17/18
ANNUAL REPORT
Corporate Information
VONEX LIMITED
ABN 39 063 074 635/ACN 063 074 635/ASX CODE: VN8
Directors
Mr Chen Chik (Nicholas) Ong (Non-Executive chairman)
Mr Matthew Fahey (Managing director)
Mr David Vilensky (Non-Executive director)
Ms Winnie Lai Hadad (Non-Executive director)
Registered and Business Office
Suite 5, 1 Centro Avenue, Subiaco WA 6008
Tel: +61 8 6388 8888
Fax: +61 8 6388 8898
Solicitors
Bowen Buchbinder Vilensky
Level 14, 251 Adelaide Terrace, Perth WA 6000
Company Secretaries
Mr Matthew Foy
Mr Daniel Smith
Share Registry
Computershare Investor Services Pty Limited
Level 11, 172 Street Georges Terrace, Perth WA 6000
Tel: +61 8 9323 2000
Fax: +61 8 9323 2033
Auditor
RSM Australia Partners
Level 32, Exchange Tower, 2 The Esplanade, Perth WA 6000
Bankers
Commonwealth Bank of Australia
ANZ Bank
Westpac Bank
www.vonex.com.au
Contents
Directors’ Report
Financial Reports
Financial Statement
Consolidated statement of profit or loss and other comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
Note 1: Statement of significant accounting policies
Note 2 : Revenue and Other Income
Note 3: Loss for the year
Note 4: Income Tax Expense
Note 5: Key Management Personnel Disclosures
Note 6: Auditors’ Remuneration
Note 7: Earnings per share
Note 8: Cash and Cash Equivalents
Note 9: Trade and Other Receivables
Note 10: Other Assets
Note 11: Intangible Assets
Note 12: Controlled Entities
Note 13: Disposal of Subsidiaries
Note 14: Parent Entity Disclosures
Note 15: Plant and Equipment
Note 16: Provisions
Note 17: Trade and Other Payables
Note 18: Borrowings
Note 19: Issued capital
Note 20: Reserves
Note 21: Contingent liabilities and contingent assets
Note 22: Operating segments
Note 23: Cash flow information
Note 24: Accumulated losses
Note 25: Events after the reporting period
Note 26: Related Party Transactions
Note 27: Financial instruments
Note 28: Commitments for Expenditure
Note 29: Share Based Payments
Note 30: Company Details
Directors’ Declaration
Additional Information
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Financial Report
1
1
Financial Report
Directors’ Report
The Directors present their report
together with the consolidated
financial report for Vonex Limited
(“Vonex” or “the Company”) and its
controlled entities (collectively the
“consolidated entity” or “Group”), for
the year ended 30 June 2018.
Directors
The names and qualifications of
persons who have held the position of
Director of Vonex Limited at any time
during the financial year and up to the
date of this report are:
> Mr Nicholas Ong—Non-Executive
Chairman
> Mr Matthew Fahey—Managing
Director and CEO
> Mr David Vilensky—Non-Executive
Director
> Ms Winnie Lai Hadad—Non-Executive
Director (appointed 1 January 2018)
> Mr Angus Parker—Managing Director
(resigned 31 December 2017)
Information on Directors & Company
Secretary
Nicholas Ong—Non-executive
Chairman
Mr Ong was a Principal Adviser at the
Australian Securities Exchange (ASX)
and brings 14 years’ experience in IPO,
listing rules compliance and corporate
governance. Mr Ong has developed a
wide network of clients in Asia-Pacific
region and provides corporate and
transactional advisory services through
boutique firm Minerva Corporate
Pty Limited. He is a member of the
Governance Institute of Australia and
holds a Bachelor of Commerce and a
Master of Business Administration from
the University of Western Australia.
Other directorships of Australian listed
companies held by Mr Ong in the last
three years are:
Current: Helios Energy Limited,
CoAssets Limited, Arrow Energy Limited
and Black Star Petroleum Limited.
Previous: Excelsior Gold Limited, Auroch
Minerals Limited, Fraser Range Metals
Group Limited, Tianmei Beverage
Group Corporation Limited, Bojun
Agriculture Holdings Limited and
Jiajiafu Modern Agriculture Limited.
2
Matthew Fahey—Managing Director
and CEO
Current: Zambezi Resources Limited,
Latin Resources Limited.
Mr Vilensky has a Bachelor of Arts and
a Bachelor of Laws from the University
of Cape Town and is a member of the
Law Society of Western Australia.
Winnie Lai Hadad—Non-Executive
Director (Appointed 1 January 2018)
Ms Lai Hadad has expertise in change
management, corporate governance
and business process improvement
and has been involved in listings on the
Australian Securities Exchange. Ms Lai
Hadad has been involved with both
investments into China and out-bound
investment from China. Her past roles
include implementing Coca-Cola
bottling strategies into Greater China
and administering the first Chinese
direct investment in an iron ore mine in
the Pilbara Region of Western Australia.
Ms Lai Hadad has not held any other
directorships of Australian listed
companies in the last three years
Ms Lai Hadad is a lawyer admitted
to practice in Western Australia, a
qualified CPA, holds a BA, BCom
and MSc, and is a graduate of both
the Australian Institute of Company
Directors and Governance Institute
of Australia.
Angus Parker – Former Managing
Director (Resigned 31 December 2017)
Mr Parker is co-founder and Chief
Technology Officer of Vonex Limited.
He is a futurist and innovator, with a
track record in advancing technology.
With 10+ years’ experience in the
development of VoIP products and
solutions, he works with world leaders
in the field to establish products
for Vonex Limited. His vision has
led him to all corners of the globe,
where, as innovator with voice, he
leads the development world with
cloud-based solutions to assist in
connecting people.
Mr Parker has not held any other
directorships of Australian listed
companies in the last three years.
Mr Fahey is Vonex Telecom’s Chief
Executive Officer and joined the
Board as Managing Director. Mr Fahey
joined Vonex Limited in 2013, through
the Vonex Group’s acquisition of
iTrinity (IP Voice & Data) where he had
served as Sales Director. Mr Fahey
brings with him 20 years’ of extensive
experience in building and managing
telecommunications companies with
a well-regarded reputation in the
industry for channel partner programs
as well as excellence in VoIP and
Telco. 2014 saw amazing growth
for Vonex winning the CRN Fast50
award for fastest growing IT company
in Australia.
In January 2018 Mr Fahey was
appointed as Chief Executive Officer
and Managing Director and sees
significant opportunities for the
Vonex business both in Australia and
internationally. Mr Fahey is focused
on driving marketing, sales and the
continued development of diverse
products in order to accelerate
business growth and expand Vonex’s
market share.
Mr Fahey has not held any other
directorships of Australian listed
companies in the last three years.
David Vilensky—Non-Executive
Director
Mr Vilensky is a practicing corporate
lawyer and the managing director
of Perth law firm Bowen Buchbinder
Vilensky. He has more than 30 years’
experience in the areas of corporate
and business law and in commercial
and corporate management.
Mr Vilensky practices mainly in the
areas of corporate and commercial
law, mergers and acquisitions, mining
and resources, trade practices
and competition law and complex
dispute resolution. Mr Vilensky acts
for a number of listed and private
companies and advises on directors’
duties, due diligence, capital raisings,
compliance with ASX Listing Rules,
corporate governance and corporate
transactions generally.
Other directorships of Australian listed
companies held by Mr Vilensky in the
last three years are:
Vonex Financial Report 2018 Matthew Foy—Joint Company
Secretary
Daniel Smith—Joint Company
Secretary
Mr Foy was previously a Senior
Adviser at the ASX and has ten
years’ experience in facilitating the
compliance of listed companies.
Mr. Foy is a qualified Chartered
Secretary and has reviewed and
approved the listing of over 40
companies during his tenure at the
ASX. Mr. Foy is also Company Secretary
of ASX-listed Arrow Resources Limited,
Protean Energy Limited, XTD Limited
and Emergent Resources Limited.
Mr Foy is a member of the Australian
Institute of Company Directors,
Governance Institute Australia, has a
Graduate Diploma (Applied Finance)
from FINSIA and a B. Com from the
University of Western Australia.
Mr Smith has primary and secondary
capital markets expertise, having
been involved in a number of IPOs and
capital raisings. Mr Smith is a director of
Minerva Corporate, a private corporate
consulting firm. Mr Smith is currently
a director and company secretary
of ASX and AIM-listed Europa Metals
Limited and ASX-listed Lachlan Star
Limited and HIPO Resources Limited,
and is Company Secretary for Taruga
Minerals Limited and Love Group
Global Limited.
Mr Smith holds a BA and is a member
of the Australian Institute of Company
Directors and the Governance Institute
of Australia.
Interests in the securities of the company
As at the date of this report, the interests of the directors in securities of the company were:
Directors
Ordinary Shares
Performance Rights
Options
Nicholas Ong
Matthew Fahey
David Vilensky
Winnie Lai Hadad
Meetings of Directors
2,460,000
6,408,291
2,550,000
Nil
2,550,000
8,830,000
2,550,000
Nil
84,499
Nil
Nil
Nil
The attendance of directors at meeting of the company’s Board of Directors held during the year is as follows:
Directors
Nicholas Ong
Matthew Fahey
David Vilensky
Winnie Lai Hadad
Angus Parker
Number of Meetings
Attended
Eligible to Attend
4
4
4
4
Nil
4
4
4
4
Nil
Financial Report
3
Directors’ Report (continued)
Principal Activities
The principal activity of the consolidated entity during the year has been the development of technologies in
communications, including its established cloud hosted PBX system. One of our key R&D projects going forward is the
Oper8tor app development. The Oper8tor app will aim to seamlessly link all voice calls across multiple platforms and devices
around the world, as well as messaging, and by doing so will create an innovative piece of communication technology
forcing notice. As at the end of the anticipated development, Oper8tor will look to be able to link mobile phones, landlines,
Skype, Google Hangouts and WeChat simultaneously into a single voice call.
Other activities include the year on year growth within our Retail and Wholesale Telco divisions.
Financial Position & Operating Results
The financial results of the consolidated entity for the financial year ended 30 June 2018 are:
Cash and cash equivalents ($)
Net assets (liabilities) ($)
Revenue ($)
Net loss after tax ($)
Loss per share (cents)
30-Jun-18
5,223,854
5,079,307
8,486,196
(14,713,402)
(21.35)
30-Jun-17
384,624
(3,170,377)
7,553,228
(9,737,819)
(17.03)
% Change
1,258%
260%
12%
(51%)
(25%)
Dividends Paid or Recommended
There were no dividends declared or paid by the Company
during the year and no dividend is recommended.
Development (R&D) tax offset rebates. The Vonex group
received a non-refundable R&D tax offset of $253,127 in
May 2018 relating to the 2016/2017 financial year.
Review of Operations
During the year, the Company continued to develop and
grow its established cloud hosted PBX system and retail
customer base. Total group sales revenues rose by 15%
during the reporting period.
The Retail division under the brand, Vonex Telecom, has
continued to grow its sales revenues base achieved via the
sale of IP hardware, full suite of telecommunication services
including the provision of data, internet, voice (including IP
voice) and billing services within Australia.
The Retail division has also undertaken numerous
advancements in the automation of new customer service
accounts received from our dealer channel partners
including the most recent announcement regarding our
latest technology release Sign On Glass on 3 July 2018.
The reporting period has seen the Retail division achieve
a 14% increase in its total revenues along with a 18% net
increase in customer accounts from June 2017 to June 2018.
These solid results have been achieved solely on the back of
stronger brand exposure and recognition.
The Wholesale division has also continued to grow its sales
revenues achieved via the offering of wholesale “white-
label” hosted PBX services under license to Internet Service
Providers (ISP’s), Telcos and Cloud Vendors within Australia
and internationally. The reporting period has seen the
Wholesale division achieve a 13% increase in its direct sales
revenue along with a 27% increase in the user numbers
hosted with Vonex from June 2017 to June 2018.
Vonex continues to be successful with the Research and
Oper8tor Development
On 25 June 2018 the Company announced the
commencement of the development of Oper8tor, following
the successful listing on ASX. Oper8tor will allow users to
communicate seamlessly across digital platforms and
geographies, removing what are traditional barriers in
cross-platform calls and messaging.
The onboarding of developers will increase the skill base of
the current development team in areas such as Software
Architecture, Big Data, Functional Programming, Machine
Learning and Mobile Development. Beta testing will
commence from October 2018 and will involve up to 5,000
controlled users targeting data collection, bug report
testing and tracking, scalability testing on elastic servers,
redundancy and online marketing. Beta development will
also include refinement of the user interface functionality.
Corporate
Board Composition
During the period and effective from 1 January 2018, Mr
Angus Parker transitioned from CEO& Managing Director
to his previous role as Chief Technology Officer, where he
is spearheading the development of Oper8tor, as well as
the Company’s numerous other technology products. Mr
Matthew Fahey moved from Chief Commercial Officer to
the CEO&Managing Director role. On the same day Ms
Winnie Lai Hadad joined the Board as a Non-Executive
Director to further strengthen the Company’s corporate
governance and commercial experience. Ms Lai Hadad
is a highly experienced lawyer, accountant and public
company advisor.
4
Vonex Financial Report 2018 ASX Listing
During the period on 13 June 2018
the Company listed on the Australian
Securities Exchange (ASX) under the
ticker code VN8 after successfully
raising $6 million (before expenses) by
way of a full form prospectus (“Offer”).
The listing on ASX also allowed the
Company to convert $2,804,319 of
convertible notes, reducing payables
and strengthening the Company’s
balance sheet.
State One Equities Pty Limited partially
underwrote the Offer for $5.5 million.
Small Holding Share Sale Facility
On 25 June 2018 the Company
announced that it had established
a sale facility for shareholders with
holdings valued at less than A$500
(“Sale Facility”). The Sale Facility
enables eligible shareholders to sell
their Vonex shares without incurring
any brokerage or handling costs. This
initiative will substantially reduce
administration costs incurred by Vonex.
At the Record Date there were
1,433 shareholders who would be
eligible to participate in the Sale
Facility, representing 57.57% of total
shareholders. The eligible shareholders
hold 1,868,507 ordinary shares in
Vonex, representing 1.26% of total
issued capital.
Partial Settlement of Outstanding
Debt
On 1 August 2017 the consolidated
entity partially settled outstanding
borrowings and creditors totaling
$474,765 via the issue of new ordinary
shares and part debt forgiveness.
Variation to Secured Convertible
Note Terms
On 6 September 2017 the Company
and the Trustee to the Secured
Convertible Note Terms entered into a
variation to the Convertible Note Trust
Deed on the following basis:
(a) The Conversion Price would reduce
from $0.10 to $0.08;
(b) The Maturity Date would be
extended from 30 September 2017
to 14 November 2017;
(c) Interest will continue to accrue at
the agreed rate until 14 November
2017 and would be calculated to
this date even if the NSX listing was
achieved by the Company prior to
this date;
(d) The Noteholders would be entitled
to be issued by the Company
one free attaching option (Note
Options) for each share issued to
Noteholders respectively following
the conversion;
(e) The Exercise Price for the Note
Options would be $0.10 with an
expiry date of 30 November 2022;
(f) On 30 October 2017, the Company
and the Trustee of the Secured
Convertible Note entered into a
variation of the Convertible Note
Trust Deed extending the maturity
date of the convertible notes from 14
November 2017 to 30 November 2017;
(g) On 11 November 2017, the Company
and the Trustee of the Secured
Convertible Note entered into a
variation of the Convertible Note
Trust Deed extending the maturity
date of the convertible notes from
30 November 2017 to 20 December
2017 on the same terms;
(h) On 5 December 2017, the Company
and the Trustee of the Secured
Convertible Note entered into a
variation of the Convertible Note
Trust Deed extending the maturing
date of the convertible notes from
20 December 2017 to 30 April 2018
on the same terms and to allow
the Company the time it needs to
pursue a new listing opportunity on
the ASX; and
(i) On 30 April 2018, the Company
convened a meeting with the
Convertible Note Holders to pass
a resolution to extend the maturity
date of the convertible notes from 30
April 2018 to 12 June 2018 to enable
the Company to list onto the ASX
under the same terms. Resolution
was passed and conversion of the
convertible notes was undertaken on
7 June 2018.
Shareholder Meetings
At a shareholders’ meeting held on
28 July 2017 shareholders approved,
amongst other things, a consolidation
of capital whereby the issued capital of
the Company was consolidated on the
basis that every five ordinary shares be
consolidated into one ordinary share.
In addition, shareholders approved
the issue of 6 million ordinary shares
and 34 million performance rights
(on a post-consolidation basis) to Mr
Angus Parker and Mr Matthew Fahey
as the inventors of the Oper8tor app
in consideration for them executing a
deed of confirmation of assignment
of patent agreement to confirm the
Company’s ownership of the Oper8tor
intellectual property.
The Company’s annual general
meeting was held on 30 November
2017 with the resolution to re-elect
Mr David Vilensky passed by a show
of hands.
On 29 January 2018 at a general
meeting of shareholders, shareholders
approved, amongst other things, the
consolidation of the Company’s capital
on a two for one basis, a variation to
the terms of the Class B and Class
C Performance Shares, variations to
Performance Rights held by directors
and key management personnel, and
the issuing of a prospectus to raise up
to $7 million by way of issuance of up
to 35,000,000 shares. All resolutions
were carried on a show of hands.
Noteholder Meeting
On 5 December 2017 the Company
advised that noteholders had
approved the extension of the term
of the outstanding convertible notes
to 30 April 2018, with 100% of votes
cast by noteholders voting in favour of
the resolution.
On 30 April 2018 the Company
had advised that noteholders had
approved a further extension of the
term of the outstanding convertible
notes to 12 June 2018, with 100% of
votes cast by noteholders voting in
favour of the resolution.
Significant Changes in the State
of Affairs
During the year the company was
successfully listed in the ASX on 13
June 2018.
There have been no other significant
changes in the state of affairs of
the consolidated entity during the
financial year.
5
Financial Report Directors’ Report (continued)
Events after the reporting period
Launch of Sign On Glass
On 3 July 2018 Vonex announced the
first release of its latest technology,
called Sign On Glass (“SOG”), to more
efficiently manage the Company’s
new and existing customers. SOG
is available on all internet enabled
devices and facilitates the sign up,
activation and ongoing management
of customers. This SOG technology
will be rolled out to the entire channel
partner network and will provide more
accurate provisioning and significantly
reduce connection times, saving up to
a week for typical orders.
Using the SOG portal, channel partners
will be able to activate the entire range
of products for their new and existing
clients. Their existing client information
will be available within the interface, so
they can perform upgrades, additions
and modifications.
The Company will continue to develop
the product and will, in time, seek
to provide a complete portal for the
channel partner which will check
product availability and site readiness
prior to sign up. The technology
will also automate the dispatch of
hardware and provide various reports
to the channel partner.
Vonex has commenced testing of these
advanced features with hundreds of
test applications to date used by the
development team.
CounterPath strategic partnership
On 2 August 2018 the Company
announced a strategic partnership with
NASDAQ and TSX listed CounterPath,
a global provider of award-winning
Unified Communications solutions for
enterprises and service providers. The
CounterPath product suite includes
Bria 5, that leverages over 10 years of
softphone experience and replaces
the need for a telephone to connect
to a VoIP phone service, or hosted PBX
extension. Its Stretto PlatformTM enables
the provisioning of desktop and mobile
VoIP software. CounterPath Bria
software is used by millions of users
across the globe.
The partnership agreement will see
Vonex and CounterPath collaboratively
working on new customer growth in
Australia. For Vonex, this could open
up much larger opportunities to work
with enterprise clients previously
not targeted, plus enable Vonex to
expand its offering to existing business,
enterprise and channel customers.
Results of Share Sale Facility
On 14 August 2018 the Company
announced the results of the Share
Sale Facility. As at market close on
22 June 2018, there were 1,868,507
ordinary shares held by 1,433
shareholders that had a market value
of less than A$500. The final number
of shares eligible to be sold under
the Facility was 1,302,079 ordinary
shares from 1,025 shareholders which
represented approximately 41% of the
total number of shareholders holding
shares in the Company.
PBX registered user growth
On 20 August 2018 the Company
announced that Vonex had achieved
24,000 registered active PBX users by
the end of July 2018. Registered PBX
users are currently growing at 500
per month and is expected to grow
as Vonex’s marketing goes into full
swing in the NBN rollout areas. Vonex
had 18,700 PBX users in July 2017, the
growth represents a 28% gain in PBX
user’s year on year.
Placement of small shareholding
shares
On 24 August 2018 the Company
announced that it has received
firm commitments from a range of
sophisticated and high net worth
investors to place all the shares
available under the Share Sale
Facility (“Facility”) at $0.1325 per
cent share pursuant to clause 3.5
of the Company’s constitution. The
final number of shares sold under
the Facility was 1,295,709 ordinary
shares from 1,022 shareholders which
represents approximately 41% of the
total number of shareholders.
Remuneration report (Audited)
The remuneration report is set out
under the following main headings:
A Remuneration Governance
B Remuneration Structure
C Details of Remuneration
D Share-based compensation
E Equity instruments issued on
exercise of remuneration options
F Value of options to Directors
G Equity instruments disclosures
relating to key management
personnel
H Other transactions with key
management personnel
I Additional statutory information
The information provided in this
remuneration report has been audited
as required by section 308(3C) of
the Corporations Act 2001. The
remuneration arrangements detailed in
this report are for the Key Management
Personnel (KMP) of the Group
as follows:
> Mr Nicholas Ong—Non-Executive
Chairman
> Mr Matthew Fahey—Managing
Director and CEO
> Mr David Vilensky—Non-Executive
Director
> Ms Winnie Lai Hadad—Non-Executive
Director (appointed 1 January 2018)
> Mr Angus Parker—Managing Director
(resigned 31 December 2017)
6
Vonex Financial Report 2018 Use of remuneration consultants
B. Remuneration Structure
The Company did not employ services
of consultants to review its existing
remuneration policies.
Voting and comments made
at the Company’s 2017 Annual
General Meeting
The Company received 95.47% of “yes”
proxy votes on its remuneration report
for the 2017 financial year, inclusive
of discretionary proxy votes. The
Company did not receive any specific
feedback at the AGM or throughout
the year on its remuneration practices.
A. Remuneration Governance
Key management personnel have
authority and responsibility for
planning, directing and controlling
the activities of the Group. Key
management personnel comprise the
Directors of the Group and Executives
of the Group. The performance of the
Group depends upon the quality of its
key management personnel. To prosper
the Group must attract, motivate and
retain appropriately skilled directors
and executives.
The Group’s broad remuneration
policy is to ensure the remuneration
package properly reflects the person’s
duties and responsibilities and
that remuneration is competitive in
attracting, retaining and motivating
people of the highest quality. The
Group does not engage the services of
any remuneration consultants.
Non-Executive remuneration
arrangements
The remuneration of Non-Executive
Directors (NED) consists of Directors’
fees, payable in arrears. They serve
on a month to month basis and there
are no termination benefits payable.
They do not receive retirement benefits
but are able to participate in share
option-based incentive programmes in
accordance with Group policy.
Directors are paid consulting fees
on time spent on Group business,
including reasonable expenses
incurred by them on business of the
Group, details of which are contained
in the Remuneration Table disclosed in
Section C of this Report. Remuneration
of Non-Executive Directors are based
on fees approved by the Board of
Directors and is set at levels to reflect
market conditions and encourage the
continued services of the Directors.
The Group has provided variable
remuneration incentive schemes to
certain Non-Executive Directors as
detailed in Note 29.
Non-executive directors’ fees are
determined within an aggregate
directors’ fee pool limit, which will
be periodically recommended for
approval by shareholders. The
maximum currently stands at $500,000
per annum as per Section 13.8 of the
Company’s constitution and may be
varied by ordinary resolution of the
shareholders in general meeting.
7
Financial Report Directors’ Report (continued)
C. Details of Remuneration
The Key Management Personnel (KMP) of the Group are the Directors and management of XTD Limited detailed in the table
below. Details of the remuneration of the Directors of the Group are set out below:
Short-term benefits
Post-employment
benefits
Share-based
payment
Salary &
fees
Cash
bonus
Long Service Leave
Superannuation
Performance
rights (iv)
30/06/2018
$
$
$
$
$
Percentage
remuneration
consisting of
performance rights
for the year
Total
$
Directors
Mr Fahey
Mr Ong
Mr Vilensky
Ms Lai
Hadad (i)
Other KMP
229,015
48,567
60,000
30,000
Mr Parker (ii)
206,901
Total
574,483
-
-
-
-
-
-
3,542
17,424
60,000
309,981
-
-
-
269
269
2,850
924,000
972,836
968,000 1,028,269
-
32,850
13,127
16,669
17,253
60,000
297,281
38,065
2,012,000 2,641,217
19%
95%
94%
0%
20%
76%
(i) Ms Lai Hadad (Non-Executive Director) (appointed on 1 January 2018)
(ii) Mr Parker (Executive Director) (resigned 31 December 2017)
Short-term benefits
Post-employment
benefits
Share-based
payment
Salary &
fees
Cash
bonus
Long Service Leave
Superannuation
Performance
rights
30/06/2017
$
$
$
$
$
Percentage
remuneration
consisting of
performance rights
for the year
Total
$
Directors
Mr Parker
Mr Fahey
Mr Ong
232,210
230,800
48,000
Mr Vilensky
59,113
Other KMP
Mr King (iii)
Total
180,000
750,123
-
-
-
-
-
-
-
-
-
-
-
-
17,392
17,100
-
-
17,100
51,592
175,500
425,102
175,500 423,400
175,500
223,500
175,500
234,613
-
356,120
197,100
702,000 1,503,715
41%
41%
79%
75%
0%
47%
(i) The Board reviewed the KMP’s of the Group during the year and determined that Mr King no longer met the definition.
(ii) During the period 10,060,000 performance rights were granted to KMP’s for a total value of $2,012,000. This represents the face value of
the performance rights granted subject to future vesting conditions.
8
Vonex Financial Report 2018 The relative proportions of remuneration that are linked to performance and those that are fixed are as follows:
Fixed Remuneration
At risk - LTI **
Director
Mr Fahey
Mr Ong
Mr Vilensky
Ms Lai Hadad
Other KMP
Mr Parker
Mr King
2018
81%
5%
6%
100%
80%
-
2017
59%
59%
21%
-
25%
100%
2018
19%
95%
94%
0%
20%
-
2017
41%
41%
79%
-
75%
0%
** Fixed Remuneration includes short term benefits and post-employment benefits
Performance rights are at risk - **Long term incentives are provided by way of the performance rights issued with long term performance
milestones (Tranche 1,2 and 3). The percentages disclosed reflect the fair value of remuneration based on the value of the performance
rights at grant date subject to future vesting conditions.
Remuneration Policy
Non-Executive Directors
Total remuneration for all Non-Executive Directors, is not to
exceed $500,000 per annum as approved by shareholders.
This does not include Consulting Fees.
Non-Executive Directors, received a fixed fee for
their services of $60,000 per annum (excl. GST) plus
superannuation for services performed. Executive Director,
Mr Fahey, is paid a fixed fee of $36,000 (excl. GST)
plus superannuation.
The Group has provided variable remuneration incentive
schemes to certain Non-Executive Directors as detailed
in Note 29. There are no termination or retirement
benefits for non-executive directors (other than
statutory superannuation).
Executive Director—Mr Fahey-Chief Executive Officer
Outlined below is a summary of the material provisions of
the Executive Services Agreement between the Company
and Mr Fahey. Mr Fahey receives an annual salary of
$250,000 plus statutory superannuation. Mr Fahey is also
entitled to director fee of $36,000 per annum. Either party
may terminate the Executive Services Agreement by giving
six months written notice.
A bonus based on Key Performance Indicators (KPIs) will be
paid as follows.
Other KMP—Mr Angus Parker-Chief Technology Officer
Outlined below is a summary of the material provisions of
the Executive Services Agreement between the Company
and Mr Angus Parker. Mr Parker receives an annual salary of
$250,000 plus statutory superannuation. Either party may
terminate the Executive Services Agreement by giving six
months written notice.
A bonus based on Key Performance Indicators (KPIs) will
be paid as follows.
D. Share-based Compensation
Short term and long term incentives
During the financial year Mr Fahey, Mr Ong, Mr Vilensky and
Mr Parker were issued performance rights incentives for
their work and ongoing commitment and contribution to
the Company.
9
Financial Report Directors’ Report (continued)
The performance rights were issued in three tranches, each with different performance milestones. Details of the
performance rights issued are as follows:
Tranche
Director and Other
KMP
Number Issued
Grant Date
Expected Date
of Milestone
Achievements
Underlying Share
Price on Grant
Date
Total Fair Value ($)
1
2
3
Mr Fahey
Mr Ong
Mr Vilensky
Mr Parker
Mr Fahey
Mr Ong
Mr Vilensky
Mr Parker
Mr Fahey
Mr Ong
Mr Vilensky
Mr Parker
100,000
2,200,000
2,420,000
100,000
100,000
1,210,000
1,210,000
100,000
100,000
1,210,000
1,210,000
100,000
10,060,000
28/07/17
Vested
0.20
28/07/17
28/07/21
0.20
28/07/17
28/07/21
0.20
20,000
440,000
484,000
20,000
20,000
242,000
242,000
20,000
20,000
242,000
242,000
20,000
2,012,000
The performance milestones attached with each of the tranches are detailed below:
1. Vonex Limited successful listing on an alternative securities exchange other than the Australian Securities Exchange. On 29
January 2018, the performance rights relating to Tranche 1 were amended such that they vest upon a successful listing on
the Australia Securities Exchange. Milestone was achieved on 7 June 2018 and performance rights vested.
2. Vonex achieving audited gross revenue of $15 million in a financial year.
3. Vonex achieving audited net profit after tax of $1 million in a financial year.
Where applicable, amounts in the table above, have been adjusted for the 5:1 and 2:1 share consolidation completed on 28
July 2017 and 29 January 2018 respectively.
Refer to Note 29 for further details in respect to the performance rights granted.
E. Equity Instruments Issued on Exercise of Remuneration Options
No equity instruments were issued during the year to Directors or key management as a result of exercising remuneration
options (2017: Nil).
F. Value of options to Directors
No options were granted, exercised or lapsed during the year to Directors or key management as part of their remuneration
(2017: Nil).
10
Vonex Financial Report 2018 G. Equity instruments disclosures relating to key management personnel
Share holdings
The numbers of shares in the Company held during the financial year by each Director and other key management
personnel of the Group are set out below.
2018
Opening Balance
Received as
Remuneration
Received During
Year on Exercise of
Options
Net Change Other
Closing Balance
Directors
Mr Matthew Fahey
Mr Nicholas Ong
Mr David Vilensky
Ms Winnie Lai Hadad
Other KMP
Mr Angus Parker
Notes:
2,838,485
130,000
130,000
-
9,687,434
12,785,919
100,0001
2,200,0003
2,420,0005
-
100,0006
4,820,000
-
-
-
-
3,469,8062
130,0004
-
-
6,408,291
2,460,000
2,550,000
-
-
8,451,1587
18,238,592
12,050,964
29,656,883
1. Conversion into ordinary shares of 100,000 Performance Rights following ASX Listing.
2. Comprising:
a. Conversion into ordinary shares of a total of 984,903 Class B Performance Shares.
b. Conversion into ordinary shares of a total of 984,903 Class C Performance Shares.
c. Issue of 1,500,000 IP Consideration shares.
3. Conversion into ordinary shares of 2,200,000 Performance Rights following ASX Listing.
4. Participation in IPO offer.
5. Conversion into ordinary shares of 2,420,000 Performance Rights following ASX Listing.
6. Conversion into ordinary shares of 100,000 Performance Rights following ASX Listing.
7. Comprising:
a. Conversion into ordinary shares of a total of 3,475,429 Class B Performance Shares.
b. Conversion into ordinary shares of a total of 3,475,429 Class C Performance Shares.
c. Issue of 1,500,000 IP Consideration shares.
d. Acquisition of 300 ordinary shares on market.
Where applicable, amounts in the table above, have been adjusted for the 5:1 and 2:1 share consolidation completed on 28 July 2017 and 29
January 2018 respectively.
11
Financial Report Directors’ Report (continued)
Deferred performance shares holdings
The table shows how many deferred KMP performance shares were granted, vested and forfeited during the year.
Year
Granted
No Granted
Grant Date
Value per
share Vested
Grant
Date value
Vested value in
FY17
Vested value
in FY18
Forfeited value
in FY18
Mr Fahey
Tranche 1
Tranche 2 *
Tranche 3
Tranche 1 **
Tranche 2
Tranche 3
Mr Ong
Tranche 1
Tranche 2*
Tranche 3
Tranche 1**
Tranche 2
Tranche 3
Mr Vilensky
Tranche 1
Tranche 2*
Tranche 3
Tranche 1**
Tranche 2
Tranche 3
Mr Parker
Tranche 1
Tranche 2*
Tranche 3
Tranche 1**
Tranche 2
Tranche 3
FY17
FY17
FY17
FY18
FY18
FY18
FY17
FY17
FY17
FY18
FY18
FY18
FY17
FY17
FY17
FY18
FY18
FY18
FY17
FY17
FY17
FY18
FY18
FY18
130,000
130,000
130,000
100,000
100,000
100,000
130,000
130,000
130,000
$0.45
$58,500
-
$0.45
$58,500
$58,500
$0.45
$58,500
$0.20
$20,000
$0.20
$20,000
$0.20
$20,000
$0.45
$58,500
-
-
-
-
-
$0.45
$58,500
$58,500
$0.45
$58,500
2,200,000
$0.20 $440,000
1,210,000
1,210,000
$0.20 $242,000
$0.20 $242,000
130,000
130,000
130,000
$0.45
$58,500
$0.45
$58,500
$58,500
$0.45
$58,500
2,420,000
$0.20 $484,000
1,210,000
1,210,000
$0.20 $242,000
$0.20 $242,000
130,000
130,000
130,000
100,000
100,000
100,000
$0.45
$58,500
$0.45
$58,500
$58,500
$0.45
$58,500
$0.20
$20,000
$0.20
$20,000
$0.20
$20,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$20,000
-
-
-
-
-
$440,000
-
-
-
-
-
$484,000
-
-
-
-
-
$20,000
-
-
$58,500
-
-
-
-
-
$58,500
-
-
-
-
-
$58,500
-
-
-
-
-
$58,500
-
-
-
-
-
Maximum
value yet
to vest
-
-
$58,500
-
$20,000
$20,000
-
-
$58,500
-
$242,000
$242,000
-
-
$58,500
-
$242,000
$242,000
-
-
$58,500
-
$20,000
$20,000
* Deferred performance rights which vested during the period as a result of the performance milestone being achieved were issued to
Directors and Other KMP on 23 June 2017.
** Deferred performance rights which vested during the period as a result of the performance milestone being achieved were issued to
Directors and Other KMP on 7 June 2018.
Where applicable, amounts in the table above, have been adjusted for the 5:1 and 2:1 share consolidation completed on 28
July 2017 and 29 January 2018 respectively.
H. Other transactions with key management personnel
On 28 July 2017 Vonex Limited issued 17,000,000 performance rights to Mr Parker and Mr Fahey as the inventors of the
Oper8tor app in consideration for them executing a deed of confirmation of assignment of patent agreement to confirm the
Company’s ownership of the Oper8tor intellectual property. No value has been allocated to the performance rights due to
significant uncertainty of the meeting the performance milestone which are based on future events.
12
Vonex Financial Report 2018 Performance Milestones:
a) 2,000,000 Performance Rights which shall vest and convert into ordinary fully paid shares in the issued share capital
of the Assignee upon completion of the beta version of the Oper8tor app and commencement of the official Oper8tor
launch in Europe;
b) 5,000,000 Performance Rights which shall vest and convert into ordinary fully paid shares in the issued share capital of
the Assignee when Oper8tor reaches 10 million Active Users; and
c) 10,0000,000 million Performance Rights which shall vest and convert into ordinary fully paid shares in the issued share
capital of the Assignee when Oper8tor reaches 50 million Active Users.
On 28 July 2017, Vonex Limited also issued 3,000,000 to Mr Angus Parker and Mr Matthew Fahey fully paid ordinary shares for
assignment of the intellectual property relating to the communication platform known as Oper8tor to the Company.
Transactions with related parties
The following transactions occurred with related parties:
Services provided:
Consultancy by The Telephone People (director-related entity of Mr Matthew Fahey)
Company secretarial, corporate compliance and accounting fees from Minerva
Corporate (director-related entity of Mr Nicholas Ong)
Payments for legal fees from Bowen Buchbinder Vilensky (director-related entity of
Mr David Vilensky)
2018
$
2017
$
-
195,904
50,000
147,500
99,714
105,000
Receivable from and payable to related parties
The following balances are outstanding at the reporting date in relation to transactions with related parties:
2018
$
2017
$
Current payables:
Trade payables to Minerva Corporate (director-related entity of Mr Nicholas Ong)
8,766
Trade payables to Bowen Buchbinder Vilensky (director-related entity of Mr David
Vilensky)
Trade payables to JS Capital Partners (director-related entity of Mr Angus Parker)
Trade payables to The Telephone people & Sliver Consulting (director-related entity of
Mr Matthew Fahey)
-
-
56,032
215,914
81,180
3,068
44,872
Loans to/from related parties
The following balances are outstanding at the reporting date in relation to loans to or from related parties at the current
and previous reporting date:
Current payables:
Loans from related parties (i)
2018
$
2017
$
-
30,000
*(i) There was a loan from Finance West Pty Limited as at 30 June 2017 of $30,000. Mr Angus Parker was an Executive
Director of Vonex Limited and is also a director and shareholder of Finance West Pty Limited
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
13
Financial Report Directors’ Report (continued)
I. Additional statutory information
Relationship between remuneration and the Group’s performance
The following table shows key performance indicators for the Group over the last five years:
2018
2017
2016
2015
2014
Loss for the year
Closing Share Price
KMP Incentives
Total KMP Remuneration
$14,713,402
14.0 cents
$ 2,012,000
$ 2,641,217
$9,737,819
$12,410,441
($376,490)
($917,276)
N/A*
$ 702,000
$ 1,503,715
N/A*
$nil
N/A*
$nil
N/A*
$nil
$858,640
$720,172
$835,664
*No closing share price as the company was unlisted.
End of Audited Remuneration Report
Environmental Regulation
The Group’s operations are note regulated by any significant environmental regulations under a law of the Commonwealth
or of a state or territory.
Officer’s indemnities and insurance
The Company has paid a premium for a contract insuring all directors and executive officers of the Company and certain
related bodies corporate against all liabilities and expenses arising as a result of work performed in their respective
capacities, to the extent permitted by law. The directors have not included in this report details of the nature of the liabilities
covered or the amount of the premium paid in respect of the directors and executive officers insurance liability contract as
disclosure is prohibited under the terms of the contract.
The Company has agreed to indemnify each person who is, or has been a director, officer or agent of the Company and/or
of certain of its related bodies corporate against all liabilities to another person (other than the Company or a related body
corporate) that may arise from their position as director, officer or agent, except where the liability arises out of conduct
involving a lack of good faith. The Company is required to meet the full amount of any such liabilities, including costs and
expenses for a period of seven years.
No liability has arisen since the end of the previous financial year which the Company would, by operation of the above
indemnities, be required to meet.
Indemnity and insurance of auditor
The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the
Company or any related entity against a liability incurred by the auditor.
During the financial year, the Company has not paid a premium in respect of a contract to insure the auditor of the
company or any related entity.
Options
At the date of this report the Company has the following options on issue:
a) 133,750 options exercisable at $0.90 on or before 3 August 2020;
b) 7,500,000 options exercisable at $0.20 on or before 7 June 2020;
c) 14,500,000 options exercisable at $0.30 on or before 7 June 2023; and
d) 14,719,731 options exercisable at $0.20 on or before 30 November 2022.
Performance Rights
As at 30 June 2018 the company had 27,610,000 performance rights on issue. As at the date of this report the Company has
27,560,000 performance rights held with the following performance conditions:
a) 780,000 convertible upon the Company reaching $10 million annualised revenue per annum in any quarter (i);
b) 4,840,000 convertible upon the Company achieving audited gross revenue of $15 million in a financial year (ii);
c) 4,840,000 convertible upon the Company achieving audited net profit after tax of $1 million in a financial year (ii);
14
Vonex Financial Report 2018 d) 2,000,000 convertible into ordinary shares upon completion of the beta version of the Oper8tor app and commencement
of the official Oper8tor launch in Europe;
e) 5,000,000 convertible into ordinary shares upon the Oper8tor app achieving 10 million Active Users;
f) 10,000,000 convertible into ordinary shares upon the Oper8tor app achieving 20 million Active Users;
g) 50,000 converted into ordinary share on 1 July 2018;
h) 50,000 convertible into ordinary share on 1 July 2019; and
i) 50,000 converted into ordinary share on 1 July 2020.
(i) Notwithstanding the performance conditions above, all the Performance Rights will vest automatically if there is a trade
sale of all or any part of the business or assets of the Company or if the Company merges with another company or
is the subject of a successful takeover or if the multi-platform phone call and messaging communication app called
“Oper8tor” is spun out into a separate Company.
(ii) Notwithstanding the Performance Conditions above, all the Performance Rights will vest automatically if there is a trade
sale of all or any part of the business or assets of the Company or if the Company merges with another company or
is the subject of a takeover of 50.1% or more, or if the multi-platform phone call and messaging communication app
called “Oper8tor” is spun out into a separate Company.
Subject to achievement of the performance conditions one share will be issued for each Performance Right that has vested
on the same terms and conditions as the Company’s issued shares and will rank equally with all other issued shares from the
issue date.
Proceedings on behalf of the company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf
of the Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking responsibility
on behalf of the Company for all or part of those proceedings.
No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under section 237 of
the Corporations Act 2001.
Non audit services
The Company may decide to employ the Auditor on assignments additional to their statutory audit duties.
Details of the amounts paid or payable to the Auditor for audit and non-audit services provided during the year are set
out below.
The Board has considered the position and, in accordance with the advice received from the Audit Compliance and Risk
Management Committee, is satisfied that the provision of the non-audit services is compatible with the general standard
of independence for auditors imposed by the Corporations Act. The directors are satisfied that the provision of non-audit
services by the Auditor, as set out below, did not compromise the auditor independence requirements of the Corporations
Act for the following reasons:d
- all non-audit services are reviewed by the Audit Compliance and Risk Management Committee to ensure they do not
impact the impartiality, and
- objectivity of the Auditor none of the services undermine the general principles relating to auditor independence as set
out in APES 110 Code of Ethics for Professional Accountants, including reviewing or auditing the Auditor’s own work, acting
in a management or a decision-making capacity for the Company, acting as advocate for the Company or jointly sharing
economic risk and rewards.
During the year the following fees were paid or payable for services provided by the auditor of the parent entity, its related
practices and non-related audit firms.
15
Financial Report Assurance services
Audit Services
RSM Australia Partners
Total remuneration for audit and assurance services
Corporate Services
RSM Australia Pty Limited
Total remuneration for corporate services
2018
$
2017
$
62,500
62,500
62,500
62,500
26,410
26,410
-
-
Auditor
RSM Australia Partners was appointed as the Group’s auditor at the 2011 Annual General Meeting and continues in office in
accordance with section 327 of the Corporations Act 2001.
Auditor’s Independence Declaration
A copy of the Auditor’s Independence Declaration as required under section 307C of the Corporations Act 2001 is included
within this financial report.
This Directors’ Report, is signed in accordance with a resolution of the Board of Directors.
Nicholas Ong
Chairman
31 August 2018
16
Vonex Financial Report 2018
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the financial report of Vonex Limited for the year ended 30 June 2018, I declare
that, to the best of my knowledge and belief, there have been no contraventions of:
(i)
(ii)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
any applicable code of professional conduct in relation to the audit.
RSM AUSTRALIA PARTNERS
Perth, WA
Dated: 31 August 2018
TUTU PHONG
Partner
Financial Reports
Financial Statement
Consolidated statement of profit or loss and
other comprehensive income AS AT 30 JUNE 2018
Note
2018
$
2017
$
Sales revenue
Cost of sales
Gross profit
Other revenues
Administration expenses
Amortisation
Account and audit fees
Bad & doubtful debt expenses
Contractor expenses
Depreciation expenses
Directors fees
Finance costs
Insurance expense
Legal fees
Loss on disposal of subsidiaries
Occupancy expenses
Repairs and maintenance
Share based payment expense
Travel expenses
Employee expenses
Loss before income tax
Income tax expense
Net loss for the year
Other comprehensive income for the year
2
2
3
3
3
13
3
29
8,067,027
7,019,641
(5,035,941)
(4,702,643)
3,031,086
2,316,998
419,169
533,587
(806,620)
(77,510)
(122,343)
(26,726)
(485,715)
(40,071)
(214,812)
(607,753)
(42,542)
(198,856)
-
(269,492)
(3,726)
(378,792)
(75,336)
(144,176)
(16,446)
(492,451)
(68,716)
(202,046)
(198,642)
(45,869)
(79,014)
(204,955)
(221,633)
(173)
(13,514,260)
(8,663,344)
(176,135)
(1,577,096)
(14,713,402)
(125,930)
(1,670,881)
(9,737,819)
-
-
(14,713,402)
(9,737,819)
-
-
Total comprehensive loss for the year
(14,713,402)
(9,737,819)
Basic and diluted earnings per share of loss attributable to the
owners of Vonex Limited (cents per share)
21.35
17.03
The accompanying notes form part of these financial statements.
18
Vonex Financial Report 2018 Consolidated statement of financial position
AS AT 30 JUNE 2018
Note
2018
$
2017
$
Current assets
• Cash and cash equivalents
• Trade and other receivables
• Other current assets
Total current assets
Non current assets
• Intangible assets
• Plant and equipment
• Other non-current assets
Total non current assets
Total assets
Current liabilties
• Trade and other payables
• Provisions
• Borrowings
Total current liabilities
• Non-current liabilities
• Provisions
• Borrowings
Total non-current liabilities
Total liabilities
Net assets/(liabilities)
Equity
• Issued capital
• Reserves
• Accumulated losses
Total Equity
8
9
10
11
15
10
17
16
18
16
18
19
20
24
5,223,854
686,142
59,637
5,969,633
1,035,103
135,020
46,566
1,216,689
7,186,322
1,613,885
338,172
29,080
1,981,137
125,878
-
125,878
2,107,015
5,079,307
45,242,507
2,353,604
(42,516,804)
5,079,307
The accompanying notes form part of these financial statements.
384,624
809,766
58,141
1,252,531
447,652
157,339
42,030
647,021
1,899,552
2,267,683
324,000
2,378,430
4,970,113
91,148
8,668
99,816
5,069,929
(3,170,377)
22,301,567
2,331,458
(27,803,402)
(3,170,377)
19
Financial Report Consolidated statement of changes in equity
FOR THE YEAR ENDED 30 JUNE 2018
At 1 July 2016
Comprehensive income:
• Loss for the year
Total comprehensive income/(loss) for the year
Transactions with owners, in their capacity as owners
• Vesting of performance shares and rights
• Share-based payment –performance shares and rights
• Capital raising costs
At 30 June 2017
Issued
Capital
Accumulate
Losses
Reserves
Total
$
$
$
$
16,014,130
(18,065,583)
19,114
(2,032,339)
-
-
(9,737,819)
(9,737,819)
6,351,000
-
(63,563)
-
-
-
-
-
-
(9,737,819)
(9,737,819)
6,351,000
2,312,344
2,312,344
-
(63,563)
22,301,567
(27,803,402)
2,331,458
(3,170,377)
At 1 July 2017
Comprehensive income:
• Loss for the year
Total comprehensive income / (loss) for the year
Transactions with owners, in their capacity as owners
• Shares issued during the year
• Vesting of performance shares and rights
• Conversion of convertible notes to ordinary shares
• Disposal of assets
• Share-based payment – options, performance shares
and rights
• Capital raising costs
At 30 June 2018
22,301,567
(27,803,402)
2,331,458
(3,170,377)
-
-
(14,713,402)
(14,713,402)
7,025,203
13,487,600
2,804,319
-
-
(376,182)
-
-
-
-
-
-
-
-
-
-
-
(4,512)
26,658
(14,713,402)
(14,713,402)
7,025,203
13,487,600
2,804,319
(4,512)
26,658
-
(376,182)
45,242,507
(42,516,804)
2,353,604
5,079,307
The accompanying notes form part of these financial statements.
20
Vonex Financial Report 2018 Consolidated statement of cash flows
FOR THE YEAR ENDED 30 June 2018
Cash flows from operating activities
• Receipts from customers
• Payments to suppliers and employees
• Research and development tax offset
• Finance costs
• Interest received
Note
2018
$
2017
$
8,057,768
7,077,377
(9,472,541)
(7,595,478)
475,457
(156,523)
2,335
132,966
(43,560)
1,836
Net cash used in operating activities
23
(1,093,504)
(426,859)
Cash flows from investing activities
• Receipt of capital grant
• Proceeds from disposal of subsidiary
• Payments for physical non-current assets
• Payment for development of intangibles
•
Loan to other entities
Net cash used in investing activities
Cash flows from financing activities
• Proceeds from issue of shares
• Net proceeds from borrowings
• Payments for issue of shares
Net cash provided by financing activities
Net increase/(decrease) in cash and cash equivalents
• Cash and cash equivalents at the beginning of the financial year
13
-
-
(22,265)
(64,961)
-
145,214
100
(172,795)
(2,165)
-
(87,226)
(29,646)
6,000,000
396,143
(376,183)
6,019,960
4,839,230
384,624
Cash and cash equivalents at end of the financial year
8
5,223,854
The accompanying notes form part of these financial statements.
-
279,589
(20,000)
259,589
(196,916)
581,540
384,624
21
Financial Report Notes to the consolidated financial statements
Consolidated notes to the financial
statements FOR THE YEAR ENDED 30 JUNE 2018
The consolidated financial statements and notes represent
those of Vonex Limited and the entities it controlled during
the year (“the consolidated entity”). Vonex Limited is an
unlisted public company, incorporated and domiciled in
Australia. The address of the Company’s registered office
and principal place of business is Suite 1, 1 Centro Avenue,
Subiaco, WA, 6008.
The separate financial statements of the parent entity,
Vonex Limited, have not been presented within this financial
report as permitted by the Corporations Act 2001.
The financial statements were authorised for issue by the
Board on 31 August 2018.
Note 1: Statement of significant accounting policies
The principal accounting policies adopted in the
preparation of the financial statements are set out below.
These policies have been consistently applied to all the
years presented, unless otherwise stated.
New, revised or amending Accounting Standards and
Interpretations adopted
The consolidated entity has adopted all of the new, revised
or amending Accounting Standards and Interpretations
issued by the Australian Accounting Standards Board
(‘AASB’) that are mandatory for the current reporting period.
Any new, revised or amending Accounting Standards or
Interpretations that are not yet mandatory have not been
early adopted.
The consolidated financial statements and notes represent
those of Vonex Limited and the entities it controlled during
the year (“the consolidated entity”). Vonex Limited is a public
company, incorporated and domiciled in Australia. The
address of the Company’s registered office and principal
place of business is Suite 5, 1 Centro Avenue, Subiaco,
WA, 6008.
The separate financial statements of the parent entity,
Vonex Limited, have not been presented within this financial
report as permitted by the Corporations Act 2001.
The financial statements were authorised for issue by the
Board on 31 August 2018.
Note 1: Statement of Significant Accounting Policies
The principal accounting policies adopted in the
preparation of the financial statements are set out below.
These policies have been consistently applied to all the
years presented, unless otherwise stated.
New, revised or amending Accounting Standards and
Interpretations adopted
The consolidated entity has adopted all of the new, revised
or amending Accounting Standards and Interpretations
issued by the Australian Accounting Standards Board
(‘AASB’) that are mandatory for the current reporting period.
Any new, revised or amending Accounting Standards or
Interpretations that are not yet mandatory have not been
early adopted.
Basis of preparation
The financial statements are general purpose financial
statements that have been prepared in accordance with
the Corporations Act 2001, Australian Accounting Standards,
Interpretations of the Australian Accounting Standards
Board, and International Financial Reporting Standards as
issued by the International Accounting Standards Board.
The consolidated entity is a for-profit entity for financial
reporting purposes under Australian Accounting Standards.
Material accounting policies adopted in the preparation
of these financial statements are presented below. They
have been consistently applied unless otherwise stated.
Except for cash flow information, the financial statements
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 financial report has been prepared on an accruals basis
and is based on historical costs, modified, where applicable,
by the measurement at fair value of selected non-current
assets, and financial assets and financial liabilities. The
amounts presented in the financial statements have been
rounded to the nearest dollar.
All amounts are presented in Australian dollars.
(a) Principles of Consolidation
The consolidated financial statements incorporate the
assets, liabilities and result of entities controlled by Vonex
Limited at the end of the reporting period. A controlled
entity is an entity over which Vonex Limited has the ability or
right to govern the financial and operating policies so as to
obtain benefits from the entity’s activities. In preparing the
consolidated financial statements, all inter-group balances
and transactions between entities in the consolidated
entity have been eliminated in full on consolidation. Where
controlled entities have entered or left the consolidated
entity during the year, the financial performance of those
entities is included only for the period of the year that they
were controlled.
(b) Business Combinations
Business combinations occur where an acquirer obtains
control over one or more businesses and results in the
consolidation of its assets and liabilities. A business
combination is accounted for by applying the acquisition
method, unless it is a combination involving entities
or businesses under common control. The acquisition
method requires that for each business combination
one of the combining entities must be identified as the
acquirer (i.e. parent entity). The business combination will
be accounted for as at the acquisition date, which is the
22
Vonex Financial Report 2018 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 unused tax losses.
Current and deferred income tax expense (revenue) is
charged or credited outside profit or loss when the tax
related to items that are recognised outside profit or loss.
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 tax 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.
date that control over the acquiree is obtained by the
parent entity. At this date, the parent shall recognise, in the
consolidated financial statements, and subject to certain
limited exceptions, the fair value of the identifiable assets
acquired and liabilities assumed. In addition, contingent
liabilities of the acquiree will be recognised where a present
obligation has been incurred and its fair value can be
reliably measured.
The acquisition may result in the recognition of goodwill or a
gain from a bargain purchase. The method adopted for the
measurement of goodwill will impact on the measurement
of any non-controlling interest to be recognised in the
acquiree where less than 100% ownership interest is held in
the acquiree.
The acquisition date fair value of the consideration
transferred for a business combination plus the acquisition
date fair value of any previously held equity interest shall
form the cost of the investment in the separate financial
statements. Consideration may comprise the sum of the
assets transferred by the acquirer, liabilities incurred by the
acquirer to the former owners of the acquiree and the equity
interests issued by the acquirer. Fair value uplifts in the value
of pre-existing equity holdings are taken to the statement
of profit and loss and other comprehensive income. Where
changes in the value of such equity holdings had previously
been recognised in other comprehensive income, such
amounts are recycled to profit or loss.
Included in the measurement of consideration transferred
is any asset or liability resulting from a contingent
consideration arrangement. Any obligation incurred relating
to contingent consideration is classified as either a financial
liability or equity instrument, depending upon the nature
of the arrangement. Rights to refunds of consideration
previously paid are recognised as a receivable. Subsequent
to initial recognition, contingent consideration classified
as equity is not remeasured and its subsequent settlement
is accounted for within equity. Contingent consideration
classified as an asset or a liability is remeasured each
reporting period to fair value through the statement of
profit and loss and other comprehensive income unless
the change in value can be identified as existing at
acquisition date.
All transaction costs incurred in relation to the business
combination are expensed to the statement of profit or loss
and other comprehensive income.
(c) 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
23
Financial Report Consolidated notes to the financial
statements FOR THE YEAR ENDED 30 JUNE 2018 (continued)
(d) Plant and Equipment
Each class of plant and equipment is carried at cost or fair value, less, where applicable, any accumulated depreciation and
impairment losses. The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess
of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash
flows that will be received from the asset’s employment and subsequent disposal. The expected net cash flows have been
discounted to their present values in determining recoverable amounts.
The cost of fixed assets constructed included the cost of materials, direct labour, borrowing costs and an appropriate
proportion of fixed and variable overheads.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when
it is probable that future economic benefits associated with the item will flow to the company and the cost of the item can
be measured reliably. All other repairs and maintenance are charged to profit or loss.
Depreciation
The depreciable amount of plant and equipment is depreciated on the straight line method over their useful lives
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 depreciation rates used for each class of depreciable assets are:
Class of Fixed Asset
Furniture and Fixtures
Plant and Equipment
Leasehold Improvements
Motor Vehicles
Computer Equipment
i. Plant and Equipment (continued)
Depreciation Rate
15% - 25%
15% - 33.3%
12%
20%
50%
The asset’s 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.
ii. Impairment of Assets
At each reporting date, the consolidated entity reviews the carrying values of its tangible and intangible assets
to determine whether there is any indication that those assets have been impaired. If such an indication exists,
the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use,
is compared 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.
If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset
is reduced to its recoverable amount. An impairment loss is recognised in the statement of profit and loss and other
comprehensive income immediately, unless the relevant asset is carried at fair value, in which case the impairment
loss is treated as a revaluation decrease. Where an impairment loss subsequently reverses, the carrying amount of
the asset is increased to the revised estimate of its recoverable amount, but only to the extent that the increased
carrying amount does not exceed the carrying amount that would have been determined had no impairment loss
been recognised for the asset in prior years. A reversal of an impairment loss is recognised in the statement of profit and
loss and other comprehensive income immediately, unless the relevant asset is carried at fair value, in which case the
reversal of the impairment loss is treated as a revaluation increase.
Impairment testing is performed annually for intangible assets with indefinite useful lives.
iii. Leases
Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are
24
Vonex Financial Report 2018 recognised as expenses in the periods in which they
are incurred.
(e) Employee Entitlements
Provision is made for the consolidated entity’s obligation
for short-term employee benefits. Short-term employee
benefits are benefits that are expected to be settled wholly
before 12 months after the end of the annual reporting
period in which the employees render the related service,
including wages, salaries and sick leave. Short-term
employee benefits are measured at the (undiscounted)
amounts expected to be paid when the obligation is settled.
The consolidated entity’s obligations for short-term
employee benefits such as wages and salaries are
recognised as a part of current trade and other payables
in the statement of financial position. The consolidated
entity’s obligations for employees’ annual leave entitlements
are recognised as provisions in the statement of financial
position.
> Short-term employee benefits
Liabilities for wages and salaries, including non-monetary
benefits, annual leave and long service leave expected to
be settled wholly within 12 months of the reporting date are
measured at the amounts expected to be paid when the
liabilities are settled.
> Other long-term employee benefits
The liability for annual leave and long service leave not
expected to be settled within 12 months of the reporting
date are measured as the present value of expected future
payments to be made in respect of services provided by
employees up to the reporting date using the projected unit
credit method. Consideration is given to expected future
wage and salary levels, experience of employee departures
and periods of service. Expected future payments are
discounted using market yields at the reporting date on
corporate bonds with terms to maturity and currency
that match, as closely as possible, the estimated future
cash outflows.
> Defined contribution superannuation expense
Contributions to defined contribution superannuation plans
are expensed in the period in which they are incurred.
(f) Provisions
Provisions are recognised when the consolidated entity 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.
(g) Financial Instruments
> Recognition and initial measurement
Financial instruments, incorporating financial assets
and financial liabilities, are recognised when the entity
becomes a party to the contractual provisions of the
instrument. Trade date accounting is adopted for financial
assets that are delivered within timeframes established by
marketplace convention.
Financial instruments are initially measured at fair value plus
transactions costs where the instrument is not classified as
“at fair value through profit or loss”. Transaction costs related
to instruments classified as “at fair value through profit or
loss” are expensed to the statement of profit or loss and
other comprehensive income immediately.
> Derecognition
Financial assets are derecognised where the contractual
rights to receipt of cash flows expires or the asset is
transferred to another party whereby the consolidated
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 expire.
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 the statement of profit and loss and other
comprehensive income.
> Classification and Subsequent Measurement
i. Financial assets at fair value through profit or loss
Financial assets are classified at fair value through profit
or loss when they are held for trading for the purpose of
short term profit taking, where they are derivatives not
held for hedging purposes, or designed 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 the statement of profit or loss and other
comprehensive income.
ii. Loans and receivables
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 using the effective interest rate method.
Loans and receivables are included in current assets,
where they are expected to mature within 12 months after
the end of the reporting period.
iii. Held-to-maturity investments
Held-to-maturity investments are non-derivative
financial assets that have fixed maturities and fixed
or determinable payments, and it is the consolidated
entity’s intention to hold these investments to maturity.
25
Financial Report Consolidated notes to the financial
statements FOR THE YEAR ENDED 30 JUNE 2018 (continued)
They are subsequently measured at amortised cost using
the effective interest rate method. Held-to-maturity
investments are included in non-current assets where they
are expected to mature within 12 months after the end of
the reporting period. All other investments are classified as
current assets.
iv. Available-for-sale financial assets
Available-for-sale financial assets are non-derivative
financial assets that are either designated as such or
that are not classified in any of the other categories.
They comprise investments in the equity of other entities
where there is neither a fixed maturity nor fixed or
determinable payments.
v. Financial Liabilities
Non-derivative financial liabilities (excluding financial
guarantees) are subsequently measured at amortised
cost using the effective interest rate method.
> Fair value
Fair value is determined based on current bid prices for all
quoted investments. Valuation techniques are applied to
determine the fair value for all unlisted securities, including
recent arm’s length transactions, reference to similar
instruments and option pricing models.
> Impairment of Assets
At the end of each reporting date, the consolidated entity
assesses whether there is objective evidence that a financial
instrument has been impaired. In the case of available-for-
sale financial instruments, a significant or prolonged decline
in the value of the instrument is considered to determine
whether an impairment has arisen. Impairment losses are
recognised in the statement of profit or loss and other
comprehensive income. Also, any cumulative decline in fair
value previously recognised in other comprehensive income
is reclassified to the profit or loss at this point.
(h) Cash and Cash Equivalents
Cash and equivalents include cash on hand, deposits
held at call with banks and other short term highly
liquid investments. For the purpose of the statement
of cash flows, cash includes deposits at call, which are
readily convertible to cash on hand and subject to an
insignificant risk of changes in value.
(i) Revenue and Other Income
Sale of goods
Revenue from the sale of goods represents sales of
customer equipment to consumer and corporate
customers. Cash sales are recognised immediately and
credit sales are recognised over the life of the contract.
Revenue arrangements with multiple deliverables
Where two or more revenue-generating activities or
deliverables are sold under a single arrangement,
each deliverable is considered to be a separate unit of
accounting and is accounted for separately.
Interest
Revenue is recognised as the interest accrues using the
effective interest rate method, which for floating rate
financial assets is the rate inherent in the instrument.
All revenue is stated net of the amount of goods and
services tax.
(j) Borrowing Costs
Borrowing costs directly attributable to the acquisition,
construction or production of assets that necessarily take a
substantial period of time to prepare for their intended use
or sale, are added to the cost of those assets, until such time
as they assets are substantially ready for their intended use
of sale.
All other borrowing costs are recognised in the
comprehensive income statement in the period in which
they are incurred. Borrowing costs predominately consist
of interest and other costs that the company incurs in
connection with the borrowing of funds.
(k) Goods and Services Tax (GST)
The company is registered for GST. Revenues, expenses
and assets and liabilities are recognised net of the amount
of GST, except where the amount of GST incurred is not
recoverable from the Australian Taxation Office (ATO). In
these circumstances the GST is recognised as part of the
cost of acquisition of the asset or as part of the item of
the expense. The net amount of GST recoverable from, or
payable to, the ATO is included with other receivables or
payables in the statement of financial position. Receivables
and payables in the statement of financial position are
shown inclusive of GST.
26
Vonex Financial Report 2018 Cash flows are presented on a gross basis. The GST
components of cash flows arising from investing or financing
activities, which are recoverable from or payable to the ATO,
are presented as operating cash flows.
(l) Trade and other payables
These amounts represent liabilities for goods, services and
other commitments provided to the consolidated entity at
the end of the reporting period that remain unpaid.
Trade payables are recognised at their transaction price.
Trade payables are obligations on the basis of normal credit
terms. Trade payables are predominately unsecured.
(m) Trade and other receivables
All trade receivables are recognised initially at the
transaction price (i.e. cost) less any provision for impairment
and allowance for any uncollectable amounts. Receivable
terms for the consolidated entity are due for settlement
within 4-30 days from the date of the invoice. Collect ability
of trade debtors is reviewed on an ongoing basis.
Receivables expected to be collected within 12 months
of the end of the reporting period are classified as
current assets. All other receivables are classified as
non-current assets.
At the end of each reporting period, the carrying amount
of trade and other receivables are reviewed to determine
whether there is any objective evidence that the amounts
are not recoverable. If so, an impairment loss is recognised
immediately in the statement of profit or loss and other
comprehensive income. When identified, debts which are
known to be uncollectible are written off.
(n) Comparative Figures
When required by Accounting Standards, comparative
figures have been adjusted to conform to changes in
presentation for the current financial year.
(o) Critical Accounting Estimates and Judgements
The Directors evaluate estimates and judgements
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 consolidated entity.
There have been no judgements, apart from those involving
estimation, in applying accounting policies that have
a significant effect on the amounts recognised in these
financial statements. Following is a summary of the key
assumptions concerning the future and other key sources of
estimation at reporting date that have not been disclosed
elsewhere in these financial statements.
Share based payment transactions
The consolidated entity measures the cost of
equity-settled transactions by reference to the fair value
of the equity instruments at the date at which they are
granted. The fair value is determined by management
using an appropriate valuation model that use estimates
and assumptions. Management exercises judgement in
preparing the valuations and these may affect the value
of any share-based payments recorded in the financial
statements (refer to notes 29 for further details).
Impairment
The consolidated entity assesses impairment at the
end of each reporting period by evaluation conditions
and events specific to the consolidated entity that
may be indicative of impairment triggers. Validity for
future operations are all elements that are considered.
Recoverable amounts of relevant assets are reassessed
using value-in-use calculations which incorporate various
key assumptions.
(p) Segment Reporting
An operating segment is a component of the Company
that engages in business activities from which it may
earn revenues and incur expense, including revenues
and expenses that relate to transactions with any of the
Company’s other components. All operating segments
operating results are regularly reviewed by the Company’s
Directors to make decisions about resources to be allocated
to the segment and assess its performance and for which
discrete financial information is available.
The Company engages in business activities within two
segments, being wholesale and retail services within
the telecommunications industry. Performance results
of the two operating segments are disclosed within the
financial statements.
27
Financial Report Consolidated notes to the financial
statements FOR THE YEAR ENDED 30 JUNE 2018 (continued)
(q) Intangibles
Customer List
Customer List is amortised on a straight line basis over
the period of 10 years from May 2013. The residual values
and useful lives are reviewed annually at each balance
date and adjusted, if appropriate.
Trademarks
Trademark is amortised on a straight line basis over the
period of 10 years from April 2013. The residual values and
useful lives are reviewed annually at each balance date
and adjusted, if appropriate.
Patents
Patent is amortised on a straight line basis over the
period of 10 years from April 2013. The residual values
and useful lives are reviewed annually at each balance
date and adjusted, if appropriate. The patent is
covering the Oper8tor development as outlined in the
Directors’ Report.
(r) Current and non-current classification
Assets and liabilities are presented in the statement
of financial position based on current and non-
current classification.
An asset is classified as current when: it is either expected
to be realised or intended to be sold or consumed in the
consolidated entity’s normal operating cycle; it is held
primarily for the purpose of trading; it is expected to be
realised within 12 months after the reporting period; or the
asset is cash or cash equivalent unless restricted from being
exchanged or used to settle a liability for at least 12 months
after the reporting period. All other assets are classified as
non-current.
A liability is classified as current when: it is either expected
to be settled in the consolidated entity’s normal operating
cycle; it is held primarily for the purpose of trading; it is due
to be settled within 12 months after the reporting period; or
there is no unconditional right to defer the settlement of the
liability for at least 12 months after the reporting period. All
other liabilities are classified as non-current.
(s) Issued capital
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.
(t) New, revised or amending Accounting Standards and
Interpretations adopted
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 the annual reporting 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 9 Financial Instruments
This standard is applicable to annual reporting periods
beginning on or after 1 January 2018. The standard replaces
all previous versions of AASB 9 and completes the project
to replace IAS 39 ‘Financial Instruments: Recognition and
Measurement’. AASB 9 introduces new classification and
measurement models for financial assets. A financial asset
shall be measured at amortised cost, if it is held within a
business model whose objective is to hold assets in order
to collect contractual cash flows, which arise on specified
dates and solely principal and interest. All other financial
instrument assets are to be classified and measured at
fair value through profit or loss unless the entity makes an
irrevocable election on initial recognition to present gains
and losses on equity instruments (that are not held-for-
trading) in other comprehensive income (OCI). For financial
liabilities, the standard requires the portion of the change
in fair value that relates to the entity’s own credit risk to
be presented in OCI (unless it would create an accounting
mismatch). New simpler hedge accounting requirements are
intended to more closely align the accounting treatment
with the risk management activities of the entity. New
impairment requirements will use an ‘expected credit loss’
(ECL) model to recognise an allowance. Impairment will be
measured under a 12-month ECL method unless the credit
risk on a financial instrument has increased significantly
since initial recognition in which case the lifetime ECL
method is adopted.
At the date of this report, the initial review by the
directors is that the application of AASB 9 will not have a
material impact on the financial position and/or financial
performance of the consolidated entity.
28
Vonex Financial Report 2018 AASB 15 Revenue from Contracts with Customers
AASB 16 Leases
This standard is applicable to annual reporting periods
beginning on or after 1 January 2018. The standard provides
a single standard for revenue recognition. The core principle
of the standard is that 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. The standard will require: contracts
(either written, verbal or implied) to be identified, together
with the separate performance obligations within the
contract; determine the transaction price, adjusted for the
time value of money excluding credit risk; allocation of the
transaction price to the separate performance obligations
on a basis of relative stand-alone selling price of each
distinct good or service, or estimation approach if no distinct
observable prices exist; and recognition of revenue when
each performance obligation is satisfied. Credit risk will be
presented separately as an expense rather than adjusted
to revenue. For goods, the performance obligation would be
satisfied when the customer obtains control of the goods.
For services, the performance obligation is satisfied when
the service has been provided, typically for promises to
transfer services to customers. For performance obligations
satisfied over time, an entity would select an appropriate
measure of progress to determine how much revenue
should be recognised as the performance obligation is
satisfied. Contracts with customers will be presented in
an entity’s statement of financial position as a contract
liability, a contract asset, or a receivable, depending on
the relationship between the entity’s performance and the
customer’s payment. Sufficient quantitative and qualitative
disclosure is required to enable users to understand the
contracts with customers; the significant judgments made
in applying the guidance to those contracts; and any assets
recognised from the costs to obtain or fulfil a contract with
a customer.
At the date of this report, the initial review by the
directors is that the application of AASB 15 will not have a
material impact on the financial position and/or financial
performance of the consolidated entity.
This standard is applicable to annual reporting periods
beginning on or after 1 January 2019. The standard
replaces AASB 117 ‘Leases’ and for lessees will eliminate
the classifications of operating leases and finance leases.
Subject to exceptions, a ‘right-of-use’ asset will be
capitalised in the statement of financial position, measured
as the present value of the unavoidable future lease
payments to be made over the lease term. The exceptions
relate to short-term leases of 12 months or less and leases
of low-value assets (such as personal computers and
small office furniture) where an accounting policy choice
exists whereby either a ‘right-of-use’ asset is recognised or
lease payments are expensed to profit or loss as incurred.
A liability corresponding to the capitalised lease will also
be recognised, adjusted for lease prepayments, lease
incentives received, initial direct costs incurred and an
estimate of any future restoration, removal or dismantling
costs. Straight-line operating lease expense recognition
will be replaced with a depreciation charge for the leased
asset (included in operating costs) and an interest expense
on the recognised lease liability (included in finance costs).
In the earlier periods of the lease, the expenses associated
with the lease under AASB 16 will be higher when compared
to lease expenses under AASB 117. However EBITDA (Earnings
Before Interest, Tax, Depreciation and Amortisation) results
will be improved as the operating expense is replaced by
interest expense and depreciation in profit or loss under
AASB 16. For classification within the statement of cash
flows, the lease payments will be separated into both a
principal (financing activities) and interest (either operating
or financing activities) component. For lessor accounting,
the standard does not substantially change how a lessor
accounts for leases. The consolidated entity will adopt this
standard from 1 July 2019 but the impact of its adoption is
yet to be assessed by the consolidated entity.
29
Financial Report 2018
$
2017
$
8,067,027
7,019,641
2,335
253,127
-
47,534
116,173
419,169
8,486,196
1,836
355,296
35,578
30,380
110,497
533,587
7,553,228
(144,052)
(164,174)
(198,642)
(221,633)
Consolidated notes to the financial
statements FOR THE YEAR ENDED 30 JUNE 2018 (continued)
Note 2 : Revenue and Other Income
Operating Activities
• Sales
Other income
• Interest received
• Research & Development tax offset
• Data Retention Grant
• Debt forgiveness
• Other income
Total other income
Total revenue
Note 3: Loss for the year
Loss before income tax includes the following specific expenses
Expenses
• Depreciation and amortisation
• Employee benefits expense (superannuation)
• Borrowing costs
• Rental expense on operating leases
2018
$
2017
$
(117,581)
(148,380)
(607,753)
(269,492)
30
Vonex Financial Report 2018 Note 4: Income Tax Expense
(a) Reconciliation
The prima facie tax on the loss is reconciled to income tax expense as follows:
Loss for the year
Prima facie tax expense at 27.5%
Non-deductible expenses
Deferred tax asset not brought to account
Income tax benefit relating to loss
(b) Deferred Tax Asset
Deferred tax asset not brought to account comprises the future benefits
at applicable tax rates:
Tax losses – revenue (resident)
Accruals and provisions
Business related costs
Other
2018
$
2017
$
(14,713,402)
(4,046,185)
3,783,778
262,407
-
5,364,232
251,805
130,171
6,769
5,752,977
(9,737,819)
(2,677,900)
2,387,524
290,376
-
1,125,321
-
-
-
1,125,321
Resident tax losses calculated at the Australian income tax rate of 27.5%.
This asset has not been recognised as an asset in the statement of financial position as its realisation is not considered probable. The asset
will only be obtained if:
(a) the company derives future assessable income of a nature and of an amount sufficient to enable the asset from the deductions for the
loss to be realised;
(b) the company continues to comply with the conditions for deductibility imposed by the law; and
(c) no changes in tax legislation adversely affect the consolidated entity in realising the asset from deductions for the losses.
31
Financial Report Consolidated notes to the financial
statements FOR THE YEAR ENDED 30 JUNE 2018 (continued)
Note 5: Key Management Personnel Disclosures
The aggregate compensation made to directors and other members of Key Management Personnel of the consolidated
entity is set out below:
Short-term employee benefits
Post-employment benefits
Share-based payments
Note 6: Auditors’ Remuneration
Remuneration of the auditor:
• Auditing or reviewing the financial report
• Other services
Note 7: Earnings per share
591,152
38,065
2,012,000
2,641,217
62,500
26,410
88,910
2018
$
2018
$
2018
$
750,123
51,592
702,000
1,503,715
62,500
-
62,500
2017
$
2017
$
2017
$
Loss for the year
(14,713,402)
(9,737,819)
Weighted average number of ordinary shares outstanding during
the year used in the calculation of basic loss per share
No. Shares
68,909,223
No. Shares
57,167,184
There is no dilution of shares due to options as the potential ordinary shares are not dilutive and are therefore not included
in the calculation of diluted loss per share.
Note 8: Cash and Cash Equivalents
Cash on hand
Cash at bank
2018
$
2017
$
1,353
5,222,501
5,223,854
1,352
383,272
384,624
32
Vonex Financial Report 2018 Note 9: Trade and Other Receivables
Current
• Trade debtors
• Less: provision for doubtful debts
Other debtors
GST
Provision for doubtful debts
Reconciliation:
• Balance at the beginning of the year
• Additional provision
• Amount used
Balance at the end of the year
Note 10: Other Assets
Current
• Loans to related parties
• Bonds/deposits paid
• Prepayments
Non-Current
• Bonds/deposits paid (i)
2018
$
2018
$
248,988
(36,000)
212,988
397,869
75,285
686,142
36,000
36,000
15,000
21,599
(599)
36,000
2018
$
2017
$
-
31,332
28,305
59,637
46,566
46,566
514,343
(15,000)
499,343
280,076
30,347
809,766
15,000
15,000
13,105
10,061
(8,166)
15,000
-
2,524
55,617
58,141
42,030
42,030
(i) Bank guarantee facilities are in place securing leased premises for staff and operations based in Brisbane, QLD and Perth, WA. Funds
held in a bank term deposit are securing the bank guarantee facility. The bank guarantee facilities will be in place for the term of the
property lease.
33
Financial Report Consolidated notes to the financial
statements FOR THE YEAR ENDED 30 JUNE 2018 (continued)
Note 11: Intangible Assets
Customer list
Less: Accumulated amortisation
Borrowing Costs - at cost
Less: Accumulated amortisation
Acquisition of IP (Oper8tor) (i)
Patents and trademarks - at cost
Less: Accumulated amortisation
Domain name acquisition
2018
$
2017
$
720,081
(372,151)
347,930
1762
(1080)
682
600,000
600,000
95,520
(11,100)
84,420
2,071
2,071
1,035,103
720,081
(300,069)
420,012
935
(526)
409
-
-
29,933
(4,773)
25,160
2,071
2,071
447,652
(i) On 28 July 2017 and subsequent to shareholder approval, the Company issued 3,000,000 fully paid ordinary shares for assignment of the
intellectual property relating to the communication platform known as Oper8tor to the Company.
34
Vonex Financial Report 2018 Note 11: Intangible Assets (continued)
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set
out below:
Customer list
Borrowing
Costs
Oper8tor
Patents and
trademarks
Domain
name
Total
Consolidated
Balance at 30 June 2016
492,055
Additions/(Disposal)
-
Amortisation expense
(72,043)
Balance at 30 June 2017
420,012
Additions/(Disposal)
Amortisation expense
-
(72,082)
643
-
(234)
409
593
(320)
-
-
-
-
600,000
-
26,236
677
(1,753)
25,160
64,368
(5,108)
3,377
-
522,311
677
(1,306)
(75,336)
2,071
-
-
447,652
664,961
(77,510)
Balance at 30 June 2018
347,930
682
600,000
84,420
2,071
1,035,103
Note 12: Controlled Entities
(a) Parent entities
The parent entity within the Group is Vonex Limited.
(b) Subsidiaries
IP Voice and Data Pty Limited (ABN 45 147 537
871)
VoNEX Holdings Pty Limited (ACN 161 709 002)
Oper8tor Pty Limited (ABN 14 601 220 633)
Vonex Wholesale Limited (ABN 98 138 093 482)
Western Nickel Limited
Golden Paradox Inc
Golden Eagle Exploration LLC USA
Golden Eagle Production LLC USA
Subsidiaries of IP Voice and Data Pty Limited
Country of
incorporation
Class of
shares
Ownership Interest
2018
2017
AUS Ordinary
AUS Ordinary
AUS Ordinary
AUS Ordinary
AUS Ordinary
USA Ordinary
USA Ordinary
USA Ordinary
100%
100%
100%
100%
0%(a)
0%(a)
0%(a)
0%(a)
100%
100%
100%
100%
0%(a)
0%(a)
0%(a)
0%(a)
Itrinity Australia Pty Limited (ACN 131 196 886)
AUS Ordinary
100%
100%
(a) Entities were disposed of on 3 January 2017.
35
Financial Report Consolidated notes to the financial
statements FOR THE YEAR ENDED 30 JUNE 2018 (continued)
Note 13: Disposal of Subsidiaries
Description
On 3 January 2017 the Company executed a binding share sale agreement to sell the Golden Eagle project in Grand County,
Utah, USA. As a result, the company lost control of interest in the following subsidiaries: Western Nickel Limited, Golden
Paradox Inc, Golden Eagle Exploration LLC USA and Golden Eagle Production LLC USA.
Consideration received
Cash proceeds from disposal of subsidiaries
Book values of net assets over which control was lost
Carrying amount of Trade and other payables at disposal
Carrying amount of tenement bonds
Loss during period to date of disposal
Loss on disposal of subsidiaries
2018
$
2017
$
-
-
-
-
-
100
37,496
(215,075)
(27,476)
(204,955)
The loss on disposal of the subsidiaries is included in the statement of profit or loss and other comprehensive income.
36
Vonex Financial Report 2018 Note 14: Parent Entity Disclosures
Financial Position
2018
$
2017
$
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Net Assets
Equity
Issued capital
Reserve
Accumulated losses
Total Equity
Financial Performance
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Guarantees
4,763,314
753,277
5,516,591
787,784
1,676,130
2,463,914
3,052,677
110,901,403
2,339,002
(110,187,728)
3,052,677
(12,543,589)
-
(12,543,589)
410,795
90,519
501,314
3,858,999
680,971
4,539,970
(4,038,656)
91,321,276
2,312,344
(97,672,276)
(4,038,656)
(76,866,533)
-
(76,866,533)
Vonex Limited has not entered into any guarantees in relation to the debts of its subsidiary (2017: nil).
Commitments for expenditure
Vonex Limited has no commitments to acquire property, plant and equipment, and has no contingent liabilities (2017: nil).
37
Financial Report Consolidated notes to the financial
statements FOR THE YEAR ENDED 30 JUNE 2018 (continued)
Note 15: Plant and Equipment
Leasehold improvements
• At cost
• Accumulated depreciation
Plant and Equipment
• At cost
• Accumulated depreciation
Office and Computer equipment
• At cost
• Accumulated depreciation
Licences and Development (inc. software)
• At cost
• Accumulated depreciation
Total plant and equipment
Movements in Carrying Amounts
2018
$
2017
$
31,517
(6,769)
24,748
112,641
(57,849)
54,792
511,508
(459,533)
51,975
255,509
(252,004)
3,505
135,020
31,517
(4,027)
27,490
114,973
(44,946)
70,027
490,580
(438,468)
52,112
263,276
(255,566)
7,710
157,339
Movement in the carrying amounts for each class of plant and equipment between the beginning and the end of the current
financial year:
Leasehold
Improvements
Plant &
Equipment
Office &
Computer
Licenses &
Development
20,631
9,906
-
(3,047)
27,490
84,191
4,388
-
(18,552)
70,027
63,820
179,157
(164,382)
(26,483)
52,112
28,344
-
-
(20,634)
7,710
Leasehold
Improvements
Plant &
Equipment
Office &
Computer
Licenses &
Development
27,490
70,027
-
-
(2,742)
24,748
-
(2,332)
(12,903)
54,792
52,112
23,942
(3,014)
(21,065)
51,975
7,710
-
(844)
(3,361)
3,505
Total
196,986
193,451
(164,382)
(68,716)
157,339
Total
157,339
23,942
(6,190)
(40,071)
135,020
Balance at 1 July 2016
Additions
Grant Funding Received
Depreciation
Carrying amount at 30 June 2017
Balance at 1 July 2017
Additions
Disposal / Write off
Depreciation
Carrying amount at 30 June 2018
38
Vonex Financial Report 2018 Note 16: Provisions
Current
Annual leave
Non-Current
Long service leave
2018
$
338,172
338,172
125,878
125,878
Provision for employee benefits represents amounts accrued for annual leave and long service leave.
Movements in Carrying Amounts
Carrying amount at the start of the year
Additional provisions recognized
Amounts used
Carrying amount at the end of the year
2018
$
415,148
219,180
(170,278)
464,050
2017
$
2017
$
324,000
324,000
91,148
91,148
334,958
135,354
(55,164)
415,148
The current portion for this provision includes the total amount accrued for annual leave entitlements and the amounts
accrued for long service leave entitlements that have vested due to employees having completed the required period of
service. Based on past experience, the consolidated entity does not expect the full amount of annual leave or long service
leave balances classified as current liabilities to be settled within the next 12 months. However, these amounts must be
classified as current liabilities since the consolidated entity does not have an unconditional right to defer the settlement of
these amounts in the event employees wish to use their leave entitlement.
The non-current portion for this provision pertains to amounts accrued for long service leave entitlements that have not yet
vested in relation to those employees who have not yet completed the required period of service.
Note 17: Trade and Other Payables
Trade payables
VISA card account
PAYG withholding
Superannuation guarantee
Other payables and accruals
Goods and services tax (GST)
Trade creditors are expected to be paid within agreed terms.
2018
$
2017
$
1,036,836
(4,437)
28,866
246,080
306,540
-
1,613,885
1,680,646
3,537
28,449
106,243
418,461
30,347
2,267,683
39
Financial Report Consolidated notes to the financial
statements FOR THE YEAR ENDED 30 JUNE 2018 (continued)
Note 18: Borrowings
Current
Unsecured
Loans from related parties – non-interest bearing
Interest bearing loan
Convertible notes (i)
Other financial liabilities(ii)
Secured
Convertible notes (i)
Finance lease – interest bearing
Non-Current
Secured
Finance lease – interest bearing
2018
$
2017
$
-
18,256
1,035
-
19,291
-
9,789
9,789
29,080
-
-
30,000
26,176
407,759
430,000
893,935
1,472,679
11,816
1,484,495
2,378,430
8,668
8,668
(i) On 7 June 2018 the unsecured and secured convertible note and accrued interest converted into ordinary shares upon the successful
completion of the Company’s listing onto the Australian Stock Exchange, at a price equal to 80% of the IPO price. A total of 17,526,989
ordinary shares were issued upon conversion of the convertible note totalling $2,804,319 (note 19).
(ii) On 1 Aug 2017 the financial liabilities converted into ordinary shares at conversion price of $0.10 per share (post 5:1 share consolidation).
A total of 3,800,000 ordinary shares were issued upon conversion of the financial liabilities totalling $380,000. (note 19). The remaining
balance was paid in cash.
40
Vonex Financial Report 2018 Note 19: Issued capital
2018
2017
$
No.
$
No.
Fully paid ordinary shares
45,242,507
147,596,560
22,301,567
608,398,417
Movement in ordinary shares
Balance at 30 June 2016
$
No.
Issue price $
16,014,130
467,265,084
Vesting of Class A vendor shares
20/09/2016
6,000,000
133,333,333
Vesting of Tranche B performance rights
23/06/2017
Capital raising costs
Balance at 30 June 2017
351,000
(63,563)
7,800,000
22,301,567
608,398,417
Issue of shares – Acquisition of Intellectual Property
28/07/2017
600,000
30,000,000
Share Capital Consolidation (5:1)
28/07/2017
(510,719,557)
Shares issued in settlement of borrowings
01/08/2017
380,000
3,800,000
Shares issued in settlement of trade payables
Share Capital Consolidation (2:1)
Vesting of Class B vendor shares
Vesting of Class C vendor shares
45,203
452,030
01/08/2017
29/01/2018
07/06/2018
6,000,000
07/06/2018
6,000,000
(65,965,941)
13,333,311
13,333,311
Vesting of Tranche 1 performance rights
07/06/2018
1,452,000
7,260,000
Vesting of Vodia performance shares
07/06/2018
35,600
178,000
Issue of Initial Public Offer shares
07/06/2018
6,000,000
30,000,000
Conversion of convertible notes to ordinary shares
07/06/2018
2,804,319
17,526,989
Capital raising costs
Balance at 30 June 2018
(376,182)
45,242,507
147,596,560
0.045
0.045
0.02
0.10
0.10
0.45
0.45
0.20
0.20
0.20
0.16
Where applicable, amounts in the table above, have been adjusted for the 5:1 and 2:1 share consolidation completed on 28 July 2017 and 29
January 2018 respectively.
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in proportion to the
number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the company does not have a limited
amount of authorised capital.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have
one vote.
At the shareholders meetings each ordinary share is entitled to one vote. The company does not have authorised share capital and there is
no par value for shares.
Capital Risk Management
The Company is not subject to any externally imposed capital requirements.
Management’s objectives when managing capital is to ensure the company continues as a going concern, so that they may continue to
provide returns for shareholders and benefits for other stakeholders.
The company’s strategy is to ensure appropriate liquidity is maintained to meet anticipated operating requirements, with a view to initiating
appropriate capital raisings as required.
41
Financial Report
Consolidated notes to the financial
statements FOR THE YEAR ENDED 30 JUNE 2018 (continued)
Note 19: Issued Capital (continued)
The working capital position of the company at 30 June 2018 and 30 June 2017 are as follows:
2018
$
1,642,965
(5,223,854)
(3,580,889)
5,079,307
1,498,418
(239%)
2018
$
14,602
1,660,694
678,308
2,353,604
2017
$
4,654,781
(384,624)
4,270,157
(3,170,377)
1,099,780
388%
2017
$
19,114
-
2,312,344
2,331,458
2018
$
2017
$
19,114
(4,512)
14,602
19,114
-
19,114
2018
$
-
1,660,694
1,660,694
2017
$
-
-
-
Total borrowings (including trade and other payables)
Less: cash and cash equivalents
Net debt
Total equity
Total capital
Gearing ratio
Note 20: Reserves
Asset revaluation reserve
Options premium reserve
Share-based payments reserve
Balance at the end of the year
Asset revaluation reserve
Balance at the beginning of the year
Reduction in reserve – disposal of assets
Balance at the end of the year
The reserve records revaluations of non-current assets.
Options premium reserve
Balance at the beginning of the year
Expense relating to options issued
Balance at the end of the year
The reserve records the valuation of options issued
42
Vonex Financial Report 2018 Share-based payments reserve
Balance at the beginning of the year
Expense related to performance shares issued 20 September 2016
Expense related to performance rights issued 20 September 2016
Expense related to Vodia performance shares issued 14 July 2017
Expense related to performance rights issued 28 July 2017
Forfeiture of performance rights issued 20 September 2016
Conversion of Vodia Performance Shares to ordinary shares (note 19)
Conversion of Tranche 1 performance shares to ordinary shares (note 19)
Conversion of Class B performance shares to ordinary shares (note 19)
Conversion of Class C performance shares to ordinary shares (note 19)
2018
$
2,312,344
10,050,516
117,000
53,656
1,904,537
(272,145)
(35,600)
(1,452,000)
(6,000,000)
(6,000,000)
2017
$
-
1,949,484
713,860
-
-
-
-
-
(351,000)
-
Balance at the end of the year
678,308
2,312,344
The reserve records the valuation of performance shares and performance rights issued to vendors (shares) and key
management personnel (rights).
Note 21: Contingent liabilities and contingent assets
Contingent liabilities
There were no known contingent liabilities at reporting date (2017: nil).
Contingent assets
There are no contingent assets at reporting date (2017: nil).
Note 22: Operating segments
Identification of reportable segments
The Consolidated entity has identified its operating segments based its service offerings, which represents retail and
wholesale services within the telecommunications industry. The three main operating segments are:
> Retail: engaged in the sale of hardware and the full suite of telecommunication services including the provision of
data,internet, voice (including IP voice) and other services within Australia.
> Wholesale: engaged in offering wholesale “white-label” hosted PBX services under license for Internet Service Providers
(ISP’s), Telcos and Cloud Vendors within Australia and internationally.
> Corporate: engaged in managing the corporate affairs of the Group, including capital-raising and listing endeavours.
Basis of accounting for purposes of report by operating segments
Unless stated otherwise, all amounts reported within the operating segments are by determined in accordance with
accounting standards adopted within the annual financial statements.
Segment assets and liabilities
Segment assets and liabilities have been identified based on where the direct relationship that exists in the provision of
services within the two main operating segments.
Unallocated items
Items of revenue, expense, assets and liabilities that are not allocated to operating segments if they are considered part of
the core operations of any segment.
43
Financial Report Consolidated notes to the financial
statements FOR THE YEAR ENDED 30 JUNE 2018 (continued)
Note 22: Operating segments (continued)
Segment information
The segment information provided to the Board of Directors for the reportable segments for the year ended 30 June 2018
and 30 June 2017 are as follows:
Segment performance
External customer sales
Other revenues
Interest received
Total segment revenues
Wholesale
$
1,091,561
35,000
-
30 June 2018
Retail
$
Corporate
TOTAL
$
$
6,975,466
-
8,067,027
-
1,030
381,834
1,305
383,139
416,834
2,335
8,486,196
1,126,561
6,976,496
EBITDA
176,110
1,146,909
(15,313,422)
(13,990,403)
Depreciation and amortisation
Interest revenue
Finance costs
Segment Profit / (loss) after income tax expenses
Segment assets
Total Assets
Segment liabilities
Total Liabilities
(17,234)
-
(40,899)
117,977
128,414
(6,968)
1,030
(6,294)
(93,379)
1,305
(117,581)
2,335
(560,560)
(607,753)
1,134,677
(15,966,056)
(14,713,402)
1,216,061
5,841,847
7,186,322
328,292
990,547
788,176
7,186,322
2,107,015
2,107,015
44
Vonex Financial Report 2018 Note 22: Operating segments (continued)
Segment performance
External customer sales
Other revenues
Interest received
Total segment revenues
30 June 2017
Wholesale
$
966,005
197,276
-
Retail
$
Corporate
$
TOTAL
$ $
6,053,636
-
7,019,641
73,917
1,116
260,558
720
531,751
1,836
1,163,281
6,128,669
261,278
7,553,228
EBITDA
119,190
741,283
(10,257,434)
(9,396,961)
Depreciation and amortisation
Interest revenue
Finance costs
Segmented Profit / (loss) after income tax expenses
Segment assets
Total assets
Segment liabilities
Total Liabilities
(43,033)
-
(3,824)
72,333
254,341
(7,723)
1,116
(6,328)
(93,296)
(144,052)
720
1,836
(188,490)
(198,642)
728,348
(10,538,500)
(9,737,819)
723,191
922,020
378,115
832,362
3,859,452
1,899,552
1,899,552
5,069,929
5,069,929
45
Financial Report Consolidated notes to the financial
statements FOR THE YEAR ENDED 30 JUNE 2018 (continued)
Note 23: Cash flow information
(a) Reconciliation of Cash Flows from Operations with Loss after Income Tax
Loss after income tax
Non-cash items:
Depreciation and amortisation expense
Interest accrued on convertible notes
Interest accrued on equity loans
Share based payments
Loss on disposal of assets/investments
Bad debts
Debt forgiven
Changes in assets and liabilities:
Trade and other receivables
• Trade and other receivables (current)
• Other assets
• Provisions
• Trade and other payables
Cash flow used in operating activities
Note 24: Accumulated losses
2017
$
2018
$
(14,713,402)
(9,737,819)
117,581
430,158
-
144,052
134,188
20,894
13,514,260
8,663,344
-
-
(47,534)
123,624
(6,032)
48,902
(561,061)
(1,093,504)
204,955
16,446
(30,380)
(310,669)
(676)
80,190
388,616
(426,859)
2018
$
2017
$
Accumulated losses at beginning of financial year
(27,803,402)
(18,065,583)
Net loss attributable to members of the company at end of financial year
(14,713,402)
(9,737,819)
Accumulated losses at end of financial year
(42,516,804)
(27,803,402)
46
Vonex Financial Report 2018 Note 25: Events after the reporting period
Results of Share Sale Facility
On 14 August 2018 the Company announced the results
of the Share Sale Facility. As at market close on 22 June
2018, there were 1,868,507 ordinary shares held by 1,433
shareholders that had a market value of less than A$500.
The final number of shares eligible to be sold under
the Facility was 1,302,079 ordinary shares from 1,025
shareholders which represented approximately 41% of the
total number of shareholders holding shares in the Company.
PBX registered user growth
On 20 August 2018 the Company announced that Vonex
Telecom had achieved 24,000 registered active PBX users
by the end of July 2018. Registered PBX users are currently
growing at 500 per month and is expected to grow as
Vonex’s marketing goes into full swing in the NBN rollout
areas. Vonex had 18,700 PBX users in July 2017, the growth
represents a 28% gain in PBX user’s year on year.
Placement of small shareholding shares
On 24 August 2018 the Company announced that it has
received firm commitments from a range of sophisticated
and high net worth investors to place all the shares available
under the Share Sale Facility (Facility) at $0.1325 per share
pursuant to clause 3.5 of the Company’s constitution.
The final number of shares sold under the Facility was
1,295,709 ordinary shares from 1,022 shareholders which
represents approximately 41% of the total number
of shareholders.
Launch of Sign On Glass
On 3 July 2018 Vonex announced the first release of its latest
technology, called Sign On Glass (SOG), to more efficiently
manage the Company’s new and existing customers. SOG is
available on all internet enabled devices and facilitates the
sign up, activation and ongoing management of customers.
This SOG technology will be rolled out to the entire channel
partner network and will provide more accurate provisioning
and significantly reduce connection times, saving up to a
week for typical orders.
Using the SOG portal, channel partners will be able to
activate the entire range of products for their new and
existing clients. Their existing client information will be
available within the interface, so they can perform upgrades,
additions and modifications.
The Company will continue to develop the product and will,
in time, seek to provide a complete portal for the channel
partner which will check product availability and site
readiness prior to sign up. The technology will also automate
the dispatch of hardware and provide various reports to the
channel partner.
Vonex has commenced testing of these advanced features
with hundreds of test applications to date used by the
development team. Vonex will continue to assess the
performance of the SOG platform with both live customer
data and testing of advanced features, and will endeavour
to keep the market informed of the ongoing upgrades to
the platform. development team. Vonex will continue to
assess the performance of the SOG platform with both live
customer data and testing of advanced features, and will
endeavour to keep the market informed of the ongoing
upgrades to the platform.
CounterPath strategic partnership
On 2 August 2018 the Company announced a strategic
partnership with NASDAQ and TSX listed CounterPath, a
global provider of award-winning Unified Communications
solutions for enterprises and service providers. The
CounterPath product suite includes Bria 5 that leverages
over 10 years of softphone experience and replaces the
need for a telephone to connect to a VoIP phone service,
or hosted PBX extension. Its Stretto PlatformTM enables
the provisioning of desktop and mobile VoIP software.
CounterPath Bria software is used by millions of users across
the globe.
The partnership agreement will see Vonex and CounterPath
collaboratively working on new customer growth in Australia.
For Vonex, this could open up much larger opportunities to
work with enterprise clients previously not targeted, plus
enable Vonex to expand its offering to existing business,
enterprise and channel customers.
47
Financial Report Consolidated notes to the financial
statements FOR THE YEAR ENDED 30 JUNE 2018 (continued)
Note 26: Related Party Transactions
Parent entity: The parent entity within the Group is Vonex Limited.
Subsidiaries: Interests in subsidiaries are set out in note 12.
Key management personnel: Disclosures relating to Key Management Personnel are set out in note 5.
Transactions with related parties
The following transactions occurred with related parties:
Services provided:
Consultancy by The Telephone People (director-related entity of Mr Matthew Fahey)
Company secretarial, corporate compliance and accounting fees from Minerva
Corporate (director-related entity of Mr Nicholas Ong)
Payments for legal fees from Bowen Buchbinder Vilensky (director-related entity of
Mr David Vilensky)
Payments for legal fees from Bowen Buchbinder Vilensky (director-related entity of
Mr David Vilensky)
2018
$
2017
$
-
195,904
99,714
99,714
50,000
147,500
105,000
105,000
Receivable from and payable to related parties
The following balances are outstanding at the reporting date in relation to transactions with related parties:
2018
$
2017
$
Current payables:
Trade payables to Minerva Corporate (director-related entity of Mr Nicholas Ong)
8,766
Trade payables to Bowen Buchbinder Vilensky (director-related entity of Mr David
Vilensky)
Trade payables to JS Capital Partners (director-related entity of Mr Angus Parker)
Trade payables to The Telephone people & Sliver Consulting (director-related entity of
Mr Matthew Fahey)
-
-
56,032
215,914
81,180
3,068
44,872
Loans to/from related parties
The following balances are outstanding at the reporting date in relation to loans to or from related parties at the current
and previous reporting date:
Current payables:
Loans from related parties (i)
2018
$
2017
$
-
30,000
(j) There was a loan from Finance West Pty Limited as at 30 June 2017 of $30,000. Angus Parker was an Executive Director of Vonex Limited
and is also a director and shareholder of Finance West Pty Limited.
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
48
Vonex Financial Report 2018 Note 27: Financial instruments
The consolidated entity’s financial instruments consist mainly of deposits with banks, short term investments and accounts
receivable and payable, loans to and from related parties and commercial loans. The main risks the consolidated entity is
exposed to through its financial instruments are interest rate risk, credit risk, liquidity risk, price risk and foreign exchange risk.
(a) Interest rate risk
The consolidated entity’s exposure to interest rate risk, which is the risk that a financial instrument will fluctuate as a result of
changes in market interest rates and effective average interest rates on those financial assets and liabilities.
The majority of cash at bank held by the consolidated entity is in deposit accounts with one of the four large Australian
Banks. Considering the amount of surplus working capital cash held by the consolidated entity during the last 12 months in
these deposit accounts, the Board believes this was the most appropriate to ensure an adequate return being received on
funds held.
There are inter-company loans in place within the consolidated entity and these facilities currently attract no exposure to
interest rate risk.
The consolidated entity continues to manage its interest rate risk through a constant monitoring of interest rates, budgets
and cash flows.
Weighted
Average
Interest Rate
Floating
Interest Rate
Fixed
Interest Rate
Within 1 Year
Fixed
Interest Rate
Within 1-5 Years
Non-Interest
Bearing
Total
%
$
$
$
$
$
2018
Financial Assets:
Cash
Receivables
Total financial assets
Financial Liabilities:
Payables
Borrowings
Total financial liabilities
Net financial assets
1.0
-
-
5.0
5,222,501
-
5,222,501
-
18,256
18,256
-
-
-
-
10,824
10,824
5,204,245
(10,824)
-
-
-
-
-
-
-
1,353
5,223,854
686,142
686,142
687,495
5,909,996
1,613,885
1,613,885
-
29,080
1,613,885
1,642,965
(926,390)
4,267,031
49
Financial Report Consolidated notes to the financial
statements FOR THE YEAR ENDED 30 JUNE 2018 (continued)
Note 27: Financial instruments (continued)
Weighted
Average
Interest Rate
Floating
Interest Rate
Fixed
Interest Rate
Within 1 Year
Fixed
Interest Rate
Within 1-5 Years
Non-Interest
Bearing
Total
%
$
$
$
$
$
2017
Financial Assets:
Cash
Receivables
Total financial assets
Financial Liabilities:
Payables
Borrowings
Total financial liabilities
Net financial assets
Sensitivity analysis
1.0
-
-
6.5
383,272
-
383,272
-
26,176
26,176
-
-
-
-
-
-
-
-
1,892,254
1,892,254
8,668
8,668
1,352
384,624
809,766
809,766
811,118
1,194,390
2,267,683
2,267,683
460,000
2,387,098
2,727,683
4,654,781
357,096
(1,892,254)
(8,668)
(1,916,565)
(3,460,391)
The effect on profit and equity as a result of changes in interest rates on net financial assets is immaterial.
(b) Credit Risk
Credit risk related to balances with banks and other financial institutions is managed by the board of directors in
accordance with approved Board policy. Such policy requires that surplus funds are only invested with counterparties with
a Standard & Poor’s rating of at least AA-. The following table provides information regarding the credit risk relating to cash
and money market securities based on Standard & Poor’s counterparty credit ratings.
Cash and cash equivalents
— AA Rated
Note
8
2018
$
2017
$
5,223,854
384,624
The maximum exposure to credit risk is the carrying amount as disclosed in the consolidated statement of financial position
and notes to the financial statements.
The consolidated entity’s assets have been pledged to secure borrowings and guarantees are in place for certain
borrowings and supplier agreements. All repayment obligations are up to date and within terms of the individual
agreements in place at balance date.
Trade and other receivables are within normal terms and appropriate provisions for doubtful debts have been made.
Carrying value approximates fair value at 30 June 2018.
(c) Net Fair Values
The net fair value of financial assets and liabilities of the consolidated entity approximated their carrying amount. The
consolidated entity has no financial assets and liabilities where the carrying amount exceeds the net fair value at reporting
date. The aggregate net fair values and carrying amounts of financial assets and financial liabilities are disclosed in the
statement of financial position and notes to the financial statements.
50
Vonex Financial Report 2018 Note 27: Financial instruments (continued)
(d) Liquidity Risk
Liquidity risk arises from the possibility that the consolidated entity might encounter difficulty in settling its debts or
otherwise meeting its obligations related to financial liabilities. The consolidated entity manages this risk through the
following mechanisms:
- preparing forward looking cash flow analysis in relation to its operational, investing and financing activities
- obtaining funding from a variety of sources
- maintaining a reputable credit profile
- managing credit risk related to financial assets
- investing only in surplus cash with major financial institutions
- comparing the maturity profile of financial liabilities with the realisation profile of financial assets
The consolidated entity does not have a significant exposure in terms of financial liabilities or illiquid financial assets and is
able to settle its debts or otherwise meet its obligations related to financial liabilities.
The financial asset and financial liability maturity analysis are as follows:
Within 1 Year
1 to 5 Years
Over 5 Years
Total
2018
$
2017
$
2018
$
2017
$
2018
2017
$
$
2018
$
2017
$
Financial liabilities
Payables
Borrowings
1,613,885
2,267,683
29,080
2,378,430
Total Expected outflows
1,642,965
4,646,113
Financial assets
Cash and cash
equivalents
Receivables
5,223,854
384,624
686,142
809,766
Total Anticipated Inflows
5,909,996
1,194,390
Net inflow / (outflow) on
financial instruments
4,267,031
(3,451,723)
(e) Foreign Exchange Risk
-
-
-
-
-
-
-
-
8,668
8,668
-
-
-
(8,668)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,613,885
2,267,683
29,080
2,387,098
1,642,965
4,654,781
5,223,854
384,624
686,142
809,766
5,909,996
1,194,390
4,267,031
3,460,391
The consolidated entity does have a minor exposure to fluctuations in foreign currencies between the US and Australian
dollar. Some wholesale customers are based in the United States of America and monthly invoices are rendered in US dollars.
When invoices are paid the proceeds are converted into Australian dollars. Depending on exchange rate fluctuations from
the time the invoice is rendered and subsequently paid, the consolidated entity may have an associated exchange rate
gain or loss. Management will continue to conduct monitoring reviews on an ongoing basis of its US based customers.
51
Financial Report Consolidated notes to the financial
statements FOR THE YEAR ENDED 30 JUNE 2018 (continued)
Note 28: Commitments for Expenditure
(a) Operating Lease Commitments
Payable:
No later than twelve months
One to five years
Greater than five years
Amounts shown are GST inclusive, where applicable.
Note 29: Share Based Payments
2018
$
2017
$
266,767
180,924
-
447,691
276,016
329,965
-
605,981
The total expense arising from share based payment transactions recognised during the year in relation to the performance
rights, performance shares and options issued was $13,514,260 (2017: $8,663,344).
Share Based Payment Expense
Performance Rights – Key Management Personnel –20 September 2016
Performance Rights – Vodia Networks Inc - 14 July 2017
Performance Rights – Key Management Personnel – 28 July 2017
Performance Rights – IP Consideration Securities – 28 July 2017
Performance Shares
Options
Total Share Based Payment Expense
Movement in share rights and performance shares during the period
2018
$
2017
$
(155,145)
53,657
1,904,537
-
10,050,517
1,660,694
13,514,260
713,860
-
-
-
7,949,484
-
8,663,344
Number of performance rights
Weighted average exercise price ($)
Balance at beginning of period
Subtotal prior to share consolidation
5:1 share consolidation
Forfeited during the period
Granted during the period (i)
Subtotal prior to share consolidation
2:1 share consolidation
Vested during the period
Balance at end of period
282,266,667
282,266,667
56,453,333
(1,560,000)
68,536,000
123,429,333
61,714,622
(34,104,622)
27,610,000
-
-
-
-
-
-
-
-
-
Performance rights granted during the period:
Amounts below have been adjusted for the 2:1 share consolidation completed on 29 January 2018. Total performance rights
granted during the period was 34,268,000.
52
Vonex Financial Report 2018 Note 29: Share Based Payments (continued)
Performance Rights—Vodia Networks Inc—14 July 2017
Vonex Limited issued 328,000 performance rights to Vodia Networks Inc in four tranches. Each performance right will convert
into 1 ordinary share of Vonex Limited upon achievement of the performance milestone. The company has assessed each
class as being probable of being achieved and have therefore recognized an expense over the expected vesting period.
The details of each tranche are tabled below:
Tranche
Number
Start Date
Exercise Price
Expiry Date
of Milestone
Achievements
Underlying
Share Price
Total Fair Value
1
2
3
4
178,000
14/07/17
50,000
14/07/17
50,000
14/07/17
Vested
01/07/2018
01/07/2019
50,000
14/07/17
01/07/2020
$0.20
$0.20
$0.20
$0.20
$35,600
$10,000
$10,000
$10,000
$35,600
$10,000
$10,000
$10,000
These performance rights were valued at their issue dates at $65,600.
Performance Milestones:
Tranche 1 has vested – 30 April 2018.
Tranche 2 performance rights convert on 1 July 2018.
Tranche 3 performance rights convert on 1 July 2019.
Tranche 4 performance rights convert on 1 July 2020.
Performance Rights—Key Management Personnel—28 July 2017
On 28 July 2017 Vonex Limited issued 16,940,000 performance rights to management. These performance rights were issued
in three tranches, each with different performance milestones. Each performance right will convert into 1 ordinary share of
Vonex Limited upon achievement of the performance milestone.
The company has assessed tranche 1,2 and 3 as being probable of being achieved and have therefore recognised an
expense over the expected vesting period.
The details of each class are tabled below:
Tranche
Number
Start Date
1
2
3
7,260,000
4,840,000
4,840,000
28/07/17
28/07/17
28/07/17
Expiry Date
of Milestone
Achievements
Vested
28/07/2021
28/07/2021
Underlying Share
Price
Total Fair Value
$0.20
$0.20
$0.20
$1,452,000
$968,000
$968,000
These performance rights were valued at their issue dates at $3,388,000.
Performance Milestones:
• On 29 January 2018, the performance rights relating to Tranche 1 were amended such that the 7,260,000 vest upon a
successful listing on the Australia Securities Exchange.
• Tranche 2 performance rights are outstanding – Convertible upon company achieving audited gross revenue of $15
million in a financial year.
• Tranche 3 performance rights are outstanding – Convertible upon company achieving audited net profit after tax of $1
million in a financial year.
53
Financial Report Consolidated notes to the financial
statements FOR THE YEAR ENDED 30 JUNE 2018 (continued)
Note 29: Share Based Payments (continued)
Performance Rights—Intellectual Property Consideration Securities—28 July 2017
On 28 July 2017 Vonex Limited issued 17,000,000 performance rights to Mr Angus Parker and Mr Matthew Fahey as the
inventors of the Oper8tor app in consideration for them executing a deed of confirmation of assignment of patent
agreement to confirm the Company’s ownership of the Oper8tor intellectual property.
No value has been allocated to the performance rights due to significant uncertainty of the meeting the performance
milestone which are based on future events.
Performance Milestones:
a) 2,000,000 Performance Rights which shall vest and convert into ordinary fully paid shares in the issued share capital
of the Assignee upon completion of the beta version of the Oper8tor app and commencement of the official Oper8tor
launch in Europe;
b) 5,000,000 Performance Rights which shall vest and convert into ordinary fully paid shares in the issued share capital of
the Assignee when Oper8tor reaches 10 million Active Users; and
c) 10,0000,000 million Performance Rights which shall vest and convert into ordinary fully paid shares in the issued share
capital of the Assignee when Oper8tor reaches 50 million Active Users.
On 28 July 2017 Vonex Limited also issued 3,000,000 to Mr Angus Parker and Mr Matthew Fahey fully paid ordinary shares for
assignment of the intellectual property relating to the communication platform known as Oper8tor to the Company.
Where applicable, amounts reported above, have been adjusted for the 2:1 share consolidation completed on 29
January 2018.
Performance Shares and Rights granted in previous financial year:
Amounts below have been adjusted for the 5:1 and 2:1 share consolidation completed on 28 July 2017 and 29 January
2018 respectively.
Performance Shares
On 20 September 2016, Vonex Limited varied the milestones for 40,000,000 performance shares which were originally issued
to vendors on acquisition of Vonex Wholesale Limited by Vonex Limited on 28 January 2016. These performance shares were
originally issued in three tranches, each with different performance milestones. Each performance share will convert into 1
ordinary share of Vonex Limited upon achievement of the performance milestone.
Class
Number
Start Date
A
B
C
13,333,378
13,333,311
13,333,311
20/09/16
20/09/16
20/09/16
Expected Date
of Milestone
Achievements
Vested
Vested
Vested
Underlying
Share Price
Total Fair Value
$0.45
$0.45
$0.45
$6,000,000
$6,000,000
$6,000,000
These performance rights were valued at their issue dates at $18,000,000.
On 29 January 2018, variation to the terms of Class B and Class C performance shares by adding an additional performance
milestone, such that each Class B and Class C performance may also convert into one ordinary fully paid share in the
Company on the occurrence of the Company listing on the Australian Securities Exchange. Class A performance shares were
vested in previous financial year.
Performance Right—Key Management Personnel—20 September 2016
Vonex Limited issued 2,340,000 performance rights to Executive Directors, management personnel, the Chairman and a
non-executive director. These performance rights were issued in three tranches, each with different performance milestones.
Each performance right will convert into 1 ordinary share of Vonex Limited upon achievement of the performance milestone.
54
Vonex Financial Report 2018 Note 29: Share Based Payments (continued)
The Company has assessed each class as being probable of being achieved and have therefore recognised an expense
over the expected vesting period. The details of each class are tabled below:
Tranche
Number
Start Date
1
2
3
780,000
780,000
780,000
20/09/16
20/09/16
20/09/16
Expected Date
of Milestone
Achievements
Forfeited
Vested
20/09/19
Underlying
Share Price
Total Fair Value
$0.45
$0.45
$0.45
$351,000
$351,000
$351,000
These performance rights were valued at their issue dates at $1,053,000.
Performance Milestones:
• Tranche 1 performance rights were forfeited and amounts previously recorded was reversed during the period as the
vesting conditions were not satisfied.
• Tranche 2 performance rights vested 23/06/2017.
• Tranche 3 performance rights are outstanding – Convertible upon company reaching $10 million annualised revenue per
annum in any quarter.
Options granted during the period
Amounts below have been adjusted for the 2:1 share consolidation completed on 29 January 2018. Total options granted
during the period was 36,853,481.
Grant date
Expiry date
Exercise Price
03/08/17
03/08/20
07/06/18 (i)
07/06/20
07/06/18
07/06/23
30/11/17 (i)
30/11/22
$0.90
$0.20
$0.30
$0.20
Balance at
the start of
the year
Granted
Expired
Exercised/
forfeited
-
-
-
-
-
133,750
7,500,000
14,500,000
14,719,731
36,853,481
-
-
-
-
-
-
-
-
-
-
Balance
at the end
of year
133,750
7,500,000
14,500,000
14,719,731
36,853,481
Weighted average exercise price: $0.2419
The weighted average remaining contractual life of options outstanding was 4.72 years.
For the options granted during the current financial year, the valuation model inputs used to determine the fair value at the
grant date, are as follows:
Grant date
Expiry date
Share price
at grant date
Exercise price
Expected
volatility
Dividend
yield
Risk-free
interest rate
Fair value at
grant date
03/08/17
03/08/20
07/06/18
07/06/23
$0.20
$0.20
$0.90
$0.30
80%
80%
0%
0%
2%
2%
5,084
1,655,610
1,660,694
55
Financial Report Consolidated notes to the financial
statements FOR THE YEAR ENDED 30 JUNE 2018 (continued)
Note 29: Share Based Payments (continued)
In addition, the weighted average exercise price for the options issued as SBP’s is $0.3055 and the weighted average years
to expiry is 4.91 years.
i. Options granted on 3 August 2017 and 7 June 2018 were free attaching options, the value of these options are not required
to be valued separately, as they are part of the share issue, and all the shares issued have been valued in the issued
capital account.
ii. Where applicable, amounts in the tables above, have been adjusted for the 5:1 and 2:1 share consolidation completed on
28 July 2017 and 29 January 2018 respectively.
Note 30: Company Details
The registered office & principal place of business is:
Suite 5, Ground Floor
1 Centro Avenue,
Subiaco, WA 6008
56
Vonex Financial Report 2018 Directors’ Declaration FOR THE YEAR ENDED 30 JUNE 2018
In the Directors’ opinion:
•
•
•
•
The attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the
Corporations Regulations 2001 and other mandatory professional reporting requirements;
The attached financial statements and notes comply with International Financial Reporting Standards as issued by
the International Accounting Standards Board as described in Note 1 to the financial statements;
The attached financial statements and notes give a true and fair view of the consolidated entity’s financial position
as at 30 June 2018 and of its performance for the financial year ended on that date; and
There are reasonable grounds to believe that the company will be able to pay its debts as and when they become
due and payable.
The Directors’ have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the Board of Directors.
Nicholas Ong
Chairman
31 August 2018
57
Financial Report
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF VONEX LIMITED
Opinion
We have audited the financial report of Vonex Limited (the Company) and its subsidiaries (the Group), which
comprises the consolidated statement of financial position as at 30 June 2018, 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, and notes to the financial statements, including a summary of
significant accounting policies, and the directors' declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
including:
(i)
Giving a true and fair view of the Group's financial position as at 30 June 2018 and of its financial
performance for the year then ended; and
(ii)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor's Responsibilities for the Audit of the Financial Report section of
our report. We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board's
APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial
report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given to
the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor's
report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
the financial report of the current period. These matters were addressed in the context of our audit of the financial
report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter
Impairment of intangible assets
Refer to Note 11 in the financial statements
The Group has intangible assets of $1,035,103 at
the reporting date.
to
Intangible assets of $600,000 relating
the
Oper8tor communication platform which at the
reporting date was not yet available for use is
required to be tested annually for impairment by
comparing its carrying amount with its recoverable
amount. Management’s assessment determined
that the recoverable amount of this asset exceeded
its carrying value at the reporting date.
For the remaining intangible assets of $435,103
relating to intangible assets amortised over their
useful life, management is required to assess at the
reporting date whether there is any indication that
these assets may be impaired. Management did not
identify any indicators of impairment, and therefore
no impairment test was required to be performed.
We determined this area to be a key audit matter due
to the size of the balance and due to the significant
management judgement involved in assessing the
recoverable amount of the Oper8tor communication
platform and whether indicators of impairment are
present in relation to the Group’s other intangible
assets.
How our audit addressed this matter
Our audit procedures in relation to the Oper8tor
communication platform included:
• Reviewing management’s assessment that
the Oper8tor communication platform was
not yet available for use at the reporting
date; and
• Evaluating the basis used by management
in determining the recoverable amount of
the Oper8tor communication platform.
Our audit procedures in relation to the intangible
assets amortised over their useful life included:
• Reviewing management’s assessment that
no impairment indicators were present; and
• Enquiring with management and reviewing
budgets to assess the future cash flows
associated with the intangible asset; and
• Checking the mathematical accuracy of the
intangible
the
amortisation expense of
assets.
Share based payments –
Refer to Note 29 in the financial statements
During the year, the Company issued 36,853,481
options as detailed in Note 29. Management used a
valuation model to value these options issued.
During the year, the Group also issued 34,268,000
in Note 29.
rights as detailed
performance
Management was required to assess the probability
of achieving the performance conditions attached to
the performance rights and estimate the length of the
expected vesting period.
We determined this to be a key audit matter due to
the significant judgement involved in assessing the
fair value of these share-based payments issued
during the year.
Our audit procedures in relation to the options
issued included:
• Obtaining
the
valuation model and
assessed whether
the model was
appropriate for valuing the options issued
during the year;
• Checking the mathematical accuracy of the
calculations in the model;
• Assessing
the
reasonableness of
the
assumptions used in the valuation model
such as the price volatility of the underlying
share, dividend yield and risk-free interest
rate; and
• Ensuring the disclosures in the financial
report were in accordance with Accounting
Standards.
Our audit procedures
performance rights issued included:
relation
in
to
the
• Reviewing management’s assessment of
the probability of achieving the performance
conditions and the estimated length of the
expected vesting period;
• Ensuring the disclosures in the financial
report were in accordance with Accounting
Standards.
Other Information
The directors are responsible for the other information. The other information comprises the information included
in the Group’s annual report for the year ended 30 June 2018, but does not include the financial report and the
auditor's report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial report or our knowledge
obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors 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 preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as
a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic
alternative but to do so.
Auditor's responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing and
Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar2.pdf. This
description forms part of our auditor's report.
Report on the Remuneration Report
Opinion on the remuneration report
We have audited the Remuneration Report included within the directors' report for the year ended 30 June 2018.
In our opinion, the Remuneration Report of Vonex Limited, for the year ended 30 June 2018, complies with
section 300A of the Corporations Act 2001.
Responsibilities
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.
RSM AUSTRALIA PARTNERS
Perth, WA
Dated: 31 August 2018
TUTU PHONG
Partner
Additional Information FOR THE YEAR ENDED 30 JUNE 2018
SHAREHOLDER INFORMATION (as at 27 August 2018)
(i) Number of shareholders: 1,413
(ii) Ordinary shares issued: 147,596,560
(iii) The twenty largest shareholders hold 90,746,296 ordinary shares representing 61.48% of the issued capital
(iv) Distribution schedule of holdings
ORDINARY SHARES
QUOTED OPTIONS EX 20¢ EXP 7/6/2020
NO. OF SHARES
NO. OF HOLDERS
NO. OF OPTIONS
NO. OF HOLDERS
1 – 1,000
1,001 - 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
187
357
300
424
145
1,413
1 – 1,000
1,001 - 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
0
47
16
36
4
103
VOTING RIGHTS OF ORDINARY SHARES
Each member presents in person, or by proxy, representative or attorney, has one vote on a show of hands and one vote per
share on a poll for each share held. Each member is entitled to notice of, and to attend and vote at, general meeting.
TOP 20 HOLDERS OF ORDINARY FULLY PAID SHARES AT 27 August 2018
Rank Name
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
CODE NOMINEES PTY Limited <28351 A/C>
FINANCE WEST PTY Limited
MR MATTHEW FAHEY
CARMINE LION GROUP PTY Limited
CARMINE LION GROUP PTY Limited
HSBC CUSTODY NOMINEES (AUSTRALIA) Limited
CONFADENT Limited
GUAVA CAPITAL PTY Limited
MR RYAN JAMES ROWE
OCTAVUS DEVELOPMENT Limited
STATE ONE STOCKBROKING Limited
COLIENS CORPORATION PTY Limited
MS TOW LOY SUN
LATERAL CONSULTING (WA) PTY Limited
MR GREGORY ROSS KING + MS SUZANNE DAWN KING
GUAVA CAPITAL PTY Limited
HEELMO HOLDINGS PTY Limited
LATERAL CONSULTING (WA) PTY Limited
MR SHANE ROBINSON + MRS HELEN ROBINSON
20.
MR BRUCE HUMMERSTON + MRS JANET HUMMERSTON
Totals: Top 20 holders of ORDINARY FULLY PAID SHARES (TOTAL)
Total Remaining Holders Balance
62
Units
19,643,296
16,203,739
5,533,698
5,238,320
5,231,527
4,377,417
3,500,000
3,078,620
3,074,653
2,807,258
2,648,489
2,420,000
2,330,000
2,239,381
2,220,000
2,158,188
2,120,666
2,096,061
1,931,810
1,893,173
90,746,296
56,850,264
% Units
13.31
10.98
3.75
3.55
3.54
2.97
2.37
2.09
2.08
1.90
1.79
1.64
1.58
1.52
1.50
1.46
1.44
1.42
1.31
1.28
61.48
38.52
Vonex Financial Report 2018 UNQUOTED SECURITIES
Set out below are the classes of unquoted securities currently on issue:
Number
113,750
14,500,000
14,719,731
27,788,000
Class
Options exercisable at 90¢ expiring 3/8/2020
Options exercisable at 30¢ expiring 7/6/2023
Options exercisable at 20¢ expiring 30/11/2022
Performance rights with various vesting milestones
SECURITIES SUBJECT TO ESCROW
Set out below are securities currently subject to escrow.
Number
190,058
189,594
94,582
165,264
247,239
99,046
102,505
5,587
9,234
178,000
133,750
14,500,000
996,701
13,723,030
23,020,000
Class
Ordinary shares in held in escrow until 6/12/2018
Ordinary shares in held in escrow until 7/12/2018
Ordinary shares in held in escrow until 8/12/2018
Ordinary shares in held in escrow until 11/12/2018
Ordinary shares in held in escrow until 12/12/2018
Ordinary shares in held in escrow until 13/12/2018
Ordinary shares in held in escrow until 14/12/2018
Ordinary shares in held in escrow until 15/12/2018
Ordinary shares in held in escrow until 18/12/2018
Ordinary shares in held in escrow until 7/6/2019
Options exercisable at 90¢ expiring 3/8/2020 held in escrow for two years from 13/6/2018
Options exercisable at 30¢ expiring 7/6/2023 held in escrow for two years from 13/6/2018
Options exercisable at 20¢ expiring 30/11/2022 held in escrow for two years from 13/6/2018
Options exercisable at 20¢ expiring 30/11/2022 held in escrow until 7/6/2019
Performance Rights held in escrow for two years from 13/6/2018
ASX LISTING RULE 4.10.19 CONFIRMATION
Pursuant to ASX Listing Rule 4.10.19 the Company confirms that from the period of admission on 8 June 2018 to 30 June 2018
the Company used its cash and assets in a form readily convertible into cash, in line with its stated business objectives.
CORPORATE GOVERNANCE
Pursuant to the ASX Listing Rules, the Company’s Corporate Governance Statement will be released in conjunction with
this report.
The Company’s Corporate Governance Statement is available on the Company’s website at:
https://investors.vonex.com.au/corporate-governance/
63
Financial Report
Additional Information FOR THE YEAR ENDED 30 JUNE 2018 (continued)
MINING ROYALTY SCHEDULE
Project
Tenements
VNX’s Interest
Other Parties
Johnston Range Iron Ore Gold and Base Metals M77/1258
Royalty
Cliff Asia Pacific(1)
Notes:
1. Vonex Limited retains a 2% royalty.
64
Vonex Financial Report 2018 65
Financial Report VONEX LIMITED
ABN 39 063 074 635/ACN 063 074 635