FLEXIROAM LIMITED — Annual Report 2015

Aug 30, 2015

Flexiroam Limited ABN 47 090 671 819 and its Controlled Entities

Appendix 4E – Preliminary Final Report For the Year Ended 30 June 2015

			2015	2014
Results for announcement to market	**Up / Down **	% Change	$	$
Revenue from ordinary activities	Up	150%	4,757,407	1,900,564
(Loss)/profit after tax from ordinary activities	Down	(3,040%)	(4,477,256)	152,285
attributable to members
(Loss)/profit attributable to members	Down	(3,040%)	(4,477,256)	152,285

Dividend Information Amount per share	Franked Amount per share
Dividend – current reporting period Nil Dividend –previous reporting period Nil	Nil Nil
Tangible Asset Backing per Ordinary Share	cents
tangible asset backing per ordinary share – previous reporting period (60,000,000 shares) tangible asset backing per ordinary share – current reporting period (188,197,501 shares)	(1.49) 4.80

Commentary on the Results for the Period

For accounting purposes, Flexiroam Malaysia has been identified as the accounting acquirer of the consolidated group. The accompanying consolidated financial statements represent a continuation of Flexiroam Malaysia’s financial statements. The consolidated results reflect a full year of Flexiroam Malaysia plus Flexiroam Limited from the date of acquisition, 18 April 2015 to 30 June 2015. The comparative period results reflect Flexiroam Malaysia only.

• Reverse Acquisition

• The reverse acquisition incurred an accounting loss on acquisition of $3,137,638.

• Increase in Sales

• The 150% increase in sales from 2014 to 2015 is attributed to performance of business to business transactions.

• Corporate and consumer sales performance saw significant increases, however corporate sales jumped by 168% within the period.

• Corporate sales accounts for 81% of total sales with 114 corporate customers to date; of that 89 are Malaysian and 25 are international customers.

• Increase in Cost of Sales

• Increase in the costs of sales is attributed to the aggressive customer acquisition activities, resulting in 51 new corporate customers in 2015 and an accumulated subscriber base of 312,061.

• Decrease in Profits

• The decrease in profits is due to the aggressive marketing, promotional and customer acquisition activities both domestically and internationally.

• Increase in administration and operating expense

• An increase in professional fees was incurred leading up to the public listing on ASX.

Audit

This Preliminary Final Report is based on the Annual Financial Report which is in the process of being audited.

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Jefrey Ong

Director

Dated at Perth this 31[th] day of August 2015

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Flexiroam Limited ABN 47 090 671 819 and its Controlled Entities Appendix 4E – Preliminary Final Report For the Year Ended 30 June 2015

Review of Operations

Flexiroam Limited

On 2 February 2015, Flexiroam Limited (formerly Island Metals Limited) held a General Meeting where the following resolutions were passed by shareholders.

• Change of control of the Company;

• Approval of performance rights plan; and

• Change of the Company name.

On 23 February 2015, Flexiroam Limited (formerly Island Metals Limited) (“ the Company ”) entered into a Share Share Sale Agreement (“ SSA ”) with the Vendor, Reapfield Technology Sdn Bhd (“ Reapfield ”), which was subsequently amended 17 March 2015 by Deed of Variation, to acquire 100% of the issued capital in its wholly owned subsidiary, Super Bonus Profit Sdn Bhd (“ Acquisition ”). Super Bonus Profit Sdn Bhd is the owner of 100% of the rights and title to Flexiroam Sdn Bhd.

On 18 April 2015, Flexiroam Limited (successfully completed the Acquisition. In accordance with the SSA, the Company issued 90,000,000 fully paid ordinary shares to Reapfield as consideration for the acquisition. Flexiroam Limited also issued 15,000,000 fully paid ordinary shares to Reapfield as repayment of loans to Flexiroam Sdn Bhd by the Vendor.

On 18 April 2015, Paul Price and KC Ong resigned as Directors of Flexiroam Limited and were replaced by Adam Sierakowski, Kenn Tat Ong (Jefrey Ong) and Iik Kho (Gerard Kho).

On 19 March 2015, the Company changed its name from Island Metals Limited to Flexiroam Limited.

On 10 June 2015, Flexiroam Limited issued the following shares and options under the Company’s Replacement Prospectus dated 15 April 2015.

• Public Offer – 46,297,500 fully paid ordinary shares at $0.20 per share;

• Advisor Shares – 2,700,000 fully paid ordinary shares;

• 1,000,000 options to Trident Capital Pty Ltd; and

• 2,000,000 options to Zero Nominees Pty Ltd.

On 16 June 2015, the Company successfully listed its securities for trading on the Australian Securities Exchange platform.

Flexiroam Sdn Bhd

Flexiroam Sdn Bhd (“ Flexiroam Malaysia ”) is the fastest growing budget international roaming provider in Asia–Pacific offering low cost roaming services internationally. Flexiroam Malaysia is the first provider in AsiaPacific to offer a range of SIM based products allowing customers to retain their existing phone numbers while traveling and enjoying unlimited voice and data on a flat rate unlimited per day fee. Flexiroam Malaysia today is developing its range of products to include mobile application which will allow travellers to be reached anywhere in the world through dedicated international numbers from over 50 countries and a SIM laminating product which will give travelers low cost data roaming in over 100 countries without needing to change their SIM cards. To date, over 300,000 people from all over the world have already benefited from combined savings totalling more than A$23 million using Flexiroam Malaysia products. Over 100 travel agencies both in Malaysia and internationally and the international low cost carrier Airasia are Flexiroam Malaysia partners.

On 3 June 2014, Flexiroam Malaysia entered into an agreement with AirAsia Berhad for the provision of preloaded, AirAsiaX SIM cards for sales and redemption purposes. Under this agreement, the AirAsiaX SIM cards can be purchased by all international outbound travellers at Flexiroam Malaysia’s business centre in Kuala Lumpur International Airport 2 (“KLIA2”). Additionally, a promotion was launched simultaneously where the first 100,000 travellers going to Japan may redeem an AirAsiaX SIM card for free at Flexiroam Malaysia’s KLIA2 outlet throughout the duration of this agreement.

On 1 November 2012, Ashish Thakral resigned as a Director of Flexiroam Malaysia.

• On 10 December 2014, Lim Si Pin was appointed as a Director of Flexiroam Malaysia.

On 22 May 2015, the Olympic Council of Malaysia appointed Flexiroam Malaysia as sponsor and preferred provider of roaming services for the 1,000 Malaysian Contingents who participated in the 8[th] Southeast Asian Games held in Singapore from 5 June 2015 to 16 June 2015.

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Flexiroam Limited ABN 47 090 671 819 and its Controlled Entities Appendix 4E – Preliminary Final Report For the Year Ended 30 June 2015

Principal Activities

The Consolidated Entity is involved in telecommunications.

Reverse acquisition

Flexiroam Limited entered into a heads of agreement dated 9 December 2014 to purchase all of the issue capital of Flexiroam Sdn Bhd (“ Flexiroam Malaysia ”) (being the holding company Super Bonus Profit Sdn Bhd and its 100% interest in Flexiroam Sdn Bhd collectively) in exchange for 90,000,000 ordinary shares. It was additionally agreed that loans held by related parties and the ultimate parent entity totalling approximately MYR 4,336,000, would be exchanged for an additional 15,000,000 ordinary shares in Flexiroam Limited. As a result the shareholder of Flexiroam Malaysia held at the date of acquisition 77% of the issue share capital of the Company, prior to the issue of shares under the prospectus.

From a legal and taxation perspective, Flexiroam Limited is considered the acquiring entity. However the acquisition of Flexiroam Malaysia by Flexiroam Limited has the features of a reverse acquisition as described in Australian Accounting Standard AASB3 "Business Combinations" notwithstanding Flexiroam Limited being the legal parent of the Group. This transaction is outside the scope of AASB 3 as the accounting acquiree does not constitute a business as defined by this standard. In this instance, the principal of reverse acquisition accounting is applied to determine the accounting acquirer but the transaction is accounted for as a share-based payment by the accounting acquirer for the net identifiable assets of the accounting acquiree in accordance with AASB2 "Share-based Payment".

For accounting purposes, Flexiroam Malaysia has been identified as the accounting acquirer of the consolidated group. The accompanying consolidated financial statements represent a continuation of Flexiroam Malaysia’s financial statements. The consolidated results reflect a full year of Flexiroam Malaysia plus Flexiroam Limited from the date of acquisition, 18 April 2015 to 30 June 2015. The comparative period results reflect Flexiroam Malaysia only.

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Flexiroam Limited ABN 47 090 671 819 and its Controlled Entities

Appendix 4E – Preliminary Final Report For the Year Ended 30 June 2015

Consolidated Statement of Profit or Loss and Other Comprehensive Income

For the financial year ended 30 June 2015

		Consolidated	Company
	Note	2015 $	2014 $
Sales 1 Cost of sales 2 Gross profit Other revenue Administration and operating expenses 3 Staff costs Depreciation and amortisation Finance expenses Share based payment 11 Loss from acquisition 4 (Loss)/profit before income tax Income tax benefit (Loss)/profit for the year from continuing operations Other comprehensive income Total comprehensive (loss)/profit for the year (Loss)/earnings per share (basic and diluted) 9		4,757,407 1,900,564 (4,049,358) (1,080,600)
		708,049 819,964
		153,874 128,025 (1,385,630) (454,716) (317,482) (232,049) (190,781) (106,800) (7,655) (2,139) (299,993) - (3,137,638) -
		(4,477,256) 152,285 (773) (634)
		(4,478,029) 151,651
		- -
		(4,478,029) 151,651
		(0.05) 0.002

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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Flexiroam Limited ABN 47 090 671 819 and its Controlled Entities

Appendix 4E – Preliminary Final Report For the Year Ended 30 June 2015

Consolidated Statement of Financial Position As at 30 June 2015

		Consolidated	Company
	Note	2015 $	2014 $
CURRENT ASSETS Cash and cash equivalents 5 Trade and other receivables Development expenditure Inventory Available for sale Convertible notes Loan receivable Total Current Assets NON CURRENT ASSETS Intellectual property 6 Plant & equipment Intangible assets 7 Total Non-Current Assets Total Assets CURRENT LIABILITIES Trade and other payables Total Current Liabilities NON CURRENT LIABILITIES Loan Deferred tax Total Non Current Liabilities Total Liabilities Net Assets EQUITY Issued capital 8 Reserves 10 Accumulated losses Total Equity		8,623,528 143,774 341,604 343,160 144,147 166,265 5,437 - 20,672 - 50,000 - 43,818 -
		9,229,206 653,199
		20,647,648 19,844,551 52,937 34,247 619,372 461,570
		21,319,957 20,340,368
		30,549,163 20,993,567
		242,009 354,533
		242,009 354,533
		- 1,229,124 1,502 706
		1,502 1,229,830
		243,511 1,584,363
		30,305,652 19,409,204
		35,318,699 21,029,757 (102,962) (1,188,497) (4,910,085) (432,056)
		30,305,652 19,409,204

The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.

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Flexiroam Limited ABN 47 090 671 819 and its Controlled Entities Appendix 4E – Preliminary Final Report For the Year Ended 30 June 2015

Consolidated Statement of Changes in Equity For the financial year ended 30 June 2015

	Note	Issued Capital $	Reserves $	Accumulated losses $	Total $
Company
Balance at 1 July 2013 Foreign exchange Total comprehensive profit for the year Balance at 30 June 2014 Consolidated Balance at 1 July 2014 Foreign exchange Total comprehensive loss for the year Issued capital Share issue costs Share based payments Balance at 30 June 2015		21,029,757 (648,724) (583,707) - (539,773) - - - 151,651			19,797,326 (539,773) 151,651
		21,029,757 (1,188,497) (432,056)			19,409,204
		21,029,757 (1,188,497) (432,056)			19,409,204
		- 785,542 - - (4,478,029) 14,854,547 - - (565,605) - - - 299,993 -			785,542 (4,478,029) 14,854,547 (565,605) 299,993
		35,318,699 (102,962) (4,910,085)			30,305,652

The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.

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Flexiroam Limited ABN 47 090 671 819 and its Controlled Entities

Appendix 4E – Preliminary Final Report For the Year Ended 30 June 2015

Consolidated Statement of Cash Flows

For the financial year ended 30 June 2015

		Consolidated	Company
	Note	2015 $	2014 $
Cash flows from operating activities Receipts from customers Payments to suppliers and employees Interest and other costs of finance paid Interest and other costs of finance received Net cash flows (used in)/ provided by operating activities Cash flows from investing activities Purchase of fixed assets Cash acquired on acquisition of Flexiroam Limited Purchase of intangible assets Proceeds from convertible note repayment Net cash flows provided by/(used in) investing activities Cash flows from financing activities Government grants Proceeds from issue of share capital Payments for share issue costs Loan received Net cash flows provided by financing activities Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year Foreign exchange Cash and cash equivalents at the end of the year		1,063,707 1,760,232 (2,093,754) (1,433,022) (7,655) (2,139) 7,403 -
		(1,030,299) 325,071
		(32,819) (34,414) 313,190 - - (566,816) 50,000 -
		330,371 (601,230)
		139,565 128,025 9,259,500 - (411,410) - 227,058 260,514
		9,214,713 388,539
		8,514,785 112,380
		143,774 21,883 (35,031) 9,511
		8,623,528 143,774

The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.

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Flexiroam Limited ABN 47 090 671 819 and its Controlled Entities

Appendix 4E – Preliminary Final Report For the Year Ended 30 June 2015

1. Sales

Corporate1 Consumer2	Consolidated 2015 3,838,911 918,496 4,757,407	Company 2014 1,382,936 517,628
		1,900,564

1 Corporate sales consist of business to business transactions involving local and foreign travel agencies and companies.

2 Consumer sales consist of business to consumer transactions through physical and revenue streams.

2. Cost of Sales

Network cost Marketing Material cost Commission due Development expenditure	Consolidated 2015 265,206 3,521,957 112,430 120,674 29,091 4,049,358	Company 2014 213,906 809,336 17,709 20,904 18,745
		1,080,600

3. Administration Expenses

Advertising and promotion Office equipment and general maintenance Others costs Professional fees Rental Software and stationary Talent and recruitment Travelling and transportation Utilities	Consolidated 2015 133,310 6,902 23,099 864,437 145,562 25,758 128,938 35,688 21,936 1,385,630	Company 2014 273,243 15,384 17,481 7,818 92,488 10,874 8,685 23,835 4,908
		454,716

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Flexiroam Limited ABN 47 090 671 819 and its Controlled Entities Appendix 4E – Preliminary Final Report For the Year Ended 30 June 2015

4. Loss on Acquisition

On 18 March 2015, Flexiroam Limited issued 90,000,000 fully paid ordinary shares to Reapfield Technology Sdn Bhd as consideration for the acquisition of 100% of all the rights and title to Flexiroam Sdn Bhd (“ Flexiroam Malaysia ”). As a result, the shareholders of Flexiroam Malaysia held at the date of acquisition 77% of the issue share capital of the Flexiroam Limited, prior to the issue of shares under the prospectus.

For the purposes of AASB 3 “Business Combinations”, the acquisition is considered under the principles of reverse acquisition accounting with Flexiroam Malaysia identified as the accounting acquirer.

The reverse acquisition is treated as an acquisition of assets and liabilities of the Flexiroam Limited as at 17 March 2015.

Cash and cash equivalents Available for sale assets Convertible note Prepayments Other receivables Trade creditors Shares awaiting to be issued Value of the asset acquisition as at 17 March 2015 oss on acquisition of Flexiroam Limited: Acquisition consideration Less net assets acquired Loss on acquisition as at 17 March 2015	$
	313,190 23,800 100,000 10,595 1,514,766 (44,950) (199,992)
	1,717,409
	$ 4,855,0471 (1,717,409)
	3,137,638

Loss on acquisition of Flexiroam Limited:

1As a result of the acquisition, the consideration fair value is based on the portion (23%) of Flexiroam Malaysia’s net assets as at acquisition date.

5. Cash and Cash Equivalents

On 10 June 2015, Flexiroam Limited successfully completed a public raising of $9,259,500 under the Company’s Replacement Prospectus dated 15 April 2015.

6. Intellectual Property

The intellectual property asset is known as Flexiroam Malaysia, an international roaming service for Malaysians who travel overseas to make and receive unlimited calls at a fixed rate by linking their home number to their overseas number. It’s run on a sophisticated integrated network of services, forming a unified system known as the ‘Flexiform Web Services’ (FWS).

Investment in the intellectual property is seen to be an intangible asset with an indefinite useful life and is stated at cost. Indefinite life intangibles are not amortised but are subject to annual impairment testing.

As at 30 June 2015, Flexiroam Malaysia holds 1 patent in Malaysia and 1 patent in India.

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Flexiroam Limited ABN 47 090 671 819 and its Controlled Entities

Appendix 4E – Preliminary Final Report For the Year Ended 30 June 2015

7. Intangible Asset

Project marketing Less : Accumulated amortisation Net book value 8. Share Capital Fully paid ordinary shares 2014 Balance as at 1 July 2013 No movements during the year Balance as at 30 June 2014 2015 Balance as at 1 July 2014 Adjustment on acquisition of Flexiroam Limited Elimination of the historical value of Flexiroam Limited issued capital Elimination of Flexiroam Malaysia issued capital Share issue – 18 March 20151 Share issue – 19 March 20152 Share issue – 10 June 20153 Share issue – 10 June 20154 Capital raising costs Balance as at 30 June 2015	Consolidated 2015 902,456 (283,084) 619,372 Number 60,000,000 - 60,000,000 60,000,000 32,200,001 - (60,000,000) 105,000,000 2,000,000 46,297,500 2,700,000 - 188,197,501	Company 2014 565,292 (103,722) 461,570 $ 21,029,757 - 21,029,757
		21,029,757 647,000 (647,000) - 4,855,047 200,000 9,259,500 540,000 (565,605)
		35,318,699

1 On 18 March 2015, 15,000,000 shares were issued at $0.01 per share in repayment of loans to Flexiroam Sdn Bhd by Reapfield Technology Sdn Bhd. On 18 March 2015, 90,000,000 shares were issued at $0.01 per share as acquisition consideration.

2 On 19 March 2015, 2,000,000 shares were issued at $0.01 per share under a Sophisticated Placement Raising.

3 On 10 June 2015, 46,297,500 shares were issued at $0.20 per share under a Replacement Prospectus.

4 On 10 June 2015, 2,700,000 shares were issued at $0.20 per share under a Replacement Prospectus.

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Flexiroam Limited ABN 47 090 671 819 and its Controlled Entities

Appendix 4E – Preliminary Final Report For the Year Ended 30 June 2015

9. Loss Per Share

Basic loss per share amounts are calculated by dividing net loss for the year attributable to ordinary equity holders by the weighted average number of ordinary shares outstanding during the year.

The following reflects the income and share data used in the basic loss per share computations:

Loss attributable to ordinary equity holders Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share Basic and diluted loss per share 0. Reserves Foreign exchange reserve Share based payment reserve (see note 11) Balance as at 30 June 2015		Consolidated Company 2015 2014 $ $
		(4,478,029) 151,651
		Number 85,597,117 Number 90,000,000 $/share $/share (0.05) 0.002
		Consolidated Company 2015 2014 $ $ (402,955) (1,188,497) 299,993 -
		(102,962) (1,188,497)

10. Reserves

11. Options

In June 2015, 3,000,000 options were issued by Flexiroam Limited as contemplated by its Replacement Prospectus dated 15 April 2015. The issue of options are valued at $299,993 (2104: $Nil). The fair value of the options is determined using the Black-Scholes option valuation methodology and applying the following inputs:

	following inputs:
		Options
	Exercise Price	$0.20
	Expiry Date	10 Dec 2018
	Risk Free Rate	2.03%
	Volatility	75%
	Value per Option	$0.099
	Total Value of Options	$299,993
	Amount Expensed in Current Year	$299,993
	Amount to be Expensed in Future Years	$-

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Flexiroam Limited ABN 47 090 671 819 and its Controlled Entities Appendix 4E – Preliminary Final Report For the Year Ended 30 June 2015

12. Segment Reporting

The Consolidated Group has identified its operating segments as telecommunications and is based on the annual report that are to be audited and used by the board of directors in assessing performance and determining the allocation of resources. The reportable segment is represented by the primary consolidated statements forming the annual report for the year ended 30 June 2015.

13. Basis of Preparation

The consolidated financial statements and notes presented in this Appendix 4E are general purpose financial statements that have been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards and Interpretations used by the Australian Accounting Standards Board. Flexiroam Limited is a for profit entity for the purposes of preparing financial statements.

Compliance with IFRS

These consolidated financial statements also comply with International Financial Reporting Standards (IFRS).

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