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AFFINITY EDUCATION GROUP LIMITED ABN 37 163 864 195

INTERIM REPORT 30 JUNE 2014

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Affinity Education Group Limited Directors' report 30 June 2014

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The directors present their report, together with the financial statements, on the company for the half-year ended 30 June 2014.

Directors The following persons were directors of the company during the whole of the financial half-year and up to the date of this report, unless otherwise stated: Stuart Bruce James - Chairman Justin Michael Laboo Stephanie Jane Daveson Jeffrey Ian Forbes Gabriel Anna Giufre

Principal activities The principal activity of the company is that of a provider of education and care for children up to 12 years, through its owned and managed child care centres in Australia.

Review of operations The loss for the company after providing for income tax amounted to $5,002,000 (30 June 2013: profit of $nil). The results represent the company’s first full half year of operations. The prior period comparative, reflects the company’s performance from incorporation date, 21 May 2013 to 30 June 2013. On 8 April 2014, the company announced a 3 for 4 pro-rata accelerated renounceable entitlement offer at an offer price of $1.12 per share. The institutional and retail offers were successfully completed on 11 April 2014 and 5 May 2014 respectively raising $75.2 million. The entitlement offer was conducted to enable the purchase of 51 childcare centres. As at 30 June 2014 completion had occurred on 34 of the 51 child care centres, of the remaining 17 centres 8 have completed since the 30 June 2014 and the remaining 9 centres are expected to complete during September 2014. As part consideration for 29 of the 51 childcare centres, the company issued 10.9 million shares to the vendors as approved at the company’s Annual General Meeting on 14 May 2014. Occupancy at the company’s child care centres has improved over the period as a result of the usual seasonality and centre specific occupancy improvement initiatives. Occupancy continues to improve on a weekly basis. The company has also seen improvement in average fees collected and wage to revenue performance over the period. Results on a guidance basis (as set out in prospectus) versus actual results The company generated a loss for the period of $5.0 million compared to a forecast profit of $2.6 million in the replacement prospectus dated 12 November 2013. The key driver of the loss is acquisition expenses of $7.8 million which offset the contribution from child care businesses acquired during the period. On a pro forma basis (excluding profits from acquisitions and acquisition and integration expenses) the company generated earnings before interest and tax of $3.9 million, in line with the replacement prospectus dated 12 November 2013.

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Strategy and future performance The company’s aim is to achieve efficiencies and economies of scale through the integration of both individual and multiple centres. The company’s strategy is to grow its business and drive future performance through: - Organic growth, including improvements in revenue levels and efficiencies gained from corporatising a large portfolio of centres; and - A considered and disciplined acquisition strategy. On 22 July 2014, the Productivity Commission completed the first stage of its inquiry into childcare and early childhood learning and released its draft report. The objectives of the inquiry are to examine and identify future options for a child care system that: - Supports workforce participation - Addresses learning and development needs of children - Is more flexible to suit the needs of families; and - Is based upon fiscally sustainable funding arrangements. The draft report included recommendations to simplify the subsidy process and increase sector funding to $8 billion per annum, with the aim of making access to childcare services more attainable for a larger number of Australian families. The company believes that its business model strongly supports the objectives of the inquiry and is confident in the strong underlying fundamentals that support its future growth. Summary statement of cash flows During the half year to 30 June 2014 the company raised $75.2m from the issue of shares as part of the accelerated renounceable entitlement offer, of which $41.2 million has been used to acquire child care centres. Cash flows from operating activities of $0.3 million include $3.5 million of payments relating to acquisition costs. Excluding payments for acquisition costs, cash flows from operating activities were $3.8 million. Summary statement of financial position As at 30 June 2014, the company has a net asset position of $147.3 million driven primarily by intangible assets of $117.0 million comprising mainly goodwill on the acquisitions of child care centres and $34.3m of cash representing that raised from the accelerated renounceable entitlement offer and operating cash flows. Working capital As at 30 June 2014 the company had net current assets of $22.5 million, primarily driven by proceeds from the issue of shares as part of the accelerated renounceable entitlement offer. Debt position As at 30 June 2014 the company had banking facilities of $29.0 million, $6.6 million of these facilities were allocated. Of the allocated amount, $6.0 million was in relation to bank guarantees and $0.6 million in relation to company credit cards and finance leases. On 28 August 2014, the company entered into an agreement that provides banking facilities of $115.5 million for both working capital ($15.5 million) and acquisition ($100.0 million) purposes.

Significant changes in the state of affairs The consolidated entity completed the acquisition of 34 child care centres during the half year to 30 June 2014. The acquisitions were funded using cash raised from the completed Accelerated Renounceable Entitlement Offer and the issue of Affinity shares as approved at the Annual General Meeting held on 14 May 2014. There were no other significant changes in the state of affairs of the company during the financial half-year.

Rounding of amounts The company is of a kind referred to in Class Order 98/100, issued by the Australian Securities and Investments Commission, relating to 'rounding-off'. Amounts in this report have been rounded off in accordance with that Class Order to the nearest thousand dollars, or in certain cases, the nearest dollar.

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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 the following page.

This report is made in accordance with a resolution of directors, pursuant to section 306(3)(a) of the Corporations Act 2001.

On behalf of the directors

________________________________ Stuart James Chair

29 August 2014 Southport

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PricewaterhouseCoopers, ABN 52 780 433 757Riverside Centre, 123 Eagle Street, BRISBANE QLD 4000, GPO Box 150, BRISBANE QLD 4001T: +61 7 3257 5000, F: +61 7 3257 5999, www.pwc.com.au

Liability limited by a scheme approved under Professional Standards Legislation.

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Auditor’s Independence Declaration

As lead auditor for the review of Affinity Education Group Limited for the half-year ended 30 June2014, I declare that to the best of my knowledge and belief, there have been:

a) no contraventions of the auditor independence requirements of the Corporations Act 2001 inrelation to the review; and

b) no contraventions of any applicable code of professional conduct in relation to the review.

Debbie Smith

Brisbane

PartnerPricewaterhouseCoopers

29 August 2014

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Affinity Education Group Limited Contents 30 June 2014

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Contents

Statement of profit or loss and other comprehensive income 6Statement of financial position 7 Statement of changes in equity 8 Statement of cash flows 9 Notes to the financial statements 10 Directors' declaration 19 Independent auditor's review report to the members of Affinity Education Group Limited 20

General information

The financial statements cover Affinity Education Group Limited as an individual entity. The financial statements are presented in Australian dollars, which is Affinity Education Group Limited's functional and presentation currency.

Affinity Education Group Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is:

170 Scarborough Street Southport QLD 4215

A description of the nature of the company's operations and its principal activities are included in the directors' report, which is not part of the financial statements.

The financial statements were authorised for issue, in accordance with a resolution of directors, on 29 August 2014. The directors have the power to amend and reissue the financial statements.

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Affinity Education Group Limited Statement of profit or loss and other comprehensive income For the half-year ended 30 June 2014

Note

Half-year to 30 Jun 2014

Period from 21 May 2013

to 30 Jun 2013

$'000 $'000

The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes

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Revenue 3 38,465 - Expenses Direct costs of providing services (2,814) - Employee benefits expense 4 (24,226) - Depreciation and amortisation expense 4 (462) - Administration expenses (829) - Building occupancy expenses (5,447) - Integration expenses (477) - Acquisition costs 16 (7,796) - Finance costs 4 (217) - Loss before income tax expense (3,803) - Income tax expense (1,199) - Loss after income tax expense for the half-year attributable to the owners of Affinity Education Group Limited

(5,002) -

Other comprehensive income for the half-year, net of tax - - Total comprehensive income for the half-year attributable to the owners of Affinity Education Group Limited

(5,002) -

Cents Cents Basic earnings per share 18 (4.39) -Diluted earnings per share 18 (4.39) -

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Affinity Education Group Limited Statement of financial position As at 30 June 2014

Note 30 Jun 2014 31 Dec 2013 $'000 $'000

The above statement of financial position should be read in conjunction with the accompanying notes 7

Assets Current assets Cash and cash equivalents 5 34,309 3,068 Trade and other receivables 6 4,479 2,176 Other 746 392 39,534 5,636 Non-current assets classified as held for sale 250 250 Total current assets 39,784 5,886 Non-current assets Property, plant and equipment 7 5,093 3,358 Intangibles 8 117,008 62,246 Deferred tax 4,281 3,456 Total non-current assets 126,382 69,060 Total assets 166,166 74,946

Liabilities Current liabilities Trade and other payables 9 10,253 5,073 Borrowings 316 19 Income tax 576 - Provisions 10 4,742 3,005 Other 1,382 452 Total current liabilities 17,269 8,549 Non-current liabilities Borrowings 388 40 Provisions 11 1,100 843 Other 75 75 Total non-current liabilities 1,563 958 Total liabilities 18,832 9,507 Net assets 147,334 65,439

Equity Issued capital 12 161,192 74,295 Accumulated losses (13,858) (8,856) Total equity 147,334 65,439

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Affinity Education Group Limited Statement of changes in equity For the half-year ended 30 June 2014

The above statement of changes in equity should be read in conjunction with the accompanying notes 8

Issued Retained Total capital profits equity $'000 $'000 $'000 Balance at 21 May 2013 - - - Profit after income tax expense for the half-year - - - Other comprehensive income for the half-year, net of tax - - - Total comprehensive income for the half-year - - - Transactions with owners in their capacity as owners: Contributions of equity, net of transaction costs (note 12) 1 - 1 Balance at 30 June 2013 1 - 1

Issued Accumulated Total capital losses equity $'000 $'000 $'000 Balance at 1 January 2014 74,295 (8,856) 65,439 Loss after income tax expense for the half-year - (5,002) (5,002)Other comprehensive income for the half-year, net of tax - - - Total comprehensive income for the half-year - (5,002) (5,002) Transactions with owners in their capacity as owners: Contributions of equity, net of transaction costs (note 12) 86,897 - 86,897 Balance at 30 June 2014 161,192 (13,858) 147,334

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Affinity Education Group Limited Statement of cash flows For the half-year ended 30 June 2014

Note



to 30 Jun 2013

$'000 $'000

The above statement of cash flows should be read in conjunction with the accompanying notes 9

Cash flows from operating activities Receipts from customers (inclusive of GST) 36,862 - Payments to suppliers (inclusive of GST) (33,135) - 3,727 - Acquisition costs (3,478) - Interest received 254 - Interest and other finance costs paid (217) - Net cash from operating activities 286 -

Cash flows from investing activities Payment for purchase of business, net of cash acquired 16 (41,201) - Payments for property, plant and equipment 7 (348) - Payments for intangibles 8 (71) - Proceeds from release of security deposits 22 - Net cash used in investing activities (41,598) -

Cash flows from financing activities Proceeds from issue of shares 12 75,174 1 Share issue transaction costs (3,191) - Proceeds from borrowings 570 250 Net cash from financing activities 72,553 251

Net increase in cash and cash equivalents 31,241 251 Cash and cash equivalents at the beginning of the financial half-year 3,068 - Cash and cash equivalents at the end of the financial half-year 34,309 251

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Affinity Education Group Limited Notes to the financial statements 30 June 2014

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Note 1. Significant accounting policies These general purpose financial statements for the interim half-year reporting period ended 30 June 2014 have been prepared in accordance with Australian Accounting Standard AASB 134 'Interim Financial Reporting' and the Corporations Act 2001, as appropriate for for-profit oriented entities. Compliance with AASB 134 ensures compliance with International Financial Reporting Standard IAS 34 'Interim Financial Reporting'. These general purpose financial statements do not include all the notes of the type normally included in annual financial statements. Accordingly, these financial statements are to be read in conjunction with the annual report for the year ended 31 December 2013 and any public announcements made by the company during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001. The principal accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period, except for the policies stated below. The prior period comparative, reflects the company’s performance from incorporation date, 21 May 2013 to 30 June 2013. New, revised or amending Accounting Standards and Interpretations adopted The company has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period. Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been early adopted. Any significant impact on the accounting policies of the company from the adoption of these Accounting Standards and Interpretations are disclosed below. The adoption of these Accounting Standards and Interpretations did not have any significant impact on the financial performance or position of the company. The following Accounting Standards and Interpretations are most relevant to the company: AASB 2012-3 Amendments to Australian Accounting Standards - Offsetting Financial Assets and Financial Liabilities The consolidated entity has applied AASB 2013-4 from 1 January 2014. The amendments add application guidance to address inconsistencies in the application of the offsetting criteria in AASB 132 'Financial Instruments: Presentation', by clarifying the meaning of 'currently has a legally enforceable right of set-off'; and clarifies that some gross settlement systems may be considered to be equivalent to net settlement. The adoption of the amendments from 1 January 2014 does not have a material impact on the consolidated entity. AASB 2013-3 Amendments to AASB 136 - Recoverable Amount Disclosures for Non-Financial Assets The consolidated entity has applied AASB 2013-3 from 1 January 2014. The disclosure requirements of AASB 136 ‘Impairment of Assets' have been enhanced to require additional information about the fair value measurement when the recoverable amount of impaired assets is based on fair value less costs of disposals. Additionally, if measured using a present value technique, the discount rate is required to be disclosed. The adoption of these amendments from 1 January 2014 may increase the disclosures by the consolidated entity. AASB 2013-4 Amendments to Australian Accounting Standards – Novation of Derivatives and Continuation of Hedge Accounting The consolidated entity has applied AASB 2013-4 from 1 January 2014 and amends AASB 139 'Financial Instruments: Recognition and Measurement' to permit continuation of hedge accounting in circumstances where a derivative (designated as hedging instrument) is novated from one counter party to a central counterparty as a consequence of laws or regulations. The adoption of these amendments from 1 January 2014 does not have a material impact on the consolidated entity. Interpretation 21 Levies The consolidated entity has applied interpretation 21 from 1 January 2014. The Interpretation clarifies the circumstances under which a liability to pay a levy imposed by a government should be recognised, and whether that liability should be recognised in full at a specific date or progressively over a period of time. The adoption of the interpretation from 1 January 2014 does not have a material impact on the consolidated entity.

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Note 2. Operating segments Identification of reportable operating segments The company operates in one segment, being provision of education and care to children aged 6 weeks to 12 years. This is based on the internal reports that are reviewed and used by the Board of Directors (who are identified as the Chief Operating Decision Makers ('CODM')) in assessing performance and in determining the allocation of resources. There is no aggregation of operating segments. As a result of this, the operating segment information is as disclosed in the statements and notes to the financial statements throughout the report. Major customers During the half-year ended 30 June 2014, none of the company's external revenue was derived from sales to one specific customer or group of customers that derived more than 10% of the revenue figure.

Note 3. Revenue



to 30 Jun 2013

$'000 $'000 Sales revenue Provision of child care services 37,425 - Other revenue Management fees 786 - Interest 254 - 1,040 - Revenue 38,465 -

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Note 4. Expenses



to 30 Jun 2013

$'000 $'000 Loss before income tax includes the following specific expenses: Depreciation Fixtures and fittings 234 - Motor vehicles 45 - Computer equipment 5 - Other equipment 121 - Total depreciation 405 - Amortisation Software 57 - Total depreciation and amortisation 462 - Finance costs Interest and finance charges paid/payable 217 - Rental expense relating to operating leases Minimum lease payments 4,929 - Superannuation expense Defined contribution superannuation expense 1,846 - Employee benefits expense excluding superannuation Employee benefits expense excluding superannuation 22,380 -

Note 5. Current assets - cash and cash equivalents 30 Jun 2014 31 Dec 2013 $'000 $'000 Cash at bank and on hand 34,309 3,068

Note 6. Current assets - trade and other receivables 30 Jun 2014 31 Dec 2013 $'000 $'000 Trade receivables 3,233 1,769 Less: Provision for impairment of receivables (175) (148) 3,058 1,621 Other receivables 1,154 - Goods and services tax receivable 267 555 4,479 2,176

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Note 7. Non-current assets - property, plant and equipment

30 Jun 2014 31 Dec 2013$'000 $'000

Plant and equipment - at cost 4 -

Fixtures and fittings - at cost 3,350 2,141 Less: Accumulated depreciation (270) (36)

3,080 2,105

Motor vehicles - at cost 909 583 Less: Accumulated depreciation (51) (6)

858 577

Computer equipment - at cost 49 16 Less: Accumulated depreciation (5) -

44 16

Other equipment - at cost 1,246 678 Less: Accumulated depreciation (139) (18)

1,107 660

5,093 3,358

Reconciliations Reconciliations of the written down values at the beginning and end of the current financial half-year are set out below:

Plant and Fixtures and Motor Computer Otherequipment fittings vehicles equipment equipment Total

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

Balance at 1 January 2014 - 2,105 577 16 660 3,358Additions 4 21 88 33 202 348Additions through business combinations (note 16) - 1,188 238 - 366 1,792Depreciation expense - (234) (45) (5) (121) (405)

Balance at 30 June 2014 4 3,080 858 44 1,107 5,093

Note 8. Non-current assets - intangibles

30 Jun 2014 31 Dec 2013$'000 $'000

Goodwill - at cost 116,257 61,509

Intellectual property - at cost 28 -

Software - at cost 787 744Less: Accumulated amortisation (64) (7)

723 737

117,008 62,246

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Note 8. Non-current assets - intangibles (continued)

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Reconciliations Reconciliations of the written down values at the beginning and end of the current financial half-year are set out below:

Intellectual Goodwill property Software Total

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

Balance at 1 January 2014 61,509 - 737 62,246 Additions - 28 43 71Additions through business combinations (note 16) 54,748 - - 54,748 Amortisation expense - - (57) (57)

Balance at 30 June 2014 116,257 28 723 117,008

Goodwill is allocated to a single cash-generating unit ('CGU'), which is based on the company's operating segment.

Note 9. Current liabilities - trade and other payables

30 Jun 2014 31 Dec 2013$'000 $'000

Trade payables 7,009 1,791 Other payables 3,244 3,282

10,253 5,073

Note 10. Current liabilities - provisions

30 Jun 2014 31 Dec 2013$'000 $'000

Annual leave 2,772 1,826 Long service leave 840 485Deferred consideration 250 230 Repairs and maintenance 880 464

4,742 3,005

Note 11. Non-current liabilities - provisions

30 Jun 2014 31 Dec 2013$'000 $'000

Long service leave 1,100 843

Note 12. Equity - issued capital

30 Jun 2014 31 Dec 2013 30 Jun 2014 31 Dec 2013Shares Shares $'000 $'000

Ordinary shares - fully paid 167,602,364 89,493,305 161,192 74,295

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Note 12. Equity - issued capital (continued)

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Movements in ordinary share capital

Details Date No of shares Issue price $'000

Balance 31 December 2013 89,493,305 74,295 Rights Issue 23 April 2014 47,811,997 $1.120 53,549 Rights Issue 15 May 2014 19,308,064 $1.120 21,625 Issue of shares on acquisition of a group of child care businesses

13 June 2014 10,988,998 $1.270 13,956

Share issue transaction costs (net of tax) - (2,233)

Balance 30 June 2014 167,602,364 161,192

Share buy-back There is no current on-market share buy-back.

Note 13. Equity - dividends

There were no dividends paid, recommended or declared during the current or previous financial half-year.

Note 14. Contingent liabilities

The company has given bank guarantees as at 30 June 2014 as follows:

30 Jun 2014 31 Dec 2013$'000 $'000

Bank guarantees 6,000 3,900

As at 30 June 2014 $6,000,000 of the bank guarantee facility has been utilised (31 December 2013: $3,900,000) and $Nil was unused (31 December 2013: $2,100,000)

Note 15. Related party transactions

Parent entity Affinity Education Group Limited is the parent entity.

Transactions with related parties Stuart James Directors fees of $105,645 (2013: nil) have been paid or are payable to Glan Avon Investments Pty Ltd, an entity controlled by Stuart James. At 30 June 2014 $nil was payable by Affinity in relation to these services.

Recruitment fees of $14,237 (2013: nil) have been paid or are payable to Select Staff Solutions, an entity controlled by Stuart James’ son. At 30 June 2014 $nil was payable by Affinity in relation to these services.

Stephanie Daveson Directors fees of $79,299 (2013: nil) have been paid or are payable to Eyedee Pty Ltd as trustee for the McDav Family Trust, en entity controlled by Stephanie Daveson. At 30 June 2014 $10,542 was payable by Affinity in relation to these services.

Fees of $1,056,300 (2013: nil) have been paid or are payable for the provision of various legal services by Corrs Chambers Westgarth, a law firm of which Stephanie Daveson is a partner. At 30 June 2014 $828,171 was payable by Affinity in relation to these services.

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Note 15. Related party transactions (continued)

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Gabriel Giufre Childcare Centre Management fees of $13,200 (2013: nil) were paid or are payable by Riverstone Rise Early Learning Pty Ltd, an entity controlled by Gabriel Giufre. At 30 June 2014 $4,400 was owed to Affinity in relation to these services. Acquisition related service fees of $496,910 (2013: nil) were paid or are payable to Childcare Acquisition Services Pty Ltd, an entity associated with Gabriel Giufre’s spouse. At 30 June 2014 $139,700 was outstanding in relation to these services. Childcare management fees of $333,707 (2013: $55,744) were paid or are payable by owners of certain child care centres. The beneficial owners of these centres include trusts in which Gabriel Giufre, her spouse and their families have interests. As at 30 June 2014 $25,861 was owed to Affinity in relation to these services. Loans to/from related parties There were no loans to or from related parties at the current and previous reporting date.

Note 16. Business combinations Various business acquisitions Between 28 March and 27 June 2014, the company acquired various businesses for the total consideration transferred of $5,431,000. These are education businesses, comprising of 5 education centres, and were acquired to expand the education offering of the company. The goodwill of $5,374,000 represents the fair value of the acquisitions. The acquired businesses contributed revenues of $883,000 and a profit before tax of $78,000. Due to the nature of the acquisitions it is impracticable to disclose the revenue and profit or loss as if the acquisitions had occurred at the beginning of the period. The values identified in relation to the acquisition of the businesses are provisional as at 30 June 2014. Details of the acquisition are as follows: Fair value $'000 Prepayments 4 Other current assets 24 Plant and equipment 248 Deferred tax asset 69 Other payables (23)Employee benefits (190)Other provisions (75) Net assets acquired 57 Goodwill 5,374 Acquisition-date fair value of the total consideration transferred 5,431

Representing: Cash paid or payable to vendor 5,391 Deferred consideration 40 5,431

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Note 16. Business combinations (continued)

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Acquisition of a group of child care businesses On 13 June 2014, the company acquired a group of child care businesses comprising of 29 education centres. Total consideration transferred amounted to $49,976,000. These are education businesses and were acquired to expand the education offering of the company. The goodwill of $49,374,000 represents the fair value of the acquisitions. The acquired businesses contributed revenues of $1,435,000 and profit before tax of $248,000. Due to the nature of the acquisitions it is impracticable to disclose the revenue and profit or loss as if the acquisitions had occurred at the beginning of the period. The values identified in relation to the acquisition of the businesses are provisional as at 30 June 2014.

Details of the acquisition are as follows:

Fair value $'000

Prepayments 47 Other current assets 378 Plant and equipment 1,544 Deferred tax asset 412 Other payables (406)Employee benefits (953)Other provisions (420)

Net assets acquired 602 Goodwill 49,374

Acquisition-date fair value of the total consideration transferred 49,976

Representing: Cash paid or payable to vendor 35,810 Affinity Education Group Limited shares issued to vendor 13,956 Deferred consideration 210

49,976

Total acquisition costs expensed to profit or loss 7,796

Note 17. Events after the reporting period

Since 30 June 2014, the company has acquired 8 child care businesses for a total purchase price of $13,700,000.

No other matter or circumstance has arisen since 30 June 2014 that has significantly affected, or may significantly affect the company's operations, the results of those operations, or the company's state of affairs in future financial years.

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Note 18. Earnings per share



to 30 Jun 2013

$'000 $'000

Loss after income tax attributable to the owners of Affinity Education Group Limited (5,002) -

Number Number

Weighted average number of ordinary shares used in calculating basic earnings per share 113,826,502 1

Weighted average number of ordinary shares used in calculating diluted earnings per share 113,826,502 1

Cents Cents

Basic earnings per share (4.39) -Diluted earnings per share (4.39) -

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Affinity Education Group Limited Directors' declaration 30 June 2014

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In the directors' opinion:

● the attached financial statements and notes thereto comply with the Corporations Act 2001, Australian AccountingStandard AASB 134 'Interim Financial Reporting', the Corporations Regulations 2001 and other mandatory professionalreporting requirements;

● the attached financial statements and notes thereto give a true and fair view of the company's financial position as at 30June 2014 and of its performance for the financial half-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 dueand payable.

Signed in accordance with a resolution of directors made pursuant to section 303(5)(a) of the Corporations Act 2001.

On behalf of the directors

________________________________ Stuart James Chair

29 August 2014 Southport

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PricewaterhouseCoopers, ABN 52 780 433 757Riverside Centre, 123 Eagle Street, BRISBANE QLD 4000, GPO Box 150, BRISBANE QLD 4001T: +61 7 3257 5000, F: +61 7 3257 5999, www.pwc.com.au

Liability limited by a scheme approved under Professional Standards Legislation.

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Independent auditor’s review report to the members ofAffinity Education Group Limited

Report on the Half-Year Financial ReportWe have reviewed the accompanying half-year financial report of Affinity Education Group Limited(the Company), which comprises the statement of financial position as at 30 June 2014, the statementof profit or loss and other comprehensive income, statement of changes in equity and statement ofcash flows for the half-year ended on that date, selected explanatory notes and the directors'declaration.

Directors' responsibility for the half-year financial reportThe directors of the company are responsible for the preparation of the half-year financial report thatgives a true and fair view in accordance with Australian Accounting Standards (including theAustralian Accounting Interpretations) and the Corporations Act 2001 and for such internal control asthe directors determine is necessary to enable the preparation of the half-year financial report that isfree from material misstatement whether due to fraud or error.

Auditor’s responsibilityOur responsibility is to express a conclusion on the half-year financial report based on our review. Weconducted our review in accordance with Australian Auditing Standard on Review Engagements ASRE2410 Review of a Financial Report Performed by the Independent Auditor of the Entity, in order tostate whether, on the basis of the procedures described, we have become aware of any matter thatmakes us believe that the financial report is not in accordance with the Corporations Act 2001including: giving a true and fair view of the entity’s financial position as at 30 June 2014 and itsperformance for the half-year ended on that date; and complying with Accounting Standard AASB 134Interim Financial Reporting and the Corporations Regulations 2001. As the auditor of AffinityEducation Group Limited, ASRE 2410 requires that we comply with the ethical requirements relevantto the audit of the annual financial report.

A review of a half-year financial report consists of making enquiries, primarily of persons responsiblefor financial and accounting matters, and applying analytical and other review procedures. A review issubstantially less in scope than an audit conducted in accordance with Australian Auditing Standardsand consequently does not enable us to obtain assurance that we would become aware of all significantmatters that might be identified in an audit. Accordingly, we do not express an audit opinion.

IndependenceIn conducting our review, we have complied with the independence requirements of the CorporationsAct 2001.

ConclusionBased on our review, which is not an audit, we have not become aware of any matter that makes usbelieve that the half-year financial report of Affinity Education Group Limited is not in accordancewith the Corporations Act 2001 including:

a) giving a true and fair view of the entity’s financial position as at 30 June 2014 and of itsperformance for the half-year ended on that date;

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b) complying with Accounting Standard AASB 134 Interim Financial Reporting and the CorporationsRegulations 2001.

Matters relating to the electronic presentation of the reviewed financial reportThis review report relates to the financial report of the company for the half-year ended 30 June 2014included on Affinity Education Group Limited’s web site. The company’s directors are responsible forthe integrity of the Affinity Education Group Limited web site. We have not been engaged to report onthe integrity of this web site. The review report refers only to the statements named above. It does notprovide an opinion on any other information which may have been hyperlinked to/from thesestatements. If users of this report are concerned with the inherent risks arising from electronic datacommunications they are advised to refer to the hard copy of the reviewed financial report to confirmthe information included in the reviewed financial report presented on this web site.

PricewaterhouseCoopers

Debbie SmithBrisbane

Partner 29 August 2014

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for personal use only - asx · for personal use only. ... as part consideration for 29 of the 51 ch...

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