CommStrat Limited and its controlled entities · We have advanced our partnership relationships with a number of associations either through marketing alliances ... has over 14,000

CommStrat Limited and its

controlled entities

ABN 31 008 434 802

ANNUAL FINANCIAL REPORT

FOR THE YEAR ENDED 30 JUNE 2014

Level 8, 574 St Kilda Road MELBOURNE VIC 3004

Postal address: PO Box 6137 ST KILDA ROAD CENTRAL VIC 8008

Telephone: (03) 8534 5000 Facsimile: (03) 9530 8911

Website: www.CommStrat.com.au

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CommStrat Limited

and its controlled entities

ABN 31 008 434 802

CONTENTS

Directors’ Report ........................................................................................... ..…2-5

Remuneration Report ................................................................................. ..…6-10

Corporate Governance Statement .................................................................11-15

Auditor’s Independence Declaration ..............................................................16

Financial Report for the year ended 30 June 2014 .......................................17-54

Consolidated Statement of Comprehensive Income .................................. 17

Consolidated Statement of Financial Position ............................................ 18

Consolidated Statement of Changes in Equity ............................................. 19

Consolidated Statement of Cash Flows ....................................................... 20

Notes to the Financial Statements ..........................................................21-54

Directors’ Declaration ........................................................................................... 55

Independent Auditor’s Report .........................................................................56-57

Supplementary Information .................................................................................. 58

Corporate Directory ............................................................................................. 59

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DIRECTORS REPORT

CommStrat Limited and its controlled entities as at 30 June 2014

The Directors present their report together with the financial report of the consolidated entity consisting of CommStrat Ltd and the entities it controlled (“Commstrat”), for the financial year ended 30 June 2014 and auditor’s report thereon. This financial report has been prepared in accordance with Australian Accounting Standards.

Directors

The names of Directors in office at any time during or since the end of the financial year are:

- Mr Alexander McNab

- Mr Mark Sowerby

- Mr Nicholas Love

- Mr Paul Wilson (resigned 11 December 2013)

Principal Activities

The principal activities of the consolidated entity during the financial year were:

The provision of integrated media solutions, servicing the public sector, private sector and selected

associations.

The publication and distribution of a range of online content, print journals and conferences and events.

The management of online job boards for a number of these industry verticals.

There were no significant changes in the nature of the consolidated entity’s activities during the year.

Operating Results

The consolidated loss after income tax attributable to the members of the consolidated entity was $651,438 (2013: Profit

$325,208)

Dividends Paid, Declared or Recommended

No dividends were paid, declared or recommended since the start of the financial year. Review of Operations

CommStrat is an integrated media company with a cohesive core offering: delivery of information and knowledge to its customer communities across multiple industry sectors, regardless of media platform. Significant progress was made during the year in delivering this offering in terms of scale of activities, partnerships and new format developments which we believe lays a strong platform for the next financial year. The significant decline in local government spending across all states however negatively impacted our largest job board, LG Jobs, and to a lesser extent some public sector focused conferences, impacting the financial result. CommStrat recorded revenue of $6.13m in 2014, a flat result relative to 2013, and earnings before interest, tax, depreciation and amortisation of $0.22m, a reduction of 77% on the previous financial year. This disappointing result is a function of challenging conditions in parts of CommStrat’s business as detailed below. Within the largest division, events and associations (which makes up nearly two thirds of the business revenue), CommStrat was able to grow revenues by over 20% as it began to increase the number of events produced by targeting opportunities to further leverage its existing customer base of professionals. These new events were focused at the private sector and there are further events already launched as part of this pipeline that will occur in the next financial year. We have advanced our partnership relationships with a number of associations either through marketing alliances or through delivery of further events, the most significant of this is with the Australian Traditional Medicine Society (which has over 14,000 members). Perhaps the most exciting development was the success in creating an online conference platform that enables CommStrat to both extend the reach of its traditional conferences to those that were unable to attend but also run online only events to remote Australia or overseas. The first two events were launched in this financial year and have already contributed nearly $100,000 of revenue with a sizeable pipeline of events to launch in the remainder of calender year 2014. This product will be a significant factor in targeting new industry sectors working with existing association or media partners to drive new and incremental revenues. CommStrat has maintained revenues within traditional print publications whilst being able to make some positive decisions about the titles that it works with to improve future profitability. During the year CommStrat ceased publication of Solar Progress and Connections magazines, both loss-making industry magazines delivered on behalf of industry partners, enabling more effective use of internal resources within the business.

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DIRECTORS REPORT (continued)


The job board business saw decline in revenues from the prior year as the most significant job board, LG jobs, suffered from the significant decline in activity in local government due to budget cuts. Revenue declined by around one third in job boards and its underlying contribution to profit also decreased by around 50% as a result. CommStrat has been able to reduce the direct cost associated with this division and redeploy resource, particularly to supporting the emerging online conference platform During the year there were also changes to the management team and Board of Directors. Chairman Paul Wilson, left to focus on his growing private equity business, and CEO, Brad Gurrie, returned to Travelzoo. CommStrat was able to promote internally for both positions to ensure strong continuity in knowledge of the business hence no negative disruption to the execution of the business strategy. Alexander McNab, already a Director and previously interim CEO of CommStrat, took on the role of Chairman and Chris Atkin, formerly CFO and General Manager (Offline), became CEO. As the ongoing recovery of the business continues, the relationship with National Australia Bank (NAB) remains strong.

CommStrat has been able to repay a further $360,000 in the financial year and continue to make amortisation payments to reduce the loan amount. NAB is aware of and supportive of the business strategy, demonstrated by an extension of the loan agreement until March 2015. The positive developments described above lead the Board to believe that CommStrat has an improved profit outlook for FY15.

Significant Changes in State of Affairs

There have been no significant changes in the consolidated entity’s state of affairs during the financial year.

After Balance Date Events

Further matters which have arisen since 30 June 2014 are as follows: - Confirmation from CommStrat’s principle banker (NAB) regarding the extension of the loan facility until 31

March 2015. - Approval of the Research & Development Tax incentive with AusIndustry which will see a rebate of

approximately $285k being received during October 2014.

No matters or circumstances besides the above, have arisen since the end of the financial year that have significantly affected or may significantly affect the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity in the future financial years.

Likely Developments

The consolidated entity expects to maintain the present status and level of operations and, as indicated above, an improved profit outcome in 2015.

Environmental Regulation

The consolidated entity’s operations are not regulated by any significant environmental regulation under a law of the Commonwealth or of a State or Territory.

Indemnifying Officers or Auditor

During or since the end of the financial year the consolidated entity has given an indemnity or entered into an agreement to indemnify, or paid or agreed to pay insurance premiums to insure each of the Directors against liabilities for costs and expenses incurred by them in defending any legal proceedings arising out of their conduct while acting in the capacity of Director of the consolidated entity, other than conduct involving a wilful breach of duty in relation to the consolidated entity. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium.

Proceedings on Behalf of Consolidated Entity

No person has applied for leave of Court to bring proceedings on behalf of the consolidated entity.

Non-audit Services

No non-audit services were provided by the external auditor to the consolidated entity during the financial year ended 30 June 2014.

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Information on Directors

MR ALEXANDER MCNAB Chairman of the Board (effective 11 December 2013) and Non-executive Director – appointed 15 February 2011 Member of the Board, Audit and Remuneration Committees

Alex’s experience includes strategy and finance expertise developed through 8 years working with Bain & Company in Australia, Asia, Europe and the United States, and five years as an investment professional at Blue Sky Alternative Investments Limited. He is currently a Director at Blue Sky Alternative Investments Limited. Alex holds a MBA, INSEAD; Bachelor of Economics (University Medal) and Bachelor of Laws, University of Queensland. Interest in Shares and Options

12,171,842 Ordinary Shares in CommStrat Limited (interest through shares held by Aust Executor Trustees Ltd as custodian of the PCI Equities Trust)

Other Listed Directorships (current and previous) Blue Sky Alternative Investments Limited Blue Sky Alternatives Access Fund Limited MR MARK SOWERBY Non-Executive Director - appointed 8 April 2009 Member of the Board, Audit and Remuneration Committees

Currently Mark is the Managing Director of Blue Sky Alternative Investments Limited. He holds previous executive management experience as CEO and general manager of privately owned entities. Mark holds a Bachelor of Agricultural Science and MBA, University of Queensland and Graduate Diploma in Applied Finance & Investment, Securities Institute of Australia. Interest in Shares and Options

342,935 Ordinary Shares in CommStrat Limited

12,171,842 Ordinary Shares in CommStrat Limited (interest through shares held by Aust Executor Trustees Ltd as custodian of the PCI Equities Trust)

Other Listed Directorships (current and previous) Blue Sky Alternative Investments Limited MR NICHOLAS LOVE Independent Non-Executive Director – appointed 3 May 2011 Member of the Board, Audit and Remuneration Committees

Nick is currently Managing Director of Shine 360 at Shine Australia. Previously he was Managing Director of Fox Interactive Media Australia and has held a range of previous commercial and product roles at Electronic Arts, ICE Interactive, ARIA and Soundbuzz. Nick holds a Bachelor of Laws, a Master of Business Administration and a Master of International Management from Bond University and has been admitted as Solicitor of the Supreme Court of Queensland. Interest in Shares and Options Nil Other Listed Directorships (current and previous) Nil MR PAUL WILSON Chairman of the Board, Audit and Remuneration Committees Independent Non-Executive Director - appointed on 27 September 2010 and resigned 11 December 2013

Paul has extensive experience in private equity and media. He is a current Director of Standard Media Index Pty Ltd, Vio Corp International Pty Ltd, Vita Group Ltd and of the Rajasthan Royals IPL cricket team, Chairman of Siteminder, and co-founder of a private equity group focussed on expansion capital in the information sector. Paul is a Fellow of the Financial Services Institute of Australasia, a member of the Institute of Chartered Accountants Australia, and a member of the Australian Institute of Company Directors. Paul holds a Bachelor of Business (Banking & Finance, Accounting), Queensland University of Technology. Interest in Shares and Options Nil Other Listed Directorships (current and previous) Vita Group Ltd

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Company Secretaries

The following persons held the position of company secretary at any time during or since the end of the financial year: KIM CLARK Company Secretary – appointed 31 July 2013

Kim is Head of Corporate Services for Boardroom Pty Ltd, the company that manages CommStrat’s share registry. Kim is an experienced professional whose career has included 6 years as the Company Secretary for an ASX 300 company. Kim’s experience includes corporate governance and compliance, risk management, capital raisings, finance negotiation and management, management of ASX relationships, management of external advisor relationship, management of Board meetings including minutes, scheduling and communication with Directors. FLEUR GUENTHER Company Secretary – appointed 25 October 2012, resigned 31 July 2013

Fleur is a Manager of Corporate Secretarial Services for Boardroom Pty Ltd, the company which manages CommStrat’s share registry. Fleur is a Chartered Company Secretary and associate member of the Institute of Chartered Secretaries Australia. She holds a Masters of Applied Commerce (Accounting) from the University of Melbourne, a Graduate Diploma in Applied Corporate Governance and a Bachelor of Arts from the University of Sydney.

Directors Meetings

The following table sets out the number of Directors meetings held during the financial year and the number of meetings attended by each Director while they were a Director or committee member. Due to the size of the business the entire Board forms the remuneration and audit committees. Meetings related to these are held within the normal Directors meetings.

NAME DIRECTORS

ELIGIBLE ATTENDED

PAUL WILSON 5 5

MARK SOWERBY 12 11

ALEXANDER McNAB 12 11

NICHOLAS LOVE 12 12

Shares Under Option

At the date of this report, the unissued ordinary shares of CommStrat Limited under performance rights are as follows: Grant Date Date of Expiry Exercise Price Number of Rights

11.12.2013 30.09.2015 $0.00 500,000 11.12.2013 30.06.2016 $0.00 500,000 11.12.2013 30.06.2016 $0.00 450,000 11.12.2013 30.06.2016 $0.00 450,000

1,900,000

The performance rights above are subject to varying performance hurdles. No option or performance right holder has any right under the options or performance rights to participate in any other share issue of the consolidated entity. During the year ended 30 June 2014 no ordinary shares of CommStrat Limited were issued on the exercise of options or performance rights granted (other than those listed above) and no further shares have been issued since the end of the 2014 financial year.

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REMUNERATION REPORT


This report details the nature and amount of remuneration for each Director and key management personnel of CommStrat Limited.

Remuneration Policy

The remuneration policy of CommStrat Limited has been designed to align Director and executive objectives with shareholder and business objectives by providing a fixed remuneration component and selectively offering specific long-term incentives based on key performance areas affecting the consolidated entity’s financial results. The Board of CommStrat Limited believes the remuneration policy to be appropriate and effective in its ability to attract and retain the best executives and Directors to run and manage the consolidated entity, as well as create goal congruence between Directors, executives and shareholders. The Board’s policy for determining the nature and amount of remuneration for Directors and senior executives of the consolidated entity is as follows:

The remuneration policy, setting the terms and conditions for the Directors and other senior executives, was developed by the remuneration committee and approved by the Board.

All executives receive a base salary (which is based on factors such as length of service and experience), superannuation, fringe benefits, with some also receiving options and performance incentives.

The performance of executives is measured against criteria agreed annually with each executive and is based predominantly on the forecast growth of the consolidated entity’s profits and shareholders’ value. All bonuses and incentives must be linked to predetermined performance criteria. The Board may, however, exercise its discretion in relation to approving incentives, bonuses and options, and can recommend changes to the committee’s recommendations. Any changes must be justified by reference to measurable performance criteria. The policy is designed to attract the highest calibre of executives and reward them for performance that results in long-term growth in shareholder wealth. Some senior executives are also entitled to participate in the employee option arrangements. All remuneration paid to Directors and executives is valued at the cost to the consolidated entity and expensed. Options issued in the prior financial year are valued using the Black-Scholes methodology and performance rights issued in the prior financial year are valued using the standard Binomial model and a combination of the Monte Carlo simulation and standard Binomial model. The Board policy is to remunerate non-executive Directors at market rates for time, commitment and responsibilities. The remuneration committee determines payments to the non-executive Directors and reviews their remuneration annually, based on market practice, duties and accountability. Independent external advice is sought when required. The maximum aggregate amount of fees that can be paid to non-executive Directors is subject to approval by shareholders at the Annual General Meeting. Fees for non-executive Directors are not linked to the performance of the consolidated entity. However, to align Directors’ interests with shareholder interests, the Directors are encouraged to hold shares in the consolidated entity.

Company performance, shareholder wealth and Director and executive remuneration

The remuneration policy has been tailored to increase goal congruence between shareholders, Directors and executives. There have been two methods applied to achieve this aim, the first being a performance-based bonus based on key-performance indicators, and the second being a performance based equity scheme for the Chief Executive Officer to encourage the alignment of personal and shareholder interests. The consolidated entity believes this policy will be effective in increasing shareholder wealth. During the year and as part of the FY13 discretionary bonus payment, the following shares were issued:

(a) Brad Gurrie 327,750 at a value of $0.02 (b) Chris Atkin 292,650 at a value of $0.02

No cash bonus was paid or is payable, in respect to the 30 June 2014 year (2013: Nil). Key management personnel of CommStrat Limited have authority and responsibility for planning, directing and controlling the activities of the consolidated entity. Key management personnel for the 2014 financial year are:

Directors

Alexander McNab Chairman (appointed 11 December 2013), Non-Executive Director Mark Sowerby Non-Executive Director Nicholas Love Independent Non-Executive Director Paul Wilson Independent Non-Executive Director, Chairman (resigned 11 December 2013)

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REMUNERATION REPORT (continued)


Key Management Personnel

Chris Atkin – Chief Executive Officer (appointed 11 December 2013), former Chief Financial Officer (appointed 1 January 2013) Brendt Henricus – Chief Financial Officer (appointed 14 April 2014) Brad Gurrie – Chief Executive Officer (appointed 19 March 2012, resigned 11 December 2013)

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Director and Executive Remuneration

Short-Term Benefits Post-

Employment

Benefits

Long- Term

benefits

Equity Based

Payments

Performance Related

2014 Cash, salary

and fees

Other Super Long Service

Leave

Options Shares Termination

Payment

Total Total Options

$ $ $ $ $ $ $ $ % %

Mr Paul Wilson (i) 38,912 – – – – – – 38,912 – –

Mr Mark Sowerby 35,000 – 3,238 – – – – 38,238 – –

Mr Alexander McNab (ii) 54,489 – 5,040 – – – – 59,529 – –

Mr Nicholas Love 35,000 – 3,238 – – – – 38,238 – –

Mr Brad Gurrie (iii) 126,744 – 10,913 – – 6,555 – 144,212 4.5 –

Mr Chris Atkin (iv) 209,038 – 19,336 4,360 – 5,853 238,587 2.5 –

Mr Brendt Henricus (v) 32,759 – 3,030 545 – – – 36,334 – –

531,942 44,795 4,905 12,408 594,050 – –

2013

Mr Paul Wilson 87,200 – – – – – – 87,200 – –

Mr Mark Sowerby 35,000 – 3,150 – – – – 38,150 – –

Mr Alexander McNab 35,000 – 3,150 – – – – 38,150 – –

Mr Nicholas Love 35,000 – 3,150 – – – – 38,150 – –

Mr Brad Gurrie 246,225 – 17,120 4,726 – – – 268,071 – –

Mr Allan Tuback (vi) 122,383 – 11,409 – – – – 133,792 – –

Mr Chris Atkin (iv) 76,492 – 7,650 1,608 – – – 85,750 – –

637,300 – 45,629 6,334 – – – 689,263 – –

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(i) Mr Paul Wilson resigned as Chairman and non-executive Director on 11 December 2013 and therefore the

details of his remuneration for the reporting period cover the period up until that date. (ii) Mr Alexander McNab was appointed as Chairman on 11 December 2013 and therefore the details of his

remuneration for the reporting period are a combination of a non-executive Director until 11 December 2013 and both Chairman and non-executive Director from 11 December 2013 until period end.

(iii) Mr Brad Gurrie resigned as Chief Executive Officer on 11 December 2013 and therefore the details of his remuneration for the reporting period cover the period up until that date.

(iv) Mr Chris Atkin was appointed as Chief Executive Officer on 11 December 2013 therefore the details of his remuneration for the 2014 reporting period are a combination of Chief Financial Officer until 10 December 2013 and Chief Executive Officer from 11 December 2013 until period end. Prior to that, Mr Atkin was appointed as Chief Financial Officer on 1 January 2013 and therefore the details of his remuneration for the 2013 reporting period are from that date.

(v) Mr Brendt Henricus was appointed as Chief Financial Officer on 14 April 2014 and therefore the details of his remuneration for the reporting period are from that date.

(vi) Mr Alan Tuback resigned as Chief Financial Officer on 7 January 2013 and therefore the details of his remuneration for the reporting period cover the period up until that date.

Employment Details of Members of Key Management Personnel

The following table provides employment details of persons who were, during the financial year, members of KMP of

the consolidated group. The employment terms and conditions of all KMP are formalised in contracts of employment.

Name Position

Contract

term end Notice Period

Termination

Payments

Employer Employee STI & LTI not

vested

Mr Alexander McNab (i) Chairman, Non-Executive

Director n/a n/a n/a n/a

Mr Mark Sowerby Non-Executive Director n/a n/a n/a n/a

Mr Nicholas Love Independent Non-

Executive Director n/a n/a n/a n/a

Mr Chris Atkin (ii) Chief Executive Officer 9/12/16 3 months 3 months at Board discretion

Mr Brendt Henricus (iii) Chief Financial Officer n/a 5 weeks 5 weeks n/a

Mr Paul Wilson (iv) Chairman, Independent

Non-Executive Director n/a n/a n/a n/a

Mr Brad Gurrie (v) Chief Executive Officer 10/06/2015 6 months 3 months at Board discretion

(i) Appointed on 11 December 2013 (formerly Independent Non-Executive Director appointed 15 February 2011)

(ii) Appointed on 11 December 2013 (formerly Chief Financial Officer appointed 1 January 2013)

(iii) Appointed on 14 April 2014

(iv) Appointed 27 September 2010, resigned 11 December 2013

(v) Appointed 19 March 2012, resigned 11 December 2013

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During the year ended 30 June 2014, CommStrat Limited granted 1,900,000 performance rights to Chris Atkin as part

of his new employment remuneration. The table below summaries the 2014 performance rights granted to Chris Atkin:

Grant date Expiry date Exercise price Performance

hurdle Vesting date Number issued

11 Dec 2013 30 Sep 2015 $0.00 * 30 Sep 2015 500,000

11 Dec 2013 30 Jun 2016 $0.00 ** **** 450,000

11 Dec 2013 30 Jun 2016 $0.00 *** **** 450,000

11 Dec 2013 30 Sep 2016 $0.00 * 30 Sep 2016 500,000

1,900,000

* Performance hurdles include employment continuance as well as free cash flow and EBITDA targets. ** Performance hurdle: The CommStrat 90-day volume weighted average share price exceeds $0.15 *** Performance hurdle: The CommStrat 90-day volume weighted average share price exceeds $0.20 **** Vesting date: Any point before 30 June 2016 the above performance hurdle is met.

The following factors and assumptions were used in determining the fair value of the performance rights granted:

Grant date Expiry date Fair

value Exercise

price

Price of shares

on grant date

Estimated volatility

Risk free

interest rate

Dividend yield

11 Dec 2013 30 Sep 2015 $0.00 $0.00 $0.04 75% 5% -

11 Dec 2013 30 Jun 2016 $0.00 $0.00 $0.04 75% 5% -

11 Dec 2013 30 Jun 2016 $0.00 $0.00 $0.04 75% 5% -

11 Dec 2013 30 Sep 2016 $0.00 $0.00 $0.04 75% 5% -

During the year ended 30 June 2013, CommStrat Limited granted 600,000 performance rights to Chris Atkin as part of

his employment remuneration. The entire parcel of 600,000 performance rights were cancelled on 11 December 2013

at the point in time in Mr Atkin was appointed to Chief Executive Officer

A. McNab Chairman Dated in Sydney, the 28th day of August 2014

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CORPORATE GOVERNANCE STATEMENT


The Board of Directors has adopted a set of Corporate Governance Practices and a Code of Conduct appropriate for the size, complexity and operations of the consolidated entity. The ongoing relevance and effectiveness of the framework will be periodically reviewed to reflect changing circumstances and ways of improving practices. Unless otherwise stated the consolidated entity has applied the Best Practice Recommendations of the ASX Corporate Governance Council. Companies should establish and disclose the respective roles and responsibilities of Board and management.

The Board’s role is to govern the consolidated entity rather than to manage it. In governing the consolidated entity, the Directors must act in the best interests of the consolidated entity as a whole. It is the role of senior management to manage the consolidated entity in accordance with the direction and delegations of the Board and the responsibility of the Board to oversee the activities of the management in carrying out these delegated duties. The Board’s responsibilities are summarised as:

Leadership of the organisation

Strategy formulation

Overseeing planning activities

Shareholder liaison

Monitoring, compliance and risk management

Group finances

Human resources

Ensuring the health, safety and well-being of Directors, Officers, Employees and Contractors

Delegation of authority

Remuneration policy

Nomination policy

The Board has delegated responsibility for the day-to-day management of the consolidated entities to the Chief Executive Officer subject to the agreed authority limits applicable. Companies should disclose the process for evaluating the performance of senior executives. Senior executives are provided with an induction when joining CommStrat Limited to familiarise them with all aspects of the business and its operations. Each year, key performance indicators (KPI’s) are set for senior executives, against which their personal performance is measured. The Chief Executive Officer’s performance is assessed annually by the Board. The performance of senior executives against their KPI’s is assessed annually in an interview with the manager to whom they report. This review process has been applied during the reporting period. Issues relating to remuneration are dealt with in more detail in the Remuneration Report which forms part of the Directors’ Report. Further information regarding the Board’s broad functions and its powers and responsibilities are contained within the consolidated entity’s Board Charter available on its website.

Structure the Board to add value

The Board has been formed so that it has an effective mix of personnel who are committed to adequately discharging their responsibilities and duties, and be of value to the consolidated entity. The names of the Directors, their independence, qualifications and experience are included in the Directors’ Report, along with the term of office held by each. The Board believes that the interests of all shareholders are best served by:

Directors having the appropriate skills, experience and contacts within the consolidated entity’s industries.

The Board striving to have a balance between the overall number of Directors and the number of Directors being independent as defined in the ASX Corporate Governance Guidelines.

Where any Director has a material personal interest in a matter, in accordance with the Corporations Act 2001, the Director will not be permitted to be present during discussion or to vote on the matter. The enforcement of this requirement aims to ensure that the interest of Shareholders, as a whole, is pursued and that their interest or the Director’s independence is not adversely affected.

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CORPORATE GOVERNANCE STATEMENT (continued)


The majority of the Board should be independent Directors. During the period 1 July 2013 to 30 June 2014 the Board was constituted of up to four non-executive Directors, two of whom were independent. The resignation of Paul Wilson in December 2013 saw the composition of the Board become three non-executive Directors, one of whom is independent. The Board believes that at this current stage in the Consolidated entity’s development and having regard to the consolidated entity’s size and the significant management input of the non-independent Directors this is an appropriate structure. The number of independent Directors on the Board may vary as the consolidated entity develops. The Board believes that it can attract appropriate independent Directors with the necessary industry experience over time and in line with the consolidated entity’s growth. The full Board forms the Remuneration and Audit Committees. The Board’s qualifications are detailed in the Directors’ Report. The Chair should be an independent Director. The previous Chairman of the Board, Mr Paul Wilson, was an independent Director. Upon his resignation in December 2013, Mr Alexander McNab assumed the role of Chairman of the Board. Mr McNab is not considered independent. Mr McNab is not an executive of Commstrat and his interest that precludes independence is as disclosed within the Director’s Report. The Board considers that Mr McNab’s relationship with the consolidated entitiy does not impact his ability to act as an effective Chairman. The roles of the Chair and Chief Executive Officer should not be exercised by the same individual. The Chairman of the Board is Mr Alexander McNab and the Chief Executive Officer is Mr Chris Atkin. There is clear delineation between their respective duties as was also the case with the previous Chair, Mr Paul Wilson and previous Chief Executive Officer, Mr Brad Gurrie. The Company should establish a Nomination Committee. Due to the small size of the Board, the full Board forms the Nomination Committee and considers Board membership nomination matters. Companies should disclose the process for Board, Committee and Director evaluation. The Board is responsible for the conduct of a performance review of the Board (both collectively and individually) and the Chief Executive Officer. This is an annual process. Management are invited to contribute to this appraisal process. The assessment of performance of individual Directors is undertaken by the Chairman who meets privately with each Director to discuss this assessment. The Directors have resolved that all new Directors will be provided with a letter of appointment setting out the consolidated entity’s expectations, their responsibilities, rights and the terms and conditions of their appointment. Companies should provide the information indicated in the Guide to Reporting on Principle 2. The information indicated in the Guide to Reporting on Principle 2 is contained within this report. Further, Directors collectively or individually have the right to seek independent professional advice at the consolidated entity’s expense, up to specified limits, to assist them to carry out their responsbilitites. All advice obtained is made available to the full Board. Companies should establish a code of conduct and disclose the code or the summary of the code.

As part of its commitment to recognising the legitimate interests of stakeholders, the consolidated entity has established a Code of Conduct to maintain confidence in the consolidated entity’s integrity, to guide compliance with legal and other obligations to legitimate stakeholders and to assign responsibility and accountability of individuals for reporting and investigating reports of unethical practices. A copy of the consolidated entity’s Code of Conduct is available its website. The Company should establish a policy concerning diversity and disclose the policy or a summary of the policy. The Board adopted a diversity policy in July 2011 which is available upon request. Diversity includes, but is not limited to, gender, age, ethnicity and cultural background. CommStrat recognises the benefits of diversity, where people from different backgrounds can bring fresh ideas and perceptions making the way work is done more efficient and effective, and products and services provided more valued. It is for these reasons that CommStrat is committed to providing a diversity inclusive workplace in which everyone has the opportunity to fully participate and is valued for their distinctive skills, experiences and perspectives. This Diversity policy applies to all policies and procedures of CommStrat related to recruitment, hiring, compensation, benefits, training, promotion, transfer, discipline, termination, and all other terms and conditions of employment. The Board is responsible for developing policies in relation to a corporate culture that supports diversity and the implementation of measureable diversity objectives.

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Strategies adopted by the consolidated entity to value and manage diversity will:

Facilitate equal employment opportunities based on ability, performance and potential;

Help to build a safe work environment by taking action against inappropriate workplace and business behaviour that does not value diversity including discrimination, harassment, bullying, victimisation and vilification;

Develop flexible work practices to meet the differing needs of our employees;

Attract and retain a skilled and diverse workforce;

Improve the quality of decision-making, productivity and teamwork, and

Create an inclusive workplace culture.

The Board will assess annually both the measurable objectives for achieving diversity and the progress in achieving them. The Board will ensure that appropriate disclosures are made in the consolidated entity’s Annual Report about its diversity practices and measures. The Board will include in the Annual Report each year:

Measurable gender diversity objectives set by the Board;

Progress towards achieving those objectives; and

The proportion of women employees in the whole organisation, at senior management level and at Board level.

Companies should disclose in each annual report the measurable objectives for achieving gender diversity set by the Board and progress towards achieving them.

The consolidated entity’s current target is for women to fill 25% of roles at all levels. The progress in achieving this is set out below in accordance with Recommendation 3.4. Companies should disclose in each annual report the proportion of women employees in the whole organisation, women in senior executive positions and women on the Board. In respect of gender diversity the consolidated entity’s current target is for women to fill 25% of roles at all levels and to increase this level over time as the business expands. The consolidated entity is an equal opportunity employer recruiting the best available staff from as wide a pool as possible. The table below shows the gender balance within the consolidated entity at the date of this report.

2013 2014

Male (%) Female (%) Male (%) Female (%)

Board of Directors and Company Secretary

80 20 75 25

Senior management 100 - 100 -

Non-senior management 63 37 55 45

Total consolidated entity wide 69 31 61 39

The current Board consists of three Directors and Senior Management consists of two employees. The recent focus of the consolidated entity has been on the restructure of the business. As the consolidated entity grows and the size of the Board increases, the recruitment and nomination process and succession planning will take into account the requirements of the diversity policy. The total consolidated entity wide numbers do not include the Board of Directors. Companies should disclose the information indicated in the Guide to reporting on Principle 3.

The above information is reported taking into account the requirements of the Guide to reporting on Principle 3 in the ASX Corporate Governance Principles and Recommendations. The Board should establish an audit committee. Due to the small size of the Board, the full Board forms the Finance, Audit & Risk Management Committee. The full Board of Directors has reviewed the Annual Report prior to signing. The Board has received attestations, as recommended by the ASX Corporate Governance Council, as to the consolidated entity’s financial condition prior to signing this Annual Report. The Board’s charter encompasses the ASX Corporate Governance Council’s ‘Best Practice Recommendations’ including the ‘Responsibilities of Risk Management & Compliance’.

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Structure of the Audit Committee. The Committee is comprised of the three Board members. The functions of the Committee including meetings re incorporated within overall Board activities. The qualifications and experience of the members are included within the Director’s Report. Charter of the Audit Committee.

The Audit Committee’s charter is to advise, maintain and monitor business risk through an appropriate internal framework, and to assist the Board in fulfilling its audit, accounting and reporting obligations. The charter is available included within the Corporate Governance policies on the consolidated entity’s website Companies should provide the information indicated in the Guide to Reporting on Principle 4. The information indicated in the Guide to Reporting on Principle 4 is as contained within this report. Establish written policies designed to ensure compliance with ASX Listing Rules. The Board has designated the company secretary as the person responsible for overseeing and co-ordinating disclosure of information to the ASX as well as communicating with the ASX. In accordance with the ASX’s ‘Listing Rules’ the consolidated entity immediately notifies the ASX of relevant information concerning the consolidated entity. Example of information that falls into the ASX’s continuous disclosure requirements is information that:

a reasonable person would or may expect to have a material effect on the price or value of the consolidated entity’s securities; and

would, or would be likely to influence persons who commonly invest in securities in deciding whether to acquire or dispose of the consolidated entity’s securities.

Companies should provide the information indicated in the Guide to Reporting on Principle 5. A copy of the consolidated entity’s Continuous Disclosure Policy is located on its web site.

Respect the rights of shareholders

The Board acknowledges the legitimate interests of various stakeholders such as employees, clients, customers, government authorities, creditors and the community as a whole. As a good corporate citizen, the Board encourages compliance and commitment to appropriate corporate practices that are fair and ethical via its ‘Code of Conduct Policy’. Companies should design a communications policy for promoting effective communication with share holders and encouraging their participation at general meetings an disclose their policy or a summary of that policy. The consolidated entity respects the rights of its shareholders, and to facilitate the effective exercise of the rights, the consolidated entity is committed to:

Communicating effectively with shareholders through ongoing releases to the market via the ASX announcements platform, direct mailings to Shareholders and the General Meetings of the consolidated entity;

Giving Shareholders ready access to balanced and understandable information about the consolidated entity and Corporate Proposals;

Making it easy for shareholders to participate in general meetings of the consolidated entity; and

Requesting the external auditor to attend the annual general meeting and be available to answer shareholders’ questions about the conduct of the audit, and the preparation and content of the Auditor’s Report.

Companies should provide the information indicated in the Guide to Reporting on Principle 6.

The consolidated entity makes available to shareholders wishing to make enquiries, a telephone number, email address and website (www.CommStrat.com.au), which is updated regularly with ASX announcements and other relevant information. This website also includes the consolidated entity’s Board Charter, Code of Conduct, Continuous Disclosure Policy, Corporate Governance Statement, Finance and Audit Committee Policy, HR and Remuneration Committee Policy, Risk Management, Share Trading and Shareholder Communication Policies. Companies should establish policies for the oversight and management of material business risks. The audit committee reviews risk management within the consolidated entity. The Board should require Management to design and implement the risk management and internal control system to manage business risk. The consolidated entity has a Risk Management Policy, a copy of which is located on its web site. Senior management reports regularly to the Board as to the effectiveness of the consolidated entity’s management of its material business risks.

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The Board should disclose whether it has received assurance from the CEO and CFO regarding the declaration provided in accordance with section 295A of the Corporations Act.

The Board confirms that it has received written confirmation from the Chief Executive Officer and the Chief Financial Officer that the declaration provided in accordance with section 295A of the Corporations Act is founded on a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to financial reporting risks.

Companies should provide the information indicated in the Guide to Reporting on Principle 7. A copy of the consolidated entity’s Risk Management Policy is located on its web site with all other information contained within this report. The Board should establish a Remuneration Committee. The consolidated entity was not included in the S&P/ASX 300 Index at the beginning of the financial year and therefore is not required to meet the requirements of Listing Rule 12.8 to have a Remuneration Committee. However, the Board is committed to ensuring that appropriate remuneration practices are established and followed within the consolidated entity, and that they are aligned with its Corporate Strategy. For this reason the consolidated entity has established a Human Resource and Remuneration Committee comprising of the full Board. The Committee’s Charter is to review and advise the Board on compensation arrangements for Directors and Senior Management. Included in the charter is the responsibility for ensuring that remuneration is fair for all employees regardless of gender and ethnic background. The Committee is aware of its responsibility to ensure that remuneration packages are market competitive and will attract, motivate and retain high-quality personnel.

Structure of the Remuneration Committee The Committee is comprised of the three Board members. Companies should clearly distinguish the structure of non-executive Directors remuneration from that of executive Directors and Senior Management. The consolidated entity is committed to remunerating its senior executives in a manner that is market-competitive and consistent with ‘Best Practice’ as well as supporting the interests of shareholders. The full Board acts as the Remuneration Committee to oversee this function. Senior executives receive a remuneration package based on fixed and variable components, determined by their position and experience. Shares and/or options subject to shareholder approval may also be granted based on an individual’s performance. Non-executive Directors are paid their fees out of the maximum aggregate amount approved by shareholders for the remuneration of non-executive Directors. Non-executive Directors do not receive performance based bonuses and do not participate in equity schemes of the consolidated entity without prior shareholder approval nor receive any retirement benefits other than superannuation. The Chief Executive Officer is compensated with a fixed remuneration package together with the opportunity to achieve short and long term incentives on the achievement of key performance requirements set by the Board. Current remuneration is disclosed in the Directors’ Report and Annual Report. Companies should provide the information indicated in the Guide to Reporting on Principle 8. There is no scheme for retirement benefits for non-executive Directors, other than for statutory superannuation for non-executive Directors and the equity-based remuneration schemes are as disclosed in the report.

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AUDITOR’S INDEPENDENCE DECLARATION


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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

CommStrat Limited and its controlled entities for the year ended 30 June 2014

Consolidated Entity

2014 2013

Notes $ $

Continuing Operations

Revenue 2 6,126,853 6,129,570

Cost of sales (1,814,614) (1,509,236)

Gross profit 4,312,239 4,620,334

Other income 2 271 727

Occupancy expenses (393,546) (335,474)

Administration expenses 3 (3,640,417) (3,105,550)

Finance costs 3 (324,650) (282,794)

Other expenses 3 (333,373) (314,092)

Profit/(loss) before income tax expense/(benefit) (379,476) 583,151

Income tax (expense)/benefit 4 (271,962) (257,943)

Profit/(loss) for the year (651,438) 325,208

Other comprehensive income - - Total comprehensive income/(loss) for the year (651,438) 325,208

Net profit/(loss) after income tax for the year attributable to members of the parent entity (651,438) 325,208

Total comprehensive income/(loss) attributable to members of the parent entity (651,438) 325,208

Basic earnings/(loss) per share (EPS) Cents Cents

Total basic earnings/(loss) per share 27 (0.03) 0.02 Diluted earnings per share (EPS)

Total diluted earnings/(loss) per share 27 (0.03) 0.01

The above statement should be read in conjunction with the accompanying notes.

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION


Consoldiated Entity

2014 2013

Notes $ $

Current assets

Cash and cash equivalents 5 158,921 202,575

Trade and other receivables 6 243,218 548,310

Other current assets 7 229,092 234,653

Total current assets 631,231 985,538

Non-current assets

Property, plant and equipment 8 44,711 135,852

Intangible assets 9 4,222,998 4,159,071

Deferred tax assets 4 2,109,956 2,381,918

Total non-current assets 6,377,665 6,676,841

Total assets 7,008,896 7,662,379

Current liabilities

Trade and other payables 10 1,563,553 933,385

Borrowings 11 2,765,000 1,210,000

Provisions 12 206,893 217,713

Other current liabilities 13 834,324 1,106,936

Total current liabilities 5,369,770 3,468,034

Non-current liabilities

Borrowings 11 850,000 2,765,000

Long term provisions 12 10,806 11,995

Total non-current liabilities 860,806 2,776,995

Total liabilities 6,230,576 6,245,029

Net Assets 778,320 1,417,350

Equity

Issued capital 14 15,821,190 15,808,782

Reserves 15 - 24,000

Accumulated losses 16 (15,042,870)

(14,415,432)

Total equity 778,320 1,417,350


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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY


Issued

capital

Accumulated

losses

Share based

payment

reserve

Total

equity

Consolidated entity $ $ $ $

At 1 July 2012 15,808,782 (14,740,640) 24,000 1,092,142

Total comprehensive profit for the year - 325,208 - 325,208

Transactions with owners in their capacity as owners:

- shares issued - - - -

At 30 June 2013 15,808,782 (14,415,432) 24,000 1,417,350

At 1 July 2013 15,808,782 (14,415,432) 24,000 1,417,350

Total comprehensive loss for the year - (651,438) - (651,438)

Transactions with owners in their capacity as owners:

- shares issued 12,408 - - 12,408

- transfer of share option reserve - 24,000 (24,000) -

At 30 June 2014 15,821,190 (15,042,870) - 778,320


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CONSOLIDATED STATEMENT OF CASH FLOWS


Consolidated Entity

2014 2013

Notes $ $

Cash flows from operating activities

Receipts from customers 6,559,931 6,935,680

Payments to suppliers and employees (5,668,366) (6,282,590)

Interest received 271 727

Finance costs (324,650) (282,794)

Net cash flows provided by / (used in) operating activities 17(b) 567,186 371,023

Cash flows from investing activities

Payments for intangible assets (250,840) (464,648)

Net cash flows used in investing activities (250,840) (464,648)

Cash flows from financing activities

Proceeds from borrowings - 100,000

Repayment of borrowings (360,000) -

Net cash flows used in / (provided by) financing activities (360,000) 100,000

Net increase / (decrease) in cash and cash equivalents held (43,654) 6,375

Net cash and cash equivalents at the beginning of the year 202,575 196,200

Cash and cash equivalents at the end of the year 17(a) 158,921 202,575


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NOTES TO THE FINANCIAL STATEMENTS


Note 1 - Statement of Significant Accounting Policies

The financial report is a general purpose financial report that has been prepared in accordance with Australian

Accounting Standards, Interpretations, other authoritative pronouncements of the Australian Accounting Standards

Board and the Corporations Act 2001.

The financial report covers CommStrat Limited and its controlled entities as a consolidated entity. CommStrat Limited is

a listed public company, incorporated and domiciled in Australia and is a for-profit entity for financial reporting purposes

under Australian Accounting Standards.

The financial report was authorised for issue by the Directors as at the date of the Directors’ report.

The following is a summary of significant accounting policies adopted by the consolidated entity in the preparation and

presentation of the financial report. The accounting policies have been consistently applied, unless otherwise stated.

Basis of Preparation

Compliance with IFRS

The consolidated financial statements of CommStrat Limited also comply with the International Financial Reporting

Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

Reporting Basis and Conventions - The financial report has been prepared on an accruals basis and is based on

historical costs modified by the revaluation of selected non-current assets, financial assets and financial liabilities for

which the fair value basis of accounting has been applied.

Critical Accounting Estimates

The preparation of the financial report requires the use of certain estimates and judgements in applying the

consolidated entity’s accounting policies. Those estimates and judgements significant to the financial report are

disclosed in Note 1(u).

Accounting Policies

a. Principles of Consolidation

The consolidated financial statements are those of the consolidated entity, comprising the financial statements

of CommStrat Limited and of all entities where CommStrat has the power to control the financial and operating

policies. Subsidiaries are consolidated from the date on which the control is established and are de-recognised

from the date that control ceased.

A list of controlled entities is contained in Note 29 to the financial statements. All controlled entities have a June

financial year-end. No controlled entities have left or entered the group during the financial year.

All inter-company balances and transactions between entities in the consolidated entity, including any unrealised

profits or losses, have been eliminated on consolidation. Accounting policies of subsidiaries have been changed

where necessary to ensure consistency with those policies applied by the parent entity.

b. Going Concern

The Directors have prepared the financial statements on a going concern basis, which contemplates continuity of normal business activities and the realisation of assets and extinguishment of liabilities in the ordinary course of business. CommStrat has a working capital deficiency of $4,738,533 at 30 June 2014 with some creditors on a payment plan. During the financial year there was non-compliance with the loan terms in place at that time with the NAB which was subsequently waived by the bank. Despite the uncertainty created by this position, there were considerable developments that give confidence that progress is being made. With an increased focus on developing both its online and offline offering, the business projects to be profitable into the future. These developments include the most recent completion of an online conference platform that enables CommStrat to both extend the reach of its traditional conferences to those that were unable to attend but also run online only events to remote Australia or overseas. The first two events were launched in this financial year and have already contributed nearly $100k of revenue with a sizeable pipeline of events to launch in the remainder of calendar year 2014. This product will be a significant factor in targeting new industry sectors working with existing association or media partners to drive new and incremental revenues.

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Note 1 - Statement of Significant Accounting Policies (continued)

b. Going Concern (continued)

The Directors have excellent relationships with both NAB & PCI Trust Debt, CommStrats key lenders. Current facilities are in place with both parties and the loan agreement with NAB was recently extended until 31 March 2015 with reduced amortisation payments. The PCI loan agreement has also been extended until 30 September 2015. The Directors have conducted an assessment of the carrying value of goodwill and tax losses recognised as a deferred tax asset. Based on this assessment the Directors are confident that sufficient cash flows and profits are achievable to support the current valuation and that taxable profits will be generated to fully utilise tax losses going forward. The valuation of goodwill and deferred tax assets and the assessment of the company as a going concern are based on forecast results approved by the Board. These forecasts take into account the revenue pipeline for events and capabilities developed in respect of delivery of virtual events which the Directors are confident will result in the growth of the business. Supported by these developments, the Directors are confident in both CommStrat’s business model and its longer term prospects and are confident that CommStrat can realise assets and extinguish liabilities at the amounts stated in the financial report.

c. Income Tax

The charge for current income tax expense (benefit) is based on the profit for the year adjusted for any non-

assessable or non-deductible items. It is calculated using the tax rates that have been enacted or are

substantially enacted by the statement of financial position date.

Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising

between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No

deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business

combination, where there is no effect on accounting or taxable profit or loss.

Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or

liability is settled. Deferred tax is credited in the statement of comprehensive income except where it relates to

items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity.

Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available

against which deductible temporary differences can be utilised.

Deferred tax assets and deferred tax liabilities are offset when the entity has:

- legally enforceable right to offset current tax assets with current tax liabilities,

- the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation

authority.

The amount of benefits brought to account or which may be realised in the future is based on the assumption

that no adverse change will occur in income taxation legislation and the anticipation that the consolidated entity

will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions

of deductibility imposed by the law.

CommStrat Limited and its wholly-owned Australian subsidiaries have formed an income tax consolidated group

under the tax consolidation regime. Each entity in the group recognises its own current and deferred tax

liabilities, except for any deferred tax assets resulting from unused tax losses and tax credits, which are

immediately assumed by the parent entity. The current tax liability of each group entity is then subsequently

assumed by the parent entity. The group has notified the Australian Taxation Office that it has formed an income

tax consolidated group. The tax consolidated group has entered a tax sharing agreement whereby each entity in

the group contributes to the income tax payable in proportion to their contribution to the net profit before tax of

the tax consolidated group.

d. Trade Receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the

effective interest method, less a provision for impairment.

Collectability of trade receivables is reviewed on an ongoing basis. Individual debts that are known to be

uncollectible are written off when identified. An impairment provision is recognised when there is objective

evidence that the consolidated entity will not be able to collect the receivable.

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e. Property, Plant and Equipment

Each class of property, plant and equipment is carried at cost less, where applicable, any accumulated

depreciation and impairment losses.

The carrying amount of plant and equipment is reviewed annually by Directors to ensure it is not in excess of the

recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net

cash flows that will be received from the assets’ employment and subsequent disposal. The expected net cash

flows have been discounted to their present values in determining recoverable amounts.

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each statement of

financial position date.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount

is greater than its estimated recoverable amount.

Depreciation

The depreciable amount of all fixed assets is depreciated on a straight-line basis over their useful lives to the

consolidated entity commencing from the time the asset is held ready for use. Leasehold improvements are

depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the

improvements.

The depreciation rates used for each class of depreciable assets are:

Class of Fixed Asset Depreciation Rate

Leasehold improvements 15–33%

Plant and equipment 4–50%

Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains

and losses are included in the statement of comprehensive income.

f. Operating Leases

Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are

charged as expenses in the periods in which they are incurred.

g. Financial Instruments

Initial recognition and measurement

Financial instruments are initially measured at fair value on trade date, when the related contractual rights or

obligations exist. Subsequent to initial recognition these instruments are measured as set out below.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not

quoted in an active market and are stated at amortised cost using the effective interest rate method.

Financial liabilities

Non-derivative financial liabilities are recognised at amortised cost, comprising original debt less principal

payments and amortisation.

h. Loans and Borrowings

All loans and borrowings are initially recognised at the fair value of the consideration received less directly

attributable transaction costs.

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost

using the effective interest method.

Borrowings are classified as current liabilities unless the consolidated entity has an unconditional right to defer

settlement of the liability for at least 12 months after the statement of financial position date.

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Note 1 - Statement of Significant Accounting Policies (continued) i. Impairment of Assets

At each reporting date, the consolidated entity reviews the carrying values of its tangible and intangible assets to

determine whether there is any indication that those assets have been impaired. If such an indication exists, the

recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is

compared to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is

expensed to the statement of comprehensive income.

Impairment testing is performed annually for goodwill and intangible assets with indefinite lives.

Where it is not possible to estimate the recoverable amount of an individual asset, the consolidated entity

estimates the recoverable amount of the cash-generating unit to which the asset belongs.

j. Intangibles

Goodwill

Goodwill on consolidation is initially recorded at the amount by which the purchase price for a business or for an

ownership interest in a controlled entity exceeds the fair value attributed to its ownership interest in the net

assets at date of acquisition. Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill is

tested annually for impairment and carried at cost less accumulated impairment losses. Gains and losses on the

disposal of an entity include the carrying amount of goodwill relating to the entity sold.

Intangibles

Mastheads acquired in a business combination are recognised at fair value on the date of acquisition.

Mastheads have an indefinite useful life and are tested annually for impairment. Mastheads are carried at fair

value less accumulated impairment losses.

Customer databases are recognised at fair value on the date of acquisition and arecarried at fair value less

accumulated impairment losses.

Customer contracts are recognised at cost on the date of acquisition. Customer contracts have a useful life of 5

years and are amortised on a straight line basis over the term of the contract. The remaining useful life of the

customer contracts at 30 June 2014 is less than one year.

Internally created software is recognised at the cost of development where there is clear evidence it will support

greater levels of future revenue generation. This is deemed to have a useful life of 3 years and is amortised on

a straight line basis over this time.

k. Foreign Currency Transactions and Balances

Functional and presentation currency

The functional currency of each of the Group’s entities is measured using the currency of the primary economic

environment in which that entity operates. The consolidated financial statements are presented in Australian

dollars which is the consolidated entity’s functional and presentation currency.

Transaction and balances

Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the

date of the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-

monetary items measured at historical cost continue to be carried at the exchange rate at the date of the

transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair

values were determined.

Exchange differences arising on the translation of monetary items are recognised in the statement of

comprehensive income, except where deferred in equity as a qualifying cash flow or net investment hedge.

Exchange differences arising on the translation of non-monetary items are recognised directly in equity to the

extent that the gain or loss is directly recognised in equity; otherwise the exchange difference is recognised in

the statement of comprehensive income.

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k. Foreign Currency Transactions and Balances (continued)

Subsidiaries

The financial results and position of foreign operations whose functional currency is different from the controlled

entity’s presentation currency are translated as follows:

- assets and liabilities are translated at year-end exchange rates prevailing at that reporting date;

- income and expenses are translated at average exchange rates for the period; and

- retained earnings are translated at the exchange rate prevailing at the date of the transaction.

Exchange differences arising on translation of foreign operations are transferred directly to the controlled entity’s

foreign currency translation reserve in the statement of financial position. These differences are recognised in

the statement of comprehensive income in the period in which the operation is disposed, as part of the gain or

loss on sale where applicable.

l. Employee Benefits

Provision is made for the controlled entity’s liability for employee benefits arising from services rendered by

employees to balance date. Employee benefits that are expected to be settled within one year have been

measured at the amounts expected to be paid when the liability is settled, plus related on-costs. Employee

benefits payable later than one year have been measured at the present value of the estimated future cash

outflows which takes into account, wage increase and retention rates to be made for those benefits. Present

value of the estimated future cash outflows are discounted using market yields at the reporting date on national

government bonds with terms to maturity and currency that match as closely as possible, the established future

cash flows.

Superannuation schemes

Contributions are made by the consolidated entity to defined contribution employee superannuation funds and

are charged as expenses when incurred.

Equity-settled compensation

The consolidated entity operates an employee share option scheme and an employee share scheme. The

bonus element over the exercise price for the grant of shares and options is recognised as an expense in the

statement of comprehensive income in the period(s) when the benefit is earned.

The total amount to be expensed over the vesting period is determined by reference to the fair value of the

options at grant date. The fair value of the options at grant date is determined using the standard Binomial

model and a combination of the Monte Carlo simulation and standard Binomial model, and is recognised as an

employee expense over the period during which the employee becomes entitled to the option. The market value

of share issued to employees for no cash consideration under the employee share scheme is recognised as an

expense when the employees become entitled to the shares.

m. Provisions

Provisions are recognised when the consolidated entity has a legal or constructive obligation, as a result of past

events, for which it is probable that an outflow of consolidated benefits will result and that outflow can be reliably

measured.

n. Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid

investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown

within borrowings in current liabilities on the statement of financial position.

o. Revenue

Revenue from the sale of goods is recognised upon the delivery of goods to customers.

Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the

financial assets.

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o. Revenue (continued)

Revenue from the rendering of a service is recognised upon the delivery of the service to the customers i.e. upon

publication of a magazine or periodical in which the advertisement is placed. Money received in advance of the

delivery of a service is recorded as a liability and disclosed as unearned income in the financial statements.

Unearned income is brought to account as revenue upon the delivery of the service to a customer.

All revenue is stated net of the amount of goods and services tax (GST).

p. Borrowing Costs

Borrowing costs directly attributable to the acquisition, construction or production of assets that necessarily take

a substantial period of time to prepare for their intended use or sale, are added to the cost of those assets, until

such time as the assets are substantially ready for their intended use or sale.

All other borrowing costs are recognised in the statement of comprehensive income in the period in which they

are incurred.

q. Goods and Services Tax (GST)

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

incurred is not recoverable from the Australian Taxation Office. In these circumstances the GST is recognised as

part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the

statement of financial position are shown inclusive of GST.

Cash flows are presented in the statement of cash flows on a gross basis, except for the GST component of

investing and financing activities, which are disclosed as operating cash flows.

r. 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 ending 30 June 2014 no comparative figures have been

adjusted.

s. Segment Reporting

A business segment is a distinguishable component of the entity that is engaged in providing products or

services that are subject to risks and returns that are different to those of other operating business segments.

The consolidated entity operates in two business segments, being conference & events and print & digital, each

drawing on the resources of a singular infrastructure.

A geographical segment is a distinguishable component of the entity that is engaged in providing products or

services within a particular consolidated environment and is subject to risks and returns that are different than

those of segments operating in other consolidated environments. The consolidated entity operated in two

geographical segments, being Australia and New Zealand until the New Zealand operations were discontinued

in 2012.

t. Discontinued Operations

A discontinued operation is a component of the entity that has been disposed of or is classified as held for sale

and that represents a separate major line of business or geographical area of operations, which is part of a

single coordinated plan to dispose of such a line of business or area of operations, or it a subsidiary acquired

exclusively with a view to resale. Where applicable, the results of discontinued operations are presented

separately on the face of the statement of comprehensive income.

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u. New Accounting Standards and Interpretations

Accounting Standards and Interpretations issued by the AASB that are not yet mandatorily applicable to the Group,

together with an assessment of the potential impact of such pronouncements on the Group when adopted in future

periods, are discussed below:

– AASB 9: Financial Instruments and associated Amending Standards (applicable for annual reporting periods

commencing on or after 1 January 2017).

The Standard will be applicable retrospectively (subject to the comment on hedge accounting below) and includes

revised requirements for the classification and measurement of financial instruments, revised recognition and

derecognition requirements for financial instruments and simplified requirements for hedge accounting.

The key changes made to the Standard that may affect the Group on initial application include certain

simplifications to the classification of financial assets, simplifications to the accounting of embedded derivatives,

and the irrevocable election to recognise gains and losses on investments in equity instruments that are not held for

trading in other comprehensive income. AASB 9 also introduces a new model for hedge accounting that will allow

greater flexibility in the ability to hedge risk, particularly with respect to hedges of non-financial items. Should the

entity elect to change its hedge policies in line with the new hedge accounting requirements of AASB 9, the

application of such accounting would be largely prospective.

Although the directors anticipate that the adoption of AASB 9 may have an impact on the Group’s financial

instruments, including hedging activity, it is impracticable at this stage to provide a reasonable estimate of such

impact.

– AASB 2012–3: Amendments to Australian Accounting Standards – Offsetting Financial Assets and Financial

Liabilities (applicable for annual reporting periods commencing on or after 1 January 2014).

This Standard provides clarifying guidance relating to the offsetting of financial instruments, which is not expected

to impact the Group’s financial statements.

– Interpretation 21: Levies (applicable for annual reporting periods commencing on or after 1 January 2014).

Interpretation 21 clarifies the circumstances under which a liability to pay a levy imposed by a government should

be recognised, and whether that liability should be recognised in full at a specific date or progressively over a

period of time. This Interpretation is not expected to significantly impact the Group’s financial statements.

– AASB 2013–3: Amendments to AASB 136 – Recoverable Amount Disclosures for Non-Financial Assets (applicable

for annual reporting periods commencing on or after 1 January 2014).

This Standard amends the disclosure requirements in AASB 136: Impairment of Assets pertaining to the use of fair

value in impairment assessment and is not expected to significantly impact the Group’s financial statements.

– AASB 2013–4: Amendments to Australian Accounting Standards – Novation of Derivatives and Continuation of

Hedge Accounting (applicable for annual reporting periods commencing on or after 1 January 2014).

AASB 2013–4 makes amendments to AASB 139: Financial Instruments: Recognition and Measurement to permit

the continuation of hedge accounting in circumstances where a derivative, which has been designated as a hedging

instrument, is novated from one counterparty to a central counterparty as a consequence of laws or regulations.

This Standard is not expected to significantly impact the Group’s financial statements.

– AASB 2013–5: Amendments to Australian Accounting Standards – Investment Entities (applicable for annual

reporting periods commencing on or after 1 January 2014).

AASB 2013–5 amends AASB 10: Consolidated Financial Statements to define an “investment entity” and requires,

with limited exceptions, that the subsidiaries of such entities be accounted for at fair value through profit or loss in

accordance with AASB 9 and not be consolidated. Additional disclosures are also required. As neither the parent

nor its subsidiaries meet the definition of an investment entity, this Standard is not expected to significantly impact

the Group’s financial statements.

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v. Critical Accounting Estimates and Judgements

The consolidated entity makes certain estimates and assumptions concerning the future, which, by definition will

seldom represent actual results. The estimate and assumptions that have a significant inherent risk in respect of

estimates based on future events, which could have a material impact on the assets and liabilities in the next

financial year, are discussed below:

Impairment of assets - Goodwill is allocated to cash generating units (CGU’s) according to applicable business

operations. The recoverable amount of a CGU is based on value-in-use calculations (using a discounted cash

flow).

These calculations are based on projected budget and cash flows approved by the Directors covering a period of

12 months. The budgets have been extrapolated out for another four years.

Management’s determination of cash flow projections are based on past performance and its expectation for the

future. The budgets prepared by management have assessed the expected revenues for each subscription,

publication, and conference/event based on historical data, known quantifiable future revenues and forecast

attendances at conferences/events. To this extent, management have been able to utilise contracted publication

revenue and confirmed event attendances at 30 June 2014 to assist in forecasting revenue.

A terminal value multiple of 4 times EBITDA is applied to represent the growth rate implied to extrapolate the cash

flows beyond the five-year forecast period. The terminal value is based on Director experience, market

comparative multiples and previous acquisitions.

In determining the present value of the consolidated entity, management has used a post-tax discount rate of 13%

applied to the cash flows of each CGU to which the goodwill has been allocated.

Mastheads - In accordance with Accounting Standards, the fair value of mastheads were determined on the date

of acquisition of Hallmark Editions Pty Ltd (“Hallmark”), which occurred during the year ended 30 June 2008. The

determination of the fair value at this time used a ‘relief from royalty rate’ approach which takes into consideration

the present value of future revenues that could be obtained by each masthead in an arm’s length transaction

between licensor and licensee. This is based on the present value of revenue that the group is expected to

generate from the masthead, an appropriate royalty rate (4.5%) and an appropriate post tax discount rate (13%).

In assessing the recoverable value at 30 June 2014, the actual revenues generated for the year ended 30 June

2014 were compared to the expected revenues forecast in the valuation conducted during the year ended 30 June

2009 and future revenues as part of the budget process referred to above. Where revenues differed, an

assessment of the present value of expected revenue based on actual performance was performed for the

masthead, using a post-tax discount rate of approximately 13%. An impairment loss is recognised where the

carrying amount exceeded the recoverable amount.

A reasonably possible change in the assumptions used in assessing the carrying value of the goodwill and

mastheads is not expected to generate an impairment loss.

Recovery of deferred tax assets - Deferred tax assets resulting from deductible temporary differences and tax

losses have been recognised as management considers it probable that future taxable profits will be available to

utilise those temporary differences and tax losses. The ability to generate future taxable profits has been

assessed against current year results where the consolidated entity is in a taxable position and the profitable

budgets referred to above.

w. Change in comparatives

The consolidated entity recognised a change in accounting policy in the 2014 financial year in relation to the

classification of direct labour. In the statement of comprehensive income, direct labour has been reclassified from

cost of sales to administration expenses which management considers a more consistent approach going forward.

Note that this change has had no effect on the total comprehensive income/(loss) for the year.

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Consolidated Entity

2014 2013

$ $

Note 2 – Revenue and other income

Revenue and other income from continuing operations:

Sale of goods 6,126,853 6,129,570

Other income:

Interest received 271 727

Total revenue and other income from continuing operations 6,127,124 6,130,297

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Consolidated Entity

2014 2013

$ $

Note 3 – Profit/(loss) for the year

(a) Profit/(loss) for the year

Profit/(loss) before tax includes the following specific expenses:

Finance costs:

Director related entities 72,730 41,340

Other 251,920 241,454

Total finance costs 324,650 282,794

Depreciation and amortisation of non-current assets:

Leasehold improvements depreciation -

Plant & equipment depreciation 91,141 77,096

Customer contracts amortisation 32,038 48,054

Job boards amortisation 154,875 -

278,054 125,150

Employee expenses:

Salaries and wages 2,303,059 1,911,119

Superannuation 247,103 221,089

Other employee expenses 231,594 304,783

Total employee expenses 2,781,756 2,436,991

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Consolidated Entity

2014 2013

$ $

Note 3 – Profit/(loss) for the year (continued) (a) Profit/(loss) for the year (continued)

Administration expenses:

Employee benefit expenses 2,781,756 2,436,991

Depreciation and amortisation expenses 278,054 125,150

Other administration expenses 580,607 543,409

Total administration expenses 3,640,417 3,105,550

Other expenses:

Directors fees 185,163 183,452

Share registry and listing fees 69,755 23,080

Other 78,455 107,560

Total other expenses 333,373 314,092

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Consolidated Entity

2014 2013

$ $

Note 4 – Income tax

(a) The components of income tax expense are:

Deferred tax 271,962 257,943

Under/over provision - -

Total income tax expense 271,962 257,943

(b) The prima facie tax, using tax rates applicable in the country of operation, on profit differs from the income tax provided in the financial statements as follows:

Profit/(loss) before tax from continuing operations (379,476) 583,150

Loss before tax from discontinued operations - -

Total profit/(loss) before income tax (379,476) 583,150

At the statutory income tax rate of 30% (2013: 30%) (113,843) 174,945

Add/(less) tax effect:

Tax losses and temporary differences not brought to account

Other non-allowable items - 1,054

Amortisation on intangibles 56,074 14,416

Research and development 114,987 -

Non-deductible intangibles 168,184 -

Under/(over) provision from the prior year 46,560 67,528

Income tax expense (benefit) 271,962 257,943

(c) Deferred tax relates to the following:

Deferred tax assets

Provision for doubtful debts 80,023 19,950

Accrued expenses 175,957 94,074

Employee benefits 65,309 68,912

Legal fees 15,948 16,425

Losses available for offset against future income 1,981,912 2,223,566

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Consolidated Entity

2014 2013

$ $

Note 4 – Income tax (continued)

(c) Deferred tax relates to the following (continued):

Deferred tax liabilities

Non-deductible intangibles (168,184) -

Unrealised foreign currency gains (41,009) (41,009)

Total deferred tax liabilities (209,193) (41,009)

Total net deferred tax assets 2,109,956 2,381,918

(d) Franking credits

Balance of franking account at year end adjusted for franking

credits arising from payment of provision for income tax and

franking credits that may be prevented from distribution in

subsequent franking years. 3,269,843 3,269,843

- converted to tax basis 980,953 980,953

(e) Un-recognised deferred tax assets

Deferred tax assets have not been recognised in the statement of financial position for the following items:

Unused tax losses 34,960 34,960

Potential benefit at 30% (2013: 30%)* 10,488 10,488

* Tax losses in 900 Degrees New Zealand Limited (f) Deferred income tax expense included in income tax expense comprises:

Decrease/(increase) in deferred tax assets 103,778 257,943

(Decrease)/increase in deferred tax liability 168,184 -

271,962 257,943

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Consolidated Entity

2014 2013

$ $

Note 5 - Cash and cash equivalents

Cash on hand 212 430

Cash at bank 158,709 202,145

158,921 202,575

Cash at bank in Australia bears a floating interest rate per annum of 0.00% - 1.00% (2013: 0.07% - 0.70%). The

consoldiated entity’s exposure to interest rate risk is disclosed in Note 20 (c).

Note 6 – Trade and other receivables

Trade receivables 509,961 614,810

Provision for impairment (a) (266,743) (66,500)

243,218 548,310

Refer to Note 20(b) for an analysis on the ageing of trade receivables at 30 June 2014 and 30 June 2013. A provision for impairment is recognised when there is objective evidence that an individual trade receivable is impaired.

(a) Movements in the provision for impairment

Opening balance at 1 July 66,500 39,820

Charge for the year 200,243 45,074

Amounts written off - (18,394)

Closing balance at 30 June 266,743 66,500

Note 7 – Other current assets

Prepayments 114,957 118,469

Other 114,135 116,184

229,092 234,653

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Consolidated Entity

2014 2013

Notes $ $

Note 8 – Property, plant and equipment

Leasehold improvements 4,505 4,505

Less accumulated depreciation (4,505) (4,505)

- -

Plant and equipment 462,607 462,607

Less accumulated depreciation (417,896) (326,755)

44,711 135,852

Total property, plant and equipment (a) 44,711 135,852

(a) Movements in carrying amounts

The movements in the carrying amount of property, plant and equipment between the beginning and end of the current

financial year is as follows:

Leasehold

improvements Plant and equipment Total

$ $ $

2014

Balance at the beginning of the financial year - 135,852 135,852

Additions at cost - - -

Depreciation expense - (91,141) (91,141)

Impairment - - -

Carrying amount at the end of the financial year - 44,711 44,711

2013

Balance at the beginning of the financial year - 212,947 212,947

Additions at cost - - -

Depreciation expense - (77,095) (77,095)

Impairment - - -

Carrying amount at the end of the financial year - 135,852 135,852

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Consolidated Entity

2014 2013

Notes $ $

Note 9 – Intangible assets

Goodwill 2,845,385 2,845,385

Virtual Events Platform 250,840 -

Careers & Jobs Platform 309,773 464,648

Company mastheads 668,000 668,000

Customer database 149,000 149,000

Customer contracts - 32,038

(a) 4,222,998 4,159,071

The movements in the intangible assets between the beginning and end of the current financial year is as follows:

Goodwill

Virtual Events

Platform

Careers & Jobs

Platform Company masthead

Customerdatabase

Customercontracts Total

$ $ $ $ $ $ $

2014

Balance at the beginning of the financial year 2,845,385 - 464,648 668,000 149,000 32,038 4,159,071 Additions during the year - 250,840 - - - 250,840 Amortisation expense - - (154,875) - - (32,038) (186,913)

Carrying amount at the end of the financial year 2,845,385 250,840 309,773 668,000 149,000 - 4,222,998

2013

Balance at the beginning of the financial year 2,845,385 - - 668,000 149,000 80,091 3,742,476 Additions during the year - - 464,648 - - - 464,648 Amortisation expense - - - - - (48,053) (48,053)

Carrying amount at the end of the financial year 2,845,385 - 464,648 668,000 149,000 32,038 4,159,071

Goodwill is located to cash generating units which are based on the consolidated entity’s reporting segments:

Consolidated

2014 2013

$ $

Print and digital 2,845,385 2,845,385

2,845,385 2,845,385

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Consolidated Entity

2014 2013

$ $

Note 10 – Trade and other payables

Trade creditors 567,404 594,033

Accrued expenses 996,149 339,352

1,563,553 933,385

Note 11 – Borrowings

Current:

Loan 2,765,000 1,210,000

Non-current:

Loan 850,000 2,765,000

Total borrowings 3,615,000 3,975,000

The consolidated entity secured a $3,500,000 flexible rate loan with its principal banker during the 2012 financial year.

At 30 June 2014, $2,765,000 (30 June 2013 $3,125,000) was drawn down on the facility. During the full year ending 30

June 2014 $360,000 capital repayments have been made on the loan and further capital repayments will be made

going forward. At 30 June 2014 the consolidated entity was in breach of its financial covenants under the existing

funding agreement with its principal banker. Since then, the principal banker has agreed to an extension to this loan

until 31 March 2015 with further monthly repayments to be made.

The consolidated entity entered into a loan agreement with PCI Equities Trust during the 2012 financial year to assist

with its ongoing working capital commitments. The loan facility is up to a maximum of $900,000 of which $850,000 is

drawn down at 30 June 2014 (30 June 2013, $850,000). Interest payable on the loan is the 90 day bank bill swap

reference rate plus a margin of 3.75%. This loan has been extended until 30 September 2015 with no repayments due

during this extrension period.

The consolidated entity’s exposure to interest rate risk is disclosed in Note 20 (c). Note 12 – Provisions

Current


Non-current


Total employee benefits 217,699 229,708

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Consolidated Entity

2014 2013

Notes $ $

Note 13 – Other current liabilities

Unearned income 375,237 843,610

Other payables 459,087 263,326

834,324 1,106,936

Note 14 – Issued capital 2014: 20,717,418 (2013: 20,097,018) fully paid shares (a) 15,821,190 15,808,782

(a) Movements in carrying amounts

Number of

shares $

Opening balance 1 July 2013 20,097,018 15,808,782

Shares issued 620,400 12,408

Closing balance 30 June 2014 20,717,418 15,821,190

Opening balance 1 July 2012 20,097,018 15,808,782

Shares issued - -

Closing balance 30 June 2013 20,097,018 15,808,782

At the shareholders meetings each ordinary share is entitled to one vote when a poll is called, otherwise each

shareholder has one vote on a show of hands.

Capital management

When managing capital, management’s objective is to ensure the consolidated entity continues as a going concern as

well as to maintain optimal returns to shareholders and benefits for other stakeholders. Management effectively

manages the consolidated entity’s capital by assessing the consolidated entity’s financial risk and adjusting its capital

structure in response to changes in these risks and in the market. These responses include the management of debt

levels and share issues. The group is not subject to externally imposed capital requirements.

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Consolidated Entity

2014 2013

Notes $ $

Note 14 – Issued capital (continued)

Capital management (continued)

Gearing Ratio Analysis

Total borrowings 3,615,000 3,975,000

Trade and other payables 1,563,553 933,385

Less cash and cash equivalents (158,921) (202,575)

Net debt 5,019,632 4,705,810

Total equity 778,320 1,417,350

Total capital 5,797,952 6,123,160

Gearing ratio 86.6% 76.8%

Note 15 - Reserves

Reserve (a) - 24,000

(a) Movements in reserves

Share based payment reserve:

Opening balance 24,000 24,000

Transfer of share option reserve to retained earnings (24,000) -

- 24,000

(a) Options were granted during the year ended 30 June 2008 as consideration for the services provided in

relation to the raising of share capital during that period. An amount of $24,000 was recognised in equity, being

the fair value of the options granted. These options expired on 28 March 2013 and have therefore been

transferred to Retained Earnings

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Note 15 – Reserves (continued)

During the year ended 30 June 2014, CommStrat Limited granted 1,900,000 performance rights to Chris Atkin as

part of his new employment remuneration. The table below summaries the 2014 performance rights granted to Mr

Atkin:

Grant date Expiry date Exercise price Performance

hurdle Vesting date Number issued

11 Dec 2013 30 Sep 2015 $0.00 * 30 Sep 2015 500,000

11 Dec 2013 30 Jun 2016 $0.00 ** **** 450,000

11 Dec 2013 30 Jun 2016 $0.00 *** **** 450,000

11 Dec 2013 30 Sep 2016 $0.00 * 30 Sep 2016 500,000

1,900,000

* Performance hurdles include employment continuance as well as free cash flow and EBITDA targets. ** Performance hurdle: The CommStrat 90-day volume weighted average share price exceeds $0.15 *** Performance hurdle: The CommStrat 90-day volume weighted average share price exceeds $0.20 **** Vesting date: Any point before 30 June 2016 the above performance hurdle is met.

The following factors and assumptions were used in determining the fair value of the performance rights granted:

Grant date Expiry date Fair

value Exercise

price

Price of shares on

grant date

Estimated volatility

Risk free interest

rate Dividend

yield

11 Dec 2013 30 Sep 2015 $0.00 $0.00 $0.04 75% 5% -

11 Dec 2013 30 Jun 2016 $0.00 $0.00 $0.04 75% 5% -

11 Dec 2013 30 Jun 2016 $0.00 $0.00 $0.04 75% 5% -

11 Dec 2013 30 Sep 2016 $0.00 $0.00 $0.04 75% 5% -

During the year ended 30 June 2013, CommStrat Limited granted 600,000 performance rights to Chris Atkin as part

of his employment remuneration. The entire parcel of 600,000 performance rights were cancelled on 11 December

2013 at the point in time in which Chris Atkin was appointed to Chief Executive Officer.

During the year ended 30 June 2012, CommStrat Limited granted 2,275,000 performance rights to Brad Gurrie as part

of his employment remuneration. The entire parcel of 2,275,000 performance rights were forfeited in the 2014

financial year, due to Brad Gurrie ceasing his employment with the consolidated entity. These performance rights did

not vest as a result of the performance hurdles attaching to the rights not being achieved.

During the year ended 30 June 2011, CommStrat Limited granted performance rights to Paul Wilson as part of his

employment remuneration. 5,000,000 were forfeited in the 2014 financial year, due to Paul Wilson ceasing his

employment with the consolidated entity. These performance rights did not vest as a result of the performance

hurdles attaching to the rights not being achieved.

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Consolidated Entity

2014 2013

$ $

Note 16 – Accumulated losses

Opening balance (14,415,432) (14,740,640)

Profit/(loss) for the year (651,438) 325,208

Reserve 24,000 -

(15,042,870) (14,415,432)

Note 17 – Notes to the statement of cash flows

For the purposes of the statement of cash flows, cash includes cash on hand and in banks and investments in money

market instruments. Cash at the end of the financial year and shown in the consolidated statement of cash flows is

reconciled to the related items in the statement of financial position as follows:

(a) Reconciliation of cash

Cash on hand 212 430

Cash at bank 158,709 202,145

158,921 202,575

(b) Reconciliation of cash flows from operating activities after income tax

Profit/(loss) after income tax expense (651,438) 325,208 Depreciation and amortisation on non-current assets 278,054 125,150

Impairment on non-current assets - -

Amounts set aside to provisions (12,010) (155,893)

Doubtful debt expense 200,243 26,680

Share based payments 12,408 -

Changes in operating assets and liabilities: (Increase) / decrease in trade receivables 104,850 (20,443)

Decrease in other current assets 5,561 3,440

(Decrease) / increase in trade and other payables 630,168 (547,822)

Decrease / (increase) in other current liabilities (272,612) 356,760

Decrease / (increase) in deferred tax balances 271,962 257,943

Net cash flows from operating activities 567,186 371,023

Non cash financing and investing activities

During the year the consolidated entity acquired no plant and equipment by hire purchase or finance leases.

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Consolidated Entity

2014 2013

Notes $ $

Note 18 – Financial arrangements

The consolidated entity has access to the following lines of credit at balance date:

PCI Equities Trust 19

Facility limit 900,000 900,000

Facility utilised (850,000) (850,000)

Unused facility 50,000 50,000

This facility is on commercial arm’s length terms and is secured by a fixed and floating charge over the assets of the consolidated entity, which is subordinated to the senior debt security, being the existing finance facilities with the consolidated entity’s principal banker. The loan was conditional on obtaining consent from CommStrat’s principal banker

Principal Banker

Facility limit 2,725,000 3,125,000

Facility utilised (2,725,000) (3,125,000)

Unused facility - -

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Consolidated Entity

2014 2013

$ $

Note 19 – Related party transactions

Transactions between related parties are on normal commercial terms with conditions no more favourable than those

available to other parties.

Amounts payable to related parties:

PCI Equities Trust

Current 179,482 956,752

Non-current 850,000 -

1,029,482 956,752

Mr Mark Sowerby and Mr Alexander McNab are Directors of Blue Sky Private Equity Limited, the responsible entity of

the Professional Capital Investments Equities Trust. The $850,000 loan at 30 June 2014 is with Australian Executor

Trustees Limited as custodian for Professional Capital Investments (PCI) Equities Trust. Refer to Note 11 for details

regarding the loan with PCI Equities Trust. The current component is for interest and fees arrears in FY14 and principal

and interest arrears in FY13.

Transactions with related parties:

Interest charged on loans payable to related parties

PCI Equities Trust 72,730 41,340

72,730 41,340

Principal proceeds / (repayment) on loans payable to related parties

PCI Equities Trust - 100,000

- 100,000

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Note 20 – Financial risk management

Risk Management Policies and Objectives

Activities undertaken by CommStrat Limited and its subsidiaries may expose the consolidated entity to market risk,

credit risk, liquidity risk and fair value and cash flow interest rate risk. The consolidated entity’s risk management

policies and objectives are therefore designed to minimise the potential impacts of these risks on the results of the

consolidated entity where such impacts may be material.

(a) Market Risk

Market risk essentially comprises foreign exchange risk, price risk and interest rate risk.

The entity is exposed to foreign exchange risk upon conversion of the consolidated entity’s New Zealand operations

(net assets and earnings) into the presentation currency of the consolidated entity. Due to the immaterial size of the

New Zealand operations, a formal foreign currency risk management policy has not been adopted or applied. The

consolidated entity’s exposure to foreign exchange risk has been minimised due to management’s decision to

discontinue its foreign operations.

Due to the nature of the consolidated entity's operations, the consolidated entity is not exposed to any significant price

risk. Accordingly, the consolidated entity does not have a risk management policy for price risk.

Interest rate risk is discussed in further detail in Note 20 (c).

(b) Credit risk

Credit risk is the risk that the other party to a financial instrument will fail to discharge their obligation resulting in the

consolidated entity incurring a financial loss. This usually occurs when debtors or counterparties to derivative contracts

fail to settle their obligations owing to the consolidated entity.

There is no concentration of credit risk with respect to current and non-current receivables as the consolidated entity

has a large number of customers. The consolidated entity’s policy is that sales are only made to customers that are

credit worthy.

At 30 June 2014, the ageing analysis of trade receivables is as follows:

Consolidated Entity

2014 2013

$ $

1-30 days (not yet due) 146,895 273,315

31-60 days 76,527 86,219

61-90 days 20,908 56,073

90 + days 265,630 199,203

Past due and considered impaired (266,743) (66,500)

Total 243,217 548,310

Trade receivables are non-interest bearing and are generally on 30-60 day terms. A provision for impairment is

recognised when there is objective evidence that an individual trade receivable is impaired. A provision for impairment

of $200,243 has been raised against the balance of trade receivables for 2014 (2013: $66,500).

Due to the short term nature of these receivables, their carrying value is assumed to approximate their fair value.

The maximum exposure to credit risk is the fair value of receivables. Collateral is not held as security, nor is the consolidated entity’s policy to transfer (on-sell) receivables to special purpose entities.

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Note 20 – Financial risk management (continued)

(c) Interest rate risk

The consolidated entity has exposure to interest rate risk due to the nature of the assets and liabilities held at balance

date.

The consolidated entity’s exposure to interest rate risk is presented in the following table:

Notes

Floating Interest Rate

Fixed Interest

Non-Interest Bearing

Total

$ $ $ $

2014

Financial assets

Cash and deposits 5 158,709 - 212 158,921

Trade receivables 6 - - 243,218 243,218

158,709 - 243,430 402,139

Weighted average interest rate 0%


Payables 10 - - (1,563,553) (1,563,553)

Borrowings 11 (3,615,000) - - (3,615,000)

(3,615,000) - (1,563,553) (5,178,553)

Weighted average interest rate 7.74%

Net financial assets/ (liabilities) (3,456,291) - (1,320,123) (4,776,414)

2013

Financial assets

Cash and deposits 5 202,145 - 430 202,575

Trade receivables 6 - - 548,310 548,310

202,145 - 548,740 750,885

Weighted average interest rate 0%


Payables 10 - - (933,385) (933,385)

Borrowings 11 (3,975,000) - - (3,975,000)

(3,975,000) - (933,385) (4,908,385)

Weighted average interest rate 7.20%

Net financial liabilities (3,772,855) - (384,645) (4,157,500)

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Note 20 – Financial risk management (continued)

(d) Market risk

The consolidated entity does not hold nor participate in any financial assets or liabilities that are exposed to significant

fair value movements. Accordingly, the consolidated entity does not have a risk management policy for market risk. (e) Liquidity risk and maturity analysis of financial assets and liability based on management’s expectation

Liquidity risk is the risk that the consolidated entity may encounter difficulties raising funds to meet commitments

associated with financial instruments, e.g. borrowing repayments.

Cash flows are continually monitored by management. The nature of the consolidated entity's activities generally allow

for upfront payment from customers (e.g. advertising, subscriptions, conferences) allowing the consolidated entity to

raise cash levels before committing to expenditures. Furthermore, the nature of the consolidated entity’s activities

provide for an even spread of cash outflows during the year which enables management to accurately forecast cash

positions and manage the consolidated entity's liquidity position accordingly.

The maturity analysis for financial assets and liabilities showing the remaining contractual maturities is presented

below. Cash flows realised from financial assets reflect managements’ expectations as to the timing of realisation. The

maturity analysis for financial liabilities reflects undiscounted contractual commitments.

Notes

< 6 Months

6-12 Months

1-5 Years > 5 Years

Less Future Interest Charges

Total

2014 $ $ $ $ $ $

Financial assets

Cash and deposits 5

158,921 - - - -

158,921

Trade receivables 6 243,218 - - - -

243,218

402,139 - - - - 402,139


Trade and other payables 10

(1,563,553) - - - -

(1,563,553)

Borrowings 11 - (2,765,000) (850,000) - -

(3,615,000)

Total expected outflows

(1,563,553) (2,765,000) (850,000) - -

(5,178,553)

Net outflow on financial instruments

(1,161,414) (2,765,000) (2,765,000) - -

(4,776,414)

2013

Financial assets

Cash and deposits 5 202,575 - - - - 202,575

Trade receivables 6 548,310 - - - - 548,310

750,885 - - - - 750,885


Trade and other payables 10 (933,385) - - - - (933,385)

Borrowings 11 (1,210,000) - (2,765,000) - - (3,975,000)

Total expected outflows (2,143,385) - (2,765,000) - - (4,908,385)

Net (outflow) on financial instruments (1,392,500) - (2,765,000) - - (4,157,500)

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Consolidated Entity

2014 2013

$ $

Note 21 – Capital and leasing commitments

Operating Leases:

Commitments for minimum lease payments in relation to non-cancellable operating leases are as follows:

Payable:

Not later than 1 year 206,452 212,721

Later than 1 year but not later than 5 years 205,098 411,550

411,550 624,271

The consolidated entity has two operating leases at 30 June 2014 relating to a rental property in Victoria and

equipment in Victoria. The Victoria property lease agreement provides for annual rental increases of 4% per annum,

expires in June 2016 and provides the consolidated entity with an option of renewal at the end of the lease period, at

which time the lease is renegotiated. The printer lease is at a fixed amount per month and expires in December 2016.

Capital commitments

There are no capital commitments for the consolidated entity at 30 June 2014.

Note 22 – Contingent liabilities

At 30 June 2014, there are no contingent liabilities.

Note 23 – Auditors remuneration

Total of all remuneration paid or due and payable to the auditors in connection with:

- Audit and review of financial reports 71,250 81,531

No non-audit services provided by the auditors during the financial year ended 30 June 2014 or 30 June 2013.

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Note 24 – Key Management Personnel Compensation

(a) Names and positions held by Directors and key management personnel in office at any time during the financial year are:

Directors:

- Mr Alexander McNab

- Mr Mark Sowerby

- Mr Nicholas Love

- Mr Paul Wilson (resigned 11 December 2013)

Key Management Personnel:

- Mr Chris Atkin – Chief Executive Officer (appointed 11 December 2013)

- Mr Brendt Henricus – Chief Financial Officer (appointed 14 April 2014)

- Mr Brad Gurrie – Chief Executive Officer (appointed 19 March 2012, resigned 11 December 2013)

(b) Number of options held by key management personnel

The movement during the reporting period in the number of options held, directly, indirectly or beneficially, by each

key management person, including their related parties, is as follows:

2014

Balance at the beginning of

the year

Granted during the year

Exercised during the year

Other changes during the year

Balance at the end of the year

Directors:

Mr Paul Wilson 5,000,000 - - (5,000,000) -

Mr Mark Sowerby - - - - -

Mr Alexander McNab - - - - -

Mr Nicholas Love - - - - -

Key Mgmt. Personnel:

Mr. Chris Atkin 550,000 1,900,000 - (550,000) 1,900,000

Mr. Brad Gurrie 2,275,000 - - (2,275,000) -

Mr. Brendt Henricus - - - - -

7,825,000 1,900,000 - (7,825,000) 1,900,000

2013

Balance at the beginning of

the year

Granted during the year

Exercised during the year

Other changes during the year

Balance at the end of the year

Directors:

Mr Paul Wilson 10,000,000 - - (5,000,000) 5,000,000

Mr Mark Sowerby - - - - -

Mr Alexander McNab - - - - -

Mr Nicholas Love - - - - -


Mr. Chris Atkin - - - 550,000 550,000

Mr. Brad Gurrie 2,275,000 - - - 2,275,000

Mr. Allan Tuback - - - - -

12,275,000 - - (4,350,000) 7,825,000

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Note 24 – Key Management Personnel Compensation (continued)

(c) Number of shares held by key management personnel:

The movement during the reporting period in the number of ordinary shares in CommStrat Limited held, directly,

indirectly or beneficially, by each key management person, including their related parties, is as follows:

(i) Mr Mark Sowerby and Mr Alexander McNab are Directors of Blue Sky Private Equity Limited, the responsible

entity of the Professional Capital Investments Equities Trust. At 30 June 2014, Aust Executor Trustees Ltd (the custodian of the Professional Capital Investments Equities Trust) owns, 12,171,842 shares (2013: 12,171,842 shares).

2014

Balance at the beginning

of the year

Granted as compensation

Purchases

Received on exercise of

options

Sales Balance at the end of the year

Directors:

Mr Paul Wilson 170,000 - - - (170,000) -

Mr Mark Sowerby (i) 12,514,777 - - - - 12,514,777

-

- Mr Alexander McNab (i) 12,171,842 - - - - 12,171,842

-


- - - - -

Mr. Chris Atkin - 292,650 - - - 292,650

Mr. Brad Gurrie 207,060 327,750 - - (534,810) -

2013

Balance at the beginning

of the year

Granted as compensation

Purchases

Received on exercise of

options

Sales Balance at the end of the year

Directors:

Mr Paul Wilson 170,000 - - - - 170,000

-

-

Mr Mark Sowerby (i) 12,514,777 - - - - 12,514,777

-

-

Mr Alexander McNab (i) 12,171,842 - - - - 12,171,842

-


Mr. Brad Gurrie 200,000 - 7,060 - - 207,060

-

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Note 24 – Key Management Personnel Compensation (continued)

(d) Remuneration of key management personnel (continued)

Consolidated Entity

2014 2013

$ $

Short-term employment benefits 531,942 637,300

Post-employment benefits 44,795 45,629

Share-based payments 12,408 -

589,145 682,929

Refer to the Remuneration Report within the Directors’ Report for information regarding individual Director and key management personnel compensation.

Parent Entity

2014 2013

$ $

Note 25 – Parent entity disclosure

Summarised presentation of the parent entity, CommStrat Limited financial statements:

Current assets 426 426

Total assets 11,177,377 11,524,964

Current liabilities (3,729,110) (2,174,105)

Non-current liabilities (850,000) (2,765,000)

Total liabilities (4,579,110) (4,939,105)

Net assets 6,598,267 6,585,859

Issued capital 15,821,190 15,808,782

Reserves - 24,000

Accumulated losses (9,222,923) (9,246,923)

Total equity 6,598,267 6,585,859

Profit/(Loss) for the year 24,000 (163,241) Total comprehensive profit/(loss) for the year 24,000 (163,241)

No guarantees have been entered into by the parent entity in relation to the debts of its subsidiaries.

Refer to Note 21 and Note 22 for details of commitments and contingencies at 30 June 2014 and 30 June 2013.

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Note 26 - Segment Reporting (a) Description of Segments

The consolidated entity has identified its operating segments based on the internal reports that are used by the Directors in assessing performance and the allocation or resources. The consolidated entity’s operating segments are identified by the nature of revenue generated and the relative risks of each segment. The two defined operating segments are:

- Conference and events

- Print and digital

(b) Segment information for continuing and discontinuing operations:

Conference and Events

Print and Digital Total

$ $ $

2014

Segment revenue Total segment revenue 2,790,277 3,336,576 6,126,853

Segment results Total segment result 1,823,980 2,488,259 4,312,239

Unallocated expenses Other income 271 Occupancy expenses (393,546) Administration expenses (3,640,417) Impairment expenses - Finance costs (324,650) Other expenses (333,373)

Profit before tax (379,476) Income tax benefit (271,962)

Profit/(Loss) after tax from continuing operations (651,438) Profit/(Loss) after tax from discontinuing operations

Profit/(Loss) for the year (651,438)

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Note 26 - Segment Reporting (continued) (b) Segment information for continuing and discontinuing operations (continued)

Conference and

Events Print and

Digital Total $ $ $

2013 Segment revenue Total segment revenue 2,120,630 4,008,940 6,129,570

Segment results Total segment result 1,398,880 3,221,454 4,620,334

Unallocated expenses Other income 727 Occupancy expenses (335,474) Administration expenses (3,105,550) Impairment expenses - Finance costs (282,794) Other expenses (314,092)

Profit before tax 583,151 Income tax expense (257,943)

Profit after tax from continuing operations 325,208 Profit after tax from discontinuing operations -

Profit for the year 325,208

(c) Segment Assets and Liabilities

Due to the nature of the business, segment assets and liabilities have not been disclosed as they are not easily segregated into the reporting segments identified above. Furthermore, segmental asset and liabiity reporting is not used by the consolidated entity as part of its internal reporting.

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Consolidated Entity

2014 2013

$ $

Note 27 – earnings per share

(a) Basic earnings per share

Profit(loss) attributable to the ordinary equity holders of the consolidated entity (cents per share) from continuing and discontinued operations (0.03) 0.02

Profit(loss) attributable to the ordinary equity holders of the consolidated entity (cents per share) from continuing operations only (0.03) 0.02

Loss attributable to the ordinary equity holders of the consolidated entity (cents per share) from discontinuing operations only - -

(b) Diluted earnings per share Profit(loss) attributable to the ordinary equity holders of the consolidated entity (cents per share) from continuing and discontinued operations (0.03) 0.01 Profit(loss) attributable to the ordinary equity holders of the consolidated entity (cents per share) from continuing operations only (0.03) 0.01

Loss attributable to the ordinary equity holders of the consolidated entity (cents per share) from discontinuing operations only - -

(c) Reconciliations of earnings used in calculating basic and diluted earnings per share The following reflects the income and share data used in the basic and diluted earnings per share computations for both the basic and diluted earnings per share: Profit(loss) attributable to the ordinary equity holders of the consolidated entity used in calculating basic earnings per share from continuing and discontinued operations (651,438) 325,208 Profit(loss) attributable to the ordinary equity holders of the consolidated entity used in calculating basic earnings per share from continuing operations only (651,438) 325,208

(d) Weighted average number of shares used as the denominator Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share 20,340,592 20,097,018 Adjustments for calculation of diluted earnings per share: options 4,568,288 9,202,671 Weighted average number of ordinary shares and potential ordinary shares used as the denominator in calculating diluted earnings per share 24,908,879 29,299,689

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Note 28 – Subsequent events

Further matters which have arisen since 30 June 2014 are as follows:

- Confirmation from principle banker (NAB) regarding the extension of the loan facility until 31 March 2015 - Approval of the Research & Development Tax incentive with AusIndustry which will see a rebate of

approximately $285,000 being received during October 2014. Besides the above, there has been no further matters or circumstances, which has arisen since 30 June 2014 that has significantly affected or may significantly affect: - the operations, in financial years subsequent to 30 June 2014, of the consolidated entity, or - the results of those operations, or - the state of affairs, in financial years subsequent to 30 June 2014, of the consolidated entity.

Note 29 – Ownership structure

Beneficial Interest Class of

Country of

2014 %

2013 %

shares Incorporation

CommStrat Limited

Subsidiaries

Percival Publishing Co Pty Limited 100 100 Ordinary Australia

900 Degrees (Australia) Pty Limited 100 100 Ordinary Australia

900 Degrees (N.Z.) Limited 100 100 Ordinary New Zealand

Maxwell Printing Co (N.Z.) Limited 100 100 Ordinary New Zealand

Permax Investments Limited 100 100 Ordinary New Zealand

Hallmark Editions Pty Limited 100 100 Ordinary Australia

Note 30 – Change in accounting policy

The consolidated entity did not recognise any changes in accounting policy in the current financial year.

Note 31 – Consolidated entity details

The registered office of the consolidated entity and the principal place of business is:

CommStrat Limited Level 8, 574 St Kilda Road MELBOURNE VIC 3004

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DIRECTORS’ DECLARATION CommStrat Limited and its controlled entities for the year ended 30 June 2014

Directors’ Declaration

The Directors of the consolidated entity declare that:

1. The financial statements and notes, as set out on pages 17-54 are in accordance with the Corporations Act 2001 and:

(a) comply with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements;

(b) give a true and fair view of the financial position of the consolidated entity as at 30 June 2014 and of its performance for the year ended on that date; and

(c) as stated in note 1, the consolidated financial statements also comply with International Financial Reporting Standards.

2. This decision has been made after receiving the Chief Executive Officers and Chief Financial Officers declaration that:

(a) the financial records of the consolidated entity 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 consolidated entity 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 Directors.

A. McNab Chairman

Dated in Melbourne, this 28th day of August 2014

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INDEPENDENT AUDITOR’S REPORT CommStrat Limited and its controlled entities for the year ended 30 June 2014

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INDEPENDENT AUDITOR’S REPORT (continued)


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SUPPLEMENTARY INFORMATION CommStrat Limited and its controlled entities for the year ended 30 June 2014

Additional information required by the ASX Limited Listing Rules and not disclosed elsewhere in this report. Substantial Shareholders:

The names of the substantial shareholders listed in the CommStrat Limited’s share register at 30 June 2014 are:

Class of Shares and Voting Rights

At 30 June 2014 there were 280 holders of the ordinary shares of the consolidated entity. The voting rights attaching to the ordinary

shares are set out in the consolidated entity’s Constitution.

Distribution of shareholders as at 30 June 2014:

Size of Holding

Shareholders Fully paid ordinary

shares %

1 - 1,000 175 27,603 0.13

1,001 - 5,000 37 99,109 0.48

5,001 - 10,000 14 105,133 0.51

10,001 - 100,000 36 1,023,275 4.94

100,001 and over 18 19,462,298 93.94

280 20,717,418 100.00

Twenty Largest Holders of Fully Paid Ordinary Shares as at 30 June 2014:

Fully paid

ordinary shares

% of

total

AUST EXECUTOR TRUSTEES LTD 12,171,842 58.75

J P MORGAN NOMINEES AUSTRALIA LIMITED 2,515,099 12.14

UBS NOMINEES PTY LTD 1,011,927 4.88

ALLOP PTY LTD 637,453 3.08

YAMBLA BAY PTY 479,916 2.32

MR ROBERT FRASER & MRS TRACY FRASER 450,065 2.17

BLUE DOG GROUP PTY LTD 327,069 1.58

CHRISTOPHER ATKIN 292,650 1.41

MR TREVOR NEIL HAY 217,485 1.05

MR SCOTT CAMERON MATTHEWS 200,000 0.97

KANUMERA INVESTMENTS PTY LTD 175,000 0.85

WELSBY PROPERTIES PTY LTD 175,000 0.85

HEGFORD PTY LTD 175,000 0.85

MR THOMAS J SHAW 162,500 0.78

MCGRATH BATTYE NOMINEES PTY LTD 125,000 0.60

KEISER SHIPPING & TRANSPORT PTY LTD 116,900 0.56

MIEK PTY LTD 116,900 0.56

TAYCOL NOMINEES PTY LTD 112,492 0.54

KINGSTON PROPERTIES PTY LIMITED 100,000 0.48

MS EMMA MIRANDA STIRLING 80,000 0.39

19,642,298 94.81

Fully paid ordinary shares

Aust Executor Trustees Ltd 12,171,842

J P Morgan Nominees Australia Limited 2,515,099

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CORPORATE DIRECTORY CommStrat Limited and its controlled entities for the year ended 30 June 2014

NSW Share Registrar

Boardroom Pty Limited Level 7, 207 Kent Street, Sydney NSW 2000 Auditor

Moore Stephens Melbourne Level 10, 530 Collins Street, Melbourne, VIC 3000 Bankers

NAB Lvl 3, 255 George St Sydney NSW 2000

Solicitors

Kain Lawyers

315 Wakefield Street, Adelaide SA 5000

Stock Exchange Listing

Quotation has been granted for all the ordinary shares of the Consolidated Entity on all member exchanges of the Australian Stock Exchange Limited.

Directors

Mr A McNab Mr M Sowerby Mr N Love

Company Secretary

Kim Clark Principal & Registered Office

Level 8, 574 St Kilda Road MELBOURNE VIC 3004 Postal address: PO Box 6137 St Kilda Road Central VIC 8008 Telephone: (03) 8534 5000 Facsimile: (03) 9530 8911 Website: www.CommStrat.com.au

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