ABN 64 089 145 424
DUBBER CORPORATION LIMITED
Annual Report
30 June 2016
DUBBER CORPORATION LIMITED
ABN 64 089 145 424
Corporate Directory
Board of Directors
Peter Pawlowitsch
Non-Executive Chairman
Steve McGovern
Managing Director
Ken Richards
Non-executive Director
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
Securities 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
Solicitor
Nova Legal
Solicitor
Ground 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 2016
Page 2
DUBBER CORPORATION LIMITED
ABN 64 089 145 424
Chairman’s Letter
Dear Shareholders
CHAIRMAN’S LETTER
2016 has been an exciting year for the Company as it continues to focus on its stated goals of targeting the extension of
its distribution channels and through these channels increasing its customer base. In addition the Company has
continued to expand and increase its product suite.
Dubber is the world's most scalable call recording platform, one that enables a telecommunications company (“telco”)
to enable entire networks of customers. This takes the notion of call recording from its limited user cases associate with
hardware models into the realm of voice data capture on a huge scale. In turn, this provides opportunity for both telco’s
and customers to use that voice data in ways that they have never previously considered. As well as traditional call
recording uses it now extends to efficiencies, embedding in work flow optimisation platforms and monetising new Value
Added Services (VAS) which can be connected to the Dubber platform via it’s open API structure. Through Dubber’s true
Software-as-a-Service (SaaS) offering we enable our customers to implement and manage recordings as never before
without the need for hardware or capital expenditure.
Given the Dubber platform core attributes, the strategy of the Company is to integrate its services at a telco network
level, as this is where calls take place and providing the greatest opportunity.
During 2016 the Company’s key areas of focus has been:
Engagement and working through the procurement process with many telcos, noting that this can be quite a
protracted process
Expand its connectivity via other technology methodologies
Commercialise ground breaking technologies which would demonstrate the core philosophy and technical
capability of the Dubber platform and illustrate the growth opportunities for the Company in new markets.
Expanded internationally to facilitate the above aims on a global basis
Dubber is a company which has a business opportunity which is truly scalable and globally deployable.
Over the next financial year, the Company’s targets are to drive usage and revenues through its existing commercial
relationships whilst continuing to expand its distribution channels primarily through telcos and expanding the product
offerings these telcos can provide their customers.
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 2016
Page 3
DUBBER CORPORATION LIMITED
ABN 64 089 145 424
Review of Operations
Corporate Highlights
REVIEW OF OPERATIONS
September 2015:
Achievement of Management Performance Milestone and 1,000,000 Performance Shares
were converted to Ordinary Shares
November 2015:
Completed a heavily institutionally backed placement of $5,689,699 being 12,643,778 shares
at $0.45 each. The capital was raised in two stages, with the first stage of $3.9 million
completed under the company’s existing share issuance capacity. The balance of the capital
raised ($1.8 million) was subject of shareholder approval at the Annual General Meeting
(AGM), held on Friday, 20 November 2015 in Melbourne.
December 2015:
Achievement of Management Performance Milestones, 1,800,000 Performance Shares were
converted to Ordinary Shares and 2,700,000 Performance Options were converted into
unlisted Options with an exercise price of $0.40
Allotted 268,888 Ordinary Shares in return for services.
February 2016:
Gavin Campion resigned from the Board.
Business Operations
Overview
For the financial year to 30 June 2016 the Group revenue associated with the Dubber business was $457,699 (for the
period to 30 June 2015 was $62,203). The Group net loss for the financial year was $9,300,655 (for the period to 30 June
2015 was $1,190,196). This was the expected position as the business is in the early stages of commercialisation.
The Company’s key areas of focus have been;
Achievement of wholesale/ partnering agreements with telecommunications service providers which would provide the
foundation for the company’s immediate future, both in terms of users and revenues.
Commercialisation of ground breaking technologies which would demonstrate the core philosophy and technical
capability of the Dubber platform and illustrate the growth opportunities for the company in new markets.
To this end, Dubber has targeted twenty telecommunications service providers’ agreements by calendar year end of
2016.
Dubber has also demonstrated the core attributes of the platform with its productisation of the ‘On Demand’ recording
capability and the ‘Playback’ feature.
Business Activities
During the year the Company was successful in its stated goals of targeting the extension of its distribution channels and
through these channels increasing its customer base. In addition the Company has continued to expand and increase its
product suite.
The Company has had significant engagement with a number of telecommunication partners across Asia, Europe, APAC
and North America into ‘Dubber Labs’, the first step in the procurement/ sales process with the most advanced discussed
further below.
Annual Report - 30 June 2016
Page 4
DUBBER CORPORATION LIMITED
ABN 64 089 145 424
Asia
REVIEW OF OPERATIONS
In July 2015, the Company launched into Asia and appointed a Master Distributer Go Cloud IT Pte Ltd. Go Cloud IT Pte
Ltd provides distribution channels to the Asian markets, through a proven sales channel. From Singapore, Go Cloud IT
Pte Ltd extends its distribution reach into the South East Asian markets, and into North Asia.
Then in March 2016 the Company signed a Memorandum of Understanding (MOU) with a Singapore based
telecommunications company with both companies working towards completing a Master Services Agreement (MSA)
during the September quarter. The MSA is expected to deliver approximately $50,000 monthly recurring revenue when
it commences with a commitment to customer numbers and, in turn, revenue growing each quarter. We are confident
this partnership alone will deliver at least 20,000 monthly ‘reserved’ subscribers within the first 12-months from
commencement, plus ‘on demand’ customers, thereby potentially delivering over $200,000 monthly recurring revenue.
In May 2016, Dubber was selected by BroadSoft Japan KK as the call recording platform for its BroadCloud® and UCOne®
service for Japanese telecommunications carriers. The agreement means that, as opposed to Dubber having to engage
with the telco sector directly, Dubber’s platform will be the BroadSoft branded recording product provided as a standard
‘tick and pick’ feature to all telcos and their customers as part of the BroadCloud service. BroadCloud is a fully managed
service that allows service providers to deliver BroadSoft’s comprehensive UC-One mobile-first unified communications
services to new and existing customers. BroadCloud eliminates the need for service providers to make substantial capital
investments and speeds time-to-market for new service offerings.
Europe
In the first quarter 2016, Dubber formerly opened its European office in London. Since that time the number of staff
based in London has grown to four. The team in Europe has had considerable success in a short time frame.
In March 2016, the Company signed a leading distribution and deployment partner in Siphon Networks Ltd (Siphon).
Siphon is a leading European player in the innovation, delivery, integration and support of advanced Voice & Unified
Communications technology. Siphon will resell Dubber services to its existing Service Provider and Enterprise clients.
Siphon has been a leading and trusted partner in the deployment of BroadSoft BroadWorks technology for six years and
is ideally placed to provide Dubber’s unique recording platform which is designed to enable an entire network customer
base to capture and use voice data. Siphon has been the driving force behind the design, delivery and support of many
UK and European Telephony Provider platforms in enabling the delivery of cloud-based Unified Communications (UC)
services.
During the year the Company signed its first two UK based telecommunications companies; The Voice Factory in
September 2015 and AVC One in June 2016. With both these companies connecting their first customers onto the
platform.
The half year has seen the foundations laid for substantial growth with European telcos engaged at various levels
including testing the service via ‘Dubber labs.’
APAC
In August 2015, Dubber entered into an agreement with Gateway ICT Pty Ltd (Gateway) to become a reseller. Gateway
is a Tier 1 ICT solutions provider within Australia and have a strong reputation to achieve word class IT deployments for
their customers. As a Cisco Premier Certified Partner, Telstra Enterprise Partner and through the other value-added
services portfolio, Gateway ICT is positioned to serve customers as the trusted technology advisor.
During the second half of the year the Company entered into MOU’s with Macquarie Telecom and MyNetFone. The
Company is currently finalising the negotiations with both companies on their MSA’s.
In November 2015, the Company was chosen to provide a tailored solution to one of Australia’s Big 4 Banks. This project
is subject to a strict Non-Disclosure Agreement. The project demonstrates Dubber's versatility in the enterprise sector,
differentiates our offer from competitors and provides many additional potential revenue streams. The first part of the
project has been successfully completed.
Annual Report - 30 June 2016
Page 5
DUBBER CORPORATION LIMITED
ABN 64 089 145 424
REVIEW OF OPERATIONS
In addition the Company has entered into a number of additional agreements with telecommunications service providers
along with reseller and deployment partners in the SME marketplace to sell and deploy the Dubber product offerings.
This includes national and regional telco SPs, Cisco re-sellers and an APAC subsidiary of a large international telco.
North America
In November 2015, the Company signed an agreement with BluIP to become the first Company to take Dubber’s “on
demand’ product. BluIP is a premier BroadSoft service provider with customers across North America. BluIP supplies
enhanced Unified Cloud Communication services and tailored applications to small to medium sized and large
enterprises through a network of partner and resellers and direct sales organisation.
The Company signed an agreement with Oxilio Inc of Canada, as a distributor/ reseller of Dubber. Oxilio is an expert
provider of call recording and capture technology to major Telcos in both Canada and the USA, and was introduced by
one of its telco customers, as Oxilio is an approved supplier to that telco to assist in accelerating the procurement of
Dubber. Oxilio has previously provided traditional call recording services as part of its IT consultancy services suite and
has made the move of switching to Dubber for its industry disruptive capabilities.
Technology developments
Launch of the Dubber Playback product, which has the potential ability to revolutionise the way that telephone
calls are managed across all networks (mobile and fixed) in all market sectors (consumer through to enterprise)
Expansion of connectivity methodologies from BroadSoft backed telco networks through to hardware and
platform connectors, such as. Cisco and other Unified Communications platforms.
Over the next financial year, the Company’s targets are to drive usage and revenues through its existing commercial
relationships whilst continuing to expand its distribution channels primarily through telecommunications companies and
expanding the product offerings these telecommunications companies can provide their customers.
Annual Report - 30 June 2016
Page 6
DUBBER CORPORATION LIMITED
ABN 64 089 145 424
Directors’ Report
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2016
Your directors present their report of Dubber Corporation Limited and its controlled entities (the Group) for the financial
year ended 30 June 2016.
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:
Managing Director
Steve McGovern
Peter Pawlowitsch Non-executive Chairman
Gavin Campion
Ken Richards
Non-executive Director (resigned 2 February 2016)
Non-executive Director
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
Experience
Interest in Shares and Options
at the date of this report
Steve McGovern is a founder of Dubber Pty Ltd. He has over 24
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.
4,266,124 ordinary shares
3,541,347 vendor performance shares expiring 27 May 2017
1,200,000 unlisted options exercisable at $0.40 each and
expiring 30 June 2018
All shares and options are held indirectly.
Directorships held in other listed entities in the
past three years
Linius Technologies Limited (18 April 2016 – present)
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 thirteen years’
experience in the accounting profession and more recently in
business management and the evaluation of businesses and mining
projects.
Annual Report - 30 June 2016
Page 7
DUBBER CORPORATION LIMITED
ABN 64 089 145 424
Interest in Shares and Options
at the date of this report
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2016
670,000 ordinary shares
200,000 unlisted options exercisable at $0.25 each and
expiring 25 November 2016
600,000 unlisted options exercisable at $0.40 each and
expiring 30 June 2018
All shares and options are held indirectly
Directorships held in other listed entities in the
past three years
Ventnor Resources Limited (12 February 2010 – present)
Department 13 International Limited (30 January 2012 – 18
Mr Ken Richards
Experience
Interest in Shares and options
at the date of this report
December 2015)
Knosys Limited (16 March 2015 – present)
Novatti Group Limited (19 June 2015 – present)
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.
745,776 ordinary shares held indirectly
200,000 unlisted options exercisable at $0.25 each and expiring
25 November 2016, held directly
150,000 unlisted options exercisable at $0.40 each and expiring
30 June 2018, held indirectly
Directorships held in other listed entities in the
past three years
Leaf Resources Limited (31 August 2007 – present)
Mr Gavin Campion
Non-executive Director (resigned 2 February 2016)
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.
1,100,000 ordinary shares
3,000,000 management performance shares expiring 27 May
2017
150,000 unlisted options exercisable at $0.40 each and
expiring 30 June 2018
Directorships held in other listed entities in the
past three years
Knosys Limited (30 April 2015 – 2 February 2016)
All shares and options are held indirectly.
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.
Annual Report - 30 June 2016
Page 8
DUBBER CORPORATION LIMITED
ABN 64 089 145 424
CORPORATE INFORMATION
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2016
Corporate Structure
Dubber Corporation Limited is a limited liability company that is incorporated and domiciled in Australia. Dubber
Corporation Limited has prepared a consolidated financial report incorporating the entities that it controlled during
the financial year as follows:
Dubber Corporation Ltd
Medulla Group Pty Ltd
Dubber Pty Ltd
Dubber Ltd (UK)
- parent entity
- 100% owned controlled entity
- 100% owned controlled entity
- 100% owned controlled entity
Principal Activities
The principal continuing activities of Dubber Corporation Limited and its controlled entities consisted of provision of call
recording and audio asset management in the cloud.
OPERATING AND FINANCIAL REVIEW
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.
Operating Results
The loss from ordinary activities after providing for income tax amounted to $9,300,655 (2015: $1,526,887).
Financial Position
At 30 June 2016 the Group had net assets of $10,888,798 (2015: $12,088,369) and cash reserves of $2,563,767 (2015:
$1,697,415).
Dividends
No dividends were paid or declared during the year. No recommendation for payment of dividends has been made.
SIGNIFICANT CHANGES IN THE 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.
EVENTS 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 outlined in the review of operations preceding this report.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS
The Group will continue to pursue its principal activity of rolling out and developing its cloud based call recording and
audio asset management platform.
Annual Report - 30 June 2016
Page 9
DUBBER CORPORATION LIMITED
ABN 64 089 145 424
MEETINGS OF DIRECTORS
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2016
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
Mr Peter Pawlowitsch
Mr Gavin Campion (resigned 2 February 2016)
Mr Ken Richards
4
4
3
4
4
4
3
4
REMUNERATION REPORT (Audited)
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
Managing Director
Non-executive Chairman
Non-executive Director (resigned 2 February 2016)
Non-executive Director
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, Channels
General Manager
Chief Technology Officer
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 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.
Annual Report - 30 June 2016
Page 10
DUBBER CORPORATION LIMITED
ABN 64 089 145 424
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2016
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 Steve McGovern ($150,000), Mr James Slaney ($16,667) and Mr Adrian Di
Pietrantonio ($40,000). The bonus therefore vested 100% during the financial year ended 30 June 2016. Mr McGovern’s
bonus was awarded for achieving key performance indicators as determined by the Board on a six monthly basis. The
bonuses for Mr Slaney and Mr Pietrantonio were paid for achieving key performance indicators set by the Managing
Director for achieving sales and operating targets.
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.
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, unless otherwise specified by any non-executive and consultancy service agreement in place,
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 2014 Annual General
Meeting, is not to exceed $500,000 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
Annual Report - 30 June 2016
Page 11
DUBBER CORPORATION LIMITED
ABN 64 089 145 424
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2016
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.
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:
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).
Annual Report - 30 June 2016
Page 12
DUBBER CORPORATION LIMITED
ABN 64 089 145 424
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2016
Ken Richards
Agreement type:
Agreement commenced:
Term of Agreement:
Remuneration:
Termination notice:
James Slaney
Agreement type:
Agreement commenced:
Term of Agreement:
Remuneration:
Termination notice:
Chris Jackson
Agreement type:
Agreement commenced:
Term of Agreement:
Remuneration:
Termination notice:
Adrian Di Pietrantonio
Agreement type:
Agreement commenced:
Term of Agreement:
Remuneration:
Termination notice:
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).
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.
Chief Technology Officer
Employment agreement (CTO Agreement)
2 March 2015
No fixed term
Annual salary of $180,000 plus statutory superannuation, increased to $200,000 plus
statutory superannuation as from 1 January 2016
Standard 4 week notice periods for termination apply to the CTO Agreement in accordance
with statutory requirements.
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 GMC Agreement. After this, the Company may
terminate the agreement on 3 months notice.
Annual Report - 30 June 2016
Page 13
DUBBER CORPORATION LIMITED
ABN 64 089 145 424
Details of Remuneration for Year
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2016
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:
Year
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
Director
Executive Directors:
S McGovern
(appointed 2/3/15)
Non-Executive Directors:
P Pawlowitsch
G Campion (appointed 2/3/15,
resigned 2/2/16)
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 2016
Short Term Benefits
Cash
Bonus
$
Salary and
Fees
$
Long Term
Benefits
Annual
Leave
$
Post-
Employment
Superannuation
$
Share Based
Payments
Options/
Shares
$
Remuneration
consisting of
options/shares
%
Remuneration
based on
performance
%
Total
$
240,000
80,000
150,000
-
(3,693)
-
22,800
7,600
79,000
56,054
128,333
73,333
36,530
75,476
-
32,466
-
5,000
-
1,693
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1) 307,820
66,667
192,845
60,310
165,000
55,000
16,667
13,333
-
-
40,000
13,333
7,731
2,400
8,866
4,632
9,551
710
1,149,528
505,999
206,667
26,666
22,455
7,742
6,650
5,325
-
-
3,470
2,024
-
1,659
-
475
-
-
7,917
6,333
18,320
5,948
15,675
5,225
74,832
34,589
447,231
8,569
223,615
4,285
216,961
264,563
55,904
1,071
-
-
-
-
-
-
111,808
2,142
55,904
1,071
55,904
1,071
856,338
96,169
309,265
65,664
345,294
337,896
95,904
78,571
-
34,125
-
5,475
-
1,693
451,943
90,875
275,935
71,961
286,130
75,339
1,167,327
282,772
2,620,809
857,768
52
9
72
7
63
78
58
1
-
-
-
-
-
-
25
2
20
2
20
1
45
33
(1) Includes rental assistance in relation to relocation to the UK.
52
9
72
7
63
78
58
1
-
-
-
-
-
-
25
2
20
2
20
1
45
33
Page 14
DUBBER CORPORATION LIMITED
ABN 64 089 145 424
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2016
Compensation Securities Issued to Key Management Personnel
Performance Options:
During the previous financial year, the following performance options were granted as performance linked incentives to
Directors and Executives. The performance options were issued free of charge and convert into unlisted exercisable
options when performance milestones are achieved. Each option entitles the holder to subscribe for one fully paid
ordinary share in the Company, at an exercise price of $0.40 per option on or before 30 June 2018.
The performance milestones are:
Milestone 1: The Company achieving a share price with a 20 day VWAP over 50 cents.
Milestone 2: The Company achieving a share price with a 20 day VWAP over 75 cents.
Key Management
Personnel
Number
Granted
Grant
Date
S McGovern
P Pawlowitsch
1,200,000
600,000
9/06/15
9/06/15
G Campion
K Richards
J Slaney
C Jackson
150,000
9/06/15
150,000
9/06/15
300,000
9/06/15
150,000
9/06/15
A Di Pietrantonio
Total
150,000
2,700,000
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
Last
Exercise
Date
30/06/18
30/06/18
30/06/18
30/06/18
30/06/18
30/06/18
30/06/18
Balance at
1/07/15
Unvested
Vested
during the
year
1,200,000
600,000
1,200,000
600,000
150,000
150,000
300,000
150,000
150,000
150,000
300,000
150,000
Balance at
30/06/16
Vested and
Exercisable
1,200,000
600,000
150,000
150,000
300,000
150,000
150,000
2,700,000
150,000
2,700,000
150,000
2,700,000
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.
For the year ended 30 June 2015, the value of the options had been allocated over the assumed vesting period of the
option’s expiry period of three years. At 30 June 2015, $8,300 (approximately 2% of the total value of the options at
grant date), assessed as vested is included in the remuneration table above for 2015.
During the year, on 29 December 2015, all performance milestones were achieved and all performance options were
converted into unlisted exercisable options. For the year ended 30 June 2016, $433,150, being the balance (and
approximately 98%) of the total value of the options at grant date vested and is included in the remuneration table
above for 2016.
Annual Report - 30 June 2016
Page 15
DUBBER CORPORATION LIMITED
ABN 64 089 145 424
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2016
Performance Shares:
During the previous 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.
The performance milestones are:
Milestone 1: The Company achieving a share price with a 20 day VWAP over 50 cents.
Milestone 2: The Company achieving a share price with a 20 day VWAP over 75 cents.
Key Management
Personnel
Number
Granted
Grant
Date
S McGovern
P Pawlowitsch
G Campion
K Richards
800,000
400,000
9/06/15
9/06/15
100,000
9/06/15
100,000
9/06/15
J Slaney
C Jackson
A Di Pietrantonio
Total
200,000
100,000
100,000
1,800,000
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
Last
Conversion
Date
30/06/18
30/06/18
30/06/18
30/06/18
30/06/18
30/06/18
30/06/18
Balance at
1/07/15
Unconverted
Converted
during the
year
Balance at
30/06/16
Unconverted
800,000
400,000
100,000
100,000
200,000
100,000
100,000
800,000
400,000
100,000
100,000
200,000
100,000
100,000
1,800,000
1,800,000
-
-
-
-
-
-
-
-
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.
For the year ended 30 June 2015, the value of the performance shares had been allocated over their expiry period of
three years. At 30 June 2015, $10,981 (approximately 2% of the total value of the performance shares at grant date), is
included in the remuneration table above for 2015.
During the year, on 29 December 2015, all performance milestones were achieved and all performance shares were
converted into fully paid ordinary shares. For the year ended 30 June 2016, $573,119, being the balance (and
approximately 98%) of the total value of the performance shares at grant date is included in the remuneration table
above for 2016.
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.
The milestones are:
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; and
(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 the following being achieved:
$30,000 (ex GST) in billed monthly revenue via channel.
Milestone 3: Upon 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.
Annual Report - 30 June 2016
Page 16
DUBBER CORPORATION LIMITED
ABN 64 089 145 424
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2016
These performance shares were valued at $560,000.
The value of the performance shares had been allocated over the periods each milestone was 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)
had been allocated and included in Mr Campion’s remuneration in the remuneration table above for 2015.
On 14 September 2015, the first performance milestone was achieved and 1,000,000 performance shares were
converted into fully paid ordinary shares. For the year ended 30 June 2016, $161,058 (29% of the total value of the
performance shares at grant date) has been allocated and included in Mr Campion’s remuneration in the remuneration
table above for 2016.
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.
Remuneration Consultants
The Board did not use the services of remuneration consultants during the year in determining the compensation for
Directors and Executives.
Voting and comments made at the company’s 2015 annual general meeting (‘AGM”)
At the 2015 AGM, 99.1% of the votes received supported the adoption of the remuneration report for the year ended
30 June 2015. 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 (2015: $17,482) 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.
Platform testing consulting fees totalling $70,818 (2015: $47,143) were charged by Prueba Pty Ltd, a company associated
with Mr Steve McGovern.
Payments totalling $2,472 (2015: nil) were made for telephony services provided by Canard Pty Ltd, a company
associated with Mr Steve McGovern and Mr Adrian Di Pietrantonio.
Intelligent Voice and 1300 MY SOLUTION are businesses associated with Mr Steve McGovern and Mr Adrian Di
Pietrantonio. The Group earned service fee income of $32,572 (2015: $7,260) from Intelligent Voice and $293,714 (2015:
$51,327) from 1300 MY SOLUTION. Trade receivables at 30 June 2016 include balances of nil (30 Jun 2015: $18,518) due
from Intelligent Voice and nil (30 June 2015: $57,095) due from 1300 MY SOLUTION.
During the previous year, Vault Pty Ltd, a company associated with Mr Pawlowitsch advanced a short term loan of
$50,000 to the Company in January 2015. This amount was repaid in March 2015 with interest of $7,500.
Other payables at 30 June 2016 includes an accrual of $75,000 for the cash bonus payable to Mr Steve McGovern for the
period January to June 2016 included in the remuneration table above for 2016.
Balances in trade creditors at 30 June 2015, included the amounts of $10,323 for Mr Adrian Di Pietrantonio and $ 1,880
for Mr James Slaney.
Other receivables at 30 June 2016 includes an amount of $140,977 (30 June 2015: $106,366) receivable from the Medulla
Group Pty Ltd vendors, including Mr Steve McGovern, Mr James Slaney and Mr Adrian Di Pietrantonio.
Amounts included in the remuneration table for Mr Gavin Campion and Mr Simon Coxhell were paid to their consultancy
companies Hydria Plenus Pty Ltd and Coxrocks Pty Ltd respectively. An amount of $9,000 (2015: nil) included in the
remuneration table for Mr Peter Pawlowitsch was paid to his consultancy company Gyoen Pty Ltd for advisory services
outside his usual Board duties.
All transactions are conducted on normal commercial terms and on an arm’s length basis.
Annual Report - 30 June 2016
Page 17
DUBBER CORPORATION LIMITED
ABN 64 089 145 424
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2016
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:
Balance at
Start of
Year
Received as
Remunerati
on
Options
Exercised
Acquired/
(disposed)
Key Management
Personnel
S McGovern
P Pawlowitsch
G Campion
(resigned 2/2/16)
K Richards
J Slaney
2,430,961
270,000
-
645,776
1,875,989
C Jackson
456,942
A Di Pietrantonio
1,945,361
Total
7,625,029
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Performance
Shares
Converted
a) 1,035,163
c) 800,000
c) 400,000
b) 1,000,000
c) 100,000
c) 100,000
a) 798,842
c) 200,000
a) 194,577
c) 100,000
a) 828,382
c) 100,000
Net Change
Other
Balance at
End of Year
-
-
4,266,124
670,000
d) (1,100,000)
-
-
-
-
-
745,776
2,874,831
751,519
2,873,743
5,656,964
(1,100,000)
12,181,993
a) – Vendor performance shares converted on achieving milestone 2.
b) – Management performance shares converted on achieving milestone 1.
c) – Performance shares converted on achieving milestones 1 & 2.
d) – Shares held at date of appointment or resignation, as applicable.
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:
Key Management
Personnel
S McGovern
P Pawlowitsch
G Campion
(resigned 2/2/16)
K Richards
J Slaney
C Jackson
A Di Pietrantonio
Balance at Start of Year
Vested
-
200,000
-
200,000
-
-
-
Performance
Options
1,200,000
600,000
150,000
150,000
300,000
150,000
150,000
Total
400,000
2,700,000
Received
as
Remunera
tion
-
-
-
-
-
-
-
-
Options
Exercised
-
-
Options
Expired
-
-
Options
Vested/
Converted
a) 1,200,000
a) 600,000
Net Change
Other
-
-
Balance at
End of Year
Vested &
Exercisable
1,200,000
800,000
-
-
-
-
-
-
-
-
-
-
-
-
a) 150,000
b) (150,000)
-
a) 150,000
a) 300,000
a) 150,000
a) 150,000
-
-
-
-
350,000
300,000
150,000
150,000
2,700,000
(150,000)
2,950,000
a) – Performance options converted into unlisted exercisable options on achieving milestones 1 &2.
b) – Options held at date of appointment or resignation, as applicable.
Annual Report - 30 June 2016
Page 18
DUBBER CORPORATION LIMITED
ABN 64 089 145 424
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2016
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:
Key Management
Personnel
Balance at
Start of Year
Received as
Remuneration
Shares
Expired
S McGovern
P Pawlowitsch
G Campion
(resigned 2/2/16)
K Richards
J Slaney
C Jackson
5,376,510
400,000
4,100,000
100,000
3,731,724
960,234
A Di Pietrantonio
3,762,323
Total
18,430,791
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Performance
Shares
Converted
a) (1,035,163)
c) (800,000)
c) (400,000)
b) (1,000,000)
c) (100,000)
c) (100,000)
a) (798,842)
c) (200,000)
a) (194,577)
c) (100,000)
a) (828,382)
c) (100,000)
Net Change
Other
Balance at
End of Year
-
-
d) (3,000,000)
-
-
-
-
3,541,347
-
-
-
2,732,882
665,657
2,833,941
(5,656,964)
(3,000,000)
9,773,827
a) – Vendor performance shares converted on achieving milestone 2.
b) – Management performance shares converted on achieving milestone 1.
c) – Performance shares converted on achieving milestones 1 & 2.
d) – Shares held at date of appointment or resignation, as applicable.
This is the end of the remuneration report.
Annual Report - 30 June 2016
Page 19
DUBBER CORPORATION LIMITED
ABN 64 089 145 424
INDEMNIFYING OFFICERS OR AUDITORS
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2016
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.
SHARE OPTIONS
At the date of this report there were the following unissued ordinary shares for which options were outstanding:
803,000 unlisted options expiring 25 November 2016, exercisable at $0.25 each
1,370,000 unlisted options expiring 31 January 2018, exercisable at $0.25 each
600,000 unlisted options expiring 27 February 2018, exercisable at $0.25 each
2,700,000 unlisted options expiring 30 June 2018, exercisable at $0.40 each
2,250,000 unlisted options expiring 31 March 2019, exercisable at $0.25 each
100,000 unlisted options expiring 31 March 2019, exercisable at $0.72 each
During the year the following options were issued:
100,000 options expiring 31 March 2019, exercisable at $0.72 each
During the year the following options were exercised:
197,000 options expiring 25 November 2016, exercised at $0.25 each
1,630,000 options expiring 31 January 2018, exercised at $0.25 each
The following performance options converted into unlisted exercisable options during the year:
2,700,00 performance options expiring 30 June 2018, exercisable at $0.40 each
No options expired 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:
13,315,172 Vendors performance shares, expiring 27 May 2017
3,000,000 Management performance shares, expiring 27 May 2017
The following performance shares converted into fully paid ordinary shares during the year:
3,892,127 Vendors performance shares, expiring 27 May 2017
204,819 Vendor’s Advisors performance shares, expiring 27 May 2017
1,000,000 Management performance shares, expiring 27 May 2017
No performance shares were issued or expired during the year.
Since the end of the financial year, no performance shares have been issued or expired, and no performance shares
converted into fully paid ordinary shares.
Annual Report - 30 June 2016
Page 20
DUBBER CORPORATION LIMITED
ABN 64 089 145 424
PROCEEDINGS ON BEHALF OF THE COMPANY
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2016
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.
ENVIRONMENTAL REGULATIONS
The Group is not currently subject to any specific environmental regulation under Australian Commonwealth or State
law.
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 18 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 18 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 2016, 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: 16 September 2016
Annual Report - 30 June 2016
Page 21
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 2016, 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, 16 September 2016
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.
DUBBER CORPORATION LIMITED
ABN 64 089 145 424
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2016
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)/benefit
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)
23
2 (b)
3
17
2016
$
2015
$
Restated
457,699
546,712
62,203
7,416
(1,764,023)
(180,703)
(1,246,057)
(657,783)
(1,709,287)
(43,270)
(2,255,879)
(2,448,064)
(319,456)
(246,109)
(313,966)
(271,939)
(594,716)
(122,831)
(515,903)
(883,629)
(9,300,655)
(3,198,930)
-
2,008,734
(9,300,655)
(1,190,196)
-
(336,691)
(9,300,655)
(1,526,887)
-
-
-
(826)
22,793
21,967
Total comprehensive loss for the year
(9,300,655)
(1,504,920)
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
(9,300,655)
-
(9,300,655)
(9,300,655)
-
(9,300,655)
(1,509,617)
(17,270)
(1,526,887)
(1,487,567)
(17,353)
(1,504,920)
(9,300,655)
-
(9,300,655)
(1,293,737)
(193,830)
(1,487,567)
Annual Report - 30 June 2016
Page 23
DUBBER CORPORATION LIMITED
ABN 64 089 145 424
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2016
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
2016
Cents
2015
Cents
RESTATED
14
14
14
14
14
14
(13.04)
(13.04)
-
-
(13.04)
(13.04)
(3.79)
(3.79)
(1.02)
(1.02)
(4.80)
(4.80)
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 2016
Page 24
DUBBER CORPORATION LIMITED
ABN 64 089 145 424
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2016
Consolidated Statement of Financial Position
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
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
Note
2016
$
2015
$
Restated
4
5
6
8
2,563,767
473,415
1,697,415
373,418
3,037,182
2,070,833
50,060
8,943,717
16,876
11,027,668
8,993,777
11,044,544
12,030,959
13,115,377
9
10
976,036
166,125
933,705
93,303
1,142,161
1,027,008
1,142,161
1,027,008
10,888,798
12,088,369
11
12
13
25,455,700
5,535,229
(20,102,131)
17,637,006
5,252,839
(10,801,476)
10,888,798
12,088,369
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
Annual Report - 30 June 2016
Page 25
DUBBER CORPORATION LIMITED
ABN 64 089 145 424
CONSOLIDATED STATEMENT OF CHANGES
IN EQUITY AS AT 30 JUNE 2016
Consolidated Statement of Changes in Equity
Issued
Capital
$
Accumulated
Losses
$
Reserves
$
Non-
controlling
Interests
$
Total
$
2016
Balance at 1 July 2015
17,637,006
(10,801,476)
5,252,839
Loss after income tax expense for the year
Total comprehensive loss for the year
-
-
(9,300,655)
(9,300,655)
-
-
Transactions with owners in their capacity
as owners:
Securities issued during the year
Capital raising costs
Cost of share based payments
7,689,938
(301,244)
430,000
-
-
-
(1,543,489)
-
1,825,879
Balance at 30 June 2016
25,455,700
(20,102,131)
5,535,229
-
-
-
-
-
-
-
12,088,369
(9,300,655)
(9,300,655)
6,146,449
(301,244)
2,255,879
10,888,798
2015
Restated
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
-
-
-
(1,509,617)
-
(17,270)
(1,526,887)
-
(1,509,617)
21,967
21,967
-
(17,270)
21,967
(1,504,920)
-
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
(10,801,476)
5,252,839
-
12,088,369
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes
Annual Report - 30 June 2016
Page 26
DUBBER CORPORATION LIMITED
ABN 64 089 145 424
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 UNE 2016
Consolidated Statement of Cash Flows
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
R&D tax offset refund received
Interest and other finance costs paid
Note
2016
$
2015
$
510,413
(6,889,049)
20,594
524,886
(31,550)
31,478
(2,259,358)
7,416
-
(118,896)
Net cash outflows used in operating activities
22
(5,864,706)
(2,339,360)
Cash flows from investing activities
Purchase of plant and equipment
Payment of security bond
Loans to other entities
Receipt of security bond
Loans repaid by other entities
Cash acquired on acquisition of subsidiary
R&D tax offset refund relating to intangible asset
Exploration and evaluating expenditure
(42,191)
(9,909)
(34,611)
125,663
-
-
846,901
-
(8,848)
-
(1,321,366)
-
150,000
1,884
-
(92,430)
16
Net cash provided by/(used in) investing activities
885,853
(1,270,760)
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
6,146,449
(301,244)
-
-
4,676,620
(367,577)
440,000
(560,687)
5,845,205
4,188,356
866,352
1,697,415
-
578,236
1,119,997
(818)
Cash and cash equivalents at the end of the year
2,563,767
1,697,415
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes
Annual Report - 30 June 2016
Page 27
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
For the year ended 30 June 2016 the group recorded a loss of $9,300,655, had net cash outflows from operating
activities of $5,864,706 and had working capital of $1,895,021 at 30 June 2016.
The ability of the group to continue as a going concern is dependent on securing additional funding through
subscription sales to the Dubber platform, eligibility of the research and development tax incentive and potential
additional capital raisings to continue to fund its operational and marketing activities.
These conditions indicate a material uncertainty that may cast a significant doubt about the group’s ability to
continue as a going concern and, therefore, that it may be unable to realise its assets and discharge its liabilities
in the normal course of business.
Management believe there are sufficient funds to meet the group’s working capital requirements and as at the
date of this report. Subsequent to year end the group expects to receive additional funds through subscriptions,
research and development tax incentives and potential capital raisings.
The financial statements have been prepared on the basis that the group is a going concern, which contemplates
the continuity of normal business activity, realisation of assets and settlement of liabilities in the normal course
of business for the following reasons:
- Growth in subscription based revenue during the year;
-
-
-
Significant pipeline of potentially new subscription based customers;
Previous success on being eligible for the research and development tax incentive; and
If required, previous success in being able to raise capital as equity.
Annual Report - 30 June 2016
Page 28
DUBBER CORPORATION LIMITED
ABN 64 089 145 424
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1.
Summary of Significant Accounting Policies (Continued)
(b)
Going concern basis (continued)
Should the group not be able to continue as a going concern, it may be required to realise its assets and discharge
its liabilities other than in the ordinary course of business, and at amounts that differ from those stated in the
financial statements. The financial report does not include any adjustments relating to the recoverability and
classification of recorded asset amounts or liabilities that might be necessary should the group not continue as a
going concern.
(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)
Government grants/research and development tax incentives
Grants from the government (such as research and development tax incentives) are recognised at their fair value
where there is reasonable assurance that the grant will be received and the Group will comply with all attached
conditions. Government grants received for the period prior to the acquisition of Dubber Pty Ltd was deducted
from the carrying value of the Dubber intellectual property, with subsequent grants being recognised as other
income.
(e)
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 2016 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.
Annual Report - 30 June 2016
Page 29
DUBBER CORPORATION LIMITED
ABN 64 089 145 424
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1.
Summary of Significant Accounting Policies (Continued)
(e)
Basis of consolidation (continued)
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.
(f)
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.
(g)
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.
(h)
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.
Annual Report - 30 June 2016
Page 30
DUBBER CORPORATION LIMITED
ABN 64 089 145 424
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1.
Summary of Significant Accounting Policies (Continued)
(i)
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.
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.
(j)
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.
Annual Report - 30 June 2016
Page 31
DUBBER CORPORATION LIMITED
ABN 64 089 145 424
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1.
Summary of Significant Accounting Policies (Continued)
(k)
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.
(l)
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.
(m)
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.
Annual Report - 30 June 2016
Page 32
DUBBER CORPORATION LIMITED
ABN 64 089 145 424
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1.
Summary of Significant Accounting Policies (Continued)
(n)
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)
the amount at which the financial asset or financial liability is measured at initial recognition;
(b)
less principal repayments;
(c)
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)
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.
Annual Report - 30 June 2016
Page 33
DUBBER CORPORATION LIMITED
ABN 64 089 145 424
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1.
Summary of Significant Accounting Policies (Continued)
(n)
Financial instruments (continued)
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.
(o)
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 2016
Page 34
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
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.
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.
Annual Report - 30 June 2016
Page 35
DUBBER CORPORATION LIMITED
ABN 64 089 145 424
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1.
Summary of Significant Accounting Policies (Continued)
(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.
(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
Intangible assets acquired as part of a business combination are brought in at fair value at acquisition. Intangible
assets with finite useful life are amortised over a straight line basis in the profit or loss over the estimated useful
life. During the period, management re assessed the useful life of the platform from 10 years to 5 years, as they
believe it is more reflective of the useful life.
(w) Goodwill
Goodwill is measured as described in note 1(k). Goodwill on acquisition of subsidiaries is included in intangible
assets. Goodwill is not amortised but it is tested for impairment annually, or more frequently if events or changes
in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses.
Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to
those cash-generating units or groups of cash-generating units that are expected to benefit from the business
combination in which the goodwill arose. The units or groups of units are identified at the lowest level at which
goodwill is monitored for internal management purposes, being the operating segments (note 20).
Annual Report - 30 June 2016
Page 36
DUBBER CORPORATION LIMITED
ABN 64 089 145 424
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1.
Summary of Significant Accounting Policies (Continued)
(x)
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.
(ii) Other long-term employee benefit obligations
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.
(y)
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 tests annually whether the carrying value of goodwill and other intangibles exceed its recoverable
amount to determine potential impairment requirements. The recoverable amount of goodwill and other
intangibles has been calculated using a number of assumptions as disclosed in note 8. No impairment has been
recognised in respect of intangibles at the end of the reporting period.
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 23. 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 – Dubber intellectual property
The Dubber SaaS intangible was acquired as part of a business combination (note 16). The intangible asset was
recognised at its fair value at the date of acquisition and is subsequently amortised on a straight-line based on
the timing of projected cash flows of the intellectual property over its estimated useful life. The Group estimates
the useful life of the asset is 5 years based on the technical obsolescence of such assets. However, the actual
useful life may be shorter or longer than 5 years, depending on technical innovations and competitor actions.
Annual Report - 30 June 2016
Page 37
DUBBER CORPORATION LIMITED
ABN 64 089 145 424
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1.
Summary of Significant Accounting Policies (Continued)
(z)
New accounting standards for application in future period & current periods
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet
mandatory, have not been early adopted by the consolidated entity for period ended 30 June 2016. The
consolidated entity's assessment of the impact of these new or amended Accounting Standards and
Interpretations, most relevant to the consolidated entity, are set out below.
AASB 2015-1 Amendments to Australian Accounting Standards – Annual Improvements to Australian
Accounting Standards 2012-2014 Cycle, and
AASB 2015-2 Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB
101.
As these amendments merely clarify the existing requirements, they do not affect the Group’s accounting policies
or any of the disclosures.
AASB 9 Financial Instruments
These amendments must be applied for financial years commencing on or after 1 January 2018. Therefore
application date for the Company will be 30 June 2019. The Company does not currently have any hedging
arrangements in place.
AASB 9 addresses the classification, measurement and de-recognition of financial assets and financial liabilities.
Since December 2013, it also sets out new rules for hedge accounting. There will be no impact on the Company’s
accounting for financial assets and financial liabilities, as the new requirements only effect 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.
AASB 15 Revenue from Contracts with Customers
These amendments must be applied for annual reporting periods beginning on or after 1 January 2018. Therefore
application date for the Company will be 30 June 2019.
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 under IAS 18 Revenue. Due to the recent release of this
standard the Company has not yet made an assessment of the impact of this standard.
AASB 16 Leases
IFRS 16 eliminates the operating and finance lease classifications for lessees currently accounted for under AASB
117 Leases. It instead requires an entity to bring most leases onto its statement of financial position in a similar
way to how existing finance leases are treated under AASB 117. An entity will be required to recognise a lease
liability and a right of use asset in its statement of financial position for most leases.
There are some optional exemptions for leases with a period of 12 months or less and for low value leases. The
application date of this standard is for annual reporting periods beginning on or after 1 January 2019. Due to the
recent release of this standard, the group has not yet made a detailed assessment of the impact of this standard.
Annual Report - 30 June 2016
Page 38
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 (continued)
AASB 2014-3 (issued August 2014) - Amendments to Australian Accounting Standards - Accounting for Acquisitions
of Interests in Joint Operations
When an entity acquires an interest in a joint operation whose activities meet the definition of a ‘business’ in
AASB 3 Business Combinations, to the extent of its share of assets, liabilities, revenues and expenses as specified
in the contractual arrangement, the entity must apply all of the principles for business combination accounting
in AASB 3, and other IFRSs, to the extent that they do not conflict with AASB 11 Joint Arrangements.
This means that it will expense all acquisition-related costs and recognise its share, according to the contractual
arrangements, of:
Fair value of identifiable assets and liabilities, unless fair value exceptions included in AASB 3 or other IFRSs,
and
Deferred tax assets and liabilities that arise from the initial recognition of an asset or liability as required by
AASB 3 and AASB 112 Income Taxes.
Goodwill will then be recognised as the excess consideration over the fair value of net identifiable assets
acquired.
Annual periods beginning on or after 1 January 2016.
There will be no impact on the financial statements when these amendments are first adopted because they
apply prospectively to acquisitions of interests in joint operations.
AASB 2014-3 (issued August 2014) - Amendments to Australian Accounting Standards - Sale or Contribution of
Assets between An Investor and its Associate or Joint Venture
Removes the inconsistency between AASB 10 Consolidated Financial Statements and AASB 128 Investments in
Associates and Joint Ventures in accounting for transactions where a parent loses control over a subsidiary that
is not a business under AASB 3 Business Combinations, by selling part of its interest to an associate or joint
venture, or by selling down part of its interest so that the remaining investment becomes an associate or joint
venture. Requires that:
Gain or loss from measuring the retained interest in the former subsidiary at fair value, as well as gains or
losses to be reclassified from other comprehensive income to profit or loss, only be recognised to the extent
of the unrelated investor’s interest in that associate or joint venture, and
Remaining gains or losses to be eliminated against the investment in associate or joint venture.
Annual periods beginning on or after 1 January 2016.
There will be no impact on the financial statements when these amendments are first adopted because they
apply prospectively to sales or contributions of assets occurring after the application date.
(aa) Parent entity financial information
The financial information for the parent entity, Dubber Corporation Limited, disclosed in note 24 has been
prepared on the same basis as the consolidated financial statements.
Annual Report - 30 June 2016
Page 39
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
Research and development tax incentive
(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/(benefit)
Current tax
Deferred tax
Movement in deferred taxes not previously recognised
(b) Reconciliation of income tax expense to prima facie tax payable
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 assets not previously brought to account
Deferred tax asset not brought to account on temporary differences &
tax losses
Amounts recognised in equity
Income tax expense/(benefit)
Consolidated
2016
$
2015
$
21,826
524,886
546,712
49,603
179,935
-
72,711
622,052
85,893
644,980
792,890
2,448,064
7,416
-
7,416
33,558
115,973
7,500
116,129
116,400
92,580
119,834
281,655
883,629
-
-
-
-
-
-
(2,008,734)
(2,008,734)
(9,300,655)
(3,535,621)
(2,790,197)
(1,060,686)
527,547
-
(183,143)
(735,032)
2,310,597
-
47,947
(1,978,861)
(47,947)
(29,873)
-
(2,008,734)
Annual Report - 30 June 2016
Page 40
DUBBER CORPORATION LIMITED
ABN 64 089 145 424
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
3.
Income Tax (continued)
(c) Deferred tax assets
Timing differences
Tax losses - revenue
Offset against Deferred Tax Liabilities
Amounts in equity
Tax losses - capital
Deferred tax assets not brought to account
(d) Deferred tax liabilities
Timing differences
Offset by Deferred Tax Assets recognised
There are no franking credits available to the Group.
4.
Cash and Cash Equivalents
Cash at bank
The company’s exposure to interest rate risk is outlined in note 15.
5.
Trade and Other Receivables
Current
Trade receivables
GST recoverable
Receivable from Medulla Group Pty Ltd vendors
Prepayments
Other receivables
Consolidated
2016
$
2015
$
89,582
3,833,945
3,923,527
(2,080,495)
1,843,032
156,933
323,367
2,323,332
95,353
2,803,216
2,898,569
(2,705,680)
192,889
114,507
323,367
630,763
(2,080,495)
2,080,495
-
(2,705,680)
2,705,680
-
2,563,767
2,563,767
1,697,415
1,697,415
53,425
83,276
140,977
146,096
49,641
473,415
82,870
119,086
106,366
6,596
58,500
373,418
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
$140,977. Receipt of this amount is expected within 12 months of 30 June 2016.
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 15. Prepayments consist of prepaid insurance and
consulting fees.
Annual Report - 30 June 2016
Page 41
DUBBER CORPORATION LIMITED
ABN 64 089 145 424
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
6.
Property, Plant and Equipment
Plant and equipment – at cost
Less: Accumulated depreciation
Net carrying amount
Consolidated
2016
$
2015
$
72,707
(22,647)
50,060
30,516
(13,640)
16,876
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:
2016
Balance at the beginning of the year
Additions
Depreciation expense
Carrying amount at the end of the year
2015
Balance at the beginning of the year
Additions
Acquisition of subsidiary (note 16)
Foreign exchange movement
Depreciation expense
Impairment (i)
Carrying amount at the end of the year
Computer
Equipment
$
Office
Renovations
$
Furniture
$
Plant &
Equipment
$
Total
$
8,863
23,981
(5,369)
27,475
2,442
4,316
5,940
-
(2,787)
(1,048)
8,863
-
-
-
-
14,516
-
-
(2)
(3,072)
7,793
18,210
(3,418)
22,585
15,851
4,532
4,173
(3)
(5,482)
220
-
(220)
-
28,874
-
-
(5)
(8,686)
(11,442)
-
(11,278)
7,793
(19,963)
220
16,876
42,191
(9,007)
50,060
61,683
8,848
10,113
(10)
(20,027)
(43,731)
16,876
(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 were impaired to their recoverable value of nil with the closure of the Abidjan office
on that date.
7.
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
2016
$
2015
$
-
-
-
-
-
119,414
(119,414)
-
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 2016
Page 42
DUBBER CORPORATION LIMITED
ABN 64 089 145 424
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
8.
Intangible Assets
Dubber intellectual property – at cost
Less: Accumulated amortisation
Goodwill
Net carrying amount
Reconciliation
Balance at the beginning of the year
Acquisition of subsidiary (note 16)
R&D tax offset refund relating to acquired intellectual property
Amortisation expense
Net carrying amount at the end of the year
Consolidated
2016
$
2015
$
8,483,031
(1,548,048)
6,934,983
9,329,932
(310,998)
9,018,934
2,008,734
2,008,734
8,943,717
11,027,668
11,027,668
-
(846,901)
(1,237,050)
8,943,717
-
11,338,666
-
(310,998)
11,027,668
The goodwill and other intangibles is attributable to Dubber’s strong position to continue to roll out its software platform
and the expected cash flows to arise from the company’s acquisition of Dubber Pty Ltd.
Goodwill acquired through the business combination has been allocated to the company’s only cash generating unit
(‘CGU’) for impairment testing. The Board has determined the recoverable amount of the CGU by assessing the fair value
less cost of disposal (FVLCOD) of the underlying assets. The method applied was the market approach based on the
current market capitalisation (number of shares on issue multiplied by the quoted market price per share) of the Group
on the Australian Securities Exchange (ASX). The recoverable value is therefore a Level 1 measurement based on
observable inputs of publicly traded shares in an active market. The Board has not identified any reasonable possible
changes in key assumptions that could cause the carrying amount of the CGU to exceed its recoverable amount. Any
reasonable change to the volatility of the company’s share price would not create an impairment.
9.
Trade and Other Payables
Current
Trade payables
Payroll tax and other statutory liabilities
Other payables
339,231
402,437
234,368
976,036
408,910
488,295
36,500
933,705
All payables are expected to be settled within 6 months. Risk management policies in regard to liquidity and currency
risk are outlined in note 15.
10.
Provisions
Current
Employee benefits
166,125
166,125
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 2016
Page 43
DUBBER CORPORATION LIMITED
ABN 64 089 145 424
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
11.
Issued Capital
Issued and paid up capital
79,929,426 (2015: 57,492,814) Ordinary shares – fully paid
Share issue costs written off against share capital
Movement in ordinary shares on issue
2016
Balance at the beginning of the year
Conversion of vendors & advisors performance shares on
achieving milestone – 2 September 2015
Conversion of management performance shares on achieving
milestone – 14 September 2015
Issued for cash pursuant to placement – 19 November 2015
Issued for cash pursuant to placement – 23 November 2015
Conversion of performance shares on achieving milestone – 29
December 2015
Conversion of performance shares on achieving milestone – 29
December 2015
Issued as consideration for advisory fees – 29 December 2015
Issued as employee incentives – 11 March 2016
Exercise of options expiring 25 November 2016
Exercise of options expiring 31 January 2018
Share issue costs
Balance at the end of the year
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 16)
– 27 February 2015
Issued as consideration for acquisition advisor fees – 27 February
2015
Conversion of vendors & advisors 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
Consolidated
2016
$
2015
$
26,644,963
(1,189,263)
25,455,700
18,525,025
(888,019)
17,637,006
Issue Price
No. of Shares
$
$0.20
$0.14
$0.45
$0.45
$0.36
$0.289
$0.45
$0.38625
$0.25
$0.25
$0.20
$0.20
$0.20
$0.20
$0.20
57,492,814
17,637,006
4,096,946
819,389
1,000,000
8,549,334
4,094,444
140,000
3,847,199
1,842,500
900,000
324,000
900,000
268,888
800,000
197,000
1,630,000
79,929,426
260,100
121,000
309,000
49,250
407,500
(301,244)
25,455,700
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
Annual Report - 30 June 2016
Page 44
DUBBER CORPORATION LIMITED
ABN 64 089 145 424
11.
Issued Capital (continued)
Options
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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
31 March 2016
Expiry Date
25 November 2016
31 January 2018
27 February 2018
30 June 2018
31 March 2019
31 March 2019
$0.25
$0.25
$0.25
$0.40
$0.25
$0.72
Option
803,000
1,370,000
600,000
2,700,000
2,250,000
100,000
7,823,000
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
Expiry Date
27 May 2017
27 May 2017
Capital risk management
Number of
Performance
Shares
3,000,000
13,315,172
16,315,172
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.
Annual Report - 30 June 2016
Page 45
DUBBER CORPORATION LIMITED
ABN 64 089 145 424
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
12.
Reserves
Option reserve
Performance share reserve
Unvested share reserve
Foreign currency reserve
Option reserve
Consolidated
2016
$
2015
$
2,311,316
2,947,583
276,330
-
5,535,229
1,495,943
3,756,896
-
-
5,252,839
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
Options issued as consideration for capital raising services – broker options
Options issued upon conversion of acquired subsidiary’s convertible notes –
attaching options
Bonus options issued to service provider
Allocation of incentive based share options values over vesting period – directors
and key management
Allocation of incentive based share options values over vesting period –
employees
Balance at the end of the year
1,495,943
-
1,015,293
70,200
-
34,950
402,150
-
433,150
8,300
347,273
2,311,316
-
1,495,943
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 part consideration for acquisition of subsidiary (note 16)
Issued as consideration for acquisition advisor fees
Allocation of incentive share based payment over vesting period – management
performance shares
Allocation of incentive share based payment over vesting period – directors and
key management
Converted into ordinary shares upon achievement of performance milestone
Balance at the end of the year
3,756,896
-
-
161,057
-
4,219,885
81,939
263,492
573,119
10,981
(1,543,489)
2,947,583
(819,401)
3,756,896
Annual Report - 30 June 2016
Page 46
DUBBER CORPORATION LIMITED
ABN 64 089 145 424
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Consolidated
2016
$
2015
$
12.
Reserves (continued)
Unvested share reserve
The unvested share reserve is used to record the value of shares formally offered and accepted as share based payments
until the shares are issued on a future specified vesting date.
Movement in unvested share reserve:
Balance at the beginning of the year
Allocation of incentive share based payment over vesting period – employee
shares
Shares issued on vesting date
Balance at the end of the year
-
585,330
(309,000)
276,330
-
-
-
-
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 17)
Balance at the end of the year
13. Accumulated Losses
-
-
-
-
(21,967)
(826)
22,793
-
Balance at the beginning of the year
Loss attributable to owners of Dubber Corporation Limited
Balance at the end of the year
(10,801,476)
(9,300,655)
(20,102,131)
(9,291,859)
(1,509,617)
(10,801,476)
Annual Report - 30 June 2016
Page 47
DUBBER CORPORATION LIMITED
ABN 64 089 145 424
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
14.
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
15.
Financial Risk Management
Consolidated
2016
$
2015
$
$
$
(9,300,655)
-
(9,300,655)
(1,190,196)
(319,421)
(1,509,617)
No.
No.
71,324,702
31,422,455
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
2016
$
2015
$
0.95
-
-
4
5
9
2,563,767
327,319
2,891,086
976,036
1,915,050
1,697,415
366,822
2,064,237
933,705
1,130,532
The carrying amounts of these financial instruments approximate their fair values.
Annual Report - 30 June 2016
Page 48
DUBBER CORPORATION LIMITED
ABN 64 089 145 424
15.
Financial Risk Management (continued)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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 technological 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 research
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 Managing Director, 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 and as such collateral is not requested nor
is it the company’s policy to secure its trade and other receivables. Receivable balances are monitored on an
ongoing basis with the result that the company does not have a significant exposure to bad debts.
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 Westpac Banking
Corporation, an 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 2016
Page 49
DUBBER CORPORATION LIMITED
ABN 64 089 145 424
15.
Financial Risk Management (continued)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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.
Financial liability and financial asset maturity analysis
Within 1 Year
1 to 5 Years
2016
$
2015
$
2016
$
2015
$
Financial assets – cash flows receivable
Trade and other receivables
Total expected inflows
327,319
327,319
366,822
366,822
Financial liabilities due for payment
realisable
Trade and other payables
Total anticipated outflows
Net (outflow)/inflow on financial
instruments
976,036
976,036
933,705
933,705
(648,717)
(566,883)
-
-
-
-
-
-
-
-
-
-
Total Contractual Cash
Flow
2016
$
2015
$
327,319
327,319
366,822
366,822
976,036
976,036
933,705
933,705
(648,717)
(566,883)
(b) Market risk
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 0.5% during the whole of the respective periods would have led to an increase/(decrease) in losses of less than
$12,819.
(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 2016
Page 50
DUBBER CORPORATION LIMITED
ABN 64 089 145 424
16.
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 finalised 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
Deferred tax liability on Dubber intellectual property
Deferred tax asset on tax losses
Goodwill
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)
(2,798,980)
790,246
2,008,734
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.
At 30 June 2015, provisional accounting was applied to the fair value of the identifiable assets and liabilities acquired. At
30 June 2016, as a result of finalisation of the subsidiary’s position an adjustment has been made to recognise the
deferred tax liability on the intellectual property offset by the deferred tax asset on the subsidiary’s tax losses with a
comparative increase in goodwill.
Annual Report - 30 June 2016
Page 51
DUBBER CORPORATION LIMITED
ABN 64 089 145 424
17. 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.
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
Loss after income tax expense from discontinued operations
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
2015
$
-
(17,059)
(111,914)
(43,731)
(172,704)
-
(172,704)
(163,987)
-
(163,987)
(336,691)
(84,929)
135,874
(42,653)
8,292
Annual Report - 30 June 2016
Page 52
DUBBER CORPORATION LIMITED
ABN 64 089 145 424
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
17. 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
18. 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
2016
$
2015
$
49,603
28,834
-
78,437
-
78,437
33,558
17,289
10,850
61,697
12,000
73,697
19.
Contingent Liabilities
The Consolidated entity has no material contingent liabilities as at reporting date (2015: Nil).
Annual Report - 30 June 2016
Page 53
DUBBER CORPORATION LIMITED
ABN 64 089 145 424
20. 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)
$
SaaS
$
Total
$
-
-
-
-
-
-
-
-
984,635
(5,821,943)
9,819,047
(885,343)
42,191
(8,787)
8,943,717
(1,237,050)
1,004,411
(9,300,655)
12,030,959
(1,142,161)
42,191
(9,007)
8,943,717
(1,237,050)
-
(180,204)
-
-
-
(17,059)
(119,414)
(43,731)
-
-
62,203
(1,813,501)
11,480,104
(933,158)
69,619
(1,526,887)
13,115,377
(1,027,008)
8,848
(2,305)
-
8,848
(20,027)
(119,414)
-
11,027,668
(310,998)
(43,731)
11,027,668
(310,998)
Corporate
$
19,776
(3,478,712)
2,211,912
(256,818)
-
(220)
-
-
7,416
466,818
1,635,273
(93,850)
-
(663)
-
-
-
-
Year Ended 30 June 2016
Revenue
Result (Loss)
Total assets
Total liabilities
Acquisition of non-current assets
Depreciation of non-current assets
Intangible assets
Amortisation
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
Annual Report - 30 June 2016
Page 54
DUBBER CORPORATION LIMITED
ABN 64 089 145 424
21.
Related Party Transactions
Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements include the financial statements of Dubber Corporation Limited and the
subsidiaries listed in the following table:
Country of Incorporation
Class of Shares
Australia
Australia
Australia
Australia
Australia
Australia
England and Wales
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Equity Holding
2016
%
2015
%
-
-
-
-
100
100
100
100
100
100
100
100
100
-
Westaf Pty Ltd
JEM Resources Pty Ltd
Cote Gold Pty Ltd
Queen Gold Pty Ltd
Medulla Group Pty Ltd
Dubber Pty Ltd
Dubber 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 2016.
The totals of remuneration paid to key management personnel of the company during the year are as follows:
Short-term employee benefits
Long-term benefits
Post-employment benefits
Share-based payments
Consolidated
2016
$
2015
$
1,356,195
22,455
74,832
1,167,327
2,620,809
532,665
7,742
34,589
282,772
857,768
Other transactions with key management personnel
Payments totalling nil (2015: $17,482) 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.
Platform testing consulting fees totalling $70,818 (2015: $47,143) were charged by Prueba Pty Ltd, a company associated
with Mr Steve McGovern.
Payments totalling $2,472 (2015: nil) were made for telephony services provided by Canard Pty Ltd, a company
associated with Mr Steve McGovern and Mr Adrian Di Pietrantonio.
Annual Report - 30 June 2016
Page 55
DUBBER CORPORATION LIMITED
ABN 64 089 145 424
21.
Related Party Transactions (continued)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Intelligent Voice and 1300 MY SOLUTION are businesses associated with Mr Steve McGovern and Mr Adrian Di
Pietrantonio. The Group earned service fee income of $32,572 (2015: $7,260) from Intelligent Voice and $293,714 (2015:
$51,327) from 1300 MY SOLUTION. Trade receivables at 30 June 2016 include balances of nil (30 Jun 2015: $18,518) due
from Intelligent Voice and nil (30 June 2015: $57,095) due from 1300 MY SOLUTION.
During the previous year, Vault Pty Ltd, a company associated with Mr Pawlowitsch advanced a short term loan of
$50,000 to the Company in January 2015. This amount was repaid in March 2015 with interest of $7,500.
Other payables at 30 June 2016 includes an accrual of $75,000 for the cash bonus payable to Mr Steve McGovern for the
period January to June 2016 included in his remuneration for 2016.
Balances in trade creditors at 30 June 2015, included the amounts of $10,323 for Mr Adrian Di Pietrantonio and $ 1,880
for Mr James Slaney.
Other receivables at 30 June 2016 includes an amount of $140,977 (30 June 2015: $106,366) receivable from the Medulla
Group Pty Ltd vendors, including Mr Steve McGovern, Mr James Slaney and Mr Adrian Di Pietrantonio.
Amounts included in the remunerations for Mr Gavin Campion and Mr Simon Coxhell were paid to their consultancy
companies Hydria Plenus Pty Ltd and Coxrocks Pty Ltd respectively. An amount of $9,000 (2015: nil) included in the
remuneration for Mr Peter Pawlowitsch was paid to his consultancy company Gyoen Pty Ltd for advisory services outside
his usual Board duties.
All transactions are conducted on normal commercial terms and on an arm’s length basis.
Consolidated
2016
$
2015
$
22.
Cash Flow Information
Reconciliation of loss for the year to net cash flows from operating activities
Net loss for the period
(9,300,655)
(1,526,887)
Non-cash flows in loss:
Depreciation and amortisation
Share based payments
Exploration expensed
Impairment of property, plant and equipment
Loss on disposal of subsidiary
Income tax benefit
Changes in assets and liabilities:
Increase in trade and other receivables
(Decrease)/Increase in trade and other payables
Increase in provisions
Net cash outflows from operating activities
1,246,057
2,255,879
-
-
-
-
(101,719)
(37,089)
72,821
(5,864,706)
331,025
515,903
119,414
43,731
163,987
(2,008,734)
(22,060)
32,505
11,756
(2,339,360)
Annual Report - 30 June 2016
Page 56
DUBBER CORPORATION LIMITED
ABN 64 089 145 424
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
23.
Share Based Payments
Value of share based payments in the financial statements
Expensed – directors and other key management personnel remuneration:
Performance options
Performance shares
Management performance shares
Expensed – other employees remuneration:
Fully paid ordinary shares
Employee options
Offered but unissued shares
Expensed – consulting fees:
Fully paid ordinary shares
Unlisted options
Vendors advisors’ performance shares
Share based payments in capital raising costs:
Unlisted brokers options
Consolidated
2016
$
2015
$
433,150
573,119
161,058
1,167,327
309,000
347,272
276,330
932,602
121,000
34,950
-
155,950
8,300
10,981
263,491
282,772
-
-
-
-
151,192
-
81,939
233,131
-
70,200
2,255,879
586,103
Annual Report - 30 June 2016
Page 57
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DUBBER CORPORATION LIMITED
ABN 64 089 145 424
23.
Share Based Payments (continued)
Summary of share based payments
Shares:
During the year, the Company issued:
268,888 fully paid ordinary shares as consideration for advisory fees of $121,000; and
800,000 fully paid ordinary shares valued at $309,000 on the vesting date of shares offered as incentives to
employees.
During the previous financial 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.
Options:
Set out below are the summaries of options granted as share based payments:
2016
Grant
Date
Expiry
Date
Exercise
Price
Defer
Type
Balance
01/07/15
Granted
Exercised
Expired or
Forfeited
Balance
30/06/16
25/11/13
15/12/14
27/02/15
9/06/15
30/06/15
31/03/16
25/11/16
31/01/18
27/02/18
30/06/18
31/03/19
31/03/19
$0.25
$0.25
$0.25
$0.40
$0.25
$0.72
1.
2.
1,000,000
3,000,000
600,000
2,700,000
2,250,000
-
9,550,000
-
-
-
-
-
100,000
100,000
(197,000)
(1,630,000)
-
-
-
-
(1,827,000)
-
-
-
-
-
-
-
803,000
1,370,000
600,000
2,700,000
2,250,000
100,000
7,823,000
Number
vested and
exercisable
803,000
1,370,000
600,000
2,700,000
750,000
100,000
6,323,000
Weighted average exercise price
$0.29
$0.72
$0.25
$0.31
$0.32
2015
Grant
Date
Expiry
Date
Exercise
Price
Defer
Type
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
1.
2.
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
$0.25
# - 1:5 consolidation of shares and options on 15/12/14
Annual Report - 30 June 2016
Page 58
DUBBER CORPORATION LIMITED
ABN 64 089 145 424
23.
Share Based Payments (continued)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The various deferred vesting options listed above are subject to milestones or vesting dates which are listed below.
Probability of achieving these milestones or vesting dates have been assessed at 100%.
1. Performance options convert into unlisted exercisable options upon the achievement of the following milestones:
Milestone 1: The Company achieving a share price with a 20 day VWAP over 50 cents.
Milestone 2: The Company achieving a share price with a 20 day VWAP over 75 cents.
2. Employee options vest and become exercisable on the following dates provided the employee is an employee of the
Company at the relevant vesting date:
Vesting date 1: 1 March 2016 - 750,000 options
Vesting date 2: 1 March 2017 - 750,000 options
Vesting date 3: 1 March 2018 - 750,000 options
The assessed fair values of the options was determined using a binomial option pricing model or Black-Scholes model,
taking into account the exercise price, term of option, the share price at grant date and expected price volatility of the
underling share, expected yield and the risk-free interest rate for the term of the option. For the options granted during
the current financial year, the inputs to the model used were:
Grant date
Dividend yield (%)
Expected volatility (%)
Risk-free interest rate (%)
Expected life of options (years)
Underlying share price ($)
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
30/06/2015
-
100%
2.045%
3.75
$0.325
$0.25
$0.2344
31/03/2016
-
100%
1.905%
3
$0.595
$0.72
$0.3495
The weighted average remaining contractual life of share-based payment options that were outstanding as at 30 June
2016 was 1.96 years (2015: 2.86 years).
The weighted average fair value of share-based payment options granted during the year was $0.3495 (2015: $0.16856)
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:
2016
Type
1.
3.
4.
Grant
Date
Expiry
Date
Balance
01/07/15
Granted
Converted
Forfeited
28/11/14
27/02/15
9/06/15
27/05/17
27/08/15
30/06/18
4,000,000
204,848
1,800,000
6,004,848
-
-
-
-
(1,000,000)
(204,848)
(1,800,000)
(3,004,848)
-
-
-
-
Balance
30/06/16
3,000,000
-
-
3,000,000
Annual Report - 30 June 2016
Page 59
DUBBER CORPORATION LIMITED
ABN 64 089 145 424
23.
Share Based Payments (continued)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2015
Type
1.
2.
3.
4.
Grant
Date
Expiry
Date
Balance
01/07/14
Granted
Converted
Forfeited
28/11/14
27/02/15
27/02/15
9/06/15
27/05/17
27/02/15
27/08/15
30/06/18
-
-
-
-
-
4,000,000
204,848
204,848
1,800,000
6,209,696
-
(204,848)
-
-
(204,848)
-
-
-
-
-
Balance
30/06/15
4,000,000
-
204,848
1,800,000
6,004,848
The weighted average remaining contractual life of performance shares outstanding at 30 June 2016 was 0.91 years
(2015: 1.51 years)
The various performance shares listed above are subject to milestones which are listed below. Probability of achieving
these milestones have been assessed at 100%.
1. Management performance shares
Milestone 1: Upon all of the following being achieved:
(e) enter into 1 Australian re-seller agreement for the Dubber technology suite;
(f) enter into re-seller and deployment partner agreement for the Dubber technology suite;
(g) enter into a re-seller integration partner agreement with 1 Australian based telecommunications Carrier for the
Dubber technology suite;
(h) 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 the following being achieved:
$30,000 (ex GST) in billed monthly revenue via channel.
Milestone 3: Upon 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. Vendors advisors’ performance shares
Milestone: The Company attaining 1,000 paying end users
3. Vendors advisors’ performance shares
Milestone: The Company attaining 3,000 paying end users by six months
4. Performance shares
Milestone 1: The Company achieving a share price with a 20 day VWAP over 50 cents.
Milestone 2: The Company achieving a share price with a 20 day VWAP over 75 cents.
Annual Report - 30 June 2016
Page 60
DUBBER CORPORATION LIMITED
ABN 64 089 145 424
23.
Share Based Payments (continued)
Offered but unissued shares
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The Company formally offered the following shares to employees. The shares are not issued to the employees until the
vesting date provided the employee is an employee of the Company at the relevant vesting date.
Vesting
Date
Balance
01/07/15
Offered
1/03/16
1/03/17
1/03/18
800,000
700,000
700,000
2,200,000
-
-
-
-
Ord FP
Shares
Issued
(800,000)
-
-
(800,000)
Forfeited
Balance
30/06/16
-
-
-
-
-
700,000
700,000
1,400,000
24.
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
2016
$
2015
$
2,211,912
8,933,704
11,145,616
256,818
256,818
10,888,798
1,635,053
8,538,432
10,173,485
93,850
93,850
10,079,635
25,455,700
5,535,229
(20,102,131)
10,888,798
17,637,006
5,252,839
(12,810,210)
10,079,635
(7,291,921)
(7,291,921)
(5,097,008)
(5,097,008)
The parent entity had no expenditure commitments or contingent liabilities at 30 June 2016 or 30 June 2015.
Annual Report - 30 June 2016
Page 61
DUBBER CORPORATION LIMITED
ABN 64 089 145 424
25. 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
Transactions with non-controlling interests
On 31 March 2015, the consolidated entity sold its 90% interest in Major Star SA (note 17).
Annual Report - 30 June 2016
MAJOR STAR SA
2015
%
100
$
-
-
-
-
-
-
-
-
(172,704)
(42,663)
(215,367)
(17,270)
-
(84,929)
135,874
(42,653)
8,292
-
Page 62
DUBBER CORPORATION LIMITED
ABN 64 089 145 424
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
26.
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
2016
$
2015
$
153,577
378,931
532,508
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.
27.
Events Subsequent to Year End
There are no matters or circumstances that have arisen since 30 June 2016 that have or may significantly affect the
operations, results, or state of affairs of the Company in future financial years.
The financial report was authorised for issue on 16 September 2016 by the board of directors.
Annual Report - 30 June 2016
Page 63
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 2016 and of its
performance for the financial year ended on that date.
2.
The Managing Director and Company Secretary 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: 16 September 2016
Annual Report - 30 June 2016
Page 64
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 2016, 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 1a, 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.
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.
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.
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 2016
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 1a.
Emphasis of matter
Without modifying our opinion, we draw attention to Note 1(b) in the financial report, which describes
conditions that give rise to 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 pages 10 to 19 of the directors’ report for the
year ended 30 June 2016. 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
2016 complies with section 300A of the Corporations Act 2001.
BDO Audit (WA) Pty Ltd
Jarrad Prue
Director
Perth, 16 September 2016
DUBBER CORPORATION LIMITED
ABN 64 089 145 424
ASX INFORMATION
FOR THEYEAR ENDED 30 JUNE 2016
Additional Shareholder Information
The following additional information is current as at 15 September 2016.
CORPORATE GOVERNANCE:
The Company’s Corporate Governance Statement
www.dubber.net/investors.
is available on the company’s website at
SUBSTANTIAL SHAREHOLDER:
Holder Name
STEVE MCGOVERN NOMINEES PTY LTD
Technical Investing Pty Ltd
Holding
4,266,124
3,996,973
% IC
5.34%
5.00%
Holding Ranges
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - 9,999,999,999
Totals
Holders
448
305
241
544
130
1,668
Total Units
113,712
849,109
2,041,495
20,452,418
56,472,691
79,929,425
% Issued Share Capital
0.14%
1.06%
2.55%
25.59%
70.65%
100.00%
There are 472 shareholders with less than a marketable parcel.
VOTING RIGHTS
Each fully paid ordinary share carries voting rights of one vote per share.
Annual Report - 30 June 2016
Page 67
DUBBER CORPORATION LIMITED
ABN 64 089 145 424
ASX INFORMATION
FOR THEYEAR ENDED 30 JUNE 2016
THE TOP 20 HOLDERS OF ORDINARY SHARES ARE:
Position
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Holder Name
STEVE MCGOVERN NOMINEES PTY LTD
TECHNICAL INVESTING PTY LTD
UBS NOMINEES PTY LTD
PENELOPE SLANEY
GLENEAGLE SECURITIES NOMINEES PTY LIMITED
AUSTRALIAN ASSOCIATED FINANCE PTY LTD
MRS HELEN GANDEL &
MR ANTHONY GANDEL
ONE MANAGED INVESTMENT FUNDS LIMITED
ONE MANAGED INVESTMENT FUNDS LIMITED
ZAV40 INVESTMENTS PTY LTD
MR ELYAS KHALIQI
ALTA HOLDINGS PTY LTD
EARTHRISE HOLDINGS PTY LTD
VENN MILNER SUPERANNUATION PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA LIMITED
MORPARQ PTY LTD
AXIAS GROUP PTY LTD
MADACHI HOLDINGS PTY LTD
JACKO13 PTY LTD
Totals
Total Issued Capital
Holding
4,266,124
3,996,973
2,784,515
2,674,831
2,674,822
2,500,000
2,250,000
2,140,072
1,629,403
1,302,000
1,243,278
1,197,000
% IC
5.34%
5.00%
3.48%
3.35%
3.35%
3.13%
2.82%
2.68%
-
2.04%
1.63%
1.56%
1.50%
1,100,000
1.38%
1,000,000
937,731
886,806
800,000
799,999
791,293
751,519
1.25%
1.17%
1.11%
1.00%
1.00%
0.99%
0.94%
35,726,366
79,929,425
44.70%
100.00%
Annual Report - 30 June 2016
Page 68
DUBBER CORPORATION LIMITED
ABN 64 089 145 424
ASX INFORMATION
FOR THEYEAR ENDED 30 JUNE 2016
UNQUOTED EQUITY SECURITIES
+Class
Escrow Period
Holders of more than 20%
Number
803,000
Number
of Holders
5
Options exercisable
at 25 cents expiring
25 November 2016
4,451,800
6
Ordinary Shares
24 months from
quotation
Nil
Nil
3,000,000
1
Management
Performance Shares
24 months from
quotation
Earthrise Holdings Pty Ltd (3,000,000)
4,781,328
3
Performance Shares
24 months from
quotation
Steve McGovern Nominees Pty Ltd
(3,541,347)
2,920,000
17
680,000
3
1,800,000
2,700,000
2,250,000
7
7
8
Unlisted options
exercisable at 25
cents expiring
31/1/2018
Unlisted options
exercisable at 25
cents expiring
27/2/2018
24 months from
quotation
Morpaq Pty Ltd (400,000)
Wales Riding Pty Ltd (300,000)
Closeburn Pty Ltd (300,000)
Performance Shares
Steve McGovern Nominees Pty Ltd (800,000)
Performance Options
Unlisted options
exercisable at 25
cents expiring
31/3/2019 vesting
1/3/2016, 1/3/2017,
1/3/2018
Steve McGovern Nominees Pty Ltd
(1,200,000)
Employee incentive scheme
Annual Report - 30 June 2016
Page 69