VINYL GROUP LTD — Interim / Quarterly Report 2013

Feb 27, 2013

Appendix 4D Preliminary final report

Rule 4.2A.3

Appendix 4D

Half-year report

Introduced 010/1/2003 Amended 17/12/10

Name of entity: Mobilarm Limited

ABN: 15 106 513 580

1. Reporting period (“current period”): Previous corresponding period

Half-year ended 31 December 2012 Half-year ended 31 December 2011

2. Results for announcement to the market

				31 December	31 December
				2012	2011
				$A’000	$A’000
2.1	Revenue	up	16% to	$2,830	$2,439
2.2	Loss from ordinary activities after	up	87% to	($227)	($1,712)
	tax attributable to members
2.3	Net loss for the period attributable	up	87% to	($227)	($1,712)
	to members

Amount per Franked amount share cents per share cents 2.4 Dividends Final nil nil Interim nil nil

• 2.5 Record date for determining entitlement to dividends: N/A

• 2.6 Brief explanation of figures (if necessary):

• See chapter 19 for defined terms.

17/12/10 – Appendix 4D

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Appendix 4D Preliminary final report

3. Net tangible assets

31 December 31 December 2012 2011 $/cents $/cents Net tangible asset backing per $0.00 $0.00 ordinary share

4. Details of entities over which control has been gained or lost

4.1 Name of the entity

N/A

4.2 Date of the gain or loss of control

N/A

• 4.3 Contribution to the reporting entity’s profit (where applicable)

N/A

5. Dividends

Amount per security

Nil

Total dividends paid on all securities during the financial year

Nil

• See chapter 19 for defined terms.

17/12/10 – Appendix 4D

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Appendix 4D Preliminary final report

7. Auditor’s review report

Note: The audit report or review must be provided as part of the report.

For all entities, if the accounts are subject to audit dispute or qualification, a description of the dispute or qualification.

This report is based on accounts to which one of the following applies:

 The accounts have been  The accounts have been audited. subject to review.  The accounts are in the  The accounts have not yet process of being audited or been audited or reviewed. subject to review.

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Sign here: Date: 28 February 2013 Director Print name: Ken Gaunt

• See chapter 19 for defined terms.

17/12/10 – Appendix 4D

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REVIEW OF OPERATIONS

Mobilarm Limited (“the Company”) and its consolidated entities (“the Group”) have completed a dynamic six months in which it focused on a new sales strategy and customer growth and retention. After the various restructuring activities in 2012, we have been able to streamline the business and initiate our plans for long term revenue creation. These include a number of significant opportunities for the Company:

• The Company obtained grant approval for the development of an integrated lifejacket and maritime survivor locating device (MSLD) combination that is truly seamless and provides the highest level of safety. This EU funded development process is currently underway.

• The Company received initial orders and began shipments to Nigeria to supply Oil and Gas customers that are now required by law to wear MSLDs as part of their operations. We are experiencing acceleration in the uptake and compliance of this directive.

• The Company has recently entered into a joint venture in Nigeria to expand on this opportunity beyond MSLDs to complete safety solutions including lifejackets, servicing and equipment rentals. This will provide ongoing, long term revenues.

We have newly developed products coming to market next month that expand the breadth of solutions we provide to the global market and continue to demonstrate that we are the technology leaders in the field with the best solutions to save lives without compromise. These product development programmes have been underway for a considerable time and as we close these and bring the products to market we not only decrease costs but increase our sales and equipment rental and service opportunities.

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Ken Gaunt Chief Executive Officer

Perth, Western Australia 28 February 2013

MOBILARM LIMITED – FINANCIAL REPORT HY 2012

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DIRECTORS’ REPORT

The Directors present their half year report of the Group, being Mobilarm Ltd and it’s consolidated entities, for the half year ended 31 December 2012.

Directors

The directors of Mobilarm Limited in office at any time during the period and until the date of this report are as follows. Directors were in office for this entire period unless otherwise stated.

Mr. David Marshall - Chairman

Mr. Ken Gaunt - Chief Executive Officer Sir Tim McClement* - Non Executive Director Mr. Brenton Scott - Non-Executive Director**

The directors have been in office since the start of the financial year to the date of this report, unless otherwise stated.

• Appointed as Non-Executive Director on 17 August 2012.

** Resigned as Director on 29 November 2012.

Principal Activities

The principal activities of the company during the half year were the development, manufacturing and sale of a Man Overboard Safety Systems.

There were no other significant changes in the nature of the activities of the company during the half year.

Dividends

No dividends were paid or declared for the half year.

MOBILARM LIMITED – FINANCIAL REPORT HY 2012

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Operations of the Company

The Company received orders of $2,991,510 in the half year ended 31 December 2012 (2011: $3,479,100), a 14% decrease. That helped the Company increase revenue to $2,830,407 in the period as compared to $2,439,269 in the half year ended 31 December 2011, an increase of 16%. The loss of the company after providing for income tax amounted for the half year ending 31 December 2012 to $226,788 (2011: Loss of $1,712,261). The decrease in the loss was due to the impact of restructuring activities during the last twelve months. These included staff reductions in the Australian operations.

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The Company’s operating expenses decreased to $1,903,946 in the half year ended 31 December 2012 as compared to $3,418,334 in the half year ended 31 December 2011, a decrease of 156%. The decrease came from the aforementioned restructuring activities. This resulted in a net loss for the half year of $226,788 as compared to a loss of $1,712,261 in the half year ended 31 December 2011, a decrease of 87%.

Financial Position of the Company

The Company ended December 2012 with net assets of $4,187,031, compared to net assets of $4,420,785 at June 2012. The reduction in in financial condition is mostly due to a build-up of inventory to satisfy demand of our Nigerian opportunity, expenditures to move to new facilities in Beverley and project expenses to bring our next generation products to market in early 2013.

On the asset side, the Company has decreased its current assets by $1,247,802 from June 2012 to June 2012, mostly due to a reduction in our net payable position. Non-current assets increased by $16,858 due to an increase in the expenditure of our next generation Mobilarm and Sea Marshall products.

Business strategy for future financial years

The Company will continue to pursue its growth strategy of becoming the world’s largest provider of Man Overboard solutions and emergency beacons. The Company plans to increase market share through organic growth during the next financial year.

Further information on likely developments in the operations of the Company and the expected results of those operations in future financial years has not been included in this report because disclosure of the information would likely result in unreasonable prejudice to the Company.

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Net Tangible Asset

The Company had a net tangible asset of $1,132,950 (December 2011: $97,968).The net tangible asset per weighted average share is $0.00 (2011: Asset of $0.00).

Changes in the State Of Affairs

There were no changes to the state of affairs of the company.

Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001

The auditor’s independence declaration is set out on page 5 and forms part of the directors’ report for the half year ended 31 December 2012.

Significant events subsequent to balance date

Since the end of the half year, no events or circumstances have arisen that would require disclosure in the financial report.

Signed in accordance with a resolution of the Directors.

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Ken Gaunt Chief Executive Officer Perth, Western Australia 28 February 2013

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MOBILARM LIMITED ABN 15 106 513 580

AUDITOR’S INDEPENDENCE DECLARATION UNDER S 307C OF THE CORPORATION ACT 2001 TO THE DIRECTORS OF MOBILARM LIMITED

• 31 December 2012 there have been;

• a. no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the review; and

• b. no contravention of any applicable code of professional conduct in relation to the review.

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JOHN DORAZIO CA For and on behalf of Walker Wayland Audit (WA) Pty Ltd Chartered Accountants Level 3, The Kirin Centre 15 Ogilvie Road, Mount Pleasant WA 6153

Dated this 28[th] day of February 2013

www.walkerwaylandwa.com.au Tel: +61 8 9364 9988 Liability limited by a scheme approved info@ww-wa.com.au Fax: +61 8 9364 9922 under Professional Standards Legislation.

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DIRECTORS’ DECLARATION

In the opinion of the directors of Mobilarm Limited (“the Company”):

In the opinion of the Directors:

• (a) The financial statements and notes of the consolidated entity are in accordance with the Corporations Act 2001, including:

• (i) giving a true and fair view of financial position of the consolidated entity as at 31 December 2012 and the performance for the half year ended on that date; and

• (ii) complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001; and

• (b) Subject to the matter disclosed in Note 2 to the financial statements, there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

Signed in accordance with a resolution of the Directors

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Ken Gaunt Chairman

Perth, Western Australia 28 February 2013

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STATEMENT OF COMPREHENSIVE INCOME

FOR THE HALF YEAR ENDED 31 DECEMBER 2012

Consolidated

	31 December 2012 $	31 December 2011 $
Revenue Sale of goods Interest Rental income Other income – fair value movement on contingent consideration Changes in inventories of finished goods and work in progress Raw materials and consumables purchased Employee benefits Share based compensation expense Depreciation and amortisation Advertising Accountancy Audit and tax Freight and cartage External consultants and contractors Rental Travel and accommodation Allowance for doubtful debts Payroll tax Legal fees Telephone and internet charges Insurance Printing, postage and stationery Motor vehicles Finance costs Foreign exchange loss/(gain) Other expenses Loss before income tax Income tax expense/(benefit) Loss for the period carried forward	2,830,410 8,207 180 2,838,797 - 869,440 4,521 953,740 (6,967) 183,604 19,067 6,553 47,186 (6,497) 143,283 27,934 107,241 90 12,040 48,400 47,843 42,217 56,170 30,387 79,263 105,617 294,453 (226,788) - (226,788)	2,439,269 5,751 19,465
		2,464,485
		79,963 (71,520) 829,932 1,672,605 153,845 182,547 5,322 8,195 57,476 22,718 221,023 141,981 170,092 26 50,839 88,765 24,216 25,106 54,229 18,438 127,321 67,748 405,805
		(1,712,261) -
		(1,712,261)

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STATEMENT OF COMPREHENSIVE INCOME (CONTINUED)

FOR THE HALF YEAR ENDED 31 DECEMBER 2012

	31 December 2012 $	31 December 2011 $
Loss for the period brought forward Other comprehensive income Total comprehensive loss for the period Basic earnings/(loss) per share (cents per share) Diluted earnings/(loss) per share (cents per share)	(226,788) - (226,788) (0.00) (0.00)	(1,712,261) (6,804)
		(1,719,065)
		(0.01)
		(0.01)

The statement of comprehensive income should be read in conjunction with the notes to the financial statements.

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STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2012

Note	Consolidated 31 December 2012 30 June 2012 $ $	Consolidated 31 December 2012 30 June 2012 $ $
CURRENT ASSETS Cash and cash equivalents Restricted cash Trade and other receivables 3 Inventories Other current assets TOTAL CURRENT ASSETS NON-CURRENT ASSETS Plant and equipment Intangible assets and goodwill 4 TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables 5 Customer deposits 5 Financial liability – Contingent Consideration 6 Interest bearing loans and borrowings 7 Provisions TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Provisions Interest Bearing loans and borrowings 7 TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Contributed equity 8 Accumulated Losses 9 Reserves 10 TOTAL EQUITY	387,223 265,174 1,245,144 521,979 74,827 2,494,347 361,093 3,054,081 3,415,174 5,909,521 1,089,116 152,225 114,233 28,520 308,092 1,692,186 15,001 15,303 30,304 1,722,490 4,187,031 27,670,729 (23,739,565) 255,867 4,187,031	1,091,190 265,174 1,463,688 293,587 93,770
		3,207,409
		320,717 2,959,544
		3,280,261
		6,487,670
		1,287,106 196,416 114,233 23,312 405,822
		2,026,889
		9,802 30,194
		39,996
		2,066,885
		4,420,785
		27,710,729 (23,512,777) 222,833
		4,420,785

The statement of financial position should be read in conjunction with the notes to the financial statements.

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STATEMENT OF CASH FLOWS

FOR THE HALF YEAR ENDED 31 DECEMBER 2012

	Consolidated 31 December 2012 31 December 2011 $ $	Consolidated 31 December 2012 31 December 2011 $ $
CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers Payments to suppliers and employees Interest received Rental income & recoveries Interest costs R&D tax rebate NET CASH FLOWS USED IN OPERATING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES Payments for plant and equipment Payment for research & development NET CASH FLOWS USED IN INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from / (Repayment of) borrowings – related parties Proceeds from share issues Costs of share issues NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES NET INCREASE/(DECREASE) IN CASH HELD CASH AT THE BEGINNING OF THE PERIOD CASH AT THE END OF THE PERIOD	2,142,085 (3,324,533) 8,207 - (5,148) 584,645 (594,744) (7,578) (101,645) (109,223) - - - - (703,967) 1,091,190 387,223	2,727,962 (4,293,668) 5,750 21,412 (9,817) -
		(1,548,361)
		(12,850) (180,484)
		(193,334)
		(929,144) 3,108,496 (150,000)
		2,029,352
		287,657
		92,470
		380,127

The statement of cash flows should be read in conjunction with the notes to the financial statements.

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STATEMENT OF CHANGES IN EQUITY

FOR THE HALF YEAR ENDED 31 DECEMBER 2012

	Issued Capital $	Accumulated Losses $	Share Based Payment Reserve $	Foreign Currency Translation Reserve $	Total Equity $
At 1 July 2011 Net loss for the period Other comprehensive income Total comprehensive loss for the period Transactions with owners in their capacity as owners Issue of equity Costs of share issues Share based payments – Performance Shares Share based payments – Employee Stock Options As at 31 December 2011 At 1 July 2012 Net loss for the period Other comprehensive income Total comprehensive loss for the period Transactions with owners in their capacity as owners Issue of director options Forfeiture of Performance Shares Share based payments – Performance Shares Share based payments – Employee Stock Options As at 31 December 2012	24,990,901 - - - 1,742,955 (249,878) 135,111 - 26,619,089 27,710,729 - - - - (50,667) 10,667 - 27,670,729	(22,038,139) (1,712,261) - (1,712,261) - - - - (23,750,400) (23,512,777) (226,788) - (226,788) - - - - (23,739,565)	212,405 - - - - - - 18,734 231,139 222,833 - - - 30,881 - - 2,153 255,867	- - (6,804) (6,804) - - - - (6,804) - - - - - - - - -
					3,165,167
					(1,712,261) (6,804)
					(1,719,065)
					1,742,955 (249,878) 135,111 18,734
					3,093,024
					4,420,785
					(226,788) -
					(226,788)
					30,881 (50,667) 10,667 2,153
					4,187,031

The statement of changes in equity should be read in conjunction with the notes to the financial statements.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 DECEMBER 2012

1 CORPORATE INFORMATION

The financial report of Mobilarm Limited (the “Company”) and its consolidated entities (“the Group”) for the half year ended 31 December 2012 was authorised for issue in accordance with a resolution of directors on 28 February 2013.

Mobilarm Limited is a Company limited by shares incorporated and domiciled in Australia. The nature of the operations and principal activities of the Company are described in the Director’s Report.

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of Preparation

This general purpose condensed financial report for the half year ended 31 December 2012 has been prepared in accordance with AASB 134 Interim Financial Reporting and the Corporations Act 2001.

The half year report does not include all of the notes normally included within the annual financial report and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the entity as the full financial report.

It is recommended that the half year financial report be read in conjunction with the annual financial report for the year ended 30 June 2012 and considered together with any public announcements made by the Company during the half year ended 31 December 2012 in accordance with the continuous disclosure obligations of the ASX listing rules.

The half year report financial report has been prepared on a historical cost basis.

For the purpose of preparing the half year financial report, the half year has been treated as a discrete reporting period.

The accounting policies and methods of computation are the same as those adopted in the most recent annual financial report.

The financial report is presented in Australian Dollars and all values are rounded to the nearest dollar.

(b) New and amending Accounting Standards and Interpretations

There have been no new standards issued since 30 June 2012 that required implementation as of the beginning of the financial year that have not been by applied by the Company.

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(c) Going Concern

This report has been prepared on a going concern basis, which contemplates the continuity of normal business activity and the realisation of assets and settlement of liabilities in the normal course of business.

The Group has incurred a net loss after tax for the half year ended 31 December 2012 of $226,788 (31 December 2011: $1,719,065) and experienced net cash outflows from operating activities of $594,744 (31 December 2011: $1,548,361). As 31 December 2012, the Group had net assets of $4,187,031 (30 June 2012: $4,420,785).

Notwithstanding the above, the ability of the Group to continue as a going concern is reliant on:

• increased cash flows from operations; and/ or

• the raising of funds through a debt or equity issue.

The directors have reviewed the business outlook and plans of the Group and believe that both of the above can be achieved.

Should the entity not achieve the matters set out above, there is significant uncertainty whether the entity will continue as a going concern and therefore whether it will realise its assets and extinguish its liabilities in the normal course of business and at amounts stated in the financial report.

The financial report does not include any adjustments that may be necessary if the Group is unable to continue as a going concern.

3 TRADE AND OTHER RECEIVABLES

	Consolidated 31 December 2012 30 June 2012 $ $	Consolidated 31 December 2012 30 June 2012 $ $
Trade debtors Less: allowance for impairment loss Sub-Total Goods and services tax Value added tax Sundry receivables R & D Rebate Total	1,130,772 (16,377) 1,114,395 13,777 94,903 22,069 - 1,245,144	814,031 (18,739)
		795,292 6,272 77,637 - 584,487
		1,463,688

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4 INTANGIBLE ASSETS AND GOODWILL

As at 31 December 2012 Cost Accumulated Amortisation Net Carrying Amount Other As at 30 June 2012 Cost Accumulated Amortisation Net Carrying Amount Other Half year ended 31 December 2012 At 1 July 2012, net of accumulated amortisation Additions Amortisation At 31 December 2012, net of accumulated amortisation	Development Costs Intellectual Property Goodwill Patents & Licenses	Total
	$ $ $ $ 3,044,380 923,919 1,924,068 67,235 (1,914,665) (923,919) 0 (67,235)	$ 5,959,601 (2,905,819)
	1,129,714 - 1,924,068 -	3,053,782
	$ $ $ $ 2,812,585 923,919 1,924,068 67,235 (1,777,706) (923,919) 0 (67,235)	298
		3,054,081
		$ 5,727,807 (2,768,860)
	1,034,879 - 1,924,068 -	2,958,947
	1,034,879 - 1,924,068 - 223,644 - - - (128,809) - - -	597
		2,959,544
		2,958,947 223,644 (128,809)
	1,129,714 - 1,924,068 -	3,053,782

Development costs

Development costs have been capitalised at cost. The intangible asset has been assessed as having a finite life and is amortised using the straight line method over a period of 5 years. If an impairment indication arises, the recoverable amount is estimated and an impairment loss is recognised to the extent that the recoverable amount is lower than the carrying value.

Intellectual property

Intellectual property costs have been capitalised at cost. The intangible asset was assessed as having a finite life and has been fully amortised.

Patents and licenses costs

Patents and licenses costs have been capitalised at cost. These patents and licenses have been granted for a minimum of 5 years by the relevant government agency and have accordingly been amortised using the straight line method over this finite life. It was determined that the patents and licenses which were being carried had no future economic benefit to the Group. Therefore, these amounts have been fully amortised.

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Goodwill

Goodwill has been capitalised at the amount of excess consideration paid over Marine Rescue Technology Limited’s (“MRT”) fair value of identifiable net assets acquired and liabilities assumed. The acquisition of MRT occurred on 9 June 2011.

5 TRADE AND OTHER PAYABLES

	Consolidated 31 December 2012 30 June 2012 $ $	Consolidated 31 December 2012 30 June 2012 $ $
Trade creditors Other creditors and accruals Sub-Total Goods and services tax Value added tax Other tax liabilities Customer deposits	830,815 53,514 884,329 1,019 51,370 152,398 1,089,116 152,225 152,225	1,078,210 208,896
		1,287,106 - - -
		1,287,106
		196,416
		196,416

Customer deposits represent prepayments from customers for orders that have not shipped as of the reporting date.

6 FINANCIAL LIABILITY – CONTINGENT CONSIDERATION

In relation to the acquisition of MRT on 9 June 2011, the purchase price included a contingent equity consideration component, in the form of shares in the Company. This contingent consideration will be granted via the issue of up to 11,423,261 ordinary shares, subject to the following terms:

• 75% of the maximum number of shares will be issued if 2012 gross revenue achieved is GBP£1,600,000 (approximately AUD$2,428,000); and

• 25% of the maximum number of shares will be issued if 2013 gross revenue achieved is GBP£2,000,000 (approximately AUD$3,035,000); and

• Any excess over the target in each year can be applied to a shortfall in the other year; and

• Any shortfall against the target is a reduction in the number of shares to be issued. The minimum target needed to earn any deferred shares is GBP£3,066,000 (approximately AUD$4,653,000).

MRT achieved 2012 gross revenue of £2,724,138, exceeding its deferred compensation target of £1,600,000. The Company issued 8,567,446 ordinary shares in accordance with the terms of the Share Purchase Agreement.

The excess 2012 gross revenue of £1,124,138 can be applied to a shortfall in the 2013 year. The shortfall would only require 2013 gross revenue of £875,862 for the remaining deferred compensation of 2,855,815 ordinary shares to be issued.

The foreign exchange rate as at 31 December 2012 was AUD$1.5177 for 1 GBP.

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The contingent consideration has been recognised at fair value based on the share price of the Company at period end, and the maximum number of shares to be issued.

	$
CURRENT At 1 July 2012 Fair value (gain)/loss At 31 December 2012 Total	114,233 -
	114,233
	114,233

7 INTEREST BEARING LOANS AND BORROWINGS

INTEREST BEARING LOANS AND BORROWINGS
	Consolidated 31 December 2012 30 June 2012 $ $
CURRENT Finance Leases Total NON-CURRENT Finance Leases Total	28,520 28,520 31 December 2012 $ 15,303 15,303	23,312
		23,312
		30 June 2012 $ 30,194
		30,194

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8 CONTRIBUTED EQUITY

8 CONTRIBUTED EQUITY
	31 December 2012 $		30 June 2012 $ 27,509,247 201,482 27,710,729 $
Issued and paid up capital 296,704,866 (30 June – 296,704,866) ordinary shares fully paid. 333,334 (30 June – 6,333,334) Performance shares	27,509,247 161,482 27,670,729 No. of shares
Reconciliation of Contributed Equity Opening balance at 1 July 2011 Issue of ordinary shares Cost of share issue Conversion of Performance Shares Class A Closing balance at 31 December 2011 Opening balance at 1 January 2012 Issue of ordinary shares Cost of share issue Issue of deferred ordinary share compensation from MRT acquisition Share based payments – Ordinary Shares Closing balance at 30 June 2012 Opening balance at 1 July 2012 Issue of ordinary shares Closing balance at 31 December 2012	193,581,712 65,025,046 - 7,000,000		24,495,494 1,392,955 (249,879) 350,000
	265,606,758		25,988,570
	265,606,758 21,280,662 - 8,567,446 1,250,000		25,988,570 1,060,125 41,534 356,518 62,500
	296,704,866		27,509,247
	296,704,866 -		27,509,247 -
	296,704,866		27,509,247

Holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at shareholder meetings.

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8 CONTRIBUTED EQUITY (continued)

8 CONTRIBUTED EQUITY (continued)
	31 December 2012 Number $		30 June 2012 Number $
Performance Shares Movement in performance shares class A on issue Balance at beginning of period Share issue Share based payment expense for the period Conversion into ordinary shares Balance at end of the period Movement in performance shares class B on issue Balance at beginning of period Share issue Share based payment expense for the period Forfeiture of shares during the year Cancellation of performance shares Balance at end of the period Movement in performance shares class C on issue Balance at beginning of period Share issue Share based payment expense for the period Forfeiture of shares during the year Balance at end of the period Total performance shares	- - - - - 833,333 - - - (833,333) - 833,334 - - (500,000) 333,334 333,334	- - - - - $125,927 - - - - $125,927 $75,555 - 10,667 (50,667) 35,555 $161,482	- - - - - 3,166,666 - - (2,333,333) - 833,333 3,166,668 - - (2,333,334) 833,334 1,666,667	- - - -
				- $309,630 - 115,556 (299,259) -
				$125,927 $185,778 - 69,333 (179,556)
				$75,555
				$75,555

Performance class A shares convert to ordinary shares on a 1 for 1 basis upon obtaining ASX conditional listing. The Company obtained conditional listing on 25 August 2010. The Company amortised the shares from their issuance date through the milestone date.

Performance class B shares convert to ordinary shares on a 1 for 1 basis upon the Company reaching a market capitalisation of $65 million dollars based on the five day weighted average share price on the ASX. The Company has amortised the Performance shares class B based upon the Company’s financial plans to reach that milestone. The Company did not meet the milestone by 28 August 2012 and as such cancelled the balance of Performance class B shares.

Performance class C shares convert to ordinary shares on a 1 for 1 basis upon the Company reaching a market capitalisation of $100 million dollars based on the five day weighted average share price on the ASX. The Company has amortised the Performance shares class C based upon the Company’s financial plans to reach that milestone. 500,000 Performance shares class C were forfeited during the period as the employees did not meet the service condition as part of the grant due to their departure from the Group. The Group offset $50,667 of previously expensed share based payments as part of the forfeiture.

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9 ACCUMULATED LOSSES Accumulated losses at the beginning of the financial period Net loss for the year Accumulated losses at the end of the financial period 10 RESERVES Share based payment Reserve Balance at the beginning of the financial year Difference in fair value of option component of convertible loan Issuance and amortisation of share options issued Options forfeited – Employee Stock Option Plan Balance at the end of the financial year December 2012 Options Number	9 ACCUMULATED LOSSES Accumulated losses at the beginning of the financial period Net loss for the year Accumulated losses at the end of the financial period 10 RESERVES Share based payment Reserve Balance at the beginning of the financial year Difference in fair value of option component of convertible loan Issuance and amortisation of share options issued Options forfeited – Employee Stock Option Plan Balance at the end of the financial year December 2012 Options Number		31	December 2012 $		30 June 2012 $
				(23,512,777) (226,788) (23,739,565) December 2012 $		(22,038,139) (1,474,638)
						(23,512,777)
			31			30 June 2012 $
		$		222,833 - 33,034 - 255,867 June 2012 Number		212,405 - 22,549 (12,121)
						222,833
						$ 72,405 - - 22,549 (12,121) - - - 82,833 140,000 222,833
Movement in options on issue Balance at beginning of year (i) Options issued – Capital Raising (ii) Options issued – Capital Raising (iii) Options issued – Employee Stock Option Plan (iv) Options forfeited – Employee Stock Option Plan (iv) Options cancelled – Employee Stock Option Plan (iv) Options issued to director Options issued to director Subtotal Compensation recorded on issue of convertible loan to director Balance at end of the year*	44,006,314 - - - - - 29,670,487 2,000,000 75,676,801 75,676,801	222,833 - - 2,153 - - 28,581 2,300 255,867 - 255,867		9,924,333 15,000,000 19,998,651 - (600,004) (316,666) - - 44,006,314

(i) See annual financial report for the year ended 30 June 2012.

(ii) See annual financial report for the year ended 30 June 2012.

(iii) See annual financial report for the year ended 30 June 2012.

(iv) See annual financial report for the year ended 30 June 2012.

(v) See annual financial report for the year ended 30 June 2012.

(vi) See annual financial report for the year ended 30 June 2012.

• Options issued to Ken Gaunt. See details on footnote 14.

• ** Options issued to Tim McClement. See details on footnote 14.

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11 COMMITMENTS AND CONTINGENCIES

Operating lease commitments

The Company has entered into commercial leases as follows.

There are no restrictions placed upon the lessee by entering into these leases.

Future minimum rentals payable under non-cancellable operating leases as at 31 December are as follows:

	31 December 2012 $	30 June 2012 $
Within one year After one year but not more than five years More than five years	216,353 411,559 314,722 942,634	136,791 191,018 -
		327,809

The Company entered into a lease agreement for premises in Beverley, UK. The lease agreement is for a term of 10 years, with an option to exit after five years in exchange for a two year lease fee. The lease has rental payment of ₤ 42,500 per annum.

12 SEGMENT INFORMATION

The company operates solely in the development, manufacturing and sale of Man Overboard safety systems. The Company operates in two geographical locations being Australia and the United Kingdom . The Company manages its operations internally as one segment under the management of the CEO. The accounting policies applied for internal reports are consistent with the policies used to prepare the financial statements.

13 CONTINGENT LIABILITIES

As at reporting date there were no contingent liabilities.

14 RELATED PARTY TRANSACTIONS

(a) The following related party transactions occurred during the financial period:

On the 8th of August 2012 the Board (excluding Mr Ken Gaunt who did not wish to make any recommendation) has proposed the issue of 29,670,487 share options to Director/Chief Executive Officer Ken Gaunt. Each option entitles the holder to exercise the option in exchange for one ordinary share in the Company. The options are exercisable at an exercise price of per option A$0.021. The Options vest when the Share Price is equal to or greater than A$0.10 (subject to adjustment under the terms of the grant). In addition, upon a Change of Control Event (i), the Options automatically vest.

• (i) Change of Control Event means:

• a. a person acquires voting power in at least 50.1% or more of the issued Shares;

• b. a person acquires the power to direct or cause the direction of management or policies of the Company;

• c. a person directly or indirectly acquires all or substantially all of the business and assets of the Group;

or

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• d. a person otherwise acquires or merges with the Group, including by way of a takeover bid, scheme of arrangement, amalgamation, merger, capital reconstruction, consolidation, share acquisition, securities issuance, share buyback or repurchase, reverse takeover, dual listed company structure, establishment of a new holding entity for the Group or any other comparable transaction or arrangement.

In association with the grant above, the Company has also proposed that the Company enter into an interest-free loan agreement with Mr. Gaunt of an amount equal to the total Grant Price payable for the 29,670,487 Options, being a total loan amount of $267,034.

A general meeting of shareholders was held on the 7th of September to vote on the above resolutions and all resolutions were approved.

In addition, Ken Gaunt did not receive a salary but a director fee of $120,000 was paid to Blazzed Pty Ltd. Any other transactions throughout the year relate to reimbursements for expenses incurred by Mr. Gaunt or his related entities on behalf of the Group.

Sir Tim McClement was issued 2,000,000 share options. Each option entitles the holder to exercise the option in exchange for one ordinary share in the Company. The options are exercisable at an exercise price of per option A$0.027. The Options vest when the Share Price is equal to or greater than A$0.10 (subject to adjustment under the terms of the grant). In addition, upon a Change of Control Event (i), the Options automatically vest.

• (i) Change of Control Event means:

• a. a person acquires voting power in at least 50.1% or more of the issued Shares;

• b. a person acquires the power to direct or cause the direction of management or policies of the Company;

• c. a person directly or indirectly acquires all or substantially all of the business and assets of the Group;

• d. (d) a person otherwise acquires or merges with the Group, including by way of a takeover bid, scheme of arrangement, amalgamation, merger, capital reconstruction, consolidation, share acquisition, securities issuance, share buyback or repurchase, reverse takeover, dual listed company structure, establishment of a new holding entity for the Group or any other comparable transaction or arrangement.

In addition, Sir Tim McClement received director fees of $18,529. Any other transactions throughout the year relate to reimbursements for expenses incurred by Mr. Gaunt or his related entities on behalf of the Group.

David Marshall did not receive a salary but a chairman fee of $27,613 paid to himself. Mr Marshall also received consulting fees from the consulting agreement signed at the time of the acquisition of MRT in the amount of $57,987. Any other transactions throughout the year relate to reimbursements for expenses incurred by Mr. Marshall or his related entities on behalf of the Group.

Brenton Scott did not receive a salary but a director fee of $52,500 was paid to Jayden Investment Trust. Any other transactions throughout the year relate to reimbursements for expenses incurred by Mr. Scott or his related entities on behalf of the Group.

Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated.

15 SUBSEQUENT EVENTS

Since the end of the half year the Company, no events or circumstances have arisen that would require disclosure in the financial report.

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MOBILARM LIMITED ABN 15 106 513 580 INDEPENDENT AUDITOR’S REVIEW REPORT TO THE MEMBERS OF MOBILARM LIMITED

Report on the Half-year Financial Report

We have reviewed the accompanying half-year financial report of Mobilarm Limited, which comprises the consolidated statement of financial position as at 31 December 2012, the consolidated statement of comprehensive income, the consolidated statement of financial position, consolidated statement of changes in equity, and consolidated statement of cash flows for the half-year ended on that date, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration.

Directors’ Responsibility for the Half-year Financial Report

The directors of Mobilarm Limited are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards (including Australian Accounting Interpretations) and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the half-year financial report that is free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410: Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the half-year financial report is not in accordance with the Corporations Act 2001 including : giving a true and fair view of Mobilarm Limited’s financial position as at 31 December 2012 and its performance for the half-year ended on that date, and complying with Accounting Standard AASB 134: Interim Financial Reporting and the Corporations Regulations 2001. As the auditor of Mobilarm Limited, ASRE 2410 requires that we comply with ethical requirements relevant to the audit of the annual financial report.

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

Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001 . We confirm that the independence declaration required by the Corporations Act 2001 , which has been given to the directors of Mobilarm Limited, would be in the same terms if provided to the directors as at the time of this auditor’s review report.

www.walkerwaylandwa.com.au Tel: +61 8 9364 9988 Liability limited by a scheme approved info@ww-wa.com.au Fax: +61 8 9364 9922 under Professional Standards Legislation.

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Conclusion

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

• (i) giving a true and fair view of Mobilarm Limited’s financial position as at 31 December 2012 and of its performance for the half-year ended on that date; and

• (ii) complying with AASB 134: Interim Financial Reporting and the Corporations Regulations 2001.

Inherent Uncertainty Regarding Continuation as a Going Concern

Without qualification to the conclusion expressed above, attention is drawn to the following matter. As a result of matters described in Note 2(c) – Going Concern to the financial report, there is significant uncertainty whether the consolidated entity will be able to pay its debts as and when they fall due and payable and realise its assets and extinguish its liabilities in the normal course of operations and at the amounts stated in the financial report. The financial report does not include any adjustments relating to the recoverability and classification of recorded asset amounts or to the amounts and classification of liabilities that might be necessary should the consolidated entity not continue as a going concern.

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JOHN DORAZIO CA For and on behalf of Walker Wayland Audit (WA) Pty Ltd Chartered Accountants Level 3, The Kirin Centre 15 Ogilvie Road, Mount Pleasant WA 6153

Dated this 28th day of February 2013

www.walkerwaylandwa.com.au Tel: +61 8 9364 9988 Liability limited by a scheme approved info@ww-wa.com.au Fax: +61 8 9364 9922 under Professional Standards Legislation.

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CORPORATE DIRECTORY

DIRECTORS

Mr. David Marshall Chairman Mr. Robert Ken Gaunt Chief Executive Officer Sir Tim McClement Non Executive Director

COMPANY SECRETARY

Mr. David McArthur Company Secretary

KEY PERSONNEL

Mr. Jorge Nigaglioni Chief Financial Officer

REGISTERED OFFICE

38 Guthrie Street Osborne Park WA 6017

PRINCIPLE PLACE OF BUSINESS

38 Guthrie Street Osborne Park WA 6017

CONTACT DETAILS

Web: www.mobilarm.com Tel: (08) 9315-3511 Fax: (08) 9315-3611

SHARE REGISTRY

Security Transfer Registrars Pty Ltd 770 Canning Highway Applecross WA 6153

LAWYERS TO THE COMPANY

AUDITORS

Cowell Clarke Walker Wayland Level 5, 63 Pirie Street, Level 3, The Kirin Centre, 15 Ogilvie Road Adelaide SA 5000 Australia Mt. Pleasant WA 6153

BANKERS

National Australia Bank

Mobilarm Limited ordinary shares are listed on the Australian Stock Exchange (ASX) under the ticker MBO.

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