NEXTED GROUP LIMITED — Interim / Quarterly Report 2014

Feb 27, 2014

ABN 75 105 012 066

DGI HOLDINGS LTD

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ASX Appendix 4D

Financial Statements for the half-year ended 31 December 2013

Results for announcement to the market

	6 months	6 months	%
Earnings	31 Dec 2013	31 Dec 2012	Increase/
	$A’000	$A’000	(Decrease)
Revenue from ordinary activities	13	5	160%
Profit/(Loss) from ordinary activities after tax attributable to members	(158)	5,294	(103%)
Profit/(Loss) for the period attributable to members	(158)	5,294	(103%)

The Company has recognised a loss of $158,098 from ordinary activities for the half-year to 31 December 2013 compared with a profit of $5,294,186 in the prior half-year. The Company was subject to a Deed of Company Arrangement (“DOCA”) and the prior period profit includes an amount of $5,954,527 relating to the forgiveness of pre-DOCA liabilities which occurred upon effectuation of the DOCA.

		Franked amount per
Dividends	Amount per share	share
Final dividend	N/A	N/A
Interim dividend	N/A	N/A
Record date for determining e	ntitlements to dividends	N/A

Record date for determining entitlements to dividends

Commentary

This report is based on information extracted from the Half-Year Report of DGI Holdings Limited for the period ended 31 December 2013. The Half-Year Report has been subject to review by the Company’s auditor and the review report is included with the attached report. Additional Appendix 4D disclosure requirements can be found in the Report of Directors and the 31 December 2013 halfyear financial statements.

	31	Dec	2013	31	Dec	2012
NTA tangible assets per security		0.26	cents		0.31	cents

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DGI HOLDINGS LIMITED ABN 75 105 012 066

HALF‐YEAR REPORT FOR THE HALF‐YEAR ENDED 31 DECEMBER 2013

DGI HOLDINGS LIMITED

ABN 75 105 012 066

Index:	Page
Corporate Directory	1
Report of the Directors	2
Auditor’s Independence Declaration	5
Statement of Profit or Loss and Other Comprehensive Income	6
Statement of Financial Position	7
Statement of Cash Flows	8
Statement of Changes in Equity	9
Notes to the Financial Report	10‐14
Directors’ Declaration	15
Independent Auditor’s Review Report	16‐17

DGI HOLDINGS LIMITED

CORPORATE DIRECTORY

Directors

Stock Exchange Listing

Mr Roger Steinepreis ‐ Non‐Executive Chairman Mr George Ventouras ‐ Non‐Executive Director Mr Nick Castleden ‐ Non‐Executive Director

ASX Limited (Home branch ‐ Perth, Western Australia) ASX Code: DGI

Company Secretary

Auditor

Ms Susan Hunter

BDO Audit (WA) Pty Ltd Chartered Accountants 38 Station Street SUBIACO WA 6008

Registered Office

Bankers

C/‐Steinepreis Paganin Level 4, The Read Buildings 16 Milligan Street Perth Telephone: + 61 8 8262 3115 Facsimile: + 61 8 8262 8490

National Australia Bank Limited Ground Floor, 50 St Georges Terrace PERTH WA 6000

Solicitors

Share Registry

Steinepreis Paganin Level 4, The Read Buildings 16 Milligan Street PERTH WA 6000

Computershare Investor Services Pty Ltd Level 2, Reserve Bank Building 45 St Georges Terrace PERTH WA 6000

1

DGI HOLDINGS LIMITED

REPORT OF THE DIRECTORS

The Directors of DGI Holdings Limited present their report on DGI Holdings Limited (“the Company” or “DGI”) for the half‐year ended 31 December 2013.

DIRECTORS

The Directors in office at the date of this report and at any time during the half‐year are as follows. Directors were in office for the entire period unless otherwise stated.

Current Directors

Mr Roger Steinepreis ‐ Non‐executive Chairman Mr George Ventouras ‐ Non‐executive Director Mr Nick Castleden ‐ Non‐executive Director

PRINCIPAL ACTIVITIES

DGI Holdings Limited is an Australian company listed on the Australian Securities Exchange (ASX code: DGI). DGI’s principal business activity is the research, development and marketing of innovative miniature projection technologies and products. It is also the intention of DGI’s board to identify new opportunities in related or non‐ related industries that may increase shareholder value.

REVIEW OF OPERATIONS AND CHANGES IN STATE OF AFFAIRS

During the half‐year, the Company continued the process of sourcing and securing agreements with mini projector manufacturers in China regarding the manufacture and/or distribution of products. These products are relevant to the Pico and Mini Projector markets and may provide an opportunity for DGI to secure sales in the Australian market.

The Company continued to assess other investment opportunities as they presented themselves and on 23 December 2013 announced that it had exercised the option to purchase 100% of the issued capital of iCollege Pty Ltd (“iCollege”), a cloud based online education company.

iCollege is a spin out of a profitable existing online education business using a proven cloud based software platform to deliver self paced career and professional development courses worldwide.

The online education market is becoming one of the faster growing industries in the world. The ability to offer education online is scalable.

The iCollege Business

iCollege is a business developed by Victor Hawkins, a management consultant and business owner for the past 20 years, and who has spent the past 5 years successfully owning and operating a cloud based software platform selling other online education courses. It is this platform that is the subject of a perpetual exclusive licence to iCollege.

The key terms of the acquisition are as follows:

1. The consideration is the issue of 250m ordinary fully paid shares with attaching 1 for 2 options (exercise price of minimum 20 cents each (post consolidation) and expiry date of 5 years) in DGI to the shareholders of iCollege.

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DGI HOLDINGS LIMITED

REPORT OF THE DIRECTORS

1. As further consideration, DGI will issue performance shares (subject to the receipt of appropriate shareholder and ASX approvals) as follows:

2. (a) Performance Tranche 1 ‐ 50m ordinary shares if sales revenue reaches $1,000,000 within 2 years;

3. (b) Performance Tranche 2 ‐ 50m ordinary shares if EBITDA reaches $500,000 within 2 years;

4. (c) Performance Tranche 3 ‐ 50m ordinary shares if EBITDA reaches $2,500,000 within 3 years; and

5. (d) For each tranche of shares issued, the Company has agreed to grant a 1 for 1 attaching option (exercise price of minimum 20 cents each (post consolidation) and expiry date of 5 years).

The completion of the transaction is subject to DGI shareholder approval and a number of other matters including a capital raising (sufficient to apply for re‐instatement), compliance with Chapters 1 and 2 of the ASX Listing Rules and approval for re‐admission to the official list of ASX.

Upon shareholder approval, DGI will change its name to iCollege Limited. Mr Victor Hawkins will be appointed as the Managing Director on completion, Mr Johannes de Back will be appointed as non‐executive Chairman and Mr Phil Re will be appointed as a non‐executive director.

RESULTS

The Company recorded a loss after tax for the half‐year ended 31 December 2013 of $158,098 (2012: Profit of $5,294,186).

SUBSEQUENT EVENTS

Subsequent to the half‐year end, the Company entered into a secured loan facility with iCollege. Pursuant to this facility DGI will loan iCollege up to a maximum of $150,000. $50,000 has been drawn down on the facility as at date of this report.

On 25 February 2014, DGI announced that the Company had raised $250,000 through a placement of 50,000,000 fully paid ordinary shares at 0.5 cents. Funds raised are to be used to re‐imburse the payment of the option fee of $75,000 in relation to exercise of the option to acquire online education company iCollege, for the preparation of the Notice of Meeting and the Prospectus issued by the Company pursuant to ASX Listing Rule 11.1.3 in order to re‐comply with Chapters 1 and 2 of the ASX Listing Rules including the payment of all expert fees, and general working capital for administration fees and the existing business operations of the Company.

The Prospectus is for an offer of 12,500,000 shares at an issue price of $0.20 per share to raise $2,500,000 (Offer). Oversubscriptions of up to a further 5,000,000 shares at an issue price of $0.20 per share to raise up to a further $1,000,000 may be accepted.

The Offer is conditional (amongst other things) upon Shareholders approving, at the General Meeting to be held on or about 14 March 2014, the issue of the Shares offered by the Prospectus (Refer to Sections 3.5 and 5.2 of the Prospectus for further details).

The Prospectus is a re‐compliance prospectus for the purposes of satisfying Chapters 1 and 2 of the ASX Listing Rules and to satisfy the ASX requirements for re‐listing following a change to the nature and scale of the Company's activities upon the completion of the iCollege acquisition.

There are no other matters or circumstances, other than disclosed elsewhere in this report, the financial statements or notes thereto, that has arisen since the end of the financial period, that has significantly affected, or may significantly affect, the operations of the Company, the results of those operations, or the state of affairs of the Company in future financial years.

3

DGI HOLDINGS LIMITED

REPORT OF THE DIRECTORS

FUTURE DEVELOPMENTS

It is the intention of DGI’s b oard to co m plete the acquisition o f iCollege Pt y Ltd and un d ertake a review of the D GI ex i sting busin e ss. There m ay be new o pportuniti e s that may i ncrease shareholder va l ue in indus t ries which m ay or may not be related to D GI’s existin g business, a lthough it i s expected that any ne w opportunities are likel y to be in the onlin e education space, or complementa r y industries.

AUDITOR INDEPENDENCE DECLARATION

A c opy of the a uditor’s independence d eclarations as required under secti o n 307C of t h e Corporat i ons Act 20 0 1 is in c luded in thi s report, an d can be fou n d on page 5 .

Si g ned in acco r dance with a resolution of the Dire c tors.

Roger Steinep r eis Chairman

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Perth, Wester n Australia 27 February 2 0 14

4

38 Station Street Subiaco, WA 6008 PO Box 700 West Perth WA 6872 Australia

Tel: +8 6382 4600 Fax: +8 6382 4601 www.bdo.com.au

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DECLARATION OF INDEPENDENCE BY PETER TOLL TO THE DIRECTORS OF DGI HOLDINGS LIMITED

As lead auditor for the review of DGI Holdings Limited for the half-year ended 31 December 2013, I declare that, to the best of my knowledge and belief, there have been no contraventions of:

• the auditor independence requirements of the Corporations Act 2001 in relation to the review; and

• any applicable code of professional conduct in relation to the review.

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Peter Toll

Director

BDO Audit (WA) Pty Ltd

Perth, 27 February 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.

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DGI HOLDINGS LIMITED

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE HALF-YEAR ENDED 31 DECEMBER 2013

Note Revenues Revenue from continuing operations Total revenues Expenses Compliance Consultant fees Legal fees Marketing expenses Depreciation and amortisation 2,3 Payment to creditor’s trust 4 Other expenses Total expenses Other Income 4 Profit/(loss) before Income Tax Income tax expense Profit/(loss) after income tax attributable to members of DGI Holdings Limited Other comprehensive income Total comprehensive income/(loss) attributable to members of DGI Holdings Limited Earnings per share Basic profit/(loss) per share Diluted profit per share	Half Year Ended 31 December 2013 $ 12,772 12,772 (20,039) (66,264) (47,747) (22,727) (4,237) ‐ (9,856) (170,870) ‐ (158,098) ‐ (158,098) ‐ (158,098) Cents per Share (0.05) ‐	Half Year Ended 31 December 2012 $ 5,172
		5,172
		(6,912) (31,472) ‐ ‐ (6,362) (575,000) (45,767)
		(665,513)
		5,954,527 5,294,186 ‐
		5,294,186 ‐
		5,294,186
		Cents per Share 6.63 6.33

The Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the notes to the interim financial statements.

6

DGI HOLDINGS LIMITED

STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2013

		31 December 2013	30 June 2013
	Note	$	$
ASSETS
Current Assets
Cash and cash equivalents		832,051	903,926
Trade and other receivables		50,989	33,285
Other	10	75,000	‐
Total Current Assets		958,040	937,211
Non‐Current Assets
Property, plant & equipment	2	20,150	20,640
Intangible assets	3	31,994	32,947
Total Non‐Current Assets		52,144	53,587
Total Assets		1,010,184	990,798
LIABILITIES
Current Liabilities
Trade and other payables		90,145	45,056
Total Current Liabilities		90,145	45,056
Total Liabilities		90,145	45,056
Net Assets		920,039	945,742
Equity
Issued capital	6	26,075,669	25,943,274
Reserves		116,130	116,130
Accumulated losses		(25,271,760)	(25,113,662)
Total Equity		920,039	945,742

The Statement of Financial Position should be read in conjunction with the notes to the interim financial statements.

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DGI HOLDINGS LIMITED

STATEMENT OF CASH FLOWS FOR THE HALF-YEAR ENDED 31 DECEMBER 2013

Note Cash flows from operating activities Receipts from customers Interest received Payments to suppliers and employees Other Net cash flows used in operating activities Cash flows from investing activities Payments for property, plant & equipment Other non‐current assets – IP Net cash flows used in investing activities Cash flows from financing activities Proceeds from borrowings Repayment of borrowings Proceeds from issue of shares Payment of share issue costs Payments made to DOCA Net cash flows provided by financing activities Net increase/(decrease) in cash and cash equivalents held Add opening cash and cash equivalents brought forward Closing cash and cash equivalents carried forward	31 December 2013 $ 2,300 10,773 (139,548) (75,000) (201,475) (2,090) (705) (2,795) ‐ ‐ 135,612 (3,218) ‐ 132,394 (71,876) 903,927 832,051	31 December 2012 $ ‐ 5,172 (58,586) ‐
		(53,414)
		‐ (13,621)
		(13,621)
		575,000 (272,500) 1,532,500 (188,037) (575,000)
		1,071,963
		1,004,928 ‐
		1,004,928

The Statement of Cash Flows should be read in conjunction with the notes to the interim financial statements.

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DGI HOLDINGS LIMITED

STATEMENT OF CHANGES IN EQUITY FOR THE HALF-YEAR ENDED 31 DECEMBER 2013

At 1 July 2013 Loss for the period Total comprehensive loss for the period Transactions with owners in their capacity as owners: Issue of share capital, net of transaction costs At 31 December 2013 At 1 July 2012 Profit for the period Total comprehensive income for the period Transactions with owners in their capacity as owners: Issue of share capital, net of transaction costs At 31 December 2012	Issued Capital Accumulated Losses Option Reserve Total Equity $ $ $ $ 25,943,274 (25,113,662) 116,130 945,742 ‐ (158,098) ‐ (158,098)
	‐ (158,098) ‐ (158,098) 132,395 ‐ ‐ 132,395
	26,075,669 (25,271,760) 116,130 920,039
	24,311,311 (30,331,968) 116,130 (5,904,527) ‐ 5,294,186 ‐ 5,294,186
	‐ 5,294,186 ‐ 5,294,186 1,631,963 ‐ ‐ 1,631,963
	25,943,274 (25,037,782) 116,130 1,021,622

The Statement of Changes in Equity should be read in conjunction with the notes to the interim financial statements.

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DGI HOLDINGS LIMITED

NOTES TO THE HALF-YEAR FINANCIAL STATEMENTS 31 DECEMBER 2013

1. BASIS OF PREPARATION OF HALF‐YEAR FINANCIAL REPORTS

Basis of Accounting

This general purpose financial report for the half‐year reporting period ended 31 December 2013 has been prepared in accordance with Corporations Act 2001 and Australian Accounting Standards (including Australian Accounting Interpretations) and authoritative pronouncements of the Australian Accounting Standards Board.

This financial report has been prepared in accordance with the historical costs convention.

The functional currency and presentation currency of DGI Holdings Limited is Australian dollars.

These half‐year financial reports do not include all the notes of the type normally included in annual financial reports and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the Company as the full financial reports.

The half‐year financial reports should be read in conjunction with the annual financial reports for the year ended 30 June 2013 and any public announcements made by DGI Holdings Limited during the half‐year reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001. For the purpose of preparing the half‐year financial statements, the half‐year has been treated as a discrete reporting period.

Accounting Standards Issued

In the half‐year ended 31 December 2013, the Company has reviewed all of the new and revised Standards and Interpretations issued by the AASB that are relevant to its operations and effective for reporting periods beginning on or after 1 July 2013.

It has been determined by the Company that there is no impact, material or otherwise, of the new and revised Standards and Interpretations on its business and, therefore, no change is necessary to the Company’s accounting policies.

• AASB 10 Consolidated Financial Statements (effective from 1 July 2013) ‐ AASB 10 establishes a new control model that applies to all entities. It replaces parts of AASB 127 Consolidated and Separate Financial Statements dealing with the accounting for consolidated financial statements and UIG‐112 Consolidation – Special Purpose Entities. The new control model broadens the situations when an entity is considered to be controlled by another entity and includes new guidance for applying the model to specific situations, including when acting as a manager may give control, the impact of potential voting rights and when holding less than a majority voting rights may give control. Consequential amendments were also made to other standards via AASB 2011‐7. The adoption of AASB 10 had no effect on the financial position or performance of the Company.

• AASB 11 Joint Arrangements (effective 1 July 2013) ‐ AASB 11 replaces AASB 131 Interests in Joint Ventures and UIG‐113 Jointly‐ controlled Entities – Nonmonetary Contributions by Venturers. AASB 11 uses the principle of control in AASB 10 to define joint control, and therefore the determination of whether joint control exists may change. In addition it removes the option to account for jointly controlled entities (JCEs) using proportionate consolidation. Instead, accounting for a joint arrangement is dependent on the nature of the rights and obligations arising from the arrangement. Joint operations that give the venturers a right to the underlying assets and obligations themselves is accounted for by recognising the share of those assets and obligations. Joint ventures that give the venturers a right to the net assets is accounted for using the equity method. Consequential amendments were also made to

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DGI HOLDINGS LIMITED

NOTES TO THE HALF-YEAR FINANCIAL STATEMENTS 31 DECEMBER 2013

other standards via AASB 2011‐7 and amendments to AASB 128. The adoption of AASB 11 had no effect on the financial position or performance of the Company.

• AASB 12 Disclosure of Interests in Other Entities (effective 1 July 2013) ‐ AASB 12 includes all disclosures relating to an entity’s interests in subsidiaries, joint arrangements, associates and structures entities. New disclosures have been introduced regarding the judgments made by management to determine whether control exists, and to require summarised information about joint arrangements, associates and structured entities and subsidiaries with non‐controlling interests. The adoption of AASB 12 had no material impact on the financial statements of the Company.

• AASB 13 Fair Value Measurement (effective 1 July 2013) ‐ AASB 13 consolidates fair value measurement guidance from across various Australian Accounting Standards into a single standard. AASB 13 does not change when fair value can or should be used. The standard defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The adoption of AASB 13 had no material impact on the financial statements of the Company.

• AASB 119 Employee Benefits (effective 1 July 2013) ‐ The main change introduced by this standard is to revise the accounting for defined benefit plans. The amendment removes the options for accounting for the liability, and requires that the liabilities arising from such plans is recognised in full with actuarial gains and losses being recognised in other comprehensive income. It also revised the method of calculating the return on plan assets. The revised standard changes the definition of short‐term employee benefits. The distinction between short‐term and other long‐term employee benefits is now based on whether the benefits are expected to be settled wholly within 12 months after the reporting date. The adoption of AASB 119 had no effect on the financial position or the performance of the Company.

2. PROPERTY, PLANT & EQUIPMENT

Opening balance Additions Accumulated depreciation Total Property, plant and equipment	31 December 2013 30 June 2013 $ $ 20,640 25,800 2,090 ‐ (2,580) (5,160)
	20,150 20,640

3. INTANGIBLE ASSETS

Intellectual property Opening balance Additions Accumulated amortisation Impairment charges Net carrying amount	31 December 2013 30 June 2013 $ $ 32,947 24,200 704 12,408 (1,657) (3,661) ‐ ‐
	31,994 32,947

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DGI HOLDINGS LIMITED

NOTES TO THE HALF-YEAR FINANCIAL STATEMENTS 31 DECEMBER 2013

4. OTHER INCOME

Effectuation of the DOCA on 4 September 2012 resulted in a net accounting gain of approximately $5,954,527.

Forgiveness of debt Liabilities settled under DOCA Trade and other payables Borrowings Employee benefits Total	31 December 2013 31 December 2012 $ $ ‐ 3,426,480 ‐ 1,994,220 ‐ 533,827
	‐ 5,954,527

The above liabilities were no longer required to be settled by the Company in line with the Terms and Conditions of the DOCA.

5. FAIR VALUE OF FINANCIAL INSTRUMENTS

Recurring fair value measurements

The Company does not have any financial instruments that are subject to recurring fair value measurements.

Due to their short‐term nature, the carrying amounts of current receivables and current trade and other payables is assumed to approximate their fair value.

6. CONTRIBUTED EQUITY

Number of Shares Summary of Movements: Issue Price 324,395,540 Opening balance 1 July 2013 ‐ Costs of capital raising ‐ 8,686,250 Exercise of Options on 16 December 2013 0.01 4,875,000 Exercise of Options on 18 December 2013 0.01 337,956,790 Closing balance at 31 December 2013 68,790,993 Opening balance 1 July 2012 (34,395,453) Consolidation of capital on 1:2 basis ‐ 120,000,000 Share placement on 10 December 2012 0.001 170,000,000 Share placement on 10 December 2012 0.01 ‐ Costs of capital raising ‐ 324,395,540 Closing balance at 31 December 2012	$ 25,943,274 (3,218) 86,863 48,750
	26,075,669
	24,311,311 ‐ 120,000 1,700,000 (188,037)
	25,943,274

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DGI HOLDINGS LIMITED

NOTES TO THE HALF-YEAR FINANCIAL STATEMENTS 31 DECEMBER 2013

7. SEGMENT INFORMATION

Management has determined the operating segments based on the reports reviewed by the Board of Directors that are used to make strategic decisions. The Company does not have any operating segments with discrete financial information. The Company does not have any customers, other than its’ bankers, and all the Company’s assets and liabilities are located within Australia. The Board of Directors review internal management reports that are consistent with the information provided in the statement of comprehensive income, statement of financial position and statement of cash flows. As a result no reconciliation is required because the information as presented is what is used by the Board to make strategic decisions.

8. CONTINGENT LIABILITIES

In the opinion of the directors there are no contingent assets or liabilities as at 31 December 2013.

9. RELATED PARTY TRANSACTIONS

Mr Roger Steinepreis, Director, is a director and shareholder of Steinepreis Paganin. During the period this entity provided legal services to the Company amounting to $47,113 (net of GST). These services were provided at normal commercial rates.

Mr George Ventouras, Director, is owner of Ventouras Consulting. During the period this entity provided services relating to maintenance of the Company’s intellectual property amounting to $12,000 (net of GST). These services were provided at normal commercial rates.

Mr Nick Castleden, Director, is a director and shareholder of Cratonix Pty Ltd. During the period this entity provided services amounting to $24,000 (net of GST) relating primarily to the assessment of projects presented to the Company, on a case by case basis. These services were provided at normal commercial rates.

10. EVENTS OCCURING AFTER REPORTING DATE

Subsequent to the half‐year end, the Company entered into a secured loan facility with iCollege. Pursuant to this facility DGI will loan iCollege up to a maximum of $150,000. $50,000 has been drawn down on the facility as at date of this report.

On 25 February 2014, DGI announced that the Company had raised $250,000 through a placement of 50,000,000 fully paid ordinary shares at 0.5 cents. Funds raised are to be used to re‐imburse the payment of the option fee of $75,000 in relation to exercise of the option to acquire online education company iCollege, for the preparation of the Notice of Meeting and the Prospectus issued by the Company pursuant to ASX Listing Rule 11.1.3 in order to re‐comply with Chapters 1 and 2 of the ASX Listing Rules including the payment of all expert fees, and general working capital for administration fees and the existing business operations of the Company.

The Prospectus is for an offer of 12,500,000 shares at an issue price of $0.20 per share to raise $2,500,000 (Offer). Oversubscriptions of up to a further 5,000,000 shares at an issue price of $0.20 per share to raise up to a further $1,000,000 may be accepted.

The Offer is conditional (amongst other things) upon Shareholders approving, at the General Meeting to be held on or about 14 March 2014, the issue of the Shares offered by the Prospectus (Refer to Sections 3.5 and 5.2 of the Prospectus for further details).

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DGI HOLDINGS LIMITED

NOTES TO THE HALF-YEAR FINANCIAL STATEMENTS 31 DECEMBER 2013

The Prospectus is a re‐compliance prospectus for the purposes of satisfying Chapters 1 and 2 of the ASX Listing Rules and to satisfy the ASX requirements for re‐listing following a change to the nature and scale of the Company's activities upon the completion of the iCollege acquisition.

No other matter or circumstance has arisen since 31 December 2013 that has significantly affected or may significantly affect the operations of the Company, the results of those operations or the state of affairs of the Company, in subsequent financial years.

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DGI HOLDINGS LIMITED DIRECTORS’ DECLARATION

In accor d ance with a resolution o f the Board of Director s , I state tha t :

In the o p inion of th e Directors:

• (a) t h e financial statements and notes of t he Company are in acc o rdance wit h the Corpor a tions Act 2 0 01, includi n g:

• (i ) giving a true and fair view of the C ompany’s f inancial pos i tion at 31 D e cember 2013 and of it s perform a nce for the h alf‐year en d ed on that date; and

• (ii) complying with Acco u nting Stan d ard AASB 1 3 4 Interim Fi n ancial Rep o rting, the C o rporations Regulati o ns 2001 an d other man d atory repo r ting require m ents; and

• (b) t h ere are rea s onable grounds to belie v e that the C ompany will be able to p ay its debt s as and wh e n t h ey become d ue and payable.

On beh a lf of the Bo a rd

Roger S t einepreis Chairman Perth, W estern Australia 27 Febr u ary 2014

1 5

Tel: +8 6382 4600 38 Station Street Fax: +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 REVIEW REPORT

To the members of DGI Holdings Limited

Report on the Half-Year Financial Report

We have reviewed the accompanying half-year financial report of DGI Holdings Limited, which comprises the statement of financial position as at 31 December 2013, the statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the half-year ended on that date, notes comprising a statement of significant accounting policies and other explanatory information, and the directors’ declaration.

Directors’ Responsibility for the Half-Year Financial Report

The directors of the company are responsible for the preparation of the half-year 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 half-year financial report that is free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity , in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the half-year financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the company’s financial position as at 31 December 2013 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 . As the auditor of DGI Holdings Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Independence

In conducting our review, 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 DGI Holdings Limited, would be in the same terms if given to the directors as at the time of this auditor’s review report.

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.

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Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of DGI Holdings Limited is not in accordance with the Corporations Act 2001 including:

• (a) giving a true and fair view of the company’s financial position as at 31 December 2013 and of its performance for the half-year ended on that date; and

• (b) complying with Accounting Standard AASB 134 Interim Financial Reporting and Corporations Regulations 2001 .

BDO Audit (WA) Pty Ltd

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Peter Toll

Director

Perth, 27 February 2014

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