XREALITY GROUP LTD — Interim / Quarterly Report 2018

Feb 25, 2018

Appendix 4D

Indoor Skydive Australia Group Limited Half Year Report Period ended 31 December 2017

Results for Announcement to the Market

Details of Reporting Periods

Current:	1	July	2017	to	31	December	2017
Comparative:	1	July	2016	to	31	December	2016

	Half year to	Half year to
Financial Results	31/12/17	31/12/16	Change %	Change $
	$	$
Total revenue	7,068,056	5,130,316	38%	1,937,740
(“revenue from ordinary activities”)
Net operating loss	(287,548)	(760,285)	62%	472,737
(“loss from ordinary activities after tax attributable to members”)
Total comprehensive loss for the period (“net loss for the period attributable to members”)	(271,191)	(760,285)	64%	489,094

Commentary on results

Please refer to the attached Interim Financial Report and Financial Statements for further explanation of the results.

Dividends	Half year to	Half year to
	31/12/17	31/12/16
Interim Dividend	n/a	n/a
Record date for determining entitlement to dividend	n/a	n/a

No dividends have been paid or declared during the period. There are no dividend reinvestment plans.

	Half year to	Half year to
	31/12/17	31/12/16
Net tangible assets per share	$0.24	$0.24

Financial Report

The Company's independent auditor, Grant Thornton Audit Pty Ltd, has completed a review of the Group's 31 December 2017 Interim Financial Report on which this report is based and has provided an unqualified Review Report. A copy of the Indoor Skydive Australia Group Limited Interim Financial Report and Financial Statements, inclusive of the Review Report is attached.

Indoor Skydive Australia Group Limited and Controlled Entities

ABN 39 154 103 607

Interim Financial Report For the half year ended 31 December 2017

2017 Interim Financial Report ________

Contents

DIRECTORS’ REPORT ............................................................................................................................. 2 AUDITOR’S INDEPENDENCE DECLARATION ....................................................................................... 4 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME ... 5 CONSOLIDATED STATEMENT OF FINANCIAL POSITION ................................................................... 6 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ................................................................... 7 CONSOLIDATED STATEMENT OF CASH FLOWS ................................................................................ 8 NOTES TO THE FINANCIAL STATEMENTS ........................................................................................... 9 DIRECTORS’ DECLARATION ................................................................................................................ 19 INDEPENDENT AUDITOR’S REVIEW REPORT TO THE MEMBERS OF INDOOR SKYDIVE AUSTRALIA GROUP LIMITED ............................................................................................................... 20

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Indoor Skydive Australia Group Limited – ABN: 39 154 103 607

2017 Interim Financial Report ________

DIRECTORS’ REPORT

Your directors submit the interim financial report of the consolidated group consisting of Indoor Skydive Australia Group Limited ( the Company or ISA Group ) and its controlled entities ( the Group ) during the half-year ended 31 December 2017.

Directors

The following persons were directors who held office during the half-year and up to the date of this report, unless otherwise stated:

Stephen BAXTER

Kenneth James GILLESPIE, AC

Daniel Christopher HOGAN, MG

Wayne Peter JONES

Company Secretary

Fiona Louise YIEND

Review of Operations

The principal activities of ISA Group are to own and/or operate Indoor Skydiving Facilities across Australia and South East Asia. It operates three Skydiving Facilities in Australia; iFLY Downunder (Penrith NSW), iFLY Gold Coast and iFLY Perth. ISA Group has an agreement for lease for its fourth Australian Indoor Skydiving Facility at Entertainment Quarter, Moore Park Sydney.

During the half year, ISA Group has developed its first Indoor Skydiving Facility in South East Asia, located at 1 Utama, Kuala Lumpur Malaysia. With a local joint venture partner, ISAG Group has commenced operations in January 2018 under our unique international “AirRider” brand.

For the half-year ended 31 December 2017, ISA Group reported Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) profit of $1,016,732 (2016: loss of $218,052) and a net loss after tax of $287,549 (2016: $760,285). The half year results were impacted by $404,811 of legal fees incurred as a result of a dispute with Sky Venture (refer to ASX announcement dated 26 February 2018). The arbitration of the dispute is scheduled for May 2018. The company anticipates that further legal fees will be incurred in the second half of the year.

EBITDA is not an accepted classification under the accounting standards, however, the Directors consider it a useful measure when considering the performance of VWT operations.

The following table summarises key reconciling items between statutory profit after tax attributable to the shareholders of the consolidated entity and EBITDA.

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Indoor Skydive Australia Group Limited – ABN: 39 154 103 607

2017 Interim Financial Report ________

EBITDA Less: Depreciation and amortisation Less: Finance cost Add: Interest income Loss before income tax benefit Income tax benefit Loss after income tax	December 2017 $ 1,016,732 (1,100,183) (289,676) 615 (372,511) 84,963 (287,549)	December 2016 $ (218,052) (713,679) (194,540) 4,788
		(1,121,483) 374,872
		(760,285)

Auditor’s Independence Declaration

The lead auditor’s independence declaration under s 307C of the Corporations Act 2001 is set out on page 4 of the interim financial report.

This directors’ report is signed in accordance with a resolution of the Board of Directors.

On behalf of the Directors

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Kenneth James Gillespie, AC Chairman

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Wayne Peter Jones Director & Chief Executive Officer

Dated: 26 February 2018

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2017 Interim Financial Report ________

AUDITOR’S INDEPENDENCE DECLARATION

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2017 Interim Financial Report

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CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

For the Half Year Ended 31 December 2017

Note Revenues 2(a) Cost of Sales Gross Profit Other income 2(a) Selling and marketing expenses 2(b) Administration expenses 2(b) Other operating expenses Loss Before Interest and Tax Finance income Finance expense Net financing costs Share of loss of a joint venture entity Loss Before Tax Income tax benefit Loss After Tax Attributable to: Equity holders of the parent Non-controlling interests Earnings per share From continuing operations: - Basic earnings per share (cents) - Diluted earnings per share (cents) Other comprehensive income Exchange differences on translation of foreign operations Other comprehensive income for the period Total comprehensive income for the period Attributable to: Equity holders of the parent Non-controlling interests	Consolidated Group Half Year ending 31 Dec 17 Half Year ending 31 Dec 16 $ $ 7,068,056 5,130,316 (1,330,010) (1,091,437)
	5,738,046 4,038,879
	435,087 24,875 2,647,184 2,215,563 2,854,984 2,226,534 738,255 567,062
	(67,289) (945,405)
	615 4,788 (289,676) (194,540)
	(289,060) (189,752) (16,161) -
	(372,511) (1,135,157)
	84,963 374,872
	(287,548) (760,285)
	(209,853) (760,285) (77,695) -
	(287,548) (760,285)
	(0.21) (0.62) (0.21) (0.62) 16,357 -
	16,357 -
	(271,191) (760,285)
	(195,196) (760,285) (75,995) -
	(271,191) (760,285)

The Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the Notes to the Financial Statements.

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Indoor Skydive Australia Group Limited – ABN: 39 154 103 607

2017 Interim Financial Report

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 31 December 2017

Notes ASSETS CURRENT ASSETS Cash and cash equivalents Trade and other receivables Inventories Other financial asset TOTAL CURRENT ASSETS NON-CURRENT ASSETS Property, plant and equipment 13 Investment in a joint venture entity 16 Intangible asset 14 Deferred tax asset Other financial asset TOTAL NON-CURRENT ASSETS TOTAL ASSETS LIABILITIES CURRENT LIABILITIES Trade and other payables 3 Deferred revenue 4 Borrowings 5 Provisions TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Borrowings 5 Provisions TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Share capital 7 Reserves Retained earnings Equity attributable to equity holders of the parent Non-controlling interests TOTAL EQUITY	Consolidated Group As at 31 Dec 2017 As at 30 Jun 2017 $ $ 363,566 1,706,457 1,120,091 917,777 154,917 74,105 68,430 42,489
	1,707,005 2,740,828
	43,250,298 43,965,692 259,480 - 1,245,797 773,304 2,252,601 2,167,638 164,811 209,245
	47,172,988 47,115,879
	48,879,992 49,856,707
	4,045,005 3,655,064 1,900,096 1,907,300 1,275,982 472,312 282,688 276,558
	7,503,771 6,311,234
	8,296,447 10,267,198 810,602 818,289
	9,107,049 11,085,487
	16,610,820 17,396,721
	32,269,172 32,459,986
	40,810,939 40,466,917 49,657 340,448 (8,557,232) (8,347,379)
	32,303,363 32,459,986 (34,191) -
	32,269,172 32,459,986

The Consolidated Statement of Financial Position should be read in conjunction with the Notes to the Financial Statements.

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Indoor Skydive Australia Group Limited – ABN: 39 154 103 607

2017 Interim Financial Report ________

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the Half Year Ended 31 December 2017

Total equity	$	32,459,986	-		3,574	35,000	41,804		(287,548)	16,357	(271,191)	32,269,172	28,253,090	133,041	5,665,000	(325,932)	-		160,164		(760,285)	(760,285)	33,125,079
Issued Capital Reserves Retained Earnings Total Attributable to the equityholders of the parent Non-controlling interests	$ $ $ $ $	Balance at 1 July 2017 40,466,917 340,448 (8,347,379) 32,459,986 -	344,022 (344,022) - - - Share issue on exercise of performance rights		- 3,574 - 3,574 - Employee share based payment performance	Issue of share options - 35,000 - 35,000 -	Acquisition of a subsidary - - - - 41,804	Comprehensive income	Loss for the half year - - (209,853) (209,853) (77,695)	Other comprehensive income - 14,657 - 14,657 1,700	Total comprehensive loss for the half year - 14,657 (209,853) (195,196) (75,995)	Balance at 31 December 2017 40,810,939 49,657 (8,557,232) 32,303,364 (34,191)	Balance at 1 July 2016 34,648,455 658,164 (7,053,529) 28,253,090 -	Adjustment 133,041 133,041 -	Shares issued during the half year 5,665,000 - - 5,665,000 -	Share issue costs (325,932) - - (325,932) -	Share issue on exercise of performance rights 486,646 (486,646) - - -		- 160,164 - 160,164 - Employee share based payment performance	Comprehensive income	Loss for the half year - - (760,285) (760,285) -	Total comprehensive loss for the half year - - (760,285) (760,285) -	Balance at 31 December 2016 40,474,169 331,682 (7,680,772) 33,125,079 -	The Consolidated Statement of Changes in Equity should be read in conjunction with the Notes to the Financial Statements.

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2017 Interim Financial Report

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CONSOLIDATED STATEMENT OF CASH FLOWS For the Half Year Ended 31 December 2017

	Consolidated Group
Cash Flows From Operating Activities Receipts from customers Payments to suppliers and employees Grant income received Interest received Finance costs Net cash inflows from operating activities Cash Flows From Investing Activities Purchase of property, plant and equipment Payments for investment in joint venture Payments for intangibles Net cash outflows from investing activities Cash Flows From Financing Activities Proceeds from issue of securities Proceeds from borrowings Repayment of borowings Share issue costs Net cash inflows from financing activities Net decrease in cash held Cash and cash equivalents at beginning of period Effects of exchange rate changes Cash and cash equivalents at end of period	Half Year ending 31 Dec 17 Half Year ending 31 Dec 16 $ $ 8,091,368 6,827,308 (6,899,794) (5,762,233) - 24,875 615 4,788 (279,957) (176,707)
	912,233 918,031
	(300,156) (9,043,897) (264,229) - (523,659) -
	(1,088,043) (9,043,897)
	- 5,665,000 - 2,084,119 (1,167,080) - - (325,932)
	(1,167,080) 7,423,187
	(1,342,891) (702,679)
	1,706,457 2,550,602 - (9,783)
	363,566 1,838,140

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Indoor Skydive Australia Group Limited – ABN: 39 154 103 607

2017 Interim Financial Report

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NOTES TO THE FINANCIAL STATEMENTS

For the Half Year Ended 31 December 2017

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. General information and basis of preparation

The condensed interim consolidated financial statements (‘the interim financial statements’) of ISA Group are for the six (6) months ended 31 December 2017 and are presented in Australian Dollar ($AUD), which is the functional currency of the Parent Company. These general purpose interim financial statements have been prepared in accordance with the requirements of the Corporations Act 2001 and AASB 134 Interim Financial Reporting. They do not include all of the information required in annual financial statements in accordance with Australian Accounting Standards, and should be read in conjunction with the consolidated financial statements of ISA Group for the year ended 30 June 2017 and any public announcements made by ISA Group during the half-year in accordance with continuous disclosure requirements arising under the Australian Securities Exchange Listing Rules and the Corporations Act 2001.

The interim financial statements have been approved and authorised for issue by the Board of Directors on 26 February 2018.

b. Significant accounting policies

The interim financial statements have been prepared in accordance with the same accounting policies adopted in ISA Group’s last annual financial statements for the year ended 30 June 2017.

The comparative statement of profit or loss for the half-year period ended 31 December 2016 has been updated to reflect the prior period error reported in the full year financial statements ended 30 June 2017. The effect of the prior period error on the comparative half year was to decrease expense by $190,059, which in turn impacted the statement of changes in equity for the prior period comparative by the same amount less tax.

The accounting policies have been applied consistently throughout ISA Group for the purposes of preparation of these interim financial statements.

c. Estimates

When preparing the interim financial statements, management undertakes a number of judgements, estimates and assumptions about recognition and measurement of assets, liabilities, income and expenses. The actual results may differ from the judgements, estimates and assumptions made by management, and will seldom equal the estimated results.

The judgements, estimates and assumptions applied in the interim financial statements, including the key sources of estimation uncertainty were the same as those applied in ISA Group’s last annual financial statements for the year ended 30 June 2017.

d. Going Concern

The Group incurred a loss for the half year after tax of $287,548 (2016: loss of $760,285) and, as at 31 December 2017, had a net current deficiency in assets of $5,796,766. The Group generated positive cash flows from operations during the half year of $912,233 (2016: $918,031). Future expected cash flows are not taken into account in determining the current assets position. Included within current liabilities are deferred revenue of $1,900,096 that will be realised as revenue once the service has been delivered to the customer. Also included as a current liability within trade and other payables is an investment amount of $2,000,000 by iFly Australia Pty Ltd which is expected to be settled through the issue of equity in the relevant subsidiaries of ISA group. Furthermore, the Group has unused debt facilities of $1,389,949 at 31 December 2017.

Management has prepared detailed cash flow forecasts that are monitored on an ongoing basis that indicate the positive cash flows generated from operations are sufficient to reverse the above net current deficiency and meet the Group’s obligations moving forward. Furthermore, the Group has received a confirmed offer letter from its financier for further financing of $1,200,000.

Therefore, given the current level of cash reserves, unused debt facilities and the forecasted positive cash flows from operations, the Directors are of the view that the Group is a going concern. Therefore, the Group will be able to meet its debts as they fall due and accordingly the financial statements have been prepared on a going concern basis.

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Indoor Skydive Australia Group Limited – ABN: 39 154 103 607

2017 Interim Financial Report ________

a) Revenue VWT revenue - rendering of services Other sales Other Income Grant Income Other b) Selling and Marketing Expenses Marketing Expenses Employment Expenses Administration Expenses Depreciation and Amortisation Expenses Occupancy Expenses Employment Expenses Share Based Payments Legal Fees Directors' fees OTE 2: REVENUE AND EXPENSES	Half Year ending 31 Dec 17 Half Year ending 31 Dec 16 $ $ 6,728,616 4,533,902 339,440 596,414 Consolidated Group
	7,068,056 5,130,316
	- 24,875 435,087 -
	435,087 24,875
	496,941 445,081 2,150,243 1,770,482
	2,647,184 2,215,563
	1,100,183 713,679 610,447 382,426 664,148 853,155 3,574 160,164 410,383 - 66,250 117,110
	2,854,984 2,226,534

NOTE 2: REVENUE AND EXPENSES

NOTE 3: TRADE AND OTHER PAYABLES Tradepayables		As at 31 December 2017 $	As at
			30 June
			2017 $
		893,093 1,151,912 2,000,000	407,894 1,247,170 2,000,000
Other accruals
Otherpayables
		4,045,005 3,655,064

In 2016, iFly Australia Pty Ltd exercised their rights under the Exclusive Territory Development Agreement to invest up to $1,000,000 in a subsidiary of the Company, Indoor Skydiving Perth Pty Ltd. The investment has been agreed to be set off against amounts owed to iFly Australia Pty Ltd for the purchase of equipment. As shares in the subsidiary have not yet been issued a non-controlling interest in the Group has not been recognised in the Group balance sheet as at the reporting date and is included in trade payables above. This is a separate transaction to the $1,000,000 investment made on similar basis by iFly Australia Pty Ltd in relation to Indoor Skydiving Gold Coast Pty Ltd in 2015 financial year. The shares of which are yet to be issued. Included in the balance above is therefore $2,000,000 which is expected to be settled through the issue of equity in subsidiaries.

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2017 Interim Financial Report ________

NOTE 4: DEFERRED REVENUE Deferred revenue		As at 31 December 2017 $	As at
			30 June
			2017 $
		1,900,096 1,907,300
		1,900,096 1,907,300

Deferred revenue primarily represents prepaid sales in respect of flight time purchased in advance. The sales are released to revenue at the time the services are rendered except the gift card revenue which is released in relation to expected redemption rates.

to expected redemption rates.
NOTE 5: BORROWINGS Current Liabilities		As at 31 December 2017 $	As at
			30 June
			2017 $
Westpac debt facility		1,275,982	472,312
		1,275,982 472,312
Non - Current Liabilities
Westpac debt facility		8,296,447	10,267,198
		8,296,447 10,267,198

The Company has in place a secured debt facility of $10.9M with Westpac Banking Corporation with an undrawn amount of $1.4M at reporting date. Interest payable on each component is based on current market rates, over a maximum 5 year term. Security provided is:

Fully Interlocking Guarantee and Indemnity by:

Indoor Skydive Australia Group Limited Indoor Skydiving Penrith Holdings Pty Ltd Indoor Skydiving Penrith Pty Ltd Indoor Skydiving Gold Coast Pty Ltd Indoor Skydiving Adelaide Pty Ltd Indoor Skydiving Perth Pty Ltd ISAG Holdings D Pty Ltd ISAG Café Pty Ltd Supported by General Security Agreement over all existing and future assets and undertaking by: Indoor Skydive Australia Group Limited Indoor Skydiving Penrith Holdings Pty Ltd Indoor Skydiving Penrith Pty Ltd Indoor Skydiving Gold Coast Pty Ltd Indoor Skydiving Adelaide Pty Ltd Indoor Skydiving Perth Pty Ltd ISAG Holdings D Pty Ltd ISAG Café Pty Ltd Mortgage over lease by Indoor Skydiving Penrith Holdings Pty Ltd.

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2017 Interim Financial Report ________

NOTE 6: SEGMENT INFORMATION

For management purposes, the Group is organised into geographical areas based on the location of its operations and has two reportable segments as follows:

• Australian operations, which constructs, owns and operates vertical wind tunnel operations of indoor skydiving facilities in Australia

• South East Asia, which constructs, owns and operates vertical wind tunnel operations of indoor skydiving facilities in Kuala Lumpur, Malaysia.

Each of these operating segments is managed separately as each geographical area operates in a different customer market as well as different marketing approaches. These operating segments are monitored separately for the purpose of making decisions about resource allocation and performance assessment.

Segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the consolidated financial statements. However, the performance of LeisureWorld Escapades Sdn. Bhd., the Group’s joint venture is evaluated using proportionate consolidation.

Transfer prices between operating segments are on an arm’s length basis in a manner similar to transactions with third party. No operating segments have been aggregated to form the above reportable operating segments.

The products and services includes indoor skydiving facilities allowing human flight within a safe environment used by tourists, enthusiasts and military.

The following tables present revenue and profit/loss information for the Group’s operating segments for the six months ended 31 December 2017 and 2016, respectively.

Half Year ended 31 December 2017 Revenue External customer Inter-segment Total revenue Results Segment profit / (loss) Half Year ended 31 December 2016 Revenue External customer Inter-segment Total revenue Results Segment loss	Australia South East Asia Adjustments & Eliminations Consolidated $ $ $ $ 7,055,961 12,095 - 7,068,056 1,893 - (1,893) -
	7,057,854 12,095 (1,893) 7,068,056
	125,921 (209,372) (289,060) (372,511)
	5,130,316 - - 5,130,316 - - - -
	5,130,316 - - 5,130,316
	(945,405) - (189,752) (1,135,157)

The following table presents assets and liabilities information for the Group’s operating segments as at 31 December 2017 and 30 June 2017, respectively.

Assets 31 December 2017 30 June 2017 Liabilities 31 December 2017 30 June 2017	Australia South East Asia Adjustments & Eliminations Consolidated $ $ $ $ 48,461,081 420,804 (1,893) 48,879,992
	49,856,707 - - 49,856,707
	16,364,017 246,803 - 16,610,820
	17,396,721 - - 17,396,721

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2017 Interim Financial Report ________

Reconciliation of loss Segment loss Finance income Finance costs Loss before tax			For half year ended 31 December 2017 2016 $ $ (83,451) (945,405)
			615 4,788 (289,676) (194,540)
			(372,511) (1,135,157)
NOTE 7: ISSUED CAPITAL		As at 31 December 2017 $	As at
			30 June
			2017 $
136,696,514 (30 June 2017: 135,884,625) fully paid ordinaryshares		42,803,385	42,459,363
Share issue costs		(1,992,446)	(1,992,446)
		40,810,939 40,466,917
		No. No. 135,884,625 120,193,004
At the beginningof the reporting period
• Shares issued duringtheperiod • Performance rights exercised
• Performance rights exercised

NOTE 8: DIVIDENDS

No dividends have been paid or declared during the period.

a.Operating Lease Commitments Non-cancellable operating leases contracted for but not Payable – minimum leasepayments: - Not later than 12 months - Between 12 months and fiveyears - Later than five years NOTE 9: CAPITAL AND LEASING COMMITMENTS	As at 31 December 2017	As at
		30 June
		2017
	$	$
	recognised in the financial statements 859,684 857,821 3,121,723 3,170,156
- Not later than 12 months
- Between 12 months and fiveyears
- Later than five years	24,441,605	24,856,067
	28,423,012 28,884,044

b. Capital Commitments

The Group does not have any capital commitments at half year reporting date.

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NOTE 10: EVENTS AFTER THE END OF THE INTERIM PERIOD

On 22 January 2018, the “AirRider” brand was officially launched at the opening of the Vertical Wind Tunnel at 1 Utama, Kuala Lumpur, Malaysia.

On 23 February 2018, the Group received a confirmed offer letter from its financier for an additional finance facility of $1.2M with a term of 5 years.

NOTE 11: INTEREST IN SUBSIDIARIES

Set out below are the Group’s subsidiaries at 31 December 2017. The subsidiaries listed below have share capital consisting solely of ordinary shares, which are held directly by the Group and the proportion of ownership interests held equals the voting rights held by the Group. Each subsidiary’s country of incorporation or registration is also its principal country of business.

		As at As at	As at As at	As at As at	As at As at
		31 December 30 June
	2017 2017 Country of incorporation
	Subsidiaries
				%	%
	Indoor SkydivingPenrith Holdings PtyLtd			Australia 100	100
	Indoor SkydivingPenrith PtyLtd			Australia 100	100
	Indoor SkydivingGold Coast PtyLtd *			Australia 100	100
	Indoor SkydivingAdelaide PtyLtd			Australia 100	100
	Indoor SkydivingPerth PtyLtd *			Australia 100	100
	ISAG Holdings D PtyLtd			Australia 100	100
	ISAG Café PtyLtd			Australia 100	100
	ISA Asia Operations PtyLtd			Australia 100	100
	ISA Asia Holdings PtyLtd			Australia 100	100
	LeisureWorld Escapades Sdn. Bhd.			Malaysia 60%	-
	*Percentage of voting power is proportional to ownership

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NOTE 12: EARNINGS PER SHARE

NOTE 12: EARNINGS PER SHARE
Earnings per share (cents per share) From continuing operations: - basic earnings per share - diluted earnings per share a. Reconciliation of earnings to profit or loss: Earnings used to calculate basic EPS Earnings used in the calculation of dilutive EPS b. Weighted average number of ordinary shares outstanding during the year used in calculating basic EPS Average number of dilutive performance rights outstanding Weighted average number of ordinary shares outstanding during the year used in calculating dilutive EPS	As at As at 31 December 30 June 2017 2017 Cents Cents (0.21) (0.68) (0.21) (0.68)
	(287,548) (891,290) (287,548) (891,290)
	No. 136,585,600 4,150,000 140,735,600	No. 131,633,571 - 136,633,571

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2017 Interim Financial Report ________

	NOTE 13: PROPERTY, PLANT AND EQUIPMENT VWT building infrastructure At cost Accumulated depreciation VWT equipment At cost Accumulated depreciation IT equipment At cost Accumulated depreciation Furniture and fittings At cost Accumulated depreciation Office Equipment At cost Accumulated depreciation Capital Work in Progress At cost Total At cost Accumulated depreciation	NOTE 13: PROPERTY, PLANT AND EQUIPMENT VWT building infrastructure At cost Accumulated depreciation VWT equipment At cost Accumulated depreciation IT equipment At cost Accumulated depreciation Furniture and fittings At cost Accumulated depreciation Office Equipment At cost Accumulated depreciation Capital Work in Progress At cost Total At cost Accumulated depreciation	NOTE 13: PROPERTY, PLANT AND EQUIPMENT VWT building infrastructure At cost Accumulated depreciation VWT equipment At cost Accumulated depreciation IT equipment At cost Accumulated depreciation Furniture and fittings At cost Accumulated depreciation Office Equipment At cost Accumulated depreciation Capital Work in Progress At cost Total At cost Accumulated depreciation	As at 31 December 2017 $	As at
					30 June
					2017 $
Movements in Carrying Value Consolidated Group: Balance at 1 July 2016 Additions Disposals / transfers Depreciation expense Balance at 30 June 2017 Additions Depreciation expense Balance at 31 December 2017		VWT Equipment IT Equipment Furniture & Fittings Office Equipment Capital WIP Total VWT Equipment Building Infrastructure
		21,863,540 6,936,986 397,127 342,515 274 8,529,771 38,070,213 8,262,704 193,085 173,611 294,490 20,967 444,599 9,389,456 1,444,775 5,169,613 1,625 (100,641) - (8,529,771) (2,014,399) (586,782) (594,428) (128,555) (165,806) (4,007) - (1,479,578) 30,984,237 11,705,256 443,808 370,558 17,234 444,599 43,965,692 28,529 - 16,093 32,762 6,194 216,578 300,156 (682,293) (292,076) (11,604) (26,557) (3,019) - (1,015,550) 30,330,473 11,413,180 448,297 376,762 20,409 661,177 43,250,298

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NOTE 14: INTANGIBLE ASSET

NOTE 14: INTANGIBLE ASSET
Movements in Carrying Value Consolidated Group: Balance at 1 July 2016 Additions	Trademark Total Exclusive Territory Development Agreement Development Costs
	- - 426,378 425,251 92,226 -	426,378 517,477
Amortisation expenses Balance at 30 June 2017 Additions Amortisation expenses	- - (170,551) (170,551) 425,251 92,226 255,827 773,304 495,148 28,511 - 523,659 - - (51,166) (51,166)
Balance at 31 December 2017	920,399 120,737 204,661 1,245,797

NOTE 15: SIGNIFICANT EVENTS DURING THE PERIOD

The half year results were impacted by $404,811 of legal fees incurred as a result of a dispute with Sky Venture as per the ASX announcement dated 21 September 2017. The Group received a formal notice from SkyVenture International Limited (SkyVenture), that it considers that ISA Group is required to use SkyVenture vertical wind tunnel equipment in any indoor facility associated with ISA Group regardless of the location of the facility. The Group denies any such obligation and is vigorously defending its position. An arbitrator of the dispute has been appointed and a hearing scheduled for May 2018. The company anticipates that further legal fees will be incurred in the second half of the year which will further impact the result.

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2017 Interim Financial Report ________

NOTE 16: INTEREST IN A JOINT VENTURE

The Group has a 40% interest in LeisureWorld Assets Sdn. Bhd., a joint venture involved in owning an indoor skydive facility in Kuala Lumpur, Malaysia. The Group’s interest in LeisureWorld Assets Sdn. Bhd. is accounted for using the equity method and the following table illustrates the summarised financial information of the Group’s investment.

	31 December 2017
	$
Current assets	302,142
Non-current assets	3,353,983
Current liabilities	(3,007,425)
Non-current liabilities	-
Equity	648,700
Group’s carrying amount of the investment	259,480
	31 December 2017
	$
Revenue	1,640
Cost of sales	(9,660)
Administration expenses	(22,706)
Finance costs	(23,146)
Loss before tax	(53,872)
Income tax benefit	13,468
Loss for the half year	(40,404)
Group’s share of the loss for the half year	(16,161)

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2017 Interim Financial Report ________

DIRECTORS’ DECLARATION

In accordance with a resolution of the directors of Indoor Skydive Australia Group Limited, the directors of the Company declare that:

1. The financial statements and notes, as set out on pages 5 to 18 are in accordance with the Corporations Act 2001 , including:

2. A. complying with Accounting Standard AASB 134: Interim Financial Reporting; and

3. B. giving a true and fair view of the consolidated entity’s financial position as at 31 December 2017 and of its performance for the half-year ended on that date.

4. 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.

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Kenneth James Gillespie, AC Chairman Dated: 26 February 2018

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Wayne Peter Jones Director & Chief Executive Officer

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2017 Interim Financial Report

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INDEPENDENT AUDITOR’S REVIEW REPORT

TO THE MEMBERS OF INDOOR SKYDIVE AUSTRALIA GROUP

LIMITED

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www.indoorskydiveaustralia.com.au

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Indoor Skydive Australia Group Limited – ABN: 39 154 103 607

2017 Interim Financial Report ________

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