SPACETALK LTD — Interim / Quarterly Report 2014

Feb 27, 2014

==> picture [596 x 38] intentionally omitted <==

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

Half Year Report – 31 December 2013
----- End of picture text -----

==> picture [120 x 39] intentionally omitted <==

MGM Wireless Ltd. ASX:MWR ABN 93 091 351 530

The Parks, Suite 13 ASX Market Announcements ROSE PARK SA 5067 ASX Limited AUSTRALIA 20 Bridge Street Phone: (08) 8104 9555 Sydney NSW 2000 Facsimile: (08) 8431 2400 www.mgmwireless.com

MGM Wireless Half-Year Results as at December 31, 2013 February 27, 2014

HIGHLIGHTS

Six months ended	31 December 2013	31 December 2012	change
Revenue	1,621,504	1,485,851	9.1%
Underlying EBITDA	485,559	483,706	0.4%
Net Profit	132,478	252,172	-47.5%
Net Cash Provided By	417,138	84,492	393.7%
Operations
Cash Balances	1,013,533	444,255	128.1%
Contracted Schools &	1,099	963	14.1%
Early Learning Centres

The Directors of MGM Wireless Ltd (ASX:MWR) are pleased to announce that growth momentum was sustained during the six months ended 31 December 2013 and that the company’s financial position continued to strengthen. Revenue and operating cash flows were higher than for the same period in 2012 and the underlying operating performance was strong as the company continued to gain clients. However, reported net profit was lower with the overall result adversley impacted by several factors including the cost of some short term growth initiatives and a number of non-cash accounting items.

The fall in reported net profit was primarilly attributable to a small number of factors including a lower gross margin, increased R&D spending, higher cost of Directors options

==> picture [27 x 26] intentionally omitted <==

MGM Wireless Ltd.

1

==> picture [596 x 38] intentionally omitted <==

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

Half Year Report – 31 December 2013
----- End of picture text -----

and a maiden tax expense.

• Higher revenue from continued growth in the number of contracted schools and an increase in revenue from the R&D rebate were partially offset by a strategic marketing decision to defer passing on an increase in wholesale messaging costs. Messaging charges to schools are now being reset to reflect the higher wholesale charges and will contribute to revenue growth and a restoration of gross margins in the six months ending 30 June 2014.

• There was a change in the timing in which revenue is booked under the contract with the WA Education Department which resulted in significantly less revenue compared with the previous year. As there will be no change in the annual revenue, the apparent first half shortfall will be reflected as a revenue gain in the June 2014 half year.

• Higher R&D costs were incurred ahead of the launch of Pinpoint. This included marketing, legal and consultant fees in additon to further development costs.

• Following the issue of options to Directors at the 2013 AGM, a non-cash charge of $107K was incurred compared with $54K in the same period in 2012.

• As accumulated tax losses are nearing full utilisation, the company is now incurring a liability for tax. In the period under review the effective tax rate was 12.4%

Of these factors, the most signficant controlable item was the decision relating to higher wholesale messaging charges. In view of the strong operating cash flow and the high level of cash balances, the decision was considered to be affordable and strategically important. The telecommunication providers have recognised the economic value of the SMS text messaging capability and are pricing accordingly. We have experienced a considerable uplift in messaging volume from our contracted schools and early learning centres, especially with our social messaging product,Outreach. Messaging volumes are expected to grow strongly as further enhancements to Outreach are implemented in the coming months. Accordingly, our pricing strategy is designed to support the anticipated growth in message volumes.

Whilst the overall impact of these factors was to signficantly reduce reported net profit for the six months ended 31 December 2013, the underlying EBITDA result was in line with the previous year and demonstrates the core strength of the company’s operations. This will be evident in the June half year as messaging revenues continue to grow and as annual revenue under the WA Education Deprtment contract balances out.

Pinpoint, MGM’s newest student safety product, was launched on 3 February 2014 to coincide with the new school year. The launch involved around 100 schools and the early trends in app download and installations on student’s smartphones are very encouraging and increasing. The number of installations now exceeds 250. Parent feedback has been positive and very useful in refining and improving marketing and take-up results. Followng the completion of some marketing enhacements which will be completed in the next few weeks, Pinpoint will be rolled-out to more schools serviced by MGM.

==> picture [27 x 27] intentionally omitted <==

MGM Wireless Ltd.

2

==> picture [596 x 38] intentionally omitted <==

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

Half Year Report – 31 December 2013
----- End of picture text -----

Pinpoint has been a major undertaking for MGM and is true to the company’s commitment to market leading innovation. Pinpoint builds a new sales channel diectly to Parents and Caregivers, by-passing the need to involve the school. Investment continues with a premium, parent pays version to be released later in calendar 2014 which will incorporate many additonal features not available with the free version.

The parent pays model is now emerging in response to the recent widespread availability of smartphones and tablets. Mobile techololgy now provides previously unheard of opportunities for parents to more efficiently engage with their children’s schools and there is plenty of evidence that parents will pay where true value is delivered. Pinpoint and other products in MGM’s pipeline are designed to tap into these needs.

MGM Wireless CEO, Mark Fortunatow, said

“MGM Wireless’ underlying operational performance remains healthy with all key areas, including new clients, messaging activity and the take-up of new products, delivering growth. The successful launch of our breakthrough product, Pinpoint, heralds the next phase in the company’s development which will see a range of powerful new products released over the next year as well as major enhancements to exsiting products. MGM Wireless is positioned to pursue many of the opportunties that are now flowing from the combination of a stable education sector, a high demand for parent engagement and the widespread availablity of powerful smartphones and tablets.”

==> picture [27 x 27] intentionally omitted <==

MGM Wireless Ltd.

3

==> picture [596 x 38] intentionally omitted <==

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

Half Year Report – 31 December 2013
----- End of picture text -----

Appendix 4D MGM Wireless Limited (ABN 93 091 351 530)

Half-Year Report 31 December 2013

(Previous corresponding period – 6 months ending 31 December 2012)

Results for announcement to the market

Financial Results	Percentage change from corresponding period $	Percentage change from corresponding period $	Amount change from corresponding period $	Amount change from corresponding period $	6 months ended 31/12/2013 $
Revenue from ordinaryactivities	9%		135,653		1,621,504
Profit/(loss) from ordinary activities after tax attributable to members	-47%		(119,694)		132,478
Netprofit/(loss)for theperiod attributable to members	-47%		(119,694)		132,478
Dividends		Amount per security		Franked amount per security
Interim dividend		Nil		Nil
Final dividend(prioryear)		$0.01		Nil
Record date for determining entitlements to the interim dividends		N/A		N/A
Record date for determiningentitlements to the final dividends		20/9/2013		N/A
Net Tangible Asset Backing		31 December 2013 (centsper share)		31 December 2012 (centsper share)
Net tangible asset backing per ordinarysecurity		17.04		6.51
Explanation/Commentary on results
Refer attached report
Controlgained or lost over entities during theperiod
Name of entity		N/A
Date ofgaining/losingcontrol		N/A
Dividends or distributions reinvestmentplan details		N/A
Joint venture and associate details		N/A
Foreign entities’ accountingstandards used		N/A

==> picture [27 x 27] intentionally omitted <==

MGM Wireless Ltd.

4

==> picture [596 x 38] intentionally omitted <==

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

Half Year Report – 31 December 2013
----- End of picture text -----

==> picture [304 x 239] intentionally omitted <==

Half-Year Report 31-Dec-13

==> picture [26 x 26] intentionally omitted <==

MGM Wireless Ltd.

1

==> picture [596 x 38] intentionally omitted <==

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

Half Year Report – 31 December 2013
----- End of picture text -----

Index

Half – Year Ended 31 December 2013

Page Index

3 Corporate Directory 4 Directors’ Report 6 Auditor’s Independence Declaration 7 Independent Audit Report to the Members of MGM Wireless Ltd 9 Directors’ Declaration 10 Financial Statements

==> picture [26 x 27] intentionally omitted <==

MGM Wireless Ltd.

2

==> picture [596 x 38] intentionally omitted <==

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

Half Year Report – 31 December 2013
----- End of picture text -----

==> picture [334 x 520] intentionally omitted <==

==> picture [26 x 27] intentionally omitted <==

MGM Wireless Ltd. 3

==> picture [596 x 38] intentionally omitted <==

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

Half Year Report – 31 December 2013
----- End of picture text -----

Directors Report

The Directors of MGM Wireless Limited submit herewith the financial report of MGM Wireless Limited and its subsidiaries (the Group) for the half year ended 31 December 2013. In order to comply the provisions of the Corporations Act 2001, the directors report as follows:

The names of the directors of the company during or since the end of the half-year are:

Name

• Mr. Mark Fortunatow

• Mr. Mark Edwin Hurd

• Mr. Shaun Michael Collopy

• Mrs. Tara Lewis-Christie

Review of Operations

The Directors of MGM Wireless Limited are pleased to report that the company sustained its growth momentum during the period under review, achieving increased revenue and a further expansion in the number of contracted schools and early learning centres.

Profit

Net profit was lower than for the same period in 2012 primarilly due to a small number of factors including a lower gross margin (mostly related to timing of revenues and cost recovery), increased R&D spending, higher cost of Directors options and a maiden tax expense.

The key financial results for the six months ended 31 December 2013 were:

• Revenue up 9% to $1.62 million

• Underlying EBITDA of $485K was in line with the same period in 2012

• Net profit down 47.5% to $132K

Revenue

Revenue for the half year was $1,621,504 compared with $1,485,851 for the same period last year; an increase of 9%.

Customer Growth

There were 1,099 contracted schools as at 31 December 2013, compared with 963 contracted schools as at 31 December 2012. This strong result reflects the continued rapid acceptance of the company’s Messaging products, with a 19% increase in the number of contracted schools compared with a year ago.

==> picture [26 x 27] intentionally omitted <==

MGM Wireless Ltd.

4

==> picture [596 x 38] intentionally omitted <==

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

Half Year Report – 31 December 2013
----- End of picture text -----

Positive Operational Cash Flows

The company’s financial position continues to strengthen. Net cash provided by operating activities increased from $84,492 for the six months ending 31 December 2012 to $417,138 for the same period in 2013.

Condensed consolidated statement of financial position

The company’s statement of financial position continued to strengthen with equity of $2.5 million as at at 31 December 2013, up 15% from 30 June 2013. Funds raised from the issue of shares ($160K) and an increase in the options issue reserve ($107K) were the main contributors to this increase. Dividends of $84K were paid out of retained earnings.

Net working capital further stregthened due to a signficant decline in outstanding payables since 30 June 2013. Current Assets (excluding cash balances) were largely unchanged.

Borrowings were unchanged at $200K and more than offset by cash balances of $1.0 million, up from $526K as at 30 June 2013.

Changes in the state of affairs

During the half year ended 31 December 2013 there was no significant change in the Group’s state of affairs other than that referred to in the half-year financial statement or notes thereto.

Dividends

No dividends have been declared during the half year ended 31 December 2013 (2012 halfyear: $nil). Dividends of $84K were paid during the half year ended 31 December 2013 (2012 half-year: $nil).

Auditor’s Independence Declaration

The auditor’s independence declaration for the half-year report ended 31 December 2013 has been received and is included on page 6.

Signed in accordance with a resolution of directors made pursuant to s.306(3) of the Corporations Act 2001.

On behalf of the Directors

==> picture [130 x 45] intentionally omitted <==

Mark Fortunatow

Executive Chairman

Rose Park, 27 February 2014

==> picture [26 x 27] intentionally omitted <==

MGM Wireless Ltd.

5

==> picture [596 x 38] intentionally omitted <==

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

Half Year Report – 31 December 2013
----- End of picture text -----

==> picture [422 x 426] intentionally omitted <==

==> picture [26 x 27] intentionally omitted <==

MGM Wireless Ltd. 6

==> picture [596 x 38] intentionally omitted <==

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

Half Year Report – 31 December 2013
----- End of picture text -----

==> picture [437 x 632] intentionally omitted <==

==> picture [26 x 27] intentionally omitted <==

MGM Wireless Ltd. 7

==> picture [596 x 38] intentionally omitted <==

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

Half Year Report – 31 December 2013
----- End of picture text -----

==> picture [416 x 457] intentionally omitted <==

==> picture [26 x 27] intentionally omitted <==

MGM Wireless Ltd. 8

==> picture [596 x 38] intentionally omitted <==

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

Half Year Report – 31 December 2013
----- End of picture text -----

Directors Declaration

The directors declare that:

(a) in the directors' opinion, there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable; and

(b) in the directors' opinion, the attached financial statements and notes thereto are in accordance with the Corporations Act 2001 , including compliance with accounting standards and giving a true and fair view of the financial position and performance of the consolidated entity.

Signed in accordance with a resolution of the directors made pursuant to s.303(5) of the Corporations Act 2001 .

On behalf of the Directors,

==> picture [110 x 40] intentionally omitted <==

Mark Fortunatow Executive Chairman Rose Park on 27 February, 2014

==> picture [26 x 27] intentionally omitted <==

MGM Wireless Ltd.

9

==> picture [596 x 38] intentionally omitted <==

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

Half Year Report – 31 December 2013
----- End of picture text -----

Condensed consolidated statement of profit or loss and other comprehensive income for the half-year ended 31 December 2013

income for the half-year ended 31 December 2013
	Half-Year Ended
	31/12/2013 31/12/2012
	$ $
Continuing Operations
Revenue	1,621,504 1,485,851
Cost ofsales	(173,228) (53,650)
Gross Profit	1,448,276 1,432,201
	- 6,345
Doubtful debts
Borrowing costs	(8,491) (13,492)
Amortisation & depreciation	(218,493) (163,801)
Consulting fees	(38,760) (44,570)
Issue of options	(107,340) (54,241)
Corporate and administration	(270,972) (242,366)
Employee costs	(652,985) (667,904)
Profit before tax	151,235 252,172
Income tax expense	(18,757) -
Profit for the period from
continuing operations	132,478 252,172
Total comprehensive income for theperiod	132,478 252,172
Profit attributable to:
Owners of the Company	132,478 252,172
Total comprehensive income attributable to:
Owners of the Company	132,478 252,172
Earnings per share
From continuing and discontinued operations
Basic (cents per share)	3.14 3.14
Diluted (cents per share)	3.14 2.97
From continuing operations
Basic (cents per share)	3.14 3.14
Diluted (cents per share)	3.14 2.97

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

==> picture [26 x 27] intentionally omitted <==

MGM Wireless Ltd.

10

==> picture [596 x 38] intentionally omitted <==

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

Half Year Report – 31 December 2013
----- End of picture text -----

Condensed consolidated statement of financial position as at 31 December 2013

013
ASSETS Current Assets Cash and cash equivalents Trade and other receivables Other Total Current Assets Non-Current Assets Property, plant and equipment Intangibles Total Non-Current Assets Total Assets LIABILITIES Current Liabilities Trade and other payables Provisions Current Tax Liabilities Total Current Liabilities Non-Current Liabilities Borrowings Total Non-Current Liabilities Total Liabilities Net Assets EQUITY Issued capital Reserves Accumulated losses Total Equity	Group As At 31/12/2013 30/06/2013 $ $ 1,013,533 526,854 629,584 483,331 302,928 651,267
	1,946,045 **1,661,452 **
	203,262 194,530 1,063,490 1,063,240
	1,266,752 1,257,770
	3,212,797 2,919,222
	254,587 429,666 125,407 88,363 142,890 42,993
	522,884 561,022
	200,000 200,000
	200,000 200,000
	722,884 761,022
	2,489,913 2,158,200
	7,356,062 7,195,825 307,735 225,375 (5,173,884) (5,263,000)
	2,489,913 2,158,200

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

==> picture [26 x 27] intentionally omitted <==

MGM Wireless Ltd.

11

==> picture [597 x 38] intentionally omitted <==

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

Half Year Report – 31 December 2013
----- End of picture text -----

Condensed consolidated statement of changes in equity for the half-year ended 31 December 2013

	Issued Accumulated Option Foreign Total Capital Losses Issue Currency Equity Reserve Translation Reserve $ $ $ $ $
At 1 July 2012 Profit attributable to members Shares issued Options issued - directors Currency translation differences At 31 December 2012 At 1 July 2013 Profit attributable to members Payment of dividends Shares issued Options issued - directors	7,010,826 (5,920,969) 170,808 5,973 1,266,638 - 252,172 - - 252,172 25,000 - - - 25,000 - - 54,241 - 54,241 - (9,326) - 1,126 (8,200)
	7,035,826 (5,678,123) 225,049 7,099 1,589,851
	7,195,825 (5,263,000) 219,402 5,973 2,158,200 - 132,478 - - 132,478 - (83,691) - - (83,691) 160,237 - - - 160,237 - - 107,340 - 107,340
Currency translation differences	- 40,329 - (24,980) 15,349
At 31 December 2013
	7,356,062 (5,173,884) 326,742 (19,007) 2,489,913

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

==> picture [27 x 27] intentionally omitted <==

MGM Wireless Ltd.

12

==> picture [596 x 38] intentionally omitted <==

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

Half Year Report – 31 December 2013
----- End of picture text -----

Condensed consolidated statement of cash flows for the half-year ended 31 December 2013

Cash flows from operating activities Receipts from customers Payments to suppliers and employees Tax payments Interest and other costs of finance Net cash provided by/(used in) operating activities Cash flows from investing activities Receipt of grant income Payments for plant and equipment Payment for research and development Net cash provided by investing activities Cash flows from financing activities Proceeds from issue of shares Dividends paid to owners of the company Net cash provided by (used in) financing activities Net increase in cash held Cash and cash equivalents at 1 July Effect of exchange rate changes Cash and cash equivalents at 31 December	Consolidated Group Half-Year Ended 31/12/2013 31/12/2012 $ $ 1,690,350 1,237,629 (1,121,052) (972,112) (143,669) (167,533) (8,491) (13,492)
	417,138 84,492
	205,693 316,753 (21,533) (1,129) (150,000) (150,000)
	34,160 165,624
	119,000 25,000 (83,619) - 35,381 25,000
	486,679 275,116 526,854 169,139 - -
	1,013,533 444,255

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

==> picture [27 x 26] intentionally omitted <==

MGM Wireless Ltd.

13

==> picture [596 x 38] intentionally omitted <==

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

Half Year Report – 31 December 2013
----- End of picture text -----

Notes to the condensed consolidated financial statements

Significant accounting policies

1.1 Statement of compliance

The half-year financial report is a general purpose financial report prepared in accordance with the Corporations Act 2001 and AASB 134 ‘Interim Financial Reporting’. Compliance with AASB 134 ensures compliance with International Financial Reporting Standard IAS 34 ‘Interim Financial Reporting’. The half-year report does not include notes of the type normally included in an annual financial report and shall be read in conjunction with the most recent annual financial report.

1.2 Basis of preparation

The condensed consolidated financial statements have been prepared on the basis of historical cost, except for the revaluation of certain non-current assets and financial instruments. Cost is based on the fair values of the consideration given in exchange for assets. All amounts are presented in Australian dollars, unless otherwise noted.

The accounting policies and methods of computation adopted in the preparation of the half-year financial report are consistent with those adopted and disclosed in the company’s 2013 annual financial report for the financial year ended 30 June 2013, except for the impact of the Standards and Interpretations described below. These accounting policies are consistent with Australian Accounting Standards and with International Financial Reporting Standards.

MGM Wireless Limited (”the Group”) has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (the AASB) that are relevant to their operations and effective for the current half-year.

 AASB 10 ‘Consolidated Financial Statements’ and AASB 2011-7 ‘Amendments to Australian Accounting Standards arising from the consolidation and Joint Arrangements standards’

 AASB 12 ‘Disclosure of Interests in Other Entities’ and AASB 2011-7 ‘Amendments to Australian Accounting Standards arising from the consolidation and Joint Arrangements standards’

 AASB 13 ‘Fair Value Measurement’ and AASB 2011-8 ‘Amendments to Australian Accounting Standards arising from AASB 13’

==> picture [27 x 27] intentionally omitted <==

MGM Wireless Ltd.

14

==> picture [596 x 38] intentionally omitted <==

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

Half Year Report – 31 December 2013
----- End of picture text -----

 AASB 119 ‘Employee Benefits’ (2011) and AASB 2011-10 ‘Amendments to Australian Accounting Standards arising from AASB 119 (2011)

 AASB 2012-2 ‘Amendments to Australian Accounting Standards – Disclosures – Offsetting Financial Assets and Financial Liabilities’

 AASB 2012-5 ‘Amendments to Australian Accounting Standards arising from Annual Improvements 2009–2011 Cycle’

 AASB 2012-10 ‘Amendments to Australian Accounting Standards – Transition Guidance and Other Amendments’

Impact of the application of AASB 10

AASB 10 replaces the parts of AASB 127 ‘Consolidated and Separate Financial Statements’ that deal with consolidated financial statements and Interpretation 112 ‘Consolidation – Special Purpose Entities’. AASB 10 changes the definition of control such that an investor controls an investee when a) it has power over an investee, b) it is exposed, or has rights, to variable returns from its involvement with the investee, and c) has the ability to use its power to affect its returns. All three of these criteria must be met for an investor to have control over an investee. Previously, control was defined as the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. Additional guidance has been included in AASB 10 to explain when an investor has control over an investee. This has not resulted in any changes to the half year model report.

Impact of the application of AASB 12

AASB 12 is a new disclosure standard and is applicable to entities that have interests in subsidiaries, joint arrangements, associates and/or unconsolidated structured entities. In general, the application of AASB 12 has resulted in more extensive disclosures in the consolidated financial statements. However this did not result in any changes to the half year model report.

Impact of the application of AASB 13

The Group has applied AASB 13 for the first time in the current year. AASB 13 establishes a single source of guidance for fair value measurements and disclosures about fair value measurements. The scope of AASB 13 is broad; the fair value measurement requirements of AASB 13 apply to both financial instrument items and non-financial instrument items for which other AASBs require or permit fair value measurements and disclosures about fair value measurements, except for share-based payment transactions that are within the scope of AASB 2 ‘Share-based Payment’, leasing transactions that are within the scope of AASB 117 ‘Leases’, and measurements that have some

==> picture [27 x 27] intentionally omitted <==

MGM Wireless Ltd.

15

==> picture [596 x 38] intentionally omitted <==

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

Half Year Report – 31 December 2013
----- End of picture text -----

similarities to fair value but are not fair value (value in use for impairment assessment purposes).

AASB 13 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date under current market conditions. Fair value under AASB 13 is an exit price regardless of whether that price is directly observable or estimated using another valuation technique. Also, AASB 13 includes extensive disclosure requirements.

AASB 13 requires prospective application from 1 January 2013. In addition, specific transitional provisions were given to entities such that they need not apply the disclosure requirements set out in the Standard in comparative information provided for periods before the initial application of the Standard. In accordance with these transitional provisions, the Group has not made any new disclosures required by AASB 13 for the 2012 comparative period, the application of AASB 13 has not had any material impact on the amounts recognised in the consolidated financial statements.

Impact of the application of AASB 119

In the current year, the Group has applied AASB 119 (as revised in 2011) ‘Employee Benefits’ for the first time. However this did not result in any changes to the half year model report.

Impact of the application of AASB 2012-2 ‘Amendments to Australian Accounting Standards - Disclosures – Offsetting Financial Assets and Financial Liabilities’

The Group has applied the amendments to AASB 7 “Disclosures – Offsetting Financial Assets and Financial Liabilities’ for the first time in the current year. The amendments to AASB 7 require entities to disclose information about rights of offset and related arrangements for financial instruments under an enforceable master netting agreement or similar arrangement.

The amendments have been applied retrospectively. As the Group does not have any offsetting arrangements in place, the application of the amendments has had no material impact on the disclosures or on the amounts recognised in the consolidated financial statements.

2. Segment information

AASB 8 Operating Segments requires operating segments to be identified on the basis of internal reports about components of the Group that are

==> picture [27 x 27] intentionally omitted <==

MGM Wireless Ltd.

16

==> picture [596 x 38] intentionally omitted <==

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

Half Year Report – 31 December 2013
----- End of picture text -----

regularly reviewed by the chief operating decision maker in order to allocate resources to the segment and to assess its performance.

In both the current and previous reporting period the Group has only been operating in one business sector and reporting to Management has been on a geographical basis. 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.

The accounting policies of the reportable segments are the same as the Group’s accounting policies.

Segment revenue and profit

MGM Wireless Holdings Pty Ltd USA Message YOU LLC NZ MGM Wireless (NZ) Pty Ltd Total for Continuing Operation Profit before tax (continuing operations)	Segment revenue Half Year Ended $ $ 31/12/2013 31/12/2012 1,600,188 1,481,853 - - 21,316 3,998	Segment profit Half Year Ended $ $ 31/12/2013 31/12/2012 145,585 258,331 (2,656) (2,944) (10,451) (3,215)
	1,621,504 1,485,851
		132,478 252,172

Segment assets and liabilities

MGM Wireless Holdings Pty Ltd MGM Wireless USA Message YOU LLC NZ MGM Wireless (NZ) Pty Ltd Consolidated Assets Consolidated Liabilities	Assets Half Year Ended 31/12/2013 31/12/2012 $ $ 3,151,170 2,315,710 250 250 - 0 61,377 66,829	Liabilities Half Year Ended 31/12/2013 31/12/2012 $ $ 703,792 768,460 - - 11,587 9,915 7,505 14,563
	3,212,797 2,382,789
		722,884 792,938

3. Issues of equity securities

During the half-year, the Group issued 170,000 ordinary shares for $119,000 on exercise of 170,000 share options issued under its share option plan. As a

==> picture [27 x 27] intentionally omitted <==

MGM Wireless Ltd.

17

==> picture [596 x 38] intentionally omitted <==

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

Half Year Report – 31 December 2013
----- End of picture text -----

result of this share issue, $30,737 was transferred from the option issue reserve to issued capital. The only other movements in the ordinary share capital or other issued share capital of the company in the current or prior half-year relates to the issue of options under a new share options issue to the directors for 310,000 options (previous issue 110,000 options). In addition, an employee recevied 30,000 options under the employee share bonus plan and 10,000 ordinary shares.

4. Key management personnel

Remuneration arragements of key management personnel are disclosed in the annual financial report.

5. Dividends

During the half-year, The Group made the following dividend payments:

Fully paid ordinary shares Final dividend	Half-year ended Half-year ended 31 December 2013 31 December 2012
	Cents Total Cents Total Per Share $ Per Share $
	1.00 83,691 - -

6. Financial instruments

This note provides information about how the Group determines fair values of various financial assets and financial liabilities.

The directors consider that the carrying amounts of financial assets and financial liabilities recognised in the consolidated financial statements approximate their fair values.

==> picture [27 x 27] intentionally omitted <==

MGM Wireless Ltd.

18