For personal use only - ASX2015/09/30 · (2014: $2.1m), and from an increasing operating expense...

Tomizone Limited

Annual Report

2015

Tomizone Limited ABN 99 000 094 995

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Table of ContentsCHAIRMAN’S LETTER 3

KEY HIGHLIGHTS 6

REVIEW OF OPERATIONS AND FINANCE 8

DIRECTORS’ REPORT 22

FINANCIAL STATEMENTS 40

Consolidated statement of profit or loss and other comprehensive income 41

Consolidated statement of financial position 42

Consolidated statement of changes in equity 43

Consolidated statement of cash flows 44

Notes to the consolidated financial statements 45

DIRECTORS’ DECLARATION 85

INDEPENDENT AUDITOR’S DECLARATION 87

INDEPENDENT AUDITOR’S REPORT 89

CORPORATE GOVERNANCE STATEMENT 92

ASX ADDITIONAL INFORMATION 103

CORPORATE INFORMATION 108

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Chairman’s Letter / 3

Chairman’s Letter

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Dear Shareholder,

Tomizone Limited (Tomizone or the Company) is pleased to present its 30 June 2015 annual report. 2015 represented a milestone year in the evolution of Tomizone. The reverse acquisition of PHW Consolidated Limited and successful capital raising culminated in the Company’s re-listing on the Australian Securities Exchange in June.

Over the past 12 months we have demonstrated our ability to deliver against key strategic objectives. We are rapidly increasing our customers engagement with consumers who are spending more time online through the Tomizone Platform. This is reflected in a 25% increase in unique device growth to over 5 million during 2015.

We have also started transforming our revenue model from the traditional paid airtime model to a subscription based revenue model, which has seen an increase of over 22% (in dollar terms) from longer-term annuity style revenue. This stable and high margin revenue stream continues to grow and represented 29% of FY15 revenue.

Our vision continues to be the creation of the best WiFi software products for the global market and we have made real progress in expanding our customer base into new geographies and verticals. Tomizone’s current global footprint includes services in 80+ countries with offices in five countries.

We recognise the need to have the right team and talent in place to capitalise on global opportunities and recruitment continues to be a significant operational objective for the Company. Since listing we have grown to 30 staff, representing a 76% increase pre-listing.

Our sales teams continue to establish strategic partnerships in key geographies with notable partnerships formed in 2015 with;

• US-based High Wire Networks which has over 500 channel partners in North America and• P2 Mobile Technologies and P2 United, channel partners based in Hong Kong targeting

B2B and government contracts for hardware and software in Asia.

We are also well placed geographically to convert a robust pipeline of sales opportunities over the next 12 months. A number of partnerships continue to grow our share in core market verticals, such as transport, retail and accommodation including the recently announced contract with New Zealand’s second largest airport, Christchurch Airport.

Existing customers are also moving up the value chain and expanding services. For example, we are currently working with ANZ Bank to roll out services to an additional 200 locations following an initial roll-out to 50 branches. F

or p

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There were also a number of challenges for the Company during the year. Due to factors outside of our control, we re-listed later than planned which stalled sales and delivery expansion. Our migration to a subscription based model and a refocusing of resources on the re-listing also impacted revenue. As a result we saw a decline in revenue to $3.5m (compared to $4.8m in 2014).

In its financial governance to further strengthen the balance sheet and to accelerate growth, the board is continuing to explore restructuring of the term debt and secure additional working capital funding.

As we continue to grow our team both locally and abroad there is increasing velocity of innovation and rapid development of new features. There is a significant opportunity for Tomizone to tap into the huge growth in platform data usage, digital engagement and mobile marketing spend.

We are well positioned to deliver a quality engagement experience for consumers looking to reduce their data consumption by connecting to Public WiFi hotspots. Our venue customers are happy to meet the demand for free WiFi from their consumers in exchange for delivering meaningful content to engage with their consumers and also to gather data for analytics. We’ve observed that big brands are also pouring billions of their media budget into mobile marketing to directly engagement with consumers.

I must also address in this letter the resignation of the CEO and co-founder, Steve Simms. As Tomizone continues to evolve, Steve recognised that the skillset needed to run this high growth global company should be carried out by an experienced global CEO.

With our international market exposure running ahead of schedule, we have commenced the search for a new CEO to ensure Tomizone is well placed to realise the next stage of its exciting development. Steve will remain as a major shareholder, a non executive director of the company and take on the role of ambassador assisting the new CEO in growing the business as and when required.

The Company is focused on growing sales revenue through subscription based products. Our sales team has grown to meet the demand for direct and indirect sales relationships. This gives us considerable scale to reach our target markets with distribution partners.

The Tomizone team is aligned and motivated to achieve our NZ$7.5m to NZ$9.5m performance targets and we are starting to bear fruit for our shareholders to become the valuable company that you expect.

We’re excited about the year ahead and thank you for your continued support as a shareholder.

Tarun Kanji Chairman

30 September 2015

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Key Highlights / 6

Key Highlights

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Key Highlights / 7

5+ million unique users

25%

SubscriptionRevenue

22%Revenue$3.5M

30 Staff76%

26+ million sessions

47%

840+ million minutes consumed

51%

900+ terabytes of data consumed

56%

FY15 at Glance(% increase year on year (YOY))

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Review of Operations and Finance / 8

Review of Operations and Finance

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Review of OperationsTomizone listed on the Australian Securities Exchange (ASX) on the 1st of June 2015. The Company successfully raised AU$5.0m and relisted with approximately 30% of the acquisition subject to performance hurdles of over NZ$7.5m and $9.5m audited revenue in FY16.This re-listing was delayed due to factors outside of the Company’s control which meant that our resources to grow the company were focussed on the listing processes.

Improve Consumer Engagement

Rapidly Increasing Consumer Engagement Over FY15

More people, spending more time online through the Tomizone Platform:• Unique user growth: 25% growth YoY in number of unique devices to

over 5 million• Session growth: 47% growth YoY in sessions to over 26 million• Minutes used: 51% growth YoY in the number of minutes spent online -

over 840 million minutes• Data consumption: 56% growth YoY in data consumed over 918

terabytes

Transform Revenue Model

Transitioning to Subscription Model

• Over 22% increase YoY in subscription revenue in absolute dollar terms

• Subscription revenue represents 29% of FY15 revenue and continues to grow

Expanding Customer Base

Successfully expanding into new geographies and verticals

• New customer deployments in US, Australia, New Zealand• Entry into new verticals positioned for growth (e.g Museums)

Lead Innovation Market Leading Product Innovation Continues

• New features and enhancements being released at velocity• Leading-edge development in venue experiences, analytics and location

based services • Scalable SaaS platform demonstrated by ease of deployment in new

verticals and geographies

Create Strategic Partnerships

Strategic Partnerships Growing Global Footprint and Capability

• Strategic engagement of partners across geographies with shift to channel based distribution and delivery, e.g. agreements signed with High Wire Networks (US), Kordia Australia, P2 Mobile Technologies (HKG)

• Securing multi-channel distribution and reseller partners globally

Accelerate Operations

Operational Growth ahead of Strategy

• Recruitment strategy ahead of schedule with high calibre candidates seeking to join Tomizone

• International market exposure running ahead of schedule, consequently commencement of search for new experienced global CEO

Strategic Objectives Delivered

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Summary of Financial PerformanceThe Company has generated revenue of $3.5m (2014: $4.8m) delivering a loss before interest and taxation (EBIT) in 2015 of ($8.50m) (2014: ($0.60m)).

Revenues have declined due to paid airtime decreasing as consumers shift to free WiFi usage and Tomizone’s transition away from driving paid airtime towards a subscription based model. Revenues were also impacted by delays in large one-off equipment sales, the delay compared to plan in the hire of sales personnel as a result of the protracted process of capital raising, re-listing, and management’s diversion to those outcomes.

Tomizone subscription services revenue are growing year on year in line with the strategic plan. Subscription services revenue grew 22% and represented 29% of the total revenue (2014: 17%). Offsetting this is the decline in airtime revenue, primarily in the legacy Jimojo product customer base, where the Company continues to work through a plan to migrate these customers to the Tomizone Lightswitch platform.

The decline in EBIT is a function of the decline in revenue, offset by a decline in the direct costs of delivering that revenue, direct costs 2015 $1.5m (2014: $2.1m), and from an increasing operating expense base, 2015 $2.8m (2014: $2.5m).

The direct cost decline was due to commissions paid decreasing in line with reduced Jimojo airtime revenue while operating expenses have increased as Tomizone embarks on its strategic plan to increase people resources directed to sales, sales delivery and product development. Additional operating costs were incurred with respect to achieving recent listing status, audit and year end activity, and the setup of new governance practices and investment in new business processes.

Net profit after tax (NPAT) has declined a similar amount to EBIT. The Company is currently loss making, with operating income tax payments immaterial, while finance costs were in line with prior year.

2015 and 2014 comparative figures reflect a number of one-off non-operating entries related to acquisition, capital raising, and listing activity over the period. These one-off costs have significantly increased the reported net loss for the year to 30 June 2015 to ($9.0m) (2014: ($1.3m)).

Key costs reducing NPAT include the $3.8m listing expense resulting from deemed consideration on acquisition of the Tomizone Limited entity (see Note 4 of Financial Statements for detail), the $1.2m impairment of the Jimojo goodwill ( Jimojo business acquisition May 2013) that is a consequence of the decline in airtime revenue from that business, $0.34m of Tomizone Limited related acquisition costs, and $0.98m of shares and fair value cost estimate for share based payment of shares and options issued on the Tomizone acquisition. Of $6.3m one-off costs in 2015, $6.0m related to non-cash entries.

Subscription Revenue as a portion of total revenueSubscription Revenue growing as expected

71% Airtime

60% Airtime

12% Hardware

11% Hardware

17% Recurring Subscription

29% Recurring Subscription

FY 2014 FY 2015

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Consumer EngagementOur business is focussed on providing the best in-venue digital experience. This drives our engagement level which is important when it comes to driving possible revenue outcomes for our venue customers.

8

CONSUMER ENGAGEMENT - UNIQUE DEVICES More consumers logging on

• �� devices actively engaging �� customer venues

• Over million �� device��

• % ��

Over million unique devices

10

CONSUMER ENGAGEMENT - DWELLConsumers continue to dwell longer, spending more time online

• �� due to increased consumerengagement

• Over 840 million minutes �� • 51% growth YoY in minutes spent

on the Tomizone platform

51% growth in minutes

used

9

CONSUMER ENGAGEMENT - SESSIONSMore consumer sessions

•

customer venues• Over 26 million sessions

• 47% growth

47% session growth

500

450

400

350

300

250

200

150

100

50

0H2 FY13 H1 FY14 H2 FY14 H1 FY15 H2 FY15

Min

utes

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8

7

6

5

4

3

2

1

0Q4

FY13Q1

FY14Q2

FY14Q3

FY14Q4

FY14Q1

FY15Q2

FY15Q3

FY15Q4

FY15

Sess

ions

(Mill

ions

)

6

5

4

3

2

1

0

Dev

ices

(Mill

ions

)

FY14 FY15

• Rapid growth in unique devices actively engaging through Lightswitch within customer venues

• Over 5 million unique device sessions in FY15• 25% YoY growth

• Rapid growth in total sessions throughLightswitch within customer venues

• Over 26 million sessions FY15• 47% YoY growth

• Rapid growth in minutes due to increasedconsumer engagement

• Over 840 million minutes in FY15• 51% YoY growth in minutes spent on the

Tomizone platform

Unique devices

Sessions

Minutes used

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CONSUMER ENGAGEMENT - DATA CONSUMPTION Consumers continue to dwell longer, consuming more data

• �� streaming video and voice

• Over 900 terabytes consumed��

• 56% growth �� • Over 26� terabytes used ��

��

56% growthin ata

se

Strategic PartnershipsTomizone can see further when it stands on the shoulders of giants. This allows us to continue to be nimble and grow into markets and verticals at velocity and scale.We have success in engaging partners in key geographic markets and we continue our drive to seek these out.

Channel Partnerships Provides distribution channels with similar target customers and leverages their existing customer base and new sales - examples include:

• P2 Mobile Technologies and P2 United - Asian channel partners based in Hong Kong, targeting B2B and government contracts for hardware and software in Asia

• High Wire Networks - over 500 channel partners in North America

Product Partnerships Accelerates synergistic product development, joint sales development and mutual business referrals. Accelerates reach into new geographies and market verticals - examples include:

• STQRY - mobile story telling and location services software platforms enhanced by Tomizone

Digital Marketing Partnerships

Digital marketing rewards consumers’ participation whilst driving new revenues for Tomizone and its customers - examples include:

• Rokt - digital advertising targeted to individual consumer behaviour and presenting relevant offers

• Opentop - digital advertising regarding consumers who participates in competitions, making purchases or joining newsletters

Delivery and Support partnerships

Provides proven and scalable national service delivery, installation and support networks. Also upsell to their customers - examples include:

• High Wire Networks - over 1,000 network certified engineers covering 95% of US population. Installed Walt Disney Family Museum (San Francisco) and The Broad Museum (Los Angeles)

• Kordia Solutions Australia - Australian delivery partner, national network of over 200 partners and contractors

Communication Partnerships

Provides effective company communications to shareholders and customers• Edelman gives Tomizone leading global communications reach (65 offices around the world)

300

250

200

150

100

50

0Q4

FY13Q1

FY14Q2

FY14Q3

FY14Q4

FY14Q1

FY15Q2

FY15Q3

FY15Q4

FY15

Terr

abyt

es

Rapid growth in consumer data use through mobile devices, streaming video and voice

• Over 900 terabytes consumed in FY15• 56% YoY growth in data usage• Over 260 terabytes used in Q4FY15 alone

Data Consumption

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Team GrowthThe Tomizone team forms the basis of our success - our people are the most important part of our delivery and our can-do culture means that we attract high calibre people to work with us.Our team growth is in-line with our strategy and ahead of schedule. We are in a strong position to grow sales, footprint and product innovation.Since listing, the team has grown to 30 people (76% increase since pre-listing)

1

OPERATIONS ��

��

�� is planned to support �� •

•

0

5

10

15

20

25

30

5

10

8

72

7

5

3

Pre-listingJune 2015

Post-listingAug 2015

FINANCE & ADMIN

PRODUCT & ENGINEERING SERVICE

DELIVERY & SUPPORT

SALES & MARKETING

��

��

�� and service delivery /support planned for �� EMEA

��

•

1

OPERATIONS ��

��

�� is planned to support �� •

•

0

5

10

15

20

25

30

5

10

8

72

7

5

3

Pre-listingJune 2015

Post-listingAug 2015

FINANCE & ADMIN

PRODUCT & ENGINEERING SERVICE

DELIVERY & SUPPORT

SALES & MARKETING

��

��

�� and service delivery /support planned for �� EMEA

��

•

Our OutlookTomizone is investing heavily to build the sales pipeline and deploy solutions swiftly at scale.

Sales & Market Delivery

• Well placed geographically and continues to build a robust pipeline of sales opportunities

• Continue to grow share in core market verticals such as transport, retail, and accommodation

• Enter new market verticals• Continue to develop in Asia• Secure multi-channel

distribution and reseller partners globally

Team & Target

• Continue to grow team to capitalise on global opportunities

• Focussed on exceeding earnout targets of NZ$7.5m - NZ$9.5m in FY2016

Headcount

Products & Innovation

• Increasing velocity of continued innovation and rapid development of new features and products

• Continued refinement of Portal, Dashboard and API connectivity which opens the product to more partners and customers

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Market OutlookHuge growth in WiFi usage, digital engagement and mobile advertising spend.

0

20

40

60

80

2011 2013

85%

37%

63%

15%

WiFi DATA CELLULAR DATA

0

20

40

60

80

2011 2013

85%

37%

63%

15%

WiFi DATA CELLULAR DATA

Most mobile data use is over WiFi

Consumers actively connect to Public WiFi Hotspots in an attempt to seek low cost access to the Internet. Consumers are increasingly expecting quality, easily accessible WiFi when they’re out and about

Brands are pouring budget into digital engagement

With the growth of smart-phones and the change in Consumer behaviour, businesses have moved US$46bn of their media budget into mobile advertising to chase a digital connection

Cellular vs WiFi - Mobile broadband use

Global mobile advertising spend (US$Billion)

$46bn2015

• Global hotspot forecast to expand with 1,184% CAGR growth rate (1)• Global addressable WiFi market of over US$26b by 2019 (2)• Mobile advertising spend growing from US$46b in 2015 to US$95b by 2018 (3)

1. Source: iPass Global WiFi Forecast - 2013 to 2018 2. Source: MarketsAndMarkets 3. Source - eMarketer, June 2014

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Our Global FootprintTomizone have connected services in over 80 countries served by 6 offices.

3

TOMIZONE’S GLOBAL FOOTPRINT

Company Products & Target MarketsTomizone is a WiFi Software company that powers in-venue digital experiences that drive consumer engagement and revenue across multiple segments.

It all starts with WiFi.

LIGHTSWITCH DASHBOARD

REDEEM

70% OFFYOUR

FAVOURITE THING!

HOTEL

RETAIL MUSEUMSTADIUM

AIRPORT

PORTAL ENGAGEMENT

WELCOME BACK!

EARN LOYALTY POINTS...

PORTAL LOYALTY

Welcome

email

postcode

GET ONLINE

PORTAL CONNECTION

+

HOSPITAL

LOYALTY

INSIGHTSCONNECTION

ENGAGEMENT

– Branding– Location based content– Network

– Analytics– Interests– Usage

– CRM– Marketing trials– Offers

– Direct sales– Brand value– Repeat business

LIGHTSWITCH DASHBOARD

REDEEM

70% OFFYOUR

FAVOURITE THING!

HOTEL

RETAIL MUSEUMSTADIUM

AIRPORT

PORTAL ENGAGEMENT

WELCOME BACK!

EARN LOYALTY POINTS...

PORTAL LOYALTY

Welcome

email

postcode

GET ONLINE

PORTAL CONNECTION

+

HOSPITAL

LOYALTY

INSIGHTSCONNECTION

ENGAGEMENT

– Branding– Location based content– Network

– Analytics– Interests– Usage

– CRM– Marketing trials– Offers

– Direct sales– Brand value– Repeat business

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Our vision is to create the best WiFi software products to enable our customers to drive consumer engagement. Our mission is to connect customers to consumers through WiFi experiences.

2

IN-VENUE CONSUMERDIGITAL CONNECTION

DRIVE COREREVENUE

MARKETINGENGAGEMENT

DATA DRIVENBUSINESS DECISIONS

MOREVALUABLE

VENUE

OFFERS “CALL TO ACTION”

INSIGHT AND ANALYTICS

BRANDED, PERSONALISEDEXPERIENCE

BRAND

REPEAT FOOTFALLAND LOYALTYl

IT STARTS WITH WIFI

Our WiFi software manages access, content, promote increased and relevant customer engagement, provide meaningful data & analytics, and enable the monetization of WiFi as a commercially viable revenue stream possibility.

Our customers choose us because we have global scale, we are consumer driven and customer focused. Our pedigree has a large part to play in showing our experience.

Tomizone generates revenue from its proprietary mix of software, services and hardware.

Consumer Driven

We facilitate more than 26 million amazing WiFi Experiences for Consumers every year

Global Scale

Our cloud-hosted software platform is easily deployed to any geographic region

Consumer Focused

We design, deploy and manage WiFi networks for over 6,000 Hotspots in 80+ countries

Experienced

Over 9 years of experience working with Wifi customers and Consumers

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Customers pay a monthly subscription fee for Lightswitch software and support. Additional revenue is generated from sell-through hardware, network design and implementation. New revenue streams are being realised through sponsored WiFi access, retargeted advertising and consumer offers from partners that are highly targeted depending on the consumer profile.

Scale and DistributionOur scale and experience makes us effective. Years of domain knowledge and trade secrets are the foundation of our Lightswitch platform. This means that our multi-channel approach to vertical market segments can yield results quickly and de-risk our business profile.

Our vibrant feedback loop with thousands of customers keeps our product team thinking and innovating.

Our growth strategy is already yielding results in the USA and soon, Asia and the Middle East. We have the capacity to grow in these regions with our product, platform and people. With the growth in global markets we are continuing our move to a primarily channel distribution model to achieve scale.

Channel Manager has 2 to 3 channels. This enables fast growth and market penetration - revenue at scale with each channel - ‘000’s of salespeople selling our products

Senior salesperson yield high value enterprise customers

Direct

Junior salesperson yield many business customers

Channel

SystemsIntegrators

Vendors

Distributors

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Our ProductsOur product allow us to partner with any organisation that has a customer relationship across the the WiFi ecosystem to design, manage and install networks.

Our Target MarketsTomizone operates in over 80 countries, with customers in accommodation, transportation & hubs, retail and metro & campus, and hospitality - while expanding into new verticals where WiFi engagement becomes increasingly critical for venues.

+ +Concierge®

Vendor agnostic and scalable hardware gateway that unlocks the power of our software in any network

Lightswitch®

Cloud hosted software solution that enables deployment of new features and services

Our people Design, install, manage and support your networks

Accommodation + HospitalityHotels, Motels, Restaurants, Bars, Cafes

HealthcareHospitals, Medical Precincts, Clinics

Retail + TransportMalls, Precincts, Chain Stores, Airports, Trains, Buses, Ferries

Events + SpecialProjects Concerts, Conferences, Custom Builds

Metro + CampusCities, Libraries, Universities, Schools, Museums

White LabelCarrierService Providers, Carriers, Network Operators

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Lightswitch Portal

Lightswitch Portal provides a range of ways for customers to monetise the WiFi they provide. Customers choose whether to charge, provide free access, or both. Free models include loyalty programs, advertising, consumer profiling data and powerful analytics.

Lightswitch Dashboard

Our Lightswitch Dashboard provides insight, painting a clear picture of consumer behaviour, and delivers central control of a customer’s network at any scale. The most important metrics are available at a glance and the business analytics enables customers to plan for the future. Lightswitch is a fully secure SaaS based system that drives content, experiences and self managed networks directly from the dashboard.

Concierge

We load off-the-shelf hardware with proprietary Tomizone software, distilling years of experience of network management into a simple installation. Our hardware gateways give us complete control of the network for the best consumer experience, but we do not build or manufacture this hardware.

Concierge 3For small deployments

Concierge 5Compatible with Business WiFi deployments

Concierge 7Compatible with large Enterprise WiFi deployments

ChauffeurWhere no fixed Internet connection exists - such as transport

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People

Our service team helps partners apply standard software, services and hardware solutions to customer requirements. The team supports both direct and channel sales to ensure the best fit and application of solutions to any given project. Our Service Levels are designed to match the customer requirements for either business (hands off) or enterprise (hands on) management of a customer network.

ConfigurationsOur software, services and hardware can be applied in 6 key configurations for any-scale deployment in any geography.

Product Customer Types Concierge Hardware

Access Points Lightswitch® Software

Internet Connectivity

Service Level

A - Single Cafe, Small Lobby, Small Bar

Concierge 3 - Portal, Dashboard

Any broadband Business/Enterprise

B - Small Small Accommodation, Motel, Backpackers

Concierge 3 3rd Party Business

Portal, Dashboard


C - Medium Hotels, Larger Hospitality Venues, Small Airports and Transport Hubs, Museums

Concierge 5 3rd Party Enterprise

Build and Deploy


D - Large Large Airports, Metro and Campus, Service Providers


Portal, Dashboard, Ads, Connect

Any broadband Enterprise

E - Mobile Ferries, Buses, Trains, Taxis

Chauffeur 3 3rd Party Enterprise


Any 4G Enterprise

F - Event Outdoor Events, Rock Concerts, Conventions



Any broadband Enterprise

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Our Revenue ModelWe have a spread set of revenue streams to de-risk the business - of particular note is our move to subscription based revenue on an annuity basis.

ExamplesOur customers vary in size and therefore have different revenue drivers to achieve their requirements for their customers.

Recurring Subscription

COREScalable, speedy growth

Additional Features

NEWMaximising customer value

Design and Installation

VALUE ADDFull service offering

Paid Airtime Usage

LEGACYLow touch, high margin

Offering Cloud based WiFi management software Advertising platform End to end management Paid WiFi service

management

Enterprise level support Data analytics packs Design Billing and authentication

Wayfinding & location based referral programmes Build and Deploy

Value to customer

In-venue consumer engagement

Valuable insights into consumers

Optimum WiFi platform design Freemium Services

Platform management Targeting valuable customer segments

Leadership and advice on best practises Sponsored WiFi Access

Increased core business revenue Additional revenue streams Complete understanding of

WiFi solution Advertising revenue

Revenue features

Fixed contract with monthly payments Upsells to captive markets High margin consulting Transactional revenue

Recurring Revenue Recurring revenue High margin hardware sales

Revenue Share with venue customer

Venue Examples Cafes, Bars, Restaurants Hotels, Museums, Small Transport Hubs

Retail, Airports, Metro

Monthly Connections 1 - 5,000+ 5,001 - 99,999 100,000+

Upfront Fee (estimate) $130 - $400 $6,000 - $19,999 $20,000+

Monthly Subscription Fee (Estimate) $49 $499 - $4,999 $5,000+

Annual Fee (Estimate) $588 $5,988 - $59,880 $60,000+

• Upfront Fee includes design, hardware and installation services

• Monthly subscription Fee is for Business Support or Enterprise Support Business Support is flat rate of $49. Enterprise Support is $499 per 10,000 unique users

Small Venue Medium Venue Large Venue

+

Indicative pricing only. Pricing can vary subject to venue size, configuration and contract

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Directors' Report / 22

Directors’ Report

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Your directors submit their report for the year ended 30 June 2015 for Tomizone Limited (the Company).

DirectorsThe names and details of the Company’s directors in office during the financial year and until the date of this report are set out below. Directors were in office for this entire period unless otherwise stated.

Tarun Kanji, Non Executive Director and Chairman (Appointed: 22 May 2015)

Stephen Simms, Executive Director and Chief Executive Officer (Appointed: 22 May 2015)

Phillip Joe, Executive Director and Chief Commercial Officer (Appointed: 22 May 2015)

Avikashan Naidu, Non Executive Director (Appointed: 3 July 2014)

Eric King Wai Chan, Non Executive Director (Appointed: 3 July 2014)

Roger Christian Steinepreis, Director (Resigned: 22 May 2015)

Paul Charles Garner, Director (Resigned: 22 May 2015)

Darren Stephen Levy, Director (Resigned: 3 July 2014)

Phillip Joe and Stephen Simms were both directors of Tomizone New Zealand Limited from its incorporation on 12th of May 2006.

Tarun Kanji (Non Executive Director and Chairman)

Tarun has nearly 25 years corporate and consulting experience spanning the US, Europe, Asia, Australia and New Zealand.

After completing a Commerce Degree at Auckland University he spent over 10 years with international accounting firms spanning corporate advisory, valuation, finance, litigation support, recovery and audit disciplines in New Zealand and Europe.

Thereafter Tarun has run a number of of senior executive roles over 10 years with Fosters Group. The roles covered a range of disciplines including finance (CFO), commercial management, business development, mergers and acquisitions, governance, and strategic development roles.

Currently Tarun is involved a number of intenationally focused ventures which has included the commercial globalisation of an evolutionary search technology software company, focused on the US and Asian markets. A range of governance roles Tarun has been or is involved with includes:

• Former Founding Chairman - Bank of India, New Zealand

• Board member - Inland Revenue NZ - Portfolio Governance Authority

• Chairman - Noske Kaeser

• Independent Director - FairWay Resolution, NZ Crown Entity

Tarun is a Fellow of Chartered Accountants Australia and New Zealand, Certified Practising Accountant of Australia, and a member of NZ Institute of Directors, Australian Institute of Directors and NZ Asian Leaders.

No Directorships of other listed companies were held in the 3 years prior to the end of the 2015 financial year.

Special Responsibility as Chairman and Chairman of Audit and Risk Committee.

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Phillip Joe (Executive Director and Chief Commercial Officer)

Phillip has over 27 years of experience in consulting, venture investments and investment management and has operational experience in Australasia, Asia and the US. He has a passion for entrepreneurship and in the funding, establishment and management of start-ups with disruptive products and services or niche markets. He is a co-founder of Tomizone.

Phillip begun his career teaching accounting, finance and information systems in Victoria and Massey Universities in New Zealand and as Visiting Fellow teaching the MBA programmes at the University of East Asia in Macau. Since academia, Phillip held financial management roles at the Broadcasting Corporation of New Zealand and was managing director of Orient Consultants Limited, a pioneering cross-cultural consulting firm facilitating trade and investment with Asia. The company co-founded other joint venture companies with Phillip as Managing Director, in property funds management (with H R L Morrison & Co Limited,) Asian Banking (with Countrywide Bank) and specialised China - New Zealand consulting (with China Minmetals NZ Limited).

He was a co-founder and past Chairman of the Academic Colleges Group which is now New Zealand’s largest private educational provider of school education, university foundation studies and tertiary training programmes. ACG has 13 schools and tertiary colleges and reportedly recently sold to PEP for NZ$500m.

Phillip has also served on private company boards and was a Non Executive Director of public listed Cadmus Technologies Limited. Phillip holds a Master of Busiess Studies (Honours), Diploma in Business and Administration and is a Chartered Accountant in Australia and New Zealand. He brings a wealth of entrepreneurial, strategic planning, financial management, operational and governance skills.


Special Responsibility as Chief Commerical Officer.

Stephen Simms (Executive Director and Chief Executive Officer)

Steve has nearly 25 years senior management and business owner experience in the Internet, Telco and Wireless sectors. He is a co-founder of Tomizone.

His professional career began as an on-air broadcaster and in the early 1990’s created his first IT start up company that specialised in pay-per-call bureau services. The company became the third largest provider in New Zealand in the four years of business before being acquired by a Telco. During the life of that company, he created and programmed the first ever 0900 (pay -per-call) merchanise payment system and the first Pre-Pay mobile phone platform in New Zealand. This product became the foundation for the largest Pre-Pay mobile phone network through Freedom / Gold mobile in the 90’s.

Steve became the Channel Manager at Telstra New Zealand to create the new national phone card programmes and had further roles in Telecom NZ and Vodafone NZ. In 2003, Steve started the first boutique WiFi network operator called Reach Wireless which led the thinking for public WiFi strategies using a combination of free and paid services. Upon exiting this company in 2005, Steve forged ahead to launch a new global WiFi business - Tomizone.

Outside of Tomizone, Steve is a technology commentator in media on TV and Radio. Steve’s disciplines are across strategic planning, business and sales development, marketing, product and technology development, writing and public speaking.


Special Responsibility as Chief Executive Officer.

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Avikashan (Avi) Naidu (Non Executive Director)

Avi is a Founder and Managing Director of Aura Funds Management, a boutique wholesale fund manager, and a principal of Aura Group. Prior to establishing Aura Funds Management, Avi was an investment banker with a high-profile independent corporate advisory firm and before that a solicitor in the Mergers & Acquisitions team at Mallesos Stephen Jaques (now King & Wood Mallesons).

Avi has advised on mergers & acquisitions, equity capital markets, private equity and funds management transactions, as well as provided general strategic corporate advice across a diverse number of sectors, including industrials, telecommunications media and technology, resources, financial services and agriculture, acting for both public and private companies.

Avi also has significant board experience, providing strategic, corporate and governance advice to the boards he serves on.

Avi holds a Bachelor of Commerce (Finance and Economics) from the University of Sydney, a Bachelor of Laws from the University of New South Wales and is admitted as a solicitor of the Supreme Court of NSW and the High Court of Australia.


Eric King Wai Chan (Non Executive Director)

Eric has extensive experience in investment banking, equity capital markets, fund management and mergers & acquisitions across various industries including technology, financial services and resources. Eric is a co-founder and Managing Director of Aura Group, a boutique investment and advisory firm.

Eric has significant board experience in both the public and private sector, with particular experience providing strategic, corporate and governance advice to small to medium enterprises. He currently serves on a number of public and private boards in Australia and Hong Kong. Eric holds a Bachelor of Laws and Bachelor of Science in information Technology from the University of Technology, Sydney and is admitted as a solicitor of the Supreme Court of New South Wales ad the High Court of Australia.

Special responsibility as Chairman of Remuneration and Nomination Committee.

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Former Directors - PHW Consolidated Limited

The names of Directors who held office from 1 July 2014 and resigned prior to the date of this report are:

Roger Steinepreis (resigned 22 May 2015)

Directorships of other listed companies in the 3 years prior to the end of the Financial Year:

Mr Steinepreis has been within the last 3 years a director of AVZ Minerals Limited (May 2007 to May 2014), DGI Holdings Limited ( July 2012 to May 2014), Adavale Resources Limited (May

2006 to December 2012), Imugene Limited ( January 2002 to October 2012), and Allied Consolidated Limited (subject to a Deed of Company Arrangement) (October 2012 to February 2013).

Mr. Steinepreis is currently a director of the following listed companies Firestrike Resources Limited (from March 2011), Apollo Consolidated Limited (from August 2009), and Latitude Consolidated Limited (formerly Integrated Resources Group Limited) (from November 2012).

Paul Garner (resigned 22 May 2015)


Mr Garner is currently a director of TTE Petroleum Ltd (from 19 July 2011).

Darren Levy (resigned 3 July 2014)


Mr Levy is currently a director of TTE Petroleum Ltd (from 8 July 2011).

Director interests in the shares and options of the Company and related bodies corporate

As at the date of this report, the interests of the directors in the shares and options of Tomizone Limited were:

Number of ordinary

shares

Number of performance

shares

Number of options over

ordinary shares

Tarun Kanji 1,875,552 1,241,062 2,403,553

Phillip Joe 15,514,279 10,265,852 1,807,299

Stephen Simms 14,044,150 9,281,616 1,634,031

Avikashan Naidu 692,306 – 3,058,332

Eric King Wai Chan 831,294 – 3,833,266

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Company Secretary

David McAllansmith (Chief Financial Officer & Company secretary)

David has over 20 years in Finance and is an experienced and qualified Chief Financial Officer with a proven track record leading Teams and key strategic initiatives to achieve positive positive financial results in organisations which include Fonterra, Lion Nathan, and Fosters Group. He has also held similar CFO and Finance Leadership roles in substantial high growth IT businesses internationally.

He provides a breadth of commercial and financial expertise in driving business planning and performance, governance, regulatory, compliance, reporting and consolidation requirements for high growth organisations. David has a Bachelor of Commerce in Law & Finance from Auckland. He has worked in Lion Nathan beverages group in various operational and corporate positions overseeing Group programmes. He has six years experience in Europe leading small to mid-size high growth Technology & Financial Service businesses through the business cycle, process change, mergers and acquisitions and change management projects. Since returning to New Zealand in 2003, David has been leading and driving strategic and performance aspirations in FMCG business’ Fosters Group, Fonterra and Tip Top in the finance and commerical divisions.

Mr McAllansmith has held the position of Joint Company Secretary since 6 July 2015.

Anand Sundaraj (Company secretary)

Mr. Sundaraj is a principal of Whittens, a commerical law firm based in Sydney. Prior to joining Whittens, Mr Sundaraj worked at international law firms Allen & Overy, King & Wood, Mallesons and Herbert Smith Freehills, as well as for global investment bank Credit Suisse.

Mr Sundaraj specialises in providing legal advice on mergers & acquisitions and capital raisings for both publicly listed and privately held entities. He also advises on funds management and general securities law matters including ASX Listing Rules compliance. Mr Sundaraj has advised on a range of capital raising transactions including the IPOs of Veda Group, QR National (now Aurizon), Aston Resources (subsequently acquired by Whitehaven), Myer Holdings and Telstra 3, and secondary issues by Westfield, Woodside, Bluescope Steel, Goodman Fielder and GrainCorp.

Mr Sundaraj holds a Bachelor of Laws (with Honours) and a Bachelor of Science from Monash University and is admitted as a solicitor of the Supreme Courts of New South Wales and Victoria. Mr Sundaraj is the author of “Listed Companies: ASX Listing Rules” in Australian Corporation Practice, published by LexisNexis Butterworths.

Mr Anand Sundaraj held the position of Company Secretary from 22 May 2015, and on a joint basis with Mr David McAllansmith since 6 July 2015.

Mr Jack Toby held the position of Company Secretary until 6 July 2015.

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Principal activities

The principal activities during the year of entities within the consolidated group:

Tomizone is a software company that powers in-venue digital experiences through WiFi to drive consumer engagement and revenue for customers. The Tomizone vision is to create the best venue engagement software products and sell them to the world. The mission of the Company is to connect customers to consumers through WiFi experiences.

Tomizone solves best-practice in-venue engagement with a ‘pay-as-you-grow’ software subscription. The Tomizone Lightswitch cloud-hosted software can be dropped into any venue and any existing WiFi network to create meaningful and relevant consumer engagement.

The core Tomizone products include:

• Lightswitch Portal - gives consumers a reasonto join a WiFi network for more than justinternet connectivity. The Portal is the venues’frictionless opportunity to engage and capturevaluable consumer data.

• Lightswitch Dashboard - displays behaviouralinsight and analytics real-time, shining a lighton valuable usage patterns. Dashboard allowscomplete control of theming, rate plans,analytics, profiling and payment across multi-site networks.

• Lightswitch API - integrates with the venuebusiness to augment existing engagement andbusiness reporting tools.

• Concierge - vendor agnostic network gatewaythat connects the WiFi network to Lightswitch.

Tomizone also operates a number of other paid WiFi software platforms servicing our Jimojo and iRoom customer bases and its original WiFi software service platform.

Operating and financial review

A comprehensive operating and finance review, provided on pages 9-21, should be read and considered as part of this Directors’ Report.

Significant changes in the state of affairs

On 22 May 2015, Tomizone Limited completed the legal acquisition of Tomizone New Zealand Limited and its controlled subsidiaries (“Tomizone Group”). The acquisition was approved at the Company’s Extraordinary General Meeting held on 28 April 2015.

Under Australian Accounting Standards and International Financial Reporting Standards Tomizone Group was deemed to be the accounting acquirer in this transaction. The acquisition has been accounted for as a share based payment transaction by which Tomizone Group acquires the net assets and listing status of PHW Consolidated Limited (“PHW”, renamed Tomizone Limited).

Accordingly, the consolidated financial statements of the Company have been prepared as a continuation of the business and operations of Tomizone Group. As the deemed acquirer, Tomizone Group has accounted for the acquisition of the Company from 22 May 2015. The comparative information for the 12 months ended 30 June 2014 presented is that of the Tomizone Group. Refer to Note 17 for a summary of shares issued during the year.

Significant events after the balance date

Co-founder and Chief Executive Officer, Stephen Simms, announced his resignation as CEO on 21 August 2015. Stephen Simms will continue in the business in the role of a Non-Executive Director and remain as a major shareholder. The search for a replacement CEO has commenced.

There have been no other significant events occurring after the balance date which may affect either the Group’s operations or results of those operations or the Group’s state of affairs.

Dividends

No dividends have been paid or declared since the start of the financial year by the Company.

The directors have recommended that no dividend be paid by the Company in respect of the year ended 30 June 2015.

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Likely developments and expected results

Likely developments in the operations of the Group and the expected results of those operations in future financial years have not been included in this report as the inclusion of such information is likely to result in unreasonable prejudice to the Group.

Environmental regulation and performance

The Group is not subject to any particular or significant environmental regulation under laws of the Commonwealth of Australia or of a State or Territory.

Indemnification and insurance of directors and officers

During the year, the Tomizone paid a premium to insure officers of the Group. The officers of the Group covered by the insurance policy include all Directors.

The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought against the officers in their capacity as officers of the Group, and any other payments arising from liabilities incurred by the officers in connection with such proceedings, other than where such liabilities arise out of conduct involving a willful breach of duty by the

Meetings of committees

Directors’ meetings+Audit and Risk

CommitteeoRemuneration and

Nomination Committee

Number of meetings held: 15 - -

Number of meetings attended: - -

Tarun Kanji (c)* 1

Phillip Joe* 1

Stephen Simms* 1

Avikashan Naidu 15

Eric King Wai Chan 15

Roger Christian Steinepreis^ 14

Paul Charles Garner 13

Darren Stephen Levy 1

officers or the improper use by the officers of their position or of information to gain advantage for themselves or someone else to cause detriment to the Group.

Details of the amount of the premium paid in respect of insurance policies are not disclosed as such disclosure is prohibited under the terms of the contract.

To the extent permitted by law, the Company has agreed to indemnify its Directors against claims by third parties from liabilities or actions arising as a Director of the Group (for an unspecified amount) unless that claim or proceeding arises out of misconduct involving a lack of good faith.

Indemnification of auditors

To the extent permitted by law, the Company has agreed to indemnify its auditors, Ernst & Young, as part of the terms of its audit engagement agreement against claims by third parties arising from the audit (for an unspecified amount). No payment has been made to indemnify Ernst & Young during or since the financial year.

Directors’ meetings

The number of meetings of directors (including meetings of committees of directors) held during the year and the number of meetings attended by each director were as follows:

^ Resigned as chairman and director on 22 May 2015* Appointed 22 May 2015 + Meeting numbers represent the combined PHW Consolidated Limited and Tomizone New Zealand Limited

o Until acquisition 22 May 2015 there was no Audit and Risk or Remuneration and Nomination Committees

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Committee membership

Members acting on the Committees of the Board during the year were:

Audit and Risk

Tarun Kanji (c)

Avi Naidu

Eric Chan

Remuneration and Nomination

Eric Chan (c)

Tarun Kanji

Avi Naidu

Notes (c) Designates the chairman of the committee

Rounding

The amounts contained in the financial report have been rounded to the nearest $1 (where rounding is applicable) where noted ($) under the option available to the Company under ASIC CO 98/0100. The Company is an entity to which the class order applies.

Auditor independence and non-audit services

The directors have received a declaration from the auditor of Tomizone Limited. This has been included on page 88.

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Group. “Executive” refers to the two Tomizone executive directors Stephen Simms and Phillip Joe and also executives David McAllansmith, Andrew Somervell and Sally Wu.

Independent and Non-Executive Directors

Executive Directors

Other Key Management Personnel

*Were executive directors of Tomizone New Zealand Limited for the entire financial year.

^Not included as KMP for accounting purposes for Tomizone

Remuneration report (audited)The Directors of the Group present the Remuneration Report for the year ended 30 June 2015 for Non-Executive Directors, Executive Directors and other Key Management Personnel, collectively referred to as “KMP”. This remuneration report outlines the remuneration arrangements of the Group in accordance with the requirements of the Corporations Act 2001(Cth), as amended (the Act) and its regulations. This information has been audited as required by section 308(3C) of the Act.

The remuneration report is presented under the following sections:

1. Introduction

2. Remuneration governance, policy, andprinciples

3. Executive remuneration outcomes (includinglink to performance)

4. Executive contracts

5. Non-executive director fee arrangements

6. Additional disclosures relating to options andshares

7. Loans to key management personnel (KMP) andtheir related parties

8. Other transactions and balances with keymanagement personnel (KMP) and their relatedparties

1. Introduction

The remuneration report details the remuneration arrangements for KMP who are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Group, directly or indirectly, including any director (whether executive or otherwise) of the parent.

The table below outlines the KMP of the Group during the financial year ended 30 June 2015. Unless otherwise indicated, the individuals were KMP for the entire financial year.

For the purposes of this report, the term “KMP” includes all currently serving non-executive and executive directors and senior executives of the

Name Date of appointment to Tomizone Limited

TARUN KANJI Independent Chair - appointed 22 May 2015

AVIKASHAN NAIDU Non-Executive Director - appointed 3 July 2014

ERIC KING WAI CHAN Non-Executive Director- appointed 3 July 2014

ROGER CHRISTIAN STEINEPREIS

Non-Executive Director - ceased 22 May 2015^

PAUL CHARLES GARNER

Non-Executive Director - ceased 22 May 2015^

DARREN STEPHEN LEVY

Non-Executive Director - ceased 3 July 2014^


STEPHEN SIMMSCEO & Executive Director - appointed 22 May 2015*

PHILLIP JOE

Chief Commercial Officer & Executive Director - appointed 22 May 2015*


DAVID MCALLANSMITH

Chief Financial Officer & Company Secretary - appointed 22 June 2015

ANDREW SOMERVELL Chief Product Officer - appointed 1 June 2013

SALLY WU Vice President Sales - appointed 4 May 2015

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2. Remuneration governance, policyand principles

The principles of the Group’s executive strategy and supporting incentive programs and frameworks are:

• to align rewards to business outcomes thatdeliver value to shareholders

• to drive a high performance culture by settingchallenging objectives and rewarding highperforming individuals; and

• to ensure remuneration is competitive in therelevant employment market place to supportthe attraction, motivation and retention ofexecutive talent.

Executive director and other key management personnel remuneration policy

Tomizone has structured a remuneration framework that is market competitive and complementary to the reward strategy of the Group.

The Board has established a Remuneration and Nomination Committee which operates in accordance with its charter as approved by the Board and is responsible for determining and reviewing compensation arrangements for the Directors and the Executive Team.

The remuneration structure that has been adopted by the Group consists of the following components:

• fixed remuneration being annual salary; and

• short term incentives, being employee shareschemes and bonuses.

The Remuneration and Nomination Committee assess the appropriateness of the nature and amount of remuneration on a periodic basis by reference to recent employment market conditions with the overall objective of ensuring maximum stakeholder benefit from the retention of a high quality Board and Executive Team.

The payment of bonuses, share options and other incentive payments are reviewed by the Remuneration and Nomination Committee annually as part of the review of executive remuneration and a recommendation is put to the Board for approval.

Non-Executive Director remuneration policy

Fees and payments to Non-Executive Directors reflect the demands which are made of the Directors in fulfilling their responsibilities. Non-Executive Director fees are reviewed annually by the Board. The constitution of the Company provides that the Non-Executive Directors of the Company are entitled to such remuneration, as determined by the Board, which must not exceed in aggregate the maximum amount determined by the Company in a general meeting.

The most recent determination was at a general meeting held on 28 April 2015 where the shareholders approved a maximum aggregate remuneration of $750,000. Annual Non-Executive Director’s fees currently agreed to be paid by the Company are $207,000 inclusive of superannuation. Additionally the Non-Executive Directors have been issued 6,555,192 options as fair and reasonable remuneration in consideration of at least the first three years’ of the Company’s operation being significantly in excess of the time commitment generally expected of non-executive director positions and will serve to align directors’ interests with those of shareholders.

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3. KMP remuneration outcomes for 2015 (including link to performance)

Executive remuneration for the years ended 30 June 2015 and 30 June 2014

Short-term benefits Post employment Other long-term benefits

Share-based payments

Termination payments Total Performance

related

Director fees

Salary & fees Cash bonus

Non monetary

benefitsSuperannuation Retirement

benefitsCash

incentivesLong

service leave

Share options Shares

$ $ $ $ $ $ $ $ $ $ $ $ $ %

Non-Executive Independent Director

Tarun Kanji

2015 7,417 112,739 – – – – – – 12,362 294,986 – 427,503 307,348 72%

2014 – – – – – – – – – – – – – –

Non-Executive Directors

Avikashan Naidu

2015 4,917 – – – – – – – 25,625 – – 30,542 25,625 77%

2014 – – – – – – – – – – – – – –

Eric King Wai Chan

2015 4,917 – – – – – – – 34,692 – – 39,609 34,692 77%

2014 – – – – – – – – – – – – – –

Total 2015 17,251 112,739 – – – – – – 72,679 294,986 – 497,654 367,665 72%

Total 2014 – – – – – – – – – – – – – –

Non Executive Directors Avikrishnan Naidu and Eric King Wai Chan held Incentive A and Incentive B options, 250,000 and 500,000 respectively, that vested Incentive A 28 April 2015 and vested Incentive B 22 May 2015.For

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Short-term benefits Post employment Other long-term benefits


Termination payments Total Performance

related

Director fees

Salary & fees Cash bonus

Non monetary

benefitsSuperannuation Retirement

benefitsCash

incentivesLong

service leave

Share options Shares

$ $ $ $ $ $ $ $ $ $ $ $ $ %

Executive Directors

Stephen Simms^

2015 – 27,330 – – – – – – – – – 27,330 – –

2014 – – – – – – – – – – – – – –

Phillip Joe

2015 – 24,597 – – – – – – – – – 24,597 – –

2014 – – – – – – – – – – – – – –

Alternative Management Limited (Phillip Joe & Stephen Simms)2015 – 460,635 – – – – – – – – – 460,635 – –

2014 – 634,387 – – – – – – – – – 634,387 – –

Total 2015 – 512,562 – – – – – – – – – 512,562 – –

Total 2014 – 634,387 – – – – – – – – – 634,387 – –


David McAllansmith

2015 – 5,171 – – 155 – – – – – – 5,326 – –

2014 – – – – – – – – – – – – – –

Andrew Somervell

2015 – 111,096 – – – – – – – 309,374 – 420,470 309,374 74%

2014 – 114,703 – – – – – – – – – 114,703 – –

Sally Wu

2015 – 36,503 26,250* – 5,830 – – – – – – 68,583 28,744 42%

2014 – – – – – – – – – – – – – –

Total 2015 – 152,770 26,250 – 5,985 – – – – 309,374 – 494,379 338,118 68%

Total 2014 – 114,703 – – – – – – – – – 114,703 – –

^ Stephen Simms resigned 21 August 2015 and is serving out contracted notice period. No addition post employment renumeration is payable. * Short term cash bonus incentives include sales target incentive award accrual for Sally Wu, Vice President Sales. All other performance related renumeration was provided exclusively by way of the award of ordinary shares and options and are noted based on the value expensed for those shares and options at award date during the year.

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4. Executive contracts

Key terms of services agreements

Chief Executive Officer

• The CEO receives fixed remuneration of$250,000 per annum including superannuation.

• The CEO’s target and maximum STI opportunityis $70,000. Performance against target isdetermined at the sole and absolute discretionof the Remuneration and NominationCommittee.

• Fixed and incentive remuneration is determinedannually by the Remuneration and NominationCommittee.

• Termination notice period is 4 monthsor without notice in the event of seriousmisconduct or breach of services agreement.

• Restraint of trade period being up to 6 months.

Chief Commercial Officer

• The CCO receives fixed remuneration of$225,000 per annum including superannuation.

• The CCO’s target and maximum STI opportunityis $70,000. Performance against target isdetermined at the sole and absolute discretionof the Remuneration and NominationCommittee.




Chief Financial Officer

• Remuneration benefits included in New ZealandDollars

• The CFO receives fixed remuneration of$225,000 per annum including superannuation.

• The CFO’s target STI opportunity is $43,875.Performance against target is determinedat the sole and absolute discretion of theRemuneration and Nomination Committee.

• The CFO’s target and maximum share basedpayment opportunity is $45,000. Performanceagainst target is determined at the sole andabsolute discretion of the Remuneration andNomination Committee.

• Fixed and incentive remuneration is determinedannually by the Nomination and RemunerationCommittee.



Chief Product Officer

• Remuneration benefits included in New ZealandDollars

• The CPO receives fixed remuneration of$120,000 per annum including superannuation.

• The CPO received in the period to 30 June 2015a fixed share allocation equivalent to 2,083,768ordinary shares for services period 1 May 2009 -31 May 2015.


• Termination notice period is 1 month or withoutnotice in the event of serious misconduct orbreach of services agreement.

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Vice President Sales

• The VP Sales receives fixed remuneration of$220,000 per annum plus Australian Federalsuperannuation contributions.

• The VP Sales’ target and maximum STIopportunity is $180,000. $30,000 of first3 months STI earnings are guaranteed.Performance against target is determined atdiscretion of the Remuneration and NominationCommittee.




5. Non-executive directorremuneration arrangements

Determination of fees and maximum aggregate NED fee pool

The Remuneration and Nomination Committee has approved a director fee pool being no more than $750,000. The Chair is to receive a flat fee of $89,000 and each non executive director a fee of $59,000. Executive directors do not receive any director fees. No additional fees are paid for serving on the Audit and Risk or Remuneration and Nomination Committees. Non-executive directors only serve on each of the Audit and Risk and Remuneration and Nomination committees.

6. Additional disclosures relating tooption and share awards

Options awarded, vested and lapsed during the year.

The table below discloses the number of share options granted, vested or lapsed during the year.

Share options do not carry any voting or dividend rights, and can only be exercised once the vesting conditions have been met, until their expiry date.

A number of shares and options were issued during the period. Details of these security issues are provided here. The director and other KMP participation by way of award of security in these issues is provided in the subsequent tables.

On 22 May 2015, Tomizone Limited completed the legal acquisition of Tomizone New Zealand Limited and its controlled subsidiaries (“Tomizone Group”).

At this date, Tomizone Limited issued various options to Non-Executive Directors to reflect that the role and responsibilities of the Chairman and Non-Executive Directors, in at least the first three years’ of the Company’s operation will be significantly in excess of the time commitment generally expected of non-executive director positions. The options have independently been considered to be fair and reasonable remuneration and will serve to align directors’ interests with those of shareholders.

• 788,056 Director A options with an expiry dateof 28 May 2016 and an exercise price of $0.00,last exercise date 27 June 2016;

• 394,028 Director B options with an expiry dateof 28 May 2016 and an exercise price of $0.00,last exercise date 28 May 2017;

• 1,791,036 Director C options with an expiry dateof 28 May 2016 and an exercise price of $0.22,last exercise date 28 May 2017;

• 1,791,036 Director D options with an expiry dateof 28 May 2017 and an exercise price of $0.22,last exercise date 28 May 2018; and

• 1,791,036 Director E options with an expiry dateof 28 May 2018 and an exercise price of $0.22,last exercise date 28 May 2019.

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Share options awarded during the year

No other KMP received options as remuneration.

No director options had vested as at 30 June 2015.

Non Executive Directors Avikrishnan Naidu and Eric King Wai Chan held Incentive A and Incentive B options, 250,000 and 500,000 respectively, that vested Incentive A 28 April 2015 and vested Incentive B 22 May 2015.

Share options expiredDuring the year ended 30 June 2015, no options to subscribe for unissued fully paid ordinary shares in the

Company expired unexercised.

Share options exercisedDuring and subsequent to the year ended 30 June 2015, no ordinary shares were issued by virtue of the

exercise of options.

Share options lapsed

During and subsequent to the year ended 30th June 2015, no share options lapsed.

Option Type

Management (Director A & B)

OptionsDirector C

OptionsDirector D

OptionsDirector E

Options Total Options

Issue date 22/5/2015 22/5/2015 22/5/2015 22/5/2015

Exercise date 28/5/2016 28/5/2016 28/5/2017 28/5/2018

Expiry date 28/6/2016 28/5/2017 28/5/2018 28/5/2019

Exercise price $0.0000 $0.2200 $0.2200 $0.2200

Fair value per option $0.2000 $0.0571 $0.0760 $0.0903

Independent Director

Tarun Kanji 394,028 597,012 597,012 597,012 2,185,064


Avikashan Naidu 394,028 597,012 597,012 597,012 2,185,064

Eric King Wai Chan 394,028 597,012 597,012 597,012 2,185,064

Total 1,182,084 1,791,036 1,791,036 1,791,036 6,555,192

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Value of options awarded, exercised and lapsed during the year

Value of options granted

during the year^

Value of options exercised during

the year#

Value of options lapsed during

the year*

Remuneration consisting of

share options for the year

30 June 2015 $ $ $ $


Tarun Kanji 12,362 – – 12,362


Avikashan Naidu 25,625 – – 25,625

Eric King Wai Chan 34,692 – – 34,692

Executive Directors

Phillip Joe – – – –

Stephen Simms – – – –


David McAllansmith – – – –

Andrew Somervell – – – –

Sally Wu – – – –

FY15 Total 72,679 – – 72,679

^ Determined at the time of grant per the AASB 2. For details on the valuation of the options, including models and assumptions used, please refer to Note 20. # Determined at the time of exercise. * Determined at the time of lapse.

There were no alterations to the terms and conditions of options awarded as remuneration since their award date.

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Shareholdings of KMP

Details of ordinary shares in the Company held directly, indirectly or beneficially, by key management personnel (KMP), including their related parties, is as follows:

Balance 1 July 2014*

Received as part of remuneration

Purchase of shares Sale of shares Balance

30 June 2015


Tarun Kanji – 1,875,552 – – 1,875,552


Avikashan Naidu – – 692,308 – 692,308

Eric King Wai Chan – – 831,298 – 831,298

Executive Directors

Stephen Simms 14,228,573 – 17,300 201,723 14,044,150

Phillip Joe 15,716,002 – – 201,723 15,514,279


David McAllansmith – – – – –

Andrew Somervell – 2,083,768 – – 2,083,768

Sally Wu – – 50,000 – 50,000

Total 29,944,575 3,959,320 1,590,906 403,446 35,091,355

*On 4 May 2015 the Company (formerly PHW Consolidated Limited) consolidated every 40 ordinary shares into 1 ordinary share. The opening issued capital has been restated on a post consolidation equivalent basis.

^On 22 May 2015 the Company (formerly PHW Consolidated Limited) acquired 100% of the issued capital of Tomizone New Zealand Limited (TNZ) by issuing 47,381,489 ordinary shares in the Company to existing shareholders of TNZ (TNZ Vendors).

Signed in accordance with a resolution of the directors.


30 September 2015For

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Financial Statements / 40

Financial Statements

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Consolidated statement of profit or loss and other comprehensive incomeFor the year ended 30 June 2015

2015 2014

Notes $ $

Revenue 3,464,196 4,781,272

Direct Costs (1,530,804) (2,110,864)

Gross profit 1,933,392 2,670,408

Other operating income 7.1 (51,053) 63,876

Employee benefits expense (1,426,245) (1,390,522)

Other expenses (1,357,923) (1,171,349)

Depreciation and amortisation expense (1,054,456) (968,771)

Acquisition Advisory Costs (336,256) –

Impairment (1,205,988) –

Listing Expenses 4 (3,816,905) –

Share Based Payment (982,120) –

Loss before income tax and finance costs (8,297,554) (796,358)

Finance costs 7.3 (807,086) (472,069)

Finance income 7.4 7,430 –

Loss before tax from continuing operations (9,097,210) (1,268,427)

Income tax benefit/(expense) 8 102,377 (65,728)

Loss for the year from continuing operations (8,994,833) (1,334,155)

LOSS FOR THE YEAR (8,994,833) (1,334,155)

Other comprehensive income

Exchange differences on translation of foreign operations (47,597) (228,619)

Income tax effect – –

Net other comprehensive income to be reclassified to profit or loss in subsequent periods (47,597) (228,619)

Net other comprehensive income not to be reclassified to profit or loss in subsequent periods – –

Other comprehensive income(loss) for the year, net of tax (47,597) (228,619)

TOTAL COMPREHENSIVE LOSS FOR THE YEAR, NET OF TAX (9,042,430) (1,562,774)

Attributable to:

Equity holders of the Parent (9,042,430) (1,562,774)

(9,042,430) (1,562,774)

Earnings per share 9

Basic, profit for the year attributable to ordinary equity holders of the Parent ($0.1206) ($0.0515)

Diluted, profit for the year attributable to ordinary equity holders of the Parent ($0.1206) ($0.0515)

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Consolidated statement of financial positionAs at 30 June 2015

2015 2014

Notes $ $

ASSETS

Current assets

Cash and short-term deposits 16 4,039,448 38,407

Trade and other receivables 15 257,415 295,452

Inventories 14 31,881 166,854

Other current financial assets 12 70,819 118,462

Current tax receivables 4,975 5,110

4,404,538 624,285

Non-current assets

Intangible assets 11 2,079,302 3,639,935

Property, plant and equipment 10 619,980 770,880

Non-current financial assets 12 – 126,384

Deferred tax assets 8 3,424 1,800

Other receivables 10,711 33,891

2,713,417 4,572,890

TOTAL ASSETS 7,117,955 5,197,175

LIABILITIES AND EQUITY

Current Liabilities

Trade and other payables 21 1,987,232 2,113,137

Interest-bearing loans and borrowings 12 1,233,811 880,617

Bank overdraft and other advances 12 134,545 86,895

Other current financial liabilities 12 219,278 46,253

Deferred revenue 18 43,999 –

Employee benefit liabilities 19 124,855 46,059

3,743,720 3,172,961

Non-current liabilities

Interest-bearing loans and borrowings 12 1,293,325 2,510,249

Other non-current financial liabilities 12 – 222,345

Deferred tax liabilities 8 244,514 350,598

1,537,839 3,083,192

TOTAL LIABILITIES 5,281,559 6,256,153

Equity

Contributed equity 17 18,804,902 6,958,292

Other capital reserves 17 91,194 –

Accumulated losses (16,653,591) (7,658,758)

Foreign currency translation reserve (406,109) (358,512)

TOTAL EQUITY 1,836,396 (1,058,978)

TOTAL EQUITY AND LIABILITIES 7,117,955 5,197,175

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Consolidated statement of changes in equityFor the year ended 30 June 2015

Attributable to the equity holders of the parent

Contributed equity (Note 17)

Other capital reserves (Note 17)

Retained earnings

Foreign currency

translation reserve

(Note 17) Total equity

$ $ $ $ $

As at 1 July 2014 6,958,292 – (7,658,758) (358,512) (1,058,978)

Loss for the period – – (8,994,833) – (8,994,833)

Other comprehensive income (Note 17) – – – (47,597) (47,597)

Total comprehensive income – – (8,994,833) (47,597) (9,042,430)

Issue of share capital - private placements (Note 17) 5,942,782 – – – 5,942,782

Issue of share capital - public placement 5,000,000 – – – 5,000,000

Cost of issuing shares (Note 4) (202,629) – – – (202,629)

Share-based payments (Note 20) 982,120 – – – 982,120

Fair value PHW Consolidated pre existing options 22 May 2015 124,337 – – – 124,337

Issue of options – 91,194 – – 91,194

At 30 June 2015 18,804,902 91,194 (16,653,591) (406,109) 1,836,396

For the year ended 30 June 2014

Attributable to the equity holders of the parent

Contributed equity (Note 17)

Retained earnings

Foreign currency

translation reserve

(Note 17) Total equity

$ $ $ $

As at 1 July 2013 6,440,160 (6,324,603) (129,893) (14,336)

Loss for the period – (1,334,155) – (1,334,155)

Other comprehensive income (Note 17) – – (228,619) (228,619)

Total comprehensive income – (1,334,155) (228,619) (1,562,774)

Issue of share capital - private placements (Note 17) 518,132 – – 518,132

At 30 June 2014 6,958,292 (7,658,758) (358,512) (1,058,978)For

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Consolidated statement of cash flowsAs at 30 June 2015

2015 2014

Notes $ $

2,932,736 3,892,602

(3,935,681) (3,398,843)

7,430 –

(542,575) (535,914)

Operating activities

Receipts from customers

Payments to suppliers and employees

Interest received

Interest paid

Costs related to acquisition of subsidiary (470,619) –

Net cash flows used in operating activities (2,008,709) (42,155)

Investing activities

Purchase from sale of property, plant and equipment – 3,000

Purchase of property, plant and equipment 10 (103,517) (43,887)

Payments for development costs 11 (626,414) (550,559)

Acquisistion of a subsidiary 4 (119,473) (766,080)

Cash acquired on acquisition of Tomizone Limited 944,928 –

Net cash flows used in investing activities (95,524) (1,357,526)

Financing activities

Proceeds from issue of shares and exercise of share options 17 6,214,695 518,133

Transaction costs on issue of shares 17 (318,417) –

Proceeds from borrowings 1,045,217 1,902,892

Repayment of borrowings (1,052,124) (1,063,054)

Net cash flows from financing activities 5,889,371 1,357,971

Net increase/(decrease) in cash and cash equivalents 3,976,186 (41,710)

Net foreign exchange difference (25,758) (756)

Cash and cash equivalents at 1 July 16 (203) 42,263

CASH AND CASH EQUIVALENTS AT 30 JUNE 16 3,950,225 (203)

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Notes to the consolidated financial statementsFor the year ended 30 June 2015

1. Corporate informationThe consolidated financial statements of Tomizone Limited (Tomizone) and its subsidiaries (collectively, the Group) for the year ended 30 June 2015 were authorised for issue in accordance with a resolution of the directors on 30 September 2015.

Tomizone Limited (formerly PHW Consolidated Limited) is a for profit company limited by shares incorporated in Australia whose shares are publicly traded on the Australian Stock Exchange. The separate financial statements of the parent entity, Tomizone Limited, have not been presented within this report as permitted by the Corporations Act 2001.

The Group is principally engaged in the provision of WiFi services and software.

The Group’s principal place of business is Level 2, Shed 19A, 137 Quay Street, Auckland, New Zealand. Further information on the nature of the operations and principal activities of the Group is provided in the directors’ report.

Information on the Group’s structure is provided in Note 5. Information on other related party relationships is provided in Note 22.

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2. Summary of significant accounting policies

2.1 Basis of preparation

The financial report is a general purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board. The financial report has also been prepared on a historical cost basis, except for derivative financial instruments, which have been measured at fair value.

The financial report is presented in Australian dollars and all values are rounded to the nearest dollar ($) unless otherwise stated.

On 22 May 2015, Tomizone Limited (formerly PHW Consolidated Limited) completed the legal acquisition of Tomizone New Zealand Limited and it’s controlled entities (“Group”). Under Australian Accounting Standards.

Tomizone New Zealand Limited was deemed to be the accounting acquirer in this transaction. The acquisition has been accounted for as a share based payment by which Tomizone New Zealand Limited acquired the net assets and listing status of Tomizone Limited.

Accordingly, the consolidated financial statements of the Group have been prepared as a continuation of the business and operations of Tomizone New Zealand Limited. As the deemed acquirer, Tomizone New Zealand Limited has accounted for the acquisition of Tomizone Limited from 22 May 2015. The comparative information for the 12 months ended 30 June 2014 presented in the consolidated financial are the statements of Tomizone New Zealand Limited.

The implications of the acquisition by Tomizone New Zealand Limited on the financial statements are as follows:

Statement of profit and loss and other comprehensive income

i. The 30 June 2015 statement of comprehensive income comprises the full year of Tomizone New Zealand Limited and for Tomizone from 22 May 2015 to 30 June 2015.

ii. The 30 June 2014 statement of comprehensive income comprises the full comparative financial year for Tomizone New Zealand Limited only.

Statement of financial position

i. The 2015 statement of financial position as at 30 June 2015 represents the combination of Tomizone and Tomizone New Zealand Limited.

ii. The 2014 statement of financial position as at 30 June 2014 represents Tomizone New Zealand Limited only.

Statement of changes in equity

i. The 2015 statement of changes in equity comprises:

• The equity balance of Tomizone New Zealand Limited as at the beginning of the financial year (1 July 2014) plus any new shares issued during the year, and the value of the shares held by existing Tomizone shareholders representing the deemed share based payment transaction.

• The total comprehensive income for the financial year and the transactions with equity holders being the 12 months from Tomizone New Zealand Limited for the year ended 30 June 2015 and the period from 22 May 2015 until 30 June 2015 for Tomizone.

ii. The 2014 statement of changes in equity comprises the full financial year for Tomizone New Zealand Limited for the 12 months ended 30 June 2014.

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Statement of cash flows

The 2015 statement of cash flows comprises:

i. The cash balance of Tomizone New Zealand Limited at the beginning of the financial year (1 July 2014).

ii. The transactions from the financial year for the 12 months of Tomizone New Zealand ended 30 June 2015 and from 22 May 2015 until 30 June 2015 for Tomizone.

iii. The cash balance of the combined Tomizone New Zealand Limited and Tomizone at the end of the period (30 June 2015).

iv. The 2014 statement of cash flows comprises the full financial year of Tomizone New Zealand Limited for the period ended 30 June 2014.

Going Concern

The financial statements of the Group have been prepared on a going concern basis, which contemplates the continuation of normal business operations and the realisation of assets and settlement of liabilities in the normal course of business.

During the year the Group incurred losses and operating cash outflows as a result of increased investment in the growth of its sales pipeline and development and commercialisation of its WiFi management and analytics software platforms. This investment is made in anticipation of generating increased future revenues. For the year ended 30 June 2015, the Group incurred a loss from continuing operations after tax of $8,994,833 (year ended 30 June 2014: $1,334,155) which included one-off non-cash costs for exchange listing $3,816,905 and for impairment of $1,205,988. In the same period the Group had operating cash outflows of $2,008,709 (year ended 30 June 2014 operating cash outflow: $42,155).

Management have prepared cash flow projections that supports the Group’s ability to continue as a going concern, inclusive of expected future capital raising. The forecast assumes that the Directors will be able to raise $3,350,000, acknowledges that the Group is in a period of growth and development. The forecast assumes that the Group will continue to grow sales of its products and services, and will continue to successfully exploit the Group’s technology and leverage the new resources and capability employed in the business. The Directors of the Group consider that the cash flow projections and assumptions will be achieved, and in the longer term, significant revenues will be generated from the commercialisation of intellectual property, and accordingly, the Group will be able to continue as a going concern. The Group has a successful history of raising debt and equity. The Directors expect to continue to be successful in this regard.

If the Group is unable to obtain such funding at an amount and timing necessary to meet the future operational plans, or to successfully commercialise their intellectual property, it may be unable to continue as a going concern.

In the event that the Group cannot continue as a going concern it may not be able to realise its assets and settle its liabilities in the normal course of operations and at the amounts stated in the financial statements.

2.2 Compliance with International Financial Reporting Standards (IFRS)

The financial report complies with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board.

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2.3 Changes in accounting policies, disclosures, standards and interpretations

(i) Accounting Standards and Interpretations issued but not yet effective

Accounting Standards and Interpretations issued by the AASB that are not yet mandatorily applicable to the Group, together with an assessment of the potential impact of such pronouncements on the Group when adopted in future periods, are discussed below:

• AASB 9: Financial Instruments and associated Amending Standards (applicable to annual reporting periods beginning on or after 1 January 2018).

• The Standard will be applicable retrospectively (subject to the provisions on hedge accounting outlined below) and includes revised requirements for the classification and measurement of financial instruments, revised recognition and derecognition requirements for financial instruments and simplified requirements for hedge accounting.

• The key changes that may affect the Group on initial application include certain simplifications to the classification of financial assets, simplifications to the accounting of embedded derivatives, upfront accounting for expected credit loss, and the irrevocable election to recognise gains and losses on investments in equity instruments that are not held for trading in other comprehensive income. AASB 9 also introduces a new model for hedge accounting that will allow greater flexibility in the ability to hedge risk, particularly with respect to hedges of non-financial items. Should the entity elect to change its hedge policies in line with the new hedge accounting requirements of the Standard, the application of such accounting would be largely prospective.

• The directors anticipate that the adoption of AASB 9 does not have a significant impact on the Group’s financial statements.

• AASB 15: Revenue from Contracts with Customers (applicable to annual reporting periods commencing on or after 1 January 2018).

• When effective, this Standard will replace the current accounting requirements applicable to revenue with a single, principles-based model. Except for a limited number of exceptions, including leases, the new revenue model in AASB 15 will apply to all contracts with customers as well as non-monetary exchanges between entities in the same line of business to facilitate sales to customers and potential customers.

• The core principle of the Standard is that an entity will recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for the goods or services. To achieve this objective,

• AASB 15 provides the following five-step process:

• identify the contract(s) with a customer;

• identify the performance obligations in the contract(s);

• determine the transaction price;

• allocate the transaction price to the performance obligations in the contract(s); and

• recognise revenue when (or as) the performance obligations are satisfed.

• This Standard will require retrospective restatement, as well as enhanced disclosures regarding revenue.

• Although the directors anticipate that the adoption of AASB 15 may have an impact on the Group’s financial statements, it is impracticable at this stage to provide a reasonable estimate of such impact.F

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2.4 Significant accounting policies

(a) Basis of consolidation

The consolidated financial statements comprise the financial statements of the Group and its subsidiaries as at 30 June 2015. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary.

Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it derecognises the related assets (including goodwill), liabilities, non-controlling interest and other components of equity while any resultant gain or loss is recognised in profit or loss. Any investment retained is recognised at fair value.

(b) Business combinations and goodwill

Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at acquisition date fair value and the amount of any non-controlling interest in the acquiree. For each business combination, the Group elects whether to measure the non-controlling interest in the acquiree at fair value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition related costs are expensed as incurred and included in administrative expenses.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date.

If the business combination is achieved in stages, the previously held equity interest is remeasured at its acquisition date fair value and any resulting gain or loss is recognised in profit or loss.

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interests, and any previous interest held, over the net identifiable assets acquired and liabilities assumed. If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the Group re-assesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts to be recognised at the acquisition date. If the re-assessment still results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognised in profit or loss.F

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After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.

Where goodwill has been allocated to a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the disposed operation is included in the carrying amount of the operation when determining the gain or loss on disposal. Goodwill disposed in these circumstances is measured based on the relative values of the disposed operation and the portion of the cash-generating unit retained.

(c) Current versus non-current classification

The Group presents assets and liabilities in the statement of financial position based on current/non-current classification. An asset is current when it is:

• Expected to be realised or intended to be sold or consumed in the Group’s normal operating cycle

• Held primarily for the purpose of trading

• Expected to be realised within twelve months after the reporting period

Or

• Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period

The Group classifies all other assets as non-current.

A liability is current when:

• It is expected to be settled in the Group’s normal operating cycle

• It is held primarily for the purpose of trading

• It is due to be settled within twelve months after the reporting period

Or

• There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period

The Group classifies all other liabilities as non-current.

Deferred tax assets and liabilities are classified as non-current assets and liabilities.

(d) Foreign currency translation

The Group’s consolidated financial statements are presented in Australian dollars ($), which is also the parent’s functional currency. For each entity the Group determines the functional currency and items included in the financial statements of each entity are measured using that functional currency. The Group uses the direct method of consolidation and on disposal of a foreign operation, the gain or loss that is reclassified to profit or loss reflects the amount that arises from using this method.

Transactions and balances

Transactions in foreign currencies are initially recorded by the Group’s entities at their respective functional currency spot rates at the date the transaction first qualifies for recognition.

Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rate of exchange at the reporting date.

Differences arising on settlement or translation of monetary items are recognised in profit or loss.F

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Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition of gain or loss on change in fair value of the item (i.e., translation differences on items whose fair value gain or loss is recognised in other comprehensive income or profit or loss are also recognised in other comprehensive income or profit or loss, respectively).

Group companies

On consolidation, the assets and liabilities of foreign operations are translated into Australian dollars at the rate of exchange prevailing at the reporting date and their statements of profit or loss are translated at exchange rates prevailing at the dates of the transactions. The exchange differences arising on translation for consolidation purpose are recognised in other comprehensive income and reflected in the foreign currency translation reserve in the statement of financial position. On disposal of a foreign operation, the component of other comprehensive income relating to that particular foreign operation is recognised in profit or loss.

Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition are treated as assets and liabilities of the foreign operation and translated at the spot rate of exchange at the reporting date.

(e) Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured, regardless of when the payment is received. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duty. The Group has concluded that it is acting as a principal in all of its revenue arrangements since it is the primary obligor in all the revenue arrangements, has pricing latitude and is also exposed to inventory and credit risks. The specific recognition criteria described below must also be met before revenue is recognised.

Sale of goods

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer, usually on delivery of the goods. Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates. The Group does not provide any extended warranties or maintenance contracts to its customers.

Sale of services

Revenue from the sale of services is recognised in the accounting period in which the services are rendered by reference to completion of the specific transaction assessed on the basis of the actual services provided as a proportion of the total services to be provided. When the contract outcome cannot be measured reliably, revenue is recognised only to the extent that the expenses incurred are eligible to be recovered.

Sale of subscriptions

Revenue is generated from subscription sales and once the customer has taken undisputed delivery of the services. The revenue from the subscription agreement is recognised on a monthly basis at equal amounts for each month of the subscription agreement. In recognising subscription sales revenues, the Group considers the nature of the tenure of the agreement and the useful life of the services being provided under the subscription agreement.

Interest income

Interest income is recorded using the effective interest rate (EIR). Interest income is included in finance income in the statement of profit or loss.

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(f) Taxes

Current income tax

Current income tax assets and liabilities for the current period are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date in the countries where the Group operates and generates taxable income.

Current income tax relating to items recognised directly in equity is recognised in equity and not in the statement of profit or loss. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

Deferred tax

Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.

Deferred tax liabilities are recognised for all taxable temporary differences except:

• When the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.

• In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint arrangements, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised, except:

• When the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.

• In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint arrangements, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity.

Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

Tax benefits acquired as part of a business combination, but not satisfying the criteria for separate recognition at that date, are recognised subsequently if new information about facts and circumstances change. The adjustment is either treated as a reduction to goodwill (as long as it does not exceed goodwill) if it was incurred during the measurement period or recognised in profit or loss.

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An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of profit or loss when the asset is derecognised.

The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.

(i) Leases

The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfilment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.

Group as a lessee

A lease is classified at the inception date as a finance lease or an operating lease. A lease that transfers substantially all the risks and rewards incidental to ownership to the Group is classified as a finance lease. An operating lease is a lease other than a finance lease.

Goods and services tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST, except:

• When the GST incurred on a sale or purchase of assets or services is not payable to or recoverable from the taxation authority, in which case the GST is recognised as part of the revenue or the expense item or as part of the cost of acquisition of the asset, as applicable

• When receivables and payables are stated with the amount of GST included

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.

Cash flows are included in the statement of cash flows on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority is classified as part of operating cash flows.

(g) Cash dividend to equity holders of the parent

The Company recognises a liability to pay cash to equity holders of the parent when the distribution is authorised and the distribution is no longer at the discretion of the Company. A corresponding amount is recognised directly in equity.

(h) Property, plant and equipment

Property, plant and equipment are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. All repair and maintenance costs are recognised in profit or loss as incurred.

Property, plant and equipment transferred from customers is initially measured at the fair value at the date on which control is obtained.

Depreciation is calculated over the estimated useful lives of the assets as follows:

Plant and equipment 20% - 50% (diminishing value)

Furniture, fittings and equipment

15% - 50% (diminishing value)

Motor vehicles 20% (straight line)

Leasehold improvements

10% - 40% (diminishing value)

Leased plant and equipment

20% (straight line)

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Finance leases are capitalised at the commencement of the lease at the inception date fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised in finance costs in the statement of profit or loss.

A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.

Operating lease payments are recognised as an operating expense in the statement of profit or loss on a straight-line basis over the lease term.

(j) Borrowing costs

Borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

(k) Intangible assets

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses. Internally generated intangibles, excluding capitalised development costs, are not capitalised and the related expenditure is reflected in the statement of profit or loss in the period in which the expenditure is incurred.

The useful lives of intangible assets are assessed as either finite or indefinite.

Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortisation period or method, as appropriate, and are treated as changes in accounting estimates and adjusted on a prospective basis. The amortisation expense on intangible assets with finite lives is recognised in the statement of profit or loss as the expense category that is consistent with the function of the intangible assets.

Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually, either individually or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.

Gains or losses arising from de-recognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the statement of profit or loss when the asset is derecognised.

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Research and development costs

Research costs are expensed as incurred. Development expenditures on an individual project are recognised as an intangible asset when the Group can demonstrate:

• The technical feasibility of completing the intangible asset so that the asset be available for use or sale;

• Its intention to complete and its ability to use or sell the asset;

• How the asset will generate future economic benefits;

• The availability of resources to complete the asset;

• The ability to measure reliably the expenditure during development; and

• The ability to use the intangible asset generated

Following initial recognition of the development expenditure as an asset, the asset is carried at cost less any accumulated amortisation and accumulated impairment losses. Amortisation is calculated on a systematic basis based on the future economic benefits over the useful life of the project. During the period of development, the asset is tested for impairment at a minimum annually, and as indicators arise.

A summary of the policies applied to the Group’s intangible assets is as follows:

(l) Financial instruments - initial recognition and subsequent measurement

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

(i) Financial assets

Initial recognition and measurement

Financial assets are classified, at initial recognition, as financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, AFS financial assets, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.

All financial assets are recognised initially at fair value plus, in the case of financial assets not subsequently measured at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset.

Subsequent measurement

For purposes of subsequent measurement, financial assets are classified in two categories:

• Financial assets at fair value through profit or loss

• Loans and receivables

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss include financial assets held for trading and financial assets designated upon initial recognition at fair value through profit or loss. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. Derivatives, including separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments as defined by AASB 139.

SoftwareCustomer Contracts

Development costs

Useful lives Finite (5 years) Finite (9 years) Finite (7 years)

Amortisation method used

Amortised on astraight-line basisover the period ofexpected futurelife of asset

Amortised on astraight-line basisover the period ofthe expectedfuture value ofcustomers

Amortised on a straight line basis over the period of expected future sales from the related project

Internally generated or acquired

Acquired Acquired Internally generated

Remaining estimated life

3 years 7 years 1-7 years

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Financial assets at fair value through profit or loss are carried in the statement of financial position at fair value with net changes in fair value presented as finance costs (negative net changes in fair value) or finance income (positive net changes in fair value) in the statement of profit or loss.

Derivatives embedded in host contracts are accounted for as separate derivatives and recorded at fair value if their economic characteristics and risks are not closely related to those of the host contracts and the host contracts are not held for trading or designated at fair value though profit or loss. These embedded derivatives are measured at fair value with changes in fair value recognised in profit and loss. Re-assessment only occurs if there is either a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required or a reclassification of a financial asset out of the fair value through profit or loss.

Loans and receivables

This category is the most relevant to the Group. Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are subsequently measured at amortised cost.

De-recognition

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily de-recognised (i.e. removed from the group’s consolidated statement of financial position) when:

• The rights to receive cash flows from the asset have expired; or

• The asset is transferred to another party whereby the entity no longer has any significiant continuing involvement in the risks and benefits associated with the asset.

Impairment of financial assets

The Group assesses, at each reporting date, whether there is objective evidence that a financial asset or a group of financial assets is impaired. An impairment exists if one or more events that has occurred since the initial recognition of the asset (an incurred ‘loss event’) has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtor or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation and observable data indicating that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

(ii) Financial liabilities

Initial recognition and measurement

Financial liabilities are classified, at initial recognition, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.

All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.

The Group’s financial liabilities include trade and other payables, loans and borrowings, including bank overdrafts, and derivative financial instruments.

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Subsequent measurement

The measurement of financial liabilities depends on their classification, as described below:

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by AASB 139. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments.

Gains or losses on liabilities held for trading are recognised in the statement of profit or loss as finance costs or finance income.

Financial liabilities designated upon initial recognition at fair value through profit or loss are designated at the initial date of recognition, and only if the criteria in AASB 139 are satisfied. The Group has not designated any financial liability as at fair value through profit or loss.

Loans and borrowings

This is the category most relevant to the Group. After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the Effective Interest Rate (EIR) method. Gains and losses are recognised in the profit or loss when the liabilities are derecognised as well as through the EIR amortisation process.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance costs in the statement of profit or loss.

This category generally applies to interest-bearing loans and borrowings. For more information refer Note 12.

De-recognition

A financial liability is de-recognised when the obligation under the liability is discharged or cancelled, or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the de-recognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss.

Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the consolidated statement of financial position if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.

(m) Derivative financial instruments and hedge accounting

Initial recognition and subsequent measurement

Where the Group uses derivative financial instruments, such as forward currency contracts, interest rate swaps and forward commodity contracts, to hedge its foreign currency risks, interest rate risks and commodity price risks, respectively. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.

Any gains or losses arising from changes in the fair value of derivatives are taken directly to profit or loss, except for the effective portion of cash flow hedges, which is recognised in OCI and later reclassified to profit or loss when the hedge item affects profit or loss.F

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For the purpose of hedge accounting, hedges are classified as:

• Fair value hedges: when hedging the exposure to changes in the fair value of a recognised asset or liability or an unrecognised firm commitment

At the inception of a hedge relationship, the Group formally designates and documents the hedge relationship to which it wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge. The documentation includes identification of the hedging instrument, the hedged item or transaction, the nature of the risk being hedged and how the entity will assess the effectiveness of changes in the hedging instrument’s fair value in offsetting the exposure to changes in the hedged item’s fair value or cash flows attributable to the hedged risk. Such hedges are expected to be highly effective in achieving offsetting changes in fair value or cash flows and are assessed on an ongoing basis to determine that they actually have been highly effective throughout the financial reporting periods for which they were designated.

Hedges that meet the strict criteria for hedge accounting are accounted for as described below:

Fair value hedges

The change in the fair value of a hedging derivative is recognised in the statement profit or loss as a finance costs. The change in the fair value of the hedged item attributable to the risk hedged is recorded as part of the carrying value of the hedged item and is also recognised in the statement of profit or loss as a finance cost.

For fair value hedges relating to items carried at amortised cost, any adjustment to carrying value is amortised through profit or loss over the remaining term of the hedge using the EIR method. EIR amortisation may begin as soon as an adjustment exists and no later than when the hedged item ceases to be adjusted for changes in its fair value attributable to the risk being hedged.

If the hedge item is derecognised, the unamortised fair value is recognised immediately in profit or loss.

When an unrecognised firm commitment is designated as a hedged item, the subsequent cumulative change in the fair value of the firm commitment attributable to the hedged risk is recognised as an asset or liability with a corresponding gain or loss recognised in the profit or loss.

(n) Inventories

Inventories are valued at the lower of cost and net realisable value. Net realisable value represents the estimated selling price for the inventories less all estimated costs of completion and costs necessary to make the sales.

Work in progress is recognised as the cost incurred in the construction of assets not yet completed.

(o) Impairment of non-financial assets

The Group assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s (CGU) fair value less costs of disposal and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators.

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The Group bases its impairment calculation on budgets and forecast calculations, which are prepared separately for each of the Group’s CGUs to which the individual assets are allocated. These budgets and forecast calculations generally cover a period of five to ten years. For longer periods, a long-term growth rate is calculated and applied to project future cash flows after the last forecast year.

Impairment losses of continuing operations, including impairment on inventories, are recognised in the statement of profit or loss in expense categories consistent with the function of the impaired asset.

For assets excluding goodwill, an assessment is made at each reporting date to determine whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group estimates the asset’s or CGUs recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the statement of profit or loss unless the asset is carried at a revalued amount, in which case, the reversal is treated as a revaluation increase.

Goodwill is tested for impairment annually as at 30 June and when circumstances indicate that the carrying value may be impaired.

Impairment is determined for goodwill by assessing the recoverable amount of each CGU (or group of CGUs) to which the goodwill relates. When the recoverable amount of the CGU is less than its carrying amount, an impairment loss is recognised in the statement of profit or loss. Impairment losses relating to goodwill cannot be reversed in future periods.

Intangible assets with indefinite useful lives are tested for impairment annually as at 30 June at the CGU level, as appropriate, and when circumstances indicate that the carrying value may be impaired.

(p) Cash and short-term deposits

Cash and short-term deposits in the statement of financial position comprise cash at banks and on hand.

For the purpose of the consolidated statement of cash flows, cash and cash equivalents consist of cash, as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Group’s cash management.

(q) Provisions

Wages, salaries and annual leave

Liabilities for wages and salaries, including non-monetary benefits and accumulating annual leave which are expected to be settled within 12 months of the reporting date are recognised in respect of employees’ services up to the reporting date. They are measured at the amounts expected to be paid when the liabilities are settled.

(r) Share-based payments

Employees (including senior executives) of the Group receive remuneration in the form of share-based payments, whereby employees render services as consideration for equity instruments (equity-settled transactions).

Equity-settled transactions

The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate valuation model. That cost is recognised, together with a corresponding increase in other capital reserves in equity, over the period in which the performance and/or service conditions are fulfilled in employee benefits expense. The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group’s best estimate of the number of equity instruments that will ultimately vest. The statement of profit or loss expense or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period and is recognised in employee benefits expense.

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No expense is recognised for awards that do not ultimately vest, except for equity-settled transactions for which vesting is conditional upon a market or non-vesting condition. These are treated as vesting irrespective of whether or not the market or non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied.

When the terms of an equity-settled transaction award are modified, the minimum expense recognised is the expense as if the terms had not been modified, if the original terms of the award are met. An additional expense is recognised for any modification that increases the total fair value of the share-based payment transaction, or is otherwise beneficial to the employee as measured at the date of modification.

The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share (further details are given in Note 9).

Cash-settled transactions

The cost of cash-settled transactions is measured initially at fair value at the grant date using a binomial model, further details of which are given in Note 20. This fair value is expensed over the period until the vesting date with recognition of a corresponding liability. The liability is remeasured to fair value at each reporting date up to and including the settlement date, with changes in fair value recognised in employee benefits expense.

(s) Fair value measurement

The Group measures financial instruments such as derivatives and non-financial assets such as investment properties, at fair value at each balance sheet date.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

• In the principal market for the asset or liability; or

• In the absence of a principal market, in the most advantageous market for the asset or liability

The principal or the most advantageous market must be accessible to by the Group.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

• Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities

• Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable

• Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

For assets and liabilities that are recognised in the financial statements at fair value on a recurring basis, the Group determines whether transfers have occurred between Levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.

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3. Significant accounting judgements, estimates and assumptions

The preparation of the Group’s consolidated financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

Other disclosures relating to the Group’s exposure to risks and uncertainties include:

• Capital management — Note 12.4

• Financial risk management objectives and policies — Note 12.3

Judgements

In the process of applying the Group’s accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognised in the consolidated financial statements.

Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Group based its assumptions and estimates on parameters available when the consolidated financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising beyond the control of the Group. Such changes are reflected in the assumptions when they occur.

Impairment of non-financial assets

An impairment exists when the carrying value of an asset or cash generating unit (CGU) exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at arm’s length, for similar assets or observable market prices less incremental costs for disposing of the asset. The value in use calculation is based on a DCF model. The cash flows are derived from the budget for the next five years and do not include restructuring activities that the Group is not yet committed to or significant future investments that will enhance the asset’s performance of the CGU being tested. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes. These estimates are most relevant to goodwill and other intangible assets with indefinite useful lives recognised by the Group. The key assumptions used to determine the recoverable amount for the different CGUs, including a sensitivity analysis, are disclosed and further explained in Note 13.


The Group initially measures the cost of cash-settled transactions with employees using a binomial model to determine the fair value of the liability incurred. The Group initially measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. Estimating fair value for share-based payment transactions requires determination of the most appropriate valuation model, which is dependent on the terms and conditions of the grant. This estimate also requires determination of the most appropriate inputs to the valuation model including the expected life of the share option, volatility and dividend yield and making assumptions about them. For cash-settled share-based payment transactions, the liability needs to be remeasured at the end of each reporting period up to the date of settlement, with any changes in fair value recognised in profit or loss. This requires a reassessment of the estimates used at the end of each reporting period. The assumptions and models used for estimating fair value for share-based payment transactions are disclosed in Note 20.

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Taxes

Deferred tax assets are recognised for all unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.

Development costs

The Group capitalises development costs in accordance with the accounting policy. Initial capitalisation of costs is based on management’s judgement that technological and economical feasibility is confirmed, usually when a product development project has reached a defined milestone according to an established project management model. In determining the amounts to be capitalised, management makes assumptions regarding the expected future cash generation of the project, discount rates to be applied and the expected period of benefits. At 30 June 2015, the carrying amount of capitalised development costs was $1,134,502 (2014: $1,227,813).

This amount includes significant investment in the development of the Tomizone Lightswitch Software Platform.

4. Share based paymenttransaction

Acquisition of Tomizone Limited

On 22 May 2015, Tomizone Limited (formerly PHW Consolidated Limited) acquired 100% of the issued capital of Tomizone New Zealand Limited and its subsidiaries. The acquisition has been accounted for as a share based payment transaction by which Tomizone New Zealand Limited acquires the net assets and listing status of Tomizone Limited. The acquisition was seen as an opportunity to use the existing listed company structure of the Company and provide exisiting shareholders of the Company the opportunity to participate in the future opportunities of Tomizone Group.

Concurrent to the acquisition a public offer issuing 25,000,000 ordinary shares at 20 cents each was undertaken.

Securities issued as Tomizone New Zealand Limited consideration:

Following completion, the original shareholders of Tomizone Limited held 22.8%, the new shareholders 26.3%, and the Tomizone New Zealand Limited shareholders 50.9% of the Company. As a consequence of this, the acquisition is accounted for as an acquisition of the assets and liabilities and listing status of Tomizone Ltd (PHW) by way of a share based payment transaction.

Deemed consideration determined as the ordinary shares at transaction date multiplied by the offer price for Tomizone consideration, 19,064,636 shares at $0.20, notes converted, 2,593,750 at $0.16, and the fair value of options outstanding at offer date at an average price of $0.01.

Ordinary shares 47,381,489

A class options

3,356,154B class options

2,163,461

A performance shares 15,676,246

B performance shares 15,676,246

$

Deemed consideration 4,352,264

Fair value of net assets at acquisition date (535,359)

Listing Expense 3,816,905

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Fair value of net assets:

The fair values of the identifiable assets and liabilities of Tomizone Limited as at the date of acquisition were:

The transaction has been accounted for as a share based payment acquisition by which Tomizone New Zealand Limited (TNZ) acquired the net assets and listing status of the Company. The acquisition resulted in deemed consideration in excess of carrying value of net assets in Tomizone Limited of $3,816,905. This is a listing expense in the year ended 30 June 2015. The listing expense represents the value to TNZ of having an immediate ASX listed company status with all of the capital raising avenues available to this type of company.

Receivables and payables have been included at their fair value. Directors were of the opinion that these were fully recoverable and that no impairment of these was required.

Since the date of acquisition, the Tomizone Limited entity has contributed losses of $284,581 to the comprehensive loss of the Group and $270,163 of this related to share based payments for the issue of options. Had the Company been part of the Group for the whole of the year, it would have contributed losses of $1,238,537 to the comprehensive loss of the Group. Acquisition costs of $712,235 have been expensed in the year. Capital raising costs of $314,370 associated with the acquisition and public offering have been deducted from the amount of capital raised.

Carrying amount

$

Assets

Current Assets 1,144,876

1,144,876

Liabilities

Current Liabilities (609,517)

(609,517)

NET ASSETS 535,359

Under the terms of the acquisition agreement entered into betweeen the Company and the shareholders of TNZ (“TNZ Vendors”), the Company agreed that on or after 22 May 2015, it will issue the shares and options, described above, to the TNZ Vendors.

Conditions attached consideration securities:

• A class Options

• Exercise price of $0.40. Expiry date of 31 December 2015

• B class Options

• Exercise price of $0.40. Expiry date of 30 September 2018

• A performance shares

• A performance shares will convert into ordinary shares, 12 months from the date of issue, if performance criteria met. Performance criteria is as follows: “the production of evidence in the form of audited accounts of Tomizone having an amount of NZ$7,500,000 (based on audited accounts) in revenue generated from the business and assets of Tomizone as at 31 January 2015 and from any organic growth from such business period prior to 30 June 2016.”

• B performance shares

• B performance shares will convert into ordinary shares, 12 months from the date of issue, if performance criteria met. Performance criteria is as follows: “the production of evidence in the form of audited accounts of Tomizone having an amount of NZ$9,500,000 (based on audited accounts) in revenue generated from the business and assets of Tomizone as at 31 January 2015 and from any organic growth from such business period prior to 30 June 2016.”

The performance shares and options will only be issued to the previous Tomizone New Zealand shareholders if revenue hurdles are met. They are treated as a capital transaction as part of the implementation agreement.

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5. Information about subsidiaries

The consolidated financial statements of the Group include:

6. Segment informationTomizone’s operating segment has been determined based on internal management reporting structure and the nature of the product provided by Tomizone. It reflects the business level at which financial information is provided to management for decision making regarding resource allocation and performance assessment. On this basis it is concluded that Tomizone is reviewed for management purpose as a single operating segment.

The Group operates in one industry, being the development and commercialisation of WiFi software, and is based primarily in Australia and New Zealand. At this stage the Group’s operations outside Australia and New Zealand are in start-up phase and are not significant to the Group. The Group has identified its operating segment based on internal reports that are reviewed and used by the Board of Directors (chief operating decision makers) in assessing performance and determining the allocation of resources.

% Equity interest

Name Country of incorporation 2015 2014

Tomizone New Zealand Limited New Zealand 100.0 100.0

Tomizone Australia Pty Limited Australia 100.0 100.0

Jimojo Pty Limited Australia 100.0 100.0

Tomizone India Pvt Limited India 100.0 100.0

Tomizone International Limited New Zealand 100.0 100.0

Tomizone Licensing Limited New Zealand 100.0 100.0

Tomizone Consulting Beijing Company Limited China 100.0 100.0

Bargain Oil Pty Limited Australia 100.0 100.0

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7. Other income/expenses7.1 Other operating income/(loss)

7.2 Operating lease expenses

7.3 Finance costs

7.4 Finance income

7.5 Research and development costs

There are no explicit research and development costs. Research into commercial opportunities to advance software is incurred and recognised through employee benefits.

2015 2014

$ $

Net gain on disposal of property, plant and equipment (344) (7,389)

Foreign exchange gains/(loss) - (net) (50,709) 71,265

(51,053) 63,876

2015 2014

$ $

Interests on debts and borrowings (646,442) (673,914)

Total interest expense (646,442) (673,914)

Net gain/loss on financial instruments at fair value through profit or loss (160,644) 201,845

Total finance costs (807,086) (472,069)

2015 2014

$ $

Interest income 7,430 –

Total finance income 7,430 –

2015 2014

$ $

Operating lease expenses 177,327 138,923

177,327 138,923

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8. Income taxThe major components of income tax expense for the years ended 30 June 2015 and 2014 are:

Consolidated statement of profit or loss

Reconciliation between tax expense and the accounting profit multiplied by Australia’s domestic tax rate for 2014 and 2015:

2015 2014

$ $

Current income tax:

Deferred tax:

Deferred tax: (102,377) 65,728

Income tax expense reported in the consolidated statement of profit or loss (102,377) 65,728

2015 2014

$ $

Accounting profit before tax from continuing operations (9,097,210) (1,268,428)

Accounting loss before income tax (9,097,210) (1,268,428)

At Australia’s statutory income tax rate of 30% (2014: 30%) (2,729,162) (380,529)

Non-deductible expenses for tax purposes

Impairment of goodwill 361,796 –

Other non-deductible expenses 283,510 185,343

Listing Expense 1,145,071 –

Deferred tax assets not recognised 775,045 245,851

Effect of lower tax rate in NZ of 28% (2014: 28%) 61,363 15,063

At the effective income tax rate of 30% (2014: 30%) (102,377) 65,728

Income tax expense / (benefit) reported in the statement of profit or loss (102,377) 65,728

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Deferred tax / (benefit)

Deferred tax relates to the following:

Reflected in the statement of financial position as follow:

The Group offsets tax assets and liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority.

Consolidated statement of financial position

Consolidated statement of profit or loss

Name 2015 2014 2015 2014

$ $ $ $

Alternative depreciation for tax purposes (95,289) (115,308) (13,674) 86,306

Intangibles in Jimojo acqusition (180,000) (259,000) (79,000) (56,000)

Employee liabilities 34,199 25,510 (9,703) 35,422

Deferred tax expense/(income) – – (102,377) 65,728

Net deferred tax (liabilities)/assets (241,090) (348,798)

Deferred tax assets 3,424 1,800

Deferred tax liabilities

Continuing operations (244,514) (350,598)

Deferred tax liabilities, net (241,090) (348,798)

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9. Earnings per share (EPS)Basic EPS amounts are calculated by dividing profit for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year.

Diluted EPS amounts are calculated by dividing the net profit attributable to ordinary equity holders of the parent (after adjusting for interest on the convertible preference shares) by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.

The following reflects the income and share data used in the basic and diluted EPS computations:

There have been no other transactions involving ordinary shares or potential ordinary shares between the reporting date and the date of authorisation of these financial statements.

2015 2014

$ $

(Loss) attributable to ordinary equity holders of the parent

Continuing operations (9,042,430) (1,562,774)

(Loss) attributable to ordinary equity holders of the Parent for basic earnings (9,042,430) (1,562,774)

(Loss) attributable to ordinary equity holders of the Parent adjusted for the effect of dilution (9,042,430) (1,562,774)

$’000 $’000

Weighted average number of ordinary shares for basic EPS 74,983 30,333

Effect of dilution:

Performance shares & options 3,476 –

Weighted average number of ordinary shares adjusted for the effect of dilution 78,459 30,333

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10. Property, plant and equipment

Finance leases

The carrying value of property, plant and equipment held under finance leases and hire purchase contracts as 30 June 2015 was $400,021 (2014: $631,336). Additions during the year was $nil (2014: $275,274) of plant and equipment under finance leases. Leased assets are pledged as security for the related finance lease liabilities.

Plant and equipment

Furniture, fittings and equipment Motor vehicles

Leasehold improvements

Leased plant and equipment Total

$ $ $ $ $ $

Cost

At 1 July 2013 218,120 42,404 13,851 7,656 693,719 975,750

Additions 126,235 1,132 – – 275,274 402,641

Disposals – – (13,851) – – (13,851)

Exchanges differences 16,990 1,941 – 785 71,106 90,822

At 30 June 2014 361,345 45,477 – 8,441 1,040,099 1,455,362

At 1 July 2014 361,345 45,477 – 8,441 1,040,099 1,455,362

Additions 149,133 1,121 50,995 3,593 – 204,842

Exchanges differences (17,003) (2,165) – (464) (57,237) (76,869)

At 30 June 2015 493,475 44,433 50,995 11,570 982,862 1,583,335

Depreciation

At 1 July 2013 189,950 26,882 – 3,611 203,924 424,367

Depreciation charged for the year

33,587 4,606 3,463 541 183,937 226,134

Disposals – – (3,463) – – (3,463)

Exchange differences 14,862 1,298 – 382 20,902 37,444

At 30 June 2014 238,399 32,786 – 4,534 408,763 684,482

At 1 July 2014 238,399 32,786 – 4,534 408,763 684,482

Depreciation charged for the year

105,850 3,792 15,148 1,730 196,571 323,091

Exchange differences (17,720) (3,669) – (336) (22,493) (44,218)

At 30 June 2015 326,529 32,909 15,148 5,928 582,841 963,355

Net book value

At 30 June 2014 122,946 12,691 – 3,907 631,336 770,880

At 30 June 2015 166,946 11,524 35,847 5,642 400,021 619,980

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11. Intangible assets

Development costs

Patents and licences with

definite useful life Software

Customer contracts Goodwill Total

$ $ $ $ $ $

Cost

At 1 July 2013 2,775,246 26,306 802,357 263,000 1,544,884 5,411,793

Additions 553,128 – – – – 553,128

Exchanges differences 249,294 2,696 1,574 – – 253,564

At 30 June 2014 3,577,668 29,002 803,931 263,000 1,544,884 6,218,485

At 1 July 2014 3,577,668 29,002 803,931 263,000 1,544,884 6,218,485

Additions 477,855 579 – – – 478,434

Exchanges differences (230,113) (1,596) (932) – – (232,641)

At 30 June 2015 3,825,410 27,985 802,999 263,000 1,544,884 6,464,278

Amortisation and impairment

At 1 July 2013 1,626,502 26,306 11,526 – – 1,664,334

Amortisation 555,651 – 157,986 29,000 – 742,637

Exchanges differences 167,702 2,696 1,181 – – 171,579

At 30 June 2014 2,349,855 29,002 170,693 29,000 – 2,578,550

At 1 July 2014 2,349,855 29,002 170,693 29,000 – 2,578,550

Amortisation 469,630 579 157,156 104,000 – 731,365

Impairment (Note 13) – – – – 1,205,988 1,205,988

Exchanges differences (128,577) (1,596) (754) – – (130,927)

At 30 June 2015 2,690,908 27,985 327,095 133,000 1,205,988 4,384,976

Net book value

At 30 June 2014 1,227,813 – 633,238 234,000 1,544,884 3,639,935

At 30 June 2015 1,134,502 – 475,904 130,000 338,896 2,079,302For

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12. Financial assets and financial liabilities12.1 Financial assets

Financial instruments at fair value through profit or loss reflect the positive change in fair value of those foreign exchange forward contracts that are not designated in hedge relationships, but are, nevertheless, intended to reduce the level of foreign currency risk for AUD loan repayments.

12.2 Financial liabilities, Interest-bearing loans and borrowings

Bank overdrafts

The Group operates overdrafts with mainstream commercial banks. The approved limits are in NZD $42,000 and in AUD $50,000.

2015 2014

$ $

Financial instruments at fair value through profit or loss

Derivatives not designated as hedges

Foreign exchange forward contracts - not designated as hedges 70,819 244,846

Total instruments at fair value through profit or loss 70,819 244,846

Total other financial assets 70,819 244,846

Total current 70,819 118,462

Total non-current – 126,384

Interest Rate 2015 2014

% $ $

Current interest-bearing loans and borrowings

Bank overdrafts 18% 89,223 38,610

Credit cards 45,322 48,285

Loans 14% – 15% 1,233,811 880,617

Total current 1,368,356 967,512

Non-current interest-bearing loans and borrowings

Loans 14% - 15% 1,187,821 2,510,249

Loan from third party investor 10% 105,504 –

Total non-current 1,293,325 2,510,249

Total interest-bearing loans and borrowings 2,661,681 3,477,761

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Loans

The loans are secured by way of assignment of a portion of Tomizone’s interests in certain business contracts to the lender, FE Investments Limited. The original loan principal was determined as the net present value assigning a portion of the face value of revenues from a pre-defined schedule of business contracts.

The loans have a maturity range of November 2015 through to January 2019. Principal and interest is settled on a monthly basis. All loans can be fully repaid by Tomizone at its discretion with minimal penalties for early settlement.

Loan from third party investor

The loan is unsecured with a maturity date of 1 July 2016.

Other financial liabilities

12.3 Financial risk management objectives and policies

The Group’s principal financial liabilities, other than derivatives, comprise of loans and borrowings, and trade and other payables. The main purpose of these financial liabilities is to finance the Group’s operations to support its operations. The Group’s principal financial assets include loans, trade and other receivables, and cash and short-term deposits that derive directly from its operations.

The Group is exposed to market risk, credit risk and liquidity risk. The Group’s senior management oversees the management of these risks. The Group’s senior management is supported by a financial risk committee that advises on financial risks and the appropriate financial risk governance framework for the Group. The financial risk committee provides assurance to the Group’s senior management that the Group’s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Group’s policies and risk objectives. All derivative activities for risk management purposes are carried out by specialist teams that have the appropriate skills, experience and supervision. It is the Group’s policy that no trading in derivatives for speculative purposes may be undertaken. The board of directors reviews and agrees policies for managing each of these risks which are summarised below.

Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprise three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk and commodity risk. Financial instruments affected by market risk include loans and borrowings, and deposits.

2015 2014

$ $

Other financial liabilities at amortised cost

Finance lease liability 219,278 268,598

Total other financial liabilities at amortised cost 219,278 268,598

Total other financial liabilities 219,278 268,598

Total current 219,278 46,253

Total non-current – 222,345

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Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group’s exposure to the risk of changes in market interest rates is limited due primarily to the Group’s long-term debt obligations that have fixed interest rates.

Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Group’s exposure to the risk of changes in foreign exchange rates relates primarily to the Group’s operating activities (when revenue or expense is denominated in a foreign currency) and the Group’s net investments in foreign subsidiaries. The Group manages its foreign currency risks by using foreign exchange forward contracts which are economic hedges but are not designated as hedge relationships for accounting purposes.

Foreign currency sensitivity

The following tables demonstrate the sensitivity to a reasonably possible change in the NZD exchange rate, with all other variables held constant. The impact on the Group’s profit before tax is due to changes in the fair value of monetary assets and liabilities. The Group’s exposure to foreign currency changes for all other currencies is not material.

The movement in the pre-tax effect is a result of a change in the fair value of monetary assets and liabilities denominated in AU dollars, where the functional currency of the entity is a currency other than AU dollars.

Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group’s receivables from customers.

Other credit risk arises from cash and cash equivalents, deposits with banks, security deposits and other receivables.

The maximum exposure to credit risk at the reporting date to recognised financial assets is the carrying amount, net of any provisions for impairment of those assets, as disclosed in the statement of financial position and notes to the financial statements. The Group does not hold any collateral.

Credit risk is managed by a risk assessment process for all customers and counterparties, which takes into account past experience. There have been no impairment losses recognised during the year (2014: nil)

Trade receivables

Customer credit risk is managed to the Group’s established policy, procedures and control relating to customer credit risk management. Credit quality of the customer is assessed at the time of customer acquisition. Outstanding customer receivables are regularly monitored.

No customer is individually greater than 10% of total revenues for the Group.

Change in USD rate

Effect on profit before tax Effect on equity

$ $

2015 -5.00% 153,380 115,037

2014 -5.00% 47,165 142,692

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Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing liquidity is to ensure, where possible, that it will always have sufficient liquidity to meet its liabilities when due.

Ultimate responsibility for liquidity management rests with the Directors. The Group ensures that, where possible, it has sufficient cash on demand to meet expected net cash outflows, including the servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters.

The Group manages liquidity risk by maintaining adequate cash reserves by continuously monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and liabilities.

Maturities of financial liabilities

The following table details the Group’s remaining contractual maturity for its financial instrument liabilities. The table has been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining contractual maturities and therefore these totals may differ from their carrying amount in the statement of financial position.

The table below summarises the maturity profile of the Group’s financial liabilities based on contractual undiscounted payments.

Year ended 30 June 2015

Year ended 30 June 2014

1 year or less 1 to 2 years 2 to 5 years Over 5 years Total

$ $ $ $ $

Interest bearing loans and borrowings 1,542,537 810,048 817,221 – 3,169,806

Finance lease liability 233,974 – – – 233,974

Trade and other payables 1,987,232 – – – 1,987,232

3,763,743 810,048 817,221 – 5,391,012

1 year or less 1 to 2 years 2 to 5 years Over 5 years Total

$ $ $ $ $

Interest bearing loans and borrowings 1,344,034 1,504,848 1,494,808 – 4,343,690

Finance lease liability 49,923 242,856 – – 292,779

Trade and other payables 2,113,137 – – – 2,113,137

3,507,094 1,747,704 1,494,808 – 6,749,606

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12.4 Capital management

For the purpose of the Group’s capital management, capital includes issued capital and all other equity reserves attributable to the equity holders of the parent. The primary objective of the Group’s capital management is to maximise the shareholder value.

The Board ensures the Group has sufficient capital as required for working capital purposes. There were no changes to the Group’s approach to capital management during the year. The Group is not subject to externally imposed capital requirements.

13. Impairment testing of goodwill and intangibles withindefinite lives

Goodwill is allocated to the WiFi services business unit. This business unit currently consists of two revenue streams representing Tomizone business unit and Jimojo business unit. On an annual basis management undertake a value-in-use assessment of the carrying value of its goodwill, to test for impairment. The value-in-use calculation is based on the Board approved budget over a 5 year period using growth rate assumptions.

Cashflows beyond the 5 year forecast period were extrapolated using a terminal growth rate of 2.0%. The pre tax discount rate applied to determine the present value of the cashflow projection is 15.0%. This rate was determined with reference to global growth in the industry and continued investment in competitive product offerings.

The discounted cash flow valuation of the goodwill in the Tomizone business unit indicated that the recoverable amount exceeds the carrying value.

The value-in-use calculation is most sensitive to the following assumptions:

• Revenue assumption

• Discount rate

• Terminal growth rate used to extrapolate cash flows

A decrease in revenue of 30% to current plans would result in an impairment.

A rise in the pre-tax discount rate to 16% or a 5% decrease in the terminal growth rate would not result in any impairment.

At the reporting date, the value-in-use calculation for the Jimojo business unit highlighted that goodwill on acquisition of Jimojo was impaired and therefore the goodwill was written off. An impairment charge of $1,205,988 has been recognised. The remaining goodwill relates to the Tomizone business unit.

14. Inventories

Work in progress represents asset construction costs related to Auckland WiFi network incurred by not yet capitalised.

2015 2014

$ $

Work in progress (at cost) 7,881 149,112

Other inventories 24,000 17,742

Total inventories at the lower of cost and net realisable value 31,881 166,854

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15. Trade and other receivables

For terms and conditions relating to related party receivables, refer to Note 22. Trade receivables are non-interest bearing and are generally on terms of 30 days. There was no provision for doubtful debts recognised during the year (2014: nil).

General security conditions provided on loan funding from lender FE Investments Limited include the Tomizone pledge of a portion of the face value of certain specified customer revenue receipts for the term of the lending. Recourse to this security is only triggered on a breach of the loan payment covenant and then where that breach is not remedied by Tomizone for two consecutive payments against the specific loan. Recourse is to the lenders Tomizone and not to the customer or related revenue. At the date of this report there is no known breach of loan payment covenants. Tomizone has determined that substantially all the risks and rewards of revenue are retained and, consequently, all receivables are recognised.

As at 30 June, the ageing analysis of trade receivables is as follows:

See Note 12 on credit risk of trade receivables, which discusses how the Group manages and measures credit quality of trade receivables that are neither past due nor impaired.

2015 2014

$ $

Trade receivables 178,295 219,140

Other receivables 56,754 44,673

Prepayments 22,366 31,639

257,415 295,452

Total

Neither past due nor

impaired < 30 days 30-60 days 61-90 days > 90 days

$ $ $ $ $ $

2015 178,295 163,468 18,097 546 1,732 (5,548)

2014 219,140 123,455 69,419 19,557 933 5,776

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16. Cash and short-term depositsFor the purpose of the consolidated statement of cash flows, cash and cash equivalents comprise the following at 30 June:

Cash at banks earns interest at floating rates based on daily bank deposit rates. The Group has pledged a part of its short-term deposits to fulfil collateral requirements. Refer to Note 12 for details of bank overdrafts.

2015 2014

$ $

CASH FLOW RECONCILIATION

Reconciliation of net profit / (loss) after tax to net cash flows from operations:

Loss after tax from continuing operations (8,994,833) (1,334,155)

323,091 226,134

1,937,353 742,637

3,816,905 –

982,120 –

344 7,389

174,027 (205,844)

– 168,343

(98,961) 75,981

8,457 5,760

(470,619) –

13,716 (4,083)

309,949 261,910

Adjustments to reconcile profit / (loss) after tax to net cash flows:

Depreciation and impairment of property, plant and equipment

Amortisation and impairment of intangible assets

Listing expenses

Share-based payment expense

Gain on disposal of property, plant and equipment

Fair value through Profit and Loss

Non-deductible sundry expense

Deferred tax movements

Movements in provisions

Cost related to acquisition of subsidiary

Working capital adjustments:

(Increase)/ decrease in trade and other receivables and prepayments

(Decrease)/ increase in trade and other payables

Decrease/ (increase) in inventories (6,258) 13,773

Net cash flows (used in)/from operating activities (2,008,709) (42,155)

2015 2014

$ $

Cash at banks and on hand 4,039,448 38,407

Bank overdrafts (89,223) (38,610)

Cash and cash equivalents 3,950,225 (203)

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17. Contributed equityAuthorised shares

Ordinary shares issued and fully paid

*Ordinary shares issued in Tomizone New Zealand Limited, pre 22 May 2015 acquisition of TomizoneLimited, have been notionally converted to 30 June 2015 equivalent based on exchange ratio determinedon 22 May 2015 acquisition, 6.56 Tomizone shares for every 1 Tomizone New Zealand Limited share.

Refer to Note 4 in respect of the performance shares and options issued.

In addition to options issued for remuneration as referenced in Note 20 the Company has the following options outstanding:

’000 $

As at 1 July 2013 29,945 6,440,160

Issued ordinary shares for cash consideration, various dates* 2,569 518,132

At 30 June 2014 32,514 6,958,292

At 1 July 2014 32,514 6,958,292

Issued ordinary shares for cash consideration, various dates* 10,025 1,714,855

Tomizone Limited shares at 22 May 2015 19,065 3,812,927

Public offer closed 22 May 2015 25,000 4,797,371

Converted loan note 22 May 2015 2,594 415,000

Share based payment 22 May 2015 931 178,969

Other share based payments 4,842 803,151

Fair value PHW Consolidated limited pre-existing options 22 May 2015 – 124,337

At 30 June 2015 94,971 18,804,902

2015 2014

’000 ’000

Ordinary shares 94,971 32,514

94,971 32,514

Number of Options Expiry date

4,326,917 31/12/2015

6,349,934 30/9/2018

375,000 1/10/2018

Unlisted Class A Options

Listed Class B Option

Unlisted Class B Option

Incentive A Options

3,356,154 30/9/2018

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Other capital reserves

Nature and purpose of reserves

Other capital reserves


The share-based payment reserve is used to recognise the value of equity-settled share-based payment transactions provided to employees, including key management personnel, as part of their remuneration. Refer to Note 20 for further details of these plans.

Other comprehensive income, net of tax:

The disaggregation of changes in the OCI by each type of reserve in equity is shown below:

18. Deferred revenue

The deferred revenue reflects revenue invoiced where the service has not been provided.

Foreign currency translation

reserve Total

$ $

As at 30 June 2015

Foreign-exchange translation differences (47,597) (47,597)

(47,597) (47,597)

As at 30 June 2014

Foreign-exchange translation differences (228,619) (228,619)

(228,619) (228,619)

2015 2014

$ $

Deferred during the year 43,999

At 30 June 43,999 –

Current 43,999 –

43,999 –

Share-based payment Total

$ $

As at 1 July 2013 – –

At 30 June 2014 – –

At 1 July 2014 – –

Equity-settled share-based payment 91,194 91,194

At 30 June 2015 91,194 91,194

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19. Employee benefit liabilityAnnual leave and accrued salaries

20. Share-based paymentsIn director and executive service agreements awards are made to directors, executives, and other key talent who have an impact on the Group’s performance. Awards are delivered in the form of options over shares which vest over a period of three years subject to meeting performance measures.

Options movements during the year

The weighted average remaining contractual life for the share options outstanding as at 30 June 2015 was 1.98 years.

The weighted average fair value of options granted during the year was $0.0864.

The range of exercise prices for options outstanding at the end of the year was $0.00 to $0.40.

2015 WAEP 2014 WAEP

Outstanding at the beginning of the year – – – –

Incentive Options 750,000 0.4000 – –

Exercised during the year – – – –

Issued on acquisition of Tomizone 22 May 2015

Director A & B options 1,182,084 – – –

Director C, D & E options 5,373,108 0.2200 – –

Global Advisor options 4,231,794 0.2200 – –

Outstanding at the end of the year 11,536,986 0.2092 – –

Exercisable at closing date 375,000 0.4000 – –

2015 2014

$ $

Current

Annual leave 35,862 31,873

Accrued salaries 88,993 14,186

124,855 46,059

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21. Trade and other payables

22. Related party disclosures

Transactions with key management personnel

Phillip Joe & Stephen Simms were founding shareholders of Tomizone New Zealand Ltd, had controlling interests, and provided executive management services through Alternative Management Ltd. Amounts payable from AML related to management services fees drawn in advance.

The ultimate parent

Tomizone Limited became the parent and ultimate controlling party of the Group on 22 May 2015. Prior to that date the parent and ultimate controlling party of the Group was Tomizone New Zealand Limited.

2015 2014

$ $

Trade payables 588,418 467,397

Other payables 565,947 961,133

Related parties (Note 21) – 52,049

Accrued expenses 345,193 152,156

Payroll tax and other statutory liabilities 487,674 480,402

1,987,232 2,113,137

Incentive B , C Options

Director A, B, Options

Director C Options

Director D Options

Director E Options

Exercise price ($) 0.40 0.00 0.22 0.22 0.22

Dividend yield (%) 0% 0% 0% 0% 0%

Expected volatility (%) 100% 80% 80% 80% 80%

Risk-free interest rate (%) 2.40% 2.40% 2.40% 2.40% 2.40%

Expected life of options 1/10/2018 28/5/2016 28/5/2016 28/5/2017 28/5/2018

Weighted average share price ($) 0.20 0.20 0.20 0.20 0.20

Model used Black-Scholes

2015 2014

$ $

Management fees in advance* _ 52,049

*Phillip Joe & Steve Simms (as Alternative Management Limited, ‘AML’)

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Compensation of key management personnel of the Group

The amounts disclosed in the table are the amounts recognised as an expense during the reporting period related to key management personnel.

Security Interests held by Key Management Personnel

23. Commitments and contingenciesOperating lease commitments - Group as lessee

The Group has entered into commercial lease on office property. Rentals paid under operating leases are charged to the income statement on a straight line basis over the period of the lease.

Future minimum rentals payable under non-cancellable operating leases as at 30 June are as follows:

2015 2014

$ $

Short-term employee benefits 821,571 749,090

Post-employment benefits 5,985 –

Share-based payment 677,039 –

Total compensation paid to key management personnel 1,504,595 749,090

Issue date 2015 2014

Number outstanding

Number outstanding

Tarun Kanji 1,875,553 –

Avikashan Naidu 692,308 –

Eric King Wai Chan 831,298 –

Stephen Simms 14,044,150 14,228,573

Phillip Joe 15,514,279 15,716,003

David McAllansmith – –

Andrew Somervell 2,083,768 –

Sally Wu – –

Total 35,041,356 29,944,576

2015 2014

$ $

Within one year 50,554 93,427

After one year but not more than five years – 53,496

50,554 146,923

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Finance lease commitments

The Group has finance lease agreements for various items of plan and equipment. The Group’s obligations under finance leases are secured by the lessor’s title to the lease assets. Future minimum lease payments under finance lease together with the present value of the net minimum lease payments are as follows:

Contingent assets and liabilities

The Group has no contingent assets or liabilities as at 30 June 2015.

24. Events after the reporting periodThe only significant event occurring after the balance date which may affect either the Group’s operations or results of those operations or the Group’s state of affairs is the resignation of Chief Executive Officer, Stephen Simms, effective 21 August 2015.

25. Auditor’s remunerationThe auditor of Tomizone Limited is Ernst & Young.

2015 2014

Minimum payments

Present value of payments

Minimum payments

Present value of payments

$ $ $ $

Within one year 233,975 219,278 49,923 49,923

After one year but not more than five years – – 242,857 218,674

Total minimum lease payments 233,975 219,278 292,780 268,597

Less amounts representing finance charges (14,697) – (24,182) –

Present value of minimum lease payments 219,278 219,278 268,598 268,597

2015 2014

$ $

Amounts received or due and receivable by Ernst & Young for:

An audit or review of the financial report of the entity and any other entity in theconsolidated group 158,000 –

158,000 –

158,000 –

Amounts received or due and receivable by non Ernst & Young audit firm for:

An audit or review of the financial report of the entity and any other entity in theconsolidated group 22,445 –

Other non-audit services. 75,823 7,370

98,268 7,370

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26. Information relating to the Tomizone Limited (theparent)

2015 2014

$ $

Current assets 5,197,705 1,420,659

Total assets 14,874,003 1,420,659

Current liabilities 79,663 260,373

Total liabilities 79,663 260,373

Issued capital 54,251,469 39,495,572

Retained earnings (39,573,823) (38,335,286)

Options issue reserve 116,694 –

14,794,340 1,160,286

Profit or loss of the Parent entity (284,851) (445,815)

Total comprehensive income of the Parent entity (284,851) (445,815)

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Directors' Declaration / 85

Directors’ Declaration

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Directors' Declaration / 86

In accordance with a resolution of the directors of Tomizone Limited, I state that:

1. In the opinion of the directors:

(a) the consolidated financial statements and notes of Tomizone Limited for the financial year ended 30 June 2015 are in accordance with the Corporations Act 2001, including:

(i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2015 and of its performance for the year ended on that date; and

(ii) complying with Accounting Standards and the Corporations Regulations 2001;

(b) the consolidated financial statements and notes also comply with International Financial Reporting Standards as disclosed in Note 2.2; and

(c) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

2. This declaration has been made after receiving the declarations required to be made to the directors by the chief executive officer and chief financial officer in accordance with section 295A of the Corporations Act 2001 for the financial year ended 30 June 2015.

On behalf of the board


30 September 2015

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Independent Auditor’s Declaration / 87

Independent Auditor’s Declaration

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Independent Auditor’s Declaration / 88

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Independent Auditor’s Report / 89

Independent Auditor’s Report

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Corporate Governance Statement / 92

Corporate Governance Statement

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1. Lay Solid Foundations for Management and Oversight

The Board is responsible for the corporate governance of the Company. The Board has adopted a Board Charter which outlines the manner in which its powers and responsibilities will be exercised and discharged having regard to principles of good corporate governance and applicable laws. Pursuant to the Board Charter, the Board assumes responsibilities including the following:

a. considering and approving the strategy of the Company;

b. adopting an annual budget and monitoring financial performance including approving the annual and half year financial statements and reports;

c. approving major investments and monitoring the return on those investments;

d. reviewing and monitoring significant business risks and overseeing how they are managed; and

e. appointing and reviewing the performance of the CEO including succession planning for the CEO and management.

The Board has delegated specific authorities to the Chairman and to its various Committees. Subject to these delegated matters, the CEO is authorised to exercise all the powers of the Directors, except with respect to the following:

a. approval of major elements of strategy including any significant change in the direction of that strategy;

b. approvals above delegated levels of credit limits, risk exposure, market risk limits and loans and encumbrances;

c. capital expenditure in excess of delegated levels of expenditure outside the ordinary course of business;

ASX Principles and Recommendations Comply Explanation

This corporate governance statement sets out Tomizone Limited’s current compliance with the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations (ASX Principles and Recommendations). The ASX Principles and Recommendations are not mandatory. However, corporate governance statement discloses the extent to which the Company has followed the ASX Principles and Recommendations. This corporate governance statement is current as at 30 June 2015 and has been approved by the board of the Company (Board).

1.1 A listed entity should disclose:

(a) the respective roles and responsibilities of its board and management; and

(b) those matters expressly reserved to the board and those delegated to management.

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d. certain remuneration matters including material changes to remuneration policies and specific remuneration recommendations relating to the Board members and other executive officers of the Company;

e. adoption of the Company’s annual budget;

f. approval of the interim and final accounts and related reports to the ASX;

g. specific matters in relation to continuous disclosure as defined in the Continuous Disclosure Policy;

h. any proposal to issue securities of the Company (except under a program previously approved by the Board); and

i. other matters as the Board may determine from time to time.

The Company is committed to the circulation of relevant materials to Directors in a timely manner to facilitate Directors’ participation in Board discussions on a fully informed basis.

The Company intends to regularly review the balance of responsibilities between the Board and management to ensure that the division of functions remains appropriate to the needs of the Company.

1.2 A listed entity should:

(a) undertake appropriate checks before appointing a person, or putting forward to security holders a candidate for election, as a director; and

(b) provide security holders with all material information in its possession relevant to a decision on whether or not to elect or re-elect a director.

The Remuneration and Nomination Committee will identify and recommend board member candidates to the Board. These recommendations will occur after considering the necessary and desirable competencies of new Board members, the range of and depth of skills and the diversity of the Board, and making appropriate checks regarding an individual being put forward.

The Committee will also ensure that all material information in its possession relevant to a decision of whether to appoint or re-elect a director is made available to security holders.


1.3 A listed entity should have a written agreement with each director and senior executive setting out the terms of their appointment.

Directors are given letters of appointment and/or service agreements, and senior executives are given employment contracts prior to their engagement with the Company.

1.4 The company secretary of a listed entity should be accountable directly to the board, through the chair, on all matters to do with the proper functioning of the board.

The Joint Company Secretaries are appointed by and responsible to the Board through the Chairman. The Chairman and the Joint Company Secretaries co-ordinate the Board agenda.


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(a) have a diversity policy which includes requirements for the board or a relevant committee of the board to set measurable objectives for achieving gender diversity and to assess annually both the objectives and the entity’s progress in achieving them;

(b) disclose that policy or a summary of it; and

(c) disclose as at the end of each reporting period the measurable objectives for achieving gender diversity set by the board or a relevant committee of the board in accordance with the entity’s diversity policy and its progress towards achieving them and either:

(1) the respective proportions of men and women on the board, in senior executive positions and across the whole organisation (including how the entity has defined “senior executive” for these purposes); or

(2) if the entity is a “relevant employer” under the Workplace Gender Equality Act, the entity’s most recent “Gender Equality Indicators”, as defined in and published under that Act.

The Company adopted a Diversity Policy in June 2015 which identifies gender diversity as a key area of focus for the Company. Each year, the Board will consider whether to set measurable objectives to achieve positive diversity outcomes, including a balance representation of women in the Company’s business. The Board is committed to assessing annually both the policy’s objectives and its progress towards achieving the measurable objectives.

A copy of the Diversity Policy is available on the Company’s website at the following URL: www.tomizone.com/investors/index.html

During the reporting period (being the financial year ended 30 June 2015), the Board did not set measurable objectives regarding gender outcomes.


(a) have and disclose a process for periodically evaluating the performance of the board, its committees and individual directors; and

(b) disclose, in relation to each reporting period, whether a performance evaluation was undertaken in the reporting period in accordance with that process.

The performance of the Board as a group and of individual Directors will be assessed each year for all future years. In particular, all Directors seeking re-election at an annual general meeting will be subject to a formal performance appraisal to determine whether the Board (with their absenting themselves) recommends their re-election to shareholders.

The Company did not undertake a formal performance appraisal during the reporting period.


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2. Structure the Board to Add ValueASX Principles and Recommendations Comply Explanation

The Company has a Remuneration and Nomination Committee which has three members being Mr Tarun Kanji, Mr Avi Naidu and Mr Eric Chan. Although the members of the committee are non-executive directors, only Mr Kanji is considered independent. The chair of the committee is Mr Chan.

A copy of the Remuneration and Nomination Committee Charter is available on the Company’s website at the following URL:

www.tomizone.com/investors/index.html

The charter was adopted by the Company in June 2015.

During the reporting period, the Remuneration and Nomination Committee did not meet. Subsequent to listing on 1 June 2015, the new remuneration committee was established and has not met in the reporting period.

2.2 A listed entity should have and disclose a board skills matrix setting out the mix of skills and diversity that the board currently has or is looking to achieve in its membership.

The Board strives to ensure that it is comprised of directors with a blend of skills, experience and attributes appropriate for the Company and its business. To date, the Board did not consider that a skills matrix was required given the stage of development of the business. However, the Board is will continue to consider whether it would be appropriate for the Company to adopt a board skills matrix as the Company continues to develop.

2.1 The board of a listed entity should:

(a) have a nomination committee which:

(1) has at least three members, amajority of whom are independentdirectors; and

(2) is chaired by an independentdirector, and disclose:

(3) the charter of the committee;

(4) the members of the committee; and

(5) as at the end of each reportingperiod, the number of times thecommittee met throughout the periodand the individual attendances of themembers at those meetings; or

(b) if it does not have a nominationcommittee, disclose that fact and theprocesses it employs to address boardsuccession issues and to ensure thatthe board has the appropriate balanceof skills, knowledge, experience,independence and diversity toenable it to discharge its duties andresponsibilities effectively.


(a) have and disclose a processfor periodically evaluating theperformance of its senior executives;and

(b) disclose, in relation to each reportingperiod, whether a performanceevaluation was undertaken in thereporting period in accordance withthat process.

The Board and senior management team intend to regularly review the performance of its senior executives and address any issues that may emerge.

The Company did not undertake a formal performance appraisal during the reporting period.



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(a) the names of the directors considered by the board to be independent directors;

(b) if a director has an interest, position, association or relationship of the type described in Box 2.3 but the board is of the opinion that it does not compromise the independence of the director, the nature of the interest, position, association or relationship in question and an explanation of why the board is of that opinion; and

(c) the length of service of each director.

The Board has reviewed the position and associations of each of the five directors in office and has determined that only Mr Tarun Kanji is independent. In making this determination the Board has had regard to the independence criteria in the ASX Principles and Recommendations, and other facts, information and circumstances that the Board considers relevant. The Board assesses the independence of new directors upon appointment and reviews their independence, and the independence of the other directors, as appropriate.

Information with respect to potential issues of independence may be disclosed to the market but no formal policy exists to ensure such disclosure.

The Company has disclosed the details of each director (including their length of service) in the 2015 Directors Report.


2.4 A majority of the board of a listed entity should be independent directors.

The Board considers only Mr Tarun Kanji to be an independent director.

Considering the Company’s current size and stage of development, the Board does not consider a majority independent board of directors to be a key priority.

2.5 The chair of the board of a listed entity should be an independent director and, in particular, should not be the same person as the CEO of the entity.

The Company’s current chairman, Mr Tarun Kanji is an independent director.

2.6 A listed entity should have a program for inducting new directors and provide appropriate professional development opportunities for directors to develop and maintain the skills and knowledge needed to perform their role as directors effectively.

Each new director of the Company will, upon appointment, participate in an induction program. This will include meeting with members of the existing Board, the Joint Company Secretaries, management and other relevant executives to familiarise themselves with the Company, its procedures and prudential requirements, and Board practices and procedures.

2. Structure the Board to Add Value

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3. Act Ethically and Responsibly

The Board is committed to the establishment and maintenance of appropriate ethical standards in order to instil confidence in both clients and the community in the way the Company conducts its business. These standards are encapsulated in the Code of Conduct which outlines how the Company expects each person who represents it to behave and conduct business.

A copy of the Code of Conduct is available on the Company’s website at the following URL:


The code was adopted by the Company in June 2015.


4. Safeguard Integrity in Corporate ReportingASX Principles and Recommendations Comply Explanation

The Company has a separately constituted Audit and Risk Committee which consists of three members being Mr Tarun Kanji, Mr Avi Naidu and Mr Eric Chan. Although the members of the committee are non-executive directors, only Mr Kanji is considered independent. The chair of the committee is Mr Kanji who is also chair of the Board.

The Company has disclosed the relevant qualifications and experience of the members of the committee in the 2015 Directors Report.

A copy of the Audit and Risk Committee Charter is available on the Company’s website at the following URL:


The charter outlines the key areas of responsibility for the committee, outlining its responsibility for oversight of the quality and integrity of the accounting, auditing, financial reporting and operational risks of the Company. The charter was adopted by the Company in June 2015.

In the 2015 financial year, the Audit and Risk Committee did not meet. Subsequent to listing on 1 June 2015, the new Audit and Risk committee was established and has not met in the reporting period.

A listed entity should:

(a) have a code of conduct for its directors, senior executives and employees; and

(b) disclose that code or a summary of it.


(a) have an audit committee which:

(1) has at least three members, all of whom are non-executive directors and a majority of whom are independent directors; and

(2) is chaired by an independent director, who is not the chair of the board, and disclose:


(4) the relevant qualifications and experience of the members of the committee; and

(5) in relation to each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or

(b) if it does not have an audit committee, disclose that fact and the processes it employs that independently verify and safeguard the integrity of its corporate reporting, including the processes for the appointment and removal of the external auditor and the rotation of the audit engagement partner.

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4.2 The board of a listed entity should, before it approves the entity’s financial statements for a financial period, receive from its CEO and CFO a declaration that, in their opinion, the financial records of the entity have been properly maintained and that the financial statements comply with the appropriate accounting standards and give a true and fair view of the financial position and performance of the entity and that the opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively.


The Company has received a declaration from the CEO and CFO that, in their opinion, the financial records have been property maintained and comply with the proper standards.

4.3 A listed entity that has an AGM should ensure that its external auditor attends its AGM and is available to answer questions from security holders relevant to the audit.

An external auditor will be present at the AGM and be available to answer questions from security holders relevant to the audit.


5. Make Timely and Balanced Disclosure

The Company is committed to providing timely, complete and accurate disclosure of information to allow a fair, and well-informed market in its securities and compliance with the continuous disclosure requirements imposed by law including the Corporates Act and the ASX Listing Rules.

A copy of the Company’s Continuous Disclosure Policy is available at the following URL:


The policy was adopted in June 2015.


(a) have a written policy for complying with its continuous disclosure obligations under the Listing Rules; and

(b) disclose that policy or a summary of it.

4. Safeguard Integrity in Corporate Reporting

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6. Respect the Rights of Security Holders

The Company provides information about itself and its governance to its investors via the website www.tomizone.com/investors/index.html which contains all relevant information about the Company. The Company will regularly update the website and contents therein as deemed necessary.


6.2 A listed entity should design and implement an investor relations program to facilitate effective two-way communication with investors.

The Company has no investor relations program in place, but ensures that all material information is conveyed to its investors so as to facilitate communication.

6.3 A listed entity should disclose the policies and processes it has in place to facilitate and encourage participation at meetings of security holders.

Although the Company does not have a formal shareholders’ communications policy in place, the Company strongly encourages participation at meetings of security holders.

6.4 A listed entity should give security holders the option to receive communications from, and send communications to, the entity and its security registry electronically.

The Company encourages shareholders to register for receipt of announcements and updates electronically.

6.1 A listed entity should provide information about itself and its governance to investors via its website.

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(a) have a committee or committees to oversee risk, each of which:

(1) has at least three members, a majority of whom are independent directors; and

(2) is chaired by an independent director, and disclose:



(5) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or

(b) if it does not have a risk committee or committees that satisfy (a) above, disclose that fact and the processes it employs for overseeing the entity’s risk management framework.

7.2 The board or a committee of the board should:

(a) review the entity’s risk management framework at least annually to satisfy itself that it continues to be sound; and

(b) disclose, in relation to each reporting period, whether such a review has taken place.


7. Recognise and Manage Risk

The Company has a separately constituted Audit and Risk Committee which consists of three members being Mr Tarun Kanji, Mr Avi Naidu and Mr Eric Chan. Although the members of the committee are non-executive directors, only Mr Kanji is considered independent.

A copy of the Audit and Risk Committee Charter is available on the Company’s website at the following URL:


The charter outlines the key areas of responsibility for the committee, outlining its responsibility for oversight over potential risks which affect the Company. The charter was adopted by the Company in June 2015.

In the 2015 financial year, the Audit and Risk Committee did not meet. Subsequent to listing on 1 June 2015, the new Audit and Risk committee was established and has not met in the reporting period.

The Board annually reviews and approves the risk framework of the Company.

The Company did not undertake a formal review during the reporting period.


(a) if it has an internal audit function, how the function is structured and what role it performs; or

(b) if it does not have an internal audit function, that fact and the processes it employs for evaluating and continually improving the effectiveness of its risk management and internal control processes.

The Company does not have an internal audit function, and does not disclose the processes it uses to improve risk management. Nonetheless, it remains committed to effective management and the control of these factors.

7.4 A listed entity should disclose whether it has any material exposure to economic, environmental and social sustainability risks and, if it does, how it manages or intends to manage those risks.

All material risks are announced to the market, in accordance with the requirements of the ASX listing rules and otherwise.

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8. Remunerate Fairly and ResponsiblyASX Principles and Recommendations Comply Explanation

The Company has a Remuneration and Nomination Committee which has three members being Mr Tarun Kanji, Mr Avi Naidu and Mr Eric Chan. Although the members of the committee are non-executive directors, only Mr Kanji is considered independent. The chair of the committee is Mr Chan.

A copy of the Remuneration and Nomination Committee Charter is available on the Company’s website at the following URL:


The charter was adopted by the Company in June 2015.

During the reporting period, the Remuneration and Nomination Committee did not meet.

8.2 A listed entity should separately disclose its policies and practices regarding the remuneration of non-executive directors and the remuneration of executive directors and other senior executives.

The Company discloses its remuneration policy in its annual report.

8.3 A listed entity which has an equity-based remuneration scheme should:

(a) have a policy on whether participants are permitted to enter into transactions (whether through the use of derivatives or otherwise) which limit the economic risk of participating in the scheme; and

(b) disclose that policy or a summary of it.

The Company has a Securities Trading Policy that prohibits directors, offices and employees from entering into transactions or arrangements which limits the economic risk of participating in unvested entitlements under any equity based remuneration scheme.


(a) have a remuneration committee which:

(1) has at least three members, a majority of whom are independent directors; and

(2) is chaired by an independent director, and disclose



(5) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or’

(b) if it does not have a remuneration committee, disclose that fact and the processes it employs for setting the level and composition of remuneration for directors and senior executives and ensuring that such remuneration is appropriate and not excessive.

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ASX Additional Information / 103

ASX Additional Information

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Additional information required by the Australian Securities Exchange Ltd and not shown elsewhere in this report is as follows. The information is current as at 25 September 2015.

a. Substantial holders

b. Distribution of equity securities

(i) Ordinary share capital

• 94,970,871 fully paid ordinary shares are held by 869 shareholders

All issued ordinary shares carry one vote per share and carry the rights to dividends.

(ii) Performance shares

• 31,352,492 performance shares are held by 28 shareholders

(iii) Options

The Company has the following classes of options on issue:

• 6,349,934 listed options exercisable at $0.40 and expiring on 30 September 2018 are held by 250 holders

• 4,326,917 unlisted options exercisable at $0.40 and expiring 31 December 2015 are held by 45 holders

• 3,356,154 unlisted options exercisable at $0.40 and expiring 30 September 2018 are held by 28 holders

• 1,182,084 unlisted director options exercisable at $0.00 and expiring on various dates specified in Schedule 8 of the Company’s notice of meeting dated 25 March 2015 are held by the following 3 holders

• 5,373,108 unlisted director options exercisable at $0.22 and expiring on various dates specified in Schedule 8 of the Company’s notice of meeting dated 25 March 2015 are held by the following 3 holders

Holders Number

Mr Eric King Wai Chan 394,028

Mr Avikashan Naidu 394,028

Mr Tarun Parbhu Kanji 394,028

Holders Number

Mr Eric King Wai Chan 1,791,036

Mr Avikashan Naidu 1,791,036

Mr Tarun Parbhu Kanji 1,791,036

Substantial holdersFully Paid

Ordinary Shares Percentage

Jouet Limited 15,514,279 16.34

Kauri Corporation Limited 14,026,849 14.77

29,541,128 31.11

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• 4,231,794 unlisted adviser options exercisable at $0.22, with 1/3 vesting on the 28 May 2016, 1/3 vesting on the 28 May 2017 and 1/3 vesting on 28 May 2018 (options expire 12 months from their respective vesting) are held by the following 3 holders

• 375,000 unlisted Class A incentive options are held by the following 2 holders

• 375,000 unlisted Class B incentive options are held by the following 2 holders

• 375,000 unlisted Class C incentive options are held by the following 2 holders

Options do not carry a right to vote.

c. Distribution Schedule

The number of shareholders, by size of holding, in each class are:

d. Unmarketable parcels

The number of shareholders holding less than a marketable parcel of the Company’s main class of securities (being fully paid ordinary shares) is 0.

Fully paid ordinary shares

Performance Shares Options

1-1,000 280 – –

1,001-5000 99 – 105

5,001-10,000 73 – 54

10,001-100,000 282 1 101

100,001 and over 135 27 34

869 28 294

Holding less than a marketable parcel –

Holders Number



Holders Number



Holders Number



Holders Number

Jonathan Hannam 1,410,598

Simon Pearce 1,410,598

Shadi Mahassel 1,410,598

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Fully paid

Ordinary shareholders Number Percentage

Jouet Limited 15,514,279 16.34

Kauri Corporation Limited 14,026,849 14.77

UBS Nominees Pty Ltd 3,400,000 3.58



Mr Roger Charles Hurst 2,178,170 2.29

Mr Andrew Somervell and Ms Christine Gill 2,083,768 2.19

Value Creation Technologies Limited 1,875,552 1.97

Ms Ivy Lam 1,168,455 1.23

Ranchland Holdings Pty Ltd 1,039,423 1.09

Mr Robert Francis Holden 924,976 0.97

Lonergan Edwards & Associates Limited 882,249 0.93

Hammond Royce Corporation Pty Ltd 750,000 0.79

Ms Holly Taylor & Mr Matt Taylor 731,663 0.77

Mr Craig Lawrence Whale 656,435 0.69

Mr David Arthur Paganin 654,807 0.69

Blue Capital Holdings No 1 Pty Ltd 653,846 0.69

Mr David Arthur Paganin 596,765 0.63

Mr Lewis Deeks & Ms Wendy Stanley 596,759 0.63

Mr Russell Neil Creagh 593,971 0.63

53,789,679 56.63

e. Twenty largest holders of quoted fully paid ordinary shares

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f. Number of restricted securities and ordinary shares subject to voluntary escrow

(i) Restricted securities

1. Escrowed for 12 months from the respective Dates of Issue to each holder of the shares they previously held in Tomizone Limited (NZ company number 1816869):

• 1,427,846 fully paid ordinary shares

2. Escrowed until 25 May 2016:

• 728,964 unlisted options expiring 31 December 2015

• 1,130,832 listed options expiring 31 September 2018

• 5,281,981 Class A performance shares

• 5,281,981 Class B performance shares

3. Escrowed until 25 May 2017:

• 15,678,605 fully paid ordinary shares

• 4,231,794 unlisted adviser options

• 1,434,497 unlisted options expiring 31 December 2015

• 2,225,322 listed options expiring 30 September 2018

• 10,394,265 Class A performance shares

• 10,394,265 Class B performance shares

• 1,182,084 unlisted director options exercisable at $0.00 and expiring on various dates specified in Schedule 8 of the Company’s notice of meeting dated 25 March 2015

• 5,373,108 unlisted director options exercisable at $0.22 and expiring on various dates specified in Schedule 8 of the Company’s notice of meeting dated 25 March 2015

(ii) Ordinary shares subject to voluntary escrow

The number of shareholders holding less than a marketable parcel of the Company’s main class of securities (being fully paid ordinary shares) is 0.

HolderNumber of shares subject

to voluntary escrow Date of release

Jouet Limited 1,551,428 25 December 2015

1,551,428 25 May 2016

12,411,423 25 May 2017

Kauri Corporation Limited 1,402,685 25 December 2015

1,402,685 25 May 2016

11,221,479 25 May 2017For

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Corporate Information / 108

Corporate Information

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Corporate Information / 109

Corporate informationABN 99 000 094 995

Directors

TARUN KANJI, Non Executive Director and Chairman

STEPHEN SIMMS, Executive Director and Chief Executive Officer

PHILLIP JOE, Executive Director and Chief Commercial Officer

AVIKASHAN NAIDU, Non Executive Director

ERIC KING WAI CHAN, Non Executive Director

Company Secretary

DAVID MCALLANSMITH, Joint Company Secretary and Chief Financial Officer

ANAND SUNDARAJ, Joint Company Secretary

Registered office

Level 14, 74 Castlereagh Street Sydney NSW 2000 Australia Phone: +61 2 9098 0934

Principal place of business

Level 2 - Shed 19A 137 Quay Street Auckland 1010 New Zealand

Share register

Link Market Services Level 12, 680 George Street Sydney NSW 2000 Australia Phone: +61 1300 554 474

Tomizone Limited shares are listed on the Australian Securities Exchange (ASX: TOM)

Solicitors

Arnold Bloch Leibler Level 21, 333 Collins Street Melbourne VIC 3000 Australia

Jones Young Level 19, 120 Albert Street Auckland 1010 New Zealand

Whittens & Mckeough Level 5, 137-139 Bathurst Street Sydney NSW 2000 Australia

Bankers

ASB Bank Limited 12 Jellicoe Street North Wharf Auckland 1010 New Zealand

Commonwealth Bank of Australia Limited 83 Market Street Sydney NSW 2000 Australia

Auditors

Ernst & Young 680 George Street Sydney NSW 2000 AustraliaF

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