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18 August 2017

FY2017 Results Announcement and Outlook

_______________

Significantly improved cost base delivers positive earnings trend
EBITDA loss of $0.84m ($0.63m improvement on pcp)
NPAT loss of $1.38m ($1.89m improvement on pcp)
well placed to translate revenue growth into earnings
expense to revenue ratio improved by 3 percentage points
Strong volume in auto markets, but on lower pricing
Authentication revenue up 17% on prior year
significant sales pipeline opportunity
Further improvements to our authentication technology

In the 2017 Financial Year (FY2017) our microdot (DataDotDNA) business continued to perform strongly, with unit volumes up slightly against FY2016 (although revenue was adversely affected by price erosion).

Our authentication (DataTraceID) business’ revenue was up 17% on FY2016 and a number of improvements are being implemented which further strengthen its offerings and prospects.

Revenue

Revenue for FY2017 was $5.34m, down $1.29m against the prior comparable period. This fall was largely driven by:

the effect of price erosion ($0.8m),
movements in foreign currency exchange rates, particularly with respect to our European operations ($0.4m), and
lower royalties from our South African and Taiwan distributors, also partially driven by exchange rates ($0.1m).

Earnings

Earnings for FY2017 have improved significantly against the previous financial year:

EBITDA for FY2017 was a loss of $0.84m (pcp: $1.46m loss); an improvement of $0.63m or 43%; and
NPAT for FY2017 was a $1.38m loss (pcp: $3.26m loss); an improvement of $1.89m or 58%.

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Page 1

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These improvements were driven by the restructuring of the Company’s cost base, giving expense savings of $1.23m (22%) against the prior period.

Additional savings from this program will be realized in FY2018 as the effect of changes made during the year are annualized (approximately $0.4m). We plan to re-deploy the majority of these savings to support growth initiatives.

With these changes, the Company is well placed to translate revenue growth into positive earnings. Critically, the Company is well aware that the path to success is through the sale of its key products and capabilities, not simply through reducing costs. However, we firmly believe that basing that future growth trajectory off an efficient and effective cost base is a critical initial step to success.

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----- Start of picture text -----

Expenses (A$m) Expenses:Revenue (%)
$5.7
86%
83%
$4.5
FY16 FY17 FY16 FY17
----- End of picture text -----

Cash

As at 30 June 2017 the cash balance was $1.77m. During FY2018 the Company expects to be near cash flow neutral or better depending on the realization of new revenue from its pipeline. Additionally, the Company’s cash flow is much improved and, as a result, we do not foresee the need to raise further capital in the year ahead to fund operations.

DataDotDNA - Microdot Business Overview

In the auto sector our DataDotDNA volumes continue to be strong, principally driven by our business with:

Subaru Australia, this foundational relationship has seen volumes grow by 11% in FY2017,
Fiat Italy, where the 1 millionth kit was supplied during FY2017 (our volumes in the year were 165,000 kits (an equal record volume with FY2016)), and
DataDot Dealer Services, our US aftermarket distributor sold 139,000 kits in FY2017.

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Page 2

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Unit pricing for this high volume segment has come under some pressure in recent times.Nonetheless, we have maintained our relationships and volume, albeit with lower margins where appropriate.

The Company has also taken steps to reduce its Cost of Goods Sold as a means of regaining margin; the results from this effort will start to materialize in FY2018.

In aggregate the number of auto and industrial kits sold were up slightly on FY2016.

The opportunity in non-auto sectors (and overall) continues to be attractive at a macro level. In addition to direct sales and distributor led initiatives, the Company is seeking other partnerships to unlock additional growth for the DataDotDNA business.

The global growth opportunity for the Technology is substantial, annual production

volume of protectable assets is estimated to exceed 350 million

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----- Start of picture text -----

70m
120m
23m
0.8m 133m 4m
2m 0.3m
1m
----- End of picture text -----

OICA Production Sales Statistics 2016

DataTraceID - Authentication Business Overview

Revenue for DataTrace ID for FY2017 was $1.0m, up 17% against the prior period. However, it is now evident that there is substantial upside to the DataTraceID Authentication business. As such it will receive greater emphasis and focus from management in the coming year. In particular:

8 of the Company’s top 10 near term prospects are DataTraceID prospects,
the pipeline for DataTraceID is now significantly larger than DataDotDNA (excluding existing relationships),
in general terms it has higher margins and is more scalable, and
according to a report commissioned by the International Trademark Association (INTA) and the International Chamber of Commerce, the global economic value of counterfeiting and piracy could reach $2.3 trillion by 2022 (from $1.7 trillion in 2015)

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Page 3

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Additionally, the Company has taken steps to add to its Authentication capabilities which are centered on its patented CSIRO developed DataTraceID technology, by adding to its ability to assure and improve consumer trust, as set out in the following chart.

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Organisational Culture

Two years ago the Board recognised that cultural change and renewal was required to improve the Company’s performance.

In particular, we needed to become more customer focused and better able to use our technology and products to solve customer problems. A strong CEO was hired and subsequently a strategic CFO and a customer focused Head of Business Development were also added to the team.

During FY2017 further progress on this front was made, including:

changes to personnel and organisational structure, with approximately a quarter of the personnel in key executive, sales and research & development roles leaving the organisation and another third having their roles restructured, and
modernisation of the processes around goal setting, performance management and additional transparency around plans and progress.

As a result, in FY2018 the Company expects to see increasingly better returns out of its sales pipeline, lead generation and product development activity. Efficiencies from these changes were also an important factor in lowering our cost base, as described above.

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Executive Incentive Arrangements

To reinforce these cultural goals and encourage high performance, the Board has implemented new incentive arrangements for the Company’s senior executives, as described in the Remuneration Report.

A new Long Term Incentive scheme has been adopted in replacement of the old scheme under which three senior executives are provided with a non-recourse loan to fund the issue of shares by the Company to them. The shares are issued at 2.7c/share (well above the current share price), and effectively provide value to the executives only when the Company’s share price exceeds that threshold. While issued immediately (with the loan offsetting the subscription price, and hence no cash impact to the Company), the executives may not deal with the shares until they have vested, over three annual tranches; and until the loan for their purchase is repaid.

This has the advantage of immediately aligning senior executive interests with shareholder interests. The Board believes this will provide a major positive incentive to our senior executives’ performance.

The Board has also determined to pay partial STIs to these three senior executives for FY2017 given the major positive impact on earnings (achieved through significant reductions on the Company’s cost base), and the significant cultural improvements they have implemented over the financial year.

All three executives were engaged on relatively modest base remuneration for their skill set and payment of the partial STI recognises their economic value to the Company for the work completed in the year.

Outlook

The Outlook for the 2018 Financial Year is positive with:

a significantly improved cost base, meaning the group is well placed to translate revenue growth into positive earnings results
strong volume in all key areas of DataDotDNA’s auto markets
the number of sales opportunities maturing in the sales pipeline particularly for DataTraceID
a number of improvements in our authentication value proposition implemented and to come, with resultant lead generation and pipeline growth
increasing confidence in the prospects for our authentication business’ future and the role it can play in delivering material upside to our results.

The Board and management share investors’ frustration with slower than anticipated growth in sales.

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As we have highlighted above, steps have been taken during the year to change the culture of the company to address the underlying issues. This has been a complex transition - but we are seeing momentum building within the business as a result - which augers well for growth this year.

Contact Information:

DataDot Technology Limited Temogen Hield, CEO Phone: 02 – 89774900 e-mail: [email protected] web site: www.datadotdna.com

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APPENDIX 4E Consolidated Financial Report for the year ended 30 June 2017

Contents	Page
Appendix 4E - Financial report	2
Directors' Report	5
Consolidated financial statements	25

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 Preliminary Final Report - June 2017

Page 1

DataDot Technology Limited

Appendix 4E Preliminary Financial Report

DataDot Technology Limited

ABN : 54 091 908 726

Reporting period Year ended 30 June 2017 Previous reporting period Year ended 30 June 2016

Results for announcement to the market	2017	2016	Change	Change
	$	$	$	%
Revenues from ordinary activities	5,343,983	6,631,371	(1,287,388)	-19.41%
Gross Margin	3,013,589	3,763,687	(750,098)	-19.93%
Expenses	4,454,725	5,683,982	(1,229,257)	-21.63%
EBITDA	(835,729)	(1,464,261)	628,532	42.92%
Loss from ordinary activities after tax attributable to owners of DataDot	(1,379,453)	(3,264,627)	1,885,174	57.75%
Technology Limited
Loss for the year attributable to the owners of DataDot Technology	(1,379,453)	(3,264,627)	1,885,174	57.75%
Limited
Net tangible assetsper ordinarysecurity	0.0032	0.0047	(0.0015)	-31.91%

Dividends
No dividends werepaid or madepayable duringtheyear ended or since	30 June 2017.

Commentary
Please refer to the attached commentaryand consolidated financial statements for theyear ended			30 June 2017.

Other information Control gained over entities having a material effect Please refer to the attached commentary and consolidated financial statements for the year ended 30 June 2017. 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 controlled entities note in the financial statements for the year ended 30 June 2017. Audit status This report is based on audited financial statements. Attachments Additional disclosure requirements can be found in the notes to the attached consolidated financial statements.

Signed By

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Bruce Rathie - Chairman 18-Aug-17

Appendix 4E Preliminary Final Report - June 2017

Page 2

DataDot Technology Limited

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Financial Report 201 7 Financial Year Ended 30 June 201 7 ABN 54 091 908 726

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Financial Report 2017

Page 3

DataDot Technology Limited

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Financial Report 2017 Financial Year ended 30 June 2017

Contents	Page
Directors Report	5
Remuneration Report	14
Auditors' Independence Declaration	24
Consolidated financial statements	25

Financial Report 2017

DataDot Technology Limited

Page 4

for the year ended 30 June 2017

Directors' Report

Directors

The Directors present their report, together with the financial statements of the consolidated entity comprising DataDot Technology Limited ("DataDot", "company" or "parent entity") and the entities it controlled (referred to hereafter as the “consolidated entity”) for the financial year ended 30 June 2017.

The following persons were directors of DataDot during the financial year and up to the date of this report, unless otherwise stated:

Bruce Rathie
Gary Flowers
Stephe Wilks

Principal activities

The principal activities of DataDot during the year were :

(a) to manufacture and distribute asset identification solutions that include :

DataDotDNA[®] - polymer and metallic microdots containing data that is unique to the assets to which the microdots are attached;

Asset Registers - databases that record asset identification data and are accessible by law enforcement agencies and insurance investigators,

(b) to manufacture and distribute high security DataTraceID[®] authentication solutions,
(c) To develop and distribute customised solutions combining DataDotDNA, DataTraceID, asset registration and/or other technologies.

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

Dividends

The Directors recommend that no dividend be paid. No dividends have been declared or paid during the period.

Review of operations

In the 2017 Financial Year (FY2017) our microdot (DataDotDNA) business continued to perform strongly with unit volumes up slightly against FY2016 (although revenue was adversely affected by price erosion).

Our authentication (DataTraceID) business revenue was up 17% on FY2016 and a number of improvements are being implemented which further strengthen its offerings and prospects.

Revenue

Revenue for FY2017 was $5.34m down $1.29m against the prior comparable period.

This fall was largely driven by:

the effect of price erosion ($0.8m),
movements in foreign currency exchange rates, particularly with respect to our European operations ($0.4m), and
lower royalties from our South African and Taiwan distributors, also partially driven by exchange rates ($0.1m).

Earnings

Earnings for FY2017 have improved significantly against the previous financial year:

EBITDA for FY2017 was a loss of $0.84m (pcp: $1.46m loss); an improvement of $0.63m or 43%; and
NPAT for FY2017 was a $1.38m loss (pcp: $3.26m loss); an improvement of $1.89m or 58%.

These improvements were driven by the restructuring of the Company’s cost base, giving expense savings of $1.23m (22%) against the prior period. Additional savings from this program will be realised in FY2018 as the effect of changes made during the year are annualised (approximately $0.4m). At this stage, we plan to re-deploy the majority of these savings to support growth initiatives.

Financial Report 2017

DataDot Technology Limited

Page 5

Directors' Report (continued)

for the year ended 30 June 2017

With these changes the Company is well placed to translate revenue growth into positive earnings earnings. Critically, the Company is well aware that the path to success is through the sale of its key products and capabilities, not simply through reducing costs. However, we firmly believe that basing the future growth trajectory off an efficient and effective cost base is a critical initial step to success.

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----- Start of picture text -----

Expenses (A$m) Expenses:Revenue (%)
$5.7
86%
83%
$4.5
FY16 FY17 FY16 FY17
----- End of picture text -----

Cash

As at 30 June 2017 the cash balance was $1.77m. During FY2018 the Company expects to be near cash flow neutral or better depending on the realisation of new revenue from its pipeline. Additionally, the Company’s cash flow is much improved and, as a result, we do not foresee the need to raise further capital in the year ahead to fund operations.

DataDotDNA - Microdot Business Overview

In the auto sector our DataDotDNA volumes continue to be strong, principally driven by our business with:

Subaru Australia, this foundational relationship has seen volumes grow by 11% in FY2017,
Fiat Italy, where the 1 millionth kit was supplied during FY2017, (our volumes in the year were 165,000 kits (an equal record volume with FY2016)), and
DataDot Dealer Services, our US aftermarket distributor sold 139,000 kits in FY2017.

Unit pricing for this high volume segment has come under some pressure in recent times. Nonetheless, we have maintained our relationships and volume, albeit with lower margins where appropriate.

The Company has also taken steps to reduce its Cost of Goods Sold as a means of regaining margin. The results from this effort will start to materialise in FY2018.

In aggregate the number of auto and industrial kits sold were up slightly on FY2016.

The opportunity in non-auto sectors (and overall) continues to be attractive at a macro level. In addition to direct sales and distributor lead initiatives, the Company is seeking other partnerships with other parties to unlock additional growth for the DataDotDNA business.

Financial Report 2017

Page 6

DataDot Technology Limited

Directors' Report (continued)

for the year ended 30 June 2017

The global growth opportunity for the Technology is substantial, annual production volume of protectable assets is estimated to exceed 350 million

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----- Start of picture text -----

70m
120m
23m
0.8m 133m 4m
2m 0.3m
1m
OICA Production Sales Statistics 2016
----- End of picture text -----

DataTraceID - Authentication Business Overview

Revenue for DataTraceID for FY2017 was $1.0m, up 17% against the prior period. However it is now evident that there is substantial upside to the DataTraceID Authentication business. As such it will receive greater emphasis and focus from management in the coming year.

In particular:

8 of the Company’s top 10 near term prospects are DataTraceID prospects,
the pipeline for DataTraceID is now significantly larger than DataDotDNA (excluding existing relationships),
in general terms it has higher margins and is more scalable, and
according to a report commissioned by the International Trademark Association (INTA) and the International Chamber of Commerce, the global economic value of counterfeiting and piracy could reach $2.3 trillion by 2022 (from $1.7 trillion in 2015).

Financial Report 2017

DataDot Technology Limited

Page 7

Directors' Report (continued)

for the year ended 30 June 2017

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Organisational Culture

Two years ago the Board recognised that cultural change and renewal was required to improve the Company’s performance.

During FY2017 further progress on this front was made, including:

changes to personnel and organisational structure, with approximately a quarter of the personnel in key executive, sales and/or research & development roles leaving the organisation, and another third having their roles restructured, and
modernisation of the processes around goal setting, performance management and additional transparency around plans and progress.

Financial Report 2017

Page 8

DataDot Technology Limited

for the year ended 30 June 2017

Directors' Report (continued)

Executive Incentive Arrangements

To reinforce these cultural goals and encourage high performance, the Board has implemented new incentive arrangements for the Company’s senior executives, as described in the Remuneration Report.

A new Long Term Incentive scheme has been adopted in replacement of the old scheme, under which three senior executives are provided with a non-recourse loan to fund the issue of shares by the Company to them. The shares are issued at 2.7c/share (well above the current share price), and effectively provide value to the executives only when the Company’s share price exceeds that threshold. While issued immediately (with the loan offsetting the subscription price, and hence no cash impact to the Company), the executives may not deal with the shares until they have vested, over three annual tranches; and until the loan for their purchase is repaid.

Outlook

The Outlook for the 2018 Financial Year is positive with:

a significantly improved cost base, meaning the group is well placed to translate revenue growth into positive earnings results
strong volume in all key areas of DataDotDNA’s auto markets
the number of sales opportunities maturing in the sales pipeline particularly for DataTraceID
a number of improvements in our authentication value proposition implemented and to come, with resultant lead generation and pipeline growth
increasing confidence in the prospects for our authentication business’ future and the role it can play in delivering material upside to our results.

The Board and management share investors’ frustration with slower than anticipated growth in sales.

As we have highlighted above, steps have been taken during the year to change the culture of the company to address the underlying issues.

This has been a complex transition but we are seeing momentum building within the business as a result which augers well for growth this year.

Financial Report 2017

Page 9

DataDot Technology Limited

for the year ended 30 June 2017

Directors' Report (continued)

Net Assets at 30 June 2017 were $5,178,682 (2016: $6,425,313). Assets per share at 30 June 2017 were $0.0068 (2016: $0.0085).

Significant changes in the state of affairs

Other than as set out in the Review of Operations there have been no significant changes in the state of affairs of the group.

Matters subsequent to the end of the financial year

On 24 July 2017, 4,285,714 shares were issued as the final payment of the buyout value of a royalty payable contract. This has the impact of reducing costs in the second half of FY 17 and FY 18 and beyond.

No other matter or circumstance has arisen since 30 June 2017 that has significantly affected, or may significantly affect the consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs.

Environmental regulation

The consolidated entity is not subject to any significant environmental regulations under Australian Commonwealth or State Law.

Financial Report 2017

Page 10

DataDot Technology Limited

Directors' Report (continued)

for the year ended 30 June 2017

Information on Directors and Company Secretary

Mr Bruce Rathie B.Com., LL.B., MBA, Grad Dip CSP, SA Fin., FAICD, FAIM

Chairman

Mr Rathie joined the Board as a non-executive Director and Chairman on 16 October 2009 and was appointed Executive Chairman in January 2012. Following the appointment of Temogen Hield as CEO in August 2015, Mr Rathie resumed the role of NonExecutive Chairman. Mr Rathie has held several senior positions in investment banking and commercial law including: Managing Director, Jardine Fleming Australia Capital Ltd; Director Corporate Finance, Ord Minnett Inc; and Director, Investment Banking, Salomon Brothers/Salomon Smith Barney Australia. In addition to listed Directorships below, Mr Rathie is Chairman of Capricorn Mutual Limited and Vice Chairman of Capricorn Society Limited. He was Chairman of the Remuneration and Nomination Committee until that role was assumed by Mr Stephe Wilks on 24 June 2016. He is a member of the Audit and Risk Management Committee. In the last four years Mr Rathie has also served as a director of the following listed companies:

PolyNovo Limited - Appointed February 2010

Mungana Goldmines Limited - Appointed September 2010; Resigned August 2013

Mr Gary Flowers B.Com., LL.B., FAICD

Independent Non-Executive Director

Mr Flowers joined the Board as a non-executive Director on 27 November 2007. Until 2007 Mr Flowers was Managing Director and CEO of Australian Rugby Union, CEO of SANZAR and a Council Member of the International Rugby Board. He was previously National Managing Partner of Sparke Helmore Lawyers. He is currently Chairman of Mainbrace Constructions Pty Limited, Director of Sparke Helmore Lawyers, Chairman of NSW Institute of Sport and Chairman of Northern Star Investments Pty Limited. He is Chairman of the Audit and Risk Management Committee and a member of the Remuneration and Nomination Committee. In the last four years Mr Flowers also served as a director of SkyFii Limited.

Mr Stephe Wilks

Independent Non-Executive Director

Mr Wilks joined the Board as a non-executive Director on 26 February 2016. He has over 25 years’ experience in the telecommunications industry both within Australia and overseas. He has been Regional Director (Asia & Japan) – Regulatory Affairs for BT Asia Pacific, Managing Director of XYZed Pty Ltd (an Optus company) as well as Chief Operating Officer of Nextgen Networks and Personal Broadband Australia. Mr Wilks is also involved with a number of private equity backed businesses in the media and technology industries. Mr Wilks has experience across a range of commercial and operations disciplines, governance and corporate finance and M&A. He is Chairman of the Remuneration and Nomination Committee and a member of the Audit and Risk Management Committee.

In the last four years Mr Wilkes has also served as a director of Dubber Corporation Limited

Mr Patrick Raper FCPA, FAICD

Company Secretary

Mr Raper joined DataDot in March 2014 as Group CFO and was appointed as Company Secretary on 22 December 2014. In June 2017 he stepped down from the position of CFO but remains as the Company Secretary. He was previously CFO and Company Secretary for Ecosave Holdings Limited (ASX: ECV) and CFO and Company Secretary of CMA Corporation Limited (ASX: CMV) and has held a number of roles within the Investment portfolio companies of Hawkesbridge Private Equity including Company Secretary, CFO, Joint Managing Director and Chairman of Trippas White Catering and Director of Corporate Services with Integrated Premises Services Pty Limited. Mr Raper was formerly CFO and Company Secretary for a number of Touraust Corporation managed entities including Reef Casino Trust (ASX: RCT) and Australian Tourism Group (ASX: ATU).

Financial Report 2017

Page 11

DataDot Technology Limited

for the year ended 30 June 2017

Directors' Report (continued)

Directors' interests

The relevant interest of each director in the shares and options over shares issued by DataDot, as notified by the directors to the Australian Stock Exchange in accordance with the Corporations Act 2001 , at the date of this report is as follows :-

Director	Interest in	Interest in	Interest in
	Shares	Share Options	Share Rights
Bruce Rathie	35,900,000	2,000,000	-
GaryFlowers	5,487,265	1,000,000	-
Stephe Wilks	-	1,000,000	-

Meetings of Directors

The number of meetings of the company's Board of Directors ('the Board') and of each Board committee held during the year ended 30 June 2017 and the number of meetings attended by each of the directors were :

Director	Board Meetings	Board Meetings	Remuneration and Nomination Committee Meetings	Remuneration and Nomination Committee Meetings	Audit and Risk Management Committee Meetings	Audit and Risk Management Committee Meetings
	No. eligible to attend	No. attended	No. eligible to attend	No. attended	No. eligible to attend	No. attended
Bruce Rathie Gary Flowers Stephe Wilks	12 12 12	12 12 12	1 1 1	1 1 1	2 2 2	2 2 2

Share rights and options

Share Rights

Unissued ordinary shares of DataDot Technology Limited under the share rights plan at the date of this report are as follows:

Grant date	Date of expiry	Number unvested
26 March 2014	26 March 2021	2,000,000

Share Options

Unissued ordinary shares of DataDot Technology Limited under the share options plan at the date of this report are as follows:

Issue Date	Date of Expiry	Number of Share Options	Exercise Price
27 November 2014	27 November 2017	3,000,000	Each Option will entitle the holder to subscribe for one Share at an exerciseprice of 5 centsper Share.
20 December 2016	20 December 2019	1,000,000	Each Option will entitle the holder to subscribe for one Share at an exerciseprice of 5 centsper Share.
26 August 2015	1 July 2018 Note 1	20,000,000	Each Option will entitle the holder to subscribe for one Share at an exerciseprice of 2.7 centsper Share
13 June 2016	1 July 2019 Note 1	9,000,000	Each Option will entitle the holder to subscribe for one Share at an exerciseprice of 2.7 centsper Share
11 October 2016	1 July 2019 Note 2	21,000,000	Each Option will entitle the holder to subscribe for one Share at an exerciseprice of 2.7 centsper Share

Note 1: These Options will be cancelled on the day after the date of this report and will be replaced with Ordinary Shares issued under the company Share Issue and Loan scheme, subject to the final results for FY17 announced herein.

Note 2: 9,000,000 of these Options will be cancelled on the day after the date of this report and will not be replaced.

For details of share options and share rights issued to directors and executives as remuneration, refer to the remuneration report.

Financial Report 2017

Page 12

DataDot Technology Limited

for the year ended 30 June 2017

Directors' Report (continued)

Indemnity and insurance of officers and auditors

No indemnities have been given to any person who is or has been an officer or auditor of the consolidated entity.

During the year DataDot paid insurance premiums in respect of directors’ and officers’ liability insurance contracts. The directors have not included details of the nature of the liabilities covered or the amount of the premium paid in respect of the directors’ and officers’ liability insurance contracts, as such disclosure is prohibited under the terms of the contract.

Proceedings on behalf of the Company

No person has applied to the court under section 237 of the Corporations Act 2001 , for leave to bring proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking responsibility on behalf of the Company, for all or part of those proceedings.

Non audit services

Details of the amounts paid or payable to the auditor for non-assurance services provided by the auditor during the financial year by the auditors are outlined in note 6 to the financial statements.

The Directors are satisfied that the provision of non-audit services during the financial year by the auditor, (or by another person or firm on the auditors’ behalf), is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001.

The Directors are of the opinion that the services disclosed in note 6 to the financial statements do not compromise the external auditor's independence requirements of the Corporations Act 2001 for the following reasons :-

(a) all non-audit services have been reviewed and approved to ensure that they do not impact on the integrity and objectivity of the auditor; and
(b) none of the services undermine the general principles relating to auditor independence set out in APES110 Code of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board, including reviewing or auditing the Auditor's own work, acting in a management or decision making capacity for the Company, acting as an advocate for the Company, or jointly sharing economic risks and rewards.

Auditor's independence declaration

A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 for the year ended 30 June 2017 is set out on page 24 of the financial report.

Auditor

BDO East Coast Partnership continues in office in accordance with section 327 of the Corporations Act 2001 .

Financial Report 2017

Page 13

DataDot Technology Limited

for the year ended 30 June 2017

Directors' Report (continued)

The following Remuneration Report forms part of the Directors’ Report

Remuneration Report (audited)

The remuneration report, which has been audited, outlines the key management personnel remuneration arrangements for the consolidated entity in accordance with the requirements of the Corporations Act 2001 and its Regulations.

Key management personnel

The following key management personnel (hereafter referred to as "KMP") of the consolidated entity throughout the year consisted of the following directors and persons of DataDot Technology Limited:

Directors

Bruce Rathie Gary Flowers Stephe Wilks Executives Temogen Hield Andrew Winfield David Williams

Chairman Appointed 16 October 2009 Non-Executive Director Appointed 27 November 2007 Non-Executive Director Appointed 26 February 2016 Chief Executive Officer Appointed 26 August 2015 Managing Director DataDot UK Appointed 1 July 2012 Chief Financial Officer Appointed 14 June 2016

Appointed 16 October 2009 Appointed 27 November 2007 Appointed 26 February 2016

Shares and Options Held

The number of shares and share options held by each KMP (or their related party) during the financial year, or at the date that they ceased their role as KMP is as follows:

Balance as at 30/6/2016	Vesting of Share Rights or Share Issues as part of remuneration	Other Additions	Disposals	Balance as at 30/6/2017

30,565,854	-	5,334,146	-	35,900,000
5,487,265	-	-	-	5,487,265
-	-	-	-	-
-	-	-	-	-

-	-	400,000	-	400,000
-	-	-	-	-
-	-	-	-	-
-	-	-	-	-
36,053,119	-	5,734,146	-	41,787,265

Financial Report 2017

Page 14

DataDot Technology Limited

Remuneration Report (audited) (continued)

for the year ended 30 June 2017

Balance as at 30/6/2016	Issue of Options as part of remuneration	Other Additions	Disposals or Cancellations	Balance as at 30/6/2017
2,000,000	-	-	-	2,000,000
1,000,000	-	-	-	1,000,000
-	1,000,000	-	-	1,000,000

20,000,000	-	-	-	20,000,000
9,000,000	-	-	-	9,000,000
-	6,000,000	-	-	6,000,000
-	15,000,000	-	-	15,000,000
32,000,000	22,000,000	-	-	54,000,000

Note 1. The CEO options were granted on 26 August 2015 with an expiry date of 1 July 2018. The exercise price is 2.7 cents with the fair value per option being 1 cent.
Note 2. The CFO options were granted on 13 June 2016 with an expiry date of 1 July 2019. The exercise price is 2.7 cents with the fair value per option being 1 cent.
Note 3. The Executive options were granted on 11 October 2016 with an expiry date of 1 July 2019. The exercise price is 2.7 cents with the fair value per option being 1 cent.

Remuneration policy

Key Management Personnel (KMP) have authority and responsibility for planning, directing and controlling the activities of DataDot. KMP include the directors of the parent entity, the group CEO, chief financial officer, the chief executive of the UK subsidiary company DataDot Technology (UK) Limited and the Vice President Business Development of DataDot Technology USA Inc.

Remuneration levels of KMP are determined by the Remuneration and Nomination Committee. The Committee’s charter is to review and make recommendations to the Board in relation to :-

Executive remuneration and incentive policy,
The remuneration of the CEO, executive directors and all direct reports of the CEO,
Executive incentive plans,
The remuneration of non-executive directors,
Retention, performance assessment and termination policies and procedures for non-executive directors, the CEO, executive directors and all direct reports of the CEO,
Establishment and oversight of employee and executive share plans and share option plans and share loan plans,
Superannuation arrangements,
The disclosure of remuneration in DDT’s publications, including ASX filings and the Annual Report,
Board composition, having regard to necessary and desirable competencies,
Board succession plans, and
Evaluation of Board performance.

The Committee did not obtain a remuneration recommendation or other advice from a remuneration consultant in 2017.

Financial Report 2017

Page 15

DataDot Technology Limited

for the year ended 30 June 2017

Remuneration Report (audited) (continued)

Remuneration policy (consolidated)

Board policy for determining the composition and value of remuneration for KMP comprises the following elements :-

Remuneration to contribute to the broader outcome of creating shareholder value,
Remuneration to be commensurate with individual duties and responsibilities,
Remuneration to be market competitive in order to attract, retain and motivate people of the highest quality,
Remuneration to be aligned with DataDot’s business strategies and financial targets,
Executives’ remuneration to comprise fixed and variable components,
Variable components to be tied to the attainment of both short-term and long-term performance targets of individuals and DataDot,
Variable components of executive remuneration to be between 30% and 50% of the value of total remuneration,
Variable component payment to be subject to DataDot’s financial capacity, and
This policy to apply uniformly across DataDot.

In relation to non-executive directors, the Constitution of DataDot and ASX Listing Rules specify that aggregate remuneration shall be determined from time to time by a general meeting. The latest determination was at the 2004 AGM when shareholders approved a ceiling on aggregate remuneration of $300,000 per annum. The actual amount paid is currently $50,000 per annum for each non-executive director other than the Chairman of the Audit and Risk Management Committee, who receives $55,000 per annum in that capacity and the Chairman of the Board who receives $85,000 in that capacity. Directors do not receive performance related remuneration and directors’ fees cover both main board and committee activities. Directors of Group subsidiary companies do not receive directors’ fees.

Relationship between remuneration and consolidated entity performance

The effect of remuneration policy on DataDot’s financial performance and on shareholder value is central to the Board’s and Remuneration and Nomination Committee’s decisions. For this reason a primary objective of remuneration policy is to tie the remuneration of KMP to financial performance, so ensuring that a significant proportion of the total remuneration of KMP is at risk, short term incentive payments (STI) being tied to net profit targets, and long-term incentive payments (LTI) being tied to growth in shareholder value. In this respect, the key factors for consideration are continuing product development and improvement, business and revenue growth, developing and maintaining the appropriate corporate culture, strategic adjustments in consultation with the Board and maintenance of an efficient cost base.

The Company’s performance and shareholder wealth for each of the last five years were

	2013	2014	2015	2016	2017
Revenue	7,030,437	7,210,707	7,026,595	6,631,371	5,343,981
EBITDA	304,944	(845,825)	(279,228)	(1,464,259)	(835,729)
Net loss after tax	(227,905)	(1,285,755)	(867,354)	(3,264,627)	(1,379,453)
Basic earnings per share (in cents)	(0.05)	(0.22)	(0.12)	(0.43)	(0.18)
Share price at year end (in cents)	1.70	2.10	1.90	2.00	.50

Performance based remuneration

The remuneration of KMP who are directors included a fixed remuneration component and an LTI component. The LTI component for directors includes share options. Options were last granted in FY 2016 to assist in the reward and retention of the Directors of the Company. The grant of Director Options is consistent with the Company’s long-term incentive remuneration policy, providing Directors with the opportunity to participate in the future growth of the Company through share ownership. The Board considers the grant of Director Options in FY 2015 to each of Mr Rathie and Mr Flowers and in FY 2016 to Mr Wilks is reasonable in the circumstances given the necessity to attract and retain Directors of the highest calibre while preserving the Company’s cash reserves and the terms on which they were issued in particular the 5c strike price.

In 2017 the remuneration of the KMP who are not directors comprised a fixed element and a performance based STI component and a performance based LTI component. The fixed element is payable in cash. The STI component is payable in cash or shares at the discretion of the directors. In 2017 KMP’s have been determined with reference to the updated Group Organisation Chart to include only the Directors, the CEO, the CFO, the Managing Director of the UK and the Vice President Business Development in USA.

Financial Report 2017

Page 16

DataDot Technology Limited

for the year ended 30 June 2017

Remuneration Report (audited) (continued)

The LTI component has in past years consisted of share rights and share options granted under the terms of the DataDot Technology Executives Share Rights Plan, for which shareholder approval was renewed at the 2013 AGM. In 2017/2018 and going forward, an Employee Share and Loan Scheme has been adopted to supplement the existing options scheme however those KMP’s participating in the Employee Share and Loan Scheme will not continue to participate in the existing options scheme . The characteristics of securities issued under this plan are:-

Share and Loan Scheme

Certain KMP’s are offered the opportunity to subscribe for shares in the Company, with the payment for that subscription being lent to the KMP on a limited recourse basis. KMP’s become fully entitled to the shares in three equal tranches.
No amounts are paid or payable by the recipient on issue of the shares;
Shares issued under this plan may only be dealt with by the recipient when the recipient becomes unconditionally entitled to the shares, and when the loans relating to those shares are fully repaid.
Where any loan amount remains unpaid one year after the date of the last unconditional Entitlement date of the offer shares, the proportionate number of shares in respect of that loan amount will be forfeited for the total nominal consideration of $1

Number of ordinary shares issued under the Share and Loan Scheme and provided as remuneration :-

For the year ended 30 June 2017 *Directors* *Key Management Personnel*Note 1 *Executive*s	Balance Granted as Vesting of Expiring or Lapsing Balance as at Remuneration Share Share as at 30/06/2016 Rights Rights 30/06/2017 - - - - - - - - - - - - - - -

Note 1 - 40,316,032 Shares are to be issued to KMP on the day after the date of this report. At the point of issue of the shares, any share options issued to those KMP’s will no longer be available to those KMP.

Share Rights

Each share right converts into one fully paid ordinary share in the Company on completion of the vesting conditions;
No amounts are paid or payable by the recipient on receipt or exercise of a share right;
Subject to the recipient’s continuous employment, share rights vest in three equal tranches at varying intervals after the date of issue;
A trading restriction applies for a further 12 months after vesting; and
Share rights expire 7 years after issue.

Number of share rights provided as remuneration :-

For the year ended 30 June 2017 *Directors* Bruce Rathie Gary Flowers Stephe Wilks *Executive*s Graham Loughlin James McCallum Patrick Raper - Note 1 Andrew Winfield	Balance Granted as Vesting of Expiring or Lapsing Balance as at Remuneration Share Share as at 30/06/2016 Rights Rights 30/06/2017 - - - - - - - - - - - - - - - 2,000,000 - (1,000,000) (1,000,000) - 3,333,334 - - (3,333,334) - 2,000,000 - - - 2,000,000 333,334 - - (333,334) -
	7,666,668 - (1,000,000) (4,666,668) 2,000,000

Note 1 – 2,000,000 Share Rights due to vest on 1 January 2016 did not vest and were rolled to 1 January 2017. New employment arrangements for Mr Raper as Company Secretary saw 2,000,000 Share Rights cancelled, with 2,000,000 Share Rights remaining and due to vest on 1 January 2017.

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

Financial Report 2017

Page 17

DataDot Technology Limited

Remuneration Report (audited) (continued)

for the year ended 30 June 2017

For the year ended 30 June 2016 *Directors* Bruce Rathie Gary Flowers Alison Coutts Stephe Wilks *Executive*s Graham Loughlin – Note 1 Gunther Schmidt – Note 2 James McCallum – Note 3 Patrick Raper - Note 4 Andrew Winfield - Note 5	Balance Granted as Vesting of Expiring or Lapsing Balance as at Remuneration Share Share as at 30/06/2015 Rights Rights 30/06/2016 - - - - - - - - - - - - - - - - - - - - - 2,000,000 - - 2,000,000 1,500,000 - (1,500,000) - - 6,666,667 - (3,333,333) - 3,333,334 4,000,000 - - (2,000,000) 2,000,000 333,334 - - - 333,334
	12,500,001 2,000,000 (4,833,333) (2,000,000) 7,666,668

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

Note 1 – 1,000,000 Share Rights vested on 1 July 2016. Graham Loughlin ceased employment on 2 July 2016 and consequently 1,000,000 Share Rights were cancelled.
Note 2 – 1,500,000 Share Rights held by Dr Gunther Schmidt at 30 June 2016 vested on 1 July 2015. Dr Schmidt ceased employment on 9 March 2016.
Note 3 – 3,333,333 Share Rights held at 30 June 2015 vested on 1 July 2015. 3,333,334 Share Rights due to vest on 1 July 2016 did not vest and were subsequently cancelled.
Note 4 – 2,000,000 Share Rights due to vest on 1 January 2016 did not vest and were rolled to 1 January 2017. New employment arrangements for Mr Raper as Company Secretary saw 2,000,000 Share Rights cancelled, with 2,000,000 Share Rights remaining and due to vest on 1 January 2017.
Note 5 - 333,334 Share Rights due to vest on 1 July 2016 did not vest and were subsequently cancelled.

Financial Report 2017

Page 18

DataDot Technology Limited

for the year ended 30 June 2017

Remuneration Report (audited) (continued)

Share Options

Each share option converts into one fully paid ordinary share in the Company on exercising of the option;
Directors options have a strike price of $0.05 payable by the Director on exercise of the option;
Non Director KMPs options have a strike price of $0.027 payable by the KMP on exercise of the option
All options have an expiry date which is approximately 3 years after the issue date.
A trading restriction applies for 12 months after exercise.

Number of share options provided as remuneration :-

For the year ended 30 June 2017 *Directors* Bruce Rathie Gary Flowers Stephe Wilks *Key Management Personnel* Temogen Hield - Note 1 David Williams – Note 1 Andrew Winfield *Executives –*Note 2	Balance Granted as Exercise of Expiring or Lapsing Balance as at Remuneration Share Share as at 30/06/2016 Options Options 30/06/2017 2,000,000 - - - 2,000,000 1,000,000 - - - 1,000,000 - 1,000,000 - - 1,000,000 20,000,000 - - - 20,000,000 9,000,000 - - - 9,000,000 - 6,000,000 - - 6,000,000 - 15,000,000 - - 15,000,000
	32,000,000 22,000,000 - - 54,000,000

Note 1 – These options will be cancelled on the day after the date of this report, and will be replaced with Shares issued under the Share and Loan Scheme detailed above.

Note 2 – 9,000,000 of these options will be cancelled on the day after the date of this report and will not be replaced. Once these options have been cancelled, there will 12,000,000 options on issue for key management personnel and executives.

For the year ended 30 June 2016 *Directors* Bruce Rathie Gary Flowers Alison Coutts *Key Management Personnel* Temogen Hield David Williams	Balance Granted as Exercise of Expiring or Lapsing Balance as at Remuneration Share Share as at 30/06/2015 Options Options 30/06/2016 2,000,000 - - - 2,000,000 1,000,000 - - - 1,000,000 1,000,000 - - (1,000,000) - - 20,000,000 - - 20,000,000 - 9,000,000 - - 9,000,000
	4,000,000 29,000,000 - (1,000,000) 32,000,000

Summary of Director, KMP and Other Executives Equity Remuneration instruments on issue following the changes detailed above to be implemented on the day after the date of this report :

Directors KMP’s Other Executives	Ordinary Shares / Loan Scheme Options Share Rights - 4,000,000 - 40,316,032 6,000,000 - - 12,000,000 2,000,000

Financial Report 2017

Page 19

DataDot Technology Limited

Remuneration Report (audited) (continued)

for the year ended 30 June 2017

Remuneration details for the year

The following table of benefits and payments, details, in respect to the financial year, the components of remuneration of each KMP. In 2017 KMP’s have been determined with reference to the updated Group Organisation Chart to include only the Directors, the CEO, the CFO, the Vice President Business Development and the Managing Director UK.

Short-term	benefits	Post-employment benefits	Post-employment benefits	Long-term benefits	Long-term benefits	Share-based payments	Total$
Cash, Salary, allowances & fees$	STI$	Non cash$	Super- annuation$	Termination $	Long service leave$	Share rights and Share Options$
77,625 26,459 49,274 249,483 118,673 180,541 199,419	- - - 81,000 - 60,000 60,419	- - - - - - -	7,374 28,794 - 19,617 1,859 17,151 -	- - - - - - -	- - - - - - -	- - 3,000 40,349 12,105 18,157 -	84,999 55,253 52,274 390,449 132,637 275,849 259,838
901,474	201,419	-	74,795	-	-	73,611	1,251,299

Short-term	benefits	Post-employment benefits		Long-term benefits		Share-based payments	Total$
Cash, Salary, allowances & fees$	STI$	Non cash$	Super- annuation$	Termination $	Long service leave$	Share rights and Share Options$
116,034 34,926 32,287 16,425 216,026 143,434 8,430 76,540	- - - - - - - -	- - - - - - - -	11,023 22,452 3,067 16,411 2,259 801 - -	- - - - - - - -	- - - - - - - -	- - - 33,624 - - - -	127,057 57,377 35,354 16,425 266,062 145,692 9,231 76,540
644,102	-	-	56,013	-	-	33,624	733,739

*Directors* Bruce Rathie Gary Flowers Stephe Wilks Alison Coutts *Executives* Temogen Hield Andrew Winfield David Williams Steve Delepine	2017 Performance based remuneration	2017 Performance based remuneration	2016 Performance based remuneration	2016 Performance based remuneration
	STI %	Share rights / Options LTI %	Bonus STI %	Share rights / Options LTI %
	0.0% 0.0% 0.0% 0.0% 20.75% 0.0% 21.75% 23.25%	0.0% 0.0% 5.74% 0.0% 10.33% 9.13% 6.58% 0.0%	0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%	0.0% 0.0% 0.0% 0.0% 12.63% 0.0% 0.0% 0.0%

Financial Report 2017

Page 20

DataDot Technology Limited

Remuneration Report (audited) (continued)

for the year ended 30 June 2017

Details of the performance based and equity-based remuneration for KMP are set out below.

Employment details of key management personnel

(a) Temogen Hield

Mr Hield joined the company in August 2015 as CEO.

Mr Hield’s remuneration package includes a base salary of approximately $250,000 plus superannuation; a fixed sum STI for FY2017 payable on achieving EBITDA targets and, for FY2018 and beyond, up to 50% of base salary subject to KPIs to be agreed at the commencement of each year, and an LTI.

In 2016 the LTI comprised 20 million share options in the Company which were due to vest in 3 tranches, subject to continued employment, and a trading restriction after share issue as follows: Tranche 1 – 7.5 million share options with an exercise price of 2.7c vesting when the volume weighted average share price (VWAP) exceeds 5c for more than 3 months and expiring 3 months after vesting; Tranche 2 – 7.5 million share options with an exercise price of 2.7c vesting when the VWAP exceeds 10c for more than 3 months and expiring 3 months after vesting; Tranche 3 – 5 million share options with an exercise price of 2.7c vesting when the VWAP exceeds 15c for more than 3 months and expiring 3 months after vesting. The above LTI package was due to expire on 1 July 2018 and shares issued were to be escrowed for 12 months save in the event of takeover, merger or scheme where a 3rd party becomes entitled to greater than 50% of the equity in DDT in which event any escrow will cease. Following the introduction for FY2017 of the Employee Share Issue and Loan Scheme, these options will be cancelled on the day after the date of this report.

In 2017/2018, the LTI component has been changed to be an Employee Share Issue and Loan Scheme, whereby the company will invite Mr Hield to subscribe for 16,126,413 shares in the Company at 2.7c per share, with the payment for that subscription being lent to him by the Company on a limited recourse basis. The offer shares will have the same rights as all other ordinary shares on issue in the Company other than the restrictions set out below. Shares issued under this offer may not be traded, transferred or encumbered prior to the shares Entitlement Date. The Entitlement Date is determined for each of the three equal tranches of 5,375,471 shares as the day after the date of this report, 1 July 2018 and 1 July 2019, or immediately at any change of control of the company. The shares may not be traded, transferred or encumbered until any outstanding loan amount in respect of the shares has been repaid. Shares may be forfeited prior to achieving the Entitlement Date if the employee ceases to be employed with the Company. Any outstanding loan amount must be repaid within one year of the last unconditional Entitlement date of the offer shares, unless otherwise agreed with the Company. Where any loan amount remains unpaid one year after the date of the last unconditional Entitlement date of the offer shares, the proportionate number of shares in respect of that loan amount will be forfeited for the total nominal consideration of $1. In recovering any loan amount, the Company has recourse only to the offer shares, and the return of those shares will be in full satisfaction of any outstanding loan obligation. Under this revised LTI, Share Options previously issued will be cancelled on the day one day after the date of this report.

Mr Hield will be paid $81,000 of the 2017 STI which can be paid in shares at the discretion of the Board. The Board determined to pay this STI so as to recognise the prudential financial management of the Company, cultural changes made during year and the need to pay a competitive package in order to retain high performing executives.

(b) David Williams

Mr Williams joined the company in June 2016 as CFO.

Mr Williams remuneration package includes a base salary of approximately $182,650 plus superannuation; a fixed sum STI for FY2017 payable on achieving EBITDA targets and, for FY2018 and beyond, up to 50% of base salary subject to KPIs to be agreed at the commencement of each year, and an LTI.

In 2016 the LTI comprised 9 million share options in the Company which were due to vest in 3 tranches, subject to continued employment, and a trading restriction after share issue as follows: Tranche 1 – 3.0 million share options with an exercise price of 2.7c vesting when the volume weighted average share price (VWAP) exceeds 5c for more than 3 months and expiring 3 months after vesting; Tranche 2 – 3.0 million share options with an exercise price of 2.7c vesting when the VWAP exceeds 10c for more than 3 months and expiring 3 months after vesting; Tranche 3 – 3.0 million share options with an exercise price of 2.7c vesting when the VWAP exceeds 15c for more than 3 months and expiring 3 months after vesting. The above LTI package was due to expire on 1 July 2019 and shares issued were to be escrowed for 12 months save in the event of takeover, merger or scheme where a 3rd party becomes entitled to greater than 50% of the equity in DDT in which event any escrow will cease.

Financial Report 2017

Page 21

DataDot Technology Limited

Remuneration Report (audited) (continued)

for the year ended 30 June 2017

In 2017/2018, the LTI component has been changed to be an Employee Share Issue and Loan Scheme, whereby the company will invite Mr Williams to subscribe for 12,094,810 shares in the Company, with the payment for that subscription being lent to him by the Company on a limited recourse basis. The offer shares will have the same rights as all other ordinary shares on issue in the Company other than the restrictions set out below. Shares issued under this offer may not be traded, transferred or encumbered prior to the shares Entitlement Date. The Entitlement Date is determined for each of the three equal tranches of 4,031,603 shares as 1 July 2018 and 1 July 2019 and 1 July 2020, or immediately at any change of control of the company. The shares may not be traded, transferred or encumbered until any outstanding loan amount in respect of the shares has been repaid. Shares may be forfeited prior to achieving the Entitlement Date if the employee ceases to be employed with the Company. Any outstanding loan amount must be repaid within one year of the last unconditional Entitlement date of the offer shares, unless otherwise agreed with the Company. Where any loan amount remains unpaid one year after the date of the last unconditional Entitlement date of the offer shares, the proportionate number of shares in respect of that loan amount will be forfeited for the total nominal consideration of $1. In recovering any loan amount, the Company has recourse only to the offer shares, and the return of those shares will be in full satisfaction of any outstanding loan obligation.

Under this revised LTI, Share Options previously issued will be cancelled on the day one day after the date of this report.

Mr Williams will be paid $60,000 of the 2017 STI which can be paid in shares at the discretion of the Board. The Board determined to pay this STI so as to recognise the prudential financial management of the Company, cultural changes made during year and the need to pay a competitive package in order to retain high performing executives.

(c) Stephen Delepine

Mr Delepine joined the company in February 2016 as Vice President Business Development.

Mr Delepine’s remuneration package includes a base salary of USD150,000, a fixed sum STI for FY2017 payable on achieving EBITDA targets and, for FY2018 and beyond, up to 50% of base salary subject to KPIs to be agreed at the commencement of each year, and an LTI.

In 2017/2018, an LTI component has been added in the form of an Employee Share Issue and Loan Scheme, whereby the company will invite Mr Delepine to subscribe for 12,094,810 shares in the Company, with the payment for that subscription being lent to him by the Company on a limited recourse basis. The offer shares will have the same rights as all other ordinary shares on issue in the Company other than the restrictions set out below. Shares issued under this offer may not be traded, transferred or encumbered prior to the shares Entitlement Date. The Entitlement Date is determined for each of the three equal tranches of 4,031,603 shares as 1 July 2018 and 1 July 2019 and 1 July 2020, or immediately at any change of control of the company. The shares may not be traded, transferred or encumbered until any outstanding loan amount in respect of the shares has been repaid. Shares may be forfeited prior to achieving the Entitlement Date if the employee ceases to be employed with the Company. Any outstanding loan amount must be repaid within one year of the last unconditional Entitlement date of the offer shares, unless otherwise agreed with the Company. Where any loan amount remains unpaid one year after the date of the last unconditional Entitlement date of the offer shares, the proportionate number of shares in respect of that loan amount will be forfeited for the total nominal consideration of $1. In recovering any loan amount, the Company has recourse only to the offer shares, and the return of those shares will be in full satisfaction of any outstanding loan obligation.

Mr Delepine will be paid $60,419 of the 2017 STI which can be paid in shares at the discretion of the Board. The Board determined to pay this STI so as to recognise the prudential financial management of the Company, cultural changes made during year and the need to pay a competitive package in order to retain high performing executives.

(d) Andrew Winfield

Mr Winfield joined the company in November 2011 as Managing Director of the UK subsidiary.

Mr Winfield’s remuneration package includes a base salary of GBP75,000, a fixed sum STI for FY2017 payable on achieving budget targets and, for FY2018 and beyond, up to 50% of base salary subject to KPIs to be agreed at the commencement of each year, and an LTI.

The Remuneration and Nomination Committee measured performance by comparing at year end the actual financial performance with budget for both DataDot Technology (UK) Limited and the Group.

These performance targets were chosen because they focus on developing regional business growth as an integral part of the DataDot Group. Mr Winfield was paid 0% of the STI.

Financial Report 2017

Page 22

DataDot Technology Limited

Remuneration Report (audited) (continued)

for the year ended 30 June 2017

In October 2016 Mr Winfield was included in the company LTI programme. The LTI comprised 6 million share options in the Company which are due to vest in 3 tranches, subject to continued employment, and a trading restriction after share issue as follows: Tranche 1 – 2.0 million share options with an exercise price of 2.7c vesting when the volume weighted average share price (VWAP) exceeds 5c for more than 3 months and expiring 3 months after vesting; Tranche 2 – 2.0 million share options with an exercise price of 2.7c vesting when the VWAP exceeds 10c for more than 3 months and expiring 3 months after vesting; Tranche 3 – 2 million share options with an exercise price of 2.7c vesting when the VWAP exceeds 15c for more than 3 months and expiring 3 months after vesting. The above LTI package is due to expire on 1 July 2019 and shares issued are to be escrowed for 12 months save in the event of takeover, merger or scheme where a 3rd party becomes entitled to greater than 50% of the equity in DDT in which event any escrow will cease.

Mr Winfield was paid 0% of the 2017 STI.

Executive service contracts

It is the Board's policy to establish executive service contracts with all KMP. No KMP is employed on a fixed term contract. The termination notice periods for executive service contracts is between one month and three months.

KMP's have no entitlement to termination payments in the event of removal for misconduct.

This report of the Board of Directors, incorporating the remuneration report, is signed in accordance with a resolution of the Board of Directors, pursuant to section 298 (2) (a) of the Corporations Act.

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Bruce Rathie - Chairman

Dated this 18[th] day of August, 2017 in Sydney

Financial Report 2017

Page 23

DataDot Technology Limited

Tel: +61 2 9251 4100 Level 11, 1 Margaret St Fax: +61 2 9240 9821 Sydney NSW 2000 www.bdo.com.au Australia

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DECLARATION OF INDEPENDENCE BY ARTHUR MILNER TO THE DIRECTORS OF DATADOT TECHNOLOGY LIMITED

As lead auditor of DataDot Technology Limited for the year ended 30 June 2017, I declare that, to the best of my knowledge and belief, there have been:

No contraventions of the auditor independence requirements of the Corporations Act 2001 relation to the audit; and
No contraventions of any applicable code of professional conduct in relation to the audit.

This declaration is in respect of DataDot Technology Limited and the entities it controlled during the period.

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Arthur Milner Partner

BDO East Coast Partnership

Sydney, 18 August 2017

BDO East Coast Partnership ABN 83 236 985 726 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO East Coast Partnership and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation, other than for the acts or omissions of financial services licensees.

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Consolidated Financial Statements for the year ended 30 June 2017

Contents	Page
Consolidated statement of profit or loss	26
Consolidated statement of comprehensive income	27
Consolidated statement of financial position	28
Consolidated statement of changes in equity	29
Consolidated statement of cash flows	30
Notes to the financial statements	31
Directors’ declaration	56
Independent auditor's report	57

Financial Report 2017

Page 25

DataDot Technology Limited

Consolidated Statement of Profit or Loss

for the year ended 30 June 2017

Notes
Revenue
Sale of goods
Service and licence fees
Royalties
Cost of sales
Gross Profit
Other income
3
Expenses
Administrative expenses
4
Marketing expenses
Occupancy expenses
Travel expenses
EBITDA
Depreciation, Amortisation and Impairment
Finance costs
Loss before income tax expense
Income tax expense/(benefit)
5
Loss after income tax expense for the year
Loss for the year attributable to :-
Owners of DataDot Technology Limited
Basic earnings / (loss) per share (cents per share)
8
Diluted earnings / (loss) per share (cents per share)
8

2017
2016
$
$ 4,791,265
5,985,547
160,061
153,705
392,657
492,119
5,343,983
6,631,371
2,330,394
2,867,684
3,013,589
3,763,687
605,407
456,034
3,841,120
4,818,918
142,312
160,040
358,955
388,941
112,338
316,083
4,454,725
5,683,982
(835,729)
(1,464,261)
503,493
1,803,075
2,690
2,633
(1,341,912)
(3,269,969)
37,541
(5,342)
(1,379,453)
(3,264,627)
(1,379,453)
(3,264,627)
(1,379,453)
(3,264,627)
(0.18)
(0.43)
(0.18)
(0.43)

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

Financial Report 2017

Page 26

DataDot Technology Limited

Consolidated Statement of Comprehensive Income

for the year ended 30 June 2017

Loss after income tax expense for the year Other comprehensive income :- Items that may be classified subsequently to profit or loss :- Exchange difference on translation of foreign operations Total comprehensive income for the year, net of tax Total comprehensive income attributable to :- Owners of DataDot Technology Limited	2017 2016 $ $ (1,379,453) (3,264,627) (14,794) 20,627 (1,394,247) (3,244,000) (1,394,247) (3,244,000)

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

Financial Report 2017

Page 27

DataDot Technology Limited

Consolidated Statement of Financial Position

as at 30 June 2017

Notes
Current Assets
Cash and cash equivalents
9
Trade and other receivables
10
Inventories
11
R&D grant receivable
Total Current Assets
Non‑Current Assets
Plant and equipment
12
Intangibles
13
Investments
Deferred Tax Asset
Total Non‑Current Assets
Total Assets
Current Liabilities
Trade and other payables
14
Employee benefits
16
Provisions
17
Other current liabilities
18
Total Current Liabilities
Non‑Current Liabilities
Employee benefits
16
Other non-current liabilities
18
Total Non‑Current Liabilities
Total Liabilities
Net Assets
Equity
Issued capital
19
Accumulated losses
Reserves
20
Equity attributed to the owners of DataDot Technology Limited
Total Equity

2017
2016
$
$ 1,768,175
2,355,153
939,585
1,137,160
737,022
845,213
320,000
383,000
3,764,782
4,720,526
466,552
556,682
2,730,511
2,858,647
120
120
33,131
60,659
3,230,314
3,476,108
6,995,096
8,196,634
985,582
822,713
127,248
202,795
60,000
70,740
216,820
144,950
1,389,650
1,241,198
23,649
35,010
403,115
495,113
426,764
530,123
1,816,414
1,771,321
5,178,682
6,425,313
39,664,364
39,584,463
(32,248,869)
(30,869,416)
(2,236,813)
(2,289,734)
5,178,682
6,425,313
5,178,682
6,425,313

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

Financial Report 2017

Page 28

DataDot Technology Limited

Consolidated Statement of Changes in Equity

for the year ended 30 June 2017

Balance at 1 July 2015
Share based payments
Share rights exercised
Share rights expired
Share issues
Share issue costs
Balance at 30 June 2016
Share based payments
Share rights exercised
Share rights expired
Share issues
Share issue costs
Balance at 30 June 2017
Loss after income tax expense
for the year
Total comprehensive income for
the year
Total comprehensive income for
the year
Transactions with owners in
their capacity as owners :-
Other comprehensive income
for the year, net of tax
Loss after income tax expense
for the year
Other comprehensive income
for the year, net of tax
Transactions with owners in
their capacity as owners :-

Attributable to equity holders of the parent
Foreign
Employee
currency
equity
Issued
Accumulated
translation
benefit
Other
Total
capital $
losses $
reserve $
reserve $
reserve $
equity $
39,388,810
(27,604,789)
(1,795,128)
290,664
(678,623)
9,600,934
-
(3,264,627)
-
-
-
(3,264,627)
-
-
20,627
-
-
20,627
-
(3,264,627)
20,627
-
-
(3,244,000)
-
-
-
55,379
-
55,379
127,500
-
-
(127,500)
-
-
-
-
-
(55,153)
-
(55,153)
69,807
-
-
-
-
69,807
(1,654)
-
-
-
-
(1,654)
39,584,463
(30,869,416)
(1,774,501)
163,390
(678,623)
6,425,313
-
(1,379,453)
-
-
-
(1,379,453)
-
-
(14,794)
-
-
(14,794)
-
(1,379,453)
(14,794)
-
-
(1,394,247)
-
-
-
85,715
-
85,715
18,000
-
-
(18,000)
-
-
-
-
-
-
-
65,400
-
-
-
-
65,400
(3,499)
-
-
-
-
(3,499)
39,664,364
(32,248,869)
(1,789,295)
231,105
(678,623)
5,178,682

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

Financial Report 2017

Page 29

DataDot Technology Limited

Consolidated Statement of Cash Flows

for the year ended 30 June 2017

Notes
Cash flows 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 grants
Net cash used in operating activities
9
Cash flows from investing activities
Interest received
Payments for plant and equipment
Payments for development and other intangibles
Net cash flows used in investing activities
Cash flows from financing activities
Payment for share issue costs
Net cash used in financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at the end of the financial year
9

2017
2016
$
$ 6,224,078
7,615,853
(6,867,800)
(9,410,543)
(2,690)
(2,633)
(10,013)
(9,156)
467,184
519,140
(189,241)
(1,287,339)
22,233
52,276
(58,896)
(70,575)
(232,655)
(385,084)
(269,318)
(403,383)
(3,499)
(1,654)
(3,499)
(1,654)
(462,058)
(1,692,376)
2,355,153
4,065,518
(124,920)
(17,989)
1,768,175
2,355,153

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

Financial Report 2017

Page 30

DataDot Technology Limited

Notes to the Financial Statements

for the year ended 30 June 2017

1 General Information

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

Unit 9, 19 Rodborough Road

Frenchs Forest NSW 2086

Australia

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

The financial statements were authorised for issue in accordance with a resolution of Directors' on 18 August 2017. The directors' have the power to amend and reissue the financial statements.

Basis of preparation

These general purpose financial statements comprise the consolidated financial statements of DataDot Technology Limited and its controlled entities (hereafter referred to as 'DataDot', 'the consolidated entity' and 'the Group') as at and for the period ended 30 June each year. They 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').

Significant accounting policies applied are provided within these financial statements, where appropriate.

2 Segment Information

Operating Segments

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.

Management has reviewed the segments and determined the group is organised into business units based on their product and services and accordingly has two reportable segments. Discrete financial information about each of these operating businesses is reported to the executive management team on at least a monthly basis.

Products and services by segment

Two reportable segments have been identified as follows:

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

DataTraceID ® – 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 intersegment transactions

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

Financial Report 2017

Page 31

DataDot Technology Limited

Notes to the Financial Statements

for the year ended 30 June 2017

2 Segment Information (continued)

The following tables present the revenue, profit/(loss) after tax, assets and liabilities information regarding operating segments for years ended 30 June 2017 and 30 June 2016.

Segment performance
Year ended 30 June 2017
Revenue from external customers
Total revenue
Gross profit
EBITDA
Finance costs
Profit / (Loss) before income tax
Income tax (expense) / benefit
Net profit / (loss) after income tax
Segment assets
Segment liabilities
Segment performance
Year ended 30 June 2016
Revenue from external customers
Total revenue
Gross profit
EBITDA
Finance costs
Income tax (expense) / benefit
Loss after income tax
Segment assets
Segment liabilities
Loss before income tax
Depreciation, amortisation and
impairment
Intersegment sales
Intersegment sales
Depreciation, amortisation and
impairment

DataDot
DataTraceID
Intersegment
eliminations
Total
$
$
$
$
4,366,915
977,068
-
5,343,983
421,404
11,631
(433,035)
-
4,788,319
988,699
(433,035)
5,343,983
2,806,370
628,623
(421,404)
3,013,589
(1,108,393)
272,664
-
(835,729)
(230,827)
(272,666)
-
(503,493)
10,287
(12,977)
-
(2,690)
(1,328,933)
(12,979)
-
(1,341,912)
(37,541)
-
-
(37,541)
(1,366,474)
(12,979)
-
(1,379,453)
7,266,954
864,494
(1,136,352)
6,995,096
1,795,319
2,445,030
(2,423,935)
1,816,414
DataDot
DataTraceID
Intersegment
eliminations
Total
$
$
$
$
5,799,248
832,123
-
6,631,371
182,500
16,164
(198,664)
-
5,981,748
848,287
(198,664)
6,631,371
3,467,192
478,995
(182,500)
3,763,687
(688,226)
(776,035)
-
(1,464,261)
(1,392,443)
(410,632)
-
(1,803,075)
(2,633)
-
-
(2,633)
(2,083,302)
(1,186,667)
-
(3,269,969)
5,342
-
-
5,342
(2,077,960)
(1,186,667)
-
(3,264,627)
8,245,874
1,087,112
(1,136,352)
8,196,634
1,776,630
2,506,075
(2,511,384)
1,771,321

Financial Report 2017

Page 32

DataDot Technology Limited

Notes to the Financial Statements

for the year ended 30 June 2017

2 Segment Information (continued)

Geographic segments

DataDot operates in three geographical regions of Australasia, Americas and Europe and each manufacture and distribute the DataDot asset identification system. Excluding intersegment transactions, Australiasia accounts for 34% of total revenue, Americas 26% and Europe 40%. 97% of the Non current assets are in Australia.

Major customers

DataDot has a number of customers to which it provides both products and services. In Australasia, one customer accounts for 8% of total revenue (2016 : 17%), in Europe one customer accounts for 14% of total revenue (2016 : 24%), in the Americas one customer accounts for 14% of total revenue (2016 : 15%) and in DataTraceID one customer accounts for 4% total revenue (2016 : 3%).

3 Other Income Interest revenue Government grants: Research and development grants * Sundry income	2017 2016 $ $ 22,233 52,276 506,999 403,583 76,175 175 605,407 456,034

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

Research and development grant

The research and development grants received from the Australian government are classified as deferred income and released to other income in line with the amortisation of the capitalised or expensed costs to which the grant relates.

The research and development grants receivable from the Australian government are recognised in the statement of financial position as an asset when the grant is reasonably certain.

4 Expenses

The consolidated statement of profit and loss includes the following specific expenses :-

Cost of sales Inventory Stock obsolescence Administration expenses Realised net loss loss on foreign currency Minimum lease payments Employee benefits expenses Employee share based expenses Superannuation expenses Research & development expenses Administrative expenses Occupancy expenses Minimum lease payments	$ $ 881,134 1,122,115 45,651 139,677 116,451 81,881 4,020 4,020 2,169,672 2,949,216 85,715 229 174,097 227,800 97,644 130,756 1,193,521 1,425,016 3,841,120 4,818,918 243,903 252,220

Financial Report 2017

Page 33

DataDot Technology Limited

Notes to the Financial Statements

for the year ended 30 June 2017

5
Income Tax
(a) Major components of tax expenses
Current income tax expense/(benefit)
Withholding tax
Income tax expense/(benefit)
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
Gross deferred tax liabilities
Set‑off of deferred tax assets
Net deferred tax liabilities
Deferred tax assets
Tax losses
Provisions
Accruals
Equity raising costs
Doubtful debts and obsolescence
Other timing differences
Gross deferred tax assets
Set‑off of deferred tax liabilities
Net deferred tax assets not brought to account
(b) The prima facie tax on loss before income tax is reconciled to the income tax expense as
follows:-
Loss before income tax expense
Net loss before income tax expense at the tax at the statutory income tax rate of 27.5% (2016: 30%)
Foreign tax rate adjustment
Income not subject to tax
Research and development expenditure added back
Expenditure not allowable
Other timing differences
Tax losses and tax offsets not recognised as deferred tax assets
Withholding tax
Aggregate income tax expense/(benefit)
(c) ecognised deferred tax assets and liabilities
Ope
R
ning balance
Deferred tax movement credited/charged to income
Closing balance

2017
2016
$
$
24,138
(22,616)
13,403
17,274
37,541
(5,342)
(1,341,912)
(3,269,969)
(369,026)
(980,991)
(65,962)
(19,314)
(142,175)
(121,075)
68,750
114,900
210,673
352,006
9,368
(39,629)
309,760
671,486
13,403
17,274
34,791
(5,343)
60,658
46,161
(27,527)
14,497
33,131
60,658
250,379
295,442
-
450
147,483
172,190
397,862
468,082
(397,862)
(468,082)
-
-
144,769
250,813
41,497
68,774
109,997
46,317
31,804
34,485
46,948
41,627
22,847
26,066
397,862
468,082
(397,862)
(468,082)
-
-

Financial Report 2017

Page 34

DataDot Technology Limited

Notes to the Financial Statements

for the year ended 30 June 2017

5 Income Tax (continued)

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.

The amount of the potential deferred tax assets attributable to revenue losses not brought to account

2017	2016
$	$
9,660,171	9,350,411

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 losses in the USA of $4,827,506 (2016: $5,853,369) will expire in 2021.

Tax consolidation

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

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.

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.

Auditors' Remuneration The auditor of DataDot Technology Limited is BDO East Coast Partnership Amounts paid or payable for audit services by BDO East Coast Partnership :- Tax compliance Other services - R&D advice An audit or review of the financial statements Other services :-	2017 2016 $ $ 104,000 104,000 25,000 20,000 20,000 25,000 149,000 149,000

6 Auditors' Remuneration

Tax compliance Amounts paid or payable to unrelated firms for: Tax compliance Other services - preparation of financial statements Audit or review of the financial statements Amounts paid or payable to BDO network firms :-	52,944 55,383 2,661 3,539 55,605 58,922 2,538 2,710 8,733 9,162 11,271 11,872

Financial Report 2017

Page 35

DataDot Technology Limited

Notes to the Financial Statements

for the year ended 30 June 2017

7 Dividends

No dividends declared or paid during the year. No franking credits are available.

Earnings Per Share
Basic loss per share (cents per share)
Diluted loss per share (cents per share)
Net loss after income tax expense used in calculating loss per share
Weighted average number of shares :-
Weighted average number of shares used in calculating basic and diluted earnings per share
Adjustments for calculation of diluted earnings per share
Adjusted weighted average number of shares
Shares and share rights issued subsequent to end of the year :-
4,285,714 shares on 24/07/2017

2017
2016
$
$ (0.18)
(0.43)
(0.18)
(0.43)
(1,379,453)
(3,264,627)
No
No
763,403,491
759,068,100
-
-
763,403,491
759,068,100

8 Earnings Per Share

Diluted earnings per share

Share rights and options issued to shareholders and related parties are considered to be potential ordinary shares and have been considered in determination of diluted earnings per share. The calculation of diluted earnings per share assumes conversion, exercise or other issue of potential ordinary shares that would have a dilutive effect on earnings per share.

9
Cash and Cash Equivalents
Reconciliation of cash
Cash at bank and on hand
Cash Flow Information
Reconciliation of loss after tax to net cash from operations :-
Loss after income tax expense for the year
Add/(less) items classified as investing/financing activities:
Interest received
Add/(less) non‑cash items:
Depreciation, amortisation and impairment
Share based payments
Foreign exchange variance
Impairment for doubtful accounts
Changes in assets and liabilities :-
Decrease in trade and other receivables
Decrease/(Increase) in non-current tax assets
Decrease in inventories
Decrease in grant receivable
Decrease/(Increase) in trade and other payables
Decrease in current tax liabilities
(Decrease)/Increase in other liabilities
Increase in employee benefits
Net cash used in operating activities
Cash at the end of the financial year shown in the consolidated statement of cash flows is reconciled as
follows :-

2017
2016
$
$ 1,768,175
2,355,153
1,768,175
2,355,153
(1,379,453)
(3,264,627)
(22,233)
(52,276)
503,493
1,803,075
151,115
229
116,450
81,881
-
(6,053)
197,575
239,288
40,642
(14,498)
108,191
26,787
63,000
115,557
162,869
(185,070)
(13,114)
-
(20,128)
49,037
(97,648)
(80,669)
(189,241)
(1,287,339)

Financial Report 2017

Page 36

DataDot Technology Limited

Notes to the Financial Statements

for the year ended 30 June 2017

9 Cash and Cash Equivalents (continued)

‑ 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.

10 Trade and Other Receivables Trade receivables Provision for impairment Prepayments Other receivables	2017 2016 $ $ 816,282 1,046,488 (117,940) (112,371) 698,342 934,117 177,315 148,452 63,928 54,591 939,585 1,137,160

(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. A charge amount of $5,569 (2016 write back: ($6,053)) 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:

Movement in provision for impairment of receivables is as follows: is objective evidence that an individual trade receivable is impaired. A charge amount of $5,569 (2016 write ba recognised by DataDot. These amounts have been included in the bad and doubtful debt expense item.	ck: ($6,053)) has been
At 1 July Charge/(Write back) for the year Amount written off (included in bad and doubtful debt expense)	112,371 117,166 5,569 (6,053) - 1,258
At 30 June	117,940 112,371
Customers with balances past due but without provision for impairment amounts to $92,945 (2016 : $97,458) The ageing of the past due but not impaired receivables are as follows :- 30 days 60 days 90 days and over	64,674 56,400 10,061 41,058 18,210 -
	92,945 97,458

The consolidated entity did not consider there to be a credit risk on the outstanding balances taking into consideration the customers credit terms and payment practices.

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 or default payments are considered objective evidence of impairment.

Financial Report 2017

Page 37

DataDot Technology Limited

Notes to the Financial Statements

for the year ended 30 June 2017

11 Inventories Raw materials Finished goods	2017 2016 $ $ 721,482 693,889 15,540 151,324 737,022 845,213

Inventories including raw materials 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 – 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.

12 Plant and Equipment Plant and equipment - at cost Accumulated depreciation Total owned plant and equipment Plant and equipment under lease Accumulated depreciation Total plant and equipment under lease Leasehold improvements - at cost Accumulated depreciation Total leasehold improvements	$ $ 2,819,161 2,876,440 (2,429,070) (2,411,512) 390,091 464,928 152,923 152,923 (76,462) (61,169) 76,461 91,754 205,740 205,740 (205,740) (205,740) - - 466,552 556,682

Movements in carrying amounts

Balance as at 1 July 2015
Additions
Disposals
Depreciation expense for the year
Exchange adjustments
Balance at 30 June 2016
Additions
Impairment and disposals
Depreciation expense for the year
Exchange adjustments
Balance at 30 June 2017

Plant and
equipment
Plant and
equipment
under lease
Leasehold
Improvements
Totals
$
$
$
$
690,754
107,046
46,866
844,666
70,575
-
-
70,575
(148,101)
-
(32,761)
(180,862)
(151,483)
(15,292)
(14,105)
(180,880)
3,183
-
-
3,183
464,928
91,754
-
556,682
65,943
-
-
65,943
(7,043)
-
-
(7,043)
(128,749)
(15,293)
-
(144,042)
(4,988)
-
-
(4,988)
390,091
76,461
-
466,552

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.

Financial Report 2017

Page 38

DataDot Technology Limited

Notes to the Financial Statements

for the year ended 30 June 2017

12 Plant and Equipment (continued)

‑ 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 office equipment is over 4 years, plant and equipment over 10 years and leasehold improvements over 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 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.

13 Intangible Assets Development - at cost Less: Accumulated amortisation Patent and trademarks - at cost Less: Accumulated amortisation Goodwill Software - at cost Less: Accumulated amortisation	2017 2016 $ $ 2,667,981 2,557,413 (1,757,512) (1,572,607) 910,469 984,806 1,485,042 1,372,445 (948,739) (798,479) 536,303 573,966 1,258,863 1,258,863 65,815 65,815 (40,939) (24,803) 24,876 41,012 2,730,511 2,858,647

Movements in carrying amounts

Balance as at 1 July 2015
Additions
Impairment and disposals
Writeback of accumulated amortisation on disposal
Amortisation expense
Exchange adjustments
Balance at 30 June 2016
Additions
Impairment and disposals
Writeback of accumulated amortisation on disposal
Amortisation expense
Exchange adjustments
Balance at 30 June 2017

Development
Patents and
trademarks
Goodwill
Software
Totals
$ $ $ $ $ 1,424,550
865,146
1,574,214
21,578
3,885,488
260,202
93,794
-
31,087
385,083
(442,897)
(186,909)
(336,402)
(48,404)
(1,014,612)
-
-
-
48,404
48,404
(257,049)
(206,425)
-
(11,653)
(475,127)
-
8,360
21,051
-
29,411
984,806
573,966
1,258,863
41,012
2,858,647
110,569
122,086
-
-
232,655
-
-
-
-
-
-
-
-
-
-
(184,906)
(159,749)
-
(16,136)
(360,791)
-
-
-
-
-
910,469
536,303
1,258,863
24,876
2,730,511

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 and 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, amortisation and impairment”. 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.

Financial Report 2017

Page 39

DataDot Technology Limited

Notes to the Financial Statements

for the year ended 30 June 2017

13 Intangible Assets (continued)

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 or a maximum period of 10 years. The amortisation has been recognised in the statement of profit or loss in the line item 'administration expenses'. 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.

In 2017, $122,087 (2016: $93,794) of costs associated with the lodging, renewal, and maintenance of patents & trademarks were incurred with $159,749 (2016: $389,710) of associated amortisation being expensed during the period.

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.

Impairment testing

DataDot conducts an annual asset impairment test to assess for any indicators of impairment. The group has identified two cash generating units (CGUs); DataDot (with a carrying value of non-current assets of $831,170) and DataTrace (with a carrying value of noncurrent assets of $2,365,892, including goodwill of $1,258,863). 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 with growth of 3% per annum, divided by the discount rate less the long-term growth rate.

Management has based the value ‑ in ‑ use calculations on the budgets approved by the DataDot Board. The FY18 budget uses a probability weighted sales pipeline to predict the revenue. Whilst the revenue growth budgeted for FY18 is 43% higher compared to actual revenue in FY2017, the Board has expressed its confidence in the achievement of this growth based on recent market developments and discussions and analysis with relevant parties in the market. The majority of the FY18 revenue budget growth relates to the DataTraceID business which is supported by several large pipeline prospects. Costs are calculated taking into account historical margins as well as estimated inflation rates over the period.

The cash flows are discounted using a post-tax discount rate of 13.00% (2016: 13.35%). The discount rate of 13.00% 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 long-term growth rate of 3% and are included in the terminal value calculation. These key assumptions were included within the calculation of both the DataDot and the DataTrace recoverable values.

Financial Report 2017

Page 40

DataDot Technology Limited

Notes to the Financial Statements

for the year ended 30 June 2017

14 Trade and Other Payables Trade payables Sundry creditors and accruals	2017 2016 $ $ 360,660 313,038 624,922 509,675 985,582 822,713

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.

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.

15 Borrowings

Financing arrangements

Unrestricted access was available at the reporting date to total credit facilities of $114,466 (2016: $112,006). There are currently no Lines of Credit provided for immediate use. $49,500 (2016: $32,750) was utilised in the provision of bank guarantees against commercial leases on real property. $2,507 (2016: $6,860) was utilised against a corporate credit card facility with $64,966 (2016: $79,256) available for immediate use.

16 Employee Benefits

Current Employee benefits Non Current Employee benefits	127,248 202,795 23,649 35,010

The current provision for all employee benefits 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.

(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 high quality Australian corporate bonds with terms to maturity and currencies that match, as closely as possible, the estimated future cash outflows.

Financial Report 2017

Page 41

DataDot Technology Limited

Notes to the Financial Statements

for the year ended 30 June 2017

17 Provisions Current Lease make good Other provisions	2017 2016 $ $ 50,000 50,000 10,000 20,740 60,000 70,740

Other provisions

A provision of $10,000 (2016 : $19,200) 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 $Nil (2016 : $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.

Lease make good

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 (2016 : $50,000) is included in other provisions.

Movements in provisions

There have been no movements in any of the classes of provisions in the current year.

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.

18 Other Liabilities

Current Deferred income Revenue received in advance Non-Current Other liabilities Deferred income	69,802 80,619 147,018 64,331 216,820 144,950 120 120 402,995 494,993 403,115 495,113

Financial Report 2017

Page 42

DataDot Technology Limited

for the year ended 30 June 2017

Notes to the Financial Statements

19 Issued capital Issued capital at beginning of financial period Shares issued or under issue during the year :- Share placement Share issue costs Issued capital at the end of the financial period Vested share rights issued during the year under the ESRP There is no current on-market share buy-back.	2017 2017 2016 2016 No $ No $ 760,674,461 39,584,463 751,978,873 39,388,810 5,330,144 83,400 3,328,922 69,807 - (3,499) - (1,654) - - 5,366,666 127,500 766,004,605 39,664,364 760,674,461 39,584,463

Ordinary shares

Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the company does not have a limited amount of authorised capital. On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote.

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. The capital risk management policy remains unchanged from 30 June 2016 Annual Report. As disclosed in Note 26, DataDot had no interest bearing liabilities as at 30 June 2017. DataDot is not subject to any externally imposed capital requirements.

Issued capital

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.

20	Reserves	2017 2016 $ $
	Foreign currency translation reserve	(1,789,295) (1,774,501)

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

Balance at beginning of financial year Movement in share‑based payments Employee equity benefits reserve	163,390 290,664 67,715 (127,274) 231,105 163,390

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 (678,623) (678,623)

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.

Total Reserves (2,236,813) (2,289,734)

Financial Report 2017

Page 43

DataDot Technology Limited

for the year ended 30 June 2017

Notes to the Financial Statements

21 Commitments
Operating lease commitments
Committed at the reporting date and recognised as liabilities, payable:-
Within one year
One to five years
Remuneration commitments
Minimum remuneration payments payable:-
Within one year
Commitments for the payment of salaries and other remuneration under long term employment
contracts in existence at the reporting date but not recognised as liabilities.

2017
2016
$
$ 235,047
162,531
606,370
249,514
841,417
412,045
128,620
197,824

22 Contingent Liabilities

Guarantees

DataDot has issued bank guarantees of $49,500 (2016: $32,750). No liability was recognised by DataDot in relation to the bank guarantee as the fair value of the guarantee is immaterial.

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 17 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. 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.

23 Controlled Entities

Controlled Entities	Controlled Entities
Principal place of business/		Ownership	interest %
	Country of Incorporation	2017	2016
Ultimate parent entity
DataDot Technology Limited	Australia
Wholly-owned subsidiaries
DataDot Technology (Australia) Pty Limited	Australia	100	100
DataDot Technology USA Inc.	USA	100	100
DataDot Security Solutions Inc	USA	100	100
DataDot Technology (UK) Limited	UK	100	100
DataDot Technology (Europe) Limited	UK	100	100
AgTechnix Pty Limited	Australia	100	100
DataTraceID Pty Limited	Australia	100	100
DataDot N.Z. Pty Limited - Deregistered 18/12/2015	New Zealand	-	100
DataDot Solutions (India) Pte Limited	India	100	100
Live Data Pty Limited	Australia	100	100

Financial Report 2017

DataDot Technology Limited

Page 44

Notes to the Financial Statements

for the year ended 30 June 2017

24 Key Management Personnel Disclosures

Compensation

The aggregate compensation made to directors and other members of key management personnel of the consolidated entity is set out below:

Remuneration of key management personnel :- Short term employee benefits Post employment benefits Share based payments (Note 27)	2017 2016 $ $ 1,102,893 1,256,818 74,795 163,535 73,611 55,380 1,251,299 1,475,733

25 Related Party Transactions

Parent entity

DataDot Technology Limited is the parent entity.

Subsidiaries

Interests in subsidiaries are set out in Note 23.

Associated entities

During the year, DataTrace invoiced Brandlok Brand Protection Pty Limited in advance for $51k. The amount was outstanding at reporting date.

Key management personnel

Disclosures relating to key management personnel are set out in Note 24 and the remuneration report in the directors' report.

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.

Interest Rate Risk

There are currently no interest bearing loans.

Foreign exchange risk

‑ As a result of significant investment in wholly owned controlled entities in the United States and the United Kingdom, 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. As each of the individual entities within the Group primarily transact in their own respective currency, foreign currency risk is deemed to be minimal.

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.

Financial Report 2017

DataDot Technology Limited

Page 45

Notes to the Financial Statements

for the year ended 30 June 2017

26 Financial Risk Management (continued)

Price risk

DataDot's exposure to commodity price risk is minimal.

Credit risk

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.

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 plant and equipment and investments in working capital (e.g. inventories and trade receivables). These assets are considered in DataDot’s overall liquidity risk.

Consolidated entity 30 June 2017 Financial Assets Cash and cash equivalents Trade and other receivables Grant receivable Financial Liabilities Trade and other payables Net maturity Consolidated entity 30 June 2016 Financial Assets Cash and cash equivalents Trade and other receivables Grant receivable Financial Liabilities Trade and other payables Net maturity	Within 1 Year $ 1,768,175 762,270 320,000 2,850,445 985,582 1,864,863 Within 1 Year $ 2,355,153 988,708 383,000 3,726,861 822,713 2,904,148

Fair value of financial instruments

Unless otherwise stated, the carrying amounts of financial instruments reflect their fair values.

Financial Report 2017

Page 46

DataDot Technology Limited

Notes to the Financial Statements

for the year ended 30 June 2017

27 Option and Share Based Payments


Option and Share Based Payments			2017	2016
Expenses arising from share based payments :-			$	$
Shares and rights issued under Employee Share Rights Plan :-
Share Rights issued at 1.8c to Graham Loughlin 01/07/2015 vesting 31/07/2015			-	18,000
Share Rights issued at 1.8c to John Kraft 01/07/2015 vesting 01/07/2017 &	01/7/2018		-	3,756
Share rights expired			-	(55,151)
Share and rights issued			-	(33,395)
Director options issued at 5c to Stephe Wilks 26/11/2016 expiring 26/11/2019			3,000	-
CEO options issued at 1.1c to Temogen Hield 27/08/2015 expiring 01/07/2018			40,349	33,624
CFO options issued at 1.1c to David Williams 13/6/16 expiring 01/07/2019			18,157	-
Executive options issued at 1.1c to Andrew Winfield 11/10/16 expiring 01/07/2019			12,105	-
Total expense arising from options and share based payments during the	period		73,611	229
Movements in share rights for the financial year	2017	2017	2016	2016
	No	Avg issue $	No	Avg issue $
Balance at the beginning of the period	8,450,002	0.0242	12,566,668	0.0260
Rights granted	-	-	2,750,000	0.02
Shares issued	(1,000,000)	0.0180	(4,866,666)	0.0213
Rights expired/cancelled	(5,450,002)	0.0243	(2,000,000)	0.0270
Balance at the end of the period	2,000,000		8,450,002
Movements in share options for the financial year	2017	2017	2016	2016
	No	Avg issue $	No	Avg issue $
Balance at the beginning of the period	32,000,000	0.0110	4,000,000	0.0110
Options issued	22,000,000	0.0060	29,000,000	0.0110
Options expired	-	-	(1,000,000)	0.0110
Balance at the end of the period	54,000,000		32,000,000

Share rights are granted by the Board, under the DataDot Technology Executive Share Rights Plan, on such terms and conditions as the Board determines, to eligible employees. A grant of share rights does not confer any right or interest in shares until all terms and conditions have been satisfied. They confer no voting rights. At pre-determined vesting intervals, subject to grantees satisfying the terms and conditions of grant, including continuous employment, each share right provides an entitlement to the issue of one ordinary share in the Company.

The options are issued for nil consideration.

For the options granted during the current financial year, the valuation model inputs used to determine the fair value at the grant date, are as follows:

Grant date	Expiry date	Share price atgrant date	Exercise price	Expected volatility	Dividend yield	Risk-free interest rate	Fair value atgrant date
10/10/2016 26/11/2016	1/07/2019 26/11/2019	$0.016 $0.016	$0.027 $0.050	83.03% 79.80%	NIL NIL	2.158% 2.158%	$0.0061 $0.004

Expected volatility was determined based on share price movements over a 1 year period prior to the grant date.

Financial Report 2017

DataDot Technology Limited

Page 47

Notes to the Financial Statements

for the year ended 30 June 2017

27 Option and Share Based Payments (continued)

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.

For share options granted during the year, the cost of equity-settled transactions are measured at fair value on the grant date. Fair value is independently determined using the Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option, together with non-vesting conditions that do not determine whether the consolidated entity receives the services that entitle the employees to receive payment. No account is taken of any other vesting conditions.

‑ 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 8).

Financial Report 2017

Page 48

DataDot Technology Limited

Notes to the Financial Statements

for the year ended 30 June 2017

28 Parent Entity Information

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.

Statement of financial position Current assets Non‑current assets Total assets Current liabilities Non‑current liabilities Total liabilities Equity Issued capital Accumulated losses Reserves Total equity Statement of profit or loss and other comprehensive income Loss after income tax Total comprehensive income	2017 2016 $ $ 1,475,768 2,328,858 5,761,846 6,157,140
	7,237,614 8,485,998
	674,993 558,451 5,646,006 6,051,686
	6,320,999 6,610,137
	39,664,364 39,584,464 (38,662,178) (37,555,318) (85,571) (153,285)
	916,615 1,875,861
	(1,106,860) (1,970,684)
	(1,106,860) (1,970,684)

Parent Entity Commitments and Guarantees

Parent Entity Commitments and Guarantees	Parent Entity Commitments and Guarantees
DataDot has issued a bank guarantee of $32,750 (2016: $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	2017	2016
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	118,750	138,750

Contingent liabilities

The parent entity had no contingent liabilities as at 30 June 2017 and 30 June 2016.

Capital commitments

The parent entity had no capital commitments for plant and equipment as at 30 June 2017 and 30 June 2016.

Significant accounting policies

The accounting policies of the parent entity are consistent with those of the consolidated entity as disclosed throughout the report.

29 Events after the reporting period

On 24 July 2017, 4,285,714 shares were issued to an employee of DataDot Technology Limited as a final consideration for the discharge of IP royalties.

No other matter or circumstance has arisen since 30 June 2017 that has significantly affected, or may significantly affect the operations of the Group, the results of its operations or the state of affairs in future financial years.

Financial Report 2017

Page 49

DataDot Technology Limited

Notes to the Financial Statements

for the year ended 30 June 2017

30 Summary of other significant accounting policies

(a) Parent entity information

In accordance with the Corporations Act 2001, these financial statements present the results of the consolidated entity only. Supplementary information about the parent entity is disclosed in Note 28.

(b) Principles of consolidation

Interests in associates and joint ventures are equity accounted and are not part of the Consolidated Group.

Subsidiaries are all those entities over which the consolidated entity has control. The consolidated entity controls an entity when the consolidated entity is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the 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 from DataDot.

(b) Principles of consolidation (continued)

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

The acquisition of subsidiaries is accounted for using the acquisition method of accounting. 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.

Where the consolidated entity loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and noncontrolling interest in the subsidiary together with any cumulative translation differences recognised in equity. The consolidated entity recognises the fair value of the consideration received and the fair value of any investment retained together with any gain or loss in profit or loss.

(c) 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.

Financial Report 2017

Page 50

DataDot Technology Limited

Notes to the Financial Statements

for the year ended 30 June 2017

30 Summary of other significant accounting policies (continued)

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.

(d) 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 the group 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.

(e) Current and non-current classification

Assets and liabilities are presented in the statement of financial position based on current and non-current classification.

An asset is current when: it is expected to be realised or intended to be sold or consumed in normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within twelve months after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period. All other assets are classified as non-current.

A liability is current when: it is expected to be settled in normal operating cycle; it is held primarily for the purpose of trading; it is due to be settled within twelve months after the reporting period; or there is no unconditional right to defer the settlement of the liability Deferred tax assets and liabilities are always classified as non-current.

(f) 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.

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.

Financial Report 2017

Page 51

DataDot Technology Limited

Notes to the Financial Statements

for the year ended 30 June 2017

30 Summary of other significant accounting policies (continued)

(g) Adoption of new and revised accounting standards

The consolidated entity has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period.

Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.

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 :-

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Effective date
Standard name for entity Requirements Impact
AASB 15 Revenue from 30-Jun-19 The core principle of the standard is that an entity An initial assessment suggests that this will not have
Contracts with Customers will recognise revenue to depict the transfer of a material impact on the group's significant revenue
promised goods or services to customers in an streams. The consolidated entity will adopt this
amount that reflects the consideration to which standard from 1 July 2018.
the entity expects to be entitled in exchange for
those goods or services. The standard will require:
contracts (either written, verbal or implied) to be
identified, together with the separate
performance obligations within the contract;
determine the transaction price, adjusted for the
time value of money excluding credit risk;
allocation of the transaction price to the separate
performance obligations on a basis of relative
stand-alone selling price of each distinct good or
service, or estimation approach if no distinct
observable prices exist; and recognition of
revenue when each performance obligation is
satisfied. Credit risk will be presented separately
as an expense rather than adjusted to revenue.
For goods, the performance obligation would be
satisfied when the customer obtains control of
the goods. For services, the performance
obligation is satisfied when the service has been
provided, typically for promises to transfer
services to customers.
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Financial Report 2017

Page 52

DataDot Technology Limited

Notes to the Financial Statements

for the year ended 30 June 2017

30 Summary of other significant accounting policies (continued)

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(g) Adoption of new and revised accounting standards (continued)
AASB 9 Financial Instruments 30-Jun-19 Amends the requirements for classification and An initial assessment suggests that this will not have
(issued December 2009 and measurement of financial assets. The available-for- a material impact on the group's financial assets and
amended December 2014) sale and held-to-maturity categories of financial liabilities. The consolidated entity will adopt this
assets in AASB 139 have been eliminated. Under standard from 1 July 2018.
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.
AASB 16 Leases 30-Jun-19 AASB 16 introduces a single lessee accounting An initial assessment suggests that the main impact
model that eliminates the requirement for leases of the adoption of the new standard is that the
to be classified as operating or finance leases. operating leases of 12 months or longer will be
The main changes introduced by the new recognised on the balance sheet. The consolidated
Standard are as follows: entity will adopt this standard from 1 July 2018.
• Recognition of a right-of-use asset and liability
for all leases (excluding short-term leases with
less than 12 months of tenure and leases relating
to low-value assets);
• Depreciation of right-of-use assets in line with
AASB 116: Property, Plant and Equipment in profit
or loss and unwinding of the liability in principal
and interest components;
• Inclusion of variable lease payments that
depend on an index or a rate in the initial
measurement of the lease liability using the index
or rate at the commencement date;
• Application of a practical expedient to permit a
lessee to elect not to separate non-lease
components and instead account for all
components as a lease; and
• Inclusion of additional disclosure requirements.
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(h) Critical accounting estimates and judgements

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.

Financial Report 2017

Page 53

DataDot Technology Limited

Notes to the Financial Statements

for the year ended 30 June 2017

30 Summary of other significant accounting policies (continued)

(h) Critical accounting estimates and judgements (continued)

‑ 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.

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.

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.

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.

Financial Report 2017

DataDot Technology Limited

Page 54

Notes to the Financial Statements

for the year ended 30 June 2017

30 Summary of other significant accounting policies (continued)

(h) Critical accounting estimates and judgements (continued)

Estimation of useful lives of assets

The estimation of the useful lives of property, plant and equipment and finite intangible 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.

Employee benefits provision

As discussed in Note 16, the liability for employee benefits expected to be settled more than 12 months from the reporting date are recognised and measured at the present value of the estimated future cash flows to be made in respect of all employees at the reporting date. In determining the present value of the liability, estimate of attrition rates and pay increases through promotion and inflation have been taken into account.

Financial Report 2017

DataDot Technology Limited

Page 55

for the year ended 30 June 2017

Directors' Declaration

In the directors' opinion:

the attached financial statements and notes thereto comply with the Corporations Act 2001, the Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements;
the attached financial statements and notes thereto comply with International Financial Reporting Standards as issued by the International Accounting Standards Board as described in note 1 to the financial statements;
the attached financial statements and notes thereto give a true and fair view of the consolidated entity's financial position as at 30 June 2017 and of its performance for the financial year ended on that date;
there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable; and

The directors have been given the declarations required by section 295A of the Corporations Act 2001.

Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001.

On behalf of the directors

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Bruce Rathie Chairman 18[th] August 2017, Sydney

Financial Report 2017

Page 56

DataDot Technology Limited

Tel: +61 2 9251 4100 Level 11, 1 Margaret St Fax: +61 2 9240 9821 Sydney NSW 2000 www.bdo.com.au Australia

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INDEPENDENT AUDITOR'S REPORT

To the members of DataDot Technology Limited

Report on the Audit of the Financial Report

Opinion

We have audited the financial report of DataDot Technology Limited (the Company) and its subsidiaries (the Group), which comprises the consolidated statement of financial position as at 30 June 2017, the consolidated statement of profit or loss, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial report, including a summary of significant accounting policies and the directors’ declaration.

In our opinion the accompanying financial report of the Group, is in accordance with the Corporations Act 2001 , including:

(i) Giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its financial performance for the year ended on that date; and
(ii) Complying with Australian Accounting Standards and the Corporations Regulations 2001 .

Basis for opinion

We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.

We confirm that the independence declaration required by the Corporations Act 2001 , which has been given to the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

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Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Carrying Value of DataTrace Non-Current Assets – Impairment Assessment

Key audit matter
How the matter was addressed in our audit

As disclosed in Note 13 of the financial report the
DataTrace cash generating unit had non-current
assets of $2.4m including goodwill of $1.3m.
The carrying value of non-current assets within
the DataTrace cash generating unit is a key audit
matter due to the size of these assets and the
degree of estimation and assumptions required to
be made by the Group, specifically concerning
future discounted cash flows.
Our audit procedures included, among others;
•
Evaluating the Group's key inputs and
assumptions used in its Value in Use
(“VIU”) model to determine the
recoverable amount of its assets;
•
Assessing the estimated budgeted growth
and pipeline prospects for the DataTrace
CGU; and
•
Performing sensitivity analysis to stress
test the key assumptions used in the ‘VIU
models, including revenue growth,
terminal growth rates and discount rates
used.

Other information

The directors are responsible for the other information. The other information comprises the information in the Group’s annual report for the year ended 30 June 2017, but does not include the financial report and the auditor’s report thereon.

Our opinion on the financial report does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the directors for the Financial Report

The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.

Page 58

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In preparing the financial report, the directors are responsible for assessing the ability of the group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the Financial Report

Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report.

A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at:

http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf

This description forms part of our auditor’s report.

Report on the Remuneration Report

Opinion on the Remuneration Report

We have audited the Remuneration Report included in pages 14 to 23 of the directors’ report for the year ended 30 June 2017.

In our opinion, the Remuneration Report of DataDot Technology Limited, for the year ended 30 June 2017, complies with section 300A of the Corporations Act 2001 .

Responsibilities

The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001 . Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.

BDO East Coast Partnership

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Arthur Milner Partner

Sydney, 18 August 2017

Page 59

AI assistant

DATADOT TECHNOLOGY LIMITED — Annual Report 2017

64764_rns_2017-08-17_1611d311-d09e-4c97-a1d8-1da25bb46ddc.pdf

18 August 2017

FY2017 Results Announcement and Outlook

_______________

Revenue

Earnings

Cash

DataDotDNA - Microdot Business Overview

The global growth opportunity for the Technology is substantial, annual production

DataTraceID - Authentication Business Overview

Organisational Culture

Executive Incentive Arrangements

Outlook

Contact Information:

APPENDIX 4E Consolidated Financial Report for the year ended 30 June 2017

DataDot Technology Limited

Financial Report 201 7 Financial Year Ended 30 June 201 7 ABN 54 091 908 726

Financial Report 2017 Financial Year ended 30 June 2017

Directors' Report

Directors

Principal activities

Dividends

Review of operations

Revenue

Earnings

Directors' Report (continued)

for the year ended 30 June 2017

Cash

DataDotDNA - Microdot Business Overview

DataTraceID - Authentication Business Overview

Directors' Report (continued)

for the year ended 30 June 2017

Organisational Culture

Directors' Report (continued)

Executive Incentive Arrangements

Outlook

Directors' Report (continued)

Significant changes in the state of affairs

Matters subsequent to the end of the financial year

Environmental regulation

Information on Directors and Company Secretary

Mr Bruce Rathie B.Com., LL.B., MBA, Grad Dip CSP, SA Fin., FAICD, FAIM

Chairman

Mr Gary Flowers B.Com., LL.B., FAICD

Independent Non-Executive Director

Mr Stephe Wilks

Independent Non-Executive Director

Mr Patrick Raper FCPA, FAICD

Company Secretary

Directors' Report (continued)

Directors' interests

Meetings of Directors

Share rights and options

Share Rights

Share Options

Directors' Report (continued)

Indemnity and insurance of officers and auditors

Proceedings on behalf of the Company

Non audit services

Auditor's independence declaration

Auditor

Directors' Report (continued)

Remuneration Report (audited)

Key management personnel

Directors

Shares and Options Held

Remuneration Report (audited) (continued)

for the year ended 30 June 2017

Remuneration policy

Remuneration Report (audited) (continued)

Remuneration policy (consolidated)

Relationship between remuneration and consolidated entity performance

Performance based remuneration

Remuneration Report (audited) (continued)

Share and Loan Scheme

Number of ordinary shares issued under the Share and Loan Scheme and provided as remuneration :-

Share Rights

Remuneration Report (audited) (continued)

DATADOT TECHNOLOGY LIMITED Annual Report 2017