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DATADOT TECHNOLOGY LIMITED — Interim / Quarterly Report 2009
Feb 26, 2009
64764_rns_2009-02-26_b0668d7c-3159-4dbd-8418-4d403377fbe7.pdf
Interim / Quarterly Report
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ABN 54 091 908 726
Financial Report for the half-year ended 31 December 2008
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DATADOT TECHNOLOGY LTD – HALF-YEAR REPORT
Contents of the Financial Report
| Corporate Information...................................................................................................................... 1 |
|---|
| Directors’ Report............................................................................................................................... 2 |
| Auditor’s Independence declaration................................................................................................ 6 |
| Condensed Income Statement........................................................................................................... 7 |
| Condensed Balance Sheet.................................................................................................................. 8 |
| Condensed Cash Flow Statement..................................................................................................... 9 |
| Condensed Statement of Changes in Equity................................................................................. 10 |
| Notes to the Financial Statements................................................................................................... 11 |
| 1. CORPORATE INFORMATION.......................................................................................... 11 |
| 2. BASIS OF PREPARATION AND ACCOUNTING POLICIES........................................ 11 |
| 3. SEGMENT INFORMATION................................................................................................ 12 |
| 4. REVENUE, INCOME AND EXPENSES............................................................................. 14 |
| 5. CASH AND CASH EQUIVALENTS.................................................................................... 16 |
| 6. DIVIDENDS PAID OR PROPOSED.................................................................................... 16 |
| 7. CONTINGENCIES................................................................................................................. 16 |
| 8. RELATED PARTY DISCLOSURES................................................................................... 17 |
| 9. EVENTS AFTER THE BALANCE SHEET DATE............................................................ 18 |
| Directors’ Declaration..................................................................................................................... 19 |
| Independent Review Report............................................................................................................ 20 |
DATADOT TECHNOLOGY LTD – HALF-YEAR REPORT
Corporate Information
ABN 54 091 908 726
This half-year report covers the consolidated entity comprising DataDot Technology Limited (DDT) and its subsidiaries. The Group’s functional and presentation currency is AUD ($).
A description of the Group’s operations and of its principal activities is included in the review of operations and activities in the Directors’ Report on page 2. The Directors’ Report is unaudited and does not form part of the financial report.
DIRECTORS
COMPANY SECRETARY REGISTERED OFFICE
Mr A. R. Farrar (Chairman) Mr G.J. Loughlin Mr G. Flowers Ms C Lo Lin Sye Mr M George
Unit 9 19 Rodborough Road Frenchs Forest NSW 2086 Phone (02) 8977 4900 Fax (02) 9975 4700
AUDITORS
BANKERS
STOCK EXCHANGE
PKF Level 10 1 Margaret Street Sydney NSW 2000
National Australia Bank 96 High Street Fremantle WA 6160
The Company is listed on the Australian Stock Exchange. The Home Exchange is Sydney.
SHARE REGISTER
OTHER INFORMATION
Ordinary shares and Options Registries Ltd Level 7, 207 Kent Street Sydney NSW 2000 Phone 1300 737 760 Fax 1300 653 459
DataDot Technology Ltd, incorporated and domiciled in Australia, is a publicly listed company limited by shares.
Page 1
DATADOT TECHNOLOGY LTD – HALF-YEAR REPORT
Directors’ Report
Your Directors present the financial report on DataDot Technology Ltd for the half-year ended 31 December 2008.
DIRECTORS
The names of the company’s directors in office during the half-year and until the date of this report are as below. Directors were in office for this entire period unless otherwise stated.
Mr A. R Farrar (Chairman) Mr I.P. Allen (Director and Chief Executive Officer) – ceased 4 February 2009 Mr B. Rathie – resigned 5 January 2009 Mr. J. F. Richards – resigned 26 November 2008 Mr G. Flowers Ms C Lo Lin Sye Mr M George - appointed 26 November 2008
REVIEW AND RESULTS OF OPERATIONS
Total revenue decreased $1,312,063 (19.8%) from $6,613,627 to $5,301,564. Management fees from DataTrace DNA Pty Ltd (DataTrace) decreased by $236,366 (35.7%) from $661,659 to $425,293, and although revenue for DataDot (Australia) Pty Ltd (DDA) and DataDot Technology (UK) Ltd (DDUK) increased slightly, revenue decreased for DataDot Technology USA, Inc. (DDUSA) by $248,423 (39.6%) and for DataDot Technology (South Africa) (Proprietary) Ltd (DDSA) by $925,955 (39.9%).
The DataDot Automated Applicator Cell (DAAC) was determined to be fully impaired resulting in an impairment loss of $2,607,394, which was offset to the extent of $1,357,797 of deferred income to be realised. The Board considered it prudent to fully impair the Laser X Project and incurred an impairment loss of $280,782. Additionally, the investment in DataTrace was considered partially impaired incurring an impairment loss of $4,058,526. Excluding the nonrecurring impairment losses net of government grants of $5,588,906, the net loss was $536,335.
The Group’s Half Year Earnings Before Interest and Tax (EBIT) and Earning Before Interest, Tax, Depreciation and Amortisation (EBITDA), and EBITDA before Impairment Losses net of Government Grants are disclosed below.
| The Group’s Half Year Earnings Before Interest and Tax (EBIT) and Tax, Depreciation and Amortisation (EBITDA), and EBITDA before Government Grants are disclosed below. |
Earning Before Interest, Impairment Losses net |
|---|---|
| 2008 2007 $ $ |
|
| Profit /(Loss) after income tax Add back: Income Tax Expense Interest Expense Profit /(Loss) before Interest and Tax (EBIT) Add back: Depreciation and amortisation expense Profit /(Loss) before interest, tax, depreciation and amortisation (EBITDA) Add back: Impairment losses net of government grants EBITDA before impairment losses net of government grants |
(7,616,378) 115,804 1,220,446 204,276 32,067 41,871 |
| (6,363,865) 361,951 |
|
| 238,625 209,411 |
|
| (6,125,240) 571,362 |
|
| 5,588,905 - |
|
| (536,335) 571,362 |
Results from operations by market segment are detailed on the following page.
Page 2
Directors’ Report (continued)
REVIEW AND RESULTS OF OPERATIONS (continued)
Going concern
The Consolidated Entity incurred an operating loss of $7,745,646 for the half-year ended 31 December 2008 (2007: $173,043).
The Consolidated Entity’s ability to continue as a going concern and develop and operate its asset identification system is primarily dependent upon its ability to further expand its non-vehicle revenue base from increasing revenues from existing distributorships and direct sales.
The Board and Management have implemented major cost reductions in the past few months and as a result of the Group’s restructure expect significant additional sustained savings moving forward.
The consolidated interim financial report has been prepared on the basis of a going concern. This basis presumes that funds will be available to finance future operations, development, expenditure commitments and to repay liabilities and that the realisation of assets and settlement of liabilities will occur in the normal course of business. The Directors believe that the Consolidated Entity will be able to fund future operations through revenue expansion and funds from the issue of new shares. At the date of this report other sources of funds are also being sought to fund future working capital requirements of the Consolidated Entity.
The Directors believe that they will be successful in raising sufficient funds to ensure that the Consolidated Entity can continue to meet its debts as and when they become due and payable. However, if additional funds are not raised, the going concern basis may not be appropriate with the result that the Consolidated Entity may have to realise its assets and extinguish its liabilities other than in the ordinary course of business and in amounts different from those stated in the consolidated interim financial report. No allowance for such circumstances has been made in the consolidated interim financial report.
Changes in Market Conditions
Global trading conditions have deteriorated significantly over the reporting period. This has particularly impacted the sales of motor vehicles in the company’s major markets. This has caused a decline in product sales and revenue from the motor vehicle related channel. In addition to this general decline, sales revenue has been further reduced by the loss of BMW Group Australia as an Original Equipment Manufacturer (OEM) customer during the period. As a consequence of these rapidly changing market conditions the board’s expectations for increased cash inflows have not been realised.
The Board and management are undertaking a major restructure to significantly contain costs, improve the efficiencies of cost of goods sold and diversify the revenue base. This will reduce the Group’s reliance on auto OEM customers and re-focus the effort on revenue generated in nonvehicle channels.
Australasia
Product sales increased by $39,053 (1.4%) from $2,826,770 to $2,865,824. DDA ceased to supply BMW Group Australia as an OEM customer during the period. This represented a $212,000 (7.5%) decline in sales revenue from the previous corresponding period. Increased sales in the heavy machinery and commercial market segments helped to offset this decline.
Net profit increased by $27,391 (2.7%) from $1,013,202 to $1,040,593.
Page 3
Directors’ Report (continued)
REVIEW AND RESULTS OF OPERATIONS (continued)
South Africa
Product sales decreased by $957,389 (41.6%) from $2,301,276 to $1,343,887. Net profit decreased $510,544 (74.7%) from $683,564 to $173,020.
The Company reported at the 2008 AGM that the South African shareholders of DDSA were disputing the payment of royalties and repayment of inter-company loans, Board voting rights and other matters relating to the Shareholders Agreement. At the AGM the Board disclosed the possibility of litigation. The current position is that the Parties are continuing to negotiate a commercial resolution of the contested matters. The South African shareholders no longer contest royalties or inter-company loans. The Board expects to conclude a satisfactory commercial resolution in the second half of the financial year.
United States
Product sales decreased by $178,556 (34.6%) from $516,579 to $338,023 and the net loss increased by $162,431 (107.6%) from $150,935 to $313,366.
The Board has become aware that last year sales that would otherwise have occurred this year were brought forward, thereby exacerbating the decline in performance in the last six months. In recognition of the half year performance and the significant downturn in the US auto industry the Board has decided to write-down the carrying value of tax losses in the US.
United Kingdom
Product sales increased by $26,327 (12.0%) from $218,707 to $245,034 and the net loss decreased by $82,485 (50.5%) from $163,272 to $80,787.
Sales of DataDotDNA to GardX Protection Limited, UK provider of vehicle protection systems, will commence in March 2009.
Joint Venture – DataTraceDNA Pty Limited
The share of loss from the DataTraceDNA Pty Limited joint venture was $195,452 (52.2%) for the half-year ended 31 December 2008 (2007: loss $128,401), an increase of $67,051 over the previous year. Management continues to develop a sales pipeline and are more focused on controlling R&D costs.
New Zealand
In early February the New Zealand Government gave notice that it will revoke the Vehicle Standards Compliance (Whole-of-Vehicle-Marking) Rule and the WOVM Notice, which together form the regulatory framework establishing mandatory whole-of-vehicle-marking. The immediate effect of this decision is to terminate the judicial review proceedings in the NZ High Court, under which the Motor Industry Association had challenged the validity of the Rule and Notice. The company had successfully applied to be joined as a respondent in these proceedings.
It is still unclear whether the NZ Government intends to retain the WOVM policy and revive it in another regulatory form that will withstand judicial challenge on technical grounds, or abandon the policy. The company will continue to consult with NZ authorities and will inform shareholders when the position is clear.
Page 4
Directors’ Report (continued)
REVIEW AND RESULTS OF OPERATIONS (continued)
Restructuring
As stated above, the Board and Management have implemented major cost reductions in the past few months and as a result of the Group’s restructure expect significant additional sustained savings moving forward. The restructure will also focus on changing the remuneration structure of sales staff to performance based pay, transitioning to an NPAT-driven culture with a new focus on diversifying the sales revenue to grow the proportion of income derived from the non-auto channels.
The auditor’s independence declaration as required under section 307c of the Corporations Act 2001 is set out on page 5 and forms part of the Directors’ Report.
Signed in accordance with a resolution of the Board of Directors.
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A. Farrar Chairman Sydney, 27th February 2009
Page 5
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Auditor's Independence Declaration
As lead auditor for the review of DataDot Technology Limited and its subsidiaries for the half-year ended 31 December 2008, I declare that to the best of my knowledge and belief, there have been:
-
(a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the review; and
-
(b) no contraventions of any applicable code of professional conduct in relation to the review.
This declaration is in respect of DataDot Technology Limited and the entities it controlled during the half-year.
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PKF
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Grant Saxon Partner
27 February 2009 Sydney
Tel: 61 2 9251 4100 | Fax: 61 2 9240 9821 | www.pkf.com.au PKF | ABN 83 236 985 726 Level 10, 1 Margaret Street | Sydney | New South Wales 2000 | Australia DX 10173 | Sydney Stock Exchange | New South Wales
PKF East Coast Practice is a member of PKF Australia Limited a national association of independent chartered accounting and consulting firms each trading as PKF. The East Coast Practice has offices in NSW, Victoria and Brisbane. PKF Australia Limited is a member of PKF International, an association of legally independent chartered accounting and consulting firms.
Liability limited by a scheme approved under Professional Standards Legislation
Page 6
DATADOT TECHNOLOGY LTD – HALF-YEAR REPORT
Condensed Income Statement
FOR THE HALF-YEAR ENDED 31 DECEMBER 2008
| Condensed Income Statement OR THE HALF-YEAR ENDED 31 DECEMBER 2008 |
|
|---|---|
| Note | Consolidated 31.12.08 31.12.07 $ $ |
| Continuing operations Revenue 4(a) Cost of sales Gross Profit Other income 4(a) Other expenses 4(a) Finance costs Impairment Losses 4(b) Share of profit /(loss) of joint venture Profit / (loss) from continuing operations before income tax Income tax expense 4(c) Net profit / (loss) from continuing operations after income tax Profit attributable to outside equity interest Loss attributable to members of the parent entity Earnings per share (cents per share) - basic and dilutive, for loss for the half year attributable to ordinary equity holders of the parent |
5,301,564 6,613,627 (1,728,362) (1,902,876) |
| 3,573,202 4,710,751 1,357,797 28,875 (4,152,710) (4,249,274) (32,067) (41,871) (6,946,702) (195,452) (128,401) |
|
| (6,395,932) 320,080 (1,220,446) (204,276) |
|
| (7,616,378) 115,804 |
|
| (129,268) (288,847) |
|
| (7,745,646) (173,043) |
|
| (2.08) (0.12) |
The Condensed Income Statement is to be read in conjunction with the attached notes.
Page 7
DATADOT TECHNOLOGY LTD – HALF-YEAR REPORT
Condensed Balance Sheet AS AT 31 DECEMBER 2008
| ondensed Balance Sheet AT 31 DECEMBER 2008 |
|
|---|---|
| Note | Consolidated 31.12.08 30.06.08 $ $ |
| ASSETS Current Assets Cash and cash equivalents 5 Trade and other receivables Inventories Total Current Assets Non-Current Assets Trade and other receivables Investment in joint venture accounted for using the equity method Plant and equipment Intangible assets Deferred tax assets Total Non-Current Assets TOTAL ASSETS LIABILITIES Current Liabilities Trade and other payables Interest-bearing loans and borrowings Income Tax Payable Provisions Total Current Liabilities Non-Current Liabilities Interest-bearing loans and borrowings Other non-current liabilities Provisions Total Non-Current liabilities TOTAL LIABILITIES NET ASSETS EQUITY Equity attributable to equity holders of the parent Contributed equity Accumulated losses Reserves Parent interests Outside equity interests TOTAL EQUITY |
1,781,636 2,639,463 2,685,784 3,275,780 717,350 537,237 |
| 5,184,770 6,452,480 |
|
| 91,613 97,134 808,406 4,350,431 1,000,381 1,096,344 299,675 2,799,022 25,878 924,695 |
|
| 2,225,953 9,267,626 |
|
| 7,410,723 15,720,106 |
|
| 1,937,617 2,143,291 151,962 191,926 64,328 41,652 416,786 501,493 |
|
| 2,570,693 2,878,362 |
|
| 90,180 142,691 355,484 1,316,883 10,861 9,099 |
|
| 456,525 1,468,673 |
|
| 3,027,218 4,347,035 |
|
| 4,383,505 11,373,071 |
|
| 26,456,519 26,456,519 (22,930,708) (15,185,063) 258,053 (368,758) |
|
| 3,783,864 10,902,698 599,641 470,373 |
|
| 4,383,505 11,373,071 |
The Condensed Balance Sheet is to be read in conjunction with the attached notes.
Page 8
DATADOT TECHNOLOGY LTD – HALF-YEAR REPORT
Condensed Cash Flow Statement FOR THE HALF-YEAR ENDED 31 DECEMBER 2008
| ndensed Cash Flow Statement THE HALF-YEAR ENDED 31 DECEMBER 2008 |
|
|---|---|
| Note | Consolidated 2008 2007 $ $ |
| Cash flows from /(used in) operating activities Cash receipts in the course of operations Cash payments in the course of operations Interest paid Income tax paid Receipt of Government Grant Net cash flows from /(used in) operating activities Cash flows from /(used in) investing activities Interest received Purchase of plant and equipment Purchase of investment accounted for using the equity method Payment for Development expenditure Receipt of Government Grant Net cash flows used in investing activities Cash flows from financing activities Proceeds from issue of shares Repayment of related party loans Repayment of finance lease payments Repayment of borrowings Net cash flows from financing activities Net increase / (decrease) in cash held Net foreign exchange differences Cash at beginning of period Cash at end of period 5 |
6,533,927 7,504,470 (6,811,355) (6,857,606) (16,469) (25,925) (97,982) (176,486) - 28,875 |
| (391,879) 473,328 |
|
| 15,477 72,744 (71,892) (192,315) (711,953) (880,554) (66,815) (152,810) 55,366 49,587 |
|
| (779,817) (1,103,348) |
|
| 324,800 510,586 (57,046) (122,536) (32,146) (53,234) |
|
| 235,608 334,816 |
|
| (936,087) (295,205) 78,260 (2,590) 2,639,463 4,730,149 |
|
| 1,781,636 4,432,354 |
The Condensed Cash Flow Statement is to be read in conjunction with the attached notes.
Page 9
DATADOT TECHNOLOGY LTD – HALF-YEAR REPORT
Condensed Statement of Changes in Equity FOR THE HALF-YEAR ENDED 31 DECEMBER 2008
| Attributable to equityholders of theparent | |
|---|---|
| Issued capital Accumulated losses Foreign currency translation reserve Total Outside equity interest Total equity $ $ $ $ $ $ |
|
| At 1 July 2007 Currency translation differences Total income and expense for period recognised directly in equity Profit (Loss) for the period Total income / expense for the period Shares issued Transaction costs on share issue Share-based payments At 31 December 2007 |
26,456,519 (16,210,047) (37,457) 10,209,015 189,921 10,398,936 73,636 73,636 73,636 |
| 73,636 73,636 73,636 (173,043) (173,043) 288,847 115,804 |
|
| (173,043) 73,636 (99,407) 288,847 189,440 |
|
| 26,456,519 (16,383,090) 36,179 10,109,608 478,768 10,588,376 |
|
| 26,456,519 (15,185,063) (368,758) 10,902,698 470,373 11,373,071 626,812 626,812 626,812 |
|
| 626,812 626,812 626,812 0 (7,745,646) 0 (7,745,646) 129,269 (7,616,377) |
|
| (7,745,646) 626,812 (7,118,834) 129,269 (6,989,565) |
Page 10
DATADOT TECHNOLOGY LTD – HALF-YEAR REPORT
Notes to the Financial Statements
FOR THE HALF-YEAR ENDED 31 DECEMBER 2008
1. CORPORATE INFORMATION
The half-year financial report of DataDot Technology Limited (the Company), for the half-year ended 31 December 2008 was authorised for issue in accordance with a resolution of the directors on 27 February 2009.
DataDot Technology Limited is a company incorporated in Australia and limited by shares, which are publicly traded on the Australian Stock Exchange.
2. BASIS OF PREPARATION AND ACCOUNTING POLICIES
Basis of preparation
This general purpose condensed financial report for the half year ended 31 December 2008 has been prepared in accordance with AASB 134 Interim Financial Reporting and the Corporations Act 2001 .
The half-year financial report does not include all notes of the type normally included within the annual financial report and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the consolidated entity as the full financial report.
It is recommended that the half-year financial report be read in conjunction with the annual report for the year ended 30 June 2008 and considered together with any public announcements made by DataDot Technology Ltd during the half-year ended 31 December 2008 in accordance with the continuous disclosure obligations of the ASX listing rules .
Changes in Accounting Policy
The accounting policies adopted are consistent with those disclosed in the annual financial report for the year ended 30 June 2008 which are in accordance with accounting standards in place at that date. The adoption of new and amending Standards and Interpretations mandatory for annual periods beginning on or after 1 July 2008 did not have a significant impact on the financial performance of the Group.
Going concern
The Consolidated Entity incurred an operating loss of $7,745,646 for the half-year ended 31 December 2008 (2007: $173,043). The cash and cash equivalents of the Consolidated Entity decreased by $936,087 during the half-year ended 31 December 2008 to $1,781,636. $1,055,610 of the 31 December 2008 balance relates to cash held in the 42.5% owned South African subsidiary, the release of which is subject to reaching satisfactory commercial resolution.
The Consolidated Entity’s ability to continue as a going concern and develop and operate its asset identification system is primarily dependent upon its ability to further expand its non-vehicle revenue base from increasing revenues from existing distributorships and direct sales.
The Board and Management have implemented major cost reductions in the past few months and as a result of the Group’s restructure expect significant additional sustained savings moving forward.
Page 11
DATADOT TECHNOLOGY LTD – HALF-YEAR REPORT
Notes to the Financial Statements (continued)
FOR THE HALF-YEAR ENDED 31 DECEMBER 2008
2. BASIS OF PREPARATION AND ACCOUNTING POLICIES (Continued)
Going concern (Continued)
This basis presumes that funds will be available to finance future operations, development, expenditure commitments and to repay liabilities and that the realisation of assets and settlement of liabilities will occur in the normal course of business. The Directors believe that the Consolidated Entity will be able to fund future operations through revenue expansion and funds from the issue of new shares. At the date of this report other sources of funds are also being sought to fund future working capital requirements of the Consolidated Entity.
The Directors believe that they will be successful in raising sufficient funds to ensure that the Consolidated Entity can continue to meet its debts as and when they become due and payable. However, if additional funds are not raised, there is a material uncertainty that gives rise to a significant doubt whether the going concern basis is appropriate and as a result that the Consolidated Entity may have to realise its assets and extinguish its liabilities other than in the ordinary course of business and in amounts different from those stated in the consolidated interim financial report. No allowance for such circumstances has been made in the consolidated interim financial report
3. SEGMENT INFORMATION
The primary reporting formation for the group is geographical segments.
Geographical segment
The following table presents the revenue and profit information regarding geographical segments for the half-year periods ended 31 December 2008 and 31 December 2007.
| Half-year ended 31 December 2008 Revenue Sales to external customers Other revenues from external customers Inter-segment sales Total segment revenue Inter-segment elimination Non segment revenue Interest revenue Government grants released Total consolidated revenue Result Segment Results Unallocated expenses Profit before tax and finance costs Finance costs Share of loss of joint venture Profit before income tax and outside equity interest Income tax revenue Net profit for the year |
Australasia USA Europe South Africa $ $ $ $ |
Total $ |
|---|---|---|
| 2,865,824 338,023 245,034 1,343,887 430,293 25,594 - - 318,319 145,122 - 13,755 |
4,792,767 455,887 477,196 |
|
| 3,614,436 508,738 245,034 1,357,642 |
5,725,850 |
|
| 1,041,481 (313,366) (80,787) 173,020 |
(477,196) 52,911 1,357,797 |
|
| 6,659,361 | ||
820,348 (6,988,761) |
||
| (6,168,413) (32,067) (195,452) |
||
| (6,395,932) (1,220,446) |
||
| (7,616,378) |
Page 12
DATADOT TECHNOLOGY LTD – HALF-YEAR REPORT
Notes to the Financial Statements (continued)
FOR THE HALF-YEAR ENDED 31 DECEMBER 2008
3. SEGMENT INFORMATION (Continued)
| Half-year ended 31 December 2007 Revenue Sales to external customers Other revenues from external customers Inter-segment sales Total segment revenue Inter-segment elimination Non segment revenue Interest revenue Other Total consolidated revenue Result Segment Results Unallocated expenses Profit before tax & finance costs Finance costs Share of loss of joint venture Profit before income tax & outside equity interest Income tax expense Net loss for period |
Australasia USA Europe South Africa $ $ $ $ |
Total $ |
|---|---|---|
| 2,826,770 516,579 218,707 2,301,276 661,659 16,825 - - 383,195 93,318 - - |
5,863,332 678,484 476,513 |
|
| 3,871,625 626,722 218,707 2,301,276 |
7,018,329 |
|
| 1,013,202 (150,935) (163,272) 683,564 |
(476,513) 71,811 28,875 |
|
| 6,642,502 | ||
1,382,559 (1,181,055) |
||
| 201,504 (41,871) (128,401) |
||
| 31,233 (204,276) |
||
| (173,043) |
Page 13
DATADOT TECHNOLOGY LTD – HALF-YEAR REPORT
Notes to the Financial Statements (continued)
FOR THE HALF-YEAR ENDED 31 DECEMBER 2008
4. REVENUE, INCOME AND EXPENSES
| (a) Revenue, Income and Expenses from Continuing Operations (i) Revenue Sale of goods Rendering of services Licence fees Finance revenue Total revenue Breakdown of finance revenue: Bank interest receivable Interest receivable on related party loans: - director loan Total finance revenue (on historical cost basis) (ii) Other income Government grants: - Government grants released (iii) Finance costs Bank loans and overdrafts Other loans (including convertible note interest) Finance charges payable under finance leases and hire purchase contracts Total finance costs (on historical cost basis) (iv) Other expenses Depreciation Amortisation of development costs Amortisation of patents Employee benefits (excluding share-based payments) Share-based payments Administrative expenses Advertising and promotional expenses Occupancy expenses Travel expenses Bad and doubtful debts |
Consolidated 2008 2007 $ $ |
|---|---|
| 4,792,767 5,779,769 433,923 745,222 21,965 16,825 52,909 71,811 |
|
| 5,301,564 6,613,627 |
|
| 48,130 68,068 4,779 3,743 |
|
| 52,909 71,811 |
|
| 1,357,797 28,875 |
|
| 1,357,797 28,875 |
|
| 4,777 12,424 16,286 17,403 11,004 12,044 |
|
| 32,067 41,871 |
|
| 167,854 152,238 62,716 53,340 8,055 3,833 2,077,559 2,510,244 - - 987,991 810,113 347,371 190,842 250,774 280,777 229,199 236,293 21,191 11,594 |
|
| 4,152,710 4,294,274 |
Page 14
DATADOT TECHNOLOGY LTD – HALF-YEAR REPORT
Notes to the Financial Statements (continued)
FOR THE HALF-YEAR ENDED 31 DECEMBER 2008
4. REVENUE, INCOME AND EXPENSES (Continued)
| VENUE, INCOME AND EXPENSES (Continued) | |
|---|---|
| (b) Impairment losses DataDot Automated Applicator Cell (DAAC) In light of the global downturn in auto sales and particularly the auto industry’s focus on cost reduction, a number of impairment indicators are present. These include a reducing number of auto sales and there being no present customer for the DAAC. As a consequence, the Board has assessed that the future income potential for this technology is uncertain and the Board has therefore determined to fully impair the project. The impairment losses net of government grants of $1,249,597 (2007: $nil) represent impairment, in full, of capitalised development costs of $2,607,394 for the DataDot Automated Applicator Cell (DAAC) net of government grants of $1,015,345 received in relation to the development of the DAAC and a further claim to be received of $342,452. Government grants provided to the Group to assist with the development of the DAAC technology were to be released to the income statement over the expected useful life of the asset upon completion of the development. The total value of the deferred grant income as at 31 December 2008 was $1,015,345 (30 June 2008 $965,012). Given the Group’s decision over the commercialisation of the DAAC, this grant income has now been fully realised. Laser X Project As with the DAAC, global auto industry downturn has resulted in a number of impairment indicators being present to create sufficient uncertainty as to the future commercial potential that the Board has assessed that the commercialisation of the project is not probable. As a consequence, the Board has decided to fully impair the project. Investment in DataTrace The Group has a 50% interest in DataTrace which is involved in the development of high security solutions. The Board has reviewed the sales pipeline for DataTrace in the context of the present global financial conditions. It believes it is prudent to significantly reduce the carrying value of the investment, recognising a loss of $4,058,526 leaving a carrying value of $808,406 as at 31 December 2008 (30 June 2008: $4,350,431). Total impairment losses |
Consolidated 2008 2007 $ $ |
| 2,607,394 280,782 4,058,526 |
|
| 6,946,702 0 |
Total impairment losses
Page 15
DATADOT TECHNOLOGY LTD – HALF-YEAR REPORT
Notes to the Financial Statements (continued) FOR THE HALF-YEAR ENDED 31 DECEMBER 2008
4. REVENUE, INCOME AND EXPENSES (Continued)
| (c) Income tax expense Income tax expense Total income tax expense Deferred tax assets of $868,488 in respect of unused tax losses in the US subsidiary were recognised at 30 June 2008 based on it being probable that the US entity would generate sufficient future taxable profits against which these losses could be utilised. In light of the performance of the US subsidiary for the six months ended 31 December 2008 and the current economic environment of the US automotive industry, the Group no longer feels that it is sufficiently probable that the US subsidiary will generate sufficient future taxable profits against which these losses could be utilised and the carried forward losses have therefore been derecognised. ASH AND CASH EQUIVALENTS For the purpose of the half-year condensed cash flow statement, cash and cash equivalents are comprised of the following: Cash at bank and in hand This includes $1,055,610 held in the South African subsidiary, the release of which is subject to reaching satisfactory commercial resolution. |
Consolidated 2008 2007 $ $ |
|---|---|
| 1,220,446 204,276 |
|
| 1,220,446 204,276 |
|
| 1,781,636 4,432,354 1,781,636 4,432,354 |
5. CASH AND CASH EQUIVALENTS
6. DIVIDENDS PAID OR PROPOSED
No dividends were declared or paid during the half-year (2007: Nil)
7. CONTINGENCIES
Contingent liabilities
DataTrace DNA Pty Ltd
On the 31[st] of October, 2005 the Group entered into a number of agreements with the CSIRO establishing DataTrace DNA Pty Ltd as a jointly controlled entity. Under the terms of the agreement, DDT is required to contribute working capital until the Directors of DataTrace determine that the joint venture entity has consistent positive cash flows to support itself.
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DATADOT TECHNOLOGY LTD – HALF-YEAR REPORT
Notes to the Financial Statements (continued) FOR THE HALF-YEAR ENDED 31 DECEMBER 2008
7. CONTINGENCIES (Continued)
Claims
The Board has been notified of potential claims by former employees in relation to unpaid long service leave. The Board expects to fully disclaim any liability and will defend any actions.
The Board also believes that there are valid claims for breach of duty against former employees which are currently being pursued and would offset any potential liability.
At this stage it is not practical to estimate any potential effect of the expected claims but legal advice is currently being sought.
Insurance Company Initiative
Included in provisions is $1,110 (30 June 2008: $nil) being an estimate of amounts payable that may arise under a sales agreement with an insurance company under which DDT has agreed to remit the insurance policy excess on behalf of insurance policy holders who have applied dots to their vehicles and whose vehicles have been stolen. The estimate is based on the probability of claims being made. Should these estimates prove incorrect then an adjustment may have to be made to either increase or decrease the amount due and payable.
8. RELATED PARTY DISCLOSURES
The following table provides the total amount of transactions that were entered into with related parties for the half-year ended 31 December 2008 and 2007.
| Service fees to | Amounts owed by | ||
|---|---|---|---|
| related parties | related parties | ||
| Related party | $ | $ | |
| Joint venture in which the parent is a venturer | |||
| DataTrace DNA Pty Limited | 2008 | 425,293 | 143,343 |
| 2007 | 661,659 | 307,164 |
Terms and condition of transactions with related parties
Sales to related parties are made in accordance with the Management Services Agreement under which the Group has been contracted to provide management services to DataTrace DNA Pty Limited.
Outstanding balances at year-end are unsecured, interest free and settlement occurs in cash.
For the half-year ended 31 December 2008, the Group has not made any allowance for doubtful debts relating to amounts owed by related parties as the payment history has been excellent (2007: $nil).
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DATADOT TECHNOLOGY LTD – HALF-YEAR REPORT
Notes to the Financial Statements (continued) FOR THE HALF-YEAR ENDED 31 DECEMBER 2008
9. EVENTS AFTER THE BALANCE SHEET DATE
Mr Ben Bootle was appointed Chief Operating Officer in December to effect the company re-structure. Mr Ian Allen, Managing Director and CEO, ceased employment with the company on February 4. Mr Bootle was appointed Acting CEO from that date.
Sales of DataDotDNA to GardX Protection Limited in the UK has been agreed and will commence in March 2009.
DDT has been successful in winning an open tender with Brisbane City Council for the provision of property identification marking kits to Council residents. The initiative is part of the Brisbane Lord Mayor's Community Safety strategy. It will be delivered through a subsidised program, widely promoted across the city. The Home Kits will be available from Council Libraries, Customer Service and Regional Business Centres and Police Citizens Youth Clubs all over Brisbane from mid-March.
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DATADOT TECHNOLOGY LTD – HALF-YEAR REPORT
Directors’ Declaration
In accordance with a resolution of the directors of DataDot Technology Ltd, I state that:
In the opinion of the directors:
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(a) the financial statements and notes of the consolidated entity are in accordance with the Corporations Act 2001 , including:
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(i) giving a true and fair view of the financial position as at 31 December 2008 and the performance for the half-year ended on that date of the consolidated entity; and
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(ii) complying with Accounting Standards AASB 134 Interim Financial Reporting and the Corporations Regulations 2001; and
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(b) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.
On behalf of the Board
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A. Farrar Chairman Sydney, 27th February 2009
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INDEPENDENT AUDITOR’S REVIEW REPORT
To the members of DataDot Technology Limited
Report on the Half-Year Financial Report
We have reviewed the accompanying half-year financial report of DataDot Technology Limited, which comprises the consolidated balance sheet as at 31 December 2008, and the income statement, statement of changes in equity and cash flow statement for the half-year ended on that date, other selected explanatory notes and the directors’ declaration.
Directors’ Responsibility for the Half-Year Financial Report
The directors of the company are responsible for the preparation and fair presentation of the half-year financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001 . This responsibility includes establishing and maintaining internal control relevant to the preparation and fair presentation of the half-year financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.
Auditor’s Responsibility
Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements (ASRE) 2410 Review of Interim and Other Financial Reports Performed by the Independent Auditor of the Entity , in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the half-year financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of DataDot Technology Limited’s financial position as at 31 December 2008 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 . As the auditor of DataDot Technology Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.
A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. It also includes reading the other information included with the financial report to determine whether it contains any material inconsistencies with the financial report. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Independence
We confirm that the independence declaration required by the Corporations Act 2001 , provided to the directors of DataDot Technology Limited on 31 December 2008, would be in the same terms if provided to the directors as at the date of this auditor’s review report.
Tel: 61 2 9251 4100 | Fax: 61 2 9240 9821 | www.pkf.com.au PKF | ABN 83 236 985 726 Level 10, 1 Margaret Street | Sydney | New South Wales 2000 | Australia DX 10173 | Sydney Stock Exchange | New South Wales
PKF East Coast Practice is a member of PKF Australia Limited a national association of independent chartered accounting and consulting firms each trading as PKF. The East Coast Practice has offices in NSW, Victoria and Brisbane. PKF Australia Limited is a member of PKF International, an association of legally independent chartered accounting and consulting firms.
Liability limited by a scheme approved under Professional Standards Legislation
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Conclusion
Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of DataDot Technology Limited is not in accordance with the Corporations Act 2001 including:
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(a) giving a true and fair view of the consolidated entity’s financial position as at 31 December 2008 and of its performance for the half-year ended on that date; and
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(b) complying with Accounting Standard AASB 134 Interim Financial Reporting and Corporations Regulations 2001 .
Material Uncertainty Regarding Continuation as a Going Concern
Without qualifying our opinion, we draw attention to Note 2 in the half-year financial report which indicates that the entity incurred an operating loss of $7,745,646 (2007: $173,043) for the half-year ended 31 December 2008 and cash and cash equivalents of the entity decreased by $936,087 during the half-year ended 31 December 2008.
These conditions, along with other matters as set forth in Note 2, indicate the existence of a material uncertainty which may cast significant doubt about the company’s ability to continue as a going concern, and therefore whether the Consolidated Entity may realise its assets and extinguish its liabilities other than in the ordinary course of business and in amounts different from those stated in the half-year financial report.
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PKF
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Grant Saxon Partner
27 February 2009 Sydney
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