For personal use only - ASX · Thursday, 27 February 2014: Inabox Group Limited (“Inabox”, ASX:IAB) has today reported its financial results for the half year ended 31 December

ACN: 161 873 187 Level 10, 9 Hunter St, Sydney, NSW 2000 Australia T: 1300 7 TELCO F: 1300 8 TELCO www.inaboxgroup.com.au

ASX RELEASE

Inabox Group core business revenue up 16%

Thursday, 27 February 2014: Inabox Group Limited (“Inabox”, ASX:IAB) has today reported its financial results for the half year ended 31 December 2013.

Inabox has reported a consolidated net profit after tax of $471,344 down 23.3% compared to the corresponding prior period, but an underlying revenue increase by 16.2% to $24.1 million.

The revenue increase is attributed to a combination of Inabox’s successful acquisition and integration of iVox alongside steady organic growth through recurring revenue generated by the existing customer base.

Inabox is broadening its future revenue and profit base by executing a strategy to enable corporate entities (such as retail, energy and financial services companies with mass market consumer bases and marketing expertise) to enter the telecommunications sector.

Investment in building and customising these enablement solutions for a number of customers has had a negative impact on profitability during the period.

Transitioning from an unlisted private company to a listed entity during this period has also incurred significant regulatory and corporate governance costs.

Organic and acquisitive growth Inabox expects to see earnings and profit growth from these new mass market customers as they transition to product launch and recurring revenue begins.

• Revenue up 16.2% to $24.1 million • NPAT down 23.3% to $471,344 due to:

o intensive investment in IT systems and network to enable mass market customers to offer telecommunications products,

o longer establishment timelines for new mass market customers, o transitioning to a listed company

• Anticipated improvement in results in the second half of the financial year as a mass market customer embarks on national marketing campaign

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Additionally, growth through acquisition continues to be a priority with a focus on identifying opportunities for increased market penetration, through smaller aggregators, and broadening the product offer through cloud-based businesses.

iVox acquisition Inabox completed its acquisition of specialist VoIP provider iVox Pty Limited on 12th July, 2013, broadening the group’s skills and expertise in next generation VoIP products. iVox contributed a pre-tax profit for the period of $303,097.

Inabox is well positioned Damian Kay said: “The core business continues to track well. Our investment in the enablement strategy has incurred costs to the business, which is reflected in the lower profits than the previous comparative period, however this investment is setting us up for the future. I expect to show Shareholders an improvement in results for the second half of 2014 and into 2015.”

Key financial metrics The table below details the key financial metrics on the previous corresponding period:

% change 31 Dec 13 ($) 31 Dec 12 ($)

Revenue +16.2% 24,127,595 20,763,970

NPAT -23.3% 471,344 614,575

EPS (cents) -54.5% 3.5 7.7

Net asset backing / (net liabilities) per share (cents)

29.34 (19.67)

The directors have determined not to issue a mid-year dividend.

-ENDS-

About Inabox Group Limited Inabox supplies wholesale telecommunications products (fixed, mobile, data) and services, including IT platforms, billing and customer support, to retail service providers around Australia through the wholesale brands, Telcoinabox and iVox. www.inaboxgroup.com.au

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Inabox contact details: Damian Kay, CEO & Managing Director [email protected] or T: 0413 888 655 Angus Fotheringham, Company Secretary [email protected] or T: 02 8248 9075

Investor/media enquiries: Andreina Amato, Investor Relations [email protected] or T: 0410 434 227

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Preliminary Half Year Report Appendix 4D Inabox Group Limited ACN 161 873 187

RESULTS FOR ANNOUNCEMENT TO THE MARKET This Preliminary Final Report is provided to the Australian Securities Exchange (ASX) under ASX Listing Rule 4.2A. Current Reporting Period: Half-Year ended 31 December 2013 Previous Corresponding Period: Half-Year ended 31 December 2012

Percentage Change %

31 Dec 13 31 Dec 12

Revenue from ordinary activities

+16.2% 24,127,595 20,763,970 Net profit / (loss) after tax attributable to members

-23.3% 471,344 614,575 Net profit / (loss) attributable to members

-23.3% 471,344 614,575 Earnings per share – basic (cents)

-54.5% 3.5 7.7 Diluted earnings per share (cents)

-55.8% 3.4 7.7

Net tangible assets / (liabilities) per share (cents)

(3.47) (14.63) Net asset backing / (net liabilities) per share (cents)

29.34 (19.67)

Dividend proposed

Nil Nil The results for the six months to 31 December 2013 comprise the results of Inabox Group Limited and its subsidiaries Telcoinabox Operations Pty Ltd and iVox Pty Ltd. The results for the prior comparative period reflect the results of Telco In A Box Pty Ltd, which transferred its business to Telcoinabox Operations on 8 May 2013. The information contained in this report should be read in conjunction with the Annual Report of Inabox Group Limited (“Inabox”) for the year ended 30 June 2013 and any public announcements made by Inabox during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001.

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Inabox Group Limited 31 December 2013

Contents

Page

Half-Year Financial Report

Directors’ Report 3

Review of results and operations 5

Auditor’s independence declaration 7

Statement of Comprehensive Income 9

Statement of Financial Position 10

Statement of changes in equity 11

Statement of cash flows 12

Notes to the financial statements 13

Directors’ Declaration 24

Independent Auditor’s Review Report to the Members 25

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DIRECTORS’ REPORT

Your directors present their report on the consolidated entity consisting of Inabox Group Limited and the entities it controlled at the end of, or during, the half-year ended 31 December 2013, referred to throughout this report as “Inabox” or “the Group”.

1. Directors

The following were directors of Inabox Group Limited during the half-year and up to the date of this report: Siimon Reynolds (Chairman, non-executive) Damian Kay (Managing Director / Chief Executive Officer) Paul Line (Director, executive / Chief Operating Officer) Garry Dinnie (Director, non-executive) David Rampa (Director, non-executive) appointed 24 January 2013

2. Principal activities

Inabox operates as a non-carrier telecommunications aggregator, providing its customers with telecommunications products including fixed line, hosted voice, mobile and data services. As part of this service, Inabox provides back office services including billing, provisioning, product development, training and support, and customer service using the brand selected by its service providers. The Group has substantially expanded its activities during the last twelve months to provide enablement and consulting services to large corporates wanting to offer telecommunications alternatives to existing or potential customers.

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3. Auditor’s independence declaration

Inabox has received an independence declaration from our auditors Ernst & Young, which forms part of the Directors’ Report for the half-year ended 31 December 2013.

Signed in accordance with a resolution of the directors of Inabox Group Limited.

Damian Kay Director Sydney, 27 February 2014

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REVIEW OF RESULTS AND OPERATIONS

A. Business Acquisition

On 12 July 2013, Inabox Group Limited completed the acquisition of all of the issued share capital of iVox Pty Ltd. Accordingly the consolidated result for the half-year ended 31 December 2013 includes the results of iVox Pty Ltd from the date of acquisition up until the reporting date.

B. Profit Result

The consolidated net profit after tax for the half-year ended 31 December 2013 was $471,344 as compared to $614,575 for the half-year ended 31 December 2012.

The results reflect:

x The acquisition of iVox which reported an unaudited standalone profit before tax for the six months ended 31 December 2012 of $362,840. After attributing, on a pro forma basis, the additional amortisation attributable to intangible assets recognised as a result of the acquisition by Inabox Group Limited, iVox pre tax profit was approximately $225,000 before tax . As disclosed in note 3, iVox contributed $303,097 before tax in the half-year to 31 December 2013.

x Revenue growth as follows:

Revenue reported 31 December 2012

20,763,970

iVox revenue half-year ended 31 December 2012 1,794,247 Pro forma 31 December 2012

22,558,217 Organic growth

1,569,378 Revenue reported 31 December 2013

24,127,595

x Investment in developing the Group’s high volume enablement capability, which involves the customisation and build of provisioning, monitoring, billing and collection systems for very large retail organisations. This repositioning of the business has necessitated a level of staff restructuring which increased non-recurring costs for the period.

x A transition from unlisted private company for the half-year December 2012 to listed entity during the current half-year with associated regulatory and governance costs.

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REVIEW OF RESULTS AND OPERATIONS, continued

C. Cash Flow

The Group’s cash position was significantly strengthened following the IPO and the acquisition of iVox which provides a stable source of cash generation.

The Group’s operating cashflow for the half year ended 31 December 2013 is, however, substantially lower than in the prior comparative period. This is primarily attributable to:

x Significant credits for carrier price reductions were realised in cash in the half year to 31 December 12 in settlement of benefits accrued in the previous financial year. There was no corresponding lag in the current half-year to 31 December 2013.

x Significant enablement contracts generating income in the half year to 31 December 2013 not receivable until the subsequent period.

x Staff incentives were paid during the half-year to 31 December 2013. There was no corresponding payment during the half-year to 31 December 2012.

D. Balance Sheet

The schedule of key balance sheet Items shows that the combined effect of IPO and iVox acquisition has created a stronger business well placed to participate in the development and consolidation of the telecommunications industry:

31 Dec 13 30 Jun 13 31 Dec 12

$ $ $

Shareholders' equity 5,694,356 537,343 2

Cash 2,442,883 409,247 -

Borrowings (670,341) (875,542) (1,017,005)

Net assets 4,083,453 (1,564,260) (254,698)

Net tangible assets / (liabilities) (482,968) (2,410,783) (1,163,422)

E. Dividends

No dividends have been either paid during the period, or declared out of profits for the period.

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AUDITOR’S INDEPENDENCE DECLARATION

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A member firm of Ernst & Young Global LimitedLiability limited by a scheme approved under Professional Standards Legislation

Ernst & Young680 George StreetSydney NSW 2000 AustraliaGPO Box 2646 Sydney NSW 2001

Tel: +61 2 9248 5555Fax: +61 2 9248 5959ey.com/au

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Audi tor ’s Independence Dec lara t ion to the Direc tors of Inabox GroupL im i t ed

In re lation to our review of the financia l report of Inabox Group Limited for the ha lf-year ended 31December 2013, to the best of my knowledge and be lief, there have been no contravent ions of theauditor independence requ irements of the Corporat ions Ac t 20 01 or any applicable code ofprofessional conduct .

Ernst & Young

Lisa Nijssen-Sm ithPartner27 February 2014�

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STATEMENT OF COMPREHENSIVE INCOME FOR THE HALF-YEAR ENDED 31 DECEMBER 2013

Consolidated

Note

31 Dec 13 31 Dec 12

$ $

Continuing Operations Revenue

4

24,127,595 20,763,970 Cost of sales

(17,610,976) (15,294,776)

Gross profit

6,516,619 5,469,194

Other income

5

20,917 70,228

Employee benefits expense

(5,023,852) (4,092,724) Depreciation and amortisation expense

(386,819) (97,002)

Bad and doubtful debts expense

(17,892) (29,657) Finance costs

(33,684) (53,890)

Other expense

(366,973) (380,574) Total Expense

(5,829,220) (4,653,847)

Profit before income tax expense

708,316 885,575

Income tax expense

6

(236,972) (271,000)

Net Profit after income tax expense

471,344 614,575

Other Comprehensive Income

- -

Total comprehensive income after tax

471,344 614,575

Earnings per share from continuing operations

Basic (cents per share)

3.5 7.7 Diluted (cents per share)

3.4 7.7

The above Statement of Comprehensive Income should be read in conjunction with the accompanying notes.

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STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2013

Consolidated

Note

31 Dec 13 30 Jun 13

$ $

ASSETS Current Assets Cash & Cash Equivalents

2,442,883 409,247 Trade & Other Receivables

7

4,496,202 2,911,029

Inventories

11,554 35,573 Other Financial Assets

8

469,671 390,171

Other Current Assets

9

1,781,450 2,551,729 Total Current Assets

9,201,760 6,297,749

Non-Current Assets

Property, Plant & Equipment

10

423,567 359,983 Intangibles

11

4,566,421 846,523

Deferred Tax Asset

12

33,824 322,829 Other Non Current Assets

13

427,882 690,496

Total Non Current Assets

5,451,693 2,219,831

TOTAL ASSETS

14,653,453 8,517,580 Current Liabilities

Trade & Other Payables

4,625,596 4,432,682

Borrowings

14

670,341 875,542 Income Tax

15

658,014 255,033

Current Provisions

16

617,009 869,026 Other Current Liabilities

17

3,088,738 2,609,187

Total Current Liabilities

9,659,698 9,041,470 Non Current Liabilities

Non Current Payables

18

592,542 800,913

Non Current Provisions

19

317,760 239,457 Total Non Current Liabilities

910,302 1,040,370

TOTAL LIABILITIES

10,570,000 10,081,840

NET ASSETS

4,083,453 (1,564,260)

EQUITY

Contributed Equity

21

5,694,356 537,343 Retained Profits / (Accumulated Losses)

731,796 260,452

Share-Based Payment Reserve

23,124 3,768 Capital Reserve

(2,365,823) (2,365,823)

TOTAL EQUITY

4,083,453 (1,564,260)

The above Statement of Financial Position should be read in conjunction with the accompanying notes.

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STATEMENT OF CHANGES IN EQUITY FOR THE HALF-YEAR ENDED 31 DECEMBER 2013

Consolidated

Share-based

Payments Reserve

Capital Reserve

Contributed

Equity

Retained Profits /

(Accumulated Losses

Total Equity

$ $ $ $ $

At 1 July 2013 3,768 (2,365,823) 537,343 260,452 (1,564,260) Profit for the period - - - 471,344 471,344 Equity Transactions:

-

Additional equity issued (net of raising costs) - - 5,157,013 -

5,157,013

Cost of share-based payments 19,356 - - - 19,356 At 31 December 2013 23,124 (2,365,823) 5,694,356 731,796 4,083,453

At 1 July 2012 - - 2 (869,275) (869,273) Profit for the period - - - 614,575 614,575 At 31 December 2012 - - 2 (254,700) (254,698)

The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.

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STATEMENT OF CASH FLOWS FOR THE HALF-YEAR ENDED 31 DECEMBER 2013

Consolidated

31 Dec 13 31 Dec 12

$ $

Cash flows from operating activities Cash receipts from customers

23,178,976 21,354,446 Cash paid to suppliers and employees

(22,774,762) (19,676,776)

Interest Income

20,917 5,562 Finance costs paid

(33,684) (53,890)

Income taxes paid

- - Net cash from operating activities

391,447 1,629,342

Cash flows from investing activities

Purchase of property, plant and equipment

(83,131) (103,554)

Purchase of intangible software

(121,446) (340,000) Net settlement of iVox acquisition

(483,460) -

Net cash used in investing activities

(688,037) (443,554)

Cash flows from financing activities

Additional capital issued, net of costs

2,512,594 -

Amounts received and held on behalf of related parties

23,239 - Advances to former related company

- (803,465)

Repayment of borrowings

(205,606) (365,140) Net cash from / (used in) financing activities

2,330,227 (1,168,605)

Net increase in cash and cash equivalents

2,033,636 17,183

Cash and cash equivalents at beginning of period 409,247 1,364

Cash and cash equivalents at end of period

2,442,883 18,547 Net increase in cash and cash equivalents

2,033,636 17,183

The above Statement of Cash Flows should be read in conjunction with the accompanying notes.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2013

1. Basis of Preparation and Accounting Policies

1.1 Basis of preparation

The consolidated results for the half year represent the activity of Inabox Group Limited and its subsidiaries Telcoinabox Operations Pty Ltd and iVox Pty Ltd (together, “the Group”). The comparative results for 2012 reflect the results of Telco In A Box Pty Ltd, which on 8 May 2013 transferred its business to Telcoinabox Operations Pty Ltd.

The interim condensed consolidated financial statements for the six months ended 31 December 2013 have been prepared in accordance with AASB 134 Interim Financial Reporting.

The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group’s annual financial statements as at 30 June 2013.

For the purpose of preparing the half-year financial report, the half-year has been treated as a discrete reporting period.

1.2. Going Concern

At 31 December 2013 Inabox had a deficiency of net current assets of $457,938.

Net cash from operating activities during the half-year to 31 December 2013 totalled $391,447. The Group’s undrawn overdraft facilities at that date of $378,510. Cash flow forecasts based on current activity and business volumes indicate that the Group will be able to meet its debts as and when they fall due over the period to 30 June 2015.

In the light of these factors, the directors are of the opinion that the entity is a going concern as at the date of this report

1.3 Cyclicality

The Group is not subject to material cyclicality in its business performance as between half-year periods.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2013, continued

1.4 Accounting Policies

The half-year financial statements have been prepared using the same accounting policies as used in the annual financial statements for the year ended 30 June 2013, apart from the adoption of the following additional policies which arise from the expansion and diversification of the Group’s activities during the period.

(a) Revenue recognition on long term enablement contracts

Customers that require significant system and process development and customisation in order to meet their business requirements are charged interim enablement fees during the build / customisation process. These fees are calculated by reference to agreed recovery rates for staff costs and other direct expenses actually spent in the period.

Revenue from the provision of these services is recognised by reference to the stage of completion. Stage of completion is measured by reference to labour hours incurred to date as a percentage of total estimated labour hours for each contract. When the contract outcome cannot be measured reliably, revenue is recognised only to the extent that the expenses incurred are eligible to be recovered.

(b) Recognition and amortisation of acquired intangibles

Customer relationships are amortised over the period of expected future sales from the related asset. The amortisation expense is recognised in profit or loss.

Brands and goodwill have indefinite future lives and are tested for impairment annually at the consolidated entity level which is regarded as a single cash-generating unit.

There are no new and revised Standards and amendments thereof and Interpretations effective for the current reporting period that have a material impact on the Entity.

2. Initial Public Offering

In July 2013, Inabox Group Limited undertook the following capital raising activities:

Shares Issued

Price per share

Total raised

$ $ "Affiliate Offer" to Inabox Group staff and service providers 104,167 $0.96 100,000 Public Offer

2,833,333 $1.20 3,400,000

2,937,500

3,500,000

Costs of Issue, net of attributable taxation deductions

(858,721)

Net Proceeds

2,641,279

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3. Business Combination

Inabox Group Limited completed its acquisition of all of the issued capital of specialist VOIP provider iVox Pty Ltd on 12 July 2013.

iVox specialises in providing fully hosted VOIP services through its service providers to business end-customers. An intrinsic part of this service is the provision of call termination services which it sells as an unbundled service on request.

Consideration for the purchase comprised $942,603 in cash, less $459,144 cash acquired, and the issue of 2,096,446 new shares at a valuation of $1.20 each, totalling $2,999,194.

Assets and liabilities acquired at provisional fair value

$ $ Trade & Other Receivables

49,018

Inventories

2,229 Other Financial Assets

79,500

Property, Plant & Equipment

54,940 Identifiable Intangible Assets

Software

366,590

Brand

121,000

Customer Relationships

1,862,000

Total

2,349,590 Deferred Tax Liability

(627,185)

Trade & Other Payables

(205,229) Income Tax Payable

(195,851)

Current Provisions

(49,796) Other Current Liabilities

(24,851)

Other Non Current Liabilities

(71,500) Non Current Provisions

(33,000)

Total identifiable net assets at fair value

1,327,865 Goodwill arising on acquisition

1,671,330

Purchase consideration transferred

2,999,194

Provisional fair value

The deferred tax asset comprises accrued employee benefits which will be deductible when paid. Customer relationships are amortised over the estimated useful lives of two groups of relationships. Approximately 25% of this intangible asset will be amortised over five years, the balance over eight years from acquisition. Goodwill comprises the value of expected synergies arising from the acquisition. Fair values ascribed are provisional and may be reviewed at the end of the financial year.

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Intangible assets acquired were valued as follows:

x Software: net present value of 5 year royalty stream x Brand: net present value of a royalty stream in perpetuity, with a terminal value based on a long-term

sustainable growth rate of 2.5% p.a. x Customer relationships: net present value of multi-period excess earnings using estimated industry

customer churn factors of 10% for fully-hosted customers and 20% p.a. for call termination only customers. x The discount rate assumed was 20%.

Brand and goodwill have been assessed to have an indefinite useful life as there is no foreseeable limit to the period over which the assets are expected to generate cash inflows for the Group.

Profit Contribution

iVox Pty Limited's contribution to the reporting entity's profit for the period ended 31 December 2013 is shown below. Under the terms of the purchase agreement Inabox was entitled to the full benefit of the results from 1 July 2013 notwithstanding that the acquisition completed on 12 July 2013. The iVox profit contribution has accordingly been included since the start of the current financial period.

31 Dec 13

$

Earnings before interest, tax, depreciation and amortisation

487,977

Depreciation

(8,424) Amortisation

(15,438)

464,115 Additional amortisation arising as a result of the fair valuation exercise described above on combination of the iVox and Inabox Group businesses during the period

(169,200)

Interest income

8,182 Interest expense

-

Profit before tax

303,097 Income tax expense

(90,929)

Profit after taxation

212,168

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31 Dec 13 31 Dec 12

$ $

4. Revenue

Operating Revenue

23,292,281 20,565,675 Net Commissions

80,320 198,295

Enablement fees

754,994 - Total Revenue

24,127,595 20,763,970

5. Other Income

Interest Income

20,917 5,562

Other income

- 64,666 Total Other Income

20,917 70,228

6. Income Tax Reconciliation

Accounting profit before income tax

708,316 885,575

Prima facie expense at statutory income tax rate of 30%

(212,495) (265,673)

Expenditure not deductible: Legal & Professional Expenses

(22,392) (4,039) Entertainment Expenses

(2,086) (1,289)

Income tax expense

(236,972) (271,000)

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31 Dec 13 30 Jun 13

$ $

7. Trade & Other Receivables Receivables from service providers / customers

4,533,788 3,063,500

Provision for doubtful debts

(37,586) (152,471) Total Trade & Other Receivables

4,496,202 2,911,029

8. Other Financial Assets

Security deposits

469,671 390,171 Total Other Financial Assets

469,671 390,171

Carrying value of these assets equates to fair value.

9. Other current assets

Deferred commission expense

1,611,795 1,758,750

Costs of Capital Raising July 2013

- 629,960 Prepayments

169,655 69,796

Loans to Service Providers

- 93,223 Total Other Current Assets

1,781,450 2,551,729

10. Property, Plant & Equipment

Computer & Office Equipment at Cost

1,074,341 806,571

Computer & Office Equipment Accumulated Depreciation

(664,296) (466,046)

410,045 340,525 Financed Handsets at Cost

323,985 323,985

Financed Handsets Accumulated Depreciation

(322,177) (319,186)

1,807 4,799 Leasehold Improvements at Cost

68,740 68,740

Leasehold Improvements Accumulated Depreciation

(57,026) (54,081)

11,714 14,659

Total Property, Plant & Equipment

423,567 359,983

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31 Dec 13 30 Jun 13

$ $

11. Intangibles

Computer Software at Cost

1,742,831 1,251,465

Computer Software Accumulated Depreciation

(714,298) (426,399) Total Computer Software

1,028,532 825,066

Customer Relationships

1,862,000 - Customer Relationships Accumulated Depreciation

(137,898) -

Total Customer Relationships

1,724,102 - Brand, at cost

121,000 -

Goodwill, at cost

1,671,330 - Trademarks, at cost

21,457 21,457 Total Intangibles

4,566,421 846,523 Brand, goodwill and trademarks have been assessed to have an indefinite useful life as there is no foreseeable limit to the period over which the assets are expected to generate cash inflows for the Group.

12. Deferred Tax Asset

Asset / (Liability) at start of period

322,829 149,865 Movement in period

(29,841) 172,694 Attributable to costs of capital raising

368,023 - Intangible asset acquired through iVox purchase

(627,185) - At End of period

33,824 322,829

13. Other Non Current Assets

Loans to Affiliates

- 40,000 Deferred Commission Expense

427,882 650,496

Total Other Non Current Assets

427,882 690,496

14. Borrowings

Bank Overdraft 121,490 191,483

Interest-bearing debt facilities 548,851 684,059

Total Borrowings 670,341 875,542

Carrying value of these liabilities equates to fair value.

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31 Dec 13 30 Jun 13

$ $

15. Income Tax Payable

Income tax payable at the start of the period

255,033 710,091 Income tax expense for period

236,972 271,893

Movement in timing differences

(29,841) 172,694 Tax liability acquired through iVox purchase

195,850 - Tax effect of capital raising taken direct to equity (10,532) Tax liability of Telcoinabox Pty Ltd not acquired by Inabox Group Ltd

(889,113)

Total income tax payable 658,014 255,033

16. Current Provisions

Employee Benefits

617,009 869,026 Total Current Provisions

617,009 869,026

17. Other Current Liabilities

IPO application monies received in advance

- 390,621 Deferred commission income

1,651,635 1,727,431

Outstanding purchase instalments for software intangibles

240,000 240,000

Amounts held on behalf of related parties (refer note 20)

841,107 -

Accruals

355,996 251,135

3,088,738 2,609,187

18. Non Current Payables

Deferred commission income

439,042 638,913 Outstanding purchase instalments for software intangibles

- 120,000

Service provider security deposits

153,500 42,000

592,542 800,913

19. Non Current Provisions

Long Service Leave

317,760 239,457

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20. Amounts held on behalf of related parties

As disclosed in the Group’s Prospectus of 23 May 2013 and the Annual Report for the year ended 30 June 2013, Inabox acquired, through its wholly-owned subsidiary Telcoinabox Operations Pty Ltd, the operating assets of the Telcoinabox business from a subsidiary of Damordam Pty Ltd (“Damordam”). Damordam is an entity controlled by the founding shareholders of the Telcoinabox business who retain significant shareholdings in Inabox.

Damordam further sold the assets and liabilities of its New Zealand business, owned by Telcoinabox (NZ) Ltd, on 1 July 2013.

Damordam retained all historical obligations of the corporate entity which owned the Telcoinabox business, and retained beneficial ownership of sufficient current assets to discharge those obligations.

Inabox has subsequently realised, on behalf of the owners, the net proceeds of both the current assets retained by the Damordam group and the sale of the New Zealand business. On imminent finalisation of the tax returns of the Damordam group, Inabox will discharge those obligations out of the cash thus realised and remit any surplus to Damordam.

31 Dec 13

$

Net proceeds of current assets owned by Damordam group 817,868

Net proceeds of sale of New Zealand business

111,320 Tax obligations settled to date

(88,081)

Net amount held on behalf of related parties

841,107

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31 Dec 13 30 Jun 13

$ $

21. Contributed Equity

Ordinary shares

Ordinary shares issued and fully paid

5,694,356 2

Movement in ordinary shares on issue

$ Shares

As at 31 December 2012

2 3

Share Split

- 7,953,777

Share-based payments

30,000 249,860

Issued for nil cash consideration

- 125,020

Capital raising 22 May 2013

531,915 554,078

Cost of issue of shares, net of tax recoverable

(24,574)

As at 30 Jun 2013

537,343 8,882,738 Proceeds from issue of shares

3,500,000 2,937,500

Cost of issue of shares

(858,722) -

Equity consideration; acquisition of iVox Pty Ltd

2,515,735 2,096,446 As at 31 December 2013

5,694,356 13,916,684 Cash received, net of costs and before tax benefit

2,512,594 257,270

22. Commitments

Operating lease commitment

The Company has entered into a commercial lease of its premises, which has a remaining term of 17 months and requires the Company to pay rent of at least $634,089 per annum. In addition, outgoings may also be payable. The future commitments payable under the non-cancellable lease agreement as at 31 December 2013 are as follows:

31 Dec 13 30 Jun 13

$ $

Within one year

648,885 636,203 After one year, but not more than five years

274,772 604,498 After more than five years

- -

923,657 1,240,701

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23. Dividends

No dividends were paid or proposed during the half-year ended 31 December 2013 or during the half-year ended 31 December 2012.

24. Share Based Payment Plan

No new options over the ordinary shares of the Inabox Group Limited were issued during the reporting period. No options were exercised or were forfeited during the reporting period.

25. Segment Information

For management purposes, the consolidated entity is organised into one main operating segment, wholesale telecommunications enablement, which comprises the full suite of fixed line voice services, including line rental services, mobile voice and data services, dial-up and high speed broadband internet services plus mobile telephone hardware. All of the Group’s activities are interrelated and discrete financial reporting is provided to the Board (chief operating decision maker) as a single segment. All significant operating decisions are based upon analysis of the Group as one segment. The financial results from this segment are equivalent to the financial statements of the consolidated entity as a whole.

26. Subsequent Events

No events have occurred after the reporting period that would require, as of the date of this half-year report, either adjustment of or disclosure in this report.

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DIRECTORS’ DECLARATION In accordance with a resolution of the directors of Inabox Group Limited, I declare on behalf of the directors that:

1. The financial statements and notes of Inabox Group Limited are in accordance with the Corporations Act 2001, including:

a. giving a true and fair view of the consolidated entity’s financial position as at 31 December 2013 and of its performance of the half year ended that date; and

b. complying with Australian Accounting Standards and the Corporations Regulations 2001; 2. The financial statements and notes also comply with the International Financial Reporting Standards; and 3. There are reasonable grounds to believe that the Company will be able to pay its debts as and when they

become due and payable. On behalf of the board

Siimon Reynolds Director

Damian Kay Director

Sydney, 27 February 2014

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INDEPENDENT AUDITOR’S REVIEW REPORT TO THE MEMBERS

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A member firm of Ernst & Young Global LimitedLiability limited by a scheme approved underProfessional Standards Legislation

Ernst & Young680 George StreetSydney NSW 2000 AustraliaGPO Box 2646 Sydney NSW 2001

Tel: +61 2 9248 5555Fax: +61 2 9248 5959ey.com/au

Repor t on t he Ha lf-Year F inancia l ReportWe have reviewed the accompany ing ha lf-year financ ia l report of Inabox Group L im ited , wh ichcompr ises the statement of f inancial posit ion as a t 31 December 2013 , the sta temen t ofcomprehensive income , statement of changes in equ ity and sta tement of cash flows for the half-yearended on that da te , notes compr ising of a summary of sign ificant accounting po licies and otherexplanatory information, and the d irectors’ declara tion of the consolidated enti ty comprising thecompany and the entities it controlled at the half-year or f rom time to t ime dur ing the ha lf-year.

Directors’ Responsibilit y for the Ha lf- Yea r F inanc ia l Repor t

The directors of the company are responsib le for the prepara tion of the half-year f inancia l report tha tgives a true and fa ir view in accordance with Austra lian Accoun ting Standards and the Corpora tions Ac t20 01 and for such interna l contro ls as the directors determ ine are necessa ry to e nab le the prepa ra tionof the ha lf-yea r financ ia l repor t that is free from materia l misstatemen t, whether due to fraud or e rror.

Aud itor ’s Responsib ility

Our responsib ility is to express a conclusion on the ha lf-year financ ia l report based on our review. Weconducted our review in accordance wi th A ud it ing Standard on Rev iew Engagemen ts ASRE 2 410Review of a F inanc ia l Report Performed by the Independent Aud itor of the Entity, in order to statewhether, on the basis of the procedures described, we have b ecome aware of any ma tter tha t makes usbe lieve that the f inanc ia l report is not in accordance wi th the Corpora tions Act 200 1 includ ing: giving atrue and fa ir view of the conso lidated entity ’s financia l posi tion as a t 31 December 20 1 3 and itsperformance for the half-year ended on that date; and comp ly ing w ith Accounting Standard AASB 1 34Interim F inancia l Reporting and the Corpora tions Regulat ions 2 00 1 . As the auditor of Inabox GroupL imited and the entit ies it controlled dur ing the ha lf-year, ASRE 2410 requ ires tha t we comply with theethica l requirements re levant to the audit of the annua l financia l report .

A review of a ha lf-year f inancia l report consists of making enquir ies, pr imarily of persons responsiblefor financia l and accounting matters, and applying ana lyt ica l and other rev iew procedures. A review issubstant ia lly less in scope than an audit conducted in accordance with Austra lian Audit ing Standardsand consequent ly does not enable us to obta in assurance that we would become awa re of a ll sign if icantmatters that might be ident ified in an audit . Accordingly, we do not exp ress an aud it op in ion.

Independence

In conduct ing our review, we have complied w ith the independence requiremen ts of the Corpora tionsAc t 20 01 . We have g iven to the directors of the company a wr itten Audi tor’s Independ ence Declarat ion,a copy of wh ich is included in the D irectors’ Report .

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A member firm of Ernst & Young Global LimitedLiability limited by a scheme approved underProfessional Standards Legislation

Conc lusionBased on our rev iew, which is not an aud it, we have not b ecome aware of any ma tter tha t makes usbe lieve that the ha lf-yea r financial repor t of Inabox Group L im ited is not in accordance w ith theCorpora tions Act 2 001 , including:

a) giv ing a true and fa ir v iew of the consolida ted en tity ’s financ ia l posit ion as at 3 1 December 2013and of its performance for the ha lf-year ended on that date; and

b) complying with Account ing Standard A ASB 134 Interim F inanc ia l Reporting and the Corpora tionsRegula tions 200 1 .

Ernst & Young

L isa Nijssen-SmithPartnerSydney27 February 201 4

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Documents

For personal use only - ASX · Thursday, 27 February 2014: Inabox Group Limited (“Inabox”, ASX:IAB) has today reported its financial results for the half year ended 31 December