a guide to our company -...

A GUIDE

TO OUR

COMPANYANNUAL REPORT 2012-13

NetComm Wireless builds devices that connect machines, networks and people worldwide

Annual Report 2012-2013 - NetComm Wireless - 1

Table of Contents

Chairman’s Report 2

Managing Director’s Report 4

Board of Directors 6

Highlights 8

Our Innovation 10

Our Strategy 12

M2M in Healthcare 14

M2M in Transportation 16

M2M in Point-of-Sale 18

M2M in Asset Management 20

M2M in Utilities 22

M2M in Business Services 24

Keeping business connected 26

Corporate Governance 28

Financials 30

2 - NetComm Wireless - Annual Report 2012-2013

Chairman’s Report

During fiscal 2013, we continued NetComm Wireless’ transition from a consumer based technology developer to a company focused on wireless M2M, an endeavour set in motion in the second half of fiscal 2011. The costs associated with this transformation have impacted statutory profit for 2012/2013, but these short-term impacts will be more than offset by the long-term advantages of wireless M2M.

Our M2M successes show that we implemented the right strategy at the right time. We had the foresight to shift our focus ahead of substantial M2M market growth, and a number of major supply contracts and distribution partnerships have been secured as a result. With a solid sales pipeline and long-term contracts with global carrier and channel partners now in place, we expect to see strong growth in revenue and earnings over the coming years.

2013 Financial PerformanceRevenue for the year ended 30 June 2013 was $42.9 million, $16.5 million below the previous year.

Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) from continuing operations was $803,000, in line with previous guidance, and an underlying EBITDA of $1.6 million was generated after excluding $0.5m, unrealised foreign exchange losses on the Company’s US$ denominated borrowings as well as $0.3 million restructuring costs taken during the year.

Successful $5.7 million capital raising On 3 June 2013, NetComm Wireless announced the successful completion of a $5.0 million equity placement. The placement was substantially oversubscribed, supported by existing shareholders as well as a number of new institutions and sophisticated investors.

A Share Purchase Plan (SPP) was offered to eligible shareholders, which was also oversubscribed and scaled back to raise an additional $700,000. The SPP shares were allotted on 28 June 2013.

2013 was a significant year for NetComm Wireless. We achieved solid progress

against the strategic priorities announced in 2011/2012, successfully positioning the

Company for the future in terms of product innovation, commercial flexibility and

continued growth in the global Machine-to-Machine (M2M) market.


Dividend policy The Directors decided to preserve cash and not pay a dividend for 2013 because of the Company’s continued investment in its global expansion, with a particular focus on the growth opportunities presented by significant M2M growth across all vertical industry sectors worldwide. NetComm Wireless’ dividend policy will be reinstated as soon as it is deemed prudent.

Despite reinvesting for growth in the global M2M market, NetComm Wireless’ balance sheet was strengthened through a reduction of net debt, which was reduced from $5.3 million in fiscal 2012 to $3.2 million in fiscal 2013.

A resilient share price has been maintained due to NetComm Wireless’ strategy to underpin its position in the wireless M2M market through the securing of long-term contracts that will continue to deliver long-term returns for the Company and its shareholders. We have actively engaged new investors over the past year and, coupled with our successful capital raising, NetComm Wireless’ share price has sustained a steady position.

I am encouraged by the progress made to date by the three committees that were established to help the Board fulfil its responsibilities in the areas of: Nominations and Remuneration; Audit and Risk Management and Investor Relations. As chair of the Investor Relations committee, considerable time was spent engaging with investors on issues ranging from executive remuneration to capital management, and I am committed to further strengthening our shareholder communications.

We remain committed to creating greater long-term value for our customers, partners and shareholders; and remain focused on delivering on our fiscal 2014 priorities through continued innovation, a disciplined approach to capital management and increased market share as global demand for custom M2M technologies continues to grow.

The outstanding achievements of the past year demonstrate the strength of our strategy and the quality of our people. Our culture of innovation is what sets us apart and on behalf of the Board, I would like to thank our Managing Director and CEO, David Stewart, and his senior management team and staff for their exceptional contribution and commitment.

I am excited about the opportunities we see in fiscal 2014 and beyond, and I would like to thank you, our shareholders, for your continued support and confidence.

Justin MilneChairman


Over the past year, we achieved a balance between maintaining existing processes where appropriate and making modifications where needed, while continuing our transition to wireless M2M. We heightened our competitive advantage through scalable production and tailored solutions, and continued to cultivate relationships with market leading telecommunications companies and enterprise partners as part of our ‘coat-tails’ strategy which enables us to significantly reduce the risks involved with growing and diversifying across geographies and markets.

We continued to invest in the acquisition of additional engineering and sales capabilities to support global growth, realigned resources to support key opportunities and strengthened our operational efficiencies. We remained focused on working with our strategic carrier and channel partners to deliver cutting-edge technologies to value added resellers, system integrators and vertical industry sectors worldwide.

Working with industry-leaders in the M2M spaceVodafone Global Enterprise approved the MachineLink 3G for mass production and global deployment in the third quarter of fiscal year 2013; and we expect volumes to increase substantially over the next two to five years with Vodafone currently targeting the top 1,500 companies worldwide.

Also in the M2M space, we expect additional volume from Cubic Transportation, South East Water and other M2M contracts. With a lag between contract and delivery, we anticipate that volumes from these contracts and others in the pipeline will build substantially in fiscal year 2015 and beyond.

We secured strategic distribution agreements with SYNNEX in North America in order to support our long-term M2M growth strategy which centres on the delivery of wireless M2M technologies to vertical markets across North America as well as the UK and Europe. These distribution partnerships will drive volume growth and profitability in line with our continued penetration of the global M2M market.

The smart meter opportunityWe set our sights on the smart meter market in 2011, and are now engaged in one of the largest 3G smart meter deployments to date – the Victorian Government’s mandatory state-wide rollout of smart meters. We have a supply contract with Ericsson and as announced to the market in May 2013, the initial order will represent revenue of AUD $12.5 million to NetComm Wireless with all of this revenue to be earned in fiscal 2014.

Managing Director’s ReportNetComm Wireless made good progress this year. The Company strengthened its

position as a leading developer of wireless Machine-to-Machine (M2M) devices,

further expanded into the fast growing global M2M sector and focused investment in

areas that will deliver long-term returns.


Further smart meter opportunities are also being pursued in Europe, Middle East, USA and Australasia. This year we entered into our second major M2M supply agreement with Mobily to support the strong demand for wireless M2M communications across industry sectors such as utilities, oil and gas and transport and other businesses located in areas with limited access to fixed line (ADSL, cable, fibre) services.

A focus on innovationOne of our key differentiators is our ability to innovate and adapt ahead of network advances and fast evolving market transitions, and we remain focused on capturing the opportunities created by these transitions. A significant current transition is the shift to flexible M2M application development to support specific functions such as: energy management (Ericsson, smart metering); transport ticketing (Cubic Transportation); sea level monitoring (Bureau of Meteorology) and sewer station control (South East Water). Our innovative open source approach will continue to drive the uptake of M2M across diverse industry sectors by removing the roadblocks to developing customised M2M applications.

We have also identified business continuity as a key growth area as the cost of Internet downtime escalates in line with increased business automation and reliance on IP-bases services such as Point of Sale (PoS), VoIP, M2M and cloud-based systems.

In recognition of NetComm Wireless’ solid commitment to innovation, we are pleased to have won the prestigious 2013 ACOMMS Award for Innovation and three categories of The Australian Business Awards 2013: Business Innovation; Best Industrial Product and Product Innovation for the second consecutive year.

Looking aheadNetComm Wireless expects to generate substantial growth from fiscal 2014 onward as it secures further M2M contracts in line with our strategic plan to grow M2M market share.

The change of government may impact the timing of our deliveries relating to our contract with Ericsson for the supply of fixed-wireless devices for the National Broadband Network (NBN).

Our strategy remains focused on operational excellence and growing our share of the global M2M market, while also enhancing margins in the fast growing business continuity and rural broadband markets.

With 50 per cent of organisations worldwide expected to have adopted M2M by 2015, and 78% citing M2M as crucial to business success, there will be increased demand for the wireless M2M technology that we develop and we remain optimistic about the long-term outlook for NetComm Wireless.

I thank you and all of our employees for your continued support. We have pursued a consistent strategy and laid the groundwork for future growth, and I am certain that when I report back to you on our progress at this time next year, we will have built an even stronger Company which remains committed to creating greater value for our shareholders.

David StewartCEO and Managing Director


Justin Milne ChairmanIndependent Non-ExecutiveMr Milne has substantial telecommunications industry experience and he is an experienced company director having served in diverse industry sectors with a multinational focus. He had an executive career in telecommunications, marketing and media. From 2002 to 2010 he was Group Managing Director of Telstra’s broadband and media businesses, and headed up Telstra’s New Media businesses in China. He is currently a Non-Executive Director of Tabcorp Holdings Limited and Members Equity Bank Pty Ltd. He is also a board member of Basketball Australia and Sydney Children’s Hospital Foundation.

David Stewart Chief Executive Officer and Managing Director Mr Stewart is an experienced CEO and successful entrepreneur with more than 30 years in management and business leadership roles. David founded Banksia Technology Pty Limited in 1988 and successfully managed the company as a fast growing and highly profitable business.

In 1996, he instigated the successful takeovers of a number of his competitors, including NetComm Limited, which was completed in November 1997. David assumed the role of Managing Director of the merged entity and remains the single

largest shareholder of NetComm Wireless Limited. David has a strong financial background, extensive experience in sales and marketing and has a strong interest in new technologies.

Ken Sheridan CFOExecutive Director Mr Sheridan joined the Board in December, 2010. He is a chartered accountant with over 30 years’ experience in senior management roles. Ken provides advice and direction on financial, HR, IT, risk management and company secretarial matters as well as business strategy. He is actively involved in the Company’s business planning and review activities and is also responsible for the design and implementation of the Company’s governance framework.

Ken BoundyDirector Independent Non-ExecutiveMr Boundy joined the Board in August, 2012 and is Chairman of the Nominations and Remuneration Committee.

He is currently Chairman and/ or non-executive director on four boards, member of two advisory boards and part owner of two businesses. Ken has held a number of prominent positions over the past thirty years including: Managing Director of the Australian Tourist Commission,

Tourism Australia; Executive General Manager, International, of James Hardie Industries Limited; Group General Manager, Corporate Development, of Goodman Fielder Limited (GFL); CEO, of Goodman Fielder Asia, Singapore (GFA) and Director, Industry Development, of the Victorian Department of Industry Commerce and Technology.

Stuart Black, AMDirectorIndependent Non-ExecutiveMr Black joined the Board in March, 2013 and is Chairman of the Audit & Risk Committee.

Mr Black is a prominent Chartered Accountant and experienced Company Director. He is the former Managing Partner in the chartered accounting firm Chapman Eastway and has extensive experience in professional services, agribusiness, financial services, manufacturing, import, distribution, IT and biotechnology. Mr Black is Non-Executive Director of Australian Agricultural Company Limited and Coffey International Limited, Chair of Chartered Accountants Benevolent Foundation Ltd and a Non-Executive Director of The Country Education Foundation of Australia Ltd. He was the former acting Chair and current Director of the Accounting Professional and Ethical Standards Board Ltd and Past President of the Institute of Chartered Accountants in Australia.

Board of Directors


Justin Milne Chairman

Independent Non-Executive

Ken Sheridan Chief Financial Officer

Executive Director

Ken Boundy DirectorIndependent Non-Executive

David Stewart Chief Executive Officer & Managing Director

Stuart Black, AM Director

Independent Non-Executive

8 - NetComm Wireless - Annual Report 2012-20138 - NetComm Wireless - Annual Report 2012-2013

1

2 3

4

5

6

7


The Vodafone MachineLink 3G hits the global M2M market Since its official launch by Vodafone at the Mobile World Congress 2013, the Vodafone MachineLink 3G has been approved for mass production and global deployment.

NetComm Wireless wins big for the second year running• 2013 ACOMMS Award for Innovation • 2013 Australian Business Award for Business Innovation• 2013 Australian Business Award for Product Innovation• 2013 Australian Business Award for Best Industrial Product

Working with Ericsson on one of the world’s largest 3G smart meter rolloutsEricsson selected NetComm Wireless to supply the 3G communications card component of the rollout of smart meters to a Victorian electricity utility.

Driving M2M growth in the Middle East with MobilyNetComm Wireless entered into a second major Machine-to-Machine (M2M) supply agreement with Mobily, a leading telecommunications service provider in the Kingdom of Saudi Arabia.

The multi-award winning Outdoor Router makes its global debutThe Outdoor Router (NTC-30) is the first device of its kind successfully launched by: Telstra (Telstra Outdoor Gateway) and Mobily (NTC-30WV).

Agreement with Etisalat group to supply M2M technologies in the Middle East, Asia and Africa The agreement extends NetComm Wireless’ M2M product portfolio to the operations of Etisalat Group in fifteen countries providing widespread access to M2M solutions and services in areas such as smart metering, mHealth, digital signage, transportation and security.

A new choice for North America’s M2M marketNetComm Wireless and SYNNEX sign distribution agreement to enhance M2M and end-to-end mobility solutions services to more than 8,000 resellers in Canada and the USA.

Highlights


1

2

3

4

5

6

7


What started out as a small team responsible for developing Australia’s very first

modem is today recognised as one of the world’s most innovative companies.

Our strength is in our ability to see waves in technology, assess the benefits and pioneer change ahead of network advances and market trends.

Our technological innovations are focused on:

• Wireless M2M devices that connect equipment such as utility metres; vehicles; PoS terminals, security cameras; medical devices, machines and systems to enable real-time awareness and control

• Superfast fibre and 4G/LTE network access devices designed to meet the phenomenal demand for data which is doubling each year

• Business continuity devices where businesses can rest assured that their businesses will stay on line with wireless broadband in the event their fixed line connection fails

Our innovatorsOur business was built on the strength of our innovators and our culture of innovation underpins our achievements. We have attracted, developed and retained the people needed to innovate leading-edge wireless M2M technologies designed to transform the way the world communicates. With the resources and systems in place to encourage, nurture and grow new ideas, innovators across our research and development (R&D), marketing, product management, sales and operations teams add ongoing value to our organisation.

OurInnovation


Extend broadbandMulti-award winning Outdoor Router Series

(NTC-30) routers are the first and only technology

to optimise 3G/4G signal strength and eradicate

black spots by attaching to the outside of a

premise to create a powerful indoor/outdoor WiFi

network virtually anywhere.

Decrease downtimeInternet downtime is costly in terms of revenue,

productivity and output for businesses, and can

be life threatening in vertical sectors such as

health and meteorology. NetComm Wireless has

equipped devices with multi-system monitoring

and automatic failover to keep communications

up and running.

Future ready

NetComm Wireless was the first to introduce

technologies that provide a future-proof central

connection point for all online activities with

support for changing user requirements,

emerging technologies and network upgrades

through innovation.

Connect machines

A global push for real-time asset monitoring

and management across all industry verticals

requires a solution that covers a diverse range

of applications and deployments. Our M2M

devices run on an open source Linux platform,

familiar to millions of developers worldwide. This

combined with our Software Development Kit

removes many of the roadblocks to developing

customised M2M applications.


Our strategic priority is to create long-term shareholder value by continuing to lead

innovation, capture global expansion opportunities, grow our Machine-to-Machine

(M2M) business, build partnerships and sustain our unique differentiators.

Due to the fast evolving nature of our industry, we have implemented a clear strategy

which is regularly reviewed by the Board to ensure the most advantageous mix of

growth, efficiency, risk and return.

OurStrategy

Global expansion strategyOur global growth strategy involves expanding our customer base and winning long-term contracts in targeted overseas markets through strategic partnerships; and identifying customers that will deliver sustainable revenues and appropriate margins.

Our efforts are heavily concentrated on global 3G/4G markets, with a particular focus on wireless M2M communications which is innovating the way that every ‘thing’ communicates. We are transitioning from a company that transformed consumer communications into a company that is now pioneering M2M communications through the development of technologies that support the remote monitoring and management of equipment and systems across diverse vertical industry sectors including: health, retail, utilities, security, transport, meteorology and mining.

Growing our M2M businessOur strategy is to sustain long-term growth in the global M2M market by leveraging cross industry opportunities and partnerships based on three key models:

1. Project based supply2. Telecommunication carrier partnerships3. Distribution / channel partnerships

Project based supplyOur key differentiator is our ability to deliver custom designed communication devices to meet the specific software and hardware requirements of our industry partners and enterprise customers. To deliver this capability requires expertise in a broad range of areas including solution architecture, network expertise and the ability to integrate our product design into the application.

Our adaptable approach has enabled us to secure project based M2M supply deals in areas such as energy utilities, security, healthcare and ticketing.


Telecommunication carrier partnershipsTo deliver on our strategy and meet the challenges of the fast evolving technological environment, we are building strong and enduring partnerships with leading telecommunications carriers such as: Telstra; Vodafone Global Enterprises; Rogers & TELUS in Canada; Etisalat and Mobily in the Middle East and Telecom New Zealand.

We will continue to strengthen our position in the global M2M market, reduce risk and create market value through our coat-tails strategy of working with large organisations to capture opportunities in global markets.

Distribution / channel partnershipsExpanding our partner network presents an exciting growth opportunity for NetComm Wireless. We partner with experienced, established and respected channel partners to help extend our reach into new geographies and vertical markets. Our strategy is to take a selective approach, engaging partners with strong technical expertise and considerable vertical market experience. We provide access to a diverse range of marketing resources and intellectual property to help differentiate our products and add value to resellers, system integrators and vertical market sectors.

In delivering on our channel partner strategy we have signed a key supply contract in North America with SYNNEX Corporation.

Innovation strategyFor over 31 years we have launched several first-to-market product innovations and our strategy is to continue this momentum by: staying ahead of network and market changes; investing in our engineers and R&D resources and cultivating a culture of innovation across every department by encouraging and rewarding new ideas.

Our innovation strategy involves:

• Growing an innovative wireless M2M, business continuity and wireless product portfolio designed to meet the unique requirements of industrial markets worldwide

• Sustaining multifaceted knowledge of wireless technologies, market trends and network evolution

• Developing products that can be customised to meet the requirements of different regions and vertical industry sectors worldwide

• Fostering continued growth through the development of our own intellectual property

• Delivering advanced hardware, firmware and software solutions

• Growing our software development team to deliver innovative firmware features

• Reducing reliance on 3rd party R&D suppliers to further strengthen our intellectual property

• Improving our knowledge of modules and chipsets to help refine our product features

• Continuing to improve end user experience through continuous refinement of our user interface

• Working closely with our customers to innovate products designed to help them grow in existing markets

Unique differentiators Customisation is our key differentiator. We seek to achieve a significant advantage over competitors that develop ‘one size fits all’ products by engineering technologies designed to meet our customers specific requirements such as the products features, design, budget or delivery timeframe. Long-term contracts that provide sustainable revenue are won by working closely with customers that require specialised devices for diverse and unique applications. Rather than compete in high volume, low price market segments, our strategy is to develop high-performance specialised and customised devices for leading companies globally.


M2M in Healthcare Healthcare needs are shifting as the population ages. A growing shortage of

doctors and healthcare professionals in rural and regional communities is coinciding

with an aging demographic and chronic illness epidemic – making reliable M2M

communications for remote healthcare more critical than ever.


For many patients, making regular trips to a hospital or medical centre simply isn’t possible, meaning healthcare providers need to help patients overcome distance barriers by finding innovative new ways to provide personalised care.

A NetComm Wireless M2M device gives practitioners and their patients a whole new level of flexibility and freedom by enabling the remote tracking, monitoring and control of medical devices over a wireless 3G/4G network.

Freedom for patientsConnecting patients and medical equipment to doctors over a wireless 3G/4G network means more control over treatment schedules and the freedom to get on with life. With medical professionals now able to remotely monitor and analyse data relating to blood pressure, heart rate and blood levels, the need for face-to-face checkups can be significantly reduced.

As well as monitoring health, NetComm Wireless’ wireless M2M devices can be used to maintain health for patients needing ongoing therapy, such as dialysis treatment for renal failure. Rather than sit in a sterile clinical environment for hours on end, patients can now be treated in the comfort of their own homes with the peace of mind that their doctor is watching.

Flexibility for practitionersThe opportunities are endless for doctors wanting to provide clinical healthcare remotely by monitoring and controlling medical equipment, or connecting with their patients via video over a wireless network.

Making the best use of available resources is now more vital than ever as increasing demands are placed on the healthcare sector. With tight certification regulations around the use of medical equipment, organisations are choosing not to integrate communications intelligence into individual pieces of medical equipment. Instead, wireless M2M devices are deployed to create a connection that can be shared between any number of Ethernet-enabled medical machines without the need to certify each device.


M2M in TransportationWhether transporting people, products or produce, real-time awareness is critical for

enabling cost-effective improvements to efficiency, safety, maintenance, logistics and

customer loyalty.


Mobile by nature, the transportation sector represents one of the greatest opportunities for wireless M2M. The live observation and management of trucks, buses, trains, ships and other vehicles over global 3G / 4G networks supports applications such as: electronic ticketing, asset tracking, road freight, fleet management, security emergency / roadside assistance, vehicle recovery, traffic information, navigation and voice.

Public transportM2M supports the global shift to cashless transport systems that will see cash and paper tickets replaced with smartcards that commuters can link to online accounts, or credit and debit cards to improve the fare collection process, eliminate cash handling risks and to improve business efficiencies with live access to customer data.

NetComm Wireless has developed 3G M2M devices for the Australian NSW State Government’s integrated electronic ticketing system which is set to operate across the state’s public ferries, trains and buses. The technology can also be adapted to connect multiple devices such as video surveillance cameras, digital displays and GPS systems to 3G.

Commercial transportIn the commercial road and sea freight sector, wireless M2M supports the remote monitoring, management and regulation of vehicles, their devices and their loads. NetComm Wireless’ 3G M2M devices improve supply chain productivity by enabling: improved management and asset coordination, visibility of inventory movements along the supply chain, information to proactively manage driver behaviour, vehicle speeds, loading, engine performance and fuel consumption as well as the improved management of regulatory and compliance obligations.

Emergency transportEmergency services cover a diverse and challenging range of M2M requirements in areas such as remote diagnostics, messaging, vehicle management, real-time tracking and traffic information. The ability to transmit information back to a central emergency centre dramatically improves the effective handling of emergency situations.

Emergency vehicle cameras can be monitored 24/7 to observe traffic congestion, general incident or emergency situations that may arise. Streaming video, audio and text via a web interface, can prepare hospitals for incoming patients and provide in-transit care from the information being relayed.


M2M in Point-of-Sale Retailers, supermarkets, restaurants, service stations and other businesses that

were once restricted to permanent locations with costly and cumbersome fixed

line services can now utilise wireless Point-of-Sale (POS) terminals to set up shop

virtually anywhere.


With access to wireless networks, fast and secure transactions can be made at events, trade fairs, exhibitions, markets, carnivals and other outdoor and temporary locations. Wireless POS systems also allow trades people, couriers, taxis and other businesses that operate on the move to save time, streamline processes and improve customer convenience by processing on the spot payments at the job site or on the road. Whether selling goods or services, a NetComm Wireless 3G M2M device gives any business the freedom to operate anywhere.

M2M in Point-of-Sale

POS anywhereAs consumers become more mobile, it is critical that businesses have the flexibility to trade at any location.

Using a wireless POS terminal, secure real-time payments can be made wherever wireless network coverage exists meaning businesses can benefit from faster transactions and the ability to increase revenue by making sales where fixed line connectivity is unavailable or unfeasible.

Smart salesAs well as offering flexibility and mobility, wireless Machine-to-Machine (M2M) retail applications reduce costly phone line rental costs, do away with cluttered wires and cables and can be used to track purchases and communicate information for improved supply chain management.

Wireless POS can also be used to support self-service solutions, customer profiling and other value-added customer applications.

Mobile wallets NFC-ready POS terminals are on the rise with Berg Insight forecasting that the global installed base of NFC-ready POS terminals will grow at a compound annual growth rate (CAGR) of 49.4 percent from 3.9 million units in 2011 to 43.4 million units in 2017. Mobile wallet services provide retailers with the opportunity to engage customers in real-time while they are making purchasing decisions by providing personalised offers in-store; while also supporting value-added services such as loyalty cards and deal coupons.


M2M in Asset Management Faced with increased challenges and demands, industry must become ever more

efficient, productive and sustainable to succeed. Seizing a competitive advantage is

all about finding effective new ways to monitor, measure and manage business assets

such as site equipment, machines, vehicles and systems.


Assets that work solo lack the Machine-to-Machine (M2M) communication capabilities needed to drive down costs and achieve a high degree of accuracy, consistency and safety. M2M gives industry the freedom to connect, monitor and control remote assets from virtually any location, making it simpler to manage system inconsistencies, control operations and reduce manual labour costs.

Sending technicians to perform maintenance tasks or troubleshoot problems can be costly and time consuming, particularly for industries such as mining, agriculture, forestry and meteorology which are often based in isolated locations or dispersed across vast and difficult to access areas.

M2M can be used to monitor and control remote equipment and systems over 3G in real time to help businesses detect and respond to maintenance issues, protect and manage assets, maintain continuity, boost productivity and cut costs.NetComm Wireless’ 3G M2M devices increase visibility into how remote assets are performing, empowering businesses to take control.

Access assets anywhereWireless communication is often the only option for industries based in remote or inaccessible areas. With 3G, industries operating in isolated locations, or spread across difficult to access areas, have the freedom to access assets remotely.

With a clear view of asset conditions from virtually any location, businesses can save time and money with a fast response to faults or security breaches. Using wireless M2M communications, malfunction alerts and accurate status information relating to temperature, location, fuel level, pressure, usage and performance can be sent to the office over 3G for immediate action.

NetComm Wireless’ 3G M2M devices optimise processes and enhance business efficiency with the power of real time awareness.

Commanding controlWhether responding to a fault or failure alert, performing scheduled maintenance or installing an upgrade, with simple access to 3G remote assets can be managed from virtually any place, at any time without human intervention.

Devices transmit real time data relating to their condition so organisations can take control by restarting systems, adjusting temperature levels, regulating pressure and making upgrades over 3G to avoid costly and inefficient manual processes.

SafetyM2M enabled machines can also protect workers by taking on tasks in dangerous environments. Remotely controlled assets and equipment can step in where heat or hazardous substance levels are deemed unsafe and can be used to improve workplace safety by doing the heavy lifting and endurance work.


M2M in Utilities ‘What gets measured gets managed,’ Peter Drucker.

Because electricity cannot be typically stored, and consumption patterns fluctuate

across days, seasons and regions – for utilities to better manage energy, supply into

the grid must match real-time usage.


The difference between peak and average demands on the grid can be substantial; but spending billions on expanding networks to meet peak demand, which spikes less than 1 per cent of the time, is no longer viable.

Unlike conventional utility service meters which use electro-mechanical counters to record only the most basic consumption information on a quarterly basis, smart meters automatically record and relay usage data at regular intervals to precisely measure energy use, thereby taking pressure off networks by giving consumers the ability to shift consumption to off peak times of the day.

Smart energy For the customer, smart energy is all about using smart meters to save energy with the insight needed to avoid using clothes dryers, air conditioners and other high energy pieces of equipment during high-demand periods. Detailed usage information also offers financial savings to customers that choose to move their consumption to lower-prices periods; and accurate billing eliminates the potential for bill shock resulting from estimated charges.

Utilities benefit from the ability to: avoid manual meter reading costs, improve customer service, fully automate billing systems, automatically determine load profiles, improve efficiency and remotely monitor and manage grid assets.

Smart waterWater, sewerage, trade waste and water saving services can be monitored and managed using smart meters to automatically transfer data to a central host system over 3G. In the same way that energy utilities use smart meters to manage energy, water utilities can achieve cost savings and efficiency benefits using smart meters to enable the undisrupted remote observation and control of pumped sewer systems, water reserves, tanks and other equipment from any location without fixed-line limitations. Water utilities can also deploy a NetComm Wireless 3G M2M device to take data from the Serial port, and using the embedded IP stack, send it over a 3G network to any IP network enabled device such as a computer, tablet or smart phone.

Smart metersSmart meters record and relay usage data at regular intervals, allowing for the precise measurement of energy and water use, offering a range of benefits to both the consumer, the utility and the environment.

NetComm Wireless designs, develops and manufactures Grid Net-enabled 3G wireless communications cards for the global smart grid market and plays a key role in the communications component of smart metre deployments both in Australia and throughout the world.


M2M in Business Services Today’s businesses operate in a fast-paced ‘always-on’ environment. Products

and services are delivered around-the-clock via vending machines and kiosks;

and information relating to flight times, traffic alerts, retail sales, exchange rates

and even the score at sporting events can be communicated to audiences

in real time using digital signage.


Wireless Machine-to-Machine (M2M) gives businesses the ability to monitor and manage remote assets such as vending machines and kiosks; while allowing for live updates to digital signs which are flourishing around airports, cinemas, shopping centres, medical centres, sporting events and train stations to promote, inform, educate and entertain.

With the right 3G M2M technology in place, businesses can remotely observe stock levels, manage inventory, communicate with customers in real time and reduce the cost and time involved with sending staff on the road.

M2M in Business Services

Connecting anywhere Digital displays once required a costly fixed line connection to connect to the Internet, or else time and money would be wasted sending technicians to individual sites to manually load new content to the sign’s hard drive.

Today, digital displays are springing up everywhere as access to 3G networks provides the freedom to install signs at outdoor sites such as bus stops or events and to switch between locations. Vending machines and interactive kiosks can also be moved between locations and setup at temporary locations such as outdoor festivals and events.

With easy access to 3G, an entire network of screens across multiple locations can be simultaneously updated in real time from a central location ensuring that businesses get the right message to the right people at the right time.

Connecting with customersIn a world of sensory overload, attracting attention is all about standing out in the crowd. Remote access to digital displays, vending machines and kiosks enables a two-way flow of information over 3G, making it easy to interact with the target audience through the machine.

Using M2M, digital signs can also engage customers through mobile and touch technologies, while allowing live behavioural and demographic information to be captured sent to a central office for analysis.

Cost savingsVending machines and kiosks that interact over 3G send real time sales data to a central database so pricing can be automatically adjusted in line with demand. Designed to provide supersized savings, NetComm Wireless’ 3G M2M devices streamline business operations by sending consumption information to the operator over 3G to reduce the cost of manual checks, ensuring that machines are never out of stock.

Savings are also achieved by anticipating faults or requirements such as ink levels in photo kiosks, and helping operators drive sales with cashless payments and by influencing customers with direct interaction.


escalation of the cost of downtime between 2010-2012 $138,000

the average cost of an hour of downtime for internet reliant businesses

39.6hoursaverage amount of disruption due to internet outage experienced annually

30%of midsize companies are expected to have recovery-in-the-cloud by 2014

In today’s around-the-clock business environment, maintaining a solid Internet

connection in the event of primary connection failure is vital.

Keeping businessconnected

38%


Whether the threat is a disaster in the form of a Tsunami, hurricane, flood or fire, or simply a disturbance caused by a network outage or technical fault, achieving ‘always-on’ connectivity is now more critical than ever as businesses of all sizes become more automated and reliant on IP-bases services such as Point of Sale (PoS), VoIP, Machine-to-Machine (M2M) and cloud-based systems.

According to a recent report by Aberdeen Group, increased dependence on the Internet resulted in a 38% escalation of the cost of downtime between 2010-2012. Losing a network connection is a very real risk and a primary concern for businesses worldwide with 74% of the 459 organisations across 49 countries surveyed by the Business Continuity Institute identifying unplanned IT and telecom outages as being the number one threat to business continuity.

In an increasingly cashless economy, even a short disruption can have a considerable impact with the average cost of an hour of downtime hitting $138,000. Depending on the continuity solutions in place, businesses can experience up to 39.6 hours of disruption annually. As well as significantly affecting revenue, this can severely impact productivity, customer service and credibility.

Keeping the network connection up and running is also critical for M2M applications which are moving to the cloud thanks to the incentive of scalability, performance and the reduction of upfront investment barriers. The cloud is increasingly used for disaster recovery as a service (DRaaS), backup and business continuity with InformationWeek reporting that 23% of respondents have already incorporated cloud services into their

business continuity and disaster recovery strategies. Forrester Research came to a similar conclusion, having found that as many as two thirds of enterprises surveyed have adopted, or are interested in, DRaaS.

With reliance on the cloud at an all time high, guarding against the threat of network failure is essential because if the Internet connection is lost, so too is access to the cloud.

Should the primary interface (which is most often a fixed line ADSL, cable or fibre connection) fail, Internet-critical businesses can confidently sustain their revenue and uphold their reputation using a wireless continuity and recovery solution.

Progressive businesses have long recognised the economic and practical benefits of using wireless technology for a fully redundant solution. 3G/4G mobile broadband offers a failover solution that can be cost-effectively deployed across multiple sites, making it a flexible backup option for businesses that operate multiple food outlets, retail stores or business branches. With 30 per cent of midsize companies expected to have recovery-in-the-cloud services in place by 2014, 3G/4G failover offers an economical complimentary solution.

NetComm Wireless has identified business continuity as a critical need, developing a solid portfolio of high-speed 3G/4G WiFi devices equipped with automatic failover to protect businesses from lost revenue, customer dissatisfaction and a breakdown of internal and external communications.


Principle 1 – Lay solid foundations for management & oversight The Board of Directors is responsible for the corporate governance of the Group and operates in accordance with the principles set out in its Charter, which is available in the corporate governance section of NetComm Wireless Limited’s (the Company’s) website. To ensure that the Board is well equipped to discharge its responsibilities it has established guidelines for the nomination and selection of directors and for the operation of the Board. A summary of the Board Charter is available on the Company’s website.

The responsibility for the operation and administration of the Group is delegated by the Board to the Chief Executive Officer (‘CEO’) / Managing Director (MD) and the executive management team. The Board ensures that both the MD and executive team are appropriately qualified and experienced to discharge their responsibilities.

To ensure that the responsibilities of the Board are upheld and executed, the Board has established the following sub-committees: • Audit and Risk Committee.• Nominations and Remuneration Committee.

Sub-committees are able to focus on a particular responsibility and provide informed feedback to the Board. Each of these sub-committees have established Charters and operating procedures in place, which are reviewed on a regular basis.

The Board reviews the performance of the MD on a yearly basis. The Nominations and Remuneration Committee annually reviews and determines the remuneration arrangements for the MD, submitting their recommendations to the Board for approval.

Principle 2 – Structure the Board to add valueBoard policy is that the Board will constantly review and monitor its performance. As part of this process the Board may seek to appoint persons who, in the opinion of the Board, will provide specialist expertise required for the Board to adequately perform its role. Additionally, the Board will also review its composition and advise Board members where it is felt that a Director’s skills are different from those required by the Company.

The skills, experience and expertise of each director in office at the date of this report and their period of office are detailed in the Directors Report. This also identifies the independent directors. None of the independent directors have any relationship with the company (as defined in accordance with the ASX recommendations) which may affect their independent status. Directors are entitled to obtain independent external advice on matters relating to accounting, law and other relevant professional matters at the expense of the company.

The Board has appointed a Nominations and Remuneration Committee, whose responsibilities include assisting the Board to identify, interview and assesses new Director candidates having regard to prerequisite requirements. A copy of the Committee’s Charter is available on the Company’s website. The members and attendance at meetings of the committee are detailed in the Director’s Report.

The independence of directors is reviewed annually prior to completion of the Annual Report. Independence is defined in accordance with the definitions contained within the ASX recommendations. Relevant disclosure is then made in the Annual Report.

The procedures for selecting and nominating new candidates for the Board are more fully described in the Corporate Governance Statement and are available on the Company’s website.

Principle 3 – Promote ethical & responsible decision-making The Board has approved a Code of Conduct a summary of which is available on the Company’s website. All directors, executives and employees are required to comply with that Code. Failure to comply will result in disciplinary action and may include reprimand, formal warning, demotion or, in extreme cases, termination of employment. The Code of Conduct addresses expectations for conduct in the following areas:• Confidential information• Rights of Security Holders• Privacy

• Security trading• Conflicts of interest• Responsibility to suppliers and customers• Employment policies and procedures

Copies of the main provisions of the Code of Conduct and Security Dealing Guidelines are available on the Company’s website. The Company has adopted the so called “whistle blower” recommendations.

The Company’s policy regarding directors and employees trading in its securities is set out in Dealing Rules. The policy restricts Directors and employees from acting on material information until it has been released to the market and adequate time has been given for this to be reflected in the securities prices.

The company is committed to diversity and recognises the benefits arising from employee and board diversity and the importance of benefiting from all available talent. Diversity includes but is not limited to gender, age, disability, ethnicity, religion and cultural background. A copy of the company’s diversity policy is available on the Company’s website.

Principle 4 – Safeguard integrity in financial reportingThe Company has established an Audit and Risk Committee whose role and operations are documented in a Charter which is approved by the Board. This Charter is available on the Company’s website.

The Committee’s Charter provides that a minimum of 3 members of the Audit and Risk Committee must be Non-Executive Directors and that the Chair will be the person appointed as Chairman by the Board. Members of the Committee at the date of this report are Mr S Black AM (Chair), Mr J Milne and Mr K Boundy, all of whom are Non-Executive Directors of the Company.

The purpose of the Committee is to: • Review the integrity of NetComm Wireless’s financial

information and systems, internal and external reporting.• Review and assess the external auditors’ activities, scope and

independence.• Review the management process for the identification of

significant business risks and exposures and review and assess the adequacy of management information and internal control structures.

• Provide assurance to the full Board that NetComm Wireless is adequately managing risks relating to corporate governance and business operations and is maintaining appropriate controls against conflicts of interest and fraud.

The Audit and Risk Committee is required under the Charter to meet at least two times per year. The Committee met three times during the year and Committee members’ attendance records are disclosed in the Directors’ Meetings section of the Directors’ Report.

The Managing Director, Chief Financial Officer and external auditor also regularly attend the Committee meetings by standing invitation. Other Directors and management are invited to attend Committee meetings and participate in discussion relating to specific issues that they have an interest in as necessary.

The Committee is authorised to obtain independent legal advice at the Company’s expense if it considers appropriate to assist it in meeting its responsibilities.

Principle 5 – Make timely and balanced disclosureThe Company has adopted policies concerning shareholder communication and continuous disclosure. The policies are designed to promote investor confidence by providing full and timely information to all security holders and market participants about the Group’s activities, so as to comply with the requirements of the Corporations Act 2001 and the ASX Listing Rules. A summary of the continuous disclosure policy and the communications policy are available on the Company’s website.

Principle 6 – Respect the rights of shareholdersThe Company has established a link to the ASX website listing all of the Company’s announcements to the market. Shareholders and market participants registering their email addresses with the Company are provided with a copy of each announcement.

Principle 7 – Recognise and manage riskThe Board has adopted a detailed risk management policy a summary of which is available on the Company’s website. It is

a policy of companies in the Group to adopt a common sense approach to the management of risk. This approach involves a clear strategy defining the risks that the Company is in business to take and those that it is not.

The basis of this policy is the obligation and desire to protect:• the Company’s people and customers;• the environment in which the Group operates;• the Company’s position as a provider of the highest quality

services and products.

The Company’s policy in respect of these foundations attributes that its physical, financial and human resources will be applied to ensure that the Company’s standards of products and services achieve and exceed expectations. To do this the Company must pursue opportunities that involve some degree of risk. Shareholders and stakeholders must expect that optimisation of such rewards are only gained from this degree of risk taking.

Management reported to the Board during the relevant reporting period as to the effectiveness of the Company’s management of its material business risk. The Board received assurance from the CEO/Managing Director and CFO that the declaration provided in accordance with section 295A of the Corporations Act was 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 report risks.

The Audit and Risk Committee has also been delegated responsibility by the Board to oversee the implementation and review of risk management and related internal compliance and control systems throughout the Group. The Committee reviews the appropriateness and adequacy of internal processes for determining, assessing and monitoring risk areas including the assessment of the effectiveness of the Group’s internal compliance and controls. The Audit and Risk Committee reports to the Board on the major issues and findings that are presented and discussed at its meetings.

Principle 8 – Remunerate fairly and responsiblyThe Board has established a Nominations and Remuneration Committee whose role is documented in a Charter which is approved by the Board. A copy of this charter is available on the Company’s website.

The Committee’s Charter provides that a minimum of 3 members of the Nominations and Remuneration Committee and the Chair will be the person appointed as Chairman by the Board. Members of the Committee at the date of this report are Mr K Boundy (Chair), Mr J Milne and Mr S Black AM, all of whom are Non-Executive Directors of the Company.

The objective of the Committee with respect to its remuneration function is to assist the Board in determining appropriate remuneration arrangements for the Directors and executive management.

These objectives include: • Reviewing the remuneration guidelines for senior management,

including base salary, bonuses, share rights and options, salary packaging and final contractual agreements.

• Reviewing non-executive fees and costs by seeking external benchmarks.

• Reviewing the CEO/Managing Director’s remuneration, allowances and incentives and final package in consultation with both independent and external reference.

The Committee will submit their recommendations to the Board regarding the remuneration arrangements and performance incentives for the Managing Director and executive team. The Board will review these recommendations before providing their approval.

Details of the Company’s remuneration structure and details of key executives’ remuneration and incentives are set out in the Remuneration Report contained within the Directors’ Report. The Remuneration Report also contains details on the remuneration structure of Non-Executive Director Remuneration.

Corporate Governance

Adoption of ASX Principles Recommendations

A summary of the main provisions of the Code of Conduct for

directors and key executives and the main provisions of the

Securities Dealing Policy are available in the corporate governance

section of NetComm Wireless Limited’s website.


Annual Report for the year ended 30 June 2013

ACN 002 490 486

NetCommWirelessLimited


NetComm Wireless Limited Directors’ Report For the Year Ended 30 June 2013

1

Your directors present their report on the company and its controlled entities for the financial year ended 30 June 2013. 1. General information a Directors

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

Name Position held J Milne Non-Executive Director & Chairman J A Brennan Non-Executive Director – Resigned 21 March 2013 K Boundy Non-Executive Director – Appointed 24 August 2012 S Black AM Non-Executive Director – Appointed 21 March 2013 J M Burton Non-Executive Director – Retired 21 November 2012 D P J Stewart CEO & Managing Director K J P Sheridan CFO & Executive Director

Directors have been in office since the start of the financial year to the date of this report unless otherwise stated.

b Company Secretary

Mr Ken J P Sheridan, the company's CFO & Executive Director, is also the company secretary. c Principal Activities

NetComm Wireless Limited (ASX: NTC) is a leading developer of innovative broadband products sold globally to major telecommunications carriers, core network providers and system integrators. For 31 years NetComm has developed a portfolio of world first data communication products, and is a respected global provider of 3G and 4G wireless devices servicing the major telecommunications carriers, Machine to Machine (M2M) and Rural Broadband markets. NetComm’s products are designed to meet the growing needs of today’s data-intensive home, business and industrial broadband applications and customized to optimise performance in line with global network advancements.



1

Your directors present their report on the company and its controlled entities for the financial year ended 30 June 2013. 1. General information a Directors

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

Name Position held J Milne Non-Executive Director & Chairman J A Brennan Non-Executive Director – Resigned 21 March 2013 K Boundy Non-Executive Director – Appointed 24 August 2012 S Black AM Non-Executive Director – Appointed 21 March 2013 J M Burton Non-Executive Director – Retired 21 November 2012 D P J Stewart CEO & Managing Director K J P Sheridan CFO & Executive Director

Directors have been in office since the start of the financial year to the date of this report unless otherwise stated.

b Company Secretary

Mr Ken J P Sheridan, the company's CFO & Executive Director, is also the company secretary. c Principal Activities

NetComm Wireless Limited (ASX: NTC) is a leading developer of innovative broadband products sold globally to major telecommunications carriers, core network providers and system integrators. For 31 years NetComm has developed a portfolio of world first data communication products, and is a respected global provider of 3G and 4G wireless devices servicing the major telecommunications carriers, Machine to Machine (M2M) and Rural Broadband markets. NetComm’s products are designed to meet the growing needs of today’s data-intensive home, business and industrial broadband applications and customized to optimise performance in line with global network advancements.


2

2. Review of operations and financial results a Operating Results

The consolidated loss of the Group after providing for income tax amounted to $541,624 (2012: $840,511 profit).

Consolidated Results and Dividends 2013 2012 $ $

The Group has experienced a decline in revenue and profitability as a result of a planned move away from supplying consumer focussed products in order to focus on the global machine to machine (“M2M”) market. As part of this activity, restructuring costs of $0.3 million were incurred during the year. The Group also experienced $0.5 million loss as a result of revaluing net monetary liabilities denominated in predominantly US$ as a result of the rapid depreciation of the A$ in the last 2 months of the year. The higher level of income tax benefit reflected additional research and development claims permitted by the ATO and an over provision for tax in the prior year. There were a number of key milestones achieved during the course of the year that were very favourable in relation to our M2M strategy. The following deserve particular mention:

In October 2012, it was announced that following a world-wide tender process, NetComm Wireless had been selected by Vodafone Global Enterprise to be their supplier of M2M IP modems for global deployment. The product, Vodafone MachineLink 3G, was officially launched at Mobile World Congress in late February 2013. The first orders were shipped to Vodafone for initial customer trials in May 2013.

In May 2013, the company announced that it had been selected by Ericsson, as the integration partner for SP AusNet, to supply the 3G communications card component for the rollout of smart meters in Victoria. This is a contract with revenue of $12.5 million which will be earned during FY14.

In June 2013, the company undertook a capital raising process by way of a placement and a Share

Purchase Plan. Total proceeds raised, net of costs, was $4.3 million. A conditional placement, which was subject to an EGM held in July 2013, raised an additional $0.9 million. These funds will assist the company in executing its M2M strategy.

Total Revenue & other income from Continuing Operations 42,857,600 59,361,477 EBITDA from Continuing Business 803,021 4,854,600 Operating Profit/(loss) from Continuing Business before Taxation

(2,681,095)

1,772,049

Income Tax Benefit/(Expense) 2,139,471 (201,870) Net Profit/(Loss) for the year after tax from continuing operations

(541,624)

1,570,179

Loss for the year from discontinued operations - (729,668)

Profit/(Loss) for the year (541,624) 840,511



3

2. Review of operations and financial results (continued)

b Significant Changes in State of Affairs

During the year the following changes occurred within the Group:

Issue of share capital as outlined in section 2a of this report. Significant Board renewal was undertaken as outlined in section 1a of this report.

c Subsequent Events

The company held an EGM on 15 July 2013 to approve the conditional placement of shares announced in June 2013. There was overwhelming support for the conditional placement which resulted in the company obtaining additional capital in the amount of $0.9 million, net of costs.

d Environmental Regulations

The Group is not subject to significant environmental regulation.

e Likely Developments, Business Strategies and Prospects

The Group is continuing to concentrate its efforts on the M2M strategy. The M2M market is a high growth

global market. Ericsson and Qualcomm have predicted that there will be 50 billion connected devices by 2020. The M2M market is still in its infancy and there are no dominant players, with many industry participants specialising in select verticals.

NetComm Wireless is planning to be one of the leading M2M device providers globally. Based on key customer wins, such as Vodafone Global Enterprise, we have gained a reputation as an innovative device supplier. This has provided us with introductions to other leading international telecommunications carriers. We plan to have relationships with between 6-8 of the top 20 global communications carriers.

We will continue to leverage our capability to design customised solutions to meet the specific needs of our customers. This approach allows us to develop tight customer relationships with a high degree of longevity and stickiness. The cycle time to deliver a new customised product can take between 9 to 12 months and so considerable investment, mainly of people time, is required before revenues begin to flow. This investment can be seen in the level of capitalised development carried on the balance sheet. All of our manufacturing occurs offshore, in China. By using contract manufacturers we have the ability to scale our business rapidly with low incremental capital expenditure. As well as global telecommunications carriers, we are targeting the following key M2M industry verticals:

Utility smart grids (electricity and water) E-health in respect of connected in-home devices which need central monitoring Business services, including point of sale, digital signage and vending machines/kiosks Manufacturing and construction Transportation ticketing Business continuity

A key component of our strategy is to leverage “coat tail” relationships. This is where we form relationships with key suppliers or ecosystem players and leverage their knowledge, contacts and reputation within key verticals.



3

2. Review of operations and financial results (continued)

b Significant Changes in State of Affairs

During the year the following changes occurred within the Group:

Issue of share capital as outlined in section 2a of this report. Significant Board renewal was undertaken as outlined in section 1a of this report.

c Subsequent Events

The company held an EGM on 15 July 2013 to approve the conditional placement of shares announced in June 2013. There was overwhelming support for the conditional placement which resulted in the company obtaining additional capital in the amount of $0.9 million, net of costs.

d Environmental Regulations

The Group is not subject to significant environmental regulation.

e Likely Developments, Business Strategies and Prospects

The Group is continuing to concentrate its efforts on the M2M strategy. The M2M market is a high growth

global market. Ericsson and Qualcomm have predicted that there will be 50 billion connected devices by 2020. The M2M market is still in its infancy and there are no dominant players, with many industry participants specialising in select verticals.

NetComm Wireless is planning to be one of the leading M2M device providers globally. Based on key customer wins, such as Vodafone Global Enterprise, we have gained a reputation as an innovative device supplier. This has provided us with introductions to other leading international telecommunications carriers. We plan to have relationships with between 6-8 of the top 20 global communications carriers.

We will continue to leverage our capability to design customised solutions to meet the specific needs of our customers. This approach allows us to develop tight customer relationships with a high degree of longevity and stickiness. The cycle time to deliver a new customised product can take between 9 to 12 months and so considerable investment, mainly of people time, is required before revenues begin to flow. This investment can be seen in the level of capitalised development carried on the balance sheet. All of our manufacturing occurs offshore, in China. By using contract manufacturers we have the ability to scale our business rapidly with low incremental capital expenditure. As well as global telecommunications carriers, we are targeting the following key M2M industry verticals:

Utility smart grids (electricity and water) E-health in respect of connected in-home devices which need central monitoring Business services, including point of sale, digital signage and vending machines/kiosks Manufacturing and construction Transportation ticketing Business continuity

A key component of our strategy is to leverage “coat tail” relationships. This is where we form relationships with key suppliers or ecosystem players and leverage their knowledge, contacts and reputation within key verticals.


4

e Likely Developments, Business Strategies and Prospects (continued)

Financial year 2014 (FY14) will represent an inflection point in product revenue mix. We anticipate a modest decline in our “base business” in FY14 but substantial growth in M2M revenues, particularly based on the recent Victorian smart meter contract win through our utilities partner, Ericsson. We anticipate M2M revenues to represent more than 55% of total revenues from FY14 and continue to grow in future years. We have plans in place to expand our geographic footprint and source additional revenues from overseas jurisdictions, with particular emphasis on North America, Europe and the Middle East. The Ericsson NBN fixed wireless contract is a key domestic M2M contract. We are confident that this contract will deliver substantial value to the company. However, there have been ongoing delays in the rollout of the NBN, principally associated with long haul fibre and wireless tower completions, which have delayed revenue generation to the company. We anticipate small volumes in FY14 with a substantial ramp up in FY15 and FY16.



5

3. Directors’ Information

a Information on Directors

Mr Justin Milne Non-Executive Director & Chairman

Mr Milne has substantial telecommunications industry experience and he is an

experienced company director having served in diverse industry sectors with a multinational focus. He had an executive career in telecommunications, marketing and media. From 2002 to 2010 he was Group Managing Director of Telstra’s broadband and media businesses, and headed up Telstra’s New Media businesses in China. He is currently a Non-Executive Director of Tabcorp Holdings Limited and Members Equity Bank Pty Ltd. He is also a board member of Basketball Australia and Sydney Children’s Hospital Foundation.

Mr John A Brennan FAICD, FAIM, Non-Executive Director (Resigned 21 March 2013)

Mr Brennan’s previous roles include National General Manager, Corporate and Government Sales for Telstra, General Manager Corporate Services for Advance Bank and Regional Manager (Computers and Telecommunications) with the PA Consulting Group.

Mr Ken Boundy Non-Executive Director (Appointed 24 August 2012)

Mr Boundy has significant marketing, distribution and international business experience across a diverse range of industry sectors. He is currently Chairman and/or Non-Executive Director on four boards, member of two advisory boards and part owner of two businesses. He has held a number of prominent positions over the past thirty years including: Managing Director of the Australian Tourist Commission, Tourism Australia; Executive General Manager, International, of James Hardie Industries Limited; Group General Manager, Corporate Development, of Goodman Fielder Limited; CEO, of Goodman Fielder Asia, Singapore and Director, Industry Development, of the Victorian Department of Industry Commerce and Technology.

Mr Stuart Black AM Non-Executive Director (Appointed 21 March 2013)


Mr John M Burton Non-Executive Director (Retired 21 November 2012)

With more than 25 years experience in the telecommunications industry, both in

Australia and overseas, Mr Burton has an in depth understanding of the factors that drive commercial success in the telecommunications arena. His professional background includes senior management roles with Telecom (now Telstra), KPMG Management Consulting, DSC Communications and Nextgen Networks. Mr Burton is also the Chairman of Spatial Vision Innovations Pty Ltd, a company that uses digital technology to address business and environmental problems. He is currently CEO of Manson Consulting, a company which provides consultancy services to a range of telecommunications organisations.



5

3. Directors’ Information

a Information on Directors

Mr Justin Milne Non-Executive Director & Chairman

Mr Milne has substantial telecommunications industry experience and he is an

experienced company director having served in diverse industry sectors with a multinational focus. He had an executive career in telecommunications, marketing and media. From 2002 to 2010 he was Group Managing Director of Telstra’s broadband and media businesses, and headed up Telstra’s New Media businesses in China. He is currently a Non-Executive Director of Tabcorp Holdings Limited and Members Equity Bank Pty Ltd. He is also a board member of Basketball Australia and Sydney Children’s Hospital Foundation.

Mr John A Brennan FAICD, FAIM, Non-Executive Director (Resigned 21 March 2013)

Mr Brennan’s previous roles include National General Manager, Corporate and Government Sales for Telstra, General Manager Corporate Services for Advance Bank and Regional Manager (Computers and Telecommunications) with the PA Consulting Group.

Mr Ken Boundy Non-Executive Director (Appointed 24 August 2012)

Mr Boundy has significant marketing, distribution and international business experience across a diverse range of industry sectors. He is currently Chairman and/or Non-Executive Director on four boards, member of two advisory boards and part owner of two businesses. He has held a number of prominent positions over the past thirty years including: Managing Director of the Australian Tourist Commission, Tourism Australia; Executive General Manager, International, of James Hardie Industries Limited; Group General Manager, Corporate Development, of Goodman Fielder Limited; CEO, of Goodman Fielder Asia, Singapore and Director, Industry Development, of the Victorian Department of Industry Commerce and Technology.

Mr Stuart Black AM Non-Executive Director (Appointed 21 March 2013)


Mr John M Burton Non-Executive Director (Retired 21 November 2012)

With more than 25 years experience in the telecommunications industry, both in

Australia and overseas, Mr Burton has an in depth understanding of the factors that drive commercial success in the telecommunications arena. His professional background includes senior management roles with Telecom (now Telstra), KPMG Management Consulting, DSC Communications and Nextgen Networks. Mr Burton is also the Chairman of Spatial Vision Innovations Pty Ltd, a company that uses digital technology to address business and environmental problems. He is currently CEO of Manson Consulting, a company which provides consultancy services to a range of telecommunications organisations.


6

3. Directors’ Information (continued)

a Information on Directors Mr David P J Stewart

CEO & Managing Director

Mr Stewart founded Banksia Technology Pty Limited in 1988 and successfully managed the company as a fast growing and highly profitable business. In 1996, he instigated the successful takeovers of a number of his competitors including NetComm Wireless Limited, which was completed in November 1997. Mr Stewart assumed the role of Managing Director of the merged entity and remains the single largest shareholder of NetComm Wireless. He has a strong financial background, extensive experience in sales and marketing and has maintained an ongoing interest in new technologies. While being very active in the operational aspects of the business, Mr Stewart also focuses on the strategic direction of the company.

Mr Kenneth J P Sheridan

CFO & Executive Director

Mr Sheridan is a Chartered Accountant with over 30 years’ experience in senior management in major corporations in Australia and Asia. He spent 11 years with KPMG before he moved into the commercial sector where he held several CFO roles with large multinational companies in Australia and Asia including three years as Finance Director of a top 10 Malaysian listed consumer goods company. Mr Sheridan was the Group CFO for Tenix, one of Australia’s largest private companies. In the 6 years prior to joining NetComm Wireless, Mr Sheridan was Managing Director and major shareholder of Acelero Pty Ltd, a human resources software company.

At the date of this report, the interest of the Directors in the ordinary shares and options of the Company are:

Ordinary Shares Options J Milne 180,588 - J A Brennan 302,795 - K Boundy 450,000 - S Black AM - - J M Burton 359,450 - D P J Stewart 22,974,596 - K J P Sheridan 204,588 -



7

b Meetings of Directors

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

Director

Board Meetings

Audit and Risk

Committee

Nominations and

Remuneration Committee

A B A B A B

J A Brennan 6 6 2 2 1 1 J M Burton 4 3 - - - - J Milne 11 11 3 3 2 2 K Boundy 10 10 3 3 2 2 S Black AM 4 4 1 1 1 1 D P J Stewart 11 11 - - - - K J P Sheridan 11 11 - - - -

A is the number of meetings the Director was entitled to attend B is the number of meetings the Director attended

As announced at the AGM in November 2011, the Board instituted two new committees: Audit and Risk Committee & Nominations and Remuneration Committee.

4. Share Options

At the date of this report, there are 200,000 options (2012: 3,082,500) issued to 1 employee (2012: 11 employees) to acquire ordinary shares. These options have all vested but have not been exercised. The details are as follows:

Date Options granted Expiry date Exercise price Number of options

10/12/2008 10/12/2013 0.162 100,000 12/02/2009 12/02/2014 0.113 100,000

200,000 .

The holders of these options do not have any rights under the options to participate in any share issue of the company or of any other entity.


8

4. Share Options (continued)

The following ordinary shares of NetComm Wireless Limited were issued during or since the end of the financial year as a result of exercise of options granted.

Date Options granted Issue price of shares Number of shares issued

19/07/2007 0.060 50,000 17/12/2007 0.070 195,000 27/02/2008 0.075 157,500 03/03/2008 0.071 100,000 31/07/2008 0.185 100,000 30/08/2008 0.162 180,000 30/10/2008 0.162 540,000

1,322,500 No amounts are unpaid on these shares. During or since the end of the financial year, no options were granted by NetComm Wireless Limited to Directors and Executives of the Group as part of their remuneration.

5. Share Rights

Details of share rights held directly, indirectly or beneficially by key management personnel and their related parties are as follows:

Balance on 1 July

2012

Share Rights

Granted during

the year

Share Rights

Exercised Share Rights Relinquished

Balance at 30

June 2013

Total Vested at 30 June

2013

Type of Share Right

D P J Stewart 1,500,000 - - (1,500,000) - 0% Cash K J P Sheridan 450,000 - - (450,000) - 0% Cash

D Morrison 250,000 - - - 250,000 0% Shares S Collins 250,000 - - - 250,000 0% Shares B Stevens 250,000 - - - 250,000 0% Shares M Cornelius 250,000 - - - 250,000 0% Shares Total 2,950,000 - - (1,950,000) 1,000,000

On July 1, 2011 NetComm Wireless Limited Executive Employee Share Plan" ("EESP") was introduced for invited Participants selected on the basis of their capability to be able to directly impact the Company's performance. Under this Plan, a Participant is made an offer of a number of Share Rights, as determined by the Board. A Share Right is an entitlement to a cash (for cash participants) or equity (for equity participants) amount equivalent to the value of one fully paid ordinary share in the Company for nil consideration, subject to the achievement of vesting conditions which include service and company performance over a 3-year period. The Share Rights will vest when the Company meets or exceeds a “performance hurdle” based on a specific EBITDA target as at the end of years 1, 2 and 3 respectively, if the Participant remains employed with the Company at that time. If the Company does not meet a performance hurdle at a given year (either year 1 or year 2), the hurdle can be “re-tested” in the subsequent year. The “re-test” would be based on a comparison of the cumulative actual EBITDA results for the current and past years compared to the cumulative EBITDA performance hurdle. The Board has resolved that any entitlements to shares in NetComm Wireless resulting from the EESP will be purchased on market. As previously advised at the Company’s Annual General Meeting in November 2012, Mr Stewart and Mr Sheridan agreed to relinquish their entitlements to share rights and will take no further part in the EESP formed on 1 July 2011.



7

b Meetings of Directors

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

Director

Board Meetings

Audit and Risk

Committee

Nominations and

Remuneration Committee

A B A B A B

J A Brennan 6 6 2 2 1 1 J M Burton 4 3 - - - - J Milne 11 11 3 3 2 2 K Boundy 10 10 3 3 2 2 S Black AM 4 4 1 1 1 1 D P J Stewart 11 11 - - - - K J P Sheridan 11 11 - - - -

A is the number of meetings the Director was entitled to attend B is the number of meetings the Director attended

As announced at the AGM in November 2011, the Board instituted two new committees: Audit and Risk Committee & Nominations and Remuneration Committee.

4. Share Options

At the date of this report, there are 200,000 options (2012: 3,082,500) issued to 1 employee (2012: 11 employees) to acquire ordinary shares. These options have all vested but have not been exercised. The details are as follows:

Date Options granted Expiry date Exercise price Number of options

10/12/2008 10/12/2013 0.162 100,000 12/02/2009 12/02/2014 0.113 100,000

200,000 .

The holders of these options do not have any rights under the options to participate in any share issue of the company or of any other entity.


8

4. Share Options (continued)

The following ordinary shares of NetComm Wireless Limited were issued during or since the end of the financial year as a result of exercise of options granted.

Date Options granted Issue price of shares Number of shares issued

19/07/2007 0.060 50,000 17/12/2007 0.070 195,000 27/02/2008 0.075 157,500 03/03/2008 0.071 100,000 31/07/2008 0.185 100,000 30/08/2008 0.162 180,000 30/10/2008 0.162 540,000

1,322,500 No amounts are unpaid on these shares. During or since the end of the financial year, no options were granted by NetComm Wireless Limited to Directors and Executives of the Group as part of their remuneration.

5. Share Rights


Balance on 1 July

2012

Share Rights

Granted during

the year

Share Rights

Exercised Share Rights Relinquished

Balance at 30

June 2013

Total Vested at 30 June

2013

Type of Share Right

D P J Stewart 1,500,000 - - (1,500,000) - 0% Cash K J P Sheridan 450,000 - - (450,000) - 0% Cash

D Morrison 250,000 - - - 250,000 0% Shares S Collins 250,000 - - - 250,000 0% Shares B Stevens 250,000 - - - 250,000 0% Shares M Cornelius 250,000 - - - 250,000 0% Shares Total 2,950,000 - - (1,950,000) 1,000,000

On July 1, 2011 NetComm Wireless Limited Executive Employee Share Plan" ("EESP") was introduced for invited Participants selected on the basis of their capability to be able to directly impact the Company's performance. Under this Plan, a Participant is made an offer of a number of Share Rights, as determined by the Board. A Share Right is an entitlement to a cash (for cash participants) or equity (for equity participants) amount equivalent to the value of one fully paid ordinary share in the Company for nil consideration, subject to the achievement of vesting conditions which include service and company performance over a 3-year period. The Share Rights will vest when the Company meets or exceeds a “performance hurdle” based on a specific EBITDA target as at the end of years 1, 2 and 3 respectively, if the Participant remains employed with the Company at that time. If the Company does not meet a performance hurdle at a given year (either year 1 or year 2), the hurdle can be “re-tested” in the subsequent year. The “re-test” would be based on a comparison of the cumulative actual EBITDA results for the current and past years compared to the cumulative EBITDA performance hurdle. The Board has resolved that any entitlements to shares in NetComm Wireless resulting from the EESP will be purchased on market. As previously advised at the Company’s Annual General Meeting in November 2012, Mr Stewart and Mr Sheridan agreed to relinquish their entitlements to share rights and will take no further part in the EESP formed on 1 July 2011.



9

6. Remuneration Report - Audited

This remuneration report, which forms part of the Directors’ Report, sets out the information about the remuneration of NetComm Wireless Limited’s directors and its senior management for the financial year ended 30 June 2013. The following persons were key management personnel of NetComm Wireless Limited during the financial year:

Remuneration Policy

The Board’s policy for determining the nature and amount of remuneration of key management personnel for the Group is as follows:

• As announced at the 2012 AGM, the Board has reinstated a Nominations & Remuneration Committee,

comprising the non-executive directors of the company.

• The Nominations & Remuneration Committee assume responsibility for making recommendations to the Board in respect of remuneration policies and practices generally, and making recommendations to the Board on remuneration packages and other terms of employment for executive directors, other senior executives and non-executive directors.

• The Board reviews the remuneration packages of all directors and other key management personnel on an

annual basis. Remuneration packages are reviewed and determined with due regard to current market rates and are benchmarked against comparable industry salaries. The overall objective is to ensure maximum shareholder benefit from the retention of a quality Board and Executive Team. To assist in achieving this objective, the nature and amount of the Executives’ and Executive Directors’ and other key management personnel’s emoluments is linked to the Group’s financial and operational performance, as determined by the Board.

The Chairman of the company presently receives an annual fee of $97,500 with all other directors receiving $57,500 per annum. Given the size of the company and the Board, no additional payments are made in respect of Chairmanship or Membership of any of the Board Committees.

Name Position held J Milne Non-Executive Director & Chairman J A Brennan Non-Executive Director K Boundy Non-Executive Director S Black AM Non-Executive Director J M Burton Non-Executive Director D P J Stewart CEO & Managing Director K J P Sheridan CFO & Executive Director B Stevens Chief Technology Officer M Cornelius Research & Development Director D Morrison General Manager - Sales S Collins Head of Engineering & Product Development



9

6. Remuneration Report - Audited

This remuneration report, which forms part of the Directors’ Report, sets out the information about the remuneration of NetComm Wireless Limited’s directors and its senior management for the financial year ended 30 June 2013. The following persons were key management personnel of NetComm Wireless Limited during the financial year:

Remuneration Policy

The Board’s policy for determining the nature and amount of remuneration of key management personnel for the Group is as follows:

• As announced at the 2012 AGM, the Board has reinstated a Nominations & Remuneration Committee,

comprising the non-executive directors of the company.

• The Nominations & Remuneration Committee assume responsibility for making recommendations to the Board in respect of remuneration policies and practices generally, and making recommendations to the Board on remuneration packages and other terms of employment for executive directors, other senior executives and non-executive directors.

• The Board reviews the remuneration packages of all directors and other key management personnel on an

annual basis. Remuneration packages are reviewed and determined with due regard to current market rates and are benchmarked against comparable industry salaries. The overall objective is to ensure maximum shareholder benefit from the retention of a quality Board and Executive Team. To assist in achieving this objective, the nature and amount of the Executives’ and Executive Directors’ and other key management personnel’s emoluments is linked to the Group’s financial and operational performance, as determined by the Board.

The Chairman of the company presently receives an annual fee of $97,500 with all other directors receiving $57,500 per annum. Given the size of the company and the Board, no additional payments are made in respect of Chairmanship or Membership of any of the Board Committees.

Name Position held J Milne Non-Executive Director & Chairman J A Brennan Non-Executive Director K Boundy Non-Executive Director S Black AM Non-Executive Director J M Burton Non-Executive Director D P J Stewart CEO & Managing Director K J P Sheridan CFO & Executive Director B Stevens Chief Technology Officer M Cornelius Research & Development Director D Morrison General Manager - Sales S Collins Head of Engineering & Product Development


10

6. Remuneration Report – Audited (continued) Relationship between the remuneration policy and company performance

The following tables set out summary information about the consolidated entity’s earnings and movements in shareholder wealth for the five years to June 2013:

Continuing Operations

30 June 2013

$

30 June 2012

$

30 June 2011

$

30 June 2010

$

30 June 2009

$ Revenue 42,857,600 59,361,477 67,602,485 55,264,440 78,473,388 Net Profit/(loss) before tax (2,681,095) 1,772,049 2,145,565 2,294,204 5,296,429 Net Profit/(loss) after tax (541,624) 1,570,179 1,057,464 1,624,988 5,891,378 Net (Loss)/profit from discontinued operations*

-

(729,668)

(2,259,611)

-

-

Profit/(loss) for the year (541,624) 840,511 (1,202,147) 1,624,988 5,891,378 30 June

2013 $

30 June 2012

$

30 June 2011

$

30 June 2010

$

30 June 2009

$ Share price at start of the year 0.12 0.13 0.20 0.17 0.18 Share price at end of the year 0.26 0.12 0.13 0.20 0.17 Interim dividend - - 0.5cps 1cps - Final dividend - - - - - Continuing Operations Basic earnings per share (cents) (0.51) 1.51 1.02 1.58 6.01 Diluted earnings per share (cents) (0.51) 1.50 1.02 1.56 5.95 Discontinued Operations Basic earnings per share (cents) - (0.70) (2.18) - - Diluted earnings per share (cents) - (0.70) (2.18) - -

As stated above the overall objective of the Board’s remuneration policy is to ensure maximum shareholder benefit from the retention of a quality Board and Executive team and to assist in achieving this objective by linking executive rewards to the group’s financial and operational performance. The Board is of the opinion that the remuneration policy and company performance are closely aligned.

*Information for 2010 & prior is not disclosed as it is not material.


NetC

omm

Wireless Lim

ited D

irectors’ Report

For the Year Ended 30 June 2013

11

6. R

emuneration R

eport – Audited (continued)

D

etails of remuneration for year ended 30 June 2013.

Details of each elem

ent of the remuneration of key m

anagement personnel and other executives of N

etCom

m W

ireless Limited are set out in the follow

ing tables:

Year ended 30 June 2013:

Short Term Em

ployee Benefits

Post Em

ployment

Benefits

Long Term

benefits Share B

ased Paym

ents O

ther B

enefits Total

% of

Rem

uneration that is

performance

based

% of

Rem

uneration that consists

of options /share

rights

Salary & Fees

Short Term

Incentive Plan N

on-Monetary

Benefits

Super-annuation

Long Service Leave

Share Rights

Termination

Benefits

Independent Non-Executive D

irectors J M

ilne 78,958

- -

- -

- -

78,958 -

-

J A B

rennan* 64,736

- -

- -

- -

64,736 -

-

K B

oundy** 43,125

- -

- -

- -

43,125 -

-

S B

lack AM

*** 13,476

- -

1,212 -

- -

14,688 -

-

J M B

urton**** 23,958

- -

- -

- -

23,958 -

- Executive D

irectors

D P

J Stew

art 416,538

- -

33,462 11,758

- -

461,758 -

-

K J P

Sheridan

265,526 45,000

- 23,897

- -

- 334,423

13%

-

Executive Officers

D M

orrison 167,500

26,880 15,000

15,075 2,721

- -

227,176 12%

-

M C

ornelius 150,000

25,000 15,000

13,500 2,439

- -

205,939 12%

-

S C

ollins 151,376

25,000 15,000

13,624 -

- -

205,000 12%

B S

tevens 142,202

- 5,000

12,798 2,312

- -

162,312 -

- Total key m

anagement

personnel compensation

1,517,395 121,880

50,000 113,568

19,230 -

- 1,822,073

* Mr J A

Brennan resigned on 21 M

arch 2013. **

Mr K

Boundy w

as appointed as Non-E

xecutive Director on 24 A

ugust 2012. *** M

r S Black AM

was appointed as N

on-Executive D

irector on 21 March 2013.

**** Mr J M

Burton retired as N

on-Executive D

irector on 21 Novem

ber 2012.


NetC

omm

Wireless Lim

ited D

irectors’ Report


11

6. R

emuneration R

eport – Audited (continued)

D

etails of remuneration for year ended 30 June 2013.

Details of each elem

ent of the remuneration of key m

anagement personnel and other executives of N

etCom

m W

ireless Limited are set out in the follow

ing tables:


Short Term Em

ployee Benefits

Post Em

ployment

Benefits

Long Term

benefits Share B

ased Paym

ents O

ther B

enefits Total

% of

Rem

uneration that is

performance

based

% of

Rem


of options/share

rights

Salary & Fees

Short Term

Incentive Plan N

on-Monetary

Benefits

Super-annuation

Long Service Leave

Share Rights

Termination

Benefits


irectors J M

ilne 78,958

- -

- -

- -

78,958 -

-

J A B

rennan* 64,736

- -

- -

- -

64,736 -

-

K B

oundy** 43,125

- -

- -

- -

43,125 -

-

S B

lack AM

*** 13,476

- -

1,212 -

- -

14,688 -

-

J M B

urton**** 23,958

- -

- -

- -

23,958 -

- Executive D

irectors

D P

J Stew

art 416,538

- -

33,462 11,758

- -

461,758 -

-

K J P

Sheridan

265,526 45,000

- 23,897

- -

- 334,423

13%

-

Executive Officers

D M

orrison 167,500

26,880 15,000

15,075 2,721

- -

227,176 12%

-

M C

ornelius 150,000

25,000 15,000

13,500 2,439

- -

205,939 12%

-

S C

ollins 151,376

25,000 15,000

13,624 -

- -

205,000 12%

B S

tevens 142,202

- 5,000

12,798 2,312

- -

162,312 -

- Total key m

anagement


1,517,395 121,880

50,000 113,568

19,230 -

- 1,822,073

* Mr J A

Brennan resigned on 21 M

arch 2013. **

Mr K

Boundy w

as appointed as Non-E

xecutive Director on 24 A

ugust 2012. *** M

r S Black AM

was appointed as N

on-Executive D


**** Mr J M

Burton retired as N

on-Executive D

irector on 21 Novem

ber 2012.

NetC

omm

Wireless Lim

ited D

irectors’ Report


12

6. R

emuneration R

eport – AU

DITED

(continued)

Details of rem

uneration for year ended 30 June 2012. D

etails of each element of the rem

uneration of key managem

ent personnel and other executives of NetC

omm

Wireless Lim

ited are set out in the following tables:


Short Term Em

ployee Benefits

Post Em

ployment

Benefits

Long Term

benefits Share B

ased Paym

ents O

ther B

enefits Total

% of

Rem

uneration that is

performance

based

% of

Rem


of options /share

rights

Salary & Fees

Short Term

Incentive Plan N

on-Monetary

Benefits

Super-annuation

Long Service Leave

Share R

ights**** Term

ination B

enefits


irectors T R

Winters*

69,750 -

- -

- -

- 69,750

- -

J A B

rennan 63,333

- -

- -

- -

63,333 -

-

J M B

urton 57,500

- -

- -

- -

57,500 -

-

J Milne**

19,167 -

- -

- -

- 19,167

- -

Executive Directors

D P

J Stew

art 433,444

270,000 -

39,010 7,249

65,000 -

814,703 41%

8%

K J P

Sheridan

229,358 51,600

- 20,642

- 19,500

- 321,100

22%

6%

Executive Officers

D M

orrison 168,079

51,600 15,000

15,577 2,791

10,833 -

263,880 22%

4%

M C

ornelius 150,000

75,000 15,000

13,500 2,500

10,833 -

266,833 32%

4%

S C

ollins 151,376

44,000 15,000

13,624 -

10,833 -

234,833 23%

5%

B S

tevens 150,617

43,000 5,000

13,971 2,370

10,833 -

225,791 24%

5%

J Lahey*** 174,730

31,500 14,856

13,023 -

- -

234,109 13%

0%

Total key m

anagement


1,667,354 566,700

64,856 129,347

14,910 127,832

- 2,570,999

* M

r T Winters retired as C

hairman on 13 D

ecember 2011.

** Mr J M

ilne was appointed as N

on-Executive D


*** Mr J Lahey joined in S

eptember 2011.

**** Share rights for all participants have not yet vested, have not been paid and are not payable until vesting criteria have been m

et.



13

6. Remuneration Report – AUDITED (continued)

Short term Incentive Plan - Cash bonuses

Key management personnel and other executives are entitled to a short-term cash incentive based on performance criteria which is defined and granted at the discretion of the Board. Where performance criteria are not met in the current year the bonus is forfeited and may not be carried forward to a future year. Short term Incentive plans are based on the achievement of specified Revenue and EBITDA levels and personal objectives. For the year ended 30 June 2013, following table discloses the total entitlement and the amount achieved.

Participants Role Total Entitlement Total Achieved % Achieved D P J Stewart CEO & Managing

Director

$450,000 -

-

K J P Sheridan CFO & Executive Director

$100,000

$45,000

45%

D Morrison General Manager - Sales

$60,000

$26,880

45%

S Collins Head of Engineering & Product Development

$50,000

$25,000

50% B Stevens Chief Technology

Officer

$50,000 -

-

M Cornelius Research & Development Director

$75,000

$25,000

33% Total

$785,000

$121,880

Share Options

An employee share option plan is in place for all employees, including directors and key management personnel. The board of directors has discontinued the issuance of share options at the beginning of the 2011 financial year. Each option entitles the holder to subscribe for and be allotted one share in the capital of the company at a pre-determined exercise price per share. Shares issued on the exercise of options will rank pari passu with all existing shares in the capital of the company from the date of issue. The option holder must remain employed with the company in order to meet the performance conditions attached to the options. No options vested or were granted to key management personnel and executives during the year. Mr David Stewart, CEO and Managing Director, relinquished 1,500,000 vested options during the year as announced at the Company’s 2012 Annual General Meeting held in November 2012.

560,000 options were exercised by key management personnel and executives during the year:

Number of options

Fair Value at grant date

D Morrison 100,000 $ 7,000 B Stevens 100,000 $18,500 J M Burton 360,000 $58,320 Total 560,000 $83,820

NetC

omm

Wireless Lim

ited D

irectors’ Report


14

6. R

emuneration R

eport – AU

DITED

(continued)

Share Rights held by key m

anagement personnel

O

n July 1, 2011 NetC

omm

Wireless Lim

ited Executive Employee S

hare Plan" ("E

ESP

") was introduced for invited Participants selected on the basis of their

capability to be able to directly impact the C

ompany's perform

ance. Under this P

lan, a Participant is made an offer of a num

ber of Share Rights, as determ

ined by the Board. A

Share Right is an entitlem

ent to a cash (for cash participants) or equity (for equity participants) amount equivalent to the value of one fully paid

ordinary share in the Com

pany for nil consideration, subject to the achievement of vesting conditions w

hich include service and company perform

ance over a 3-year period. The Share R

ights will vest w

hen the Com

pany meets or exceeds a “perform

ance hurdle” based on a specific EBITDA target as at the end of years 1,

2 and 3 respectively, if the Participant remains em

ployed with the C

ompany at that tim

e. If the Com

pany does not meet a perform

ance hurdle at a given year (either year 1 or year 2), the hurdle can be “re-tested” in the subsequent year. The “re-test” w

ould be based on a comparison of the cum

ulative actual EBITD

A results for the current and past years com

pared to the cumulative EB

ITDA hurdle am

ounts. The Board has resolved that any entitlements to shares in N

etCom

m

Wireless resulting from

the EESP

will be purchased on m

arket. D

etails of share rights held directly, indirectly or beneficially by key managem

ent personnel and their related parties are as follows:

B

alance on 1 July 2012

Share Rights

Granted during

the year

Rights

Relinquished

Minim

um fair

value of Rights

Maxim

um fair

value of Rights

Rights

Exercised

Balance at 30 June 2013

Total Vested at 30 June 2013

Type of Share R

ight

D P

J Stew

art 1,500,000

- (1,500,000)

- -

- -

- C

ash K

J P S

heridan 450,000

- (450,000)

- -

- -

- C

ash D

Morrison

250,000 -

- -

- -

250,000 0%

S

hares S

Collins

250,000 -

- -

- -

250,000 0%

S

hares B

Stevens

250,000 -

- -

- -

250,000 0%

S

hares M

Cornelius

250,000 -

- -

- -

250,000 0%

S

hares Total

2,950,000

-

(1,950,000) -

- -

1,000,000

As at 1 July 2013, the EB

ITDA perform

ance hurdles for years 1 and 2 were not m

et so Plan P

articipants had no vesting of their Share Rights. B

ased on estim

ates of EBITDA for the year ending 30 June 2014, the Board is of the view

that the EBITD

A performance hurdles w

ill not be met and that no share rights w

ill vest for any Participant. Accordingly, the fair value of these R

ights has been assessed as nil.


NetC

omm

Wireless Lim

ited D

irectors’ Report


14

6. R

emuneration R

eport – AU

DITED

(continued)

Share Rights held by key m

anagement personnel

O

n July 1, 2011 NetC

omm

Wireless Lim

ited Executive Employee S

hare Plan" ("E

ESP

") was introduced for invited Participants selected on the basis of their

capability to be able to directly impact the C

ompany's perform

ance. Under this P

lan, a Participant is made an offer of a num

ber of Share Rights, as determ

ined by the Board. A

Share Right is an entitlem

ent to a cash (for cash participants) or equity (for equity participants) amount equivalent to the value of one fully paid

ordinary share in the Com

pany for nil consideration, subject to the achievement of vesting conditions w

hich include service and company perform

ance over a 3-year period. The Share R

ights will vest w

hen the Com

pany meets or exceeds a “perform

ance hurdle” based on a specific EBITDA target as at the end of years 1,

2 and 3 respectively, if the Participant remains em

ployed with the C

ompany at that tim

e. If the Com

pany does not meet a perform

ance hurdle at a given year (either year 1 or year 2), the hurdle can be “re-tested” in the subsequent year. The “re-test” w

ould be based on a comparison of the cum

ulative actual EBITD

A results for the current and past years com

pared to the cumulative EB

ITDA hurdle am

ounts. The Board has resolved that any entitlements to shares in N

etCom

m

Wireless resulting from

the EESP

will be purchased on m

arket. D

etails of share rights held directly, indirectly or beneficially by key managem

ent personnel and their related parties are as follows:

B

alance on 1 July 2012

Share Rights

Granted during

the year

Rights

Relinquished

Minim

um fair

value of Rights

Maxim

um fair

value of Rights

Rights

Exercised

Balance at 30 June 2013

Total Vested at 30 June 2013

Type of Share R

ight

D P

J Stew

art 1,500,000

- (1,500,000)

- -

- -

- C

ash K

J P S

heridan 450,000

- (450,000)

- -

- -

- C

ash D

Morrison

250,000 -

- -

- -

250,000 0%

S

hares S

Collins

250,000 -

- -

- -

250,000 0%

S

hares B

Stevens

250,000 -

- -

- -

250,000 0%

S

hares M

Cornelius

250,000 -

- -

- -

250,000 0%

S

hares Total

2,950,000

-

(1,950,000) -

- -

1,000,000

As at 1 July 2013, the EB

ITDA perform

ance hurdles for years 1 and 2 were not m

et so Plan P

articipants had no vesting of their Share Rights. B

ased on estim

ates of EBITDA for the year ending 30 June 2014, the Board is of the view

that the EBITD

A performance hurdles w

ill not be met and that no share rights w

ill vest for any Participant. Accordingly, the fair value of these R

ights has been assessed as nil.



15

6. Remuneration Report - Audited (continued)

Service contracts The following table provides employment details of persons who were, during the financial year, the directors and executive officers of the consolidated group receiving the highest remuneration.

END OF AUDITED REMUNERATION REPORT

Position held as at 30 June 2013 Contract details (duration & termination)

J Milne Non-Executive Director & Chairman No fixed term. K Boundy Non-Executive Director No fixed term (appointed 24 August 2012). J A Brennan Non-Executive Director Resigned 21 March 2013 J M Burton Non-Executive Director Retired 21 November 2012. S Black AM Non-Executive Director No fixed term (appointed 21 March 2013). D P J Stewart CEO & Managing Director 12 month contract automatically renewed.

12 months notice required to terminate. Entitled to 12 months gross salary upon termination.

K J P Sheridan CFO & Executive Director Standard employment agreement. 2 months notice required to terminate. Entitled to 2 months gross salary upon termination.


Standard employment agreement. 2 months notice required to terminate. Entitled to 2 months gross salary upon termination.

D Morrison General Manager - Sales Standard employment agreement. 2 months notice required to terminate. Entitled to 2 months gross salary upon termination.

M Cornelius Research & Development Director Standard employment agreement. 2 months notice required to terminate. Entitled to 2 months gross salary upon termination.

B Stevens Chief Technology Officer Standard employment agreement. 2 months notice required to terminate. Entitled to 2 months gross salary upon termination.



15

6. Remuneration Report - Audited (continued)

Service contracts The following table provides employment details of persons who were, during the financial year, the directors and executive officers of the consolidated group receiving the highest remuneration.

END OF AUDITED REMUNERATION REPORT

Position held as at 30 June 2013 Contract details (duration & termination)

J Milne Non-Executive Director & Chairman No fixed term. K Boundy Non-Executive Director No fixed term (appointed 24 August 2012). J A Brennan Non-Executive Director Resigned 21 March 2013 J M Burton Non-Executive Director Retired 21 November 2012. S Black AM Non-Executive Director No fixed term (appointed 21 March 2013). D P J Stewart CEO & Managing Director 12 month contract automatically renewed.

12 months notice required to terminate. Entitled to 12 months gross salary upon termination.

K J P Sheridan CFO & Executive Director Standard employment agreement. 2 months notice required to terminate. Entitled to 2 months gross salary upon termination.


Standard employment agreement. 2 months notice required to terminate. Entitled to 2 months gross salary upon termination.

D Morrison General Manager - Sales Standard employment agreement. 2 months notice required to terminate. Entitled to 2 months gross salary upon termination.

M Cornelius Research & Development Director Standard employment agreement. 2 months notice required to terminate. Entitled to 2 months gross salary upon termination.

B Stevens Chief Technology Officer Standard employment agreement. 2 months notice required to terminate. Entitled to 2 months gross salary upon termination.


16

7. Other information

a Indemnification and Insurance of Directors and Auditors

All Directors of the Group, its secretaries and executive officers are entitled to be indemnified under Clause 23 of the Company’s Constitution to the maximum extent permitted by law unless the liability arises out of conduct involving a lack of good faith. Since the end of the previous financial year, the Group has paid insurance premiums in respect of a directors and officers liability insurance contract against certain liabilities (subject to exclusions), for all current and former officers of the Group, including all directors named in this report, the company secretaries and executive officers of the Group, and directors and officers who have retired or relinquished their positions. The insurance policies prohibit disclosure of the premiums paid in respect of those policies and the nature of the liabilities insured by the policies. The Group has not otherwise, during or since the end of the financial year, except to the extent permitted by law, indemnified or agreed to indemnify any current or former officer or auditor of the Group against a liability incurred by such an officer or auditor.

b Proceedings on behalf of the Company

No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the company, or to 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 part of those proceedings.

No proceedings have been brought or intervened in on behalf of the company with leave of the Court under section 237 of the Corporations Act 2001.

c Auditors Independence Declaration

The lead auditor’s independence declaration for the year ended 30 June 2013 has been received and can be found on page 18 of the financial report.

d Non Audit Services

The directors are satisfied that the provision of non audit services during the year is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001, because the nature and scope of each type of non audit service provided means that auditor independence was not compromised. Fees for non audit services which were paid/payable to the external auditors (Grant Thornton Audit Pty Ltd) during the year ended 30 June 2013 are disclosed at Note 3.

e Corporate Governance

The Directors of NetComm Wireless Limited have always recognised the need for appropriate standards of corporate behaviour and accountability to ensure the quality of the company’s financial reporting. Recent commentary and directions from Australian regulatory authorities have further emphasised this issue in the minds of investors. The Directors of NetComm Wireless Limited reaffirm their support for the principles of corporate governance and transparency and have reviewed their policies with regard to current best practice.



17

7. Other information (continued) f Dividends

No dividends were paid during the financial year 2013 (2012: Nil).

The directors’ report is signed in accordance with a resolution of directors made pursuant to s.298(2) of the Corporations Act 2001. On behalf of the Directors Director: Director:

J Milne, Chairman Sydney

D P J Stewart, CEO & Managing Director Sydney

27 September 2013 27 September 2013

Grant Thornton Audit Pty Ltd ACN 130 913 594 Level 19, 2 Market Street Sydney NSW 2000 Locked Bag Q800 QVB Post Office Sydney NSW 1230 T +61 2 8297 2400 F +61 2 9299 4445 E [email protected] W www.grantthornton.com.au

18

‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited. Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current scheme applies.

Auditor’s Independence Declaration To the Directors of NetComm Wireless Limited In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit of NetComm Wireless Limited for the year ended 30 June 2013, I declare that, to the best of my knowledge and belief, there have been:

a no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and

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

GRANT THORNTON AUDIT PTY LTD Chartered Accountants

Simon Coulton Partner - Audit & Assurance Sydney, 27 September 2013



18


Auditor’s Independence Declaration To the Directors of NetComm Wireless Limited In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit of NetComm Wireless Limited for the year ended 30 June 2013, I declare that, to the best of my knowledge and belief, there have been:

a no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and

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




Index to the financial statements

Contents Page

Consolidated statement of profit or loss and other comprehensive income 20

Consolidated statement of financial position 21

Consolidated statement of changes in equity 22

Consolidated statement of cash flows 23

Notes to the financial statements

1. Significant accounting policies 24

2. Revenue and other income from continuing operations 38

3. Expenses 38

4. Income tax expense/(benefit) 39

5. Dividends 39

6. Cash and cash equivalents 40

7. Trade and other receivables 40

8. Inventories 41

9. Other assets 41

10. Property, plant and equipment 41

11. Goodwill 42

12. Other intangible assets 43

13. Trade and other payables 43

14. Borrowings 43

15. Provisions 44

16. Other liabilities 44

17. Issued capital 44

18. Reserves 44

19. Contingent liabilities 45

20. Expenditure commitments 45

21. Cash flow information 45

22. Key management personnel compensation 46

23. Related party transactions 48

24. Share based payments 48

25. Retirement benefit obligations 50

26. Earnings per share 50

27. Financial instruments 51

28. Events after the reporting date 55

29. Segment reporting 55

30. Parent entity disclosures 57

31. Discontinued operations 58

32. Company details 59

Director’s declaration 60

Independent auditor's report 61

ASX additional information 63

Corporate directory 64

NetComm Wireless LimitedIndex to the financial statements

30 June 2013

19


2013 2012

Note $ $


Revenue from the sale of goods 2 42,779,990 59,186,120

Other income 2 77,610 175,357

Change in inventories (890,231) 3,535,241

Raw materials consumed (28,066,042) (44,756,740)

Employee benefits (7,017,679) (8,412,348)

Other expenses 3 (6,080,627) (4,873,030)

Earnings before interest, tax, depreciation and amortisation (EBITDA) 803,021 4,854,600

Depreciation and amortisation expense 3 (2,902,008) (2,622,465)

Finance costs 3 (582,108) (460,086)

Profit/(Loss) before income tax (2,681,095) 1,772,049

Income tax benefit/(expense) 4 2,139,471 (201,870)

Profit/(Loss) for the year from continuing operations (541,624) 1,570,179

Loss for the year from discontinued operations 31 (a) - (729,668)

Profit/(Loss) for the year (541,624) 840,511

Attributable to equity holders of the parent (541,624) 840,511

Other comprehensive income/(expense)

Items that may be reclassified subsequently to profit or loss:

Exchange differences arising on translation of foreign operations 177,758 22,125

Net change in the fair value of cash flow hedges recognised in equity (984,410) -

Income tax relating to components of other comprehensive income 4 295,323 -

Other comprehensive income for the period (net of tax) (511,329) 22,125

Total comprehensive income/(loss) for the period (1,052,953) 862,636

Attributable to equity holders of the parent (1,052,953) 862,636

(1,052,953) 862,636

Earnings per share from continuing operations:

Basic earnings per share (cents per share) 26 (0.51) 1.51

Diluted earnings per share (cents per share) 26 (0.51) 1.50

Earnings per share from discontinued operations:

Basic earnings per share (cents per share) 26 - (0.70)

Diluted earnings per share (cents per share) 26 - (0.70)

NetComm Wireless LimitedConsolidated statement of profit or loss & other comprehensive income

For the year ended 30 June 2013

The above consolidated statement of profit or loss & other comprehensive income should be read in conjunction with the

accompanying notes.

20


2013 2012

Note $ $

ASSETS

Current assets

Cash and cash equivalents 6 3,882,067 7,049,729

Trade and other receivables 7 4,700,381 9,333,294

Inventories 8 9,857,493 9,863,695

Other assets 9 1,252,681 1,087,316

Total current assets 19,692,622 27,334,034

Assets from discontinued operations 31 (b) - 5,300

Non-current assets

Property, plant and equipment 10 1,877,280 2,228,612

Deferred tax assets 4 (c) 4,441,435 2,027,119

Goodwill 11 895,999 895,999

Other intangible assets 12 6,216,712 4,389,931

Other assets 9 302,143 302,143

Total non-current assets 13,733,569 9,843,804

TOTAL ASSETS 33,426,191 37,183,138

LIABILITIES

Current liabilities

Trade and other payables 13 5,900,269 7,239,460

Borrowings 14 7,066,858 12,319,681

Provisions 15 634,460 908,542

Income tax liability - 128,216

Other current liabilities 16 203,299 421,555

Total current liabilities 13,804,886 21,017,454

Non-current liabilities

Borrowings 14 79,462 116,017

Provisions 15 313,076 222,752

Total non-current liabilities 392,538 338,769

TOTAL LIABILITIES 14,197,424 21,356,223

NET ASSETS 19,228,767 15,826,915

EQUITY

Issued capital 17 14,331,878 9,877,073

Reserves 18 (199,244) 312,085

Retained earnings 5,096,133 5,637,757

TOTAL EQUITY 19,228,767 15,826,915

NetComm Wireless LimitedConsolidated statement of financial position


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

21


Ord

inary

Reta

ined

Fo

reig

nF

ore

ign

Op

tion

s a

nd

To

tal

Sh

are

sE

arn

ing

sC

urre

ncy

Exch

an

ge

Sh

are

Rig

hts

Tra

nsla

tion

Hed

gin

gR

eserv

e

Reserv

eR

eserv

e

No

te$

$$

$$

$

9,7

96,7

73

4,7

97,2

46

(1

05,8

48)

-

352,4

76

14,8

40,6

47

-

840,5

11

-

-

-

840,5

11

-

-

22,1

25

-

-

22,1

25

-

840,5

11

22,1

25

-

-

862,6

36

18 (a

)-

-

-

-

43,3

32

43,3

32

17 (a

)80,3

00

-

-

-

-

80,3

00

9,8

77,0

73

5,6

37,7

57

(8

3,7

23)

-

395,8

08

15,8

26,9

15

9,8

77,0

73

5,6

37,7

57

(8

3,7

23)

-

395,8

08

15,8

26,9

15

-

(541,6

24)

-

-

-

(5

41,6

24)

18 (b

)-

-

177,7

58

-

-

177,7

58

18 (C

)-

-

-

(6

89,0

87)

-

(6

89,0

87)

-

(541,6

24)

177,7

58

(6

89,0

87)

-

(1

,052,9

53)

17 (a

)4,3

42,4

22

-

-

-

-

4,3

42,4

22

17 (a

)112,3

83

-

-

-

-

112,3

83

14,3

31,8

78

5,0

96,1

33

94,0

35

(6

89,0

87)

395,8

08

19,2

28,7

67

Co

nso

lidate

d s

tate

men

t of c

han

ges in

eq

uity

Fo

r the y

ear e

nd

ed

30 J

un

e 2

013

Pro

fit for th

e p

erio

d

NetC

om

m W

irele

ss L

imite

d

To

tal c

om

pre

hen

siv

e in

co

me fo

r the p

erio

d

Bala

nce a

t 1 J

uly

2011

Recognitio

n o

f share

based p

aym

ents

Exchange d

iffere

nce o

n tra

nsla

tion o

f fore

ign o

pera

tions

The a

bove c

onsolid

ate

d s

tate

ment o

f changes in

equity

should

be re

ad in

conju

nctio

n w

ith th

e a

ccom

panyin

g n

ote

s.

Exerc

ise o

f optio

ns

Bala

nce a

t 30 J

un

e 2

012

Bala

nce a

t 30 J

un

e 2

013

Fore

ign e

xchange h

edgin

g (N

et o

f tax)

Exerc

ise o

f optio

ns

To

tal c

om

pre

hen

siv

e in

co

me fo

r the p

erio

d

Loss fo

r the p

erio

d

Bala

nce a

t 1 J

uly

2012

Issue o

f ord

inary

share

s (N

et o

f transactio

n c

osts

and ta

x)

Exchange d

iffere

nce o

n tra

nsla

tion o

f fore

ign o

pera

tions

22


2013 2012

Note $ $

Cash flows from operating activities:

Receipts from customers 52,153,952 66,590,970

Payments to suppliers and employees (49,579,804) (66,208,860)

Finance costs (582,108) (460,086)

Income taxes paid - (193,522)

Net cash (used in) continuing operations 1,992,040 (271,498)

Net cash provided by discontinued operations 31(c) - 78,406

Net cash (used in) / provided by operating activities 21 1,992,040 (193,092)

Cash flows from investing activities:

Proceeds from sale of plant and equipment - 11,472

Interest received 77,575 95,388

Acquisition of property, plant and equipment (556,734) (421,041)

Acquisition of intangible assets (3,845,970) (3,631,462)

Net cash (used in) by investing activities (4,325,129) (3,945,643)

Cash flows from financing activities:

Proceeds from issue of shares & options (net of transaction costs & tax) 17 (a) 4,454,805 80,300

Proceeds from borrowings 48,510,971 62,029,949

Repayment of borrowings (53,800,349) (55,569,716)

Net cash provided by / (used in) financing activities (834,573) 6,540,533

Net increase in cash and cash equivalents held (3,167,662) 2,401,798

Cash and cash equivalents at beginning of financial period 7,049,729 4,647,931

Cash and cash equivalents at end of financial period 6 3,882,067 7,049,729

NetComm Wireless LimitedConsolidated statement of cash flows


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

23


NetComm Wireless Limited Notes to the financial statements For the year ended 30 June 2013

24

1 Statement of Significant Accounting Policies General information

The financial statements are general purpose financial statements that have been prepared in accordance with Australian Accounting Standards, including Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001. The financial statements cover the consolidated Group of NetComm Wireless Limited (“the Group” or the “consolidated entity”). NetComm Wireless Limited is a listed public company, incorporated and domiciled in Australia, and is a for-profit entity for the purpose of preparing financial statements. Compliance with Australian Accounting Standards results in the compliance with the International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

The financial statements were authorised for issue by the directors on 27 September 2013. The following is a summary of the material accounting policies adopted by the Group in the preparation of the financial statements. The accounting policies have been consistently applied, unless otherwise stated.

Basis of Preparation

The financial statements have been prepared on an accruals basis and are based on historical costs modified by the revaluation of selected non current assets, financial assets and financial liabilities for which the fair value basis of accounting has been applied. Cost is based on the fair values of the consideration given in exchange for assets. All amounts are presented in Australian dollars, unless otherwise noted.

Critical accounting judgements and key sources of uncertainty

In the application of the Group’s accounting policies, management is required to make judgements, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects current and future periods. Refer to note 1(w) for a discussion of critical judgements in applying the entity’s accounting policies and key sources of estimation uncertainty.

Adoption of new and revised Accounting Standards

None of the new standards and amendments that are mandatory for the first time for the financial year beginning 1 July 2012 affected any of the amounts recognised in the current period or any prior period and are not likely to affect future periods. However, amendments made to AASB 101: Presentation of Financial Statements effective 1 July 2012 now require the statement of profit or loss and other comprehensive income to show the items of comprehensive income grouped into those that are not permitted to be reclassified to profit or loss in the future period and those that may have to be reclassified if certain conditions are met.



25

1 Statement of Significant Accounting Policies (continued)

(a) Principles of Consolidation

The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of NetComm Wireless Limited as at 30 June 2013 and the results of all subsidiaries for the year then ended. A subsidiary is an entity over which NetComm Wireless Limited has the power to control the financial and operating policies of an entity so as to obtain benefits from its activities. A list of subsidiaries is contained in Note 30(d) to the financial statements. All subsidiaries have a 30 June financial year end. All intercompany balances and transactions between entities in the consolidated entity, including any unrealised profits or losses, have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistencies with those policies applied by the parent entity. Subsidiaries are fully consolidated from the date which control is transferred to the Group. They are deconsolidated from the date control ceases.

(b) Business Combinations Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The cost of the

business combination is measured as the aggregate of the fair values (at the date of exchange) of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree. Acquisition related costs are recognised in the profit or loss as incurred. The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under AASB 3 ‘Business Combinations’ are recognised at their fair values at the acquisition date, except for non-current assets (or disposal groups) that are classified as held for sale in accordance with AASB 5 ‘Non-current Assets Held for Sale and Discontinued Operations’, which are recognised and measured at fair value less costs to sell. Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised. If, after reassessment, the Group’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination the excess is recognised immediately in profit or loss. The interest of minority shareholders in the acquiree is initially measured at the minority’s proportion of the net fair value of the assets, liabilities and contingent liabilities recognised. Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions.



25


(a) Principles of Consolidation

The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of NetComm Wireless Limited as at 30 June 2013 and the results of all subsidiaries for the year then ended. A subsidiary is an entity over which NetComm Wireless Limited has the power to control the financial and operating policies of an entity so as to obtain benefits from its activities. A list of subsidiaries is contained in Note 30(d) to the financial statements. All subsidiaries have a 30 June financial year end. All intercompany balances and transactions between entities in the consolidated entity, including any unrealised profits or losses, have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistencies with those policies applied by the parent entity. Subsidiaries are fully consolidated from the date which control is transferred to the Group. They are deconsolidated from the date control ceases.

(b) Business Combinations Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The cost of the

business combination is measured as the aggregate of the fair values (at the date of exchange) of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree. Acquisition related costs are recognised in the profit or loss as incurred. The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under AASB 3 ‘Business Combinations’ are recognised at their fair values at the acquisition date, except for non-current assets (or disposal groups) that are classified as held for sale in accordance with AASB 5 ‘Non-current Assets Held for Sale and Discontinued Operations’, which are recognised and measured at fair value less costs to sell. Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised. If, after reassessment, the Group’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination the excess is recognised immediately in profit or loss. The interest of minority shareholders in the acquiree is initially measured at the minority’s proportion of the net fair value of the assets, liabilities and contingent liabilities recognised. Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions.


26


(c) Foreign Currency Transactions and Balances & policy on hedge accounting for FX exposures Functional and presentation currency

The functional currency of each of the Group’s entities is measured using the currency of the primary economic environment in which that entity operates. The consolidated financial statements are presented in Australian dollars which is the parent entity’s functional and presentation currency.

Transaction and balances

Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the year end exchange rate. Non monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined. Exchange differences arising on the translation of monetary items are recognised in profit or loss in the period in which they arise.

Group companies

The financial results and position of foreign operations whose functional currency is different from the Group’s presentation currency are translated as follows: • assets and liabilities are translated at year end exchange rates prevailing at that reporting date;

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

• all resulting exchange differences shall be recognised in other comprehensive income and as a separate

component of equity. Exchange differences arising on translation of foreign operations are transferred directly to the Group’s foreign currency translation reserve in the statement of financial position. These differences are recognised in profit or loss in the period in which the operation is disposed. Goodwill and fair value adjustments arising on the acquisition of a foreign entity on or after the date of transition to IFRS are treated as assets and liabilities of the foreign entity and translated at exchange rates prevailing at the reporting date.

Derivative financial instruments and hedge accounting

Derivative financial instruments are accounted for as financial assets at fair value through profit or loss (FVTPL) except for derivatives designated as hedging instruments in cash flow hedge relationships, which requires a specific accounting treatment. To qualify for hedge accounting, the hedging relationship must meet several strict conditions with respect to documentation, probability of occurrence of the hedged transaction and hedge effectiveness. All derivative financial instruments used for hedge accounting are recognised initially at fair value and reported subsequently at fair value in the statement of financial position.



27


Derivative financial instruments and hedge accounting (continued)

To the extent that the hedge is effective, changes in the fair value of derivatives designated as hedging instruments in cash flow hedges are recognised in other comprehensive income and included within the cash flow hedge reserve in equity. Any ineffectiveness in the hedge relationship is recognised immediately in profit or loss. At the time the hedged item affects profit or loss, any gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss and presented as a reclassification adjustment within other comprehensive income. However, if a non-financial asset or liability is recognised as a result of the hedged transaction, the gains and losses previously recognised in other comprehensive income are included in the initial measurement of the hedged item.

If a forecast transaction is no longer expected to occur or if the hedging instrument becomes ineffective, any related gain or loss recognised in other comprehensive income is transferred immediately to profit or loss.

(d) 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 taxation authority or it is recognised as part of the cost of acquisition of an asset or part of an item of expenses. Receivables and payables in the statement of financial position are shown inclusive of GST and the net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables. Cash flows are presented in the statement of cash flows on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows.

(e) Income Tax

The charge for current income tax expense is based on the profit for the year adjusted for any non-assessable or disallowed items. It is calculated using the tax rates that have been enacted or are substantively enacted by the balance date.

Deferred tax is accounted for in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss.

Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is credited in profit or loss except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity. Deferred tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible temporary differences can be utilised.


28

1 Statement of Significant Accounting Policies (continued) (e) Income Tax (continued)

The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the consolidated Group will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.

NetComm Wireless Limited and its wholly-owned Australian subsidiaries have formed an income tax consolidated group under the tax consolidation regime. The group notified the Australian Tax Office that it had formed an income tax consolidated group to apply from 20 August 2006.

The stand-alone taxpayer within a group approach has been used to allocate current income tax expense and deferred tax expense to wholly-owned subsidiaries that form part of the tax consolidated group. Each entity in the group recognises its own current and deferred tax assets and liabilities, as if they continue to be a separate taxable entity in their own right, except for any deferred tax assets resulting from unused tax losses and tax credits, which are immediately assumed by the parent entity. The current tax liability of each group entity is then subsequently assumed by the parent entity.

(f) Revenue Recognition

Revenue is measured at the fair value of consideration received or receivable. Revenue is reduced for estimated customer returns, rebates and other similar allowances. Revenue from the sale of goods, including communications and networking devices, are recognised at the time goods are dispatched to customers. Revenue from a contract to provide services is recognised on a pro-rata basis over the term of the service agreement. Interest revenue is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount. Other revenue is recognised when the right to receive the revenue has been established. All revenue is stated net of the amount of goods and services tax (GST).

(g) Share-based Payments

Equity settled compensation benefits are provided to employees via the Employee Option Plan and the NetComm Wireless Limited Executive Employee Share Plan. Information relating to these plans is set out in notes 22 & 24. The fair value of options granted is recognised as an employee benefit expense with a corresponding increase in equity. The fair value is measured at grant date and recognised over the period during which the employees become unconditionally entitled to the options.

The fair value at grant date is independently determined using a Binomial Approximation option pricing model that takes into account the exercise price, the term of the option, the share price at grant date, the expected volatility of the underlying share, the expected dividend yield and the risk free rate for the term of the option. The fair value of the options granted excludes the impact of any non market vesting conditions. Non market vesting conditions are included in assumptions about the number of options that are expected to vest. At each balance date, the entity revises its estimate of the number of options that are expected to vest. The employee benefit expense recognised each period takes into account the most recent estimate.



28

1 Statement of Significant Accounting Policies (continued) (e) Income Tax (continued)


NetComm Wireless Limited and its wholly-owned Australian subsidiaries have formed an income tax consolidated group under the tax consolidation regime. The group notified the Australian Tax Office that it had formed an income tax consolidated group to apply from 20 August 2006.

The stand-alone taxpayer within a group approach has been used to allocate current income tax expense and deferred tax expense to wholly-owned subsidiaries that form part of the tax consolidated group. Each entity in the group recognises its own current and deferred tax assets and liabilities, as if they continue to be a separate taxable entity in their own right, except for any deferred tax assets resulting from unused tax losses and tax credits, which are immediately assumed by the parent entity. The current tax liability of each group entity is then subsequently assumed by the parent entity.

(f) Revenue Recognition

Revenue is measured at the fair value of consideration received or receivable. Revenue is reduced for estimated customer returns, rebates and other similar allowances. Revenue from the sale of goods, including communications and networking devices, are recognised at the time goods are dispatched to customers. Revenue from a contract to provide services is recognised on a pro-rata basis over the term of the service agreement. Interest revenue is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount. Other revenue is recognised when the right to receive the revenue has been established. All revenue is stated net of the amount of goods and services tax (GST).

(g) Share-based Payments

Equity settled compensation benefits are provided to employees via the Employee Option Plan and the NetComm Wireless Limited Executive Employee Share Plan. Information relating to these plans is set out in notes 22 & 24. The fair value of options granted is recognised as an employee benefit expense with a corresponding increase in equity. The fair value is measured at grant date and recognised over the period during which the employees become unconditionally entitled to the options.

The fair value at grant date is independently determined using a Binomial Approximation option pricing model that takes into account the exercise price, the term of the option, the share price at grant date, the expected volatility of the underlying share, the expected dividend yield and the risk free rate for the term of the option. The fair value of the options granted excludes the impact of any non market vesting conditions. Non market vesting conditions are included in assumptions about the number of options that are expected to vest. At each balance date, the entity revises its estimate of the number of options that are expected to vest. The employee benefit expense recognised each period takes into account the most recent estimate.



29


(g) Share-based Payments (continued)

Equity-settled share based payment transactions with other parties are measured at the fair value of the goods and services received, except where the fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments granted, measured at the date the entity obtains the goods or the counterparty renders the service. For cash-settled share-based payments, a liability equal to the portion of the goods or services received is recognised at the current fair value determined at each reporting date.

(h) Property, Plant and Equipment

Each class of property, plant and equipment is carried at cost less, where applicable, any accumulated depreciation and impairment losses. Cost includes all directly attributable expenditure incurred including costs to get the asset ready for its use as intended by management. Costs include an estimate of any expenditure expected to be incurred at the end of the asset’s useful life, including restoration, rehabilitation and decommissioning costs. The carrying amount of property, plant and equipment is reviewed annually by directors for indications of impairment. If any such indications exist, an impairment test is carried out, and any impairment losses on the assets recognised.

Depreciation

The depreciable amount of all fixed assets is depreciated on a straight line basis over their useful lives to the Group commencing from the time the asset is held ready for use. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements. The depreciable amount is the carrying value of the asset less estimated residual amounts. The residual amount is based on what a similar asset of the expected condition of the asset at the end of its useful life could be sold for.

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

Class of Asset Useful Life Plant and equipment 2-6 years Leasehold improvements Over the term of the lease Development assets 2-6 years

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance date. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are recognised in profit or loss.



29


(g) Share-based Payments (continued)

Equity-settled share based payment transactions with other parties are measured at the fair value of the goods and services received, except where the fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments granted, measured at the date the entity obtains the goods or the counterparty renders the service. For cash-settled share-based payments, a liability equal to the portion of the goods or services received is recognised at the current fair value determined at each reporting date.

(h) Property, Plant and Equipment

Each class of property, plant and equipment is carried at cost less, where applicable, any accumulated depreciation and impairment losses. Cost includes all directly attributable expenditure incurred including costs to get the asset ready for its use as intended by management. Costs include an estimate of any expenditure expected to be incurred at the end of the asset’s useful life, including restoration, rehabilitation and decommissioning costs. The carrying amount of property, plant and equipment is reviewed annually by directors for indications of impairment. If any such indications exist, an impairment test is carried out, and any impairment losses on the assets recognised.

Depreciation

The depreciable amount of all fixed assets is depreciated on a straight line basis over their useful lives to the Group commencing from the time the asset is held ready for use. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements. The depreciable amount is the carrying value of the asset less estimated residual amounts. The residual amount is based on what a similar asset of the expected condition of the asset at the end of its useful life could be sold for.

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

Class of Asset Useful Life Plant and equipment 2-6 years Leasehold improvements Over the term of the lease Development assets 2-6 years

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance date. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are recognised in profit or loss.


30


(i) Impairment of Assets

At each reporting date, the Group reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is recognised in profit or loss. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

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. Where an impairment loss subsequently reverses, the carrying amount of the asset or cash generating unit is increased to the revised recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised in prior years. A reversal of an impairment loss is recognised immediately in profit or loss. Impairment of goodwill is not reversed. Refer also to note 1(y) on goodwill.

(j) Leases

Leases of fixed assets where substantially all the risks and benefits incidental to the ownership of the asset, but not the legal ownership that are transferred to entities in the Group are classified as finance leases. Finance leases are capitalised by recording an asset and a liability at the lower of the amounts equal to the fair value of the leased property or the present value of the minimum lease payments, including any guaranteed residual values. Lease payments are allocated between the reduction of the lease liability and the lease interest expense for the period. The interest expense is recognised in the profit or loss so as to achieve a constant periodic rate of interest on the remaining balance of the liability outstanding. Lease payments for operating leases, where substantially all of the risks and benefits remain with the lessor, are recognised in profit or loss on a straight line basis over the lease term. Contingent rentals are recognised as an expense in the period 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.

(k) Derivative Financial Instruments

The fair value of all derivative financial instruments outstanding at reporting date are recognised in the statement of financial position as either financial assets or financial liabilities. Changes in the fair value of derivative financial instruments that are designated and effective as hedges of future cash flows are recognised directly in equity, with any ineffective portion being recognised in profit or loss. Changes in the fair value of derivative financial instruments are recognised in profit or loss as they arise. Derivatives embedded in other financial instruments, or other non financial host contracts, are treated as separate derivatives when their risks and characteristics are not closely related to those of the host contract, and the host contract is not carried at fair value with unrealised gains or losses reported in profit or loss.



31

1 Statement of Significant Accounting Policies (continued) (l) Financial Assets

Financial assets are classified into the following specified category: ‘loans and receivables’. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.

Loans and receivables

Trade receivables, loans and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as ‘loans and receivables’. Loans and receivables are measured at amortised cost using the effective interest method less impairment. Interest income is recognised by applying the effective interest rate. Appropriate allowances for estimated irrecoverable amounts are recognised in profit or loss when there is objective evidence that the asset is impaired. The allowance recognised is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the effective interest rate computed at initial recognition.

Effective interest method

The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees on points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial asset, or, where appropriate, a shorter period. Income is recognised on an effective interest basis for debt instruments.

(m) Cash and Cash Equivalents

Cash and cash equivalents include cash on hand and in banks, deposits held at call with banks and financial institutions, investments in money market instruments with maturities of three months or less from the date of acquisition, and bank overdrafts. Bank overdrafts are shown within short term borrowings in current liabilities on the statement of financial position.

(n) Inventories

Finished goods and raw materials are valued at the lower of cost and net realisable value. Cost is the direct cost of purchase, plus freight and duty and any other costs directly attributable to acquisition. Net realisable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale. Inventory is recognised on a weighted average cost basis.



31

1 Statement of Significant Accounting Policies (continued) (l) Financial Assets

Financial assets are classified into the following specified category: ‘loans and receivables’. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.

Loans and receivables

Trade receivables, loans and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as ‘loans and receivables’. Loans and receivables are measured at amortised cost using the effective interest method less impairment. Interest income is recognised by applying the effective interest rate. Appropriate allowances for estimated irrecoverable amounts are recognised in profit or loss when there is objective evidence that the asset is impaired. The allowance recognised is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the effective interest rate computed at initial recognition.

Effective interest method

The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees on points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial asset, or, where appropriate, a shorter period. Income is recognised on an effective interest basis for debt instruments.

(m) Cash and Cash Equivalents

Cash and cash equivalents include cash on hand and in banks, deposits held at call with banks and financial institutions, investments in money market instruments with maturities of three months or less from the date of acquisition, and bank overdrafts. Bank overdrafts are shown within short term borrowings in current liabilities on the statement of financial position.

(n) Inventories

Finished goods and raw materials are valued at the lower of cost and net realisable value. Cost is the direct cost of purchase, plus freight and duty and any other costs directly attributable to acquisition. Net realisable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale. Inventory is recognised on a weighted average cost basis.


32

1 Statement of Significant Accounting Policies (continued) (o) Intangibles Research and development costs

Expenditure during the research phase of a project is recognised as an expense when incurred. Development costs (relating to the design and testing of new or improved products) are recognised as intangible assets when it is probable that the project will generate future benefits considering its commercial and technical feasibility and its cost can be measured reliably. The expenditure capitalised consists of all directly attributable costs. Capitalised development costs are amortised from the point at which the product is ready for use and for no longer than 3 years.

Subsequent to initial recognition, intangible assets are reported at cost less accumulated amortisation and impairment costs.

Computer software

Computer software is measured on a cost basis less amortisation and impairment losses. Computer software is amortised on a straight line basis over 3.3 years, commencing from the time the software is ready for use.

Development assets Cost incurred in acquiring assets for research and development is measured at costs less accumulated amortisation and any accumulated impairment losses. Development assets are amortised on a straight line basis over 2-6 years.

(p) Borrowing Costs Borrowing costs are recognised in profit or loss in the period in which they are incurred.

(q) Employee Benefits

Provision is made for the Group’s liability for employee benefits arising from services rendered by employees to balance date, including wages and salaries, annual leave and long service leave. Employee benefits that are expected to be settled within one year have been measured at the amounts expected to be paid when the liability is settled, plus related on costs. Employee benefits payable later than one year have been measured at present value of the estimated future cash outflows to be made for those benefits. Contributions are made by the Group to employee superannuation funds which are of the defined contribution type. Contributions to these defined contribution superannuation schemes are recognised as an expense in the period they are payable.

(r) Financial instruments Debt and equity instruments

Debt and equity instruments are classified as either liabilities or equity in accordance with the substance of the contractual arrangement. An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Group are recorded at the proceeds received, net of direct issue costs.



33


(r) Financial instruments (continued) Other financial liabilities

Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs and are subsequently measured at amortised cost using the effective interest method, with the interest expense recognised on an effective yield basis. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period.

Trade payables

Trade payables are initially measured at fair value, and are subsequently measured at amortised cost.

(s) Provisions

Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured.

(t) Earnings per share Basic earnings per share is determined by dividing net profit after income tax attributable to members of the company, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year. Diluted earnings per share adjusts the figures in the determination of basic earnings per share by taking into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.

(u) Dividends

A liability is recorded for the amount of any dividend declared, determined or publicly recommended by the directors on or before the end of financial year but not distributed at balance date.

(v) Issued capital

Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of transaction costs and tax, from the proceeds.


34

1 Statement of Significant Accounting Policies (continued) (w) Standards and Interpretations issued not yet effective

Certain new accounting standards and interpretations have been published that are not mandatory for 30 June, 2013 reporting periods. The Group’s assessment of the impact of these new standards and Interpretations are set out below. (i) AASB 9 Financial Instruments (effective from 1 January, 2015) AASB 9 aims to replace AASB 139 Financial Instruments: Recognition and Measurement in its entirety. AASB 9 requires that gains or losses on financial liabilities measured at fair value are recognised in profit or loss, except that the effects of changes in the liability’s credit risk are recognised in other comprehensive income. The amendments require that any changes in fair value attributable to the liability’s credit risk be recognised in other comprehensive income instead of profit or loss. The replacement standard (AASB 9) is being issued in phases. To date, the chapters dealing with recognition, classification, measurement and derecognition of financial assets and liabilities have been issued. These chapters are effective for annual periods beginning 1 January 2015. Further chapters dealing with impairment methodology and hedge accounting are still being developed.

Management have yet to assess the impact that this amendment is likely to have on the financial statements of the Group. However, they do not expect to implement the amendments until all chapters of AASB 9 have been published and they can comprehensively assess the impact of all changes. (ii) AASB 10 Consolidated Financial Statements (effective from 1 January, 2014) AASB 10 establishes a revised control model which broadens the situations when an entity is considered to be controlled by another entity. The effect of this change may lead to more entities being consolidated into the Group. The Company does not expect that this change with have any impact on the financial statements due to there currently not being any entities or investment within the group that are not currently consolidated. (iii) AASB 13 Fair Value Measurement (effective from 1 January, 2014) Currently, fair value measurement requirements are included in several Accounting Standards. AASB 13 establishes a single framework for measuring fair value of financial and non-financial items recognized at fair value in the statement of financial position or disclosed in the notes in the financial statements. The Company has not yet conducted a detailed analysis of the differences between the current fair value calculation methodologies used and those required by AASB 13. The Group’s management have yet to assess the impact of this new standard.

(iv) AASB 119 Employee Benefits (effective1 January, 2013). The Company currently calculates its liability for annual leave employee benefits on the basis that it is due to be settled within 12 months of the end of the reporting period because employees are entitled to use this leave at any time. The amendments to AASB 119 require that such liabilities be calculated on the basis of when the leave is expected to be taken, i.e. expected settlement.

When this standard is first adopted for the 30 June, 2014 year end, annual leave liabilities will be recalculated on 1 July 2012. Leave liabilities for any employees with significant balances of leave outstanding who are not expected to take their leave within 12 months will be discounted, which may result in a reduction of the annual leave liabilities recognised on 1 July 2012, and a corresponding increase in retained earnings at that date.



35

1 Statement of Significant Accounting Policies (continued) (w) Standards and Interpretations issued not yet effective (continued)

(vi) AASB 12 Disclosure of Interests in Other Entities (effective from 1 January, 2014) AASB 12 combines the disclosure requirements for subsidiaries, joint arrangements, associates and structured entities within a comprehensive disclosure standard. Its aim is to provide more transparency on ‘borderline’ consolidation decisions and includes enhanced disclosures centred on significant judgements and assumptions made around determining control, joint control and significant influence. The Company does not expect that this change will have any impact on the financial statements other than to add additional disclosure.

Then Group will adopt the new standards detailed above from their operative date. They will therefore be applied in the financial statement for the annual reporting ending 30 June 2014. There are no other standards that are not yet effective and that are expected to have a material impact on the Group in the current or future reporting periods and on foreseeable future transactions.

(x) Critical accounting estimates and judgements

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 based on current trends and economic data, obtained both externally and within the Group. The following are the critical judgements (apart from those involving estimations, which are dealt with below) that management has made in the process of applying the Group’s accounting policies and that have the most significant effect on the amounts recognised in the financial statements.

Inventories

Note 8 sets out the categories of inventories carried. The net realisable value of inventories is the estimated selling price in the ordinary course of business less estimated costs to sell which approximates fair value less costs to sell. The key assumptions require the use of management judgement and are reviewed annually. These key assumptions are the variables affecting the estimated costs to sell and expected selling price. Any reassessment of cost to sell or selling price in a particular year will affect the cost of goods sold. The following are the key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year:

Impairment of assets

The Group assesses impairment at each reporting date by evaluating conditions specific to the Group that may lead to impairment of assets. Where an impairment trigger exists, the recoverable amount of the asset is determined. Value in use calculations performed in assessing recoverable amounts incorporate a number of key estimates.



36


(x) Critical accounting estimates and judgements (continued)

Deferred Tax Asset

Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is credited in profit or loss except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity. Deferred tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible temporary differences can be utilised.


Internally generated intangible assets – research and development expenditure Expenditure on research activities is recognised as an expense in the period in which it is incurred. An internally-generated intangible asset arising from development (or from the development phase of an internal project) is recognised if, and only if, all of the following have been demonstrated:

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

the intention to complete the intangible asset and use or sell it; the ability to use or sell the intangible asset; how the intangible asset will generate probable future economic benefits; the availability of adequate technical, financial and other resources to complete the development

and to use or sell the intangible asset; and the ability to measure reliably the expenditure attributable to the intangible asset during its

development.

The amount initially recognised for internally-generated intangible assets is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above. Where no internally-generated intangible asset can be recognised, development expenditure is recognised in profit or loss in the period in which it is incurred. Subsequent to initial recognition, internally-generated intangible assets are reported at cost less accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets that are acquired separately.

(y) Goodwill

Goodwill acquired in a business combination is initially measured at its cost, being the excess of the cost of the business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised at the date of the acquisition. Goodwill is subsequently measured at its cost less any accumulated impairment losses.

For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash generating units, or groups of cash-generating units, expected to benefit from the synergies of the business combination. Cash-generating units or groups of cash-generating units to which goodwill has been allocated are tested for impairment annually or more frequently if events or changes in circumstances indicate that goodwill might be impaired.



37


(y) Goodwill (continued) If the recoverable amount of the cash-generating unit (or group of cash-generating units) is less than the carrying amount of the cash-generating unit (or groups of cash-generating units), the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit (or groups of cash-generating units) and then to the other assets of the cash generating units pro-rata on the basis of the carrying amount of each asset in the cash-generating unit (or groups of cash-generating units). An impairment loss recognised for goodwill is recognised immediately in profit or loss and is not reversed in a subsequent period. On disposal of an operation within a cash-generating unit, the attributable amount of goodwill is included in the determination of the profit or loss on disposal of the operation.

(z) Discontinued operations In the consolidated statement of profit or loss and other comprehensive income, income and expenses from discontinued operations are reported separately from income and expenses from continuing operations. The resulting profit or loss (after taxes) is reported separately in the consolidated statement of profit or loss and other comprehensive income.



37


(y) Goodwill (continued) If the recoverable amount of the cash-generating unit (or group of cash-generating units) is less than the carrying amount of the cash-generating unit (or groups of cash-generating units), the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit (or groups of cash-generating units) and then to the other assets of the cash generating units pro-rata on the basis of the carrying amount of each asset in the cash-generating unit (or groups of cash-generating units). An impairment loss recognised for goodwill is recognised immediately in profit or loss and is not reversed in a subsequent period. On disposal of an operation within a cash-generating unit, the attributable amount of goodwill is included in the determination of the profit or loss on disposal of the operation.

(z) Discontinued operations In the consolidated statement of profit or loss and other comprehensive income, income and expenses from discontinued operations are reported separately from income and expenses from continuing operations. The resulting profit or loss (after taxes) is reported separately in the consolidated statement of profit or loss and other comprehensive income.

2

2013 2012

$ $

Revenue

Sales revenue 42,779,990 59,186,120

42,779,990 59,186,120

Other income

Interest revenue 77,575 95,388

Other revenue 35 79,969

77,610 175,357

Total revenue and other income 42,857,600 59,361,477

3

Included in expenses are the following specific items

2013 2012

$ $

Other expenses comprising:

Advertising and marketing 615,176 (168,200)

Property expenses 934,189 832,115

Distribution and selling costs 813,722 952,478

Insurance expenses 332,212 267,437

Legal & professional fees 712,902 526,588

Travel expenses 833,763 739,287

Contractor costs 505,758 608,299

Other expenses 1,332,905 1,115,026

6,080,627 4,873,030

915,175 644,941

1,986,833 1,977,524

2,902,008 2,622,465

2013 2012

$ $

Auditors' remuneration

Auditing or reviewing the financial statements 101,500 51,510

Taxation services 30,399 12,750

Other services - consulting 9,086 -

140,985 64,260

2013 2012

$ $

Other auditors:

BDO Audit (NSW-VIC) Pty Limited

Auditing or reviewing the financial statements - 56,999

Taxation services - 14,275

Other services - consulting - 35,681

- 106,955

Deloitte

Taxation services 664 1,641

664 1,641

Crowe Horwath

Other services - consulting 19,200 -

19,200 -

Total auditors' remuneration 160,849 172,856

2013 2012

$ $

Rental expenses on operating leases

Minimum lease payments 819,752 645,208

Finance Costs

Bank borrowings 552,719 407,682

Finance leases 29,389 52,404

582,108 460,086

Cost of sales 28,956,158 41,221,500

(Reversal)/impairment of doubtful receivables 4,155 (98,357)

Defined contribution superannuation expenses 644,483 634,003

Loss on sale of property, plant and equipment (231) 15,393

Research & development costs 909,520 569,276

Share-based payments - equity settled benefit - 43,332

NetComm Wireless Limited

Notes to the Financial Statements


Revenue and other income from continuing operations

Depreciation, amortisation and impairments:

Amortisation of intangible assets (note 12(b))

Expenses

Depreciation of property, plant and equipment (note 10(b))

Grant Thornton is the auditor of the Group. Amounts received or due and receivable by Grant Thornton are detailed below:

38

68 - NetComm Wireless - Annual Report 2012-2013NetComm Wireless Limited



4

(a) Income tax recognised in profit or loss 2013 2012

$ $

Tax expense comprises:

Current tax (benefit)/expense (1,755,117) (371,655)

349,404 773,066

Under/(over) provision for tax in prior year (733,758) (199,541)

Income tax (benefit)/expense (2,139,471) 201,870

Income tax recognised in other comprehensive income

Income tax relating to components of other comprehensive income (295,323) -

(b)

2013 2012

$ $

i) Amounts recognised in profit or loss

Net profit/(loss) before tax (2,681,095) 1,772,049

(804,329) 531,615

- Share based payments - 13,000

- Entertainment 6,980 4,500

-Tax rate Difference in NZ - 28% (16,041) (22,514)

- Other items 4,287 31,844

- Non-deductible amortisation of intangibles - 158,500

Under/(over) provision for tax in prior years (733,758) (199,541)

(596,610) (315,534)

Income tax (benefit)/expense (2,139,471) 201,870

ii) Amounts recognised in equity

Net change in the fair value of cash flow hedges (984,410) -

(295,323) -

Total amounts recognised in equity (295,323) -

(c)

Opening Charged to Charged to Closing

balance income

other comprehensive

income balance

$ $ $ $

Unused tax losses 2,548,879 2,468,397 - 5,017,276

Temporary differences

Accrued expenses 8,019 41,613 - 49,632

Provisions 312,800 (26,157) - 286,643

Inventory 182,762 83,838 - 266,600

Intangibles and Other (1,025,341) (448,698) - (1,474,039)

Cash flow hedges - - 295,323 295,323

2,027,119 2,118,993 295,323 4,441,435

Opening Charged to Charged to Closing

balance income

other comprehensive

income balance

$ $ $ $

Unused tax losses 1,707,372 841,507 - 2,548,879

Temporary differences

Accrued expenses 44,200 (36,181) - 8,019

Provisions 343,417 (30,617) - 312,800

Inventory 243,364 (60,602) - 182,762

Intangibles and Other (379,675) (645,666) - (1,025,341)

1,958,678 68,441 - 2,027,119

5

Balance of franking account

2013 2012

$ $

591,961 591,961

2012

Dividends

No dividends were paid during the year-ended 30 June 2013 (2012: Nil).

The nature of the evidence supporting the recognition of tax losses incurred in prior periods includes forecast taxable income that is expected to

arise in the next 2 years as a result of new supply and distribution agreements entered into by the Group in prior years.

Income tax (benefit)/expense

Deferred tax (benefit) / expense relating to the origination and reversal of temporary differences

2013

Tax at the Australian tax rate of 30%

Tax at the Australian tax rate of 30%

Balance of franking account at period end adjusted for franking credits arising from dividends

recognised as receivables, and franking debits arising from payment of proposed dividends, and

franking credits that may be prevented from distribution in subsequent financial years

Research & Development tax concession

Deferred tax assets/(liabilities) arise from the following:

The prima facie income tax expense on pre-tax accounting profit from continuing operations and other comprehensive income

reconciles to the income tax expense in the financial statements as follows:

39




6

(a) Cash on hand 2013 2012

$ $

Cash on hand 1,778 1,735

Cash at bank 3,880,289 7,047,994

3,882,067 7,049,729

(b) Effective interest rate

These funds are bearing floating interest rates of between 0.05% and 2% (2012: 0.05% to 2.0%).

2013 2012

$ $

Cash and cash equivalents 3,882,067 7,049,729

3,882,067 7,049,729

7

2013 2012

$ $

Trade receivables (i) 4,748,053 9,227,923

Income tax receivable - 148,888

Allowance for doubtful debts (47,672) (43,517)

4,700,381 9,333,294

(i)

Aging of past due but not impaired 2013 2012

$ $

0-30 Days 531,815 1,804,177

30-60 Days 136,519 605,290

60+ Days 82,351 12,879

750,685 2,422,346

The average credit period on sales of goods and rendering of services is 30 days, although a few customers have 45 day terms. No interest is

charged on overdue receivables. An allowance has been made for estimated unrecoverable trade receivable amounts arising from the past sale of

goods and rendering of services, determined by reference to past default experience. The Group will also consider any change in the quality of the

trade receivable from the date credit was initially granted up to the reporting date.

Before accepting any new customers, the Group obtain third party references to assess the potential customer’s credit quality and define the credit

limits by customer. Included in the Group’s trade receivable balance are debtors with a carrying amount of $750,685 (2012: $2,422,346 ) which are

past due at the reporting date for which the Group has not provided as there has not been a significant change in credit quality and the amounts are

still considered recoverable. The Group does not hold any collateral over these balances. The average age of these receivables is 59 days (2012:

53 days).

Trade and other receivables

Cash at the end of the financial year as shown in the statement of cash flows is reconciled to

items in the statement of financial position as follows:

Cash and cash equivalents

40

Annual Report 2012-2013 - NetComm Wireless - 69NetComm Wireless Limited



6

(a) Cash on hand 2013 2012

$ $

Cash on hand 1,778 1,735

Cash at bank 3,880,289 7,047,994

3,882,067 7,049,729

(b) Effective interest rate

These funds are bearing floating interest rates of between 0.05% and 2% (2012: 0.05% to 2.0%).

2013 2012

$ $

Cash and cash equivalents 3,882,067 7,049,729

3,882,067 7,049,729

7

2013 2012

$ $

Trade receivables (i) 4,748,053 9,227,923

Income tax receivable - 148,888

Allowance for doubtful debts (47,672) (43,517)

4,700,381 9,333,294

(i)

Aging of past due but not impaired 2013 2012

$ $

0-30 Days 531,815 1,804,177

30-60 Days 136,519 605,290

60+ Days 82,351 12,879

750,685 2,422,346

The average credit period on sales of goods and rendering of services is 30 days, although a few customers have 45 day terms. No interest is

charged on overdue receivables. An allowance has been made for estimated unrecoverable trade receivable amounts arising from the past sale of

goods and rendering of services, determined by reference to past default experience. The Group will also consider any change in the quality of the

trade receivable from the date credit was initially granted up to the reporting date.

Before accepting any new customers, the Group obtain third party references to assess the potential customer’s credit quality and define the credit

limits by customer. Included in the Group’s trade receivable balance are debtors with a carrying amount of $750,685 (2012: $2,422,346 ) which are

past due at the reporting date for which the Group has not provided as there has not been a significant change in credit quality and the amounts are

still considered recoverable. The Group does not hold any collateral over these balances. The average age of these receivables is 59 days (2012:

53 days).

Trade and other receivables

Cash at the end of the financial year as shown in the statement of cash flows is reconciled to

items in the statement of financial position as follows:

Cash and cash equivalents

40




7

Movement in the allowance for doubtful debts 2013 2012

$ $

Balance at the beginning of the year 43,517 145,544

Increase/(decrease) in allowance for impairment 4,155 (98,357)

Amounts written off as uncollectible - (3,670)

Balance at the end of the year 47,672 43,517

Aging of impaired receivables 2013 2012

$ $

0-30 Days - -

30-60 Days - 30,638

60+ Days 47,672 12,879

47,672 43,517

8

2013 2012

$ $

Current

Raw materials and stores 1,407,606 1,230,226

Communication Modules 1,567,453 2,125,517

Finished goods 5,405,945 4,818,696

Goods in transit 1,476,489 1,689,256

Total Inventories 9,857,493 9,863,695

9

2013 2012

Current $ $

Prepayments 588,798 424,125

Deposits and bonds 663,883 663,191

1,252,681 1,087,316

Non - Current

Deposits and bonds 302,143 302,143

302,143 302,143

10

(a) Summary of property, plant and equipment

2013 2012

$ $

Plant and equipment

At cost 4,282,807 4,047,817

Less accumulated depreciation (3,268,143) (2,733,378)

Total plant and equipment 1,014,664 1,314,439

Leased plant and equipment

At cost 913,854 912,800

Less accumulated amortisation (627,586) (437,867)

Total leased plant and equipment 286,268 474,933

Leasehold improvements

At cost 227,752 226,886


Total leasehold improvements 27,943 52,257

Development Assets

At cost 885,241 537,395


Total development assets 548,405 386,983

Total property,plant and equipment 1,877,280 2,228,612

Inventories

Trade and other receivables (continued)

Property, Plant and Equipment

Other assets

41




10

(b) Movements in carrying amounts

Plant and

equipment

Leased plant and

equipment

Leasehold

improvements

Development assets Total

$ $ $ $ $

2013

Balance at the beginning of the year 1,314,439 474,933 52,257 386,983 2,228,612

Additions 214,805 1,053 - 347,846 563,704

Disposals (370) - - - (370)

Net foreign currency translation differences 342 1 166 - 509

Depreciation expenses (514,552) (189,719) (24,480) (186,424) (915,175)

Carrying amount at the end of the year 1,014,664 286,268 27,943 548,405 1,877,280

2012

Balance at the beginning of the year 1,235,681 697,456 71,414 2,435 2,006,986

Additions 425,436 - - 452,649 878,085

Disposals (750) (13,798) - - (14,548)

Net foreign currency translation differences 252 53 109 - 414

Depreciation expenses (346,180) (208,778) (19,266) (68,101) (642,325)

Carrying amount at the end of the year 1,314,439 474,933 52,257 386,983 2,228,612

11

2013 2012

$ $

Gross carrying amount

Balance at beginning of financial year 895,999 895,999

Balance at end of financial year 895,999 895,999

Net book value

At the beginning of the financial year 895,999 895,999

At the end of the financial year 895,999 895,999

(a) Impairment testing

2013 2012

$ $

Call Direct Cellular Solutions 2003 Pty Limited 766,023 766,023

C10 Communications Pty Limited 129,976 129,976

895,999 895,999

(b) Key Assumptions Used

i) Call Direct Cellular Solutions 2003 Pty Limited

Cash flows:

Growth rates:

Discount rates:

ii) C10 Communications Pty Limited

Cash flows:

Growth rates:

Discount rates:

The primary assumptions underlying the cash flow projections for impairment testing include revenue growth of 32% in FY14 (off a low base in FY13) (FY13 actual

growth: 1%). The increase against the prior year is due to increased focus on M2M wireless opportunities followed by, for the purposes of this impairment testing, a

continuous revenue growth of 10% per annum till 2017 with no terminal value. As the forecasts reported to the Chief Operating Decision Maker extend out to FY17

only, no terminal growth rate has been included in the calculation.

The primary assumptions underlying the cash flow projections for impairment testing include an 2% increase in revenue in FY14 (FY13 actual growth : -7%) and flat

growth during FY15-FY17 due to the maturity level of ADSL internet gateways in the market.

Goodwill

The Group assessed the recoverable amount of goodwill by apply a value in use ("VIU") model for each identified cash-generating unit. The recoverable amounts of

the cash -generating units were determined based on past experience and expectations for the future, utilising both internal and external sources of data and relevant

industry trends.

For the purpose of annual impairment testing, goodwill has been allocated for impairment testing purposes to the following cash-generating units representing the

goodwill that arose in the acquisition of each business:

The following describes the key assumptions on which the Group has based its cash flow projections when determining value in use ("VIU") relating to the cash-

generating units.

The VIU calculations use after tax cash flow projections based on actual operating results and financial forecasts for the next four years which have been approved by

management. These forecasts are based on managements best estimates to determine income, expenditure and cash flow for Call Direct Cellular Solutions 2003 Pty

Limited. The present value of the expected cash flows of each CGU is determined by applying a discount rate.

Discount rates used are the pre-tax weighted average cost of capital ("WACC") with appropriate adjustments for the risk profile relating to each CGU. Having assessed

the risk specific to each CGU, the management has applied a WACC of 12% (2012: 12%) to each CGU on the basis that the risk fall within a similar range across all

CGUs.

The VIU calculations use after tax cash flow projections based on actual operating results and financial forecasts for the next four years which have been approved by

management. These forecasts are based on management best estimates to determine income, expenditure and cash flow for C10 Communications Pty Limited.

Discount rates used are the pre-tax weighted average cost of capital ("WACC") with appropriate adjustments for the risk profile relating to each CGU. Having assessed

the risk specific to each CGU, the management has applied a WACC of 12% (2012: 12%) to each CGU on the basis that the risk fall within a similar range across all

CGUs.

It was determined that goodwill associated with the Group's activities was not impaired and there was no other circumstances in the performance of acquired entities

indicating impairment. Both businesses have continued to operate and perform in accordance with the expectations of the Group.

Property, Plant and Equipment (continued)

All Goodwill has arisen from acquisitions made during prior financial years.

42




11

(c) Impairment of goodwill

12

(a) Summary of intangible assets

2013 2012

$ $

Product Development costs

Cost 11,405,501 7,599,624

Accumulated amortisation (5,227,104) (3,275,383)

Net carrying value 6,178,397 4,324,241

Computer software

Cost 804,080 792,008

Accumulated amortisation (787,013) (753,194)

Net carrying amount 17,067 38,814

Other intangibles

Cost 2,470,140 2,470,140

Accumulated amortisation (2,448,892) (2,443,264)

Net carrying amount 21,248 26,876

Total 6,216,712 4,389,931

(b) Movements in carrying amounts

Product

development

costs

Computer

software

Other intangibles Total

$ $ $ $

Balance at the beginning of the year 4,324,241 38,814 26,876 4,389,931

Additions 3,805,877 7,690 - 3,813,567

Net foreign currency translation differences - 47 - 47

Amortisation (1,951,721) (29,484) (5,628) (1,986,833)

Carrying amount at year end 6,178,397 17,067 21,248 6,216,712

Balance at the beginning of the year 2,520,631 124,762 543,247 3,188,640

Additions 3,155,340 10,180 28,140 3,193,660

Disposals - - (12,317) (12,317)

Net foreign currency translation differences - 88 - 88

Amortisation (1,351,730) (96,216) (532,194) (1,980,140)

Carrying amount at year end 4,324,241 38,814 26,876 4,389,931

13

2013 2012

$ $

Current unsecured liabilities

Trade payables (i) 4,191,006 5,201,100

Sundry payables and accrued expenses 1,600,534 1,833,916

Letter of credit (ii) 108,729 204,444

Total current trade and other payables 5,900,269 7,239,460

(i)

(ii)

14

2013 2012

$ $

Current - Secured

Finance lease 171,104 322,738

Trade refinance (i) 6,895,754 11,996,943

7,066,858 12,319,681

Non-Current - Secured

Finance lease 79,462 116,017

Total borrowings 7,146,320 12,435,698

Borrowings

The letter of credit facility is secured by a General Security Agreement with a fixed and floating charge over all assets and liabilities of NetComm

Wireless Limited.

The average credit period on purchases of certain goods from various Asian countries is 30 days, although some request payment in advance of

shipment. No interest is charged on overdue payables. The Group has financial risk management policies in place to ensure that all payables are

paid within the credit timeframe.

(ii) Banking Covenants: At 30 June 2013 the company was in breach of one of its banking covenants given the low EBITDA experienced for the year ended 30 June

2013. The Company obtained written confirmation indicating that, while reserving its rights, the bank would take no further action at this time.

Trade and other payables

(i) The trade refinance facility is secured by a General Security Agreement with a fixed and floating charge over all assets and liabilities of NetComm Wireless Limited.

The finance lease is secured against the underlying finance lease asset. Refer to Note 20 for further details of this borrowing.

Other intangible assets

Goodwill (continued)

There was no impairment of goodwill during the year (2012: Nil).

Management believes that any reasonably possible change in the above key assumptions on which recoverable amounts are based would not cause the aggregate

amount to exceed the recoverable amount of the CGUs.

2013

2012

43




15

2013 2012

$ $

Current

Employee entitlements 634,460 908,542

Non - current


Total provisions 947,536 1,131,294

16

2013 2012

Current $ $

Deferred income - current 203,299 421,555

203,299 421,555

17

2013 2012

$ $

14,331,878 9,877,073

(a) Movements in issued and paid up ordinary share capital of the company

2013 2012 2013 2012

No. No. $ $

At the beginning of the reporting period 104,833,864 103,757,614 9,877,073 9,796,773

Shares issued during the year - - - -

- 07/06/2013 15,800,000 - 3,642,823 -

- 26/06/2013 2,743,526 - 699,599 -

Exercise of options 962,500 1,076,250 112,383 80,300

At reporting date 124,339,890 104,833,864 14,331,878 9,877,073

18

(a) Movements in share options & share rights reserve

2013 2012

$ $


Recognition of share based payments - 43,332


The option reserve is used to recognise the fair value of options and equity based share rights issued but not exercised.

(b) Movements in foreign exchange reserve

2013 2012

$ $

Balance at the beginning of the year (83,723) (105,848)

Exchange difference on translation of foreign operations 177,758 22,125

Balance at the end of the year 94,035 (83,723)

(c) Movements in foreign exchange hedging reserve

2013 2012

$ $

Balance at the beginning of the year - -


Tax benefit 295,323 -

Balance at the end of the year (689,087) -

Provisions

Other liabilities

Issue costs $386,177 associated with the issue of shares have been directly paid from the proceeds of the issues. These costs have been

deducted from the issued capital in the statement of financial position, rather than charged as an expense of the Company, as they are considered

to form part of the net equity raised. (2012: Nil)

If a forecast transaction is no longer expected to occur or if the hedging instrument becomes ineffective, any related gain or loss recognised in other

comprehensive income is transferred immediately to profit and loss.

Issued Capital

Changes to the then Corporations Law abolished the authorised capital and par value concept in relation to share capital from 1 July 1998.

Therefore, the company does not have a limited amount of authorised capital and issued shares do not have a par value. Ordinary shares confer

on their holders the right to participate in dividends and/or capital returns declared by the board and an entitlement to vote at any general meeting of

the company.

Exchange differences arising on translation of the foreign controlled entities are taken to the foreign currency translation reserve. The reserve is

recognised in profit or loss when the net investment is disposed of.

124,399,890 (2012: 104,833,864) Ordinary shares - paid up no par value

Reserves

The hedge reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging instruments, net of tax,

related to hedged transactions that have not yet occurred. The Group uses USD denominated borrowings as a hedge against USD sales that are

expected to occur close to the maturity date of the borrowings. The cumulative deferred gain or loss on the hedge is recognised in other

comprehensive income and included within the cash flow hedge reserve in equity.

On 7 June 2013, the Group issued a total of 15,800,000 ordinary shares at an exercise price of $0.255 per share.

Additionally, 962,500 ordinary shares were issued as a result of the exercise of vested options arising from the employee shares options plan

granted to employees. Options were exercised at an average price of $0.117 per option. (see Note 24) (2012: 1,076,250 )

On 26 June 2013, the Group issued a total of 2,743,526 shares under share purchase plan at the issue price of $0.255 per share.

44




15

2013 2012

$ $

Current


Non - current


Total provisions 947,536 1,131,294

16

2013 2012

Current $ $

Deferred income - current 203,299 421,555

203,299 421,555

17

2013 2012

$ $

14,331,878 9,877,073

(a) Movements in issued and paid up ordinary share capital of the company

2013 2012 2013 2012

No. No. $ $

At the beginning of the reporting period 104,833,864 103,757,614 9,877,073 9,796,773

Shares issued during the year - - - -

- 07/06/2013 15,800,000 - 3,642,823 -

- 26/06/2013 2,743,526 - 699,599 -

Exercise of options 962,500 1,076,250 112,383 80,300

At reporting date 124,339,890 104,833,864 14,331,878 9,877,073

18

(a) Movements in share options & share rights reserve

2013 2012

$ $


Recognition of share based payments - 43,332


The option reserve is used to recognise the fair value of options and equity based share rights issued but not exercised.

(b) Movements in foreign exchange reserve

2013 2012

$ $

Balance at the beginning of the year (83,723) (105,848)

Exchange difference on translation of foreign operations 177,758 22,125

Balance at the end of the year 94,035 (83,723)

(c) Movements in foreign exchange hedging reserve

2013 2012

$ $

Balance at the beginning of the year - -


Tax benefit 295,323 -

Balance at the end of the year (689,087) -

Provisions

Other liabilities

Issue costs $386,177 associated with the issue of shares have been directly paid from the proceeds of the issues. These costs have been

deducted from the issued capital in the statement of financial position, rather than charged as an expense of the Company, as they are considered

to form part of the net equity raised. (2012: Nil)

If a forecast transaction is no longer expected to occur or if the hedging instrument becomes ineffective, any related gain or loss recognised in other

comprehensive income is transferred immediately to profit and loss.

Issued Capital

Changes to the then Corporations Law abolished the authorised capital and par value concept in relation to share capital from 1 July 1998.

Therefore, the company does not have a limited amount of authorised capital and issued shares do not have a par value. Ordinary shares confer

on their holders the right to participate in dividends and/or capital returns declared by the board and an entitlement to vote at any general meeting of

the company.

Exchange differences arising on translation of the foreign controlled entities are taken to the foreign currency translation reserve. The reserve is

recognised in profit or loss when the net investment is disposed of.

124,399,890 (2012: 104,833,864) Ordinary shares - paid up no par value

Reserves

The hedge reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging instruments, net of tax,

related to hedged transactions that have not yet occurred. The Group uses USD denominated borrowings as a hedge against USD sales that are

expected to occur close to the maturity date of the borrowings. The cumulative deferred gain or loss on the hedge is recognised in other

comprehensive income and included within the cash flow hedge reserve in equity.

On 7 June 2013, the Group issued a total of 15,800,000 ordinary shares at an exercise price of $0.255 per share.

Additionally, 962,500 ordinary shares were issued as a result of the exercise of vested options arising from the employee shares options plan

granted to employees. Options were exercised at an average price of $0.117 per option. (see Note 24) (2012: 1,076,250 )

On 26 June 2013, the Group issued a total of 2,743,526 shares under share purchase plan at the issue price of $0.255 per share.

44




19

20

Non-cancellable operating lease commitments

2013 2012

$ $

Not longer than 1 year 566,824 675,702

Longer than 1 year and not longer than 5 years 877,456 1,634,178

1,444,280 2,309,880

2013 2012

$ $


Longer than 1 year and not longer than 5 years 104,316 119,722

Minimum future lease payments 260,871 476,904

Less future finance charges (10,305) (38,149)

Present value of minimum lease payments 250,566 438,755

Included in the financial statements:

Current borrowings (note 14) 171,104 322,738

Non - current borrowings (note 14) 79,462 116,017

250,566 438,755

21

Reconciliation of cash flow from operations with profit after income tax

2013 2012

$ $

(Loss)/Profit for the year (541,624) 840,511

Non-cash flows in profit

Depreciation and amortisation 2,902,008 2,622,465

Share based payments - 43,332

Interest received (77,575) (95,388)

Changes in operating assets and liabilities:

Decrease/(increase) in trade and other receivable 4,638,213 1,127,671

Decrease/(increase) in inventories 6,202 (2,629,716)

Decrease/(increase in other assets (165,365) (508,159)

Decrease/(increase) in deferred tax assets (2,414,316) (68,441)

(Decrease)/increase in trade and other payables (1,339,188) (1,960,918)

(Decrease)/increase in other liabilities (832,557) 338,509

(Decrease)/increase in provisions (183,758) 97,043

Net cash from operating activities 1,992,040 (193,092)

Non-cash financing and investing activities

The group leases its offices in Australia and New Zealand under operating leases. Leases generally provide the right of renewal at which time all terms are

renegotiated. Lease payments comprise a base amount and in some cases an incremental contingent rental. Contingent rents are normally based on movements in the

CPI or market reviews. In the current year, the Parent signed a new 5 year lease for its Head Office premises in Lane Cove and also renewed the lease on its

Melbourne premises.

Finance lease liabilities

Finance leases relate to plant and equipment. The Group has the option to purchase the plant and equipment at the conclusion of the lease arrangements. The Group’s

obligation under finance leases are secured by the lessor’s title to the leased assets.

Deferred payments arising from acquisitions recorded in other liabilities are investing related activities and thus have been excluded from this reconciliation.

Cash flow information

There were no contingent liabilities as at 30 June 2013 (2012 : Nil)

Contingent liabilities

Expenditure commitments

45




22

(a) Directors and other key management personnel

The directors and other members of key management personnel of the Group during the year were:

J Milne Non Executive Director & Chairman

J A Brennan Non Executive Director (Resigned 21 March 2013)

K Boundy Non Executive Director (Appointed 24 August 2012)

S Black AM Non Executive Director (Appointed 21 March 2013)

J M Burton Non Executive Director (Retired 21 November 2012)

D P J Stewart CEO & Managing Director

K J P Sheridan CFO & Executive Director and Company Secretary




B Stevens Chief Technology Officer

(b) Remuneration of key management personnel

2013 2012

$ $

Short term benefits 1,689,275 2,298,910

Post employment benefits 113,568 129,347

Other long term benefits 19,230 14,910

Termination benefits - 127,832

Share based payments - -

Total 1,822,073 2,570,999

(c) Shares held by key management personnel

No. No. No.

J Milne - 180,588 180,588

J A Brennan 122,795 - 122,795

K Boundy 450,000 - 450,000

S Black - - -

J M Burton 377,795 (18,345) 359,450

D P J Stewart* 22,944,008 30,588 22,974,596

K J P Sheridan 174,000 30,588 204,588

D Morrison 250,000 100,000 350,000

S Collins - - -

B Stevens 350,000 150,000 500,000

M Cornelius 2,486,170 - 2,486,170

27,154,768 473,419 27,628,187

* The 22,974,596 shares held by D P J Stewart's related entities.

T R Winters - - -

J Milne - - -

J A Brennan 122,795 - 122,795

J M Burton 377,795 - 377,795

D P J Stewart* 22,944,008 - 22,944,008

K J P Sheridan 174,000 - 174,000

D Morrison - 250,000 250,000

J Lahey - - -

S Collins - - -

B Stevens - 350,000 350,000

M Cornelius 2,486,170 - 2,486,170

26,104,768 600,000 26,704,768


2012

The aggregate compensation made to key management personnel of the Group is set out below:

Further information on remuneration of key management personnel can be found in the remuneration report within the Directors’ Report.

2013

Balance 1 July Movement during the

Year - on market

transactions

Balance 30 June

Key management personnel compensation

46




22

(a) Directors and other key management personnel

The directors and other members of key management personnel of the Group during the year were:

J Milne Non Executive Director & Chairman

J A Brennan Non Executive Director (Resigned 21 March 2013)

K Boundy Non Executive Director (Appointed 24 August 2012)

S Black AM Non Executive Director (Appointed 21 March 2013)

J M Burton Non Executive Director (Retired 21 November 2012)

D P J Stewart CEO & Managing Director

K J P Sheridan CFO & Executive Director and Company Secretary




B Stevens Chief Technology Officer

(b) Remuneration of key management personnel

2013 2012

$ $

Short term benefits 1,689,275 2,298,910

Post employment benefits 113,568 129,347

Other long term benefits 19,230 14,910

Termination benefits - 127,832

Share based payments - -

Total 1,822,073 2,570,999

(c) Shares held by key management personnel

No. No. No.

J Milne - 180,588 180,588

J A Brennan 122,795 - 122,795

K Boundy 450,000 - 450,000

S Black - - -

J M Burton 377,795 (18,345) 359,450

D P J Stewart* 22,944,008 30,588 22,974,596

K J P Sheridan 174,000 30,588 204,588

D Morrison 250,000 100,000 350,000

S Collins - - -

B Stevens 350,000 150,000 500,000

M Cornelius 2,486,170 - 2,486,170

27,154,768 473,419 27,628,187


T R Winters - - -

J Milne - - -

J A Brennan 122,795 - 122,795

J M Burton 377,795 - 377,795

D P J Stewart* 22,944,008 - 22,944,008

K J P Sheridan 174,000 - 174,000

D Morrison - 250,000 250,000

J Lahey - - -

S Collins - - -

B Stevens - 350,000 350,000

M Cornelius 2,486,170 - 2,486,170

26,104,768 600,000 26,704,768


2012

The aggregate compensation made to key management personnel of the Group is set out below:

Further information on remuneration of key management personnel can be found in the remuneration report within the Directors’ Report.

2013

Balance 1 July Movement during the

Year - on market

transactions

Balance 30 June

Key management personnel compensation

46




22

(d) Options held by key management personnel

Granted Exercised Relinquished

Balance during the during the during the Balance

1 July year year year 30 June

D P J Stewart 1,500,000 - - (1,500,000) -

J A Brennan 360,000 - - - 360,000

J M Burton 360,000 - (360,000) - -

M Cornelius - - - - -

J Milne - - - - -

J Lahey - - - - -

S Collins - - - - -

B Stevens 100,000 - (100,000) - -

D Morrison 200,000 - (100,000) - 100,000

K J P Sheridan - - - - -

2,520,000 - (560,000) (1,500,000) 460,000

Weighted Average Exercise Price 0.156 0.170 0.162 0.167

T R Winters 780,000 - - (780,000) -

D P J Stewart 4,000,000 - - (2,500,000) 1,500,000

J A Brennan 360,000 - - - 360,000

J M Burton 360,000 - - - 360,000

M Cornelius - - - - -

J Milne - - - - -

J Lahey - - - - -

S Collins - - - - -

B Stevens 450,000 - (350,000) - 100,000

D Morrison 450,000 - (250,000) - 200,000

K J P Sheridan - - - - -

6,400,000 - (600,000) (3,280,000) 2,520,000

Weighted Average Exercise Price 0.154 - 0.081 0.162 0.156

Balance Total Total Total

30 June vested exercisable unexercisable

D P J Stewart - - - -

J A Brennan 360,000 360,000 360,000 -

J M Burton - - - -

M Cornelius - - - -

J Milne - - - -

J Lahey - - - -

S Collins - - - -

B Stevens - - - -

D Morrison 100,000 100,000 100,000 -

K J P Sheridan - - - -

460,000 460,000 460,000 -

T R Winters

D P J Stewart 1,500,000 1,500,000 1,500,000 -

J A Brennan 360,000 360,000 360,000 -

J M Burton 360,000 360,000 360,000 -

M Cornelius - - - -

J Milne - - - -

J Lahey - - - -

S Collins - - - -

B Stevens 100,000 80,000 80,000 20,000

D Morrison 200,000 180,000 180,000 20,000

K J P Sheridan - - - -

2,520,000 2,480,000 2,480,000 40,000

The following is a list of options issued, vested and exercisable as at the end of the reporting period for key management personnel

2013

All share options issued to key management personnel were made in accordance with the provisions of the employee share option plan. During the

financial year 560,000 options (2012: 600,000) were exercised by key management personnel. Further details on the employee share option plan

and share options granted during the 2013 and 2012 financial years are contained at note 24.

2013

2012

2012

Key management personnel compensation (continued)

47




22

(e) Share Rights held by key management personnel


PARTICIPANTSBalance on 1

July 2012

Fair Value at

grant date

Rights

Exercised

Rights

Relinquished

Balance at 30

June 2013

Total Vested at 30

June 2013

Type of Share

Right

David Stewart 1,500,000 195,000$ - (1,500,000) - - Cash

Ken Sheridan 450,000 58,500$ - (450,000) - - Cash

Danny Morrison 250,000 32,500$ - - 250,000 - Shares

Steve Collins 250,000 32,500$ - - 250,000 - Shares

Brett Stevens 250,000 32,500$ - - 250,000 - Shares

Michael Cornelius 250,000 32,500$ - - 250,000 - Shares

Total 2,950,000 383,500$ - (1,950,000) 1,000,000 -

Implicit Share Price used in determining value of initial share rights 0.20$

Actual share price on 1 July 2011 (the date of grant) 0.13$

Actual share price on 1 July 2012 (the first Vesting Date) 0.13$

Number of share rights 1,000,000

23

There are no related party transactions except as per Note 22.

24 Share-based Payments

Employee Option Plan

An employee share scheme was established in 1993 and current details are noted below.

a) each employee’s length of service;

b) the contribution to the group which has been made by the employee;

c) the potential contribution of the employee to the group; and

d) any other matters which the board considers relevant.

The Board has decided to discontinue using the Options Plan in favour of the new Share Rights Plan.

Entitlement

Vesting

On July 1, 2011 NetComm Wireless Limited Executive Employee Share Plan" ("EESP") was introduced for invited Participants selected on the

basis of their capability to be able to directly impact the Company's performance. Under this Plan, a Participant is made an offer of a number

of Share Rights, as determined by the Board. A Share Right is an entitlement to a cash (for cash participants) or equity (for equity participants)

amount equivalent to the value of one fully paid ordinary share in the Company for nil consideration, subject to the achievement of vesting

conditions which include service and company performance over a 3-year period. The Share Rights will vest when the Company meets or

exceeds a “performance hurdle” based on a specific EBITDA target as at the end of years 1, 2 and 3 respectively, if the Participant remains

employed with the Company at that time. If the Company does not meet a performance hurdle at a given year (either year 1 or year 2), the

hurdle can be “re-tested” in the subsequent year. The “re-test” would be based on a comparison of the cumulative actual EBITDA results for

the current and past years compared to the targeted EBITDA results. The Board has resolved that any entitlements to shares in NetComm

Wireless resulting from the EESP will be purchased on market.

Key management personnel compensation (continued)

As at 1 July 2013, the EBITDA performance hurdles for years 1 and 2 were not met so Plan Participants had no vesting of their Share Rights.

Based on estimates of EBITDA for the year ending 30 June 2014, the Board is of the view that the EBITDA performance hurdles will not be

met and that no share rights will vest for any Participant. Accordingly, the fair value of these Rights has been assessed as nil.

Related party transactions

The board of directors may at its discretion offer options to employees in such numbers and at such times as it thinks fit, having regard to:

Shares issued on the exercise of options will rank pari passu with all existing shares in the capital of the company from the date of issue.

All outstanding options have now vested.

Each option entitles the holder to subscribe for and be allotted one share in the capital of the company at the exercise price per share.

48




24 Share-based Payments (continued)

Exercise of Options

An option may be exercised:

i.

ii. Within 180 days:

iii.

iv.

2013

Number of

Options

Exercise Price

$

Expiry Date Number of

Options

Exercisable

30 June 2013

100,000 0.185 31-Jul-13 100,000

240,000 0.162 30-Oct-13 240,000

120,000 0.162 30-Oct-13 120,000

100,000 0.162 10-Dec-13 100,000

100,000 0.113 12-Feb-14 100,000

660,000 660,000

2012

Number of

Options

Exercise Price

$

Expiry Date Number of

Options

Exercisable

30 June 2012

50,000 0.600 19-Jul-12 50,000

105,000 0.700 17-Dec-12 105,000

100,000 0.710 03-Mar-13 100,000

100,000 0.185 31-Jul-13 80,000

1,480,000 0.162 30-Oct-13 1,480,000

740,000 0.162 30-Oct-13 740,000

100,000 0.070 17-Dec-12 100,000

100,000 0.185 31-Jul-13 80,000

157,500 0.075 27-Feb-13 157,500

100,000 0.162 10-Dec-13 80,000

100,000 0.113 12-Feb-14 80,000

3,132,500 3,052,500

There were options of 962,500 (2012: 1,076,250) exercised during the year ended 30 June 2013.

Subsequent to year end 360,000 (2012: 50,000) options were exercised by employees/directors.

Valuations of Options

(a)

(b)

(c)

(d)

Mr David Stewart, CEO and Managing Director, relinquished 1,500,000 vested options during the year as announced at the Company’s 2012

Annual General Meeting held in November 2012.

At 30 June 2013, there are 660,000 options (2012: 3,132,500) issued to 3 employees/directors (2012: 12 employees/directors) to acquire ordinary shares. These

options have all vested. Details as follows:

The fair value at grant date of all options is independently determined using the Binomial Approximation pricing model.

Options are granted in accordance with the terms of the Employee Option Plan (refer above for detail),

The expected price volatility is based on a daily closing share price for NetComm Limited over the 12 months immediately prior to date of

grant: N/A (2012: N/A),

The risk free interest rate is based on the 5 year Commonwealth Bond rate on date of issue: N/A

The expected dividend yield is based on the dividends received by shareholders of NetComm Limited during the 12 months prior to date

of grant: 0% (2012: 0%).

If any person or that person’s associate has acquired or become entitled to 40% or more of the company’s voting shares.

On July 1, 2011 NetComm Wireless Limited Executive Employee Share Plan" ("EESP") was introduced for invited Participants selected on the basis of their capability

to be able to directly impact the Company's performance. More details of this plan are disclosed under Note 22 (e).

No share based payments expense has been recognised for the year ended 30 June 2013 (2012: $127,832).

The 660,000 (2012: 3,132,500) options outstanding at 30 June 2013 have a weighted average exercise price of $0.158 (2012: $0.147) and a weighted average

remaining contractual life of 0.36 years (2012: 1.2 years). Exercise prices range from $0.113 to $0.185 in respect of options outstanding at 30 June 2013.

After an option has vested in accordance with the rules outlined above, but before expiry of the option, provided the participant is at the time of

exercise an employee or director of the Group.

Of the death, disablement or retirement of the participant; or

After an option has vested in accordance with the rules outlined above and the participant resigns or is retrenched.

If the Board otherwise permits it.

No options issued to employees expired during the financial year in accordance with the rules of the Share Option Plan (2012: 4,150,630).

No new options were issued during the year.

49




25 Retirement Benefit Obligations

Superannuation Commitments

26 Earnings per Share

2013 2012

$ $

Earnings reconciliation

Net profit for the year (541,624) 1,570,179

Basic and diluted earnings (541,624) 1,570,179

2013 2012

Weighted average number of ordinary shares used as the denominator No. No.

Number for basic earnings per share 106,223,194 104,223,847

Effect of share options issued under the employee option plan not yet vested 70,015 229,212

Number for diluted earnings per share 106,293,209 104,453,059

2013 2012

Earnings per share Cents Cents

Basic earnings per share (0.51) 1.51

Diluted earnings per share (0.51) 1.50

2013 2012

$ $

Earnings reconciliation

Net (loss)/profit for the year - (729,668)

Basic and diluted earnings - (729,668)

2013 2012

Weighted average number of ordinary shares used as the denominator No. No.

Number for basic earnings per share 106,223,194 104,223,847

Effect of share options issued under the employee option plan not yet vested 70,015 229,212

Number for diluted earnings per share 106,293,209 104,453,059

2013 2012

Earnings per share Cents Cents

Basic earnings per share - (0.70)

Diluted earnings per share - (0.70)

EPS and DEPS for discontinued operations are the same as the Loss cannot be diluted



Discontinued Operations

Discontinued Operations

The Group provides employees with access to external superannuation plans that provide benefits on retirement, resignation, disability or death. This is a defined

contribution plan.

50


27 Financial Instruments

(a) Capital Risk Management

(b) Financial Risk Management Objectives

(c) Market Risk

(d) Foreign Currency Risk Management

2013 2012 2013 2012

US Dollars 8,776,990 16,428,388 4,518,693 8,502,482

Canadian Dollars - - - 1,036,752

Euros - - 264,814 -

Total 8,776,990 16,428,388 4,783,507 9,539,234

Foreign currency sensitivity

Most of the Group’s transactions are carried out in AUD. Exposures to currency exchange rates arise from the Group’s overseas

sales and purchases, which are primarily denominated in US dollars (USD).

The carrying amount of the Group’s foreign currency denominated monetary assets and monetary liabilities at the reporting date

that are denominated in a currency that is different to the functional currency of the respective entities holding the monetary

assets and liabilities are as follows:

To mitigate the Group’s exposure to foreign currency risk, non-AUD cash flows are monitored and hedging relationships are

formed between a portion of the bank borrowings and a portion of the sales that equate to ‘firm’ commitments in accordance with

the Group’s risk management policies.

Generally, the Group’s risk management procedures distinguish short-term foreign currency cash flows (due within 12 months)

from longer-term cash flows (due after 12 months). Where the amounts to be paid and received in a specific currency are

expected to largely offset one another, no further hedging activity is undertaken.




The Group’s activities expose it to a variety of financial risks: market risk (including foreign currency and interest rate risk), credit

risk and liquidity risk. The Group’s overall risk management program focuses on the unpredictability of financial and exchange

rate markets and seeks to minimise potential adverse effects on the Group’s performance. Risk management is carried out by

the Board of Directors through the Audit and Risk Management Committee.

Market risk is the risk that the fair value or future cash flow of a financial asset or financial liability will fluctuate because of

changes in market prices. Market risk comprises foreign currency risk and interest rate risk. The Group’s activities expose it

primarily to the financial risks of changes in foreign currency exchange rates and interest rates.

Liabilities Assets

The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising

the return to stakeholders through the optimisation of the debt and equity balance. The Group’s overall strategy is to focus on the

global M2M sector. The group raised $4.3M in equity during the financial year to fund the company's growth plan in the M2M

sector and provide additional working capital.

The capital structure of the Group consists of debt, which includes the borrowings disclosed in note 14, cash and cash

equivalents and equity attributable to equity holders of the parent, comprising issued capital, reserves and retained earnings.

Operating cash flows are used to maintain and expand the Group’s assets as well as to pay for operating expenses, including

tax liabilities.

Foreign currency denominated financial assets and liabilities which expose the Group to currency risk are disclosed below. The

amounts shown are those reported to key management translated into AUD at the closing rate 0.9138. (2012: 1.02336)

51




27 Financial Instruments (continued)

(d) Foreign Currency Risk Management (continued)

Foreign currency sensitivity analysis

The Group is mainly exposed to US dollars (USD), and Euros (EUR). (2012: US dollars and Canadian dollars)

2013 2012

US Dollars 340,880 695,746

Canadian Dollars - 114,894

Euros 29,424 -

2013 2012

New Zealand Dollars 9,601 (8,364)

(e) Interest rate risk management

The following table details the Group’s sensitivity to a 10% increase and decrease in the Australian dollar against the relevant

foreign currencies (arising from monetary assets and liabilities held at balance date in a currency different to the functional

currency of the respective entities holding the assets or liabilities), which represents management’s assessment of the possible

change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary

items (including liabilities for goods in transit) and adjusts their translation at a period end for a 10% change in foreign currency

rates.

The following table details the Group's sensitivity to a 10% increase and decrease in the Australian dollar against the relevant

foreign currencies arising from translation of foreign operations. A positive number indicates an increase in other comprehensive

income where the Australian dollar weakens against the respective currency. For a strengthening of the Australian dollar against

the respective currency there would be an equal and opposite impact on the other comprehensive income and other equity, and

the balances below would be negative.

Other comprehensive income

The foreign exchange impact in the table is attributable to the exposure outstanding on USD receivables and borrowings and

EUR receivables at year end in the Group. In management’s opinion, the above sensitivity analysis is representative of the

inherent foreign exchange risk during the course of the year.

Profit or loss

The Group includes a New Zealand subsidiary whose functional currency is different to the Group’s presentation currency. As

stated in the Group’s Accounting Policies per Note 1(c), on consolidation the assets and liabilities of this entity are translated into

Australian dollars at exchange rates prevailing on the reporting date. The income and expenses of this entity are translated at the

average exchange rates for the period. Exchange differences arising are classified as equity and are transferred to a foreign

exchange translation reserve. The Group’s future reported other comprehensive income could therefore be impacted by changes

in rates of exchange between the Australian Dollar and the New Zealand Dollar.

The Group is exposed to interest rate risk as the parent entity borrows funds at floating interest rates. The Group does not hedge

this risk through derivatives such as interest rate swaps.

The Group's exposures to interest rates on financial assets and financial liabilities are detailed in the liquidity risk management

section of this note.

52





(f) Interest rate sensitivity analysis

(g) Credit risk management

(h) Liquidity risk management

The table below details the company’s and the Group’s drawn and undrawn facilities.

2013 2012

$ $

Letter of Credit & Trade Refinance 15,000,000 15,000,000

Used at balance date (note 13) 108,729 204,444

Used at balance date (note 14) 6,895,754 11,996,943

Unused at balance date 7,995,517 2,798,613

Trade Receivables Finance 2,000,000

Used at balance date (note 14) - -

Unused at balance date - 2,000,000

Floating Bill Facility - 2,000,000

Used at balance date (note 14) - -

Unused at balance date - 2,000,000

Ultimate responsibility for liquidity risk management rests with the Board of Directors, who have built an appropriate liquidity risk

management framework for the management of the Group’s short, medium and long term funding and liquidity management

requirements. The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing

facilities by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and

liabilities. The Group also uses a trade payables finance facility to manage its liquidity risk.

The sensitivity analysis below has been determined based on a 50 basis point change in interest rates taking place at the

beginning of the financial year and held constant throughout the reporting period, which represents management’s assessment

of the possible change in interest rates. At reporting date, if interest rates had been 50 basis points higher or lower and all other

variables were held constant, the Group’s net profit would increase/(decrease) by ($23,763) (2012: increase/(decrease) by

$16,455). This is mainly attributable to the Group's exposure to interest rates on its variable rate borrowings.

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group.

The Group has adopted a policy of only dealing with creditworthy counterparties. The Group uses publicly available financial

information and its own trading record to rate its major customers. The Group’s exposure and the credit ratings of its

counterparties are continuously monitored and controlled by counterparty limits that are reviewed and approved by the CEO &

CFO. Trade receivables consist of a large number of customers, spread across diverse industries and geographical areas.

Ongoing credit evaluation is performed on the financial condition of accounts receivable.

The Group is exposed to the credit risk. The Group has a major customer (note 29(a)) who generated around 17% (FY12: 16%)

revenues to the Group. However, there is minimal credit risk arising from this customer based on the historial information and

previous trading experience.

Other than item noted above, the Group does not have any significant credit risk exposure to any single counterparty or any

group of counterparties having similar characteristics. The credit risk on liquid funds is limited because the counterparties are

banks with high credit-ratings assigned by international credit-rating agencies. The carrying amount of financial assets recorded

in the financial statements, net of any allowances for losses, represents the Group’s maximum exposure to credit risk. Refer

further detail in note 7.

Consolidated

53





(h) Liquidity risk management (continued)

Liquidity and interest risk tables

Less than 1

month $

1-3 months $ 3 months-1

year $

1-5 years $ 5+ years $

2013

Non-interest bearing 3,198,731 785,069 - - -

Finance lease liability 25,875 51,751 78,929 104,316 -

- - 7,090,878 - -

3,224,606 836,820 7,169,807 104,316 -

2012

Non-interest bearing 2,965,675 2,205,520 - - -

Finance lease liability 27,102 54,203 275,877 119,723 -

81,778 6,956,836 5,335,553 - -

3,074,555 9,216,559 5,611,430 119,723 -

Less than 1

month $

1-3 months $ 3 months-1

year $

1-5 years $ 5+ years $

2013

Non-interest bearing 531,815 4,216,238 - - -

3,882,067 - 650,496 302,143 -

4,413,882 4,216,238 650,496 302,143 -

2012

Non-interest bearing 1,804,175 6,506,963 - - -

7,049,729 - 582,830 369,809 -

8,853,904 6,506,963 582,830 369,809 -

0.00%

8.58%

Weighted avg

effective interest

rate %

The following tables detail the Group’s expected maturity for its non-derivative financial assets. The tables have been drawn up

based on the undiscounted contractual maturities of the financial assets including interest that will be earned on those assets

except where the Group anticipates that the cash flow will occur in a different period based on the earliest date on which the

Group can expect to receive. The table includes both interest and principal cash flows.

Variable interest rate

instruments


instruments

4.07%

0.00%

8.77%

4.30%


instruments

0.00%

1.31%

0.00%

The following tables detail the Group’s remaining contractual maturity for its non-derivative financial liabilities. The tables have

been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be

required to pay. The table includes both interest and principal cash flows.

Weighted avg

effective interest

rate %


instruments

1.66%

54





(i) Capital management policies and procedures

The Group's capital management objectives are:

to ensure the Group's ability to continue as a going concern; and

to provide an adequate return to shareholders

2013 2012

$ $

Borrowings 7,146,320 12,435,698

Cash and cash equivalents (3,882,067) (7,049,729)

Net Borrowings 3,264,253 5,385,969

Total equity 19,228,767 15,826,915

Net Borrowings to Equity ratio 0.17 0.34

(j) Fair Value of Financial Instruments

The fair value of financial assets and financial liabilities are determined as follows:

28 Events after the reporting date

29 Segment reporting

Restatement of prior year comparative information

The Group undertook an internal reorganisation of its business with effective from 1 July 2012. The comparative information has

been reclassified to achieve consistency in disclosure in current year amounts and other disclosures.

Information reported to the chief decision maker for the purposes of resource allocation and assessment of segment performance

focuses on:

• Base Business

• M2M Business

The Base business segment supplies communication devices, including but not limited to fixed wireless + ADSL internet gateways,

designed and manufactured for use primarily by consumer and small medium enterprises (SME). The M2M business segment

division specialises in the development of advanced industrial-grade and commercial 3G /4G wireless broadband products and

solutions for business continuity (disaster recovery), primary mobile broadband and remote M2M connectivity. NetComm Wireless'

M2M products, solutions and services are designed to support applications in areas such as transport, metering, security,

surveillance, banking, health and mining.

The fair value of other financial assets and financial liabilities are determined in accordance with generally accepted

pricing models based on discounted cash flow analysis using prices from observable current market transactions.

The Group monitors capital on the basis of the carrying amount of equity plus its borrowings, less cash and cash equivalents as

presented on the face of the statement of financial position.

The Group sets the amount of capital in proportion to its overall financing structure, i.e. equity and financial liabilities. The Group

manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk

characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Group may adjust the amount of

dividends paid to shareholders, return capital to shareholders, issue new shares, or sell assets to reduce debt.

Capital for the reporting periods under review is summarised as follows:

The company held an EGM on 15 July 2013 to approve the conditional placement of shares announced in June 2013. There was

overwhelming support for the conditional placement which resulted in the company obtaining additional capital in the amount of

$950,481, net of costs.

Other than for the item noted above, there has not arisen during the interval between the end of the reporting period and the date of

this report, any item, transaction or event of a material and unusual nature that has, in the opinion of the Directors of the Company,

significantly affected or may significantly affect the operations of the consolidated entity, the results of those operations or the state of

affairs of the consolidated entity in subsequent financial years.

The directors consider that the carrying amounts of financial assets and financial liabilities recorded at amortised cost in the

financial statements approximate their fair values.

The fair value of financial assets and financial liabilities with standard terms and conditions and trade on active liquid

markets are determined with reference to quoted market prices;

55




29 Segment reporting (continued)

(a) Continuing and Discontinued Operations

30 June 30 June 30 June 30 June

2013 2012 2013 2012

$ $ $ $


Revenue generated from external customers

Base Business 36,515,595 52,856,825 630,949 4,906,377

M2M Business 6,264,395 6,329,295 94,462 (227,134)

Discontinued operations

Services - Australia - 134,524 - (827,118)

Intersegment Revenue

Base Business 1,233,395 3,572,820 - -

Intersegment Eliminations (1,233,395) (3,572,820) - -

Segment result 42,779,990 59,320,644 725,411 3,852,125

Other income 77,610 175,357

Depreciation and amortisation expense (2,902,008) (2,622,465)

Finance costs (582,108) (460,086)

Group Profit before tax (2,681,095) 944,931

Income tax (expense)/benefit 2,139,471 (104,420)

42,779,990 59,320,644 (541,624) 840,511

2013 2012

$ $

Customer A 7,210,005 9,724,480

Total Revenue 42,779,990 59,320,643

Customer Share of Total (%) 17% 16%

(b) Reconciliation of Group's operating segments to financial statements

30 June 30 June

2013 2012

$ $

Revenue and other income

Total reportable segment revenues 42,779,990 59,320,644

Other Segment income 77,610 175,357

Discontinued operations - (134,524)

Revenue & other income 42,857,600 59,361,477

Profit or Loss

Total reportable segment operating profit 725,411 3,852,125

Other segment profit 77,610 175,357

Operating loss of discontinued operations - 827,118

Operating profit from continuing operations 803,021 4,854,600

Depreciation and amortisation expense (2,902,008) (2,622,465)

Finance costs (582,108) (460,086)

Profit before tax (2,681,095) 1,772,049

Revenue

Revenue Segment Profit

The totals presented for the group's operating segments reconcile to the key figures as presented in its financial statements as

follows:

Segment profit represents the profit earned by each segment without allocation of other income, finance costs and depreciation

and amortisation.

The revenue reported above represents revenue generated from external customers. Intersegment revenues represent transfers

between segments which are eliminated on consolidation. Revenues from a single customer greater than 10% of total revenues

reside in the Base Business segment.

No segment assets and liabilities are disclosed because there is no measure of segment assets or liabilities regularly reported to

the chief decision maker.

During 2013, $5,151,694 or 12% (2012: $7,250,702 or 12%) of the Group's revenues were generated from New Zealand.

Consolidated revenue and profit

for the period

The following is an analysis of the Group’s revenue and results by reportable operating segment.

56


30 Parent entity disclosures

(a) Financial position

2013 2012

Assets $ $

Current assets 13,260,883 19,996,043

Non-current assets 18,020,644 14,094,970

Total assets 31,281,527 34,091,013

Liabilities

Current liabilities 21,299,701 24,824,037

Non-current liabilities 392,538 338,770

Total liabilities 21,692,239 25,162,807

Equity

Issued capital 14,331,926 9,877,120

Retained earnings (4,449,358) (1,344,722)

Reserves

General reserves 395,808 395,808

Foreign exchange hedging reserve (689,090) -

Total equity 9,589,286 8,928,206

(b) Financial performance

2013 2012

$ $

(Loss)/profit for the year (3,104,636) (2,200,238)

Other comprehensive income (689,098) -

Total comprehensive income (3,793,734) (2,200,238)

(c) Commitments for the acquisition of property, plant and equipment by the parent entity

2013 2012

Finance lease liabilities $ $


Longer than 1 year and not longer than 5 years 104,315 119,722

260,870 476,904

(d) Subsidiaries

Percentage Percentage

owned owned

2013 2012

Name of subsidiary Country of incorporation % %

NetComm Wireless (NZ) Limited, (formerly Dynalink Modems Ltd) New Zealand 100 100

Call Direct Cellular Solutions 2003 Pty Ltd Australia 100 100

C10 Communications Pty Ltd Australia 100 100

NetComm Wireless (Canada) Limited, (formerly Canada NetComm Limited) Canada 100 100




Finance leases relate to plant and equipment. The Company has the option to purchase the plant and equipment at the conlusion of the

lease arrangements. The Company's obligations under finance leases are secured by the lessor's title to the leased assets.

57


31 Discontinued Operations

(a) Income Statement

2013 2012

$ $

Revenue from the sale of goods - 134,524

Other income - -

Change in inventories - (905,525)

Raw materials consumed - -

Employee benefits - (26,015)

Administrative expenses - (30,102)

Other expenses - -

Earnings before interest, tax, depreciation and amortisation (EBITDA) - (827,118)

Depreciation and amortisation expense - -

Finance costs - -

Loss before income tax - (827,118)

Income tax (expense)/benefit - 97,450

Loss after income tax - (729,668)

Attributable to equity holders of the parent - (729,668)

Other comprehensive income

Exchange differences arising on translation of foreign operations - -

Income tax relating to components of other comprehensive income - -

Other comprehensive income for the period (net of tax) - -

Total comprehensive income for the period - (729,668)

Attributable to equity holders of the parent (729,668)

- (729,668)

(b) Financial position

2013 2012

$ $

Current assets

Trade and other receivables - 5,300

Total current assets - 5,300

(c) Cash Flows

2013 2012

$ $

Operating Activities - 78,406

Net Cash Flows from discontinued operations - 78,406




58


32

The registered office and principal place of business of the company is:


Level 2

18-20 Orion Road

Lane Cove NSW 2066




Company details

59


In the opinion of the directors of NetComm Wireless Limited

(a)

(i) giving a true and fair view of its financial position as at 30 June 2013

(ii) and of its performance for the financial year ended on that date; and

(b)

(c)

(d)

Signed in accordance with a resolution of the directors

On behalf of the Directors

J Milne D P J Stewart

Director Director

27 September 2013 27 September 2013

NetComm Wireless LimitedDirectors' Declaration

the consolidated financial statements and notes of NetComm Wireless Limited are in accordance with

the Corporations Act 2001, including:

(iii) complying with Australian Accounting Standards (including the Australian Accounting

Interpretations) and the Corporations Regulations 2001;

Note 1 confirms that the consolidated financial statements also comply with International

Financial Reporting Standards.

there are reasonable grounds to believe that NetComm Wireless Ltd will be able to pay its debts as and

when they become due and payable.

The directors have been given the declarations required by Section 295A of the Corporations

Act 2001 from the Chief Executive Officer and Chief Financial Officer for the financial year ended

30 June 2013.

60



61


Independent Auditor’s Report To the Members of NetComm Wireless Limited Report on the financial report We have audited the accompanying financial report of NetComm Wireless Limited (the “Company”), which comprises the consolidated statement of financial position as at 30 June 2013, the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information 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 of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001. The Directors’ responsibility also includes such internal control as the Directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. The Directors also state, in the notes to the financial report, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, the financial statements comply with International Financial Reporting Standards.

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. Those standards require us to 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 judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error.

62

In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation of the financial report that gives a true and fair view 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 Company’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.

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

Independence In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. Auditor’s opinion In our opinion:

a the financial report of NetComm Wireless Limited is in accordance with the Corporations Act 2001, including:

i giving a true and fair view of the consolidated entity’s financial position as at 30 June 2013 and of its 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 the notes to the financial statements.

Report on the remuneration report We have audited the remuneration report included in pages 9 to 15 of the directors’ report for the year ended 30 June 2013. 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 Australian Auditing Standards. Auditor’s opinion on the remuneration report In our opinion, the remuneration report of NetComm Wireless Limited for the year ended 30 June 2013, complies with section 300A of the Corporations Act 2001.




62

In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation of the financial report that gives a true and fair view 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 Company’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.

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

Independence In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. Auditor’s opinion In our opinion:

a the financial report of NetComm Wireless Limited is in accordance with the Corporations Act 2001, including:

i giving a true and fair view of the consolidated entity’s financial position as at 30 June 2013 and of its 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 the notes to the financial statements.

Report on the remuneration report We have audited the remuneration report included in pages 9 to 15 of the directors’ report for the year ended 30 June 2013. 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 Australian Auditing Standards. Auditor’s opinion on the remuneration report In our opinion, the remuneration report of NetComm Wireless Limited for the year ended 30 June 2013, complies with section 300A of the Corporations Act 2001.




ASX Additional Information

The shareholder information set out below was applicable as at 25 September 2013.

1 Distribution of Shareholders

Analysis of number of shareholders by size of holding

Category of Holding Number Number of Shares

1 - 1,000 127 55,467

1,001 - 5,000 439 1,299,925

5,001 - 10,000 224 1,743,999

10,001 - 100,000 630 22,672,863

100,001 - share and over 171 102,927,636

Total 1,591 128,699,890

2 Twenty Largest Shareholders

The names of the twenty largest holders of quoted shares are:

Shareholder Number of Shares Percentage of total

sharesBrad Industries Pty Ltd 22,974,596 17.85%

UBS Nominees Pty Ltd 11,335,352 8.81%

NBT Pty Ltd 11,144,923 8.66%

Dr Colin Rose 3,490,223 2.71%

UBS Wealth Management Australia Nominees P/L 2,486,764 1.93%

Michael John Cornelius 2,486,170 1.93%

Askey Computer Corp 2,053,528 1.60%

Yarradale Investments Pty Ltd 1,782,158 1.38%

Mr Gary John Jackson & Ms Christine Gregg 1,593,534 1.24%

BNP Paribas Noms Pty Ltd 1,570,000 1.22%

Catch 88 Pty Ltd 1,368,759 1.06%

Gordon Denby Coad & Miss Shirley Pratt 1,211,176 0.94%

Mrs Cher Suey Cheah, Mr Seuk-Liong Chea & Miss

Sheryn Wei Lynn Cheah 1,200,000 0.93%

HSBC Custody Nominees (Australia) Limited 1,163,381 0.90%

Ms DG Leong / Mr RA Press 1,014,093 0.79%

Mr Darren Jacobus Jansen & Mrs Carolyn Jane

Jansen 982,300 0.76%

Coolah Holdings Pty Limited 884,831 0.69%

Carrier International Pty Limited 809,476 0.63%

Robert & Mary Waldie 767,311 0.60%

Mr Suthara Youhorn & Mrs Youhorn Chea 696,893 0.54%

Total 71,015,468 55.18%

3 Voting Rights

All ordinary shares (whether fully paid or not) carry one vote per share without restriction.

4 Substantial Shareholders

As at 25 September 2013 the substantial shareholders were as follows:

Shareholder Number of SharesPercentage of total

sharesBrad Industries Pty Ltd 22,974,596 17.85%

UBS Nominees Pty Ltd 11,335,352 8.81%

NBT Pty Ltd 11,144,923 8.66%

63

DIRECTORSJ Milne (Non Executive Director & Chairman)

K Boundy (Non Executive Director)

S Black AM (Non Executive Director)

D P J Stewart (CEO & Managing Director)

K J P Sheridan (CFO & Executive Director)

COMPANY SECRETARYK J P Sheridan

REGISTERED OFFICELevel 2, 18-20 Orion Rd

Lane Cove NSW 2066

Telephone: +61 (2) 9424-2000

Facsimile: +61 (2) 9427-9260

AUDITORGrant Thornton Audit Pty Limited.

Chartered Accountants

Level 19

2 Market Street, Sydney NSW 2000

SOLICITORSDLA Phillips Fox

201 Elizabeth Street, Sydney NSW 2000

Maddocks

Angel Place

123 Pitt St, Sydney NSW 2000

BANKERSNational Australia Bank

SHARE REGISTERLink Market Services

Level 12

680 George St

Sydney NSW 2000

Telephone: 8280 7552

WEB ADDRESSwww.netcommwireless.com

CorporateDirectory30 June 2013

Trademarks and registered trademarks are the property of NetComm Wireless Limited or their respective owners. Specifications are subject to change without notice. Images shown may vary slightly from the actual product.

NETCOMM WIRELESS LIMITED ABN 85 002 490 486

Head Office, 18-20 Orion RoadLane Cove, Sydney, NSW 2066, Australia

p: +61 2 9424 2000 f: +61 2 9424 2010e: [email protected]

a guide to our company -...

Documents