DTI GROUP LTD — Annual Report 2014

Dec 4, 2014

Annual Report 2014

D T I G R O U P L I M I T E D

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A B N 1 5 0 6 9 7 9 1 0 9 1

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Table of Contents

Corporate Directory.................................................................................................................... …2	Corporate Directory.................................................................................................................... …2
1	Directors’ Report.................................................................................................................. 3
2	Consolidated Statement of Profit or Loss and Other Comprehensive Income...................................... 11
3	Consolidated Statement of Financial Position............................................................................ 12
4	Consolidated Statement of Changes in Equity ...........................................................................................13
5	Consolidated Statement of Cash Flows.....................................................................................................14
6	Notes to the Consolidated Financial Statements......................................................................... 15
7	Directors’ Declaration.......................................................................................................... 38
8	Auditor’s Report................................................................................................................. 39
9	Auditor’s Independence Declaration........................................................................................ 41

Corporate Directory

Directors

Chris Morris Non-Executive Chairman Richard Johnson Managing Director Neil Goodey Non-Executive Director Glyn Denison Non-Executive Director Jeremy King Non-Executive Director

Corporate Advisor

Pendulum Capital Pty Limited Level 2, 24 Outram Street West Perth WA 6005 Telephone: 08 9282 5400

Company Secretary

Bruce Mitchell

Solicitors

Hewett & Lovitt Level 1, 849 Wellington Street West Perth WA 6005

Registered and Principal Office

50 Affleck Road Perth Airport WA 6105 Telephone: 08 9479 1195 Facsimile: 08 9479 1190 Website: www.dti.com.au

Auditors

BDO Audit (WA) Pty Ltd 38 Station Street Subiaco WA 6008 Telephone: 08 6382 4600

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Directors’ report

The Directors present their report for the consolidated entity, consisting of DTI Group Limited (“DTI” or “the Company”) and the entities it controlled at the end of, or during, the year ended 30 June 2014 (“the Group”) and the auditor’s report thereon.

Directors

The names and details of the Company’s Directors in office during the financial year and until the date of this report are set out below. Directors were in office for this entire period unless otherwise stated.

Chris Morris

Non-Executive Chairman

Term of Office

Chris was appointed non-executive Chairman of DTI on 29 June 2011.

Skills and Experience

Chris has worked across the global securities industry for more than 30 years. He co-founded Computershare in 1978 and oversaw its listing on ASX in 1994. Chris’ long-term strategic vision and passion for the industry have been instrumental in transforming Computershare from an Australian business into a successful global public company.

Other Directorships and Offices (current and recent)

Non-Executive Chairman of Computershare Limited Non-Executive Chairman of Smart Parking Limited Former Non-Executive Director of Webfirm Group Limited

Board and Committee Memberships

Chairman of the Nominations and Remuneration Committee

Richard Johnson

Managing Director

Term of Office

Richard joined DTI as General Manager in 2005 and commenced the role as Chief Executive Officer in 2006. On 9 August 2011 he joined the Board as Managing Director.

Skills and Experience

Richard’s qualifications include a Bachelor of Science in Electrical Engineering from the University of Calgary, and a Master of Engineering Studies and a Master of Business Administration from the University of Western Australia. He has more than 19 years’ experience in the transit technology sector. Richard held senior management positions at ERG Limited which developed, supplied and managed integrated fare collection systems for the transit industry around the world.

Other Directorships and Offices (current and recent)

Director of Virtual Observer Pty Ltd Director of DTI EMEA Ltd Director of DTI SaleCo Pty Ltd

Board and Committee Memberships

Member of the Nominations and Remuneration Committee

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Neil Goodey

Non-Executive Director

Term of Office

Neil co-founded DTI on 8 June 1995 and held the position of Managing Director until 2008.

Skills and Experience

Over the last 25 years Neil has founded and managed a number of successful technology-driven companies, including DTI. He created the software-focused vision for DTI and worked directly with the Company’s engineering team to develop DTI’s products and underlying intellectual property.

Other Directorships and Offices (current and recent)

Managing Director of Corescan Pty Ltd Former Executive Director of Aeroquest International Limited

Board and Committee Memberships

Member of the Nominations and Remuneration Committee Member of the Audit, Risk and Compliance Committee

Glyn Denison

Non-Executive Director

Term of Office

Glyn was appointed a Director on 19 January 2004. He was formerly an Executive Director of DTI responsible for business development before relinquishing his executive responsibilities in December 2006.

Skills and Experience

Glyn’s qualifications include a Bachelor of Engineering and a Diploma in Business and Administration. He has over 30 years’ experience in the development of international distribution of technical products for the public transport industry, including senior roles at ERG Limited. Glyn has extensive knowledge of the public transit sector, including the existing customer base of DTI and its business partners.

Other Directorships and Offices (current and recent)

Non-Executive Director of OBJ Ltd Former Non-Executive Director of Australian Renewable Fuels Ltd

Board and Committee Memberships

Member of the Nominations and Remuneration Committee

Jeremy King

Non-Executive Director

Term of Office

Jeremy was appointed a Director on 29 June 2011.

Skills and Experience

Jeremy is a corporate lawyer by background and holds a Bachelor of Laws. He has over 15 years’ experience in domestic and international legal, financial and corporate matters. Jeremy has extensive corporate experience, particularly in relation to crossborder private equity and leveraged buy-out acquisitions, as well as acting for banks, financial institutions and corporate issuers in respect of various debt and equity capital raisings.

Other Directorships and Offices (current and recent)

Director of DTI SaleCo Pty Ltd Director and Company Secretary of Smart Parking Limited Non-Executive Director of Orca Energy Limited Non-Executive Director of CEB Resources PLC Chairman of Continuation Investments Limited Former Director of Glory Resources Limited

Board and Committee Memberships

Chairman of the Audit, Risk and Compliance Committee Member of the Nominations and Remuneration Committee

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Company Secretary

Bruce Mitchell

Date of appointment – 27 May 2012

Bruce has been a qualified Chartered Accountant for almost 20 years and has over 18 years’ experience in senior financial roles. He joined DTI in 2012 as Chief Financial Officer and is responsible for the management and administration of all aspects relating to both internal and external financial accounting and reporting. Prior to joining DTI, Bruce gained experience working as a financial director for several South Africa-based companies. He has worked across varied industries including information technology and manufacturing.

Bruce has a Bachelor of Accounting Science (Honours) from the University of South Africa, and a Bachelor of Commerce from the University of Natal.

Principal activities

DTI is a leading provider of integrated surveillance systems and fleet management solutions for the global mobile security market. DTI’s customers are transit agencies, law enforcement authorities and high-value freight operators. The Company offers the following products and services:

• Surveillance solutions – specialised hardware systems, incorporating video, audio, GPS tracking, communications and high-speed recording technology; supported by sophisticated device and data management software to provide a comprehensive, fleet-wide, CCTV and vehicle management solution; and

• Managed services – back-end control room communications and infrastructure comprising wide-area urban surveillance, driver development and risk mitigation, video management, vehicle data analysis and monitoring, schedule adherence analysis, IT infrastructure, help desk, technical support and monitoring, and first line maintenance.

DTI markets and distributes its product range to customers around the world, both directly and in conjunction with a network of integrators and business partners.

Review of operations

Australian Operations

DTI maintained its strong market position in the Australian transit sector during the 2014 financial year with over $9 million of sales through existing contracts and additional orders. These sales are marginally up on the previous financial year, but with an increased diversity of sales which covered a range of customers in Perth, Adelaide, Canberra, Tasmania, Melbourne, Sydney, and Brisbane, combined with increased customer sales into new markets such as high value freight.

The Company has a current install base of over 5,500 CCTV systems in public transport organisations in Australia including a substantial installation base in five of Australia’s eight capital cities with an ongoing business development campaign in Melbourne and Sydney showing results with new customers purchasing systems with new bus procurements.

As mentioned in the previous annual report, DTI signed a contract with Bombardier Transportation (“Bombardier”) in September 2011 for the provision of advanced surveillance equipment covering three rail projects in Australia. The equipment was tested and qualified and is now being fitted to trains which are in traffic use by the end customer. Installations will continue through the 2015 financial year. Bombardier is one of the world's largest companies in the passenger rail industry and the selection of DTI equipment for these initial projects is viewed as an ideal opportunity to progress with further projects globally with Bombardier.

In September 2012, DTI signed a multi-million dollar contract with the Brisbane City Council (BCC) for the supply, installation, and maintenance of advanced video surveillance systems into 307 existing buses and 90 new buses per year for three years as well as the installation of depot infrastructure of up to a further 6 depots. The award includes a standing offer arrangement for the inclusion of further contracts if requested by the BCC and demonstrated further confidence with our installation base. The 307 buses have been installed with ongoing installation of 90 new buses per year progressing as scheduled by the bus manufacturer.

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DTI continued to expand into other mobile market segments with a multi-million dollar contract signed in October 2013 for the provision of video surveillance systems with Ansaldo STS Australia Pty Ltd for remote monitoring of driverless trains and level crossings on rail lines which are operated by Rio Tinto in the northwest of Western Australia. The Autohaul Driverless Train project will provide systems to remotely operate Rio Tinto trains 1,500 kilometres from the Rio Tinto control centre in Perth. The DTI scope for the project included the provision of remote video surveillance monitoring systems on locomotives to ensure the safe movement of the driverless trains. The project also included the supply of systems to enable remote monitoring of over 40 level crossings on the rail network. All of the systems have now been delivered with final system integration testing to be completed over the next few months.

Also in the high value freight sector, a contract was signed with Aurizon in October 2013 for the development of a reversing camera solution for coal trains in Queensland. The pilot solution provided a real-time view of the end of the coal train to the train driver which can be over 2 kilometres in length. The pilot has been deemed a success by the customer and up to 76 locomotives could have this system installed pending approval by the Aurizon.

DTI has further expanded its public transport offering through the service bureau concept. In July 2014, DTI signed a bus system maintenance agreement with the Dyson Group in Melbourne for three years plus an additional two-year option. The service bureau provides for continuous and steady revenue streams through a broad range of outsourced services and DTI remains fairly unique in this offering in the marketplace. Revenue from services increased 17% this financial year to $2.11 million with the provision of these services to customers in Perth, Adelaide, Brisbane, Tasmania as well as in the UK for the Eversholt Rail project.

The market for mobile surveillance equipment in Australia continues to remain strong with DTI pursuing a range of further prospects in a number of market segments.

International Operations

DTI experienced moderate growth in international operations during the 2014 financial year through ongoing relationships with key partners and the development of new customers in Europe. Future further growth in the 2015 financial year is expected. The 2014 financial year was the second year in a row where international sales were greater than domestic sales.

In the United States, DTI’s key strategic alliance partner, a large and well known global company, provided ongoing market access to the largest customers of transit surveillance systems in the US. In December 2010, DTI announced the approval by a key US city to equip 426 buses with digital surveillance systems with further options for 1,100 units which were exercised in March 2012 and deliveries continued throughout the 2012-2013 financial year. With the ongoing success of the project which is being reinforced by increasing demand from key stakeholders such as the driver’s union, further expansion of the project is expected to continue in the 2015 financial year with a further order for over 900 systems with options of more than an additional 600 systems.

The initial three year strategic alliance with the key US partner, which was renewed in September 2009 to include the design and manufacture of the MobileView Penta, was renewed in September 2013 to extend the alliance until December 2017 with a further five year option. The MobileView 4 and Penta range has been well received with over 13,000 units being sold to date.

In addition to the strategic alliance, DTI signed a separate multi-million dollar contract for the San Francisco MTA with Kratos Public Safety & Security Solutions Incorporated in December 2012 for the supply, installation support, and integration of advanced video surveillance systems for 357 existing buses. A further multi-million dollar order was issued by Kratos in September 2013 for a further 551 systems for bus and light rail vehicles in San Francisco and these have now been installed.

DTI announced in July 2014 that its advanced surveillance solution has been specified in a bus procurement tender issued by the San Francisco MTA. The bus procurement tender includes the manufacture of up to 454 buses over a five-year period. The tender states that the contractor shall provide and install a digital video recording and surveillance system by DTI or an approved equal. This on-going support by the MTA gives DTI a strong ongoing relationship and reference site on the west coast of the United States.

In September 2013, DTI received a letter of intent from National Express West Midlands (NEWM) in Birmingham for the provision of 234 systems for their buses. Concurrent with this, an order for 26 systems from the bus builder Alexander Denis who are building new buses for NEWM was issued. In May 2014, DTI received a further order from Alexander Denis for 100 additional systems. These orders represent a significant endorsement of the DTI solution in the UK bus market.

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An order for the supply, monitoring and long term support of advanced on-board video surveillance systems was issued in April 2014 as part of the class 321 rail vehicle refurbishment project by Vossloh Kiepe UK Ltd for Eversholt Rail Group Ltd. This project further builds on DTI’s growing footprint within London’s commuter rail networks. Each vehicle will be equipped with DTI’s proven, high capacity and ultra-reliable hybrid recording platform (DRU2) providing real-time, high resolution images from both internal saloon and forward facing cameras within the drivers cab. The maintenance of these systems will be incorporated under the existing service bureau contract originally signed in 2011 for 5 years plus additional options of 5 years plus 4 years.

In July 2014, DTI received its first order in France from Cibest for the supply of advanced video equipment for 100 buses in the region of Grand Besançon. Each bus will be equipped with DTI's latest hybrid Mobile Digital Recorder (MDR5L) with five highresolution megapixel IP cameras. The MDR5L will be fitted with a quick removable hard drive plus dual-frequency WiFi and 3G communications. Concurrent with receiving this order, DTI also opened a French office located in the city of Besançon.

Building on this initial success in France, an order with its French partner, Cibest was issued for 36 advanced video surveillance systems for the Marseille Metro in August 2014. Santerne, a member of the Vinci group, is the leader of the consortium which holds the head contract with the Regie des Transports de Marseille (RTM), the operator of the Marseille Metro. Each metro train will be equipped with DTI's latest hybrid MDR5R with eight high-resolution megapixel IP cameras with integrated microphones providing comprehensive video and audio recording throughout the train. The scope of works also includes DTI's video management software suite.

In July 2014, DTI received an order to provide 30 Video Surveillance Systems for Tshwane Buses in South Africa by Bona Electronic Solutions. The City of Tshwane Metropolitan Municipality includes Pretoria and is one of the country's three capital cities, serving as the executive (administrative) and de facto national capital. Each bus will be equipped with DTI's latest hybrid Mobile Digital Recorder (MDR5L) which can record up to 16 high-resolution megapixel IP or analogue cameras. The MDR5L will be fitted with a quick removable 2TB hard drive plus dual-frequency WiFi and 3G communications.

DTI announced in July 2014 an initial order of video surveillance systems by the Polish railway vehicle manufacturer PESA for delivery to ZKM Gda � sk, the operator of the trams in Gda � sk Poland. ZKM Gda � sk operates over 100 trams on 12 lines covering a total length of 116 kilometres plus over 200 buses. Each tram will be equipped with DTI's latest hybrid Mobile Digital Recorder (MDR5M) with eight high- resolution megapixel IP cameras, plus two forward-facing high-resolution megapixel IP cameras and four external side-view megapixel IP cameras. The MDR5M will be fitted with an internal 4TB hard drive and a quick removable 2TB hard drive plus dual-frequency WiFi and 4G communications. The scope also includes 3D stereoscopic over-the-door passenger counting modules for each of the 12 doors, plus two transit-grade voice spectrum microphones. A DTI supplied touch-screen Driver Display Unit presents a selection of cameras to the driver at either end of the tram. The solution includes DTI's GPS-based vehicle location system, wireless data communications infrastructure and DTI's fleet management software suite. The solution also enables the 4G based technology to link live vision from the tram to a central control station.

DTI is also targeting a range of further system orders from the European and United States markets. DTI has exhibited in a range of international trade shows over the past year including Trako and Transexpo in Poland, Infrarail in London, the National Public Transport conference in Bordeaux, and UTP in Paris.

Technology Development Activities

Key developments include:

The development of the MDR5N product was commenced in the 2014 financial year. The MDR5N is based on the cost-effective MDR5L which includes the integration of technologies into the product such as dual frequency wireless networking, 3G communications, lower power components, a smaller footprint, 16 full-frame rate camera channels. The MDR5N also includes 8 transit rated Power Over Ethernet ports catering specifically for the next generation of high resolution megapixel IP cameras.

As part of DTI’s comprehensive rail product suite, development continued on a pantograph and overhead wire infrastructure inspection solution which uses machine vision and video analytics. These systems will be incorporated in the DTI central maintenance suite to provide rail maintenance staff with easy to reference pantograph infrastructure condition with alerts to potential threats and loss of service on the rail line. Importantly, DTI is currently in the process of submitting a range of patents for this technology.

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DTI has also commenced initial trials in the UK, Poland, and in Australia on automated passenger counting using video analytics. The video based passenger counting module is a cost effective way to count and monitor passenger numbers on rail or bus fleets. Using discreet overhead cameras above doorways, this technology uses a virtual trip-wire zone for detection of human forms. Every time passengers cross a line or enter a designated area in either direction, the software registers a count (in/out) and updates the database. This information is processed and stored on-board a database partition within the DTI recorder.

The Virtual Observer (“VO”) technology incorporates spatial-temporal data structures to allow footage from forward view cameras across a number of vehicles to be stitched together across time from a virtual location chosen by the surveillance operator. DTI is currently promoting this technology in the US market.

Corporate Activities

The Board communicated to shareholders in May 2014 that it would prefer to seek listing the Company on the Australian Stock Exchange. Plans to achieve this milestone have reached an advanced stage for a public offer of securities and ASX listing. The public offer is planned to be structured as a modest capital raising of new capital for the Company, as well as a facility for existing shareholders to sell down a percentage of their shareholding. It is proposed that the initial public offer be underwritten. An update will be provided to shareholders at the forthcoming Annual General Meeting.

Results and dividends

The result of the consolidated Group for the financial year ended 30 June 2014 was a $1,115,975 profit (2013: $1,625,184 profit) after a $10,809 share of Virtual Observer’s loss for the year (2013: $14,756 loss), a $111,025 share of DTI EMEA’s loss for the year (2013: $93,624 loss) and a net foreign exchange gain of $137,651 (2013: $136,013 gain).

Total revenue was marginally higher for the period, showing a 2% increase over the previous year, mainly from a rise in services provided. Administrative costs were higher, a result of proposed initial public offer and ASX listing costs incurred. Other costs increased with additional travel being undertaken. Employee benefits were up on the prior period, due to higher R&D resourcing, though their increase was offset by reduced administrative and operational staff costs. Costs of materials were lower, primarily resulting from increased cost reduction efforts. The tax expense is 49% of profit before tax due to the combined effect of tax on the R&D grant and previous carried forward tax losses now being fully utilised.

The EBITDA result of the consolidated Group for the financial year ended 30 June 2014 was a $3,076,060 profit (2013: $3,002,098 profit). No dividends have been paid or declared since the end of the previous financial year (2013: nil) and the Directors do not recommend any dividend be paid.

The outlook remains strong and DTI has entered the 2015 financial year with a very robust list of prospects bolstered by ongoing contracts and orders.

Significant changes in the state of affairs

Subsequent to approval by shareholders at a General Meeting held 9 June 2014, the Company converted all of its fully paid ordinary shares into a larger number of shares on the basis that every one fully paid ordinary share be divided into seven fully paid ordinary shares with effect from 5.00pm (WST) on 10 June 2014.

The effect on the Company’s capital structure was to increase the number of shares on issue from 10,921,573 to 76,451,011, and to increase the number of options granted from 1,767,258 to 12,370,806. Accordingly the exercise price of the options was reduced from $2.25 to 32.2 cents. The expiry date of the options remains unchanged at 30 June 2015.

Events since the end of the financial year

Other than any matters described in Note 23 to these financial statements, there has not arisen in the interval between the end of the year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors to affect significantly the operations of the Company, the results of those operations, or the state of affairs of the Company in future financial years.

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Likely developments and expected results of operations

Likely developments in the operations of the Group and the expected results of those operations in future financial years have not been included in this report as the inclusion of such information is likely to result in unreasonable prejudice to the Group.

Environmental regulation

The Company is not subject to any environmental regulation.

The Directors have considered compliance with the National Greenhouse and Energy Reporting Act 2007 which requires entities to report greenhouse gas emissions and energy use. The Directors have assessed that there are no current reporting requirements, but the Company may be required to do so in the future.

Options

At the date of this report, unissued ordinary shares of the Company under option are:

Date Options Granted	Expiry Date	Exercise Price	Number of Options
30 June 2011	30 June 2015	$0.322	12,370,806

There were no other options issued to Directors or key management personnel during the year.

Further information in respect of these options is set out in Note 20 to the financial statements.

Directors’ meetings

The number of Directors’ meetings and number of meetings attended by each of the Directors of the Company during the financial year are as follows:

Director	Attended	Eligible
Neil Goodey	6	6
Glyn Denison	5	6
Chris Morris	5	6
Richard Johnson	6	6
Jeremy King	6	6

Auditor independence

In relation to the audit of the financial report for the year ended 30 June 2014, the Auditors have issued the Directors with an independence declaration. Refer to page 41 for the specific declaration.

Non-audit services

The Board of Directors is satisfied that the provision of non-audit services during the year is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001 . The Directors are satisfied that the services disclosed below did not compromise the external auditor’s independence for the following reasons:

• All non-audit services are reviewed and approved by Board of Directors prior to commencement to ensure they do not conversely affect the integrity and objectivity of the auditor; and

• The nature of the services provided does not compromise the general principles relating to auditor independence as set out in the APES Code of Ethics for Professional Accountants.

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The total fees for non-audit services paid to the auditor or related practices of the auditor during the year ended 30 June 2014 were $24,613 being for the Investigating Accountant’s Report and review work performed in connection with the Company’s proposed initial public offer and ASX listing (2013: nil).

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.

No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under section 237 of the Corporations Act 2001.

Indemnification of Officers and Auditors

During the financial year, the Company paid a premium in respect of a contract insuring the Directors of the Company (as named above) and all executive officers of the Company against a liability incurred as such Director, secretary or executive officer to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium.

The Company has not otherwise, during or since the financial year, indemnified or agreed to indemnify an officer or auditor of the Company or of any related body corporate against a liability incurred as such an officer or auditor.

Signed in accordance with a resolution of the Directors made pursuant to s298(2) of the Corporations Act 2001 .

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Richard Johnson Director 27 August 2014, Perth, Australia

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Financial statements

Consolidated Statement of Profit or Loss and Other Comprehensive Income for the year ended 30 June 2014

for the year ended 30 June 2014
Note	2014 $ 2013 $
Revenue from continuing operations 3(a) Other income 3(b) Change in inventory of finished goods 3(c) Raw materials and consumables used 3(c) Employee benefits expense Depreciation and amortisation expense Administration expenses Marketing expenses Research and development expenses Other expenses Finance costs 3(d) Profit from operations before income tax Income tax (expense) / benefit 4 Profit after tax Profit is attributable to: Owners of DTI Group Limited Other comprehensive income Items that may be reclassified to profit or loss: Exchange differences on translation of foreign operations Total other comprehensive income/(loss) Total comprehensive income for the year Total comprehensive income is attributable to: Owners of DTI Group Limited	19,798,072 19,496,642 1,014,151 1,085,479 290,425 222,426 (10,184,984) (11,116,111) (5,044,230) (4,284,361) (966,829) (948,285) (1,221,789) (1,064,811) (733,272) (730,150) (44,161) (43,212) (710,495) (473,190) (4,262) (49,366)
	2,192,626 2,095,061 (1,076,651) (469,877)
	1,115,975 1,625,184
	1,115,975 1,625,184 (18,361) -
	(18,361) -
	1,097,614 1,625,184
	1,097,614 1,625,184

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

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Consolidated Statement of Financial Position

as at 30 June 2014

Consolidated Statement of Financial Position as at 30 June 2014
Note	2014 $ 2013 $
Current assets Cash and cash equivalents 24(a) Other financial assets 7 Trade and other receivables 8 Inventories 9 Other current assets 10 Total current assets Non-current assets Other receivables 8 Property, plant and equipment 11 Intangible assets 12 Deferred tax assets 13 Total non-current assets Total assets Current liabilities Trade and other payables 14 Borrowings 15 Provisions 17 Total current liabilities Non-current liabilities Borrowings 16 Provisions 17 Deferred tax liabilities 4(c) Total non-current liabilities Total liabilities Net assets Equity Contributed equity 18 Reserves 19(a) Accumulated losses 19(b) Total equity	1,447,821 1,170,440 400,063 400,063 5,746,979 3,996,921 2,543,940 2,113,713 90,644 85,255
	10,229,447 7,766,392
	452,232 634,636 651,921 631,862 2,054,686 2,859,628 - 235,123
	3,158,839 4,361,249
	13,388,286 12,127,641
	2,882,313 2,904,977 13,021 5,323 - 97,315
	2,895,334 3,007,615
	65,711 31,346 48,508 46,371 203,810 -
	318,029 77,717
	3,213,363 3,085,332
	10,174,923 9,042,309
	9,274,384 9,239,384 1,138,596 1,156,957 (238,057) (1,354,032)
	10,174,923 9,042,309

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

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Consolidated Statement of Changes in Equity

for the year ended 30 June 2014

	Contributed Equity Options Reserve Foreign Currency Translation Reserve Accumulated Gains / (Losses) Total $ $ $ $ $
At 30 June 2012 Profit for the year Other comprehensive income Total comprehensive income for the year Transactions with owners in their capacity as owners Issue of share capital Share based payments At 30 June 2013 Profit for the year Other comprehensive income/(loss) Total comprehensive income/(loss) for the year Transactions with owners in their capacity as owners Issue of share capital At 30 June 2014	9,202,481 1,153,272 - (2,979,216) 7,376,537 - - - 1,625,184 1,625,184 - - - - -
	- - - 1,625,184 1,625,184
	36,903 - - - 36,903 - 3,685 - - 3,685
	9,239,384 1,156,957 (1,354,032) 9,042,309
	- - - 1,115,975 1,115,975
	- - (18,361) - (18,361)
	- - (18,361) 1,115,975 1,097,614
	35,000 - - - 35,000
	9,274,384 1,156,957 (18,361) (238,057) 10,174,923

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

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Consolidated Statement of Cash Flows

for the year ended 30 June 2014

Consolidated Statement of Cash Flows for the year ended 30 June 2014
Note	2014 $ 2013 $
Cash flows from operating activities Receipts from customers Payments to suppliers and employees Interest received Research and development grant received Interest paid Net cash inflow from operating activities 24(b) Cash flows from investing activities Payments for plant and equipment Payments for intangible assets Payment of term deposit Net cash outflow from investing activities Cash flows from financing activities Proceeds from issues of shares Repayment of borrowings Net cash outflow from financing activities Net increase / (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year 24(a)	17,641,938 20,100,964 (17,761,356) (18,912,694) 87,658 16,359 877,254 869,483 (4,262) (49,366)
	841,232 2,024,746
	(203,076) (420,366) (349,929) (1,212,125) - (28,383)
	(553,005) (1,660,874)
	- 36,903 (10,846) (42,548)
	(10,846) (5,645)
	277,381 358,227 1,170,440 812,213
	1,447,821 1,170,440

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

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Notes to the consolidated financial statements

Note 1: Summary of significant accounting policies

Statement of compliance

The financial report is a general purpose financial report which has been prepared in accordance with the Corporations Act 2001, Accounting Standards and Australian Accounting Interpretations, and complies with other requirements of the law. The Company’s financial statements and accompanying notes of the Company comply with International Financial Reporting Standards (‘IFRS’). DTI Group Limited is a for profit entity for the purpose of preparing the financial statements.

The financial statements were authorised as per the Directors’ declaration on page 38 dated 27 August 2014.

Basis of preparation

The financial report has been prepared on the basis of historical cost. Cost is based on the fair values of the consideration given in exchange for assets.

In the application of IFRS management is required to make judgments, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstance, the results of which form the basis of making the judgments. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Judgments made by management in the application of IFRS that have significant effects on the financial statements and estimates with a significant risk of material adjustments in the next year are disclosed in note 1(v) are, where applicable, in the relevant notes to the financial statements.

Accounting policies

Accounting policies are selected and applied in a manner which ensures that the resulting financial information satisfies the concepts of relevance and reliability, thereby ensuring that the substance of the underlying transactions or other events is reported.

The accounting policies set out below have been applied in preparing the financial statements for the year ended 30 June 2014, the comparative information presented in these financial statements for the year ended 30 June 2013.

The following significant accounting policies have been adopted in the preparation and presentation of the financial report:

(a) Principles of consolidation

Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group 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. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

The acquisition method of accounting is used to account for business combinations by the Group. Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

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(b) Trade and other payables

Trade payables and other accounts payable are recognised when the Company becomes obliged to make future payments resulting from the purchase of goods and services. The amounts are unsecured and are usually paid within 60 to 90 days of recognition.

(c) Property, plant and equipment

Plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Depreciation is provided on property, plant and equipment. Depreciation is calculated on either a diminishing value or straight line basis so as to allocate the net cost or other re-valued amount of each asset over its estimated useful life or in the case of certain leased plant and equipment the shorter lease term.

The following estimated useful lives are used in the calculation of depreciation:

• Plant and equipment: 2.5 – 5 years

• Motor vehicles under finance lease: 5 years

(d) Provisions

Provisions for legal claims, service warranties and make good obligations are recognised when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount has been reliably estimated. Provisions are not recognised for future operating losses.

(e) Impairment of assets

At each reporting date, the entity reviews the carrying amounts of its assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the entity estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised in profit or loss immediately, unless the relevant asset is carried at fair value, in which case the impairment loss is treated as a revaluation decrease.

Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cashgenerating unit) in prior years. A reversal of an impairment loss is recognised in profit or loss immediately, unless the relevant asset is carried at fair value, in which case the reversal of the impairment loss is treated as a revaluation increase.

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(f) Employee benefits

Provision is made for benefits accruing to employees in respect of wages and salaries, annual leave, long service leave, and sick leave when it is probable that settlement will be required and they are capable of being measured reliably.

Provisions made in respect of wages and salaries, annual leave, long service leave and sick leave expected to be settled within 12 months are measured at their nominal values using the remuneration rate expected to apply at the time of settlement.

Share-based compensation benefits are provided to employees via the DTI Employee Option Plan. Information regarding to this is set out in note 20.

The fair value of options granted under the DTI Option Plan is recognised as an employee benefit expense with a corresponding increase in equity. The fair value is measured at grant date and recognised over the period during which employees become unconditionally entitled to the options. Where the options have vested but are not taken up and are forfeited, the previously recognised expense is not reversed.

The fair value at grant date is independently determined using a 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 volatility of the underlying share, and the risk free interest rate for the term of the option.

The fair value of the options granted is adjusted to reflect market vesting conditions, but excludes the impact of any nonmarket vesting conditions (for example, profitability and sales growth targets). Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. At each reporting date, the Company revises its estimate of the number of options that are expected to become exercisable. The employee benefit expense recognised each period takes into account the most recent estimate. The impact to the original estimates, if any, is recognised in the consolidated statement of profit or loss and other comprehensive income with a corresponding adjustment to equity.

(g) Investment and other financial assets

The Company classifies its financial assets as loans and receivables. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition.

Loans and receivable

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for those with maturities greater than 12 months after the reporting date which are classified as non-current assets.

Loans and receivables are included in trade and other receivables (note 8) in the statement of financial position. Financial assets are derecognised when the rights to receive the cash flows from the financial assets have expired or have been transferred and the Company has transferred substantially all the risks and rewards of ownership.

Loans and receivables are carried at amortised cost using the effective interest method.

The Company assesses at each reporting date whether there is objective evidence that a financial asset or group of financial assets is impaired.

(h) Financial instruments issued by the Company

Debt and equity instruments are classified as either liabilities or as equity in accordance with the substance of the contractual arrangement.

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Transaction costs arising on the issue of equity instruments are recognised directly in equity as a reduction of the proceeds of equity instruments to which the costs relate. Transaction costs are costs that are incurred directly in connection with the issue of those equity instruments and which could not have been incurred had those instruments not been issued.

(i)

Borrowings

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transactions costs) and the redemption amount is recognised in the consolidated statement of profit or loss and other comprehensive income over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities, which are not an incremental cost relating to the actual draw-down of the facility, are recognised as prepayments and amortised on a straight-line basis over the term of the facility.

(j) Foreign currency

Functional and Presentation Currency

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’).

The consolidated financial statements are presented in Australian dollars, which is the Company’s functional and presentation currency.

Transactions and Balances

Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are generally recognised in profit or loss. They are deferred in equity if they relate to qualifying cash flow hedges and qualifying net investment hedges or are attributable to part of the net investment in a foreign operation.

Foreign exchange gains and losses that relate to borrowings are presented in the income statement, within finance costs. All other foreign exchange gains and losses are presented in the income statement on a net basis within other income or other expenses.

Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. For example, translation differences on non-monetary assets and liabilities such as equities held at fair value through profit or loss are recognised in profit or loss as part of the fair value gain or loss and translation differences on non-monetary assets such as equities classified as available-for-sale financial assets are recognised in other comprehensive income.

Group Companies

The results and financial position of foreign operations (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

• assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial position;

• income and expenses for each statement of profit or loss and other comprehensive income are translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and

• all resulting exchange differences are recognised in other comprehensive income.

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(k) Goods and services tax

Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except:

• i. where the amount of GST incurred is not recoverable from the taxation authority, it is recognised as part of the cost of acquisition of the asset or as part of the item of expense; or

• ii. for receivables and payables which are recognised inclusive of GST.

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

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

(l) Government grants

Government grants are assistance by the government in the form of transfers of resources to the Company in return for past or future compliance with certain conditions relating to the operating activities of the entity. Government grants include government assistance where there are no conditions specifically relating to the operating activities of the Company other than the requirement to operate in certain regions or industry sectors.

Government grants relating to income are recognised as income over the periods necessary to match them with the related costs. Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Company with no future related costs are recognised as income of the period in which it becomes receivable.

Government grants relating to assets are treated as deferred income and recognised in profit and loss over the expected useful lives of the assets concerned.

(m) Inventories

Inventories are valued at the lower of cost and net realisable value. Costs are assigned to inventory on hand by the method most appropriate to each particular class of inventory, with the majority being valued on a weighted average basis by location. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

(n) Leased assets

Leased assets classified as finance leases are recognised as assets. The amount initially brought to account is the present value of minimum lease payments. Finance leased assets are amortised on a diminishing value basis over the estimated useful life of the asset.

Finance lease payments are allocated between interest expense and reduction of lease liability over the term of the lease. The interest expense is determined by applying the interest rate implicit in the lease to the outstanding lease liability at the beginning of each lease payment period.

Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Company as lessee are classified as operating leases (note 21). Payments made under operating leases (net of any incentives received from the lessor) are charged to the consolidated statement of profit or loss and other comprehensive income on a straight-line basis over the period of the lease.

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(o) Trade and other receivables

Trade receivables and other receivables are recorded at amounts due less any allowance for doubtful debts.

Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off. An allowance account (provision for impairment of trade receivables) is used when there is objective evidence that the Company will not be able to collect all amounts due according to the original terms of receivables. The amount of the allowance is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. Cash flows relating to short-term receivables are not discounted if the effect of discounting is immaterial. The amount of the allowance is recognised in the profit and loss.

(p) Intangible assets

Intangibles

Internally generated intangible assets, excluding capitalised development costs, are not capitalised and expenditure is recognised in profit or loss in the year in which the expenditure is incurred.

Research and development costs

Research expenditure is recognised as an expense as incurred. Costs incurred on development projects (relating to the design and testing of new or improved products) are recognised as intangible assets when it is probable that the project will be a success considering its commercial and technical feasibility and its costs can be measured reliably. The expenditure capitalised comprises all directly attributable costs, including costs of materials, services and direct labour. Other development expenditures that do not meet these criteria are recognised as an expense as incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period.

The intangible assets in existence as at 30 June 2012 have been assessed as having a finite life and are amortised using the straight line method over a period of 4 years. Intangible assets arising from 1 July 2012 are amortised in proportion to the sales of the commercial units they relate to, as this is deemed to be a more accurate and reasonable basis.

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

A summary of the policies applied to the Group’s intangible assets is as follows:

Policy	Patents	Development Costs
Useful lives	Finite	Finite
Amortisation methods used	Amortised over the period of expected future	Amortised over the period of expected future
	benefits from the related project on a straight- line	benefits from the related product on a
	basis	straight- line basis
Internally Generated or acquired	Acquired	Internally generated
Impairment testing	Annually and more frequently when an indication of	Annually for assets not yet available for use
	impairment exists	and more frequently when an indication of
		impairment exists. The amortisation method
		is reviewed at each financialyear end

Patents have been assessed as having a useful life and are amortised using the straight line method over a period of 10 years. The patents have been granted for between fifteen and twenty years by the relevant government agency.

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

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(q) Revenue recognition

Revenues are recognised at fair value of the consideration received net of the amount of goods and services tax (GST) or value added tax (VAT) payable to the taxation authorities. Sales revenue represents sales of products or services. Sales of products are recognised when the significant risks and rewards of ownership of the goods have passed to the buyer and can be measured reliably. Risks and rewards are considered passed to the buyer at the time of delivery of the goods to the customer.

Service revenue is recognised when the fees in respect of services rendered are earned, usually when services have been provided to customers.

Interest income is recognised on a time proportion basis using the effective interest method.

(r) Income tax

Current Tax

Current tax is calculated by reference to the amount of income taxes payable or recoverable in respect of the taxable profit or tax loss for the period. It is calculated using tax rates and tax laws that have been enacted or substantively enacted by reporting date. Current tax for current and prior periods is recognised as a liability (or asset) to the extent that it is unpaid (or refundable).

Deferred Tax

Deferred tax is accounted for using the comprehensive balance sheet liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax base of those items.

In principle, deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised to the extent that it is probable that sufficient taxable income will be available against which deductible temporary differences or unused tax losses and tax offsets can be utilised. However, deferred tax assets and liabilities are not recognised if the temporary differences giving rise to them arise from the initial recognition of assets and liabilities (other than as a result of a business combination) which affects neither taxable income nor accounting profit. Furthermore, a deferred tax liability is not recognised in relation to taxable temporary differences arising from goodwill.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in associates and are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and that they are expected to reverse in the foreseeable future.

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

Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.

Current and Deferred Tax for the period

Current and deferred tax is recognised as an expense or income in the consolidated statement of profit or loss and other comprehensive income, except when it relates to items credited or debited directly to equity, in which case the deferred tax is also recognised directly in equity, or where it arises from the initial accounting for a business combination, in which case it is taken into account in the determination of goodwill or excess.

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(s) Cash and cash equivalents

For statement of cash flow purposes, cash and cash equivalents includes cash on hand and deposits held at call with financial institutions.

(t) Contributed equity

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

If the Company re-acquires its own equity instruments, for example as a result of a share buy-back, those instruments are deducted from equity and the associated shares are cancelled. No gain or loss is recognised in profit or loss and the consideration paid including any directly attributable incremental costs (net of income taxes) is recognised directly in equity.

(u) New accounting standards and Australian Accounting interpretations

New and amended accounting standards adopted

The Group has applied the following standards and amendments for the first time for their annual reporting period commencing 1 July 2013:

• AASB 10 Consolidated Financial Statements , AASB 11 Joint Arrangements , AASB 12 Disclosure of Interests in Other Entities , AASB 128 Investments in Associates and Joint Ventures , AASB 127 Separate Financial Statements and AASB 2011-7 Amendments to Australian Accounting Standards arising from the Consolidation and Joint Arrangements Standards ;

• AASB 2012-10 Amendments to Australian Accounting Standards – Transition Guidance and other Amendments which provides an exemption from the requirement to disclose the impact of the change in accounting policy on the current period ;

• AASB 13 Fair Value Measurement and AASB 2011-8 Amendments to Australian Accounting Standards arising from AASB 13 ;

• AASB 119 Employee Benefits (September 2011) and AASB 2011-10 Amendments to Australian Accounting Standards arising from AASB 119 (September 2011);

• AASB 2012-5 Amendments to Australian Accounting Standards arising from Annual Improvements 2009-2011 Cycle ; and

• AASB 2012-2 Amendments to Australian Accounting Standards – Disclosures – Offsetting Financial Assets and Financial Liabilities .

The adoption of these new accounting standards has only affected the disclosures in the notes to the financial statements.

New accounting standards and interpretations not yet adopted

Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2014 reporting periods and have not yet been applied in the financial report. The Group’s assessment of the impact of these new standards and interpretations is set out below.

AASB Amendment	Affected Standard(s)	Nature of Change to Accounting Policy	Application Date of Standard	Application Date for Group (Yearended)
AASB 9	Financial Instruments	Changes to classification and measurement requirements of financial instruments and hedge accounting	1 Jan 18	30 June 19
AASB 2013-3	Amendments to AASB 136 – Recoverable Amount Disclosures for Non-Financial Assets	Changes to certain disclosures regarding impairment of assets	1 Jan 14	30 June 15

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(v) Significant accounting estimates and judgements

Revenue Recognition

In accordance with the accounting policy detailed in note 1(q), the Company recognises revenue at the fair value of the consideration received (net of the amount of GST payable) when the significant risks and reward of ownership of the goods have passed to the buyer at the time of the delivery of goods to the customer, or when services rendered are provided to customers. At 30 June 2014 management has determined that the profits on the contracts have been recognised in the correct reporting period and that there are no future losses on any contracts that should be recognised at 30 June 2014.

Inventory Obsolescence

Inventories are accounted for in accordance with the accounting policy detailed in note 1(m). Where the net realisable value of inventory is lower than its cost the Company recognises a provision for inventory obsolescence. At 30 June 2014 management has determined that a provision for inventory obsolescence of $64,704 (2013: $59,652) is still required for inventory where net realisable value is lower than its cost.

Development Costs Capitalised

Development Costs have been capitalised in accordance with the accounting policy detailed in note 1(p). At 30 June 2014 management has assessed that all of the net capitalised development expenditure carried forward at year end, of $1,934,955 (2013: $2,771,692), comprises all directly attributable costs, including costs of materials, services, direct labour and an appropriate proportion of overheads.

Share-based Payment Transactions

The Company measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the dated at which they are granted. The fair value is determined by an internal valuation using the BlackScholes option pricing model.

Impairment

The Group assesses impairment at each reporting date by evaluating conditions specific to the Group that may lead to impairment of assets. Where an impairment trigger exists, the recoverable amount of the asset is determined.

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Note 2: Financial risk management

The Group’s principal financial instruments are cash and borrowings. The main purpose of these financial instruments is to raise finance for the Group’s operations. The Group has various other financial assets and liabilities such as trade and other receivables and trade payables, which arise directly from its operations. The Group does not enter into derivative transactions. The main risks arising from the Group’s financial instruments are interest rate risk, liquidity risk, credit risk and foreign exchange risk. The Board reviews and agrees policies for managing each of these risks.

The following table details the Group’s exposure to interest rate risk as at 30 June 2014. The amounts disclosed in the table are the contractual undiscounted cash flows. The payables cash flows equal their carrying balances as the impact of discounting is not significant.

30 June 2014 Financial Liabilities Fixed Rate Other Borrowings Non-interest bearing Payables 30 June 2013 Financial Liabilities Fixed Rate Other Borrowings Non-interest bearing Payables	Maturing 1 year or less Over 1 to 2 years Over 2 years Total contractual cash flows Total carrying value Weighted Average Active Interest Rate $ $ $ $ $ %
	19,533 19,533 62,698 101,764 78,732 6.5%
	2,481,732 - - 2,481,732 2,481,732 -
	2,501,265 19,533 62,698 2,583,496 2,560,464
	8,364 8,364 31,800 48,528 36,669 7% 2,592,981 - - 2,592,981 2,592,981 - 2,601,345 8,364 31,800 2,641,509 2,629,650

Net fair value

The carrying amount of financial assets and financial liabilities recorded in the financial statements represents their respective net fair values, determined in accordance with the accounting policies disclosed in Note 1.

Credit risk exposure

The Group's maximum exposure to credit risk at reporting date in relation to each class of recognised financial assets is the carrying amount of those assets as disclosed in the statement of financial position. There are no historical default rates in respect of receivables. Cash balances and term deposits are held with financial institutions of minimum AA ratings.

Foreign exchange risk

The Company has transactions in currencies other than Australian Dollars which carry receivables and payables in the respective currency. These financial instruments are not hedged.

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The Company’s exposure to foreign currency risk at the end of the reporting period, expressed in Australian dollars, was as follows:

		30 June2014	30 June2014			30 June2013	30 June2013	30 June2013
	USD $	EUR $	GBP $	SEK $	USD $	EUR $	GBP $	ZAR $	SEK $
Cash	497,397	-	104,545	-	405,551	-	8,612	-	-
Trade and otherdebtors	1,295,310	14,928	1,628,748	-	1,317,943	2,230	674,532	-	-
Trade payables	(1,200,615)	(39,478)	(1,339,125)	(9,584)	(1,391,700)	(340)	(35,105)	(5,049)	(2,224)

Interest rate risk

The Company's loan and lease arrangements are subject to fixed interest rates and therefore would not have been impacted by any increase/decrease in interest rates during the current year.

Profit is sensitive to higher/lower interest income from cash and cash equivalents and term deposits as a result of changes in interest rates. At year end the Company’s term deposits were earning interest at 3.15% and the Company’s bank account was earning interest of 2.35%.

Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Board's approach to managing liquidity is to ensure, as far as possible, that the Group will always have sufficient liquidity to meet its liabilities when due. As at 30 June 2014 and the date of this report, the Group has sufficient liquid assets to meet its financial obligations.

Sensitivity analysis

(i) Interest rate risk

The Company's loan and lease arrangements are subject to fixed interest rates and therefore would not have been impacted by any increase/decrease in interest rates during the current year. Accordingly, an increase in interest rates would not have impacted the Company's interest expense.

Movements in interest rates on the Company’s bank accounts and term deposits would not have a significant impact on the Company’s result for the year.

(ii) Foreign exchange rate risk

Foreign currency balances held in British Pounds relate to DTI EMEA Ltd. Any movements in the British Pound exchange rate would not impact on profit for the year as any translation differences are taken to the foreign currency translation reserve.

Based on the financial instruments held at 30 June 2014, had the Australian dollar weakened by 5% against the US Dollar, Euro, & Swedish Krone, with all other variables held constant, the Group’s pre-tax profit for the year would have been $27,898 (2013: $16,321) lower. If the Australian dollar had strengthened the corresponding impact would be an increase in pre-tax profit by the same amount.

Price risk

Investments held are not listed or traded in active markets and therefore no price risk arises.

Capital management

The Company’s objectives when managing capital are to:

• safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders, and

• maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

The Company does not have any externally imposed capital requirements.

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Note 3: Revenue and expenses

Note 3: Revenue and expenses
	2014 2013 $ $
(a) Revenue Revenue from sale of goods Revenue from the rendering of services (b) Other Income Research & development grant Net foreign exchange gains Interest received Other (c) Material cost of sales Material cost of sales (d) Finance costs Interest: - Non-related entities - Finance lease charges (e) Operating lease payments Minimum lease payments (f) Defined contribution superannuation expense Superannuation (g) Share based payment expense Employee share based payment expense (h) Impairment losses – financial assets Trade receivables	17,686,265 17,697,978 2,111,807 1,798,664
	19,798,072 19,496,642
	787,965 877,254 137,651 136,013 87,658 72,060 877 152
	1,014,151 1,085,479
	9,894,559 10,893,685
	116 47,634 4,146 1,732
	4,262 49,366
	141,302 153,950
	409,562 370,098
	35,000 3,685
	14,970 -

Note 4: Income tax

Note 4: Income tax
	2014 2013 $ $
(a) Income tax expense / (benefits) Current tax expense Deferred tax Adjustments for current tax of prior periods	637,718 - 418,399 469,877 20,534 -
	1,076,651 469,877

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	2014 2013 $ $	2014 2013 $ $
(b) Numerical reconciliation of income tax expense to prima facie tax payable Profit / (loss) before income tax expense Prima facie tax payable / (benefit) on profit / (loss) at 30% (2013: 30%) Tax effect of: Director and employee option expense R & D tax incentive Other Utilisation of previously unrecognised tax losses Effect of lower statutory income tax rate in the United Kingdom Adjustments for current tax of prior periods Deferred taxes not brought to account Income tax expense / (benefit) (c) Deferred income tax balances recognised in the accounts: Deferred tax liabilities Work in progress Unrealised foreign exchange gain Property, plant & equipment Set off of deferred tax liabilities Net recognised deferred tax liability Deferred tax assets Annual leave provision Long service leave provision Accrued audit fees Superannuation provision Investments Capital raising fees Provision for diminution in trading stock Provision for doubtful debts Tax losses carried forward Set off of deferred tax liabilities Deferred tax asset not brought to account as realisation is not probable Net recognised deferred tax assets	2,192,626 2,095,061
	657,788 628,518 10,500 1,107 288,921 487,060 87,581 (24,126) - (634,098) 11,102 11,416 20,534 - 225 -
	1,076,651 469,877
	(322,031) (357,261) - (6,107) (227,338) (402,164) 345,559 765,532
		(203,810) -
	- 235,123

Net deferred tax assets will be brought to account when it is probable that immediate sufficient tax profits will be available against which temporary differences and tax losses can be utilised.

Franking credits available for subsequent financial years based on a tax rate of 30% are $82,768 (2013: $82,768).

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Note 5: Directors and executive disclosures

Key management personnel

The key management personnel of DTI Group Ltd during the year were:

Directors:

Chris Morris Non-Executive Chairman Richard Johnson Managing Director Neil Goodey Non-Executive Director Glyn Denison Non-Executive Director Jeremy King Non-Executive Director

Other key management personnel:

Jean-Michel Florent Chief Operating Officer (appointed 1 May 2013) Bruce Mitchell Chief Financial Officer

Included in the 2013 comparatives below is the compensation for Peter Levy who was the Chief Operating Officer until the date of his resignation of 26 April 2013.

of his resignation of 26 April 2013.
	2014 2013 $ $
Compensation by category: key management personnel Short-term benefits Post-employment benefits Share based payments ote 6: Auditor’s remuneration BDO Audit (WA) Pty Ltd & BDO LLP Remuneration of the auditors of the entities for: Auditing or reviewing the financial report Non-audit services performed by BDO during the year comprise: Investigating Accountant’s Report and review work for proposed initial public offer and ASX listing ote 7: Other financial assets Term deposits ote 8: Trade and other receivables Current Trade receivables Accrued debtors Customs duty refund Net R&D grant/income tax receivable Customer retentions Non-Current Customer retentions Accrued debtors	736,578 682,693 64,157 43,406 35,000 1,640
	835,735 727,739
	49,515 47,321
	24,613 -
	400,063 400,063
	5,325,066 2,990,400 109,975 101,655 - 28,128 149,730 876,738 162,208 -
	5,746,979 3,996,921
	- 162,210 452,232 472,426
	452,232 634,636

Note 6: Auditor’s remuneration

Note 7: Other financial assets

Note 8: Trade and other receivables

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(a) Impaired trade receivables

At 30 June 2014 current trade receivables of the Group with a nominal value of $22,621 (2013: $7,651) were impaired. It was assessed that no portion of these receivables is expected to be recovered and the full amount has been provided for.

	2014 2013 $ $
Movements in the provision for impairment of receivables are as follows: At July 1 Provision for impairment recognised during the year Receivables written off during the year as uncollectable	7,651 7,651 14,970 - - -
	22,621 7,651

The creation and release of the provision for impaired receivables has been included in ‘other expenses’ in the statement of profit or loss and other comprehensive income. Amounts charged to the allowance account are generally written off when there is no expectation of recovering additional cash.

• (b) Past due but not impaired

At 30 June 2014 trade receivables of $2,293,521 (2013: $400,752) were past due, but not impaired. These relate to a number of independent customers for whom there is no recent history of default and within one month of year end over $1.3m of the past due amounts had been collected. The ageing analysis of these trade receivables is as follows:

Up to 3 months 3 to 6 months Over 6 months	1,598,319 163,988 695,072 82,215 130 154,549
	2,293,521 400,752

The other classes within trade and other receivables do not contain impaired assets and are not past due. Based on the credit history of these other classes, it is expected that these amounts will be received when due. The Group does not hold any collateral in relation to these receivables.

(c) Foreign exchange and interest rate risk

Information on the Group’s exposure to foreign currency risk and interest rate risk in relation to trade and other receivables is provided in note 2.

(d) Fair value and credit risk

Due to the short-term nature of current receivables, their carrying amount is assumed to approximate their fair value. The accrued debtor amount relates to a sale to a customer of equipment which is being paid off in instalments. The loan is being repaid over a ten year period to June 2021 and is interest free. The fair value has been calculated based on cash flows discounted using a rate of 10%. The maximum exposure to credit risk at the end of the reporting period is the carrying amount of each class of receivables mentioned above.

Note 9: Inventories

	2014 2013 $ $
Raw materials / unassembled stock 2,007,886 1,664,903 Finished goods 600,758 508,462 Provision for inventory obsolescence (a) (64,704) (59,652) 2,543,940 2,113,713 (a) A provision for inventory obsolescence was established in a previous year. It was re-assessed & adjusted this financial year and is included in the raw materials & consumables used number in the statement of profit or loss and other comprehensive income. The movement in the provision is comprised as follows: At July 1 (59,652) (190,256) Provision for inventory obsolescence (recognised)/written back during the year (5,052) 130,604 (64,704) (59,652)	2,007,886 1,664,903 600,758 508,462 (64,704) (59,652)
	2,543,940 2,113,713
	(64,704) (59,652)

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Note 10: Other current assets

Note 10: Other current assets
	2014 2013 $ $
Deposits 11,507 4,584 Prepayments 79,137 80,671 90,644 85,255 Prepayments are primarily comprised of insurance costs recognised over the period of the policy. Note 11: Property, plant and equipment Buildings 107,064 107,064 At cost (21,924) (11,218) Less accumulated depreciation 85,140 95,846 Workshop and R&D plant and equipment At cost 535,002 475,338 Less accumulated depreciation (318,485) (214,398) 216,517 260,940 Office equipment & software At cost 837,185 712,750 Less accumulated depreciation (617,779) (527,214) 219,406 185,536 Motor vehicles At cost 214,891 142,917 Less accumulated depreciation (84,033) (53,377) 130,858 89,540 Total written down value 651,921 631,862 Movements in carrying amounts Buildings Balance at the beginning of the year 95,846 103,372 Additions - 2,864 Depreciation expense (10,706) (10,390) Carrying amount at the end of the year 85,140 95,846 Workshop and R&D plant and equipment Balance at the beginning of the year 260,940 54,704 Additions 59,664 274,215 Depreciation expense (104,087) (67,979) Carrying amount at the end of the year 216,517 260,940 Office equipment & software Balance at the beginning of the year 185,536 150,547 Additions 124,022 102,798 Depreciation expense (90,474) (67,809) Foreign currency translation 322 - Carrying amount at the end of the year 219,406 185,536 Motor vehicles Balance at the beginning of the year 89,540 65,453 Additions 71,974 40,490 Depreciation expense (30,656) (16,403) Carrying amount at the end of the year 130,858 89,540	11,507 4,584 79,137 80,671
	90,644 85,255
	85,140 95,846
	535,002 475,338 (318,485) (214,398)
	216,517 260,940
	837,185 712,750 (617,779) (527,214)
	219,406 185,536
	214,891 142,917 (84,033) (53,377)
	130,858 89,540
	651,921 631,862
	95,846 103,372 - 2,864 (10,706) (10,390)
	85,140 95,846
	260,940 54,704 59,664 274,215 (104,087) (67,979)
	216,517 260,940
	185,536 150,547 124,022 102,798 (90,474) (67,809) 322 -
	219,406 185,536
	89,540 65,453 71,974 40,490 (30,656) (16,403)
	130,858 89,540

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Note 12: Intangible assets

Note 12: Intangible assets
	Development costs Goodwill Patents Total $ $ $ $
At 30 June 2013 Cost (gross carrying amount) Accumulated amortisation Net carrying amount Movements in carrying amounts Balance at 1 July 2012 Additions Amortisation expense Carrying amount at 30 June 2013 At 30 June 2014 Cost (gross carrying amount) Accumulated amortisation Net carrying amount Movements in carrying amounts Balance at 1 July 2013 Additions Transferred to expense Amortisation expense Carrying amount at 30 June 2014	4,335,806 2,432 101,493 4,439,731 (1,564,114) - (15,989) (1,580,103)
	2,771,692 2,432 85,504 2,859,628
	2.358,522 2,432 72,255 2,433,209 1,190,868 - 21,255 1,212,123 (777,698) - (8,006) (785,704)
	2,771,692 2,432 85,504 2,859,628
	4,212,780 2,432 144,887 4,360,099
	(2,277,825) - (27,588) (2,305,413)
	1,934,955 2,432 117,299 2,054,686
	2,771,692 2,432 85,504 2,859,628
	- - 43,394 43,394
	(117,430) - - (117,430)
	(719,307) - (11,599) (730,906)
	1,934,955 2,432 117,299 2,054,686

(a) Description of the Group’s intangible assets

(i) Development costs

Development costs are carried at cost less accumulated amortisation and accumulated impairment losses. The intangible assets in existence as at 30 June 2012 have been assessed as having a finite life and are amortised using the straight line method over a period of 4 years. Intangible assets arising from 1 July 2012 are amortised in proportion to the sales of the commercial units they relate to, as this is deemed to be a more accurate and reasonable basis. 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.

The recoverability of the carrying amount of the product development assets is dependent on ongoing commercial sale of the product developed or alternatively, sale of the business.

(ii) Goodwill

Goodwill has been externally acquired and is carried at cost less accumulated impairment losses. The goodwill arose on the acquisition of the remaining 50.5% of Virtual Observer Pty Ltd on 28[th] June 2012 and represents the difference between the purchase price and the net liabilities.

(iii) Patents

Patents have been externally acquired and are carried at cost less accumulated impairment losses. This intangible asset has been assessed as having a useful life and is amortised using the straight line method over a period of 10 years. The patents have been granted for between fifteen and twenty years by the relevant government agency. 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.

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Note 13: Deferred tax assets

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13: Deferred tax assets
	2014 2013 $ $
Deferred Tax Asset Deferred tax assets to be recovered within 12 months	- 235,123

Note 14: Trade and other payables

	2014 2013 $ $
Trade payables Other payables ATO & HMRC (incl PAYG) Provision for annual leave Supplier retentions payable Superannuation liability FBT liability Payroll tax liability	1,658,959 2,133,740 285,102 264,922 392,460 53,381 400,581 311,995 - 10,145 100,301 98,263 7,267 (7,629) 37,643 40,160
	2,882,313 2,904,977

(a) Risk exposure

Information about the Group’s exposure to foreign exchange is provided in Note 2.

Note 15: Borrowings (current)

	2014 2013 $ $
Secured: Loan - Capital Finance Australia Ltd Less: Unexpired Interest Net carrying amount - Capital Finance Australia Ltd loan Total current borrowings	17,757 7,603 (4,736) (2,280)
	13,021 5,323
	13,021 5,323

(a) Further information on loans to related parties is set out in note 25.

(b) The loans were based on normal commercial terms and conditions.

(c) Refer to note 2 for risk exposures and risk management details.

Note 16: Borrowings (non-current)

	2014 2013 $ $
Secured: Loan - Capital Finance Australia Ltd Less: Unexpired Interest Net carrying amount - Capital Finance Australia Ltd loan Total non-current borrowings	74,720 36,480 (9,009) (5,134)
	65,711 31,346
	65,711 31,346

(a) Refer to note 2 for risk exposures and risk management details.

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Note 17: Provisions

e 17: Provisions
	2014 2013 $ $
Current Warranty provision The movement in the warranty provision is comprised as follows: At July 1 Provision for warranty recognised/(written back) during the year Non-current Employee entitlements - long service leave	- 97,315
	97,315 72,394 (97,315) 24,921
	- 97,315
	48,508 46,371

Note 18: Contributed Equity

	2014 2014 2013 2013 No. $ No. $
(a) Ordinary shares Balance at the beginning of financial year Shares issued on option conversion Shares issued to Director as remuneration 7 for 1 share split completed 10 June 2014 Capital raising costs Balance at the end of the financial year	10,904,073 9,239,384 10,876,117 9,202,481 - - 27,956 36,903 17,500 35,000 - - 65,529,438 - - - - - - -
	76,451,011 9,274,384 10,904,073 9,239,384

Fully paid ordinary shares carry one vote per share and carry the right to dividends. Ordinary shares have no par value and the Company does not have a limited amount of authorised capital.

(b) Options

The following options to issue ordinary shares were on issue as at 30 June 2014 (post 7 for 1 share split).

Number of	Grant date	Expiry date	Exercise
Options			price
12,370,806	30 June 2011	30 June 2015	$0.322

See Note 20 for details on share based payments.

Note 19: Reserves and accumulated losses

Note 19: Reserves and accumulated losses
	2014 $	2013 $
(a) Reserves Option reserves Foreign currency translation reserve	1,156,957 (18,361) 1,138,596	1,156,957 -
		1,156,957

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	2014	2013 $
	$
Option reserves Balance 1 July Option expense for the year Balance 30 June The share option reserve records items recognised as expenses on valuation of employee share options and items recognised as expenses on fair valuation of options issued for cash consideration or that are free attaching. Foreign currency translation reserve Balance 1 July Currency translation differences – current year Balance 30 June The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries. (b) Accumulated losses Movements in accumulated losses were as follows: Balance 1 July Net profit for the year Balance 30 June		1,153,272 3,685
	1,156,957
	-
	1,156,957	1,156,957
		- -
	-
	(18,361)
	(18,361)	-
		(2,979,216) 1,625,184
	(1,354,032)
	1,115,975
	(238,057)	(1,354,032)

Note 20: Share-based payments

The following share-based payment arrangements existed at 30 June 2014:

On 30 November 2013, 17,500 shares were issued to a Director as part of his remuneration. The expense has been measured based on the fair value of the shares issued, which has been determined to be $2 each. Accordingly an expense of $35,000 has been recorded. The fair value was determined with reference to the price of recent share issues.

As at 30 June 2014 there were 12,370,806 unlisted options over ordinary shares issued pursuant to a subscription agreement with Finico Pty Ltd. The options have a four year term and are exercisable at $0.322 on or before 30 June 2015.

The following table contains the number (“No.”), weighted average exercise prices (“WAEP”) of and movements in share options issued during the year:

issued during the year:
	2014 WAEP 2013 WAEP No. $ No. $
Outstanding at the beginning of the year Effect of 7 for 1 share split Granted during the year Forfeited during the year Exercised during the year Outstanding at the end of the year Exercisable at the end of the year	1,767,258 2.250 2,289,258 2.05 10,603,548 (1.928) - - - - - - - - (494,044) 1.36 - - (27,956) 1.32
	12,370,806 0.322 1,767,258 2.25
	12,370,806 0.322 1,767,258 2.25

DT I GRO U P L IMIT ED – ANNU AL RE PORT 201 4 Page | 34

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Note 21: Capital and leasing commitments

(a) Finance lease commitments

The Company signed two motor vehicle leases commencing in April 2013 and three motor vehicle leases commencing in November 2013. The leases are 5 year finance leases with lease payments paid monthly in advance. There are no terms of renewal, purchase options or escalation clauses in respect of the leases.

Finance lease commitments The Company signed two motor vehicle leases commencing in April 2013 and three motor vehicle leases commencing in November 2013. The leases are 5 year finance leases with lease payments paid monthly in advance. There are no terms of renewal, purchase options or escalation clauses in respect of the leases.
	2014 2013 $ $
Minimum finance lease payable: Not later than 1 year Later than 1 year but not later than 5 years Minimum lease payments Future finance charges Present value of minimum lease payments	17,757 7,603 74,720 36,480
	92,477 44,083 (13,745) (7,414)
	78,732 36,669

(b) Operating lease commitments

The Company signed an operating lease in June 2012 for the land on which the office and workshop facilities are situated with a lease term of 5 years, with the option to extend for a further 5 years. The Company does not have the option to purchase the leased asset at the expiry of the lease.

The Company signed an operating lease in June 2012 for computer equipment with a lease term of 3 years. The Company does not have the option to purchase the leased asset at the expiry of the lease.

The Company signed an operating lease in November 2013 for the lease, commencing 1 January 2014, of office space for DTI EMEA Ltd in the UK with a lease term of 5 years. The Company does not have the option to purchase the leased asset at the expiry of the lease.

Non-cancellable operating lease payable:
Not later than 1 year	154,156	145,010
Later than 1 year but not later than 5 years	294,688	389,326
	448,844	534,336

Note 22: Contingent liabilities

e 22: Contingent liabilities
	2014 2013 $ $
Bank guarantees for unconditional undertaking of contracts	400,063 400,063

The Company has given bank guarantees relating to performance requirements of contracts. These are secured by term deposits.

Under the contract for the lease of land on which the office and workshop facilities are situated, the Company may at some future point (at the option of the Lessor) be required to “make good” the land and remove the building and any improvements thereon. The Lessor is required to give four years notice of any such requirement. A bank guarantee in relation to this contract of $107,800 is included in the amounts above.

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Note 23: Events occurring after the reporting period

No matters or circumstance have arisen that have significantly affected, or may significantly affect, the operations of DTI Group Limited, the results of those operations or the state of affairs of DTI Group Limited in subsequent years that is not otherwise disclosed in this report.

Note 24: Notes to the cash flow statement

(a) Reconciliation of cash

For the purpose of the cash flow statement, cash includes cash on hand and in banks and short term deposits with banks. Cash at the end of the financial year as shown in the cash flow statement is reconciled to the related items in the statement of financial position as follows:

of financial position as follows:
	2014	2013 $
	$
Cheque account British Sterling bank account US Dollar bank account Petty cash (b) Reconciliation of profit / (loss) after income tax to the net cash used in operating activities Operating profit Non-cash items: Depreciation & amortisation Employee share option expense Grant income Exchange differences on foreign operations Change in operating assets and liabilities - (Increase) / decrease in trade and other receivables - (Increase) / decrease in inventories - (Increase) / decrease in intangibles - Increase / (decrease) in trade and other payables - (Increase) / decrease in financial asset - Increase / (decrease) in provision Net inflow / (outflow) from operating activities	845,329	756,535 8,612 405,551 (258)
	104,545
	497,397
	550
	1,447,821	1,170,440
		1,625,184 948,285 3,685 (877,254) - 1,313,445 (45,640) - (1,351,100) 469,964 (61,823)
	1,115,975
	966,829
	35,000
	(787,965)
	(18,361)
	(785,082)
	(430,227)
	423,970
	(22,662)
	438,933
	(95,178)
	841,232	2,024,746

Non-cash financing and investing activities

Shares were issued to employees under the DTI Employee Option Plan (refer Note 20: Share-based payments).

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Note 25: Related party transactions

The Company has related party relationships with its subsidiaries.

Subsidiaries

DTI Group Limited holds 100% (2013: 100%) of the shares in Virtual Observer Pty Ltd. A loan was created during the current and prior years when payments were made by DTI Group Limited on behalf of Virtual Observer Pty Ltd. At reporting date 2014 this loan balance was $94,229 (2013: $61,517).

DTI Group Limited holds 100% of the shares in DTI EMEA Ltd. A loan was created during the current and previous years when payments were made by DTI Group Ltd to DTI EMEA Ltd. At reporting date 2014 this loan balance was $789,409 (2013: $585,423). In addition, sales were made during the year by DTI Group Ltd to DTI EMEA Ltd and at reporting date the debtor balance was $1,311,714 (2013: $285,782).

During the year, DTI Group Limited incorporated DTI Saleco Pty Ltd in which it holds 100% (2013: none) of the shares. A loan was created during the current year when payments were made by DTI Group Limited on behalf of DTI Saleco Pty Ltd. At reporting date 2014 this loan balance was $748 (2013: $nil).

No interest is charged on the loans with subsidiaries and there are no fixed repayment terms for the loans.

Note 26: Parent entity financial information: DTI Group Ltd

The individual financial statements for the parent entity show the following amounts:

The individual financial statements for the parent entity show the following amounts:
	2014 2013 $ $
Statement of Financial Position Current assets Total assets Current liabilities Total liabilities Shareholders’ equity: Issued capital Share option reserve Accumulated losses Profit for the year Total comprehensive income Note 27: Company information	10,523,138 8,152,757 13,158,005 11,964,025 (2,728,508) (2,873,089) (2,983,082) (2,921,716) 9,274,384 9,239,384 1,156,957 1,156,957 (256,418) (1,354,032)
	10,174,923 9,042,309
	1,097,614 1,525,125
	1,097,614 1,525,125

DTI Group Limited is an unlisted public company, incorporated and operating in Australia.

Registered office and principal place of business

50 Affleck Road Perth Airport, WA, 6105 Tel: (08) 9479 1195 Internet: www.dti.com.au

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Directors’ declaration

In the opinion of the Directors of DTI Group Limited ("the Company"):

1. The financial statements and accompanying notes set out on pages 11 - 37 are in accordance with the Corporations Act 2001 , and:

2. (i) comply with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and

3. (ii) give a true and fair view of the consolidated entity’s financial position as at 30 June 2014 and of its performance for the year ended on that date.

4. In the Directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

5. The Company has included in the notes to the financial statements an explicit and unreserved Statement of Compliance with International Financial Reporting Standards.

This declaration is made in accordance with a resolution of the Board of Directors and is signed for and on behalf of the Directors by:

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Richard Johnson Director

27 August 2014, Perth, Australia

DT I GRO U P L IMIT ED – ANNU AL RE PORT 201 4 Page | 38

Tel: +61 8 6382 4600 38 Station Street Fax: +61 8 6382 4601 Subiaco, WA 6008 www.bdo.com.au PO Box 700 West Perth WA 6872 Australia

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INDEPENDENT AUDITOR’S REPORT

To the members of DTI Group Limited

Report on the Financial Report

We have audited the accompanying financial report of DTI Group Limited, which comprises the consolidated statement of financial position as at 30 June 2014, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration of the consolidated entity comprising the company and the entities it controlled at the year’s end or from time to time during the financial year.

Directors’ Responsibility for the Financial Report

The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In Note 1, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Stat e ments , that the financial statements comply with International Financial Reporting Standards .

Auditor’s Responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about whether the financial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the company’s preparation of the financial report that gives a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.

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

BDO Audit (WA) Pty Ltd ABN 79 112 284 787 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 Audit (WA) Pty Ltd 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) in each State or Territory other than Tasmania.

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Independence

In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001 . We confirm that the independence declaration required by the Corporations Act 2001 , which has been given to the directors of DTI Group Limited, would be in the same terms if given to the directors as at the time of this auditor’s report.

Opinion

In our opinion:

• (a) the financial report of DTI Group Limited is in accordance with the Corporations Act 2001 , including:

• (i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2014 and of its performance for the year ended on that date; and

• (ii) complying with Australian Accounting Standards and the Corporations Regulations 2001 ; and

• (b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 1.

BDO Audit (WA) Pty Ltd

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Glyn O’Brien

Director

Perth, 27 August 2014

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38 Station Street Tel: +61 8 6382 4600 Fax: +61 8 6382 4601 Subiaco, WA 6008 www.bdo.com.au PO Box 700 West Perth WA 6872 Australia

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DECLARATION OF INDEPENDENCE BY GLYN O'BRIEN TO THE DIRECTORS OF DTI GROUP LIMITED

As lead auditor of DTI Group Limited for the year ended 30 June 2014, I declare that, to the best of my knowledge and belief, there have been:

1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and

2. No contraventions of any applicable code of professional conduct in relation to the audit.

This declaration is in respect of DTI Group Limited and the entities it controlled during the period.

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Glyn O’Brien

Director

BDO Audit (WA) Pty Ltd

Perth, 27 August 2014

BDO Audit (WA) Pty Ltd ABN 79 112 284 787 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 Audit (WA) Pty Ltd 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) in each State or Territory other than Tasmania.

D TI G R O UP L IM IT E D – AN N U AL RE PO R T 20 1 4

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