ANNUAL REPO RT
Corporate Information
Directors
Chen Chik (Nicholas) Ong (Non-Executive Chairman)
Matthew Fahey (Managing Director)
David Vilensky (Non-Exec. Director)
Winnie Lai Hadad (Non-Exec. Director)
Registered and Business Office
Level 8, 99 St Georges Terrace
Perth WA 6000
Tel: +61 8 6388 8888
Fax: +61 8 6388 8898
Solicitors
Bowen Buchbinder Vilensky
Level 14, 251 Adelaide Terrace
Perth WA 6000
Bankers
Commonwealth Bank of Australia
ANZ Bank
Westpac Bank
Website
www.vonex.com.au
https://investors.vonex.com.au/corporate-governance
Company Secretaries
Matthew Foy
Daniel Smith
Share Registry
Computershare Investor Services Pty Limited
Level 11, 172 St 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
ASX CODE: VN8, VN8O
B
Vonex Financial Report 2019 Contents
DIRECTORS REPORT ......................................................................................................................................................................... 2
AUDITOR’S INDEPENDENCE DECLARATION ...............................................................................................................................19
FINANCIAL STATEMENTS ...............................................................................................................................................................20
Consolidated statement of profit or loss and other comprehensive income ................................................................. 2
Consolidated statement of financial position .........................................................................................................................21
Consolidated statement of changes in equity ....................................................................................................................... 22
Consolidated statement of cash flows .....................................................................................................................................24
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS ................................................................................................... 25
Note 1: Statement of Significant Accounting Policies ......................................................................................................... 25
Note 2: Revenue ........................................................................................................................................................................34
Note 3: Other Income ................................................................................................................................................................... 35
Note 5: Income Tax Expense ................................................................................................................................................... 35
Note 6: Key Management Personnel Disclosures ............................................................................................................... 36
Note 7: Auditors’ Remuneration ............................................................................................................................................... 36
Note 8: Earnings per Share ................................................................................................................................................. 36
Note 9: Cash and Cash Equivalents ..................................................................................................................................... 37
Note 10: Trade and Other Receivables ................................................................................................................................. 37
Note 11: Current Assets – Contract Assets .............................................................................................................................38
Note 12: Other Assets .................................................................................................................................................................38
Note 15: Subsidiaries ................................................................................................................................................................. 40
Note 16: Parent Entity Disclosures ................................................................................................................................................41
Note 17: Plant and Equipment .................................................................................................................................................41
Note 18: Provisions .....................................................................................................................................................................42
Note 19: Trade and Other Payables ....................................................................................................................................... 43
Note 20: Borrowings ....................................................................................................................................................................44
Note 21: Issued Capital ...............................................................................................................................................................44
Note 22: Reserves ........................................................................................................................................................................46
Note 23: Contingent Liabilities and Contingent Assets ....................................................................................................46
Note 24: Operating Segments .................................................................................................................................................... 47
Note 25: Cash Flow Information ................................................................................................................................................48
Note 26: Accumulated losses ....................................................................................................................................................49
Note 27: Events After the Reporting Period ..........................................................................................................................49
Note 28: Related Party Transactions ........................................................................................................................................49
Note 29: Financial Instruments ...................................................................................................................................................50
Note 30: Commitments for Expenditure ................................................................................................................................. 53
Note 31: Share Based Payments ............................................................................................................................................... 53
Note 32: Company Details ..................................................................................................................................................... 56
DIRECTORS’ DECLARATION ....................................................................................................................................................... 57
INDEPENDENT AUDITOR’S REPORT .............................................................................................................................................. 53
ADDITIONAL INFORMATION ......................................................................................................................................................... 56
Financial Report
1
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 2019.
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)
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
Ltd. 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.
Matthew Fahey - Managing Director
& CEO
Winnie Lai Hadad – Non-Executive
Director
Mr Fahey is Vonex Telecom’s Chief
Executive Officer and joined the Board
as Managing Director. Mr Fahey joined
Vonex Ltd 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 fast 50 award
for the fastest growing IT company in
Australia.
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:
Current: Latin Resources Limited and
Oakdale Resources Limited.
Mr Vilensky has a Bachelor of Arts, a
Bachelor of Laws from the University of
Cape Town and is a member of the Law
Society of Western Australia.
Ms Lai Hadad has expertise in change
management, corporate governance,
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.
Matthew Foy – Joint Company
Secretary
Mr Foy was previously a Senior Adviser
at the ASX and has twelve 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 Ltd.
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.
Daniel Smith – Joint Company
Secretary
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 Ltd and
ASX-listed Lachlan Star Limited and
HIPO Resources Limited, and is Company
Secretary for Taruga Minerals Limited
and Love Group Global Ltd.
Mr Smith holds a BA and is a member
of the Australian Institute of Company
Directors and the Governance Institute
of Australia
2
Vonex Financial Report 2019 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
Nicholas Ong
Matthew Fahey
David Vilensky
Winnie Lai Hadad
Meetings of Directors
Ordinary Shares
Performance Rights
2,460,000
6,408,291
2,550,000
Nil
2,550,000
8,830,000
2,550,000
Nil
Options
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
Principal Activities
Number of Meetings
Attended
Eligible to Attend
6
6
6
6
6
6
6
6
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 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, land lines, Skype, Google Hangouts, WeChat
simultaneously into a single voice call.
Other activities include the year on year growth within our Retail and Wholesale Telco divisions.
3
Financial Report Directors’ Report (continued)
Financial Position & Operating Results
The financial results of the consolidated entity for the financial year ended 30 June 2019 are:
Cash and cash equivalents ($)
Net assets / (liabilities) ($)
Revenue ($)
Net loss after tax ($)
Loss per share (cents)
30-Jun-19
3,173,355
3,334,424
9,209,953
(2,791,622)
(1.99)
30-Jun-18
5,223,854
5,079,307
8,486,196
(14,713,402)
(21.35)
% Change
(39%)
(34%)
9%
(81%)
(91%)
Dividends Paid or Recommended
There were no dividends declared or
paid by the Company during the year
and no dividend is recommended.
Review of Operations
Following Vonex’s listing on the ASX on
the 13th of June 2018, the Company has
achieved consistent growth, reaching
30,000 registered active Private Branch
Exchange (PBX) users in July 2019, with
growth increasing to 31,000 registered
daily users in August 2019. The Company
has driven this significant growth through
a targeted marketing campaign and
increased engagement with Vonex’s
broad network of Channel Partners.
The growth of PBX users is mainly
derived through Channel Partners, a
network of hundreds of qualified sales
partners who collaborate with Vonex.
PBX registrations are a key indicator
of business development progress as
Vonex penetrates the multibillion-dollar
Australian market for telco services to
Small and Medium Enterprises (SMEs).
The Company continues to target SME
customers and expects its PBX userbase
to continue its strong growth trajectory.
Post year-end, from mid-June to mid-
August, the Company delivered 40%
growth in orders processed through
Vonex’s channel-focused sales software,
Sign On Glass (SOG), which added
more than 400 new orders in just two
months. The Company launched the
SOG sales technology and paperless
Channel Partner portal in July 2018. SOG
was designed to assist in the efficient
management of the Company’s new
and existing customers. Developed
in-house, the system is used to facilitate
customer-focused upgrade and
deployment of Vonex’s cloud-hosted PBX
system. The Company has been able
to drive Channel Partner growth off the
back of this technology.
The number of Vonex active users
grew by more than 25% in the last 12
months, supported by the recruitment of
Vonex’s Channel Partners and targeted
marketing to the IT and communications
managed services provider community.
The Company also delivered 38% year-
on-year growth in new customer sales,
with May 2019 being the largest new
customer sales month for the Company.
Factors driving customer and user
growth across the year include:
• Implementation of the Company’s
Channel Partner focused sales
software, Sign On Glass, which has
accelerated average deployment time
for a hosted PBX customer to just
48 hours;
• The continued rollout of the National
Broadband Network (NBN) in
metropolitan areas, with 4.1 million
premises in Australia currently ready for
NBN services but not yet connected;
• Vonex’s commencement in late 2018
of targeted online marketing across all
states after the successful completion
of pilot marketing testing, which has
driven vonex.com.au unique visitor
website growth of more than 110% over
the past six months;
• Improved engagement with new and
existing Channel Partners.
Throughout the year Vonex has
remained focused on the expansion
of existing business units, as well as
developing new cutting-edge products
and has concentrated its efforts in these
main areas:
1. The retail division, Vonex Telecom:
marketing and investment in the
Company’s Channel Partners has
focused on opportunities that will
arise over the next 36 months through
the continued rollout of the NBN.
The NBN is now targeting the highly
populated city areas of Australia.
This delivers an upgraded internet
network directly past the doors of the
Company’s target customers (small
to medium businesses). The Company
has focused on expanding the
Channel Partner program to increase
the Company’s presence and drive
additional sales in these areas where
the NBN is newly available. During
FY19, Vonex rolled out a nationwide
marketing campaign which positioned
the Company as an attractive
provider of telco services to SMEs
during the transition to the NBN.
2. The development and launch of the
Oper8tor App: Vonex remains focused
on developing the Oper8tor App, in
which the Company sees significant
potential as the world’s only mobile
solution to allow multiple social media
and communications platforms to
seamlessly interface.
3. The Company engaged in a thorough
evaluation of its wholesale business,
with a view to expanding the
products and services offered via
this business unit. Vonex continues
to attract new white-label carrier
businesses to the group, both in
Australia and overseas.
4. Across the year, the Company ramped
up its marketing initiatives to drive
user growth and adoption. A major
trial marketing campaign took place
across a period of three months which
targeted Southeastern Queensland
ahead of the Company’s launch in
4
Vonex Financial Report 2019
major capital cities in October 2018.
Across the campaign, Vonex pushed
a variety of content including custom
video and static ads. The aim of the
marketing campaign was to achieve
greater brand awareness and gather
audience intelligence.
The trial marketing campaign was a
success, driving an increase in traffic
of 114% compared to the monthly
average. The campaign used powerful
third-party software and platforms
to identify key audiences with
analytics collected from several million
impressions of Vonex Telecom ads.
Significantly, the campaign provided
excellent insight to progress how to
roll out the national campaign. The
campaign coincided with the delivery
of NBN across capital cities so that
Vonex could maximise benefits from
the nationwide enforced cutover to
the NBN.
Channel Partners
Across the year the Company vetted
and recruited 73 new Channel Partners
with a further 20 recruited totaling 93
by the time of reporting, driving further
customer acquisition and accelerating
growth across the Company’s retail
business. The Company has engaged
in several key initiatives to expand the
value of its Channel Partner network, and
in March 2019, secured an experienced
new Head of Marketing, Anna Dunsdon,
to implement plans to drive continued
acceleration in PBX user growth.
The Company’s network of Channel
Partners connects Vonex with SME
customers in all major Australian cities
and accelerates the Company’s
growth by selling Vonex’s proprietary
technologies, including its cloud-based
PBX and Vonex-branded traditional
mobile, internet, and business
phone plans.
Channel Partners are typically IT
businesses and managed service
providers. Vonex continues to sign up
and onboard new Channel Partners
through inbound enquiries and targeted
marketing to the IT and communications
managed services provider community.
In June 2019, Vonex entered a partnership
as VoIP and Hosted Phone System telco
provider to Australia’s largest business-
to-business loyalty program, Qantas
Business Rewards (“QBR”). The partnership
provides the Company with valuable
marketing support over the next 24
months, presenting significant growth
opportunities for Vonex.
Through the partnership with Qantas
Airways Ltd. (ASX: QAN), businesses
can earn unlimited QBR points for
every purchase made with Vonex’s
monthly ONdesk cloud-based phone
plans – including its Traveller plan, or
its Commercial, Business or Executive
advanced plans which come with the
most advanced IP desktop phone with
built-in Bluetooth and Wi-Fi, the Yealink
T5 series.
QBR is the largest and fastest-growing
business loyalty program in Australia
and is the only rewards program 100%
dedicated to rewarding small and
medium businesses in Australia, aligning
with Vonex’s SME-focused strategy.
Vonex and QBR’s partnership officially
launched on 15 August 2019.
To expand into new market segments and
attract new customers, Vonex appointed
strategic partner CounterPath in August
2018. CounterPath is a NASDAQ and
TSX listed (NASDAQ: CPAH) (TSX: PATH)
global provider of award-winning Unified
Communications solutions for enterprises
and service providers.
The partnership has seen both parties
working to deliver new customer growth in
Australia. In particular, the partnership has
enabled Vonex to expand its offering to
existing business, enterprise and channel
customers.
Vonex has been able to provide end
users a Vonex branded version of
CounterPath’s Bria software for desktop,
iPhone, iPad and Android phones and
tablets. Vonex has also white-label
selected CounterPath products to sell
under its own brand. CounterPath’s Bria
software leverages more than 10 years
of softphone experience and replaces
the need for a telephone to connect
to a VoIP phone service, or hosted PBX
extension. CounterPath Bria software
is deployed to millions of active users
across the globe.
The Vonex Phone App, launched in
October 2018, was the first initiative
under the CounterPath joint marketing
and distribution agreement. The app
is underpinned by CounterPath’s Bria
software and is available on iOS,
Android, Windows and Mac. Users of
Vonex hosted phone systems can use
the app to connect to their business
phone systems anywhere in the world via
Wi-Fi or mobile data.
The Vonex Phone App provides users with
full access to all the features of the hosted
PBX platform, including making and
receiving calls from a landline number,
access to full call history and contacts,
sending instant messages to other users,
music on hold, managing calls via auto
attendants and more.
When sold through Vonex’s Wholesale
(white label) division, this product will
generate additional wholesale PBX
registration fees for each device that
is registered to the platform. As an
enterprise grade solution, Vonex Phone is
available for enterprise and government
clients, where scalability, mobility and
unified communication systems are all key
drivers of adoption, which has led to new
opportunities not previously targeted.
Oper8tor Development
Vonex’s Oper8tor App has entered the final
stages of testing ahead of its launch which
is anticipated in the near-term. Expediting
the final stages of testing is a priority for
the Company. While the development
window has been extended, the Company
believes this is in the best interests of the
Company’s shareholders to ensure the
right solution is delivered to the market to
maximise the impact of the Oper8tor App’s
initial launch.
The Oper8tor App is a disruptive
aggregated communications platform
which targets the inclusion of conference,
voice, message and video functionality,
facilitating user communication across a
broad swathe of channels. Oper8tor aims
to link seamlessly all voice calls as well
as messaging across multiple platforms
and devices and utilises Vonex’s patented
Call Blast technology as a key point of
difference in targeting both consumer and
communication technology providers.
The technology targets both consumers
and communication technology providers
and can be deployed worldwide. The more
competitors that come onto the market,
the greater the need for Oper8tor as a
communication aggregator that will allow
individuals to talk to others across multiple
platforms and apps.
Under the Oper8tor App, there are three
distinct marketable products: Oper8tor
Conference, Oper8tor Message and
Oper8tor Voice. Vonex intends to introduce
a fourth component, Oper8tor Video, after
the initial soft launch.
5
Financial Report
Oper8tor Conference will allow customers
to schedule and conduct conferences
across the Public Switched Telephone
Network (PSTN) and mobile phone
networks. Oper8tor Message will allow
inter-platform messaging across selected
social networks, as well as between users
of Oper8tor itself. This will drive adoption
of Oper8tor complementing the voice
capabilities of the app.
Oper8tor Voice will allow for unscheduled
calling between PSTN, mobile phones and
social media users; breaking down the
barriers presented by traditional social
media platforms, and providing cross
platform call capabilities between social
media products and traditional landlines
and mobiles.
One of the crucial components developed
to power the app and enable the Call
Blast feature is Vonex’s advanced new
conference call platform, Oper8tor
Switchboard. The Company designed
Switchboard to handle and transcode
tens of thousands of simultaneous calls
between different platforms.
To date over 160 continuously improving
beta test builds of Oper8tor have passed
through Apple’s mobile app testing service,
TestFlight, and Google Play’s mobile app
testing service.
Through this process, Vonex has
developed Oper8tor Version 1 towards
its final stages of completion, which will
demonstrate features including Call Blast,
cross-platform social media messaging
incorporating SMS, improved contact
management, Oper8tor-to-Oper8tor
message chat and voice calls. The bulk of
the costs associated with the beta stage
of development of the Oper8tor App was
deemed eligible expenditure for Research
and Development tax incentive purposes.
Vonex has achieved significant progress
on the Oper8tor messaging functionality,
with successful chat testing conducted
through the platform linking third-party
messaging platforms as well as traditional
mobile SMS. Two major social media
platforms are now connected through the
Oper8tor messaging platform, with a third
imminent.
The Company has engaged in
development and third-party application
unit testing and load testing to ensure
Oper8tor performs as expected. Initial
testing feedback has led to the delivery of
several valuable improvements in the app
which will optimise the users experience.
6
Vonex has lodged an application with
the Patent Office to protect IP around its
message functionality. When granted,
this will help to de-risk Oper8tor as Vonex
commercialises and scales up adoption
of the platform. Vonex also has elected
to write its own code for a range of tasks
to ensure it can control the stability
of several key elements of Oper8tor
including third-party connections,
consistency of functionality across different
manufacturers’ devices, and adherence to
Android’s recently imposed requirement to
provide 64-bit versions of apps.
Vonex plans to complete this work in
quarter 4 of 2019, after which the Company
will commence executing its planned
marketing and commercialisation strategy
for Oper8tor. Following the initial launch
of Oper8tor V1 in Australia, the Company
will move to commercialise Oper8tor in the
European market where Vonex expects to
generate revenue from advertising and
in-app purchases.
During the year, Vonex reached a key
milestone with Oper8tor Conference
readied for white labelling to business.
White labelling allows Vonex business
customers to brand Oper8tor Conference
with their organisational branding,
including logos, colors and additional text.
Oper8tor Conference empowers users
to schedule and join conferences with
minimal hassle.
Vonex is integrating technology developed
for Oper8tor Conference into the broader
Oper8tor platform, and plans to roll both
apps out into the larger market of Europe
once the Australian launch is finalised. At
this stage, the company envisages that
the commercial launch of the Oper8tor
mobile app in Europe will be in financial
year 2020 following the initial Australian
launch.
PBX software
During current year, the Company
updated its PBX Cloud system. The
Company’s PBX software offers SME
clients a range of benefits compared
to on-premise PBX systems, including
lower cost, high scalability and much
higher reliability. The updated software
provides a more-user friendly interface
with automation for a range of hardware
vendors, stronger security and seamless
integration with customer relationship
management systems.
Corporate
Senior Leadership Changes
During the year, Vonex expanded its
Sales and Business Development Team
to support and service the growth
driven by its marketing campaigns and
Channel Partner engagement programs.
This included the recruitment of a new
Business Development Manager and the
expansion of the Company’s Support
Team based in the Philippines.
The Company also appointed senior
executive, Terry Tangredi, as Head of
Sales. Mr Tangredi brings more than 25
years of senior management experience
in IT, telecommunications and
telematics, with expertise in the areas
of organisational performance, strategy
and leadership.
Outlook
The Company’s focus continues to be
on the recruitment of new Channel
Partners across Australia to support the
anticipated growth driven by the NBN
rollout. National marketing programs in
Australia’s capital cities remain underway
to gain traction with SME customers and
facilitate strong growth in registered
PBX users.
With the latest Communications Report
from the Australian Communications
and Media Authority (ACMA) forecasting
Australian telecommunications industry
revenue to grow from $44 billion in 2018 to
$47 billion by 2022, Vonex continues to see
a positive outlook for growth in sales as
the Company’s customer base expands.
Closure of Small Shareholding Share
Sale Facility
Vonex announced the closure of a Share
Sale Facility for holders of small parcels
of shares in the Company (Facility) on 8
August 2018. The Facility was provided
to holders of small parcels of shares to
sell their shares without incurring any
brokerage or handling cost that could
otherwise make a sale of their shares
uneconomic or difficult.
The number of shares eligible to be
sold under the Facility was 1,295,709
ordinary shares from 1,022 shareholders,
representing approximately 41% of the
total number of shareholders presently
holding shares in the Company
as at August 2018. Vonex received
commitments to place all the shares
available under the Facility at $0.1325
per share.
Directors’ Report (continued)Vonex Financial Report 2019 Significant Changes in the State
of Affairs
There have been no other significant
changes in the state of affairs of the
consolidated entity during the financial
year.
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:
Events after the reporting period
Subsequent to the reporting period on
16 August 2019 Vonex advised that it had
surpassed 31,000 registered daily active
PBX users. This milestone is the latest in
a consistent period of growth for the
Company, with a key recent development
being over 40% growth in orders processed
through Vonex’s channel-focused sales
software, Sign On Glass, in the past two
months – adding more than 400 new
orders since mid-June.
In addition, Vonex advised it had launched
its partnership program with Qantas
Airways as a VoIP and Hosted Phone
System telco provider to the Qantas
Business Rewards (QBR) program, as first
announced to the ASX on 19 June 2019.
On 22 August 2019 the Company
announced it had lodged a new
application with the Patent Office to
protect the IP surrounding the unique
Message functionality of its Oper8tor
aggregated communications platform.
Apart from the disclosures made within this
report, no other matter or circumstance
has arisen since 30 June 2019 that has
significantly affected, or may significantly
affect the consolidated entity’s operations,
the results of those operations, or the
consolidated entity’s state of affairs in
future financial years.
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
• 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
• Mr Angus Parker – Chief Technology
Officer
Use of remuneration consultants
The Company did not employ services
of consultants to review its existing
remuneration policies.
Voting and comments made at the
Company’s 2018 Annual General
Meeting
The Company received 100% of “yes”
proxy votes on its remuneration report
for the 2018 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.
B Remuneration Structure
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.
Non-Executive Directors are able to
participate in share option-based
incentive programmes in accordance
with Group policy.
When required to spend time on Group
Business outside of NED duties, Directors
are paid consulting fees on time spent
and 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 31.
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 C Details of Remuneration
The key management personnel (“KMP”) of the Group are the Directors and management of Vonex 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
Cash
bonus
Long Service
Leave
Superannuation
Performance
rights
$
$
30/06/2019
Directors
Mr Fahey
Mr Ong
Mr Vilensky
Ms Hadad (i)
Other KMP
Mr Parker (ii)
Total
Salary & fees
$
286,000
60,000
60,000
60,000
250,000
716,000
30/06/2018
Directors
Mr Fahey
Mr Ong
Mr Vilensky
Ms Hadad (i)
Other KMP
Mr Parker (ii)
Total
Salary & fees
$
229,015
48,567
60,000
30,000
206,901
574,483
$
-
-
-
-
-
-
$
3,267
-
-
-
8,272
11,539
$
-
-
-
-
-
-
$
3,542
-
-
-
13,127
16,669
29,597
311,619
342,538
1,138,252
Total
$
346,189
207,372
207,372
65,700
Total
$
253,473
576,112
631,546
32,850
Percentage
remuneration
consisting of
performance
rights for the
year
9%
68%
68%
0%
9%
30%
Percentage
remuneration
consisting of
performance
rights for the
year
1%
92%
90%
0%
14%
64%
29,597
141,672
141,672
-
3,492
527,276
571,277
-
27,325
5,700
5,700
5,700
23,750
68,175
17,424
269
269
2,850
17,253
38,065
Short-term benefits
Post-employment
benefits
Share-based
payment
Cash
bonus
Long Service
Leave
Superannuation
Performance
rights
$
$
3,492
240,773
1,105,537
1,734,754
(i) Ms Hadad (Non-Executive Director) (appointed on 1 January 2018)
(ii) Mr Parker (Executive Director) (resigned 31 December 2017)
The relative proportions of remuneration that are linked to performance and those that are fixed are as follows:
Director
Mr Fahey
Mr Ong
Mr Vilensky
Ms Hadad
Other KMP
Mr Parker
Fixed Remuneration*
At risk – LTI **
2019
91%
32%
32%
100%
91%
2018
99%
8%
10%
100%
86%
2019
9%
68%
68%
0%
9%
2018
1%
92%
90%
0%
14%
*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
8
Directors’ Report (continued)Vonex Financial Report 2019
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 (6) months
written notice.
A bonus based on key performance indicators (“KPIs”) will be
paid as follows:
The Company may at any time during the Term or any extension
thereof pay a performance-based bonus over and above the
salary. In determining the extent of any performance based
bonus, the Company shall take into consideration the key
performance indicators of the Executive and the Company, as
the Company may set from time to time, and any other matter
that it deems appropriate and may issue shares in the Company
to the Executive in lieu of cash if the Executive consents.
D Share-based Compensation
Short term and long term incentives
In prior financial years 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.
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.
The Group has provided variable remuneration incentive
schemes to certain Non-Executive Directors as detailed in Note
31. There are no termination or retirement benefits for non-
executive directors (other than statutory superannuation).
Executive Director - Mr Matthew Fahey –
Chief Executive Officer
Outlined below is a summary of the material provisions of the
Executive Services Agreement between the Company and Mr
Matthew Fahey. Mr Fahey receives an annual salary of $250,000
plus statutory superannuation. Mr Fahey is also entitled to
director fee of $36,000 per annum. Either party may terminate
the Executive Services Agreement by giving six (6) months
written notice.
A bonus based on key performance indicators (“KPIs”) will be
paid as follows:
The Company may at any time during the Term or any extension
thereof pay a performance-based bonus over and above the
salary. In determining the extent of any performance based
bonus, the Company shall take into consideration the key
performance indicators of the Executive and the Company, as
the Company may set from time to time, and any other matter
that it deems appropriate and may issue shares in the Company
to the Executive in lieu of cash if the Executive consents.
9
Financial Report D Share-based Compensation (continued)
The performance rights were issued in three tranches, each with different performance milestones. Details of the performance
rights issued are as follows:
Tranche
Director and
Other KMP
Number Issued
Grant Date
Expected Date
of Milestone
Achievements
Underlying Share
Price on Grant Date
Total Fair Value
($)
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 Ltd 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 the 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 31 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 personnel as a result of exercising
remuneration options (2018: Nil).
F Value of options to Directors
No options were granted, exercised or lapsed during the year to Directors or key management personnel as part of their
remuneration (2018: Nil).
10
Directors’ Report (continued)Vonex Financial Report 2019
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.
Opening Balance
Received as
Remuneration
Received During Year on
Exercise of Options Net Change Other
Closing Balance
6,408,291
2,460,000
2,550,000
-
-
18,238,592
29,656,883
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(249,700)1
(249,700)
6,408,291
2,460,000
2,550,000
-
-
17,988,892
29,407,183
2019
Directors
Mr Matthew Fahey
Mr Nicholas Ong
Mr David Vilensky
Ms Winnie Lai Hadid
Other KMP
Mr Angus Parker
Notes:
1. On-market disposal of shares
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
Grant
Date
value
Vested
value in
FY17
Vested
value in
FY18
Forfeited
value in FY18
Maximum
value yet
to vest
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
2,200,000
1,210,000
1,210,000
130,000
130,000
130,000
2,420,000
1,210,000
1,210,000
130,000
130,000
130,000
100,000
100,000
100,000
$0.45
$0.45
$0.45
$0.20
$0.20
$0.20
$0.45
$0.45
$0.45
$0.20
$0.20
$0.20
$0.45
$0.45
$0.45
$0.20
$0.20
$0.20
$0.45
$0.45
$0.45
$0.20
$0.20
$0.20
$58,500
$58,500
$58,500
$20,000
$20,000
$20,000
$58,500
$58,500
$58,500
$440,000
$242,000
$242,000
$58,500
$58,500
$58,500
$484,000
$242,000
$242,000
$58,500
$58,500
$58,500
$20,000
$20,000
$20,000
-
$58,500
-
-
-
-
-
$58,500
-
-
-
-
-
$58,500
-
-
-
-
-
$58,500
-
-
-
-
-
-
-
$20,000
-
-
-
-
-
$440,000
-
-
-
-
-
$484,000
-
-
-
-
-
$20,000
-
-
$58,500
-
-
-
-
-
$58,500
-
-
-
-
-
$58,500
-
-
-
-
-
$58,500
-
-
-
-
-
-
-
$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
23rd 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
7th 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.
11
Financial Report
Directors’ Report (continued)
H Other transactions with key management personnel
Transactions with related parties
The following transactions occurred with related parties:
Services provided:
Company secretarial, corporate compliance and accounting fees from Minerva Corporate
(Director-related entity of Nicholas Ong)
54,000
195,904
Payments for legal fees from Bowen Buchbinder Vilensky (Director-related entity of David Vilensky)
40,550
99,714
2019
$
2018
$
Receivable from and payable to related parties
The following balances are outstanding at the reporting date in relation to transactions with related parties:
Current payables:
Trade payables to Minerva Corporate (director-related entity of Nicholas Ong)
9,900
8,766
Trade payables to The Telephone People & Silver Consulting (director-related entity of Matthew Fahey)
-
56,032
2019
$
2018
$
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:
2019
2018
2017
2016
2015
Loss for the year
$2,791,622
$14,713,402
$9,737,819
$12,410,441
$(376,490)
Closing Share Price
11.0 cents
14.0 cents
N/A*
KMP Incentives
$342,538
$1,105,537
$702,000
N/A*
$nil
N/A*
$nil
Total KMP Remuneration
$1,138,252
$1,734,754
$1,503,715
$858,640
$720,172
* No closing share price as the company was unlisted
End of Audited Remuneration Report
12
Vonex Financial Report 2019
Environmental Regulation
The Group’s operations are not 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;
d) 14,719,731 options exercisable at $0.20 on or before 30 November 2022;
e) 3,215,060 options exercisable at $0.20 on or before 30 November 2022; and
f)
1,800,000 options exercisable at $0.20 on or before 30 November 2022
Performance Rights
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);
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; and
f)
10,000,000 convertible into ordinary shares upon the Oper8tor App achieving 20 million active users;
g) 50,000 convertible into ordinary share on 1 July 2019; and
h) 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.
13
Financial Report 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:
• 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.
14
Directors’ Report (continued)Vonex Financial Report 2019 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.
Assurance services
Audit Services
RSM Australia Partners
Total remuneration for audit and assurance services
Corporate Services
RSM Australia Pty Ltd
Total remuneration for corporate services
2019
$
67,000
67,000
-
-
2018
$
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
30 August 2019
15
Financial Report
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the financial report of Vonex Limited for the year ended 30 June 2019, 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: 30 August 2019
TUTU PHONG
Partner
16
Vonex Financial Report 2019
Consolidated statement of profit or loss and
other comprehensive income
AS AT 30 JUNE 2019
Note
2019
$
2018
$
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 non-current assets
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
3
4
4
4
17
4
31
8,801,740
8,067,027
(5,452,340)
(5,035,941)
3,349,400
3,031,086
408,213
419,169
(1,152,363)
(806,620)
(83,453)
(98,736)
(11,270)
(570,908)
(57,184)
(236,520)
(5,867)
(43,980)
(47,985)
(24,185)
(214,430)
(5,806)
(77,510)
(122,343)
(26,726)
(485,715)
(40,071)
(214,812)
(607,753)
(42,542)
(198,856)
-
(269,492)
(3,726)
(1,008,458)
(13,514,260)
(136,521)
(176,135)
(2,851,568)
(1,577,096)
(2,791,622)
(14,713,402)
-
-
(2,791,622)
(14,713,402)
-
-
Total comprehensive loss for the year
(2,791,622)
(14,713,402)
Basic and diluted earnings per share of loss attributable to the owners of Vonex
Limited (cents per share)
(1.99)
(21.35)
The accompanying notes form part of these financial statements
17
Financial Report Consolidated statement of financial position
AS AT 30 JUNE 2019
Note
2019
$
2018
$
Current assets
Cash and cash equivalents
Trade and other receivables
Contract assets
Other current assets
Total current assets
Non-current assets
Intangible assets
Plant and equipment
Contract assets
Other non-current assets
Total non-current assets
Total assets
Current liabilities
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
The accompanying notes form part of these financial statements.
18
9
10
11
12
13
17
11
12
19
18
20
18
20
21
22
26
3,173,355
5,223,854
616,615
38,670
305,204
686,142
-
59,637
4,133,844
5,969,633
981,139
214,479
17,492
70,967
1,284,077
5,417,921
1,578,844
481,846
-
1,035,103
135,020
-
46,566
1,216,689
7,186,322
1,613,885
338,172
29,080
2,060,690
1,981,137
22,808
-
22,808
2,083,498
3,334,423
125,878
-
125,878
2,107,015
5,079,307
45,484,270
45,242,507
3,158,579
2,353,604
(45,308,426)
(42,516,804)
3,334,423
5,079,307
Vonex Financial Report 2019 Consolidated statement of changes in equity
AS AT 30 JUNE 2019
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
At 1 July 2018
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
Share-based payment – options, performance shares
and rights
Capital raising costs
At 30 June 2019
Issued
Capital
$
Accumulated
Losses
$
Reserves
$
Total
$
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
45,242,507
(42,516,804)
2,353,604
5,079,307
-
-
(2,791,622)
(2,791,622)
231,763
10,000
-
-
-
-
-
-
-
-
-
-
(2,791,622)
(2,791,622)
231,763
10,000
804,975
804,975
-
-
45,484,270
(45,308,426)
3,158,579
3,334,423
The accompanying notes form part of these financial statements.
19
Financial Report Consolidated statement of cash flows
AS AT 30 JUNE 2019
Cash flows from operating activites
Receipts from customers
Payments to suppliers and employees
Research and development tax offset
Finance costs
Interest received
Note
2019
$
2018
$
8,817,964
8,057,768
(10,917,315)
(9,472,541)
313,760
1,226
25,129
475,457
(156,523)
2,335
Net cash used in operating activities
25
(1,759,236)
(1,093,504)
Cash flows from investing activities
Receipt of capital grant
Payments for physical non-current assets
Payment for development of intangibles
Repayment of loans
Net cash used in investing activities
Cash flows from financing activites
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
Exchange rate adjustments
(63)
(260,945)
-
(18,256)
(279,264)
-
(22,265)
(64,961)
-
(87,226)
-
-
-
-
6,000,000
396,143
(376,183)
6,019,960
(2,038,500)
4,839,230
5,223,854
384,624
(11,999)
-
Cash and cash equivalents at end of the financial year
9
3,173,355
5,223,854
The accompanying notes form part of these financial statements.
20
Vonex Financial Report 2019 Consolidated notes to the financial statements
FOR THE YEAR ENDED 30 JUNE 2019
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 Level 8, 99 St Georges Terrace, Perth, WA, 6000.
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 30 August 2019.
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 following Accounting Standards and Interpretations are
most relevant to the consolidated entity:
AASB 9 Financial Instruments
The consolidated entity has adopted AASB 9 from 1 January
2018. The standard introduced 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 that
are solely principal and interest. A debt investment shall be
measured at fair value through other comprehensive income
if it is held within a business model whose objective is to both
hold assets in order to collect contractual cash flows which
arise on specified dates that are solely principal and interest
as well as selling the asset on the basis of its fair value. All
other financial assets are 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 or contingent
consideration recognised in a business combination) in Other
Comprehensive Income (‘OCI’). Despite these requirements, a
financial asset may be irrevocably designated as measured
at fair value through profit or loss to reduce the effect of, or
eliminate, an accounting mismatch. For financial liabilities
designated at fair value through profit or loss, 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 use an
‘Expected Credit Loss’ (‘ECL’) model to recognise an allowance.
Impairment is measured using 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. For receivables, a simplified approach
to measuring expected credit losses using a lifetime expected
loss allowance is available.
AASB 15 Revenue from Contracts with Customers
The consolidated entity has adopted AASB 15 from 1 July
2018. The standard provides a single comprehensive model
for revenue recognition. The core principle of the standard is
that an entity shall recognise revenue to depict the transfer of
promised goods or services to customers at an amount that
reflects the consideration to which the entity expects to be
entitled in exchange for those goods or services. The standard
introduced a new contract-based revenue recognition
model with a measurement approach that is based on an
allocation of the transaction price. This is described further
in the accounting policies below. Credit risk is presented
separately as an expense rather than adjusted against
revenue. Contracts with customers are 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.
Customer acquisition costs and costs to fulfil a contract can,
subject to certain criteria, be capitalised as an asset and
amortised over the contract period. Upon transition, the
application of these new standard had impacted the financial
position and financial performance of the consolidated
entity with an increase to sales revenue of $56,162 and a
corresponding increase in contract assets.
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.
21
Financial Report Consolidated notes to the financial statements
FOR THE YEAR ENDED 30 JUNE 2019 (continued)
Note 1: Statement of Significant Accounting Policies
(continued)
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 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
22
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 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
Vonex Financial Report 2019 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.
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
Depreciation Rate
Furniture and Fixtures
Plant and Equipment
Leasehold Improvements
Motor Vehicles
Computer Equipment
15% - 25%
15% - 33.3%
12%
20%
50%
(i) Plant and Equipment
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 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.
23
Financial Report
Consolidated notes to the financial statements
FOR THE YEAR ENDED 30 JUNE 2019 (continued)
Note 1: Statement of Significant Accounting Policies
Classification and Subsequent Measurement
(continued)
e) Employee Entitlements (continued)
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.
(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 (including allowances for expected
credit losses) 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. 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.
24
Vonex Financial Report 2019
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
Revenue from contracts with customers
Revenue is recognised at an amount that reflects the
consideration to which the consolidated entity is expected to
be entitled in exchange for transferring goods or services to a
customer. For each contract with a customer, the consolidated
entity: identifies the contract with a customer; identifies the
performance obligations in the contract; determines the
transaction price which takes into account estimates of
variable consideration and the time value of money; allocates
the transaction price to the separate performance obligations
on the basis of the relative stand-alone selling price of each
distinct good or service to be delivered; and recognises
revenue when or as each performance obligation is satisfied
in a manner that depicts the transfer to the customer of the
goods or services promised. Variable consideration within
the transaction price, if any, reflects concessions provided to
the customer such as discounts, rebates and refunds, any
potential bonuses receivable from the customer and any
other contingent events. Such estimates are determined using
either the ‘expected value’ or ‘most likely amount’ method.
The measurement of variable consideration is subject to a
constraining principle whereby revenue will only be recognised
to the extent that it is highly probable that a significant
reversal in the amount of cumulative revenue recognised will
not occur. The measurement constraint continues until the
uncertainty associated with the variable consideration is
subsequently resolved. Amounts received that are subject to
the constraining principle are initially recognised as deferred
revenue in the form of a separate refund liability.
Rendering of telecommunications services
Revenue from the rendering of retail telecommunications
services includes the provision of data, internet, voice and
other services. Revenue from the rendering of data and internet
services to consumers and corporate customers is recognised
on a straight-line basis over the period the service is provided.
Revenue for voice services is recognised at completion of the
call. Revenue from wholesale hosted PBX service customers is
charged based on the number of PBX registrations recorded on
a daily basis and invoiced monthly in arrears.
Where revenue for services is invoiced to customers and/or
received in advance, the amount that is unearned at a reporting
date is recognised in the statement of financial position as
deferred income, and its recognition in the profit or loss is
deferred until the period to which the invoiced amount relates.
Sale of goods
Revenue from the sale of goods represents sales of customer
equipment to consumer and corporate customers. Revenue
from the sale of goods is recognised at the point in time when
the customer obtains control of the goods or service.
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.
Other revenue
Other revenue is recognised when it is received or when the
right to receive payment is established.
(j) Contract Assets
Contract assets are recognised when the consolidated entity
has satisfied the performance obligations in the contract
and either has not recognised a receivable to reflect its
unconditional right to consideration or the consideration is
not due. Contract assets are treated as financial assets for
impairment purposes.
(k) 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 as an expense 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.
25
Financial Report Consolidated notes to the financial statements
FOR THE YEAR ENDED 30 JUNE 2019 (continued)
Note 1: Statement of Significant Accounting Policies
(continued)
(l) 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.
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.
(m) 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.
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 31 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.
(n) Trade and other receivables
(q) Segment Reporting
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.
Identification of reportable operating segments
The consolidated entity is organised into three operating
segments based on differences in products and services
provided: computer manufacturing, computer retailing and
computer distribution. These operating segments are based on
the internal reports that are reviewed and used by the Board
of Directors (who are identified as the Chief Operating Decision
Makers (‘CODM’)) in assessing performance and in determining
the allocation of resources. There is no aggregation of
operating segments.
Other segments represent the investment property holdings
and rental income of the consolidated entity.
The CODM reviews EBITDA (earnings before interest, tax,
depreciation and amortisation). The accounting policies
adopted for internal reporting to the CODM are consistent with
those adopted in the financial statements.
(o) Comparative Figures
When required by Accounting Standards, comparative figures
have been adjusted to conform to changes in presentation for
the current financial year.
(p) 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.
Types of products and services
The principal products and services of each of these operating
segments are as follows:
Retail Telecommunications: engaged in the sale of hardware
and the full suite of telecommunication services including the
provision of data, internet, voice (including IP voice) and billing
services within Australia.
Wholesale Telecommunications: engaged in offering wholesale
“white label” hosted PBX services under license for Internet
Service Providers (“ISP’s”), Telco’s and Cloud Vendors within
Australia and Internationally.
26
Vonex Financial Report 2019 Corporate: engaged in managing the corporate affairs of
the Group, including capital-raising its headquarters central
functions as well as its risk management and self-insurance
activities along with special development projects such as the
Oper8tor App.
(r) 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.
(s) 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.
(t) Issued capital
Ordinary shares are classified as equity.
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new
shares or options are shown in equity as a deduction, net of
tax, from the proceeds.
(u) Earnings Per Share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit
attributable to equity holders of the company, excluding
any costs of servicing equity other than ordinary shares, by
weighted average number of ordinary shares outstanding
during the financial year, adjusted for the bonus elements in
ordinary shares issued during the year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the
determination of basic earnings per share to take into account
the after income tax effect of interest and other financing
costs associated with dilutive potential ordinary shares and
the weighted average number of shares assumed to have
been issued for no consideration in relation to dilutive potential
ordinary shares.
(v) 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 2019. 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 16 Leases
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. Based
on the current assessment, if the new standard was applied
to the current year 30 June 2019, assets would increase by
$832,902 and liabilities would increase by $863,305. Lease
expense would decrease by $176,620, while interest expense
would increase by $37,782.
27
Financial Report Consolidated notes to the financial statements
FOR THE YEAR ENDED 30 JUNE 2019 (continued)
Note 2: Revenue
Revenue from customers
Sales revenue
Disaggregation of revenue
2019
$
2018
$
8,801,740
8,067,027
The disaggregation of revenue from customers is as follows:
Retail
Wholesale
Corporate
Consolidated - 30 June 2019
$
$
Major service lines
Telephony
Internet
Hardware
Hosted PBX
Geographical regions
Australia
United States of America
5,708,657
1,363,759
472,232
-
-
-
-
1,257,092
7,544,648
1,257,092
7,544,648
-
1,207,610
49,482
7,544,648
1,257,092
$
-
-
-
-
-
-
-
-
Retail
Wholesale
Corporate
$
-
-
-
-
-
-
-
-
Consolidated - 30 June 2018
$
$
5,517,653
1,051,043
406,770
-
-
-
-
1,091,561
6,975,466
1,091,561
6,975,466
-
1,043,930
47,631
6,975,466
1,091,561
Major service lines
Telephony
Internet
Hardware
Hosted PBX
Geographical regions
Australia
United States of America
28
Total
$
5,708,657
1,363,759
472,232
1,257,092
8,801,740
8,752,258
49,482
8,801,740
Total
$
5,517,652
1,051,043
406,770
1,091,561
8,067,027
8,019,396
47,631
8,067,027
Vonex Financial Report 2019 Consolidated notes to the financial statements
FOR THE YEAR ENDED 30 JUNE 2019 (continued)
Note 3: Other Income
Other income
Interest received
Research & development tax offset
Government Incentive Rebate
Debt forgiveness
Other income
Total other income
Note 4: Loss for the year
Loss before income tax includes the following specific expenses
Expenses
Depreciation and amortisation
Employee benefits expense (superannuation)
Finance costs
Rental expense on operating leases
Note 5: 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
Non-assessable income
Deferred tax asset not brought to account
Income tax expense
2019
$
23,764
313,760
1,500
12,797
56,392
408,213
2018
$
2,335
253,127
-
47,534
116,173
419,169
2019
$
2018
$
(140,638)
(234,669)
(5,867)
(214,430)
(117,581)
(148,380)
(607,753)
(269,492)
2019
$
2018
$
(2,791,622)
(14,713,402)
(767,696)
(4,046,185)
198,767
(86,284)
655,213
-
3,853,388
(69,610)
262,407
-
29
Financial Report Consolidated notes to the financial statements
FOR THE YEAR ENDED 30 JUNE 2019 (continued)
Note 5: Income Tax Expense (continued)
(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
2019
$
2018
$
5,997,272
5,364,232
202,216
183,953
(77,930)
251,805
130,171
6,769
6,305,511
5,752,977
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.
Note 6: 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 7: Auditors’ Remuneration
Remuneration of the auditor:
- auditing or reviewing the financial report
- other services
Note 8: Earnings per Share
Loss for the year
Weighted average number of ordinary shares outstanding during the year used in the
calculation of basic loss per share
2019
$
727,539
68,175
342,538
1,138,252
2019
$
67,000
-
67,000
2019
$
2018
$
591,152
38,065
1,105,537
1,734,754
2018
$
62,500
26,410
88,910
2018
$
(2,791,622)
(14,713,402)
No. Shares
No. Shares
148,743,340
68,909,223
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.
30
Vonex Financial Report 2019
Note 9: Cash and Cash Equivalents
Cash on hand
Cash at bank
Note 10: Trade and Other Receivables
Current
Trade debtors
Less: Allowance for expected credit losses
Other debtors
GST
2019
$
1,352
3,172,003
3,173,355
2018
$
1,353
5,222,501
5,223,854
2019
$
223,892
(39,400)
184,492
488,285
48,247
672,777
2018
$
248,988
(36,000)
212,988
397,869
75,285
686,142
Allowance for expected credit losses
The consolidated entity has recognised a loss of $11,270 in profit or loss in respect of the expected credit losses for the year ended
30 June 2019.
The ageing of the receivables and allowance for expected credit losses provided for the above are as follows
Expected credit loss rate
2019
%
Carrying amount
2019
$
Allowance for expected
credit losses 2019
$
Consolidated
0 to 3 months overdue
3 to 6 months overdue
Over 6 months overdue
2%
73%
100%
184,914
12,723
26,355
223,892
Movements in the allowance for expected credit losses (2018: provision for impairment of receivables) are as follows:
Reconciliation:
Opening balance
Additions
Receivables written off during the year as uncollectable
Closing balance
2019
$
36,000
10,209
(6,809)
39,400
3,696
9,349
26,355
39,400
2018
$
15,000
21,599
(599)
36,000
31
Financial Report
Consolidated notes to the financial statements
FOR THE YEAR ENDED 30 JUNE 2019 (continued)
Note 11: Current Assets – Contract Assets
Current
Contract assets
Non-current
Contract assets
Reconciliation:
Reconciliation of the written down values at the beginning and end of the Current and
previous financial year are set out below:
Balance at the beginning of the year
Additional provision
Transfer to sales adjustments
Balance at the end of the year
Note 12: Other Assets
Current
Bonds/deposits paid
Prepayments
Non-current
Bonds/deposits paid (i)
2019
$
38,670
17,492
-
73,467
(17,305)
56,162
2019
$
-
305,204
305,204
70,967
70,967
2018
$
-
-
-
-
-
-
2018
$
31,332
28,305
59,637
46,566
46,566
(i) Covers bank guarantee facilities that are in place securing leased premises for staff and operations based in Brisbane, QLD and Melbourne, VIC and bond paid
on office premises in 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.
32
Vonex Financial Report 2019
Note 13: Intangible assets
Customer list
Less: Accumulated amortisation
Borrowing Costs - at cost
Less: Accumulated amortisation
Acquisition of IP (Oper8tor)
Patents and trademarks - at cost
Less: Accumulated amortisation
Domain name acquisition
Note 14: Intangible assets
Reconciliations
2019
$
720,081
(444,234)
275,847
1,762
(1,762)
-
600,000
600,000
125,009
(21,788)
103,221
2,071
2,071
2018
$
720,081
(372,151)
347,930
1,762
(1,080)
682
600,000
600,000
95,520
(11,100)
84,420
2,071
2,071
981,139
1,035,103
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 2017
Additions/(Disposal)
Amortisation expense
347,930
-
(72,082)
682
593
(320)
600,000
600,000
-
84,420
64,368
(5,108)
2,071
1,035,103
-
-
664,961
(77,510)
Balance at 30 June 2018
347,930
682
600,000
84,420
2,071
1,035,103
Additions/(Disposal)
Amortisation expense
-
(72,083)
(682)
-
-
29,489
(10,688)
-
-
29,489
(83,453)
Balance at 30 June 2019
275,847
-
600,000
103,221
2,071
981,139
33
Financial Report
Consolidated notes to the financial statements
FOR THE YEAR ENDED 30 JUNE 2019 (continued)
Note 15: Subsidiaries
(a) Parent entity
The parent entity within the Group is Vonex Ltd.
(b) Subsidiaries
Subsidiaries
IP Voice and Data Pty Ltd (ABN 45 147 537 871)
VoNEX Holdings Pty Ltd (ACN 161 709 002)
Oper8tor Pty Ltd (ABN 14 601 220 633)
Vonex Wholesale Ltd (ABN 98 138 093 482)
Subsidiaries of IP Voice and Data Pty Ltd
Itrinity Australia Pty Ltd (ACN 131 196 886)
Note 16: Parent Entity Disclosures
Financial Position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Net Assets
Equity
Issued capital
Reserves
Accumulated losses
Total Equity
Financial Performance
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Guarantees
Country of
incorporation
Class of shares
AUS
AUS
AUS
AUS
Ordinary
Ordinary
Ordinary
Ordinary
Ownership Interest
2019
100%
100%
100%
100%
2018
100%
100%
100%
100%
AUS
Ordinary
100%
100%
2019
$
3,184,395
745,411
3,929,806
488,455
1,532,501
2,020,956
1,908,850
2018
$
4,763,314
753,277
5,516,591
787,784
1,676,130
2,463,914
3,052,677
111,143,166
3,143,977
(112,378,293)
1,908,850
110,901,403
2,339,002
(110,187,728)
3,052,677
(2,190,565)
(12,543,589)
-
-
(2,190,565)
(12,543,589)
Vonex Ltd has not entered into any guarantees in relation to the debts of its subsidiary (2018: nil).
Commitments for expenditure
Vonex Ltd has no commitments to acquire property, plant and equipment, and has no contingent liabilities (2018: nil).
34
Vonex Financial Report 2019 Note 17: Plant and Equipment
Leasehold improvements
At cost
Accumulated depreciation
Plant and Equipment
At cost
Accumulated depreciation
Office & Computer equipment
At cost
Accumulated depreciation
Licenses & Development (inc. software)
At cost
Accumulated depreciation
Total plant and equipment
Movements in Carrying Amounts
2019
$
34,282
(5,342)
28,940
117,077
(60,451)
56,626
2018
$
31,517
(6,769)
24,748
112,641
(57,849)
54,792
371,542
(244,345)
127,197
511,508
(459,533)
51,975
249,587
(247,869)
1,718
255,509
(252,004)
3,505
214,479
135,020
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
Licences &
Development
Balance at 1 July 2017
27,490
70,027
Additions
Grant Funding Received
Depreciation
Carrying amount at 30 June 2018
-
(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
Balance at 1 July 2018
Additions
Disposal / Write off
Depreciation
Carrying amount at 30 June 2019
Leasehold
Improvements
Plant &
Equipment
Office &
Computer
Licences &
Development
24,748
31,071
(21,281)
(5,598)
28,940
54,792
19,193
(2,870)
(14,489)
56,626
51,975
110,564
-
(35,344)
127,195
3,505
-
(34)
(1,753)
1,718
Total
157,339
23,942
(6,190)
(40,071)
135,020
Total
135,020
160,828
(24,185)
(57,184)
214,479
35
Financial Report Consolidated notes to the financial statements
FOR THE YEAR ENDED 30 JUNE 2019 (continued)
Note 18: Provisions
Current
Annual leave
Long service leave
Non-current
Long service leave
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
2019
$
339,166
142,680
481,846
22,808
22,808
2019
$
464,050
149,180
(108,576)
2018
$
338,172
-
338,172
125,878
125,878
2018
$
415,148
219,180
(170,278)
Carrying amount at the end of the year
504,654
464,050
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.
36
Vonex Financial Report 2019
Note 19: Trade and Other Payables
Trade payables
VISA card account
PAYG withholding
GST
Superannuation guarantee
Other payables and accruals
Trade creditors are expected to be paid within agreed terms.
Note 20: Borrowings
Current
Unsecured
Interest bearing loan
Convertible notes
Secured
Finance lease – interest bearing
2019
$
2018
$
1,058,971
1,036,836
4,042
57,138
48,247
56,276
354,170
1,578,844
(4,437)
28,866
-
246,080
306,540
1,613,885
2019
$
2018
$
-
-
-
-
-
-
18,256
1,035
19,291
9,789
9,789
29,080
37
Financial Report
Consolidated notes to the financial statements
FOR THE YEAR ENDED 30 JUNE 2019 (continued)
Note 21: Issued Capital
2019
2018
$
No.
$
No.
Fully paid ordinary shares
45,484,270
149,343,362
45,242,507
147,596,560
Movement in ordinary shares
Balance at 30 June 2017
$
No.
Issue price
$
22,301,567
608,398,417
Issue of shares – Acquisition of Intellectual Property
28/07/2018
600,000
30,000,000
Share Capital Consolidation (5:1)
Shares issued in settlement of borrowings
Shares issued in settlement of trade payables
Share Capital Consolidation (2:1)
Vesting of Class B vendor shares
Vesting of Class C vendor shares
28/07/2018
01/08/2018
01/08/2018
29/01/2019
380,000
45,203
07/06/2019
6,000,000
07/06/2019
6,000,000
Vesting of Tranche 1 performance rights
07/06/2019
1,452,000
Vesting of Vodia performance shares
07/06/2019
35,600
(510,719,557)
3,800,000
452,030
(65,965,941)
13,333,311
13,333,311
7,260,000
178,000
Issue of Initial Public Offer shares
07/06/2019
6,000,000
30,000,000
Conversion of convertible notes to ordinary shares
07/06/2019
2,804,319
17,526,989
Capital raising costs
Balance at 30 June 2018
(376,182)
45,242,507
147,596,560
Issue of shares in lieu of services
Vesting of Vodia performance shares
Issue of shares in satisfaction of promotional and
marketing services
17/12/2018
14/02/2019
05/06/2019
186,905
10,000
44,858
1,289,000
50,000
407,802
Balance at 30 June 2019
45,484,270
149,343,362
0.02
0.10
0.10
0.45
0.45
0.20
0.20
0.20
0.16
0.145
0.20
0.11
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.
38
Vonex Financial Report 2019
Note 21: Issued Capital (continued)
The working capital position of the company at 30 June 2019 and 30 June 2018 are as follows:
Total borrowings (including trade and other payables)
Less: cash and cash equivalents
Net debt
Total equity
Total capital
Note 22: 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
2019
$
2018
$
1,578,844
1,642,965
(3,173,355)
(5,223,854)
(1,594,511)
(3,580,889)
3,334,423
1,739,912
5,079,307
1,498,418
2019
$
14,602
1,861,296
1,282,681
2018
$
14,602
1,660,694
678,308
3,158,579
2,353,604
2019
$
14,602
-
14,602
2018
$
19,114
(4,512)
14,602
2019
$
1,660,694
200,602
2018
$
-
1,660,694
1,861,296
1,660,694
39
Financial Report
Consolidated notes to the financial statements
FOR THE YEAR ENDED 30 JUNE 2019 (continued)
Note 22: Reserves (continued)
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 2018
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)
Balance at the end of the year
2019
$
2018
$
678,308
2,312,344
-
10,050,516
117,000
8,686
117,000
53,656
488,687
1,904,537
-
(10,000)
-
-
-
(272,145)
(35,600)
(1,452,000)
(6,000,000)
(6,000,000)
1,282,681
678,308
The reserve records the valuation of performance shares and performance rights issued to vendors (shares) and key management
personnel (rights).
Note 23: Contingent Liabilities and Contingent Assets
Contingent Liabilities
There were no known contingent liabilities at reporting date (2018: nil).
Contingent Assets
There are no contingent assets at reporting date (2018: nil).
Note 24: 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”),
Telco’s and Cloud Vendors within Australia and Internationally.
> Corporate: engaged in managing the corporate affairs of the Group, including capital-raising its headquarters central
functions as well as its risk management and self-insurance activities along with special development projects such as the
Oper8tor App.
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.
40
Vonex Financial Report 2019
Note 24: Operating Segments (continued)
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.
Segment information
The segment information provided to the Board of Directors for the reportable segments for the year ended 30 June 2019 and 30
June 2018 are as follows:
Segment performance
External customer sales
Other revenues
Interest received
Total segment revenues
30 June 2019
Wholesale
$
1,257,092
26,755
1
Retail
$
7,544,648
14,298
1,012
1,283,848
7,559,957
Corporate
$
-
343,396
22,751
366,148
TOTAL
$
8,801,740
384,449
23,764
9,209,953
EBITDA
230,845
492,266
(3,391,993)
(2,668,882)
Depreciation and amortisation
(10,575)
(20,854)
(109,208)
(140,637)
Interest revenue
Finance costs
1
1,992
1,012
(773)
22,751
(7,086)
23,764
(5,867)
Segment Profit / (loss) after income tax expenses
222,263
471,651
(3,485,536)
(2,791,622)
Segment assets
Total assets
Segment liabilities
Total Liabilities
156,675
2,176,030
3,085,216
5,417,921
5,417,921
215,174
1,283,374
584,950
2,083,498
2,083,498
41
Financial Report Consolidated notes to the financial statements
FOR THE YEAR ENDED 30 JUNE 2019 (continued)
Note 24: Operating Segments (continued)
Segment performance
External customer sales
Other revenues
Interest received
Total segment revenues
30 June 2018
Wholesale
Retail
Corporate
$
$
1,091,561
35,000
-
6,975,466
-
1,030
$
-
381,834
1,305
TOTAL
$
8,067,027
416,834
2,335
1,126,561
6,976,496
383,139
8,486,196
EBITDA
176,110
1,146,909
(15,313,422)
(13,990,403)
Depreciation and amortisation
Interest revenue
Finance costs
(17,234)
-
(40,899)
(6,968)
1,030
(6,294)
(93,379)
1,305
(117,581)
2,335
(560,560)
(607,753)
Segmented Profit / (loss) after income tax expenses
117,977
1,134,677
(15,966,056)
(14,713,402)
Segment assets
Total assets
Segment liabilities
Total liabilities
128,414
1,216,061
5,841,847
7,186,322
7,186,322
328,292
990,547
788,176
2,107,015
2,107,015
42
Vonex Financial Report 2019 Note 25: 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
Promotion expenses – equity settled
Share based payments
Loss on disposal of assets/investments
Bad debts
Interest adjustments
Other
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 26: Accumulated Losses
Accumulated losses at beginning of financial year
Net loss attributable to members of the company at end of financial year
Accumulated losses at end of financial year
2019
$
2018
$
(2,791,622)
(14,713,402)
140,637
-
38,280
1,008,458
24,185
11,270
(1,975)
5,285
(12,797)
69,527
(326,130)
40,604
35,041
117,581
430,158
-
13,514,260
-
-
-
-
(47,534)
123,624
(6,032)
48,902
(561,061)
(1,759,235)
(1,093,504)
2019
$
2018
$
(42,516,804)
(27,803,402)
(2,791,622)
(14,713,402)
(45,308,426)
(42,516,804)
Note 27: Events after the Reporting Period
Subsequent to the reporting period on 16 August 2019 Vonex advised that it had surpassed 31,000 registered daily active PBX
users. This milestone is the latest in a consistent period of growth for the Company, with a key recent development being over 40%
growth in orders processed through Vonex’s channel-focused sales software, Sign On Glass, in the past two months – adding
more than 400 new orders since mid-June.
In addition, Vonex advised it had launched its partnership program with Qantas Airways as a VoIP and Hosted Phone System
telco provider to the Qantas Business Rewards (QBR) program, as first announced to the ASX on 19 June 2019.
On 22 August 2019 the Company announced it had lodged a new application with the Patent Office to protect the IP surrounding
the unique Message functionality of its Oper8tor aggregated communications platform.
Apart from the disclosures made within this report, no other matter or circumstance has arisen since 30 June 2019 that has
significantly affected, or may significantly affect the consolidated entity’s operations, the results of those operations, or the
consolidated entity’s state of affairs in future financial years.
43
Financial Report Consolidated notes to the financial statements
FOR THE YEAR ENDED 30 JUNE 2019 (continued)
Note 28: Related Party Transactions
Parent entity
The parent entity within the Group is Vonex Ltd.
Subsidiaries
Interests in subsidiaries are set out in Note 15.
Key management personnel
Disclosures relating to key management personnel are set out in Note 6.
Transactions with related parties
The following transactions occurred with related parties:
Services provided:
Company secretarial, corporate compliance and accounting fees from Minerva Corporate
(director-related entity of Nicholas Ong)
54,000
195,904
Payments for legal fees from Bowen Buchbinder Vilensky (director-related entity of David Vilensky)
40,550
99,714
Receivable from and payable to related parties
The following balances are outstanding at the reporting date in relation to transactions with related parties:
2019
$
2018
$
Current payables:
Trade payables to Minerva Corporate (director-related entity of Nicholas Ong)
Trade payables to The Telephone people & Sliver Consulting (director-related entity of Matthew Fahey)
2019
$
9,900
-
2018
$
8,766
56,032
44
Vonex Financial Report 2019
Note 29: Financial Instruments (continued)
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
%
1.0
-
-
5.0
Weighted
Average
Interest Rate
%
1.0
-
-
5.0
Floating
Interest Rate
$
3,172,003
-
3,172,003
-
-
-
3,172,003
Floating
Interest Rate
$
5,222,501
-
5,222,501
-
18,256
18,256
5,204,245
Fixed
Interest
Rate Within
1 Year
Fixed
Interest
Rate Within
1-5Years
$
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
Fixed
Interest
Rate Within
1 Year
Fixed
Interest
Rate Within
1-5Years
$
-
-
-
-
10,824
10,824
(10,824)
$
-
-
-
-
-
-
-
Non-Interest
Bearing
$
Total
$
1,352
536,532
537,884
3,173,355
536,532
3,709,887
1,530,597
-
1,530,597
(992,714)
1,530,597
-
1,530,597
2,179,290
Non-Interest
Bearing
$
Total
$
1,353
686,142
687,495
5,223,854
686,142
5,909,996
1,613,885
-
1,613,885
(926,390)
1,613,885
29,080
1,642,965
4,267,031
2019
Financial Assets:
Cash
Receivables
Total financial assets
Financial Liabilities:
Payables
Borrowings
Total financial liabilities
Net financial assets
2018
Financial Assets:
Cash
Receivables
Total financial assets
Financial Liabilities:
Payables
Borrowings
Total financial liabilities
Net financial assets
Sensitivity Analysis
The effect on profit and equity as a result of changes in interest rates on net financial assets is immaterial.
45
Financial Report
Consolidated notes to the financial statements
FOR THE YEAR ENDED 30 JUNE 2019 (continued)
Note 29: Financial Instruments (continued)
(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
2019
$
2018
$
3,173,355
5,223,854
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 2019.
(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.
(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.
46
Vonex Financial Report 2019 Note 29: Financial Instruments (continued)
(d) Liquidity Risk (continued)
The financial asset and financial liability maturity analysis are as follows:
Within 1 Year
1 to 5 Years
Over 5 Years
Total
2019
$
$
2018
2019
2018
2019
2018
Financial liabilities
Payables
Borrowings
1,530,597
1,613,885
-
29,080
Total expected outflows
1,530,597
1,642,965
Financial assets
Cash and cash equivalents
3,173,355
5,223,854
Receivables
624,530
686,142
Total anticipated inflows
3,797,885
5,909,996
Net inflow / (outflow) on
financial instruments
2,267,288
4,267,031
$
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
2019
$
2018
$
1,530,597
1,613,885
-
29,080
1,530,597
1,642,965
3,173,355
5,223,854
624,530
686,142
3,797,885
5,909,996
2,267,288
4,267,031
(e) Foreign Exchange Risk
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 USA based customers.
Note 30: Commitments for Expenditure
(a) Operating Lease Commitments
Payable:
No later than twelve months
One to five years
Greater than five years
Amount shown are GST inclusive, where applicable.
2019
$
186,869
598,608
-
2018
$
266,767
180,924
-
785,477
447,691
47
Financial Report Consolidated notes to the financial statements
FOR THE YEAR ENDED 30 JUNE 2019 (continued)
Note 31: Share Based Payments
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 $1,008,458 (2018: $13,514,260).
Share Based Payment Expense
Performance Rights – Key Management Personnel – 20 September 2016
Performance Rights – Vodia Networks Inc - 14 July 2018
Performance Rights – Key Management Personnel – 28 July 2017
Performance Shares
Issue of ordinary shares in lieu of services
Issue of shares in satisfaction of promotional and marketing services
Options
Total Share Based Payment Expense
Movement in share rights and performance shares during the period
Balance at beginning of period
Vested during the period
Balance at end of period
Performance rights granted during the period:
Total performance rights granted during the period was $nil (2018: 34,268,000).
2019
$
117,000
8,686
488,687
2018
$
(155,145)
53,657
1,904,537
-
10,050,517
148,625
44,858
-
-
200,602
1,660,694
1,008,458
13,514,260
Number of
performance
rights
27,610,000
(50,000)
27,560,000
Weighted
average
exercise price
($)
-
-
-
Performance Rights – Vodia Networks Inc - 14 July 2017
Vonex Ltd issued 328,000 performance rights to Vodia Networks Inc in four tranches. Each performance right will convert into 1
ordinary share of Vonex Ltd 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
1
2
3
4
Number
178,000
50,000
50,000
50,000
Start Date
14/07/17
14/07/17
14/07/17
14/07/17
Expected Date of
Milestone Achievements
Underlying Share Price
Total Fair Value
Vested
Vested
01/07/19
01/07/20
$0.20
$0.20
$0.20
$0.20
$35,600
$10,000
$10,000
$10,000
These performance rights were valued at their issue dates at $65,600.
48
Vonex Financial Report 2019
Note 31: Share Based Payments (continued)
Performance Milestones:
• Tranche 1 has vested – 30 April 2018
• Tranche 2 performance rights convert on 1 July 2019.
• 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 Ltd 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 Ltd upon
achievement of the performance milestone.
The company has assessed tranche 1, 2 and 3 as being probable of being achieved and have therefore recognized an expense
over the expected vesting period.
The details of each class are tabled below:
Tranche
Number
Start Date
Expected Date of
Milestone Achievements
Underlying Share Price
Total Fair Value
1
2
3
7,260,000
4,840,000
4,840,000
28/07/17
28/07/17
28/07/17
Vested
28/07/21
28/07/21
$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.
Performance Rights – Intellectual Property Consideration Securities – 28 July 2017
On 28 July 2017, Vonex Ltd 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) 10,000,000 Performance Rights which shall vest and convert into ordinary fully paid shares in the issued share capital of the
Assignee when Oper8tor reaches 50 million Active Users.
On 28 July 2017 Vonex Ltd 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.
49
Financial Report
Consolidated notes to the financial statements
FOR THE YEAR ENDED 30 JUNE 2019 (continued)
Note 31: Share Based Payments (continued)
Performance Rights – Key Management Personnel – 20 September 2016
Vonex Ltd 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 Ltd upon achievement of the performance milestone.
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
Expected Date of
Milestone Achievements
Underlying Share Price
Total Fair Value
1
2
3
780,000
780,000
780,000
20/09/16
20/09/16
20/09/16
Forfeited
Vested
20/09/19
$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 June 2018.
• 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
03/08/17
07/06/18 (i)
07/06/18
30/11/17 (i)
05/06/19
05/06/19
Expiry
date
Exercise
Price
Balance at the
start of the year
Granted
Exercised
Expired/
forfeited
Balance at the
end of year
03/08/20
07/06/20
07/06/23
30/11/22
30/11/22
30/11/22
$0.90
$0.20
$0.30
$0.20
$0.20
$0.20
133,750
7,500,000
14,500,000
14,719,731
-
-
-
-
-
-
3,215,060
1,800,000
36,853,481
5,015,060
-
-
-
-
-
-
-
-
-
-
-
-
-
-
133,750
7,500,000
14,500,000
14,719,731
3,215,060
1,800,000
41,868,541
Weighted average exercise price: $0.2369
The weighted average remaining contractual life of options outstanding was 3.15 years
50
Vonex Financial Report 2019
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
05/06/19
05/06/19
30/11/22
30/11/22
Share price at
grant date
Exercise
price
Expected
volatility
Dividend
yield
Risk-free
interest rate
Fair value at
grant date
$0.10
$0.10
$0.20
$0.20
80%
80%
0%
0%
2%
2%
128,602
72,000
200,602
In addition, the weighted average exercise price for the options issued as SBP’s is $0.20 and the weighted average years to expiry
is 3.42 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 32: Company Details
The registered office and principal place of business is:
Level 8, 99 St Georges Terrace, Perth, WA, 6000
DIRECTORS’ DECLARATION
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
2019 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
30 August 2019
51
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
INDEPENDENT AUDITOR’S REPORT
comprises the consolidated statement of financial position as at 30 June 2019, the consolidated statement of profit
TO THE MEMBERS OF VONEX LIMITED
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
Opinion
significant accounting policies, and the directors' declaration.
We have audited the financial report of Vonex Limited (the Company) and its subsidiaries (the Group), which
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
comprises the consolidated statement of financial position as at 30 June 2019, the consolidated statement of profit
including:
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
Giving a true and fair view of the Group's financial position as at 30 June 2019 and of its financial
(i)
significant accounting policies, and the directors' declaration.
performance for the year then ended; and
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
(ii)
including:
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
(i)
Giving a true and fair view of the Group's financial position as at 30 June 2019 and of its financial
performance for the year then ended; and
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
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
(ii)
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
Basis for Opinion
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 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
We confirm that the independence declaration required by the Corporations Act 2001, which has been given to
our report. We are independent of the Group in accordance with the auditor independence requirements of the
the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor's
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board's
report.
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 believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
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.
52
Vonex Financial Report 2019
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
Intangible assets
Refer to Note 13 in the financial statements
The Group has intangible assets of $981,139 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 $381,139
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 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 and
testing
management
in determining
amount of the Oper8tor communication platform.
the basis used by
recoverable
the
Our audit procedures in relation to the intangible assets
amortised over their useful life included:
• Reviewing management’s assessment
impairment indicators were present; and
that no
• Enquiring with management and reviewing budgets
to assess the future cash flows associated with the
intangible assets; and
• Checking
the mathematical accuracy of
amortisation expense of the intangible assets.
the
53
Financial Report
Share based payments
Refer to Note 31 in the financial statements
During the year, the Company issued 5,015,060
options. Management used a valuation model to
value these options issued.
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 included:
• Obtaining
the valuation model and assessing
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 inputs and reasonableness of the
assumptions used in the valuation model; and
• 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 2019 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.
54
Vonex Financial Report 2019
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 2019.
In our opinion, the Remuneration Report of Vonex Limited, for the year ended 30 June 2019, 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: 30 August 2019
TUTU PHONG
Partner
55
Financial Report
Additional Information
FOR THE YEAR ENDED 30 JUNE 2019
SHAREHOLDER INFORMATION (as at 23 August 2019)
(i) Number of shareholders: 1,420
(ii) Ordinary shares issued: 149,343,362
(iii) Distribution schedule of holdings of ordinary shares is set out below
Category (size of holding)
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – and over
Total
(iv) Distribution schedule of holdings of quoted options is set out below
Category (size of holding)
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – and over
Total
VOTING RIGHTS
Holders
184
346
290
444
156
1,420
Holders
0
41
16
36
4
97
Total Units
56,987
1,180,221
2,190,478
15,286,436
130,629,240
149,343,362
Total Units
0
129,431
111,250
975,999
6,283,320
7,500,000
Ordinary Shares
Each ordinary share is entitled to one vote when a poll is called, otherwise each member present at a meeting or by proxy has
one vote on a show of hands.
Options & Performance Rights
There are no voting rights attached to any class of options, performance shares or performance rights that are on issue.
TOP 20 HOLDERS OF ORDINARY FULLY PAID SHARES AT 23 August 2019
Rank
Name
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
FINANCE WEST PTY LTD
CARMINE LION GROUP PTY LTD
MR MATTHEW FAHEY
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
CONFADENT LIMITED
GUAVA CAPITAL PTY LTD
COLIENS CORPORATION PTY LTD
STATE ONE HOLDINGS PTY LTD
CARMINE LION GROUP PTY LTD
MS TOW LOY SUN
LATERAL CONSULTING (WA) PTY LTD
GUAVA CAPITAL PTY LTD
LATERAL CONSULTING (WA) PTY LTD
STATE ONE STOCKBROKING LTD
MR BRUCE HUMMERSTON + MRS JANET HUMMERSTON
HEELMO HOLDINGS PTY LTD
BILL BROOKS PTY LTD
DR ROBERT POPOVIC
MR SHANE ROBINSON + MRS HELEN ROBINSON
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Totals: Top 20 holders of ORDINARY FULLY PAID SHARES (Total)
Total Remaining Holders Balance
Total Shares on Issue
56
Units
22,457,855
16,203,739
7,220,596
5,533,698
4,717,012
3,500,000
3,078,620
2,420,000
2,385,109
2,340,000
2,330,000
2,239,381
2,158,188
2,096,061
1,974,950
1,893,173
1,555,000
1,425,674
1,399,612
1,383,810
88,312,478
61,030,884
149,343,362
% Units
15.04
10.85
4.83
3.71
3.16
2.34
2.06
1.62
1.60
1.57
1.56
1.50
1.45
1.40
1.32
1.27
1.04
0.95
0.94
0.93
59.13%
40.875
100%
Vonex Financial Report 2019
SUBSTANTIAL SHAREHOLDERS
As at 23 August 2019, shareholders with a relevant interest in 5% or more of the Company’s securities are set out below:
No. of Shares
16,203,739
19,643,296
% Interest
10.85%
13.15%
Holder
Finance West Pty Ltd & Angus Parker
Code Nominees Pty Ltd <28351 A/C>
VOTING RIGHTS OF OPTIONS
There are no voting rights attached to any class of options that are on issue.
TOP 20 QUOTED OPTIONHOLDERS AS AT 23 August 2019
Rank
Name
1
2
3
4
5
6
7
7
7
7
11
12
13
14
15
16
16
16
16
16
16
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
BILL BROOKS PTY LTD
YARRAANDOO PTY LTD
LA’MONDE INDUSTRIES PTY LTD
MR BRETT HOLTERMAN + MRS KAREN FISHER
AORAKI SUPERANNUATION PTY LTD
MR LINDSAY GEORGE DUDFIELD + MRS YVONNE SHEILA DOLING DUDFIELD
NAVCO PTY LTD
PAC PARTNERS PTY LTD
MR STACEY HUBERT CARTER
MINERVA EQUITY PTY LTD
SWAN VIEW RETIREMENT PTY LTD
MR PETER WILLIAM DORIZZI + MRS JUDITH ANN DORIZZI
DOOR IMAGE AUSTRALIA PTY LTD
BENICOVE PTY LTD
MR NICHOLAS HORTON-JONES + MRS PETRA KOBZOVA
MR MICHAEL STARR
MRS PENELOPE ANN REDFEARN + MR GARY REDFEARN
JOHN WILLIAM STACEY + BEVERLEY ROSALIND STACEY
MR LAURENCE TATTERSALL + MS LORRAINE TATTERSALL
Totals: Top 21 holders
Total Remaining Holders Balance
Total quoted options on issue
UNQUOTED SECURITIES
Units
4,905,690
1,002,630
250,000
125,000
95,000
65,000
62,500
62,500
62,500
62,500
37,500
32,499
31,250
30,000
28,750
25,000
25,000
25,000
25,000
25,000
25,000
7,003,319
496,681
7,500,000
% Units
65.41%
13.37%
3.33%
1.67%
1.27%
0.87%
0.83%
0.83%
0.83%
0.83%
0.50%
0.43%
0.42%
0.40%
0.38%
0.33%
0.33%
0.33%
0.33%
0.33%
0.33%
93.23%
6.62%
100%
57
Financial Report
Additional Information
FOR THE YEAR ENDED 30 JUNE 2019 (continued)
Set out below are the classes of unquoted securities currently on issue:
Number
113,750
14,500,000
19,734,791
27,560,000
Class
options exercisable at 90¢ expiring 3/8/20
options exercisable at 30¢ expiring 7/6/23
options exercisable at 20¢ expiring 30/11/22
performance rights with various vesting milestones
Unquoted Equity Security Holders with Greater than 20% of an Individual Class
As at 23 August 2019 the following classes of unquoted securities had holders with greater than 20% of that class on issue is set out below.
Options exercisable at 90¢ expiring 3/8/2020
QUATTRO CAPITAL PTY LTD
MRS KSENJA STMADICA
Options exercisable at 30¢ expiring 7/6/23
CODE NOMINEES PTY LTD
STATE ONE EQUITIES PTY LTD
Performance Rights
MR MATTHEW FAHEY
Mr Angus Parker
ON-MARKET BUYBACK
Currently there is no on-market buy-back of the Company’s securities.
SECURITIES SUBJECT TO ESCROW
Set out below are securities currently subject to escrow
% Interest
77.57%
22.43%
% Interest
64.83%
28.74%
% Interest
31.57%
31.20%
Number
133,750
14,500,000
996,701
13,723,030
23,020,000
Class
Options exercisable at 90¢ expiring 3/8/20 held in escrow for two years from 13 June 2018
options exercisable at 30¢ expiring 7/6/23 held in escrow for two years from 13 June 2018
options exercisable at 20¢ expiring 30/11/22 held in escrow for two years from 13 June 2018
options exercisable at 20¢ expiring 30/11/22 held in escrow until 7/6/2019
Performance Rights held in escrow for two years from 13 June 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 2019 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/
PROJECT & JOINT VENTURE SCHEDULE
Project
Tenements
VNX’s Interest
Other Parties
Johnston Range Iron Ore Gold and Base Metals
M77/1258
Royalty
Mineral Resources Limited(i)
Notes:
i. Vonex Limited retains a 2% royalty.
58
Vonex Financial Report 2019
59
Financial Report Vonex Ltd (ASX:VN8)
ABN 39 063 074 635 / ACN: 063 074 635
Level 8 99 St Georges Terrace Perth WA 6000