My Net Fone Limited Annual Report 2008 · PDF fileAnnual Report 2008. ... Chairman’s...
Transcript of My Net Fone Limited Annual Report 2008 · PDF fileAnnual Report 2008. ... Chairman’s...
www.mynetfone.com.au
My Net Fone LimitedAnnual Report 2008
ContentsBoard of Directors 2/ Company Profile, Vision & Values 3/ What is VoIP? 4/ Key Achievements 5/
Chairman’s Review 6/ Managing Director’s Review 7/ Customers‘ Testimonials 10/ Directors’ Report 12/
Corporate Governance Statement 19/ Income Statement 22/ Balance Sheet 23/ Cash Flow Statement 24/
Statement of Changes in Equity 25/ Notes to the Financial Statements 26/ Directors’ Declaration 49/
Auditor’s Independence Declaration 50/ Independent Auditor’s Report 51/ ASX Additional Information 53/
Corporate information 55/
Finalist – Information & Communication TechnologyCITY OF SYDNEY - BUSINESS AWARDS 08
Finalist – SMART 50 COMPANY AWARDS 2008
Board of Directors
Mr Terry Cuthbertson B. Bus., CAChairman
A Chartered Accountant, previously partner with KPMG with extensive corporate finance expertise and knowledge. Also Director of S2Net Limited, Montec International Limited, Mint Wireless Limited, Austpac Resources N.L. and Healthzone Limited.
Director since March 2006
Mr Andy Fung B.E. MComManaging Director
Extensive experience in telecommunications. Formerly Director of Business Development of Lucent Technologies. Director of Symbio Networks Pty Ltd since 2002.
Director since March 2006
Mr René Sugo B.Eng. (Hon)Technical Director
Extensive experience in telecommunications. Formerly Technical Director of Lucent Technologies. Director of Symbio Networks Pty Ltd since 2002.
Director since March 2006
Mr Michael Boorne Electronics Eng. Dip.Non-Executive Director
A successful entrepreneur with extensive experience in combining technical expertise with commercial and corporate experience. Founder of Sprit Modems and Mitron Pty Ltd and previously a non Executive Director of Netcomm Ltd. AlsoDirector of Boorne Management Pty Ltd and Earglow Pty Ltd.
Director since December 2006
Ms Catherine Ly B.Bus., CPAChief Financial Officer
Company Secretary since July 2006
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Mr Sugo
Mr Boorne
Mr Cuthbertson
Mr Fung
Ms Ly
My Net Fone Limited (ASX: MNF), listed on the Australian Securities Exchange, is Australia’s leading broadband
VoIP service provider. Headquartered in Sydney, Australia, the company provides voice and broadband
services for customers to make and receive phone calls over any type of broadband Internet connection. The
company’s mission is to help customers save on their phone bills, deliver excellent customer service and offer
innovative service offerings.
Company Profile
Vision
Values• Superior Customer Service
• Excellent Quality
• Value for money
• Innovation
• Team work
• Integrity
• Passion
To revolutionise how our customers
communicate and enhance their
communication experiences by delivering
innovative solutions with superior value
and quality customer service.
To be recognised by our customers,
employees and shareholders as the most
innovative and customer-centric
communications provider in Australia.
To be an employer of choice and provide
our employees with relevant training, career
development opportunities and a great
environment in which to work.
3
What is VoIP? 4
Voice over Internet Protocol (VoIP) enables users to make and receive phone calls over any broadband
Internet connection. VoIP converts voice into packets of data routing voice conversations over the Internet.
These packets of data are re-assembled into voice at the receiving end anywhere in the world, allowing VoIP
users to use VoIP services just like a conventional phone service.
Benefits of VoIP • Cost Savings: Users enjoy big savings to their telephone bills.
• Enhanced features: VoIP delivers enhanced functionalities at
little or no additional cost.
• Convergence: The integration of voice, data, and internet
offers business-grade connection to end users.
Why MyNetFone VoIP? The Australian VoIP market is rapidly growing as consumers recognise
the benefits of VoIP. MyNetFone is Australia's leading provider of VoIP
services for its quality and reliability. The company is constantly
developing new applications and partnering with equipment
suppliers of the most reputable brands, providing the best possible
VoIP and converged solutions to residential and business users.
The new arrival: Virtual PBX MyNetFone introduces Virtual PBX as part of its business offerings
considering that virtuality is a reality and businesses are turning to this
emerging technology for cost savings and enhanced features.
A PBX system is essential for office communications and a Virtual PBX
provides similar quality and functionalities, without the need to own
and maintain physical equipment with Virtual PBX, business customers
still enjoy crystal clear communications at low rates and make huge
savings on communications equipment. Installation and maintenance
costs are eliminated with simple “Do-It-Yourself” installation and a
user-friendly system management portal. The system is not tied to
physical connection and enables users to expand their
communication network anywhere in the world.
Continuing innovation MyNetFone is a market leader in VoIP and IP applications, and will
continue to develop new and exciting voice and broadband data
innovations to transform the Australian communications landscape.
Wall Socket
DSL/CableModemRouter
VoiceAdaptor
Telephone
Internet
Key Achievements – June 08 5
Paying customers as of June 07
Gross revenue
Gross margin
60,000
$6,808,941
$2,012,024
71%
108%
132%
Financial year07/08
% change fromlast year
Chairman’s Review 6
I am very pleased to report that since its listing in May 2006, My Net Fone Limited has achieved strong growth and this year is no exception. This financial year 2007/08 saw the company once again doubling its gross revenue, gross profit and customer numbers from the previous year.
The gross revenue and gross profit for the year were over $6.8M (2007:$3.3M) and $2M (2007: $0.87M), an increase of 107.8% and 132.3% respectively. The revenue growth is due to the continuing increase in subscriber growth and call usage by customers. The deferred revenue for the year increased to $0.73M as compared with $0.44M in 2007 – an increase of 65.9%. The deferred revenue is the call credits deposited by the customers in their accounts for making future phone calls and is non-refundable. The company reached cash flow positive in the second half of the year and made a net trading loss of $1.9M (2007:$3.3M) for the year, significantly reducing previous year’s loss.
It is important to point out that the significant growth the company experienced in the year includes strong contributions from the SMB (small & medium business) sector as well as from the traditional residential users. These two segments: residential and enterprise will form the platform of growth and expansion for the company in future years. Under the current tight economic climate, business enterprises are very conscious of cost control. My Net Fone’s services are ideal for SMB’s translating cost savings and efficiency gains to their bottom lines. The technology shift to IP (Internet Protocol) also facilitates the transition of moving away from out-dated equipment to MyNetFone’s new generation innovative services.
On the other side of the coin, the company’s exponential growth in a relatively short time frame has placed many challenges and stresses in the daily operations and management of the company. The recruitment, development and retention of well trained and motivated staff as well as the formulation of systems and processes to ensure efficient and effective operations are some of the challenges the company faces in order to deliver quality and cost effective services that our customers expect of us. The growth has also transformed the company from a start-up to a medium sized organisation that comes with a different set of challenges.
The company is very fortunate to have a dedicated, hard working management team led by Andy Fung, Rene Sugo and Catherine Ly in managing the growth and delivering results and benefits to the company. The IP era in the telecom industry has only just begun with broadband roll-outs and usage increasing daily. The potential opportunities are therefore enormous. However, to capitalise these opportunities and to turn it into a profitable business requires vision, risk taking and strategies that are then translated into concrete plans and actions to achieve the desired outcomes. The management team at My Net Fone Limited has demonstrated a track record of success in turning market opportunities into business results.
On behalf of the board, I would like to take this opportunity to thank the management team in achieving a very successful year. The board will continue to provide its full support to the team to ensure the company maintains its momentum of growth and deliver positive results to shareholders.
I also would like to thank my fellow Director Mr Boorne for his contributions to the board. Last but not least, my sincere thanks to the many shareholders for their continued support and commitments to the company as I look forward to a bright future with My Net Fone in the years ahead.
Terry CuthbertsonChairman
Managing Director’s Review 7
I am pleased to report that the company achieved another year of significant growth with gross revenue of over $6.8M (2007:$3.3M) and $2M (2007: $0.87M) respectively. The loss for the year was reduced by 40.3% to $1.9M. The deferred revenue for the year increased by 65.9% to $0.73M (2007: $0.44M). The deferred revenue is the call credits deposited by the customers in their accounts and will be recognized once the customers have progressively used up the call credits. As of July 2008, the company had over 60,000 paying customers. Since IPO in May 2006, the company has consistently grown exponentially: doubling its gross revenue, gross profit and customer numbers every 12 months while the yearly loss has been reducing significantly.
Business Highlights
While My Net Fone’s residential customer segment continued its strong growth this year following the release of additional call plans targeting specific overseas markets, this year’s highlight is the significant in-roads that we had made into the SMB (small & medium business) enterprise market. My Net Fone had successfully delivered solutions to enterprises ranging from SOHO (small office & home office) to business customers with multi-location offices in various parts of Australia. The business solutions included a spectrum of IP and VoIP technologies, ranging from multi-port gateways to convergent VoIP and broadband data offerings with VPN (Virtual Private Networks) and remote firewall functionalities.
In the enterprise segment, a whole new generation of PBX’s with IP capabilities (IP PBX) has started to come on the market replacing conventional TDM based equipment. My Net Fone has successfully inter-worked and deployed with our partners a variety of IP PBX’s from different suppliers using the industry standard protocol, SIP. Our partners bundled MyNetFone VoIP service with their IP PBX equipment offering compelling value propositions to their customers. Due to our inter-working capabilities with a wide selection of PBX types, My Net Fone is therefore well positioned to be a VoIP provider of choice to customers who decide to replace their aging PBX equipment with new generation IP PBX.
In response to customers’ needs, My Net Fone also provides broadband Internet data as part of the convergent, bundled offerings of voice and data. Business customers are increasingly looking to source voice and broadband data from a single provider to meet their needs and to minimise multiple handling, i.e. a one-stop shop. A convergent solution in which voice and data are transported over the same IP based infrastructure delivers not just cost savings to business customers but also flexibility and convenience which had not been possible until the advent of IP technology.
My Net Fone reached another significant milestone following the successful launch of its Virtual PBX offerings at this year’s CeBIT show. Virtual PBX is a service that delivers conventional PBX features and functionalities to business customers without them having to purchase and maintain hardware equipment at their premises other than telephony handsets. The service is ideally suited to businesses who do not desire to make substantial up-front capital investments in equipment purchase due to a variety of business reasons. Since its launch, the service has gained traction and mindshare with business customers from a variety of industry backgrounds.
This year, My Net Fone participated as a major sponsor of Australia’s leading IT&T trade exhibition, CeBIT organised by Hanover Fairs. MyNetFone’s brand and message were included in emails that were sent out by the organiser inviting their clients to attend, and were imprinted on 30,000 show bags given out to the attendees at the exhibition. The company’s participation at the exhibition with a professional and functional stand, together with various marketing events and promotions before and during the event, has further deepened MyNetFone’s brand awareness and goodwill in the market and entrenched MyNetFone as a leading provider of VoIP service and IP applications in Australia.
8
The company continued to receive awards from different publications and industry events as well compliments from its customers. Increasingly, the MyNetFone brand and its services have been gaining recognition in the telecom industry and the market. We strive to enhance and maintain the MyNetFone brand synonymous to quality and cost effective VoIP and IP services in Australia.
Company’s Operations
The company’s business philosophy is to strive for continual improvements in all aspects of its internal operations to gain efficiency in productivity and agility in competitiveness. The improvements are incremental and on-going all the time. We believe by this means, our staff and internal processes are aligned closely to match our customers’ needs and to be ahead of our competitors.
We focused on the following key areas during the year:
- MyNetFone Website
In addition to providing information about MyNetFone’s products and services, the website is also an important e-commerce platform for customers’ transactions and interactions with the company’s services. We continued to make the customer interfaces with our website user-friendly, informative and intuitive.
- Service order fulfilment
We had developed further automation processes and systems to provision and fulfil customers’ orders in the most efficient and timely manner. The goal is to enable the customers to use and enjoy the MyNetFone service in the shortest possible time once an order is placed by the customer.
- Service delivery
The delivery of professional, quality customer service by all parts of the company is an on-going exercise of training, development and performance measurements.
Going Forward
While we expect the MyNetFone business to continue to grow and we are very excited by the opportunities unfolding with the continuing up-take of IP PBX’s and our own Virtual PBX by our customers in the enterprise segment. This industry wide shift to IP technology has caused all service providers to compete in a new territory that few has had any previous experience before. My Net Fone will seize this window of opportunity to establish itself as a potent force in the Australian market.
Another area that we look forward to growing is with the launch of naked DSL service in the new financial year. This broadband data service, together with MyNetFone’s VoIP, will be offered as a convergent, bundled offering. One of the key advantages of this offering is that customers will no longer need to subscribe and pay a monthly line rental fee to the incumbent provider, making the value proposition for MyNetFone bundled services even more compelling than ever before.
9
Finally, with revenue and customer number growing and doubling every year, the company has moved away from being a start-up and has evolved into a maturing, albeit still young, organisation with proper corporate structures, systems and processes. The management team at My Net Fone is well aware that the development and retention of well trained, highly motivated and committed staff is absolutely critical to the continuing growth and success of the business if My Net Fone is to be a new generation provider of choice in this highly competitive market. We continue to develop and refine human resource policy within the company that will meet a range of challenges arising from the current economy with near full employment.
On behalf of the management team, I would like to take this opportunity to thank our staff and partners for their dedication and contributions as well as their passion in serving our customers. I am confident that My Net Fone’s business will continue to grow in the new financial year and look forward to your continuing support.
Andy FungManaging Director
10Customers’ Testimonials
Hello,
I thought you might be the best people to pass
on my thanks to the rest of your company. On
Friday, I ordered the Netgear TA612V with a
Panasonic Cordless Phone. It arrived at my
workplace this [Monday] morning. I arrived home
this evening, plugged everything in, and tested it. It
just worked. Just like a regular phone line, but
without having to deal with Telstra. Awesome.
Thank you for your prompt service, your perfectly
pre-configured hardware, your reasonable pricing,
and for including a DID number. I will definitely
be recommending you to my friends and colleagues.
Sorry if this sounds like Marketing copy, but it’s
just so damn nice to have something that actually
really is “plug and play”.
Thanks again,
Bruce.
Dear Mynetfone Team, On behalf on Total Care Transport, I would like to thank you for you excellent commitment and services to our business. Our rollout at the head office went very seamless, we are hoping to work with you all in the near future, as we are rolling out our VoIP solutions for the remaining 10 branches.
A very special thanks to Sampson for his excellent support once again.
Kindest Regards,
William
2008
Directors’ Report 12
FOR THE YEAR ENDED 30 JUNE 2008
Your directors present this report on the company and its controlled entity (the economic entity) for the
financial year ended 30 June 2008.
DirectorsThe directors of the Company at any time during or since the end of the financial year are:
Name and qualifications Experience, special responsibilities and other directorship
Mr Terry Cuthbertson
B.Bus., CA
Chairman
Mr Michael BoorneElectronics Eng. Dip.
Non-Executive Director
Mr Andy FungB.E. MCom
Managing Director
Mr René Sugo B.Eng. (Hon)Technical Director
A Chartered Accountant, previously partner with KPMG with extensive
corporate finance expertise and knowledge. Also Director of S2 Net Limited,
Montec International Limited, Austpac Resources N.L., Healthzone Limited
and Mint Wireless Limited. Director since March 2006
A successful entrepreneur with extensive experience in combining technical
expertise with commercial and corporate experience. Founder of Sprit
Modems and Mitron Pty Ltd and previously a non Executive Director of
Netcomm Ltd. Also Director of Boorn Management Pty Ltd and Earglow Pty
Ltd. Director since December 2006
Extensive experience in telecommunications. Formerly Director of
Business Development of Lucent Technologies. Director of Symbio
Networks Pty Ltd since 2002. Director since March 2006
Extensive experience in telecommunications. Formerly Technical
Director of Lucent Technologies. Director of Symbio Networks Pty Ltd
since 2002. Director since March 2006
Company Secretary
Ms Catherine Ly B.Bus., CPA, is Chief Financial Officer for the Company and has been appointed as Company
Secretary since July 2006.
Board and Committee Meetings
From 1/7/07 to 30/6/08, the Directors held 12 board meetings and 3 audit committee meetings. Each director’s
attendance at those meetings is set out in the following table.
Directors
T. Cuthbertson
A. Fung
R. Sugo
M. Boorne
Committe Meetings Attended
Board Audit
Eligible to Attend Attended Eligible to Attend Attended
12
12
12
12
12
12
12
12
3
3
2
1
3
3
2
1
Directors’ Report 13
For the year ended 30 June 2008
Operating Result The consolidated loss of the Group for the financial year after providing for income tax amounted to
$1,941,179 ( 2007: $3,250,320); representing a decrease of 40.3% compared with last year.
Review of Operations A review of the operations of the economic entity during the financial year and the results of those operations
are as follows:
The gross revenue and gross profit for the year were $6,808,941 (2007:$3,275,942) and $2,012,024 (2007:
$866,012) respectively. The revenue growth was due to the continuing increase in subscriber growth and usage
of the MyNetFone VoIP service. The gross profit was achieved as a result of maintenance of the margins as well
as efficient application of resources. The deferred revenue for the year increased to $725,892 as compared
with $437,539 in 2007 – an increase of 65.9%. The deferred revenue is the call credits deposited by the
customers in their accounts for making future phone calls. This revenue will be recognized once the customers
have progressively used up the call credits.
The subscriber numbers as of July was over 60,000 representing a 71.4% increase over last year. While we
expect the subscriber growth and call usage to continue, it is important to highlight the increase in enterprise
customer sign-ups for a wide range of MNF Business Solutions including Multi-line, Virtual PBX, SIP trunk and
converged broadband and VoIP services. In addition to the residential market, MyNetFone has now made
significant in-roads into the enterprise segment with higher ARPU (average revenue per user). The continuing
sign-up of high value enterprise customers will propel MyNetFone to reach profitability sooner than otherwise
possible. However, the demands and challenges of enterprise customers are vastly different from the
residential users. The company therefore continues to make improvements in all aspects of its service delivery
to customers, streamlining its internal systems and processes as well as setting targets and benchmarks that are
best practice in the industry.
The revenue and customer number growth has only resulted in a moderate increase in operating costs which
were achieved primarily by means of exploiting economies of scale and efficient applications of resources
with automated systems and processes.
Significant Changes in the State of Affairs
No significant changes in the economic entity's state of affairs occurred during the financial year.
Principal Activities The principal activity of the Group during the course of the year was to provide VoIP phone, broadband
Internet and enhanced services to residential and enterprise customers. In the financial year, the Group
primarily derived its revenue from:
• Monthly fees and call charges from residential and enterprise customers
• Sales of customer premises equipment
• Wholesale of traffic minutes
Directors’ Report 14
After Balance Date Events There were no significant events after the balance date that would materially alter the operations or financial
performance of the company.
Future Developments The likely developments in the operations of the economic entity and operations in future financial years are as
follows:
• The sale of VoIP and broadband Internet services
• The development and sale of enhanced services for residential & enterprise customers
• The development and sale of naked DSL and bundled VoIP services.
Environmental Issues
The Group’s operations are not regulated by any significant environmental regulation under a law of the
Commonwealth or of a State or Territory.
DividendsNo dividends were declared or paid since the start of the financial year. No recommendation for payment of
dividends has been made.
Options
No options were granted during or since the end of the financial year by the company to directors.
Remuneration ReportRemuneration philosophy*
The remuneration philosophy of the Board is currently to recognize that in the early stage of growth the
company needs to contain operating costs and so the salaries established for the executive directors are
negotiated at rates below market levels that would normally be available to persons with such experience and
qualifications. At this time the Board has established salary arrangements for the key executives which is
commensurate with their level of experience. As the company matures the Board will review its approach to
setting remuneration levels by balancing short and long term benefits and linking remuneration to
performance. The Board may issue options to employees under the Company Employee Option Plan as set out
in note 13 to the financial statements.
*designated as audited
Remuneration of Key Management Personnel For all the Key Management Personnel, only basic salaries and fees and superannuation were granted during
the year, no other short term benefit, long term benefit, performance related or share based payment were
paid in the year except for the options disclosed above. No bonuses were granted during the year.
Details of the nature and amount of each major element of remuneration of each director of the Company
and each of the named company executives who receives the highest remuneration are:
For the year ended 30 June 2008
Directors’ Report 15
Year ended 30 June 2008 Year Short term* Post Employment* Share Based Total*Payment Options*
Salary & fees $ Superannuation $ $ $Non-executive
Mr T. Cuthbertson
Mr M. Boorne
Executive
Mr A. Fung (Managing Director)
Mr R. Sugo (Technical Director)
Total
Management Executives
Mr L. Tai (Director)
Ms C. Ly (Chief Financial Officer)
Total
2008
2008
2008
2008
2008
2008
50,000
30,000
168,000
168,000
416,000
53,333
103,000
156,333
4,500
2,700
15,120
15,120
37,440
4,800
9,270
14,070
-
-
-
-
-
-
-
-
54,500
32,700
183,120
183,120
453,440
58,133
112,270
170,403
Only two specified executives are included in the disclosure as there are only four specified executives in total employed in the Company in 2008, two of whom are Executive Directors disclosed above.
Year ended 30 June 2007 Year Short term* Post Employment* ShareBased Total*Payment Options*
Salary & fees $ Superannuation $ $ $Non-executive
Mr T. Cuthbertson
Mr M. Boorne
Executive
Mr A. Fung (Managing Director)
Mr R. Sugo (Technical Director)
Total
Management Executives
Mr L. Tai (Director)
Ms C. Ly (Chief Financial Officer)
Total
2007
2007
2007
2007
2007
2007
50,000
15,000
150,000
150,000
365,000
50,000
100,000
150,000
4,500
1,350
13,500
13,500
32,850
4,500
9,000
13,500
80,000
620,000
-
-
700,000
-
-
-
134,500
636,350
163,500
163,500
1,097,850
54,500
109,000
163,500
Only two specified executives are included in the disclosure as there are only four specified executives in total employed in the Company in 2007, two of whom are Executive Directors disclosed above.
*designated as audited
Directors
Directors
For the year ended 30 June 2008
Directors’ Report 16
Compensation of Directors and Key Management Personnel*
The Company has entered into Executive Employment Agreements with Andy Fung and Rene Sugo. Each of
the Agreements is for a period of three years expiring on 30 April 2009. The key terms of the Agreements
are reviewable on July 1 every year. The Board approved salary increments for Andy Fung and Rene Sugo
in July 2007, bringing their base salary to $168,000 per annum each plus the standard superannuation
guarantee levy. A review has been undertaken in August 2008.
The remuneration and other terms of employment for the Key Executives above are set out in written
agreements. Each of these employment agreements is unlimited in term but may be terminated by written
notice by either party and by the Company making payment in lieu of notice.
Each of these agreements sets out the arrangements for total fixed remuneration, performance-related cash
bonus opportunities, superannuation, termination rights and obligations and eligibility to participate in the
employee equity-based incentive scheme. Executive salaries are reviewed annually. The executive
employment agreements do not require the Company to increase base salary, incentive bonuses or to
continue the participants’ participation in equity-based incentive programs.
The Company may terminate the employment of the Key Executive without notice and without payment in
lieu of notice in some circumstances. This includes if the executive:
1. commits an act of serious misconduct;
2. commits a material breach of the executive employment agreement;
3. denigrates or engages in any behavior that may materially damage the reputation of, or otherwise
bring, the Company into disrepute; or
4. is convicted of any criminal offence which would in the reasonable opinion of the Board of Directors
adversely affect the carrying out of the executive’s duties.
Consolidated Company2008 2007 2008 2007
Short term*
Post employment*
Share-based Payment*
$ $ $ $572,333
51,510
-
623,843
515,000
46,350
700,000
1,261,350
80,000
7,200
-
87,200
65,000
5,850
700,000
770,850
*designated as audited
For the year ended 30 June 2008
Directors’ Report 17
The Company may terminate the employment of the key executive at any time by giving the executive notice
of termination or payment in lieu of such notice. The amount of notice required from the Company in these
circumstances is set out in the following table:
Name of key executive Company notice period Employee notice period Termination provision
Andy Fung 1 month 1 month 1 month base salary
René Sugo 1 month 1 month 1 month base salary
Leo Tai 1 month 1 month 1 month base salary
Catherine Ly 1 month 1 month 1 month base salary
Directors’ interests in shares and options of the company or related bodies corporateAt the date of this Report, the particulars of shares and options held by the directors of the company in the
company or in related bodies corporate which are required to be declared in the register of directors' share
holdings are as follows:
Name of Director Share holding Options
Mr Andy Fung 13,488,954 7,817,223
Mr René Sugo 13,488,955 7,817,222
Mr Terry Cuthbertson 1,125,000 1,000,000
Mr Michael Boorne 2,335,104 -
Total 30,438,013 16,634,445
Directors BenefitsNo director has received or has become entitled to receive, during or since the financial year, a benefit
because of a contract made by the company, controlled entity or related body corporate with a director, a
firm which a director is a member or an entity in which a director has a substantial financial interest.
Indemnifying Officer or AuditorNo indemnities have been given or agreed to be given or insurance premiums paid or agreed to be paid,
during or since the end of the financial year, to any person who is or has been an officer or auditor of the
company.
Proceedings on Behalf of CompanyNo person has applied for leave of Court to bring proceedings on behalf of the company or intervene in any
proceedings to which the company is a party for the purpose of taking responsibility on behalf of the company
for all or any part of those proceedings. The company was not a party to any such proceedings during the
year.
Auditors Independence DeclarationA copy of the auditor's independence declaration as required under section 307C of the Corporations Act
2001 has been included.
For the year ended 30 June 2008
Directors’ Report 18
Signed in accordance with a resolution of the Board of Directors:
Terry CuthbertsonChairman
Andy FungManaging Director
Sydney, 27 August, 2008
For the year ended 30 June 2008
Corporate Governance Statememt 19
The Board of Directors of My Net Fone Limited is responsible for the corporate governance practices of the
consolidated entity. The Board guides and monitors the business and affairs of My Net Fone Limited on behalf
of the shareholders by whom they are elected and to whom they are accountable.
My Net Fone Limited’s Corporate Governance Statement is structured with reference to the Corporate
Governance Council’s Principles and Recommendations (2nd Edition, August 2007).
Taking into consideration theses principles and recommendations, the Board acknowledges that their key
responsibilities are:
• Overseeing the business and strategic direction of the Company in order to maximise performance
and generate appropriate levels of shareholder return.
• Appointment, evaluation and removal of the Chairman, the Managing Director, the Chief Financial
Officer and the Company Secretary.
• Ensuring that management establishes and follows an appropriate system of internal controls, risk
management and legal compliance.
• Reviewing the performance and implementation of corporate strategies by senior management and
ensuring that senior management have the necessary resources to do so.
• Approving and supervising significant capital expenditure, capital management, acquisitions and
divestments.
• Approving and monitoring annual budgets and strategic plans.
• Approving and monitoring financial and other reporting made to shareholders and the ASX under the
continuous disclosure regime.
The Board has chosen not to follow all of the best practice recommendations set by the ASX Corporate
Governance. The recommendations have not been met in the following areas:
• A Nomination Committee has not been established. The best practice recommendations recognise
that nomination committees may not be required for smaller companies. Due to the size of the
Company and its Board, the Board does not consider it necessary to establish a Nomination
Committee.
• A Remuneration Committee has not been established. Due to the size of the Company and its Board,
the Board does not consider it necessary to establish a Remuneration Committee.
Composition of the Board
The skills, experience and expertise relevant to the position of director held by each director in office at the
date of the annual report is included in the Directors’ Report. There are two Non-executive Directors sitting on
the Board and both of them are independent of management and free from any business or other relationship
that could materially interfere with – or could reasonably be perceived to materially interfere with – the
exercise of their unfettered and independent judgement.
In the context of director independence, “materiality” is considered from both the company and individual
director perspective. The determination of materiality requires consideration of both quantitative and
qualitative elements. An item is presumed to be quantitatively immaterial if it is equal to or less than 5% of the
appropriate base amount. It is presumed to be material (unless there is qualitative evidence to the contrary) if
Corporate Governance Statememt 20
it is equal to or greater than 10% of the appropriate base amount. Qualitative factors considered include
whether a relationship is strategically important, the competitive landscape, the nature of the relationship and
the contractual or other arrangements governing it and other factors that point to the actual ability of the
director in question to shape the direction of the company’s loyalty.
In accordance with the definition of independence above, and the materiality thresholds set, the following
directors of My Net Fone Limited are considered to be independent:
Name Position
Mr. Terry Cuthbertson Chairman, Non-executive Director
Mr. Michael Boorne Non-executive Director
There are procedures in place, agreed by the Board, to enable directors in furtherance of their duties to seek
independent professional advice at the company’s expense.
Nomination Committee
During the year of 2008 My Net Fone Limited had not set up a Nomination Committee due to the scale of the
company.
Audit Committee
Given the small size of the Board, the Board has conducted all the functions of an Audit Committee. It is the
Board’s responsibility to ensure that an effective internal control framework exists within the entity. This includes
internal controls to deal with both the effectiveness and efficiency of significant business processes, the
safeguarding of assets, the maintenance of proper accounting records, and the reliability of financial
information as well as non-financial considerations such as the benchmarking of operational key performance
indicators.
The Board members have met every month and held conference calls where necessary to ensure it continues
to operate within the established guidelines.
The details of meeting and attendances are disclosed in the Directors’ Report.
Performance Evaluation The performance of the Board and key executives is reviewed regularly against both measurable and
qualitative indicators.The performance criteria against which directors and executives are assessed are
aligned with the financial and non-financial objectives of My Net Fone Limited in the coming year. Directors
whose performance is consistently unsatisfactory may be asked to retire.
During the reporting period, My Net Fone Limited did not comply with ASX Corporate Governance Council
best practice recommendation 2.5 since the Board considered that the company size was not big enough to
form a performance committee.
Corporate Governance Statememt 21
Remuneration Policies It is the company’s objective to provide maximum stakeholder benefit from the retention of a high quality
Board and executive team by remunerating directors and key executives fairly and appropriately with
reference to relevant employment market conditions. To assist in achieving this objective, the Board links the
nature and amount of executive directors’ and officers’ emoluments to the company’s financial and
operational performance. The expected outcomes of the remuneration structure are;
• Retention and motivation of key executives;
• Attraction of high quality management to the company; and
• Performance incentives that allow executives to share the success of My Net Fone Limited.
There is no scheme to provide retirement benefits, other than statutory superannuation, to non-executive
directors.
The Board is responsible for determining and reviewing compensation arrangements for the directors
themselves and the executive team.
There was no Remuneration Committee set up throughout the year due to the small scale of the Company.
The amount of remuneration for all key management personnel for the company are detailed in the directors’
report under the heading Remuneration of Key Management Personnel.
Income Statement 22
Note CONSOLIDATED PARENT
$ $ $ $
Revenue
Rendering of services
Cost of sales
Gross profit
Finance revenue
Other income
Distribution expenses
Marketing expenses
Occupancy expenses
Administrative expenses
Technology and support expenses
Other expenses
Finance costs
Loss before income tax
Income tax expense
Loss after income tax
Net loss for the year
Earnings per share (cents per share)
- basic for loss for the year
- diluted for loss for the year
6,808,941
(4,796,917)
2,012,024
44,167
75,446
(237,989)
(842,448)
(202,685)
(2,313,485)
(121,890)
(343,178)
(11,141)
(1,941,179)
-
(1,941,179)
(1,941,179)
(3.76)
(3.76)
3.(a)
3.(a)
3.(b)
3.(c)
2008 2007 2008 2007
3,275,942
(2,409,930)
866,012
55,187
70,457
(112,512)
(573,252)
(200,927)
(2,746,296)
(228,799)
(368,990)
(11,200)
(3,250,320)
-
(3,250,320)
(3,250,320)
(7.16)
(7.16)
-
-
-
29,640
269,778
-
-
(187,443)
(97,543)
-
(100,084)
(205)
(85,857)
-
(85,857)
(85,857)
The above income statement should be read in conjunction with the accompanying notes.
For the year ended 30 June 2008
-
-
-
44,261
289,903
-
-
(172,400)
(779,396)
-
(223,181)
(45)
(840,858)
-
(840,858)
(840,858)
Balance Sheet 23
AS AT 30 JUNE 2008
Note CONSOLIDATED PARENT
$ $ $ $
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Total Current Asset
Non-currect Assets
Other receivables
Investment in subsidiaries
Property, plant and equipment
Total Non-current Asset
TOTAL ASSETS
LIABILITIES
Current Liabilities
Trade and other payables
Deferred revenue
Provisions
Total Current Liabilities
Non-current Liabilities
Other payables
Provisions
Total Non-current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed capital
Share based payment reserve
Accumulated losses
TOTAL EQUITY
794,341
428,596
62,128
1,285,065
450
-
199,529
199,979
1,485,044
2,340,149
725,892
135,636
3,201,677
-
19,580
19,580
3,221,257
(1,736,213)
3,990,515
1,048,333
(6,775,061)
(1,736,213)
5.
6.
7.
6.
18.
8.
9.
10.
11.
9.
11.
12.
2(d).
2008 2007 2008 2007
The above balance sheet should be read in conjunction with the accompanying notes.
387,537
9,377
62,128
459,042
3,155,313
5,000,000
-
8,155,313
8,614,355
70,731
-
-
70,731
-
-
-
70,731
8,543,624
8,805,515
1,048,333
(1,310,224)
8,543,624
1,143,489
175,882
62,128
1,381,499
450
-
243,054
243,504
1,625,003
1,374,193
437,539
83,915
1,895,647
6,308
11,710
18,018
1,913,665
(288,662)
3,496,887
1,048,333
(4,833,882)
(288,662)
847,653
2,067
62,128
911,848
2,342,783
5,000,000
-
7,342,783
8,254,631
118,778
-
-
118,778
-
-
-
118,778
8,135,853
8,311,887
1,048,333
(1,224,367)
8,135,853
Cash Flow Statement 24
CONSOLIDATED PARENT
$ $ $ $
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Borrowing costs
Net cash provided by (used in) operating
activities
Cash flows from investing activities
Purchase of property, plant and equipment
Decrease/ (Increase) in security deposit
Advances to subsidiary
Net cash provided by (used in) investing
activities
Cash flows from financing activities
Proceeds from issue of shares
Transaction costs of issue of shares
Net Cash provided by (used in) financing
activities
Net increase (decrease) in cash and cash
equivalents
Cash and cash equivalents at beginning of
Financial year
Cash and cash equivalents at end of finacial
year
7,600,920
(8,457,811)
44,167
(11,141)
(823,865)
(18,911)
-
-
(18,911)
500,000
(6,372)
493,628
(349,148)
1,143,489
794,341
5.
8.
7.
12.
12.
5.
2008 2007 2008 2007
The above cash flow statement should be read in conjunction with the accompanying notes.
289,445
(460,094)
29,640
(205)
(141,214)
-
-
(812,530)
(812,530)
500,000
(6,372)
493,628
(460,116)
847,653
387,537
Note
For the year ended 30 June 2008
3,873,543
(5,517,648)
55,187
(11,200)
(1,600,119)
(72,607)
33,600
-
(39,007)
900,000
(11,472)
888,528
(750,598)
1,894,086
1,143,489
344,004
(541,528)
44,261
(45)
(153,308)
-
-
(1,623,800)
(1,623,800)
900,000
(11,472)
888,528
(888,580)
1,736,233
847,653
Statment of Changes in Equity 25
Issued Capital
$ $ $ $CONSOLIDATED
As at 1 July 2006
IPO costs recognised directly in equity
Loss for the year
Total recognised income and expense for the year
Other equity movements
Issue of share capital
Share based payments
As at 30 June 2007
Movements
Share issue costs
Net income/ (expense) recognised directly in equity
Loss for the year
Total recognised income and expense for the year
Other equity movements
Issue of share capital
Share based payments
As at 30 June 2008
PARENT
As at 1 July 2006
IPO costs recognised directly in equity
Loss for the year
Total recognised income and expense for the year
Other equity movements
Issue of share capital
Share based payments
As at 30 June 2007
Movements
Share issue costs
Net income/ (expense) recognised directly in equity
Loss for the year
Total recognised income and expense for the year
Other equity movements
Issue of share capital
Share based payments
As at 30 June 2008
2,608,359
(11,472)
-
(11,472)
900,000
-
3,496,887
(6,372)
(6,372)
-
(6,372)
500,000
3,990,515
7,423,359
(11,472)
-
(11,472)
900,000
-
8,311,887
(6,372)
(6,372)
-
(6,372)
500,000
-
8,805,515
The above statement of changes in equity should be read in conjunction with the accompanying notes.
Share basedpayment &
other
AccumulatedLosses Total
348,333
-
-
-
-
700,000
1,048,333
-
-
-
-
-
-
1,048,333
348,333
-
-
-
-
700,000
1,048,333
-
-
-
-
-
-
1,048,333
(1,583,562)
-
(3,250,320)
(3,250,320)
-
-
(4,833,882)
-
-
(1,941,179)
(1,941,179)
-
-
(6,775,061)
(383,509)
-
(840,858)
(840,858)
-
-
(1,224,367)
-
-
(85,857)
(85,857)
-
-
(1,310,224)
1,373,130
(11,472)
(3,250,320)
(3,261,792)
900,000
700,000
(288,662)
(6,372)
(6,372)
(1,941,179)
(1,947,551)
-
500,000
-
(1,736,213)
7,388,183
(11,472)
(840,858)
(852,330)
900,000
700,000
8,135,853
(6,372)
(6,372)
(85,857)
(92,229)
-
500,000
-
8,543,624
For the year ended 30 June 2008
Notes to the Financial Statements 26
For the year ended 30 June 2008
1 CORPORATE INFORMATION The financial report of My Net Fone Limited and its controlled entity (the Group) for the year ended 30 June 2008
was authorized for issue in accordance with a resolution of the directors on 27 August 2008.
My Net Fone Limited (the Parent) is a company limited by shares incorporated in Australia whose shares are
publicly traded on the Australian Securities Exchange.
The nature of the operations and principal activities of the Group are described in the Directors' Report.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of Preparation The financial report is a general purpose financial report that has been prepared in accordance with
Australian Accounting Standards, Australian Accounting Interpretations, other authoritative
pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001.
Australian Accounting Standards set out accounting policies that the AASB has concluded would result
in a financial report containing relevant and reliable information about transactions, events and
conditions to which they apply. Compliance with Australian Accounting Standards ensures that the
financial statements and notes also comply with International Financial Reporting Standards. Material
accounting policies adopted in the preparation of this financial report are presented below. They have
been consistently applied unless otherwise stated.
The financial report has been prepared on an accruals basis and is based on historical costs, modified,
where applicable, by the measurement at fair value of selected non-current assets, financial assets and
financial liabilities.
The financial report is presented in Australian dollars.
(b) Statement of compliance Certain Australian Accounting Standards and Interpretations have recently been issued or amended
but are not yet effective and have not been adopted by the Group for the annual reporting period
ended 30 June 2008. The directors have not early adopted any of these new or amended standards or
interpretations. The directors have not yet fully assessed the impact of these new or amended standards
(to the extent relevant to the Group) and interpretations.
The financial report complies with Australian Accounting Standards, which include Australian equivalents
to International Financial Reporting Standards (AIFRS). Compliance with AIFRS ensures that the financial
report, comprising the financial statements and notes thereto, complies with International Financial
Reporting Standards (IFRS).
(c) Basis of consolidation The consolidated financial statements comprise the financial statement of My Net Fone Limited and its
subsidiary (My Net Fone Australia Pty Ltd) as at 30 June 2008 ('the Group').
Subsidiaries are all those entities (including special purpose entities) over which the Group has the power
to govern the financial and operating policies so as to obtain benefits from their activities. The existence
and effect of potential voting rights that are currently exercisable or convertible are considered when
assessing whether a group controls another entity.
The financial statements of the subsidiary are prepared for the same reporting period as the parent
company, using consistent accounting policies.
Notes to the Financial Statements 27
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) (c) Basis of consolidation
Subsidiaries are consolidated from the date on which control is transferred to the Group and cease to
be consolidated from the date on which control is transferred out of the Group.
In preparing the consolidated financial statements all intercompany balances and transactions have
been eliminated infull.
Subsidiaries are fully consolidated from the date on which control is obtained by the Group and cease to
be consolidated from the date on which control is transferred out of the Group.
(d) Going Concern The Directors believe that the Group will be able to continue as a going concern and, as a
consequence, the financial report has been prepared on a going concern basis. This basis presumes
that funds will be available to finance future operations and the realisation of assets and settlement of
liabilities will occur in the normal course of business.
The Group incurred an operating loss of $1,941,179 (2007: loss of $3,250,320) during the year ended 30
June 2008, and as at that date the Group's total liabilities exceeded total assets by $1,736,213. (2007:
$288,662).
However, this negative liability position is viewed as controllable by the directors because:
1/ Included in the current liabilities is $725,892 of deferred revenue which will be recognised as 2009
revenue when customers' credits are progressively used up. This deferred revenue does not represent a
gross cash outflow.
2/ Of the total amount of $2,200,634 of trade payables, $2,037,678 is owed to Symbio Networks Pty Ltd
which is a related party to My Net Fone. Symbio Networks has agreed to an extended payment term of
the payable at a commercial interest rate similar to bank overdraft to My Net Fone.
The Directors believe that the going concern basis of accounting is appropriate due to the expected
cash flows to be generated by the Group over the next twelve months. The Directors will closely monitor
cash flows as the Group grows and if revenues do not increase as expected, the directors will look to
contain costs and negotiate with the related party supplier Symbio Networks to change and extend
payment terms. The Directors believe that these actions, if required, will be sufficient to ensure that the
company will be able to pay its debts as and when they fall due for the next twelve months at least.
Notwithstanding the above, the directors acknowledge that there are a number of risk factors that could
materially affect the Group's future profitability and cash flows, which include, but are not limited to:
(i) Competition
There can be no assurance given in respect of the Group's ability to continue to compete profitably in
the competitive markets in which the Group operates. The potential exists for change in the competitive
environment in which the Group operates.
(ii) Management of Growth
Consistent with early stage growth companies, the Group is not currently operating profitably. There is a
risk the Group will have insufficient working capital to meet its business requirements and the expansion of
the Group will depend upon the ability of management to implement and successfully manage the
Group's growth strategy.
For the year ended 30 June 2008
Notes to the Financial Statements 28
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) (d) Going Concern (Continued) (iii) Reliance on Key Management
The responsibility of overseeing the day-to-day operations and strategic management of the Group
is substantially dependent upon its senior management and its key personnel. There can be no
assurance given that there will be no detrimental impact on the Group if one, or a number of, these
employees cease their employment.
(iv) New Products and Technological Developments
The Group's current core business of broadband telecommunications is highly competitive and is
subject to the introduction of new and improved products and services into the market on a regular basis.
(v) Broadband Access Arrangements
The Group currently has certain access to the Internet backbone network. Terms of the supply of
broadband are negotiated regularly. There is no guarantee that future access arrangements will be able
to be negotiated on acceptable terms.
(vi) Distribution Channels and Device Suppliers
Currently the Group benefits from its good working relationship with its distribution channels to promote its
products and services and with its device suppliers to provide its VoIP adaptors. There is no guarantee
that these relationships will continue in the future.
(vii) Agreement with Symbio
The Group is dependant upon the supply of services by Symbio pursuant to its contract with Symbio,
details of which are set out at Note 19. If, notwithstanding its contractual obligations, Symbio were to fail
to supply the group, there is no guarantee that the Group could either obtain these services from another
party or provide them itself in the short term.
(viii) Legislation, Regulation and Policies
Any material adverse changes in government or other regulatory organisation policies or legislation which
impacts on the telecommunications industry, may affect the viability and profitability of the Group.
(ix) Internet Access
The use of VoIP technology is dependent on quality and speed of access to the Internet. The market
growth of VoIP may be limited by the take up rate of broadband and other fast Internet access or by the
quality of such access.
(e) Reverse acquisition In accordance with AASB 3 Business Combinations, when My Net Fone Limited (the legal parent)
acquired My Net Fone Australia Pty Limited (the legal subsidiary), the acquisition was deemed to be a
reverse acquisition since the substance of the transaction was that the existing shareholders of My Net
Fone Australia Pty Limited have, through My Net Fone Australia Pty Limited, effectively acquired My Net
Fone Limited. Under reverse acquisition accounting, the consolidated financial statements are prepared
as if My Net Fone Australia Pty Limited had acquired My Net Fone Limited, not vice versa as
represented by the legal position.
(f) Significant accounting judgements, estimates and assumptions The carrying amounts of certain assets and liabilities are often determined based on estimates and
assumptions of future events. The key estimates and assumptions that have a significant risk of causing a
material adjustment to the carrying amounts of certain assets and liabilities within the next annual
reporting period are:
For the year ended 30 June 2008
Notes to the Financial Statements 29
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) (f) Significant accounting judgements, estimates and assumptions (Continued) Share-based payment transactions
The Group measures the cost of equity-settled transactions with employees by reference to the fair value
of the equity instruments at the date at which they are granted. The fair value is determined by an
independent valuer using a binomial model. The assumptions are detailed in note 13.
(g) 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. The following specific recognition criteria must also be met
before revenue is recognised:
(i) Rendering of services
Revenue from telecommunication services are recognised when the services are provided to the
customer.
Deferred revenue represents the un-used proportion of cash received in advance for call credits
determined on a specific account basis at balance date.
(ii) Interest income / Finance revenue
Revenue is recognised as interest accrues using the effective interest method. This is a method of
calculating the amortised cost of a financial asset and allocating the interest income over the relevant
period using the effective interest rate, which is the rate that exactly discounts estimated future cash
receipts through the expected life of the financial asset to the net carrying amount of the financial asset.
(h) Leases The determination of whether an arrangement is or contains a lease is based on the substance of the
arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on
the use of a specific asset or assets and the arrangement conveys a right to use the asset.
Operating lease payments are recognised as an expense in the income statement on a straight-line
basis over the lease term. Lease incentives are recognised on a straight-line basis over the lease term.
(i) Cash and cash equivalents Cash and cash equivalents in the balance sheet comprise cash at bank and in hand and short-term
deposits with an original maturity of three months or less that are readily convertible to known amounts of
cash and which are subject to an insignificant risk of changes in value.
For the purposes of the Cash Flow Statement, cash and cash equivalents consist of cash and cash
equivalents as defined above, net of outstanding bank overdrafts.
(j) Trade and other receivables Trade receivables and other receivables, which generally have 30-90 day terms, are recognised and
carried at original invoice amount less an allowance for any uncollectible amounts.
An allowance for doubtful debts is made when there is objective evidence that the Group will not be
able to collect the debts. Bad debts are written off when identified.
(k) Foreign Currency Translation (i) Functional and presentation currency
Both the functional and presentation currency of My Net Fone Limited and its subsidiary is Australian dollars
For the year ended 30 June 2008
Notes to the Financial Statements 30
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) (k) Foreign Currency Translation (Continued) ($). Each entity in the Group determines its own functional currency and items included in the financial
statements of each entity are measured using that functional currency.
(ii) Transactions and balances
Transactions in foreign currencies are initially recorded in the functional currency by applying the
exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in
foreign currencies are retranslated at the rate of exchange ruling at the balance sheet date.
All exchange differences in the consolidated financial report are taken to profit or loss.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using
the exchange rate as at the date of the initial transaction. Non-monetary items measured at fair value in a
foreign currency are translated using the exchange rates at the date when the fair value was determined.
(l) Income tax Current tax assets and liabilities 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 by the balance sheet date.
Deferred income 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; or
• when the taxable temporary difference is associated with investments in subsidiaries,
associates or interests in joint ventures, and the timing of the reversal of the temporary difference
can be controlled and it is probable that the temporary difference will not reverse in the
foreseeable future.
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of
unused tax assets and unused tax losses, 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 income 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; or
• when the deductible temporary difference is associated with investments in subsidiaries,
associates or interests in joint ventures, in which case a deferred tax asset is only recognised to the
extent that it is probable that the temporary difference will reverse in the foreseeable future and
taxable profit will be available against which the temporary difference can be utilised.
The carrying amount of deferred income tax assets is reviewed at each balance sheet 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 income tax asset to be utilised.
Unrecognised deferred income tax assets are reassessed at each balance sheet date and are recognised
For the year ended 30 June 2008
Notes to the Financial Statements 31
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) (l) Income tax (Continued) to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be
recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to
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 balance sheet date.
Income taxes relating to items recognised directly in equity are recognised in equity and not in profit or loss.
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set
off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the
same taxable entity and the same taxation authority.
(m) Other taxes Revenues, expenses and assets are recognised net of the amount of GST except:
• when the GST incurred on a purchase of goods and services is not recoverable from the taxation
authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as
part of the expense item as applicable; and
• receivables and payables, which 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 balance sheet.
Cash flows are included in the Cash Flow Statement 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 are classified as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable
to, the taxation authority.
(n) Property, plant and equipment Plant and equipment is carried at cost or fair value as indicated less, where applicable, any accumulated
depreciation and impairment losses.
Depreciation is calculated on a straight-line basis over the estimated useful life of the assets as follows:
Furniture & Fittings – over 6 to 10 years
Office Equipment – over 3 to 5 years
IT Systems - over 2 to 4 years
The assets' residual values, useful lives and amortisation methods are reviewed, and adjusted if
appropriate, at each financial year end.
(i) Impairment
The carrying values of plant and equipment are reviewed for impairment at each reporting date, with
recoverable amount being estimated when events or changes in circumstances indicate that the carrying
value may be impaired.
For the year ended 30 June 2008
Notes to the Financial Statements 32
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) (n) Property, plant and equipment (Continued) The recoverable amount of plant and equipment is the higher of fair value less costs to sell and value in
use. 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.
For an asset that does not generate largely independent cash inflows, recoverable amount is
determined for the cash-generating unit to which the asset belongs, unless the asset's value in use can be
estimated to be close to its fair value.
An impairment exists when the carrying value of an asset or cash-generating units exceeds its
estimated recoverable amount. The asset or cash-generating unit is then written down to its recoverable
amount.
For plant and equipment, impairment losses are recognised in the income statement in the other expenses
line item.
(ii) De-recognition and disposal
An item of property, plant and equipment is derecognised upon disposal or when no further 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 profit or loss in the year the asset is
derecognised.
(o) Other financial assets Financial assets in the scope of AASB 139 Financial Instruments: Recognition and Measurement are
classified as either financial assets at fair value through profit or loss, loans and receivables, held-to-
maturity investments, or available-for-sale investments, as appropriate. When financial assets are
recognised initially, they are measured at fair value, plus in the case of investments not at fair value
through profit or loss, directly attributable transaction costs. The group determines the classifications of its
financial assets after initial recognition and, when allowed and appropriate, re-evaluates this
designation at each financial year-end.
(i) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are
not quoted in an active market. Such assets are carried at amortised cost using the effective interest
method. Gains or losses are recognised in the profit or loss when the loans or receivables are
derecognised or impaired, as well as through the amortisation process.
(ii) Investments in subsidiaries held by the parent
Investments in subsidiaries held by the parent entity are recognised and subsequently measured at cost in
the separate financial statements of the Company, less any impairment.
(p) Impairment of assets The group assesses at each reporting date whether there is an indication that an asset may be
impaired. If any such indication exists, or when annual impairment testing for an asset is required, the
group makes an estimate of the asset’s recoverable amount. An asset’s recoverable amount is the higher
of its fair value less costs to sell and its value in use and is determined for an individual asset, unless the
For the year ended 30 June 2008
Notes to the Financial Statements 33
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) (p) Impairment of assets (Continued) asset does not generate cash inflows that are largely independent of those from other assets or groups of
assets and the asset's value in use cannot be estimated to be close to its fair value. In such cases the asset
is tested for impairment as part of the cash-generating unit to which it belongs. When the carrying amount
of an asset or cash-generating unit exceeds its recoverable amount, the asset or cash-generating
unit 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. Impairment losses relating to continuing operations are recognised in those
expense categories consistent with the function of the impaired asset.
(q) Trade and other payables Trade payables and other payables are carried at amortised costs and represent liabilities for goods and
services provided to the Group prior to the end of the financial year that are unpaid and arise when the
Group becomes obliged to make future payments in respect of the purchase of these goods and services.
(r) Provisions Provisions are recognised when the group has a present obligation (legal or constructive) as a result of a
past event, it is probable that an outflow of resources embodying economic benefits will be required to
settle the obligation and a reliable estimate can be made of the amount of the obligation.
When the group expects some or all of a provision to be reimbursed, for example under an insurance
contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually
certain. The expense relating to any provision is presented in the income statement net of any
reimbursement.
Provisions are measured at the present value of management's best estimate of the expenditure required
to settle the present obligation at the balance sheet date. If the effect of the time value of money is
material, provisions are discounted using a current pre-tax rate that reflects the time value of money and
the risks specific to the liability. The increase in the provision resulting from the passage of time is
recognised in finance costs.
(s) Employee leave benefits (i) Wages, salaries and annual leave
Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be
settled within 12 months of the reporting date are recognised in current provisions 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.
(ii) Long service leave
The liability for long service leave is recognised in the provision for employee benefits and measured as the
present value of expected future payments to be made in respect of services provided by employees up
to the reporting date using the projected unit credit method. Consideration is given to expected future
wage and salary levels, experience of employee departures, and periods of service. Expected future
payments are discounted using market yields at the reporting date on national government bonds with
terms to maturity and currencies that match, as closely as possible, the estimated future cash outflows.
For the year ended 30 June 2008
Notes to the Financial Statements 34
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) (t) Contributed capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares
or options are shown in equity as a deduction, net of tax, from the proceeds.
(u) Earnings per share Basic earnings per share is calculated as net loss attributable to members of the group, adjusted to
exclude any costs of servicing equity (other than dividends), divided by the weighted average number of
ordinary shares.
Diluted earnings per share is calculated as net loss attributable to members of the parent divided by the
weighted average number of ordinary shares and dilutive potential ordinary shares.
(v) De-recognition of financial assets and financial liabilities (i) Financial Assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial
assets) is derecognised when:
- the rights to receive cash flows from the asset have expired;
- the Group retains the right to receive cash flows from the asset, but has assumed an obligation to pay
them in full without material delay to a third party under a 'pass-through' arrangement; or
- the Group has transferred its rights to receive cash flows from the asset and either (a) has transferred
substantially all the risks and rewards of the asset, or (b) has neither transferred nor retained substantially
all the risks and rewards of the asset, but has transferred control of the asset.
(ii) Financial Liabilities
A financial liability is derecognised when the obligation under the liability is discharged, cancelled or
expires.
(w) Share-based payment transactions The Group provides benefits to its employees and Directors (including key management personnel) in the
form of share-based payments, whereby employees render services in exchange for shares or rights over
shares (equity-settled transactions).
The cost of these equity-settled transactions with employees and Directors is measured by reference to the
fair value of the equity instruments at the date at which they are granted. The fair value is determined by
an external valuer using a binomial model, further details of which are given in note 13.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity,
over the period in which the performance and/or service conditions are fulfilled (the vesting period),
ending on the date on which the relevant employees and Directors become fully entitled to the award
(the vesting date).
At each subsequent reporting date until vesting, the cumulative charge to the income statement is the
product of (i) the grant date fair value of the award; (ii) the current best estimate of the number of awards
that will vest, taking into account such factors as the likelihood of employee turnover during the vesting
period and the likelihood of non-market performance conditions being met; and (iii) the expired portion of
the vesting period.
The charge to the income statement for the period is the cumulative amount as calculated above less the
amounts already charged in previous periods. There is a corresponding credit to equity.
(x) Comparative Figures When required by Accounting Standards, comparative figures have been adjusted to conform to
changes in presentation for the current financial year.
For the year ended 30 June 2008
Notes to the Financial Statements 35
CONSOLIDATED PARENT
$ $ $ $2008 2007 2008 2007
(continued)
3. REVENUES AND EXPENSES
Revenue and Expenses from Continuing Operations
(a) Revenue
Rendering of services
Finance revenue
Breakdown of finance revenue:
Bank interest receivable
(b) Other income
Contribution from landlord
Rent received
Management fees
Other
(c) Other expenses
Depreciation on property, plant and equipment
Accounting and audit fees
General expenses
Stamp duty
Settlement fees
Valuation report
Legal fees
Listing fees
Registry fees
Merchant processing fees
Subscriptions and memberships
(d) Minimum lease payments
Operating lease – premises
(e) Employee benefits expense
Wages and salaries
Superannuation
Share based payments expense
Payroll tax
Workers’ compensation costs
6,808,941
44,167
6,853,108
44,167
44,167
7,578
56,149
-
11,719
75,446
62,436
30,925
51,195
-
12,000
3,000
4,541
24,381
18,808
129,349
6,543
343,178
187,443
1,815,844
307,084
-
89,981
9,401
2,222,310
-
29,640
29,640
29,640
29,640
-
187,443
60,000
22,335
269,778
-
30,225
23,670
-
-
3,000
-
24,381
18,808
-
-
100,084
187,443
80,000
7,200
-
5,232
419
92,851
For the year ended 30 June 2008
3,275,942
55,187
3,331,129
55,187
55,187
7,578
51,720
-
11,159
70,457
49,247
107,570
42,816
27,389
-
-
21,042
18,309
28,776
62,939
10,901
368,990
180,342
1,654,635
288,456
700,000
91,146
7,791
2,742,028
-
44,261
44,261
44,261
44,261
-
172,400
105,000
12,503
289,903
-
104,720
14,944
27,389
-
-
21,042
18,309
28,776
-
8,000
223,180
172,400
65,000
5,850
700,000
3,259
226
774,335
Notes to the Financial Statements 36
CONSOLIDATED PARENT
$ $ $ $2008 2007 2008 2007
(continued)
4. INCOME TAX
The major components of income tax expense are:
Income Statement
Current income tax
Current income tax charge
Adjustments in respect of current income tax of
previous years
Deferred income tax
Relating to origination and reversal of
temporary differences
Income tax expense reported in the income
statement
A reconciliation between tax expense and the product of accounting profit before income tax multiplied by the company’s applicable
income tax rate is as follows:
Accounting profit before tax from continuing
operations
At the statutory income tax rate of 30%
Share based payment expenses not
allowable for income tax purposes
Unrecognised temporary differences
Unrecognised tax losses
Income tax expense reported in the income
statement
Entities in the Group have tax losses arising in Australia of $5,119,223 (2007:$3,431,938) that are available to be offset against future taxable
profits. A deferred tax asset relating to these losses has not been recognised as utilisation of the tax losses is not considered to be probable.
The total deductible temporary differences in relation to the non-recognition of the deferred tax asset is $305,730 (2007: $194,227)
The Group has yet to decide whether it will form a tax consolidated group for tax purposes.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,941,179)
(582,354)
-
76,216
506,138
-
-
(85,857)
(25,757)
-
(54,474)
80,231
-
-
For the year ended 30 June 2008
(3,250,320)
(975,096)
210,000
61,597
703,499
-
-
(840,858)
(252,257)
210,000
(33,307)
75,564
-
-
Notes to the Financial Statements 37
CONSOLIDATED PARENT
$ $ $ $2008 2007 2008 2007
(continued)
5. CASH AND CASH EQUIVALENTS
Cash at bank and on hand
Reconciliation to Cash Flow Statement
For the purposes of the Cash Flow Statement, cash and
cash equivalents comprise the following at 30 June 2008:
Cash at the bank and on hand
Reconciliation of net profit after tax to net cash flow from operations:
Net loss
Adjustments for:
Depreciation of plant and equipment
Net loss on disposal of plant and equipment
Share based payments expense
Changes in assets and liabilities
(Increase)/decrease in trade and other receivables
(Increase)/decrease in inventories
(Decrease)/increase in trade and other creditors
(Decrease)/increase in deferred revenue
(Decrease)/increase in provisions
Net cash flow from/(used in) operating activities
6. TRADE AND OTHER RECEIVABLES
Current
Trade receivables
Less: Provision for impairment of receivables
Other receivables
Non-current
Other receivables
Intercompany receivable*
* The intercompany receivable corresponds to the cash advances made by My Net Fone Limited to its subsidiary My Net Fone Australia Pty
Ltd at cost value. These cash advances are non-interest bearing.
7. OTHER FINANCIAL ASSETS
Current
Term deposits
Short term deposits are made for period of 6 months and earn interest at the respective short term deposit rates. The deposit was made for
the purpose of bank guarantee for office premises.
794,341
794,341
(1,941,179)
62,436
-
-
(252,714)
-
959,648
288,353
59,591
(823,865)
405,804
(80,000)
102,792
428,596
450
-
450
62,128
387,537
387,537
(85,857)
-
-
-
(7,311)
-
(48,046)
-
-
(141,214)
-
-
9,377
9,377
-
3,155,313
3,155,313
62,128
For the year ended 30 June 2008
1,143,489
1,143,489
(3,250,320)
49,247
-
700,000
(20,063)
-
635,211
219,613
66,194
(1,600,119)
86,963
-
88,919
175,882
450
-
450
62,128
847,653
847,653
(840,858)
-
-
700,000
25,111
-
(37,561)
-
-
(153,308)
-
-
2,067
2,067
-
2,342,783
2,342,783
62,128
Notes to the Financial Statements 38
$ $ $ $
Furniture &Fittings
(continued)
8. PROPERTY, PLANT AND EQUIPMENT
CONSOLIDATED
Year ended 30 June 2008
At 1 July 2007, net of accumulated depreciation and
impairment
Additions
Disposals
Depreciation charge for the year
At 30 June 2008, net of accumulated depreciation
At 30 June 2008
Cost
Accumulated depreciation
Net carrying amount
CONSOLIDATED
Year ended 30 June 2007
At 1 July 2006, net of accumulated depreciation and
impairment
Additions
Disposals
Depreciation charge for the year
At 30 June 2007, net of accumulated depreciation
At 30 June 2007
Cost
Accumulated depreciation and impairment
Net carrying amount
These assets are not impaired as at year end.
9. TRADE AND OTHER PAYABLES
Current
Trade payables
Other creditors
Security deposit
Lease incentive
(i) Trade payable are non-interest bearing and are normally settled on 30-day terms with non-related suppliers.
Included in trade payable is $2,037,678 payable to Symbio Networks. Refer to Note 2(d) and Note 19.
175,425
-
-
(31,752)
143,673
211,697
(68,024)
143,673
190,877
15,905
-
(31,357)
175,425
212,073
(36,648)
175,425
2,200,634
119,207
14,000
6,308
2,340,149
OfficeEquipment IT Systems Total
CONSOLIDATED PARENT
$ $ $ $2008 2007 2008 2007
42,409
7,016
-
(15,469)
33,956
68,596
(34,640)
33,956
26,290
29,630
-
(13,511)
42,409
61,580
(19,171)
42,409
1,239,107
125,508
2,000
7,578
1,374,193
25,220
11,895
-
(15,215)
21,900
43,812
(21,912)
21,900
2,527
27,072
-
(4,379)
25,220
31,917
(6,697)
25,220
63,202
7,529
-
-
70,731
243,054
18,911
-
(62,436)
199,529
324,105
(124,576)
199,529
219,694
72,607
-
(49,247)
243,054
305,570
(62,516)
243,054
115,210
3,568
-
-
118,778
For the year ended 30 June 2008
$ $ $
Notes to the Financial Statements 39
CONSOLIDATED PARENT
$ $ $ $2008 2007 2008 2007
(continued)
9. TRADE AND OTHER PAYABLES (Continued)
Non-current
Lease incentive
10. DEFERRED REVENUE
Pre-paid calling credits
Deferred revenue relates to cash received from customers up front with respect to pre-paid calling credits. The balance represents the
unused call credits as at balance date.
11. PROVISIONS
CONSOLIDATED
As at 1 July 2007
Arising during the year
Utilised during the year
As at 30 June 2008
Current
Non-current
PARENT
As at 1 July 2007
Arising during the year
Utilised during the year
As at 30 June 2008
Current
Non-current
-
725,892
6,308
437,539
-
-
-
-
Annual leave Long service leave Total
83,915
85,245
(33,524)
135,636
135,636
-
135,636
-
-
-
-
-
-
-
11,710
7,870
-
19,580
-
19,580
19,580
-
-
-
-
-
-
-
95,625
93,115
(33,524)
155,216
135,636
19,580
155,216
-
-
-
-
-
-
-
For the year ended 30 June 2008
Notes to the Financial Statements 40
CONSOLIDATED PARENT
$ $ $ $2008 2007 2008 2007
12. CONTRIBUTED CAPITAL AND RESERVES
A ORDINARY SHARES
Shares issued and fully paid
Movements in ordinary shares on issue
At 1 July
Issued during the year:
- 2,000,000 shares at 20 cents per share
Share Placement
- 2,777,778 shares at 18 cents per share
- transaction costs
At 30 June
Movements in ordinary shares on issue
At 1 July
Issued during the year:
- 2,000,000 shares at 20 cents per share
Share Placement
- 2,777,778 shares at 18 cents per share
- transaction costs
At 30 June
3,990,515
(continued)
3,496,887 8,805,515 8,311,887
49,777,777
-
2,777,778
-
52,555,555
3,496,887
-
500,000
(6,372)
3,990,515
44,999,999
2,000,000
2,777,778
-
49,777,777
2,608,359
400,000
500,000
(11,472)
3,496,887
$
Parent
49,777,777
2,777,778
-
52,555,555
2008 2007Number of Shares $Number of Shares
8,311,887
500,000
(6,372)
8,805,515
$
Consolidated2008 2007
Number of Shares $Number of Shares
Ordinary shares have the right to receive dividends as declard and in the event of winding up the company, to participate in the proceeds from the sale of all
surplus assets in proportion to the number of and amounts paid up on shares held.
For the year ended 30 June 2008
44,999,999
2,000,000
2,777,778
-
49,777,777
7,423,359
400,000
500,000
(11,472)
8,311,887
Notes to the Financial Statements 41(continued)
12. ISSUED CAPITAL AND RESERVES (Continued)
Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the company.
Under AIFRS reverse acquisition rules, the number of shares disclosed by the consolidated group are those of My Net
Fone Limited whilst the value of shares disclosed by the consolidated group is an aggregation of My Net Fone
Australia Pty Limited (Legal Subsidiary) and My Net Fone Limited (Legal Parent).
Movements during the year
- On 26 October 2007, after approval by shareholders in the 2007 AGM, the Company successfully completed a
placement raising $500,000 before capital raising costs. That placement was to convert a part of the existing debt
to Symbio Networks, a related party to My Net Fone, into My Net Fone equity through the issue of 2,777,778 fully
paid ordinary shares at a price of 18 cents per share and 5,555,556 attaching options at an exercise price of 25
cents and expiring 30 April 2009. The Company obtained official quotation of these shares and options on 29
October 2007.
No. WAEP $ No. WAEP $2008 2008 2007 2007
B SHARE OPTIONS
34,488,096
-
5,555,556
(2,000,000)
-
(2,000,000)
36,043,652
35,543,652
Movements in ordinary shares on issue
Outstanding at the beginning of the year
Granted during the year
Granted during the year per placement
Forfeited during the year
Exercised during the year
Expired during the year
Outstanding at the end of the year
Exercisable at the end of the year
Outstanding options as at year end
The outstanding balance as at 30 June 2008 is represented by:
- 11,611,111 options issued under a share based payment option scheme under which options to subscribe for the compamy’s shares have
been granted to certain executives and other employees. (Refer Note 13)
- 6,250,000 options issued to IPO investers over ordinary shares with an exercise price of 25 cents each. exercisable immediately and until
30 April 2009.
- 6,071,429 options issued to seed capital investors over ordinary shares with an exercise price of 25 cents each, excercisable from 13 March
2007 and until 30 April 2009.
- 1,000,000 options issued to non-executive director approved by shareholders in the EGM held on 16 February 2007 with an exercise price
of 30 cents each, exercisable from 26 February 2007 and until 30 September 2008. (Refer Note 13)
- 5,555,556 options issued to share placement investors over ordinary shares with an exercise price of 25 cents each, exercisable from 04
July 2007 and until 30 April 2009.
- 5,555,556 options issued to Symbio Networks Pty Ltd over ordinary shares with an exercise price of 25 cents each, exercisable from 26
October 2007 and until 30 April 2009.
0.25
-
0.25
-
-
-
0.25
0.25
For the year ended 30 June 2008
23,932,540
7,000,000
5,555,556
-
(2,000,000)
-
34,488,096
22,876,985
0.25
0.26
0.25
-
0.20
-
0.25
0.26
Notes to the Financial Statements 42(continued)
13. SHARE BASED PAYMENT PLANS
No. WAEP $ No. WAEP $2008 2008 2007 2007
b. SHARE OPTIONS
Movements during the year
The following table illustrates the number (No.) and weighted average exercise prices (WAEP) of and movements in share options
issued during the year:
16,611,111
-
(2,000,000)
(2,000,000)
12,611,111
12,111,111
Outstanding at the beginning of the year
Granted during the year
Forfeited during the year
Exercised during the year
Expired during the year
Outstanding at the end of the year
Exercisable at the end of the year
0.26
0.25
0.30
0.25
0.25
11,611,111
7,000,000
-
(2,000,000)
-
16,611,111
5,000,000
0.25
0.26
-
0.20
-
0.26
0.28
Outstanding options as at year end Jun-08 Jun-07
EOP - Refer Note a
Options granted to Directors - Refer Note b
Total
500,000
12,111,111
12,611,111
500,000
16,111,111
16,611,111
a. Employee Option Plan (EOP)
The Board may issue options under the EOP to any employee of the Company and its subsidiaries, including executive directors and
non-executive directors.
Options will be issued free of charge, unless the Board determines otherwise. Each option is to subscribe for one share and when,
issued, the shares will rank equally with other shares.
Unless the terms on which an option was offered specify otherwise, an option may be exercised at any time after one year from the
date it is granted, provided the employee is still employed by the Company.
An option may also be exercised in special circumstances, that is, at any time within 6 months after the employee's death, total and
permanent disablement, or retrenchment. An option lapses upon the termination of the employee's employment by the Company
and, unless the terms of the offer of the option specify otherwise, lapses three years after the date upon which it was granted.
The exercise price per share for an option will be 25 cents per share in respect of options granted before the Company was
admitted to the official listing of the ASX and there after be the average closing market price of the Company's share over the five
trading days before their issue.
The maximum number of options on issue under the EOP must not at any time exceed 5% of the total number of shares on issue at
that time.
For the year ended 30 June 2008
Notes to the Financial Statements 43
FOR THE YEAR ENDED 30 JUNE 2007
(continued)
13. SHARE BASED PAYMENT PLANS (Continued)
The outstanding balance as at 30 June 2008 is represented by:
- 11,111,111 options over ordinary shares with an exercise price of 25 cents each, exercisable from 18 May 2008 and
until 30 April 2009.
- 500,000 EOP options over ordinary shares with an exercise price of 25 cents each, exercisable upon meeting the
above conditions and until 30 April 2009.
- 1,000,000 options issued to non-executive director approved by shareholders in the EGM held on 16 February 2007
with an exercise price of 30 cents each, exercisable from 26 February 2007 and until 30 September 2008.
The weighted average remaining contractual life for the share options outstanding as at 30 June 2008 is 0.32 years
(2007: 1.32 years).
The weighted average exercise price for options outstanding at the end of the year was 25 cents (2007: 26 cents).
Each option was issued free of charge and entitles the holder to subscribe for, and be allotted, one ordinary share
in the capital of My Net Fone Limited.
Shares issued on the exercise of options will rank equally with all existing shares on issue, as at the exercise date.
The exercise price of each option to Mr. Terry Cuthbertson is 30 cents, exercisable from 26 February 2007. The expiry
date for exercising these options is 30 September 2008. All options not exercised on or before the expiry date will
lapse.
The expense recognised in the income statement in relation to share based payments is disclosed in note 3(e).
The fair value of equity settled share options granted is estimated as at the date of grant using a binomial model
taking into account the terms and conditions upon which the options were granted.
The following table lists the inputs to the model used for the year ended 30 June 2007:
Sensitivity analysis
- If the volatility rate used had been 40%, the share based payment expense for the year would have been around
$750k.
- If the volatility rate used had been 50%, the share based payment expense for the year would have been around
$800k.
2,000,000
Nil
30
6.35
0.2
0.20
0.33
2007
Number of options granted
Dividend yield (%)
Expected volatility (%)
Risk free interest rate (%)
Expected life of option (year)
Option exercise price ($)
Share price at grant date ($)
2,000,000
Nil
30
6.45
0.9
0.25
0.33
2,000,000
Nil
30
6.06
1.6
0.30
0.33
Notes to the Financial Statements 44(continued)
14. COMMITMENTS AND CONTINGENCIES
Operating lease commitments – Group as lessee
The Group has entered into a commercial lease for building rental from Brenmoss Properties Pty Ltd and Appreciate
Group Pty Ltd. The term of the lease is for 3 years commencing on 1st May 2006 and ending on the 30th April 2009.
An additional rent for car parking is also attached with the lease.
The Group is entitled to sublet part of the premises to Symbio Networks Pty Ltd during the term of the lease. The ratio
between My Net Fone Limited and Symbio Networks Pty Limited is 70 to 30.
Future minimum rentals payable under non-cancellable operating leases as at 30 June are as follows:
CONSOLIDATED PARENT
$ $ $ $2008 2007 2008 2007
193,354
-
-
193,354
Within one year
After one year but not more than five years
More than five years
186,600
155,500
-
342,100
193,354
-
-
193,354
186,600
155,500
-
342,100
For the year ended 30 June 2008
Notes to the Financial Statements 45(continued)
15. EVENTS AFTER THE BALANCE SHEET DATE
There have been no other material transactions or events outside the ordinary business of My Net Fone Limited
subsequent to 30 June 2008. The financial report was authorised for issue on 27 August 2008 by the Board of
Directors.
16. AUDITORS’ REMUNERATION
Amounts due and receivable by Grosvenor Schiliro for 2008 and received by Ernst & Young Australia for 2007:
17. DIRECTOR AND EXECUTIVE DISCLOSURES
(a) Details of Key Management Personnel
Mr Andy Fung (Managing Director)
Mr René Sugo (Technical Director)
Mr Leo Tai (Director)
Mr Terry Cuthbertson (Non-executive Chairman)
Mr Michael Boorne (Non-executive Director)
(b) Compensation of Key Management Personnel
The Group has applied the exemption under Corporations Amendments Regulation 2006 No 4 which exempts listed companies from
providing remuneration disclosures in relation to their key management personnel in their annual financial reports by Accounting
Standard AASB 124 Related Party Disclosures. These disclosures are provided on pages 14 to 16 of the Directors’ Report designated
as audited.
(c) Shareholdings of Key Management Personnel
1 July 2007
Balance atbeginning of
period
12,100,065
12,100,066
2,478,440
1,125,000
1,164,000
28,967,571
– audit and review of the financial report
1,388,889
1,388,889
-
-
1,171,104
3,948,882
-
-
-
-
-
-
100,000
100,000
CONSOLIDATED PARENT
$ $ $ $2008 2007 2008 2007
100,000
100,000
35,000
35,000
35,000
35,000
Trade duringthe year
Optionsexercised
Balance atend ofperiod
30 June 200830 June 2008
Directors
Mr Andy Fung
Mr René Sugo
Mr Leo Tai
Mr Terry Cuthbertson
Mr Michael Boorne
Total
The above shareholdings are held indirectly through controlled entities. No shares were granted during the year.
13,488,954
13,488,955
2,478,440
1,125,000
2,335,104
32,916,453
For the year ended 30 June 2008
CONSOLIDATED PARENT
$ $ $ $2008 2007 2008 2007
Notes to the Financial Statements 46(continued)
17. DIRECTOR AND EXECUTIVE DISCLOSURES (Cont’d)
1 July 2006
Balance atbeginning of
period
12,100,065
12,100,066
2,478,440
1,125,000
-
27,803,571
-
-
-
-
-
-
Trade duringthe year
Optionsexercised
Balance atend ofperiod
30 June 200730 June 2007
Directors
Mr Andy Fung
Mr René Sugo
Mr Leo Tai
Mr Terry Cuthbertson
Mr Michael Boorne
Total
The above shareholdings are held indirectly through controlled entities.
12,100,065
12,100,066
2,478,440
1,125,000
1,164,000
28,967,571
1 July 2007
Balance atbeginning of
period
5,039,445
5,039,444
1,032,222
1,000,000
4,000,000
16,111,111
2,777,778
2,777,778
-
-
-
5,555,556
-
-
-
-
4,000,000
4,000,000
Optionsexercised/
lapsed
Balance atend ofperiod
30 June 200830 June 2008
Directors
Mr Andy Fung
Mr René Sugo
Mr Leo Tai
Mr Terry Cuthbertson
Mr Michael Boorne
Total
- No options were granted during the year
- 11,111,111 options are restricted and exerciasble from 18 May 2008 to 30 April 2009.
- 1,000,000 options are exercisable from 26 Februany 2007 to 30 September 2008.
- 5,555,556 options are exercisable from 26 October 2007 to 30 April 2009.
- During the year, Michael Boorne did not exercise 2,000,000 options that expired on 31 December 2007, which in turn caused the lapse of
the other 2,000,000 options that is contingent upon the successful exercising of the options in December 2007.
7,817,223
7,817,222
1,032,222
1,000,000
-
17,666,667
1 July 2006
Balance atbeginning of
period
-
-
-
1,000,000
6,000,000
7,000,000
-
-
-
-
2,000,000
2,000,000
Granted Optionsexercised
Balance atend ofperiod
30 June 200730 June 2007
Directors
Mr Andy Fung
Mr René Sugo
Mr Leo Tai
Mr Terry Cuthbertson
Mr Michael Boorne
Total
5,039,445
5,039,444
1,032,222
1,000,000
4,000,000
16,111,111
For the year ended 30 June 2008
1,164,000
1,164,000
(d) Share options of Key Management Personnel
5,039,445
5,039,444
1,032,222
-
-
11,111,111
Trade duringthe year
Notes to the Financial Statements 47(continued)
18. INVESTMENT IN SUBSIDIARIES
The consolidated financial statemants include the financial statements of My Net Fone Limited and the subsidiaries
listed in the following table:
The investment in the abovementioned subsidiary was not impaired during the year (2007: $nil).
19. RELATED PARTY DESCLOSURE
The following table provides the total amount of transactions that were entered into with related parties for the
relevant financial year:
20. EARNINGS PER SHARE
The following reflects the income and share data used in the basic earnings per share computations:
21. SEGMENT NOTE
The group operates in one business segment and one geographical segment being the telecommunications
segment in Australia.
Country ofIncorporation
% EquityInterest InvestmentName
My Net Fone Australia Pty Limited Australia 100 5,000,000
Related Party $ $ $ $
Sales torelated parties
78,925
60,000
5,390,305
-
Purchasesfrom related
parties
Amounts owedto related
parties
2,037,678
-
Amounts owedto related
parties
Consolidated
Symbio Networks Pty Limited (i)
Parent
Subsidiary:
My Net Fone Australia Pty Limited (ii)
(i) The Group entered into a VoIP technology services agreement which includes the provision of technology, software, support and
related services with Symbio Networks Pty Ltd (a director related entity) for a term of 5 years commencing on 1 April 2006. The agreement
is at both normal market prices and on normal commercial terms. Additionally the agreement stipulates an agreed pricing structure which
is volume based and gives the Group the ability to benefit from higher volume commitments in order to reduce its cost base. The
agreement is currently being reviewed in light of experience gained so far and future plans.
(ii) Transactions within the Group have been eliminated in full on consolidation.
9,547
3,155,313
Net loss attributable to ordinary equity holders of the parent (used in calculating basic EPS)
Net loss attributable to ordinary equity holders of the parent (used in calculating diluted EPS)
Weighted average number of ordinary shares for basic earnings per share
Effect of dilution:
Share options
Weighted average number of ordinary shares adjusted for the effect of dilution
There have been no transactions involving ordinary shares or potential ordinary shares between the reporting date and the date of
completion of these financial statements.
2008 2007
Consolidated
(1,941,179)
(1,941,179)
51,629,629
Nil
51,629,629
For the year ended 30 June 2008
(3,250,320)
(3,250,320)
45,365,905
Nil
45,365,905
Notes to the Financial Statements 48(continued)
22. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group’s principal financial instruments commprise cash at bank and short term deposits.
The main risks arising from the Group’s financial instruments are cash flow interest rate risk, liquidity risk and credit risk.
The Board reviews and agrees the policies for managing each of these risks and they are summarised below:
Interest rate risk
The company has no interest bearing liabilities. Funds on deposit are disclosed and the respective weighted
average interest rate are disclosed below.
Liquidity Risk
The Group’s objective is to maintain a balance between continuity of funding and interest revenue through the use
of current accounts and short term deposits.
Credit risk
The company has no significant exposure to credit risk as the majority of its sales are pre-paid as at year end.
However, for credit sales the company only trades with recognised creditworthy third parties. It is the Group’s policy
that all customers who wish to trade on credit terms are subject to credit verification procedures. Moreover, the
company considers it is appropriate to provide a provision for impairment of receivables for the year ended 30 June
2008.
Fair values
Set out below is a comparison by category of carrying amounts and fair values of all of the Group’s financial
instruments recongnised in the financial statements.
Carrying amountConsolidated
758,874
35,467
428,596
62,128
2,340,149
Financial assets
Cash (weighted average effective interest rate 4.8%)
Cash at call
(weighted average effective interest rate 5.25%)
Trade and other receivables
Other financial assets
(weighted average effective interest rate 4.25%)
Financial liabilities
On balance sheet
Trade payables
758,874
35,467
428,596
62,128
2,340,149
Fair value Carrying amount Fair value
2008 2007
1,109,046
34,443
175,882
62,128
1,374,193
1,109,046
34,443
175,882
62,128
1,374,193
Carrying amountParent
387,537
9,377
62,128
70,731
Financial assets
Cash (weighted average effective interest rate 4.8%)
Trade and other receivables
Other financial assets
(weighted average effective interest rate 4.25%)
Financial liabilities
On balance sheet
Trade payables
387,537
9,377
62,128
70,731
Fair value Carrying amount Fair value
2008 2007
847,653
2,067
62,128
118,778
847,653
2,067
62,128
118,778
For the year ended 30 June 2008
23. COMPANY DETALS The registered office of the company is: My Net Fone Limited Level 2, 10-14 Waterloo Street
Surry Hills NSW 2010
The principal place of business is: My Net Fone Limited Level 2, 10-14 Waterloo Street
Surry Hills NSW 2010
Directors’ Declaration 49
The directors of the company declare that:
1. the financial statements and notes, as set out on pages 22 to 48, are in accordance with the Corporations Act 2001
and:
a. comply with Accounting Standards and the Corporations Regulations 2001; and
b. give a true and fair view of the financial position as at 30 June 2008 and of the performance for the year
ended on that date of the company and consolidated group;
2. the Chief Executive Officer and Chief Financial Officer have each declared that
a. the financial records of the company for the financial year have been properly maintained in accordance
with section 286 of the Corporations Act 2001;
b. the financial statements and notes for the financial year comply with the Accounting Standards; and
c. the financial statements and notes for the financial year give a true and fair view;
3. in the directors’ opinion there are reasonable grounds to believe that the company will be able to pay its debts as
and when they become due and payable.
This declaration is made in accordance with a resolution of the Board of Directors.
Terry Cuthbertson
Chairman
Andy Fung
Managing Director
Sydney, 27 August 2008
50
Grosvenor SchiliroChartered Accountants & Business Advisers
MY NET FONE LIMITED AND CONTROLLED ENTITYAUDITOR’S INDEPENDENCE DECLARATION
I declare that, to the best of my knowledge and belief, during the year ended 30 June 2008 there have been:
a) no contraventions of the auditor independence requirements as set out in the Corporations Act 2001
in relation to the audit; and
b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of My Net Fone Limited and Controlled entity.
Grosvenor Schiliro
Mark SchiliroPartner
Dated in Sydney, this twenty seventh day of August 2008
Independent Auditor’s Report 51
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF MY NET FONE LIMITED
Report on the Financial Report
We have audited the accompanying financial report of My Net Fone Limited (the Company) and My Net Fone Limited and
Controlled Entity (the consolidated entity), which comprises the balance sheet as at 30 June 2008, and the income
statement, statement of changes in equity and cash flow statement for the year ended on that date, a summary of
significant accounting policies and other explanatory notes and the directors’ declaration of the consolidated entity
comprising the company and entity it controlled at the year’s end or from time to time during the financial year.
As permitted by the Corporations Regulations 2001, the company has disclosed information about the remuneration of
directors and executives (remuneration disclosures), required by Accounting Standard AASB 124: Related Party Disclosures,
under the heading ‘Remuneration Report’ in pages 14 to 16 of the directors’ report and not in the financial report.
Directors’ Responsibility for the Financial Report
The directors of the company are responsible for the preparation and fair presentation of the financial report in accordance
with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001.
This responsibility includes establishing and maintaining internal controls relevant to the preparation and fair presentation of
the financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate
accounting policies; and making accounting estimates that are reasonable in the circumstances. In Note 2 the directors also
state, in accordance with Accounting Standard AASB 101: Presentation of Financial Statements, that compliance with the
Australian equivalents to International Financial Reporting Standards (AIFRS) ensures that the financial report, comprising the
financial statements and notes, complies with AIFRS.
The directors of the company also are responsible for preparation and presentation of the remuneration disclosures
contained in the directors’ report in accordance with the Corporations Regulations 2001.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance
with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements
relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report
is free from material misstatement and that the remuneration disclosures in the directors’ report comply with Accounting
Standard AASB 124.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report.
The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of
the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal controls
Grosvenor SchiliroChartered Accountants & Business Advisers
Independent Auditor’s Report 52
relevant to the entity’s preparation and fair presentation of the financial report in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal
controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of
accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report and the
remuneration disclosures in the directors’ report.
Our procedures include reading the other information in the Annual Report to determine whether it contains any material
inconsistencies with the financial report.
Our audit did not involve an analysis of the prudence of business decisions made by the directors or management.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.
Auditor’s Opinion
In our opinion
a. the financial report of My Net Fone Limited and My Net Fone Limited and Controlled Entity is in accordance with the
Corporations Act 2001, including:
i. giving a true and fair view of the company’s and consolidated entity’s financial position as at
30 June 2008 and of their performance for the year ended on that date; and
ii. complying with Australian Accounting Standards (including the Australian Accounting
Interpretations) and the Corporations Regulations 2001;
b. the financial report also complies with International financial Reporting Standards as disclosed in Note 2, and
c. the remuneration disclosures that are contained in pages 14 to 16 of the directors’ report comply with Accounting
Standard AASB 124.
Grosvenor Schiliro
Mark SchiliroPartner
Sydney Dated this twenty seventh day of August 2008
ASX Additional Information 53
Additional information required by the Australian Stock Exchange Ltd and not shown elsewhere in this report is as follows. The
information is current as at 01 September 2008.
(a) Distribution of equity securities
(i) Ordinary share capital
52,555,555 fully paid ordinary shares are held by 314 individual shareholders.
All issued ordinary shares carry one vote per share and carry the rights to dividends.
(ii) Options
34,543,656 options are held by 242 individual option holders.
Options do not carry a right to vote.
The number of shareholders, by size of holding, in each class are:
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
The number of security investors holding less than a marketable parcel of ordinary shares is 25
(b) Substantial shareholders
Ordinary shareholders
Avondale Innovations Pty Ltd
Amber (Asia) Pty Ltd
Mr W. G. Martin + Mrs B. M. Martin
Boorne Gregg Investments Pty Limited
Symbio Networks Pty Ltd
Fully Paid Ordinary Shares Options
6
40
66
173
29
314
2
55
103
45
37
242
Fully Paid
Number Percentage
12,100,066
12,100,066
3,277,314
2,835,000
2,777,778
23.02
23.02
6.24
5.40
5.29
54
(c) Twenty largest holders of quoted equity securities
Avondale Innovations Pty Ltd
Amber (Asia) Pty Ltd
Mr W.G. Martin + Mrs B.M. Martin
Boorne Gregg Investments Pty Limited
Symbio Networks Pty Ltd
L&C Pty Ltd
Earglow Pty Ltd
ANZ Nominees Limited
Mr Peter James Connolly
Kore Management Services Pty Limited
Lee Superfund Management Pty Limited
Mr A. McMillan + Mrs S. McMillan
Mr Christopher John Ayres
Mr N W Durnford & Mrs C D Durnford
Mr J.E. Bradley + Mrs N.M. Vandepeer
Mr Geoffrey David Wyatt
Mr Boon Leng Low
Chemco Pty Ltd
Mr Raymond Alfred Jackson
HSBC Custody Nominees (Australia) Limited
(d) On-Market Buy Back
There is currently no on-market buy back.
(e) Use of Cash
My Net Fone Limited has used the cash and assets in a form readily convertible to cash that it held at 18
May 2006 (the date MNF listed on the Australian Securities Exchange) in a way consistent with its business
objectives.
Fully Paid
Number Percentage
12,100,066
12,100,066
3,277,314
2,835,000
2,777,778
2,478,430
2,109,784
1,500,000
1,420,000
1,125,000
1,125,000
469,033
400,000
370,000
370,000
300,000
296,000
267,857
258,603
200,000
45,779,931
23.02
23.02
6.24
5.40
5.29
4.72
4.01
2.85
2.70
2.14
2.14
0.89
0.76
0.70
0.70
0.57
0.56
0.51
0.49
0.38
87.09
55CORPORATE INFORMATION
DirectorsTerry Cuthbertson (Chairman)
Michael Boorne
Andy Fung
René Sugo
Company Secretary
Catherine Ly
Registered Office
Level 2,
10-14 Waterloo Street
Surry Hills NSW 2010
Australia
Principal place of business
Level 2,
10-14 Waterloo Street
Surry Hills NSW 2010
Austraila
Phone 61 2 8008 8000
Share Register
Link Market Services Limited
Level 12
680 George Street
Sydney NSW 2000
Australia
Phone 61 2 8280 7100
Solicitors
Colin Biggers & Paisley
Level 42
2 Park Street
Sydney NSW 2000
This annual report covers both My Net Fone Limited
as an individual entity and the consolidated entity
comprising My Net Fone Limited and its subsidiary.
The Group’s functional and presentation currency is AUD ($)
The company is listed on the Australian Securities
Exchange under the code MNF
The Annual General Meeting of My Net Fone Limited
will be held at Level 2, 10-14 Waterloo Street, Surry Hills
NSW 2010 at 10:30 am on 31 October 2008.
Bankers
Commonwealth Bank of Australia
Elizabeth & Foveaux Streets
Sydney NSW 2010
Australia
Auditors
Grosvenor Schiliro
Level 2, 333 George Street
Sydney NSW 2000
Australia
Annual Report
Copies of the 2008 Annual Report with
the Financial Statements can be downloaded from:
www.mynetfone.com.au/investor/annual-reports
MyNetFone Limited Annual Report 2008