong first half, the Middle East suffered from COVID-19 in the last quarter when most test centres were closed.

The entry into Nigeria three years ago with the IELTS business has been very successful with very strong growth being recorded in FY20. Digital marketing revenue in the UK and USA also grew during the year driven by new products and services from IDP Connect.

Directors' Report

Results by Service

To aid the reader's understanding of the company's results, IDP Education has also prepared financial results by secondary segments which show revenue and gross profit by service. The analysis below discusses the operational and financial highlights for each of the company's services.

Student Placement - Operational and Financial Summary

				Growth

	Unit	FY20	FY19	Unit	%

Volumes
- Australia	000's	24.2	28.6	-4.4	-15.4%
- Multi-Destination	000's	26.8	21.0	5.8	27.5%
- Total Volumes	000's	51.0	49.6	1.4	2.8%
Revenue
- Australia	A$m	90.4	104.4	-14.0	-13.4%
- Multi-Destination	A$m	100.2	65.9	34.3	52.0%
- Total Revenue	A$m	190.6	170.3	20.3	11.9%
Gross Profit	A$m	155.2	138.5	16.6	12.0%
Gross Profit Margin	%	81%	81%
Average Fee (A$)
- Australia	A$	3,742	3,654	88	2.4%
- Multi-destination	A$	3,738	3,137	601	19.2%
- Total	A$	3,740	3,435	305	8.9%

Note: The Average Fee for Student Placement shown in this table is calculated as total Student Placement revenue divided by the number of courses IDP Education enrolled students into at its client education institutions during the period. Total Student Placement revenue includes all revenue associated with all placements including any revenue received from the student. Volume data to calculate the Average Fee only includes IDP Education client education institution course enrolments and excludes course enrolment volumes at education institutions that are not clients of IDP Education.

Student placement volumes rose by 2.8% in FY20 and reflects the strong performance through until the end of March 2020 and then the decline in volumes in the last quarter compared to the previous year as COVID-19 stopped students travelling to destination markets for the commencement of their courses.

Student Placement office expansion slowed in FY20 with a total network of 128 student facing offices at the end June 2020, with the addition of a 3rd party office in Kenya and 2 offices in India in the first half of FY20.

Volumes to Australia declined 15.4% which reflected impact of COVID-19 on IDP students unable to travel from China for the semester one intake in February, and uncertainty delaying students' decisions for semester two. Growth in Australia onshore volumes and growth in smaller markets of Hong Kong and Nepal were not enough to offset declines from India and China which are IDP's largest source markets of students.

The investment in the 'multi-destination' strategy continued to drive growth with a 27.5% increase in total volumes to the UK, USA, Canada, New Zealand and Ireland. Canada was the strongest destination market for IDP in FY20 with volumes rising 29%. Positive regulatory settings continued in Canada, and strong execution in IDP student placement offices particularly in India was the key driver of this growth.

Volumes to the UK increased by 22% with IDP's focus on the higher quality institutions being rewarded by increasing market share and volume growth in India, Indonesia and the Middle East.

Directors' Report

The average student placement fee across the business increased by 8.9% relative to that recorded in FY19. A range of factors contributed to this increase, including:

A strong increase in commission rates negotiated with clients, particularly UK and Canadian Clients;
A higher proportion of post-graduate and undergraduate courses and a lower proportion of English language and pathway programs where students enrolled;
Foreign exchange rates that were favourable during the year compared to FY19;
Incentives paid by clients for achievement of volume targets

English Language Testing - Operational and Financial Summary

							Growth

	Unit		FY20		FY19		Unit	%

Volumes	000's	1,095.6	1,283.2		-187.6	-14.6%
Revenue	A$m	325.5	359.6	-34.1	-9.5%
Gross Profit	A$m	145.7	154.5	-8.7	-5.7%
Gross Profit Margin	%	45%	43%
Average Fee	A$	297.1	280.2	16.9	6.0%

The Average Fee for English Language Testing is the average of all English Language Testing revenue divided by the total number of IELTS tests conducted during the period.

In English Language Testing, IDP Education's IELTS volumes declined 14.6% in FY20 taking the annual total to 1,095,600 tests

- with a decline in volume due to the COVID-19 impact in the last quarter.

Declines in volume occurred in most markets due to the closure of test centres, however there was a number of markets that despite the impact of these closures achieved growth compared to FY19. The markets that had material volume increases were Nigeria, Japan, Uzbekistan, Lebanon, Sri Lanka and Chile.

The average fee for English Language Testing of 6% was primarily a benefit of favourable foreign exchange rates with a 1% increase in the underlying price. The loss of the China License fee for five months offset the impact of price increases taken in Australia and India.

Directors' Report

English Language Teaching - Operational and Financial Summary

								Growth

		Unit		FY20		FY19		Unit	%

		000's	94.4	94.2		0.2	0.2%
	Revenue	A$m	28.5	27.5	1.0	3.6%
	Gross Profit	A$m	19.4	18.9	0.5	2.6%
	Gross Profit Margin	%	68%	69%
	Average Course Fee	A$	302.0	292.2	9.8	3.4%

IDP Education's English Language teaching business comprises 9 schools across Cambodia and Vietnam. The division was flat during FY20 with schools being closed during COVID-19 lockdowns and able to provide only limited online courses. Total course volumes across the division were up 0.2% for the year to a record 94,400 courses.

Revenue grew by a higher rate due to a higher average course fee, with a benefit from foreign exchange as course fees in Cambodia are charged and paid in US dollars.

Digital Marketing and Events - Financial Summary

										Growth

		Unit		FY20		FY19		$m	%

Revenue	A$m	38.2	36.8		1.5		4.0%
Gross Profit		A$m	22.8	19.8			3.0	14.9%
Gross Profit Margin	%	60%	54%

The Digital Marketing and Events segment captures the revenue IDP generates from its student placement events and from IDP-connect digital marketing business. Digital Marketing revenue had growth of 5% for the year after a stronger first half growth of 12% slowed in the second half as institutions reduced marketing spend. Events are in-country recruitment fairs that IDP holds to promote its university clients to prospective students and their families. Universities that attend these events pay a fee to attend and meet IDP's students in each source country. The events are run on a cost-recovery basis in some markets and make a small loss in some markets and form a key part of the marketing activities for the company's student placement business. Physical events were unable to be held in most countries in the second half and IDP quickly established a platform to hold virtual events, as a result the margin in the segment improved as virtual events are run at a lower cost.

Other - Financial Summary

									Growth
		Unit		FY20		FY19
		$m	%

Revenue	A$m	4.3	4.0		0.3	6.9%
Gross Profit		A$m	2.2	2.4			-0.2	-7.8%
Gross Profit Margin	%	51%	59%

The company generated a small amount of other revenue in FY20 which was derived via contracted activities for development programs initiated by government or semi-government bodies, office services revenue and other miscellaneous items. Revenue from these activities grew at 6.9% during the year, while gross profit declined 7.8%.

Directors' Report

Financial Position

The financial position of IDP Education remains strong. As at 30 June 2020 the company had total assets of $701.9m of which 19% related to intangible assets and the remaining being comprised primarily of cash, trade receivables and property, plant and equipment. Total assets exceeded total liabilities by $392.9m.

IDP Education has the following facilities:

Great British Pound	Facility A: Acquisition funding 3-year unsecured Cash Advance loan facility for
£30,906,112	acquisition of UK subsidiaries
Australian Dollar	Facility B: 3-year unsecured Cash advance facility to support both general corporate
purposes and working capital requirements of the Group
$25,000,000
Australian Dollar	Facility C: Acquisition funding 3-year unsecured Cash Advance loan facility for
$5,000,000	investment in HCP Ltd
Australian Dollar	Facility E: Guarantees, Transaction Facilities and Credit Card Merchant Facilities
$7,600,000
Australian Dollar	Facility F: Working Capital facility to 30 June 2021
$150,000,000

The total drawn debt is $59.8m at 30 June 2020.

From a cash perspective the company had $307.1m of cash on the balance sheet as at 30 June 2020.

Foreign Exchange

IDP Education currently earns revenues and incurs expenses in approximately 45 currencies and as a result is exposed to movements in foreign exchange rates. It is therefore important to consider IDP Education's financial performance on an underlying basis by excluding the impact of foreign exchange movements during the year.

To illustrate the impact of foreign currency exchange rate movements on the FY20 result, IDP Education has restated its FY19 results using the foreign exchange rates that were recorded in FY20. By comparing FY20 to the restated FY19 financials, IDP Education is able to isolate the underlying performance of the business during the period.

The table below summarises this analysis and by comparing to the Summary Financials on page 3 shows that foreign exchange movements had a positive impact on the net profit after tax for the year. The weakening of the Australian dollar contributed $22.7m favourable exchange movement in revenue, and $12.5m favourable exchange movement in gross profit which offset the increase in expenses from exchange movement in IDP's offshore operations. The impact of exchange movements on net profit after tax was favourable $3.2m

Directors' Report

Underlying Growth

										Growth
			FY20 Statutory		FY20		FY19 *
	Unit							$m	%
		Post AASB16		Pre AASB16		Pre AASB16


Total Revenue	A$m	587.1	587.1	620.8		-33.7		-5.4%
Gross Profit	A$m	345.2	342.6	346.5	-1.3	-0.4%
EBIT	A$m	107.8	107.3	100.3	7.4	7.4%
NPAT	A$m	67.8	71.5	69.0	-1.2	-1.8%
NPAT (Adjusted) **	A$m	70.4	74.1	71.4	-1.1	-1.5%

Calculated by restating the prior comparable period's financial results using the actual FX rates that were recorded during the current period
Adjusted NPAT excludes acquired intangible amortisation

IDP Education utilises a variety of methods to manage its foreign currency exchange rate risk. The key method is the use of forward exchange contracts and currency option contracts. IDP Education's hedging policy requires it to put in place hedges to cover the expected net cash operating flows of certain currencies including the GBP, INR, CNY, CAD and SGD.

Business Strategy and Prospects

The company's results during the period are largely due to continued delivery of the organic growth strategy. This strategy has been designed to leverage past investment in the company's global network and capitalise on opportunities in the long term growth of international student and high-stakes English language testing markets.

The impact of COVID-19 we expect will impact the intakes for student placement for FY21 to some degree. It is uncertain when higher education institutions will be in a position to return to previous on campus activity levels. As the majority of IELTS test takers undertake the test for academic or migration purposes until international borders are open for travel and higher education institutions are able to allow international students to commence courses on campus, IELTS testing volumes will likely be impacted.

In Student Placement, the multi-destination strategy has underpinned the company's growth over recent years. The company has made substantial investments in establishing capabilities in the United States, the United Kingdom, Canada, New Zealand and Ireland, and it expects to continue to benefit from these investments as it grows volumes to these destinations, once the COVID-19 impacts have ceased.

In Australia, IDP Education is well positioned to capitalise on growth in the number of international student enrolments to Australian institutions. IDP Education has a market leading position and strong reputation in its existing source countries for placing students to Australia. It will continue to build market share in these countries and will also look to leverage this capability and reputation by selectively and incrementally expand its source country presence.

In addition to this organic volume growth IDP Education is driving longer term growth in Student Placement through the use of technology. The investment in the digital platform for international students to engage with IDP Education beyond just the traditional face-to-face counselling service which is the main element of the current service offering. The ongoing enhancement of IDP Education's digital platform, is enhancing the experience of all of its customers providing deeper and richer ways to engage with students and clients throughout the international student journey.

IDP Education is also well positioned to capitalise on the continued growth in global demand for high-stakes English language testing driven by the ongoing requirement for English language capability for the purpose of study, work and migration.

The IELTS partners, IDP Education, British Council and Cambridge Assessment, have also invested significantly in systems, testing approaches and technology to advance and improve the IELTS product.

Directors' Report

Risks

An investor in IDP Education also needs to consider the risks that have the potential to impact the financial performance of the company going forward. A number of these key risks are summarised below.

Regulatory risk - The company generates a substantial amount of income from placing international students into education institutions in Australia, the United States, the United Kingdom, Ireland, Canada and New Zealand. To the extent that any of these destination countries alter immigration policies, regulation or visa requirements that reduce the number of student or migration visas that they grant, this will have a direct impact on IDP Education's student placement enrolment volumes and/or IELTS test volumes and therefore revenue. Changes by government immigration authorities in these destination countries that decrease or remove the acceptance of IELTS, increase competition from other providers or change the way that tests are administered, could also have a material and adverse impact on the company's financial position and performance.

Geopolitical - Political events and tension, unfavourable press, negative international relations and other international events may reduce the attractiveness of particular destination countries for students and other migrants originating from particular source countries. Any future circumstances which reduce the attractiveness of a particular destination country to foreign students or other migrants may have a material and adverse impact on the company's financial position and performance.

Risks of operating a global company - The global footprint which IDP Education operates across is exposed to regulatory, operating and management complexities and risks. There are certain risks inherent in doing business in foreign jurisdictions such as unexpected changes in legal and regulatory requirements, difficulties in managing foreign operations, longer payment cycles, problems in collecting accounts receivable, political instability, expropriation, nationalisation, the application of sanctions, embargoes or export and trade restrictions and war. There may also be foreign exchange controls which restrict or prohibit repatriation of funds and prohibitions and delays from customers or government agencies. These issues may arise from time to time, in the foreign jurisdictions in which IDP Education operates, which could have a material and adverse impact on the company's financial position and performance.

Competition - IDP Education operates in highly competitive markets across all of its geographies and products. IELTS in particular competes with a number of alternative high-stakes English language tests and, in most jurisdictions, IDP Education competes with the British Council as a distributor of IELTS. The following factors have the potential to reduce the number or profitability of IELTS tests that are conducted by IDP Education and therefore could have a material and adverse impact on the company's financial position and performance: (i) the cost of sitting alternative high-stakes English language tests being lower than that for IELTS; (ii) increased acceptance by destination education institutions and immigration departments of alternative high-stakes English language tests; (iii) an increase in the number of testing centres, and times, at which alternative high-stakes English language tests can be taken; (iv) alternative high-stakes English language tests being marked in quicker timeframes when compared to those for IELTS; or (v) alternative high-stakes English language tests being perceived to be fairer and/or more suited to people whose first language is not English.

Relationship with Education Australia

Education Australia, which represents 38 Australian universities, owns approximately 40% of the Shares of IDP Education Limited. The Constitution of IDP Education Limited requires that:

for such time as Education Australia is registered as the holder of at least 10% of the voting securities in the company (Securities), a majority of the Board is to comprise, collectively, Independent Directors (as defined in the Constitution) and representatives of Education Australia; or
if at any time Education Australia ceases to hold at least 10% of the Securities, a majority of the Board is to comprise Independent Directors only;

Accordingly, there exists the potential for Education Australia to exert a significant degree of influence over the company's management and affairs and over matters requiring Shareholder approval, including (among other things) the election of Directors and the approval of significant corporate transactions.

Directors' Report

Directors

The following persons were Directors of IDP Education Limited during the financial year and up to the date of this report unless otherwise stated:

Name	Particulars
Peter Polson	Non-Executive Director and Chairman
Andrew Barkla	Managing Director and Chief Executive Officer
Ariane Barker	Non-Executive Director
Professor David Battersby AM	Non-Executive Director
Chris Leptos AM	Non-Executive Director
Professor Colin Stirling	Non-Executive Director
Greg West	Non-Executive Director

Director	Experience, qualifications and expertise
Peter Polson	∙ Peter was appointed as a Non-Executive Director at IDP in March 2007
Non-Executive Director	∙ Peter has broad experience in the financial services industry, first as Managing Director of
and Chairman	the international funds management business with the Colonial Group, then as an
	executive with the Commonwealth Banking Group with responsibility for all investment
	and insurance services, including the group's funds management, master funds,
	superannuation and insurance businesses and third party support services for brokers,
	agents and financial advisers
	∙ He is the Chairman of Challenger Limited (listed company director since November 2003),
	Challenger Life Company Limited, Avant Group Insurance Limited and Very Special Kids
	∙ He is also a director of Avant Mutual Group Limited and Avant Group Holdings Limited
Andrew Barkla	∙ Andrew was appointed as Chief Executive Officer and Managing Director at IDP in August
Chief Executive Officer	2015
and Managing Director	∙ Andrew has extensive experience in the technology, services and software industry, with
	over 20 years of senior management experience in roles across Australia, New Zealand,
	Asia and North America
	∙ Prior to joining IDP, Andrew worked for SAP as President of Australia and New Zealand
	∙ Prior to his role at SAP, Andrew held leadership roles at Unisys, including as Vice
	President of Unisys' Asia Pacific Japan operations covering 13 countries, as Member of
	Unisys' Global Executive Committee and as Chairman of Unisys West, a technology
	services joint venture between BankWest and Unisys
	∙ Earlier in his career, Andrew was Vice President and General Manager of PeopleSoft's
	Asia Pacific region

Directors' Report

Ariane Barker

Non-Executive Director

Professor David

Battersby AM

Non-Executive Director

Chris Leptos AM

Non-Executive Director

Professor Colin Stirling

Non-Executive Director

Greg West

Non-Executive Director

Ariane was appointed as a Non-Executive Director at IDP in November 2015 and is Chair of the Audit and Risk Committee
As the CEO of Scale Investors, Ariane works to activate investment capital for female entrepreneurs and gender balanced startups to support growth for early stage businesses. She is a member of the Murdoch Children's Research Institute (MCRI) Investment Committee, and is a former Board Member of Emergency Services & State Superannuation (ESSSuper)
Ariane has extensive experience in international finance, risk management, and debt and equity capital markets, having worked in executive roles with JBWere (part of National Australia Bank), Merrill Lynch, Goldman Sachs and HSBC in the United States, Europe, Japan, Hong Kong and Australia
Ariane is a graduate and member of the Australian Institute of Company Directors (AICD)
David was appointed as a Non-Executive Director at IDP in February 2011. He was appointed Vice-Chancellor of the University of Ballarat in 2006 and, in 2014, he became Foundation Vice-Chancellor of Federation University Australia completing his term of office in 2016
He took up his current appointment as an Adjunct Professor at Southern Cross University in 2017
His previous senior appointments have been at universities in Australia and New Zealand and he has undertaken consultancies for UNESCO, the OECD and various government agencies
He was foundation Chair of the Australian Regional Universities Network and the board of the Museum of Australian Democracy at Eureka and is currently on the board of directors of the Melbourne Institute of Technology
He is also Deputy Chair of the Board of Education Australia Limited
Chris was appointed as a Non-Executive Director at IDP in November 2015
His other Board roles include Chairman of SEA Electric, and President & Chairman of the National Heart Foundation
He is also a Senior Adviser to Flagstaff Partners, a member of the Advisory Board of The University of Melbourne Faculty of Business & Economics and the Advisory Council of Asialink. He is an Adjunct Professor at Monash University, and a Governor of The Smith Family
He was previously a Senior Partner with KPMG, and Managing Partner Government at Ernst & Young where he had national responsibility for leading the public sector and higher education practice
He is a Fellow of the Institute of Chartered Accountants and a Fellow of the AICD
Colin was appointed as a Non-Executive Director at IDP Education in February 2018
He is the President and Vice-Chancellor of Flinders University and brings more than thirty years of experience in international education in Australia, the UK and the USA
Colin is a director of Education Australia Limited and has held various other board positions across health, academic and community organisations
Educated at the University of Edinburgh, and with a PhD from the University of Glasgow, Colin began his award-winning scientific career at the University of California, Berkeley
Greg was appointed as a Non-Executive Director at IDP Education in December 2006
He is a Chartered Accountant with experience in higher education, investment banking and financial services
He is Chair of Education Australia Limited and was appointed as a director in 2006. Greg has been a member of the Council of the University of Wollongong since 2018. He was appointed to the Board of UOWGE Limited in 2003, a business arm of the University of Wollongong which includes its international university campuses in Dubai, Hong Kong and Malaysia
Over the last decade, Greg has worked in ASX listed mid-cap biotech companies and listed start-ups, and over recent years as the CEO of a dual listed (ASX & Nasdaq) biotech company. His prior work experience was at PWC and he held senior executive roles with a number of financial institutions, including Bankers Trust, Bain & Company and Deutsche Bank

Directors' Report

Company Secretary

The Company Secretary is Murray Walton, who is also the Chief Financial Officer of the Group. Murray Walton is a member of the Institute of Chartered Accountants Australia and New Zealand and a graduate member of the Australian Institute of Company Directors (AICD).

Meetings of Directors

The following table sets out the number of meetings (including meetings of committees of directors), held for the year and the number of meetings attended by each Director.

			Audit and Risk	Remuneration	Nomination
	Board	Committee	Committee	Committee

	Held	Attended	Held	Attended	Held	Attended	Held	Attended

Peter Polson	11	11	7	7	4	4	2	2

Andrew Barkla	11	11	-	-	-	-	-	-

Ariane Barker	11	10	7	6	4	4	2	2

Professor David Battersby AM	11	11	-	-	-	-	2	2

Chris Leptos AM	11	11	-	-	4	4	2	2

Professor Colin Stirling	11	10	-	-	-	-	2	2

Greg West	11	11	7	7	-	-	2	2

Principal activities

The Group's principal activities during the year were:

placement of international students into education institutions in Australia, UK, USA, Canada, New Zealand and Ireland. Services include counselling, application processing and pre-departure guidance;
distribution and administration of International English Language Testing System ("IELTS") tests, a globally recognised high-stakes English language test for study, work and migration purposes. IDP is a co-owner of IELTS with the British Council and Cambridge Assessment;
operation of English language schools in Vietnam and Cambodia; and
operation of digital marketing and event service.

There was no significant change in the nature of these activities during the year.

Directors' Report

Significant changes in state of affairs

Equity Raising

On 2 April 2020, IDP Education Limited successfully completed a $225m fully underwritten institutional placement (Placement) of 21.1m new fully paid ordinary shares to institutional investors at a price of $10.65 per share.

Following the institutional placement, on 7 May 2020, the Company successfully completed its Share Purchase plan (SPP), which was offered to the eligible shareholders. The SPP proceeds was $29m with 2.8m new shares issued at $10.65 per share.

The proceeds of the Placement and SPP will be used to enhance balance sheet strength and financial flexibility, and to support the business during the current macro-economic uncertainty by materially increasing liquidity.

COVID-19 impact

The impact of COVID-19 we expect will impact the intakes for student placement for FY21 to some degree. It is uncertain when higher education institutions will be in a position to return to previous on campus activity levels. As the majority of IELTS test takers undertake the test for academic or migration purposes, until international borders are open for travel and higher education institutions are able to allow international students to commence courses on campus, IELTS testing volumes will be impacted.

Future developments

Likely developments in, and expected results of the operations of the Group in subsequent years are referred to on page 11 except to the extent disclosure of the information would be likely to result in unreasonable prejudice to the Group. The type of information not disclosed includes commercial in confidence information such as detailed operational plans and strategies that would provide third parties with a commercial advantage.

Dividends

In respect of the financial year ended 30 June 2020, an interim dividend of 16.5 cents per share franked at 17% was declared on 12 February 2020 and the payment was deferred to 24 September 2020. IDP's Board of Directors has decided not to declare a full year dividend.

In respect of the financial year ended 30 June 2019, an interim dividend of 12.0 cents per share franked at 50% was paid on 29 March 2019. A final dividend of 7.5 cents per share franked at 45% was paid on 26 September 2019.

Events subsequent to balance date

Other than the COVID-19 impact discussed above, there has not been any matter or circumstances occurring subsequent to the balance date that has significantly affected, or may significantly affect, the operation of the Group, the results of those operations, or the state of affairs of the Group in future financial years.

Directors' interests in securities

The relevant interests of Directors in the Company's securities at the date of this report were:

		Ordinary Shares		Options		Performance
					Rights


Peter Polson	52,817	-	-

Andrew Barkla	257,259	295,000	182,510

Ariane Barker	21,684	-	-

Professor David Battersby AM	10,048	-	-

Chris Leptos AM	28,684	-	-

Professor Colin Stirling	-	-	-

Greg West	27,817	-	-

Directors' Report

Environmental regulation and performance

The Group's operations are not subject to any significant environmental regulations under the government legislation of the countries it operates in. The Group's environmental footprint is small and arises primarily from the energy used and materials consumed in its offices. The Board believes that the consolidated company has adequate systems in place for the monitoring of environmental regulations.

Indemnification and insurance of officers

During the year, the Company paid a premium in respect of a contract insuring the Directors of IDP Education Limited (as named above), the Company Secretary, Murray Walton, and all executive officers of IDP against a liability incurred as such a Director, secretary or executive officer to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium. The Company has not otherwise, during or since the end of the financial year, except to the extent permitted by law, indemnified or agreed to indemnify an officer or auditor of the Company against a liability incurred as such an officer or auditor.

Non-audit services

The Group may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor's expertise and experience with the Group are essential and will not compromise their independence.

Details of amounts paid or payable to the auditor Deloitte Touche Tohmatsu for audit and non-audit services provided during the year are outlined in Note 25 to the financial statements.

The Directors have considered the non-audit services provided during the year and are satisfied these services are compatible with the general standard of independence for auditors imposed by the Corporations Act 2001 for the following reasons:

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

Auditor's independence declaration

A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 39.

Rounding of amounts to the nearest thousand dollars

The Group is of the kind referred to in ASIC Corporations (Rounding in Financials/Directors' Reports) Instrument 2016/191 dated 24 March 2016, and in accordance with that Corporations Instrument amounts in the Directors' report and financial report are rounded off to the nearest thousand dollars, except where otherwise stated, to the nearest dollar.

Corporate governance policies

IDP is committed to strong and effective governance frameworks and complies with the Australian Securities Exchange Corporate Governance Principles and Recommendations 3rd Edition (ASX Principles). IDP's Corporate Governance Statement, in addition to corporate governance policies are available in the Investor Centre - Corporate Governance section of the company Website, at https://investors.idp.com/Investor-Centre/?page=Corporate-Governance

Directors' Report

Letter from Remuneration Committee Chairman

Dear Shareholder,

On behalf of the Board I am pleased to introduce IDP Education Limited's (IDP) 2020 Remuneration Report for which we seek your support at our Annual General Meeting in October 2020.

2020 was our fourth full year of operation since listing. As detailed in the financial section of our Report we were on track for another record result when the COVID-19 pandemic began to impact our business operations across our regions. The Board and management responded quickly and effectively in an effort to minimise the impact on the business. Key initiatives adopted, included:

A temporary 20% fixed annual remuneration reduction which was agreed to by all employees, executives and Directors. The reductions implemented for each category have been as follows:
o Employees -4 ½ months commencing 15 May 2020
o Global Leadership Team and Senior Leaders - 6 months commencing 1 April 2020 o Non-executive Directors - 6 months commencing 1 April 2020
These adjustments will remain under review as we continue to respond to the ongoing impact of the pandemic. Together we share the responsibility of caring for our customers and our company during this unusual period. Our strong culture and values underpin our team's response which has been universally supportive.
Our people are at the very core of our business success and it is critical we retain our talented team to ensure we are able to maximise the 'rebound' opportunities that will arise when restrictions to global mobility are lifted. A detailed review of our business has been conducted to ensure our people are optimally assigned to strengthen our operations and the services we deliver to our customers. Natural attrition has continued; however, replacement of vacant roles has been tightly monitored.
A capital raising was initiated to preserve IDP's very strong financial position and provide a working capital buffer.
Increased debt facilities were negotiated.
Globally a reduction in all expense lines was achieved including renegotiation of leases, reduction in marketing spend and accessing available government subsidies to partially offset revenue losses due to the COVID-19 pandemic.

There have been many positive achievements over 2020. These include:

In Student Placement, an SP App was rolled out to 20 countries with 18,000 downloads by the end of the financial year. Supporting students in their course selections and the introduction of Net Promoter Score in 15 countries has enabled us to better understand student experience at 5 key customer journey points.
In IELTS we developed a suite of supporting materials to ensure that test takers, teachers and referring partners were able to optimise the computer delivered IELTS experience. This has resulted in an increased take up of this product and created an online version of IELTS (IELTS Indicator) supporting 5,000 test takers. It enabled the recognition by 500 universities and helps to extend the reputation of IELTS and its brand.
Virtual events connecting clients with 56,000 students in Q4, together with webinars and multichannel updates keep customers and stakeholders abreast of rapid developments and continue to cement our position as a trusted leader in International Education.
Increased capability to provide data-driven intelligence regarding student sentiment and behaviour has enabled us to further strengthen our brand, with our International Student Crossroads research allowing us to influence policy making and gain recognition globally.

Notwithstanding the severe impact of COVID-19 we have managed to report a satisfactory financial performance for the year. Revenue of $587m was marginally down year on year and NPAT of $68m was up 2%. Our share price volatility reflects the uncertainty in the current global environment. Despite this volatility IDP has delivered a more than 400% TSR since listing.

As always, remuneration was a key focus of your Board as we continued to ensure that there is alignment between shareholders and management. Retention of talent is critical as we face IDP's growth challenges, technological change, our diverse geographies, community, Government and regulatory changes.

Directors' Report

Key initiatives this year, included:

IDP's Board and executive KMP remuneration strategies and policies were reviewed and updated;
Remuneration adjustments arising from the independent remuneration benchmark assessments of all executive KMP positions, as well as GLT roles undertaken last year were implemented in July 2019;
A Remuneration Workshop was independently curated during the year to ensure all aspects of remuneration were thoroughly considered, including regulatory changes, changes in the ASX Corporate Governance Guidelines and Principles and market trends;
A change to the remuneration mix of selected senior executives was implemented;
The specific non-financial and financial key performance indicators (KPI) for FY20 were reviewed and updated to ensure they remained appropriately focussed and challenging;
In a particularly difficult remuneration environment careful consideration was given to the award outcomes across the group. With a balanced approach we have endeavoured to ensure that all FY20 awards truly reflected performance and were both fair and equitable, all things considered; and
The performance conditions for IDP's LTI were reviewed and updated. The EPS CAGR rate was increased and the TSR comparator group was recomposed to more accurately reflect our business peers.

2020 has been a truly challenging year and these challenges will remain for the foreseeable future. As Chair of the Remuneration Committee I will continue to work closely with my fellow Directors, external advisors and management to ensure that IDP maintains a strong and effective talent pool ready to face the challenges ahead. This will most likely require a greater degree of flexibility and discretion. Our objectives remain unchanged and that is to focus on shareholder alignment, drive results and provide remuneration systems that reward and motivate employees to successfully execute our business strategies.

I will continue to maintain contact with our key stakeholders to ensure transparency and that there is a clear understanding of our remuneration strategies.

Peter Polson

Chair of the Remuneration Committee

19 August 2020

Directors' Report

Remuneration Report

Key management personnel (KMP) is defined by AASB 124 Related Party disclosures. Only Directors, the Chief Executive Officer and executives that have the authority and responsibility for planning, directing and controlling the activities of IDP, directly or indirectly and are responsible for the entity's governance are classified as KMP.

The KMP was established on the listing of the company in November 2015 and included in the Financial Reporting for FY16 onwards. On appointment of Mr Pental as Chief Operating Officer in FY19 the role was reviewed and it was determined that the COO was not Executive KMP as he was not responsible for planning, directing and controlling activities of IDP across the entire business. The review was completed again by the company secretary at the end of FY20 and as the responsibilities of the role had expanded, the COO is now included in Executive KMP.

The KMP of IDP for the year ended 30 June 2020 were:

		Position	Period as KMP

Executive KMP

Andrew Barkla		Managing Director and Chief Executive Officer	17	August 2015 to Current

Murray Walton		Chief Financial Officer and Company Secretary	9	March 2010 to Current

Warwick Freeland		Chief Strategy Officer and Managing Director	10	August 2008 to Current
	IELTS Australia

Harmeet Pental		Chief Operating Officer	1	July 2019 to Current

Non-Executive Directors

Peter Polson		Chair	21	March 2007 to Current

Ariane Barker		Non-Executive Director	12	November 2015 to Current

Professor David Battersby AM		Non-Executive Director	9	February 2011 to Current

Chris Leptos AM		Non-Executive Director	12	November 2015 to Current

Greg West		Non-Executive Director	4	December 2006 to Current

Professor Colin Stirling		Non-Executive Director	6	February 2018 to Current

Remuneration governance

This section of the Remuneration Report describes the role of the Board and the Remuneration Committee, and the use of remuneration consultants when making remuneration decisions.

Role of the Board and the Remuneration Committee

The Board is responsible for IDP's remuneration strategy and policy. Consistent with this responsibility, the Board has established the Remuneration Committee (the Committee).

In summary, the role of the Committee includes assisting and advising the Board on remuneration policies and practices for the Board, the Chief Executive Officer (CEO), the other Executive KMP, senior executives and other persons whose activities, individually or collectively, affect the financial soundness of the Company. The Committee advises the Board on remuneration practices and policies which are fair and responsible to drive a performance culture and align with shareholder outcomes.

Directors' Report

The Committee's role and interaction with the Board, internal and external advisors, are further illustrated below:

Further information on the Committee's role, responsibilities and membership is contained in the Corporate Governance Statement. The Remuneration Committee Charter can also be viewed in the Corporate Governance section of the Investor Centre of the IDP website.

As at 30 June 2020, the Committee comprised the following Non-executive Directors:

Mr Peter Polson (Chair)
Ms Ariane Barker
Mr Chris Leptos

The Directors' Report provides information regarding:

skills, experience and expertise of the Committee members; and
number of meetings and attendance of members at the Committee meetings

Use of remuneration consultants

The Board directly engages external advisors to provide input to the process of reviewing Executive KMP and Non-executive Director remuneration. A Use of Remuneration Consultants Policy was approved by the Board on 21 August 2017.

During FY20, Crichton and Associates Pty Limited (Crichton and Associates) were engaged by the Board to provide recommendations in relation to KMP and various other remuneration consulting services. Crichton and Associates were paid (invoiced) $19,638 for these services.

Directors' Report

The following arrangements were made to ensure that the remuneration recommendations have been made free from undue influence:

Crichton and Associates takes instructions from an independent Non-executive Director and the Committee and is accountable to the Board for all work completed;
During any assignment, Crichton and Associates may seek input from management, however deliverables are provided directly to the Remuneration Committee and considered by the Board; and
Professional fee arrangements are agreed directly with the Remuneration Committee Chairman.

Consequently, the Board is satisfied that the remuneration recommendations were made free from undue influence from any member of the KMP.

In addition to providing remuneration consulting services, Crichton and Associates also provided services relating to other aspects of remuneration of the Group's employees, including the provision of valuation services, IDP Education Employee Incentive Plan (IDIP) award offer documentation and other related advisory services. For these services Crichton and Associates was paid (invoiced) $63,515 during FY20.

Remuneration strategy

IDP's Board, Executive and Employee Remuneration Policy (Policy) aims to set employee and executive remuneration that is fair, competitive and appropriate for the markets in which it operates and is mindful of internal relativities. IDP Education aims to ensure that the mix and balance of remuneration is appropriate to reward fairly, attract, motivate and retain senior executives and other key employees.

Specific principles of IDP's remuneration strategy include:

reward as one important component of the overall employee experience supporting the attraction and retention of a highly skilled and diverse workforce;
the weighting toward shared KPIs and performance measures recognises IDP Education's success requires collaboration;
providing a fair and competitive (internal and external) fixed annual remuneration for all positions under transparent policies and review procedures;
linking executive rewards to shareholder value accretion by providing appropriate equity (or equivalent) incentives to selected senior executives and employees linked to long-term company performance and core values;
providing competitive total rewards to attract and retain appropriately skilled employees and executives;
have a meaningful portion of remuneration 'at risk', dependent upon meeting pre-determined benchmarks, both short (annual) and long term (3+ years); and
establishing appropriate, demanding performance hurdles for any executive equity incentive remuneration.

The Policy is drafted in such a way as to enable IDP to navigate the complexity of managing remuneration across numerous geographies and varying job roles.

Executive KMP remuneration strategy and objectives are summarised in the table overleaf:

Directors' Report

Executive remuneration mix

IDP endeavours to provide an appropriate and competitive mix of remuneration components balanced between fixed and at risk and paid both in cash and deferred equity.

Remuneration overview

As discussed above, each executive's total remuneration package may be comprised of the following elements:

Fixed Annual Remuneration (FAR)
At-RiskRemuneration:

Short Term Incentive (STI) o Long Term Incentive (LTI)

The illustration below provides an overview of the average FY20 Total Target Remuneration mix for the CEO, other Executive KMP and senior executives of IDP compared to FY19.

The FY20 remuneration mix for the CEO is slightly below the performance aggressive range (33 ⅓ :33 ⅓:33 ⅓) as the weighting of the STI component has increased. The remuneration mix for other Executive KMP is slightly above the performance balanced range (50:25:25) with the inclusion of the COO in this group.

* Mr Pental is included in Senior Executives for the purposes of a like for like comparison year on year

In determining the Total Target Remuneration mix for the CEO and other Executive KMP, the Board has considered the following:

Setting market competitive FAR;
Achieving an appropriate mix between fixed and variable remuneration;
Providing a meaningful STI (targeted at up to 100% of FAR) aligned to the achievement of key financial and other organisational metrics over the current financial year; and
Providing meaningful LTI (targeted at up to 60% of FAR) aligned to meeting benchmark earnings (EPS CAGR) and share growth (relative TSR) targets over a three (3) year performance period.

It is intended that if the benchmark targets are achieved then IDP will have outperformed and the CEO and other Executive KMP will achieve top quartile remuneration benefits.

The reward mix and performance expectations are reviewed annually.

Directors' Report

Executive KMP Remuneration Mix

The mix of remuneration for the Executive KMP in FY20 is shown in the following table and a detailed description of each is discussed in more detail below:

	Fixed Annual	STI1	STI2	LTI3
	Remuneration($)	(At-Target)($)	(Exceptional)($)	(At-Target)($)
Executive KMP
Andrew Barkla4	1,050,000	1,050,000	1,863,750	630,000
Murray Walton5	575,770	287,885	510,996	201,520
Warwick Freeland6	455,106	227,553	403,907	204,800
Harmeet Pental	557,325	557,325	989,252	334,395

¹STI payout for on-target performance ²Maximum STI payout

³LTI allocation value for FY20

⁴Mr Barkla's FAR was increased $150,000, STI (at-target) was increased by $510,000 and the LTI (at-target) was increased by $90,000 ⁵Mr Walton's FAR was increased by $16,770, STI (at-target) was increased by $8,385 and the LTI (at-target) was increased by $4,870 ⁶ Mr Freeland's FAR was increased by $3,256, STI (at-target) was increased by $6,628 and the LTI (at-target) was increased by $5,967

These changes were made after a thorough evaluation of the importance of the role and the incumbent and including by reference to external market data, independently assessed.

Fixed Annual Remuneration

Fixed Annual Remuneration represents the fixed portion of executive remuneration and includes base salary, salary packaged benefits, allowances and employer superannuation contributions.

IDP's approach to FAR settings is to aim to position all executives between the median and 75th percentile of relevant comparator group executives as determined by independent benchmark assessment and advice.

The table below applied logically, can be used as a guide to IDP's remuneration setting process.

Relative

Positioning

1st Quartile

2nd Quartile

Mid-point (Median)

3rd Quartile

4th Quartile

Comments

Inexperienced in the position but coping, or an experienced employee exhibiting performance gaps.

Experienced in the position, usually with a minimum of two years' service. In the competent range,

but capable of further development or improvement in the role.

Fully competent executive or employee making a consistent and sound contribution, coping with and sometimes exceeding all the demands of the position.

Very experienced executive, exhibiting demonstrably superior performance. External appointees

would often be recruited at this level. That is between the median and 75th percentile. The majority

of senior executives would be likely to be paid at the 62.5th percentile, that is the middle of the 3rd

quartile.

Only outstanding and strategically critical executives would be remunerated in the 4th quartile. Care will be taken not to duplicate or inflate TAR through STI or LTI at this level. Less than 10% of executives likely to be paid at this level.

Executive KMP FAR is tested regularly for market competitiveness by reference to appropriate independent and externally sourced comparable benchmark information, including comparable Australian Securities Exchange (ASX) listed companies, and based on a range of size criteria including market capitalisation, revenue, number of employees taking into account an executive's responsibilities, performance, qualifications, experience and geographic location.

FAR adjustments, if any, are made with reference to individual performance, an increase in job role or responsibility, changing market circumstances as reflected through independent benchmark assessments or through promotion.

Any adjustments made to Executive KMP remuneration are approved by the Board, based on Committee recommendations referring to benchmarking data and the guidance of the independent remuneration consultant where appropriate.

Directors' Report

Short term incentive

IDP has target based STI plans in place for all Executive KMP.

Performance criteria set for STI plans reflect fundamental strategic or performance objectives to ensure a focused and successful performance incentive program.

The target and maximum annual STI that may be awarded to Executive KMP is expressed as a percentage of FAR. The key features of the STI plan are as follows:

Purpose

Performance criteria

Rewarding performance

Performance period

STI payment

The STI arrangements at IDP are designed to reward executives for achievement against annual performance targets set by the Board at the beginning of the performance period. The STI program is reviewed annually by the Remuneration Committee and approved by the Board.

During FY20, the key performance criteria of IDP were directed to achieving the following Board approved targets:

Earnings before Interest and Taxation;
Exceed budgeted growth in the number growth in volume of hot and warm student placement leads to global business
Year on year growth in the number of Applied students to all destinations;
Increase IELTS market share year on year;
Develop and implement complete suite of Computer delivered (CD) IELTS preparation materials for test takers;
Drive student referrals
Implement and embed Net Promoter Score (NPS) in Student Placement (SP operations
Increase productivity in SP measured by the number of finalised students per dedicated sales and counselling full time equivalent (FTE) team members
Launch the SP App in all offshore countries with localised content and accurate and timely application data entered;
Leadership development including succession plan for all Global Leadership Team (GLT) roles, I for mission critical roles;

The Board believes that these specific STI performance criteria support the strategic direction of the Company and will encourage an increase in financial performance, market share and shareholder returns.

The STI performance weightings are set under a predetermined matrix with the Board determination final.

Executive KMP's STI have a stretch component that is designed to encourage above at- target performance.

The STI performance period is for the financial year 1 July to 30 June.

The CEO's STI is paid as follows:

STI amounts up to $100,000 and 50% of any amount above $100,000 will be paid in cash subsequent to 30 June 2020 following completion of the performance period and audit of the associated financial statements; and
50% of any amount above $100,000 will be satisfied through a grant of service rights issued under the IDIP. The service rights are subject to a vesting condition that the CEO remains employed for a further 12 months from the end of the financial year.

The COO's STI is paid as follows:

70% will be paid in cash subsequent to 30 June following completion of performance period and audit of the associated financial statements; and
30% will be satisfied through a grant of service rights issued under the IDIP. The service rights are subject to a vesting condition that the CEO remains employed for a further 12 months from the end of the financial year.

The STI of other Executive KMP will be paid in cash subsequent to 30 June 2020 following completion of the performance period and audit of the associated financial statements.

Directors' Report

The performance criteria set are reviewed annually to ensure they align with the company's evolving business strategies and goals. The FY21 performance criteria will consist of a mix of financial (EBIT) and non-financial criteria.

FY21 budgets have been prepared at a time of significant uncertainty due to the uncertainty of impact and timing of any economic recovery post COVID-19. Accordingly, the Board has implemented a process of quarterly budgeting and will be required to impose a much higher degree of discretion in both setting and measuring performance for this year.

Long-term incentives

The IDP Education Employee Incentive Plan (IDIP) is the Company's employee equity scheme.

The IDIP has been structured to meet contemporary equity design standards and enables the Company to offer selected employees a range of different remuneration, incentive awards or employee share scheme interests.

The flexible design accommodates current and future needs with seven possible award structures available. The Company has currently offered five of these, Performance Rights, Options Service Rights, Deferred Shares and Exempt Shares (general employees only), to Executive KMP and senior executives as depicted below.

Awards Available Under the IDIP

Performance		Service	Exempt	Deferred		Stock
Options		Cash Rights			Appreciation
Rights	Rights	Shares	Shares
			Rights

IDP has offered a range of LTI Awards under the IDIP. These Awards are designed to assist in the motivation and retention of senior management and other selected employees in line with contemporary market practice.

The vesting conditions are designed to achieve the long term objectives of the Company as identified by the Board at the time of granting and the individual LTI awards have included some of the following criteria:

Achievement of forecast or target financial performance measures, including: o Earnings per share compound annual growth;
o Total shareholder return (TSR) compound annual growth; or
o IDP comparative ranking of TSR against the component companies in the ASX300 Discretionary Index or other relevant selected comparator group.

The vesting conditions also include continuous service over the three year LTI period to promote talent retention. The relevant performance conditions and the hurdle rates are reviewed, updated and approved annually.

The Board believes that the specific LTI vesting conditions will ensure the alignment of KMP's awards with shareholder returns. As at 30 June 2020, Executive KMP participate in the following Awards under the IDIP:

the FY18 Award;
the FY19 Award;
the FY20 Award; and
Deferred STI grant.

The key features of the LTI plans are as follows:

	Performance		Grant
	rights/options		date fair	Exercise		Vesting
LTI Award	awards	Grant date	value ($)	price ($)	Vesting conditions	date
FY18 Award -	Performance	15-Sep-17	5.45	0.00	EPS target CAGR over the period 1 July	31-Aug-20
Tranche 1	Rights				2017 to 30 June 20201
					Continuous employment with IDP until
					Vesting Date

1 The base EPS has been set at FY17 EPS of 16.58 cents per share. 50% of performance rights available will vest if an EPS CAGR of at least 12% is achieved. 100% of performance rights available will vest if an EPS CAGR of at least 14% is achieved. Vesting will be on a pro rata basis between 12% and 14%

Directors' Report

	Performance		Grant
	rights/options		date fair	Exercise
LTI Award	awards	Grant date	value ($)	price ($)	Vesting conditions
FY18 Award -	Performance	15-Sep-17	4.07	0.00	Ranking in TSR against the component
Tranche 2	Rights				companies in the ASX300 Discretionary
					Index from grant date to 30 June 20201
					Continuous employment with IDP until
					Vesting Date

FY19 Award -	Performance	27-Sep-18	9.67	0.00	EPS target CAGR over the period 1 July
Tranche 1	Rights				2018 to 30 June 20212
					Continuous employment with IDP until
					Vesting Date

FY19 Award -	Performance	27-Sep-18	6.30	0.00	Ranking in TSR against the component
Tranche 2	Rights				companies in the ASX300 Discretionary
					Index from grant date to 30 June 20213
					Continuous employment with IDP until
					Vesting Date

FY20 Award -	Performance	1-Oct-19	15.17	0.00	EPS target CAGR over the period 1 July
Tranche 1	Rights				2019 to 30 June 20224
					Continuous employment with IDP until
					Vesting Date

FY20 Award -	Performance	1-Oct-19	7.79	0.00	Ranking in TSR against the component
Tranche 2	Rights				companies in a selected 'peer' group of
					forty (40) ASX listed companies of a
					similar size (based on Market
					Capitalisation) over the period period 1
					July 2019 to 30 June 20225

Continuous employment with IDP until

Vesting Date

Vesting date

31-Aug-20

31-Aug-21

31-Aug-22

Termination benefits

The remuneration and other terms of employment are covered in a formal employment contract. The employment contracts include provisions requiring a minimum notice period by both the Executive and IDP Education. If either party provides notice, the Company may make a payment in lieu of notice.

For all Executive KMP, in the event of serious misconduct or other circumstances warranting summary dismissal, notice is not required.

50% of performance rights available will vest if IDP achieves a ranking in TSR against the component companies in the ASX 300 Discretionary Index of greater or equal to 50th percentile. 100% of performance rights available will vest if IDP achieves a ranking in TSR against the component companies in the ASX 300 Discretionary Index of greater or equal to 75th percentile. Vesting will be on a pro rata basis between 50th percentile and 75th percentile achievement
The base EPS has been set at FY18 EPS of 20.23 cents per share. 50% of performance rights available will vest if an EPS CAGR of at least 12% is achieved. 100% of performance rights available will vest if an EPS CAGR of at least 14% is achieved. Vesting will be on a pro rata basis between 12% and 14%
50% of performance rights available will vest if IDP achieves a ranking in TSR against the component companies in the ASX 300 Discretionary Index of greater or equal to 50th percentile. 100% of performance rights available will vest if IDP achieves a ranking in TSR against the component companies in the ASX 300 Discretionary Index of greater or equal to 75th percentile. Vesting will be on a pro rata basis between 50th percentile and 75th percentile achievement
The base EPS has been set at FY19 EPS of 26.3 cents per share. 50% of performance rights available will vest if an EPS CAGR of at least 15% is achieved. 100% of performance rights available will vest if an EPS CAGR of at least 17.5% is achieved. Vesting will be on a pro rata basis between 15% and 17.5%
50% of performance rights available will vest if IDP achieves a ranking in TSR against the component companies in a selected 'peer' group of forty (40) ASX listed companies of a similar size (based on Market Capitalisation) of greater or equal to 50th percentile. 100% of performance rights available will vest if IDP achieves a ranking in TSR against the component companies in a selected 'peer' group of forty (40) ASX listed companies of a similar size (based on Market Capitalisation) of greater or equal to 75th percentile. Vesting will be on a pro rata basis between 50th percentile and 75th percentile achievement

Directors' Report

The minimum notice period for each Executive KMP are set out in the below table.

			Notice
		Notice	period by
	Contract	period by	IDP
	type	Executive	Education	Redundancy Payment
Executive KMP

Andrew Barkla	Ongoing	3 months	9 months	If terminated by reason of
				redundancy, 5 weeks notice and 34
				weeks severance

Murray Walton	Ongoing	3 months	3 months	General redundancy terms apply as
				mandated by the Fair Work Act 2009

Warwick Freeland	Ongoing	13 weeks	26 weeks	General redundancy terms apply as
				mandated by the Fair Work Act 2009

Harmeet Pental	Ongoing	6 months	6 months	General retrenchment provisions
				apply in accordance with Ministry of
				Manpower (Singapore) requirements

Clawback provisions

The Board approved an executive remuneration malus and clawback policy in relation to performance based remuneration on 21 August 2017. No circumstances have arisen during the current year that have required application of this policy.

Linking remuneration and performance in FY20

FY20 STI performance scorecard

The Board believes that the specific STI performance criteria set encourage the delivery of improved financial performance, an increase in market share and the resulting improvement in shareholder returns.

The relationship between the Executive KMP at-risk remuneration and IDP Education's performance can be demonstrated through the STI performance criteria, their weighting and the outcome achieved for FY20.

Measure	Weighting	Outcome
Consolidated Earnings before Interest and Taxation	50.0%	20.8%
Volume of hot and warm student placement leads to global business	5.0%	3.2%
Volume of Applied students to all destinations	5.0%	5.3%
Increase IELTS market share	7.5%	7.9%
Suite of CD IELTS preparation materials implemented globally	7.5%	7.5%
Increase student referrals	5.0%	5.4%
Implement and embed NPS in SP operations	5.0%	5.0%
Increase productivity to 38.9 finalised students per dedicated Full Time Equivalent	5.0%	0.0%
Launch SP App, with localised content and training provided	5.0%	5.0%
Succession Plan for GLT roles and Talent review implemented	5.0%	5.0%

	100.0%	65.1%

Consolidated EBIT was adversely impacted by COVID-19. It is difficult to quantify the exact impact. Management's response to the pandemic was exceptional. Apart from trying to maintain a business as usual approach as far as practicable, significant effort was made to control costs. About $35m in savings were achieved through remuneration reductions, bonus reduction,

Directors' Report

rental relief, marketing, travel, consulting fees and other sundry savings. These savings enabled IDP to achieve an earnings result similar to FY19. A small amount of various Government subsidies were also received, where eligible.

The STI measures were selected to ensure the Executive KMP together with the full Global Leadership Team remain focussed on continuously improving customer experience and leadership capability, building a strong pipeline of students as well as growth in finalised volumes, growing IELTS market share and increasing CD IELTS uptake to position IDP for future financial success.

The Board is particularly delighted that the Company and the executive team have delivered these results in a year which presented many challenges to the business due to COVID-19 and the resultant temporary changes to international mobility. The outcomes reflect actual results, no discretion has been exercised in determining these payments.

The table below provides a summary of STI payments achieved for the FY20 performance year:

			At-Target STI	At-Target STI
	STI At-Target	STI Achieved1,2	Achieved	Forfeited
FY20	$	$	%	%

Executive KMP
Andrew Barkla	1,050,000	683,4683	65.1%	366,532
Murray Walton	287,885	187,391	65.1%	100,494
Warwick Freeland	227,553	148,119	65.1%	79,434
Harmeet Pental	557,325	362,7754	65.1%	182,677

Without the impact of COVID-19 the Board believes the results for FY20 would have been well above expectations. While COVID-19 has impacted on shareholders adversely we believe executives have also been adversely impacted by reduced remuneration, lower STI payments than would otherwise apply and the lower share price impact on both their LTI awards, performance expectations and unvested awards.

After deep contemplation the Board believes that no 'special' adjustment is required to these reward outcomes and that the results fairly reflect remuneration and performance outcomes, all things considered.

LTI performance scorecard

LTI Awards are granted annually to all executive KMP. Apart from special incentive awards, LTI awards are granted as performance rights with both an earnings (EPS CAGR) and TSR (IDP TSR relative to S&P/ ASX 300 25 Discretion Accumulation Index (XDKAI) component company TSR) over a set three year performance period. There are currently three unvested LTI grants and the current expectation of each grant for performance vesting is as follows:

Award	EPS CAGR Vesting	Estimated % to vest	TSR relative Vesting	Estimated % to vest
	Date		Date
FY18 LTI	31 August 2020	100%	31 August 2020	100%
FY19 LTI	31 August 2021	Uncertain	31 August 2021	Uncertain
FY20 LTI	31 August 2022	Uncertain	31 August 2022	Uncertain

The EPS CAGR for the period from 1 July 2016 to 30 June 2019 was 18.1% and 17.1% for the period from 1 July 2017 to 30 June 2020. It is not appropriate to provide further guidance on the likelihood of achievement of future EPS hurdles at this time.

We believe the EPS CAGR component of LTI awards provides a very strong correlation between IDP's performance and Executive KMP remuneration outcomes.

STI amounts indicated to have been achieved in respect of the year ended 30 June 2020 are subject to annual review and only payable subsequent to 30 June 2020 upon ratification and recommendation by the Remuneration Committee and approval by the Board
With the exception noted in footnote 3 and 4, all STI amounts will be paid in cash
An STI amount of $291,744 satisfied through a grant of service rights issued under the IDIP. The service rights are subject to a vesting condition that the CEO remains employed for a further 12 months from the end of the financial year
An STI amount of $108,832 satisfied through a grant of service rights issued under the IDIP. The service rights are subject to a vesting condition that the COO remains employed for a further 12 months from the end of the financial year

Directors' Report

IDP's TSR performance relative to the component companies in the ASX/S&P300 Discretionary Index also reflects IDP's outperformance as it has consistently achieved top quartile performance over an extended period. Accordingly, the Board believes the reward outcomes for executives of a series of years are in alignment with company performance.

The following table provides a summary of critical performance metrics showing IDP Education's financial performance for FY20 and the four years prior

Measure	FY20	FY19	FY18	FY17	FY16
Revenue ($000)	587,106	598,136	487,155	394,187	361,636
% change from previous year	-1.84%	22.78%	23.58%	9.00%	16.71%
Earnings Before Interest and Taxation ($000)	107,761	97,116	75,924	61,224	53,664
% change from previous year	10.96%	27.91%	24.01%	14.09%	18.86%
Net Profit after Taxation ($000)	67,809	66,311	51,481	41,511	39,914
% change from previous year	2.26%	28.81%	24.02%	4.00%	26.81%
Basic Earnings per Share (cents per share)	26.14	26.26	20.59	16.58	15.95
% change from previous year	-0.46%	27.54%	24.18%	3.95%	26.79%
3 year Compound Annual Growth Rate (Conventional)	16.39%	18.08%	17.85%	14.04%	23.49%
Diluted Earnings per Share (cents per share)	26.09	26.09	20.14	16.20	15.60
% change from previous year	0%	29.54%	24.32%	3.85%	25.00%
Dividend (cents per share)	24.00	18.50	14.00	12.50	19.18
% change from previous year	29.73%	32.14%	12%	-34.83%	23.11%
Share Price as at 30 June ($)	15.49	17.66	10.58	5.09	4.12
Average STI payout as a % at-target for eligible KMPs	65.1%	112.3%	122.5%	119.5%	94.3%

Despite an extremely disruptive last quarter the momentum IDP had created in the first three quarters combined with judicious cost savings in Q4 IDP was able to achieve a small increase in NPAT. EPS was slightly down as a result of the capital raising in Q4. Dividend per share increased by nearly 30%. While all the key financial metrics were down on FY20 budgets the results reflect a very strong underlying performance.

The component of LTI awards linked to TSR relative performance is a less reliable measure of performance. Because this measure requires a calculation of all the component companies in the XDKAI or specific comparator group the exact performance can only be assessed at the final test date (30th June each year). An indicative only result can be shown by comparing IDP's TSR relative to the XDKAI as set out in the chart overleaf.

As indicated, IDP has consistently outperformed the XDKAI. Since listing IDP has achieved an approximate 492% TSR, whereas the XDKAI has returned 48%. This means shareholder returns for IDP shareholders have enjoyed TSR performance in excess of ten times this representative comparator index over the relevant period.

Accordingly, based on early indications, a 100% vesting of the TSR component of the LTI awards are expected although subject to independent verification and testing at the relevant test dates.

XDKAI IEL

26-Nov-15

26-Jan-16

26-Mar-16

26-May-16

26-Jul-16

26-Sep-16

26-Nov-16

26-Jan-17

26-Mar-17

26-May-17

26-Jul-17

26-Sep-17

26-Nov-17

26-Jan-18

26-Mar-18

26-May-18

26-Jul-18

26-Sep-18

26-Nov-18

26-Jan-19

26-Mar-19

26-May-19

26-Jul-19

26-Sep-19

26-Nov-19

26-Jan-20

26-Mar-20

26-May-20

-	100	200	300	400	500	600	700	800	900	Directors'


											Report

Consumer S&P/ASX300 vs TSR IEL (XDKAI) Index Discretionary 2020 June 30 to 2015 November 26

Directors' Report

Executive KMP Statutory remuneration table

The following table has been prepared in accordance with Section 300A of the Corporations Act 2001 and details statutory accounting expense of all remuneration-related items for the Executive KMP. Note that the table below accrues amounts for equity awards being expensed throughout FY20 that are yet to, and may never, be realised by the Executive KMP member. The statutory remuneration table below differs from the FY20 KMP remuneration mix outlined on page 25. Differences arise mainly due to the accounting treatment of share-based payment (performance rights and options).

						Post-	Long-	Equity-
						employment	Term	Based
			Short term Benefits		Benefits	Benefits	Benefits
								Performance
					Non-monetary			rights/	Total
	Financial	Salary1	STI2	Other3	Benefits4	Superannuation	Leave5	Options6	remuneration
	Year	$	$	$	$	$	$	$	$
Executive KMP

Andrew Barkla	2020	972,500	683,468	-	-	25,000	40,202	512,919	2,234,089
	2019	875,000	606,377	-	-	25,000	24,533	721,365	2,252,275

Murray Walton7	2020	521,982	187,391	11,037	-	25,000	19,714	89,929	855,053
	2019	534,000	313,856	-	-	25,000	39,157	117,258	1,029,271

Warwick Freeland	2020	407,351	148,119	-	-	25,000	16,055	103,241	699,766
	2019	416,850	248,081	-	-	25,000	15,210	168,474	873,615

Harmeet Pental	2020	458,512	362,775	24,600	72,543	51,922	-	156,536	1,126,888
	2019	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a

Total	2020	2,360,345	1,381,753	35,637	72,543	126,922	75,971	862,625	4,915,796

	2019	1,825,850	1,168,314	-	-	75,000	78,900	1,007,097	4,155,161

1 Salary changes reflect increases effective from 1 July 2019 offset by a 20% reduction from 1 April 2020 to 30 June 2020

Short-termSTI includes both cash and service rights expected to be paid/vest in future periods as a result of FY18 and FY19 STI outcomes
Other short term benefits for COO represent travel allowance and medical insurance for this offshore position
Non-monetarybenefits for COO represent car benefit and housing benefit for this offshore position
Long-Termbenefits represents long service leave accrued but untaken during the year
Equity based benefits represent benefits issued under the LTI. It represents statutory accounting expenses measured under AASB 2, which are based on the grant date fair value, amortised on a straight line basis over the vesting period. Refer to share based payments accounting policy (note 23) for further details
7The 'Other' amount is a 10 year service award paid under IDP's Global Service Recognition policy, equivalent to one week's salary.

Directors' Report

Executive KMP LTI outcomes

								Closing	Closing
					Granted	Exercised	Forfeited	balance -	balance -	Closing
		Performance rights/	Grant	Opening	during	during	during	vested and	vested but not	balance -
Executive KMP	LTI Award	options awards1	date	balance	year	year	year	exercisable	exercisable	unvested
Andrew Barkla	The FY17 Award	Performance Rights	14-Sep-16	116,505	-	(116,505)	-	-	-	-
	CEO Incentive	Options	17-Aug-15	720,000	-	(425,000)	-	295,000	-	-
	Award
	The FY18 Award	Performance Rights	27-Sep-17	94,302	-	-	-	-	-	94,302
	The FY19 Award	Performance Rights	27-Sep-18	49,723	-	-	-	-	-	49,723
	The FY20 Award	Performance Rights	01-Oct-19	-	38,485	-	-	-	-	38,485
Murray Walton	The FY17 Award	Performance Rights	14-Sep-16	33,216	-	(33,216)	-	-	-	-
	The FY18 Award	Performance Rights	27-Sep-17	31,011	-	-	-	-	-	31,011
	The FY19 Award	Performance Rights	27-Sep-18	18,015	-	-	-	-	-	18,015
	The FY20 Award	Performance Rights	01-Oct-19	-	12,310	-	-	-	-	12,310

Warwick Freeland	The FY17 Award	Performance Rights	14-Sep-16	45,490	-	(45,490)	-	-	-	-
	The FY18 Award	Performance Rights	27-Sep-17	37,925	-	-	-	-	-	37,925
	The FY19 Award	Performance Rights	27-Sep-18	18,308	-	-	-	-	-	18,308
	The FY20 Award	Performance Rights	01-Oct-19	-	12,510	-	-	-	-	12,510

Harmeet Pental	The FY17 Award	Performance Rights	14-Sep-16	63,912	-	(63,912)	-	-	-	-
	The FY18 Award	Performance Rights	27-Sep-17	58,308	-	-	-	-	-	58,308
	The FY19 Award	Performance Rights	27-Sep-18	27,231	-	-	-	-	-	27,231
	The FY20 Award	Performance Rights	01-Oct-19	-	19,175	-	-	-	-	19,175

1 To date all LTI awards granted since listing have met their performance conditions and have vested.

Directors' Report

Executive KMP shareholdings

Details of ordinary shares held by the Executive KMP and their related parties are provided in the table below:

				Performance/
				Service
		Opening		Rights		Options	Net change	Closing
Executive KMP		balance		exercised		exercised	other1	balance
Andrew Barkla	100,000	138,976	425,000	(422,183)	241,793
Murray Walton	64,500	33,216	-	(27,945)	69,771
Warwick Freeland	-	45,490	-	(45,490)	-
Harmeet Pental	-	63,912	-	(51,956)	11,956

Non-executive Director remuneration strategy and framework

Non-executive Director fees are determined by reference to external survey data, taking account of the Group's relative size and business complexity.

Under the Constitution, the Directors decide the total amount paid to all Directors as remuneration for their services as a Director. However, under the ASX Listing Rules, the total amount paid to all Directors for their services must not exceed in aggregate in any financial year the amount fixed by the Company in a general meeting. This amount, being the fee pool limit, has been fixed at $1,500,000 per financial year.

Each Non-executive Director's total remuneration package may be comprised of the following elements:

Base fee
Committee fee

Non-executive Directors have no entitlement to STI or LTI.

No retirement benefits are payable to Non-executive Directors other than statutory superannuation entitlements. The below table provides further details relating to the components of the Non-executive Director remuneration.

Component	Delivered	Description

Base Fee	Cash	The base fee represents remuneration for service on the IDP
		Education Board. The base fee for the Chair represents the entire
		remuneration for that role.
Committee Chair fees	Cash	Committee chair fees represent remuneration for chairing Board
		committees.
Committee Member	Cash	Committee member fees represent remuneration for service on an
Fees		IDP Board Committee.

Non-executive Director remuneration was last increased effective March 2018 based on an independent assessment of Board remuneration of comparable companies. This increase represents the only increase in fees since the company listed in November 2017. The current Non-executive Director remuneration fee structure is shown in the following table:

		$ per annum

Base Fee
Chair	350,000
Non-executive Director	150,000
Committee Chair Fees
Audit and Risk Committee	20,000
Nomination Committee	10,000
Remuneration Committee	10,000

1 These amounts represent ordinary shares purchased or sold directly or indirectly by the Executive KMP during the financial year. These transactions have no connection with the roles and responsibilities as employees of the Group

Directors' Report

	$ per annum

Committee Member Fees
Audit and Risk Committee	10,000
Nomination Committee	10,000
Remuneration Committee	10,000

Directors' Report

Non-executiveDirector statutory remuneration table

			Short term		Post-	Long term	Equity-
				Benefits		employment	Benefits	Based Benefits
		Directors	STI	Other	Non-	Superannuation	Leave	Performance	Total remuneration
	Financial Year	Fees1	$	$	monetary	$	$	rights	$
Non-executive Directors

Peter Polson	2020	307,677	-	-	-	24,823	-	-	332,500
	2019	325,000	-	-	-	25,000	-	-	350,000

Ariane Barker	2020	180,500	-	-	-	-	-	-	180,500
	2019	190,000	-	-	-	-	-	-	190,000

Professor David Battersby AM	2020	138,813	-	-	-	13,187	-	-	152,000
	2019	146,118	-	-	-	13,882	-	-	160,000

Greg West	2020	147,489	-	-	-	14,011	-	-	161,500
	2019	155,251	-	-	-	14,749	-	-	170,000

Chris Leptos AM	2020	147,489	-	-	-	14,011	-	-	161,500
	2019	155,251	-	-	-	14,749	-	-	170,000

Professor Colin Stirling	2020	138,813	-	-	-	13,187	-	-	152,000
	2019	146,118	-	-	-	13,882	-	-	160,000

Total	2020	1,060,781	-	-	-	79,219	-	-	1,140,000
	2019	1,117,738	-	-	-	82,262	-	-	1,200,000

1 The Chair and Directors fees were set upon listing to reflect relevant market benchmarks for an ASX listed entity of similar size and complexity and as assessed independently. Directors fees were last increased effective 1 March 2018 to align with market and reflects the increased scale and complexity of IDP and the commensurate increase in time commitment by the Board. In FY20 Directors agreed to a 20% reduction in fees payable for the period 1 April to 30 June in light of impact of COVID-19 on business performance and cash flow.

Directors' Report

Non-executive Director shareholdings

Details of ordinary shares held by the Non-executive Directors and their related parties are provided in the table below:

	Opening	Performance	Options	Net change	Closing
	balance	Rights	exercised	other1	balance
		exercised

Non-executive Directors
Peter Polson	50,000*	-	-	2,817	52,817
Ariane Barker	18,867	-	-	2,817	21,684
Professor David Battersby AM	7,231	-	-	2,817	10,048
Greg West	25,000	-	-	2,817	27,817
Chris Leptos AM	25,867	-	-	2,817	28,684
Professor Colin Stirling	-	-	-	-	-

*There was an error in Peter Polson's ordinary share holdings as at 30 June 2019, which has been corrected and restated in the table above.

1. These amounts represent ordinary shares purchased or sold directly or indirectly by the Non-executive Directors during the financial year. These transactions have no connection with the roles and responsibilities as Non-executive Directors of the Group

Minimum Shareholding requirement

A minimum shareholding policy was introduced during FY18. The policy requires Non-executive Directors to hold shares to the equivalent value of the annual base fee, unless the Non-executive Director is a representative of Education Australia (a major shareholder in IDP) in which case any minimum shareholding requirement will be determined by Education Australia in its absolute discretion. A transition period of three years is allowed to achieve this minimum holding. As at 30 June 2020 all Directors who are not representatives of Education Australia hold more shares than their threshold requirement.

This report is made in accordance with a resolution of the Directors

Peter Polson	Andrew Barkla
Chairman	Managing Director
Melbourne
19 August 2020

Deloitte Touche Tohmatsu

ABN 74 490 121 060

477 Collins Street

Melbourne VIC 3000

Tel: +61 3 9671 7000

www.deloitte.com.au

19 August 2020

The Board of Directors

IDP Education Limited

Level 8, 535 Bourke Street

Melbourne VIC 3000

Dear Board Members

IDP Education Limited

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

As lead audit partner for the audit of the financial statements of IDP Education Limited for the financial year ended 30 June 2020, I declare that to the best of my knowledge and belief, there have been no contraventions of:

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

Yours sincerely

DELOITTE TOUCHE TOHMATSU

Genevra Cavallo

Partner

Chartered Accountants

Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte Network.	39

Financial report
Consolidated statement of profit or loss ....................................................................................................................................	41
Consolidated statement of comprehensive income ...................................................................................................................	42
Consolidated statement of financial position .............................................................................................................................	43
Consolidated statement of changes in equity............................................................................................................................	44
Consolidated statement of cash flow.........................................................................................................................................	46
Notes to the financial statements ..............................................................................................................................................	47
1.	Basis of preparation ....................................................................................................................................................	47
Financial Performance ..............................................................................................................................................................	51
2.	Segment information ...................................................................................................................................................	51
3.	Revenue......................................................................................................................................................................	52
4.	Expenses and finance costs........................................................................................................................................	53
5.	Income taxes ...............................................................................................................................................................	54
6.	Dividends ....................................................................................................................................................................	58
7.	Earnings per share ......................................................................................................................................................	59
Assets and liabilities ..................................................................................................................................................................	60
8.	Trade and other receivables........................................................................................................................................	60
9.	Contract assets ...........................................................................................................................................................	61
10.	Capitalised development costs....................................................................................................................................	61
11.	Property, plant and equipment ....................................................................................................................................	62
12.	Right-of-use assets .....................................................................................................................................................	63
13.	Intangible assets .........................................................................................................................................................	64
14.	Other current assets....................................................................................................................................................	68
15.	Trade and other payables ...........................................................................................................................................	68
16.	Contract liabilities ........................................................................................................................................................	69
17.	Provisions....................................................................................................................................................................	69
Capital structure and financing..................................................................................................................................................	70
18.	Borrowings ..................................................................................................................................................................	70
19.	Lease liabilities ............................................................................................................................................................	71
20.	Cash flow information..................................................................................................................................................	72
21.	Issued capital ..............................................................................................................................................................	73
22.	Financial instruments ..................................................................................................................................................	74
Other notes ...............................................................................................................................................................................	82
23.	Share-based payments ...............................................................................................................................................	82
24.	Related party transactions...........................................................................................................................................	87
25.	Remuneration of auditors ............................................................................................................................................	87
26.	Subsidiaries.................................................................................................................................................................	88
27.	Associates...................................................................................................................................................................	89
28.	Deed of cross guarantee .............................................................................................................................................	91
29.	Parent entity information .............................................................................................................................................	93
30.	Contingent liabilities ....................................................................................................................................................	93
31.	Events after the reporting period .................................................................................................................................	93

Consolidated statement of profit or loss for the year ended 30 June 2020

			30 June 2020	30 June 2019
	Notes		$'000	$'000
Revenue	3	587,106	598,136
Expenses	4.1	(438,138)	(483,120)
Depreciation and amortisation		(40,888)	(17,919)
Finance income		849	297
Finance costs	4.2	(6,037)	(2,039)
Share of (loss)/profit of associates		(319)	19
Profit for the year before income tax expense		102,573	95,374
Income tax expense	5	(34,764)	(29,063)
Profit for the year		67,809	66,311
Profit for the year attributable to:


Owners of IDP Education Limited		67,873	66,627

Non-controlling interests		(64)	(316)

		67,809	66,311

Earnings per share for profit attributable to ordinary equity holders	Notes		30 June 2020	30 June 2019
Basic earnings per share (cents per share)	7		26.14	26.26
Diluted earnings per share (cents per share)	7		26.09	26.09

The above statement should be read in conjunction with the accompanying notes.

Consolidated statement of comprehensive income for the year ended 30 June 2020

	Notes	30 June 2020	30 June 2019
		$'000	$'000
Profit for the year
	67,809	66,311
Other comprehensive income

Items that may be reclassified subsequently to profit or loss:


Net investment hedge of foreign operations		490	(777)
Exchange differences arising on translating the foreign operations		(3,790)	2,575
Gains/(losses) arising on changes in fair value of hedging instruments
entered into for cash flow hedges
Forward foreign exchange contracts		(269)	(806)
Cumulative gains/(losses) arising on changes in fair value of hedging
instruments reclassified to profit or loss		803	(343)
Income tax related to gains/(losses) recognised in other comprehensive
income	5	(276)	495
Items that will not be reclassified subsequently to profit or loss:		-	-

Other comprehensive income for the year, net of income tax		(3,042)	1,144
Total comprehensive income for the year		64,767	67,455
Total comprehensive income attributable to:

Owners of IDP Education Limited		64,802	67,787
Non-controlling interests		(35)	(332)

		64,767	67,455

The above statement should be read in conjunction with the accompanying notes.

Consolidated statement of financial position as at 30 June 2020

		30 June 2020		30 June 2019
	Notes	$'000		$'000
CURRENT ASSETS
Cash and cash equivalents	20	307,089	56,059
Trade and other receivables	8	68,407	68,558
Contract assets	9	23,586	32,564
Derivative financial instruments	22	461	1,007
Current tax assets		16,279	11,040
Other current assets	14	13,332	16,019
Total current assets		429,154		185,247
NON-CURRENT ASSETS
Contract assets	9	3,210	2,854
Investment in associate	27	5,929	4,760
Property, plant and equipment	11	24,216	21,288
Rights-of-use assets	12	82,598	-
Intangible assets	13	128,641	133,811
Capitalised development costs	10	5,944	3,921
Deferred tax assets	5	10,841	17,130
Derivative financial instruments	22	-	328
Other non-current assets	14	11,385	119
Total non-current assets		272,764		184,211
TOTAL ASSETS		701,918		369,458
CURRENT LIABILITIES
Trade and other payables	15	57,318	92,682
Dividends payable	6	41,983	-
Lease liabilities	19	17,262	-
Contract liabilities	16	37,821	34,184
Provisions	17	11,342	10,311
Current tax liabilities		3,654	2,809
Financial liabilities at fair value through profit or loss	22	-	174
Derivative financial instruments	22	929	1,663
Total current liabilities		170,309		141,823
NON-CURRENT LIABILITIES
Trade and other payables	15	-	537
Borrowings	18	59,831	60,478
Lease liabilities	19	67,301	-
Derivative financial instruments	22	-	365
Deferred tax liabilities	5	5,082	5,725
Provisions	17	6,474	6,583
Total non-current liabilities		138,688		73,688
TOTAL LIABILITIES		308,997		215,511
NET ASSETS		392,921		153,947
EQUITY
Issued capital	21	270,959	30,811
Reserves		6,843	14,789
Retained earnings		115,466	108,659
Equity attributable to owners of IDP Education Limited		393,268		154,259
Non-controlling interests		(347)		(312)
TOTAL EQUITY		392,921		153,947

The Group has reclassified the presentation of treasury shares issued to employees from Issued capital to Share based payments reserve. The reclassification is to better align the vested treasury shares to the underlying Share based payments reserve. The equity section as at 30 June 2019 is reclassified as above. The reclassification has no impact on net profit, net assets or cash flows of the Group.

The above statement should be read in conjunction with the accompanying notes.

Consolidated statement of changes in equity for the year ended 30 June 2020

			Cash flow	Foreign currency	Share based		Equity attributable	Non-
		Issued	hedge	translation	payments	Retained	to owners of IDP	controlling
		capital	reserve	reserve	reserve	earnings	Education Limited	interests	Total
	Note	$'000	$'000	$'000	$'000	$'000	$'000	$'000	$'000
As at 30 June 2018		9,734	240	50	9,628	81,614	101,266	20	101,286
Effect of adoption of new accounting
standards (i)(ii)		-	-	-	-	7,490	7,490	-	7,490
Reclassification of treasury shares issued to
the employees (iii)		8,024	-	-	(8,024)	-	-	-	-
As at 1 July 2018		17,758	240	50	1,604	89,104	108,756	20	108,776
Change in the fair value of cash flow hedges,
net of income tax		-	(802)	-	-	-	(802)	-	(802)
Exchange differences arising on translating

the foreign operations		-	-	1,962	-	-	1,962	(16)	1,946
Profit for the year		-	-	-	-	66,627	66,627	(316)	66,311
Total comprehensive income for the year		-	(802)	1,962	-	66,627	67,787	(332)	67,455
Issue of new shares	21.1	4,939	-	-	-	-	4,939	-	4,939
Acquisition of treasury shares	21.2	(1,930)	-	-	-	-		-
(1,930)	(1,930)
Share-based payments		-	-	-	21,779	-	21,779	-	21,779

Issue of treasury shares to employees		10,044	-	-	(10,044)	-	-	-	-
Dividends paid	6	-	-	-	-	(47,072)	(47,072)	-	(47,072)
As at 30 June 2019		30,811	(562)	2,012	13,339	108,659	154,259	(312)	153,947

During the year ended 30 June 2019, the Group adopted AASB 15 Revenue from Contracts with Customers on a modified retrospective basis. This resulted in an increase of $7.756 million to retained profits as at 1 July 2018, being the cumulative effect on initial application of the standard.
During the year ended 30 June 2019, the Group adopted AASB 9 Financial Instruments. This resulted in a charge of $0.266 million to retained profits as at 1 July 2018, being the cumulative effect on initial application of the standard.
The Group has reclassified the presentation of treasury shares issued to employees from Issued capital to Share based payments reserve. The reclassification is to better align the vested treasury shares to the underlying Share based payments reserve. The equity section as at 30 June 2018 is reclassified as above. The reclassification has no impact on net profit, net assets or cash flows of the Group.

The above statement should be read in conjunction with the accompanying notes.

Consolidated statement of changes in equity (continued) for the year ended 30 June 2020

					Share based		Equity attributable	Non-
		Issued	Cash flow	Foreign currency	payments	Retained	to owners of IDP	controlling
		capital	hedge reserve	translation reserve	reserve	earnings	Education Limited	interests	Total
	Note	$'000	$'000	$'000	$'000	$'000	$'000	$'000	$'000
As at 30 June 2019		12,743	(562)	2,012	31,407	108,659	154,259	(312)	153,947
Reclassification of treasury shares issued
to the employees (i)		18,068	-	-	(18,068)	-	-	-	-
As at 1 July 2019		30,811	(562)	2,012	13,339	108,659	154,259	(312)	153,947
Change in the fair value of cash flow
hedges, net of income tax		-	373	-	-	-	373	-	373
Exchange differences arising on

translating the foreign operations		-	-	(3,444)	-	-	(3,444)	29	(3,415)
Profit for the year		-	-	-	-	67,873	67,873	(64)	67,809
Total comprehensive income for the year		-	373	(3,444)	-	67,873	64,802	(35)	64,767
Exercise of share options	21.1	612					612		612
Issue of new shares, net of transaction

costs	21.1	248,963	-	-	-	-	248,963	-	248,963
Acquisition of treasury shares	21.2	(17,940)	-	-	-	-	(17,940)	-	(17,940)
Share-based payments schemes

including tax effect		-	-	-	3,638	-	3,638	-	3,638
Issue of treasury shares to employees		8,513	-	-	(8,513)	-	-	-	-
Dividends paid/payable	6	-	-	-	-	(61,066)	(61,066)	-	(61,066)
As at 30 June 2020		270,959	(189)	(1,432)	8,464	115,466	393,268	(347)	392,921

The Group has reclassified the presentation of treasury shares issued to employees from Issued capital to Share based payments reserve. The reclassification is to better align the vested treasury shares to the underlying Share based payments reserve. The equity section as at 30 June 2019 is reclassified as above. The reclassification has no impact on net profit, net assets or cash flows of the Group.

The above statement should be read in conjunction with the accompanying notes.

Consolidated statement of cash flow for the year ended 30 June 2020

		30 June 2020		30 June 2019
	Notes	$'000		$'000
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers (i)		610,105	578,252
Payments to suppliers and employees (i)		(494,971)	(473,152)
Interest received		563	297
Interest paid		(5,472)	(1,539)
Income tax paid		(31,623)	(29,153)
Net cash inflow from operating activities	20	78,602	74,705
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for investment in associates		(1,788)	(696)
Payments for plant and equipment, intangible assets and capitalised

development costs		(22,422)	(19,674)
Net cash outflow from investing activities		(24,210)	(20,370)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings	18	14,000	14,696

Repayments of borrowings	18	(14,000)	(19,000)

Issue of new shares net of transaction costs	21.1	248,963	-

Proceeds from exercise of share options	21.1	612	4,939

Payments for treasury shares	21.2	(17,940)	(1,930)

Repayment of lease liabilities		(15,478)	-

Dividends paid	6	(19,083)	(47,072)

Net cash inflow/(outflow) from financing activities		197,074	(48,367)
Net increase in cash and cash equivalents		251,466	5,968
Cash and cash equivalents at the beginning of the year		56,059	48,809
Effect of exchange rates on cash holdings in foreign currencies		(436)	1,282
Cash and cash equivalents at the end of the year	20	307,089	56,059

The Group has restated the 30 June 2019 receipts from customers and payment to suppliers and employees to include gross GST amount. The restatement has no impact the net operating cash inflow of the Group.

The above statement should be read in conjunction with the accompanying notes.

IDP Education Limited

Notes to the consolidated financial statements for the year ended 30 June 2020

Notes to the financial statements

1. Basis of preparation

This general purpose financial report for the year ended 30 June 2020 has been prepared in accordance with Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board (AASB) and the Corporations Act 2001.

The financial statements are for the consolidated entity, consisting of IDP Education Limited (the Company) and its controlled subsidiaries (the Group). IDP Education Limited is a for profit company limited by shares whose shares are publicly traded on the Australian Securities Exchange (ASX).

The consolidated financial statements for the year ended 30 June 2020 were authorised for issue in accordance with a resolution of the Directors on 19 August 2020.

1.1. Compliance with IFRS

This general purpose financial report complies with Australian Accounting Standards. Compliance with Australian Accounting Standards ensures that the financial report, comprising the financial statements and the notes thereto, complies with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

1.2. Historical cost convention

The consolidated financial statements have been prepared on the basis of historical cost, except for certain financial assets and financial liabilities (including derivative instruments) that have been recognised at fair value through profit and loss.

1.3. Significant accounting policies

The principal accounting policies adopted in the preparation of the financial report are set out in the relevant notes except for those disclosed in notes 1.8 to 1.9.

The accounting policies adopted are consistent with those of the previous financial year except as noted. When the presentation or classification of items in the financial report is amended, comparative amounts are also reclassified.

The financial report has been prepared on a going concern basis.

The performance of IDP Education in the first nine months of FY20 was strong with revenue growth of 19.2% compared to the same period in FY19 representing a continuation of the strong organic growth the company has been experiencing over the past eight years. However the financial impact of COVID-19 on the business was evident from the end of March and revenue declined by 64% in the last quarter compared to the same period in FY19 leading to an overall decline in revenue of 1.8% for the full year.

Despite the impacts from COVID-19, the Group has sufficient cash reserves to meet any obligations or liabilities as and when they become due and payable.

1.4. Critical accounting estimates and judgements

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

Assessment of uncertain tax positions: Note 5 - Income taxes and Note 14 - Other assets
Note 13 - Intangible assets - Impairment test of goodwill and intangible assets with indefinite useful lives
Note 22.3 - Fair value of financial instruments
Note 23.3 - Fair value of share-based payments

1.5. Rounding of amounts

The Company is of the kind referred to in ASIC Corporations (Rounding in Financial/Directors' Reports) Instrument 2016/191 dated 24 March 2016, and in accordance with that Corporations Instrument, amounts in the consolidated financial statements and the Directors' report have been rounded to the nearest thousand dollars unless otherwise stated.

IDP Education Limited

Notes to the consolidated financial statements for the year ended 30 June 2020

1. Basis of preparation (continued)

1.6. Adoption of new and revised Accounting Standards

The Group has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board that are relevant to their operations and effective for the current year.

New and revised Standards and amendments thereof and Interpretations effective for the current year that are relevant to the Group include:

AASB 16 Leases
Interpretation 23 Uncertainty over Income Tax Treatments and AASB 2017-4 Amendments to Australian Accounting Standards - Uncertainty over Income Tax Treatment

AASB 16 Leases

The Group has adopted the new lease accounting standard AASB 16 Leases from 1 July 2019. AASB 16 introduces significant changes to lessee accounting by removing the classification of leases as either operating or finance leases as required by AASB 117 and instead introduces a single lessee accounting model.

Applying that model, a lessee is required to:

Recognise assets and liabilities for all leases with a term of more than 12 months in the Consolidated Statement of Financial Position initially measured at the present value of the future lease payments, unless the underlying asset is of low value;
Recognise amortisation of lease assets separately from interest on lease liabilities in the Consolidated Statement of Profit or Loss;
Separate the total amount of cash paid into a principal portion (presented within financing activities) and interest (presented within operating activities) in the Consolidated Cash Flow Statement.

The Group has elected to apply the modified retrospective approach for leases. For leases, which were classified as operating leases under AASB 117, the Group has recognised right-of-use assets and lease liabilities as at the transition date (1 July 2019). The Group did not have any leases previously classified as finance leases on the adoption date.

The Group has elected to apply the recognition exemption for leases of low-value assets or short-term leases including office equipment such as printers and other IT equipment for use by staff in its offices.

The effect on 1 July 2019 of the recognition of the new right-of-use assets and lease liabilities is disclosed below.

		1 July 2019
		$'000
Increase in right-of-use assets	82,736
Decrease in assets from de-recognition of prepaid rent	(2,027)
Increase in lease liabilities -current	(14,991)
Increase in lease liabilities -non-current	(65,718)

Impact on retained earnings	-

The reconciliation of non-cancellable operating lease commitments disclosed at 30 June 2019 to initial lease liabilities recognised as at 1 July 2019 is set out below

		$'000
Operating lease commitments disclosed as at 30 Jun 2019	46,951
Adjustments as a result of a different treatment of extension and termination options	49,349
Short term and low value leases	(11)
Discounting with incremental borrowing rate at the first application of AASB 16	(15,580)
Lease liabilities recognised as of 1 July 2019	80,709

Interpretation 23 Uncertainty over Income Tax Treatments

The Group has adopted Interpretation 23 Uncertainty over Income Tax Treatments and AASB 2017-4Amendments to Australian Accounting Standards - Uncertainty over Income Tax Treatment from 1 July 2019. The adoption of Interpretation 23 does not have a material impact on the financial statements of the Group.

IDP Education Limited

Notes to the consolidated financial statements for the year ended 30 June 2020

1. Basis of preparation (continued)

1.7. Standards and Interpretations in issue not yet effective

At the date of authorisation of the consolidated financial statements, other Standards and Interpretations in issue but not yet effective were listed below.

Standard and Interpretation

AASB 2014-10 Amendments to Australian Accounting Standards - Sale or Contribution of Assets between an Investor and its Associate or Joint Venture [AASB10 & AASB128], AASB 2015-10 Amendments to Australian Accounting Standards - Effective Date of Amendments to AASB 10 and AASB 128 and AASB 2017-5 Amendments to Australian Accounting Standards - Effective Date of Amendments to AASB 10 and AASB 128 and Editorial Corrections

Effective for annual reporting periods beginning on or after

1 January 2022

Expected to be initially applied in the financial year ending

30 June 2023

AASB 2018-6 Amendments to Australian Accounting Standards - Definition of a Business

AASB 2018-7 Amendments to Australian Accounting Standards - Definition of Material

AASB 2019-1 Amendments to Australian Accounting Standards - References to the Conceptual Framework

1 January 2020

30 June 2021

AASB 2019-3 Amendments to Australian Accounting	1 January 2020	30 June 2021
Standards - Interest Rate Benchmark Reform

AASB 2019-5 Amendments to Australian Accounting	1 January 2020	30 June 2021
Standards - Disclosure of the Effect of New IFRS
Standards Not Yet Issued in Australia

In addition, at the date of authorisation of the financial statements no IASB Standards and IFRIC Interpretations were on issue but not yet effective, but for which Australian equivalent Standards and Interpretations have not yet been issued.

The Directors of the Group do not anticipate that the adoption of above amendments will have a material impact in future periods on the financial statements of the Group.

IDP Education Limited

Notes to the consolidated financial statements for the year ended 30 June 2020

1. Basis of preparation (continued)

1.8. Basis of consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at 30 June 2020. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if and only if the Group has:

Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee);
Exposure, or rights, to variable returns from its involvement with the investee; and
The ability to use its power over the investee to affect its returns.

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary.

Profit or loss and each component of Other Comprehensive Income (OCI) are attributed to the equity holders of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group's accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

Non-controlling interests in subsidiaries are identified separately from the Group's equity therein. Those interests of non- controlling shareholders that are present ownership interests entitling their holders to a proportionate share of net assets upon liquidation may initially be measured at fair value or at the non-controlling interests' proportionate share of the fair value of the acquiree's identifiable net assets. The choice of measurement is made on an acquisition-by-acquisition basis. Other non- controlling interests are initially measured at fair value. Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests' share of subsequent changes in equity. Total comprehensive income is attributed to non-controlling interests even if this results in the non-controlling interests having a deficit balance.

1.9. Foreign currency translation

The Group's consolidated financial statements are presented in Australian dollars, which is also the parent's functional currency. For each Group controlled entity, the Group determines the functional currency and items included in the financial statements of each Group controlled entity are measured using that functional currency.

Transactions and balances

Transactions in foreign currencies are initially recorded at the rates of exchange prevailing on the dates of the transactions. At each subsequent balance sheet date:

Foreign currency monetary items are retranslated at the rates prevailing at the balance sheet date. Exchange differences arising on the settlement or retranslation of monetary items are recognised in the profit or loss with exception of monetary items that are designated as part of the hedge of the Group's net investment of a foreign operation; and
Non-monetaryitems which are measured at historical cost are not retranslated.

Group consolidation

On consolidation, the assets and liabilities of foreign operations are translated into Australian dollars at the rate of exchange prevailing at the reporting date and their statements of profit or loss are translated at exchange rates prevailing at the dates of the transactions. The exchange differences arising on translation for consolidation purposes are recognised in other comprehensive income. On disposal of a foreign operation, the component of other comprehensive income relating to that particular foreign operation is recognised in profit or loss.

Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition are treated as assets and liabilities of the foreign operation and translated at the spot rate of exchange at the reporting date.

IDP Education Limited

Notes to the consolidated financial statements for the year ended 30 June 2020

Financial Performance

2. Segment information

Basis of segmentation

The Group has identified its operating segments based on the internal reports that are reviewed and used by the Chief Operating Decision Maker in assessing performance and determining the allocation of resources. The Chief Operating Decision Maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Chief Executive Officer.

The Chief Operating Decision Maker determined that its operating segments comprise the geographic regions of:

Asia - which includes Bangladesh, Cambodia, China, Hong Kong, India, Indonesia, Japan, Laos, Malaysia, Mauritius, Nepal, Philippines, Singapore, South Korea, Sri Lanka, Taiwan, Thailand, and Vietnam;
Australasia - which includes Australia, Fiji, New Zealand and New Caledonia; and
Rest of World - which includes Argentina, Azerbaijan, Bahrain, Brazil, Canada, Chile, Colombia, Cyprus, Ecuador, Egypt, Germany, Greece, Iran, Ireland, Italy, Jordan, Kazakhstan, Kuwait, Lebanon, Mexico, Nigeria, Oman, Pakistan, Peru, Poland, Qatar, Romania, Russia, Saudi Arabia, Spain, Switzerland, Turkey, Ukraine, Uzbekistan, the United Arab Emirates, the United Kingdom and United States of America.

These geographic segments are based on the Group's management reporting system and the way management views the business.

The principal activities of each segment are provision of student placement services, International English Language Testing (IELTS), digital marketing and event services and English language teaching services.

Geographic segment revenue and results
	Segment revenue	Segment EBIT
	30 June 2020	30 June 2019	30 June 2020	30 June 2019
	$'000		$'000	$'000	$'000
Asia	389,174	391,774	127,127	113,554
Australasia	57,399	63,299	9,708	12,223
Rest of World	140,533	143,063	29,436	30,150
Consolidated total	587,106	598,136	166,271	155,927
Corporate cost				(58,510)	(58,811)
EBIT				107,761	97,116
Net finance cost				(5,188)	(1,742)
Profit before tax				102,573	95,374

Service segment

The Group also uses a secondary segment which shows revenue and gross profit by service. Revenue by service segment is disclosed in Note 3. Gross profit (i.e. revenue less direct costs) by service segment is shown below:

	30 June 2020	30 June 2019
	$'000	$'000
Student placement	155,150	138,515
IELTS examination	145,720	154,470
English language teaching	19,354	18,862
Digital marketing and events	22,799	19,849
Other	2,183	2,367

	345,206	334,063

IDP Education Limited

Notes to the consolidated financial statements for the year ended 30 June 2020

3. Revenue

Accounting policy

The Group's revenue mainly comprises of:

Student placement revenue
IELTS examination revenue
English language teaching revenue
Digital marketing revenue

Revenue is measured based on the consideration to which the Group expects to be entitled in a contract with a customer. The Group recognises revenue when it transfers control of a service to a customer.

Under AASB 15, revenue recognition for each of the major revenue streams is as follows:

Revenue stream

Student placement revenue

IELTS examination revenue

English language teaching revenue

Digital marketing revenue

Performance obligation

Institution application service, visa application service and pre-departure service

Provision of English language testing service

Provision of English language teaching courses

Hosting the advertising content online, lead generation and enquiry processing

Timing of recognition

Point in time recognition when the performance obligations are satisfied after applying the withdrawal rate (i.e. when students withdraw from the courses after the enrolments are confirmed), which will be deferred.

Over time from the date the testing commences, until the testing results are issued.

Revenue is calculated based on the input method (i.e. resources consumed and cost incurred).

Over time starting from the expiry of the trial period, until the completion of the courses

Revenue is calculated based on the output method (i.e. lessons delivered).

Over time starting from the date that the content goes live, until the expiry of the advertising contract

Revenue is calculated based on the input method (i.e. resources consumed and cost incurred).

Disaggregation of revenue

The Group derives its revenue from the transfer of services over time and at a point in time in the following major services.

Timing of revenue recognition

At a point in time

Student placement revenue Other revenue

Over time

IELTS examination revenue English language teaching revenue Digital marketing and event revenue

Total revenue

30 June 2020 30 June 2019

$'000 $'000

190,566 170,252

4,2713,994

325,517 359,576

28,503 27,521

38,249 36,793

587,106 598,136

IDP Education Limited

Notes to the consolidated financial statements for the year ended 30 June 2020

4. Expenses and finance costs

4.1	Expenses
			30 June 2019
		30 June 2020
		$'000	$'000

Service providers fees	192,568	210,924

Employee benefits expenses	159,789	156,639

Occupancy expenses	8,934	25,344

Marketing expenses	25,348	29,725

Administrative expenses	10,760	14,565

IT and communication expenses	17,410	16,726

Consultancy and professional expenses	11,096	11,129

Travel expenses	6,904	9,225

Foreign exchange (gain)/loss	(510)	3,500

Other expenses	5,839	5,343

		438,138	483,120

4.2	Finance costs
			30 June 2019
		30 June 2020
		$'000	$'000

Interest on borrowings	959	1,454

Interest expenses on lease liabilities	4,487	-

Other finance costs	591	585

		6,037	2,039

4.3 Included in the employee benefit expenses

	30 June 2020	30 June 2019
	$'000	$'000

Share-based payments	1,631	3,142

Governments wages subsidies (1)	(4,464)	-

Defined contribution plans	10,015	9,021

COVID-19related governments wages subsidies

As a result of the COVID-19 pandemic, governments in Australia and foreign jurisdictions provided wages subsidies to the business. During FY20, IDP received $4.464m government wages subsidies. It was recognised as deductions against employee expenses as permitted under AASB 112 Government Grants.

IDP Education Limited

Notes to the consolidated financial statements for the year ended 30 June 2020

5. Income taxes

Critical accounting estimates and assumptions

The Group is subject to income taxes in Australia and foreign jurisdictions and as a result the calculation of the Group's tax charge involves a degree of estimation and judgment in respect of certain items. The Group recognises liabilities for potential tax audit issues based on management's assessment of whether additional taxes may be payable. Where the final tax outcome of these matters is different from the amounts that were initially recorded, these differences impact the current and deferred tax provisions in the period in which such determination is made.

Accounting policy

IDP Education Limited is the head entity in a tax-consolidated group under Australian taxation law. As a result the Company and Australian entities controlled by the Company are all subject to income tax through membership of the tax-consolidated group. The consolidated current and deferred tax amounts for the tax-consolidated group are allocated to the members of the tax- consolidated group using the 'separate taxpayer within group' approach, with deferred taxes being allocated by reference to the carrying amounts in the financial statements of each member entity and the tax values applying under tax consolidation. Current tax liabilities and assets and deferred tax assets arising from unused tax losses and relevant tax credits arising from this allocation process are then accounted for as immediately assumed by the head entity, as under Australian taxation law the head entity has the legal obligation (or right) to these amounts.

Entities within the tax-consolidated group have entered into a tax funding arrangement and a tax sharing agreement with the head entity. Under the terms of the tax funding arrangement, the entities controlled by the Group have agreed to pay an amount to or from the head entity equal to the tax liability or asset assumed by the head entity for that period as noted above. Such amounts are reflected in amounts receivable from or payable to the head entity. Accordingly, the amount arising under the tax funding arrangement for each period is equal to the tax liability or asset assumed by the head entity for that period and no contribution from (or distribution to) equity participants arises in relation to income taxes.

Income tax expense comprises current and deferred tax. Income tax expense is recognised in the profit or loss except to the extent it relates to items recognised directly in equity in which case it is recognised in equity.

Current tax is the expected tax payable on the taxable income 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.

Deferred tax is recognised using the balance sheet method providing for 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 the following temporary differences:

The initial recognition of assets or liabilities in a transaction that is not a business combination;
The initial recognition of goodwill; and
The initial recognition of assets and liabilities in a transaction which at the time of the transaction affects neither accounting profit nor taxable profit (tax loss).

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantially enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

A deferred tax asset is recognised to the extent that it is probable that future tax profits will be available against which the temporary difference can be utilised. Deferred tax assets are reviewed each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Research and development incentive

Research and development (R&D) incentives are accounted for in accordance with AASB 120 Accounting for Government Grants and Disclosure of Government Assistance. R&D incentives are assistance to the Group by the Australian Government in the form of a reduction in income tax liability in return for expenditure on eligible R&D as registered with AusIndustry. R&D incentives receivable as compensation for expenses or losses already incurred by the Group with no future related costs are recognised in profit or loss in the period in which they are quantified and become receivable. The amount of R&D incentives received or receivable in respect of eligible R&D as registered with AusIndustry that is in excess of the amount that would have otherwise been deductible in calculating income tax expense are included in other revenue.

IDP Education Limited

Notes to the consolidated financial statements for the year ended 30 June 2020

5. Income taxes (continued)

5.1 Income tax recognised in profit or loss

	30 June 2020	30 June 2019
	$'000	$'000

Current tax

Current tax expense in respect of the current year	30,834	34,657

Withholding taxes	872	793
Adjustments recognised in the current year in relation to the current tax of prior

years	652	16

	32,358	35,466

Deferred tax

In respect of the current year	2,406	(6,403)

Total income tax expense recognised in the current year relating to continuing		29,063
operations	34,764

The income tax expense for the year can be reconciled to the accounting profit as follows
		30 June 2019
	30 June 2020
	$'000	$'000

Profit before tax	102,573	95,374

Income tax expense calculated at 30% (2019: 30%)	30,772	28,612
Add tax effect of:


Non-deductible expenses	635	550

Attributed income	178	1,026
Unused tax losses, tax offsets and timing differences not recognised as deferred

tax assets	2,415	788

Withholding taxes	872	793

Effect on deferred tax balances due to the change in income tax rate	481	-
Adjustments recognised in the current year in relation to the current tax of prior

years	652	16

	36,005	31,785
Less tax effect of:


Non-assessable income	(378)	(970)

Other deductible items	(29)	(163)

Adjustments recognised in relation to prior year deferred tax balances	2,363	(1,160)

Effect of tax rate in foreign jurisdictions	(3,124)	(417)

Tax losses	(73)	(12)

Income tax recognised in profit or loss	34,764	29,063

IDP Education Limited

Notes to the consolidated financial statements for the year ended 30 June 2020

5. Income taxes (continued)

5.2 Deferred tax balances

The following is the analysis of deferred tax assets/(liabilities) presented in the consolidated statement of financial position:

					30 June 2020		30 June 2019
					$'000		$'000

Deferred tax assets				10,841		17,130

Deferred tax liabilities				(5,082)		(5,725)

					5,759		11,405

2020
Temporary differences and tax losses
			Recognised in

				other
	Opening	Recognised in	comprehensive	Recognised in		Closing
$'000	balance	profit or loss	income	reserves		balance

Accrued expenses	1,760	599	-	-		2,359

Deferred capital expenditure	96	281	-	-		377

Employee benefits	9,452	(1,489)	-	(2,964)		4,999

Leases	-	886	-	-		886

Trade receivable	339	538	-	-		877

Derivative financial
instruments	580	(51)	(160)	-		369

Hedge of net investments	1,070	-	(147)	-		923

Unrealised foreign exchange
losses	437	(195)	-	-		242

Plant, property and
equipment	(1,026)	(278)	-	-		(1,304)

Deferred revenue	(418)	598	-	-		180

Intangible assets	(5,725)	612	31	-		(5,082)

Prepayments	(35)	2	-	-		(33)

Tax losses	1,698	(1,127)	-	-		571

Others	3,177	(2,782)	-	-		395

Net deferred tax	11,405	(2,406)	(276)	(2,964)		5,759

IDP Education Limited

Notes to the consolidated financial statements for the year ended 30 June 2020

5. Income taxes (continued)

5.2 Deferred tax balances (continued)

2019

Temporary differences and tax losses

		Effect of
		initial
		application		Recognised
		of new	Recognised	in other
	Opening	accounting	in profit or	comprehen	Recognised	Closing
$'000	balance	standards	loss	sive income	in reserves	balance

Accrued expenses	1,957	-	(197)	-	-	1,760

Deferred capital expenditure	105	-	(9)	-	-	96

Employee benefits	531	-	4,794	-	4,127	9,452

Trade receivable	7	114	218	-	-	339
Derivative financial

instruments	105	-	130	345	-	580

Hedge of net investments	837	-	-	233	-	1,070
Unrealised foreign exchange

losses	179	-	258	-	-	437
Plant, property and

equipment	(730)	-	(296)	-	-	(1,026)

Deferred revenue	(19)	-	(399)	-	-	(418)

Intangible assets	(6,196)	-	554	(83)	-	(5,725)

Prepayments	(39)	-	4	-	-	(35)

Tax losses	1,581	-	117	-	-	1,698

Others	1,948	-	1,229	-	-	3,177

Net deferred tax	266	114	6,403	495	4,127	11,405

5.3	Unrecognised deferred tax assets
			30 June 2019
		30 June 2020
		$'000	$'000

Deductible temporary differences, unused tax losses and unused tax credits for
which no deferred tax assets have been recognised are attributable to the
following:

- temporary differences	802	369

- tax losses	4,531	2,937

		5,333	3,306

The unrecognised tax losses will expire between 5 years and indefinite.

IDP Education Limited

Notes to the consolidated financial statements for the year ended 30 June 2020

6. Dividends

Accounting policy

Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the entity, on or before the end of the reporting period but not distributed at the end of the reporting period.

6.1	Dividends paid/payable
			30 June 2020		30 June 2019

			cents per		Total		cents per		Total

			share		$'000		share		$'000

Final dividend paid in respect of prior financial year
- 45% franked (2019: 60%) at the Australia
corporate tax rate of 30%		7.5		19,083		6.5		16,539
Interim dividend payable/paid in respect of current

financial year - 17% franked (2019: 50%) at the
Australia corporate tax rate of 30%		16.5		41,983		12.0		30,533

Total					61,066				47,072

The final dividend of 7.5c per share for the financial year ended 30 June 2019 was paid on 26 September 2019.

The interim dividend of 16.5c per share for the financial year ended 30 June 2020 were declared on 12 February 2020 to shareholders registered on 6 March 2020. The payment was deferred to 24 September 2020.

Dividends proposed and not recognised at the end of the reporting period IDP's Board of Directors has decided not to declare a full year dividend.
Franking credits

The balance of the franking account at 30 June 2020 is $12.111m (2019: $8.579m) based on the Australian corporate tax rate

of 30% (2019: 30%). The dividend payment on 24 September 2020 will reduce the franking credits available by $3.058m.

IDP Education Limited

Notes to the consolidated financial statements for the year ended 30 June 2020

7. Earnings per share

Accounting policy Basic earnings per share

Basic earnings per share (EPS) is calculated by dividing the profit attributable to equity holders of the Company, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the reporting period, adjusted for bonus elements in ordinary shares issued during the reporting period.

Diluted earnings per share

Diluted EPS adjusts the figures used in the determination of basic EPS to take into account:

the after income tax effect of any interest and other financing costs associated with dilutive potential ordinary shares; and
the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares.

	30 June 2020			30 June 2019
	Cents			Cents

	Basic		Diluted		Basic		Diluted

Earnings per share	26.14		26.09	26.26		26.09

						30 June 2019
					30 June 2020
Earnings used in calculating earnings per share					$000	$000

Earnings used in the calculation of basic and diluted earnings per share			67,873		66,627

Weighted average number of shares used as the denominator				30 June 2019
		30 June 2020

Weighted average number of shares used as denominator in calculating basic
EPS					259,678,139	253,751,406
Weighted average of potential dilutive ordinary shares:

- options					-	693,562
- performance rights					501,802	897,735

Weighted average number of shares used as denominator in calculating
diluted EPS					260,179,941	255,342,703

IDP Education Limited

Notes to the consolidated financial statements for the year ended 30 June 2020

Assets and liabilities

8. Trade and other receivables

Accounting policy

Receivables arise from revenue that has been billed, but not yet settled by the customer.

Revenue is measured at the fair value of the consideration received or receivable. Revenue is recognised as the relevant performance obligations identified in a customer contract are satisfied. Refer to Note 3 for further details of revenue recognition.

Where revenue recognised precedes billings it results in a contract asset as disclosed in Note 9 below, and where cash amounts are received in advance of revenue recognition it results in a contract liability as disclosed in Note 16.

IDP's credit terms are generally 30 to 60 days from the date of invoice. As such, the carrying amount of receivables approximates their fair value.

	30 June 2020	30 June 2019
	$'000	$'000

Trade receivables	65,339	64,819

Credit loss allowance	(1,527)	(1,416)

	63,812	63,403

Other receivables	4,595	5,155

	68,407	68,558

Credit Loss Allowance

The Group applies the simplified approach under AASB 9 to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables.

Expected credit losses are measured by grouping trade receivables and contract assets based on shared credit risk characteristics. The contract assets relate to unbilled work in progress and have substantially the same risk characteristics as the trade receivables for the same types of contracts.

A provision allowance is determined based on historic credit loss rates for each group of customers, adjusted for any material expected changes to the customers' future credit risk.

Movement in the credit loss allowance
		30 June 2019
	30 June 2020
	$'000	$'000

Balance at beginning of the year	(1,416)	(599)
Adoption of AASB 9 as of 1 July 2018	-	(380)
Impairment losses recognised on receivables	(874)	(804)

Impairment losses reversed	668	140

Amounts written off during the year	95	227
Balance at end of the year	(1,527)	(1,416)

IDP Education Limited

Notes to the consolidated financial statements for the year ended 30 June 2020

9. Contract assets

	30 June 2020	30 June 2019
	$'000	$'000

Student placement services	26,796	35,418


Current	23,586	32,564

Non-current	3,210	2,854

	26,796	35,418

Amounts relating to contract assets are balances where revenue recognised precedes billings under customer contracts. The Group recognised contract assets for any performance obligations satisfied. Any amount previously recognised as contract assets is reclassified to trade receivables at the point at which it is invoiced to the customer.

10. Capitalised development costs

Accounting policy

Capitalised development costs represent internally developed systems not yet put into use. These assets will be transferred to intangible assets or plant, property and equipment as appropriate on the date of completion.

Capitalised development costs arising from the development phase of an internal project are recognised if, and only if, all of the following have been demonstrated:

the technical feasibility of completing the intangible asset so that it will be available for use;
the intention to complete the intangible asset and use it;
the ability to use the intangible asset;
the intangible asset will generate probable future economic benefits;
the availability of adequate technical, financial and other resources to complete the development and the intangible asset; and
the ability to measure reliably the expenditure attributable to the intangible asset during its development.

The amount recognised is the sum of the expenditure incurred from the date when the project development first meets the recognition criteria listed above. Where above criteria is not met, development expenditure is recognised in profit or loss in the period in which it is incurred.

	30 June 2020	30 June 2019
	$'000	$'000

Balance at beginning of the year	3,921	5,683

Additions	8,398	8,019

Transfers to property, plant and equipment	(277)	-

Transfers to intangible assets	(6,059)	(9,781)

Effect of foreign currency exchange differences	(39)	-

Balance at end of the year	5,944	3,921

IDP Education Limited

Notes to the consolidated financial statements for the year ended 30 June 2020

11. Property, plant and equipment

Accounting policy

Property, plant and equipment is carried at cost, net of accumulated depreciation and impairment losses, if any. Property, plant and equipment are depreciated using the straight-line basis over their estimated useful economic lives. The expected depreciation rate for each class of depreciable assets are:

Class of Fixed Asset	Depreciation rate
Leasehold Improvements	Lease term
Plant and equipment	20-33%
Impairment

The carrying values of property, plant and equipment are reviewed annually for indications of impairment to ensure they are not in excess of the recoverable amount for these assets. An impairment loss is recognised to the extent that the carrying amount of an asset or cash-generating unit exceeds its recoverable amount.

The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

	Leasehold	Plant and		Total
Cost	improvements	equipment
	$'000		$'000
	$'000

Balance at 1 July 2018	22,463	19,828		42,291

Additions	5,309	4,859		10,168

Disposals	(482)	(1,627)		(2,109)

Balance at 30 June 2019	27,290	23,060		50,350

Additions	8,236	5,128		13,364

Transfer from capitalised development costs	277	-		277

Disposals	(8,967)	(5,461)		(14,428)

Effect of foreign currency exchange differences	562	821		1,383

Balance at 30 June 2020	27,398	23,548		50,946

Accumulated depreciation

Balance at 1 July 2018	(10,359)	(12,945)		(23,304)

Depreciation for the year	(3,962)	(3,743)		(7,705)

Disposals	403	1,544		1,947

Balance at 30 June 2019	(13,918)	(15,144)		(29,062)

Depreciation for the year	(2,579)	(4,828)		(7,407)

Disposals	5,694	5,460		11,154

Effect of foreign currency exchange differences	(661)	(754)		(1,415)

Balance at 30 June 2020	(11,464)	(15,266)		(26,730)

Net Book Value

At 30 June 2019	13,372	7,916		21,288

At 30 June 2020	15,934	8,282		24,216

IDP Education Limited

Notes to the consolidated financial statements for the year ended 30 June 2020

12. Right-of-use assets

Accounting policy

The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of property, plant and equipment. In addition, the right-of-use assets are periodically reduced by impairment losses in accordance with AASB 136 Impairment of Assets, if any, and adjusted for certain remeasurement of the lease liability.

Short-term leases and leases of low-value assets

The Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases of office and IT equipment that have a lease term of 12 months or less or for leases of low-value assets such as printers and other IT equipment for use by staff in its offices. The Group recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

The carrying value of right-of-use assets is presented below:

		Office buildings
Cost			$'000
Balance at 30 June 2019			-

Initial adoption of AASB 16 on 1 July 2019			82,736
Additions			24,284
Disposal			(723)
Effect of foreign currency exchange differences			(3,881)

Balance at 30 June 2020			102,416

Accumulated depreciation

Balance at 30 June 2019			-

Depreciation for the period			21,148
Disposal			(531)
Effect of foreign currency exchange differences			(799)

Balance at 30 June 2020			19,818

Net Book Value
At 30 June 2019			-
At 30 June 2020			82,598


Amounts recognised in the Statement of Profit or Loss	30 June 2020	30 June 2019
	$'000	$'000
Depreciation expenses on right-of-use assets	21,148	-
Interest expenses on lease liabilities	4,487	-
Expenses relating to short term or low value leases	870	-
Occupancy expenses (1)	8,064	25,344

(1) COVID-19-related rent concessions

In May 2020, the IASB amended IFRS 16 to provide lessees with a practical expedient that relieves a lessee from assessing whether a COVID-19 related rent concession is a lease modification and allow lessees that apply the practical expedient to account for COVID-19 related rent concessions as if they were not lease modifications.

IDP has applied the practical expedient to all rent concessions that meet the conditions. $1.3m was recognised in profit or loss to reflect changes in lease payments that arose from rent concessions.

IDP Education Limited

Notes to the consolidated financial statements for the year ended 30 June 2020

13. Intangible assets

Critical accounting estimates and assumptions

Impairment of goodwill and other intangible assets with indefinite useful lives

Goodwill and intangible assets with indefinite useful lives are allocated to a cash-generating unit (CGU) or group of CGUs and tested for impairment annually to determine whether they have subject to any impairment in accordance with the accounting policy stated below.

A CGU is the smallest identifiable group of assets that generate cash flows largely independent of cash flows of other groups of assets. Goodwill and other indefinite life intangible assets are allocated to CGU or group of CGUs which are no larger than one of the Group's reportable segments.

The recoverable amounts of the CGU or group of CGUs to which the assets have been allocated have been determined based on the value in use calculations. These calculations are performed based on cash flow projections and other supplementary information which, given their forward looking nature, require the adoption of assumptions and estimates.

The key assumptions and estimates utilised in management's assessments relate primarily to:

Three years cash flow forecasts sourced from internal budgets and management forecasts;
Terminal value growth rates applied to the period beyond the three year cash flow forecasts; and
Post-taxdiscount rates, used to discount the cash flows to present value.

Each of these assumptions and estimates is based on a "best estimate" at the time of performing the valuation. However, increase in discount rates or changes in other key assumptions, such as operating conditions or financial performance, may cause the carrying value of CGU or group of CGUs to exceed their recoverable amount.

Accounting policy

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses. Internally generated intangibles, excluding capitalised development costs, are not capitalised and the related expenditure is reflected in profit or loss in the period in which the expenditure is incurred.

The useful lives of intangible assets are assessed as either finite or indefinite.

Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortisation period or method, as appropriate, and are treated as changes in accounting estimates and adjusted on a prospective basis. The amortisation expense on intangible assets with finite lives is recognised in the statement of profit or loss as expenses. Intangible assets with indefinite useful lives are not amortised but are tested for impairment annually, or more frequently if events or changes in circumstances indicate that it might be impaired and is carried at cost less accumulated impairment losses.

IDP Education Limited

Notes to the consolidated financial statements for the year ended 30 June 2020

13. Intangible assets (continued)

			Student						Website				Contracts
				Brand and				technology				for English
			placement
				trade		Customer		and				language
	Software		licence								Total
			names		relationships		database		Goodwill		testing

Cost	$'000		$'000		$'000		$'000		$'000		$'000		$'000		$'000

Balance at 1 July 2018	52,196		2,493		15,083		14,180		7,210		38,830		35,200		165,192

Additions	343		-		-		-		-		-		-		343
Transfer from capitalised
9,781		-		-		-		-		-		-		9,781
development costs


Disposals	(8)		-		-		-		-		-		-		(8)
Effect of foreign currency
-		-		198		196		102		361		-		857
exchange differences

Balance at 30 June 2019	62,312		2,493		15,281		14,376		7,312		39,191		35,200		176,165

Additions	1,701		-		-		-		-		-				1,701
Transfer from capitalised
6,059		-		-		-		-		-		-		6,059
development costs


Disposals	(22,023)		(2,493)		-		-		-		-		-		(24,516)
Effect of foreign currency
44		-		(125)		(124)		(64)		(228)		-		(497)
exchange differences

Balance at 30 June 2020	48,093		-		15,156		14,252		7,248		38,963		35,200		158,912

Accumulated amortisation

Balance at 1 July 2018	(25,405)		(2,493)		(218)		(1,385)		(2,587)		-		-		(32,088)

Amortisation for the year	(7,325)		-		-		-		-		-		-		(7,325)
Amortisation of intangible

assets generated from	-		-		(71)		(969)		(1,849)		-		-		(2,889)
business combinations

Disposals	7		-		-		-		-		-		-		7
Effect of foreign currency
-		-		-		(20)		(39)		-		-		(59)
exchange differences

Balance at 30 June 2019	(32,723)		(2,493)		(289)		(2,374)		(4,475)		-		-		(42,354)

Amortisation for the year	(9,137)		-		-		-		-		-		-		(9,137)
Amortisation of intangible

assets generated from
business combinations	-		-		(71)		(1,638)		(1,487)		-		-		(3,196)

Disposals	21,865		2,493		-		-		-		-		-		24,358
Effect of foreign currency
(93)		-		-		58		93		-		-		58
exchange differences

Balance at 30 June 2020	(20,088)		-		(360)		(3,954)		(5,869)		-		-		(30,271)

Net Book Value

At 30 June 2019	29,589		-		14,992		12,002		2,837		39,191		35,200		133,811

At 30 June 2020	28,005		-		14,796		10,298		1,379		38,963		35,200		128,641

IDP Education Limited

Notes to the consolidated financial statements for the year ended 30 June 2020

13. Intangible assets (continued)

Software

Software is amortised over the useful life of 3 to 5 years. Student placement licence

Student placement licence was a separately identifiable intangible asset arising from a business combination and was recognised at fair value at the acquisition date. The Group has fully amortised the balance based on the regulation change in China.

Brand and trade names

Brand and trade names are separately identifiable intangible assets arising from business combinations and are recognised at fair value at the acquisition date. The useful life of brand and trade names are assessed based on nature of the specific market and assets. Brand and trade names from the Hotcourses acquisition are considered to have an indefinite useful life and as such are not amortised but are tested for impairment annually or more frequently if events or changes in circumstances indicate that it might be impaired. Brand and trade name from the Promising Education acquisition is amortised over 15 years.

Customer relationships

Customer relationships are separately identifiable intangible assets arising from business combinations and are recognised at fair value at the acquisition date. Customer relationships are amortised between 8 and 19 years.

Website technology and database

Website technology and database is a separately identifiable intangible asset arising from a business combination and is recognised at fair value at the acquisition date. Website technology and database are amortised between 3 and 5 years.

Contracts for English language testing and Goodwill

Contracts for English language testing acquired on 1 September 2006 are recognised at their fair value at date of acquisition. There is no termination date in accordance with its term and management has re-assessed the events and circumstances, which supports an indefinite useful life assessment for Contracts for English language testing. These contracts are considered to have an indefinite useful life and as such are not amortised.

Contracts of English language testing and goodwill are not amortised but are tested for impairment annually, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Contracts of English language testing and goodwill are allocated to CGUs for the purpose of impairment testing. The allocation is made to those CGUs or group of CGUs that are expected to benefit from the Contracts for English language testing and business combination in which the goodwill arose.

IDP Education Limited

Notes to the consolidated financial statements for the year ended 30 June 2020

13. Intangible assets (continued)

Impairment testing and key assumptions

A summary by CGU of the carrying amount of goodwill and intangible assets with indefinite useful lives is detailed below:

		30 June 2020	30 June 2019

CGU/Group of CGUs	Goodwill		Intangible assets with		Goodwill	Intangible assets with
			indefinite useful lives		indefinite useful lives

		$'000		$'000		$'000	$'000

Asia - IELTS testing	4,476		14,625		4,476	14,625

Australasia - IELTS testing	3,451		11,275		3,451	11,275

Rest of World - IELTS testing	2,847		9,300		2,847	9,300

China - Student placement	2,451		-		2,451	-

UK - Digital marketing	25,738		14,098		25,966	14,222

		38,963		49,298		39,191	49,422

The Group tests whether goodwill and intangible assets with indefinite useful lives are subject to any impairment annually or whenever an impairment indictor is present. The recoverable amount is based on a value in use calculation which uses discounted cash flow projections based on three years internal budgets and management forecasts. Cash flow projections during the forecast period are based on management's best estimate of volume growth, expenses, inflation and foreign exchange rates throughout the period.

Key assumptions

CGU/Group of CGUs	Valuation	Years of cash flow	Terminal
	method	projection	growth rate	Post-tax discount rate %
				2020	2019


Asia - IELTS testing	Value in use	3	3%	9.3%	9.6%

Australasia - IELTS testing	Value in use	3	0%	9.3%	9.6%

Rest of World - IELTS testing	Value in use	3	3%	9.3%	9.6%

China - Student placement	Value in use	3	3.3%	19%	18%

UK - Digital marketing	Value in use	3	1.5%	10.5%	9.9%

The Group is actively managing the impacts and risks arising from COVID-19 on its operations and to date there are no known significant long-term structural changes that affect the future cash flows of the CGUs. As part of it COVID-19 response, the Group is closely monitoring its budgets and forecasts based on the best information available. These include but are not limited to international travel restrictions, government-imposed lockdowns, social distancing measures and institutions reduced marketing spend.

As a result, as at 30 June 2020 and 2019, the recoverable amount supports the carrying amount and no impairment has been recognised. For UK - Digital marketing CGU, the recoverable amount supporting the carrying amount is dependent on the achievement of 80% of next three years forecast EBITDA. No other reasonably possible changes in significant assumptions would give rise to an impairment of Intangible assets with indefinite useful lives and goodwill.

IDP Education Limited

Notes to the consolidated financial statements for the year ended 30 June 2020

14. Other assets

	30 June 2020	30 June 2019
Other current assets	$'000	$'000

Prepayments Refundable deposits Other assets

Other non-current assets

4,006

8,928

398

13,332

30 June 2020 $'000

6,101

9,552

366

16,019

30 June 2019 $'000

Prepayments	974	119

GST receivables (1)	10,411	-

	11,385	119

GST receivables represents GST paid in advance in foreign jurisdictions, which are to be refunded to the Group. The processing of such refunds is expected to take longer than 12 months.

Critical accounting estimates and assumptions

The Group is subject to GST in Australia and foreign jurisdictions and as a result the Group's indirect tax position involves a degree of estimation and judgment in respect of certain items. The Group recognises GST receivables based on management's assessment of whether GST will be refunded to the Group. Where the final tax outcome of these matters is different from the amounts that were initially recorded, these differences impact the profit and loss in the period in which such determination is made.

15. Trade and other payables

Current

Trade payables Other payables Employee benefits payable

Non-current

30 June 2020 30 June 2019

$'000 $'000

38,728 68,858

753768

17,837 23,056

57,318 92,682

Lease incentive liabilities	-	537

	57,318	93,219

As at 30 June 2020 and 2019, the carrying value of trade and other payables approximated their fair value.

IDP Education Limited

Notes to the consolidated financial statements for the year ended 30 June 2020

16. Contract liabilities

	30 June 2020	30 June 2019
	$'000	$'000

Amounts received in advance of delivery of exams (1)	17,238	12,271

Amounts received in advance of student placement services (2)	3,590	5,949

Amounts received in advance of events (3)	1,286	2,711

Amounts received in advance of language courses (4)	3,553	3,706

Amounts received in advance of online digital marketing services (5)	12,154	9,547

	37,821	34,184

The contract liabilities arise in respect to IELTS fees paid by candidates in advance of the IELTS testing month
The contract liabilities arise as a result of fees paid by students in advance of the student placement services
The contract liabilities arise as a result of exhibition fees paid by participants in advance of the event date
The contract liabilities arise as a result of tuition fees paid by participants in advance of the tuition date
The contract liabilities arise as a result of digital marketing contracts fees paid by customers in advance of service delivery The brought-forward contract liabilities from 30 June 2019 ($34.184m) have been fully recognised in the current reporting period revenue.

17. Provisions

Accounting policy

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

Provision for make good

A make good liability or obligation is provided for to dismantle, remove and restore items of property, plant and equipment in properties leased by the Group. The provision calculation is based on the terms of the lease agreements.

Employee benefits

A liability is recognised for benefits accruing to employees in respect of wages and salaries and long service leave when it is probable that settlement will be required and they are capable of being measured reliably.

Provision is made for the Group's liability for employee benefits arising from services rendered by employees to balance date. Employee benefits that are expected to be settled within one year have been measured at the amounts expected to be paid when the liability is settled, plus related on-costs. Employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits.

	30 June 2020	30 June 2019
	$'000	$'000

Employee benefits	15,894	13,034

Make good provision	1,922	3,860

	17,816	16,894


Current	11,342	10,311

Non-current	6,474	6,583

	17,816	16,894

IDP Education Limited

Notes to the consolidated financial statements for the year ended 30 June 2020

Capital structure and financing

18. Borrowings

	30 June 2020	30 June 2019
Current	$'000	$'000

Bank loans	-	-

Non-current

Bank loans	59,831	60,478

Total	59.831	60,478

18.1 Reconciliation of liabilities arising from financing activities

			Impact of foreign
	Opening	Financing	currency	Other	Closing
	balance	cash flows (i)	translation	changes	balance
	$'000	$'000	$'000	$'000	$'000

2020

Bank loans	60,478	-	(491)	(156)	59,831

2019

Bank loans	63,928	(4,304)	777	77	60,478

The cash flows from bank loans make up the net amount of proceeds from borrowings and repayments of borrowings in the statement of cash flows.

18.2 Financing arrangement

The Group has access to the following borrowing facilities at the end of the year:

	Currency	30 June 2020	30 June 2019
		'000	'000
Cash advance facility A (1)	GBP	30,906	30,906
Facility utilised at end of the year	GBP	(30,906)	(30,906)
Facility not utilised at end of the year	GBP	-	-

Cash advance facility B (1)	AUD	25,000	25,000
Facility utilised at end of the year	AUD	-	-
Facility not utilised at end of the year	AUD	25,000	25,000

Cash advance facility C (1)	AUD	5,000	5,000
Facility utilised at end of the year	AUD	(4,826)	(4,826)
Facility not utilised at end of the year	AUD	174	174
Cash advance facility F (2)	AUD	150,000	-
Facility utilised at end of the year	AUD	-	-
Facility not utilised at end of the year	AUD	150,000	-

Cash advance facility A, B and C will expire on 31 December 2021.
Cash advance facility F will expire on 30 June 2021.

IDP Education Limited

Notes to the consolidated financial statements for the year ended 30 June 2020

19. Lease liabilities

Accounting policy

The lease liability is initially measured at present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group's incremental borrowing rate as the discount rate. The discount rate is generally calculated using incremental borrowing rates for the specific lease terms and currencies. The weighted average incremental borrowing rate used to calculate the lease liabilities on adoption of AASB 16 Leases as of 1 July 2019 was 5.47%. Reference interest rates based on risk-free rates in major countries and currencies were used to calculate the incremental borrowing rate.

Lease payments included in the measurement of the lease liability comprise the following:

Fixed payments, including in substance fixed payments less any lease incentives receivables;
Variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement rate;
Amounts expected to be payable under a residual value guarantee;
The exercise price under a purchase option that the Group is reasonably certain to exercise;
Lease payments in an optional renewal period if the Group is reasonably certain to exercise an extension option; and
Payment of penalties for early termination of a lease unless the Group is reasonably certain not to terminate early

The lease liability is presented as a separate line in the consolidated statement of financial position.

The lease liability is measured at amortised cost using the effective interest method. It will be remeasured when there is a change in index or rate for future lease payments, a change in the Group's estimated amount payable under a residue value guarantee or changes in the Group's assessment of probabilities of exercising a purchase, extension or termination option.

When the lease liability is remeasured, a corresponding adjustment is made to the carrying amount of the right-of-use asset or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero. The Group did not make any such adjustment during the period presented.

		30 June 2020
Maturity analysis		$'000

Year 1	21,112
Year 2	17,928
Year 3	14,305
Year 4	11,972
Year 5	9,140
Year 6 and onwards	25,073

	99,530

Less: interest expenses	(14,967)

	84,563

Presented as:
Current lease liabilities	17,262
Non-current lease liabilities	67,301

	84,563

The Group does not face a significant liquidity risk with regard to its lease liabilities.

IDP Education Limited

Notes to the consolidated financial statements for the year ended 30 June 2020

20. Cash flow information

Cash and cash equivalents include cash on hand, deposits held at call with financial institutions, other short-term highly liquid investments with maturities of three months or less, net of bank overdrafts.

The reconciliation of profit for the year after tax to net cash flows from operating activities is as follows:

	30 June 2020	30 June 2019
	$'000	$'000

Net profit after tax	67,809	66,311
Adjustment for:

Depreciation and amortisation	40,888	17,919

Credit losses	477	972

Share of (gain)/loss of an associate	319	(19)

Net foreign exchange (gain)/loss	(510)	3,500

Interest expenses	6,037	2,039
Share-based payments	1,631	3,142
Unwinding discount of provisions	-	102
Loss on disposal of plant and equipment	89	163
Movement in working capital:
Trade and other receivables	(326)	(24,308)
Contract assets	8,622	(8,455)
Derivative financial instruments	(225)	1,483
Other assets	(10,136)	(2,931)
Trade and other payables and contract liabilities	(34,787)	16,664

Current and deferred tax assets	3,264	(3,165)

Provisions	922	2,827
Cash generated from operations	84,074	76,244
Interest paid	(5,472)	(1,539)
Net cash inflow from operating activities	78,602	74,705
Reconciliation of cash and cash equivalents
		30 June 2019
	30 June 2020
	$'000	$'000

Cash and bank balances on demand	87,089	56,059
Term deposits with maturity within three months	220,000	-
	307,089	56,059

IDP Education Limited

Notes to the consolidated financial statements for the year ended 30 June 2020

21. Issued capital

21.1	Share capital
										30 June 2019
					Note			30 June 2020
								$'000		$'000

Ordinary shares fully paid						281,964		32,389

Treasury shares			21.2		(11,005)		(1,578)

							270,959		30,811


Movement in ordinary shares (fully paid)			Number of shares		$ per share		$'000

Balance at 1 July 2018			250,294,968				27,450

Exercise of options			3,430,000		1.44		4,939

Issue of shares to satisfy future option exercises			720,000		-		-

Balance at 30 June 2019			254,444,968				32,389

Exercise of options			-		1.44		612

Issue of new shares under institutional placement and SPP			23,891,243		10.65		254,441

Share issue costs			-				(5,478)

Balance at 30 June 2020			278,336,211				281,964

21.2	Treasury shares
Movement in treasury shares	Note	Number of shares		$ per share	$'000
Balance at 1 July 2018			1,154,629					9,692
Acquisition of treasury shares - FY19			146,795		13.14		1,930
Issue of shares to satisfy future option exercises			720,000		-		-
Transfer to employees			(1,402,084)		7.16		(10,044)
Balance at 30 June 2019			619,340					1,578
Acquisition of treasury shares - FY20			1,051,122		17.07		17,940
Transfer to employees	23.2	(1,040,075)		8.19		(8,513)
Balance at 30 June 2020			630,387				11,005

During FY20, 1,040,075 treasury shares were transferred to employees under the performance rights plans (Note 23.2). These shares therefore ceased to be held as treasury shares after these dates.

During FY20, IDP Education Employee Share Scheme Trust acquired 1,051,122 shares (at an average price of $17.07 per share) to be held in the Trust for the benefit of IDP group employees who are participants in the IDP Education Employee Incentive Plan.

As at 30 June 2020, there were 630,387 treasury shares ($11.005m) held in the Trust. These shares will be transferred to eligible employees under the Performance Rights plan once the vesting conditions are met.

IDP Education Limited

Notes to the consolidated financial statements for the year ended 30 June 2020

22. Financial instruments

22.1 Financial assets and liabilities
		30 June 2019
	30 June 2020
	$'000	$'000

Financial assets

Cash and cash equivalents	307,089	56,059
Derivative financial instruments

Foreign exchange forward/option contracts	461	1,335

Trade and other receivables	68,407	68,558

Contract assets	26,796	35,418
Financial liabilities


Borrowings	59,831	60,478

Lease liabilities	84,563	-
Fair value through profit or loss


Contingent consideration	-	174
Derivative financial instruments


Foreign exchange forward/option contracts	929	2,028

Trade and other payables	57,318	93,219

Dividends payable	41,983	-

IDP Education Limited

Notes to the consolidated financial statements for the year ended 30 June 2020

22. Financial Instruments (continued)

Accounting policy

Derivative financial instruments and hedge accounting Initial recognition and subsequent measurement

The Group uses derivative financial instruments, such as forward currency contracts and options to hedge its foreign currency risks. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.

Any gains or losses arising from changes in the fair value of derivatives are taken directly to profit or loss, except for the effective portion of cash flow hedges, which is recognised in other comprehensive income (OCI) and later reclassified to profit or loss when the hedged item affects profit or loss.

Cash flow hedges

Hedges are classified as cash flow hedges when hedging the exposure to variability in cash flows that is either attributable to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction or the foreign currency risk in an unrecognised firm commitment.

The effective portion of the gain or loss on the hedging instrument is recognised in OCI in the cash flow hedge reserve, while any ineffective portion is recognised immediately in the statement of profit or loss as other operating expenses.

The Group uses forward currency contracts and options as hedges of its exposure to foreign currency risk in forecast transactions and firm commitments. The ineffective portion relating to foreign currency contracts is recognised in profit or loss.

Amounts recognised as OCI are transferred to profit or loss when the hedged transaction affects profit or loss, such as when the hedged financial income or financial expense is recognised or when a forecast transaction occurs.

If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover (as part of the hedging strategy), or if its designation as a hedge is revoked, or when the hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss previously recognised in OCI remains separately in equity until the forecast transaction occurs or the foreign currency firm commitment is met.

Hedge of net investments in foreign operations

Hedges of a net investment in a foreign operation, including a hedge of a monetary item that is accounted for as part of the net investment, are accounted for in a way similar to cash flow hedges. Gains or losses on the hedging instrument relating to the effective portion of the hedge are recognised as OCI while any gains or losses relating to the ineffective portion are recognised in the statement of profit or loss. On disposal of the foreign operation, the cumulative value of any such gains or losses recorded in equity is transferred to the statement of profit or loss.

The Group uses a foreign currency loan as a hedge of its exposure to foreign exchange risk on its investments in foreign subsidiaries. The loan at 30 June 2020 was a borrowing of GBP 30.906m which has been designated as a hedge of the net investment in the subsidiary in UK. This borrowing is being used to hedge the Group's exposure to the GBP foreign exchange risk on this investment. Gains or losses on the retranslation of this borrowing are transferred to OCI to offset any gains or losses on translation of the net investment in the subsidiary. There is no ineffectiveness in the year ended 30 June 2020.

22.2 Financial risk management objectives and policies

The Group's Corporate Treasury function provides services to the business, co-ordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations of the Group through internal risk reports which analyse exposures by degree and magnitude of risks. These risks include market risk (including currency risk) and liquidity risk.

The Group seeks to minimise the effects of these risks by using derivative financial instruments to hedge risk exposures. The use of financial derivatives is governed by the Group's policies approved by the Board of Directors, which provide written principles on foreign exchange risk, the use of financial derivatives and the investment of excess liquidity. Compliance with policies and exposure limits is reviewed by the internal auditors on a continuous basis. The Group does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.

The Group's Corporate Treasury function reports at least quarterly to the Group's Audit and Risk Committee, an independent body that monitors risks and policies implemented to mitigate risk exposures.

IDP Education Limited

Notes to the consolidated financial statements for the year ended 30 June 2020

22. Financial Instruments (continued)

22.2 Financial risk management objectives and policies (continued) Market risk

Foreign currency risk management

The Group's activities expose it primarily to the financial risks of changes in foreign currency exchange rates. Foreign exchange risk arises when future commercial transactions and recognised assets and liabilities are denominated in a currency that is not the Group's functional currency. Predominantly these foreign currencies include British Pounds (GBP), Indian Rupee (INR) and Chinese Yuan (CNY).

Foreign currency exchange rate risk arises from:

GBP payments to the University of Cambridge Local Examinations Syndicate test materials commitment;
Borrowings denominated in GBP;
Other foreign currencies income or operational expenses (mainly CNY and INR); and
GBP, USD, CAD and NZD receivable from student placement revenue and IELTS examination fees.

Cash flow hedge

The Company utilises a variety of methods to manage its foreign currency exchange rate risk. The key method is the use of forward exchange contracts and currency option contracts. The Company's hedging policy permits the purchase of forward exchange contracts up to 100% and currency option contracts up to 50% of the currency exposure on the current and following year's forecast cash operating expenses and revenues (net of any forecast cash receipts and payments in the same currency). The main currencies currently covered by the hedging strategy are GBP, CNY and INR.

The Company's current policy is to enter into hedges during the current year covering up to 25% each quarter of the foreign currency exchange rate exposure of the following financial year's forecast cash operating expenses (net of any forecast cash receipts). The balance of the hedge program is completed when the Board approves the Company's budget and cash flow forecasts for the following financial year (which is prior to the commencement of that financial year).

COVID-19 impacts

In late February 2020, IDP reduced forecast hedging volumes in response to potential volatility arising from COVID-19 financial impacts. This proactive approach was implemented to ensure IDP is not over hedged across the FY21 financial year. Portfolio adjustments and further hedging can be initiated in future to ensure IDP's hedging portfolio is in line with highly probable forecast transactions.

The following table details the significant forward currency contracts and options outstanding at the end of the reporting period.

				Foreign currency		Fair value (AUD)

			30 June 2020	30 June 2019		30 June 2020	30 June 2019
Buy GBP					$'000	$'000
	$'000	$'000

0 to 3 months	7,500	9,250	(339)	211

3 to 6 months	5,000	5,000	50	137

6 months to 1 year	8,250	10,000	(332)	93

Over 1 year	-	6,000	-	53
Sell INR



0 to 3 months	566,000	283,991	136	(419)

3 to 6 months	-	335,715	-	(409)

6 months to 1 year	-	666,678	-	(560)
Buy CNY



0 to 3 months	15,000	15,700	(11)	95

3 to 6 months	15,000	15,700	(10)	177

6 months to 1 year	24,000	31,400	(34)	198

IDP Education Limited

Notes to the consolidated financial statements for the year ended 30 June 2020

22. Financial Instruments (continued)

22.2 Financial risk management objectives and policies (continued) Market risk (continued)

Foreign currency risk management (continued)

Foreign currency denominated monetary assets and monetary liabilities

The carrying amounts of the Group's foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are as follows:

			30 June 2020			30 June 2019
AUD equivalent		Assets	Liabilities		Assets	Liabilities
			$'000	$'000		$'000	$'000
USD	17,173	(13,811)	15,649	(259)
CNY	2,233	(8,985)	2,509	(8,521)
GBP	34,155	(65,740)	29,334	(77,315)
INR	3,345	(33,222)	7,268	(15,929)
NZD	5,662	(514)	3,026	(40)
VND	3,046	(7,693)	2,654	(671)
CAD	20,565	(1,673)	6,767	(316)

Other Currencies	15,622	(20,922)	13,979	(7,580)
Total		101,801	(152,560)	81,186	(110,631)

Foreign currency sensitivity analysis

The following table details the Group's sensitivity to a 10% movement in the Australian dollar against the significant foreign currencies. 10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management's assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and foreign exchange contracts. A positive number below indicates an increase in profit or equity whereas a negative number below indicates a decrease in profit or equity.

		Effect on profit	and loss	Effect on equity
USD			$'000	$'000
2020	-10%		262	262
2019	-10%		1,197	1,197
CNY
2020	-10%		(525)	339
2019	-10%		(468)	(1,481)
GBP
2020	-10%		1,852	440

2019	-10%		615	523
INR

2020	-10%		(2,324)	(2,229)

2019	-10%		(674)	(2,740)
CAD

2020	-10%		1,469	1,137
2019	-10%		502	(175)
Other currencies

2020	-10%		(373)	(312)
2019	-10%		896	1,020

IDP Education Limited

Notes to the consolidated financial statements for the year ended 30 June 2020

22. Financial Instruments (continued)

22.2 Financial risk management objectives and policies (continued) Interest rate risk management

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group's exposure to the risk of changes in market interest rates relates primarily to the Group's debt obligations with floating interest rates.

At 30 June 2020, the Group was exposed to the variable interest rate loans of $60.2 m (2019: $60.7m).

Interest rate sensitivity analysis

The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings affected, after the impact of hedge accounting. With all other variables held constant, the Group's profit is affected through the impact on floating rate borrowings, as follows:

		Increase/decrease in	Effect on profit and loss	Effect on equity
		basis points	$'000	$'000
2020	50	211	211
2019	50	212	212

The assumed movement in basis points for the interest rate sensitivity analysis is based on the currently observable market environment.

Liquidity risk management

The Board of Directors is ultimately responsible for liquidity risk management. The Group has established an appropriate liquidity risk management framework for the management of the Group's short, medium and long term funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

The Group has a policy which describes the manner in which cash balances will be invested. The investment policy is to ensure sufficient flexibility to capture investment opportunities as they may occur, yet maintain reasonable parameters in the execution of the investment program.

The following table summarises the maturity profile of the Group's financial liabilities based on contractual undiscounted payments. The table has been drawn up based on the net cash inflows and outflows on derivative instruments that settle on a net basis and the undiscounted gross inflows and outflows on those derivatives that require gross settlement.

			More than 5		Carrying
	Less than 1	1-5 years	years	Total	amount
	year $'000	$'000	$'000	$'000	$'000
30 June 2020


- Trade and other payables	57,318	-	-	57,318	57,318

- Dividends payables	41,983	-	-	41,983	41,983

- Interest-bearing borrowings	767	60,607	-	61,374	59,831

- Lease liabilities	21,112	53,345	25,073	99,530	84,563

- Foreign exchange forward contracts	929	-	-	929	929

	122,109	113,952	25,073	261,134	244,624
30 June 2019


- Trade and other payables	93,219	-	-	93,219	93,219

- Interest-bearing borrowings	946	62,134	-	63,080	60,478
- Financial liabilities at fair value through

profit or loss	174	-	-	174	174

- Foreign exchange forward contracts	2,028	-	-	2,028	2,028

	96,367	62,134	-	158,501	155,899

IDP Education Limited

Notes to the consolidated financial statements for the year ended 30 June 2020

22. Financial Instruments (continued)

22.2 Financial risk management objectives and policies (continued) Credit risk management

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. The Group only transacts with financial institutions that are rated the equivalent of investment grade and above. Credit rating information is supplied by independent rating agencies where available and, if not available, the Group uses other publicly available financial information and its own trading records to rate its major customers. The Group's exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties. Credit exposure for cash and cash equivalents is controlled by counterparty limits that are reviewed and approved by the Audit and Risk Committee annually.

The Group's customer base comprises Australia, UK, US, Canada and New Zealand universities and institutions and IELTS test centres. Credit risk assessments are conducted on new and renegotiated contracts to evaluate each customer's creditworthiness. Management considers the Group's credit risk is low due to the industry characteristic of major customers and the diverse customer base.

Management also considers many factors that influence the credit risk of its customer base including the industry default risk and country in which customers operate in. Management closely monitors the economic and political environment in geographical areas to limit the exposure to particular volatility. The Group's activities are increasingly geographically spread reducing the credit risk associated with one particular market or region.

Carrying value of financial assets represents the Group's maximum exposure to credit risk because the financial assets are not offset by the financial liabilities as they do not meet the net presentation requirements under AASB 132 and the Group does not have agreements in place to enable offset as a result of credit event.

22.3 Fair value of financial instruments Critical accounting estimates and assumptions

The Group measures fair value of financial instruments at each reporting date. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

In the principal market for the asset or liability, or
In the absence of a principal market, in the most advantageous market for the asset or liability

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows

Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities;
Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable; and
Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

IDP Education Limited

Notes to the consolidated financial statements for the year ended 30 June 2020

22. Financial Instruments (continued)

22.3 Fair value of financial instruments (continued)

Fair value of the Group's financial assets and financial liabilities that are measured at fair value on a recurring basis

Financial	Fair value	Fair value as at
assets/	hierarchy	30 June 2020
financial		$'000
liabilities

Fair value as at	Valuation techniques and	Significant
30 June 2019	key inputs	unobservable
$'000		inputs

Relationship of unobservable inputs to fair value

Foreign	Level 2
currency
forward and
options
contracts
Contingent	Level 3
consideration
in business
combinations/
investment in
associate

Assets: 461

Liabilities: 929

Nil

Assets: 1,335	Discounted cash flow.	N/A
	Future cash flows are
	estimated based on
Liabilities: 2,028	forward exchange rates
	(from observable forward
	exchange rates at the end
	of the reporting period)
	and contract forward rates,
	discounted at a rate that
	reflects the credit risk of
	various counterparties.

174	Discounted cash flow	WACC
	method was used to
	capture the present value	Probability of
	of the expected future	meeting
	economic benefits that	contingent
	will flow out of the Group	consideration
	arising from the	KPIs
	contingent consideration.

N/A

slight decrease or increase in the discount rate used and/or KPIs probability in isolation would not result in a significant change in the fair value.

Fair value of financial assets and financial liabilities that are not measured at fair value on a recurring basis (but fair value disclosures are required)

The Directors consider that the carrying amounts of financial assets and financial liabilities recognised in the consolidated financial statements approximate their fair values as detailed in Note 22.1.

Reconciliation of Level 3 fair value measurements
Contingent consideration		$'000

As at 30 June 2018	870
Settlement	(696)

As at 30 June 2019	174
Settlement	(174)

As at 30 June 2020	-

IDP Education Limited

Notes to the consolidated financial statements for the year ended 30 June 2020

22. Financial Instruments (continued)

22.4 Capital management

The Group's objective is to maintain an optimal capital structure for the business which ensures sufficient liquidity, provide returns for shareholders, benefits for other stakeholders and to minimise the cost of capital.

As at 30 June 2020, IDP has following facilities:

Great British Pound £30,906,112

Australian Dollar $25,000,000

Australian Dollar $5,000,000

Australian Dollar $150,000,000

Facility A: Acquisition funding unsecured Cash Advance loan facility for acquisition of UK subsidiaries

Facility B: Unsecured Cash advance facility to support both general corporate purposes and working capital requirements of the Group

Facility C: Acquisition funding unsecured Cash Advance loan facility for investment in HCP Ltd

Facility F: Unsecured Cash advance facility to support both general corporate purposes and working capital requirements of the Group

The Company has complied with all bank lending requirements during the year and at the date of this report. IDP's capital management is characterised by:

Ongoing cash flow forecast analysis, detailed budgeting processes and consistent cash repatriation of surplus available cash from its overseas operations to ensure net cost of funds is minimised;
The Group may adjust the level of dividends paid to shareholders, return capital to shareholders or issue new shares in order to maintain or adjust the capital structure;
Maintain gearing to a level that does not limit IDP growth opportunities; and
Monitor the gearing ratio of the Group.

As at 30 June 2020, the net leverage ratio was nil (2019: 0.04). The ratio is calculated as Net Debt to Earnings before Interest, tax, depreciation and amortisation (EBITDA) as defined by the loan covenants.

IDP Education Limited

Notes to the consolidated financial statements for the year ended 30 June 2020

Other notes

23. Share-based payments

Critical accounting estimates and assumptions

Estimating fair value for share-based payment transactions requires determination of the most appropriate valuation model, which depends on the terms and conditions of the grant. This estimate also requires determination of the most appropriate inputs to the valuation model including the expected life of the share option or performance right, volatility and dividend yield and making assumptions about them. The assumptions and models used for estimating fair value for share-based payment transactions are disclosed in Note 23.3 below.

Accounting policy

Share-based compensation benefits are provided to key management personnel (KMP) and certain employees via long-term incentive (LTI) performance rights and options plans.

The fair value of equity-settled rights and options granted under the plans is recognised as an employee benefit expense over the period during which the employees become unconditionally entitled to the rights and options with a corresponding increase in equity. The total amount to be expensed is determined by reference to the fair value of the rights and options granted, which includes any market performance conditions and the impact of any non-vesting conditions but excludes the impact of any service and non-market performance vesting conditions. Non-market vesting conditions are included in assumptions about the number of rights and options that are expected to vest which are revised at the end of each reporting period. The impact of the revision to original estimates, if any, is recognised in the consolidated statement of profit or loss, with a corresponding adjustment to equity.

The fair value is measured at grant date and the expense recognised over the life of the plan. The fair value of performance rights and options is independently determined using Monte Carlo Simulation or similar pricing model that takes into account the exercise price, the term of the plan, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of the option. The expected price volatility is based on the historic volatility (based on the remaining life of the plans), adjusted for any expected changes to future volatility due to publicly available information.

IDP Education Limited

Notes to the consolidated financial statements for the year ended 30 June 2020

23. Share-based payments (continued)

23.1 Performance rights and option plans

The LTI plan is designed to align executives' interest with those of shareholders by incentivising participants to deliver long term shareholders returns. Under the plan, participants are granted performance rights or options that have vesting hurdles. The vesting hurdles must be satisfied at the end of the performance period for the rights to vest.

Details of the current performance rights and options plans are summarised in the table below.

Performance rights/options

No. of

Grant

Exercise

Vesting conditions

Vesting

awards

performance

date

date fair

price

date

rights/Options

value

CEO incentive award

295,000

17-Aug-15

0.51

1.44

Total shareholder

31-Aug-18

return CAGR

(1)

FY18 LTI award - tranche 1

171,173

15-Sep-17

5.45

N/A

EPS target CAGR

31-Aug-20

FY18 LTI award - tranche 2

171,168

15-Sep-17

4.07

N/A

Total shareholder

31-Aug-20

return hurdle

FY18 IDP plan award - tranche 1

130,018

15-Sep-17

5.45

N/A

EPS target CAGR

31-Aug-20

FY18 IDP plan award - tranche 2

130,003

15-Sep-17

4.07

N/A

Total shareholder

31-Aug-20

return hurdle

FY19 LTI award - tranche 1

87,107

27-Sep-18

9.67

N/A

EPS target CAGR

31-Aug-21

FY19 LTI award - tranche 2

87,103

27-Sep-18

6.30

N/A

Total shareholder

31-Aug-21

return hurdle

FY19 IDP plan award - tranche 1

80,100

27-Sep-18

9.67

N/A

EPS target CAGR

31-Aug-21

FY19 IDP plan award - tranche 2

80,080

27-Sep-18

6.30

N/A

Total shareholder

31-Aug-21

return hurdle

FY20 LTI award - tranche 1

67,546

1-Oct-19

15.17

N/A

EPS target CAGR

31-Aug-22

FY20 LTI award - tranche 2

67,540

1-Oct-19

7.79

N/A

Total shareholder

31-Aug-22

return hurdle

FY20 IDP plan award - tranche 1

55,384

1-Oct-19

15.17

N/A

EPS target CAGR

31-Aug-22

FY20 IDP plan award - tranche 2

55,362

1-Oct-19

7.79

N/A

Total shareholder

31-Aug-22

return hurdle

FY19 Deferred STI

15,466

1-Oct-19

15.58

N/A

Service condition

1-Jul-20

(1) The expiry date of the CEO incentive award options is 12 October 2020

IDP Education Limited

Notes to the consolidated financial statements for the year ended 30 June 2020

23. Share-based payments (continued)

23.2 Movements during the year

The table below summarises the movement in the number of performance rights/options in these plans during the year:

2020

							Number of options or rights

											Vested and
				Vesting	Exercise	Opening	Granted	Exercised	Forfeited	Closing		exercisable
				period	during	during the	during the		at balance
		Grant date	(years)	price	balance	the year	year	year	balance		date
Options plan
CEO incentive award
options (1)	17-Aug-15	3.0	$1.44	720,000	-	(425,000)	-	295,000		295,000
Total Options				720,000	-	(425,000)	-	295,000	295,000
Performance right plans
FY17 LTI	14-Sep-16	3.0	$0.00	369,247	-	(369,247)	-	-	-
FY17 IDP plan award	14-Sep-16	3.0	$0.00	223,357	-	(223,357)	-	-	-
FY18 LTI	15-Sep-17	3.0	$0.00	371,509	-	-	(29,168)	342,341	-
FY18 IDP plan award	15-Sep-17	3.0	$0.00	269,295	-	-	(9,274)	260,021	-
FY19 LTI	27-Sep-18	3.0	$0.00	188,205	-	-	(13,995)	174,210	-
FY19 IDP plan award	27-Sep-18	3.0	$0.00	164,463	-	-	(4,283)	160,180	-
FY18 deferred STI	27-Sep-18	1.0	$0.00	22,471	-	(22,471)	-	-	-
FY20 LTI	1-Oct-19	3.0	$0.00	-	135,086	-	-	135,086	-
FY20 IDP plan award	1-Oct-19	3.0	$0.00	-	110,746	-	-	110,746	-
FY19 deferred STI	1-Oct-19	1.0	$0.00	-	15,466	-	-	15,466	-

Total Performance
Rights				1,608,547	261,298	(615,075)	(56,720)	1,198,050		-
Total All Plans				2,328,547	261,298	(1,040,075)	(56,720)	1,493,050	295,000
Weighted average
exercise price				0.45	-	0.59	-	0.28	1.44

(1) The expiry date of the CEO incentive award options is 12 October 2020

IDP Education Limited

Notes to the consolidated financial statements for the year ended 30 June 2020

23. Share-based payments (continued)

23.2 Movements during the year (continued)

2019

							Number of options or rights

											Vested and
				Vesting	Exercise	Opening	Granted	Exercised	Forfeited	Closing		exercisable
				period	during	during the	during the		at balance
		Grant date	(years)	price	balance	the year	year	year	balance		date
Options plan
CEO incentive award
options (1)	17-Aug-15	3.0	$1.44	4,150,000	-	(3,430,000)	-	720,000		720,000
Total Options				4,150,000	-	(3,430,000)	-	720,000	720,000
Performance right plans
FY16 performance rights	19-Oct-15	3.0	$0.00	1,107,635	-	(1,107,635)	-	-	-
award

FY17 LTI	14-Sep-16	3.0	$0.00	369,247	-	-	-	369,247	-
FY17 IDP plan award	14-Sep-16	3.0	$0.00	223,357	-	-	-	223,357	-
FY17 special incentive	14-Sep-16	1.6	$0.00	97,087	-	(97,087)	-	-	-
award

Hotcourses earn out	31-Jan-17	2.0	$0.00	230,499	-	(197,362)	(33,137)	-	-
FY18 LTI	15-Sep-17	3.0	$0.00	371,509	-	-	-	371,509	-
FY18 IDP plan award	15-Sep-17	3.0	$0.00	277,526	-	-	(8,231)	269,295	-
FY19 LTI	27-Sep-18	3.0	$0.00	-	188,205	-	-	188,205	-
FY19 IDP plan award	27-Sep-18	3.0	$0.00	-	166,241	-	(1,778)	164,463	-
FY18 deferred STI	27-Sep-18	1.0	$0.00	-	22,471	-	-	22,471	-

Total Performance
Rights				2,676,860	376,917	(1,402,084)	(43,146)	1,608,547		-
Total All Plans				6,826,860	376,917	(4,832,084)	(43,146)	2,328,547	720,000
Weighted average
exercise price				0.88	-	1.02	-	0.45	1.44

(1) The expiry date of the CEO incentive award options is 12 October 2020

IDP Education Limited

Notes to the consolidated financial statements for the year ended 30 June 2020

23. Share-based payments (continued)

23.3 Fair value and pricing model

The fair value of performance rights and options granted under the Plan is estimated at the date of grant using a Monte Carlo Simulation Model taking into account the terms and conditions upon which the performance rights/options were granted. The model simulates the total shareholders return of the Company to the vesting date using the Monte Carlo Simulation technique. The simulation repeated numerous times produce a distribution of payoff amounts. The performance rights fair value is taken as the average payoff amount calculated, discounted back to the valuation date.

In valuing the performance rights, a number of assumptions were used as shown in the table below:
	1 October 2019
	Performance Rights

Exercise price	-
Share value at grant date	$15.72
Expected volatility	35%
Expected dividend yield	1.23%
Risk free interest rate	0.66%

The expected volatility is a measure of the amount by which the price is expected to fluctuate during a period.

23.4 Total share-based payment expenses for the year

The following expenses were recognised in employees benefit expenses during the year relating to share-based payments described above:

	2020	2019
	$'000	$'000

LTI performance rights/options plans	1,631	3,142

	1,631	3,142

IDP Education Limited

Notes to the consolidated financial statements for the year ended 30 June 2020

24. Related party transactions

Note 26 and 27 provides the information about the Group's structure including the details of the subsidiaries and associates.

Transactions with key management personnel
		30 June 2019
	30 June 2020
	$	$

Short-term employee benefits	4,911,059	4,111,902

Post-employment benefits	206,141	157,262

Other long-term benefits	75,971	78,900

Share-based payments	862,625	1,007,097

Total compensation paid to key management personnel	6,055,796	5,355,161

Refer to the Remuneration Report, which forms part of the Directors' Report for further details regarding KMP's remuneration.

25. Remuneration of auditors

The auditor of IDP Education Limited is Deloitte Touche Tohmatsu (Australia). During the year, the following fees were paid or payable for services provided by the auditors of the Group or its related practices.

	30 June 2020	30 June 2019
		$
	$

Group Auditor, Deloitte Touche Tohmatsu (Australia)

Audit and review of financial statements	514,000	460,500

Other consultancy service (1)	251,002	25,000

Member firms of Deloitte Touche Tohmatsu in relation to subsidiaries


Audit and review of financial statements	341,459	382,123

Taxation advisory services	35,143	27,887

	1,141,604	895,510

For the year ended 30 June 2020, other consultancy service primarily relates to IT support services in relation to Human Resource Application software. The IT support services company (Presence of IT) was acquired by Deloitte during FY20.

IDP Education Limited

Notes to the consolidated financial statements for the year ended 30 June 2020

26. Subsidiaries

Details of the Group's subsidiaries at the end of the reporting period are as follows:

		Place of
		incorporation
		and	Proportion of voting power
Name of subsidiary	Principal activity	operation	controlled by the Group

			2020	2019

IELTS Australia Pty Limited	Examinations	Australia	100%	100%

IDP World Pty Ltd	Holding company	Australia	100%	100%

IDP Education Pty Ltd (South Korea)	Student Placements & Examinations	Korea	100%	100%

IDP Education Services Co. Ltd (1)	Student Placements & Examinations	Thailand	100%	100%

IDP Education Australia (Thailand) Co. Ltd (1)	English Language Teaching	Thailand	100%	100%

IDP Education (Vietnam) Ltd	Student Placements & Examinations	Vietnam	100%	100%

Yayasan Pendidikan Australia (2)	Student Placements & Examinations	Indonesia	100%	100%

PT IDP Consulting Indonesia	Student Placements & Examinations	Indonesia	100%	100%

IDP Consulting (Hong Kong) Co. Ltd	Holding company	Hong Kong	100%	100%

IDP Education India Pvt Ltd	Student Placements & Examinations	India	100%	100%

IDP Education Cambodia Ltd	Student Placements, Examinations	Cambodia	100%	100%
	& English Language Teaching
IDP Education LLC	Client Relations	United States of	100%	100%
		America

IDP Education UK Limited	Client Relations	United Kingdom	100%	100%

IDP Education (Canada) Ltd	Client Relations & Examinations	Canada	100%	100%

IDP Education (Bangladesh) Pvt Ltd	Student Placements & Examinations	Bangladesh	100%	100%

IDP Education (Egypt) LLC	Student Placements & Examinations	Egypt	100%	100%
IDP Education Consulting (Beijing) Co., Ltd	Student Placements	China	100%	100%

IDP Business Consulting (Shanghai) Co., Ltd	Student Placements	China	100%	100%

Beijing Promising Education Limited	Student Placements	China	100%	100%

IDP Education Services New Zealand Limited	Student Placements & Examinations	New Zealand	100%	100%

IDP Education Turkey LLC	Student Placements & Examinations	Turkey	100%	100%

IDP Education Lanka (Private) Limited	Student Placements & Examinations	Sri Lanka	100%	100%

IDP Education Pakistan (Private) Limited	Student Placements & Examinations	Pakistan	100%	100%

IDP Education Nepal Private Limited	Examinations	Nepal	100%	100%

IDP Education Japan Limited	Examinations	Japan	100%	100%
IDP Connect Limited (formerly Hotcourses Ltd)	Digital marketing and online	United Kingdom	100%	100%
	students recruitment
Complete University Guide Limited	Digital marketing	United Kingdom	100%	100%

Hotcourses Data Limited	Digital marketing	United Kingdom	100%	100%

Hotcourses Inc	Client Relations	United States of	100%	100%
		America
Hotcourses Pty Limited	Client Relations	Australia	100%	100%

Hotcourses India Private Limited	Online services	India	100%	100%

IDP Education India Services LLP	Shared services	India	100%	100%

IDP Education Limited

Notes to the consolidated financial statements for the year ended 30 June 2020

26. Subsidiaries (continued)

		Place of
		incorporation
		and	Proportion of voting power
Name of subsidiary	Principal activity	operation	controlled by the Group

			2020	2019

IDP Education Student Services Nepal Private
Limited	Student Placements	Nepal	51%	51%

IDP Education Singapore Pte Ltd	Student Placements & Examinations	Singapore	100%	-

IDP Education Limited owns 100% ordinary Class A shares, which represents 49% of total shares of IDP Education Australia (Thailand) Co. Ltd and IDP Education Services Co. Ltd. According to the company constitution, ordinary Class A shares holds 100% voting right of the company. Based on these facts and circumstances, management determined that, in substance, the Group controls these entities with no non- controlling interest
Foundation controlled through IDP Education Limited's capacity to control management of the company

27. Associates

Accounting policy

An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.

The results and assets and liabilities of associates are incorporated in these consolidated financial statements using the equity method of accounting, except when the investment, or a portion thereof, is classified as held for sale, in which case it is accounted for in accordance with AASB 5. Under the equity method, an investment in an associate is initially recognised in the consolidated statement of financial position at cost and adjusted thereafter to recognise the Group's share of the profit or loss and other comprehensive income of the associate. When the Group's share of losses of an associate exceeds the Group's interest in that associate (which includes any long-term interests that, in substance, form part of the Group's net investment in the associate), the Group discontinues recognising its share of further losses. Additional losses are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate.

An investment in an associate is accounted for using the equity method from the date on which the investee becomes an associate. On acquisition of the investment in an associate, any excess of the cost of the investment over the Group's share of the net fair value of the identifiable assets and liabilities of the investee is recognised as goodwill, which is included within the carrying amount of the investment. Any excess of the Group's share of the net fair value of the identifiable assets and liabilities over the cost of the investment, after reassessment, is recognised immediately in profit or loss in the period in which the investment is acquired.

The requirements of AASB 139 are applied to determine whether it is necessary to recognise any impairment loss with respect to the Group's investment in an associate. When necessary, the entire carrying amount of the investment (including goodwill) is tested for impairment in accordance with AASB 136 Impairment of Assets as a single asset by comparing its recoverable amount (higher of value in use and fair value less costs of disposal) with its carrying amount, Any impairment loss recognised forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognised in accordance with AASB 136 to the extent that the recoverable amount of the investment subsequently increases.

When a group entity transacts with an associate of the Group, profits and losses resulting from the transactions with the associate are recognised in the Group's consolidated financial statements only to the extent of interests in the associate that are not related to the Group.

IDP Education Limited

Notes to the consolidated financial statements for the year ended 30 June 2020

27. Associates (continued)

		Place of	Proportion of voting power
		incorporation
Name of associates	Principal activity	and operation	held by the Group

			2020	2019

HCP Limited	English language test preparation and online services	China	20%	20%

IELTS UK Services Ltd	Provision of English language test development	United Kingdom	33.33%	-

Summarised financial information in respect of the associates is set out below. The summarised financial information below represents amounts shown in the associate's financial statements prepared in accordance with IFRS.

			30 June 2020	30 June 2019
			$'000	$'000
Current assets	10,623	6,416

Non-current assets	6,408	4,912

Current liabilities	8,838	2,098

Non-current liabilities	466	705


Revenue	13,065	8,832

Profit for the year	(762)	95

Other comprehensive income for the year	-	-

Total comprehensive income	(762)	95

Reconciliation of the above summarised financial information to the carrying amount of the interest in associates recognised in the consolidated financial statements:

		30 June 2020	30 June 2019
		$'000	$'000
Net assets of the associates	7,653	8,525

Proportion of the Group's ownership interest in associates	1,398	1,705
Long term loans	1,442	-
Goodwill	3,089	3,055

Carrying amount of the Group's interest in associates	5,929	4,760

Transactions and balances with associates are as follows.
		30 June 2020	30 June 2019
		$'000	$'000
Transactions
Provision of services	1,019	-
Services received	(938)	-

Balances
Trade and other payables	(756)	-

Notes to the consolidated financial statements	IDP Education Limited

for the year ended 30 June 2020
28. Deed of cross guarantee
The following wholly-owned entities have entered into a Deed of Cross Guarantee.
Company	Financial year entered into agreement
IDP Education Limited	30 June 2017
IELTS Australia Pty Limited*	30 June 2017
IDP World Pty Ltd*	30 June 2017

These entities are not required to prepare and lodge a financial report and directors' report under ASIC Corporations (Wholly owned Companies) Instrument 2016/785 issued by the Australian Securities and Investments Commission.

The companies that are members of this deed guarantee the debts of the others and represent the "Closed Group" from the date of entering into the agreement. These are the only members of the Deed of Cross Guarantee and therefore these companies also represent the 'Extended Closed Group'.

28.1 Statement of profit or loss, other comprehensive income and a summary of movements in consolidated retained profits of the Closed Group for Deed of Cross Guarantee purposes

		30 June 2020	30 June 2019
Statement of comprehensive income		$'000	$'000
Revenue	282,018	308,667
Dividend income	6,886	7,242
Expenses	(218,719)	(227,680)
Depreciation and amortisation	(17,111)	(9,798)
Finance income	549	192
Finance costs	(1,975)	(2,028)
Share of profit/(loss) of associates	(319)	19
Profit for the year before income tax expense	51,329	76,614
Income tax expense	(16,870)	(23,852)
Profit for the year of the Closed Group	34,459	52,762
Other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Net investment hedge of foreign operations	491	(777)
Exchange differences arising on translating the foreign operations	87	69
Gain/loss arising on changes in fair value of hedging instruments entered
into for cash flow hedges
Forward foreign exchange contracts	(269)	(806)
Cumulative gain/loss arising on changes in fair value of hedging
instruments reclassified to profit or loss	803	(343)
Income tax related to gains/losses recognised in other comprehensive
income	(309)	578
Items that will not be reclassified subsequently to profit or loss:	-	-
Other comprehensive income for the year, net of income tax	803	(1,279)
Total comprehensive income for the year of the Closed Group	35,262	51,483

Summary of movements in consolidated retained profits

Retained profits at 1 July

Effects of initial application of new accounting standards Profit for the year

Dividends paid

Retained profits at 30 June of the Closed Group

30 June 2020	30 June 2019
$'000	$'000
80,229	63,252

11,287
34,45952,762

(61,066) (47,072)

53,62280,229

IDP Education Limited

Notes to the consolidated financial statements for the year ended 30 June 2020

28. Deed of Cross Guarantee (continued)

28.2 Consolidated statement of financial position of the Closed Group for Deed of Cross Guarantee purposes

30 June 2020	30 June 2019
$'000	$'000

CURRENT ASSETS

Cash and cash equivalents Trade and other receivables Contract assets

Derivative financial instruments Current tax assets

Other current assets

Total current assets

NON-CURRENT ASSETS Contract assets Investments in subsidiaries Investments in associates Property, plant and equipment Right-of-use assets Intangible assets Capitalised development costs Deferred tax assets

Other non-current assets

281,87231,957

53,48456,843

23,58632,564

4611,007

14,4627,702

4,2025,439

378,067 135,512

3,2102,854

63,94463,485

5,9294,761

6,6517,897

17,457-

73,89475,404

5,1882,748

6,5209,907

973446

Total non-current assets	183,766	167,502
TOTAL ASSETS	561,833	303,014
CURRENT LIABILITIES
Trade and other payables	94,262	102,736
Dividends payable	41,983	-
Lease liabilities	6,433	-
Contract liabilities	7,261	5,492
Provisions	8,713	8,049
Financial liabilities at fair value through profit or loss	-	174
Derivative financial instruments	929	1,663

Total current liabilities	159,581	118,114
NON-CURRENT LIABILITIES
Trade and other payables	-	537
Borrowings	59,831	60,478
Lease liabilities	10,851	-
Derivative financial instruments	-	365
Provisions	1,781	3,199

Total non-current liabilities	72,463	64,579
TOTAL LIABILITIES	232,044	182,693
NET ASSETS	329,789	120,321
EQUITY
Issued capital	270,959	30,811
Reserves	5,208	9,281
Retained earnings	53,622	80,229
TOTAL EQUITY	329,789	120,321

IDP Education Limited

Notes to the consolidated financial statements for the year ended 30 June 2020

29. Parent entity information

IDP Education Limited is the parent entity of the Group. The financial information presented below represents that of the parent and is not comparable to the consolidated results.

Financial information
Financial position		30 June 2019
30 June 2020
	$'000	$'000
Current assets	370,894	102,485
Total assets	546,287	265,953
Current liabilities	193,333	140,751
Total liabilities	265,796	205,109
Equity
Issued capital	270,959	30,811

Retained earnings	4,022	21,014

Reserves	5,510	9,019
Total equity	280,491	60,844
Financial performance		30 June 2019
30 June 2020
Profit for the year	44,075	48,720
Other comprehensive income	1,367	(1,453)
Total comprehensive income	45,442	47,267

During the year, the parent entity received $66.9m dividends income from the subsidiaries (2019: $62.2m).

30. Contingent liabilities

The Directors are not aware of any significant contingent liabilities as at 30 June 2020 (2019: nil).

31. Events after the reporting period

The Group is actively managing the impacts and risks arising from COVID-19 on its operations. The impact of COVID-19 we expect will, to some degree, affect the student placement revenue for FY21. It is uncertain when higher education institutions will be in a position to return to previous on campus activity levels. As the majority of IELTS test takers undertake the test for academic or migration purposes, until international borders are open for travel and higher education institutions are able to allow international students to commence courses on campus, IELTS testing volumes will be impacted. Throughout this period, the Group continues to have sufficient cash reserves to meet any obligations or liabilities when they become due and payable.

Other than the matters reported above, there were no significant events since the balance sheet date.

IDP Education Limited

Directors' declaration

In the Directors' opinion:

the consolidated financial statements and notes of IDP Education Limited and its controlled entities (the Group) set out on pages 41 to 93 are in accordance with the Corporations Act 2001, including:
1. complying with Accounting Standards, the Corporations Regulations 2001, and other mandatory professional reporting requirements; and
2. giving a true and fair view of the Group's financial position as at 30 June 2020 and of its performance, as represented by the results of its operations, changes in equity and its cash flows, for the year ended on that date; and
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.
at the date of this declaration, there are reasonable grounds to believe that the members of the Extended Closed Group identified in note 28 will be able to meet any obligations or liabilities to which they are, or may become, subject by virtue of the Deed of Cross Guarantee described in note 28.

Note 1 confirms that the financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board.

The Directors have been given the declarations by Chief Executive Officer and Chief Financial Officer required by section 295A of the Corporations Act 2001.

The declaration is made in accordance with a resolution of the Directors.

Peter Polson	Andrew Barkla
Chairman	Managing Director
Melbourne
19 August 2020

Deloitte Touche Tohmatsu

ABN 74 490 121 060

477 Collins Street

Melbourne VIC 3000

Tel: +61 (0) 3 9671 7000

www.deloitte.com.au

Independent Auditor's Report

to the members of IDP Education Limited

Report on the Audit of the Financial Report

We have audited the financial report of IDP Education Limited (the "Company") and its subsidiaries (the "Group") which comprises the consolidated statement of financial position as at 30 June 2020, the consolidated statement of profit or loss, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information, and the directors' declaration.

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

giving a true and fair view of the Group's financial position as at 30 June 2020 and of its financial performance for the year then ended; and
complying with Australian Accounting Standards and the Corporations Regulations 2001.

Basis for Opinion

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

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

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

Key Audit Matters

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

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

Key Audit Matter

How the scope of our audit responded to the

Key Audit Matter

Assessment

uncertain

tax

Our procedures included, but were not limited to:

positions

• Understanding the process that management

Refer to Note 5 Taxation & Note 14 Other

have undertaken to identify and assess uncertain

assets

tax positions, including the monitoring and

guidance issued by regulatory authorities,

The

Group

operates

across

large

• In conjunction with our tax specialists, we:

number

jurisdictions

including

Australasia, Asia and various other

o Assessed the current status of tax

locations.

Consequently,

the

Group is

assessments and investigations and the

subject to investigations and audit

process to monitor developments in

activities by revenue authorities on a

ongoing disputes by management,

range

tax

matters, estimates

and

o Evaluated

external tax

advice where

assumptions during the normal course of

available,

including

assessing

the

business,

including

transfer

pricing,

independence, competency and objectivity

indirect taxes and transaction related tax

of the tax advisors, and

matters.

Significant

judgement

therefore

o Read recent rulings and correspondence

with local tax authorities, to assess that the

exercised in the determination of the tax

tax provisions had been appropriately

position in relation these.

accounted for or adjusted to reflect the

latest external tax developments.

We also assessed the appropriateness of the

disclosures in the Notes to the financial statements.

Carrying value of UK Digital

Our procedures in conjunction with our valuation

Marketing

cash generating

unit

specialists included,

but were

not limited

to:

(CGU)

Refer to Note 13 Intangible assets

• Understanding the process that management has

undertaken to assess the recoverable amount,

The carrying value of UK Digital Marketing

• We assessed the assumptions and methodology

CGU contains $25.7 million of goodwill

used in the impairment models, in particular,

and $14.1 million of intangible assets with

those relating to revenue, EBITDA and discount

indefinite useful lives, which are required

rates. Our procedures included the following:

to be assessed for impairment annually or

o Agreeing forecasted cash flows to the

where there is an indicator of impairment.

latest Board approved budget and

As disclosed in Note 13, the directors

assessing the historical accuracy of

have assessed the UK Digital marketing

forecasting,

CGU for impairment using a 'value in use'

o Evaluated the underlying cash flow

discounted cash flow model. The

assumptions in the impairment model

impairment

assessment

incorporated

including management's assessment of

significant

judgments

and estimates,

the impact of COVID-19 on the

including

factors such

forecast

cash

forecasted cash flows,

flows and discount rate.

o Tested the calculations in the

impairment model for mathematical

accuracy; and,

o Assessed the sensitivity of the

calculations by varying key assumptions

within a reasonably possible range.

o Assessed the discount rate adopted with

the assistance of Deloitte valuation

specialists.

We also assessed the appropriateness of the

disclosures in the Notes to the financial statements.

Other Information

The directors are responsible for the other information. The other information comprises the Directors' Report included in the Group's annual report for the year ended 30 June 2020 but does not include the financial report and our auditor's report thereon.

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

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

Responsibilities of the Directors for the Financial Report

The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.

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

Auditor's Responsibilities for the Audit of the Financial Report

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

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

Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are

based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern.

Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial report.
We are responsible for the direction, supervision and performance of the Group's audit. We remain solely responsible for our audit opinion.

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

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

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

Report on the Remuneration Report

Opinion on the Remuneration Report

We have audited the Remuneration Report included in pages 20 to 38 of the Director's Report for the year ended 30 June 2020.

In our opinion, the Remuneration Report of IDP Education Limited, for the year ended 30 June 2020, complies with section 300A of the Corporations Act 2001.

Responsibilities

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

DELOITTE TOUCHE TOHMATSU

Genevra Cavallo

Partner

Chartered Accountants

Melbourne, 19 August 2020

	IDP Education Limited
Corporate Directory
Directors	Principal registered office in Australia
Peter Polson	Level 8
Chairman	535 Bourke Street
	MELBOURNE VIC 3000
Andrew Barkla	AUSTRALIA
Managing Director and Chief Executive Officer	Ph: +61 3 9612 4400
Ariane Barker	Share Registry
	Link Market Service Limited
Professor David Battersby AM	Tower 4
	727 Collins Street
Chris Leptos AM	MELBOURNE VIC 3008
Professor Colin Stirling	Australia
Auditor

Greg West	Deloitte Touche Tohmatsu
	477 Collins Street
	MELBOURNE VIC 3000
Secretary	AUSTRALIA
Ph: +61 3 9671 7000
Murray Walton
	Stock exchange listing
	IDP Education Limited shares are listed on the Australian
	Securities Exchange (Listing code: IEL)
	Website
	www.idp.com
	ABN
	59 117 676 463

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Idp Education Ltd. published this content on 20 August 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 19 August 2020 22:33:05 UTC

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Company Profile

IDP Education Limited is an Australia-based education services provider. The Company is engaged in the placement of international students into educational institutions in Australia, the United Kingdom, the United States, Canada, New Zealand and Ireland. Its services include counseling, application processing and pre-departure guidance. It also distributes and administrates International English Language Testing System (IELTS) tests, an English language test for study, work and migration purposes. It is a co-owner of IELTS with the British Council and Cambridge Assessment. It also operates English language schools in Vietnam and Cambodia and the operation of digital marketing and event services. The Company operates in approximately 50 countries around the world. Its geographical segments include Asia, Australasia and Rest of World. Asia segment includes Bangladesh, Cambodia, China, Hong Kong, India and other. Australasia segment includes Australia, Fiji, New Zealand and New Caledonia.

Sector

Professional & Business Education

Calendar

2024-08-20 - Q4 2024 Earnings Release (Projected)

Related indices

S&P/ASX 200

More about the company

Income Statement Evolution

More financial data

Ratings for IDP Education Limited

Trading Rating

Investor Rating

ESG Refinitiv

B-

More Ratings

Analysts' Consensus

Sell

Buy

Mean consensus

OUTPERFORM

Number of Analysts

Last Close Price

16.24 AUD

Average target price

21.9 AUD

Spread / Average Target

+34.88%

Consensus

EPS Revisions

Estimates Revisions

Quarterly earnings - Rate of surprise

Company calendar

Sector Professional & Business Education

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Professional & Business Education