Annual Report 2015
D T I
G R O U P L T D
A B N 1 5 0 6 9 7 9 1 0 9 1
Table of Contents
Corporate Directory .................................................................................................................. …1
Directors’ Report........................................................................................................................... 2
Consolidated Statement of Profit or Loss and Other Comprehensive Income................................ 18
Consolidated Statement of Financial Position .............................................................................. 19
Consolidated Statement of Changes in Equity ............................................................................. 20
Consolidated Statement of Cash Flows ....................................................................................... 21
Notes to the Consolidated Financial Statements .......................................................................... 22
Directors’ Declaration ................................................................................................................. 52
Auditor's Report .......................................................................................................................... 53
Auditor’s Independence Declaration ............................................................................................ 55
Shareholder Information ............................................................................................................. 56
Corporate Directory
Non-Executive Chairman
Managing Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Directors
Chris Morris
Richard Johnson
Neil Goodey
Glyn Denison
Jeremy King
Company Secretary
Bruce Mitchell
Registered and Principal Office
31 Affleck Road
Perth Airport WA 6105
Telephone: 08 9479 1195
Facsimile: 08 9479 1190
Website:
www.dti.com.au
Share Register
Computershare Investor Services Pty Limited
Yarra Falls
452 Johnston Street
Abbotsford Vic 3067
Stock Exchange Listing
DTI Group Ltd shares are listed on the Australian Securities
Exchange (ASX code: DTI)
Corporate Advisor
Pendulum Capital Pty Limited
Level 1, 5 Ord Street
West Perth WA 6005
Telephone: 08 9282 5400
Solicitors
Hewett & Lovitt
Level 1, 849 Wellington Street
West Perth WA 6005
Auditors
BDO Audit (WA) Pty Ltd
38 Station Street
Subiaco WA 6008
Telephone: 08 6382 4600
Bankers
Westpac Banking Corporation
109 St Georges Terrace
Perth WA 6000
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Directors’ report
The Directors present their report for the consolidated entity, consisting of DTI Group Ltd (“DTI” or “the Company”) and the entities it
controlled at the end of, or during, the year ended 30 June 2015 (“Group”) and the auditor’s report thereon.
Directors
The names and details of the Company’s Directors in office during the financial year and until the date of this report are set out
below. Directors were in office for this entire period unless otherwise stated.
Chris Morris
Non-Executive Chairman
Term of Office
Chris was appointed Non-executive Chairman of DTI on 29 June 2011.
Skills and Experience
Chris has worked across the global securities industry for more than 30 years. He co-founded Computershare in 1978 and oversaw
its listing on ASX in 1994. Chris’s long-term strategic vision and passion for the industry have been instrumental in transforming
Computershare from an Australian business into a successful global public company.
Other Directorships and Offices (current)
Non-Executive Chairman of Computershare Limited
Non-Executive Chairman of Smart Parking Limited
Other Directorships and Offices (former)
Nil
Board and Committee Memberships
Chairman of the Nominations and Remuneration Committee
Richard Johnson
Managing Director
Term of Office
Richard joined DTI as General Manager in 2005 and commenced the role as Chief Executive Officer in 2006. On 9 August 2011 he
joined the Board as Managing Director.
Skills and Experience
Richard’s qualifications include a Bachelor of Science in Electrical Engineering from the University of Calgary, and a Master of
Engineering Studies and a Master of Business Administration from the University of Western Australia. He has more than 20 years
experience in the transit technology sector. Richard held senior management positions at ERG Limited which developed, supplied
and managed integrated fare collection systems for the transit industry around the world.
Other Directorships and Offices (current and former)
Nil
Board and Committee Memberships
Member of the Nominations and Remuneration Committee
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Neil Goodey
Non-Executive Director
Term of Office
Neil co-founded DTI on 8 June 1995 and held the position of Managing Director until 2008.
Skills and Experience
Over the last 25 years Neil has founded and managed a number of successful technology-driven companies, including DTI. He
created the software-focused vision for DTI and worked directly with the Company’s engineering team to develop DTI’s products and
underlying intellectual property.
Other Directorships and Offices (current and former)
Nil
Board and Committee Memberships
Member of the Nominations and Remuneration Committee
Member of the Audit, Risk and Compliance Committee
Glyn Denison
Non-Executive Director
Term of Office
Glyn was appointed a Director on 19 January 2004. He was formerly an Executive Director of DTI responsible for business
development before relinquishing his executive responsibilities in December 2006.
Skills and Experience
Glyn’s qualifications include a Bachelor of Engineering and a Diploma in Business and Administration. He has over 30 years
experience in the development of international distribution of technical products for the public transport industry, including senior
roles at ERG Limited. Glyn has extensive knowledge of the public transit sector, including the existing customer base of DTI and its
business partners.
Other Directorships and Offices (current)
Non-Executive Director of OBJ Ltd
Chairman of Wesbuilders Cooperative Limited
Other Directorships and Offices (former)
Nil
Board and Committee Memberships
Member of the Nominations and Remuneration Committee
Member of the Audit, Risk and Compliance Committee
Jeremy King
Non-Executive Director
Term of Office
Jeremy was appointed a Director on 29 June 2011.
Skills and Experience
Jeremy is a corporate lawyer by background and holds a Bachelor of Laws. He has over 15 years experience in domestic and
international legal, financial and corporate matters. Jeremy has extensive corporate experience, particularly in relation to cross-
border private equity and leveraged buy-out acquisitions, as well as acting for banks, financial institutions and corporate issuers in
respect of various debt and equity capital raisings.
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Directors’ report (contd)
Other Directorships and Offices (current)
Director and Company Secretary of Smart Parking Limited
Non-Executive Director of Orca Energy Limited
Chairman of Continuation Investments Limited
Other Directorships and Offices (former)
Non-Executive Director of CEB Resources PLC
Board and Committee Memberships
Chairman of the Audit, Risk and Compliance Committee
Member of the Nominations and Remuneration Committee
Company Secretary
Bruce Mitchell
Date of appointment – 27 May 2012
Bruce has been a qualified Chartered Accountant for over 20 years and has over 20 years experience in senior financial roles. He
joined DTI in 2012 as Chief Financial Officer and is responsible for the management and administration of all aspects relating to both
internal and external financial accounting and reporting. Prior to joining DTI, Bruce gained experience working as a financial director
for several South African-based companies. He has worked across varied industries including information technology and
manufacturing.
Bruce has a Bachelor of Accounting Science (Honours) from the University of South Africa, and a Bachelor of Commerce from the
University of Natal.
Principal activities
DTI is a leading provider of integrated surveillance systems and fleet management solutions for the global mobile security market.
DTI’s customers are transit agencies, law enforcement authorities and high-value freight operators. The Company offers the
following products and services:
(cid:120)
(cid:120)
Surveillance solutions – specialised hardware systems, incorporating video, audio, GPS tracking, communications and high-
speed recording technology; supported by sophisticated device and data management software to provide a comprehensive,
fleetwide, CCTV and vehicle management solutions.
Managed services – back-end control room communications and infrastructure comprising wide-area urban surveillance, driver
development and risk mitigation, video management, vehicle data analysis and monitoring, schedule adherence analysis, IT
infrastructure, help desk, technical support and monitoring, and first line maintenance.
DTI markets and distributes its product range to customers around the world, both directly and in conjunction with a network of
integrators and business partners.
DTI is a company limited by shares that is incorporated and domiciled in Australia. The Company is publicly listed on the Australian
Securities Exchange under the code “DTI”.
Review of operations
DTI progressed to the next step in the Company’s evolution with the successful listing on the ASX in early December 2014. As DTI
provides its solutions to a range of private enterprise and government sectors both domestically and internationally, listing on the
ASX will assist the Company to expand its profile to additional customers and regions in the future. The initial public offering of
6.68 million new shares was conducted to provide the Company with additional working capital and funding to support the future
growth of the Company; to enhance DTI’s flexibility to pursue growth opportunities, including possible acquisitions; to provide DTI
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with the benefits of an increased profile from being a listed entity; and to provide investors an opportunity to become a shareholder of
DTI.
As provided in DTI’s updated Forecast Guidance issued to the ASX on 20 April 2015, the forecasted revenue and other income for
the 12 month period ending 30 June 2015 was projected to be approximately $15.0 million resulting in a forecast NPAT performance
of between $0 and $0.300 million. The actual revenue and other income for the 12 month period ending 30 June 2015 was
$16.04 million resulting in an NPAT profit of $0.113 million and an EBITDA profit of $1.529 million.
The majority of opportunities which formed part of the Company’s original financial forecast for the 2015 financial year were deferred
resulting in the updated Forecast Guidance issued to the ASX on 20 April 2015. Of the known opportunities which formed the
Company’s original financial forecast for 2015, only one has been lost, with four having been won. A further two contracts were won
in the period which did not form part of the original forecast. The decisions of the remaining prospects have been delayed.
The outlook for DTI in the mobile security market remains positive and this is reinforced by the record number of prospects currently
being pursued which total over 100 with a corresponding value well over $200 million. The challenge is converting the opportunities
into projects or purchase orders in a timely manner.
Australasia
DTI maintained its strong market position in the Australian transit sector in the second half with sales of $4.23 million being above
first half sales by $0.59 million. For the corresponding 12 month period, sales in Australasia slightly reduced from $9.46 million in
2014 to $7.88 million in 2015. The reduction was primarily due to reduced sales relating to the completion of the Rio Tinto supply
project. Sales of bus equipment remained strong and increased in the corresponding period and sales of maintenance services
increased by 13% from $2.05 million to $2.31 million. Reduced sales in the Americas have led to Australasia picking up a higher
portion of the Employee Expenses and Overheads.
Sales in Australia included a wide range of customers in Perth, Adelaide, Canberra, Tasmania, Melbourne, Sydney and Brisbane. In
the first half, DTI signed a multi-year maintenance contract with the Dyson Group, one of Victoria’s largest bus companies, and has
recently signed a contract for video surveillance systems by Yarra Trams to be installed on its C2 Citadis trams in Melbourne. The
Yarra Trams network includes 487 trams and with 250 kilometres of double track, Melbourne's tram network is the largest in the
world. In the second half, DTI signed a multi-year contract with the Brisbane City Council, and has received initial orders for
armoured cash transit vehicles to a prominent Australian security provider.
Europe, Middle East, Africa (EMEA)
DTI experienced strong growth in the EMEA market with sales growing from $1.52 million in the 2014 financial year to $2.93 million
in the 2015 financial year. The increase in sales is primarily from new customers in South Africa, France, and Poland. Increased
spend on marketing, the establishing of an office in South Africa and the high costs incurred in entering into the Poland market have
led to an increase in Employee Expenses and Overheads in 2015.
In the UK, an order for the supply, monitoring and long-term support of advanced on-board video surveillance systems was
announced in January 2015 as part of the class 321 rail vehicle refurbishment project for Eversholt Rail Group Ltd. This latest
deployment raises the number of Class 321 and Class 315 rail cars installed with DTI’s surveillance technology to over 700 – the
majority of which operate daily as part of the London commuter rail network. Also in the UK, DTI announced in July 2014 the order
and initial deliveries of video surveillance systems for 100 new double and single deck vehicles from Alexander Dennis Limited which
is the largest bus and coach manufacturer in the UK.
DTI opened a French office located in the city of Besançon in July 2014 in order to expand into the French market. Concurrent with
the establishment of an office, DTI received its first order in France from Cibest (its French partner) for the supply of advanced video
equipment for 100 buses in the region of Grand Besançon and building on this initial success in France, an order with Cibest was
issued for 36 advanced video surveillance systems for the Marseille Metro in August 2014. A subsequent order was received for
66 systems for Syndicat Mixte des Transports (SMT) Artois-Gohelle, the operator of buses in the Artois-Gohelle region of northern
France.
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Directors’ report (contd)
In July 2014, DTI received an order to provide 30 video surveillance systems for Tshwane Buses covering Pretoria in South Africa
and the South African presence was further expanded with an order for 106 video surveillance systems for Cape Town in June 2015.
DTI opened an office in South Africa in February 2015 to pursue a further range of active prospects in South Africa. This investment
in South Africa forms an important part of DTI’s growth strategy of extending the reach of the Company’s offering to transit operators
primarily in bus and rail in the region.
DTI announced in July 2014 an initial order of video surveillance systems by the Polish railway vehicle manufacturer PESA for
delivery to ZKM Gda(cid:276)sk, the operator of the trams in Gda(cid:276)sk Poland. Following this order, DTI announced the receipt of two further
orders in Poland. The first project includes an order for 30 video surveillance systems by DTI’s Polish partners, DTI Polska Sp. z o.o.
and R&G Plus Sp. z o.o, for delivery to MPK – (cid:224)od(cid:296) Sp. z o.o., the operator of the trams in (cid:224)od(cid:296) Poland. The second project includes
an order for 16 video surveillance systems by the Polish railway vehicle manufacturer and refurbishment company, Modertrans
Pozna(cid:276) Sp. z o.o. for delivery to ZKM Gda(cid:276)sk Sp. z o.o., the operator of the trams in Gda(cid:276)sk, Poland.
Americas
DTI experienced weak sales in the Americas market in the 2015 financial year as a result of timing issues with deliveries due to
matters unrelated to DTI as explained below and sales fell from $8.82 million in 2014 to $3.89 million in 2015. This reduction was
primarily due to reduced sales relating to Kratos and UTC. With Kratos, the main retrofit project for the San Francisco MTA was
successfully completed in the first half of the 2013 financial year. However, ongoing sales associated with new vehicle procurements
for the MTA have only recently commenced as announced at the end of March 2015.
As mentioned in the 2014 Annual Report, a key US city, which initially equipped 426 buses with digital surveillance systems in 2011
and a further 1,100 units equipped throughout the 2012–13 financial year, is proceeding with a further expansion in the 2015 and
2016 financial years with an order for over 900 systems, but the manufacture of the buses was delayed due to matters unrelated to
DTI. These orders are now being received and will be delivered in the 2016 financial year. Options of more than 200 out of 600 in the
contract are understood to be in the process of being exercised.
In July 2014, DTI announced that its advanced surveillance solution was specified in a bus procurement tender issued by the San
Francisco MTA. The bus procurement tender includes the manufacture of up to 454 buses over a five-year period with orders now
expected to commence towards the end of this financial year. The tender states that the contractor shall provide and install a digital
video recording and surveillance system by DTI or an approved equal. This is a strong statement as it highlights the customer’s
preference for DTI products going forward for the next five years. The Company is also hopeful that the DTI solution is
recommended for further vehicle procurements with the MTA such as the 64 vehicle light rail project which has options of up to
260 cars.
In January 2015, DTI created a wholly owned subsidiary in the US. The subsidiary will be an effective structure for DTI to become
closer to specific customers in the very large North American market. This subsidiary forms an important part of DTI’s growth
strategy of extending the reach of DTI’s offering to transit operators primarily in bus and rail in North America. As part of the strategy,
DTI commenced direct sales in the US market in June 2015.
In addition, the receipt of US denominated funds from the US market provides DTI with a slight positive sensitivity to a declining
Australian dollar based on current forecast revenue. The US revenue is an important hedge against a declining Australian dollar as
many electronic components are sourced in US denominated funds.
Technology Development Activities
DTI continues to build on its offering to realise its vision to become a global leader in surveillance systems and fleet management
solutions for the global mass transit industry and other related markets. One key element of this strategy includes continuing to
invest in the Company’s R&D program to develop new or improved products and solutions. Custom modifications to DTI’s product
range are carried out by the Company’s in-house development team. DTI’s ability to modify both hardware and software, coupled
with a close relationship to the end customer, allows for specific customer requirements to be quickly and effectively delivered.
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DTI's comprehensive back-end CCTV management solution which centralises and coordinates the vehicle CCTV and other data
continues to be improved and enhanced. The latest generation is called DTI Central. DTI Central caters for improved enterprise
views, more redundancy, improved logging, improved job queuing, increased scalability, easier configuration of many aspects of the
system and updated user interfaces. DTI Central will cater for increased integration with other solutions as they arise in the Smart
City environment.
As part of DTI’s comprehensive rail product suite, development continued on a pantograph and overhead wire infrastructure
inspection solution which uses machine vision and video analytics. These systems will be incorporated in the DTI central
maintenance suite to provide rail maintenance staff with easy to reference pantograph infrastructure condition with alerts to potential
threats and loss of service on the rail line. DTI has applied for four patents for this technology and currently has trials in Australia,
France, Turkey, Poland and one planned for the UK.
DTI has also progressed trials in Poland and Australia on automated passenger counting using video analytics. The video based
passenger counting module is a cost-effective way to count and monitor passenger numbers on rail or bus fleets. Using discreet
overhead cameras above doorways, this technology uses a virtual trip-wire zone for detection of human forms. Every time
passengers cross a line or enter a designated area in either direction, the software registers a count (in/out) and updates the
database. This information is processed and stored on-board a database partition within the DTI recorder.
The Virtual Observer technology incorporates spatial-temporal data structures to allow footage from forward view cameras across a
number of vehicles to be stitched together across time from a virtual location chosen by the surveillance operator. DTI is currently
promoting this technology in the US market.
The development of the MDR6 product was commenced in the 2014 financial year. The MDR6 is based on the cost-effective MDR5L
which includes the integration of technologies into the product such as dual frequency wireless networking, 3G/4G communications,
lower power components, a smaller footprint, 16 full-frame rate camera channels. The MDR6 also includes eight transit rated Power
Over Ethernet ports catering specifically for the next generation of high resolution megapixel IP cameras.
Quality Assurance Activities
DTI qualified for ISO9001:2008 Quality Assurance accreditation with an audit in July 2015 by internationally recognised accreditation
firm Bureau Veritas. As the world’s most widely recognised quality management standard, ISO9001 outlines ways to achieve, as well
as benchmark, consistent performance and service. The ISO9001 accreditation provides further assurance to customers and will
cater to broadening business opportunities globally.
Cash Position
The Company’s cash balance improved to $3.8 million from $1.4 million at the end of June 2014. This was predominantly due to the
net cash proceeds from the Company’s initial public offer plus the exercise of options.
Balance Sheet
The Company’s balance sheet has further strengthened in 2015. There is virtually no debt and liquidity is robust with the ratio of
current assets to current liabilities being 4.1 (2014: 3.5). The accumulated losses situation of prior years has been reversed to a
retained profits position, with the transfer of the share option reserve on exercise/expiry of all the share options.
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Directors’ report (contd)
Results and dividends
The result of the consolidated Group for the financial year ended 30 June 2015 was a $113,517 profit (2014: $1,115,975 profit) after
a $11,803 share of Virtual Observer’s loss for the year (2014: $10,809 loss), a $169,964 share of DTI EMEA’s loss for the year
(2014: $111,025 loss), a $4,574 share of DTI USA Inc’s profit for the year (2014: n/a) and a net foreign exchange gain of $295,351
(2014: $137,651 gain).
Total revenue was $14.7 million, which is significantly down on the prior year’s $19.8 million. This was mainly due to weak sales in
the Americas market arising out of timing issues with deliveries that were unrelated to DTI. The high costs incurred in entering into
the Poland market and the establishing of an office in South Africa have led to an increase in marketing expenses. Employee
benefits, administrative and other expenses were contained and reduced to less than in the previous year. Costs of materials were
lower, primarily resulting from increased cost reduction efforts. The tax expense is 84% of profit before tax due to the combined
effect of tax on the $0.991 million R&D grant and previous carried forward tax losses now being fully utilised.
The EBITDA result of the consolidated Group for the financial year ended 30 June 2015 was a $1,529,197 profit (2014: $3,076,060
profit).
No dividends have been paid or declared since the end of the previous financial year (2014: nil) and the Directors do not recommend
any dividend be paid.
The outlook remains strong and DTI has entered the 2015 financial year with a very robust list of prospects bolstered by ongoing
contracts and orders.
Significant changes in the state of affairs
There have been no significant changes in the state of affairs of DTI.
Events since the end of the financial year
No matters or circumstance have arisen that have significantly affected, or may significantly affect, the operations of DTI, the results
of those operations or the state of affairs of DTI in subsequent years that is not otherwise disclosed in this report.
Likely developments and expected results of operations
DTI remains confident in its outlook as it seeks to drive growth via its strong pipeline of opportunities. The Company’s ongoing
investment in research and development aims to strive for continued innovation and market leadership of the products and services
that DTI offers to the global mass transit industry and other related markets. Based on its assessment of existing and anticipated
new orders and projects, DTI is aiming to achieve at least a 50% increase in FY16 EBITDA compared to FY15 EBITDA.
Environmental regulation
The Company is not subject to any environmental regulation. The Directors have considered compliance with the National
Greenhouse and Energy Reporting Act 2007 which requires entities to report greenhouse gas emissions and energy use. The
Directors have assessed that there are no current reporting requirements, but the Company may be required to do so in the future.
Options
At the date of this report, there are no unissued ordinary shares of the Company under option as the previously outstanding options
were all exercised prior to, or expired on, 30 June 2015. There were no other options issued to Directors or key management
personnel during the year.
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Further information in respect of options is set out in Note 18 to the financial statements.
Shares Issued on the Exercise of Options
The following ordinary shares of the Company were issued during the year ended 30 June 2015 on the exercise of options. No
further shares have been issued since that date. No amounts are unpaid on any of the shares.
Date Options Granted
Issue Price
of Shares
Number of
Shares Issued
30 June 2011
$0.322
8,496,107
Directors’ meetings
The number of Directors’ meetings and number of meetings attended by each of the Directors of the Company during the financial
year are as follows:
Board Meetings
Audit Committee Meetings
Remuneration Committee Meetings
Director
Attended
Eligible
Attended
Eligible
Attended
Eligible
Neil Goodey
Glyn Denison
Chris Morris
Richard Johnson
Jeremy King
7
7
5
7
6
7
7
7
7
7
2
1
–
–
2
2
2
–
–
2
–
–
–
–
–
–
–
–
–
–
Information on Directors’ interests in securities of DTI
Interest in Securities at the Date of this Report
Shares 1
6,575,198
2,887,638
18,048,144
469,908
350,000
Options
–
–
–
–
–
Current Directors
Neil Goodey
Glyn Denison
Chris Morris
Richard Johnson
Jeremy King
Note:
1 Shares means fully paid ordinary shares in the capital of the Company.
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Directors’ report (contd)
Remuneration Report
This Remuneration Report, which forms part of the Directors' Report, sets out information about the remuneration of Key
Management Personnel (KMP) of the Group.
Details of KMP
Details of the KMP of the Group, during or since the end of the financial year are set out below:
Directors
Chris Morris
Richard Johnson
Neil Goodey
Glyn Denison
Jeremy King
Non-Executive Chairman
Managing Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Other KMP
Jean-Michel Florent
Bruce Mitchell
Chief Operating Officer
Chief Financial Officer
Unless otherwise disclosed, the KMP held their position from 1 July 2015 until the date of this report.
Remuneration Policy and Link to Performance
The Board has established the current remuneration structure and policies of the Company to ensure that they are aligned to the
needs of the business, and meet the Company’s remuneration principles. The Nominations and Remuneration Committee will
annually review the remuneration policies and remuneration of the KMP. This review will include the determination of incentive
packages of executive KMP. From time to time, the committee may also engage external remuneration consultants to assist with this
review.
The Company’s remuneration policy for the Chief Executive Officer (CEO) is detailed in a Management Compensation Plan
(MCP). The CEO is the only member of the KMP currently participating in the MCP.
DTI wishes to structure the total remuneration of the CEO in a way that not only incentivises the CEO to deliver on short-term
financial performance but also encourages him to build long-term shareholder value.
The MCP is based on the concept of a total package guide which is an indication of what the CEO’s total remuneration would be if
budgeted financial performance is achieved and the CEO performed satisfactorily. If the business and/or the CEO perform below
standard then the total remuneration will be less. If financial performance exceeds budget and there is above average
performance by the CEO then the package can increase by up to 18.75% of the targeted total remuneration.
The composition of the total package guide is:
(cid:120)
(cid:120)
(cid:120)
base salary – 75% of package guide;
bonus payment – 12.5% of package guide or up to 25% of the base salary for exceptional performance; and
long-term incentive (LT Incentive) – 12.5% of package guide payable in equity securities. This can be up to 33.3% of the base
salary for exceptional performance.
The bonus payments and LT Incentive are determined following the finalisation of the audited annual financial results. If
employment has ceased for any reason on or before the date when the bonus is paid or is due for payment, eligibility to receive the
bonus payment and LT Incentive lapses.
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The CEO can elect to receive the bonus payment in equity securities, subject to shareholder approval.
The non-financial ratings for both the bonus payment and LT Incentive are a guide only and individual scores will not be disclosed
to the CEO unless a score of less than two out of four on any criteria is assessed.
The Board of DTI reserves the right not to pay any bonus or LT Incentive if earnings are significantly below budget.
Assessing Performance and Claw-back of Remuneration
The Nominations and Remuneration Committee is responsible for assessing performance against KPIs and recommending to the
Board the bonus payment and LT Incentive to be paid. Prior to the establishment of the Nominations and Remuneration Committee
in December 2014, these responsibilities were undertaken by the Board.
In the event of serious misconduct or a material misstatement in the Company’s financial statements, the Board can cancel or defer
performance-based remuneration and may also claw back performance-based remuneration paid in previous financial years.
Elements of Executive Remuneration
Fixed Remuneration
Executive KMP and other executive management may receive their fixed remuneration as cash, or cash with non-monetary benefits
such as health insurance, and car allowances. Fixed remuneration is reviewed annually, or on promotion. Superannuation is
calculated on fixed remuneration at the rate of 9.5%.
Bonuses
Executive KMP and other executive management may receive a cash bonus as determined by the CEO and approved by the Board
following a performance review by the CEO.
Relative Proportions of Fixed and Variable Remuneration Expense
The following table shows the relative proportions of remuneration that are linked to performance and those that are fixed based on
the amounts disclosed as statutory remuneration expense.
Fixed Remuneration
At Risk – Short-term Incentive
At Risk – Long-term Incentive
2015
%
63
100
100
2014
%
63
100
100
2015
%
16
–
–
2014
%
16
–
–
2015
%
21
–
–
2014
%
21
–
–
Executive KMP
Richard Johnson
Jean-Michel Florent
Bruce Mitchell
Notes:
(cid:120)
(cid:120)
Richard Johnson’s (CEO) remuneration is calculated as the total package guide including over performance bonuses. The CEO receives a base salary of
$240,000 plus superannuation at the rate of 9.5%, with eligibility for short-term bonuses of up to $60,000 and LT Incentives in the form of shares up to $80,000
under the MCP. Details of the MCP are provided in a separate section of this Remuneration Report.
Jean-Michel Florent (COO) and Bruce Mitchell (CFO) are paid fixed salaries and may receive a cash bonus based on a performance assessment carried out by
the CEO and approved by the Board. Details of the cash bonus paid are set out in a separate section of this Remuneration Report.
D T I G R O U P L T D – A N N U A L R E P O R T 2 0 1 5
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Directors’ report (contd)
Employment Contracts with KMP
Component
Fixed remuneration
Contract duration
Notice period – individual
Notice period – company
Termination payments
Managing Director
$240,000
Ongoing contract
4 weeks
Other Executive KMP
$170,000–$211,571
Ongoing contract
8 weeks
Between 1 and 5 weeks depending on
service and age of employee
None specified
Between 1 and 5 weeks depending on
service and age of employee
None specified
In the event of serious misconduct, termination may be without notice and without payment in lieu.
Note:
The Managing Director is eligible for compensation under the MCP as provided in a separate section of this remuneration report.
Non-Executive Director Remuneration
Non-Executive Directors receive a Board fee and fees for chairing or participating on Board committees, as set out below. They do
not receive performance-based pay or retirement allowances. The fees are inclusive of superannuation. The Chairman does not
receive additional fees for participating in or chairing committees.
Fees are to be reviewed annually by the Nominations and Remuneration Committee. The current base fee structure was reviewed
by the Board effective from 9 December 2014 reflecting the increased Non-Executive Directors’ responsibilities for a public listed
company.
The maximum annual aggregate Directors’ fee pool limit is $250,000 and was approved by shareholders at a general meeting of
shareholders on 9 June 2014.
The Chairman of the Board receives a fixed fee of $50,000 per annum. Other Non-Executive Directors each receive an annual Board
fee of $30,000 plus an additional $5,000 per annum Audit, Risk and Compliance Committee fee. A further fee of $5,000 per annum is
paid to the chairman of the Audit, Risk and Compliance Committee. No additional fees apply with respect to the Nominations and
Remuneration Committee.
All Non-Executive Directors have entered into a service agreement with the Company in the form of a letter of appointment. The
letter summarises various matters relating to the appointment including the position’s role and responsibilities, time commitments,
remuneration and expenses, outside interests, securities dealing policy and the treatment of confidential information. These matters
are consistently applied for each Non-Executive Director.
D T I G R O U P L T D – A N N U A L R E P O R T 2 0 1 5
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KMP Remuneration
Details of the nature and amount of each element of the remuneration of each KMP for the current and prior financial year are as
follows:
2015
Short-term Benefits
Post-
Employment
Benefits
Salary and
fees
$
Cash bonus
$
Travel
allowance
$
Annual and
long service
leave
$
Super-
annuation
$
Share-based
payments
$
27,172
27,450
36,855
240,000
31,562
190,338
168,206
721,583
–
–
–
104,000
–
15,943
30,000
149,943
–
–
–
4,660
–
11,660
–
16,320
–
–
–
10,523
–
12,138
5,231
27,892
2,581
2,331
–
27,316
–
19,171
17,405
68,804
–
–
–
-
–
–
–
–
Total
$
29,753
29,781
36,855
386,499
31,562
249,250
220,842
984,542
Director
Neil Goodey
Glyn Denison
Chris Morris
Richard Johnson
Jeremy King
Jean-Michel Florent
Bruce Mitchell
Total
Notes:
(cid:120)
(cid:120)
(cid:120)
Richard Johnson (CEO) was awarded a short-term cash bonus totalling $14,000 and LT Incentives in the form of shares totalling $24,000 for performance during
the 2015 financial year, which was accrued in the 2015 financial year. The CEO received a short-term bonus totalling $18,000 and LT Incentives totalling
$48,000, both taken as cash payments, for his performance for the 2014 financial year which were not accrued and therefore expensed in FY2015. DTI has not
yet sought shareholder approval for an employee share plan, and the LT Incentives relating to the 2015 financial year totalling $24,000 have been paid in the
form of cash. The LT Incentive awarded to the CEO for the 2014 financial year totalling $48,000 was also paid in the form of a cash payment in lieu of shares as
agreed with the CEO, given the proposed listing of the Company on ASX.
Jean-Michel Florent, (COO) was awarded a performance cash bonus of $1,988 subsequent to the end of the 2015 financial year. The Company has not accrued
for the bonus which will therefore be expensed in FY2016. The COO received a cash bonus of $13,955 for performance during the 2014 financial year which was
not accrued in FY2014 and has been expensed in the 2015 financial year. The bonus was based on a review of his performance in relation to sales targets for
each of the financial years by the CEO and approved by the Board and is not linked to the MCP.
Bruce Mitchell (CFO) was awarded a performance cash bonus of $15,000 subsequent to the end of the 2015 financial year. The Company has not accrued for
the bonus which will therefore be expensed in FY2016. The CFO also received a cash bonus of $15,000 for performance during the 2014 financial year which
was not accrued in FY2014 and has been expensed in the 2015 financial year. The bonus was based on a review of his performance for each of the financial
years by the CEO and approved by the Board and is not linked to the MCP.
2014
Short-term Benefits
Post-
Employment
Benefits
Director
Neil Goodey
Glyn Denison
Chris Morris
Salary and
fees
$
21,000
21,727
22,000
–
–
–
Richard Johnson
240,000
33,000
Jeremy King
21,000
Jean-Michel Florent
180,000
Bruce Mitchell
Total
Notes:
170,462
676,189
–
850
12,000
45,850
Cash bonus
$
Travel
allowance
$
Annual and
long service
leave
$
Super-
annuation
$
Share-based
payments
$
–
–
–
8,308
–
6,231
–
14,539
–
–
–
19,620
–
14,330
5,512
39,462
1,943
2,010
–
26,021
–
17,305
16,878
64,157
Total
$
22,943
23,737
22,000
–
–
–
35,000
361,949
–
–
–
21,000
218,716
204,852
35,000
875,197
(cid:120)
(cid:120)
Richard Johnson was awarded a short-term cash bonus totalling $33,000 and LT Incentives totalling $35,000 for performance during the 2013 financial year. The
LT Incentive share-based payment was via the issue of 17,500 shares in DTI at $0.286 per share (on a post-share split basis). The FY2013 performance linked
remuneration was paid in the 2014 financial year and was not accrued in the FY2013 accounts.
The cash bonuses awarded to Jean-Michel Florent ($850) and Bruce Mitchell ($12,000) were for the 2013 financial year. The bonuses were approved and paid
subsequent to the end of the 2013 financial year and were not accrued in the FY2013 accounts. The bonuses have therefore been expensed in the 2014
financial year.
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Directors’ report (contd)
Relationship between Remuneration and DTI Performance
The relationship between remuneration and DTI’s FY2015 performance for the following executive KMPs is set out below.
Richard Johnson
(cid:120) Cash bonus based on the achievement of budgeted EBITDA (70% weighting) and the achievement of other criteria including
projects and margins, business expansion, service levels and product reliability (30% weighting). The composition of the cash
bonus is 12.5% of the package guide or up to 25% of the base salary for exceptional performance.
(cid:120)
LT Incentive based on the achievement of earnings per share performance compared to the previous period (50% weighting)
and non-financial performance including leadership, replaceability and character (50% weighting). The LT Incentive forms 12.5%
of the package guide or up to 33% of the base salary for exceptional performance.
Jean-Michel Florent
Cash bonus based on sales in which he was directly involved.
Bruce Mitchell
The cash bonus is based on non-financial criteria relating to the Chief Financial Officer’s role.
Performance-based Remuneration Granted and Forfeited during the Year
The following bonuses relate to performance for the 2015 and 2014 financial years awarded under the Company’s MCP. The
bonuses for the 2015 financial year were awarded subsequent to the end of the financial year; however, an accrual was recorded in
FY2015. No accrual was recorded for the bonus relating to performance of the CEO for FY2014 and it was therefore expensed in
FY2015.
Short-term Benefits
Total
Opportunity
(Note 1)
$
Awarded
%
Forfeited
%
Total
Opportunity
$
2015
Bonus relating to the 2015 financial year performance (accrued in FY2015)
LT Incentives
Shares / Cash
Granted
(Note 2)
$
Shares / Cash
Forfeited
$
Richard Johnson
60,000
23
77
80,000
24,000
56,000
Bonus relating to the 2014 financial year performance (expensed in FY2015)
Richard Johnson
60,000
30
70
80,000
48,000
32,000
Notes:
1
2
The CEO was awarded a short-term cash bonus totalling $14,000 and LT Incentives in the form of shares totalling $24,000 for performance during FY2015,
which were accrued in FY2015. The CEO received a short-term bonus totalling $18,000 and LT Incentives totalling $48,000, both taken as cash payments, for
his performance for FY2014 which were not accrued and therefore expensed in FY2015.
DTI has not yet sought shareholder approval for an employee share plan, and the LT Incentives relating to FY2015 totalling $24,000 have been paid in the form
of cash. The LT Incentive awarded to the CEO for FY2014 totalling $48,000 were also paid in the form of a cash payment in lieu of shares as agreed with the
CEO, given the proposed listing of the Company on ASX.
No other KMP were awarded bonuses under the Company’s MCP for the 2015 or 2014 financial years.
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Statutory Performance Indicators
DTI aims to align executive remuneration to the Company’s strategic and business objectives and the creation of shareholder wealth.
The following table shows measures of the Group’s financial performance over the last two years as required by the Corporations
Act 2001. However, these are not necessarily consistent with the measures used in determining the variable amounts of
remuneration to be awarded to KMPs. As a consequence, there may not always be a direct correlation between the statutory key
performance measures and the variable remuneration awarded.
Performance Indicators
FY2015
FY2014
Profit (loss) after tax
$113,517
$1,115,975
Dividends
Share price
nil
$0.30
nil
n/a
Basic earnings per share
0.1 cents
1.5 cents
Note:
DTI listed on the ASX on 9 December 2014.
Options Granted to KMP
No options were granted as remuneration to KMP of the Company or Group during the financial year.
Reconciliation of Options and Ordinary Shares Held by KMP
Options
KMP
Neil Goodey
Glyn Denison
Chris Morris
Richard Johnson
Jeremy King
Jean-Michel Florent
Bruce Mitchell
Notes:
Balance at the
Start of the Year
Granted
121,310
44,905
11,200,000
4,445
175,000
–
–
–
–
–
–
–
–
–
Acquired
(Disposed)
–
–
Exercised
121,310
33,836
Expired
–
11,069
(557,000)
7,200,000
3,443,000
30,000
–
527,000
–
34,445
175,000
527,000
–
–
–
–
–
Balance at the
End of the Year
–
–
–
–
–
–
–
(cid:120)
(cid:120)
(cid:120)
All options were vested and exercisable.
The amounts paid per ordinary share on the exercise of options at the date of exercise were as follows: $0.322.
The options that expired during the year were granted on 30 June 2011.
Ordinary Shares
KMP
Neil Goodey
Glyn Denison
Chris Morris
Richard Johnson
Jeremy King
Jean-Michel Florent
Bruce Mitchell
Balance at the Start
of the Year
Granted as
Compensation
6,453,888
2,853,802
11,200,000
435,463
175,000
–
–
–
–
–
–
–
–
–
Received on
Exercise of Options
121,310
33,836
7,200,000
34,445
175,000
527,000
–
Acquired
(Disposed)
–
–
(351,856)
–
–
–
249,000
Balance at the End
of the Year
6,575,198
2,887,638
18,048,144
469,908
350,000
527,000
249,000
None of the shares are held nominally by the Directors or any other KMP.
D T I G R O U P L T D – A N N U A L R E P O R T 2 0 1 5
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Directors’ report (contd)
Loans Given to KMP
No loans have been given or provided to KMP.
Other Transactions with KMP
Computershare Investor Services Pty Limited provides share registry service to DTI. Chris Morris (Non-Executive Chairman of DTI)
is also the Non-Executive Chairman of Computershare Limited. DTI paid Computershare Investor Services Pty Limited $12,798
during the current year (2014: n/a)
Reliance on External Remuneration Consultants
There has not been any reliance on external remuneration consultants.
This concludes the remuneration report, which has been audited.
Auditor independence
In relation to the audit of the financial report for the year ended 30 June 2015, the auditors have issued the Directors with an
independence declaration. Refer to page 55 for the specific declaration.
Non-audit services
The Board of Directors is satisfied that the provision of non-audit services during the year is compatible with the general standard of
independence for auditors imposed by the Corporations Act 2001. The Directors are satisfied that the services disclosed below did
not compromise the external auditor’s independence for the following reasons:
(cid:120)
(cid:120)
All non-audit services are reviewed and approved by Board of Directors prior to commencement to ensure they do not
conversely affect the integrity and objectivity of the auditor.
The nature of the services provided does not compromise the general principles relating to auditor independence as set out in
the APES Code of Ethics for Professional Accountants.
The total fees for non-audit services paid to the auditor or related practices of the auditor during the year ended 30 June 2015 were
$11,720 (2014: $24,613) being for the Investigating Accountant’s Report and review work performed in connection with the
Company’s proposed initial public offer and ASX listing.
Proceedings on behalf of the Company
No person has applied to the court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the
Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking responsibility on behalf of
the Company for all or part of those proceedings.
No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under section 237 of the
Corporations Act 2001.
D T I G R O U P L T D – A N N U A L R E P O R T 2 0 1 5
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Indemnification of officers and auditors
During the financial year, the Company paid a premium in respect of a contract insuring the Directors of the Company (as named
above) and all executive officers of the Company against a liability incurred as such Director, secretary or executive officer to the
extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the
amount of the premium.
The Company has not otherwise, during or since the financial year, indemnified or agreed to indemnify an officer or auditor of the
Company or of any related body corporate against a liability incurred as such an officer or auditor.
Signed in accordance with a resolution of the Directors made pursuant to s298(2) of the Corporations Act 2001.
Richard Johnson
Director
28 August 2015, Perth, Australia
D T I G R O U P L T D – A N N U A L R E P O R T 2 0 1 5
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Financial statements
Consolidated Statement of Profit or Loss and Other Comprehensive Income
for the year ended 30 June 2015
Revenue from continuing operations
Other income
Change in inventory of finished goods
Raw materials and consumables used
Employee benefits expense
Depreciation and amortisation expense
Administration expenses
Marketing expenses
Research and development expenses
Other expenses
Finance costs
Profit from operations before income tax
Income tax (expense) / benefit
Profit after tax
Profit is attributable to:
Owners of DTI Group Ltd
Other comprehensive income
Items that may be reclassified to profit or loss:
Exchange differences on translation of foreign operations
Total other comprehensive income/(loss)
Total comprehensive income for the year
Total comprehensive income is attributable to:
Owners of DTI Group Ltd
Earnings per share for profit / (loss) attributable to the
ordinary equity holders of the Company:
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
Note
3(a)
3(b)
3(c)
3(c)
3(d)
4
2015
$
14,705,897
1,338,250
736,816
(7,736,182)
(4,821,419)
(884,832)
(985,215)
(1,033,018)
(14,158)
(610,736)
(4,892)
690,511
(576,994)
2014
$
19,798,072
1,014,151
290,425
(10,184,984)
(5,044,230)
(966,829)
(1,221,789)
(733,272)
(44,161)
(710,495)
(4,262)
2,192,626
(1,076,651)
113,517
1,115,975
113,517
1,115,975
(60,276)
(60,276)
53,241
(18,361)
(18,361)
1,097,614
53,241
1,097,614
25
25
0.14
0.14
1.46(1)
1.46(1)
(1) The number of shares used in calculating the June 2014 earnings per share has been adjusted to reflect the effect of the 7 for 1 share split completed in June 2014.
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.
D T I G R O U P L T D – A N N U A L R E P O R T 2 0 1 5
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Consolidated Statement of Financial Position
as at 30 June 2015
Current assets
Cash and cash equivalents
Other financial assets
Trade and other receivables
Inventories
Other current assets
Total current assets
Non-current assets
Other receivables
Property, plant and equipment
Intangible assets
Deferred tax assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Borrowings
Total current liabilities
Non-current liabilities
Borrowings
Provisions
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained profits / (accumulated losses)
Total equity
Note
24(a)
7
8
9
10
8
11
12
4(c),13
14
15
16
17
4(c)
18
19(a)
19(b)
2015
$
3,839,829
400,063
6,309,975
4,612,086
130,640
2014
$
1,447,821
400,063
5,746,979
2,543,940
90,644
15,292,593
10,229,447
531,032
573,076
2,517,548
–
3,621,656
452,232
651,921
2,054,686
–
3,158,839
18,914,249
13,388,286
3,720,171
19,042
3,739,213
46,704
70,273
380,305
497,282
4,236,495
14,677,754
13,723,974
(78,637)
1,032,417
14,677,754
2,882,313
13,021
2,895,334
65,711
48,508
203,810
318,029
3,213,363
10,174,923
9,274,384
1,138,596
(238,057)
10,174,923
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
D T I G R O U P L T D – A N N U A L R E P O R T 2 0 1 5
Page | 19
Consolidated Statement of Changes in Equity
for the year ended 30 June 2015
Contributed
Equity
$
Options
Reserve
$
Foreign
Currency
Translation
Reserve
$
Retained
Profits /
(Accumulated
Losses)
$
Total
$
At 30 June 2013
9,239,384
1,156,957
–
(1,354,032)
9,042,309
Profit for the year
Other comprehensive income/(loss)
Total comprehensive income/(loss)
for the year
Transactions with owners in their
capacity as owners
Issue of share capital (Note 18(a))
–
–
–
35,000
–
–
–
–
–
(18,361)
1,115,975
–
1,115,975
(18,361)
(18,361)
1,115,975
1,097,614
–
–
35,000
At 30 June 2014
9,274,384
1,156,957
(18,361)
(238,057)
10,174,923
Profit for the year
Other comprehensive income/(loss)
Total comprehensive income/(loss)
for the year
Transactions with owners in their
capacity as owners
Transfer option reserve to retained
earnings
Issue of share capital (net of
transactions costs)
At 30 June 2015
–
–
–
–
–
–
(60,276)
113,517
–
113,517
(60,276)
(60,276)
113,517
53,241
(1,156,957)
–
1,156,957
–
4,449,590
13,723,974
–
–
–
–
4,449,590
(78,637)
1,032,417
14,677,754
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
D T I G R O U P L T D – A N N U A L R E P O R T 2 0 1 5
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Consolidated Statement of Cash Flows
for the year ended 30 June 2015
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Research and development grant received
Interest paid
Tax paid
Note
2015
$
2014
$
14,661,528
(16,304,326)
51,038
833,895
(4,892)
(134,677)
17,641,938
(17,761,356)
87,658
877,254
(4,262)
–
Net cash inflow / (outflow) from operating activities
24(b)
(897,434)
841,232
Cash flows from investing activities
Payments for plant and equipment
Payments for intangible assets
Net cash outflow from investing activities
Cash flows from financing activities
Proceeds from issues of shares
Share issue expenses
Repayment of borrowings
Net cash inflow / (outflow) from financing activities
Net increase / (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Effect of foreign exchange on opening balances
Cash and cash equivalents at the end of the year
24(a)
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
(179,578)
(1,089,396)
(1,268,974)
4,734,111
(290,156)
(12,986)
4,430,969
2,264,561
1,447,821
127,447
3,839,829
(203,076)
(349,929)
(553,005)
–
–
(10,846)
(10,846)
277,381
1,170,440
–
1,447,821
D T I G R O U P L T D – A N N U A L R E P O R T 2 0 1 5
Page | 21
Notes to the consolidated financial statements
Note 1: Summary of significant accounting policies
Statement of compliance
This financial report includes the consolidated financial statements and notes of DTI Group Ltd and its subsidiaries (“Group”). The
financial report is a general purpose financial report which has been prepared in accordance with the Corporations Act 2001,
Australian Accounting Standards, Australian Accounting Interpretations, and other authoritative pronouncements of the Australian
Accounting Standards Board. The Group’s financial statements and accompanying notes also comply with International Financial
Reporting Standards (IFRS).
DTI is a for-profit company limited by shares incorporated in Australia whose shares have been publicly traded on the Australian
Securities Exchange from 9 December 2014.
The financial statements were authorised as per the Directors’ declaration on page 52 dated 28 August 2015.
Basis of preparation
The financial report has been prepared on the basis of historical cost. Cost is based on the fair values of the consideration given in
exchange for assets.
In the application of IFRS management is required to make judgments, estimates and assumptions about carrying values of assets
and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical
experience and various other factors that are believed to be reasonable under the circumstance, the results of which form the basis
of making the judgments. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if
the revision affects both current and future periods.
Judgments made by management in the application of IFRS that have significant effects on the financial statements and estimates
with a significant risk of material adjustments in the next year are disclosed in Note 1(x) are, where applicable, in the relevant notes
to the financial statements.
As a result of becoming a disclosing entity during the year, the Company has provided the disclosures required of a disclosing entity,
including segment reporting and earnings per share information. Accounting policies for these new disclosures have been included in
Note 1(u) and (v). Comparatives for these new disclosures have been provided.
Accounting policies
Accounting policies are selected and applied in a manner which ensures that the resulting financial information satisfies the concepts
of relevance and reliability, thereby ensuring that the substance of the underlying transactions or other events is reported.
The accounting policies set out below have been applied in preparing the financial statements for the year ended 30 June 2015 and
the comparative information presented in these financial statements for the year ended 30 June 2014.
The following significant accounting policies have been adopted in the preparation and presentation of the financial report:
(a)
Principles of consolidation
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity
when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to
affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date
on which control is transferred to the Group. They are deconsolidated from the date that control ceases.
D T I G R O U P L T D – A N N U A L R E P O R T 2 0 1 5
Page | 22
The acquisition method of accounting is used to account for business combinations by the Group. Intercompany
transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses
are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. Accounting policies
of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.
(b)
Trade and other payables
Trade payables and other accounts payable are recognised when the Company becomes obliged to make future payments
resulting from the purchase of goods and services. The amounts are unsecured and are usually paid within 60 to 90 days
of recognition.
(c)
Property, plant and equipment
Plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directly
attributable to the acquisition of the items.
Depreciation is provided on property, plant and equipment. Depreciation is calculated on either a diminishing value or
straight line basis so as to allocate the net cost or other re-valued amount of each asset over its estimated useful life or in
the case of certain leased plant and equipment the shorter lease term.
The following estimated useful lives are used in the calculation of depreciation:
plant and equipment – 2.5–5 years
(cid:120)
(cid:120) motor vehicles under finance lease – 5 years
(cid:120)
buildings – 10 years.
(d)
Provisions
Provisions for legal claims, service warranties and make good obligations are recognised when the Company has a
present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required
to settle the obligation and the amount has been reliably estimated. Provisions are not recognised for future operating
losses.
(e)
Impairment of assets
At each reporting date, the entity reviews the carrying amounts of its assets to determine whether there is any indication
that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is
estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows
that are independent from other assets, the entity estimates the recoverable amount of the cash-generating unit to which
the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows
have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the
carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised
in profit or loss immediately, unless the relevant asset is carried at fair value, in which case the impairment loss is treated
as a revaluation decrease.
D T I G R O U P L T D – A N N U A L R E P O R T 2 0 1 5
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Note 1: Summary of significant accounting policies (contd)
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to
the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed
the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-
generating unit) in prior years. A reversal of an impairment loss is recognised in profit or loss immediately, unless the
relevant asset is carried at fair value, in which case the reversal of the impairment loss is treated as a revaluation increase.
(f)
Employee benefits
Provision is made for benefits accruing to employees in respect of wages and salaries, annual leave, long service leave,
and sick leave when it is probable that settlement will be required and they are capable of being measured reliably.
Provisions made in respect of wages and salaries, annual leave, long service leave and sick leave expected to be settled
within 12 months are measured at their nominal values using the remuneration rate expected to apply at the time of
settlement.
(g)
Investment and other financial assets
The Company classifies its financial assets as loans and receivables. The classification depends on the purpose for which
the investments were acquired. Management determines the classification of its investments at initial recognition.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market. They are included in current assets, except for those with maturities greater than 12 months after the
reporting date which are classified as non-current assets.
Loans and receivables are included in trade and other receivables (Note 8) in the statement of financial position.
Financial assets are derecognised when the rights to receive the cash flows from the financial assets have expired or have
been transferred and the Company has transferred substantially all the risks and rewards of ownership.
Loans and receivables are carried at amortised cost using the effective interest method.
The Company assesses at each reporting date whether there is objective evidence that a financial asset or group of
financial assets is impaired.
(h)
Financial instruments issued by the Company
Debt and equity instruments are classified as either liabilities or as equity in accordance with the substance of the
contractual arrangement.
Transaction costs arising on the issue of equity instruments are recognised directly in equity as a reduction of the proceeds
of equity instruments to which the costs relate. Transaction costs are costs that are incurred directly in connection with the
issue of those equity instruments and which could not have been incurred had those instruments not been issued.
(i)
Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured
at amortised cost. Any difference between the proceeds (net of transactions costs) and the redemption amount is
recognised in the consolidated statement of profit or loss and other comprehensive income over the period of the
borrowings using the effective interest method. Fees paid on the establishment of loan facilities, which are not an
incremental cost relating to the actual draw-down of the facility, are recognised as prepayments and amortised on a
straight-line basis over the term of the facility.
D T I G R O U P L T D – A N N U A L R E P O R T 2 0 1 5
Page | 24
(j)
Foreign currency
Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary
economic environment in which the entity operates (‘the functional currency’).
The consolidated financial statements are presented in Australian dollars, which is the Company’s functional and
presentation currency.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the
translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are generally
recognised in profit or loss. They are deferred in equity if they relate to qualifying cash flow hedges and qualifying net
investment hedges or are attributable to part of the net investment in a foreign operation.
Foreign exchange gains and losses that relate to borrowings are presented in the consolidated statement of profit and loss
in finance costs. All other foreign exchange gains and losses are presented in the income statement on a net basis within
other income or other expenses.
Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the
date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported
as part of the fair value gain or loss. For example, translation differences on non-monetary assets and liabilities such as
equities held at fair value through profit or loss are recognised in profit or loss as part of the fair value gain or loss and
translation differences on non-monetary assets such as equities classified as available-for-sale financial assets are
recognised in other comprehensive income.
Group companies
The results and financial position of foreign operations (none of which has the currency of a hyperinflationary economy)
that have a functional currency different from the presentation currency are translated into the presentation currency as
follows:
(cid:120)
(cid:120)
(cid:120)
assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of
that statement of financial position;
income and expenses for each statement of profit or loss and other comprehensive income are translated at average
exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the
transaction dates, in which case income and expenses are translated at the dates of the transactions); and
all resulting exchange differences are recognised in other comprehensive income.
(k)
Goods and services tax
Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except:
(cid:120)
(cid:120)
where the amount of GST incurred is not recoverable from the taxation authority, it is recognised as part of the cost
of acquisition of the asset or as part of the item of expense; or
for receivables and payables which are recognised inclusive of GST.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or
payables.
Cash flows are included in the statement of cash flows on a gross basis. The GST component of cash flows arising from
investing and financing activities which is recoverable from, or payable to, the taxation authority is classified as operating
cash flows.
D T I G R O U P L T D – A N N U A L R E P O R T 2 0 1 5
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Note 1: Summary of significant accounting policies (contd)
(l)
Government grants
Government grants are assistance by the government in the form of transfers of resources to the Company in return for
past or future compliance with certain conditions relating to the operating activities of the entity. Government grants include
government assistance where there are no conditions specifically relating to the operating activities of the Company other
than the requirement to operate in certain regions or industry sectors.
Government grants relating to income are recognised as income over the periods necessary to match them with the related
costs. Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose
of giving immediate financial support to the Company with no future related costs are recognised as income of the period in
which it becomes receivable.
Government grants relating to assets are treated as deferred income and recognised in profit and loss over the expected
useful lives of the assets concerned.
(m)
Inventories
Inventories are valued at the lower of cost and net realisable value. Costs are assigned to inventory on hand by the method
most appropriate to each particular class of inventory, with the majority being valued on a weighted average basis by
location. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of
completion and the estimated costs necessary to make the sale.
(n)
Leased assets
Leased assets classified as finance leases are recognised as assets. The amount initially brought to account is the present
value of minimum lease payments. Finance leased assets are amortised on a diminishing value basis over the estimated
useful life of the asset.
Finance lease payments are allocated between interest expense and reduction of lease liability over the term of the lease.
The interest expense is determined by applying the interest rate implicit in the lease to the outstanding lease liability at the
beginning of each lease payment period. Leases in which a significant portion of the risks and rewards of ownership are
not transferred to the Company as lessee are classified as operating leases (Note 21). Payments made under operating
leases (net of any incentives received from the lessor) are charged to the consolidated statement of profit or loss and other
comprehensive income on a straight-line basis over the period of the lease.
(o)
Trade and other receivables
Trade receivables and other receivables are recorded at amounts due less any allowance for doubtful debts.
Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written
off. An allowance account (provision for impairment of trade receivables) is used when there is objective evidence that the
Company will not be able to collect all amounts due according to the original terms of receivables. The amount of the
allowance is the difference between the asset's carrying amount and the present value of estimated future cash flows,
discounted at the original effective interest rate. Cash flows relating to short-term receivables are not discounted if the
effect of discounting is immaterial. The amount of the allowance is recognised in the profit and loss.
(p)
Intangible assets
Intangibles
Internally generated intangible assets, excluding capitalised development costs, are not capitalised and expenditure is
recognised in profit or loss in the year in which the expenditure is incurred.
Research and development costs
D T I G R O U P L T D – A N N U A L R E P O R T 2 0 1 5
Page | 26
Research expenditure is recognised as an expense as incurred. Costs incurred on development projects (relating to the
design and testing of new or improved products) are recognised as intangible assets when it is probable that the project
will be a success considering its commercial and technical feasibility and its costs can be measured reliably. The
expenditure capitalised comprises all directly attributable costs, including costs of materials, services and direct labour.
Other development expenditures that do not meet these criteria are recognised as an expense as incurred. Development
costs previously recognised as an expense are not recognised as an asset in a subsequent period.
The intangible assets in existence as at 30 June 2012 have been assessed as having a finite life and are amortised using
the straight line method over a period of 4 years. Intangible assets arising after 1 July 2012 are amortised in proportion to
the sales of the commercial units they relate to, as this is deemed to be a more accurate and reasonable basis.
The carrying value of an intangible asset arising from development expenditure is tested for impairment annually when the
asset is not yet available for use, or more frequently when an indication of impairment arises during the reporting period.
A summary of the policies applied to the Group’s intangible assets is as follows:
Policy
Useful lives
Amortisation methods used
Patents
Finite
Amortised over the period of expected
future benefits from the related project on
a straight-line basis
Development Costs
Finite
Amortised over the period of expected
future benefits from the related product on
a straight-line basis
Internally generated or acquired
Acquired
Internally generated
Impairment testing
Annually and more frequently when an
indication of impairment exists
Annually for assets not yet available for
use and more frequently when an
indication of impairment exists. The
amortisation method is reviewed at each
financial year end
Patents have been assessed as having a useful life and are amortised using the straight line method over a period of
10 years. The patents have been granted for between 15 and 20 years by the relevant government agency.
Gains or losses arising from de-recognition of an intangible asset are measured as the difference between the net disposal
proceeds and the carrying amount of the assets and are recognised in profit or loss when the asset is derecognised.
(q)
Revenue recognition
Revenues are recognised at fair value of the consideration received net of the amount of GST or value added tax payable
to the taxation authorities. Sales revenue represents sales of products or services. Sales of products are recognised when
the significant risks and rewards of ownership of the goods have passed to the buyer and can be measured reliably. Risks
and rewards are considered passed to the buyer at the time of delivery of the goods to the customer.
Service revenue is recognised when the fees in respect of services rendered are earned, usually when services have been
provided to customers.
Interest income is recognised on a time proportion basis using the effective interest method.
(r)
Income tax
Current tax
Current tax is calculated by reference to the amount of income taxes payable or recoverable in respect of the taxable profit
or tax loss for the period. It is calculated using tax rates and tax laws that have been enacted or substantively enacted by
reporting date. Current tax for current and prior periods is recognised as a liability (or asset) to the extent that it is unpaid
(or refundable).
D T I G R O U P L T D – A N N U A L R E P O R T 2 0 1 5
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Note 1: Summary of significant accounting policies (contd)
Deferred tax
Deferred tax is accounted for using the comprehensive balance sheet liability method in respect of temporary differences
arising from differences between the carrying amount of assets and liabilities in the financial statements and the
corresponding tax base of those items.
In principle, deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised
to the extent that it is probable that sufficient taxable income will be available against which deductible temporary
differences or unused tax losses and tax offsets can be utilised. However, deferred tax assets and liabilities are not
recognised if the temporary differences giving rise to them arise from the initial recognition of assets and liabilities (other
than as a result of a business combination) which affects neither taxable income nor accounting profit. Furthermore, a
deferred tax liability is not recognised in relation to taxable temporary differences arising from goodwill.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in associates and are only
recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of
the temporary differences and that they are expected to reverse in the foreseeable future.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period(s) when the asset
and liability giving rise to them are realised or settled, based on tax rates (and tax laws) that have been enacted or
substantively enacted by reporting date. The measurement of deferred tax liabilities and assets reflects the tax
consequences that would follow from the manner in which the Company expects, at the reporting date, to recover or settle
the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the
Company intends to settle its current tax assets and liabilities on a net basis.
Current and deferred tax for the period
Current and deferred tax is recognised as an expense or income in the consolidated statement of profit or loss and other
comprehensive income, except when it relates to items credited or debited directly to equity, in which case the deferred tax
is also recognised directly in equity, or where it arises from the initial accounting for a business combination, in which case
it is taken into account in the determination of goodwill or excess.
(s)
Cash and cash equivalents
For statement of cash flow purposes, cash and cash equivalents includes cash on hand and deposits held at call with
financial institutions.
(t)
Contributed equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are
shown in equity as a deduction, net of tax, from the proceeds. If the Company re-acquires its own equity instruments, for
example as a result of a share buy-back, those instruments are deducted from equity and the associated shares are
cancelled. No gain or loss is recognised in profit or loss and the consideration paid including any directly attributable
incremental costs (net of income taxes) is recognised directly in equity.
(u)
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision
maker. The chief operating decision maker is the Board of DTI which assesses the financial performance and position of
the group, and makes strategic decisions.
D T I G R O U P L T D – A N N U A L R E P O R T 2 0 1 5
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(v)
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing:
(cid:120)
(cid:120)
the profit or loss attributable to owners of the company, excluding any costs of servicing equity other than ordinary
shares; and
by the weighted average number of ordinary shares outstanding during the financial year,
adjusted for bonus elements in ordinary shares issued during the year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:
(cid:120)
(cid:120)
the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares; and
the weighted average number of additional ordinary shares that would have been outstanding assuming the
conversion of all dilutive potential ordinary shares.
(w)
New accounting standards and Australian accounting interpretations
New and amended accounting standards adopted
The Group has applied the following standards and amendments for the first time for their annual reporting period
commencing 1 July 2014:
(cid:120)
(cid:120)
(cid:120)
(cid:120)
AASB 2013-3 Amendments to AASB 136 – Recoverable Amount Disclosures for Non-Financial Assets;
AASB 2013-4 Amendments to Australian Accounting Standards – Novation of Derivatives and Continuation of Hedge
Accounting;
Interpretation 21 Accounting for Levies; and
AASB 2014-1 Amendments to Australian Accounting Standards.
The adoption of AASB 2013-3 had a small impact on the impairment disclosures and AASB 2014-1 has required additional
disclosures in our segment note. No cash generating units have been aggregated. Other than that, the adoption of these
standards did not have any impact on the current period or any prior period.
New accounting standards and interpretations not yet adopted
Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2015
reporting periods and have not yet been applied in the financial report. The Group’s assessment of the impact of these new
standards and interpretations is set out below.
D T I G R O U P L T D – A N N U A L R E P O R T 2 0 1 5
Page | 29
Note 1: Summary of significant accounting policies (contd)
AASB
Amendment
AASB 9
Affected
Standard(s)
Financial
Instruments
AASB 15
Revenue from
contracts with
customers
Nature of Change to Accounting
Policy
Changes to classification and
measurement requirements of
financial instruments and hedge
accounting
New standard for the recognition
of revenue based on the principle
that revenue is recognised when
control of a good or service
transfers to a customer
AASB
2014-4
Clarification of
Acceptable
Methods of
Depreciation
and
Amortisation
Clarifies that revenue-based
methods for calculating
depreciation and amortisation are
usually not appropriate
(x)
Significant accounting estimates and judgements
Revenue recognition
Application
Date of
Standard
1 Jan 18
Application
Date for
Group
(Year ended)
30 June 19
1 Jan 18
30 June 19
1 Jan 16
30 June 17
Impact
While the group has yet to
undertake a detailed
assessment of the changes, no
significant impact is anticipated.
Management is currently
assessing the impact of the new
rules. At this stage, the group is
not able to estimate the impact
of the new rules on the group’s
financial statements. The group
will make more detailed
assessments of the impact over
the next 12 months.
Management is currently
assessing the impact. It is likely
that the basis for amortisation of
certain of the intangibles will be
changed from the current units
sold to number of years of
useful life.
In accordance with the accounting policy detailed in Note 1(q), the Company recognises revenue at the fair value of the
consideration received (net of the amount of GST payable) when the significant risks and reward of ownership of the goods
have passed to the buyer at the time of the delivery of goods to the customer, or when services rendered are provided to
customers. At 30 June 2015 management has determined that the profits on the contracts have been recognised in the
correct reporting period and that there are no future losses on any contracts that should be recognised at 30 June 2015.
Inventory obsolescence
Inventories are accounted for in accordance with the accounting policy detailed in Note 1(m). Where the net realisable
value of inventory is lower than its cost the Company recognises a provision for inventory obsolescence. At 30 June 2015
management has determined that a provision for inventory obsolescence of $80,643 (2014: $64,704) is still required for
inventory where net realisable value is lower than its cost.
Development costs capitalised
Development costs have been capitalised in accordance with the accounting policy detailed in Note 1(p). At 30 June 2015
management has assessed that all of the net capitalised development expenditure carried forward at year end, of
$2,364,504 (2014: $1,934,955), comprises all directly attributable costs, including costs of materials, services, direct labour
and an appropriate proportion of overheads.
D T I G R O U P L T D – A N N U A L R E P O R T 2 0 1 5
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Amortisation of intangible assets
Intangible assets are amortised over their useful life. Amortisation commences when the asset is available for use.
Amortisation reflects the pattern in which the assets future economic benefits are expected to be consumed by the entity
and accordingly is calculated in accordance with the unit method incorporating sales made relating to the assets. This
requires estimates of future sales to determine useful lives of the assets.
Share-based payment transactions
The Company measures the cost of equity-settled transactions with employees by reference to the fair value of the equity
instruments at the dated at which they are granted. The fair value is determined by an internal valuation using the Black-
Scholes option pricing model.
Impairment
The Group assesses impairment at each reporting date by evaluating conditions specific to the Group that may lead to
impairment of assets. Where an impairment trigger exists, the recoverable amount of the asset is determined. The
recoverable amounts of assets are calculated using a number of assumptions as disclosed in Note 1(e). DTI Group Ltd has
recognised an impairment expense of $0.585 million in respect of its loans to its subsidiaries Virtual Observer Pty Ltd and
DTI EMEA Ltd, as the loans are greater than the net assets of the subsidiaries. This impairment is eliminated in the
consolidated accounts of the Group.
Note 2: Financial risk management
The Group’s principal financial instruments are cash, trade and other receivables, trade and other payables, and borrowings. The
main purpose of these financial instruments is to raise finance for the Group’s operations. The Group has various other financial
assets and liabilities such as trade and other receivables and trade payables, which arise directly from its operations. The Group
does not enter into derivative transactions. The main risks arising from the Group’s financial instruments are interest rate risk,
liquidity risk, credit risk and foreign exchange risk. The Board reviews and agrees policies for managing each of these risks.
The following table details the Group’s exposure to interest rate risk as at 30 June 2015. The amounts disclosed in the table are the
contractual undiscounted cash flows. The payables cash flows equal their carrying balances as the impact of discounting is not
significant.
Maturing
1 Year or Less
$
Over 1 to
2 Years
$
Over 2 Years
$
Total Contractual
Cash Flows
$
Total
Carrying Value
$
12,846
12,846
40,055
73,430
65,746
3,214,436
3,227,282
–
–
3,214,436
3,214,436
12,846
40,055
3,287,866
3,280,182
Weighted
Average
Active Interest
Rate
%
6.5%
–
30 June 2015
Financial Liabilities
Fixed rate
Other borrowings
Non-interest bearing
Payables
D T I G R O U P L T D – A N N U A L R E P O R T 2 0 1 5
Page | 31
Note 2: Financial risk management (contd)
Maturing
1 Year or Less
$
Over 1 to
2 Years
$
Over 2 Years
$
Total Contractual
Cash Flows
$
Total
Carrying Value
$
19,533
19,533
62,698
101,764
78,732
2,481,732
2,501,265
–
–
2,481,732
2,481,732
19,533
62,698
2,583,496
2,560,464
Weighted
Average
Active Interest
Rate
%
6.5%
–
30 June 2014
Financial Liabilities
Fixed rate
Other borrowings
Non-interest bearing
Payables
Net Fair Value
The carrying amount of financial assets and financial liabilities recorded in the financial statements represents their respective net
fair values, determined in accordance with the accounting policies disclosed in Note 1.
Credit Risk Exposure
The Group's maximum exposure to credit risk at reporting date in relation to each class of recognised financial assets is the carrying
amount of those assets as disclosed in the statement of financial position. There are no historical default rates in respect of
receivables. Cash balances and term deposits are held with financial institutions of minimum AA ratings.
Foreign Exchange Risk
The Company has transactions in currencies other than Australian Dollars which carry receivables and payables in the respective
currency. These financial instruments are not hedged.
The Company’s exposure to foreign currency risk at the end of the reporting period, expressed in Australian dollars, was as follows:
30 June 2015
USD
$
689,441
2,686,687
(2,258,193)
0.77
EUR
$
59,683
396,155
(6,668)
0.70
GBP
$
USD
$
116,053
291,694
(1,625,594)
0.49
497,397
1,295,310
(1,200,615)
0.94
30 June 2014
EUR
$
–
14,928
(39,478)
0.69
GBP
$
104,545
1,628,748
(1,339,125)
0.55
SEK
$
(9,584)
0.16
Cash
Trade and other debtors
Trade payables
Average exchange rates
Interest Rate Risk
The Company's loan and lease arrangements are subject to fixed interest rates and therefore would not have been impacted by any
increase/decrease in interest rates during the current year.
Profit is sensitive to higher/lower interest income from cash and cash equivalents and term deposits as a result of changes in interest
rates. At year end the Company’s term deposits were earning interest at 3.14% and the Company’s bank account was earning
interest of 0.8%.
D T I G R O U P L T D – A N N U A L R E P O R T 2 0 1 5
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Liquidity Risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Board's approach to
managing liquidity is to ensure, as far as possible, that the Group will always have sufficient liquidity to meet its liabilities when due.
As at 30 June 2015 and the date of this report, the Group has sufficient liquid assets to meet its financial obligations.
Sensitivity Analysis
Interest Rate Risk
The Company's loan and lease arrangements are subject to fixed interest rates and therefore would not have been impacted by any
increase/decrease in interest rates during the current year. Accordingly, an increase in interest rates would not have impacted the
Company's interest expense.
Movements in interest rates on the Company’s bank accounts and term deposits would not have a significant impact on the
Company’s result for the year.
Foreign Exchange Rate Risk
Foreign currency balances held in British Pounds relate to DTI EMEA Ltd. Any movements in the British Pound exchange rate would
not impact on profit for the year as any translation differences are taken to the foreign currency translation reserve.
Based on the financial instruments held at 30 June 2015, had the Australian dollar weakened by 5% against the US Dollar, Euro and
Swedish Krone, with all other variables held constant, the Group’s pre-tax profit for the year would have been $34,251 (2014:
$27,898) lower. If the Australian dollar had strengthened the corresponding impact would be an increase in pre-tax profit by the
same amount.
Price Risk
Investments held are not listed or traded in active markets and therefore no price risk arises.
Capital management
The Company’s objectives when managing capital are to:
(cid:120)
safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits
for other stakeholders, and
(cid:120) maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return
capital to shareholders, issue new shares or sell assets to reduce debt.
The Company does not have any externally imposed capital requirements.
D T I G R O U P L T D – A N N U A L R E P O R T 2 0 1 5
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Note 3: Revenue and expenses
(a) Revenue
Revenue from sale of goods
Revenue from the rendering of services
(b) Other Income
Research and development grant
Net foreign exchange gains
Interest received
Other
(c) Material cost of sales
Material cost of sales
(d) Finance costs
Interest:
Non-related entities
Finance lease charges
(e) Operating lease payments
Minimum lease payments
(f)
(g)
(h)
(i)
Defined contribution superannuation expense
Superannuation
Share based payment expense
Employee share based payment expense
Impairment losses – financial assets
Trade receivables
Impairment losses – non-financial assets
Provision for inventory write-off
2015
$
2014
$
12,145,455
2,560,442
17,686,265
2,111,807
14,705,897
19,798,072
991,861
295,351
51,038
–
787,965
137,651
87,658
877
1,338,250
1,014,151
6,999,366
9,894,559
156
4,736
4,892
116
4,146
4,262
144,291
141,302
462,197
409,562
–
–
35,000
14,970
15,939
5,052
D T I G R O U P L T D – A N N U A L R E P O R T 2 0 1 5
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Note 4: Income tax
(a)
Income tax expense / (benefits)
Current tax expense
Deferred tax
Adjustments for current tax of prior periods
(b)
Numerical reconciliation of income tax expense
to prima facie tax payable
2015
$
348,510
254,153
(25,669)
576,994
2014
$
637,718
418,399
20,534
1,076,651
Profit / (loss) before income tax expense
690,511
2,192,626
Prima facie tax payable / (benefit) on profit / (loss) at 30% (2014: 30%)
207,153
657,788
Tax effect of:
Director and employee option expense
Research and development tax incentive
Other
Effect of lower statutory income tax rate in the UK and USA
Adjustments for current tax of prior periods
Deferred taxes not brought to account
Income tax expense / (benefit)
(c)
Deferred income tax balances recognised in the accounts:
Deferred tax liabilities
Work in progress
IP Capitalised
Unrealised foreign exchange gain
Property, plant and equipment
Other
Set off of deferred tax liabilities
Net recognised deferred tax liability
Deferred tax assets
Annual leave provision
Property, plant and equipment
Long service leave provision
Accrued audit fees and other
creditors
Superannuation provision
Investments
Patents
Capital raising fees
Provision for diminution in trading stock
Provision for doubtful debts
Tax losses carried forward
Set off of deferred tax liabilities
Deferred tax asset not brought to account as realisation is not probable
Net recognised deferred tax assets
–
356,960
(13,417)
(43,136)
–
69,434
576,994
(695,899)
(98,111)
(48,307)
–
(6,974)
468,986
(380,305)
150,298
35,951
21,082
23,475
228
79,916
10,503
121,044
24,193
2,296
–
(468,986)
–
–
10,500
288,921
87,581
11,102
20,534
225
1,076,651
(322,031)
–
–
(227,338)
–
345,559
(203,810)
119,581
–
14,552
7,864
30,090
79,916
–
73,343
19,411
6,786
–
(345,559)
(5,984)
–
D T I G R O U P L T D – A N N U A L R E P O R T 2 0 1 5
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Note 4: Income tax (contd)
Net deferred tax assets will be brought to account when it is probable that immediate sufficient tax profits will be available against
which temporary differences and tax losses can be utilised.
Franking credits available for subsequent financial years based on a tax rate of 30% are $82,768 (2014: $82,768).
Note 5: Segment information
Description of Segments
The Board of DTI examines the group’s performance from a geographic perspective and has identified three reportable segments of
its business, as set out in the table below. Revenue is allocated to a segment based on the location of the customer.
Segment Results and Other Segment Disclosures
2015
Total segment revenue
Inter-segment revenue
Revenue from external customers
EBITDA
Material items of income or expense
R&D grant income
Cost of sales – materials
Employee expenses and overheads
Material non-cash items other than
depreciation and amortisation included
in EBITDA
Non-current assets
2014
Total segment revenue
Inter-segment revenue
Revenue from external customers
EBITDA
Material items of income or expense
R&D grant income
Cost of sales – materials
Employee expenses and overheads
Material non-cash items other than
depreciation and amortisation included
in EBITDA
Non-current assets
Australasia
$
7,883,743
–
7,883,743
2,037,428
991,861
2,922,635
4,210,891
–
3,061,909
9,461,402
–
9,461,402
2,241,106
787,448
4,256,124
3,601,265
–
–
EMEA
$
4,209,951
1,279,831
2,930,120
(767,324)
–
1,790,623
1,906,821
–
559,747
2,917,512
1,400,893
1,516,619
(921,323)
–
1,221,357
1,216,586
–
459,479
Americas
$
3,914,537
22,503
3,892,034
259,093
–
2,286,108
1,346,834
–
–
8,820,051
–
8,820,051
1,756,278
–
4,417,078
2,646,695
–
–
Total
$
16,008,231
1,302,334
14,705,897
1,529,197
991,861
6,999,366
7,464,546
–
3,621,656
21,198,965
1,400,892
19,798,072
3,076,060
787,448
9,894,559
7,464,546
–
3,158,839
Revenues of approximately $2,894,369 (2014: $4,539,165) are derived from a single external customer. These revenues are
attributed to the Americas segment.
D T I G R O U P L T D – A N N U A L R E P O R T 2 0 1 5
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Reconciliation of EBITDA to profit before income tax is as follows:
EBITDA
Interest revenue
Finance costs
Depreciation and amortisation
Profit / (loss) before income tax from continuing operations
Note 6: Auditor’s remuneration
BDO Audit (WA) Pty Ltd
Remuneration of the auditors of the entities for:
Auditing or reviewing the current year financial report
Auditing or reviewing the prior year financial report – under accrual
BDO LLP
Remuneration of the auditors of the entities for:
Auditing or reviewing the current year’s financial report
Auditing or reviewing the prior year’s financial report
Non-audit services performed by BDO during the year comprise:
Investigating Accountant’s Report and review work for proposed initial
public offer and ASX listing
Note 7: Other financial assets
Term deposits (Note 22)
Note 8: Trade and other receivables
Current
Trade receivables
Accrued debtors
Net R&D grant/income tax receivable
Customer retentions
Non-Current
Accrued debtors
2015
$
1,529,197
51,038
(4,892)
(884,832)
690,511
2014
$
3,076,060
87,658
(4,262)
(966,829)
2,192,626
53,768
9,259
63,027
16,122
2,277
18,399
29,960
3,143
33,103
16,412
–
16,412
11,720
24,613
400,063
400,063
5,452,900
124,977
732,098
–
6,309,975
5,325,066
109,975
149,730
162,208
5,746,979
531,032
452,232
D T I G R O U P L T D – A N N U A L R E P O R T 2 0 1 5
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Note 8: Trade and other receivables (contd)
(a)
Impaired trade receivables
At 30 June 2015 current trade receivables of the Group with a nominal value of $7,651 (2014: $22,621) were impaired.
It was assessed that no portion of these receivables is expected to be recovered and the full amount has been provided for.
Movements in the provision for impairment of receivables are as follows:
At July 1
Provision for impairment recognised during the year
Receivables written off during the year as uncollectable
2015
$
22,621
–
(14,970)
7,651
2014
$
7,651
14,970
–
22,621
The creation and release of the provision for impaired receivables has been included in ‘other expenses’ in the statement of
profit or loss and other comprehensive income. Amounts charged to the allowance account are generally written off when there
is no expectation of recovering additional cash.
(b) Past due but not impaired
At 30 June 2015 trade receivables of $2,207,599 (2014: $2,293,521) were past due, but not impaired. These relate to a number
of independent customers for whom there is no recent history of default. The ageing analysis of these trade receivables is as
follows:
Up to 3 months
3 to 6 months
Over 6 months
2015
$
1,530,082
360,091
317,426
2,207,599
2014
$
1,598,319
695,072
130
2,293,521
The other classes within trade and other receivables do not contain impaired assets and are not past due. Based on the credit
history of these other classes, it is expected that these amounts will be received when due. The Group does not hold any
collateral in relation to these receivables.
(c) Foreign exchange and interest rate risk
Information on the Group’s exposure to foreign currency risk and interest rate risk in relation to trade and other receivables is
provided in Note 2.
(d) Fair value and credit risk
Due to the short-term nature of current receivables, their carrying amount is assumed to approximate their fair value.
The accrued debtor amount relates to a sale to a customer of equipment which is being paid off in instalments. The loan is
being repaid over a ten year period to June 2021 and is interest free. The fair value of $655,999 has been calculated based on
cash flows discounted using a rate of 10%. The maximum exposure to credit risk at the end of the reporting period is the
carrying amount of each class of receivables mentioned above.
D T I G R O U P L T D – A N N U A L R E P O R T 2 0 1 5
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(e) Fair value of financial instruments
Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value.
Fair value hierarchy
The following tables detail the consolidated entity's assets and liabilities, measured or disclosed at fair value, using a three level
hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being:
(cid:120)
(cid:120)
(cid:120)
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the
measurement date.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or
indirectly.
Level 3: Unobservable inputs for the asset or liability.
2015 Consolidated
Assets
Accrued debtor
Total assets
2014 Consolidated
Assets
Accrued debtor
Total assets
Level 1
$
–
–
Level 1
$
–
–
Level 2
$
–
–
Level 2
$
–
–
Level 3
$
655,999
655,999
Level 3
$
585,484
585,484
Total
$
655,999
655,999
Total
$
585,484
585,484
There were no transfers between levels during the financial years.
The carrying amounts of trade and other receivables and trade and other payables are assumed to approximate their fair
values due to their short-term nature.
The fair value of financial liabilities is estimated by discounting the remaining contractual maturities at the current market
interest rate that is available for similar financial liabilities.
Valuation techniques for fair value measurements categorised within Level 2 and Level 3
The accrued debtor amount relates to a sale to a customer of equipment which is being paid off in instalments. The loan is
being repaid over a ten-year period to June 2021 and is interest-free. The fair value of $655,999 has been calculated based on
cash flows discounted using a rate of 10%. The maximum exposure to credit risk at the end of the reporting period is the
carrying amount of each class of receivables set out above.
The Level 3 assets unobservable inputs and sensitivity are as follows:
Description
Accrued debtor
Unobservable Inputs
Discount rate
Range
(Weighted Average)
10.0% to 11.0%
Sensitivity
1.00% change would
increase/decrease fair value
by $65,600
D T I G R O U P L T D – A N N U A L R E P O R T 2 0 1 5
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Note 9: Inventories
Raw materials / unassembled stock
Finished goods
Provision for inventory obsolescence (Note (a))
(a)
A provision for inventory obsolescence was established in a previous year. It
was re-assessed and adjusted this financial year and is included in the raw
materials and consumables used number in the statement of profit or loss and
other comprehensive income. The movement in the provision is comprised as
follows:
At July 1
Provision for inventory obsolescence (recognised) / written back during the year
Note 10: Other current assets
Deposits
Prepayments
Prepayments are primarily comprised of insurance costs recognised over the period of the policy.
Note 11: Property, plant and equipment
Buildings
At cost
Less accumulated depreciation
Workshop and R&D plant and equipment
At cost
Less accumulated depreciation
Office equipment and software
At cost
Less accumulated depreciation
2015
$
3,214,953
1,477,776
(80,643)
4,612,086
2014
$
2,007,886
600,758
(64,704)
2,543,904
(64,704)
(15,939)
(80,643)
2015
$
2,083
128,557
130,640
2015
$
119,668
(33,735)
85,933
592,219
(430,384)
161,835
960,278
(736,008)
224,270
(59,652)
(5,052)
(64,704)
2014
$
11,507
79,137
90,644
2014
$
107,064
(21,924)
85,140
535,002
(318,485)
216,517
837,185
(617,779)
219,406
D T I G R O U P L T D – A N N U A L R E P O R T 2 0 1 5
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Motor Vehicles
At cost
Less accumulated depreciation
Total written down value
Movements in carrying amounts
Buildings
Balance at the beginning of the year
Additions
Depreciation expense
Carrying amount at the end of the year
Workshop and R&D plant and equipment
Balance at the beginning of the year
Additions
Depreciation expense
Carrying amount at the end of the year
Office equipment and software
Balance at the beginning of the year
Additions
Depreciation expense
Foreign currency translation
Carrying amount at the end of the year
Motor vehicles
Balance at the beginning of the year
Additions
Depreciation expense
Carrying amount at the end of the year
2015
$
214,891
(113,853)
101,038
573,076
85,140
12,604
(11,811)
85,933
216,517
57,217
(111,899)
161,835
219,406
109,757
(104,702)
(191)
224,270
130,858
–
(29,820)
101,038
2014
$
214,891
(84,033)
130,858
651,921
95,846
–
(10,706)
85,140
260,940
59,664
(104,087)
216,517
185,536
124,022
(90,474)
322
219,406
89,540
71,974
(30,656)
130,858
D T I G R O U P L T D – A N N U A L R E P O R T 2 0 1 5
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Note 12: Intangible assets
At 30 June 2014
Cost (gross carrying amount)
Accumulated amortisation
Net carrying amount
Movements in carrying amounts
Balance at 1 July 2013
Additions
Transferred to expense
Amortisation expense
Carrying amount at 30 June 2014
At 30 June 2015
Cost (gross carrying amount)
Accumulated amortisation
Net carrying amount
Movements in carrying amounts
Balance at 1 July 2014
Additions
Transferred to expense
Amortisation expense
Carrying amount at 30 June 2015
Development
costs
$
Goodwill
$
Patents
$
144,887
(27,588)
117,299
85,504
43,394
–
(11,599)
Total
$
4,360,099
(2,305,413)
2,054,686
2,859,628
43,394
(117,430)
(730,906)
117,299
2,054,686
2,432
–
2,432
2,432
–
–
–
2,432
Goodwill
$
Patents
$
Total
$
2,432
–
2,432
2,432
–
–
–
2,432
195,707
(45,095)
5,449,495
2,931,947
150,612
2,517,548
117,299
50,820
–
(17,507)
2,054,686
1,089,396
(626,534)
150,612
2,517,548
4,212,780
(2,277,825)
1,934,955
2,771,692
–
(117,430)
(719,307)
1,934,955
Development
costs
$
5,251,356
(2,886,852)
2,364,504
1,934,955
1,038,576
(609,027)
2,364,504
Description of the Group’s intangible assets
(a) Development costs
Development costs are carried at cost less accumulated amortisation and accumulated impairment losses. The intangible
assets of $327,038 in existence as at 30 June 2012 have been assessed as having a finite life and are amortised using the
straight line method over a period of four years. Intangible assets arising from 1 July 2012 of $638,862 are amortised in
proportion to the sales of the commercial units they relate to, as this is deemed to be a more accurate and reasonable
basis. The remaining amount of development costs not ready for use of $1,353,604 has been subject to impairment
testing. 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 amount. No impairment was needed for 2015 and 2014.
(b) Goodwill
Goodwill has been externally acquired and is carried at cost less accumulated impairment losses. The goodwill arose on
the acquisition of the remaining 50.5% of Virtual Observer Pty Ltd on 28 June 2012 and represents the difference between
the purchase price and the net liabilities.
D T I G R O U P L T D – A N N U A L R E P O R T 2 0 1 5
Page | 42
(c) Patents
Patents have been externally acquired and are carried at cost less accumulated impairment losses. This intangible asset
has been assessed as having a useful life and is amortised using the straight line method over a period of 10 years. The
patents have been granted for between fifteen and twenty years by the relevant government agency. 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 amount.
(d) Impairment
The recoverable amount of intangible assets has been determined using the value in use method. Value in use has been
derived from calculating the discounted net cash flows expected to be derived from the asset. The cash flow for 2016 has
been based on the actual 2015 results, which is reasonable with a conservative approach used for budgeting by
management. The cash flows for the years 2017 to 2020 have been based on extrapolating 2015 by using the
inflation/growth rate (2%) from the RBA. Cash flows have been estimated over five years, as beyond five years would be
difficult to support and justify. The cash flows have excluded cash flow from financing activity (interest) and non-cash items
(depreciation).
A discount factor of 15% has been used.
Note 13: Deferred tax assets
Deferred Tax Asset
Deferred tax assets to be recovered within 12 months
Note 14: Trade and other payables
Trade payables
Other payables
ATO and HMRC (including PAYG)
Provision for annual leave
Superannuation liability
FBT liability
Payroll tax liability
Risk exposure
Information about the Group’s exposure to foreign exchange is provided in Note 2.
2015
$
–
2014
$
–
2015
$
2,881,343
203,440
79,260
505,735
759
8,456
41,178
3,720,171
2014
$
1,658,959
285,102
392,460
400,581
100,301
7,267
37,643
2,882,313
D T I G R O U P L T D – A N N U A L R E P O R T 2 0 1 5
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Note 15: Borrowings (current)
Secured:
Loan – Capital Finance Australia Ltd
(Finance Lease Note 21(a))
Less: Unexpired Interest
Net carrying amount - Capital Finance Australia Ltd loan
Total current borrowings
(a)
(b)
(c)
Further information on loans to related parties is set out in Note 26.
The loans were based on normal commercial terms and conditions.
Refer to Note 2 for risk exposures and risk management details.
Note 16: Borrowings (non-current)
Secured:
Loan – Capital Finance Australia Ltd
(Finance Lease Note 21(a))
Less: Unexpired Interest
Net carrying amount – Capital Finance Australia Ltd loan
Total non-current borrowings
(a)
Refer to Note 2 for risk exposures and risk management details.
Note 17: Provisions
Current
Warranty provision
The movement in the warranty provision is comprised as follows:
At July 1
Provision for warranty recognised/(written back) during the year
2015
$
22,904
(3,862)
19,042
19,042
2015
$
51,851
(5,147)
46,704
46,704
2015
$
–
–
–
–
2014
$
17,757
(4,736)
13,021
13,021
2014
$
74,720
(9,009)
65,711
65,711
2014
$
–
97,315
(97,315)
–
Non-current
Employee entitlements – long service leave
70,273
48,508
D T I G R O U P L T D – A N N U A L R E P O R T 2 0 1 5
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Note 18: Contributed Equity
(a)
Ordinary shares
Balance at the beginning of financial year
Issued under IPO
Shares issued on option conversion
Shares issued to Director as remuneration
7 for 1 share split completed 10 June 2014
Capital raising costs
2015
No.
2015
$
2014
No.
2014
$
76,451,011
6,680,000
8,496,107
–
–
–
9,274,384
2,004,000
2,735,746
–
–
(290,156)
10,904,073
–
–
17,500
65,529,438
–
9,239,384
–
–
35,000
–
–
Balance at the end of the financial year
91,627,118
13,723,974
76,451,011
9,274,384
Fully paid ordinary shares carry one vote per share and carry the right to dividends.
Ordinary shares have no par value and the Company does not have a limited amount of authorised capital.
(b)
Options
The following options to issue ordinary shares which were on issue as at 30 June 2014 (post 7 for 1 share split) were exercised
during 2015 or expired on 30 June 2015. No options were on issue as at 30 June 2015.
Number of Options
Grant Date
Expiry Date
Exercise Price
12,370,806
30 June 2011
30 June 2015
$0.322
See Note 20 for details on share-based payments.
Note 19: Reserves and accumulated losses
(a)
Reserves
Option reserves
Foreign currency translation reserve
Option reserves
Balance 1 July
Transfer to retained income
Balance 30 June
The share option reserve records items recognised as expenses on valuation of
employee share options and items recognised as expenses on fair valuation of
options issued for cash consideration or that are free attaching.
All options were either exercised or lapsed on 30 June 2015 and the balance of the
Option Reserves transferred to Retained Income.
Foreign currency translation reserve
Balance 1 July
Currency translation differences – current year
Balance 30 June
2015
$
–
78,637
78,637
1,156,957
(1,156,957)
–
2014
$
1,156,957
(18,361)
1,138,596
1,156,957
–
1,156,957
(18,361)
(60,276)
(78,637)
–
(18,361)
(18,361)
D T I G R O U P L T D – A N N U A L R E P O R T 2 0 1 5
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Note 19: Reserves and accumulated losses (contd)
The foreign currency translation reserve is used to record exchange differences
arising from the translation of the financial statements of foreign subsidiaries.
(b)
Retained profits / accumulated losses0
Movements in accumulated losses were as follows:
Balance 1 July
Net profit for the year
Transfer from Option Reserves
Balance 30 June
Note 20: Share-based payments
No share based payments were made during the year ended 30 June 2015.
The following share-based payment arrangements existed at 30 June 2014:
2015
$
2014
$
(238,057)
113,517
1,156,957
1,032,417
(1,354,032)
1,115,975
–
(238,057)
On 30 November 2013, 17,500 shares were issued to a Director as part of his remuneration. The expense has been measured based
on the fair value of the shares issued, which has been determined to be $2 each at the time. Accordingly an expense of $35,000 has
been recorded. The fair value was determined with reference to the price of recent share issues.
As at 30 June 2014 there were 12,370,806 unlisted options over ordinary shares issued pursuant to a subscription agreement with
Finico Pty Ltd. The options have a four year term and are exercisable at $0.322 on or before 30 June 2015.
The following table contains the number (“No.”), weighted average exercise prices (WAEP) of and movements in share options issued
during the year:
Outstanding at the beginning of the year
Effect of 7 for 1 share split
Granted during the year
Expired during the year
Exercised during the year
Outstanding at the end of the year
2015
No.
12,370,806
–
–
(3,874,699)
(8,496,107)
–
WAEP
$
0.322
–
–
0.322
0.322
–
2014
No.
1,767,258
10,603,548
–
–
–
12,370,806
WAEP
$
2.250
(1.928)
–
–
–
0.322
Exercisable at the end of the year
–
–
12,370,806
0.322
D T I G R O U P L T D – A N N U A L R E P O R T 2 0 1 5
Page | 46
Note 21: Capital and leasing commitments
(a) Finance lease commitments
The Company signed two motor vehicle leases commencing in April 2013 and three
motor vehicle leases commencing in November 2013. The leases are 5 year finance
leases with lease payments paid monthly in advance. There are no terms of renewal,
purchase options or escalation clauses in respect of the leases.
Minimum finance lease payable:
Not later than 1 year
Later than 1 year but not later than 5 years
Minimum lease payments
Future finance charges
Present value of minimum lease payments
(b) Operating lease commitments
The Company signed an operating lease in June 2012 for the land on which the office
and workshop facilities are situated with a lease term of 5 years, with the option to
extend for a further 5 years. The Company does not have the option to purchase the
leased asset at the expiry of the lease.
The Company signed an operating lease in June 2012 for computer equipment with a
lease term of 3 years. The Company does not have the option to purchase the leased
asset at the expiry of the lease.
The Company signed an operating lease in November 2013 for the lease,
commencing 1 January 2014, of office space for DTI EMEA Ltd in the UK with a lease
term of 5 years. The Company does not have the option to purchase the leased asset
at the expiry of the lease.
Non-cancellable operating lease payable:
Not later than 1 year
Later than 1 year but not later than 5 years
Note 22: Contingent liabilities
Bank guarantees for unconditional undertaking of contracts
The Company has given bank guarantees relating to performance requirements of
contracts. These are secured by term deposits.
Under the contract for the lease of land on which the office and workshop facilities
are situated, the Company may at some future point (at the option of the Lessor) be
required to “make good” the land and remove the building and any improvements
thereon. The Lessor is required to give four years notice of any such requirement.
A bank guarantee in relation to this contract of $107,800 is included in the amounts
above.
2015
$
17,757
56,998
74,755
(9,009)
65,746
2014
$
17,757
74,720
92,477
(13,745)
78,732
123,231
138,829
262,060
154,156
294,688
448,844
2015
$
2014
$
400,063
400,063
D T I G R O U P L T D – A N N U A L R E P O R T 2 0 1 5
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Note 23: Events occurring after the reporting period
No matters or circumstance have arisen that have significantly affected, or may significantly affect, the operations of DTI Group Ltd,
the results of those operations or the state of affairs of DTI Group Ltd in subsequent years that is not otherwise disclosed in this
report.
Note 24: Notes to the cash flow statement
(a)
Reconciliation of Cash
For the purpose of the cash flow statement, cash includes cash on hand and in banks and short term deposits with banks.
Cash at the end of the financial year as shown in the cash flow statement is reconciled to the related items in the statement
of financial position as follows:
Australian Dollar bank accounts
British Sterling bank account
US Dollar bank account
Euro bank account
Petty cash
2015
$
2,974,102
116,053
689,441
59,683
550
3,839,829
2014
$
845,329
104,545
497,397
–
550
1,447,821
(b)
Reconciliation of profit / (loss) after income tax to the net cash used in
operating activities
Operating profit
113,517
1,115,975
Non-cash items:
Depreciation and amortisation
Employee share option expense
Grant income
Exchange differences on foreign operations
Change in operating assets and liabilities
(Increase) / decrease in trade and other receivables
(Increase) / decrease in inventories
(Increase) / decrease in other assets
Increase / (decrease) in trade and other payables
(Increase) / decrease in financial asset
Increase / (decrease) in provision
Increase / (decrease) in deferred tax
Net inflow / (outflow) from operating activities
Non-cash financing and investing activities
884,832
–
(991,861)
(187,598)
355,700
(2,068,146)
(39,996)
837,858
–
21,765
176,495
(897,434)
966,829
35,000
(787,965)
405,609
(785,082)
(430,227)
–
(22,662)
438,933
(95,178)
–
841,232
Shares were issued to employees on the conversion of options under the DTI Employee Option Plan (refer Note 20: Share-
based payments).
D T I G R O U P L T D – A N N U A L R E P O R T 2 0 1 5
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Note 25: Earnings per share
Earnings per Share
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
Reconciliation of earnings used in calculating earnings per share
The following reflects the income and share data used in the calculations of basic
and diluted earnings per share:
Net earnings used in calculating basic and diluted earnings per share
2015
Cents per Share
2014
Cents per Share
0.14
0.14
2015
$
1.46
1.46
2014
$
113,517
1,115,975
2015
Number of
Shares
2014
Number of
Shares
Weighted average number of shares used as the denominator
Weighted average number of ordinary shares used in calculating basic earnings per
share, adjusted to reflect the 7 for 1 share split completed 10 June 2014
Effect of dilutive securities
Adjusted weighted average number of ordinary shares used in calculating diluted
earnings per share
80,674,582
230,043
76,399,997
–
80,904,625
76,399,997
Note: There are no Options or other potential ordinary shares outstanding at 30 June
2015.
Note 26: Related party transactions
Key management personnel
Compensation by category: key management personnel
Short-term benefits
Post-employment benefits
Share based payments
2015
$
915,738
68,804
–
984,542
2014
$
776,040
64,157
35,000
875,197
Computershare Investor Services Pty Limited provides share registry service to DTI. Chris Morris (Non-Executive Chairman of DTI)
is also the Non-Executive Chairman of Computershare Limited. DTI paid Computershare Investor Services Pty Limited $12,798
during the current year (2014: n/a)
Detailed remuneration disclosures are provided in the remuneration report on pages 10 to 16.
D T I G R O U P L T D – A N N U A L R E P O R T 2 0 1 5
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Note 26: Related party transactions (contd)
Subsidiaries
DTI Group Ltd holds 100% (2014: 100%) of the shares in Virtual Observer Pty Ltd. A loan was created during the current and prior
years when payments were made by DTI Group Ltd on behalf of Virtual Observer Pty Ltd. At reporting date 2015 this loan balance
was $110,073 (2014: $94,229).
DTI Group Ltd holds 100% of the shares in DTI EMEA Ltd. A loan was created during the current and previous years when
payments were made by DTI Group Ltd to DTI EMEA Ltd. At reporting date 2015 this loan balance was $1,034,852 (2014:
$789,409). In addition, sales were made during the year by DTI Group Ltd to DTI EMEA Ltd and at reporting date the debtor balance
was $2,022,520 (2014: $1,311,714).
During the previous year, DTI Group Ltd incorporated DTI SaleCo Pty Ltd in which it holds 100% (2014: 100%) of the shares. DTI
SaleCo Pty Ltd’s name was changed to DTI Capital Pty Ltd during the current year. A loan was created during the current year and
prior years when payments were made by DTI Group Ltd on behalf of DTI Capital Pty Ltd. At reporting date 2015 this loan balance
was $1,119 (2014: $748).
During the year, DTI Group Ltd incorporated DTI USA Holdings Inc. (USA entity) in which it holds 100% of the shares. A loan was
created during the current year when payments were made by DTI Group Ltd on behalf of DTI USA Holdings Inc. At reporting date
2015 this loan balance was $4,999 (2014: n/a).
During the year, DTI USA Holdings Inc. incorporated DTI USA Inc. (USA entity) in which it holds 100% of the shares. A loan was
created during the current year when payments were made by DTI Group Ltd on behalf of DTI USA Inc. At reporting date 2015 this
loan balance was $12,544 (2014: n/a). In addition, sales were made during the year by DTI Group Ltd to DTI USA Inc. and at
reporting date the debtor balance was $22,503 (2014: n/a).
No interest is charged on the loans with subsidiaries and there are no fixed repayment terms for the loans.
Note 27: Parent entity financial information: DTI Group Ltd
The individual financial statements for the parent entity show the following amounts:
Statement of Financial Position
Current assets
Total assets
Current liabilities
Total liabilities
Shareholders’ equity:
Issued capital
Reserves
Share option reserve
Retained Income / (accumulated losses)
Profit /(loss) for the year
Total comprehensive income /(loss)
Contingent liabilities
Refer to Note 22 for details of contingent liabilities.
2015
$
16,476,951
19,107,562
(3,979,230)
(4,429,808)
14,014,131
(290,157)
–
953,780
2014
$
10,523,138
13,158,005
(2,728,508)
(2,983,082)
9,274,384
–
1,156,957
(256,418)
14,677,754
10,174,923
(323,922)
1,097,614
(323,922)
1,097,614
D T I G R O U P L T D – A N N U A L R E P O R T 2 0 1 5
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Note 28: Company information
DTI Group Ltd is a listed public company (ASX: DTI), incorporated and operating in Australia.
Registered office and principal place of business
31 Affleck Road
Perth Airport, WA, 6105
Tel: (08) 9479 1195
Internet: www.dti.com.au
D T I G R O U P L T D – A N N U A L R E P O R T 2 0 1 5
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Directors’ declaration
In the opinion of the Directors of DTI Group Ltd ("Company"):
1
2
3
The financial statements and accompanying notes set out on pages 18– 51 are in accordance with the Corporations Act
2001, and:
(i)
(ii)
comply with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting
requirements; and
give a true and fair view of the consolidated entity’s financial position as at 30 June 2015 and of its performance for
the year ended on that date.
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.
The Company has included in the notes to the financial statements an explicit and unreserved Statement of Compliance with
International Financial Reporting Standards.
The directors have been given the declarations by the chief executive officer and chief financial officer required by section 295A of
the Corporations Act 2001.
This declaration is made in accordance with a resolution of the Board of Directors and is signed for and on behalf of the Directors by:
Richard Johnson
Director
28 August 2015, Perth, Australia
D T I G R O U P L T D – A N N U A L R E P O R T 2 0 1 5
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Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
INDEPENDENT AUDITOR’S REPORT
To the members of DTI Group Ltd
Report on the Financial Report
We have audited the accompanying financial report of DTI Group Ltd, which comprises the
consolidated statement of financial position as at 30 June 2015, the consolidated statement of profit or
loss and other comprehensive income, the consolidated statement of changes in equity and the
consolidated statement of cash flows for the year then ended, notes comprising a summary of
significant accounting policies and other explanatory information, and the directors’ declaration of the
consolidated entity comprising the company and the entities it controlled at the year’s end or from
time to time during the financial year.
Directors’ Responsibility for the Financial Report
The directors of the company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error. In Note 1, the directors also state, in accordance with Accounting Standard AASB 101
Presentation of Financial Statements, that the financial statements comply with International
Financial Reporting Standards.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our
audit in accordance with Australian Auditing Standards. Those standards require that we comply with
relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain
reasonable assurance about whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial report. The procedures selected depend on the auditor’s judgement, including the
assessment of the risks of material misstatement of the financial report, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the company’s
preparation of the financial report that gives a true and fair view in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the company’s internal control. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of accounting estimates made by the directors, as
well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinion.
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an
Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of
the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation other than for the acts or omissions of
financial services licensees
Independence
In conducting our audit, 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 DTI Group Ltd, would be in the same terms if given to the directors
as at the time of this auditor’s report.
Opinion
In our opinion:
(a)
the financial report of DTI Group Ltd is in accordance with the Corporations Act 2001, including:
(i)
giving a true and fair view of the consolidated entity’s financial position as at 30 June 2015
and of its performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(b)
the financial report also complies with International Financial Reporting Standards as disclosed in
Note 1.
Report on the Remuneration Report
We have audited the Remuneration Report included in the directors’ report for the year ended 30 June
2015. The directors of the company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
Opinion
In our opinion, the Remuneration Report of DTI Group Ltd for the year ended 30 June 2015 complies
with section 300A of the Corporations Act 2001.
BDO Audit (WA) Pty Ltd
Dean Just
Director
Perth, 28 August 2015
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
DECLARATION OF INDEPENDENCE BY DEAN JUST TO THE DIRECTORS OF DTI GROUP LTD
As lead auditor of DTI Group Ltd for the year ended 30 June 2015, I declare that, to the best of my
knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of DTI Group Ltd and the entities it controlled during the period.
Dean Just
Director
BDO Audit (WA) Pty Ltd
Perth, 28 August 2015
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an
Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of
the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation other than for the acts or omissions of
financial services licensees
Shareholder Information
The shareholder information set out below was applicable at 19 August 2015.
Distribution of Equity Securities
Size of Holding
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
Number of Shareholders
Percentage of Shareholding
2
149
170
201
51
573
0.00
0.46
1.49
6.89
91.16
100.00
There were 15 holders of less than a marketable parcel of ordinary shares.
Twenty Largest Registered Shareholders
Name
Utilico Investments Limited
Finico Pty Limited
Legrande Investments Pty Ltd
Bluekara Pty Ltd
Pendulum Investments Pty Ltd
Fineshore Pty Ltd
Mr Nino Tufilli
Bernville Pty Ltd
Super Rab Pty Ltd
LTC Management Pty Ltd
Mr Glyn Denison
Mr Neil Edward Goodey
Wood Street Pty Ltd
The Stephens Group Pty Ltd
Lacydee Investments Pty Ltd
Foxmore Holdings Pty Ltd
Mr Michael Beech + Mrs Robin Lynn Beech
Dalcrest Investment Pty Ltd
Zanea Pty Ltd
Cleary Nominees Pty Ltd
Total
Number of
Shares
12,250,000
17,348,144
5,212,185
4,525,570
3,648,869
3,403,650
2,479,264
2,126,250
2,126,250
2,007,642
1,955,660
1,928,318
1,785,227
1,662,500
1,415,767
1,333,332
1,260,000
1,191,664
1,106,000
1,102,796
Percentage of
Issued Shares
13.37
18.93
5.69
4.94
3.98
3.71
2.71
2.32
2.32
2.19
2.13
2.10
1.95
1.81
1.55
1.46
1.38
1.30
1.21
1.20
69,869,088
76.25
D T I G R O U P L T D – A N N U A L R E P O R T 2 0 1 5
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Substantial Shareholders
Name
Chris Morris
Utilico Investments Limited
Neil Goodey
LeGrande Investments Pty Ltd
Nino Tufilli
Voting Rights
Number of Ordinary Shares in
the Substantial Shareholding
18,048,144
12,468,750
6,575,198
6,403,829
5,882,914
Subject to any special rights or restrictions attached to any class or classes of shares in the Company, at a general meeting every
holder of shares present in person or by proxy, body corporate representative or attorney has one vote on a show of hands and one
vote for each Share held on a poll.
Votes are cast by a show of hands unless a poll is demanded. The chairperson of the meeting or least five Shareholders entitled to
vote on the resolution or shareholders with at least 5% of the votes that may be cast on the resolution may demand a poll.
Escrowed Shares
The number of shares subject to voluntary escrow is 70,917,925. Following the release of this Annual Report, the holding lock on the
escrowed shares will be lifted; thereby, ending the voluntary escrow period.
On-market Buyback
The Company is not currently conducting an on-market buyback of its shares.
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