For personal use only - Home - Australian Securities …€¦ · · 2011-10-28For personal use only. For personal use only. ... Notes to the Financial Statements 28 ... Other awards

NumberPorting

SIP Trunking

Virtual PBXNumber EnterpriseServices

HostedService

My Net Fone LimitedAnnual Report 2011

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ContentsBoard of Directors 2

Chairman Review 3

What does MyNetFone stand for? 4

Our Solutions 5

Our Customers 6

Business Community 8

Directors’ Report 10

Corporate Governance Statement 18

Consolidated Statement of Comprehensive Income 24

Statement of Financial Position 25

Statement of Cash Flows 26

Statement of Changes in Equity 27

Notes to the Financial Statements 28

Directors’ Declaration 52

Auditor’s Independence Declaration 53

Independent Auditor’s Report 54

ASX Additional Information 56

Corporate Information 58

• Deloitte Technology Fast 500 Asia Pacific Awards for the 3rd consecutive year

• Deloitte Technology Fast 50 Australia Awards for the 3rd consecutive year

• City of Sydney Business Awards finalist 2010

Other awards we are proud to have earned...

AwardsThe awards received in 2011 financial year include:

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Board of Directors

Mr René Sugo B.Eng. (Hon)Technical Director

Extensive experience in telecommunications. Formerly Technical Director of Lucent Technologies. Director of Symbio Networks Pty Ltd since 2002 andSymbio Wholesale Pty Ltd since 2009.

Director since March 2006

Mr Michael Boorne Electronics Eng. Dip.Non-Executive Director

A successful entrepreneur with extensive track record in combining technical expertise with commercial and corporate experience. Founder of Sprit Modems and Mitron Pty Ltd and previously a non Executive Director of Netcomm Ltd. Also Director of Boorne Management Pty Ltd and Earglow Pty Ltd.

Director since December 2006

Ms Catherine Ly B.Bus., CPAChief Financial Officer

Company Secretary since July 2006

Mr Terry Cuthbertson B. Bus., CAChairman

A Chartered Accountant, previously partner at KPMG with extensive corporate finance expertise and knowledge. Also Director of S2 Net Ltd, Montec International Ltd, Austpac Resources N.L.,Mint Wireless Ltd, Healthzone Ltd and South American Iron & Steel Ltd and OMI Holding Ltd.


Mr Andy Fung B.E. MComManaging Director

Extensive experience in telecommunications. Formerly Director of Business Development of Lucent Technologies. Director of Symbio Networks Pty Ltd since 2002 and Symbio Wholesale Pty Ltd since 2009.


Mr SugoMr Boorne

Mr Cuthbertson

Mr FungMs Ly

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Chairman Review 3

AchievementsDuring the year MyNetFone led the market with its innovation, being the first service provider in Australia (and all of Asia Pacific) to be fully certified by Microsoft for interoperability with its revolutionary Microsoft Lync unified communications platform. This endorsement from one of the world’s largest software companies is a testament to the technical capa-bilities and quality of the team at MyNetFone, and has given us a unique advantage in the Business and Enterprise market.

In addition MyNetFone passed another milestone having deployed its 1000th Virtual PBX customer this year. The Virtual PBX system is a hosted phone system, meaning that customers do not need to purchase PBX equipment, but rather rely on a system hosted by MyNetFone in its data centre – commonly referred to as “the cloud”. This allows small to medium businesses to take advantage of leading edge technology and features without the costs and hassles of purchasing and maintaining their own equipment.

National BroadbandMyNetFone is preparing itself for the upcoming opportunities presented by the Federal Government’s National Broad-band Network (NBN). As this new network rolls out across the country it will provide an opportunity for competitive providers like MyNetFone to reach customers on a level playing field not previously seen in the Australian market. The new National Broadband Network will bring the ability to deliver high quality broadband to customers from all around the country. This will enable MyNetFone to deliver its innovative value added voice and internet services to residential and business customers alike. It will for example, facilitate the delivery of our innovative and market leading Virtual PBX service, and allow us to innovate even further to provide new products to Australian homes and businesses.

The FutureAt MyNetFone we are very excited about the opportunities that the future holds for us. We have the reputation of a solid and reliable service provider, we have the willingness and ability to innovate and create new products and services, and most importantly we have the team in place to carry us forward and allow us to grow at an ever increas-ing pace.

On behalf of the board, I would like to take this opportunity to thank all the staff and the management team in achiev-ing another very successful year. The board will continue to provide its full support to the team to ensure the company maintains its momentum of profitable growth and continues to deliver more amazing achievements and strong performance. I would also like to thank my fellow colleagues on the Board of Directors, and the Management team for their hard work and dedication in making MyNetFone one of Australia’s leading communications service providers.Most importantly I would like to thank our many shareholders for their continued and loyal support. We look forward to a very exciting year ahead which I am sure will be rewarding for all of us.

Terry CuthbertsonChairman

Fellow Shareholders,

With another year of solid growth behind it, MyNetFone has once again set new records for itself. Revenue rose by 12.5% to $13.6M due to consistent customer acquisition and delivery of new products and services. Gross profit rose by 9.8% to $5.7M yielding an EBIDTA of $1.08M and NPAT of $1.01M in what was a very tough economic climate. Now with a total base of over 92,000 services in operation, MyNetFone has established itself as a solid and credible communica-tions provider in the Australian market.

This solid performance has allowed the board to declare an annual dividend of 1.3 cents per share, (an increase of 73% on last year’s performance) rewarding shareholders for their continued loyalty. The increase in dividends reflects the Board’s confidence in the future growth potential of the business.

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MyNetFone ticks the right boxes to deliver the right solutions to satisfy our business customers’ communications

needs and is the sound choice for business customers to stay connected.

Sound Choice Breeds SuccessMyNetFone’s tagline, “Your World, Connected” encompasses the company’s culture and focus which is to

understand the customers’ needs and deliver quality communications solutions that connect customers

seamlessly with their clients, suppliers, partners and stakeholders. MyNetFone is the sound choice for customers

to stay connected within their world.

As a growing business itself, MyNetFone truly understands the needs

and aspirations of our business customers, and offers solutions that

successfully combine quality and feature rich benefits with simplicity

and flexibility. The strong uptake of these IP based communications

solutions is a testament to the increasing acceptance by customers

of new generation, innovative services with great value and benefits. MyNetFone is well positioned to serve our

customers in this increasingly Internet (IP) centric world of communications including the upcoming NBN.

What does MyNetFone stand for? 4

Reliable &sound network

Cost savingsthat sound right

Flexibilitysounds great

Customer Support Teambased in Australia

Sound technologyinnovation

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MyNetFone provides cloud hosted communications solutions to businesses of all sizes - whether they update to

a new phone system, move/expand to a new office or simply just want to make the most of their existing system

by exploiting new generation IP communications.

Our Solutions

Enterprise customers demand high service quality and reliability. MyNetFone delivers

on both counts with the most comprehensive VoIP infrastructure in Australia with

protected fibre network and built-in redundancy as well as a highy qualified and

experienced service team delivering 24/7 support backed by enterprise grade SLA’s.

Enterprise Solutions

MyNetFone delivers tailored solutions to meet the needs of business customers with“big”

business features without the high price tag. Customers could enjoy savings at up to 60%.

• Virtual PBX offers user friendly call features in the cloud without the need for up-

front investments in expensive PBX equipment.

• SIP Trunking – enables businesses to leverage their existing hardware investments

and eliminate expensive ISDN access and call costs.

MyNetFone is the first service provider in Australia

accredited to fully interwork with Microsoft’s Lync

Server.*

Business Solutions

MyNetFone offers a suite of simple to use, flexible solutions to meet the needs of home

offices and small businesses. The Small Office Solutions provide exceptional value and

help small businesses keep their overheads low and run their operations efficiently.

Small Office Solutions

* Microsoft Unified Communications Open Interoperability Program – Lync Server http://technet.microsoft.com/en-us/lync/gg131938.aspx#tab=4

Number Portability – You can

bring your phone number with

you when you join the MyNetFone.

MyNetFone Enhanced Services

Virtual Fax – You can send and

receive faxes via your email

address – no need for fax

equipment.

Meet-me Conference – You can

set up multiple calls to have a

conference, saving time and

travel.

Special Numbers – With 1300 &

1800 toll free and “gold”

numbers, you can make it easy

for your clients to reach you.

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Our Customer Stories

ChallengeAs the owner of Australia’s number one camera, video and digital store, michaels, Peter Michael recognises

that the same progression is happening in communications as in cameras – the move from analog to digital.

michaels needed a flexible system from a reliable provider that met the store’s actual communications

requirements. The business’ existing PABX was sophisticated, but it was difficult to make changes to the system

to keep up with the requirements of a dynamic business. In addition, there was a high probability that once

anything did go wrong, it would be very expensive and difficult to fix.

SolutionMyNetFone provided to michaels a Virtual PBX system with 30 lines with Cisco SPA942 desktop handsets and

supplemented by Siemens C470IP cordless handsets, ideal for the retail environment.

The system, as Peter Michael describes it, is “designed for the ‘layman’ – anybody can set it up”. The switch to

the new system was smooth that “the customers didn’t notice, the staff didn’t notice – it was virtually seamless”,

says Mr. Michael.

BenefitsPeter Michael lists the following among the benefits michaels

has gained from the new Virtual PBX system:

• Future-proof system that will keep up as the business

grows

• Flexibility to add, remove or change lines as required

• Handsets are virtually plug & play

• 50% savings on communications costs since switching

to Virtual PBX

• Improved customer communications with national

toll free 1800 numbers, as well as local numbers in

different states

“MyNetFone has been the sound choice for our business, check it out yourself and you’ll

most likely find it is the sound choice for your business”

– Peter Michael, michaels Camera Video & Digital

michaels Camera Video & Digital

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ChallengeAbigroup is one of Australia's leading national contractors with construction projects across multiple sites

nation-wide. When establishing site offices for new projects, Abigroup faces two main challenges: setting up a

phone and fax connection, and short timeframes for establishing the site offices.

At most of Abigroup’s construction sites, there are no existing landlines and installing new lines used to present

the company with a significant cost as well as a potential delay to a project’s delivery schedule.

SolutionMyNetFone’s solution addresses both of Abigroup’s communication challenges: cost and time. MyNetFone

provides Voice services over 3G internet connection to their various sites across Australia. The service is

connected to an existing phone handset and fax machine via a Voice Adaptor, delivering all communications

requirements for a small site office. Some larger sites have multiple adaptors with lines to key telephone systems.

This provides seamless telephone services to the end users. This is a solution that appears the same to the user

that found in any small to medium office at a fraction of the cost.

The solution was recommended to Abigroup by their Site Setup contractor company Sheahan & Associates

International, who investigated a number of alternatives before settling on MyNetFone as the most flexible and

efficient solution.

BenefitsThe communications solution provided by MyNetFone delivers a number of benefits to Abigroup and is the

perfect fit for their requirements.

Fast delivery MyNetFone services can be setup within hours, and the Voice Adaptor

delivered by express courier within days, so a new Site can be up and running

in minimum time. This is compared to several weeks’ worth of lead time

required for ‘traditional’ landline phone services.

Flexibility & portabilityThe portability of the MyNetFone service is a major drawcard for Abigroup – once a project is finished, the

3G Device, Voice Adaptor, phone handset and fax machine can simply be taken to another location where

there is 3G coverage, plugged in, and start working immediately.

ValueThe MyNetFone service is a very cost-efficient solution

for Abigroup’s requirements. Each combination of Voice

plan and Adaptor from MyNetFone, plus wireless modem

and internet tail sourced by Sheahan & Associates

International can be used over and over at various

projects with a low monthly voice plan fee. This is a

saving of at least 60% to 90%, depending on site

requirements, compared to Abigroup’s previous site

communications setups.

Abigroup

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8Engaging the Business Community

Award SponsorshipMyNetFone prides itself on being Australia’s most

awarded IP communications provider. Having reaped

the benefits of being recognised for service quality and

financial performance with multiple awards, in FY10/11

MyNetFone has stepped up to sponsor the City of

Sydney Business Awards and help other businesses

achieve the same recognition.

MyNetFone has a solid history with the City of Sydney

Business Awards, having been a finalist twice and

winning the award in previous years, so it was natural

progression for MyNetFone to support the awards in a

sponsor capacity.

MyNetFone's support of the City of Sydney Business

Awards reflects our commitment to helping small

businesses grow. Our services facilitate this by delivering 'big business' features without the high price-tag,

helping small businesses present themselves professionally and communicate with their customers more

efficiently.

Thought LeadershipMyNetFone aims to not only lead innovation, but also

educate business owners about the opportunities

presented by the shift to IP communications.

The ‘Let’s Talk Business’ series of seminars was the

perfect opportunity to fulfill this aim, and MyNetFone

Technical Director, Rene Sugo was invited to be a guest

speaker at the Communications-themed seminar,

which focused on informing business owners about the

developments in communications, and helping them

utilise these to run their business more efficiently.

ExposMyNetFone participated in the inaugural MyBiz Expo.

The expo provided information about the latest

products and services designed to meet the needs of

small and medium enterprises.

Our participation allowed us to reach out to the small

business community, which accounts for 96% of all

Australian businesses*.

* Australian Bureau of Statistics: Counts of Australian Businesses,

most recent - June 2009

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2011

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FOR THE YEAR ENDED 30 JUNE 2011

Your Directors present this report, together with the financial statements of the Group, being the company andits controlled entities, for the financial year ended 30 June 2011

Information on DirectorsThe Directors of the Company at any time during or since the end of the financial year are:

Name and qualifications Experience, special responsibilities and other directorship

Mr Terry Cuthbertson

B.Bus., CA

Chairman

Mr Michael BoorneElectronics Eng. Dip.

Non-Executive Director

Mr Andy FungB.E. MCom

Managing Director

Mr René Sugo B.Eng. (Hon)Technical Director

A Chartered Accountant, previously partner at KPMG with extensive

corporate finance expertise and knowledge. Also Director of S2 Net Ltd,

Montec International Ltd, Austpac Resources N.L., Mint Wireless Ltd, South

American Iron & Steel Ltd, Sun Biomedical Ltd and OMI Holdings Ltd.


A successful entrepreneur with extensive track record in combining technical

expertise with commercial and corporate experience. Founder of Sprit

Modems and Mitron Pty Ltd and previously a non Executive Director of

Netcomm Ltd. Also Director of Boorne Management Pty Ltd and Earglow Pty

Ltd.

Director since December 2006

Extensive experience in telecommunications. Formerly Director of Business

Development of Lucent Technologies. Director of Symbio Networks Pty Ltd

since 2002 and Symbio Wholesale Pty Ltd since 2009.


Extensive experience in telecommunications. Formerly Technical Director of

Lucent Technologies. Director of Symbio Networks Pty Ltd since 2002 and

Symbio Wholesale Pty Ltd since 2009.


Company Secretary

Ms Catherine Ly B.Bus., CPA, is Chief Financial Officer for the Company and has been appointed as Company

Secretary since July 2006.

My Net Fone Limited ABN 37 118 699 853 and Controlled Entities

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For the year ended 30 June 2011

Principal Activities and Significant Changes in Nature of ActivitiesThe principal activity of the Group during the course of the year was to provide VoIP telephony, broadband

Internet and other enhanced services to residential and enterprise customers.

In the financial year, the Group primarily derived its revenue from fees and call charges from residential and

enterprise customers as well as from sales of customer premises equipment.

There was no significant change in the nature of the business activities of the Group during the year.

Operating Result The consolidated profit of the Group for the financial year after providing for income tax amounted to

$1,005,197 (2010: $1,973,565).

Review of Operations

A review of the operations of the economic entity during the financial year and the results of those operations

are as follows:

1. Gross Revenue Increase and Profitable EBITDA and NPATThe Group delivered gross revenue of $13,604,905 and EBITDA profit of $1,084,700 for the year ended June 2011.

The results were achieved through organic growth of the customer numbers and service usage of MyNetFone’s

VoIP, broadband Internet and a range of enhanced services by residential and business customers. The gross

profit for the year was $5,720,047 (2010: $5,208,249) which was achieved due to the maintenance of margins.

The Net Profit After Tax (NPAT) was $1,005,197 with earnings per share at 1.91 cents.

The deferred revenue for the year increased 1.7% to $1,021,176 compared with $1,004,588 in the previous year.

The deferred revenue is the call credits deposited by the customers in their accounts for making future phone

calls. This revenue will be recognised once the customers have progressively used up the call credits.

Directors

T. Cuthbertson

A. Fung

R. Sugo

M. Boorne

Committee Meetings Attended

Board Audit

Eligible to Attend Attended Eligible to Attend Attended

11

11

11

11

11

11

11

11

2

2

2

2

2

2

2

2


Board and Committee Meetings

From 1/7/10 to 30/6/11, the Directors held 11 board meetings and 2 audit committee meetings. Each Director’s

attendance at those meetings is set out in the following table.

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Full year endedJune 2011

Full year endedJune 2010 % increase

Gross revenue

Gross Profit

EBITDA

NPAT

Earnings per share

$13,604,905

$5,720,047

$1,084,700

$1,005,197

1.91 cents

$12,091,969

$5,208,249

$2,026,149

$1,973,565

3.76 cents

12.5%

9.8%

(46.5%)

(49.1%)

(49.1%)

2. Net Cash Flow The Net Cash Flow generated from operating activities increased by $487,464 for the financial year. The closing

cash balance was $2,452,732 (2010: $1,965,268). The Company remains debt free with no overdraft or loan facili-

ties.

Business Outlook and GuidanceMy Net Fone Group continued to sign up new customers and recorded the highest number of 92,000 services in

operation as of July 2011.

The Group has experienced solid growth in the enterprise segment with the uptake of its Virtual (hosted, cloud

based) PBX service. As the service does not require significant upfront capital investments and delivers flexibility

and enhanced features, it proves to be popular with SME’s (small and medium enterprises) as well as businesses

with multiple locations, especially in some vertical market segments, e.g. retail, accounting firms. There are now

over 1,000 businesses around Australia using MyNetFone’s Virtual PBX service. This number is expected to grow

further with marketing campaigns underway to further promote the service and with the release of more

features in the financial year.

With the SIP Trunking service, the Group offers quality VoIP service to business enterprises that deploy physical

PBX equipment on their premises. Since the Group has undertaken extensive interworking testing with leading

brands of PBX equipment available on the Australian market, it expects the SIP Trunking service to grow strongly

as more businesses install new generation IP based PBX’s.

Customers moving across to take up the MyNetFone VoIP service inevitably want to retain their telephone

numbers as a number change would be detrimental to on-going business operations. The Group has now devel-

oped comprehensive, field proven systems and processes to implement number portability, whereby new

customers to the MyNetFone service are able to keep their existing telephone numbers. The Group’s capability

to offer number portability efficiently and seamlessly is a key market differentiator.

An innovative product which has enjoyed strong growth is MyNetFone’s Virtual Fax, with which customers can

send and receive faxes using their computer, without a fax machine. The Group will continue to develop innova-

tive IP based services that offer flexibility and convenience.

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Financial PositionThe net assets of the company have marginally increased to $386,523 as at June 2011 from $13,572 of the same

period last year due to business growth.

Significant Changes in the State of AffairsNo other significant changes in the economic entity's state of affairs occurred during the financial year.

After Balance Date EventsThe My Net Fone Board entered into Head of Agreement on 24 August, 2011 to acquire the whole of Symbio

Group. The details of this agreement were released to the market on 30 August 2011.

Except for the above, there were no other significant events after the balance date that would materially alter

the operations or financial performance of the company.

Future DevelopmentsDisclosure of information regarding likely developments in the operations of the consolidated entity in future

financial years and the expected results of those operations is likely to result in unreasonable prejudice to the

consolidated entity. Accordingly, this information has not been disclosed in this report.

Environmental IssuesThe Group’s operations are not regulated by any significant environmental regulation under a law of the

Commonwealth or of a State or Territory.

Dividends Paid or RecommendedDividends paid or declared for payment during the financial year are as follows:

Ordinary dividend paid on 15 October 2010 as recommended in last year’s report $394,166

Interim dividend of $0.05 cents per share paid on 18 March 2011 $262,778

Final ordinary dividend of $0.08 cents per share recommended to be paid 8 September 2011 to

shareholders registered at 25 August 2011 in respect of the financial year ended 30 June 2011 $420,444

The dividends are unfranked.


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OptionsAt the date of this report, the unissued ordinary shares of My Net Fone Limited under option as follows:

Grant Date Date of Expiry Exercise price Number under Option

29 July 2010

26 October 2010

26 October 2010

31 August 2013

31 October 2013

31 October 2013

10 cents

14 cents

14 cents

400,000

2,000,000

1,000,000

A total of 3,000,000 options issued to directors were approved by the shareholders in the AGM held on 26

October 2010.

For details of options issued to directors and executives as remuneration, refer to the remuneration report.

Remuneration Report

Remuneration Philosophy

The remuneration philosophy of the Board currently is to recognise that in the early stage of growth the com-

pany needs to contain operating costs and so the salaries established for the Executive Directors are negotiated

at rates below market levels that would normally be available to persons with such experience and qualifica-

tions. At this time the Board has established salary arrangements for the key executives which is commensurate

with their level of experience. As the company matures the Board will review its approach to setting remunera-

tion levels by balancing short and long term benefits and linking remuneration to performance. The Board may

issue options to employees under the Company Employee Option Plan as set out in Note 13 to the financial

statements.

Remuneration Details of Key Management Personnel for the Year Ended 30 June 2011

For all the Key Management Personnel, only basic salaries and fees, bonuses and superannuation were granted

during the year, no other short term benefit, long term benefit, performance related or share based payments

were paid in the year except for the options disclosed above. No bonuses were granted during the year.

Details of the nature and amount of benefits and payments for each Director of the Company and each of the

named company executives who receives the highest remuneration are:For

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Group Key Management

Personnel

Bonus$

Non-executive

Mr T. Cuthbertson

Mr M. Boorne

Executive

Mr A. Fung (Managing Director)

Mr R. Sugo (Technical Director)

Total

Management Executives

Mr L. Tai (Director)

Ms C. Ly (Chief Financial Officer)

Total

59,125

37,625

208,555

208,555

513,860

60,000

127,085

187,085

5,321

3,386

18,770

18,770

46,247

5,400

11,438

16,838

7,141

7,141

14,281

14,281

42,844

-

4,067

4,067

71,587

48,152

241,606

241,606

602,951

65,400

142,590

207,990

(Only two specified executives are included in the disclosure as there are only four specified executives in total employed in the Company in 2011, two of whom are Executive Directors disclosed above.)

Directors



Salary & fees$

Short Term Benefits

Superannuation$

PostEmployment

BenefitsShare Based

Payment Options Total

$

-

-

-

-

-

-

-

-

Options$

Securities Received that are Not Performance RelatedNo members of key management personnel are entitled to receive securities which are not performance based

as part of their remuneration package.

Share Based PaymentsThe terms and conditions relating to options granted as remuneration during the year to key management

personnel and other executives during the year are as follows:

These share based payments are for the options disclosed above. The details and valuation of these options

are set out in Note 13 to the financial statements. The fair value of the option was valued at grant date at 1.43

cents and 2.03 cents for 3 million and 200,000 options respectively.

The 3 million options were approved by shareholders in the AGM held on 26 October 2010; and 400,000 options

were granted under the Company Employee Option Plan by the board on 29 July 2010.

Group KeyPersonnel

Option(’000)

GrantDate

Grant Value$

VestedDuring Year

%

Expiry Date forVesting

Mr T. Cuthbertson

Mr M. Boorne

Mr A. Fung

Mr R. Sugo

Ms C. Ly

500

500

1,000

1,000

200

26/10/10

26/10/10

26/10/10

26/10/10

29/07/10

7,141

7,141

14,281

14,281

4,067

-

-

-

-

-

31/10/2013

31/10/2013

31/10/2013

31/10/2013

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The Company has entered into Executive Employment Agreements with Andy Fung and Rene Sugo. The

remuneration and terms of employment for other Key Executives are also set out in written agreements. Each

of these employment agreements are unlimited in term but may be terminated by written notice by either

party and by the Company making payment in lieu of notice.

Each of these agreements sets out the arrangements for total fixed remuneration, performance-related cash

bonus opportunities, superannuation, termination rights and obligations and eligibility to participate in the

employee equity-based incentive scheme. Executive salaries are reviewed annually. The Executive

Employment Agreements do not require the Company to increase base salary, incentive bonuses or to

continue the participants’ participation in equity-based incentive programs.

The Company may terminate the employment of the Key Executive without notice and without payment in

lieu of notice in some circumstances. This includes if the executive:

1. commits an act of serious misconduct;

2. commits a material breach of the Executive Employment Agreement;

3. denigrates or engages in any behaviour that may materially damage the reputation of, or otherwise

bring, the Company into disrepute; or is convicted of any criminal offence which would in the

reasonable opinion of the Board of Directors adversely affect the carrying out of the executive’s duties.

The Company may terminate the employment of the Key Executive at any time by giving the executive

notice of termination or payment in lieu of such notice. The amount of notice required from the Company

in these circumstances is set out in the following table:



Name of key executive Company notice period Employee notice period Termination provision

Andy Fung 1 month 1 month 1 month base salary

René Sugo 1 month 1 month 1 month base salary

Leo Tai 1 month 1 month 1 month base salary

Catherine Ly 1 month 1 month 1 month base salary

Directors’ Interests in Shares and Options of the Company or Related Bodies CorporateAt the date of this Report, the particulars of shares and options held by the Directors of the company in the

company or in related bodies corporate which are required to be declared in the register of Directors' share

holdings are as follows:

Name of Director Share holding Options

Mr Andy Fung 13,488,955

Mr René Sugo 13,488,955

Mr Terry Cuthbertson 1,125,000

Mr Michael Boorne 4,225,533

Total 32,328,443

1,000,000

1,000,000

500,000

500,000

3,000,000

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Directors’ BenefitsNo Director has received or has become entitled to receive, during or since the financial year, a benefit

because of a contract made by the company, controlled entity or related body corporate with a Director, a

firm which a Director is a member of or an entity in which a Director has a substantial financial interest.

Indemnifying Officer or AuditorNo indemnities have been given or agreed to be given or insurance premiums paid or agreed to be paid,

during or since the end of the financial year, to any person who is or has been an officer or auditor of the

company.

Proceedings on Behalf of CompanyNo person has applied for leave of Court to bring proceedings on behalf of the company or intervene in any

proceedings to which the company is a party for the purpose of taking responsibility on behalf of the

company for all or any part of those proceedings. The company was not a party to any such proceedings

during the year.

Non-Audit ServicesThere were no amounts paid or payable to the auditors for non-audit services during the year.

Auditor’s Independence DeclarationA copy of the auditor's independence declaration as required under section 307C of the Corporations Act

2001 has been received and can be found on page 56 of the financial report.

This Directors’ Report, incorporating the remuneration report, is signed in accordance with a resolution of the

Board of Directors.



Terry CuthbertsonChairman

Andy FungManaging Director

Sydney, 31 August 2011

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The Board of Directors of My Net Fone Limited is responsible for the corporate governance practices of the

consolidated entity. The Board guides and monitors the business and affairs of My Net Fone Limited on behalf

of the shareholders by whom they are elected and to whom they are accountable.

This statement outlines the main corporate governance practices adopted by the Company, which comply

with the ASX Corporate Governance Council Principles and Recommendations (2nd Edition, August 2007)

unless otherwise stated.

Principle 1: Lay solid foundations for management and oversight

The Board’s primary role is the protection and enhancement of long term shareholder value. To fulfil this role,

the Board is responsible for the overall corporate governance of the Group including formulating its strategic

direction, approving and monitoring capital expenditure, setting senior Executive and Director remuneration,

establishing and monitoring the achievement of management’s goals and ensuring the integrity of risk

management, internal control, legal compliance and management information systems. It is also responsible

for approving and monitoring financial reporting. The Board has delegated responsibility for the day to day

operation and administration of the Company to the Managing Director.

Principle 2: Structure the board to add value

The skills, experience and expertise relevant to the position of Director held by each Director in office at the

date of the annual report is included in the Directors’ Report. Directors of My Net Fone Limited are considered

to be independent when they are independent of management and free from any business or other

relationship that could materially interfere with, or could reasonably be perceived to materially interfere with,

the exercise of their unfettered and independent judgement.

The membership of the Board during the year ended 30 June 2011, including independent status, and date of

appointment was as follows:

Recommendation 2.1 requires that a majority of the Board should be Independent Directors. The Company

does not comply with this recommendation. The Board is 50% independent. Whilst the Company agrees with

the benefits of a majority Independent Directors, it believes that it can better achieve the results of the

Company with the current Board’s level of expertise without burdening shareholders with the additional costs

associated with adding further Independent Directors.

Recommendation 2.2 requires the Chairman be an Independent Director. The Company complies with this

recommendation. The Company believes that when the Chairman is a significant driver behind the business as

well as being a shareholder, he adds much value to the Company.

Name

Terry Cuthbertson

Michael Boorne

Andy Fung

Rene Sugo

Status

Non-Executive Independent Chairman

Non-Executive Independent Director

Executive Director

Executive Director

Date of Appointment

08 March 2006

19 December 2006

08 March 2006

08 March 2006


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Recommendation 2.3 requires that the role of the Chairman and Chief Executive Officer of the Company is not

exercised by the same individual. The Company complies with this recommendation as the Chairman and the

Managing Director are two separate individuals.

Independent Directors

An Independent Director is considered independent:

a) who is not a member of management

b) who has not within the last three years been employed in an executive capacity by the

Company or been a principal or a professional adviser or consultant to the Company

c) is not a significant supplier to the Company

d) has no material contractual relationship with the Company other than as a Director, and

e) is free from any interest or business or other relationship, which could materially interfere with

the Director’s ability to act in the best interests of the Company

Based on the above criteria, two Non-Executive Directors including the Chairman were considered

independent during the financial year.

Independent Professional Advice and Access to Company Information

Each Director has the right of access to all relevant Company information and to the Company’s executives

and subject to prior consultation with the Chairman, may seek independent professional advice at the

company’s expense. A copy of advice received by the Director is made available to all other members of the

Board.

Board Processes

The Board has mandates and operating procedures which are reviewed on a regular basis. The Board has also

established a range of policies which govern its operation.

The Board holds a scheduled meeting every month and any other strategic meetings as and when

necessitated by the Company’s operations. The agenda for the meetings is prepared through the input of the

Chairman and the Company Secretary. Standing items include matters of Compliance and Reporting,

Financials, Shareholder Communications and Investment Strategy and Outcomes. Submissions are circulated

in advance.

With the exception of the Managing Director, Directors must retire by rotation and stand for re-election at the

AGM each year.

A performance evaluation for the Board and senior Executives has taken place in the reporting period.


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The Board Committees

Nomination Committee Recommendation 2.4 states that the Board should establish a Nomination Committee. Due to the size of the

Company it has not established a formal Nomination Committee and the functions of the Nomination

Committee are undertaken by a full Board. The composition of the Board is monitored (both in respect of size

and membership) to ensure that the Board has a balance of skill and experience appropriate to the needs of

the Company. When a vacancy arises, the Board will identify candidates with appropriate expertise and

experience and appoint the most suitable person.

Remuneration CommitteeRecommendation 8.1 states that the Board should establish a Remuneration Committee. Due to the size of the

Company it has not established a formal Remuneration Committee and the functions of the Remuneration

Committee are undertaken by a full Board. Non-Executive Directors are remunerated by way of director fee

and superannuation contributions.

The Chairman and the other Non-Executive Director of My Net Fone Limited are also Directors of several listed

and non-listed companies and are further remunerated by those Companies. Further detail is provided in the

Directors’ Report.

Audit CommitteeDue to the size of the Company it has not established a formal Audit Committee and the functions of the Audit

Committee are undertaken by a full Board. The Board is responsible for considering the effectiveness of the

systems and standards of internal control, financial reporting and any other matter at the request of the Board.

The external auditors attend meetings by invitation to report to the Board.

The Audit responsibilities of the Board are to ensure that:

• relevant, reliable and timely information is available to the Board to monitor the performance of

the Company

• external reporting is consistent with committee members’ information and knowledge and is

adequate for shareholder needs

• management process supports external reporting in a format which facilitates ease of understanding

by shareholders and institutions

• the external audit arrangements are adequate to ensure the maintenance of an effective and

efficient external audit involving,

review of the terms of engagement, scope and auditor’s independence;

recommendation as to the appointment, removal and remuneration of an auditor;

review of the provision of non-audit services provided by the external auditor ensuring

they do not adversely impact on audit independence.

• a review of the Company’s risk profile and an assessment of the operation of the Company’s

internal control system is performed.

The external auditor is required to attend the Annual General Meeting and is available to answer

shareholder questions. The Board as a whole monitors the performance of the annual & half-yearly audit

performed by the External Auditor. For details on the number of meetings of the audit committee held during

the year and the attendees at those meetings, refer to the Directors’ Report.

***


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Principle 3: Promote ethical and responsible decision making

The Board expects all Executive and Non-Executive Directors to act professionally in their conduct and with the

utmost integrity and objectivity. All Executive and Non-Executive Directors must comply with the Company’s

Code of Conduct and Ethics (Recommendation 3.1).

The company encourages Directors to have a significant personal financial interest in My Net Fone Limited by

acquiring and holding shares on a long-term basis. Insider trading laws prohibit Directors and their associates

from dealing in the Company’s shares whilst in possession of price sensitive information that is not generally

available. Once the Directors have traded in shares or otherwise dealt with any securities, they should

immediately disclose this to the Board and Company Secretary to facilitate appropriate disclosure with ASX. A

Director or an entity controlled by Directors is not permitted to purchase or sell shares in the Company at other

times without prior consent of the Board. This policy does not preclude a Director or an entity controlled by a

Director from taking up or renouncing an entitlement to the Company’s shares or participating in the

Company’s Share Purchase Plan or the Dividend Reinvestment Plan (Recommendation 3.2).

Trading PolicyThe company’s policy regarding Directors trading in its securities restricts them from acting on material

information until it has been released to the market and adequate time has been given for it to be reflected in

the security’s prices.

The company has adopted a Securities Trading Policy disallowing Directors and employees from dealing in the

Company’s securities in the period between the end of the Company’s half year/full year and the lodgement

of those profit announcements with the ASX. Directors and employees also require the approval of the Board

prior to trading in the Company’s securities.

A copy of the Securities Trading Policy is available on the Company’s website at www.mynetfone.com.au in

the Corporate Governance section.

Principle 4: Safeguard integrity in financial reporting

The Company’s Board is committed to ensuring the adoption of processes which are aimed at providing

assurance that the financial statements and related notes are in accordance with applicable accounting

standards and provide a true and fair view. Compliance with these procedures and policies is subject to review

by the external Auditor. The Board also evaluates the performance and independence of the external Auditor

on an annual basis.

The Managing Director and the Chief Financial Officer provide the Board with written confirmation that the

Company’s financial reports present a true and fair view, in all material respects, of the Company’s financial

condition and that the operational results are in accordance with relevant accounting standards.


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Principle 6: Respect the rights of shareholders

Shareholders are entitled to vote on significant matters affecting the business which include the election and

remuneration of Directors, changes to the constitution and receipt of annual and interim financial statements.

Shareholders are strongly encouraged to attend and participate in the Annual General Meeting of

My Net Fone Limited to lodge questions to be responded by the Board and/or the Managing Director, and are

able to appoint proxies.

The Board informs shareholders of all major developments affecting the Company’s state of affairs on the

Company’s website at www.mynetfone.com.au.

A hard copy Annual Report will be mailed to shareholders who have requested to receive one at the close of

the financial year. An electronic version of the Annual Report will be available on the Company’s website.

The Company Secretary is responsible for ensuring My Net Fone Limited complies with its continuous disclosure

obligation and in conjunction with the Chairman, will decide whether any price sensitive information they

become aware of should be disclosed to the ASX. Where possible, all continuous disclosure releases to the ASX

are approved by the Board. Where time does not permit approval by the Board, the Chairman must approve

the release. Any information of a material nature affecting the Company is disclosed to the market through

release to the ASX as soon as the Company becomes aware of such information, in accordance with the ASX

Continuous Disclosure requirement.

Principle 7: Recognise and manage risk

The Board acknowledges that it is responsible for the overall system of internal control but recognises that no

cost effective internal control system will preclude all errors and irregularities. The Board has responsibility for

reviewing the risk profile and reporting on the operation of the internal control system. The Board (a) requires

executive management to report annually on the operation of internal controls (b) reviews the external audit

of internal controls and liaises with the external auditor and (c) conducts any other investigations and obtains

any other information it requires in order to assess the effectiveness of the internal control system. In respect of

the current financial year all necessary declarations have been submitted to the Board.

The Board identifies the following business risks as having the potential to significantly or materially affect the

company’s performance (a) administrative risks including operational, compliance and financial reporting (b)

market related risks.


Principle 5: Make timely and balanced disclosure

The Company’s Board is committed to keeping the investment community including shareholders and

regulators fully informed, in a timely and accessible manner, of events and risks that impact the Company. The

Board complies with its continuous disclosure obligations, as defined under the Corporations Act and ASX

Listing Rules, in respect of price sensitive information which is lodged with the ASX as soon as practicable and

before disclosure to external parties.

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Administrative Risks

The Managing Director is responsible for recognising and managing administrative risks including (a)

operational, (b) compliance and (c) financial reporting. The Managing Director and the Chief Financial Officer

provide a declaration to the Board to certify that the Company’s financial statements and notes present a true

and fair view in all material respects of the Company’s financial condition and operational results and that

they have been prepared and maintained in accordance with relevant Accounting Standards and the

Corporations Act 2001. In respect of the current financial year all necessary declarations have been submitted

to the Board. In addition, the Managing Director and the Chief Financial Officer will confirm in writing to the

Board that the declaration provided above 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.

Market Risks

The Board is primarily responsible for recognising and managing market related risks. In respect of the current

financial year, all necessary declarations have been submitted to the Board. The Board performs a risk review

on an annual basis to ensure that adequate controls are in place to mitigate risk associated with market risk,

fraud, transaction reporting errors, material reporting risks and compliance risk.

Principle 8: Remuneration fairly and responsibly

The Company’s remuneration policy and practices are designed to attract, motivate and retain high quality

staff. The Remuneration Report in the Director’s Report provides detail of remuneration of Non-Executive and

Executive Directors.

The Company’s Employee Share Option Scheme was approved by shareholders at the Company’s listing on

the ASX. Under this scheme, share options were issued to some senior staff members in this financial year. It is

expected more high quality staff will be issued share options in future.

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Consolidated Statement of Comprehensive Income 24

Note

$ $

Revenue

Rendering of services

Cost of sales

Gross profit

Finance revenue

Other income

Distribution expenses

Marketing expenses

Occupancy expenses

Administrative expenses

Technology and support expenses

Other expenses

Finance costs

Profit/(Loss) before income tax

Income tax (expense)/benefit

Profit/(Loss) from continuing operations

Profit/(Loss) for the year

Other comprehensive income

Total comprehensive income for

the year net of tax

Total comprehensive income for the year

13,604,905

(7,884,858)

5,720,047

105,807

70,710

(119,348)

(586,444)

(219,482)

(3,428,443)

(120,000)

(354,791)

(18,506)

1,049,550

(44,353)

1,005,197

1,005,197

-

-

1,005,197

3.(a)

3.(a)

3.(b)

3.(c)

4

2011 2010

12,091,969

(6,883,720)

5,208,249

55,522

70,368

(143,471)

(372,379)

(214,750)

(3,111,345)

(120,000)

(342,744)

(18,649)

1,010,801

962,764

1,973,565

1,973,565

-

-

1,973,565

Earnings per share (cents per share)

- basic for profit for the year 1.91 3.76

- diluted for profit for the year 1.80 3.76

The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.



CONSOLIDATED GROUP

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AS AT 30 JUNE 2011

CONSOLIDATED GROUP

$ $

ASSETS

Current Assets

Cash and cash equivalents

Trade and other receivables

Other financial assets

Total Current Assets

Non-current Assets

Property, plant and equipment

Deferred income tax assets

Formation cost

Total Non-current Assets

TOTAL ASSETS

LIABILITIES

Current Liabilities

Trade and other payables

Deferred revenue

Provisions

Total Current Liabilities

Non-current Liabilities

Provisions

Total Non-current Liabilities

TOTAL LIABILITIES

NET ASSETS

EQUITY

Issued capital

Share based payment reserve

Accumulated losses

TOTAL EQUITY

2,452,732

392,150

62,128

2,907,010

49,562

918,411

1,950

969,923

3,876,933

1,728,310

1,021,176

648,742

3,395,228

92,182

92,182

3,490,410

386,523

3,990,515

1,099,309

(4,703,301)

386,523

5.

6.

7.

8.

4.

8.

9.

10.

11.

11.

12.

2011 2010

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


1,965,268

190,156

62,128

2,217,552

84,712

962,764

1,950

1,049,426

3,266,978

1,606,239

1,004,588

596,996

3,207,823

45,583

45,583

3,253,406

13,572

3,990,515

1,048,333

(5,025,276)

13,572

Statement of Financial Position

Note

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Statement of Cash Flows 26

$ $

Cash flows from operating activities

Receipts from customers

Payments to suppliers and employees

Interest received

Borrowing costs

Net cash provided by/(used in) operating activities

Cash flows from investing activities

Purchase of property, plant and equipment

Decrease/ (Increase) in security deposit

Net cash provided by/(used in) investing activities

Cash flows from financing activities

Payment of dividends on ordinary shares

Net Cash provided by/(used in) financing activities

Net increase/(decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of financial year

Cash and cash equivalents at end of financial year

14,850,699

(13,793,592)

105,807

(18,506)

1,144,408

-

-

-

(656,944)

(656,944)

487,464

1,965,268

2,452,732

5.

8.

7.

5.

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


13,680,551

(12,901,300)

55,522

(18,650)

816,123

-

-

-

-

-

816,123

1,149,145

1,965,268


CONSOLIDATED GROUP 2011 2010

Note

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Issued Capital

$ $ $ $CONSOLIDATED GROUP

As at 1 July 2009

Profit for the year

Other comprehensive income for the year

Total recognised income and expense for the year

Dividends paid and provided

Share based payments

As at 30 June 2010

Profit for the year

Other comprehensive income for the year

Total recognised income and expense for the year

Dividends paid and provided

Share based payments

As at 30 June 2011

3,990,515

-

-

-

-

-

3,990,515

-

-

-

-

-

3,990,515

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

Share basedpayment &

other

AccumulatedLosses Total

1,048,333

-

-

-

-

-

1,048,333

-

-

-

-

50,976

1,099,309

(6,604,675)

1,973,565

-

1,973,565

(394,166)

-

(5,025,276)

1,005,197

-

1,005,197

(683,222)

-

(4,703,301)

(1,565,827)

1,973,565

-

1,973,565

(394,166)

-

13,572

1,005,197

-

1,005,197

(683,222)

50,976

386,523



Statement of Changes in Equity

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1. CORPORATE INFORMATION These consolidated statements and notes represent those of My Net Fone Limited and Controlled Entities (The

Consolidated Group).

The separate financial statements of the parent entity, My Net Fone Limited, have not been presented within this

financial report as permitted by the Corporations Act 2001.

The financial statements were authorised for issue on 31 August 2011 by the Directors of the company.

The nature of the operations and principal activities of the Group are described in the Directors' Report.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Basis of Preparation The financial statements are general purpose financial statements that have been prepared in accordance

with Australian Accounting Standards, Australian Accounting Interpretations, other authoritative

pronouncements of the Australian Accounting Standards Board (AASB) and the Corporations Act 2001.

Australian Accounting Standards set out accounting policies that the AASB has concluded would result in

financial statements containing relevant and reliable information about transactions, events and

conditions. Compliance with Australian Accounting Standards ensures that the financial statements and

notes also comply with International Financial Reporting Standards as issued by the IASB. Material

accounting policies adopted in the preparation of these financial statements are presented below and

have been consistently applied unless otherwise stated.

The financial report has been prepared on an accruals basis and is based on historical costs, modified,

where applicable, by the measurement at fair value of selected non-current assets, financial assets and

financial liabilities.

(b) Adoption of New and Revised Accounting Standards Certain new accounting standards and interpretations have been published that are not mandatory for

the 30 June 2011 reporting period. The Group's assessment of the impact of these standards (to the extent

relevant to the Group) and interpretations is set out below:

(i) AASB 9 Financial Instruments and AASB 2009-11 Amendments to Australian Accounting Standards arising

from AASB 9 and AASB 2010 Amendment to Australian Accounting Standards arising from AASB 9

(December 2010) (effective from 1 January 2013)

AASB 9 Financial Instruments addresses the classification, measurement and derecognition of financial

assets and financial liabilities. The standard is not applicable until 1 January 2013 but is available for early

adoption. The Group has not yet decided when to adopt AASB 9. However, it is not expected this will have

a significant impact on the Group's financial statements.

(ii) Revised AASB 124 Related Party Disclosures and AASB 2009-12 Amendments to Australian Accounting

Standards (effective from 1 January 2011)

In December 2009 the AASB issued a revised AASB 124 Related Party Disclosures. It is effective for account-

ing periods beginning on or after 1 January 2011 and must be applied retrospectively. The amendment

clarifies and simplifies the definition of a related party and removes the requirement for government-

related entities to disclose details of all transactions with the government and other government-related

entities. The Group will apply the amended standard from 1 July 2011. The amendments will not have any

effect on the Group's financial statements.


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2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) (b) Adoption of New and Revised Accounting Standards (continued) (iii) AASB 2010-6 Amendments to Australian Accounting Standards – Disclosures on Transfers of Financial

Assets (effective for annual reporting periods beginning on or after 1 July 2011)

In November 2010, the AASB issued AASB 2010-6 Disclosures on Transfers of Financial Assets which amends

AASB 1 First-time Adoption of Australian Accounting and AASB 7 Financial Instruments: Disclosures to intro-

duce additional disclosures in respect of risk exposures arising from transferred financial assets. The Fund

intends to apply the amendment from 1 July 2011, however, the amendments will not have any impact

on the Group's disclosures.

(iv) Amendments to AASB 2010-4 Further Amendments to Australian Accounting Standards arising from the

Annual Improvements Project (effective for annual reporting periods beginning on or after 1 July 2010 / 1

January 2011)

In June 2010, the AASB made a number of amendments to Australian Accounting Standards as a result of

the IASB's annual improvements project. The Group does not expect that any adjustments will be necess-

ary as the result of applying the revised rules.

(v) AASB 1053 Application of Tiers of Australian Accounting Standards and AASB 2010-2 Amendments to

Australian Accounting Standards arising from Reduced Disclosure Requirements (effective from 1 July 2013)

On 30 June 2010 the AASB officially introduced a revised differential reporting framework in Australia. Under

this framework, a two-tier differential reporting regime applies to all entities that prepare general purpose

financial statements. The Company is listed on the ASX and is not eligible to adopt the new Australian

Accounting Standards – Reduced Disclosure Requirements. The two standards will therefore have no

impact on the financial statements of the entity.

(vi) AASB 2010-8 Amendments to Australian Accounting Standards – Deferred Tax: Recovery of Underlying

Assets (effective from 1 January 2012)

In December 2010, the AASB amended AASB 112 Income Taxes to provide a practical approach for

measuring deferred tax liabilities and deferred tax assets when investment property is measured using the

fair value model. AASB 112 requires the measurement of deferred tax assets or liabilities to reflect the tax

consequences that would follow from the way management expects to recover or settle the carrying

amount of the relevant assets or liabilities, that is through use or through sale. The amendment introduces a

rebuttable presumption that investment property which is measured at fair value is recovered entirely by

sale. The Group will apply the amendment from 1 July 2012. The amendments are not expected to impact

the Group.

(c) Principles of Consolidation The consolidated financial statements incorporate the assets, liabilities and results of entities controlled by

My Net Fone Limited at the end of the reporting period. A controlled entity is any entity over which My Net

Fone Limited has the ability and right to govern the financial and operating policies so as to obtain

benefits from the entity’s activities. Control will generally exist when the parent owns, directly or indirectly

through subsidiaries, more than half of the voting power of an entity. In assessing the power to govern, the

existence and effect of holdings of actual and potential voting rights are also considered.

In preparing the consolidated financial statements, all inter-group balances and transactions between

entities in the consolidated group have been eliminated on consolidation. Accounting policies of sub-

sidiaries have been changed where necessary to ensure consistency with those adopted by the parent

entity.


Notes to the Financial Statements (continued)


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2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(d) Going Concern The Directors believe that the Group will be able to continue as a going concern and, as a consequence,

the financial report has been prepared on a going concern basis. This basis presumes that funds will be

available to finance future operations and the realisation of assets and settlement of liabilities will occur in

the normal course of business.

The Group incurred an operating profit of $1,005,197 (2010: $1,973,565) during the year ended 30 June

2011, and as at that date the Group's total assets exceeded total liabilities by $386,523 (2010: Group's total

assets exceeded liabilities by $13,572).

1/ Included in the current liabilities is $1,021,176 of deferred revenue which will be recognised as 2012

revenue when customers' credits are progressively used up. This deferred revenue does not represent a

gross cash outflow.

2/ Of the total amount of $1,600,388 of trade payables, $160,074 is owed to Symbio Networks Pty Ltd and

$1,342,083 is owed to Symbio Wholesale Pty Ltd; both of which are related parties to My Net Fone. Symbio

Networks and Symbio Wholesale have agreed to an extended payment term of the payable at a

commercial interest rate similar to bank overdraft to My Net Fone.

The Directors believe that the going concern basis of accounting is appropriate due to the expected cash

flows to be generated by the Group over the next twelve months. The Directors will closely monitor cash

flows as the Group grows and if revenues do not increase as expected, the Directors will look to contain

costs and negotiate with the related party supplier Symbio Networks to change and extend payment

terms. The Directors believe that these actions, if required, will be sufficient to ensure that the company will

be able to pay its debts as and when they fall due for the next twelve months at least.

Notwithstanding the above, the Directors acknowledge that there are a number of risk factors that could

materially affect the Group's future profitability and cash flows, which include, but are not limited to:

(i) Competition

There can be no assurance given in respect of the Group's ability to continue to compete profitably in the

competitive markets in which the Group operates. The potential exists for change in the competitive

environment in which the Group operates.

(ii) Management of Growth

The Group achieved a profit for FY10/11, however, there is still a risk the Group will have insufficient working

capital to meet its business requirements and the expansion of the Group will depend upon the ability of

management to implement and successfully manage the Group's growth strategy.

(iii) Reliance on Key Management

The responsibility of overseeing the day-to-day operations and strategic management of the Group is

substantially dependent upon its senior management and its key personnel. There can be no assurance

given that there will be no detrimental impact on the Group if one, or a number of, these employees

cease their employment.

(iv) New Products and Technological Developments

The Group's current core business of broadband telecommunications is highly competitive and is subject

to the introduction of new and improved products and services into the market on a regular basis.




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(d) Going Concern (Continued)

(v) Broadband Access Arrangements

The Group currently has certain access to the Internet backbone network. Terms of the supply of broad-

band are negotiated regularly. There is no guarantee that future access arrangements will be able to be

negotiated on acceptable terms.

(vi) Distribution Channels and Device Suppliers

Currently the Group benefits from its good working relationship with its distribution channels to promote its

products and services and with its device suppliers to provide its VoIP adaptors. There is no guarantee that

these relationships will continue in the future.

(vii) Agreement with Symbio

The Group is dependent upon the supply of services by Symbio pursuant to its contracts with Symbio

Networks Pty Ltd and Symbio Wholesale Pty Ltd, details of which are set out at Note 19. If, notwithstanding

its contractual obligations, Symbio were to fail to supply the group, there is no guarantee that the Group

could either obtain these services from another party or provide them itself in the short term.

(viii) Legislation, Regulation and Policies

Any material adverse changes in government or other regulatory organisation policies or legislation which

impacts on the telecommunications industry, may affect the viability and profitability of the Group.

(ix) Internet Access

The use of VoIP technology is dependent on quality and speed of access to the Internet. The market

growth of VoIP may be limited by the take up rate of broadband and other fast Internet access or by the

quality of such access.

(e) Reverse Acquisition

In accordance with AASB 3 Business Combinations, when My Net Fone Limited (the legal parent) acquired

My Net Fone Australia Pty Limited (the legal subsidiary), the acquisition was deemed to be a reverse

acquisition since the substance of the transaction was that the existing shareholders of My Net Fone

Australia Pty Limited have, through My Net Fone Australia Pty Limited, effectively acquired My Net Fone

Limited. Under reverse acquisition accounting, the consolidated financial statements are prepared as if

My Net Fone Australia Pty Limited had acquired My Net Fone Limited, not vice versa as represented by the

legal position.

(f) Critical Account Estimates and Judgments

The Directors evaluate estimates and judgments incorporated into the financial statements based on

historical knowledge and best available current information. Estimates assume a reasonable expectation

of future events and are based on current trends and economic data, obtained both externally and within

the Group. Key estimates that have a significant risk of causing adjustments to the carrying amounts of

certain assets and liabilities within the next annual reporting period are:




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(f) Critical Account Estimates and Judgments (Continued)

Share-based payment transactions

The Group measures the cost of equity-settled transactions with employees by reference to the fair value

of the equity instruments at the date at which they are granted. The fair value is determined by an

independent valuer using a Black-Scholes model. The assumptions are detailed in Note 13.

(g) Revenue Recognition

Revenue is measured at the fair value of the consideration received or receivable after taking into

account any trade discounts and volume rebates allowed. The following specific recognition criteria must

also be met before revenue is recognised:

(i) Rendering of services

Revenue from telecommunication services are recognised when the services are provided to the

customer.

Deferred revenue represents the unused proportion of cash received in advance for call credits

determined on a specific account basis at balance date.

(ii) Interest income / Finance revenue

Interest revenue is recognised using the effective interest rate method, which, for floating rate financial

assets, is the rate inherent in the instrument.

(h) 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.

Lease incentives under operating leases are recognised as a liability and amortised on a straight-line basis

over the life of the lease term.

(i) Cash and Cash Equivalents

Cash and cash equivalents in the statement of financial position comprise cash at bank and in hand and

short-term deposits with an original maturity of three months or less that are readily convertible to known

amounts of cash and which are subject to an insignificant risk of changes in value.

For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash

equivalents as defined above, net of outstanding bank overdrafts.

(j) Trade and Other Receivables

Trade receivables and other receivables, which generally have 30-90 day terms, are recognised and

carried at original invoice amount less an allowance for any uncollectible amounts.

An allowance for doubtful debts is made when there is objective evidence that the Group will not be able

to collect the debts. Bad debts are written off when identified.




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2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) (k) Foreign Currency Translation (i) Functional and presentation currency

Both the functional and presentation currency of My Net Fone Limited and its subsidiary is Australian dollars

($). Each entity in the Group determines its own functional currency and items included in the financial

statements of each entity are measured using that functional currency.

(ii) Transactions and balances

Transactions in foreign currencies are initially recorded in the functional currency by applying the ex-

change rates ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign

currencies are retranslated at the rate of exchange ruling at the balance sheet date.

All exchange differences in the consolidated financial report are taken to profit or loss.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using

the exchange rate as at the date of the initial transaction. Non-monetary items measured at fair value in a

foreign currency are translated using the exchange rates at the date when the fair value was determined.

(l) Income Tax The income tax expense (revenue) for the year comprises current income tax expense (income) and

deferred tax expense (income).

Current income tax expense charged to the profit or loss is the tax payable on taxable income. Current

tax liabilities (assets) are measured at the amounts expected to be paid to (recovered from) the relevant

taxation authority.

Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances

during the year as well as unused tax losses.

Current and deferred income tax expense (income) is charged or credited outside profit or loss when the

tax relates to items that are recognised outside profit or loss.

Except for business combinations, no deferred income tax is recognised from the initial recognition of an

asset or liability where there is no effect on accounting or taxable profit or loss.

Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period

when the asset is realised or the liability is settled and their measurement also reflects the manner in which

management expects to recover or settle the carrying amount of the related asset or liability.

Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the

extent that it is probable that future taxable profit will be available against which the benefits of the

deferred tax asset can be utilised.

Where temporary differences exist in relation to investments in subsidiaries, branches, associates, and joint

ventures, deferred tax assets and liabilities are not recognised where the timing of the reversal of the

temporary difference can be controlled and it is not probable that the reversal will occur in the foresee-

able future.




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2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) (l) Income Tax (Continued) Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is

intended that net settlement or simultaneous realisation and settlement of the respective asset and liability

will occur. Deferred tax assets and liabilities are offset where: (a) a legally enforceable right of set-off exists;

and (b) the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority

on either the same taxable entity or different taxable entities where it is intended that net settlement or

simultaneous realisation and settlement of the respective asset and liability will occur in future periods in

which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled.

(m) 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 Tax 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 cashflows on a gross basis, except for the GST component of

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

(n) Property, Plant and Equipment Plant and equipment are measured on the cost basis.

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

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

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

expected net cash flows have been discounted to their present values in determining recoverable

amounts.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as

appropriate, only when it is probable that future economic benefits associated with the item will flow to

the Group and the cost of the item can be measured reliably. All other repairs and maintenance are

charged to the statement of comprehensive income during the financial period in which they are incurred.

Depreciation The depreciable amount of all fixed assets is depreciated on a straight-line basis over the asset’s useful life

to the consolidated group commencing from the time the asset is held ready for use.

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

Furniture & Fittings – over 6 to 10 years

Office Equipment – over 3 to 5 years

IT Systems - over 2 to 4 years

The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each

reporting period.

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

amount is greater than its estimated recoverable amount.

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

gains and losses are included in the statement of comprehensive income. When revalued assets are sold,

amounts included in the revaluation surplus relating to that asset are transferred to retained earnings.




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2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) (o) Financial Instruments Financial assets and financial liabilities are recognised when the entity becomes a party to the contractual

provisions to the instrument. For financial assets, this is equivalent to the date that the company commits

itself to either the purchase or sale of the asset (ie trade date accounting is adopted).

Financial instruments are initially measured at fair value plus transaction costs, except where the instrument

is classified ‘at fair value through profit or loss’, in which case transaction costs are expensed to profit or

loss immediately.

(i) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are

not quoted in an active market and are subsequently measured at amortised cost.

Loans and receivables are included in current assets, except for those which are not expected to mature

within 12 months after the end of the reporting period. (All other loans and receivables are classified as

non-current assets.)

(ii) Investments in subsidiaries held by the parent

Investments in subsidiaries held by the parent entity are recognised and subsequently measured at cost in

the separate financial statements of the Company, less any impairment.

(p) Impairment of Assets At the end of each reporting period, the Group assesses whether there is any indication that an asset may

be impaired. The assessment will include the consideration of external and internal sources of information

including dividends received from subsidiaries, associates or jointly controlled entities deemed to be out of

pre-acquisition profits. If such an indication exists, an impairment test is carried out on the asset by

comparing the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell

and value in use, 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.

Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the

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

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

(q) Trade and Other Payables Trade and other payables represent the liability outstanding at the end of the reporting period for goods

and services received by the Group during the reporting period which remains unpaid. The balance is

recognised as a current liability with the amount being normally paid within 30 days of recognition of the

liability.




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2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) (r) Provisions Provisions are recognised when the group has a present obligation (legal or constructive) as a result of a

past event, it is probable that an outflow of resources embodying economic benefits will be required to

settle the obligation and a reliable estimate can be made of the amount of the obligation.

When the group expects some or all of a provision to be reimbursed, for example under an insurance

contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually

certain. The expense relating to any provision is presented in the Statement of Comprehensive Income net

of any reimbursement.

Provisions are measured at the present value of management's best estimate of the expenditure required

to settle the present obligation at the Statement of Financial Position date. If the effect of the time value of

money is material, provisions are discounted using a current pre-tax rate that reflects the time value of

money and the risks specific to the liability. The increase in the provision resulting from the passage of time

is recognised in finance costs.

(s) Employee Leave Benefits Provision is made for the Group’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. Employee benefits

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

outflows to be made for those benefits. In determining the liability, consideration is given to employee

wages increases and the probability that the employee may satisfy vesting requirements. Those cash

outflows are discounted using market yields on national government bonds with terms to maturity that

match the expected timing of cash flows.

(t) Contributed Capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or

options are shown in equity as a deduction, net of tax, from the proceeds.

(u) Earnings per Share Basic earnings per share is determined as net Profit/(Loss) attributable to members of the group, adjusted

to exclude any costs of servicing equity (other than dividends), divided by the weighted average number

of ordinary shares.

Diluted earnings per share includes options outstanding which will have the potential to convert to

ordinary shares and dilute the basic earnings per share.

(v) De-recognition of Financial Assets and Financial Liabilities Financial assets are de-recognised where the contractual rights to receipt of cash flows expires or the

asset is transferred to another party whereby the entity no longer has any significant continuing involve-

ment in the risks and benefits associated with the asset. Financial liabilities are de-recognised where the

related obligations are either discharged, cancelled or expired. The difference between the carrying

value of the financial liability extinguished or transferred to another party and the fair value of considerat-

ion paid, including the transfer of non-cash assets or liabilities assumed, is recognised in profit or loss.




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2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) (w) Share-based Payment Transactions The Group provides benefits to its employees and Directors (including key management personnel) in the

form of share-based payments, whereby employees render services in exchange for shares or rights over

shares (equity-settled transactions).

The cost of these equity-settled transactions with employees and Directors is measured by reference to the

fair value of the equity instruments at the date at which they are granted. The fair value is determined by

an external valuer using a Black-Scholes model.

The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over

the period in which the performance and/or service conditions are fulfilled (the vesting period), ending on

the date on which the relevant employees and Directors become fully entitled to the award (the vesting

date).

At each subsequent reporting date until vesting, the cumulative charge to the Statement of

Comprehensive Income is the product of (i) the grant date fair value of the award; (ii) the current best

estimate of the number of awards that will vest, taking into account such factors as the likelihood of

employee turnover during the vesting period and the likelihood of non-market performance conditions

being met; and (iii) the expired portion of the vesting period.

The charge to the Statement of Comprehensive Income for the period is the cumulative amount as

calculated above less the amounts already charged in previous periods. There is a corresponding credit

to equity.




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$ $2011 2010

(continued)

2. PARENT INFORMATION

The following information has been extracted from the books and records of the parent and has been prepared in accordance with accounting standards.

(a) Statement of Financial Position

(b) Statement of Comprehensive Income

446,817

152

62,128

509,097

2,206,520

5,000,100

7,206,620

7,715,717

36,200

420,444

456,644

-

456,644

7,259,073

8,805,515

1,099,309

(2,645,751)

7,259,073

(99,823)

(99,823)



Assets

Current Assets

Cash and cash equivalents



Total Current Assets

Non Current Assets

Other receivables

Investment in subsidiaries

Total Non Current Assets

Total Assets

Liabilities

Current Liabilities

Trade and other payables

Provisions

Total Current Liabilities

Total Non Current Liabilities

Total Liabilities

Net Assets

Equity

Issued Capital

Share based payment reserve

Accumulated losses

Total Equity

Total Loss

Total comprehensive loss

Guarantees

My Net Fone Limited has not entered into any guarantees, in the current or previous financial year, in relation to the debts of its subsidiaries.

Contingent Liabilities

No contingent liabilities existed at 30 June 2011.

Contractual commitments

At 30 June, My Net Fone Limited has not entered into any contractual commitments for the acquisition of property, plant and equipment.

423,827

444

62,128

486,399

2,930,227

5,000,100

7,930,327

8,416,726

31,417

394,166

425,583

-

425,583

7,991,143

8,805,515

1,048,333

(1,862,705)

7,991,143

(56,871)

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CONSOLIDATED GROUP

$ $2011 2010

(continued)

3. REVENUES AND EXPENSES

(a) Revenue

Rendering of services

Finance revenue

Breakdown of finance revenue:

Bank interest receivable

(b) Other income

Rent received

Other

(c) Other expenses

Depreciation on property, plant and equipment

Accounting and audit fees

General expenses

Consulting fees

Legal fees

Listing fees

Registry fees

Merchant processing fees

Subscriptions and memberships

(d) Minimum lease payments

Operating lease – premises

(e) Employee benefits expense

Wages and salaries

Superannuation

Share based payments expense

Payroll tax

Workers’ compensation costs

12,091,969

55,522

12,147,491

55,522

55,522

58,004

12,364

70,368

52,584

36,450

71,475

(2,910)

1,890

14,342

17,688

145,512

5,713

342,744

193,347

2,777,535

244,746

-

132,865

10,600

3,165,746


13,604,905

105,807

13,710,712

105,807

105,807

58,006

12,704

70,710

35,150

35,541

78,513

-

-

14,405

22,231

149,117

19,834

354,791

193,353

2,884,087

328,916

50,976

138,924

9,690

3,412,593


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$ $2011 2010

(continued)

4. INCOME TAX

303,240

6,756

(309,996)

(962,764)

(962,764)

303,240

6,756

(309,996)

(962,764)

(962,764)

(962,764)



Entities in the Group have tax losses arising in Australia of $3,061,369

(2010: 3,151,972) that are available to be offset against future taxable

profits. A deferred tax asset relating to these losses of $918,411 has been

recognised as recoverable in the next two years.

Deferred tax assets to be recovered within 12 months

Deferred tax assets to be recovered after more than 12 months

The total deductible temporary differences in relation to the deferred

tax asset is $437,099 (2010: $409,272)

The Group has yet to decide whether it will form a tax consolidated group for tax purposes.

The components of tax expense comprise:

Current income tax charge

Unrecongnised temporary differences

Recoupment of prior year losses

Over/(under) provision in respect of prior years

Income tax expense/(benefit) reported in

Statement of Comprehensive Income

The prima facie tax on profit from ordinary activities before income tax is

reconciled to the income tax as follows:

The prima facie tax on profit from ordinary

activities before income tax at 30% (2010: 30%)

Unrecognised temporary differences

Recoupment of prior year losses

Over/(under) provision in respect of prior years

Income tax expense/(benefit) reported in

Statement of Comprehensive Income

CONSOLIDATED GROUP

314,865

39,946

(354,811)

44,353

44,353

314,865

39,946

(354,811)

44,353

44,353

44,353

338,899

579,512

388,087

574,677

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CONSOLIDATED GROUP

$ $2011 2010

(continued)

5. CASH AND CASH EQUIVALENTS

7. OTHER FINANCIAL ASSETS

Current

Term deposits

Short term deposits are made for period of 6 months and earn interest at the respective short term deposit rates. The deposit was made for

the purpose of bank guarantee for office premises.

1,965,268

1,965,268

1,973,565

52,584

-

197,600

(962,764)

(597,920)

111,416

41,642

816,123

229,736

(20,000)

(19,580)

190,156

62,128



Cash at bank and on hand

Reconciliation to Cash Flow Statement

For the purposes of the Cash Flow Statement, cash and cash equivalents comprise the following at 30 June 2011:

Cash at bank and on hand

Reconciliation of net profit after tax to net cash flow from operations:

Net profit/(loss)

Non-cash flows in profit:

Depreciation of plant and equipment

Share based payments expense

Changes in assets and liabilities

(Increase)/decrease in trade and other receivables

(Increase)/decrease in tax assets

(Decrease)/increase in trade and other payables

(Decrease)/increase in deferred revenue

(Decrease)/increase in provisions

Net cash flow from operating activities

Current

Trade receivables

Less: Provision for doubtful debts

Other receivables

6. TRADE AND OTHER RECEIVABLES

2,452,732

2,452,732

1,005,197

35,150

50,976

(201,993)

44,353

122,071

16,588

72,066

1,144,408

394,659

(20,000)

17,491

392,150

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$ $ $ $

Furniture &Fittings

(continued)

8. PROPERTY, PLANT AND EQUIPMENT

CONSOLIDATED GROUP

Year ended 30 June 2011

At 1 July 2010, net of accumulated depreciation and

impairment

Additions

Disposals

Depreciation charge for the year

At 30 June 2011, net of accumulated depreciation

At 30 June 2011

Cost

Accumulated depreciation and iimpairment

Net carrying amount

Year ended 30 June 2010

At 1 July 2009, net of accumulated depreciation and

impairment

Additions

Disposals

Depreciation charge for the year

At 30 June 2010, net of accumulated depreciation

At 30 June 2010

Cost

Accumulated depreciation and impairment

Net carrying amount

These assets are not impaired as at year end.

FORMATION COST

MNF Leasing Pty Limited

9. TRADE AND OTHER PAYABLES

Trade payables

Other creditors

Security deposit

(i) Trade payable are non-interest bearing and are normally settled on 30-day terms with non-related suppliers. Included in trade payable is

$160,074 and $1,342,083 payable to Symbio Networks and Symbio Wholesale respectively. Refer to Note 1(d) and Note 19.

OfficeEquipment IT Systems Total


CONSOLIDATED GROUP

$ $2011 2010

80,167

-

-

(31,505)

48,662

211,697

(163,035)

48,662

111,921

-

-

(31,754)

80,167

211,697

(131,530)

80,167

4,545

-

-

(3,645)

900

68,596

(67,696)

900

18,901

-

-

(14,356)

4,545

68,596

(64,051)

4,545

-

-

-

-

-

43,812

(43,812)

-

6,474

-

-

(6,474)

-

43,812

(43,812)

-

84,712

-

-

(35,150)

49,562

324,105

(274,543)

49,562

137,296

-

-

(52,584)

84,712

324,105

(239,393)

84,712


1,950

1,461,884

141,855

2,500

1,606,239

1,950

1,600,388

125,422

2,500

1,728,310

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CONSOLIDATED GROUP

$ $2011 2010

(continued)

10. DEFERRED REVENUE

Pre-paid calling credits

Deferred revenue relates to cash received from customers up front with respect to pre-paid calling credits. The balance represents the

unused call credits as at balance date.

11. PROVISIONS

CONSOLIDATED

As at 1 July 2010

Arising during the year

Utilised during the year

As at 30 June 2011

Current

Non-current

A provision has been recognised for employee entitlements relating to long service leave. In calculating the present value of future cash

flows in respect of long service leave, the probability of long service leave being taken is based on historical data. The measurement and

recognition criteria relating to employee benefits have been included in Note 1.

1,021,176 1,004,588

Annual leave Long serviceleave

Total

394,166

683,222

(656,944)

420,444

420,444

-

420,444

202,830

171,880

(143,412)

228,298

228,298

-

228,298

642,579

901,701

(803,356)

740,924

648,742

92,182

740,924



Proposeddividend

45,583

46,599

-

92,182

-

92,182

92,182

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CONSOLIDATED GROUP

$ $2011 2010

12. ISSUED CAPITAL AND RESERVES

A ORDINARY SHARES

Shares issued and fully paid

Movements in ordinary shares on issue

At 1 July

Issued during the year:

At 30 June

3,990,515

(continued)

3,990,515

52,555,555

-

52,555,555

3,990,515

-

3,990,515

52,555,555

-

52,555,555

3,990,515

-

3,990,515

$2011 2010

Number of Shares $Number of Shares

Ordinary shares have the right to receive dividends as declared and in the event of winding up the company, to participate in the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on shares held.

Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the company.

Under AIFRS reverse acquisition rules, the number of shares disclosed by the consolidated group are those of My Net Fone Limited whilst the value of shares disclosed by the consolidated group is an aggregation of My Net Fone Australia Pty Limited (Legal Subsidiary) and My Net Fone Limited (Legal Parent).

Movements during the yearThere was no movement during the year.



No. WAEP $ No. WAEP $2011 2011 2010 2010

B SHARE OPTIONS

-

3,400,000

-

-

-

-

3,400,000

3,400,000

Movements in ordinary shares on issue

Outstanding at the beginning of the year

Granted during the year

Granted during the year per placement

Forfeited during the year

Exercised during the year

Expired during the year

Outstanding at the end of the year

Exercisable at the end of the year

Outstanding options as at year end

The outstanding balance as at 30 June 2011 is represented by:

- 400,000 options issued under a share based payment option scheme under which options to subscribe for the company’s shares have

been granted to certain executives and other employees with an exercise price of 10 cents each. The first tranche of 200,000 options is

exercisable from 01 August 2011 and the second tranche is exercisable from 01 August 2012. Both tranches are exercisable until 31 August

2013 (Refer note 13a).

- 2,000,000 options issued to Executive Directors approved by shareholders in the AGM held on 26 October 2010 with an exercise price of

14 cents each, exercisable from 24 November 2010 and until 31 October 2013 (Refer Note 13b).

- 1,000,000 options issued to Non-Executive Directors approved by shareholders in the AGM held on 26 October 2010 with an exercise price

of 14 cents each, exercisable from 24 November 2010 and until 31 October 2013 (Refer Note 13b).

-

0.14

-

-

-

-

0.14

0.14

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

CONSOLIDATED GROUP

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Notes to the Financial Statements 45(continued)

13. SHARE BASED PAYMENT PLANS

No. WAEP $ No. WAEP $2011 2011 2010 2010

b. Share Options granted to the Directors

Movements during the year

The following table illustrates the number (No.) and weighted average exercise prices (WAEP) of and movements in share options

issued during the year:

-

3,000,000

-

-

-

3,000,000

3,000,000

Outstanding at the beginning of the year

Granted during the year

Forfeited during the year

Exercised during the year

Expired during the year

Outstanding at the end of the year

Exercisable at the end of the year

The outstanding balance as at 30 June 2011 is represented by:

- 2,000,000 options issued to Executive Directors approved by shareholders in the AGM held on 26 October 2010 with an exercise

price of 14 cents each, exercisable from 24 November 2010 and until 31 October 2013.

- 1,000,000 options issued to Non-Executive Directors approved by shareholders in the AGM held on 26 October 2010 with an exercise

price of 14 cents each, exercisable from 24 November 2010 and until 31 October 2013.

The weighted average remaining contractual life for the share options outstanding as at 30 June 2011 is 2.16 years (2010: Not

applicable).

The weighted average exercise price for options outstanding at the end of the year was 14 cents (2010: Not applicable).

-

0.14

-

-

-

0.14

0.14

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Outstanding options as at year end

EOP - Refer Note a

Options granted to Directors - Refer Note b

Total

a. Employee Option Plan (EOP) The Board may issue options under the EOP to any employee of the Company and its subsidiaries, including Executive Directors and Non-Executive Directors.

Options will be issued free of charge, unless the Board determines otherwise. Each option is to subscribe for one share and when, issued, the shares will rank equally with other shares.

Unless the terms on which an option was offered specify otherwise, an option may be exercised at any time after one year from the date it is granted, provided the employee is still employed by the Company.

An option may also be exercised in special circumstances, that is, at any time within 6 months after the employee's death, total and permanent disablement, or retrenchment. An option lapses upon the termination of the employee's employment by the Company and, unless the terms of the offer of the option specify otherwise, lapses three years after the date upon which it was granted.

The exercise price per share for an option will be the average closing market price of the Company's share over the five trading days before their issue. The maximum number of options on issue under the EOP must not at any time exceed 5% of the total number of shares on issue at that time.



CONSOLIDATED GROUP

$ $2011 2010

400,000.00

3,000,000.00

3,400,000.00

-

-

-

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14. COMMITMENTS AND CONTINGENCIES

Operating lease commitments – Company as lessee

The Company has renewed a commercial lease for building rental from Brenmoss Properties Pty Ltd and

Appreciate Group Pty Ltd. The term of the lease is for 3 years commencing on 1st May 2009 and ending on the 30th

April 2012. An additional rent for car parking is also attached with the lease.

The Company is entitled to sublet part of the premises to Symbio Networks Pty Ltd during the term of the lease. The

ratio between My Net Fone Limited and Symbio Networks Pty Limited is 70 to 30.



b. Share Options granted to the Directors (Continued)

Share options issued to Directors during the year

During the year options were issued to interests associated with the following Directors:

Mr Terry Cuthbertson (Chairman)

Mr Michael Boorne (Non-executive Director)

Mr Andy Fung

Mr Rene Sugo

Each option was issued free of charge and entitles the holder to subscribe for, and be allotted, one ordinary share in the capital of My Net Fone Limited.

Shares issued on the exercise of options will rank equally with all existing shares on issue, as at the exercise date.

The exercise price of each option to all Executive and Non-Executive Directors is 14 cents, exercisable from 24 November 2010. The expiry date for exercising these options is 31 October 2013. All options not exercised on or before the expiry date will lapse.

The expense recognised in the consolidated statement of comprehensive income in relation to share based payments is disclosed in Note 3. (e).

The weighted average fair value of options granted during the year was 0.14 cents (2010: Not applicable).

The fair value of equity settled share options granted is estimated as at the date of grant using a Black-Scholes model taking into account the terms and conditions upon which the options were granted.

The following table lists the inputs to the model used for the year ended 30 June 2011:

Number of options granted

Dividend yield (%)

Expected volatility (%)

Risk free interest rate (%)

Expected life of option (years)

Option exercise price ($)

Share price at grant date ($)

Number

500,000

500,000

1,000,000

1,000,000

3,000,000

2011

3,000,000

7.4

72

4.33

2.16

0.14

0.14

400,000

7.4

72

4.33

2.21

0.10

0.09

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16. AUDITORS’ REMUNERATION

Amounts due and receivable by MNSA Pty Ltd Chartered Accountants:

17. DIRECTOR AND EXECUTIVE DISCLOSURES

(a) Details of Key Management Personnel

Mr Andy Fung (Managing Director)

Mr René Sugo (Technical Director)

Mr Terry Cuthbertson (Non-executive Chairman)

Mr Michael Boorne (Non-executive Director)

Mr Leo Tai (Director)

Ms Catherine Ly (CFO)

(b) Compensation of Key Management Personnel

The Group has applied the exemption under Corporations Amendments Regulation 2006 No 4 which exempts listed companies from

providing remuneration disclosures in relation to their key management personnel in their annual financial reports by Accounting

Standard AASB 124 Related Party Disclosures. These disclosures are provided on pages 6 to 8 of the Directors' Report designated as

audited.

– Audit and review of the financial report 35,000

CONSOLIDATED GROUP

$ $2011 2010

34,091



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

14. COMMITMENTS AND CONTINGENCIES (Continued)

CONSOLIDATED GROUP

$ $2011 2010

Within one year

After one year but not more than five years

More than five years

161,128

-

-

161,128

193,353

177,240

-

370,593

15. EVENTS AFTER REPORTING DATE

The Board of My Net Fone entered Heads of Agreement on 24 August 2011 to acquire the whole of Symbio Group. The details of this Agreement were released to the market on 30 August 2011.

The dividend as recommended by the Board will be paid subsequent to the balance date.

Since the reporting date, there have been no other significant events, other than those mentioned above, which would impact on the financial position of the Company as disclosed in the Statement of Financial Position as at 30 June 2011, and on the cash flow of the Company for the year ended on that date.

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1 July 2009

Balance atbeginning of

period

13,488,955

13,488,955

2,478,440

1,125,000

2,335,104

32,916,453

-

-

-

-

-

-

Trade duringthe year

Optionsexercised

Balance atend ofperiod

30 June 201030 June 2010

Directors

Mr Andy Fung

Mr René Sugo

Mr Leo Tai


Mr Michael Boorne

Total

The above shareholdings are held indirectly through controlled entities.

13,488,955

13,488,955

2,478,440

1,125,000

4,225,533

34,806,883

1 July 2010


period

-

-

-

-

-

-

-

1,000,000

1,000,000

500,000

500,000

-

200,000

3,200,000

-

-

-

-

-

-

-

Optionsexercised/

lapsed


30 June 201130 June 2011

- 3,000,000 options to Directors are exercisable from 24 November 2010 to 31 October 2013.

- 100,000 options issued to C Ly from Employee Options Scheme are exercisable from 01 August 2011 to 31 August 2013, and the other

tranche of 100,000 are exercisable from 01 August 2012 to 31 August 2013.

1,000,000

1,000,000

500,000

500,000

-

200,000

3,200,000


(d) Share options of Key Management Personnel

Granted

-

-

-

-

1,890,429

1,890,429


(c) Shareholdings of Key Management Personnel

1 July 2010


period

13,488,955

13,488,955

2,478,440

1,125,000

4,225,533

34,806,883

-

-

-

-

-

-

-

-

-

-

-

-

Trade duringthe year

Optionsexercised


30 June 201130 June 2011

Directors

Mr Andy Fung

Mr René Sugo

Mr Leo Tai


Mr Michael Boorne

Total

The above shareholdings are held indirectly through controlled entities. No shares were granted during the year.

13,488,955

13,488,955

2,478,440

1,125,000

4,225,533

34,806,883

Directors

Mr Andy Fung

Mr René Sugo


Mr Michael Boorne

Executives

Mr Leo Tai


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19. RELATED PARTY DISCLOSURE

The following table provides the total amount of transactions that were entered into with related parties for the

relevant financial year:

Related Party $ $ $ $

Sales torelated parties

97,061

-

120,000

-

917,107

7,291,485

-

-

Purchasesfrom related

parties

Amounts owedto related

parties

160,074

1,342,083

-

-

Amounts owedby related

parties

Consolidated Group

Symbio Networks Pty Limited (i)

Symbio Wholesale Pty Limited (ii)

Parent Entity

Subsidiary:

My Net Fone Australia Pty Limited (iii)

MNF Leasing Pty Limited (iii)

(i) The Group entered into a technology services Agreement which includes provision of platform resources, technical support, traffic minutes and customer

devices with Symbio Networks Pty Ltd (a director related entity) for a term of 5 years commencing on 1 April 2006. This Agreement was extended for a further

period of 5 years. The Agreement is at both normal market prices and on normal commercial terms with an agreed pricing structure which gives the Group the

ability to benefit from high volume commitments in order to reduce its cost base. Due to administrative changes within Symbio, the bulk of the Agreement has

been novated to Symbio Wholesale Pty Ltd starting on 1 May 2009 while the part of the Agreement relating to customer devices remains with Symbio Networks

Pty Ltd. Both Agreements will expire in April, 2016.

(ii) The Group has re-assigned parts of the Symbio Networks Agreement to Symbio Wholesale Pty Ltd starting from 01 May 2009. The Agreement with Symbio

Wholesale includes platform resource, technical support and traffic minutes .

(iii) Transactions within the Group have been eliminated in full on consolidation.

6,860

-

2,205,520

1,000



1 July 2009


period

-

-

-

-

-

-

-

-

-

-

-

-

-

-

GrantedOptions

excrcised/lapsed


30 June 201030 June 2010

Directors

Mr Andy Fung

Mr René Sugo


Mr Michael Boorne

Executives

Mr Leo Tai


Total

-

-

-

-

-

-

-

-

-

-

-

-

-

-

18. INVESTMENT IN SUBSIDIARIES

The consolidated financial statements include the financial statements of My Net Fone Limited and the subsidiaries

listed in the following table:

The investment in the abovementioned subsidiaries was not impaired during the year (2010: $Nil).

Country ofIncorporation

% EquityInterest

Investment$Name

My Net Fone Australia Pty Limited Australia 100 5,000,000

MNF Leasing Pty Limited Australia 100 100

(d) Share options of Key Management Personnel (Continued)

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22. DIVIDENDS

CONSOLIDATED GROUP

$ $2011 2010

The Directors have recommended the payment of a dividend of 0.8 cent per fully

paid ordinary share, (2010: 0.75 cents) unfranked. The aggregate amount of the

proposed dividend expected to be paid on 8 September 2011 is 1.3 cents per share.

420,444 394,166

Net profit/(loss) attributable to ordinary equity holders of the parent (used in calculating basic EPS)

Net profit/(loss) attributable to ordinary equity holders of the parent (used in calculating diluted EPS)

Weighted average number of ordinary shares for basic earnings per share

Effect of dilution:

Share options

Weighted average number of ordinary shares adjusted for the effect of dilution

There have been no transactions involving ordinary shares or potential ordinary shares between the reporting date and the date of

completion of these financial statements.

2011 2010

Consolidated Group

1,005,197

1,005,197

52,555,555

3,400,000

55,955,555

1,973,565

1,973,565

52,555,555

Nil

52,555,555

21. SEGMENT NOTE

The group operates in one business segment and one geographical segment being the telecommunications

segment in Australia.

20. EARNINGS PER SHARE

The following reflects the income and share data used in the basic earnings per share computations:

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23. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Group’s principal financial instruments comprise cash at bank and short term deposits.

The main risks arising from the Group’s financial instruments are cash flow interest rate risk. The Board reviews and

agrees policies for managing each of these risks and they are summarised below:

Interest rate risk

The company has no interest bearing liabilities. Funds on deposit and the respective weighted average interest rate

are disclosed below.

Liquidity risk

The Group’s objective is to maintain a balance between continuity of funding and interest revenue through the use

of current accounts and short term deposits.

Credit risk

The company has no significant exposure to credit risk as the majority of its sales are pre-paid as at year end.

However, for credit sales the company only trades with recognised credit worthy third parties. It is the Group’s policy

that all customers who wish to trade on credit terms are subject to credit verification procedures. Moreover, the

company considers it is appropriate to provide a provision for doubtful debts for the year ended 30 June 2011.

Set out below is a comparison by category of carrying amounts and fair values of all of the Group’s financial

instruments recongnised in the financial statements.

Carrying amountConsolidated Group

2,430,971

21,761

392,150

62,128

1,728,310

Financial assets

Cash (weighted average effective interest rate 4.2%)

Cash at call (weighted average effective interest rate 5%)



Financial liabilities

On statement of financial position

Trade payables

2,430,971

21,761

392,150

62,128

1,728,310

Fair value Carrying amount Fair value

2011 2010

1,943,884

21,384

190,156

62,128

1,606,239

1,943,884

21,384

190,156

62,128

1,606,239

24. COMPANY DETALS The registered office of the company is: My Net Fone Limited Level 2, 10-14 Waterloo Street

Surry Hills NSW 2010

The principal place of business is: My Net Fone Limited Level 2, 10-14 Waterloo Street


(weighted average effective interest rate 5.8%)

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Directors’ Declaration 52

The Directors of the company declare that:

1. the financial statements and notes, as set out on pages 24 to 51, are in accordance with the Corporations Act 2001

and:

a. comply with Accounting Standards, which, as stated in accounting policy Note 1 to the financial

statements, constitutes explicit and unreserved compliance with International Financial Reporting

Standards (IFRS); and

b. give a true and fair view of the financial position as at 30 June 2011 and of the performance for the year

ended on that date of the company and consolidated group;

2. the Chief Executive Officer and Chief Financial Officer have each declared that:

a. the financial records of the company for the financial year have been properly maintained in accordance

with s 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. After the date of this declaration, in the Directors’ opinion there are reasonable grounds to believe that the

company will be able to pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the Board of Directors.

Terry Cuthbertson

Chairman

Andy Fung

Managing Director

Sydney

Dated this 31st day of August 2011


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53

MY NET FONE LIMITED ABN 37 118 699 853 AND CONTROLLED ENTITIES

AUDITOR’S INDEPENDENCE DECLARATION UNDER S 307C OF THE CORPORATIONS ACT 2001 TO THE DIRECTORS OF MY NET FONE LIMITED AND CONTROLLED ENTITIES

I declare that, to the best of my knowledge and belief, during the year ended 30 June 2011 there have been:

i. no contraventions of the auditor independence requirements as set out in the Corporations Act 2001

in relation to the audit; and

ii. no contraventions of any applicable code of professional conduct in relation to the audit.

MNSA PTY LTD

Mark SchiliroDirector

Dated in Sydney, this 31st day of August 2011

Auditors’ Independence Declaration

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MY NET FONE LIMITED ABN 37 118 699 853 AND CONTROLLED ENTITIES

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF MY NET FONE LIMITED

Report on the Financial Report

We have audited the accompanying financial report of My Net Fone Limited (the Company) and My Net Fone Limited and

Controlled Entities (the consolidated entity), which comprises the statement of financial position as at 30 June 2011, and the

statement of comprehensive income, statement of changes in equity and statement of cash flows for the year ended on

that date, a summary of significant accounting policies and other explanatory notes and the Directors’ declaration of the

consolidated entity comprising the company and the entities it controlled at the year’s end or from time to time during the

financial year.

Directors’ Responsibility for the Financial Report

The Directors of the company are responsible for the preparation and fair presentation of the financial report that gives a true

and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal

control as the Directors determine is necessary to enable the preparation of the financial report that is free from material

misstatement, whether due to fraud or error. In Note 1, the Directors also state, in accordance with Accounting Standard

AASB 101: Presentation of Financial Statement, that the financial statements comply with International Financial Reporting

Standards (IFRS).

Auditor’s Responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance

with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements

relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report

is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report.

The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of

the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control

relevant to the entity’s preparation and fair presentation of the financial report in order to design audit procedures that are

appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal

control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of

accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial report.

Our procedures include reading the other information in the Annual Report to determine whether it contains any material

inconsistencies with the financial report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

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Independence

In conducting our audit, we have complied with the independence requirements of the Corporations Act 2011.

Auditor’s Opinion

In our opinion

a. the financial report of My Net Fone Limited and My Net Fone Limited and Controlled Entities is in accordance with

the Corporations Act 2001, including:

i. giving a true and fair view of the company’s and consolidated entity’s financial position as at

30 June 2011 and of their performance for the year ended on that date; and

ii. complying with Australian Accounting Standards and the Corporations Regulations 2001; and

b. the financial report also complies with International Financial Reporting Standards as disclosed in Note 1.

Report on the Remuneration Report

We have audited the Remuneration Report included in pages 14 to 16 of the report of the Directors for the year ended 30

June 2011. The Directors of the company are responsible for the preparation and presentation of the remuneration report in

accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration

Report, based on our audit conducted in accordance with the Australian Auditing Standards.

Auditor’s Opinion

In our opinion the remuneration report of My Net Fone Limited for the year ended 30 June 2011, complies with section 300A

of the Corporations Act 2001.

MNSA PTY LTD

Mark SchiliroDirector

Sydney

Dated this 31st day of August 2011

ons Act 2011.

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ASX Additional Information 56

Additional information required by the Australian Securities Exchange Ltd and not shown elsewhere in this report is as follows.

The information is current as at 19 August 2011.

(a) Distribution of equity securities

(i) Ordinary share capital

52,555,555 fully paid ordinary shares are held by 310 individual shareholders.

All issued ordinary shares carry one vote per share and carry the rights to dividends.

(ii) Options

3,400,000 unlisted options are held by 6 individual option holders.

Options do not carry a right to vote.

The number of shareholders, by size of holding, in each class are:

1 – 1,000

1,001 – 5,000

5,001 – 10,000

10,001 – 100,000

100,001 and over

The number of security investors holding less than a marketable parcel of ordinary shares is 18.

(b) Substantial shareholders

Ordinary shareholders

Avondale Innovations Pty Ltd

The Fung Family Super Fund

Mr W. G. Martin & Mrs. B. M. Martin

Amber (Asia) Pty Ltd

Mr M. J. Boorne

Fully Paid Ordinary Shares

7

40

64

167

32

310

Fully Paid

Number Percentage

13,488,955

10,000,000

3,545,171

3,488,955

3,187,249

25.67

19.03

6.75

6.64

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57

(c) Twenty largest holders of quoted equity securities

Avondale Innovations Pty Ltd

The Fung Family Super Fund

Mr W.G. Martin & Mrs. B.M. Martin

Amber (Asia) Pty Ltd

Mr Michael John Boorne

L&C Pty Ltd

Boorne Gregg Investments Pty Ltd

Lee Superfund Management Pty Ltd

Kore Management Services Pty Ltd

Earglow Pty Ltd

Mr Christopher John Ayres

Mr A. McMillan & Mrs S. McMillan

Mr Michael Korber

Mr. Peter James Connolly

Cowoso Capital Pty Ltd

Mr N.W. Durnford & Mrs C.D. Durnford

Mr J.E. Burdekin & Mrs H.E. Burdekin

Mrs E.A. Moffat

HSBC Custody Nominees (Australia) Ltd

Endan Pty Ltd

(d) On-Market Buy Back

There is currently no on-market buy back.

Fully Paid

Number Percentage

13,488,955

10,000,000

3,545,171

3,488,955

3,187,249

2,478,430

1,610,000

1,125,000

1,125,000

1,025,784

700,000

519,033

506,655

458,867

400,000

370,000

310,000

308,370

300,000

263,794

45,211,263

25.67

19.03

6.75

6.64

6.06

4.72

3.06

2.14

2.14

1.95

1.35

0.99

0.96

0.87

0.76

0.70

0.59

0.59

0.57

0.50

86.04

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58CORPORATE INFORMATION

DirectorsTerry Cuthbertson (Chairman)

Michael Boorne

Andy Fung

René Sugo

Company Secretary

Catherine Ly

Registered Office

Level 2,

10-14 Waterloo Street


Australia

Principal Place of Business

Level 2,

10-14 Waterloo Street


Austraila

Phone 61 2 8008 8000

Share Register

Link Market Services Limited

Level 12

680 George Street

Sydney NSW 2000

Australia

Phone 61 2 8280 7100

Solicitors

Colin Biggers & Paisley

Level 42

2 Park Street

Sydney NSW 2000

This annual report covers both My Net Fone Limited

as an individual entity and the consolidated group

comprising My Net Fone Limited and its subsidiaries.

The Group’s functional and presentation currency is AUD ($)

The company is listed on the Australian Securities

Exchange under the code MNF

The Annual General Meeting of My Net Fone Limited

will be held at Level 2, 10-14 Waterloo Street, Surry Hills

NSW 2010 at 10:30 am on 30 November 2011.

Bankers

Commonwealth Bank of Australia

Elizabeth & Foveaux Streets

Sydney NSW 2010

Australia

Auditors

MNSA PTY LTD

Chartered Accountants

Level 2, 333 George Street

Sydney NSW 2000

Australia

Annual Report

Copies of the 2011 Annual Report with

the Financial Statements can be downloaded from:

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My Net Fone Limited Annual Report 2011

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