SPACETALK LTD — Annual Report 2016

Aug 30, 2016

Appendix 4E Preliminary final report Year ending 30 June 2016

ASX Market Announcements Australian Securities Exchange 20 Bridge Street Sydney NSW 2000

ASX Release MGM Wireless Ltd Wednesday, 31 August 2016

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MGM Wireless 2016 results:

Consolidation completed with successful roll out of next generation school mobile communication platform and improved EBITDA.

Company well positioned for coming year.

• EBITDA up 8% to $2.15 million

• Launch of SchoolStar places MGM at forefront of school communication products

• Revenue down 12% to $3.4 million primarily due to overhang of SMS credits from previous year

• Net profit of $0.50 million, down 52% primarily due to higher amortisation

• Cash at 30 June $1.4 million

• Final dividend maintained at 1.3 cents per share

School Communication and Attendance Management provider MGM Wireless (ASX: MWR) has announced its 2016 financial results today, with the completion and launch of its next generation mobile communications mobile platforms, strong improvement in EBITDA, significant reductions in cash costs and increased revenue generating capability.

Key results

Key results
twelve months ended 30 June
$ million unless otherwise specified	2016	2015	Change
Sales Revenue	2.51	3.14	(20)%
Total Revenue	3.40	3.87	(12)%
EBITDA	2.15	2.00	7 %
Net Profit	0.50	1.04	(52)%
Dividend per share (cents)	1.3	1.3	-
EBITDA margin	63%	52%	+ 11%
Net cash from operating activities	0.35	0.89	(60)%
Cash balance	1.41	1.53	(8)%
Net cash/(debt)	1.29	1.38	(6)%
Earnings per share (basic) cents	5.84	12.16	(52)%
Contracted Schools & Early Learning Centres	1,265	1,165	+ 9%

The company reported net profit after tax of $503,674 for the 12 months to 30 June, down on the

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Appendix 4E Preliminary final report Year ending 30 June 2016

previous year’s record result of $1,041,780, due to reduced revenue and increased amortisation charges. Revenue for the year was $3,402,316 down from $3,867,822 primarily as a result of reduced SMS credit sales due to an overhang of unused SMS credits from the previous year.

EBITA for the year of $2,145,176 was up 7% on the previous result of $1,995,655, as the company more than offset the impact of lower revenue with a 35% reduction in pre-tax cash costs.

The Company has announced an unchanged final dividend of 1.3 cents per share, which will be unfranked, as franking is not available while tax paid is exceeded by refundable R&D tax offsets.

Shareholders will be eligible to participate in a dividend reinvestment scheme (refer details in Appendix 4E).

Executive Chairman Mr Mark Fortunatow said that the development and release in April of MGM SchoolStar was the most significant outcome from the year.

“Our objective this year was to release a new and advanced school communication platform with the sophisticated features, savings and analytical capabilities normally seen only in the world’s leading social media and advertising products” he said.

“MGM School Star brings fundamental change to our clients and MGM Wireless. All MGM systems are now enabled with the MGM SchoolStar mobile app platform. It’s broadened our service offering for schools, parents and caregivers and brought new demands for our sales, service and technical capabilities.

“The response from schools has been exceptional, and I have no doubt that the development and introduction of the SchoolStar platform will be as significant for the company as our invention of the SMS based student attendance management systems in 2002.

“With features like, message cost savings, security and engagement analytics we have a platform that we expect will drive revenue growth going forward as customer numbers, adoption of more MGM products by existing clients and SMS messaging all increase” he said.

Mr Fortunatow said the demands associated with the new product release had made for an “intensive year for MGM Wireless. The company completely funded the significant engineering and marketing efforts to launch the School Star platform as well as continuing develop and improve all other products. We aligned our cash cost structure with anticipated revenue in the past year to deliver strong EBITDA results. Furthermore, we have funded the expansion and training of our salesforce with more staff and marketing personnel to cope with interest and demand” he said.

Amongst the many new breakthrough features, SchoolStar allows schools to send personal 2-way messages to parents about their children’s absence for free. For those parents who have not downloaded the SchoolStar app, or have no mobile data or Wi-Fi, the system automatically sends messages and news articles by SMS instead.

Similar to Facebook, SchoolStar also allows posting of school news, articles, event reminders, sports details, notices, pictures, videos and much more using MGM’s highly secure, Australia-domiciled infrastructure. Parents, caregivers and other school community members such as Old Scholars can securely access school information through a 2-factor registration process which matches the personal detail parents provide at time of registration to the schools existing database of parents before access is provided.

Then, using Google style analytics, SchoolStar allows schools to measure, refine and improve their parent engagement efforts. Schools can see which parents are using the app, how often, when and which news articles or posts they like and read most.

Released in April, the feedback from existing users and new clients is overwhelmingly positive and enthusiastic. Customers are amazed at the capabilities SchoolStar offers, with schools also finding SchoolStar’s security features particularly attractive.

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Appendix 4E Preliminary final report Year ending 30 June 2016

SMS message traffic trends and revenues

Mr Fortunatow said there were three clear trends which are driving greater uptake of mobile school communications systems and higher SMS message traffic in the school attendance and communication market.

“First, government authorities are placing greater pressure on schools to improve student attendance.

“Same-day parent notification of their child’s unexplained non-attendance is now regarded as an essential strategy to improve attendance. Mobile messaging is now widely accepted as the only reliable, fast and cost effective way to contact parents.

“Second, focus on student safety and welfare has increased. Events such as the spate of school lookdowns and bomb threats earlier this year highlighted the need for rapid, assured and verifiable communication with all parents where mobile messaging is highly effective.

“Third, the use of free in-app messaging is driving the increase in school use of mobile messaging for school news, event reminders, sport and other non-critical forms of school communication” he said.

Mr Fortunatow said that that while free in-app messaging was partially displacing SMS as a delivery platform, it was actually having a positive effect on growing overall SMS based message traffic.

“Mobile industry experience shows over 60% abandonment by all consumers of all mobile apps within 7 weeks of download and install, meaning a significant proportion of parents end up without a school app – or they don’t check it on a regular basis’ he said

“Data shows in every school there is a significant cohort of about 30% or more of parents that don’t want to use a school app – preferring to receive school alerts, absence messages and news by SMS instead.

“SchoolStar surpasses these limitations in its unique capability to automatically switch from free in-app message delivery to SMS if a parent doesn’t have the app, or has no mobile data or Wi-Fi, and to also resend in-app messages that are not read using SMS instead. For this reason, we are seeing SMS traffic continue to grow” he said. “We are seeing an overall trend of 2-7% monthly SMS traffic increase compared to last year.”

Ongoing R&D

The company maintained its commitment to ongoing research and development, with cash expenditure of $1.24 million, up 16% on the previous year’s record level of $1.07 million. “We expect this will increase again this year. The future of our business lies with ongoing innovation in our products that continue to provide cost, feature and convenience benefits as technology evolves. We are continuing our efforts in mobile and web server applications for schools and now in IoT and wearable devices” said Mr Fortunatow.

The company made its first foray into the wearables market with the AllMyTribe children’s smartwatches, family wearable devices and the AllMyTribe Internet of Things (IoT) platform in 2016. “This is an area which is embryonic but progressing. It’s clear we have an excellent, valuable IoT platform with our AllMyTribe software. We are keenly studying what type of wearable devices and which distribution options give the best opportunity for growth” he said.

Cash at 30 June was $1.41 million, down from $1.53 million at the beginning of the year, after reducing borrowings by 23% from $150,000 to $115,000 and payment of dividends to shareholders.

Mr Fortunatow said that after a focus on consolidation in 2016, the company was expecting the New Year to be a period of transition and growth, as school customers and use of all the company’s products increases

“It is an incremental rather than exponential process as growing school business sustainably takes time as you work with customers, their systems and school specific cultural issues.

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Appendix 4E Preliminary final report Year ending 30 June 2016

“We have proven, world leading products and the skills to continue to innovative and commercialise on an ongoing basis. We are intent on growing our overall revenues by leveraging our capabilities into a wider product range and into a customer base beyond our traditional education market over the course of the year”.

About MGM Wireless Ltd and Messageyou, LLC

MGM Wireless is recognized in Australia and internationally as a pioneer of socially responsible technology-enabled school communications with a proven track record to design, develop and successfully commercialise innovative world class technology products.

The Company’s patented SMS School communication solutions empower schools to effectively communicate to parents and caregivers using SMS text messaging to improve student attendance, welfare, safety and parent engagement. Measurable benefits for schools include reduced operating costs, increased productivity and improved parent and community engagement which ultimately improve student learning and social outcomes.

Schools in Australia and New Zealand use messageyou software in their day to day operations.

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

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4

Appendix 4E Preliminary final report Year ending 30 June 2016

Appendix 4E Preliminary Final Report Under Listing Rule 4.3A

MGM Wireless Limited

(ABN 93 091 351 530) Year Ending 30 June 2016 (Previous corresponding period – Year ending 30 June 2015)

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5

Appendix 4E Preliminary final report Year ending 30 June 2016

Appendix 4E Preliminary Final Report

MGM Wireless Limited

(ABN 93 091 351 530) Year Ending 30 June 2016

(Previous corresponding period – Year ending 30 June 2015)

Results for announcement to the market

Results for announcement to the	market
		$
Revenue from ordinary activities	Down 12%	to 3,402,316
Profit/(loss) from ordinary activities after tax attributable to members	Down 53%	to 503,674
Net Profit/(loss) for period attributable to members	Down 53%	to 503,674
Dividends (distributions)	Amount	Franked amount
	per security	per security
Final dividend	1.3¢	Nil¢
Previous corresponding period	1.3¢	Nil¢
Record date for determining entitlements to dividends	23 September 2016
Payment date	26 October 2016
Net tangible asset backing	30 June 2016	30 June 2015
Net tangible asset backing per ordinary security	$0.24	$0.24
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

The DRP is in operation in respect of the final dividend. The last date for lodgement of election notices under the DRP is 26 September 2016. Shares issued under the DRP will be priced at a discount of 5% to the average of the volume of the volume weighted average price of MWR shares between 26 September and 10 October 2016.

There is no conduit foreign income for this dividend.

Joint venture and associate details	Not applicable
Foreign entities' accounting standards used	Not applicable
Status of Audit

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

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Appendix 4E Preliminary final report Year ending 30 June 2016

MGM Wireless Limited Commentary on Results For the Year Ended 30 June 2016

The directors of MGM Wireless Ltd are pleased to report the Company’s financial results for the 12 months to 30 June 2016.

Review of operations

Description of operations

MGM Wireless generates revenue and income through the provision of technology solutions that assist schools to improve communication within their communities and for cost effective management and improvement of student attendance and engagement. Through research and development, the Company has developed a range of products to meet school needs which are supplied and supported under long term contracts.

The Company’s strategy to deliver returns to shareholders through these operations involves:

• innovation, development and sale of products that win market support by offering best in class functionality and security while giving users demonstrable advances in the management of communication, attendance, engagement and safety

• expansion of the number of schools using MGM Wireless products and the number of MGM Wireless products used per school

• optimisation of business operations to improve efficiency and operating margins.

The company is also engaged in research and development in the application of technology to applications and services to deliver gains in cost, effectiveness, convenience and welfare. Initiatives being undertaken within this are at varying and early stages of development, and do not yet involve significant amounts of invested capital and are not yet financially material. The initiatives include the development of an Internet of Things (IoT) platform and developing a range of children’s smartwatches and family wearable devices and other technologies and services outside the school sector.

Overview

The 2016 financial result essentially entails lower net earnings as a result of an 86% increase in amortisation. MGM Wireless recorded net profit before tax of $930,405 for the twelve months, which compares with the previous year of $1,313,997. The movement includes a $549,924 increase in amortisation charges.

Business development saw the contracted schools and early learning centres increase to 1,265 at 30 June, 9% higher than the 1,165 at the beginning of the year.

The development and release of MGM SchoolStar in April was the major business development activity for the year.

Profit

MGM Wireless recorded a net profit after tax of $503,674 for the 2016 financial year which compares with $1,041,780 in the previous year. Earnings per share (basic) were 5.84 cents compared with 12.16 cents.

EBITDA of $2,153,332 was 8% higher than the 2015 figure of $1,995,655. Operating margin (EBITDA/Revenue) improved significantly, rising from 52% to 63%.

7

Appendix 4E Preliminary final report Year ending 30 June 2016

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----- Start of picture text -----

Factors in movement in profit before tax FY15 to FY16
$'000
1,314
930
107 5 ()
564
0 ()
0
()
0 0 0 0 0 0 0
( 1,600_)
_( 1,200)
( 800_)
_( 400)
_( -_)
FY15 Profit before tax Sales revenue Other Revenue Cost of Sales Other cash expenses Bad & d'ful debts Option issue costs Depn & Amort FY16 Profit before tax
----- End of picture text -----*

Key elements in the profit result were:

• lower revenue. Sales revenue was $2,506,992 compared with $3,144,119. Total revenue was $3,402,316 compared with $3,867,822. The movement is due to lower license fees and lower sales of SMS credits due to an overhang in the market from strong sales in the previous period.

• reduced cash expenses. Pre-tax cash expenditure items[1] were reduced by 31%, ($514,402 lower) chiefly through lower employee expenditure and interest expense.

• Significantly higher amortisation charges, which rose 86%, increasing from $638,919 to $1,188,843. The increase in amortisation reflects the increase in capitalised research and development

• Depreciation of $22,642, was 18% lower than the previous year’s $27,565

• Bad and doubtful debt provision was $42,807, down from $150,000

• Option issue costs of $88,250, down from $93,571.

Cash flows

MGM Wireless generated cash of $353,969 from operating activities. Total cash movement for the year was an outflow of $132,832 with increased research and development, payment of dividends and repayments of borrowings being the major outflow items from investing and financing activities.

Statement of financial position

The Company maintains a strong statement of financial position with net cash of $1,290,660 after borrowings of $115,000. Total cash balance at 30 June of $1,405,660 was 8% lower than the opening figure of $1,526,754.

Other significant balance sheet movements included:

• a 19% increase in intangibles which rose from $1,663,113 to $2,317,683, reflecting capitalisation of research and development during the period.

• a 24% increase in provision for employee entitlements which rose from $221,611 to $275,196 due to the stability of its workforce.

• reduction in borrowings from $150,000 to $115,000.

1 cost of sales, interest expense, corporate and administration, consulting, and employee expenses

8

Appendix 4E Preliminary final report Year ending 30 June 2016

Total equity increased 17%, rising from $4,093,276 to $4,651,232.

9

Consolidated statement of profit or loss and other comprehensive income

Note Continuing Operations Revenue 2 Cost of sales Doubtful debts Borrowing costs Amortisation & depreciation Option issue costs Consulting fees Corporate and administration Employee costs Profit before tax Income tax expense 3 Profit for the year Other comprehensive income Exchange differences on translating foreign operations 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 Earnings per share From continuing and discontinued operations: Basic (cents per share) 4 Diluted (cents per share) 4	Group Year Ended
	30/06/2016 30/06/2015
	$ $
	3,402,316 3,867,822 (311,456) (261,728) (42,807) (150,000) (11,442) (15,174) (1,211,485) (666,483) (88,250) (93,571) (55,773) (47,655) (414,094) (365,963) (336,604) (953,251)
	930,405 1,313,997 (426,731) (272,217)
	503,674 1,041,780
	(11,738) (4,839)
	(11,738) (4,839)
	491,936 1,036,941
	503,674 1,041,780
	491,936 1,036,941
	5.84 12.16 5.64 11.96

Appendix 4E Preliminary final report Year ending 30 June 2016

Consolidated statement of financial position

Note ASSETS Current Assets Cash and cash equivalents 5 Trade and other receivables 6 Other current assets 7 Total Current Assets Non-Current Assets Property, plant and equipment 9 Intangible assets 10 Deferred tax assets Total Non-Current Assets Total Assets LIABILITIES Current Liabilities Trade and other payables 11 Provisions 13 Current Tax Liabilities Total Current Liabilities Non-Current Liabilities Borrowings 12 Total Liabilities Net Assets EQUITY Issued capital 14 Reserves 15 Accumulated losses Total Equity	Group As At
	30/06/2016 30/06/2015
	$ $
	1,405,660 1,526,754
	794,282 787,592
	846,027 636,264
	3,045,969 2,950,610
	168,461 183,214
	2,626,645 2,016,176
	11,101 -
	2,806,207 2,199,390
	5,852,176 5,150,000
	391,284 508,773
	275,196 221,611
	419,462 176,339
	1,085,942 906,723
	115,000 150,000
	1,200,942 1,056,723
	4,651,234 4,093,277
	7,454,029 7,376,993
	463,877 396,467
	(3,266,672) (3,680,183)
	4,651,234 4,093,277

Appendix 4E – Page 11

Appendix 4E Preliminary final report Year ending 30 June 2016

Consolidated statement of changes in equity

Consolidated At 30 June 2014 Profit attributable to members Currency translation differences Total comprehensive income Transactions with owners Contributions and distributions Payment of dividends Options issued to directors Transactions with owners At 30 June 2015 Profit attributable to members Currency translation differences Total comprehensive income Transactions with owners Contributions and distributions Payment of dividends Shares issued to directors Options issued to directors Transactions with owners At 30 June 2016	Issued Accumulated Option Foreign Total
	Capital Losses Issue Currency Equity
	Reserve Translation
	Reserve
	$ $ $ $ $
	7,376,993 (4,627,722) 301,762 5,973 3,057,006 - 1,041,780 - - 1,041,780 - - - (4,839) (4,839)
	- 1,041,780 - (4,839) 1,036,941
	- (94,241) - - (94,241) - - 93,571 - 93,571
	- (94,241) 93,571 - (670)
	7,376,993 (3,680,183) 395,333 1,134 4,093,277
	- 503,674 - - 503,674 - - - (11,738) (11,738)
	- 503,674 - (11,738) 491,936
	- (90,163) - - (90,163) 77,036 - - - 77,036 - - 79,148 - 79,148
	77,036 (90,163) 79,148 - 66,021
	7,454,029 (3,266,672) 474,481 (10,604) 4,651,234

Appendix 4E – Page 12

Appendix 4E Preliminary final report Year ending 30 June 2016

Consolidated statement of cash flows

Note Cash flows from operating activities Receipts from customers Payments to suppliers Tax payments Receipts from grants Interest payments 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 Payment of dividends Repayment of borrowing Proceeds from the issue of shares Proceeds from options exercised 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 6	Group Year Ended
	30/06/2016 30/06/2015
	$ $
	2,488,531 2,993,040 (2,161,201) (1,783,437) (669,857) (306,490) 826,633 710,623 (11,442) (15,174)
	472,664 1,598,562
	(1,744) (24,571) (534,272) (1,069,569)
	(536,016) (1,094,140)
	(90,163) (94,241) (35,000) (50,000) - 93,571 55,683 -
	(69,480) (50,670)
	(132,832) 453,752 1,526,754 1,077,840 11,738 (4,838) 1,405,660 1,526,754

MGM Wireless Limited

Appendix 4E – Page 13

Appendix 4E Preliminary final report Year ending 30 June 2016

Notes to the Financial Statements for the Year Ended 30 June 2016

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 2015 annual financial report.

2. Revenue The following is an analysis of the Group's revenue for the year. Revenue Sales revenue R&D tax incentive revenue 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% (2015: 30%) Non-assessable items Non-deductible items Utilisation of tax losses Adjustments recognised in the current year in relation to the current tax of prior years Total income tax expense	Group
	Year Ended
	30/06/2016 30/06/2015
	$ $
	2,575,683 3,157,199 826,633 710,623
	3,402,316 3,867,822
	Group
	Year Ended
	30/06/2016 30/06/2015
	$ $
	930,405 1,313,997 279,122 394,199 (245,543) (214,107) 383,654 344,691 (11,101) (275,816) 20,599 23,250
	426,731 272,217

Group

Appendix 4E – Page 14

	Appendix 4E Preliminary final report Year ending 30 June 2016
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)	Year Ended
	30/06/2016 30/06/2015
	$ $
	5.84 12.16 - -
	5.84 12.16
	5.64 11.96 - -
	5.64 11.96
	503,674 1,041,780
	503,674 1,041,780
	- -
	503,674 1,041,780
	8,625,988 8,567,414

Group Year Ended

Appendix 4E – Page 15

	Appendix 4E Preliminary final report Year ending 30 June 2016
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 diluted earnings per share from continuing operations Weighted average number of ordinary shares for the purposes of diluted earnings per share (all measures)	30/06/2016 30/06/2015
	$ $
	503,674 1,041,780
	503,674 1,041,780
	- -
	503,674 1,041,780
	8,924,746 8,794,623

5. Cash and Cash Equivalents

For the purposes of the statement of cash flows, cash and cash equivalents include cash on hand and 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 6. Trade and Other Receivables Current Trade receivables Provision for doubtful debts 7. Other Current Assets R&D tax incentive Prepayments		Group Year Ended
		30/06/2016 30/06/2015
		$ $
		1,405,660 1,526,754
		Group Year Ended
		30/06/2016 30/06/2015
		$ $
		1,008,384 957,179 (214,102) (169,587)
		794,282 787,592
		Group Year Ended
		30/06/2016 30/06/2015
		$ $
		826,633 623,301 19,394 12,963
		846,027 636,264

8. Other Financial Assets

Cost of	Cost of
Parent	Parent

Appendix 4E – Page 16

	Appendix 4E Preliminary final report Year ending 30 June 2016
Date of Country of Class of Unlisted Controlled Entity Acquisition Incorporation Shares MGM Wireless Holdings Pty Ltd 8/10/2003 Australia Ordinary Message You LLC 11/09/2006 USA Ordinary MGM Wireless (NZ) Pty Ltd 18/05/2010 Australia Ordinary	Entity's Entity's
	Investment Investment
	30/06/2016 30/06/2015
	$ $
	767,000 767,000 124,440 124,440 80 80
	891,520 891,520

The equity holding in all companies is 100%

9. Plant, Equipment and Leasehold Improvements

Cost Balance at 30 June 2014 Additions Transfer to Intangible Assets Balance at 30 June 2015 Additions Balance at 30 June 2016 Accumulated depreciation and impairment Balance at 30 June 2014 Transfer to Intangible Assets Amortisation/Depreciation expense Balance at 30 June 2015 Amortisation/Depreciation expense Balance at 30 June 2016 Written Down Value	Plant and Leasehold
	Equipment Improvements Total
	$ $ $
	437,006 182,607 619,613 24,571 - 24,571 (151,543) - (151,543)
	310,034 182,607 492,641
	11,076 - 11,076
	321,110 182,607 503,717
	(346,904) (71,224) (418,128) 136,828 - 136,828 (16,988) (11,138) (28,127)
	(227,064) (82,362) (309,427)
	(15,780) (10,049) (25,829)
	(242,844) (92,411) (335,256)
	78,266 90,196 168,461

10. Intangible Assets

		Group
	Year Ended
	30/06/2016	30/06/2015
	$	$

Appendix 4E – Page 17

Appendix 4E Preliminary final report Year ending 30 June 2016

		Pre Year
At cost		6,225,309 4,425,997
Accumulated amortisation and impairment		(3,598,664) (2,409,821)
Carrying Value		2,626,645 2,016,176
		Capitalised
	Distribution	Development
	Rights	Costs Total
Cost	$	$ $
Balance at 30 June 2014	441,017	2,764,076 3,205,093
Additions from internal developments	-	1,069,361 1,069,361
Transfer from Plant & Equipment	-	151,543 151,543
Balance at 30 June 2015	441,017	3,984,980 4,425,997
Additions from internal developments	-	1,799,312 1,799,312
Balance at 30 June 2016	441,017	5,784,292 6,225,309
Accumulated amortisation and impairment
Balance at 30 June 2014	(44,102)	(1,590,535) (1,634,637)
Amortisation	(44,102)	(594,254) (638,356)
Transfer from Plant & Equipment	-	(136,828) (136,828)
Balance at 30 June 2015	(88,204)	(2,321,617) (2,409,821)
Amortisation	(44,101)	(1,144,742) (1,188,843)
Balance at 30 June 2016	(132,305)	(3,466,359) (3,598,664)
Carrying Value	308,712	2,317,933 2,626,645

11. Trade and Other Payables

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Group
Year Ended
30/06/2016 30/06/2015
$ $
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Appendix 4E – Page 18

Appendix 4E Preliminary final report Year ending 30 June 2016

Trade payables 228,929 233,884 Indirect tax liability 106,286 182,710 Accrued SMS charges 56,069 78,713 Rent Incentive - 13,466 391,284 508,773 12. Borrowings Group Year Ended 30/06/2016 30/06/2015 $ $ Non - Current Unsecured loans from related parties 115,000 150,000 Group Year Ended 13. Provisions 30/06/2016 30/06/2015 Current $ $ Employee benefits 275,196 221,611 Movement in provisions: Opening 221,611 190,301 Amounts provided 146,014 31,310 Amounts used (92,429) - Closing balance 275,196 221,611 Group Year Ended 14. Issued capital 30/06/2016 30/06/2015 $ $ 14.1 Issued and paid up capital Ordinary shares, fully paid 7,454,029 7,376,993 (30 June 2016: 8,664,960, 30 June 2015: 8,567,414)

14.2 Fully paid ordinary shares Balance as at 30 June 2014 Shares issued during the year Balance as at 30 June 2015 Shares issued to Directors Balance as at 30 June 2016	Group
	Number of Issued
	shares capital $
	8,567,414 7,276,993 - -
	8,567,414 7,276,993 97,546 77,036
	8,664,960 7,454,029

15. Reserves

	Group
	Year Ended
30/06/2016	30/06/2015
$	$

Appendix 4E – Page 19

Appendix 4E Preliminary final report Year ending 30 June 2016

Option issue reserve Foreign currency translation reserve Balance as at 30 June 2014 Options issued Currency translation differences Balance as at 30 June 2015 Options issued Currency translation differences Balance as at 30 June 2016	474,481 395,333 (10,604) 1,134
	463,877 396,467
	Option Issue Foreign Currency
	Reserve Translation Reserve
	301,762 5,973 93,571 - - (4,839)
	395,333 1,134 79,148 - - (11,738)
	474,481 (10,604)

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 and is recognised directly in the Statement of Profit or Loss and Other Comprehensive Income before accumulation in this reserve.

16. Subsequent Events

There has not been any matter or circumstance that has arisen since 30 June 2016, 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.

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Signed: Mark Fortunatow Director

Appendix 4E – Page 20