SPACETALK LTD — Annual Report 2013

Aug 26, 2013

ASX Market Announcements ASX Limited 20 Bridge Street Sydney NSW 2000

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ASX Release MGM Wireless Ltd Tuesday August 27, 2013

MGM WIRELESS ACHIEVES ANOTHER RECORD PROFIT & DECLARES A MAIDEN DIVIDEND

Highlights of the year included:

• Net Profit increased by 9% to a record $657K

• 1,053 schools and child care centre clients, up 21%

• Substantial increase in R&D spending to over $1.4m

• Pinpoint announced; release looming

• Solid pipeline of new products for upcoming release

• Maiden dividend of 1 cent per share declared

The Directors of school communications group, MGM Wireless (ASX:MWR) are pleased to report that the company achieved a record net profit of $657,835 for the year ended 30 June 2013, up 9.0% on the previous year. EBITDA was up 61% on the prior year, at $1.38 million and provides a better indication of the company’s underlying performance. This was the company’s third consecutive year of rising profits. The net result was after a tax expense of $43K, notional costs associated with the issue of options to Directors after last year’s AGM of $54K and a near tripling in amortisation to $657K.The record result was achieved from a 16% increase in revenue to $3.0 million and after a substantial boost in spending on research and development which exceeded $1.4m; up from $911K in 2011-12. In view of this boost to spending as well as additional costs incurred in preparing MGM PinPoint for market release, a modest decline in profit from the record 2012 result was expected. However, new school signings and sales of SMS message credits in May and June as well as the R&D tax offset rebate were higher than expected resulting in a very positive outcome.

At a Pre Tax level the result is in line with the guidance provided to the market in early August. However, it subsequently became apparent that the company would be incurring tax liabilities as carried forward tax losses were increasingly utilised. Over the next few years, we expect the effective tax rate to rise as the carried forward losses diminish, however, the company will generate franking credits as tax payments are made.

Net cash flow from operations jumped from $301K in 2011-12 to $910K in 2012-13 resulting in a large increase in cash balances, to $527K, as at 30 June 2013. These cash balances offset shareholder loans to the company, the company’s only debt, of $200k (down from $300K as at 30 June 2012). In view of the stronger than expected financial results and the large cash balances, the Directors have

Appendix 4E Preliminary final report Period ending 30 June 2013

resolved to declare a maiden dividend of 1.0 cent per share, unfranked, for the year ended 30 June 2013.

MGM Wireless CEO, Mark Fortunatow said

“For some time now we have been relentlessly focussed on building an innovative company around a recurring revenue business model. We now have a large, diversified and profitable customer base, with all R&D spending internally funded. We believe that the future for MGM Wireless is very bright and a maiden dividend is a reflection of the Directors confidence in that outlook.

Having established a track record of sustained and accelerating profit growth - the passion, energy and excitement at MGM is at an all-time high. As an established company, we have proven processes and structures in-place, and now, with a well-funded balance sheet, and a portfolio of new, innovative and exciting products soon to be released, we believe we are heading for an exceptionally exciting period of growth.”

The number of school and child care centre clients was 1,053 as at 30 June 2013, an increase of 20.6% over the year earlier. This included 73 child care centres, a substantial increase reflecting the success of our strategy to focus on multi-centre groups. Child care centres are embracing MGM solutions not only as a new tool to communicate to parents, but increasingly for automated and personalised SMS for overdue fee reminders.

In March 2013, MGM Wireless was appointed preferred supplier of rollmarking technology to the Catholic Diocese of Parramatta school network and in May 2013 a multi-site agreement was secured with Mission Australia covering its network of pre-schools around Australia. Both of these agreements were for products developed over the past two years, Rollmarker and Outreach respectively, and demonstrate the company’s success in developing new value added offerings.

Innovation and a market leading suite of products are the key drivers of the company’s success. As a small and flexible company, however, there are times when the central focus will be on product development with a view to accelerating longer term growth. Last year, spending on research and development was substantially increased with the benefits expected to flow in the current and following years. MGM Wireless is aggressively expanding its product portfolio and is leveraging the opportunity afforded by cloud and smartphone technologies.

New product releases are diversifying the company’s revenue base and transforming MGM Wireless from a relatively narrow communications focus to a broader focus on student safety, parent engagement and productivity improvements for school staff. Productivity improvements from MGM products lead to a sustainable increase in school funding – a key outcome all schools are trying to achieve.

In April 2013, the company announced a new product for both parents and schools which will greatly enhance the safety of at risk children who are unexplainably absent from school. MGM Pinpoint is a breakthrough product which integrates with the company’s core messaging service and enables parents to locate their child through a smartphone app. The app leverages a range of GPS and Wi-Fi technologies and mines multiple school databases to provide an accurate location of a student whose safety may be compromised. MGM Pinpoint, which is currently in testing and will be progressively released in the coming months, has generated considerable parent and school interest.

Through 2013-14, the company will progressively release a number of important upgrades to existing products and will launch new products for both schools and parents. Parents have demonstrated time and again their desire to be positively engaged with their child’s school and seek more and more information on their activities, progress and security. Smartphone and tablet technologies are great enablers that are bringing a previously unheard of level of information to parents and MGM Wireless is developing apps to help both schools and parents communicate more effectively.

Appendix 4E – Page 2

Appendix 4E Preliminary final report Period ending 30 June 2013

Mark Fortunatow added

“New products are broadening our revenue base and accelerating our growth. Whilst gaining a greater share of school spending on technology is important, that spending is finite, but directly accessing parents through smartphones and tablets markedly increases the potential revenue opportunity.”

For further information contact: Mobile: +61 421 328 984 MGM Wireless Ltd. - (ASX:MWR) Phone: +61 8 8431 2300 Mark Fortunatow, CEO Email: Web: www.mgmwireless.com mfortunatow@mgmwireless.com

Appendix 4E – Page 3

Appendix 4E Preliminary final report Period ending 30 June 2013

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Appendix 4E Preliminary Final Report Under Listing Rule 4.3A

MGM Wireless Limited

(ABN 93 091 351 530) Year Ending 30 June 2013 (Previous corresponding period – Year ending 30 June 2012)

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Appendix 4E – Page 4

Appendix 4E Preliminary final report Period ending 30 June 2013

Appendix 4E Preliminary Final Report

MGM Wireless Limited

(ABN 93 091 351 530) Year Ending 30 June 2013

(Previous corresponding period – Year ending 30 June 2012)

Results for announcement to the market

				$
Revenue from ordinary activities		Up 16%	to	3,023,144
Profit/(loss) from ordinary activities after tax attributable		Up 9%	to	657,835
to members
Net Profit/(loss) for period attributable to members		Up 9%	to	657,835
Dividends (distributions)		Amount	Franked amount
		per security		per security
Final dividend		1¢		Nil¢
Previous corresponding period		Nil¢		Nil¢
Record date for determining entitlements to
dividends		20 September
		2013
Payment date for the final dividend	8	November 2013
Net tangible asset backing		30 June 2013	30 June 2012
Net tangible asset backing per ordinary security		$0.26		$0.03
Control gained or lost over entities during the
period
Name of entity		Not applicable
Date of gaining or losing control		Not applicable
Dividend or distribution reinvestment plan details		Not applicable
Joint venture and associate details		Not applicable
Foreign entities' accounting standards used		Not applicable

Appendix 4E – Page 5

Appendix 4E Preliminary final report Period ending 30 June 2013

MGM Wireless Limited Commentary on Results For the Year Ended 30 June 2013

MGM Wireless Ltd is pleased to report that during the period under review, the Company achieved its previously stated goals of maintaining and improving revenue growth whilst simultaneously improving operations to increase profit, improve cash flow and strengthen its balance sheet.

During the year ended 30 June 2013, the Company implemented a range of initiatives designed to underpin accelerated medium and long term growth. Specifically, spending on research and development was increased by 55% to $1.4 million, all of which has been expensed, and there was increased investment in the Company’s sales and marketing capability. Research and development spending was directed at both existing products, to ensure that they are able to sustain their position as market leaders, and new products which will open new avenues for revenue generation.

EBITDA in 2012-13 was 61% higher than the prior year, at $1.38 million, reflecting continuing strong growth in the number of schools and child care centres supplied by the Company, the increasing penetration of high value products and a higher R&D rebate. The result was after a $54K imputed cost of options issued to Directors after the 2012 AGM.

Key financial results for the year include:

1. EBITDA profit 61% improvement to $1,384,563 (2012 result $858,267)

2. Net profit 9% improvement to $657,835 (2012: $602,756)

3. Revenue for the full year was 16% higher at $3,023,144 (2012: $2,605,719).

4. Customer base of operational schools grew by 15.7% to a total of 808 schools (2011: 698).

5. Total number of schools signed (including those not yet operational 21% higher at 1,053 (2012: 873)

6. For the six months to June 30, 2013 an EBITDA profit of $955,098 (2012: $490,919) with a net profit of $448,656 (2012: $362,750).

Balance Sheet

The company’s shareholder equity strengthened from $1,266,638 as at 30 June 2012 to $2,158,00 as at 30 June 2013 primarily due to a marked reduction in accumulated losses and the exercise of options.

Total assets were 33% higher than a year earlier at $2,919,222 as at 30 June 2013 primarily due to higher working capital and a large increase in cash.

Total current liabilities were 9% lower than a year earlier with $561,022 as at 30 June 2013 which included $74,578 accrued SMS charges and trade payables of $210,294. Borrowings (from Directors) were reduced from $300,000 as at 30 June 2012 to $200,000

A surge in sales in May and June together with a higher than anticipated R&D rebate enabled the Company to report a higher than expected profit in 2012-13. Together with a strong balance sheet and a pipeline of product upgrades and new products which will be released over the course of the next year, MGM is well placed to sustain its high growth rates.

Appendix 4E – Page 6

Appendix 4E Preliminary final report Period ending 30 June 2013

Consolidated statement of comprehensive income

Notes Continuing Operations Revenue 2 Cost of sales Doubtful debts Borrowing costs Amortisation & depreciation Consulting fees Corporate and administration Employee costs Profit before tax Income tax expense 3 Profit for the year from continuing operations Profit for the year Other comprehensive income Exchange differences on translating foreign operations Transfer to foreign currency reserve Other comprehensive income net of tax Total comprehensive income for the year Profit attributable to: Owners of the Company Total comprehensive income attributable to: Owners of the Company Note 8.2 details profit by segment. Earnings per share From continuing and discontinued operations: Basic (cents per share) 4 Diluted (cents per share) 4 From continuing operations Basic (cents per share) 4 Diluted (cents per share) 4	Group
	Year Ended
	30/06/2013 30/06/2012
	$ $
	3,023,144 2,605,719
	(94,764) (120,130)
	7,389 (18,349)
	(26,789) (28,586)
	(656,946) (226,924)
	(78,695) (31,544)
	(187,970) (431,168)
	(1,284,541) (1,146,262)
	700,828 602,756
	(42,993) -
	657,835 602,756
	657,835 602,756
	- 1,306
	- (1,306)
	- -
	657,835 602,756
	657,835 602,756
	657,835 602,756
	8.14 7.54
	8.14 7.54
	8.14 7.54
	8.14 7.54

Appendix 4E – Page 7

Appendix 4E Preliminary final report Period ending 30 June 2013

Consolidated statement of financial position

Consolidated statement of financial position
Notes ASSETS Current Assets Cash and cash equivalents 6 Trade and other receivables 7 Other 8 Total Current Assets Non-Current Assets Property, plant and equipment 9 Intangibles 10 Total Non-Current Assets Total Assets LIABILITIES Current Liabilities Trade and other payables 11 Borrowings 12 Provisions 13 Current Tax Liabilities Total Current Liabilities Borrowings 12 Non-Current Liabilities Total Liabilities Net Assets EQUITY Parent entity interest: Issued capital 14 Reserves 15 Accumulated losses 16 Outside equity interest: Issued capital Accumulated losses Total Equity	Group
	As At
	30/06/2013 30/06/2012
	$ $
	526,854 169,139
	483,331 362,730
	651,267 421,553
	1,661,452 953,422
	194,530 165,905
	1,063,240 1,063,240
	1,257,770 1,229,145
	2,919,222 2,182,567
	429,666 532,540
	- -
	88,363 83,389
	42,993 -
	561,022 615,929
	200,000 300,000
	200,000 300,000
	761,022 915,929
	2,158,200 1,266,638
	7,195,825 7,010,826
	225,375 176,781
	(5,263,000) (5,920,969)
	2,158,200 1,266,638
	- -
	- -
	2,158,200 1,266,638

Appendix 4E – Page 8

Appendix 4E Preliminary final report Period ending 30 June 2013

Consolidated statement of changes in equity

Consolidated At 30 June 2011 Profit attributable to members Adjusted accumulated depreciation Other comprehensive income Currency translation differences At 30 June 2012 Profit attributable to members Shares issued to directors Shares issued to investors Options issued to directors Currency translation differences At 30 June 2013	Issued Accumulated Option Foreign Total
	Capital Losses Issue Currency Equity
	Reserve Translation
	Reserve
	$ $ $ $ $
	7,010,826 (6,544,909) 177,319 4,667 647,903 - 602,756 - - 602,756 - 17,537 - - 17,537 - - - 1,306 1,306 - 3,647 (6,511) - (2,864)
	7,010,826 (5,920,969) 170,808 5,973 1,266,638 - 657,835 - - 657,835 159,999 - - - 159,999 25,000 - - - 25,000 - - 54,241 - 54,241 - 134 (5,647) - (5,513)
	7,195,825 (5,263,000) 219,402 5,973 2,158,200

Appendix 4E – Page 9

Appendix 4E Preliminary final report Period ending 30 June 2013

Consolidated statement of cash flows

Consolidated statement of cash flows	Appendix 4E Preliminary final report Period ending 30 June 2013
Notes Cash flows from operating activities Profit (loss) for the year Amortisation Non-cash salaries Depreciation Doubtful debts provision Income tax expense recognised Movements in working capital: (Increase) / decrease in trade and other receivables (Increase) / decrease in other assets Increase / (decrease) in trade and other payables Increase / (decrease) in provisions Decrease in unearned revenue Net cash generated from / (used in) operations Cash flows from investing activities Payments for plant and equipment Payment for research and development Net cash provided / (used) by investing activities Cash flows from financing activities Proceeds from issue of shares Costs associated with the issue of shares Proceeds from borrowing Non cash movement of Retained Earnings Net cash provided / (used) by financing activities Net increase / decrease in cash held Cash at the beginning of the year Effect of exchange rate changes Cash at the end of the year 9	Group
	Year Ended
	30/06/2013 30/06/2012
	$ $
	657,835 602,756 642,000 200,000 - - 14,946 26,924 (7,389) 18,349 42,993 -
	1,350,385 848,029 (113,212) (50,968) - - (102,875) (330,402) 4,974 2,185 (229,714) (167,702)
	909,558 301,142
	(43,569) (40,376) (642,000) (200,000)
	(685,569) (240,376)
	184,999 - - (3,951) (100,000) (14,037) 48,727 17,080
	133,726 (908)
	357,715 59,858 169,139 107,975 - 1,306
	526,854 169,139

Appendix 4E – Page 10

Appendix 4E Preliminary final report Period ending 30 June 2013

MGM Wireless Limited Notes to the Financial Statements for the Year Ended 30 June 2013

1. Significant Accounting Policies

Statement of Compliance

The Appendix 4E preliminary final report has been prepared in accordance with ASX listing rules and the recognition and measurement criteria of Accounting Standards and interpretations. Accounting Standards include Australian equivalents to International Financial Reporting Standards.

Basis of Preparation

The Appendix 4E has been prepared on the basis of historical cost. The accounting policies and methods of computation adopted in the preparation of the Appendix 4E are consistent with those adopted and disclosed in the company’s 2013 annual financial report.

2. Revenue The following is an analysis of the Group's revenue for the year from continuing operations. Revenue Sales revenue R&D tax incentive Total revenue 3. Income Tax 3.1 Income tax expense The income tax expense for the year differs from the prima facie tax as follows: Profit / loss for the year Prima facie tax benefit at 30% (2012, 30%) Non-assessable items Non-deductible items Deferred tax assets not brought to account Total income tax expense 3.2 Deferred tax asset Deferred tax assets not brought to account arising from tax losses, the benefits of which will only be realised if the conditions for deductibility occur:	Group
	Year Ended
	30/06/2013 30/06/2012
	$ $
	2,381,144 2,195,811
	642,000 409,908
	3,023,144 2,605,719
	700,828 602,756
	210,248 180,827
	(276,707) (159,625)
	690,540 419,819
	(581,088) (441,021)
	42,993 -
	275,428 1,047,177

Appendix 4E – Page 11

	Appendix 4E Preliminary final report Period ending 30 June 2013
4. Earnings per share Basic earnings per share From continuing operations (cents per share) From discontinued operations (cents per share) Total basic earnings per share (cents per share) Diluted earnings per share From continuing operations (cents per share) From discontinued operations (cents per share) Total diluted earnings per share (cents per share) 4.1 Basic earnings per share The earnings and weighted average number of ordinary shares used in the calculation of basic earnings per share are as follows. Net profit / (loss) for the year attributable to owners of the Company Earnings used in the calculation of total basic earnings per share Profit for the year from discontinued operations used in the calculation of basic earnings per share from discontinued operations Earnings used in the calculation of basic earnings per share from continuing operations Weighted average number of ordinary shares for the purposes of basic earnings per share (all measures)	Group
	Year Ended Year Ended 30/06/2013 30/06/2012 $ $ 8.14 7.54 - -
	8.14 7.54
	8.14 7.54 - -
	8.14 7.54
	657,835 602,756
	657,835 602,756
	- -
	657,835 602,756
	8,081,208 7,992,441

Appendix 4E – Page 12

Appendix 4E Preliminary final report Period ending 30 June 2013

4.2 Diluted earnings per share The earnings and weighted average number of ordinary shares used in the calculation of diluted earnings per share are as follows. Net profit / (loss) for the year attributable to owners of the Company Earnings used in the calculation of total diluted earnings per share Profit for the year from discontinued operations used in the calculation of diluted earnings per share from discontinued operations Earnings used in the calculation of basic earnings per share from continuing operations Weighted average number of ordinary shares for the purposes of basic earnings per share (all measures)

Group Year Ended Year Ended 30/06/2013 30/06/2012 $ $ 657,835 602,756 657,835 602,756 - - 657,835 602,756 8,081,208 7,992,441

5. Segment Revenues and Results

The Group operates predominantly in one business segment being the provision of school messaging services and internet related services. The revenue figure quoted blow is inclusive of $642,000 R&D Tax inventive for the period (2012: $411,734). The Group functions with a subsidiary operating in each geographical segment. Each company represents a strategic business unit that offers different risks and rates of returns. This is the basis by which management controls and reviews the operations of the Group.

5.1 Segment Revenues and Results

The following is an analysis of the Group’s revenue and results from continuing operations by reportable segment.

MGM Wireless Holdings MGM Wireless USA Message YOU LLC NZ MGM Wireless (NZ) Pty Ltd Total for Continuing Operation Profit before tax (continuing operations)	Segment revenue Segment profit	Segment revenue Segment profit
	Year Ended Year Ended
	30/06/2013 30/06/2012 30/06/2012 30/06/2012
	3,005,993 2,507,187 662,712 613,752
	- - - -
	- - (5,440) (10,996)
	17,151 98,532 563 -
	3,023,144 2,605,719 657,835 602,756
		657,835 602,756

Revenue reported above represents revenue generated from external customers. The segment result for NZ and the USA represents the profit earned by each segment without allocation of central administration costs and director’s salaries, investment revenue, finance costs and income tax expense. These costs are routinely considered to be part of the Australian operations. This is the basis on which segment results are routinely reporting to the chief operating decision maker for the purposes of resource allocation and assessment of segment performance.

Appendix 4E – Page 13

Appendix 4E Preliminary final report Period ending 30 June 2013

5.2 Segment assets and liabilities

MGM Wireless Holdings MGM Wireless USA Message YOU LLC NZ MGM Wireless (NZ) Pty Ltd Consolidated Assets Consolidated Liabilities	Assets Liabilities Year Ended Year Ended	Assets Liabilities Year Ended Year Ended
	30/06/2013 30/06/2012 30/06/2013 30/06/2012
	2,852,943 2,058,365 744,542 866,841
	1,000 1,000 - -
	0 5,669 11,259 22,489
	65,279 117,533 5,221 26,599
	2,919,222 2,182,567 761,022 915,929
		761,022 915,929

Each segment's assets and liabilities are accounted for within their own entity. Other assets and liabilities are retained within the Australian entity. General intellectual property is retained by the parent company.

5.3 Other segment information

MGM Wireless Holdings MGM Wireless USA Message YOU LLC NZ MGM Wireless (NZ) Pty Ltd Depreciation and Amortisation Additions to Non-Current Assets	Depreciation and amortisation Additions to non-current assets	Depreciation and amortisation Additions to non-current assets
	Year Ended Year Ended
	30/06/2013 30/06/2012 30/06/2013 30/06/2012
	656,946 226,924 43,570 19,062 - - - - - - - - - - - - 656,946 226,924 43,570 19,062
		43,570 19,062

5.4 Geographical Information

All revenues in New Zealand result from the Group’s preferred supplier status (1 of 3 companies) to New Zealand Government’s Early Notification initiative whereby the Government funded the first year’s license fees for all eligible schools.

6. Cash and Cash Equivalents

For the purposes of the statement of cash flows, cash and cash equivalents include cash on hand an in banks and investments in money market instruments, net of outstanding bank overdrafts. Cash and cash equivalents at the end of the reporting period as shown in the statement of cash flows can be reconciled to the related items in the statement of financial position as follows:

Cash and bank balances Cash at bank earns interest at floating rates based on daily bank deposit rates.	Group
	30/06/2013 30/06/2012
	$ $
	526,854 169,139

Cash comprises cash at bank and in hand. Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

Appendix 4E – Page 14

Appendix 4E Preliminary final report Period ending 30 June 2013

7. Trade and other receivables Current Trade receivables Provision for doubtful debts	Group
	30/06/2013 30/06/2012
	$ $
	502,205 390,062
	(18,874) (27,332)
	483,331 362,730

Trade Receivables of $502,205 includes trade receivables of $502,010 and accrued revenue of $195. Trade and other receivables having been reviewed and Provision for potential Doubtful Debts of $18,874 established. No further impairment loss is considered necessary.

Terms and conditions relating to the above financial instruments:

• Trade debtors are non-interest bearing and generally repayable in the range within 30-180 days

• Due to the short term nature of these receivables, their carrying value is assumed to approximate their fair value

• Transactions between the parent entity and its subsidiary consist of intercompany loans, upon which no interest is charged and no repayment schedule exists. The fair value approximates the carrying value of the receivable.

7.2 Past due but not impaired trade receivables

As at 30 June 2013, trade receivables of $89,719 (2012: $102,632) were past due but not impaired. These relate to a number of recent accounts where there is no recent history of default.

Past due 0-30 days Past due 31-90 days Past due over 91 days Movement in the provision for doubtful debts Balance at the beginning of the year Amounts recovered during the year (Increase)/Decrease in provision attributable to new sales Balance at the end of the year	Group
	30/06/2013 30/06/2012 $ $ 3,676 20,571 6,215 6,668 79,838 75,393
	89,729 102,632
	(27,332) (6,836)
	11,757 -
	(3,299) (20,496)
	(18,874) (27,332)

8. Other Current Assets R&D tax incentive Prepayments Sundry debtors	Group
	30/06/2013 30/06/2012 $ $
	642,000 409,908
	8,059 10,437
	1,208 1,208
	651,267 421,553

Appendix 4E – Page 15

Appendix 4E Preliminary final report Period ending 30 June 2013

9. Plant, Equipment and Leasehold Improvements

Plant and Leasehold Equipment Improvements 9.1 Plant, Equipment and Leasehold Improvements $ $ Balance at 30 June 2011 397,588 124,822 Additions 16,647 2,415 Disposals - - Balance at 30 June 2012 414,235 127,237 Additions 6,621 36,949 Disposals - - Balance at 30 June 2013 420,856 164,186 Accumulated depreciation and impairment Balance at 30 June 2011 (315,322) (55,393) Adjusted accumulated depreciation 17,717 4,356 Amortisation/Depreciation expense (22,451) (4,473) Eliminated on disposal of assets - - Balance at 30 June 2012 (320,056) (55,510) Amortisation/Depreciation expense (11,060) (3,886) Eliminated on disposal of assets - - Balance at 30 June 2013 (331,116) (59,396) Comparative figures have been altered to reflect a reclassification of assets. Written Down Value	Plant and Leasehold
	Equipment Improvements	Total
	$ $	$
	397,588 124,822 16,647 2,415 - -	522,410 19,062 -
	414,235 127,237 6,621 36,949 - -	541,472 43,570 0
	420,856 164,186	585,042
	(315,322) (55,393) 17,717 4,356 (22,451) (4,473) - -	(370,715) 22,073 (26,924) -
	(320,056) (55,510) (11,060) (3,886) - -	(375,566) (14,946) -
	(331,116) (59,396)	(390,512)
		194,530

9.2 Impairment losses recognised in the year

The following useful lives are used in the calculation of depreciations. Plant and Equipment: 5 years Leasehold Improvements: 10 years

The useful lives used in the calculation of depreciation were considered appropriate estimations of expense allocations in the period. An assessment of the remaining net values was also deemed an appropriate estimation of the remaining useful life of the items with no provision for impairment required.

Appendix 4E – Page 16

Appendix 4E Preliminary final report Period ending 30 June 2013

10. Intangible Assets

Cost Balance at 30 June 2011 Additions from internal developments Disposals Balance at 30 June 2012 Additions from internal developments Disposals Balance at 30 June 2013 Accumulated amortisation and impairment Balance at 30 June 2011 Amortisation Disposal Balance at 30 June 2012 Amortisation Disposal Balance at 30 June 2013 Carrying Value	Intellectual
	Property	Intellectual
	Message	Distribution Property
	You	Rights Software Total
	$	$ $ $
	766,000	533,902 1,270,357 2,570,259 - 200,000 200,000 - - (766,000)
	-
	(766,000)
		533,902 1,470,357 2,004,259 - 642,000 642,000 - - -
	-
	-
	-
	-	533,902 2,112,357 2,646,259
		(92,885) (648,134) (1,507,019) - (200,000) (200,000)
	(766,000)
	-
	766,000	- - 766,000
		(92,885) (848,134) (941,019) - (642,000) (642,000) - - -
	-
	-
	-
	-	(92,885) (1,490,134) (1,583,019)
		441,017 622,223 1,063,240
	-

Other than ‘Distribution Rights’, the remaining intangible assets have finite useful lives considered to be 5 years.

The current amortisation charges for these intangible assets are included under depreciation and amortisation expense in the Statement of Comprehensive Income. The useful life of intangible assets and impairment considerations of intangibles are subject to management estimates and judgements.

Distribution rights have arisen from the acquisition of territory rights from former distributors. These assets have provided the Company the right to operate in the respective territories. The income from those territories, WA, SA, Queensland, Victoria and Tasmania is the major part of the MGM Wireless’s income. As the amount of income in respect of these distribution rights has not decreased in any of the territories since acquisition, the Board is of the opinion that the value of the assets remains unchanged and no amortisation is appropriate.

Appendix 4E – Page 17

Appendix 4E Preliminary final report Period ending 30 June 2013

11. Trade and Other Payables Trade creditors and accruals: Other corporations Directors and director related entities Tax liability Accrued SMS charges Unearned revenue - licence fees	Group
	30/06/2013 30/06/2012
	$ $
	210,294 283,023
	- 39,379
	139,568 92,895
	74,578 112,018
	5,226 5,225
	429,666 532,540

Terms and conditions relating to the above financial instruments:

• Trade creditors and accrued charges are non-interest bearing and normally settle on terms between 30-180 days.

• Due to the short-term nature of these payables, their varying value is assumed to approximate their fair value

• Unearned or deferred revenue represents annual license fees charged under purchase contracts

• Share subscription monies held in trust represents funds received at balance date for a placement of securities completed subsequent to balance date.

12. Borrowings Current Unsecured loans from related parties Non - Current Secured loans from related parties	Group
	30/06/2013 30/06/2012
	$ $
	- -
	- -
	200,000 300,000

The Directors have agreed not to invoke the security clause attached to their loans until revised loan agreements have been subject to shareholder approval.

13. Provisions Current Employee benefits Movement in provisions Opening Amounts provided Amounts used Closing balance Number of employees
	88,363 83,389
	83,389 81,204
	38,917 32,221
	(33,943) (30,036)
	88,363 83,389
	16 16

The provision for employee benefits represents annual leave and long service leave entitlements accrued.

Appendix 4E – Page 18

Appendix 4E Preliminary final report Period ending 30 June 2013

14. Issued capital 14.1 Issued and paid up capital Ordinary shares, fully paid (30 June 2013 =8,359,110, 30 June 2012 = 7,992,441) 14.2 Fully paid ordinary shares Balance as at 30 June 2011 Share consolidation Balance as at 30 June 2012 Shares issued to Directors and a former Director Shares issued to Investors Balance as at 30 June 2013	30/06/2013 30/06/2012
	$ $
	7,195,825 7,010,826
	Group
	Number of Share
	shares capital $
	239,766,768 7,010,826
	(231,774,327) -
	7,992,441 7,010,826
	266,669 159,999
	100,000 25,000
	8,359,110 7,195,825

Ordinary shares have the right to receive dividends as declared and, in the event of winding up the company, to participate in the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on shares held. Ordinary shares entitle their holders to one vote, either in person or by proxy, at a meeting of the Group.

14.3 Share options

At 30 June 2013 there were options over 300,000(2012,450,000) ordinary shares of the Company. Details of these options and movement since 30 June 2012 follow:

Expiry Date	Exercise Price	Number	Expired	New	Exercised	Closing
				-
18/11/2012	25.0c each	100,000	-	-	100,000
30/04/2013	60.0c each	83,331	(83,331)	-
30/04/2013	60.0c each	266,669	-		266,669
30/04/2016	70.0c each			300,000		300,000
			83,331	300,000	366,669	300,000

Shares options granted under the employee share option plan carry no rights to dividends and no voting rights.

Appendix 4E – Page 19

Appendix 4E Preliminary final report Period ending 30 June 2013

15. Reserves Option issue reserve Foreign currency translation reserve Balance as at 30 June 2011 Movement in foreign currency translation reserve Currency translation differences Balance as at 30 June 2012 Options issued Movement in foreign currency translation reserve Currency translation differences Balance as at 30 June 2013	Group
	30/06/2013 30/06/2012
	$ $
	219,402 170,808 5,973 5,973
	225,375 176,781
	Option Issue Foreign Currency
	Reserve Translation Reserve
	177,319 4,667 - 1,306 (6,511) -
	170,808 5,973 54,241 - -- (5,647) -
	219,402 5,973

Nature and purpose of reserve

The option issue reserve is used to accumulate amounts received on the issue of options and records items recognised as expenses on valuation of incentive based share options.

The foreign currency translation reserve is used to record exchange rate differences arising from the translation of the financial statements of foreign subsidiaries are recognised directly in the Statement of Comprehensive Income before accumulation in this reserve.

16. Retained earnings Retained Earnings/(Accumulated losses) Balance at the beginning of the year Net profit / (loss) attributable to members Currency translation Adjusted accumulated depreciation Balance at the end of the year	Group
	30/06/2013 30/06/2012
	$ $
	(5,220,007) (5,920,969)
	(5,920,969) (6,544,909) 700,828 602,756
	134 3,647
	- 17,537
	(5,220,007) (5,920,969)

Appendix 4E – Page 20

Appendix 4E Preliminary final report Period ending 30 June 2013

17. Subsequent Events

On 27 August 2013, the Directors of MGM Wireless declared a final dividend on ordinary shares in respect of the 2013 financial year. The total amount of the dividend is $83,591, which represents an unfranked divided of 1 cent per share. The dividend is payable on 8 November 2013 and has not been provided for in the 30 June 2013 financial statements. Except for as disclosed above, there has not been any matter or circumstance that has arisen since 30 June 2013, which has significantly affected, or may significantly affect the operations of the Group, the result of those operations, or the state of affairs of the Group in subsequent financial years.

18. Status of Audit or Review

The statutory financial statements of the consolidated entity are in the process of being audited.

==> picture [133 x 44] intentionally omitted <==

Signed: Mark Fortunatow Director

Appendix 4E – Page 21