DATADOT TECHNOLOGY LIMITED — Annual Report 2013

Aug 28, 2013

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APPENDIX 4E

Consolidated Preliminary Financial Statements for the year ended 30 June 2013

Contents	Page
Appendix 4E ‐ Preliminary Financial Report	2
Executive Chairman's Review	3
Consolidated Preliminary Financial Statements	7

ABN : 54 091 908 726 Unit 9, 19 Rodborough Road Frenchs Forest NSW 2086 P : (02) 8977 4900 F : (02) 9975 4700 www.datadotdna.com

Appendix 4E 30 June 2013 - Page 1

DataDot Technolgy Limited

Appendix 4E Preliminary Financial Report

DataDot Technology Limited

ABN : 54 091 908 726

Reporting period Year ending 30 June 2013 Previous reporting period Year ending 30 June 2012

Results for announcement to the market	2013	2012	Change	Change
	$	$	$	%
Revenue	7,030,437	7,071,396	(40,959)	‐0.58%
Gross Margin	3,932,948	4,074,136	(141,188)	‐3.47%
Expenses	4,681,274	6,580,996	1,899,722	28.87%
EBITDA (and impairment)	366,027	(1,212,299)	1,578,326	130.19%
Loss from ordinary activities after tax attributable to members	(160,878)	(1,647,001)	1,486,123	90.23%
Net loss attributable to members	(160,878)	(1,647,001)	1,486,123	90.23%
Net tangible asset backing per ordinaryshare	0.0054	0.0068	(0.0014)	‐20.48%

Dividends

No dividends were paid or made payable during the year ended or since 30 June 2013.

Commentary

Please refer to the attached commentary and consolidated preliminary financial statements for the year ended 30 June 2013

Other information

2013 2012

Control gained over entities having a material effect N/A Loss of control over entities having a material effect N/A Dividend or distribution reinvestment plans N/A Details of associates and joint venture entities Please refer to the attached preliminary controlled entities and joint ventures note in the financial statements for the year ended 30 June 2013.

Audit status

This report is based on financial statements that are in the process of being audited.

Attachments

Additional disclosure requirements can be found in the notes to the attached consolidated preliminary financial statements.

Signed By

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Bruce Rathie ‐ Executive Chairman

28‐Aug‐13

Appendix 4E 30 June 2013 - Page 2

DataDot Technolgy Limited

Executive Chairman’s Review

Overview of 2013 – Material Turnaround in Profitability

2013 was characterised by restructuring, cost reduction and strategic refocus. The company is pleased to report that these initiatives have proved successful with much improved bottom line performance. Revenue of $7,030,437 was similar to the prior year ($7,071,396) but earnings before interest, tax, depreciation, amortisation and impairment (EBITDA) were materially higher, coming in as a positive $366,027 against a loss of $1,212,299 in 2012 and representing a $1,578,326 turn around year on year. The net loss after tax (attributable to members) has also been materially reduced by $1,486,123, from a loss of $1,647,001 in 2012 to a loss of $160,878 in 2013. This turnaround in profitability highlights the fundamentally different approach the company has taken towards cost control and the magnitude of these efforts.

We are delighted with the strong performance of DataDot UK, which increased revenue by $504,918 to $2,126,587 and to a positive EBITDA of $62,271 in 2013 from an EBITDA loss of $186,492 in the prior year. This was predominantly due to the economic turnaround in Europe, which is slowly building momentum, and in particular to sales in the Italian market where DataDotDNA is applied to most Fiat passenger vehicles that are financed by Fiat. Over 500,000 kits have been sold into the Italian market since that program was initiated, which is a great credit to our Italian distributor.

DataDot USA achieved stronger revenue in 2013, increasing by $196,368 over 2012, but has carried the set‐up and start‐up costs of our new product and initiatives in the US, referred to below, with EBITDA falling to a loss of $42,548 in 2013 against a positive EBITDA of $93,639 in 2012.

DataDot Australasia suffered a reduction in revenue and some margin loss but still materially reduced its EBITDA loss in 2013 to $274,676 from a loss of $542,466 in 2012, with most of the cost saving initiatives having been implemented in Australia during the year.

DataTraceDNA also had a much improved year with EBITDA rising from a $710,955 loss in 2012 to a positive adjusted EBITDA of $304,781 in 2013 (adjusted after taking a loan revaluation into account).

DataDot South Africa continues to grow strongly in the whole of vehicle marking segment in South Africa with royalty income of $554,115 in 2013 as against $375,388 in the prior year.

Despite the strict control over costs in 2013, the company invested in growth opportunities including the CopDots program and the National Metal Register in the US through its 50% owned joint venture DataDot Security Solutions Inc, the launch of the National Equipment Register and the National Marine Register and other initiatives such as the Theft Deterrent Warranty product in Australia. These investments and costs were met out of existing company resources. Cash as at 30 June 2013 was $897,398.

The prognosis for these businesses is discussed later in this anouncement.

Appendix 4E 30 June 2013 - Page 3

DataDot Technolgy Limited

Strategy

The company has two major products ‐ DataDotDNA, the micro dot product used in asset identification as a theft deterrent and DataTraceDNA, the taggant detectable in small concentrations by a smart reader and used in asset authentication.

Traditionally, DataDotDNA has been sold largely into the auto space where the company has been very successful, particularly in Italy and South Africa. Our strategy is to extend DataDotDNA sales into both the industrial and consumer spaces by harnessing the benefits of product bundling in building B2B sales and leveraging the marketing benefits of law enforcement support and established retail distribution in building B2C. In markets requiring solutions for industrial scale theft and product substitution, the theft deterrent properties of DataDotDNA combined with the authentication properties of DataTraceDNA and the data storage and retrieval capabilities linked to both these products, offers a more powerful value proposition than either product by itself. Products are bundled into industry‐specific packages, including registers or databases to where information related the asset, its owner and other data can be stored and accessed by law enforcement. In Australia, we have launched the National Equipment Register and National Marine Register, with the National Metal Register a work in progress. In the US, the National Metals Register is set for formal release in September 2013 with our partner Verisk Analytics Inc, a large NASDAQ listed company with access to insurers and law enforcement. In the consumer market we have also launched the exciting CopDots product in the US, which I discuss further in the Outlook section below. This product’s extensive engagement of law enforcement agencies supports all our product offerings in the US. We also propose to roll these programs out in the UK during 2014.

DataTraceDNA continues to be focussed on brand protection for global companies together with industrial applications where counterfeiting is a problem. This product continues to gain traction due to its robust nature and improving economic outlooks in the US and Europe. Its pipeline is building strongly.

We also continue with product development with in‐house metal dot manufacture now in production at our Spokane facility. We are adding electronic products to our product range as well as developing our existing product capability. We look to stay at the leading edge of what is available in the market.

Management

The management team in the company has been completely revamped over the last two years. In Australia, the current Head of Business Development International for DataDotDNA joined the company in April 2012 and the current Director Business Development Australia for DataDotDNA joined the company in July 2012. These talented business executives are making a very strong contribution to the turn‐around in the company’s performance.

The current Director of the DataTraceDNA business has been in place for over 2 years and has the technical and business development skill to aggressively grow that business going forward.

Our new Chief Financial Officer joined the company in April 2013 and has been a critical hire bringing financial expertise and experience the company has not had the benefit of in the past.

Appendix 4E 30 June 2013 - Page 4

DataDot Technolgy Limited

The Managing Director of DataDot UK took up the role two years ago and has demonstrated great capability growing the UK operations to an even stronger profit this year. The head of our US operations has been integral in bringing on new products for that and European markets, including the new CopDots pen and Thor laser‐etched metal dots. These products together with our traditional DataDotDNA product are manufactured in our factory in Spokane, Washington State.

As you can see from the above, this is a fresh, new and vigorous team to take the company into the future.

I have agreed with the Board that I will remain as Executive Chairman for the foreseeable future to bed down the new team and the revamped strategy.

Press Commentary

Shareholders will be aware of the Fairfax press articles back in April this year making allegations about our DataTraceDNA technology and our dealing with a major European pharmaceutical company. We reiterate the comments made in the ASX release of 15 April 2013 in which we stated that the products supplied to the European Pharmaceutical Company were appropriate for their intended application and categorically deny the allegations made.

We also now have available spectral and chemical analysis from a reputable and independent laboratory confirming that product supplied to our client was not material bought off the shelf from China, rebranded and on‐sold as a security product to our client as alleged.

DataTrace DNA has not lost a customer in the period following publication of the Fairfax press articles in April, nor has it received any demands from any customer.

We stand behind the DataTraceDNA technology as a world‐class technology.

Possible Capital Consolidation

The company was originally floated on the ASX in 2005 and has generally underperformed against its promise generally for reasons other than the business fundamentals. Since becoming Chairman, I have moved to address a number of legacy issues within the company. Management has been changed, the company restructured and governance tightened under the guidance of a vigilant Board. When these initiatives have been properly bedded down, it is likely during the course of the 2014 financial year that the Board may take the decision to consolidate the capital of the company to better reflect its market position.

Outlook for 2014

Having achieved material cost reductions and made investments in new opportunities during 2013, the company expects 2014 to be a year when the green shoots of growth emerge. During the course of 2013, the company invested in a number of growth initiatives as follows:

• 1 building relationships with Allianz Insurance Australia and its Club Marine brand;

• 2 growing relationships with law enforcement;

• 3 launching the National Equipment Register in Australia;

Appendix 4E 30 June 2013 - Page 5

DataDot Technolgy Limited

• 4 launching the National Marine Register in Australia;

• 5 launching the CopDot program in the US ‐ search “CopDots” on Google to see the very strong support of that product by law enforcement. CopDots are currently sold through about 120 Lowes Home Improvement stores in the US with 300 (accumulative total) of the 1750 stores in the US targeted for the end of September and over 800 by calendar year end. We are also looking at the potential of other channels to market in the US for this product, possibly with a warranty attached;

• 6 preparing for formal release of the National Metals Register in the US with Verisk Analytics Inc. as our partner in September 2013;

• 7 preparing for launch of the National Metals Register in the UK in 2014;

• 8 signing a 3 year supply contract with Subaru Australia;

• 9 already supplying DataTraceDNA to a major wine company in China which is rolling it out through multiple factories;

• 10 signed a 3 year contract with a Turkish cable company for supply of DataTraceDNA;

• 11 discussing with major car manufacturers the use of DataTraceDNA for parts marking, to protect against counterfeit and grey market parts. This would further diversify our activities into the very large spare parts segment of the auto industry;

• 12 continued investment in R&D in core products.

These are just some of many initiatives we expect to turn into revenue growth during the course of the 2014 year, building on the foundations put in place during 2013. Further, with 49% of revenues coming from Europe and the US, the depreciation of the Australian dollar is a welcome boost to parent company earnings that is expected to contribute positively to growth in 2014.

Given all of the above factors, we expect to see growth in revenues during 2014.

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Bruce Rathie Executive Chairman 28 August 2013

Appendix 4E 30 June 2013 - Page 6

DataDot Technolgy Limited

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ABN : 54 091 908 726 Unit 9, 19 Rodborough Road Frenchs Forest NSW 2086 P : (02) 8977 4900 F : (02) 9975 4700 www.datadotdna.com

Consolidated Preliminary Financial Statements for the year ended 30 June 2013

Contents	Page
Consolidated Statement of Profit or Loss	8
Consolidated Statement of Comprehensive Income	9
Consolidated Statement of Financial Position	10
Consolidated Statement of Changes in Equity	11
Consolidated Statement of Cash Flows	12
Notes to the Financial Statements	13

Appendix 4E 30 June 2013 - Page 7

DataDot Technolgy Limited

Consolidated Statement of Profit or Loss

for the year ended 30 June 2013

Notes Revenue Sale of goods Service and licence fees Royalties Cost of sales Gross Profit Other income 2 Expenses Employee benefits expenses Administrative expenses Marketing expenses Occupancy expenses Travel expenses Finance costs 3 Depreciation, amortisation and disposal expenses 3 Bad and doubtful debts 9 Other expenses :‐ Restructuring expense Impairment losses 13 Loss before income tax Income tax expense 4 Loss for the year Loss for the year attributable to :‐ Members of the parent entity Non controlling interest Basic earnings / (loss) per share (cents per share) 7 Diluted earnings / (loss) per share (cents per share) 7	2013 2012 $ Restated $ 6,178,922 6,422,751 297,400 273,257 554,115 375,388
	7,030,437 7,071,396 3,097,489 2,997,260
	3,932,948 4,074,136
	640,399 592,284
	1,786,179 3,118,903 1,106,686 1,240,799 506,706 240,097 394,534 382,862 317,433 307,189 48,449 49,877 435,761 529,794 85,526 201,475
	4,681,274 6,070,996 0 315,297 0 194,703
	0 510,000 (107,927) (1,914,576)
	58,894 (5,663)
	(166,821) (1,908,913)
	(160,878) (1,647,001) (5,943) (261,912)
	(166,821) (1,908,913)
	(0.03) (0.40)
	(0.03) (0.40)

The above consolidated statement of profit or loss should be read in conjunction with the accompanying notes.

Appendix 4E 30 June 2013 - Page 8

DataDot Technolgy Limited

Consolidated Statement of Comprehensive Income	for the year	ended 30	June 2013
	Notes	2013	2012
		$	Restated $
Loss for the year		(166,821)	(1,908,913)
Other comprehensive income :‐
Items that will not be classified subsequently to profit or loss :‐
Exchange difference on translation of foreign operations		16,311	(61,155)
Total comprehensive income for the year net of tax		(150,510)	(1,970,068)
Total comprehensive income attributable to :‐
Members of the parent entity		(144,567)	(1,708,156)
Non controlling interest		(5,943)	(261,912)
		(150,510)	(1,970,068)

The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.

Appendix 4E 30 June 2013 - Page 9

DataDot Technolgy Limited

Consolidated Statement of Financial Position

Consolidated Statement of Financial Position Notes Current Assets Cash and cash equivalents 8 Trade and other receivables 9 Inventories 10 Grant receivable 11 Current tax assets 4 Total Current Assets Non‑Current Assets Plant and equipment 12 Intangible assets 13 Deferred tax assets 4 Total Non‑Current Assets Total Assets Current Liabilities Trade and other payables 14 Borrowings 15 Income tax payable 4 Provisions 16 Other current liabilities 17 Total Current Liabilities Non‑Current Liabilities Borrowings 15 Provisions 16 Total Non‑Current Liabilities Total Liabilities Net Assets Equity Contributed equity 18 Accumulated losses Reserves 19 Parent interests Non‑controlling interests Total Equity	as at 30 June 2013 2013 2012 $ Restated $ 897,398 1,409,367 1,247,698 1,333,620 1,136,582 1,417,371 308,000 508,687 4,036 58,701
	3,593,714 4,727,746
	905,962 794,399 3,294,967 2,961,847 0 0
	4,200,929 3,756,246
	7,794,643 8,483,992
	994,818 1,061,915 437,664 748,904 11,494 20,148 365,898 455,573 31,362 0
	1,841,236 2,286,540
	52,806 0 2,526 4,407
	55,332 4,407
	1,896,568 2,290,947
	5,898,075 6,193,045
	33,376,382 33,102,482 (25,161,212) (25,068,191) (2,317,105) (1,795,099)
	5,898,065 6,239,192 0 (46,149)
	5,898,065 6,193,043

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

Appendix 4E 30 June 2013 - Page 10

DataDot Technolgy Limited

Consolidated Statement of Changes in Equity

for the year ended 30 June 2013

Balance at 1 July 2011 Balance at 30 June 2012 Other comprehensive income for the year, net of tax Acquisition of non‐controlling interest in AgTechnix Pty Limited Loss after income tax expense for the year Other comprehensive income Prior period adjustment (Note 29) Balance at 1 July 2011 restated Loss after income tax expense for the year restated Total comprehensive income for the year Share based payments restated Transactions with owners in their capacity as owners :‐ Share based payments Share rights vested Share rights expired Balance at 30 June 2013 for the year, net of tax Acquisition of non‐controlling interest in DataDot Technology (UK) Limited Transactions with owners in their capacity as owners :‐ Total comprehensive income for the year	Attributable to equity holders of theparent
	33,102,482 (25,857,705) 540,360 148,856 0 (93,661) 7,840,332 0 2,436,515 (2,380,148) (56,367) 0 0 0
	33,102,482 (23,421,190) (1,839,788) 92,489 0 (93,661) 7,840,332 0 (1,647,001) 0 45,469 0 (261,912) (1,863,444) 0 0 (61,155) 0 0 0 (61,155)
	0 (1,647,001) (61,155) 45,469 0 (261,912) (1,924,599) 0 0 0 277,310 0 0 277,310 0 0 0 0 (309,424) 309,424 0
	33,102,482 (25,068,191) (1,900,943) 415,268 (309,424) (46,149) 6,193,043 0 (160,878) 0 0 0 (5,943) (166,821) 0 16,311 0 0 0 16,311
	0 (160,878) 16,311 0 0 (5,943) (150,510) 0 0 0 172,639 0 0 172,639 273,900 0 0 (273,900) 0 0 0 0 67,857 0 (67,857) 0 0 0 0 0 0 0 (369,199) 52,092 (317,107)
	33,376,382 (25,161,212) (1,884,632) 246,150 (678,623) 0 5,898,065

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

Appendix 4E 30 June 2013 - Page 11

DataDot Technolgy Limited

Consolidated Statement Cash Flows

for the year ended 30 June 2013

Notes Cash from operating activities Receipts from customers (inclusive of GST) Payments to suppliers and employees (inclusive of GST) Interest paid Income tax paid Receipt of government grant Net cash flows from / (used in) operating activities 8 Cash flows from investing activities Interest received Purchase of plant and equipment Payment for development and other intangible assets Net cash flows used in investing activities Cash flows from financing activities Payment for acquisition of minority interest Proceeds from borrowings Repayment of borrowings Payment of finance lease liabilities Net cash flows from / (used in) financing activities Net decreases in cash and cash equivalents Cash and cash equivalents at beginning of year Effect of exchange rate on cash holdings in foreign currencies Cash and cash equivalents at end of year 8	2013 2012 $ Restated $ 7,772,462 7,135,984 (7,585,936) (8,593,470) (48,449) (13,789) (12,883) (124,920) 508,687 11,500
	633,881 (1,584,695)
	10,256 72,097 (272,771) (148,193) (609,930) (593,824)
	(872,445) (669,920)
	(156,994) 0 0 195,000 (54,914) (48,247) (65,463) 0
	(277,371) 146,753
	(515,935) (2,107,862) 1,409,367 3,528,593 (28,909) (11,364)
	864,523 1,409,367

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

Appendix 4E 30 June 2013 - Page 12

DataDot Technolgy Limited

Notes to the Financial Statements

for the year ended 30 June 2013

1 Summary of significant accounting policies

DataDot Technology Limited is a listed public company limited by shares, incorporated and domiciled in Australia.

(a) Basis of preparation

These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and

interpretations issued by the Australian Accounting Standards Board ('AASB') and the Corporations Act 2001 as appropriate for for‐ profit oriented entities.

These financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board ('IASB').

The principal accounting policies adopted in the preparation of the financial statements are presented below and have been consistently applied to all years presented, unless otherwise stated.

The financial statements have been prepared under the historical cost convention, except for, where applicable, the revaluation of available for sale financial assets, financial assets at fair value through profit or loss, certain classes or property, plant and equipment and derivative financial instruments.

(b) Comparative figures

When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year.

(c) Basis of consolidation

The consolidated financial statements comprise the financial statements of DataDot Technology Limited and its subsidiaries (hereafter referred to as 'DataDot' and 'the Group') (as outlined in note 23) as at and for the period ended 30 June each year. Interests in associates and joint ventures are equity accounted and are not part of the Consolidated Group (see note (i+B390)

Subsidiaries are all those entities over which DataDot has the power to govern the financial and operating policies so as to obtain benefits from their activities. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether DataDot controls another entity.

The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. In preparing the consolidated financial statements, all intercompany balances and transactions, income and expenses and profit and losses resulting from intra ‑ group transactions have been eliminated in full.

Subsidiaries are fully consolidated from the date on which control is obtained by DataDot and cease to be consolidated from the date on which control is transferred out of DataDot.

Investments in subsidiaries held by DataDot Technology Limited are accounted for at cost in the separate financial statements of the parent entity less any impairment charges.

Non ‑ controlling interests are allocated their share of net profit after tax in the statement of profit or loss and are presented within equity in the consolidated statement of financial position, separately from the equity of the owners of the parent.

Losses are attributed to the non ‑ controlling interest even if that results in a deficit balance.

The group treats transactions with non‐controlling interests that do not result in a loss of control as transactions with equity owners of the group. A change in ownership interest results in an adjustment between the carrying amounts of the controlling interest and non‐controlling interests to reflect their relative interests in the subsidiary. Any difference between the amount of the adjustment to non‐controlling interests and the consideration paid or received is recognised as a separate reserve within equity attributable to owners of DataDot Technology Limited.

Appendix 4E 30 June 2013 - Page 13

DataDot Technolgy Limited

Notes to the Financial Statements

for the year ended 30 June 2013

1 Summary of significant accounting policies (continued)

(c) Basis of consolidation (continued)

If DataDot loses control over a subsidiary, it

• Derecognises the assets (including goodwill) and liabilities of the subsidiary.

• ‑

• Derecognises the carrying amount of any non controlling interest.

• Derecognises the cumulative translation differences, recorded in equity.

• Recognises the fair value of the consideration received.

• Recognises the fair value of any investment retained.

• Recognises any surplus or deficit in profit or loss.

• Reclassifies the parent’s share of components previously recognised in other comprehensive income to profit or loss.

• (d) Foreign currency translation

Functional and presentation currency

Both the functional and presentation currency of DataDot Technology Limited and its Australian subsidiaries is Australian dollars ($). Each entity in DataDot determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency.

The functional currencies of the overseas subsidiaries are:

Name of overseas subsidiaries Functional currency DataDot Technology USA Inc United States Dollar (US$) DataDot Technology (UK) Ltd Great Britain Pound (£)

Transactions and balances

Transactions in foreign currencies are initially recorded in the functional currency by applying the exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at balance date.

Non ‑ monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the date of the initial transaction. Non ‑ monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

Translation of Group Companies functional currency to presentation currency

The results of the overseas subsidiaries are translated into Australian dollars (presentation currency) as at the date of each transaction. Assets and liabilities are translated at exchange rates prevailing at reporting date.

As at the reporting date the assets and liabilities of these subsidiaries are translated into the presentation currency of DataDot Technology Limited at the rate of exchange ruling at the statement of financial position date and their statements of comprehensive income are translated at the average exchange rate for the year.

Exchange variations resulting from the translation are recognised in the foreign currency translation reserve in equity. These variations are recognised in the statement of comprehensive income in the period.

Appendix 4E 30 June 2013 - Page 14

DataDot Technolgy Limited

Notes to the Financial Statements

for the year ended 30 June 2013

1 Summary of significant accounting policies (continued)

(e) Cash and cash equivalents

Cash and cash equivalents in the statement of financial position comprise cash at bank and in hand and short ‑ term deposits with an original maturity of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. For the purposes of the statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts. Bank overdrafts are included within interest ‑ bearing loans and borrowings in current liabilities on the statement of financial position.

(f) Trade and other receivables

Trade receivables, which generally have 30 ‑ 60 day terms, are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less an allowance for impairment.

Collectability of trade receivables is reviewed on an ongoing basis at an operating unit level. Individual debts that are known to be uncollectible are written off when identified. An impairment provision is recognised when there is objective evidence that DataDot will not be able to collect the receivable. Financial difficulties of the debtor, default payments or debts more than 60 days overdue are considered objective evidence of impairment. The amount of the impairment loss is the receivable carrying amount compared to the present value of estimated future cash flows, discounted at the original effective interest rate.

(g) Inventories

Inventories including raw materials, work in progress and finished goods are valued at the lower of cost and net realisable value

Costs incurred in bringing each product to its present location and condition are accounted for as follows :‐

Raw materials – purchase cost on either the weighted average cost or on first ‑ in, first ‑ out basis; and

Finished goods and work ‑ in ‑ progress – cost of direct materials and labour and a proportion of variable and fixed manufacturing overheads based on normal operating capacity. Costs are assigned on the basis of weighted average costs.

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

• (h) Investments and other financial assets

Investments and financial assets in the scope of AASB 139 Financial Instruments: Recognition and Measurement are categorised as either financial assets at fair value through profit or loss, loans and receivables, held ‑ to ‑ maturity investments, or available ‑ for ‑ sale financial assets. The classification depends on the purpose for which the investments were acquired or originated. Designation is re ‑ evaluated at each financial year end, but there are restrictions on reclassifying to other categories.

When financial assets are recognised initially, they are measured at fair value, plus, in the case of assets not at fair value through profit or loss, directly attributable transactions costs.

Recognition and derecognition

All regular purchases and sales of financial assets are recognised on the trade date i.e. the date that DataDot commits to purchase the asset. Regular purchases or sales are purchases or sales of financial assets under contracts that require delivery of the assets within the period established generally by regulation or convention in the marketplace. Financial assets are derecognised when the right to receive cash flows from the financial assets has expired or when the entity transfers substantially all the risks and rewards of the financial assets. If the entity neither retains nor transfers substantially all of the risks and rewards, it derecognises the asset if it has transferred control of the assets.

Appendix 4E 30 June 2013 - Page 15

DataDot Technolgy Limited

Notes to the Financial Statements

for the year ended 30 June 2013

1 Summary of significant accounting policies (continued)

(h) Investments and other financial assets (continued)

Subsequent measurement

(i) Financial assets at fair value through profit or loss

Financial assets classified as held for trading are included in the category ‘financial assets at fair value through profit or loss.

Financial assets are classified as held for trading if they are acquired for the purpose of selling in the near term with the intention of making a profit. Derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Gains or losses on financial assets held for trading are recognised in profit or loss and the related assets are classified as current assets in the statement of financial position.

(ii) Loans and receivables

Loans and receivables including loans to key management personnel are non ‑ derivative financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are carried at amortised cost using the effective interest method. Gains and losses are recognised in the statement of comprehensive income when the loans and receivables are derecognised or impaired. These are included in current assets, except those with maturities greater than 12 months after reporting date, which are classified as non ‑ current.

(i) Interest in a jointly controlled entity

DataDot has or had an interest in a joint venture that is a jointly controlled entity. A joint venture is a contractual arrangement whereby two or more parties undertake an economic activity that is subject to joint control. A jointly controlled entity involves the establishment of a separate entity.

DataDot’s investment in its jointly controlled entity is accounted for under the equity method of accounting in the consolidated financial statements. The financial statements of the joint venture are used by DataDot to apply the equity method. The reporting dates of the joint venture and DataDot are identical and both use consistent accounting policies.

The investment in the joint venture is carried in the consolidated statement of financial position at cost plus post ‑ acquisition changes in DataDot’s share of net assets of the joint venture, less any impairment in value. The consolidated statement of comprehensive income reflects DataDot’s share of the results of operations of the joint venture.

Where there has been a change recognised directly in the joint venture equity, DataDot recognises its share of any changes and discloses this, when applicable, in the consolidated statement of changes in equity.

(j) Plant and equipment

Plant and equipment is stated at historical cost less accumulated depreciation and any accumulated impairment losses. Such cost includes the cost of replacing parts that are eligible for capitalisation when the cost of replacing the parts is incurred. Similarly, when each major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement only if it is eligible for capitalisation. All other repairs and maintenance are recognised in profit or loss as incurred.

Depreciation is calculated over the useful life of the asset using a combination of straight ‑ line basis and diminishing value method. The estimated useful lives of the plant and equipment are over 4 to 10 years.

The assets' residual values, useful lives and amortisation methods are reviewed, and adjusted if appropriate, at each financial year end.

Derecognition

An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal.

Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the year the asset is derecognised.

Appendix 4E 30 June 2013 - Page 16

DataDot Technolgy Limited

Notes to the Financial Statements

for the year ended 30 June 2013

1 Summary of significant accounting policies (continued)

(k) Leases

The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset.

Group as a lessee

Finance leases, which transfer to DataDot substantially all the risks and benefits incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised as an expense in profit or loss.

Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset and the lease term if there is no reasonable certainty that DataDot will obtain ownership by the end of the lease term.

Operating lease payments are recognised as an expense in the statement of comprehensive income on a straight ‑ line basis over the lease term. Operating lease incentives are recognised as a liability when received and subsequently reduced by allocating lease payments between rental expense and reduction of the liability.

(l) Impairment of financial assets

DataDot assesses at each balance date whether a financial asset or group of financial assets is impaired.

(i) Financial assets carried at amortised cost

If there is objective evidence that an impairment loss on loans and receivables carried at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate (i.e. the effective interest rate computed at initial recognition). The carrying amount of the asset is reduced either directly or through use of an allowance account. The amount of the loss is recognised in profit or loss.

DataDot first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, and individually or collectively for financial assets that are not individually significant. If it is determined that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, the asset is included in a group of financial assets with similar credit risk characteristics and that group of financial assets is collectively assessed for impairment. Assets that are individually assessed for impairment and for which an impairment loss is or continues to be recognised are not included in a collective assessment of impairment.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed. Any subsequent reversal of an impairment loss is recognised in profit or loss, to the extent that the carrying value of the asset does not exceed its amortised cost at the reversal date.

(ii) Financial assets carried at cost

If there is objective evidence that an impairment loss has been incurred on an unquoted equity instrument that is not carried at fair value (because its fair value cannot be reliably measured), or on a derivative asset that is linked to and must be settled by delivery of such an unquoted equity instrument, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the current market rate of return for a similar financial asset.

Appendix 4E 30 June 2013 - Page 17

DataDot Technolgy Limited

Notes to the Financial Statements

for the year ended 30 June 2013

1 Summary of significant accounting policies (continued)

(m) Impairment of non ‑ financial assets other than intangibles

Non ‑ financial assets other than intangibles are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

DataDot conducts an annual internal review of asset values, which is used as a source of information to assess for any indicators of impairment. External factors, such as changes in expected future processes, technology and economic conditions, are also monitored to assess for indicators of impairment. If any indication of impairment exists, an estimate of the asset's recoverable amount is calculated.

An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. Recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows that are largely independent of the cash inflows from other assets or groups of assets (cash ‑ generating units). Non ‑ financial assets other than goodwill that suffered an impairment are tested for possible reversal of the impairment whenever events or changes in circumstances indicate that the impairment may have reversed.

• (n) Goodwill and intangibles

Intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment or more frequently if events or changes in circumstances indicate that they might be impaired.

Intangible assets acquired separately are initially measured at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses. Internally generated intangible assets, excluding capitalised development costs, are not capitalised and expenditure is recognised in profit or loss in the year in which the expenditure is incurred.

The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives are amortised over the useful 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 is reviewed at least at each financial year ‑ end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for prospectively by changing the amortisation period or method as appropriate, which is a change in accounting estimate. The amortisation expense on intangible assets with finite lives is recognised in profit or loss in the expense category consistent with the function of the intangible asset.

Intangible assets with indefinite useful lives are tested for impairment annually either individually or at the cash ‑ generating unit level. Such intangibles are not amortised. The useful life of an intangible asset with an indefinite life is reviewed each reporting period to determine whether indefinite life assessment continues to be supportable. If not, the change in the useful life assessment from indefinite to finite is accounted for as a change in an accounting estimate and is thus accounted for on a prospective basis.

Goodwill

Where an entity or operation is acquired in a business combination, the identifiable net assets acquired are measured at fair value. The excess of the fair value of the cost of the acquisition over the fair value of the identifiable net assets acquired is brought to account as goodwill. Goodwill is not amortised. Instead, goodwill is tested annually for impairment, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Impairment losses on goodwill are taken to profit or loss and are not subsequently reversed.

Appendix 4E 30 June 2013 - Page 18

DataDot Technolgy Limited

for the year ended 30 June 2013

Notes to the Financial Statements

1 Summary of significant accounting policies (continued)

(n) Goodwill and intangibles (continued)

Research and development costs

Research costs are expensed as incurred. An intangible asset arising from development expenditure on an internal project is recognised only when DataDot can demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or sale, its intention to complete and its ability to use or sell the asset, how the asset will generate future economic benefits, the availability of resources to complete the development and the ability to measure reliably the expenditure attributable to the intangible asset during its development. Following the initial recognition of the development expenditure, the cost model is applied requiring the asset to be carried at cost less any accumulated amortisation and accumulated impairment losses. Any expenditure so capitalised is amortised over the period of expected benefits from the related project.

The carrying value of an intangible asset arising from development expenditure is tested for impairment annually when the asset is not yet available for use, or more frequently when an indication of impairment arises during the reporting period.

A summary of the policies applied to DataDot's intangible assets is as follows:

Development costs:‐ Useful lives Finite Amortisation method used Amortised for a period of 5‐10 years on a straight ‑ line basis. Internally generated or acquired Internally generated Impairment testing Annually for assets not yet available for use and more frequently when an indication of impairment exists. The amortisation method is reviewed at each financial year ‑ end.

Patent costs :‐ Useful lives Finite Amortisation method used Amortised for a period of 10 years on a straight ‑ line basis. Internally generated or acquired Acquired Impairment testing Annually for assets not yet available for use and more frequently when an indication of impairment exists. The amortisation method is reviewed at each financial year ‑ end.

The patents have been granted for a minimum of 10 years.

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in profit or loss when the asset is derecognised.

(o) Trade and other payables

Trade and other payables are carried at amortised cost and due to their short term nature are not discounted. They represent liabilities for goods and services provided to DataDot prior to the end of the financial year that are unpaid and arise when DataDot becomes obliged to make future payments in respect of the purchase of these goods and services. The amounts are unsecured and are usually paid within 30 days of recognition.

Appendix 4E 30 June 2013 - Page 19

DataDot Technolgy Limited

Notes to the Financial Statements

for the year ended 30 June 2013

1 Summary of significant accounting policies (continued)

(p) Borrowings

All borrowings are initially recognised at the fair value of the consideration received less directly attributable transaction costs.

After initial recognition, borrowings are subsequently measured at amortised cost using the effective interest method. Fees paid on the establishment of loan facilities that are yield related are included as part of the carrying amount of the loans and borrowings.

Borrowings are classified as current liabilities unless DataDot has an unconditional right to defer settlement of the liability for at least 12 months after the statement of financial position date.

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset (i.e. an asset that necessarily takes a substantial period of time to get ready for its intended use or sale) are capitalised as part of the cost of that asset. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. DataDot Technology Limited does not currently hold qualifying assets but, if it did, the borrowing costs directly associated with this asset would be capitalised (including any other associated costs directly attributable to the borrowing and temporary investment income earned on the borrowings).

(q) Provisions and employee benefits

Provisions are recognised when DataDot has a present obligation (legal or constructive) when, 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.

Provisions are measured at the present value of management's best estimate of the expenditure required to settle the present obligation at the statement of financial position date using a discounted cash flow methodology. The risks specific to the provision are factored into the cash flows and as such a risk ‑ free government bond rate relative to the expected life of the provision is used as a discount rate. If the effect of the time value of money is material, provisions are discounted using a current pre ‑ tax rate that reflects the time value of money and the risks specific to the liability. The increase in the provision resulting from the passage of time is recognised in finance costs.

Employee benefits

(i) Wages, salaries and annual leave

Liabilities for wages and salaries, including non ‑ monetary benefits and annual leave expected to be settled within 12 months of the reporting date are recognised in provisions in respect of employees’ service up to the reporting date. They are measured at the amounts expected to be paid when the liabilities are settled.

(ii) Long service leave

The liability for long service leave is recognised and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures, and periods of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currencies that match, as closely as possible, the estimated future cash outflows.

Appendix 4E 30 June 2013 - Page 20

DataDot Technolgy Limited

Notes to the Financial Statements

for the year ended 30 June 2013

1 Summary of significant accounting policies (continued)

(r ) Share based payment transactions

Equity settled transactions:

DataDot provides benefits to its employees (including KMP) in the form of share ‑ based payments, whereby employees render services in exchange for rights over shares (equity ‑ settled transactions).

The Executive Share Rights Plan (ESRP) provides benefits to senior executives of DataDot.

The cost of these equity ‑ settled transactions with employees is measured by reference to the fair value of the equity instruments at the date at which they are granted.

The cost of equity ‑ settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled (the vesting period), ending on the date on which the relevant employees become fully entitled to the award (the vesting date).

At each subsequent reporting date until vesting, the cumulative charge to the statement of comprehensive income is the product of: (i) The grant date fair value of the award.

• (ii) The current best estimate of the number of awards that will vest, taking into account such factors as the likelihood of employee turnover during the vesting period and the likelihood of non ‑ market performance conditions being met.

• (iii) The expired portion of the vesting period.

The charge to the statement of profit or loss for the period is the cumulative amount as calculated above less the amounts already charged in previous periods. There is a corresponding entry to equity.

Until an award has vested, any amounts recorded are contingent and will be adjusted if fewer awards vest than were originally anticipated. Any award subject to a market condition is considered to vest irrespective of whether or not that market condition is fulfilled, provided that all other conditions are satisfied.

If the terms of an equity ‑ settled award are modified, as a minimum an expense is recognised as if the terms had not been modified. An additional expense is recognised for any modification that increases the total fair value of the share ‑ based payment arrangement, or is otherwise beneficial to the employee, as measured at the date of modification.

If an equity ‑ settled award is cancelled, it is treated as if it had expired on the date of cancellation. However, if a new award is substituted for the cancelled award and designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award, as described in the previous paragraph.

The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share (see note 7).

• (s) Contributed equity

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

Appendix 4E 30 June 2013 - Page 21

DataDot Technolgy Limited

for the year ended 30 June 2013

Notes to the Financial Statements

1 Summary of significant accounting policies (continued)

(t) Revenue recognition

Revenue is recognised and measured at the fair value of the consideration received or receivable to the extent that it is probable that the economic benefits will flow to DataDot and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised:

(i) Sale of goods

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer and the costs incurred or to be incurred in respect of the transaction can be measured reliably. Risks and rewards of ownership are considered passed to the buyer at the time of delivery of the goods to the customer.

(ii) Rendering of services

Revenue from the rendering of a service is recognised upon the delivery of the service to the customers.

(iii) Royalties

Revenue is recognised when the underlying goods are sold. Fixed rate manufacturing royalties are recognised over the period of the underlying agreement.

(iv) Licence fee

Revenue is recognised when DataDot has an unconditional entitlement to the fee.

(v) Interest income

Revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset.

(vi) Government grants

Government grants are recognised in the statement of financial position as a asset when the grant is reasonably certain

The grant is recognised as income over the period necessary to match the grant on a systematic basis to the costs that it is intended to compensate.

• (u) Income tax and other taxes

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities based on the current period’s taxable income. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the statement of financial position date.

Deferred income tax is provided on all temporary differences at the statement of financial position date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred income tax liabilities are recognised for all taxable temporary differences except:

• When the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.

• When the taxable temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, and the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred income tax assets are recognised for all deductible temporary differences, carry ‑ forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry ‑ forward of unused tax credits and unused tax losses can be utilised, except:

• When the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.

Appendix 4E 30 June 2013 - Page 22

DataDot Technolgy Limited

Notes to the Financial Statements

for the year ended 30 June 2013

1 Summary of significant accounting policies (continued)

(u) Income tax and other taxes (continued)

• When the deductible temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, in which case a deferred tax asset is only recognised to the extent that it is probable that the temporary difference will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilised.

The carrying amount of deferred income tax assets is reviewed at each statement of financial position date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.

Unrecognised deferred income tax assets are reassessed at each statement of financial position date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the statement of financial position date.

Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority.

Tax consolidation

DataDot Technology Limited and its wholly owned Australian controlled entities implemented the tax consolidated legislation as of 1 July 2003.

In addition, DataTrace DNA Pty Limited became part of the tax consolidation group in December 2010 when it became a wholly owned subsidiary of DataDot Technology Limited. The head entity, DataDot Technology Limited and the controlled entities in the tax consolidated group continue to account for their own current and deferred tax amounts. As DataDot is in a cumulative tax loss position, DataDot has not applied the group allocation approach in determining the appropriate amount of current taxes and deferred taxes to allocate to members of the tax consolidated group.

AgTechnix Pty Limited became a wholly owned subsidiary of DataDot Technology Limited on 29 June 2012 and is now part of the tax consolidated group.

In addition to its own current and deferred tax amounts, DataDot Technology Limited also recognises the current tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from controlled entities in the tax consolidated group when it is probable that future taxable profit will allow the deferred tax asset to be recovered.

DataDot Technology Limited has not entered into any tax funding agreements with the tax consolidated entities.

Other taxes

Revenues, expenses and assets are recognised net of the amount of GST except:

• When the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable.

• Receivables and payables, which are stated with the amount of GST included.

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position.

Cash flows are included in the statement of cash flows on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority, is classified as part of operating cash flows.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.

Appendix 4E 30 June 2013 - Page 23

DataDot Technolgy Limited

Notes to the Financial Statements

for the year ended 30 June 2013

1 Summary of significant accounting policies (continued)

(v) Earnings per share

Basic earnings per share is calculated as net profit attributable to members of the parent, adjusted to exclude any costs of servicing equity (other than dividends) and preference share dividends, divided by the weighted average number of ordinary shares, adjusted for any bonus element.

Diluted earnings per share are calculated as net profit attributable to members of the parent, adjusted for

• Costs of servicing equity (other than dividends) and preference share dividends.

• The after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses.

• Other non ‑ discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares.

divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element.

• (w) Adoption of new and revised accounting standards

During the current year, DataDot adopted all of the new and revised Australian Accounting Standards and Interpretations applicable to its operations which became mandatory.

Any significant impact on the accounting policies of the consolidated entity from the adoption of these Accounting Standards and Interpretations is discussed above. The adoption of these Accounting Standards and Interpretations did not have any significant impact on the financial performance or position of the consolidated entity.

• (x) New accounting standards for application in future periods

The AASB has issued new and amended Accounting Standards and Interpretations that have mandatory application dates for future reporting periods. DataDot has decided against early adoption of these standards. The following table summarises those future requirements, and their impact on the entity :‐

Standard name	Effective date for entity	Requirements	Impact
AASB 2012‐5 Amendments to Australian Accounting Standards arising from Annual Improvements 2009–2011 Cycle	30 Jun 14	Non‐urgent but necessary changes to standards.	No impact expected.
AASB 2012‐6 Amendments to Australian Accounting Standards ‐ Mandatory Effective Date of AASB 9 and Transition Disclosures (issued September 2012)	30‐Jun‐16	Defers the effective date of AASB 9 to 1 January 2015. Entities are no longer required to restate comparatives on first time adoption. Instead, additional disclosures on the effects of transition are required.	As comparatives are no longer required to be restated, there will be no impact on amounts recognised in the financial statements. However, additional disclosures will be required on transition, including the quantitative effects of reclassifying financial assets on transition.
AASB 2012‐9 Amendment to AASB 1048 arising from the Withdrawal of Australian Interpretation 1039 (issued December 2012)	30‐Jun‐14	Deletes Australian Interpretation 1039 Substantive Enactment of Major Tax Bills In Australia from the list of mandatory Australian Interpretations to be applied by entities preparing financial statements under the Corporations Act 2001 or other general purpose financial statements.	There will be no impact on first‐time adoption of this amendment as the group does not account for proposed changes in taxation legislation until the relevant Bill has passed through both Houses of Parliament, which is consistent with the views expressed by the Australian Accounting Standards Board in their agenda decision of December 2012.

Appendix 4E 30 June 2013 - Page 24

DataDot Technolgy Limited

for the year ended 30 June 2013

Notes to the Financial Statements

1 Summary of significant accounting policies (continued)

(x) New accounting standards for application in future periods (continued)

Standard name	Effective date for entity	Requirements	Impact
AASB 9 Financial Instruments (issued December 2009 and amended December 2012)	30‐Jun‐16	Amends the requirements for classification and measurement of financial assets. The available‐ for‐sale and held‐to‐maturity categories of financial assets in AASB 139 have been eliminated. Under AASB 9, there are three categories of financial assets: • Amortised cost • Fair value through profit or loss • Fair value through other comprehensive income. The following requirements have generally been carried forward unchanged from AASB 139 Financial Instruments: Recognition and Measurement into AASB 9: • Classification and measurement of financial liabilities; and • Derecognition requirements for financial assets and liabilities. However, AASB 9 requires that gains or losses on financial liabilities measured at fair value are recognised in profit or loss, except that the effects of changes in the liability’s credit risk are recognised in other comprehensive income.	Adoption of AASB 9 is only mandatory for the year ending 30 June 2016. The entity has not yet made an assessment of the impact of these amendments. The entity has financial liabilities measured at fair value through profit or loss. The amendments require that any changes in fair value attributable to the liability’s credit risk be recognised in other comprehensive income instead of profit or loss. There will be no impact on the financial statements when these amendments are first adopted because they apply prospectively from 1 January 2015.
AASB 10 Consolidated Financial Statements (issued August 2011)	30‐Jun‐14	Introduces a single ‘control model’ for all entities, including special purpose entities (SPEs), whereby all of the following conditions must be present: • Power over investee (whether or not power used in practice) • Exposure, or rights, to variable returns from investee • Ability to use power over investee to affect the entity’s returns from investee.	When this standard is first adopted for the year ended 30 June 2014, there will be no impact on transactions and balances recognised in the financial statements because the entity does not have any special purpose entities or because the new definition of control does not change the classification of any of the entities investments in subsidiaries, joint arrangements or associates.
AASB 11 Joint Arrangements (issued August 2011)	30‐Jun‐14	Joint arrangements will be classified as either ‘joint operations’ (where parties with joint control have rights to assets and obligations for liabilities) or ‘joint ventures’ (where parties with joint control have rights to the net assets of the arrangement). Joint arrangements structured as a separate vehicle will generally be treated as joint ventures and accounted for using the equity method (proportionate consolidation no longer allowed).	All joint ventures of the entity are equity accounted and therefore minimal impact is expected due to the adoption of AASB 11.

Appendix 4E 30 June 2013 - Page 25

DataDot Technolgy Limited

Notes to the Financial Statements

for the year ended 30 June 2013

1 Summary of significant accounting policies (continued)

(x) New accounting standards for application in future periods (continued)

Standard name	Effective date for entity	Requirements	Impact
AASB 119 Employee Benefits (reissued September 2011)	30‐Jun‐14	Main changes include: • Elimination of the ‘corridor’ approach for deferring gains/losses for defined benefit plans • Actuarial gains/losses on remeasuring the defined benefit plan obligation/asset to be recognised in OCI rather than in profit or loss, and cannot be reclassified in subsequent periods • Subtle amendments to timing for recognition of liabilities for termination benefits • Employee benefits expected to be settled (as opposed to due to settled under current standard) wholly within 12 months after the end of the reporting period are short‐term benefits, and therefore not discounted when calculating leave liabilities. Annual leave not expected to be used wholly within 12 months of end of reporting period will in future be discounted when calculating leave liability.	The entity currently calculates its liability for annual leave employee benefits on the basis that it is due to be settled within 12 months of the end of the reporting period because employees are entitled to use this leave at any time. The amendments to AASB 119 require that such liabilities be calculated on the basis of when the leave is expected to be taken, i.e. expected settlement. When this standard is first adopted for the 30 June 2014 year end, annual leave liabilities will be recalculated on 1 July 2012 as long‐term benefits because they are not expected to be settled wholly within 12 months after the end of the reporting period. This will result in a reduction of the annual leave liabilities recognised on 1 July 2012, and a corresponding increase in retained earnings at that date. Comparatives for the year ended 30 June 2013 will also be restated.
AASB 12 Disclosures of Interests in Other Entities (issued August 2011)	30 Jun 14	Combines existing disclosures from AASB 127 Consolidated and Separate Financial Statements, AASB 128 Investments in Associates and AASB 131 Interests in Joint Ventures. Introduces new disclosure requirements for interests in associates and joint arrangements, as well as new requirements for unconsolidated structured entities.	As this is a disclosure standard only, there will be no impact on amounts recognised in the financial statements. However, additional disclosures will be required for interests in associates and joint arrangements, as well as for unconsolidated structured entities.
AASB 13 Fair Value Measurement (issued September 2011).	30‐Jun‐14	Currently, fair value measurement requirements are included in several Accounting Standards. AASB 13 establishes a single framework for measuring fair value of financial and non‐financial items recognised at fair value in the statement of financial position or disclosed in the notes in the financial statements.	The entity has yet to conduct a detailed analysis of the differences between the current fair valuation methodologies used and those required by AASB 13. However, when this standard is adopted for the first time for the year ended 30 June 2014, there will be no impact on the financial statements because the revised fair value measurement requirements apply prospectively from 1 July 2013. When this standard is adopted for the first time for the year ended 30 June 2014, additional disclosures will be required about fair values.

Appendix 4E 30 June 2013 - Page 26

DataDot Technolgy Limited

Notes to the Financial Statements

for the year ended 30 June 2013

1 Summary of significant accounting policies (continued)

(y) Critical accounting estimates and judgments

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements and estimates on historical experience and on other various factors it believes to be reasonable under the circumstances, the result of which form the basis of the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions and conditions.

Management has identified the following critical accounting policies for which significant judgements, estimates and assumptions are made. Actual results may differ from these estimates under different assumptions and conditions and may materially affect financial results or the financial position reported in future periods. Further details of the nature of these assumptions and conditions may be found in the relevant notes to the financial statements.

(i) Significant accounting judgements

Impairment of non ‑ financial assets

DataDot assesses impairment of all assets at each reporting date by evaluating conditions specific to DataDot and to the particular asset that may lead to impairment. These include product and manufacturing performance, technology, economic and political environments and future product expectations. If an impairment trigger exists the recoverable amount of the asset is determined. Given the current uncertain economic environment management considered that the indicators of impairment were significant enough and as such these assets have been tested for impairment in this financial period.

Capitalised development costs

Development costs are only capitalised by DataDot when it can be demonstrated that the technical feasibility of completing the intangible asset is valid so that the asset will be available for use or sale.

Revision of estimated useful life of development costs

The Group originally determined that the capitalised development costs would generate revenues over a 3 to 10 year period. During the period the Group revised that period up to 5 years for product development and up to 10 years for other development activities. As a result, amortisation expense is decreased prospectively over the remaining 5 to 10 years during which the capitalised development costs are expected to generate revenues. This has resulted in an decreased amortisation expense during the current financial year of $110,987.

Based on the capital development costs recognised as at 30 June 2013, the effect of the change in future periods will be a decrease in amortisation by the following amounts :‐

		$
Financial Year	2014	50,489
Financial Year	2015	137

As future capitalised development costs are unknown, it is impractical to exactly estimate the actual effect in future periods

Appendix 4E 30 June 2013 - Page 27

DataDot Technolgy Limited

Notes to the Financial Statements

for the year ended 30 June 2013

1 Summary of significant accounting policies (continued)

(y) Critical accounting estimates and judgments (continued)

(i) Significant accounting judgements (continued)

Taxation

DataDot's accounting policy for taxation requires management's judgement as to the types of arrangements considered to be a tax on income in contrast to an operating cost. Judgement is also required in assessing whether deferred tax assets and certain deferred tax liabilities are recognised on the statement of financial position. Deferred tax assets, including those arising from unrecouped tax losses, capital losses and temporary differences, are recognised only where it is considered more likely than not that they will be recovered, which is dependent on the generation of sufficient future taxable profits.

No deferred tax assets are recognised in DataDot’s financial statements for the carried forward tax losses for the Parent entity, DataDot Technology (Australia) Pty Limited, DataDot Technology (USA) Inc., or DataDot Technology (UK) Limited. As at 30 June 2013 the amount of deferred tax assets attributable to revenue losses not brought to account was $8,061,337 (2012: $8,195,897)

Assumptions about the generation of future taxable profits and repatriation of retained earnings depend on management's estimates of future cash flows. These depend on estimates of future production and sales volumes, operating costs, restoration costs, capital expenditure, dividends and other capital management transactions. Judgements are also required about the application of income tax legislation. These judgements and assumptions are subject to risk and uncertainty, hence there is a possibility that changes in circumstances will alter expectations, which may impact the amount of deferred tax assets and deferred tax liabilities recognised on the statement of financial position and the amount of other tax losses and temporary differences not yet recognised. In such circumstances, some or all of the carrying amounts of recognised deferred tax assets and liabilities may require adjustment, resulting in a corresponding credit or charge to the statement of profit or loss.

(ii) Significant accounting estimates and assumptions

Impairment of goodwill and intangibles with indefinite useful lives

DataDot determines, at least on an annual basis, whether goodwill and intangibles with indefinite useful lives are impaired. This requires an estimation of the recoverable amount of the cash generating units to which the goodwill and intangibles with indefinite useful lives are allocated. The assumptions used in the estimation of recoverable amount are discussed in note 13.

Share ‑ based payment transactions

DataDot measures the cost of equity ‑ settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The accounting estimates and assumptions relating to equity ‑ settled share ‑ based payments would have no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact expenses and equity.

Make good provisions

A provision has been made for the present value of anticipated costs of future restoration of leased manufacturing premises. The provision includes future cost estimates associated with factory dismantling and make good of the office environment.

Estimation of useful lives of assets

The estimation of the useful lives of assets has been based on historical experience as well as lease terms (for leased equipment). In addition, the condition of the assets is assessed at least once per year and considered against the remaining useful life. Adjustments to useful life are made when considered necessary.

Appendix 4E 30 June 2013 - Page 28

DataDot Technolgy Limited

Notes to the Financial Statements

for the year ended 30 June 2013

Other Income Interest revenue Government grants: Research and development grant Global growth funding grant Australian apprenticeships employer incentives Revaluation of financial liability (refer note 15 and 22) Sundry income	2013 2012 $ Restated $ 10,256 72,097 308,000 508,687 0 10,000 0 1,500 315,151 0 6,992 0
	640,399 592,284

2 Other Income

• There are no unfulfilled conditions or contingencies attached the grants.

3 Expenses

The consolidated income statement includes the following specific expenses :‐

Cost of sales Provision for stock obsolescence Administration expenses Net loss/(gain) on foreign currency Minimum lease payments Occupancy expenses Minimum lease payments Finance costs Bank loans and overdrafts Other borrowings Finance charges payable under finance leases and hire purchase contracts Total finance costs Depreciation, amortisation and disposals Depreciation Amortisation Loss on disposal of plant and equipment Total Depreciation and Amortisation 4 Income Tax (a) Major components of tax expenses Current income tax expense Withholding Tax Deferred income tax Income tax expense	12,999 0
	(53,930) 45,470 5,004 9,676
	(48,926) 55,146
	234,403 246,853
	3,678 10,334 38,024 7,726 6,747 31,817
	48,449 49,877
	161,783 285,480 258,983 244,314 14,995 0
	435,761 529,794
	21,462 (5,663) 37,432 0 0 0
	58,894 (5,663)

Appendix 4E 30 June 2013 - Page 29

DataDot Technolgy Limited

for the year ended 30 June 2013

Notes to the Financial Statements

4 Income Tax (continued) Net loss before income tax at the tax at the statutory income tax rate of 30% (2012: 30%) Foreign tax rate adjustment Adjustment for income assessable in overseas tax jurisdictions Research and development expenditure added back Expenditure not allowable Other timing differences Previously unrecognised tax losses brought to account Unused tax losses and tax offsets not recognised as deferred tax assets Aggregate income tax expense/(benefit) (c) Recognised deferred tax assets and liabilities Opening balance Deferred tax asset credited to income Deferred tax liability charged to income Closing balance Deferred tax assets and liabilities Deferred income tax at 30 June relates to the following :‐ Deferred tax liabilities Development costs Plant and equipment Patents & Trademarks Goodwill Accounts receivable Gross deferred tax liabilities (b) The prima facie tax on loss before income tax of $107,927 is reconciled to the income tax expense as follows :‐ Set‑off of deferred tax assets Net deferred tax liabilities Deferred tax assets Tax losses Foreign currency balances Goodwill Provisions Accruals Equity raising costs Legal fees Doubtful debts and obsolescence Other timing differences Gross deferred tax assets Set‑off of deferred tax liabilities Net deferred tax assets arising from temporary differences not brought to account	2013 2012 $ $ (32,378) (650,096) 70,313 32,332 37,432 68,792 97,320 221,351 20,836 43,952 47,365 (31,387) 0 (319,387) (181,994) 628,780
	58,894 (5,663)
	0 0 50,061 922,211 (50,061) (922,211)
	0 0
	368,037 496,469 10,469 13,987 216,107 0 377,659 377,658 0 34,097
	972,272 922,211 (972,272) (922,211)
	0 0
	181,994 634,231 629,407 609,296 78,270 101,026 106,312 82,826 120,072 40,667 50,670 80,174 0 18,408 16,168 2,939 0 33,355
	1,182,891 1,602,922 (972,272) (922,211)
	210,619 680,711

The potential deferred tax assets arising from unused tax losses and temporary differences have only been recognised where it is probable that the future taxable profit will be available against which tax losses can be utilised.

Appendix 4E 30 June 2013 - Page 30

DataDot Technolgy Limited

for the year ended 30 June 2013

Notes to the Financial Statements

	2013	2012
Income Tax (continued)	$	$
(c) Recognised deferred tax assets and liabilities (continued)
The amount of the potential deferred tax assets attributable to revenue losses not brought to account	8,195,897	8,290,926
Adjustment recognised for prior periods	47,434	214,364
Less losses recognised as realisation of benefit is deemed to be sufficiently probable	(181,994)	(309,393)
	8,061,337	8,195,897

4 Income Tax (continued)

The potential deferred tax asset will only be obtained if:

(i) the relevant company derives future assessable income of a nature and an amount sufficient to enable the benefit to be realised;

(ii) the relevant company continues to comply with the conditions for deductibility imposed by law; and

(iii) no changes in tax legislation adversely affect the relevant company in realising the benefit.

Tax consolidation

DataDot Technology Limited and its 100% owned Australian resident subsidiaries have formed a tax consolidated group with effect from 1 July 2003. In December 2010, DataTrace DNA Pty Limited became a member of the tax consolidated group after becoming a wholly owned subsidiary of DataDot Technology Limited. DataDot Technology Limited is the head entity of the tax consolidated group. Members of the group have not entered into a tax sharing arrangement in order to allocate income tax expense to the wholly owned subsidiaries on a pro ‑ rata basis. There is no agreement for the allocation of income tax liabilities between the entities should the head entity default on its tax payment obligations. At the reporting date, the possibility of default is remote.

AgTechnix Pty Limited became a wholly owned subsidiary of DataDot Technology Limited on 29 June 2012 and is now part of the tax consolidated group.

5 Auditors' Remuneration

The auditor of DataDot Technology Limited is BDO East Coast Partnership

Amounts received or due and receivable for audit services by BDO East Coast Partnership :‐

Tax compliance Other services Amounts received or due and receivable by non BDO audit firms for: Taxation services Other services Dividends Dividends declared or paid during the year Franking account balance An audit or review of the financial report of the entity and any other entity in the consolidated group Other services in relation to the entity and any other entity in the consolidated group :‐ An audit or review of the financial report of the entity and any other entity in the consolidated group Amounts received or due and receivable for audit services by Related Entities of BDO East Coast Partnership :‐	107,287 113,876 50,320 33,516 28,985 20,000
	186,592 167,392
	30,875 0 821 624 8,957 12,132
	9,778 12,756
	0 0
	0 0

6 Dividends

Appendix 4E 30 June 2013 - Page 31

DataDot Technolgy Limited

Notes to the Financial Statements

for the year ended 30 June 2013

7 Earnings Per Share Basic earnings / (loss) per share (cents per share) Diluted earnings / (loss) per share (cents per share) Net loss used in calculating earnings / (loss) per share Weighted average number of shares :‐ Weighted average number of shares used in calculating basic earnings per share Adjustments for calculation of diluted earning per share Weighted average number of shares used in calculating diluted earnings per share	2013 2012 $ Restated $ (0.03) (0.40)
	(0.03) (0.40)
	(166,821) (1,908,913)
	No No 480,800,800474,575,800 17,628,082 16,471,712
	498,428,882491,047,512

Shares and share rights issued subsequent to end of the year :‐

3,875,000 shares on vesting from share rights 01/07/2013 1,300,000 share rights issued vesting 22/07/2014, 22/07/2015 and 22/07/2016 8 Cash and Cash Equivalents

Reconciliation of cash

Cash at bank and on hand Bank overdraft Cash at bank earns interest at floating rates based on daily bank deposits. Cash Flow Information Reconciliation of net loss after tax to net cash flow from operations :‐ Loss after income tax Add/(less) items classified as investing/financing activities: Cash at the end of the financial year shown in the consolidated statement of cash flows is reconciled as follows :‐ Interest received Add/(less) non‑cash items: Depreciation and amortisation Disposal of plant and equipment Revaluation of financial liability Non‑cash borrowing costs Share based payments Foreign exchange variance Impairment losses Impairment for doubtful accounts Changes in assets and liabilities :‐ (Increase)/decrease in trade and other receivables (Increase)/decrease in current tax assets (Increase)/decrease in inventories (Increase)/decrease in grant receivable (Decrease)/increase in trade and other payables (Decrease)/increase in current tax liabilities (Decrease)/increase in other liabilities (Decrease)/increase in provisions Net cash from / (used in) operating activities	897,398 1,409,367 (32,875) 0
	864,523 1,409,367
	(166,821) (1,908,913) (10,256) (72,097) 420,766 529,794 14,992 3,990 (315,151) 0 0 33,940 172,639 277,310 (53,930) 45,470 0 194,703 85,526 201,475 85,922 (403,684) 54,665 0 280,789 (476,325) 200,687 0 (67,097) 97,139 (8,654) (59,345) 31,362 (141,872) (91,556) 93,720
	633,883 (1,584,695)

Appendix 4E 30 June 2013 - Page 32

DataDot Technolgy Limited

Notes to the Financial Statements

for the year ended 30 June 2013

9 Trade and Other Receivables Trade receivables Provision for impairment Prepayments Other debtors and receivables	2013 2012 $ $ 1,014,274 1,169,858 (144,603) (92,859)
	869,671 1,076,999 159,495 161,722 218,532 94,899
	1,247,698 1,333,620

(a) Provision for impairment

Trade receivables are non ‑ interest bearing and are generally on 30 day terms. A provision for impairment loss is recognised when there is objective evidence that an individual trade receivable is impaired. An impairment charge of $85,526 (2012: $201,475) has been recognised by DataDot. These amounts have been included in the bad and doubtful debt expense item.

Movement in provision for impairment of receivables is as follows:

At 1 July Charge for the year Amount written off (included in bad and doubtful debt expense) At 30 June Aging of trade receivables:‐ Current 30 days 60 days 90 days and over The aging of the impaired receivables provided for above are as follows :‐ 60 days 90 days and over	92,859 9,797 85,526 201,475 (33,782) (118,413)
	144,603 92,859
	683,874 752,373 180,631 218,546 13,487 54,182 136,282 144,757
	1,014,274 1,169,858
	8,321 0 136,282 92,859
	144,603 92,859

Customers with balances past due but without provision for impairment amounts to $185,797 (2012 : $324,626)

The aging of the past due but not impaired receivables are as follows :‐ 30 days 60 days 90 days and over	180,631 218,546 5,166 54,182 0 51,898
	185,797 324,626

(b) Fair value and credit risk

Due to the short term nature of these receivables, their carrying value is assumed to approximate their fair value. The maximum exposure to credit risk is the fair value of receivables. Collateral is not held as security, nor is it DataDot's policy to transfer (on ‑ sell) receivables to special purpose entities.

Refer to note 26 for more information on the risk management policy of DataDot and the credit quality of DataDot’s trade receivables.

(c) Foreign exchange and interest rate risk

Details regarding foreign exchange and interest rate risk exposure are disclosed in note26.

10 Inventories

Inventories Raw materials Finished goods	$ $ 1,026,017 1,355,693 110,565 61,678
	1,136,582 1,417,371

Appendix 4E 30 June 2013 - Page 33

DataDot Technolgy Limited

Notes to the Financial Statements

for the year ended 30 June 2013

11 Grant Receivable Research and development grant 12 Plant and Equipment Plant and equipment ‐ at cost At cost Accumulated depreciation Total owned plant and equipment Plant and equipment ‐ leased Cost Accumulated depreciation Total leased plant and equipment Leasehold improvements Cost Accumulated depreciation Total leasehold improvements Total Plant and Equipment Cost Accumulated depreciation	2013 2012 $ Restated $ 308,000 508,687
	2,699,163 2,558,376 (1,943,750) (1,794,778)
	755,413 763,598
	152,923 118,453 (15,292) (94,972)
	137,631 23,481
	169,061 155,753 (156,143) (148,433)
	12,918 7,320
	3,021,147 2,832,582 (2,115,185) (2,038,183)
	905,962 794,399

Movements in carrying amounts

Balance as at 1 July 2011 Additions Disposals Depreciation charge for the year Exchange adjustments Restated Balance at 30 June 2012 Prior period adjustment (Note 29) Restated Balance at 30 June 2012 Additions Transfer from Intangibles Disposals Depreciation charge for the year Exchange adjustments Balance at 30 June 2013	Plant & equipment at cost Plant & equipment leased Leasehold Improvements Totals $ $ $ $ 819,777 39,873 7,805 867,455 145,693 0 2,500 148,193 (4,192) 0 0 (4,192) (165,517) (9,805) (2,985) (178,307) 9,649 (6,587) 0 3,062
	805,410 23,481 7,320 836,211 (41,812) 0 0 (41,812)
	763,598 23,481 7,320 794,399 136,075 129,442 7,254 272,771 17,837 0 0 17,837 (14,992) 0 0 (14,992) (144,837) (15,292) (1,654) (161,783) (2,270) 0 0 (2,270)
	755,411 137,631 12,920 905,962

(a) Plant and equipment pledged as security for liabilities

Leased assets and assets under hire purchase contracts are pledged as security for the related finance lease and hire purchase liabilities.

Plant and equipment with a carrying amount of $722,266 (restated 2012 : $707,425) are pledged as securities for current and non ‑ current liabilities as disclosed in note 15.

During the year, DataDot acquired plant and equipment and leasehold improvements with an aggregate value of $152,923 (2012 : $Nil) by means of finance leases.

Appendix 4E 30 June 2013 - Page 34

DataDot Technolgy Limited

Notes to the Financial Statements

for the year ended 30 June 2013

13 Intangible Assets Development Cost Accumulated amortisation Net carrying amount Patent and trademarks Cost Accumulated amortisation Net carrying amount Goodwill Cost Software Cost Accumulated amortisation Net carrying value Total Intangible Assets Movements in carrying amounts Balance as at 1 July 2011 Additions Amortisation Impairment losses B l t 30 J 2012 a ance a une Additions Disposals ‐ cost Transfer to PPE Amortisation Write back of accumulated amortisation on disposal Balance at 30 June 2013	2013 2012 $ $ 1,698,432 1,578,121 (471,643) (688,093) 1,226,789 890,028 1,205,786 1,098,545 (433,221) (334,995) 772,565 763,550 1,258,863 1,258,864 65,582 72,727 (28,832) (23,322) 36,750 49,405 3,294,967 2,961,847 Development Patents and trademarks Goodwill Software Development Totals $ $ $ $ $ 623,491 862,106 1,258,864 61,399 2,805,860 449,812 140,896 0 3,116 593,824 (183,275) (44,749) 0 (15,110) (243,134) 0 (194,703) 0 0 (194,703)	2013 2012 $ $ 1,698,432 1,578,121 (471,643) (688,093)
		1,226,789 890,028
		1,205,786 1,098,545 (433,221) (334,995)
		772,565 763,550
		1,258,863 1,258,864
		65,582 72,727 (28,832) (23,322)
		36,750 49,405
		3,294,967 2,961,847
	890 028 763 550 1 258 864 49 405 2 961 847 , , , , , , , 485,522 107,230 0 17,178 609,930 (365,211) 0 0 0 (365,211) 0 0 0 (17,837) (17,837) (148,761) (98,225) 0 (11,997) (258,983) 365,211 0 0 0 365,211
	1,226,789 772,555 1,258,864 36,749 3,294,957

Development costs

Development costs are carried at cost less accumulated amortisation and accumulated impairment losses. The intangible assets have been assessed as having finite lives. All intangible assets are amortised using the straight line method over a period of 5 to 10 years. The amortisation has been recognised in the statement of profit or loss in the line item “depreciation and amortisation expense”. If an impairment indication arises, the recoverable amount is estimated and an impairment loss is recognised to the extent that the recoverable amount is lower than the carrying amount.

Patents and trademarks

Patent costs are carried at cost less accumulated amortisation and accumulated impairment losses. These intangible assets have been assessed as having a finite life and are amortised using the straight line method over the period of the patent. The amortisation has been recognised in the income statement in the line item 'depreciation and amortisation expense'. If an impairment indication arises, the recoverable amount is estimated and an impairment loss is recognised to the extent that the recoverable amount is lower than the carrying amount.

Appendix 4E 30 June 2013 - Page 35

DataDot Technolgy Limited

Notes to the Financial Statements

for the year ended 30 June 2013

13 Intangible Assets (continued)

Patents and trademarks (continued)

In 2013, $107,230 (2012 : $140,896) of costs associated with the lodging, renewal, and maintenance of patents & trademarks were incurred with $98,225 (2012 : $44,749) of associated amortisation being expensed during the period. After a review of patents, an impairment charge of $Nil (2012 : $194,703 ) was incurred to reflect the intentional abandonment of identified patents.

Goodwill

After initial recognition, goodwill acquired in a business combination is measured at cost less any accumulated impairment losses. Goodwill is not amortised but is subject to impairment testing on at least an annual basis or whenever there is an indication of impairment.

Impairment testing

The group has identified two cash generating units (CGUs); DataDot (with a carrying value of $1,512,962) and DataTrace (with a carrying value of $2,704,032). The recoverable value of the CGUs is determined based on value in use calculations. Value in use is calculated based on the present values of cash flow projections over a five year period with the terminal value calculated on the year 5 projected cash flow divided by the discount rate less the growth rate.

Management has based the value ‑ in ‑ use calculations on the budgets approved by the DataDot Board. The budget uses estimated growth rates to project revenue. Costs are calculated taking into account historical gross margins as well as estimated inflation rates over the period.

The cash flows are discounted using a discount rate of 20%. The discount rate of 20% pre‐tax reflects management’s assessment of the time value of money and DataDot’s weighted average cost of capital adjusted for the risk free rate and the volatility of the share price relative to market movements, and inherent uncertainty of the business. Cash flows beyond the five year period are extrapolated using an estimated growth rate of 5% are included in te terminal value. The growth rate does not exceed the long term average growth rate for the business in which the cash generating unit operates.

Im p act o f p ossible chan g es in ke y assum p tions

If the discount rate was increased by 1.2% or more, the DataTrace CGU would indicate an impairment of DataTrace's intangible assets of $5,951, with all other assumptions remaining constant.

14 Trade and Other Payables

Trade and Other Payables
Trade payables Sundry creditors and accruals Other taxes payable	417,712 595,304 565,411 459,421 11,695 7,190
	994,818 1,061,915

Fair value and credit risk

Due to the short term nature of these payables, their carrying value is assumed to approximate their fair value.

Interest rate, foreign exchange and liquidity risk

Details regarding foreign exchange and interest rate risk exposure are disclosed in note 26

Appendix 4E 30 June 2013 - Page 36

DataDot Technolgy Limited

Notes to the Financial Statements

for the year ended 30 June 2013

			2013	2012
**15 **	Borrowings		$	$
	Current	Maturity
	Interest bearing secured :‐
	Bank overdraft		32,875	0
	Obligations under finance leases and hire purchase contracts	2014	49,975	1,457
	Bank loan	2014	3,720	58,625
			86,570	60,082
	Interest bearing unsecured :‐
	Loans payable to other parties	2014	257,673	0
	Non Interest bearing unsecured :‐
	Loans payable to other parties	2014	93,421	688,822
	Total current borrowings		437,664	748,904
	Non‑current
	Interest bearing secured:‐
	Obligations under finance leases and hire purchase contracts	2015	52,806	0
	Total non‐current borrowings		52,806	0

Fair value

The carrying value of DataDot's current and non ‑ current borrowings approximate their fair value.

Interest rate, foreign exchange and liquidity risk

Details regarding foreign exchange and interest rate risk exposure are disclosed in note 26

Assets pledged as security

L ease a li bili t es are e i ff ect ve y secure i l d as t h e r g i h ts to t h e ease l d assets recogn se i d n t i h e nanc a statements revert to t fi i l h e essor n l i the event of default.

The bank loan is in the form of a commercial loan. A fixed and floating charge over the assets of DataDot Technology Limited and DataDot Technology (Australia) Pty Limited has been provided to the bank as security for the loan. Plant and equipment with a carrying amount of $722,266 (restated 2012 : $707,425) are pledged as securities for current and non ‑ current liabilities. The loan is repayable over 36 monthly periods.

Defaults and breaches

During the current and prior years, there were no defaults or breaches on any of the loans.

Unsecured Loans

A current amount payable to other parties of $257,673 (£154,656) which DataDot Technology (UK) Limited (DDUK) borrowed at an interest free basis in 2002 for the establishment of the UK business. The loan, which is guaranteed by DataDot, was renegotiated in August 2012 as part of the share sale agreement to include interest of 7.5% pa and is repayable in instalment by 30 June 2014. On 1 July 2013, £59,656 of the loan was repaid by DDUK with the remaining £95,000 to be repaid in December 2013 and June 2014.

A current amount payable to other parties of $93,421 (£59,995) arose from an executed share sale agreement for the purchase of shares owned by another DDUK minority shareholder in August 2012 for £60,000 of which £5 was paid on execution and the balance due on 1 July 2013.

A non interest bearing unsecured borrowing at 30 June 2012 of $315,151 (included in the $688,822 balance in the 30 June 2012) relates to funding that was received from IPECO Pty Limited for AgTechnix Pty Limited. The funding has been revalued to $nil at 30 June 2013 on the basis that it is not expected that the amount will be repaid as AgTechnix is not anticipated to make profits in the period to 29 June 2015. Due to the fact that a possible obligation remains, this has been disclosed as a contingent liability (refer note 22).

Appendix 4E 30 June 2013 - Page 37

DataDot Technolgy Limited

Notes to the Financial Statements

for the year ended 30 June 2013

16 Provisions Current Employee benefits Restructuring costs provision Other provisions Non Current Employee benefits Employee benefits Aggregate employee benefits provision :‐ Balance at beginning of the year Additional provisions Amount used Balance at end of the year	2013 2012 $ $ 294,358 280,346 0 103,687 71,540 71,540
	365,898 455,573
	2,526 4,407
	280,346 294,384 120,059 149,322 (106,047) (163,360)
	294,358 280,346

The current provision for all employee benefits (annual and long service leave) includes all unconditional entitlements where employees have completed the required period of service. The amount is presented as current since the consolidated entity does not have unconditional right to defer settlement. However based on past experience, the consolidated entity does not expect all employees to take the full amount of accrued annual and long service leave within the next twelve months.

Annual and long service leave that is not expected to be taken within the next twelve months 183,011 124,776

Restructuring costs provision

In 2012 the Board and Management implemented major cost reductions and as a result of DataDot’s restructure achieved significant additional sustained savings. The major cost components of the restructuring were termination payments associated with cessation of employment together with costs incurred in closing facilities surplus to requirements.

Other provisions

A provision of $20,000 (2012 : $20,000) estimating potential amounts payable under an agreement with an Australian motor vehicle distributor where DataDot has agreed to remit the theft excess (to a maximum of $800) payable by automobile owners in the event that vehicles are stolen and remain unrecovered (subject to conditions) is included in other provisions.

A provision of $1,540 (2012 : $1,540) estimating potential amounts payable under an agreement with Swann Insurance which DataDot has agreed to remit the insurance excess on behalf of policy holders who have applied DataDots to their vehicles and whose vehicles have been stolen is included in other provisions.

In accordance with the lease agreement with the owner of DataDot's facilities in Frenchs Forest, Australia, DataDot must restore the leased premises to its original condition at the end of the lease term, a provision of $50,000 (2012 : $50,000) is included in other provisions.

17 Other Liabilities

Unearned income 18 Contributed Equity Issued capital at beginning of financial period Shares issued or under issue during the year :‐ Issued Capital at the end of the financial period Vested share rights issued under the ESRP at 1 July 2012 at 4.4c per share	31,362 0 2013 2013 2012 2012 No $ No $ 474,575,800 33,102,482474,575,800 33,102,482 6,225,000 273,900 0 0	31,362 0
	480,800,800 33,376,382474,575,800 33,102,482

Appendix 4E 30 June 2013 - Page 38

DataDot Technolgy Limited

Notes to the Financial Statements

for the year ended 30 June 2013

18 Contributed Equity (continued)

Capital Management

When managing capital, management's objective is to ensure the entity continues as a going concern as well as to maintain optimal returns to shareholders and benefits for other stakeholders. Management also aims to maintain a capital structure that ensures the lowest cost of capital available to the entity.

As disclosed in Note 15, DataDot had total interest bearing liabilities of $397,049 as at 30 June 2013 (2012 : $60,082). DataDot is not subject to any externally imposed capital requirements.

19 Reserves Foreign currency translation reserve Balance at beginning of financial year Currency translation differences arising during the year Balance at end of financial year Prior period adjustment (Note 29) Restated balance at end of financial year	2013 2012 $ Restated $ (1,900,943) 540,360 16,311 (61,155)
	(1,884,632) 479,205 0 (2,380,148)
	(1,884,632) (1,900,943)

The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries.

Employee equity benefits reserve Restated balance at beginning of financial year Movement in share‑based payments Balance at end of financial year Prior period adjustment (Note 29) Restated balance at end of financial year	415,268 148,856 (169,118) 277,310
	246,150 426,166 0 (10,898)
	246,150 415,268

The employee equity benefits reserve is used to record the value of share based payments provided to employees, including KMP, as part of their remuneration. Refer to note 24.

Other reserves Balance at beginning of financial year Acquisition of non‐controlling interest in AgTechnix Pty Limited Acquisition of non‐controlling interest in DataDot Technology (UK) Limited Balance at end of financial year	(309,424) 0 0 (309,424) (369,199) 0
	(678,623) (309,424)

This reserve is used to record the differences which may arise as a result of transactions with non‐controlling interests that do not result in a loss of control. Refer to note 25.

Total Reserves (2,317,105) (1,795,099)

20 Segment Information

Segment descriptions

DataDot has identified its operating segments based on the internal reports that are reviewed and used by the executive management team (the chief operating decision makers) in assessing performance and in determining the allocation of resources.

Three of the operating segments are identified by management based on the location of the selling segment. Two of the operating segments are identified by management based on the product offerings. Discrete financial information about each of these operating businesses is reported to the executive management team on at least a monthly basis.

Appendix 4E 30 June 2013 - Page 39

DataDot Technolgy Limited

Notes to the Financial Statements

for the year ended 30 June 2013

20 Segment Information (continued)

Products and services by segment

The three geographical regions of Asia Pacific, Americas and Europe each manufacture and distribute an asset identification system that includes :‐

DataDotDNA® ‑ polymer and metallic microdots containing etched data that is unique to the assets to which the microdots are attached;

DataBaseDNA ‑ a global database that records asset identification data and is accessible by law enforcement agencies and insurance investigators.

The only operating segment that is identified by product offerings managed on a global basis is :‐

DataTraceDNA® – a high speed, high security, machine readable system for authenticating materials, products, and assets and IntelliSeed™ by AgTechnix is a frontier patent pending technology, supporting global agriculture and protecting investments in intellectual property across a diverse spectrum of agricultural activities, including seed and plant genetics.

Accounting policies and inter ‑ segment transactions

The accounting policies used by DataDot in reporting segments internally is the same as those contained in the prior period. Inter segment pricing is determined on an arm’s length basis.

The following tables present the revenue, profit/(loss) before tax, assets and liabilities information regarding operating segments for years ended 30 June 2013 and 30 June 2012.

Major customers

DataDot has a number of customers to which it provides both products and services. In Australasia, one customer accounts for 17% of total revenue (2012 : 17%) and in Europe one customer accounts for 11% of total revenue (2012 : 11%).

Segment performance Year ended 30 June 2013 Revenue from External customers Sales revenue Gross profit EBITDA Finance revenue Finance costs Profit / (Loss) before income tax Income tax expense Net profit / (loss) after income tax Segment assets Segment liabilities Depreciation, amortisation, disposals & Impairment Revenue from transactions with other operating segments of the same entity	Australasia Americas Europe DataTraceDNA Eliminations Total $ $ $ $ $ $
	3,059,802 1,032,979 2,126,587 811,069 (1,892,712) 5,137,725 1,487,531 257,449 2,010 145,722 1,892,712
	4,547,333 1,290,428 2,128,597 956,791 (1,892,712) 7,030,437
	3,194,443 644,975 710,397 440,986 (1,057,853) 3,932,948
	(274,676) (42,548) 62,271 619,932 1,048 366,027
	(232,398) (11,223) (3,683) (188,457) 0 (435,761) 93,661 86 177 1,062 (84,730) 10,256 (10,500) (6,640) (50,763) (64,228) 83,682 (48,449)
	(423,913) (60,325) 8,002 368,309 0 (107,927)
	(44,520) (6,182) (8,192) 0 0 (58,894)
	(468,433) (66,507) (190) 368,309 0 (166,821)
	14,261,548 693,993 1,151,718 2,241,832 (10,554,448) 7,794,643
	7,946,056 5,458,473 1,089,263 1,698,881 (14,296,105) 1,896,568

Appendix 4E 30 June 2013 - Page 40

DataDot Technolgy Limited

Notes to the Financial Statements

for the year ended 30 June 2013

20 Segment Information (continued)

Segment performance (continued) Australasia Americas Europe DataTraceDNA Eliminations Total Year ended 30 June 2012 $ $ $ $ $ $ Revenue from External customers 3,547,056 836,611 1,621,669 1,066,060 (1,604,387) 5,467,009 1,335,784 139,732 3,784 125,087 0 1,604,387 Sales revenue 4,882,840 976,343 1,625,453 1,191,147 (1,604,387) 7,071,396 Gross profit 3,450,389 637,633 460,493 565,027 (1,039,406) 4,074,136 EBITDA (including impairments) (542,466) 93,639 (186,492) (710,955) 133,975 (1,212,299) (563,067) (16,700) (8,377) (136,352) 0 (724,497) Finance revenue 74,599 31 0 2,011 (4,544) 72,097 Finance costs (18,104) (8) (36,036) (273) 4,544 (49,877) Profit / (loss) before income tax (1,049,038) 76,962 (230,905) (845,569) 133,975 (1,914,576) Income tax expense (57,988) 0 63,651 0 0 5,663 Net profit / (loss) after income tax (1,107,026) 76,962 (167,254) (845,569) 133,975 (1,908,913) Segment assets 13,814,081 636,641 1,058,723 2,435,669 (9,461,122) 8,483,992 Segment liabilities 6,929,480 5,378,915 1,018,118 2,247,715 (13,283,281) 2,290,947 Depreciation, amortisation, disposals & Impairment Revenue from transactions with other operating segments of the same entity 2013 2012 21 Commitments $ $ Finance lease commitments Minimum finance lease payments payable Within one year 54,392 51,328 Later than one year but not later than five years 54,392 99,741 Later than five years 0 0 108,784 151,069 Operating lease commitments Minimum operating lease payments payable Within one year 151,495 127,816 Later than one year but not later than five years 328,300 15,798 Later than five years 0 0 479,795 143,614 Remuneration commitments Minimum remuneration payments payable Within one year 469,154 176,435 Later than one year but not later than five years 0 0 Later than five years 0 0 469,154 176,435 Commitments for the payment of salaries and other remuneration under long term employment contacts in existence at the reporting date but not recognised as liabilities. Non cancellable operating leases contracted for but not capitalised in the financial statements	Australasia Americas Europe DataTraceDNA Eliminations Total $ $ $ $ $ $	Australasia Americas Europe DataTraceDNA Eliminations Total $ $ $ $ $ $
	3,547,056 836,611 1,621,669 1,066,060 (1,604,387) 5,467,009 1,335,784 139,732 3,784 125,087 0 1,604,387
	4,882,840 976,343 1,625,453 1,191,147 (1,604,387) 7,071,396 3,450,389 637,633 460,493 565,027 (1,039,406) 4,074,136
	(542,466) 93,639 (186,492) (710,955) 133,975 (1,212,299)
	(563,067) (16,700) (8,377) (136,352) 0 (724,497) 74,599 31 0 2,011 (4,544) 72,097 (18,104) (8) (36,036) (273) 4,544 (49,877)
	(1,049,038) 76,962 (230,905) (845,569) 133,975 (1,914,576)
	(57,988) 0 63,651 0 0 5,663
	(1,107,026) 76,962 (167,254) (845,569) 133,975 (1,908,913)
	13,814,081 636,641 1,058,723 2,435,669	(9,461,122) 8,483,992
	6,929,480 5,378,915 1,018,118 2,247,715	(13,283,281) 2,290,947
		2013 2012 $ $ 54,392 51,328 54,392 99,741 0 0
		108,784 151,069
		151,495 127,816 328,300 15,798 0 0
		479,795 143,614
		469,154 176,435 0 0 0 0
		469,154 176,435

Appendix 4E 30 June 2013 - Page 41

DataDot Technolgy Limited

Notes to the Financial Statements

for the year ended 30 June 2013

22 Contingent Liabilities

Guarantees

DataDot has issued bank guarantees of $32,750 (2012: $38,050). No liability was recognised by DataDot in relation to the bank guarantee as the fair value of the guarantee is immaterial.

Insurance company initiative

Under a sales agreement with an insurance company, DataDot has agreed to remit the insurance policy excess on behalf of insurance policy holders who have applied dots to their vehicles and whose vehicles have been stolen. A provision has been made (refer note 16 Other provisions ). The estimate is based on the probability of claims being made. Should these estimates prove incorrect then an adjustment may have to be made to either increase or decrease the amount due and payable.

Theft deterrent system rebate contingencies

Under an agreement with an Australian motor vehicle distributor, DataDot has agreed to remit the theft excess (to a maximum of $800) payable by automobile owners in the event that vehicles are stolen and remain unrecovered (subject to certain conditions). A provision has been made (refer note 16 Other provisions ). The estimate is based on the probability of vehicles being stolen and unrecovered and claims being made. Should these estimates prove incorrect then an adjustment may have to be made to either increase or decrease the amount due and payable.

Tax related contingencies ‐ transfer pricing

DataDot has offshore operations in the United States and the United Kingdom. As disclosed in note 24, there are intra Group transactions, which include DataDot and its subsidiaries. These transactions are on an arm's length basis and are conducted at normal market prices and on normal commercial terms.

Subsidiary funding arrangement

An amount of $315,151 in funding was received from IPECO Pty Limited for AgTechnix Pty Limited. The funding is to be repaid from profits generated by AgTechnix over the three years to 29 June 2015. It has been determined from forecasts that insufficient profits will be generated during the three years and on that basis it is not expected that the amount will be repaid. However, if sufficient profits are made during the three years, repayment of the funding will be required and a revaluation expense will need to be taken up in the statement of comprehensive income. Due to the fact that a possible obligation remains, this has been disclosed as a contingent liability.

23 Controlled Entities and Joint Ventures

	Country of	% Equity		Investment	Investment
	Incorporation	2013	2012	2013 $	2012 $
Ultimate parent entity
DataDot Technology Limited	Australia
Controlled entities
DataDot Technology (Australia) Pty Limited	Australia	100	100	100	100
DataDot Technology USA Inc.	USA	100	100	181,818	181,818
DataDot Technology (UK) Limited	UK	100	72	1,177	846
DataDot Technology (Europe) Limited	UK	100	100	167	0
AgTechnix Pty Limited	Australia	100	100	200	200
DataTrace DNA Pty Limited	Australia	100	100	2,395,010	2,395,010
DataDot N.Z. Pty Limited	New Zealand	100	100	404	0
Joint venture entities
DataDot Technology (Asia) Pte. Limited	Taiwan	0	50	0	0
DataDot Security Solutions Inc	USA	50	50	0	0

Appendix 4E 30 June 2013 - Page 42

DataDot Technolgy Limited

Notes to the Financial Statements

for the year ended 30 June 2013

24 Related Party Transactions

Key management personnel

Note Remuneration of key management personnel :‐ Short term employee benefits Post employment benefits Termination benefits Share based payments 27 DataDot Technology Limited funding received prior to the acquisition of the minority shareholding from IPECO Pty Limited for AgTechnix Pty Limited	2013 2012 $ $ 1,354,526 1,574,484 83,246 164,192 64,806 276,778 172,639 257,642
	1,675,217 2,273,096
	0 195,000

25 Acquisitions & Disposals

Acquisition of Minority Shareholding in AgTechnix Pty Limited

On 29 June 2012, DataDot acquired the remaining 49% of AgTechnix Pty Limited (AgTechnix) A class shares and 50% of AgTechnix B class shares owned by IPECO Pty Limited, so becoming the sole shareholder and owner of AgTechnix and making AgTechnix a fully integrated, wholly‐owned subsidiary of DataDot. The acquisition was undertaken to better utilise existing product support capacity within DataDot and to rationalise operating costs, including the costs to DataDot and IPECO of maintaining a separate JV company. AgTechnix will be operated utilising existing DataDot resources and as such AgTechnix will have no staffing or other operating costs going forward. The shares were transferred for a nominal consideration. DataDot recognised a decrease in non‐controlling interests of $309,424 and an increase in equity attributable to owners of the parent of $309,424 as shown in other reserves.

Over the past two years, DataDot and IPECO Pty Limited have each provided funding to AgTechnix for a total of $315,151 for each entity. This funding is classified as Interest Bearing Loans & Borrowings and described in note 15 above. No additional funding will be provided to AgTechnix. The funding will be repaid to DataDot and IPECO equally from profits generated by AgTechnix over the next three years. If insufficient profits are generated during the three years then the remaining balance will be extinguished at the end of the three year period.

Disposal of joint Venture Interest in DataDot Technology (Asia) Pte Limited

On 30 June 2013, DataDot transferred its 50% share in DataDot Technology (Asia) Pte Limited for $1 to DataDot Technology Taiwan Pte Limited.

Acquisition of minority shareholding in DataDot Technology UK Limited (DDUK)

During the period, on 15 August, a share sale agreement was executed between DataDot Technology Limited (DataDot) and a minority shareholder of DataDot Technology UK Limited (DDUK). Under the agreement, all the shares owned by the minority shareholder were purchased by DataDot for an agreed consideration of £150,000. As part of the share sale agreement, £105,000 of a £250,000 loan from the minority shareholder to DDUK was also repaid during the period, with payment of the remaining £145,000 due in three instalments (£50,000 in July 2013 which has been paid, £50,000 in December 2013 and £45,000 in June 2014). The amount of the loan outstanding is interest bearing.

DataDot also executed a share sale agreement with the other minority shareholder of DDUK, for an agreed consideration of £60,000, with £5 paid immediately and the remaining £59,995 due on or before 1 July 2013 and was paid on the due date. This agreement was effective on 30 August 2012, at which point DataDot owned 100% of DDUK.

Appendix 4E 30 June 2013 - Page 43

DataDot Technolgy Limited

for the year ended 30 June 2013

Notes to the Financial Statements

26 Financial Risk Management

DataDot's principal financial instruments comprise banks loans, finance leases and cash and short ‑ term deposits. The main purpose of these financial instruments is to raise finance for DataDot’s operations. DataDot has various other financial assets and liabilities such as trade receivables and trade payables, which arise directly from its operations. It is, and has been throughout the period under review, DataDot’s policy that no trading in financial instruments shall be undertaken. The main risks arising from DataDot’s financial instruments are cash flow interest rate risk, liquidity risk, foreign currency risk and credit risk. The Board reviews and agrees policies for managing each of these risks and they are summarised below.

Risk Exposures and Responses

The main risks DataDot is exposed to through its financial instruments are credit risk, liquidity risk and market risk consisting of interest rate risk, foreign currency risk and commodity and equity price risk.

Interest Rate Risk

DataDot’s exposure to cash flow interest rate risk is minimal as DataDot’s only long ‑ term debt obligation with a floating interest rate is a $150,000 commercial bank loan with Commonwealth Bank of Australia repayable in 36 equal instalments.

Foreign exchange risk

As a result of significant investment in wholly ‑ owned and partly ‑ owned controlled entities in the United States, the United Kingdom and Taiwan, DataDot’s statement of financial position can be affected significantly by movements in the exchange rates. DataDot does not seek to hedge this exposure.

DataDot also has transactional currency exposures. Such exposure arises from sales or purchases by an operating unit in currencies other than the unit’s functional currency.

DataDot does require its operating units to use forward currency contracts to eliminate the currency exposures on any individual transactions in excess of $100,000 for which payment is anticipated more than one month after DataDot has entered into a firm commitment for a sale or purchase. There has been no such transaction during the year. It is DataDot's policy not to enter into forward contracts until a firm commitment is in place and to negotiate the terms of the hedge derivatives to exactly match the terms of the hedged item to maximise hedge effectiveness.

At 30 June 2013 DataDot had the following exposure to foreign currency that is not designated in cash flow hedges:

$ $

Financial Assets Cash and cash equivalents Trade and other receivables Financial Liabilities Trade and other payables Borrowings Net exposure	526,838 412,863 896,365 1,049,570
	1,423,203 1,462,433
	697,179 722,096 102,781 0
	799,960 722,096
	623,243 740,337

The following sensitivity analysis is based on the foreign currency rate risk exposures in existence at the statement of financial position date. At 30 June 2013, if the Australian dollar moved against the UK Pound and the US Dollar, as illustrated in the table below, with all other variables held constant, post tax profit/(loss) and equity would have been affected as follows:

		Post tax
Judgements of reasonably possible movements higher / (lower)		profit/(loss)	Equity
		$	$
Year Ended	30 June 2013
Plus	5%	(13,883)	34,413
Minus	10%	30,218	(80,363)
Year Ended	30 June 2012
Plus	5%	(19,819)	(249,248)
Minus	10%	48,033	587,464

The effect of volatility of foreign exchange rates within expected reasonable possible movements would not be material.

Appendix 4E 30 June 2013 - Page 44

DataDot Technolgy Limited

Notes to the Financial Statements

for the year ended 30 June 2013

26 Financial Risk Management (continued)

Price risk

DataDot's exposure to commodity price risk is minimal.

Credit Risk

Credit risk arises from the financial assets of DataDot, which comprise cash and cash equivalents, trade and other receivables. DataDot's exposure to credit risk arises from potential default of the counter party, with a maximum exposure equal to the carrying amount of these instruments. Exposure at reporting date is addressed in each applicable note.

DataDot does not hold any credit derivatives to offset its credit exposure.

DataDot trades only with recognised, creditworthy third parties, and as such collateral is not requested nor is it DataDot's policy to securitise its trade and other receivables.

It is DataDot's policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis with the result that DataDot's exposure to bad debts is not significant.

Liquidity risk

Liquidity risk arises from the financial liabilities of DataDot and DataDot’s subsequent ability to meet their obligations to repay their financial liabilities as and when they fall due.

DataDot’s objective is to maintain a balance between continuity of funding and flexibility through the use of loans, convertible notes, finance leases and hire purchase contracts. DataDot manages liquidity risk by monitoring cash flow and maturity profiles of financial assets and liabilities.

At reporting date, DataDot had total credit facilities of $144,184. $3,720 was utilised as a bank loan with 1 monthly repayment outstanding. $38,323 was provided through Lines of Credit of which $5,448 was available for immediate use. $32,750 was utilised in the provision of bank guarantees against commercial leases on real property. $1,783 was utilised against a corporate credit card facility and $47,460 was available for immediate use.

The table below reflects all contractually fixed pay ‑ offs and receivables for settlement, repayments and interest resulting from recognised financial liabilities as of 30 June 2013. For all obligations shown the respective undiscounted cash flows for the respective upcoming fiscal years are presented. Cash flows for financial assets and liabilities without fixed amount of timing are based on the conditions existing as at 30 June 2012.

The remaining contractual maturities of DataDot's financial liabilities are: 6 months or less 6‑12 months 1‑5 years	2013 2012 $ $ 337,701 190,068 158,698 29,312 52,806 528,067
	549,205 747,447

Maturity analysis of financial assets and liabilities based on management's expectations

The risk implied from the values shown in the tables below, reflects a balanced view of cash inflows and outflows. Leasing obligations, trade payables and other financial liabilities mainly originate from the financing of assets used in our ongoing operations such as property, plant, equipment and investments in working capital (e.g. inventories and trade receivables). These assets are considered in DataDot’s overall liquidity risk.

Appendix 4E 30 June 2013 - Page 45

DataDot Technolgy Limited

Notes to the Financial Statements

for the year ended 30 June 2013

26 Financial Risk Management (continued)

Consolidated entity 30 June 2013

Consolidated entity 30 June 2013 Within 1 Year 1 to 5 Years Over 5 Years Total $ $ $ $ Financial Assets Cash & cash equivalents 897,398 0 0 897,398 Trade & other receivables 1,247,698 0 0 1,247,698 Grant receivable 308,000 0 0 308,000 2,453,096 0 0 2,453,096 Financial Liabilities Trade & other payables 994,818 0 0 994,818 Borrowings 437,664 52,806 0 490,470 1,432,482 52,806 0 1,485,288 Net maturity 1,020,614 (52,806) 0 967,808 Consolidated entity 30 June 2012 Within 1 Year 1 to 5 Years Over 5 Years Total $ $ $ $ Financial Assets Cash & cash equivalents 1,409,367 0 0 1,409,367 Trade & other receivables 1,333,620 0 0 1,333,620 Grant receivable 508,687 0 0 508,687 3,251,674 0 0 3,251,674 Financial Liabilities Trade & other payables 1,061,917 0 0 1,061,917 Interest bearing loans & borrowings 748,904 0 0 748,904 1,810,821 0 0 1,810,821 Net maturity 1,440,853 0 0 1,440,853 Share Based Payments 2013 2012 Expenses arising from share based payments :‐ $ Restated $ Shares and rights issued under Employee Share Rights Plan :‐ Share Rights issued at 4.4c to Ben Bootle 01/01/2011 vesting 01/07/2012 0 73,467 Share Rights issued at 4.4c to Ross Hawkey 01/01/2011 vesting 01/07/2013 33,000 89,381 37,733 74,484 Share Rights issued at 4.4c to Greg Gothard 01/01/2011 vesting 01/07/2012 0 17,632 3,773 7,448 Share Rights issued at 4.4c to John Kraft 01/01/2011 vesting 01/07/2013 & 01/07/2014 7,547 14,897 44,000 0 46,586 0 Total Expense arsing from share based payments during the period 172,639 277,310 Movements is share rights for the financial year 2013 2013 2012 2012 No Avg issue $ No Avg issue $ Balance at the beginning of the period 12,475,000 0.0440 19,425,000 0.0440 Rights Granted 12,500,000 0.0224 4,500,000 0.0440 Shares Issued (6,225,000) 0.0440 0 0.0000 Rights Expired (2,250,000) 0.0440 (11,450,000) 0.0440 Balance at the end of the period 16,500,000 0.0269 12,475,000 0.0440 Share Rights issued at 1.6c to Gunther Schmidt 01/01/2011 vesting 01/07/2013, 01/07/2014 & 01/07/2015 Share Rights issued at 4.4c to Graham Loughlin 01/01/2011 vesting 01/07/2013 & 01/07/2014 Share Rights issued at 4.4c to Geoff George 01/01/2011 vesting 01/07/2013 & 01/07/2014 Share Rights issued at 2.6c to Ripley 33 P/L for contractor services rendered by Paul McLean 01/01/2013 vesting 01/07/2014, 01/07/2015 & 01/07/2016	Within 1 Year 1 to 5 Years Over 5 Years Total $ $ $ $ 897,398 0 0 897,398 1,247,698 0 0 1,247,698 308,000 0 0 308,000	Within 1 Year 1 to 5 Years Over 5 Years Total $ $ $ $ 897,398 0 0 897,398 1,247,698 0 0 1,247,698 308,000 0 0 308,000
	2,453,096 0 0 2,453,096
	994,818 0 0 994,818 437,664 52,806 0 490,470
	1,432,482 52,806 0 1,485,288
	1,020,614 (52,806) 0 967,808
	Within 1 Year 1 to 5 Years Over 5 Years Total $ $ $ $ 1,409,367 0 0 1,409,367 1,333,620 0 0 1,333,620 508,687 0 0 508,687
	3,251,674 0	0 3,251,674
	1,061,917 0 748,904 0	0 1,061,917 0 748,904
	1,810,821 0	0 1,810,821
	1,440,853 0	0 1,440,853
		2013 2012 $ Restated $ 0 73,467 33,000 89,381 37,733 74,484 0 17,632 3,773 7,448 7,547 14,897 44,000 0 46,586 0
		172,639 277,310
	16,500,000 0.0269 12,475,000 0.0440

27 Share Based Payments

Appendix 4E 30 June 2013 - Page 46

DataDot Technolgy Limited

Notes to the Financial Statements

for the year ended 30 June 2013

28 Parent Entity Disclosures

The following information has been extracted from the books and records of the parent, DataDot Technology Limited and has been prepared in accordance with Accounting Standards.

Assets Current assets Non‑current assets Total assets Liabilities Current liabilities Non‑current liabilities Total liabilities Equity Issued capital Accumulated losses Reserves Total equity Loss for the year of the parent entity Total comprehensive income for the year net of tax	2013 2012 $ Restated $ 401,655 1,621,159 6,018,199 4,627,821
	6,419,854 6,248,980
	674,689 624,873 6,095,972 5,259,565
	6,770,661 5,884,438
	33,376,382 33,102,482 (33,656,662) (33,153,306) (70,528) 415,366
	(350,808) 364,542
	(571,204) (1,210,801)
	(571,204) (1,210,801)

Parent Entity Commitments and Guarantees

DataDot has issued a bank guarantee of $32,750 (2012 : $32,750). No liability was recognised by DataDot in relation to the bank guarantee as the fair value of the guarantee is immaterial.

Remuneration commitments

Commitments for the payment of salaries and other remuneration under long term employment

contacts in existence at the reporting date but not recognised as liabilities.

Minimum remuneration payments payable Within one year Later than one year but not later than five years Later than five years	302,543 176,435 0 0 0 0
	302,543 176,435

29 Prior Period Adjustments and Restatement of Comparatives

Inventory, plant and equipment and depreciation & amortisation

Depreciation of plant and equipment commissioned and used in production and for loan in the year ended 30 June 2012 has been understated. This plant and equipment was not included in the schedule of depreciation as the assets were classified as under construction or as inventory. For the year ended 30 June 2012, inventory was overstated by $66,541, plant and equipment written down value was overstated by $41,812 and depreciation and amortisation expense was understated by $108,353.

Employee equity benefit reserve and employee benefits expense

Share rights granted to employees were not recognised over the correct vesting period and included a 12 month holding lock period beyond the vesting period. Additionally, expired share rights were classified as an expense and should have been written back to accumulated losses. As a result, for the year ended 30 June 2012, accumulated losses were overstated by $56,368, employee equity benefits reserve was understated by $91,616 and employee benefit expenses were understated by $147,923 (2012: $45,410).

Research and development grant

The research and development grant received and receivable from the Australian government has been reclassified as other income. A grant amount of $508,687 was classified as income tax benefit in the 2012 financial statements.

Appendix 4E 30 June 2013 - Page 47

DataDot Technolgy Limited

Notes to the Financial Statements

for the year ended 30 June 2013

29 Prior Period Adjustments and Restatement of Comparatives (continued)

Accumulated losses and foreign currency translation reserve

The unrealised exchange loss on the loan account with the subsidiary DataDot Technology USA Inc was classified as a loss in prior periods and has been reclassified as foreign currency translation reserve. There is no profit and loss reclassification effect in 2012. As a result, for the year ended 30 June 2012, accumulated losses were overstated by $2,380,148, foreign currency translation reserve was understated by $2,380,148.

Reclassification

DataDot undertook a review of accounts and classification is order to standardise reporting across the Group. As a result the following classification amendments have been made :‐

following classification amendments have been made :‐
	Adjustment
Consolidated statement of profit or loss and other income ‐ extract	$
Sale of goods	(188,141)
Service and licence fees	188,141
Cost of goods sold	(60,067)
Employee benefits expense	(216,484)
Administrative expenses	208,933
Marketing expenses	36,073
Finance costs	31,544

In relation to the above prior period adjustments and restatements of comparatives, the extracts for those items affected are below :‐

In relation to the above prior period adjustments and restatements of comparatives, the extracts for those items affected are below :‐
	2012	Adjustment	2012
	Reported $	$	Restated $
Consolidated statement of profit or loss and other comprehensive income ‐ extract
Sale of goods	6,610,892	(188,141)	6,422,751
Service and licence fees	85,116	188,141	273,257
Cost of goods sold	3,057,327	(60,067)	2,997,260
Gross profit	4,134,202	(60,066)	4,074,136
Other income	83,597	508,687	592,284
Expenses
Employee benefits expense	3,187,464	(68,561)	3,118,903
Administrative expenses	1,031,866	208,933	1,240,799
Marketing expenses	204,024	36,073	240,097
Finance costs	18,333	31,544	49,877
Depreciation and amortisation expenses	421,441	108,353	529,794
Loss from continuing operations before income tax	(2,166,988)	252,412	(1,914,576)
Income tax benefit	514,350	(508,687)	5,663
Net loss for the period	(1,652,638)	(256,275)	(1,908,913)
Loss for the period attributable to members of the parent entity	(1,390,726)	(256,275)	(1,647,001)
Total comprehensive income for the period net of tax	(1,713,793)	(256,275)	(1,970,068)
Total comprehensive income for the period net of tax attributable to members of the
parent entity	(1,451,881)	(256,275)	(1,708,156)
Basic earnings / (loss) per share (cents per share)	(0.35)	(0.05)	(0.40)
Diluted earnings / (loss) per share (cents per share)	(0.35)	(0.05)	(0.40)

Appendix 4E 30 June 2013 - Page 48

DataDot Technolgy Limited

for the year ended 30 June 2013

Notes to the Financial Statements

29 Prior Period Adjustments and Restatement of Comparatives (continued)

Consolidated statement of financial position ‐ extract Current Assets Inventories Total Current Assets Non‑Current Assets Plant and equipment Total Non‑Current Assets Total Assets Net Assets Equity Accumulated losses Reserves Parent interests Total Equity	2012 Adjustment 2012 Reported $ $ Restated $ 1,483,912 (66,541) 1,417,371
	4,794,287 (66,541) 4,727,746
	836,211 (41,812) 794,399
	3,798,058 (41,812) 3,756,246
	8,592,345 (108,353) 8,483,992
	6,301,396 (108,353) 6,193,043
	(27,248,431) 2,180,240 (25,068,191) 493,494 (2,288,593) (1,795,099)
	6,347,545 (108,353) 6,239,192 6,347,545 (108,353) 6,239,192

30 Subsequent Events

No matter or circumstance has arisen since 30 June 2013 which is not otherwise dealt with in this report, that has significantly affected or may significantly affect the operations of the Group, the results of its operations or the state of affairs of the Group.

Appendix 4E 30 June 2013 - Page 49

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