Dubber Corporation Limited
Annual Report 2015

Plain-text annual report

ABN 64 089 145 424 DUBBER CORPORATION LIMITED FORMERLY KNOWN AS CRUBIBLE GOLD LIMITED Annual Report 30 June 2015 For personal use only DUBBER CORPORATION LIMITED ABN 64 089 145 424 Corporate Directory BOARD OF DIRECTORS Peter Pawlowitsch Non-Executive Chairman Steve McGovern Managing Director Ken Richards Gavin Campion Non-executive Directors Ian Hobson Company Secretary SHARE REGISTER Automic Registry Services Suite 1A, Level 1, 7 Ventnor Avenue West Perth WA 6005 Telephone +61 8 9324 2099 Facsimile +61 8 9321 2337 AUDITOR BDO AUDIT (WA) PTY LTD 38 Station Street Subiaco WA 6008 STOCK EXCHANGE Dubber Corporation Limited shares are listed on the Australian Securities Exchange ASX Code: DUB PRINCIPAL AND REGISTERED OFFICE IN AUSTRALIA Suite 5, 2 Russell Street Melbourne VIC 3000 Telephone: +61 3 8566 7888 Website: www.dubber.net/corporation SOLICITOR Nova Legal Solicitor Grd Floor 10 Ord Street Nova Legal West Perth WA 6005 BANKER Westpac Banking Corporation Limited 150 Collins Street Melbourne VIC 3000 Annual Report - 30 June 2015 Page 2 For personal use only DUBBER CORPORATION ABN 64 089 145 424 Chairman’s Letter Dear Shareholders CHAIRMAN’S LETTER The acquisition of Dubber has been pivotal to the change in direction of the Company with a number of exciting developments announced at a time when many junior ASX listed companies have continued struggle in challenging market conditions. The Company acquired the Dubber technology suite from Medulla Group Pty Ltd, with the transaction and associated capital raising finalising throughout the year. The Dubber technology suite provides call recording and audio asset management in the cloud. Dubber provides enhanced service at a fraction of the cost base and is flexible to a myriad of applications, not easily achievable with current market solutions. These benefits include immediate access to the call recording at any time from any location and the ability to asset manage and utilise recordings within existing enterprise systems as is the case for other forms of content, but largely not for voice recording. Following completion of the acquisition, the Company focused on a broad range of opportunities that exist within the business and enterprise markets through highly targeted global networks. Management prioritised leveraging pre- existing sales, deployment and technology providers to optimise the Company’s growth. The priority distribution networks targeted by Dubber were direct sales, agent, reseller and distributors, platform integration, telecommunication networks and open API. The Company announced several key partnerships with telecommunications network providers including Inference Solutions and Broadsoft. The partnership with Broadsoft included interoperability testing and accreditation, enabling telecommunications service providers to integrate Dubber’s call recording platform into their existing Broadsoft software without needing additional hardware.. Dubber was the Platinum Sponsor at the Broadsoft Customer and Technical Summits which were held in Melbourne, Hong Kong, Warsaw and Johannesburg 2015 has marked a very exciting change in direction for the Company. On behalf of the Board, I would like to thank all staff and contractors for their contribution to the continuing development of the Company. I would also like to thank our shareholders for their continued support. Yours faithfully Peter Pawlowitsch Chairman Annual Report - 30 June 2015 Page 3 For personal use only DUBBER CORPORATION LIMITED ABN 64 089 145 424 Review of Operations REVIEW OF OPERATIONS Corporate March 2015: The Company sold its interests in its Ivorian subsidiary, which owns all licences in Cote d’Ivoire, for a nominal sum, saving the cost associated with the relinquishing of licences and closing local subsidiaries. The Company also advised its joint venture partner on the Poya Project in Burkina Faso that it has withdrawn from the joint venture with title handed back to the joint venture partner. The Company completed all matters required for the acquisition of Dubber Pty Ltd in March 2015. This included a Prospectus to raise $4,676,020 and the issue of 23,383,100 ordinary 20 cent shares. The Company welcomed Mr Steve McGovern and Mr Gavin Campion as directors and Mr Simon Coxhell resigned as director. January 2015 The Company lodged a re-compliance prospectus for the purpose of satisfying Chapters 1 and 2 of the Listing Rules and to satisfy ASX requirements for re-admission to the Official List following a change to the nature and scale of the Company’s activities. This prospectus included an offer of 20,000,000 Shares at an issue price of $0.20 per Share to raise $4,000,000 (before expenses of the offer), with the ability to take oversubscriptions of 5,000,000 Shares to raise a further $1,000,000 for a total raising of up to $5,000,000. December 2014 Approval for the acquisition of Medulla Group Pty Ltd, consolidation of the issued capital on a 5 to 1 basis and change of name from Crucible Gold Limited to Dubber Corporation Limited, amongst others. October 2014 Mr Tim Fry and Michel Mian resigned as directors of the Company. September 2014 Dubber achieved its first acquisition performance milestone of 1,000 paying end users resulting in 20,484,882 (4,097,005 post-consolidation) Performance Shares being issued. June 2014 The Company advised that due diligence pertaining to the Dubber acquisition was completed. The Company then moved to complete a capital raising via the issue of 3.9m shares at 2.5 cents to raise $97,500. 2 for 1 renounceable rights issue at 2.5 cents completed with shortfall oversubscribed, raising approximately $1,500,000. Business Operations Overview The market had been increasingly challenging for listed, Australian junior resource companies, particularly for those with assets in West Africa. This prompted the Company to investigate alternate opportunities in other sectors. In April 2014 the Company announced a transaction with an Australian technology company, Medulla Group Pty Ltd (“Medulla”) to acquire a transformative Cloud based call recording software technology. Dubber is a software technology suite in a multi-billion dollar hardware centric market place. It provides enhanced service at a fraction of the cost base and is flexible to a myriad of applications, not easily achievable with current market solutions. These benefits include immediate access to the call recording at any time from any location and the ability to asset manage and utilise recordings within existing enterprise systems as is the case for other forms of content, but largely not for voice recording. The browser-based technology will include cheap IP (internet protocol) based telephone calls/recording and a ‘freemium’ to subscription business model. It is available in a scalable enterprise platform with promising early domestic sales and a future plan to internationalise through a system of integration/consultancy firms plus distribution and resellers. Annual Report - 30 June 2015 Page 4 For personal use only DUBBER CORPORATION LIMITED ABN 64 089 145 424 REVIEW OF OPERATIONS A primary focus for Dubber throughout the year has been the delivery of its products through various sales channels, including telecommunication companies. Background on Dubber The Dubber Platform provides call recording and audio asset management in the cloud. Dubber is a transformative Cloud based Software-as-a-Service (SaaS) solution in a multi-billion dollar hardware centric market place. It provides enhanced service and is flexible to a myriad of requirements not easily achievable with current market solutions. The Dubber Platform:  Captures call recordings from many sources including from browsers, mobile, private automatic branch exchange (PABX), hosted voice applications and legacy recording devices.  Manages recordings in a secure, permission-based environment. Call recordings are immediately searchable and accessible from any location via a web browser. Dubber has market leading scalability both in terms of concurrent recording and storage.  Provides value added tools enabling the use of recordings to enhance existing business systems and processes. Recording will be available across all devices and is instantly accessible for many and varied User requirements. The Dubber Platform is a Native Cloud product delivering secure, scalable and robust functionality at a significant saving compared to the cost base normally associated with traditional call recording offerings. Dubber is a classic transformation of a traditional hardware/software market to a Cloud based platform, which delivers many competitive advantages to the Dubber Platform, as set out below:  Is a Native Cloud product built to quickly scale around the Amazon Web Services (AWS) global Cloud infrastructure.  Has a multi-tenant architecture providing the ability to support a complex channel sales model. This provides the Dubber Platform with the ability to separately manage accounts and Users, all with potentially unique subscription, permissions, sales rules, etc via a single scalable global platform.  Key functionality is available to developers and integrators through open Application Programme Interfaces (APIs).  Has built its own end-to-end scalable Cloud telephony platform, which enables the User to make and record a call instantly, without downloading any software, plug-ins or authentication tools.  Enables all Users to record calls made via on-premise internet protocol (IP) PABXs, hosted phone systems or enhancing legacy recording solutions.  Is available on multiple communication devices both as the source of recording and for playback and retrieval. Annual Report - 30 June 2015 Page 5 For personal use only DUBBER CORPORATION LIMITED ABN 64 089 145 424 REVIEW OF OPERATIONS The view of Dubber’s management is that key benefits of using the Dubber Platform are:  scalable on demand which impacts the customer experience and cost profile;  deployable internationally in line with AWS global infrastructure;  centralising all recordings from all disparate devices, platforms, locations or systems into one highly functional platform;  instant playback and management of the recording asset including permanent availability for such functionality;  use of metadata for Big Data applications, for example key word search/ analytics and work flow optimisation;  capture inbound and outbound calls with functionality that would not normally be available for recording by traditional solutions;  there is no reliance on traditional storage infrastructure either at the customer’s premises or in a data centre; and  OPEX rather than CAPEX pricing structure due to SaaS subscription model. Annual Report - 30 June 2015 Page 6 For personal use only DUBBER CORPORATION LIMITED ABN 64 089 145 424 Business Activities REVIEW OF OPERATIONS Following the successful acquisition of Dubber, the Company has focussed on forging partnerships with telecommunication carrier networks. In March 2015 Dubber announced a partnership with Inference Solutions, as part of the Company’s strategy to integrate Dubber into telecommunications service providers at a network level. Inference Solutions is a world leader in advanced IVR and call automation technologies for carriers, large enterprises and Business Process Outsourcing. The Dubber platform has been integrated into Inference’s Studio platform for the seamless and rapid deployment of voice automation solutions that require call recording. Through this partnership, Inference will resell Dubber’s call recording platform via their existing and new channels to service provider and enterprise clients in Australia and internationally. In May, Dubber completed an interoperability program with Broadsoft, a leading provider of software and services that enable mobile, fixed-line and cable service providers to offer Unified Communications over Internet Protocol networks. The interoperability enables telecommunications service providers to integrate Dubber’s call recording platform into their existing Broadsoft software without needing additional hardware. During the year, Dubber was a Platinum Sponsor at the Broadsoft Customer and Technical Summits which were held in Melbourne, Hong Kong, Warsaw and Johannesburg. The Company was able to demonstrate how it enables telecommunications carrier networks to connect call recording onto its network within hours at no cost and is minimally disruptive. Traditionally, telecommunication networks connecting to call recording across their network had to invest significant capital expenditure for hardware licences, productisation and commitment to support infrastructure. In July, Dubber announced it had released ‘Dubber Lab’ for Broadsoft partners. Essentially, the Dubber Lab enables telecommunications and service providers to connect to the Dubber platform within hours for testing and migrate seamlessly into a production environment without traditional technical hurdles or requirements. Dubber’s success in attracting partnerships with industry leaders culminated in August with Dubber announcing it had entered into a Reseller Agreement with Gateway ICT Pty Ltd (Gateway ICT). Gateway ICT is a Cisco Platinum Partner and will directly resell Dubber’s call recording system to customers as additional service to their Telstra Bill. Steve McGovern, CEO of Dubber, said ‘As an experienced Telstra Enterprise Partner, Gateway ICT will be capable of introducing Dubber to the Telstra sales team and this will enable Dubber services to appear on the Telstra bill’. The Cisco customer base had always been a priority in Dubber’s Business and Enterprise strategy, and the technology has been designed with that channel in mind as it provides for a truly global opportunity. In September 2015, Dubber became available in the UK and European markets opening up a revolutionary way in which telecommunications carriers can supply call recording and associated technologies to their customer base. The release into these markets was a result of European Broadsoft roadshow. Dubber advised that a number of other prominent telecos had engaged in the testing process. The Euopean market was a key target for Dubber and this release is a likely first step which the Company hopes will see re-sellers and telco partners providing Dubber recording on a previously unmatched scale. This will be made possible through the software being available in German, Polish, Dutch, French, Spanish and Portuguese to meet service levels of potential customers. In the same period, Dubber continued to succeed in Australian markets with the Company exceeding the performance milestone of 3,000 paying users for the initial vendors of the Dubber business. Annual Report - 30 June 2015 Page 7 For personal use only DUBBER CORPORATION LIMITED ABN 64 089 145 424 Exploration Activities Poya Project, Burkina Faso REVIEW OF OPERATIONS Prior to the acquisition of Dubber, the Company (formerly Crucible Gold) owned an 88.89% interest in the Poya Gold Exploration Licence covering 111 square kilometres of prospective Birimian volcanic ground. During the year, prior to disposal of this asset, the Company investigated a number of private and public potential joint venture partners, consistent to the Company’s earlier business strategy. In March 2015 the Company advised its partner on the Poya Project in Burkina Faso that the Company had withdrawn from the joint venture with title handed back to the joint venture partner. Aboisso and Bodite Projects, Cote d’Ivoire The Company was granted the Aboisso licence in May 2014 with exploration activities continuing soon after the legal granting of this licence. The Company collected 151 soil samples at its Aboisso licence in eastern Cote d’Ivoire immediately adjacent to the Ghanian border. Samples were submitted to Bureau Veritas laboratory for low level gold analysis however results returned a maximum gold value of 22 part per billion (ppb) which is not considered significant. Following the insignificant results returned by exploration activities conducted during the year, in March 2015 the Company announced it had sold its Ivorian subsidiary which owned the Bodite and Aboisso licences in Cote d’Ivoire. Annual Report - 30 June 2015 Page 8 For personal use only DUBBER CORPORATION LIMITED ABN 64 089 145 424 Directors’ Report DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2015 Your directors present their report of Dubber Corporation Limited and its controlled entities (the Group) for the financial year ended 30 June 2015. Directors The names of the directors of the Company in office during the financial year and up to the date of this report are as follows: Steve McGovern Peter Pawlowitsch Gavin Campion Ken Richards Simon Coxhell Tim Fry Michel Mian Managing Director (appointed 2 March 2015) Non-executive Chairman Non-executive Director (appointed 2 March 2015) Non-executive Director Executive Technical Director (resigned 2 March 2015) Chairman (resigned 20 October 2014) Non-executive Director (resigned 20 October 2014) Directors have been in office since the start of the financial year to the date of this report unless otherwise stated. The particulars of the qualifications, experience and special responsibilities of each Director are as follows: Mr Steve McGovern Managing Director (appointed 2 March 2015) Experience Steve McGovern is a founder of Dubber Pty Ltd. He has over 23 years experience in the fields of telecommunications, media sales, pay TV and regulatory. Mr McGovern has been a senior executive of several established companies, both domestically and internationally, which have been primarily associated with new and emerging markets and have required a strong sales and solutions focus. Interest in Shares and Options at the date of this report 3,466,124 ordinary shares 3,541,347 vendor performance shares 1,200,000 performance options 800,000 performance shares All shares and options are held indirectly. Directorships held in other listed entities during the three years prior to the current year Mr McGovern has not been a director of any ASX listed company in the past three years Mr Peter Pawlowitsch Non-executive Chairman Experience Mr Pawlowitsch holds a Bachelor of Commerce from the University of Western Australia, is a current member of the Certified Practising Accountants of Australia and also holds a Master of Business Administration from Curtin University. These qualifications have underpinned more than twelve years’ experience in the accounting profession and more recently in business management and the evaluation of businesses and mining projects. Annual Report - 30 June 2015 Page 9 For personal use only DUBBER CORPORATION LIMITED ABN 64 089 145 424 Interest in Shares and Options at the date of this report Directorships held in other listed entities during the three years prior to the current year DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2015 270,000 ordinary shares 200,000 unlisted options 600,000 performance options 400,000 performance shares All shares and options are held indirectly Mr Pawlowitsch is a director of: Ventnor Resources Limited Kunene Resources Limited Knosys Limited Mr Gavin Campion Non-executive Director (appointed 2 March 2015) Experience Interest in Shares and Options at the date of this report Gavin Campion is a start-up and turnaround entrepreneur and operator in Cloud based technology markets. He has acted as CEO and/or founded a number of successful digital services and technology companies. Mr Campion has an honours degree in marketing from the UK. 1,000,000 ordinary shares 3,000,000 management performance shares 150,000 performance options 100,000 performance shares All shares and options are held indirectly. Directorships held in other listed entities during the three years prior to the current year Mr Campion is a director of: Knosys Limited Mr Ken Richards Experience Non-executive Director Mr Richards has in excess of 25 years’ experience as a Managing Director in various companies listed and unlisted and in various industries. He holds a Bachelor of Commerce and Master of Business Administration degrees from the University of Western Australia and is a fellow of the Australian Institute of Company Directors. Interest in Shares and options at the date of this report 645,776 ordinary shares held indirectly 200,000 unlisted options held directly 150,000 performance options held indirectly 100,000 performance shares held indirectly Directorships held in other listed entities during the three years prior to the current year Mr Richards is a director of: Leaf Energy Limited Mr Simon Coxhell Executive Technical Director (resigned 02 March 2015) Experience Simon Coxhell is a geologist with a Bachelor of Science and Masters Qualifying from James Cook University, Townsville. Mr Coxhell has over 26 years’ experience encompassing all aspects of the resource sector including exploration, development and mining. Mr Coxhell has evaluated and assessed numerous projects across many commodities including gold, copper, iron ore, diamonds, Annual Report - 30 June 2015 Page 10 For personal use only DUBBER CORPORATION LIMITED ABN 64 089 145 424 DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2015 Interest in Shares and Options Directorships held in other listed entities during the three years prior to the current year Mr Tim Fry Experience vanadium ,rare earths, mineral sands, garnet and oil shale. Also completing many JORC compliant resource estimates for gold, mineral sands, garnet, rare earths, oil shale and vanadium resources. Mr Coxhell has been a member of AUSIMM since 1993. 6,000 ordinary shares held directly 44,000 ordinary shares held indirectly 200,000 unlisted options held directly Mr Coxhell is a former director of: Venus Resources Limited Navigator Resources Limited Cohiba Minerals Limited Chairman (resigned 20 October 2014) Mr Fry was formerly Executive General Manager – West Africa for Lihir Gold Ltd, an ASX listed gold producer with annual production in excess of 1 million ounces and operations in Australia, Papua New Guinea and Cote d’Ivoire. In his role as Executive General Manager with Lihir, Mr Fry had responsibility for operations, in the region and a significant gold business development in excess of US$30 million. He exploration programme subsequently held a key leadership role as part of the integration team following the Lihir merger with Newcrest Mining Ltd in mid 2010. Prior to joining Lihir, Mr Fry was President of Dyno Nobel Asia Pacific (2002-2008), a company he had been with since 1992. As part of Dyno Nobel’s global management team he played an integral role in steering the company through European private equity ownership, sale to a Macquarie Bank lead consortium in 2005, listing on the ASX in early 2006 to the subsequent sale of the business to Incitec Pivot Ltd in June 2008. Mr Fry has extensive experience in the mining, resources and civil engineering industries and has a B. Eng (Hons) degree in Mining, ACSM, MAICD. Interest in Shares and Options 160,000 ordinary shares held directly 30,000 ordinary shares held indirectly 200,000 unlisted options held directly Directorships held in other listed entities during the three years prior to the current year Mr Fry has not been a director of any ASX listed company in the past three years Mr Michel Mian Experience Non-Executive Director (resigned 20 October 2015) Mr Mian is an Economist by training, and has been involved in the exploration & mining sector from 1996 to 2009, first with Equigold Cote d’Ivoire as President Director General & Chairman of the board. Mr Mian played a key role in securing the significant land package for Equigold (in excess of 18,000 km2) and the subsequent discovery of the 2.9 MOz, Bonikro deposit. From 2009 to 2010 Mr Mian was President of Lihir Gold Cote d’Ivoire and Annual Report - 30 June 2015 Page 11 For personal use only DUBBER CORPORATION LIMITED ABN 64 089 145 424 DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2015 following the merger of Lihir Gold Ltd and Newcrest Mining Ltd, Mr Mian took on the role as President of Newcrest Cote d’Ivoire from September 2010 to December 2011. Newcrest Mining Ltd, presently now operates the Bonikro mine and has an extensive exploration programme in the country. Mr Mian has been awarded the following honorific medals for his community and business services: Gold Medal for the Best African Manager in Madrid in 2006; Gold Medal for the award 2007 at Meridian Hotel in Paris; his company has been granted the award for the excellence of service quality. Officer of National Order of Cote d’Ivoire by his Excellency the Head of State for services rendered to Cote d’Ivoire. Interest in Shares and Options 50,000 ordinary shares 200,000 unlisted options All shares and options are held directly Directorships held in other listed entities during the three years prior to the current year Mr Mian has not been a director of any ASX listed company in the past three years. Company Secretary Mr Ian Hobson was appointed as Company Secretary on 17 October 2011 and holds a Bachelor of Business degree and is a Chartered Accountant and Chartered Secretary. Mr Hobson provides company secretary services and corporate, management and accounting advice to a number of listed public companies. Principal Activities The principal activities of Dubber Corporation Limited and its controlled entities consisted of provision of call recording and audio asset management in the cloud. Operating Results The loss from ordinary activities after providing for income tax amounted to $3,535,621 (2014: $950,999). Review of Operations A review of operations for the financial year and the results of those operations is contained within the review of operations preceding this report. Dividends Paid or Recommended No dividends were paid or declared since the start of the financial year. No recommendation for payment of dividends has been made. Financial Position At 30 June 2015 the Group had net assets of $10,079,635 (2014: $1,732,554) and cash reserves of $1,697,415 (2014: $1,119,997). Significant Changes in State of Affairs Significant changes in the state of affairs of the Company during the financial year are detailed in the review of operations. In the opinion of the directors, there were no other significant changes in the state of affairs of the Company that occurred during the financial year under review not otherwise disclosed in this report or in the financial statements. Annual Report - 30 June 2015 Page 12 For personal use only DUBBER CORPORATION LIMITED ABN 64 089 145 424 DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2015 Matters Subsequent to Balance Date No matters or circumstances have arisen, since the end of the financial year, which significantly affected, or may significantly affect, the operations of the group, the results of those operations, or the state of affairs of the Group in subsequent financial years, other than as follows. The Company announced on 2 September 2015 that the Group has registered 3,307 paying users as at 25 August 2015, confirming the passing of the performance milestone of 3,000 paying users for the initial vendors of the Dubber business. The Company also confirmed that the signing of the Go Cloud Master Distributer Agreement to establish a re-seller network across Asia, was the final requirement in the first tranche of Management performance shares held by Mr Gavin Campion, a director of the Company. Full details of all performance shares are set out in the Company’s Prospectus dated 15 January 2015. A fully paid ordinary share was issued for converting and cancelling each of the following performance shares upon achieving the above performance milestones: 3,892,127 milestone 2 performance shares held by the vendors of Medulla Group Pty Ltd; 204,818 milestone 2 performance shares held the vendor’s advisors; and 1,000,000 milestone 1 Management performance shares held by Mr Gavin Campion. Likely Developments and Expected Results of Operations The Group will continue to pursue its principal activity of rolling out and developing its cloud based call recording and audio asset management platform. Environmental Regulations The Group is not currently subject to any specific environmental regulation under Australian Commonwealth or State law. Meetings of Directors The numbers of meetings of directors held during the year and the numbers of meetings attended by each director were as follows: Number eligible to attend Number attended Directors' Meetings Mr Steve McGovern (appointed 2 March 2015) Mr Peter Pawlowitsch Mr Gavin Campion (appointed 2 March 2015) Mr Ken Richards Mr Simon Coxhell (resigned 2 March 2015) Mr Tim Fry (resigned 20 October 2014) Mr Michel Mian (resigned 20 October 2014) 1 3 1 3 2 1 1 1 3 1 3 2 - 1 Annual Report - 30 June 2015 Page 13 For personal use only DUBBER CORPORATION LIMITED ABN 64 089 145 424 REMUNERATION REPORT (Audited) DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2015 The remuneration report details the key management personnel remuneration arrangements for the consolidated entity, in accordance with the requirements of the Corporations Act 2001 and its Regulations. Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including all directors. The following persons were directors of Dubber Corporation Limited during the financial year: Steve McGovern Peter Pawlowitsch Gavin Campion Ken Richards Simon Coxhell Tim Fry Michel Mian Managing Director (appointed 2 March 2015) Non-executive Chairman Non-executive Director (appointed 2 March 2015) Non-executive Director Executive Technical Director (resigned 2 March 2015) Chairman (resigned 20 October 2014) Non-executive Director (resigned 20 October 2014) Other persons that fulfilled the role of a key management person during the year, are as follows: James Slaney Chris Jackson Adrian Di Pietrantonio General Manager (appointed 2 March 2015) Chief Technology Officer (appointed 2 March 2015) General Manager, Channels (appointed 2 March 2015) Overview of remuneration policies The Board as a whole is responsible for considering remuneration policies and packages applicable both to Directors and executives of the Company and the Consolidated Entity. Key management personnel have authority and responsibility for planning, directing and controlling the activities of the Company and the Consolidated Entity, including Directors of the Company and other executives. Key management personnel comprise the Directors of the Company, and executives for the Company and the Consolidated Entity including the key management personnel. Broadly, remuneration levels for key management personnel of the Company and key management personnel of the Consolidated Entity are competitively set to attract and retain appropriately qualified and experienced Directors and executives and reward the achievement of strategic objectives. The Board obtains independent advice on the appropriateness of remuneration packages of both the Company and the Consolidated Entity given trends in comparative companies both locally and internationally, and the objectives of the Company’s remuneration strategy. Remuneration packages consist of fixed remuneration including base salary, employer contributions to superannuation funds and non-cash benefits. The Company has a variable remuneration package for Directors, which involves Performance Shares. This plan allows Directors to convert Performance Shares to fully paid ordinary shares for nil cash consideration, subject to performance based vesting conditions. Discretionary bonuses were paid to Mr James Slaney and Mr Adrian Di Pietrantonio of $13,333 each. Fixed remuneration Fixed remuneration consists of base remuneration (which is calculated on a total cost basis and includes any FBT charges related to employee benefits including motor vehicle), as well as employer contributions to superannuation funds. Remuneration levels are reviewed annually by the Board through a process that considers individual, segment and overall performance of the Consolidated Entity. The Board has regard to remuneration levels external to the Consolidated Entity to ensure the Directors’ and executives’ remuneration is competitive in the market place. Annual Report - 30 June 2015 Page 14 For personal use only DUBBER CORPORATION LIMITED ABN 64 089 145 424 DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2015 Executive Directors are employed full time and receive fixed remuneration in the form of salary and statutory superannuation or consultancy fees, commensurate with their required level of services. Non-Executive Directors receive a fixed monthly fee for their services. Where Non-Executive Directors provide services materially outside their usual Board duties, they are remunerated on an agreed retainer or daily rate basis. Service agreements It is the Consolidated Entity’s policy that service agreements for key management personnel are unlimited in term but capable of termination on 3 months’ notice and that the Consolidated Entity retains the right to terminate the service agreements immediately, by making payment equal to 3 months’ pay in lieu of notice. The service agreement outlines the components of compensation paid to key management personnel but does not prescribe how remuneration levels are modified year to year. Remuneration levels are reviewed annually on a date as close as possible to 30 June of each year to take into account key management personnel’s performance. Certain key management personnel will be entitled to bonuses as the Board may decide in its absolute discretion from time to time, to a maximum of 50% of the key management personnel’s annual base salary per annum. Non-Executive Directors Total remuneration for all Non-Executive Directors, last voted upon by shareholders at the 2012 Annual General Meeting, is not to exceed $250,000 per annum and has been set at a level to enable the Company to attract and retain suitably qualified Directors. The Company does not have any scheme relating to retirement benefits for Non-Executive Directors. Relationship between the remuneration policy and Company performance The remuneration policy has been tailored to increase goal congruence between shareholders, Directors and executives. Two methods have been applied to achieve this aim, the first being a performance-based rights subject to performance based vesting conditions, and the second being the issue of options or shares to key management personnel to encourage the alignment of personal and shareholder interests. Share-based payment arrangements Options The Company operates an Employee Share Option Plan (“ESOP”) for executives and senior employees of the Consolidated Entity. In accordance with the provisions of the ESOP, executives and senior employees may be granted options to purchase ordinary shares at an exercise price to be determined by the Board with regard to the market value of the shares when it resolves to offer the options. The options may only be granted to eligible persons after the Board considers the person’s seniority, position, length of service, record of employment, potential contribution and any other matters which the Board considers relevant. Each employee share option converts into one ordinary share of the Company on exercise. No amounts are paid or payable to the Company by the recipient on receipt of the option. The options carry neither rights to dividends nor voting rights. Options may be exercised at any time from the date of vesting to the date of their expiry. The number of options granted is determined by the Board. To date, options granted under the ESOP expire within thirty six months of their issue, or immediately on the resignation of the executive or senior employee, whichever is the earlier. Annual Report - 30 June 2015 Page 15 For personal use only DUBBER CORPORATION LIMITED ABN 64 089 145 424 DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2015 Employment Details of Directors and other Key Management Personnel Remuneration and other terms of employment for key management personnel are formalised in service agreements. Details of these agreements are as follows: Steve McGovern Agreement type: Agreement commenced: Term of Agreement: Remuneration: Termination notice: Peter Pawlowitsch Agreement type: Agreement commenced: Term of Agreement: Remuneration: Termination notice: Gavin Campion Agreement type: Agreement commenced: Term of Agreement: Remuneration: Termination notice: Ken Richards Agreement type: Agreement commenced: Term of Agreement: Remuneration: Termination notice: Managing Director Executive service agreement (MD Agreement) 2 March 2015 No fixed term Annual salary of $240,000 plus statutory superannuation During the first 6 months of the MD Agreement, the Company may terminate the agreement on 3 months notice, or by providing a cash payment in lieu of such notice equal to the salary payable for the remainder of the first 6 months of the MD Agreement (subject to the limitation of the Corporations Act and Listing Rules). After this, the Company may terminate the agreement on 3 months notice. Non-executive Chairman Letter of appointment 1 December 2014 No fixed term Annual fee of $76,650 (inclusive of statutory superannuation) plus reimbursement of all reasonable expenses incurred in performing the Chairman’s duties In the event Peter is removed as a director by shareholders under the Corporations Act or Constitution, or is unable to perform his duties, he is entitled to receive a termination payment of 3 months worth of his director’s fee (subject to the limitation of the Corporations Act and Listing Rules). Non-executive Director Non-executive and consultancy service agreement for services as a non-executive director and consultant 2 March 2015 No fixed term nil director’s fees are payable; a consultancy fee of $219,000 per annum (plus GST); and 4 million Management Performance Shares which are exercisable into Shares in the Company upon the Management Performance Milestones The parties may terminate the Consultancy Agreement by giving 3 months notice (or payment in lieu of such notice on the part of the Company). In the event the Consultancy Agreement is terminated, Gavin is entitled to payment of any outstanding amounts owing up to the date of termination, not including any unexpired term of the Consultancy Agreement (subject to the limitation of the Corporations Act and Listing Rules). Non-executive Director Letter of appointment 1 December 2014 No fixed term Annual fee of $40,000 (inclusive of statutory superannuation) plus reimbursement of all reasonable expenses incurred in performing the Non-executive Director’s duties In the event Ken is removed as a director by shareholders under the Corporations Act or Constitution, or is unable to perform his duties, he is entitled to receive a termination payment of 1 months worth of his director’s fee (subject to the limitation of the Corporations Act and Listing Rules). Annual Report - 30 June 2015 Page 16 For personal use only DUBBER CORPORATION LIMITED ABN 64 089 145 424 DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2015 James Slaney Agreement type: Agreement commenced: Term of Agreement: Remuneration: Termination notice: General Manager Executive service agreement (GM Agreement) 2 March 2015 Same terms as termination notice below: Annual salary of $200,000 plus statutory superannuation Until the earlier of achievement of all the Vendor Performance Milestones or the first 27 months of the GM Agreement, the Company may terminate the agreement on 3 months notice, or by providing a cash payment in lieu of such notice equal to the salary payable for the remainder of the first 27 months of the GM Agreement. After this, the Company may terminate the agreement on 3 months notice. Chris Jackson Agreement type: Agreement commenced: Term of Agreement: Remuneration: Termination notice: Chief Technology Officer Employment agreement (CTO Agreement) 2 March 2015 No fixed term Annual salary of $180,000 plus statutory superannuation Standard 4 week notice periods for termination apply to the CTO Agreement in accordance with statutory requirements. Adrian Di Pietrantonio Agreement type: Agreement commenced: Term of Agreement: Remuneration: Termination notice: General Manager, Channels Executive service agreement (GMC Agreement) 2 March 2015 Same terms as termination notice below: Annual salary of $165,000 plus statutory superannuation Until the earlier of achievement of all the Vendor Performance Milestones or the first 27 months of the GMC Agreement, the Company may terminate the agreement on 3 months notice, or by providing a cash payment in lieu of such notice equal to the salary payable for the remainder of the first 27 months of the GM Agreement. After this, the Company may terminate the agreement on 3 months notice. Annual Report - 30 June 2015 Page 17 For personal use only DUBBER CORPORATION LIMITED ABN 64 089 145 424 Details of Remuneration for Year DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2015 Details of the remuneration of each Director and named executive officer of the company, including their personally-related entities, during the year was as follows: Director Executive Directors: S McGovern (appointed 2/3/15) Non-Executive Directors: P Pawlowitsch G Campion (appointed 2/3/15) K Richards S Coxhell (resigned 2/3/15) T Fry (resigned 20/10/14) M Mian (resigned 20/10/14) Other Key Management Personnel: J Slaney (appointed 2/3/15) C Jackson (appointed 2/3/15) A Di Pietrantonio (appointed 2/3/15) Total Annual Report - 30 June 2015 Year 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 Short Term Benefits Long Term Benefits Post- Employment Share Based Payments Salary and fees $ Cash Bonus $ Annual Leave $ Superannuati on $ Options/ Shares $ Remuneration consisting of options/shares % Remuneration based on performance % Total $ 80,000 - 56,054 74,755 73,333 - 75,476 31,667 32,466 89,833 5,000 33,750 1,693 23,417 66,667 - 60,310 - 55,000 - 505,999 253,422 - - - - - - - - - - - - - - 13,333 - - - 13,333 - 26,666 - - - - - - - - - - - - - - - 2,400 - 4,632 - 710 - 7,742 - 7,600 - 5,325 2,209 - - 2,024 1,927 1,659 1,233 475 3,122 - - 6,333 - 5,948 - 5,225 - 8,569 - 96,169 - 4,285 18,270 264,563 - 1,071 18,270 - 18,270 - 18,270 - 18,270 2,142 - 1,071 - 1,071 - 65,664 95,234 337,896 - 78,571 51,864 34,125 109,336 5,475 55,142 1,693 41,687 90,875 - 71,961 - 75,339 - 34,589 8,491 282,772 91,350 857,768 353,263 9 - 7 19 78 - 1 35 - 17 - 33 - 44 2 - 2 - 1 - 33 26 9 - 7 - 78 - 1 - - - - - - - 2 - 2 - 1 - 33 - Page 18 For personal use only DUBBER CORPORATION LIMITED ABN 64 089 145 424 DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2015 Compensation Securities Issued to Key Management Personnel Performance Options: During the year the following performance options were granted as performance linked incentives to Directors and Executives. The options were issued free of charge. Each option entitles the holder to subscribe for one fully paid ordinary share in the Company, exercisable when performance milestones are achieved, at an exercise price of $0.40 per option on or before 30 June 2018. Key Management Personnel Number granted S McGovern 1,200,000 P Pawlowitsch G Campion K Richards J Slaney C Jackson A Di Pietrantonio 600,000 150,000 150,000 300,000 150,000 150,000 Total 2,700,000 No. vested during the period Grant date 9/06/15 9/06/15 9/06/15 9/06/15 9/06/15 9/06/15 9/06/15 - - - - - - - - Average Value per option at grant date $ $0.1635 $0.1635 $0.1635 $0.1635 $0.1635 $0.1635 $0.1635 Exercise price $ $0.40 $0.40 $0.40 $0.40 $0.40 $0.40 $0.40 Vested and Exercisable - - - - - - - - Last exercise date 30/06/18 30/06/18 30/06/18 30/06/18 30/06/18 30/06/18 30/06/18 The total value of the options at grant date was $441,450. Fair values at grant date was determined using a hybrid up and in option pricing model. The vesting of the options is dependent on the achievement of performance milestones, the timing of which is uncertain. The value of the options have been allocated over the assumed vesting period of the option’s expiry period of three years. At 30 June 2015, $8,299 (approximately 2% of the total value of the options at grant date), assessed as vested is included in the remuneration table above. All options issued to Directors in 2014 were not performance based and vested immediately upon issue. Performance Shares: During the year the following performance shares were granted as performance linked incentives to Directors and Executives. The performance shares were issued free of charge. Each performance share converts into one fully paid ordinary share in the Company for nil cash consideration, upon the achievement of performance milestones, expiring 30 June 2018. Key Management Personnel Number granted No. vested during the period Grant date S McGovern P Pawlowitsch G Campion K Richards J Slaney C Jackson A Di Pietrantonio 800,000 400,000 100,000 100,000 200,000 100,000 100,000 Total 1,800,000 9/06/15 9/06/15 9/06/15 9/06/15 9/06/15 9/06/15 9/06/15 - - - - - - - - Average Value per share at grant date $ $0.3245 $0.3245 $0.3245 $0.3245 $0.3245 $0.3245 $0.3245 Vested and Convertible Last conversion date - - - - - - - - 30/06/18 30/06/18 30/06/18 30/06/18 30/06/18 30/06/18 30/06/18 The total value of the performance shares at grant date was $584,100. Fair values at grant date was determined using a hybrid up and in option pricing model. The conversion of the performance shares is dependent on the achievement of performance milestones, the timing of which is uncertain. The value of the performance shares have been allocated over their expiry period of three years. At 30 June 2015, $10,982 (approximately 2% of the total value of the performance shares at grant date), is included in the remuneration table above. Annual Report - 30 June 2015 Page 19 For personal use only DUBBER CORPORATION LIMITED ABN 64 089 145 424 DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2015 Management Performance Shares: On 28 November 2014, Shareholders approved the issue of 4,000,000 performance shares to Mr Gavin Campion pursuant to the terms of his non-executive services and consultancy agreement. Each performance share is convertible into one fully paid ordinary share in the Company upon the achievement of certain milestones being met. These performance shares were valued at $560,000. The value of the performance shares have been allocated over the periods each milestone is expected to be met or over the period to their expiry date of 27 May 2017. At 30 June 2015, $263,491 (47% of the total value at grant date) has been allocated and included in Mr Campion’s remuneration in the remuneration table above. Shares Issued to Key Management Personnel on Exercise of Compensation Options No shares were issued to directors on exercise of compensation options during the year. Voting and comments made at the company’s 2014 annual general meeting (‘AGM”) At the 2014 AGM, 100% of the votes received supported the adoption of the remuneration report for the year ended 30 June 2014. The company did not receive any specific feedback at the AGM regarding its remuneration practices. Loans with Key Management Personnel There were no loans to key management personnel or their related entities during the financial year. Other Transactions with Key Management Personnel Payments totalling nil (2014: $7,500) were paid to Avitus Capital Ltd, a company associated with Mr Pawlowitsch, for consulting fees (not provided by Mr Pawlowitsch). Payments totalling $17,482 (2014: $39,275) were paid to Ventnor Resources Ltd (a company associated with Mr Pawlowitsch) for rent for the Company’s former offices in West Perth and shared expenses. The Company paid an amount of nil (2014: $3,486) to TD Continental (a company associated with Mr Mian) for field staff. Payments totalling $47,143 (2014: nil) were made to Prueba Pty Ltd, a company associated with Mr Steve McGovern, for platform testing consulting fees during the four months period since acquiring the Dubber business. Intelligent Voice and 1300 MY SOLUTION are businesses associated with Mr Steve McGovern and Mr Adrian Di Pientrantonio. The Group earned service fee income of $7,260 from Intelligent Voice and $51,327 from 1300 MY SOLUTION during the four months since acquiring the Dubber business. Trade receivables at 30 June 2015 include balances of $18,518 due from Intelligent Voice and $57,095 due from 1300 MY SOLUTION. $28,460 was paid by 1300 MY SOLUTION during the year to the Company. The Company entered into sub-underwriting agreements for the renounceable rights share issue completed during the previous financial year, with entities associated with two of its Directors. Coxrocks Pty Ltd (a company associated with Mr Coxhell) and Kellen Investments Pty Ltd (a company associated with Mr Richards), as sub-underwriters, subscribed for shares to the value of $4,500 and $65,000 respectively. The sub-underwriters received no fees for acting as sub- underwriters. During the year, Vault Pty Ltd, a company associated with Mr Pawlowitsch advance a short term loan of $50,000 to the Company in January 2015. This amount was repaid in March with interest of $7,500. Balances in trade creditors at 30 June 2015, include the amounts of $10,323 Mr Adrian Di Pietrantonio and $ 1,880 for Mr James Slaney. Amounts included in the remuneration table for Mr Gavin Campion and Mr Simon Coxhell were paid to their consultancy companies Hydrya Plenus Pty Ltd and Coxrocks Pty Ltd respectively. All transactions are conducted on normal commercial terms and on an arm’s length basis. Annual Report - 30 June 2015 Page 20 For personal use only DUBBER CORPORATION LIMITED ABN 64 089 145 424 DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2015 Additional Disclosures Relating to Key Management Personnel Shareholdings The number of shares in the Company held during the financial year by each Director and other members of key management personnel of the Consolidated Entity, including their personally related parties, is set out below: Director S McGovern (appointed 2/3/15) P Pawlowitsch G Campion (appointed 2/3/15 K Richards S Coxhell (resigned 2/3/15) T Fry (resigned 20/10/14) M Mian (resigned 20/10/14) J Slaney (started 2/3/15) C Jackson (started 2/3/15) A Di Pietrantonio (started 2/3/15) Balance at Beginning of Year - 1,350,000 - 3,228,880 250,000 950,000 250,000 - - - 6,028,880 Received as Remuneration Options Exercised Acquired/ (disposed) Net Change Other Balance at End of Year d) 1,035,163 - b) 1,395,798 2,430,961 - - - - - - - - - - - - - - - - - d) 798,842 d) 194,577 d) 828,382 c) (1,080,000) - - - c) (2,583,104) c) (200,000) - a) (50,000) 270,000 - 645,776 - - - - - - - - a) (950,000) a) (250,000) b) 1,077,147 1,875,989 b) 262,365 456,942 b) 1,116,979 1,945,361 2,856,964 (3,863,104) 2,602,289 7,625,029 a) - Shares held at date of appointment or resignation, as applicable. b) - Shares issued as part consideration for acquisition of Medulla Group Pty Ltd. c) - 1:5 consolidation of existing shares and options on 15/12/14. d) - Vendor performance shares converted on achieving milestone 1. Annual Report - 30 June 2015 Page 21 For personal use only DUBBER CORPORATION LIMITED ABN 64 089 145 424 DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2015 Option Holdings The number of options over ordinary shares in the Company held during the financial year by each Director and other members of key management personnel of the Consolidated Entity, including their personally related parties, is set out below: Director S McGovern (appointed 2/3/15) P Pawlowitsch G Campion (appointed 2/3/15 K Richards S Coxhell (resigned 2/3/15) T Fry (resigned 20/10/14) M Mian (resigned 20/10/14) J Slaney (started 2/3/15) C Jackson (started 2/3/15) A Di Pietrantonio (started 2/3/15) Balance at Beginning of Year Received as Remuneration Options Expired/ Cancelled Net Change Other Balance at End of Year Number Vested Number Exercisable - 1,200,000 - 3,250,000 600,000 b) (3,050,000) - 150,000 - 1,000,000 150,000 b) (800,000) - - - - 2,000,000 1,250,000 1,000,000 - - - - - - 300,000 150,000 150,000 b) (1,800,000) a) (200,000) (250,000) a) (1,000,000) - - - - a) (1,000,000) - - - 1,200,000 800,000 150,000 350,000 - - - 300,000 150,000 150,000 8,500,000 2,700,000 (5,900,000) (2,200,000) 3,100,000 - - - - - - - - - - - - - - - - - - - - - - a) - Options held at date of appointment or resignation, as applicable. b) - 1:5 consolidation of existing shares and options on 15/12/14. Annual Report - 30 June 2015 Page 22 For personal use only DUBBER CORPORATION LIMITED ABN 64 089 145 424 DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2015 Performance Shares Holdings The number of performance shares over ordinary shares in the Company held during the financial year by each Director and other members of key management personnel of the Consolidated Entity, including their personally related parties, is set out below: Director S McGovern (appointed 2/3/15) P Pawlowitsch G Campion (appointed 2/3/15 K Richards S Coxhell (resigned 2/3/15) T Fry (resigned 20/10/14) M Mian (resigned 20/10/14) J Slaney (started 2/3/15) C Jackson (started 2/3/15) A Di Pietrantonio (started 2/3/15) Balance at Beginning of Year Received as Remuneration Shares Expired/ Converted Net Change Other Balance at End of Year - - - - - - - - - - - 800,000 b) (1,035,163) a) 5,611,673 5,376,510 400,000 4,100,000 100,000 - - - - - - - - - - - - - - - 400,000 4,100,000 100,000 - - - 200,000 b) (798,842) a) 4,330,566 3,731,724 100,000 b) (194,577) a) 1,054,811 960,234 100,000 b) (828,382) a) 4,490,705 3,762,323 5,800,000 (2,856,964) 15,487,755 18,430,791 a) – Performance shares issued as part consideration for acquisition of Medulla Group Pty Ltd. b) - Vendor performance shares converted on achieving milestone 1. This is the end of the remuneration report. Annual Report - 30 June 2015 Page 23 For personal use only DUBBER CORPORATION LIMITED ABN 64 089 145 424 DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2015 Indemnifying Officers or Auditors Dubber Corporation Limited has paid premiums to insure directors against liabilities for costs and expenses incurred by them in defending legal proceedings arising from their conduct while acting in the capacity of director of Dubber Corporation Limited, other than conduct involving a wilful breach of duty in relation to Dubber Corporation Limited. Options At the date of this report there were the following unissued ordinary shares for which options were outstanding:      1,000,000 unlisted options expiring 25 November 2016, exercisable at $0.25 each 3,000,000 unlisted options expiring 31 January 2018, exercisable at $0.25 each 600,000 unlisted options expiring 27 February 2018, exercisable at $0.25 each 2,250,000 unlisted options expiring 31 March 2019, exercisable at $0.25 each 2,700,000 unlisted performance options expiring 30 June 2018, exercisable at $0.40 each During the year the following options were issued:     600,000 options expiring 27 February 2018, exercisable at $0.25 each 3,000,000 options expiring 31 January 2018, exercisable at $0.25 each 2,250,000 options expiring 31 March 2019, exercisable at $0.25 each 2,700,000 performance options expiring 30 June 2018, exercisable at $0.40 each During the year the following options expired:     2,200,000 options exercisable at 40 cents each (pre capital consolidation), expired on 26 September 2014 1,250,000 performance options exercisable at 40 cents each (pre capital consolidation), expired on 26 September 2014 1,000,000 options exercisable at 40 cents each (pre capital consolidation), expired on 13 December 2014 100,000 options exercisable at $2.00 each (post capital consolidation), expired on 23 February 2015 No options were exercised during the year. Since the end of the financial year, no other options have expired or been issued or exercised. Performance Shares At the date of this report there were the following unissued ordinary shares for which performance shares were outstanding:    13,315,173 Vendors performance shares, expiring 27 May 2017 3,000,000 Management performance shares, expiring 27 May 2017 1,800,000 performance shares, expiring 30 June 2018 During the year the following performance shares were issued:     21,099,427 Vendors performance shares, expiring 27 May 2017 409,696 Vendor’s Advisors performance shares, expiring 27 May 2017 4,000,000 Management performance shares, expiring 27 May 2017 1,800,000 performance shares, expiring 30 June 2018 The following performance shares converted into fully paid ordinary shares during the year:   3,892,127 Vendors performance shares, expiring 27 May 2017 204,878 Vendor’s Advisors performance shares, expiring 27 May 2017 Since the end of the financial year, no performance shares have been issued or expired, while the following performance shares converted into fully paid ordinary shares:    3,892,127 Vendors performance shares, expiring 27 May 2017 204,818 Vendor’s Advisors performance shares, expiring 27 May 2017 1,000,000 Management performance shares, expiring 27 May 2017 Annual Report - 30 June 2015 Page 24 For personal use only DUBBER CORPORATION LIMITED ABN 64 089 145 424 Corporate Governance DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2015 Under ASX Listing Rule 4.10.3 the Company’s Corporate Governance Statement can be located at the URL on the Company’s website being: https://dubber.net/corporation/policies/ Proceedings on Behalf of the Company No person has applied for leave of Court to bring proceedings on behalf of Dubber Corporation Limited or intervene in any proceedings to which Dubber Corporation Limited is a party for the purpose of taking responsibility on behalf of Dubber Corporation Limited for all or any part of those proceedings. Dubber Corporation Limited was not a party to any such proceedings during the year. Non-audit Services There were no amounts paid or payable to the auditor for non-audit services provided during the year by the auditor other than those outlined in Note 19 to the financial statements. The directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or by another person or firm on the auditor’s behalf), is compatible with the general standard of independence for auditors imposed by the Corporation Act 2001. The directors are of the opinion that the services as disclosed in Note 19 to the financial statements do not compromise the external auditor’s independence requirements of the Corporations Act 2001 for the following reasons:  all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity of the auditor; and  none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board, including reviewing or auditing the auditor's own work, acting in a management or decision-making capacity for the company, acting as advocate for the company or jointly sharing economic risks and rewards. Auditor's Independence Declaration The auditor’s independence declaration for the year ended 30 June 2015, as required under section 307C of the Corporations Act 2001, has been received and is included within the financial report. Signed in accordance with a resolution of the Board of Directors: Peter Pawlowitsch Director Dated: 30 September 2015 Annual Report - 30 June 2015 Page 25 For personal use only 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 JARRAD PRUE TO THE DIRECTORS OF DUBBER CORPORATION LIMITED As lead auditor of Dubber Corporation Limited 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 Dubber Corporation Limited and the entities it controlled during the period. Jarrad Prue Director BDO Audit (WA) Pty Ltd Perth, 30 September 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. For personal use onlyDUBBER CORPORATION ABN 64 089 145 424 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2015 Consolidated Statement of Profit or Loss and Other Comprehensive Income Revenue from continuing operations Service income Other revenue from ordinary activities Expenses Service platform costs Consulting fees Depreciation and amortisation Directors fees and benefits Employee benefits expense Finance costs Share based payments Other expenses from ordinary activities Loss before income tax expense from continuing operations Income tax expense Loss after income tax from continuing operations Loss after income tax from discontinued operations Loss after income tax expense for the year Other comprehensive income Items that may be reclassified to profit or loss Foreign currency translation differences Derecognition of foreign currency reserve Other comprehensive income for the year, net of tax Note 2 (a) 24 2 (b) 3 18 2015 $ 2014 $ RESTATED 62,203 7,416 - 12,733 (319,456) (246,109) (313,966) (271,939) (594,716) (122,831) (515,903) (883,629) (3,198,930) - (3,198,930) (336,691) (3,535,621) - (122,615) (1,405) (123,710) - - (91,350) (329,099) (655,446) - (655,446) (295,553) (950,999) (826) 22,793 21,967 2,103 - 2,103 Total comprehensive loss for the year (3,513,654) (948,896) Loss for the year is attributable to: Owners of Dubber Corporation Limited Non-controlling interests Total comprehensive loss for the year is attributable to: Owners of Dubber Corporation Limited Non-controlling interests Total comprehensive loss for the year attributable to owners of Dubber Corporation Limited arises from: Continuing operations Discontinued operations (3,518,351) (17,270) (3,535,621) (3,496,301) (17,353) (3,513,654) (921,443) (29,556) (950,999) (919,550) (29,346) (948,896) (3,302,471) (193,830) (3,496,301) (645,388) (274,162) (919,550) Annual Report - 30 June 2015 Page 27 For personal use only DUBBER CORPORATION ABN 64 089 145 424 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2015 Earnings per share attributable to the owners of Dubber Corporation Limited Loss from continuing operations: Basic loss per share Diluted loss per share Loss from discontinued operations: Basic loss per share Diluted loss per share Loss for the year: Basic loss per share Diluted loss per share Note 2015 Cents 2014 Cents 15 15 15 15 15 15 (10.18) (10.18) (1.02) (1.02) (11.20) (11.20) (2.32) (2.32) (0.94) (0.94) (3.26) (3.26) The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes. Annual Report - 30 June 2015 Page 28 For personal use only DUBBER CORPORATION LIMITED ABN 64 089 145 424 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2015 Consolidated Statement of Financial Position ASSETS Current Assets Cash and cash equivalents Trade and other receivables Other assets Total Current Assets Non-Current Assets Property, plant and equipment Intangible assets Total Non-Current Assets Total Assets LIABILITIES Current Liabilities Trade and other payables Provisions Total Current Liabilities Total Liabilities NET ASSETS EQUITY Issued capital Reserves Accumulated losses Total equity attributable to the owners of Dubber Corporation Limited Non-controlling interests TOTAL EQUITY Note 2015 $ 2014 $ 4 5 6 7 9 10 11 12 13 14 26 1,697,415 373,418 - 1,119,997 104,489 554,191 2,070,833 1,778,677 16,876 9,018,934 9,035,810 61,683 - 61,683 11,106,643 1,840,360 933,705 93,303 1,027,008 107,806 - 107,806 1,027,008 107,806 10,079,635 1,732,554 17,637,006 5,252,839 (12,810,210) 10,155,008 993,326 (9,291,859) 10,079,635 - 1,856,475 (123,921) 10,079,635 1,732,554 The above consolidated statement of financial position should be read in conjunction with the accompanying notes. Annual Report - 30 June 2015 Page 29 For personal use only DUBBER CORPORATION LIMITED ABN 64 089 145 424 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY AS AT 30 JUNE 2015 Consolidated Statement of Changes in Equity Issued Capital $ Accumulated Losses $ Reserves $ Non- controlling Interests $ Total $ 2015 Balance at 1 July 2014 10,155,008 (9,291,859) 993,326 (123,921) 1,732,554 Loss after income tax expense for the year Other comprehensive income for the year, net of tax Total comprehensive loss for the year Transactions with owners in their capacity as owners: Non-controlling interests in disposed subsidiaries Securities issued during the year Capital raising costs Cost of share based payments - - - (3,518,351) - (17,270) (3,535,621) - (3,518,351) 21,967 21,967 - (17,270) 21,967 (3,513,654) - 7,896,831 (414,833) - - - - - - (819,401) - 5,056,947 141,191 - - - 141,191 7,077,430 (414,833) 5,056,947 Balance at 30 June 2015 17,637,006 (12,810,210) 5,252,839 - 10,079,635 2014 Balance at 1 July 2013 8,639,816 (8,370,416) 899,873 (94,365) 1,074,908 Loss after income tax expense for the year Other comprehensive income for the year, net of tax Total comprehensive loss for the year - - - (921,443) - (29,556) (950,999) - (921,443) 2,103 2,103 - (29,556) 2,103 (948,896) Transactions with owners in their capacity as owners: Securities issued during the year Capital raising costs Cost of share based payments 1,598,232 (83,040) - - - - - - 91,350 - - - 1,598,232 (83,040) 91,350 Balance at 30 June 2014 10,155,008 (9,291,859) 993,326 (123,921) 1,732,554 The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes Annual Report - 30 June 2015 Page 30 For personal use only DUBBER CORPORATION ABN 64 089 145 424 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 UNE 2015 Consolidated Statement of Cash Flows Cash flows from operating activities Receipts from customers Payments to suppliers and employees Interest received Interest and other finance costs paid Note 2015 $ 2014 $ 31,478 (2,259,358) 7,416 (118,896) - (568,376) 12,733 - Net cash outflows used in operating activities 23 (2,339,360) (555,643) Cash flows from investing activities Purchase of plant and equipment Payment of security bond Loans to other entities Loans repaid by other entities Cash acquired on acquisition of subsidiary Exploration and evaluating expenditure (8,848) - (1,321,366) 150,000 1,884 (92,430) (814) (20,000) (525,000) - - (287,038) 17 Net cash outflows used in investing activities (1,270,760) (832,852) Cash flows from financing activities Proceeds from issue of shares Payment of share issue costs Proceeds from borrowings Repayment of borrowings Net cash provided by financing activities Net increase in cash held Cash and cash equivalents at the beginning of the year Effect of exchange rate changes on cash 4,676,620 (367,577) 440,000 (560,687) 1,598,232 (60,096) - - 4,188,356 1,538,136 578,236 1,119,997 (818) 149,641 971,800 (1,444) Cash and cash equivalents at the end of the year 1,697,415 1,119,997 The above consolidated statement of cash flows should be read in conjunction with the accompanying notes Annual Report - 30 June 2015 Page 31 For personal use only DUBBER CORPORATION LIMITED ABN 64 089 145 424 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Notes to the Consolidated Financial Statements 1. Summary of Significant Accounting Policies (a) Basis of Preparation Dubber Corporation Limited (“Company” or “Parent Entity”) is a company limited by shares, incorporated and domiciled in Australia. These consolidated financial statements and notes represent those of Dubber Corporation Limited and controlled entities (“Group” or “Consolidated Entity”). The nature of the operations and principal activities of the Group are described in the Directors’ Report. The financial report is a general purpose financial report that has been prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001. Dubber Corporation Limited is a for- profit entity for the purpose of preparing the financial statements. Australian Accounting Standards set out accounting policies that the AASB has concluded would result in a financial report containing relevant and reliable information about transactions, events and conditions. The financial statements and notes also comply with International Financial Reporting Standards. Material accounting policies adopted in the preparation of this financial report are presented below and have been consistently applied unless otherwise stated. The financial reports have been prepared on an accruals basis and are based on historical costs, modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities. The separate financial statements of the parent entity, Dubber Corporation Limited, have not been presented within this financial report as permitted by the Corporations Act 2001. These financial statements are presented in Australian dollars, rounded to the nearest dollar. (b) Going concern basis The financial report has been prepared on a going concern basis which contemplates the continuity of normal business activity and the realisation of assets and the settlement of liabilities in the normal course of business. For the year ended 30 June 2015 the Group incurred a net loss after tax of $3,535,621 (2014: $950,999), net cash outflow from operating activities of $2,339,360 (2014: $555,643) and net cash outflow from investing activities of $1,270,760 (2014: $832,852). The ability of the Group to continue as a going concern is dependent on the Company being able to raise additional funds as required to meet ongoing business operating costs and for working capital. The Directors believe that they will be able to raise additional capital as required and are in the process of evaluating the Group’s cash requirements. The Directors believe that the Group will continue as a going concern. As a result, the financial report has been prepared on a going concern basis. However, should the Group be unsuccessful in undertaking additional raisings, there is a material uncertainty that may cast significant doubt on the Group’s ability to continue as a going concern and therefore whether it will be able to pay its debts as and when they fall due. No adjustments have been made relating to the recoverability and classification of liabilities that might be necessary should the Group not continue as a going concern. Annual Report - 30 June 2015 Page 32 For personal use only DUBBER CORPORATION LIMITED ABN 64 089 145 424 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1. Summary of Significant Accounting Policies (Continued) (c) Revenue recognition Interest revenue is recognised using the effective interest rate method, which, for floating rate financial assets, is the rate inherent in the instrument. Service income is recognised at the time the service is accessed by the customer. All revenue is stated net of the amount of goods and services tax (GST). (d) Basis of consolidation Subsidiaries The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Dubber Corporation Limited (“Company” or “parent entity”) as at 30 June 2015 and the results of all subsidiaries for the year then ended. Dubber Corporation Limited and its subsidiaries together are referred to in these financial statements as the Group or the consolidated entity. Subsidiaries are all entities (including special purpose entities) over which the Group has control. The Group has control over 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 use its power to affect those returns. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de- consolidated from the date that control ceases. 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 the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. The acquisition of subsidiaries is accounted for using the acquisition method of accounting. Refer to the 'business combinations' accounting policy for further details. A change in ownership interest, without the loss of control, is accounted for as an equity transaction, where the difference between the consideration transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity attributable to the parent. Non-controlling interest in the results and equity of subsidiaries are shown separately in the statement of profit or loss and other comprehensive income, statement of financial position and statement of changes in equity of the consolidated entity. Losses incurred by the consolidated entity are attributed to the non-controlling interest in full, even if that results in a deficit balance. Where the consolidated entity loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The consolidated entity recognises the fair value of the consideration received and the fair value of any investment retained together with any gain or loss in profit or loss. (e) 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, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the full Board of Directors. Annual Report - 30 June 2015 Page 33 For personal use only DUBBER CORPORATION LIMITED ABN 64 089 145 424 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1. Summary of Significant Accounting Policies (Continued) (f) Foreign currency translation Functional and presentation currency (i) The consolidated financial statements are presented in Australian dollars, which is the functional and presentation currency of Dubber Corporation Limited. Transactions and balances (ii) Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities, denominated in foreign currencies, are recognised in profit or loss. Foreign operations (iii) The assets and liabilities of foreign operations are translated to the functional currency as exchange rates at the reporting date. The income and expenses of foreign operations are translated to Australian dollars at exchange rates at the dates of the transactions. Foreign currency difference are recognised in other comprehensive income, and presented in the foreign currency translation reserve in equity. On consolidation, exchange differences arising from the translation of any net investment in foreign entities are recognised in other comprehensive income. When the settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely in the foreseeable future, foreign exchange gains and losses arising from such a monetary item are considered to form part of a net investment in a foreign operation and are recognised in other comprehensive income, and are presented in the translation reserve in equity. When a foreign operation is sold or any borrowings forming part of the net investment are repaid, the associated exchange differences are reclassified to profit or loss, as part of the gain or loss on sale. (g) Finance income Finance income comprises interest income earned on funds invested in bank accounts and call deposits. Interest is recognised on an accruals basis in the consolidated statement of profit or loss and other comprehensive income, using the effective interest method. (h) Income tax The income tax expense (revenue) for the year comprises current income tax expense (income) and deferred tax expense (income). Current income tax expense charged to the profit or loss is the tax payable on taxable income calculated using applicable income tax rates enacted, or substantially enacted, as at the end of the reporting period. Current tax liabilities (assets) are therefore measured at the amounts expected to be paid to (recovered from) the relevant taxation authority. Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year as well as unused tax losses. Current and deferred tax expense (income) is charged or credited directly to equity instead of the profit or loss when the tax relates to items that are credited or charged directly to equity. Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets also result where amounts have been fully expensed but future tax deductions are available. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss. Annual Report - 30 June 2015 Page 34 For personal use only DUBBER CORPORATION LIMITED ABN 64 089 145 424 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1. Summary of Significant Accounting Policies (Continued) (h) Income tax (continued) Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates enacted or substantively enacted at the end of the reporting period. Their measurement also reflects the manner in which management expects to recover or settle the carrying amount of the related asset or liability. Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised. Where temporary differences exist in relation to investments in subsidiaries, branches, associates, and joint ventures, deferred tax assets and liabilities are not recognised where the timing of the reversal of the temporary difference can be controlled and it is not probable that the reversal will occur in the foreseeable future. Current assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets and liabilities are offset where a legally enforceable right of set-off exists, the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur in future periods in which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled. (i) Provisions Provisions are recognised when a Group company has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured. (j) Business combinations The acquisition method of accounting is used to account for all business combinations, regardless of whether equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises the fair values of the assets transferred, the liabilities incurred and the equity interests issued by the group. The consideration transferred also includes the fair value of any asset or liability resulting from a contingent consideration arrangement and the fair value of any pre-existing equity interest in the subsidiary. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the group recognises any non- controlling interest in the acquired asset either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net identifiable assets. The excess of the consideration transferred and the amount of any non-controlling interest in the acquire over the fair value of the net identifiable assets acquired is recorded as goodwill, If those amounts are less than the fair value of the net identifiable assets of the subsidiary acquired and the measurement of all amounts has been reviewed, the difference is recognised directly in profit or loss as a bargain purchase. Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions. Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are subsequently remeasured to fair value with changes in fair value recognised in profit or loss. Annual Report - 30 June 2015 Page 35 For personal use only DUBBER CORPORATION LIMITED ABN 64 089 145 424 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1. Summary of Significant Accounting Policies (Continued) (k) Cash and cash equivalents Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within short-term borrowings in current liabilities in the statement of financial position. (l) Trade receivables Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. Trade receivables are generally due for settlement within 30 days. They are presented as current assets unless collection is not expected for more than 12 months after the reporting date. Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectable are written off by reducing the carrying amount directly. An allowance account (provision for impairment of trade receivables) is used when there is objective evidence that the group will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments (more than 30 days overdue) are considered indicators that the trade receivable is impaired. The amount of the impairment 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 the discounting is immaterial. The amount of the impairment losses is recognised in profit or loss within other expenses. When a trade receivable for which an impairment allowance has been recognised becomes uncollectable in a subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against other expenses in profit or loss. (m) Financial instruments Initial recognition and measurement Financial assets and financial liabilities are recognised when the entity becomes a party to the contractual provisions to the instrument. For financial assets, this is the equivalent to the date that the company commits itself to either the purchase or sale of the asset (i.e. trade date accounting is adopted). Financial instruments are initially measured at fair value plus transactions costs, except where the instrument is classified 'at fair value through profit or loss', in which case transaction costs are expensed to profit or loss immediately. Classification and subsequent measurement Financial instruments are subsequently measured at either of fair value, amortised cost using the effective interest rate method, or cost. Fair value represents the amount for which an asset could be exchanged or a liability settled, between knowledgeable, willing parties. Where available, quoted prices in an active market are used to determine fair value. In other circumstances, valuation techniques are adopted. Amortised cost is calculated as: (a) (b) (c) the amount at which the financial asset or financial liability is measured at initial recognition; less principal repayments; plus or minus the cumulative amortisation of the difference, if any, between the amount initially recognised and the maturity amount calculated using the effective interest method; and less any reduction for impairment. (d) Annual Report - 30 June 2015 Page 36 For personal use only DUBBER CORPORATION LIMITED ABN 64 089 145 424 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1. Summary of Significant Accounting Policies (Continued) (m) Financial instruments (continued) The effective interest method is used to allocate interest income or interest expense over the relevant period and is equivalent to the rate that exactly discounts estimated future cash payments or receipts (including fees, transaction costs and other premiums or discounts) through the expected life (or when this cannot be reliably predicted, the contractual term) of the financial instrument to the net carrying amount of the financial asset or financial liability. Revisions to expected future net cash flows will necessitate an adjustment to the carrying value with a consequential recognition of an income or expense in profit or loss. The Group does not designate any interest as being subject to the requirements of accounting standards specifically applicable to financial instruments. Financial assets at fair value through profit or loss (i) Financial assets are classified at ‘fair value through profit or loss’ when they are either held for trading for the purpose of short-term profit taking, derivatives not held for hedging purposes, or when they are designated as such to avoid an accounting mismatch or to enable performance evaluation where a group of financial assets is managed by key management personnel on a fair value basis in accordance with a documented risk management or investment strategy. Such assets are subsequently measured at fair value with changes in carrying value being included in profit or loss. Loans and receivables (ii) Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are subsequently measured at amortised cost. Loans and receivables are included in current assets, except for those which are not expected to mature within 12 months after the end of the reporting period. All other loans and receivables are classified as non-current assets. Financial liabilities (iii) Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost. Convertible notes are issued from the Company and are convertible at the option of the holder, and the number of shares to be issued does not vary with changes in their fair value. The liability component of a convertible note is recognised at the fair value of a similar liability that does not have an equity conversion option. The equity component is recognised initially at the difference between the fair value of the convertible note as a whole and the fair value of the liability component. Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts. Financial assets are derecognised where the contractual rights to receipt of cash flows expires or the asset is transferred to another party whereby the entity no longer has any significant continuing involvement in the risks and benefits associated with the asset. Financial liabilities are derecognised where the related obligations are either discharged, cancelled or expired. The difference between the carrying value of the financial liability extinguished or transferred to another party and the fair value of consideration paid, including the transfer of non-cash assets or liabilities assumed is recognised in profit or loss. Annual Report - 30 June 2015 Page 37 For personal use only DUBBER CORPORATION LIMITED ABN 64 089 145 424 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1. Summary of Significant Accounting Policies (Continued) (n) Property, plant and equipment Each class of property, plant and equipment is carried at cost or fair value as indicated, less, where applicable, any accumulated depreciation and impairment losses. Plant and equipment Plant and equipment are measured on the cost basis. Depreciation The depreciable amount of all fixed assets including buildings and capitalised leased assets, but excluding freehold land, is depreciated on a straight-line basis over the asset's useful life to the company commencing from the time the asset is held ready for use. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements. The estimated useful lives used for each class of depreciable assets are: Class of Fixed Asset Furniture, Fixtures and Fittings Computer Equipment Computer Software Useful Life 4 years 3 years 3 years The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included in the statement of profit or loss and other comprehensive income. When revalued assets are sold, amounts included in the revaluation surplus relating to that asset are transferred to retained earnings. Property, plant and equipment is derecognised and removed from the statement of financial position on disposal or when no future economic benefits are expected. Gains and losses from derecognition are measured as the difference between the net disposal proceeds, if any, and the carrying amount and are recognised in the statement of profit or loss and other comprehensive income. Subsequent costs are included in the property, plant and equipment's carrying value or recognised as a separate asset when it is probable that future economic benefits associated with the item will be realised and the cost of the item can be measured reliably. All other repairs and maintenance are recognised in the statement of profit or loss and other comprehensive income. Annual Report - 30 June 2015 Page 38 For personal use only DUBBER CORPORATION LIMITED ABN 64 089 145 424 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1. Summary of Significant Accounting Policies (Continued) (o) Exploration and development expenditure Exploration and evaluation expenditures in relation to each separate area of interest are recognised as an exploration and evaluation asset in the year in which they are incurred where the following conditions are satisfied: i) ii) the rights to tenure of the area of interest are current; and at least one of the following conditions is also met: a. the exploration and evaluation expenditures are expected to be recouped through successful development and exploration of the area of interest, or alternatively, by its sale; or exploration and evaluation activities in the area of interest have not, at the reporting date, reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or in relation to, the area of interest are occurring. b. Exploration and evaluation assets are initially measured at cost and include acquisition of rights to explore, studies, exploratory drilling, trenching and sampling and associated activities and an allocation of depreciation and amortisation of assets used in exploration and evaluation activities. General and administrative costs are only included in the measurement of exploration and evaluation costs where they are related directly to operational activities in a particular area of interest. Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount. The recoverable amount of the exploration and evaluation asset is estimated to determine the extent of the impairment loss (if any). Where an impairment loss subsequently reverses, the carrying amount of the asset 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 in previous years. (p) Impairment of assets At each reporting date, the Group assesses whether there is any indication that an asset may be impaired. The assessment will include the consideration of external and internal sources of information including, dividends received from subsidiaries, associates or jointly controlled entities deemed to be out of pre-acquisition profits. If such an indication exists, an impairment test is carried out on the asset by comparing the recoverable amount of the asset, being the higher of the asset's fair value less costs to sell and value in use, to the asset's carrying value. Any excess of the asset's carrying value over its recoverable amount is expensed to the statement of profit or loss and other comprehensive income. Where an impairment loss on a revalued asset is identified, this is debited against the revaluation surplus in respect of the same class of asset to the extent that the impairment loss does not exceed the amount in the revaluation surplus for that same class of asset. Non-financial assets, other than inventories, deferred tax assets, assets from employee benefits, investment properties, biological assets, and deferred acquisition costs, are assessed for any indication of impairment at the end of each reporting period. Any indication of impairment requires formal testing of impairment by comparing the carrying amount of the asset to an estimate of the recoverable amount of the asset. An impairment loss is calculated as the amount by which the carrying amount of the asset exceeds the recoverable amount of the asset. Intangible assets with an indefinite useful life and intangible assets not yet available for use are tested for impairment annually regardless of whether there is any indication of impairment. Annual Report - 30 June 2015 Page 39 For personal use only DUBBER CORPORATION LIMITED ABN 64 089 145 424 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1. Summary of Significant Accounting Policies (Continued) (p) Impairment of assets (continued) The recoverable amount is the greater of the asset's fair value less costs to sell and its value in use. The asset's value in use is calculated as the estimated future cash flows discounted to their present value using a pre-tax rate that reflects current market assessments of the time value of money and the risks associated with the asset. Assets that cannot be tested individually for impairment, are grouped together into the smallest group of assets that generates cash inflows (the asset's cash-generating unit). Impairment losses are recognised in the statement of profit or loss and other comprehensive income. Impairment losses are allocated first, to reduce the carrying amount of any goodwill allocated to cash-generating units, and then to other assets of the group on a pro-rata basis. Assets other than goodwill are assessed at the end of each reporting period to determine whether previously recognised impairment losses may no longer exist or may have decreased. Impairment losses recognised in prior periods for assets other than goodwill are reversed up to the carrying amounts that would have been determined had no impairment loss been recognised in prior periods. (q) Trade and other payables Trade and other payables represent the liability outstanding at the end of the reporting period for goods and services received by the company during the reporting period which remain unpaid. The balance is recognised as a current liability with the amounts normally paid within 30 days of recognition of the liability. (r) Goods and services tax (GST) Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the statement of financial position are shown inclusive of GST. (s) 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. Incremental costs directly attributable to the issue of new shares or options for the acquisition of a business are not included in the cost of the acquisition as part of the purchase consideration. (t) Earnings per share Basic earnings per share (i) Basic earnings per share is calculated by dividing the profit attributable to ordinary shareholders of the company by the weighted average number of ordinary shares outstanding during the financial year. Diluted earnings per share (ii) Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares. Annual Report - 30 June 2015 Page 40 For personal use only DUBBER CORPORATION LIMITED ABN 64 089 145 424 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1. Summary of Significant Accounting Policies (Continued) (u) Share-based payment transactions Employees of the Company receive remuneration in the form of share-based payment transactions, whereby employees render services in exchange for equity instruments ("equity-settled transactions"). When the goods or services acquired in a share-based payment transaction do not qualify for recognition as assets, they are recognised as expenses. The cost of equity-settled transactions and the corresponding increase in equity is measured at the fair value of the goods or services acquired. Where the fair value of the goods or services received cannot be reliably estimated, the fair value is determined indirectly by the fair value of the equity instruments using the Black Scholes option valuation technique. Equity-settled transactions that vest after employees complete a specified period of service are recognised as services received during the vesting period with a corresponding increase in equity. (v) Intangible assets Other intangible assets that are acquired by the Group and have finite useful lives are measured at costs less accumulated amortisation and accumulated impairment losses. Other intangible assets are amortised on a straight line basis in the profit and loss over their estimated useful lives, from the date that they are available for use. The estimated useful life of the intangible asset is 10 years. (w) Employee Provisions Short-term employee benefit obligations (i) Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave expected to be settled wholly within 12 months after the end of the reporting period are recognised in other liabilities in respect of employees' services rendered up to the end of the reporting period and are measured at amounts expected to be paid when the liabilities are settled. Liabilities for non-accumulating sick leave are recognised when leave is taken and measured at the actual rates paid or payable. Other long-term employee benefit obligations (ii) Liabilities for long service leave and annual leave are not expected to be settled wholly within 12 months after the end of the reporting period. They are recognised as part of the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees to the end of the reporting period using the projected unit credit method. Consideration is given to expected future salaries and wages levels, experience of employee departures and periods of service. Expected future payments are discounted using national government corporate bond rates at the end of the reporting period with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows. Regardless of when settlement is expected to occur, liabilities for long service leave and annual leave are presented as current liabilities in the statement of financial position if the entity does not have an unconditional right to defer settlement for at least 12 months after the end of the reporting period. (x) Critical accounting estimates and judgements The directors evaluate estimates and judgments incorporated into the financial statements based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the company. Key estimates - Impairment The Group assesses impairment at the end of the reporting period by evaluating conditions specific to the Annual Report - 30 June 2015 Page 41 For personal use only DUBBER CORPORATION LIMITED ABN 64 089 145 424 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS company that may be indicative of impairment triggers. Recoverable amounts of relevant assets are reassessed using value-in-use calculations which incorporate various key assumptions. Key judgements – Exploration and evaluation expenditure The Group capitalises expenditure relating to exploration and evaluation where it is considered likely to be recoverable or where the activities have not reached a stage which permits a reasonable assessment of the existence of reserves. While there are certain areas of interest from which no reserves have been extracted, the directors are of the continued belief that such expenditure should not be written off since feasibility studies in such areas have not yet concluded. Key judgements – 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 date at which they are granted. The fair value is determined using the Black-Scholes method. The related assumptions are detailed in note 24. The accounting estimates and assumptions relating to equity-settled share-based payments would have no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact expenses and equity. Key Estimates-Impairment of Intangibles The group tests whether intangibles have suffered any impairment, in accordance with the accounting policy in note 1. The recoverable amount of the intangible is based on a number of assumptions. No impairment has been recognised in respect to of the intangible at the reporting period. Annual Report - 30 June 2015 Page 42 For personal use only DUBBER CORPORATION LIMITED ABN 64 089 145 424 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1. Summary of Significant Accounting Policies (Continued) (y) New accounting standards for application in future period & current periods In the year ended 30 June 2015, the Company has reviewed all of the new and revised Standards and Interpretations issued by the AASB that are relevant to its operations and effective for the current annual reporting period. It has been determined by the Company that there is no impact, material or otherwise, of the new and revised Standards and Interpretations on its business and, therefore, no change is necessary to the Group accounting policies. The Company has also reviewed all new Standards and Interpretations that have been issued but are not yet effective for the year ended 30 June 2015. Reference Title Summary AASB 9 Financial Instruments AASB 9 AAB 9 addresses the classification, measurement and derecognition of financial assets and financial liabilities. Since December 2013, it also sets out new rules for hedge accounting. AASB 15 (issued June 2014) Revenue from contracts with customers Annual Report - 30 June 2015 An entity will recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This means that revenue will be recognised when control of goods or services is transferred, rather than on transfer of risks and rewards as is currently the case Impact on Group’s financial report There will be no impact on the company’s accounting for financial assets and financial liabilities as the new requirements only affect the accounting for available-for-sale financial assets and the accounting for financial liabilities that are designated at fair value through profit or loss and the company does not have any such financial assets or financial liabilities. The new hedging rules align hedge accounting more closely with the company’s risk management practices. As a general rule it will be easier to apply hedge accounting going forward. The new standard also introduces expanded disclosure requirements and changes in presentation. The company has not yet made an assessment of the impact of this standard. Application date for Group Must be applied for financial years commencing on or after 1 January 2018. Application date for the company will be 30 June 2019. The company does not currently have any hedging arrangements in place. Must be applied for annual reporting periods beginning on or after 1 January 2018. Application date for the company will Page 43 For personal use only DUBBER CORPORATION LIMITED ABN 64 089 145 424 Reference Title Summary under IAS 18 Revenue. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Impact on Group’s financial report Application date for Group be 30 June 2019. The Group has not elected to early adopt any new Standards or Interpretations. (z) Parent entity financial information The financial information for the parent entity, Dubber Corporation Limited, disclosed in note 25 has been prepared on the same basis as the consolidated financial statements. Annual Report - 30 June 2015 Page 44 For personal use only DUBBER CORPORATION LIMITED ABN 64 089 145 424 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2. Revenue and Expenses from Continuing Operations (a) Other revenue Interest (b) Other expenses Audit fees Accounting and tax advice fees Exploration impaired Legal fees Marketing Securities exchange and registry fees Travel costs Other administration 3. Income Tax (a) Income Tax Expense Loss before income tax expense Tax at the Australian tax rate of 30% Tax effect of amounts not deductible (taxable) in calculating taxable income Deferred tax asset not brought to account on temporary differences & tax losses Income tax expense (b) Unrecognised Deferred Tax Assets Timing differences Tax losses – revenue Tax losses - capital Offset against deferred tax liabilities recognised Deferred tax assets not brought to account There are no franking credits available to the Group. Consolidated 2015 $ 2014 $ 7,416 12,733 33,558 115,973 7,500 116,129 116,400 92,580 119,834 281,655 883,629 26,409 43,590 46,498 55,976 - 34,065 23,454 99,107 329,099 (3,535,621) (921,443) (1,060,686) (276,433) (183,144) 132,852 1,243,830 143,581 - - 95,354 2,542,999 323,367 2,961,720 - 2,961,720 9,789 1,677,000 323,367 2,010,156 - 2,010,156 Annual Report - 30 June 2015 Page 45 For personal use only DUBBER CORPORATION LIMITED ABN 64 089 145 424 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 4. Cash and Cash Equivalents Cash at bank The company’s exposure to interest rate risk is outlined in note 16. 5. Trade and Other Receivables Current Trade receivables GST recoverable Receivable from Medulla Group Pty Ltd vendors Prepayments Other receivables Consolidated 2015 $ 2014 $ 1,697,415 1,697,415 1,119,997 1,119,997 82,870 119,086 106,366 6,596 58,500 373,418 - 27,298 - 57,191 20,000 104,489 The acquisition of Medulla Group Pty Ltd (“Medulla”) was on a no liability basis. It was determined on reconciling the acquisition and liabilities paid of Medulla that the vendors of Medulla Group Pty Ltd owed Dubber Corporation Limited $106,366. Receipt of this amount is expected within 6 months of 30 June 2015. Trade and other receivables are all due within three months of this report and no impairment provision has been made. Information about credit and liquidity risk is outlined in note 16. Prepayments consist of prepaid insurance and consulting fees. 6. Other Assets Current Loan – Abidjan office Guarantees – Abidjan office Convertible note advances Funding to Dubber Pty Ltd - - - - - 18,724 10,467 500,000 25,000 554,191 The loan and guarantees represented expenditure incurred on the Group’s office in Abidjan, Côte d’Ivoire on behalf of the landlord. Rent on the premises was offset against the loan, and interest charged on the outstanding balance. This arrangement completed with the closure of the Abidjan office in December 2014. The convertible note advances were interest free unsecured funding to Dubber Pty Ltd (“Dubber”), in accordance with the binding term sheet with Dubber, Medulla Group Pty Ltd (“Medulla”) and Medulla’s shareholders, with the funds used for the commercialisation of Dubber’s voice recording software. The Company agreed to provide additional interest free unsecured funding to Dubber for the marketing, sales and distribution of its software on an as needs basis until completion of the acquisition of Medulla. The total loans to Dubber were eliminated within the Group, upon the completion of the acquisition of Medulla on 27 February 2015. Risk management policies in regard to credit and currency risk are outlined in note 16. Annual Report - 30 June 2015 Page 46 For personal use only DUBBER CORPORATION LIMITED ABN 64 089 145 424 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 7. Property, Plant and Equipment Plant and equipment – at cost Less: Accumulated depreciation Net carrying amount Consolidated 2015 $ 2014 $ 30,516 (13,640) 16,876 142,115 (80,432) 61,683 Reconciliation Reconciliation of the carrying amount for each class of property, plant and equipment between the beginning and the end of the current and previous financial year are set out below: 2015 Balance at the beginning of the year Additions Acquisition of subsidiary (note 17) Foreign exchange movement Depreciation expense Impairment (i) Carrying amount at the end of the year 2014 Balance at the beginning of the year Additions Foreign exchange movement Depreciation expense Carrying amount at the end of the year Computer Equipment $ Office Renovations $ Furniture $ Plant & Equipment $ Total $ 2,442 4,316 5,940 - (2,787) (1,048) 8,863 4,726 814 111 (3,209) 2,442 14,516 - - (2) (3,072) (11,442) - 19,742 - 431 (5,657) 14,516 15,851 4,532 4,173 (3) (5,482) (11,278) 7,793 24,587 - 584 (9,320) 15,851 28,874 - - (5) (8,686) (19,963) 220 45,025 - 1,051 (17,202) 28,874 61,683 8,848 10,113 (10) (20,027) (43,731) 16,876 94,080 814 2,177 (35,388) 61,683 (i) The property, plant and equipment held at the Group’s office in Abidjan, Côte d’Ivoire with a carrying value of $43,731 at 31 December 2014 (30 June 2014: $60,801) were impaired to their recoverable value of nil with the closure of the Abidjan office on that date. 8. Exploration Expenditure Balance at the beginning of the year Expenditure incurred during the year Expenditure incurred during the year expensed Exploration expenditure at cost Consolidated 2015 $ 2014 $ - 119,414 (119,414) - - 310,087 (310,087) - The recoverability of the carrying amount of the transaction and evaluation assets is dependent upon the successful development and commercial exploitation, or alternatively, sale of the respective areas of interest. The exploration expenditure has been written-off in 2015 as the recoverability criteria by further exploration or sale is not considered capable of satisfaction. Annual Report - 30 June 2015 Page 47 For personal use only DUBBER CORPORATION LIMITED ABN 64 089 145 424 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 9. Intangible Assets Dubber intellectual property – at cost Less: Accumulated amortisation Net carrying amount Reconciliation Balance at the beginning of the year Acquisition of subsidiary (note 17) Amortisation expense Net carrying amount at the end of the year 10. Trade and Other Payables Current Trade payables Payroll tax and other statutory liabilities Other payables Consolidated 2015 $ 2014 $ 9,329,932 (310,998) 9,018,934 - 9,329,932 (310,998) 9,018,934 - - - - - - - 408,910 488,295 36,500 933,705 69,773 - 38,033 107,806 All payables are expected to be settled within 6 months. Risk management policies in regard to liquidity and currency risk are outlined in note 16. 11. Provisions Current Employee benefits 93,303 93,303 - - Employee benefits represent annual leave entitlements of employees within the Group and is non-interest bearing. The entire obligation is presented as current, since the Group does not have a right to defer settlement. Annual Report - 30 June 2015 Page 48 For personal use only DUBBER CORPORATION LIMITED ABN 64 089 145 424 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 12. Issued Capital Issued and paid up capital 57,492,814 (2014: 90,043,920) Ordinary shares – fully paid Share issue costs written off against share capital Consolidated 2015 $ 2014 $ 18,525,025 (888,019) 17,637,006 10,628,194 (473,186) 10,155,008 Movement in ordinary shares on issue 2015 Balance at the beginning of the year Consolidation of shares at 1:5 – 15 December 2014 Issued for cash pursuant to prospectus – 27 February 2015 Issued as part consideration for acquisition of subsidiary (note 17) – 27 February 2015 Issued as consideration for acquisition advisor fees – 27 February 2015 Conversion of performance shares on achieving milestone – 27 February 2015 Issued upon conversion of acquired subsidiary’s convertible notes – 27 February 2015 Share issue costs Balance at the end of the year 2014 Balance at the beginning of the year Issued for cash pursuant to placement – 6 May 2014 Issued for cash pursuant to renounceable rights issue – 5 June Issue Price No. of Shares $ $0.20 $0.20 $0.20 $0.20 $0.20 90,043,920 (72,035,260) 23,383,100 10,155,008 - 4,676,620 5,248,088 1,049,618 755,961 151,192 4,097,005 819,401 6,000,000 57,492,814 1,200,000 (414,833) 17,637,006 $0.025 26,114,640 3,900,000 8,639,816 97,500 2014 $0.025 15,201,127 380,028 Issued for cash pursuant to renounceable rights issue – 27 June 2014 Share issue costs Balance at the end of the year Options $0.025 44,828,153 90,043,920 1,120,704 (83,040) 10,155,008 At the end of the year, the following options over unissued ordinary shares were outstanding: Exercise Price Number under Grant Date 25 November 2014 15 December 2014 27 February 2015 9 June 2015 30 June 2015 Expiry Date 25 November 2016 31 January 2018 27 February 2018 30 June 2018 31 March 2019 $0.25 $0.25 $0.25 $0.40 $0.25 Option 1,000,000 3,000,000 600,000 2,700,000 2,250,000 9,550,000 Annual Report - 30 June 2015 Page 49 For personal use only  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DUBBER CORPORATION LIMITED ABN 64 089 145 424 12. Issued Capital (continued) Performance shares Each performance share converts into one fully paid ordinary share for nil cash consideration, upon the achievement of performance based milestones. At the end of the year, the following performance shares yet to be converted into ordinary shares were outstanding: Grant Date 28 November 2014 27 February 2015 27 February 2015 9 June 2015 Expiry Date 27 May 2017 27 August 2015 27 May 2017 30 June 2018 Capital risk management Number of Performance Shares 4,000,000 4,096,975 13,315,173 1,800,000 23,212,148 The group’s objectives when managing capital are to safeguard the ability to continue as a going concern, so that benefits to stakeholders and an optimum capital structure are maintained. In order to maintain or adjust the capital structure, the company may return capital to shareholders, cancel capital, issue new shares or options or sell assets. 13. Reserves Option reserve Performance share reserve Foreign currency reserve Option reserve Consolidated 2015 $ 2014 $ 1,495,943 3,756,896 - 5,252,839 1,015,293 - (21,967) 993,326 The option reserve is used to accumulate amounts received on the issue of options and records items recognised as expenses on valuation of incentive based share options. Movement in option reserve: Balance at the beginning of the year Issue of incentive based share options – directors options Options issued as consideration for capital raising services – broker options Options issued upon conversion of acquired subsidiary’s convertible notes – attaching options Issue of incentive based share options – directors and key management Balance at the end of the year 1,015,293 - 70,200 402,150 8,300 1,495,943 923,943 91,350 - - - 1,015,293 Annual Report - 30 June 2015 Page 50 For personal use only DUBBER CORPORATION LIMITED ABN 64 089 145 424 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Consolidated 2015 $ 2014 $ 13. Reserves (continued) Performance share reserve The performance share reserve is used to record the value of performance shares issued as share based payments until the performance shares are converted into fully paid ordinary shares upon achievement of performance based milestones. Movement in performance share reserve: Balance at the beginning of the year Issued as incentive share based payment – management performance shares Issued as part consideration for acquisition of subsidiary (note 17) Issued as consideration for acquisition advisor fees Issued as incentive share based payment – directors and key management Converted into ordinary shares upon achievement of performance milestone Balance at the end of the year - 263,492 4,219,885 81,939 10,981 (819,401) 3,756,896 - - - - - - - Foreign currency reserve The foreign currency reserve is used to record exchange differences arising from the translation of the financial statements of foreign operations. Movement in foreign currency reserve: Balance at the beginning of the year Currency translation differences Derecognition on disposal of subsidiary (note 18) Balance at the end of the year (21,967) (826) 22,793 - (24,070) 2,103 - (21,967) 14. Accumulated Losses Balance at the beginning of the year Total comprehensive loss for the year Balance at the end of the year (9,291,859) (3,518,351) (12,810,210) (8,370,416) (921,443) (9,291,859) Annual Report - 30 June 2015 Page 51 For personal use only DUBBER CORPORATION LIMITED ABN 64 089 145 424 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 15. Earnings per Share (EPS) The earnings and weighted average number of ordinary shares used in the calculation of basic earnings per share are as follows: Earnings attributable to the owners of Dubber Corporation Limited used to calculate EPS Loss from continuing operations Loss from discontinued operations Loss for the year Weighted average number of ordinary shares used in the calculation of EPS Weighted average number of ordinary shares used as the denominator in calculating basic EPS As the Company is in a loss position there is no diluted EPS calculated 16. Financial Risk Management Consolidated 2015 $ 2014 $ $ (3,198,930) (319,421) (3,518,351) $ (655,446) (265,997) (921,443) No. No. 31,422,455 28,287,084 Financial instruments consist mainly of deposits with banks and accounts receivable and payable. The totals for each category of financial instruments, measured in accordance with AASB 139 as detailed in the accounting policies to these financial statements, are as follows: Financial Assets Cash and cash equivalents Trade and other receivables Total Financial Assets Financial Liabilities Trade and other payables Total Financial Instruments Weighted Average Interest Rate (%) Note 2015 $ 2014 $ 1.9 - - 4 5, 6 10 1,697,415 366,822 2,064,237 933,705 1,130,532 1,119,997 601,489 1,721,486 107,806 1,613,680 The carrying amounts of these financial instruments approximate their fair values. Annual Report - 30 June 2015 Page 52 For personal use only DUBBER CORPORATION LIMITED ABN 64 089 145 424 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 16. Financial Risk Management (continued) Financial Risk Management Policies Exposure to key financial risks is managed in accordance with the Group’s risk management policy with the objective to ensure that the financial risks inherent in mineral exploration activities and new business reviews are identified and then managed or kept as low as reasonably practicable. The main financial risks that arise in the normal course of business are market risk (including currency risk and interest rate risk), credit risk and liquidity risk. Different methods are used to measure and manage these risk exposures. Liquidity risk is monitored through the ongoing review of available cash and future commitments for exploration expenditure. Exposure to liquidity risk is limited by anticipating liquidity shortages and ensures capital can be raise in advance of shortages. Interest rate risk is managed by limiting the amount interest bearing loans entered into by the company. It is the Board's policy that no speculative trading in financial instruments be undertaken so as to limit expose to price risk. Primary responsibility for identification and control of financial risks rests with the Company Secretary, under the authority of the Board. The Board is apprised of these risks from time to time and agrees any policies that may be undertaken to manage any of the risks identified. Details of the significant accounting policies and methods adopted, including criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each financial instrument are disclosed in Note 1 to the financial statements. The carrying values less the impairment allowance for receivables and payables are assumed to approximate fair values due to their short term nature. Cash and cash equivalents are subject to variable interest rates. Specific Financial Risk Exposures and Management (c) Credit risk Exposure to credit risk relating to financial assets arises from the potential non-performance by counter parties of contract obligations that could lead to a financial loss to the company. The company trades only with recognised, creditworthy third parties. The company has no customers and consequently no significant exposure to bad debts or other credit risks. With respect to credit risk arising from financial assets, which comprise cash and cash equivalents and receivables, the exposure to credit risk arises from default of the counter party, with a maximum exposure equal to the carrying amount of these instruments. The majority of cash and deposits is held with ANZ Bank Ltd, a AA- credit rated bank. (d) Liquidity risk Liquidity risk arises from the possibility that the company might encounter difficulty in settling its debts or otherwise meeting its obligations related to financial liabilities. Prudent liquidity risk management implies maintaining sufficient cash reserves to meet the ongoing operational requirements of the business. It is the company’s policy to maintain sufficient funds in cash and cash equivalents. Furthermore, the company monitors its ongoing research and development cash requirements and raises equity funding as and when appropriate to meet such planned requirements. The company has no undrawn financing facilities. Trade and other payables, the only financial liability of the company, are due within 3 months. Annual Report - 30 June 2015 Page 53 For personal use only DUBBER CORPORATION LIMITED ABN 64 089 145 424 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 16. Financial Risk Management (continued) The tables below reflect an undiscounted contractual maturity analysis for financial liabilities. Cash flows realised from financial assets reflect management's expectation as to the timing of realisation. Actual timing may therefore differ from that disclosed. The timing of cash flows presented in the table to settle financial liabilities reflects the earliest contractual settlement dates and does not reflect management's expectations that banking facilities will be rolled forward. Financial liability and financial asset maturity analysis Within 1 Year 1 to 5 Years Total Contractual Cash Flow 2015 $ 2014 $ 2015 $ 2014 $ 2015 $ 2014 $ Financial assets – cash flows receivable Trade and other receivables Total expected inflows 366,822 366,822 601,489 601,489 Financial liabilities due for payment realisable Trade and other payables Total anticipated outflows Net (outflow)/inflow on financial instruments (b) Market risk 933,705 933,705 107,806 107,806 (566,883) 493,683 - - - - - - - - - - 366,822 366,822 601,489 601,489 933,705 933,705 107,806 107,806 (566,883) 493,683 i. Interest rate risk The company’s cash-flow interest rate risk primarily arises from cash at bank and deposits subject to market bank rates. The company does not have any borrowings or enter into hedges. An increase/(decrease) in interest rates by 1% during the whole of the respective periods would have led to an increase/(decrease) in both equity and losses of less than $16,975. ii. Currency risk The Company previously operated in West Africa and was exposed to foreign exchange risk arising from currency exposures, primarily with respect to the Central African Franc (XOF). Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the entity’s functional currency. The risk is measured using sensitivity analysis and cash flow forecasting, Due to the discontinuation of the Company’s foreign operations at this stage, the group does not hedge foreign exchange exposure. (c) Fair value The Group does not have any financial instruments that are subject to recurring fair value measurements. Due to their short-term nature, the carrying amounts of the current receivables and current trade and other payables is assumed to approximate their fair value. Annual Report - 30 June 2015 Page 54 For personal use only DUBBER CORPORATION LIMITED ABN 64 089 145 424 17. Business Combination NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS On 27 February 2015, the Company acquired 100% of the issued shares of Medulla Group Pty Ltd (“Medulla”). Medulla owns 100% of Dubber Pty Ltd the operating entity of the Dubber technology suite. Medulla is a holding entity with no material operations. The total cost of the acquisition was $5,269,503 and comprised an issue of equity instruments. The Company issued 5,248,088 ordinary fully paid shares and 21,099,427 performance shares to the shareholders of Medulla, as consideration for the acquisition. The provisionally accounted fair value of the identifiable assets and liabilities of the subsidiary as at the date of acquisition were: Cash and cash equivalents Trade and other receivables Plant and equipment Intangible asset – Dubber intellectual property Trade and other payables Provisions Loans and borrowings Loan payable to Dubber Corporation Limited Net assets acquired Cost of the acquisition: Securities issued, at fair value Cash paid or payable to the vendor Payments made in prior periods Direct costs relating to the acquisition Total cost of the combination Net cash flow from the acquisition: Cash acquired with subsidiary Cash paid to the vendor Net cash inflow Fair Value $ 1,884 133,662 10,113 9,329,932 (811,735) (81,547) (120,656) (3,192,150) 5,269,503 5,269,503 - - - 5,269,503 1,884 - 1,884 The acquired subsidiary contributed revenues of $62,203 and loss after tax of $1,813,501 to the Group for the period from 27 February 2015 to 30 June 2015. If the acquisition had occurred on 1 July 2014, the full year contributions would have been revenue of $108,013 and loss after tax of $4,947,433. We have applied provisional accounting to this transaction. Annual Report - 30 June 2015 Page 55 For personal use only DUBBER CORPORATION LIMITED ABN 64 089 145 424 18. Discontinued Operations NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS In December 2014, the Company closed the Group’s office in Abidjan, Côte d’Ivoire. On 31 March 2015, the consolidated entity sold its 90% interest in Major Star SA, a company registered in Côte d’Ivoire that owned the Bodite and Aboisso exploration licences in Cote d’Ivoire. Following the insignificant results returned by exploration activities conducted during the year, the subsidiary was sold for nil consideration and saved the Group the costs associated with relinquishing the licences and deregistering the subsidiary. Financial information relating to the discontinued operation for the period to the date of disposal is set out below. Financial performance and cash flow information The financial performance and cash flow information presented are for the nine months ended 31 March 2015 and the year ended 30 June 2014. Financial performance: Revenue Interest Expenses Depreciation and amortisation Exploration expensed Impairment of property, plant and equipment Loss before income tax expense Income tax expense Loss after income tax Loss on disposal before income tax Income tax expense Loss on disposal after income tax 2015 $ 2014 $ - 2,018 (17,059) (111,914) (43,731) (172,704) - (33,983) (263,589) - (295,554) - (172,704) (295,554) (163,987) - (163,987) - - - Loss after income tax expense from discontinued operations (336,691) (295,554) Cash flow: Net cash used in investing activities Net cash from financing activities Effect of exchange rate changes on cash Net Increase/decrease in cash and cash equivalents from discontinued operations (84,929) 135,874 (42,653) 8,292 (241,355) 192,902 (12,619) (61,072) Annual Report - 30 June 2015 Page 56 For personal use only DUBBER CORPORATION LIMITED ABN 64 089 145 424 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 18. Discontinued Operations (continued) Details of the sale of the subsidiary Carrying amounts of assets and liabilities disposed: Cash and cash equivalents Net assets Details of disposal: Total sale consideration Non-controlling interests Carrying amount of net assets disposed Derecognition of foreign currency reserve Disposal costs Loss on disposal before income tax Income tax expense Loss on disposal after income tax 19. Auditors’ Remuneration Remuneration of the auditor of the company, BDO Audit (WA) Pty Ltd, for: Audit services Taxation advice – BDO Corporate Tax (WA) Pty Ltd Corporate advice – BDO Corporate Finance (WA) Pty Ltd Payments to other auditors Due diligence report – BDO East Coast Partnership Total remuneration to auditors $ 3 3 - (141,191) (3) (22,793) - (163,987) - (163,987) Consolidated 2015 $ 2014 $ 33,558 17,289 10,850 61,697 12,000 73,697 26,409 16,340 - 42,749 9,000 51,749 20. Contingent Liabilities The Consolidated entity has no material contingent liabilities as at reporting date (2014: Nil). Annual Report - 30 June 2015 Page 57 For personal use only DUBBER CORPORATION LIMITED ABN 64 089 145 424 21. Operating Segments NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS The Group has identified its operating segments based on the internal reports that are reviewed and used by the Board of Directors (chief operating decision makers) in assessing performance and determining the allocation of resources. The Group is managed primarily on the basis that it has only one main operating segment. Previously, this involved the exploration of mineral resources in West Africa. With the acquisition of Dubber Pty Ltd on 27 February 2015 and the disposal of the West African gold projects on 31 March 2015, the Group’s sole continuing operation is the Dubber technology suite. All the Group’s activities are interrelated, and discrete financial information is reported to the Board of Directors as a single segment. Accordingly, all significant operating decisions are based upon analysis of the Group as one segment. The financial results from this segment are equivalent to the financial statements of the Group as a whole. The accounting policies applied for internal purposes are consistent with those applied in the preparation of these financial statements. Gold West Africa (Discontinued) $ Technology $ Total $ Corporate $ 7,416 (1,541,916) 1,635,273 (93,850) - (663) - - (180,204) - - - (17,059) (119,414) (43,731) - - 12,733 (608,948) 1,758,660 (105,598) - (1,405) - 2,018 (342,051) 81,700 (2,208) 814 (33,983) (310,087) 62,203 (1,813,501) 9,471,370 (933,158) 69,619 (3,535,621) 11,106,643 (1,027,008) 8,848 (2,305) - 9,329,932 (310,998) - - - - - - - 8,848 (20,027) (119,414) (43,731) 9,329,932 (310,998) 14,751 (950,999) 1,840,360 (107,806) 814 (35,388) (310,087) Year Ended 30 June 2015 Revenue Result (Loss) Total assets Total liabilities Acquisition of non-current assets Depreciation of non-current assets Exploration expensed Impairment of property, plant and equipment Intangible assets Amortisation Year Ended 30 June 2014 Revenue Result (Loss) Total assets Total liabilities Acquisition of non-current assets Depreciation of non-current assets Exploration expensed Annual Report - 30 June 2015 Page 58 For personal use only DUBBER CORPORATION LIMITED ABN 64 089 145 424 22. Related Party Transactions Subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS The consolidated financial statements include the financial statements of Dubber Corporation Limited ant the subsidiaries listed in the following table: Country of Incorporation Class of Shares Australia Australia Côte d’Ivoire Ghana Australia Australia Côte d’Ivoire Côte d’Ivoire Côte d’Ivoire Australia Australia Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Equity Holding 2015 % 2014 % 100 100 - - 100 100 - - - 100 100 100 100 90 90 100 100 100 100 100 - - Westaf Pty Ltd JEM Resources Pty Ltd Major Star SA Major Sun Mining Company Ltd Cote Gold Pty Ltd Queen Gold Pty Ltd Cote Gold SA Queen Gold SA Westaf SA Medulla Group Pty Ltd Dubber Pty Ltd Parent entity Dubber Corporation Limited is the ultimate Australian parent entity and ultimate parent of the Group. Key management personnel Refer to the Remuneration Report contained in the Directors' Report for details of the remuneration paid or payable to each member of Dubber Corporation Limited's key management personnel for the year ended 30 June 2015. The totals of remuneration paid to key management personnel of the company during the year are as follows: Short-term employee benefits Post-employment benefits Share-based payments Consolidated 2015 $ 2014 $ 532,665 34,589 282,772 850,026 253,422 8,491 91,350 353,263 Other transactions with key management personnel Payments totalling nil (2014: $7,500) were paid to Avitus Capital Ltd, a company associated with Mr Pawlowitsch, for consulting fees (not provided by Mr Pawlowitsch). Payments totalling $17,482 (2014: $39,275) were paid to Ventnor Resources Ltd (a company associated with Mr Pawlowitsch) for rent for the Company’s former offices in West Perth and shared expenses. The Company paid an amount of nil (2014: $3,486) to TD Continental (a company associated with Mr Mian) for field staff. Annual Report - 30 June 2015 Page 59 For personal use only DUBBER CORPORATION LIMITED ABN 64 089 145 424 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 22. Related Party Transactions (continued) Payments totalling $47,143 (2014: nil) were made to Prueba Pty Ltd, a company associated with Mr Steve McGovern, for platform testing consulting fees during the four months period since acquiring the Dubber business. Intelligent Voice and 1300 MY SOLUTION are businesses associated with Mr Steve McGovern and Mr Adrian Di Pientrantonio. The Group earned service fee income of $7,260 from Intelligent Voice and $51,327 from 1300 MY SOLUTION during the four months since acquiring the Dubber business. Trade receivables at 30 June 2015 include balances of $18,518 due from Intelligent Voice and $57,095 due from 1300 MY SOLUTION. $28,460 was paid to 1300 MY SOLUTION during the year. The Company entered into sub-underwriting agreements for the renounceable rights share issue completed during the previous financial year, with entities associated with two of its Directors. Coxrocks Pty Ltd (a company associated with Mr Coxhell) and Kellen Investments Pty Ltd (a company associated with Mr Richards), as sub-underwriters, subscribed for shares to the value of $4,500 and $65,000 respectively. The sub-underwriters received no fees for acting as sub- underwriters. During the year, Vault Pty Ltd, a company associated with Mr Pawlowitsch advance a short term loan of $50,000 to the Company in January 2015. This amount was repaid in March with interest of $7,500. Balances in trade creditors at 30 June 2015, include the amounts of $10,323 Mr Adrian Di Pietrantonio and $ 1,880 for Mr James Slaney. Amounts included in the remuneration table for Mr Gavin Campion and Mr Simon Coxhell were paid to their consultancy companies Hydrya Plenus Pty Ltd and Coxrocks Pty Ltd respectively. All transactions are conducted on normal commercial terms and on an arm’s length basis. Annual Report - 30 June 2015 Page 60 For personal use only DUBBER CORPORATION LIMITED ABN 64 089 145 424 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Consolidated 2015 $ 2014 $ 23. Cash Flow Information Reconciliation of loss for the year to net cash flows from operating activities Net loss for the period (3,535,621) (950,999) Non-cash flows in loss: Depreciation and amortisation Share based payments Exploration expensed Impairment of property, plant and equipment Loss on disposal of subsidiary Changes in assets and liabilities: Increase in trade and other receivables Increase in trade and other payables Increase in provisions Net cash outflows from operating activities 24. Share Based Payments Value of share based payments in the financial statements Share based payments expensed – directors fees and benefits Share based payments expensed – employee benefits expense Share based payments expensed – consulting fees Share based payments – capital raising costs Summary of share based payments Shares: 331,025 515,903 119,414 43,731 163,987 (22,060) 32,505 11,756 (2,339,360) 35,388 91,350 310,087 - - (71,730) 30,261 - (555,643) 278,488 4,285 233,131 70,200 586,104 91,350 - - - 91,350 During the year, the Company issued 755,961 fully paid ordinary shares as consulting fees with a value of $151,192 to advisors to the acquisition of Medulla Group Pty Ltd. No shares were issued as share based payments during the previous financial year. Annual Report - 30 June 2015 Page 61 For personal use only DUBBER CORPORATION LIMITED ABN 64 089 145 424 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 24. Share Based Payments (continued) Options: Set out below are the summaries of options granted as share based payments: 2015 Grant Date Expiry Date Exercise Price Balance 01/07/14 Granted Exercised Expired or Forfeited Balance 30/06/15 26/09/11 13/12/11 23/02/12 25/11/13 15/12/14 27/02/15 9/06/15 30/06/15 26/09/14 13/12/14 23/02/15 25/11/16 31/01/18 27/02/18 30/06/18 31/03/19 $0.40 $0.40 $0.40 # $0.25 $0.25 $0.25 $0.40 $0.25 3,450,000 1,000,000 500,000 5,000,000 - - - - 9,950,000 - - - - 3,000,000 600,000 2,700,000 2,250,000 8,550,000 - - - - - - - - - (3,450,000) (1,000,000) (500,000) # (4,000,000) - - - - (8,950,000) - - - 1,000,000 3,000,000 600,000 2,700,000 2,250,000 9,550,000 Number vested and exercisable - - - 1,000,000 3,000,000 600,000 - - 4,600,000 Weighted average exercise price $0.22 $0.30 $0.40 $0.29 $0.25 # - 1:5 consolidation of shares and options on 15/12/14 2014 Grant Date Expiry Date Exercise Price Balance 01/07/13 Granted Exercised Expired or Forfeited Balance 30/06/14 Number vested and exercisable 26/09/11 26/09/11 13/12/11 23/02/12 25/11/13 12/04/14 26/09/14 13/12/14 23/02/15 25/11/16 $0.40 $0.40 $0.40 $0.40 $0.05 6,500,000 3,450,000 1,000,000 500,000 - 11,450,000 - - - - 5,000,000 5,000,000 - - - - - - (6,500,000) - - - - (6,500,000) - 3,450,000 1,000,000 500,000 5,000,000 9,950,000 - 3,450,000 1,000,000 500,000 5,000,000 9,950,000 Weighted average exercise price $0.40 $0.05 $0.40 $0.22 $0.22 The assessed fair values of the options was determined using a binomial option pricing model or Black-Scholes model, taking into account the exercise price, term of option, the share price at grant date and expected price volatility of the underling share, expected yield and the risk-free interest rate for the term of the option. For the options granted during the current financial year, the inputs to the model used were: Grant date Dividend yield (%) Expected volatility (%) Risk-free interest rate (%) Expected life of options (years) Underlying share price ($) Option exercise price ($) Value of option ($) 15/12/2014 - 100% 2.045% 3.125 $0.20 $0.25 $0.13405 27/02/2015 - 100% 2.26% 3 $0.20 $0.25 $0.11700 9/06/2015 - 60% 1.79% 3.21 $0.394 $0.40 $0.1635 30/6/2015 - 100% 2.045% 3.75 $0.325 $0.25 $0.2344 Annual Report - 30 June 2015 Page 62 For personal use only DUBBER CORPORATION LIMITED ABN 64 089 145 424 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 24. Share Based Payments (continued) The weighted average remaining contractual life of share-based payment options that were outstanding as at 30 June 2015 was 2.86 years (2014: 1.54 years). The weighted average fair value of share-based payment options granted during the year was $0.16856 (2014: $0.01827) each. Performance shares: Each performance share converts into one fully paid ordinary share for nil cash consideration, upon the achievement of performance based milestones. Set out below are the summaries of performance shares issued as share based payments: 2015 Grant Date Expiry Date Balance 01/07/14 28/11/14 27/02/15 27/02/15 9/06/15 27/05/17 27/02/15 27/08/15 30/06/18 - - - - - Weighted average remaining contractual life of performance shares outstanding at end of period Granted during the year 4,000,000(1) 204,848(2) 204,848(3) 1,800,000(4) 6,209,696 1.51 Converted Forfeited Balance 30/06/15 Vested and exercisable - (204,848) - - (204,848) - - - - - 4,000,000 - 204,848 1,800,000 6,004,848 - - - - The various performance shares and options listed above are subject to milestone which are listed below. Probability of achieving these milestones have been assessed at 100%. (1)Milestone 1: Upon all of the following being achieved: (a) enter into 1 Australian re-seller agreement for the Dubber technology suite; (b) enter into re-seller and deployment partner agreement for the Dubber technology suite; (c) enter into a re-seller integration partner agreement with 1 Australian based telecommunications Carrier for the Dubber technology suite; (d) enter into a partner agreement with a technology company which will assist with establishing a re- seller/integration agreement for the Dubber technology suite in a jurisdiction outside of Australia . Milestone 2: Upon all of the following being achieved: (a) $30,000 (ex GST) in billed monthly revenue via channel Expiry Milestone 3: Upon all of the following being achieved: $100,000 (ex GST) ¡n billed monthly revenue via channel. Milestone 4: Upon the following being achieved: The Company breaking even, based on EBITDA over a rolling 3 month period. If this milestone is achieved, then Milestones 1, 2 and 3 will be deemed achieved. (2) Milestone: The Company attaining 1,000 paying end users (3) Milestone: The Company attaining 3,000 paying end users by six months (4) Milestone 1: The Company achieving a share price with a 20 day VWAP over 50C. Milestone 2: The Company achieving a share price with 20 day VWAP over 75c. Milestone Annual Report - 30 June 2015 Page 63 For personal use only  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Converted Expired or Forfeited Balance 30/06/14 Vested and excersiabl e Granted during the year - - - - (25,250,000) (25,250,000) - - - - DUBBER CORPORATION LIMITED ABN 64 089 145 424 2014 Grant Date Expiry Date Balance 01/07/13 26/09/11 26/09/14 25,250,000 25,250,000 0 Weighted average remaining contractual life of performance shares outstanding at end of period 25. Parent Entity Disclosures Summary Financial information The individual financial statements for the parent entity show the following aggregate amounts: Statement of financial position Current assets Non-current assets Total assets Current liabilities Total liabilities Net Assets Equity Issued capital Reserves Accumulated losses Total equity Loss for the year Total comprehensive loss 2015 $ 2014 $ 1,635,053 8,538,430 10,173,483 93,850 93,850 10,079,653 1,757,777 883 1,758,660 105,598 105,598 1,653,062 17,622,778 5,252,839 (12,795,982) 10,079,635 10,140,779 1,015,293 (9,503,010) 1,653,062 (5,097,008) (5,097,008) (837,170) (837,170) The parent entity had no expenditure commitments or contingent liabilities at 30 June 2015 or 30 June 2014. Annual Report - 30 June 2015 Page 64 For personal use only DUBBER CORPORATION LIMITED ABN 64 089 145 424 26. Non-controlling Interests (NCI) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Set out below is summarised financial information for each subsidiary that has non-controlling interests that are material to the group. Amounts disclosed are before intercompany eliminations. Ownership interest held by non-controlling interests Summarised statement of financial position Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities Net Assets Accumulated NCI Summarised statement of profit or loss and other comprehensive income Loss for the year Other comprehensive income Total comprehensive loss Losses allocated to NCI Summarised cash flows Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities Foreign exchange movement Net (decrease) in cash and cash equivalents MAJOR STAR SA 2015 % 100 $ 2014 % 10 $ 20,899 60,801 81,700 2,207 1,336,586 1,338,793 (1,257,093) (123,759) - - - - - - - - (172,704) (42,663) (295,553) (9,071) (215,367) (304,624) (17,270) (29,556) - (84,929) 135,874 (42,653) - (241,355) 192,902 (12,619) 8,292 (61,072) Transactions with non-controlling interests - - On 31 March 2015, the consolidated entity sold its 90% interest in Major Star SA (note 18). Annual Report - 30 June 2015 Page 65 For personal use only DUBBER CORPORATION LIMITED ABN 64 089 145 424 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 27. Commitments Operating lease commitments Non-cancellable operating leases contracted for but not recognised in the financial statements: Payable – minimum lease payments - Not later than one year - After one year but not more than five years Consolidated 2015 $ 2014 $ 148,383 532,508 680,891 - - - Medulla Group Pty Ltd entered into a lease for the Group’s principal place of business on Russell Street in Melbourne with an unrelated landlord which commenced on 24 October 2014. The initial term of the lease is five years, with an option to extend for a further term of five years. Rental for the first year is $145,000 per annum, however the first five months of the term is subject to a rent free period. On each anniversary of the lease commencement date, the rent will be increased by a fixed rate of 3.5%. The Company has not declared a dividend. 28. Events Subsequent to Year End There are no matters or circumstances that have arisen since 30 June 2015 that have or may significantly affect the operations, results, or state of affairs of the Company in future financial years other than: The Company announced on 2 September 2015 that the Group has registered 3,307 paying users as at 25 August 2015, confirming the passing of the performance milestone of 3,000 paying users for the initial vendors of the Dubber business. The Company also confirmed that the signing of the Go Cloud Master Distributer Agreement to establish a re-seller network across Asia, was the final requirement in the first tranche of Management performance shares held by Mr Gavin Campion, a director of the Company. Full details of all performance shares are set out in the Company’s Prospectus dated 15 January 2015. A fully paid ordinary share was issued for converting and cancelling each of the following performance shares upon achieving the above performance milestones: 3,892,127 milestone 2 performance shares held by the vendors of Medulla Group Pty Ltd; 204,818 milestone 2 performance shares held the vendor’s advisors; and 1,000,000 milestone 1 Management performance shares held by Mr Gavin Campion. The financial report was authorised for issue on 30 September 2015 by the board of directors. Annual Report - 30 June 2015 Page 66 For personal use only DUBBER CORPORATION LIMITED ABN 64 089 145 424 Directors’ Declaration The directors of the company declare that: DIRECTOR’S DECLARATION 1. The financial statements and notes are in accordance with the Corporations Act 2001, and: (a) (b) comply with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and give a true and fair view of the financial position of the Company as at 30 June 2015 and of its performance for the financial year ended on that date. 2. The Managing Director and CFO have each declared that: (a) (b) the financial records of the company for the financial year have been properly maintained in accordance with section 286 of the Corporations Act 2001; the financial statements and notes for the financial year comply with the accounting standards; and (c) the financial statements and notes for the financial year give a true and fair view. 3. In the opinion of the directors’ there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable. 4. Note 1 confirms that the financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board. This declaration is made in accordance with a resolution of the Board of Directors. Peter Pawlowitsch Director Dated: 30 September 2015 Annual Report - 30 June 2015 Page 67 For personal use only 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 Dubber Corporation Limited Report on the Financial Report We have audited the accompanying financial report of Dubber Corporation Limited, 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(a), 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. 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 Dubber Corporation Limited, would be in the same terms if given to the directors as at the time of this auditor’s report. 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. For personal use onlyOpinion In our opinion: (a) the financial report of Dubber Corporation Limited 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(a). Emphasis of matter Without modifying our opinion, we draw attention to Note 1 (b) in the financial report, which indicates that the ability of the consolidated entity to continue as a going concern is dependent upon the future successful raising of necessary funding through equity. These conditions, along with other matters as set out in Note 1 (b), indicate the existence of a material uncertainty that may cast significant doubt about the consolidated entity’s ability to continue as a going concern and therefore, the consolidated entity may be unable to realise its assets and discharge its liabilities in the normal course of business. 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 Dubber Corporation Limited for the year ended 30 June 2015 complies with section 300A of the Corporations Act 2001. BDO Audit (WA) Pty Ltd Jarrad Prue Director Perth, 30 September 2015 For personal use onlyDUBBER CORPORATION LIMITED ABN 64 089 145 424 ASX INFORMATION FOR THEYEAR ENDED 30 JUNE 2015 Additional Shareholder Information The following additional information is current as at 25 September 2015. SUBSTANTIAL SHAREHOLDERS There are no substantial holders. RANGE OF HOLDING – ORDINARY SHARES HOLDERS SHARES 1 – 1,000 1,001 – 5,000 5,001 - 10,000 10,001 - 100,000 100,001 and above There are 356 shareholders with less than a marketable parcel. VOTING RIGHTS Each fully paid ordinary share carries voting rights of one vote per share. THE TOP 20 HOLDERS OF ORDINARY SHARES ARE: NAME BNP PARIBAS NOMINEES PTY LTD STEVE MCGOVERN NOMINEES PTY LTD ALTA HOLDINGS PTY LTD DIPZHOU PROPERTY MANAGER PTY LTD PENELOPE SLANEY SLANEY HOLDINGS PTY LTD HSBC CUSTODIANS NOMINEES PTY LTD LYDIAN ENTERPRISES PTY LTD EARTHRISE HOLDINGS PTY LTD JP MORGAN NOMINEES PTY LTD RANK 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. MORPARQ PTY LTD AXIAS GROUP PTY LTD 12. 13. MADACHI HOLDINGS PTY LTD 14. MR B DUETSCHER PETERLYN PTY LTD 15. JAKANA PTY LTD 16. P J HERBERT 17. ZAV40 INVESTMENTS PTY LTD 18. CHRIS JACKSON 19. FENCOURT ENTERPRISES PTY LTD 20. 423 193 120 362 111 1,209 96,388 529,630 993,465 15,397,194 41,476 58,492,814 UNITS 2,453,172 2,430,961 2,000,000 1,945,361 1,875,989 1,875,983 1,839,352 1,700,000 1,000,000 880,543 800,000 636,596 554,972 522,500 520,000 500,000 500,000 482,500 456,942 450,000 % OF UNITS 4.19 4.16 3.42 3.33 3.21 3.21 3.14 2.91 1.71 1.51 1.28 1.09 0.95 0.89 0.89 0.85 0.85 0.82 0.78 0.77 Totals: Top 20 holders of ORDINARY SHARES (TOTAL) 23,424,871 39.96 Annual Report - 30 June 2015 Page 70 For personal use only DUBBER CORPORATION LIMITED ABN 64 089 145 424 ASX INFORMATION FOR THEYEAR ENDED 30 JUNE 2015 UNQUOTED EQUITY SECURITIES Number 1,000,000 Number of Holders 5 +Class Escrow Period Options exercisable at 25 cents expiring 25 November 2016 2,190,000 17 Ordinary Shares 27 February 2016 6,709,254 4,451,800 3,000,000 12,630,790 4,781,328 6 6 1 6 3 Ordinary Shares Ordinary Shares 12 months from quotation 24 months from quotation Management Performance Shares 24 months from quotation Performance Shares 12 months from quotation Performance Shares 24 months from quotation 2,920,000 17 Unlisted options exercisable at 25 cents expiring 31/1/2018 27 February 2016 680,000 1,800,000 2,700,000 2,250,000 3 7 7 8 Unlisted options exercisable at 25 cents expiring 27/2/2018 24 months from quotation Performance Shares Performance Options Unlisted options exercisable at 25 cents expiring 31/3/2019 vesting 1/3/2016, 1/3/2017, 1/3/2018 Annual Report - 30 June 2015 Page 71 For personal use only 

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