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HALF-YEARLY REPORT 2011

Half Year Financial Report31 December 2011

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HALF-YEARLY REPORT 2011

Results for announcement to the market 01

Directors’ Report 02

Auditor’s Independence Declaration 04

Condensed statement of comprehensive income 05

Condensed statement of financial position 06

Condensed statement of changes in equity 07

Condensed statement of cash flow 08

Notes to the condensed financial statements 09

Directors’ Declaration 18

Independent Auditor’s Review Report 19

Corporate Directory 21

Contents

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Eftel Limited and Controlled Entities ABN 47 073 238 178 - - 1 - -

Results for announcement to the marketResults for announcement to the marketResults for announcement to the marketResults for announcement to the market

Consolidated Consolidated Consolidated Consolidated

31 December 201131 December 201131 December 201131 December 2011

$ '000$ '000$ '000$ '000

Revenue

Up 96.8% to 28,318

Earnings before interest, taxation, depreciation and amortisation (excluding redundancy costs)

Up 577.2% to 1,966

Net profit/ (loss) for the period attributable to members

Down 645.8% to (3,107)

Dividends (distributions)Dividends (distributions)Dividends (distributions)Dividends (distributions)

Amount per Amount per Amount per Amount per shareshareshareshare

Franked Franked Franked Franked amount per amount per amount per amount per

shareshareshareshare

Interim dividend

nil nil

Record date for determining entitlements to the dividend

n/a

CurrentCurrentCurrentCurrent Previous Previous Previous Previous

PeriodPeriodPeriodPeriod PeriodPeriodPeriodPeriod

31 December31 December31 December31 December 30 June30 June30 June30 June

2011201120112011 2011201120112011

c per sharec per sharec per sharec per share c per sharec per sharec per sharec per share

Net Tangible Assets per Ordinary Share (NTA Backing)

(30.49) (1.02)

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Directors’ Directors’ Directors’ Directors’ RRRReport eport eport eport

The directors of Eftel Limited submit herewith the financial report for the half-year ended 31 December 2011. In order to comply with the provisions of the Corporations Act 2001, the directors report as follows:

DirectorsDirectorsDirectorsDirectors

The names of the directors of the company during or since the end of the half-year are:

Mr Stephe Wilks (appointed 27 October 2011) Non Executive Chairman

Mr Scott Stavretis (appointed 24 October 2011) CEO, Managing Director

Mr Ilario Faenza

Non Executive Director

Mr Larry Kestelman (appointed 28 July 2011) Non Executive Director

Mr Paul Stevenage


Mr Simon Ehrenfeld


Principal ActivitiesPrincipal ActivitiesPrincipal ActivitiesPrincipal Activities

Eftel Limited is a national telecommunications carrier within Australia, providing telecommunication and Internet services to consumers, corporate and government clients and the wholesale market.

ReviewReviewReviewReview of Operationsof Operationsof Operationsof Operations

During this half the company went through a period of significant change with the successful completion of the merger with ClubTelco, which led to in excess of 120,000 services within the group and combined revenues of more than $1m per week. This business changing acquisition directly reflected in our results. In keeping with accounting standards, all previous corresponding (PCP) figures relate to ClubTelco accounts, as the transaction was treated as a reverse acquisition.

Our revenues increased from $13.5m in H1 FY11 to $28.2m in H1 FY12 due to the combination of ClubTelco, the acquisition of Platform Networks on 28 August 2011 and a significant increase in organic sales - mainly contributed from within our consumer division.

Gross contribution margin increased from 21% to 36% due to the increased scale of the company now able to seek improved supplier buying arrangements. These arrangements have not only helped drive down costs but also allowed the group to gain access to new product lines such as mobile and mobile wireless broadband. With the addition of new products and competitive supply we have been able to release new products in the market that have allowed us to aggressively compete with our larger competitors in the industry.

In July 2011 the company signed a deal with NBN Co. that enabled the group to connect directly into the NBN to aggregate and provide NBN fibre services that will be sold throughout our consumer, retail and wholesale divisions. We have secured our first major wholesale customer, being Australia's largest private retail telecommunications company, Dodo Australia.

The strategic acquisition of Platform Networks, cemented the group as a competitive provider of wholesale services to the telecommunications market by leveraging the systems and resources of Platform Networks together with the companies newly increased scale and buying power. This acquisition also resulted in merging networks, providing us with significant headroom for future growth.

During this period we also successfully raised $2.6m in new equity that the company put to immediate use, including the building of significant sales channels for the ClubTelco consumer division. These sales have shown an immediate positive impact. At a time where the industry is struggling with average revenue per user (ARPU) we have been able to turn the pre-transaction revenues of ClubTelco that were in decline to a positive month on month growth of revenue that is expected to continue to increase due to continued organic acquisition.

These significant events and the continued efforts of our high calibre management team (including executives we have been able to retain and attract this past year due to our new scale) led to a direct contribution to EBITDA. After adding back $402k of redundancy costs due to acquisition activity, the EBITDA for the half ending December 31 2011 was $1.966m.

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Auditor’sAuditor’sAuditor’sAuditor’s Independence DeclarationIndependence DeclarationIndependence DeclarationIndependence Declaration

The auditor’s independence declaration is included on page 4 of the half-year report.

RouRouRouRounnnnding off of Amountsding off of Amountsding off of Amountsding off of Amounts

The company is a company of the kind referred to in ASIC Class Order 98/0100, dated 10 July 1998, and in accordance with that Class Order amounts in the directors’ report and the half-year financial report are rounded off to the nearest thousand dollars, unless otherwise indicated.

Signed in accordance with a resolution of directors made pursuant to s.303(5) of the Corporations Act 2001.

On behalf of the Directors

Scott StavretisScott StavretisScott StavretisScott Stavretis

Managing Director

Melbourne, 29 February 2012Melbourne, 29 February 2012Melbourne, 29 February 2012Melbourne, 29 February 2012

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Condensed statement of comprehensive income for the halCondensed statement of comprehensive income for the halCondensed statement of comprehensive income for the halCondensed statement of comprehensive income for the halffff----year ended 31 December 2011year ended 31 December 2011year ended 31 December 2011year ended 31 December 2011

ConsolidatedConsolidatedConsolidatedConsolidated

NoteNoteNoteNote

HalfHalfHalfHalf----year year year year endedendedendedended


31313131----DecDecDecDec----11111111 31313131----DecDecDecDec----10101010

$’000$’000$’000$’000 $’000$’000$’000$’000

Revenue from operations

28,199 13,529

Other revenue

119 857

Total revenue

28,318 14,386

Communication expenses

(17,976) (10,638)

Employee benefits expense

(6,004) (1,853)

Occupancy expenses

(370) (39)

Depreciation and amortisation expense

(1,366) (5)

Finance costs

(438) -

Impairment of Assets

11 (3,931) -

Other expenses

(2,403) (2,268)

Profit/ (loss) before income tax expense

(4,170) (417)

Income tax (expense) / benefit

1,063 -

Profit/ (loss) for the periodProfit/ (loss) for the periodProfit/ (loss) for the periodProfit/ (loss) for the period

(3,107) (417)

Other Other Other Other comprehensive incomecomprehensive incomecomprehensive incomecomprehensive income

Exchange Rate differences on translating foreign operations

4 -

Total comprehensive income/ (loss) attributable to members of Eftel Limited

(3,103) (417)

Earnings per share:Earnings per share:Earnings per share:Earnings per share:

Basic (cents per share)

4 (5.850) (1.382)

Diluted (cents per share)

4 (5.850) (1.382)

The notes following the financial statements form part of the financial report.

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Condensed statement of financial position as at 31 December 2Condensed statement of financial position as at 31 December 2Condensed statement of financial position as at 31 December 2Condensed statement of financial position as at 31 December 2011011011011


NoteNoteNoteNote

31313131----DecDecDecDec 30303030----JunJunJunJun

2011201120112011 2011201120112011

$’000$’000$’000$’000 $’000$’000$’000$’000

Current assetsCurrent assetsCurrent assetsCurrent assets

Cash and cash equivalents

1,630 1,156

Trade and other receivables

5,720 2,955

Other

2,240 1,168

Assets held for sale

11 - 4,912

Total current assetsTotal current assetsTotal current assetsTotal current assets

9,590 10,191

NonNonNonNon----current assetscurrent assetscurrent assetscurrent assets

Property, plant and equipment

1,410 719

Deferred tax assets

2,171 1,108

Goodwill

17,050 15,992

Other intangible assets

345 205

Total nonTotal nonTotal nonTotal non----current assetscurrent assetscurrent assetscurrent assets

20,976 18,024

Total assetsTotal assetsTotal assetsTotal assets

30,566 28,215

Current liabilitiesCurrent liabilitiesCurrent liabilitiesCurrent liabilities

Trade and other payables

15,308 10,257

Borrowings

9 1,212 3,351

Provisions

3,551 2,995

Deferred revenue

2,354 2,168

Total current liabilitiesTotal current liabilitiesTotal current liabilitiesTotal current liabilities

22,425 18,771

NonNonNonNon----current liabilitiescurrent liabilitiescurrent liabilitiescurrent liabilities

Borrowings

9 4,092 962

Provisions

676 2,006

Total nonTotal nonTotal nonTotal non----current liabilitiescurrent liabilitiescurrent liabilitiescurrent liabilities

4,768 2,968

Total liabilitiesTotal liabilitiesTotal liabilitiesTotal liabilities

27,193 21,739

Net assetsNet assetsNet assetsNet assets

3,373 6,476

EEEEquityquityquityquity

Issued capital

10 6,476 6,476

Reserves

4 -

Accumulated losses

(3,107) -

Total equityTotal equityTotal equityTotal equity

3,373 6,476


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Condensed statement ofCondensed statement ofCondensed statement ofCondensed statement of changes in equity for the halfchanges in equity for the halfchanges in equity for the halfchanges in equity for the half----year ended 31 December 2011year ended 31 December 2011year ended 31 December 2011year ended 31 December 2011


Issued capitalIssued capitalIssued capitalIssued capital

Employee Employee Employee Employee share share share share option option option option

reservereservereservereserve

Foreign Foreign Foreign Foreign currency currency currency currency

translation translation translation translation reservereservereservereserve

Accumulated Accumulated Accumulated Accumulated profits/(losses)profits/(losses)profits/(losses)profits/(losses)

Total equityTotal equityTotal equityTotal equity

$’000$’000$’000$’000 $’000$’000$’000$’000 $’000$’000$’000$’000 $’000$’000$’000$’000 $’000$’000$’000$’000

Incorporation at 7 June 2010

- - - - -

Issue of shares on 10 June 2010

242 - - - 242

Net profit/ (loss) for the period

- - - (417) (417)

Other comprehensive income

- - - - -

Total comprehensive income/ (loss) attributable to members of the parent entity

- - - (417) (417)

Recognition of share-based payments

- - - - -

Balance at 31 Dec 2010Balance at 31 Dec 2010Balance at 31 Dec 2010Balance at 31 Dec 2010

242 - - (417) (175)

Balance at 1 Jul 2011

6,476 - - - 6,476

Net profit/ (loss) for the period

- - - (3,107) (3,107)

Other comprehensive income

- - 4 - 4

Total comprehensive income/ (loss) attributable to members of the parent entity

- - 4 (3,107) (3,103)

Issue of ordinary shares

- - - - -

Share issue costs

- - - - -

Share options exercised

- - - - -

Share-based payment expenses

- - - - -

Balance at 31 Dec 2011Balance at 31 Dec 2011Balance at 31 Dec 2011Balance at 31 Dec 2011

6,476 - 4 (3,107) 3,373


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Condensed statement of cash flow for the halfCondensed statement of cash flow for the halfCondensed statement of cash flow for the halfCondensed statement of cash flow for the half----year ended 31 December 2011year ended 31 December 2011year ended 31 December 2011year ended 31 December 2011


NoteNoteNoteNote


HalfHalfHalfHalf----year year year year ended ended ended ended


$’000$’000$’000$’000 $’000$’000$’000$’000

Cash flows from operating Cash flows from operating Cash flows from operating Cash flows from operating activitiesactivitiesactivitiesactivities

Receipts from customers

26,452 9,534

Payments to suppliers and employees

(25,531) (9,049)

Interest and other costs of finance paid

(438) -

Income tax paid

- -

Net cash provided by operating Net cash provided by operating Net cash provided by operating Net cash provided by operating activitiesactivitiesactivitiesactivities

483 485

Cash flows from investing Cash flows from investing Cash flows from investing Cash flows from investing activitiesactivitiesactivitiesactivities

Interest received

- -

Payment for property, plant and equipment

(484) (145)

Bank overdraft acquired as part of Platform Networks

8 (97) -

Payment for intangible assets

(17) -

Net cash used in investing Net cash used in investing Net cash used in investing Net cash used in investing activitiesactivitiesactivitiesactivities

(598) (145)

Cash flows from financing Cash flows from financing Cash flows from financing Cash flows from financing activitiesactivitiesactivitiesactivities

Proceeds from borrowings

1,338 -

Repayment of borrowings

(700) -

Repayment of lease liabilities

(49) -

Payment for share issue costs

- -

Receipts from share issue

- -

Net cash used in financing Net cash used in financing Net cash used in financing Net cash used in financing activitiesactivitiesactivitiesactivities

589 -

Net (decrease)/increase in cash and cash equivalents

474 340

Cash and cash equivalents at the beginning of the period

1,156 -

Cash and cash equivalents at the end of the periodCash and cash equivalents at the end of the periodCash and cash equivalents at the end of the periodCash and cash equivalents at the end of the period

1,630 340


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Notes to the condensed financial statements for the halfNotes to the condensed financial statements for the halfNotes to the condensed financial statements for the halfNotes to the condensed financial statements for the half----year ended 31 December 2011year ended 31 December 2011year ended 31 December 2011year ended 31 December 2011

1. Corporate information1. Corporate information1. Corporate information1. Corporate information

The financial report of Eftel Limited for the half-year ended 31 December 2011 was authorised for issue in accordance with a resolution of the directors on 29 February 2012. Eftel Limited is a company limited by shares incorporated in Australia whose shares are publicly traded on the Australian Securities Exchange. The principal activities of the consolidated entity for the half-year were the provision of telecommunications and supply of internet services.

2. Significant accounting policies 2. Significant accounting policies 2. Significant accounting policies 2. Significant accounting policies

Statement of complianceStatement of complianceStatement of complianceStatement of compliance

The half-year financial report is a general purpose financial report prepared in accordance with the Corporations Act 2001 and AASB 134 ‘Interim Financial Reporting’. Compliance with AASB 134 ensures compliance with International Financial Reporting Standard IAS 34 ‘Interim Financial Reporting’. The half-year financial report does not include notes of the type normally included in an annual financial report and shall be read in conjunction with the most recent annual financial report. Accordingly, it is recommended that this report be read in conjunction with the annual report for the financial year ended 30 June 2011 and any public announcements made by Eftel Limited and its controlled entities ("the consolidated entity") during the half-year in accordance with any continuous disclosure obligations arising under the Corporations Act 2001.

Basis oBasis oBasis oBasis of preparationf preparationf preparationf preparation

The condensed financial statements have been prepared on the basis of historical cost, except for the revaluation of certain non-current assets and financial instruments. 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.

The company is a company of the kind referred to in ASIC Class Order 98/0100, dated 10 July 1998, and in accordance with that Class Order amounts in the directors’ report and the half-year financial report are rounded off to the nearest thousand dollars, unless otherwise indicated.

Going ConcernGoing ConcernGoing ConcernGoing Concern

The financial report has been prepared on the going concern basis, which assumes continuity of normal business activities and realisation of assets and the settlement of liabilities in the ordinary course of business. As at 31 December 2011, the consolidated entity had net current liabilities of $12,835,000 (June 2011: $8,580,000) and had incurred a loss of $3,107,000 (Dec 2010 loss: $417,000) and had experienced net operating cash inflows of $483,000 (Dec 2010: $485,000) for the half-year then ended.

The EBITDA for the period, excluding one-off redundancy costs of $402,000, was $1,966,000 (December 2010: -$412,000).

The main contributing factors to the loss for the half-year ended 31 December 2011 were non-cash items, being:

• Asset impairment charges of $3,931,000 (One-off impairment cost on MSAN assets)

• Depreciation and amortisation charges of $1,366,000 (Including $1,065,000 of depreciation charges on the MSAN network which will not be ongoing due to the impairment recognised in this period)

The main contributing factors to the net current liability position of the consolidated entity as at 31 December 2011 were:

• Trade payables of $4,890,000 as at 31 December 2011 from Dodo Wholesale Pty Ltd, which is a related party to the company's majority shareholders.

• Deferred revenue of $2,354,000. Deferred revenue is services invoiced in advance as such, is a non-cash liability and is spread across the large customer base of Eftel. F

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Consistent with June 2011, the consolidated entity has received a revised letter of financial support from Dodo Australia Pty Ltd ATF the Dodo Partnership (a partnership of the Slepoy and Kestelman Family Trusts) (‘Dodo Australia Pty Ltd’), being the ultimate parent entity of Dodo Wholesale Pty Ltd, which confirms the following;

• Dodo Wholesale Pty Ltd will not require payment of the accounts payable balance of $4.890m unless the consolidated entity has sufficient cash resources to do so and will continue to provide services on extended terms to ensure that Eftel is able to meet other creditor payments as they fall due;

• Dodo Wholesale Pty Ltd has deferred the earliest repayment of the loan of $2.25m until March 2013;

• Dodo Australia Pty Ltd has pledged to provide the necessary financial support to enable the consolidated entity and company to meet all their debts as and when they fall due for a period of at least 12 months; and

• Dodo Wholesale Pty Ltd has provided a facility of $1.5 million to finance the purchase of Platform Networks Pty Ltd. The facility has been drawn down to $1.338m and is repayable in August 2013.

After adjusting for the deferred revenue balance and the amounts owing to Dodo Wholesale Pty Ltd, the consolidated entity has net current liabilities of $5.591M. Based on the extended accounts payable terms and loan forbearance provided by Dodo Australia Pty Ltd as described above, the consolidated entity trading profitably as a result of the synergies resulting from the merger of Eftel and ClubTelco, the financial support received from Dodo Australia Pty Ltd, and the additional finance facility from Dodo Wholesale Pty Ltd to finance the purchase of Platform Networks Pty Ltd, the directors have prepared cash flow forecasts that indicate the company and consolidated entity will have sufficient cash flows to meet all working capital requirements for a period of at least 12 months from the date of signing the consolidated financial report. Accordingly, the directors consider it appropriate for the consolidated financial statements to be prepared on the going concern basis.

StatStatStatStatement of complianceement of complianceement of complianceement of compliance

The accounting policies and methods of computation adopted in the preparation of the half-year financial report are consistent with those adopted and disclosed an the company's 2011 annual financial report for the financial year ended 30 June 2011, except for the impact of the Standards and Interpretations described below. These accounting policies are consistent with the Australian Accounting Standards and with International Financial Reporting Standards. From 1 July 2011, the Group has adopted all of the new and revised Standards and interpretations issued by the Australian Accounting Standard Board (the AASB) that are relevant to their operations and effective for the current reporting period. The adoption of these amendments have not resulted in any changes to the Group's accounting policies and have no effect on the amounts reported for the current or prior periods.

(i) AASB 2009-14: Amendments to Australian Interpretation - Prepayments of a Minimum Funding Requirement; (ii) AASB 2010-4: Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project; (iii) AASB2010-5 Amendments to Australian Accounting Standards ; (iv) AASB2010-6 'Amendments to Australian Accounting Standards - Disclosures on Transfers of Financial Assets' ; (v) AASB2010-9 'Amendments to Australian Accounting Standards - Severe Hyperinflation and Removal of Fixed Dates for

First-time adopters' ; (vi) AASB2011-5 'Amendments to Australian Accounting Standards - extending relief from Consolidation, the Equity Method

and Proportionate Consolidation' ;

The Group has elected not to adopt any new standards or interpretations that have been issued or amended but are not yet effective.

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Notes to the condensed financial statements for the halfNotes to the condensed financial statements for the halfNotes to the condensed financial statements for the halfNotes to the condensed financial statements for the half----year ended 31 Decemyear ended 31 Decemyear ended 31 Decemyear ended 31 December 2011ber 2011ber 2011ber 2011

3. Segment information3. Segment information3. Segment information3. Segment information

The consolidated entity operates in the Telecommunications industry in Australia. The group's principal activity is provision of Internet and telephony services to wholesale, corporate and retail customers. Revenue reported below represents revenue generated from external customers. There were no inter-segment sales in the period (2010: Nil). Segment profit represents the profit earned by each segment without allocation of common shared communication costs, central administration costs and directors' salaries, investment revenue, finance costs and income tax expenses. This is the measure reported to the chief operating decision maker for the purposes of resource allocation and assessment of segment performance.

The consolidated entity has generated its major revenue from the following products and services:

Segment revenueSegment revenueSegment revenueSegment revenue


$'000$'000$'000$'000 $'000$'000$'000$'000

Broadband Internet

13,229 4,199

Mobile Phone

1,034 433

VoIP

2,017 2,464

Home Phone

6,676 6,428

Other

5,362 862

Total revenues

28,318 14,386

The consolidated entity operates solely in the telecommunications industry in Australia. The consolidated entity's principal activity is provision of Internet and telephony services. The consolidated entity is aggregated into a single reportable segment given the similarity of the services provided, method in which services are delivered, types of customers and regulatory environment. There are no inter-segment transactions. There was no single customer that contributed 10% or more to the consolidated entity's revenue for the December 2011 half.


4. 4. 4. 4. Earnings per shareEarnings per shareEarnings per shareEarnings per share



centscentscentscents centscentscentscents

Basic earnings per share - cents

(5.850) (1.382)

Diluted earnings per share - cents

(5.850) (1.382)

Weighted average number of ordinary shares outstanding during the year used in the calculation of basic earning per share

53,110,063 30,176,456

Reconciliation of earnings used in calculating earnings per share

$'000$'000$'000$'000 $'000$'000$'000$'000

Net profit/(loss)

(3,107) (417)

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Notes to the condensed fNotes to the condensed fNotes to the condensed fNotes to the condensed financial statements for the halfinancial statements for the halfinancial statements for the halfinancial statements for the half----year ended 31 December 2011year ended 31 December 2011year ended 31 December 2011year ended 31 December 2011

5. Contingencies and commitments5. Contingencies and commitments5. Contingencies and commitments5. Contingencies and commitments

Contingent liabilitiesContingent liabilitiesContingent liabilitiesContingent liabilities

Court proceedingsCourt proceedingsCourt proceedingsCourt proceedings

There were no court proceedings at the date of this report.

Contingent liabilContingent liabilContingent liabilContingent liabilitiesitiesitiesities

Eftel has received notice of a potential claim from an entity that both supplied services to and received services from Eftel in prior years. Eftel disputes the validity of the claim and has sought legal advice on the matter.

6. Subsequent events 6. Subsequent events 6. Subsequent events 6. Subsequent events

There is no material event occurred subsequent to the end of the period.

7. Leases7. Leases7. Leases7. Leases

Finance leasesFinance leasesFinance leasesFinance leases

Finance leases relate to plant and equipment with lease terms of 2 to 3 years. The borrowings on the finance leases are secured by the assets financed. The consolidated entity retains ownership of the plant and equipment at the conclusion of the lease agreement.

Operating leasesOperating leasesOperating leasesOperating leases

Leasing arrangements

Operating leases relate to property, plant and equipment with lease terms between 1 and 5 years. The majority of operating lease contracts contain market review clauses in the event that the consolidated entity exercises its option to renew. The consolidated entity does not have an option to purchase the leased asset at the expiry of the lease period.


31313131----DecDecDecDec----11111111 30303030----JunJunJunJun----11111111

$'000$'000$'000$'000 $'000$'000$'000$'000

Non-cancellable operating leases contracted for but not capitalised in the financial statements

Not longer than 1 year

399 338

Longer than 1 year and not longer than 5 years

133 243

532 581

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8. Acquisition of business8. Acquisition of business8. Acquisition of business8. Acquisition of business

Name of business acquiredName of business acquiredName of business acquiredName of business acquired 2011201120112011

Date of Date of Date of Date of

AcquisitionAcquisitionAcquisitionAcquisition

Proportion of Proportion of Proportion of Proportion of business business business business

acquired (%)acquired (%)acquired (%)acquired (%)

Cost of Cost of Cost of Cost of acquisition acquisition acquisition acquisition

$'000$'000$'000$'000

Platform Networks

23 August 2011 100% 50,000

50,000

On 23 August 2011, Eftel announced the acquisition of Platform Networks Pty Ltd.

The fair value of the net assets acquired and the goodwill have been provisionally determined, and are as follows:

Platform NetworksPlatform NetworksPlatform NetworksPlatform Networks

Carrying ValueCarrying ValueCarrying ValueCarrying Value Fair value Fair value Fair value Fair value

adjustmentsadjustmentsadjustmentsadjustments Fair valueFair valueFair valueFair value

$’000$’000$’000$’000 $’000$’000$’000$’000 $’000$’000$’000$’000

Net assets acquired:


929 - 929

Other current assets

348 - 348

Property, plant & equipment

573 - 573

Other intangible assets

140 - 140

Bank overdraft

(97)

(97)


(2,415) - (2,415)

Provisions

(86) - (86)

Borrowings

(400) - (400)

(1,008) - (1,008)

Goodwill arising on acquisition

1,058

Total consideration

50

Net cash acquired:

Bank overdraft

(97)

Total net cash acquired

(97)

The principal activities of Platform Networks are the provision of telecommunication and Internet services.

Up to 31 December 2011 Platform Networks contributed a Net Loss of $555,000 towards the profit & loss statement of the consolidated entity. F

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8. Acquisition of business8. Acquisition of business8. Acquisition of business8. Acquisition of business (con’t)(con’t)(con’t)(con’t)

On 30 June 2011, the Company acquired ClubTelco Pty Ltd. The consideration comprises issuance of 603,529,130 fully paid ordinary shares in Eftel Limited. Pursuant to Accounting Standard AASB3 'Business Combinations', this transaction represents a reverse acquisition with the result that ClubTelco Pty Ltd was identified as the acquirer of Eftel Limited (the "acquiree" and "legal parent"). The Eftel group is deemed to be acquired by ClubTelco Pty Ltd at 30 June 2011 for reporting purposes. The principal business of the acquired business is internet service provision. The consolidated entity has paid a premium for the acquiree as it believes the acquisitions will introduce additional synergies to its existing operations. The fair values of net assets acquired and the resulting goodwill have been provisionally determined, but will be finalised by 30 June 2012, and are as follows:

EftelEftelEftelEftel

Carrying ValueCarrying ValueCarrying ValueCarrying Value Fair value Fair value Fair value Fair value

adjustmentsadjustmentsadjustmentsadjustments Fair valueFair valueFair valueFair value

$’000$’000$’000$’000 $’000$’000$’000$’000 $’000$’000$’000$’000

Net assets acquired:


691

691

Other current assets

668

668

Assets held for sale

4,912

4,912

Property, plant and equipment

550

550

Deferred tax assets

4,226 (3,422) 804

Goodwill

10,346 (10,346) -

Intangible assets – software

72

72

Intangible assets – customer base

670 (563) 107


(9,132)

(9,132)

Deferred revenue

(1,396)

(1,396)

Provisions

(4,819)

(4,819)

Conversion loan

(500)

(500)

Other borrowings

(4,313)

(4,313)

1,975 (14,331) (12,356)

Goodwill arising on acquisition

15,992

Total consideration

3,636

Goodwill arose in the acquisition because the cost of the combination included a control premium. In addition, the consideration paid for the combination effectively included amounts in relation to the benefit from synergies, revenue growth, future market development and the assembled workforce of ClubTelco Pty Ltd. These benefits are not recognised separately from goodwill because they do not meet the recognition criteria for identifiable intangible assets.

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Notes to the condensed financial stateNotes to the condensed financial stateNotes to the condensed financial stateNotes to the condensed financial statements for the halfments for the halfments for the halfments for the half----year ended 31 December 2011year ended 31 December 2011year ended 31 December 2011year ended 31 December 2011

9. Loans and Borrowings9. Loans and Borrowings9. Loans and Borrowings9. Loans and Borrowings


NotesNotesNotesNotes 31313131----DecDecDecDec----11111111 30303030----JunJunJunJun----11111111

$'000$'000$'000$'000 $'000$'000$'000$'000

CurrentCurrentCurrentCurrent

Secured - at amortised cost

Obligations under finance leases and hire purchase contracts (i) 33 80

Vendor financing facilities

(ii) - 277

Loans from related parties

(iii) 749 2,864

Unsecured- at amortised cost

Other Loans

(iv) 430 130

1,212 3,351

NonNonNonNon----currentcurrentcurrentcurrent

Secured - at amortised cost

Other Loans

- 30

Loans from related parties

(iii) 4,092 932

Unsecured- at amortised cost

Other Loans

-

4,092 962

(i) Hire purchase contracts in place are due to be fully repaid within the June 2012 half. In June 2011 hire purchase

contracts associated with BroadbandNext assets were classified as current liabilities. (ii) The amounts at 30 June 2011 represent a vendor financing facility secured by the BroadbandNext equipment at a fixed

rate of 5.0% per annum with monthly instalments payable. This debt has been fully repaid in the December 2011 half. This facility has since been repaid in full.

(iii) On 31 December 2011 this amount comprised loans of $2,250,000, $1,338,000, $359,000, $500,000, $337,000 and $57,000. The $2,250,000 facility is interest only with repayments commencing March 2013. The $1,338,000 facility is interest only and is repayable in full in August 2013. The $359,000 facility is subject to monthly repayments and will be fully repaid within the next 12 months. The $500,000 and $57,000 facilities are interest only with repayments commencing in July 2012. The $337,000 facility is subject to monthly repayments until June 2013.

(iv) This amount at 31 December 2011 comprised facilities of $30,000 and $400,000. The $30,000 facility is interest only until July 2012 and then repayable in full. The $400,000 facility is interest only and subject to annual renewal in August each year. F

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NoteNoteNoteNotes to the condensed financial statements for the halfs to the condensed financial statements for the halfs to the condensed financial statements for the halfs to the condensed financial statements for the half----year ended 31 December 2011year ended 31 December 2011year ended 31 December 2011year ended 31 December 2011

10. Issued Capital10. Issued Capital10. Issued Capital10. Issued Capital



$'000$'000$'000$'000 $'000$'000$'000$'000

53,110,355 fully paid ordinary shares

6,476 3,894

(2010: 249,458,707)

6,476 3,894

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.


No.No.No.No. $'000$'000$'000$'000

Fully paid ordinary sharesFully paid ordinary sharesFully paid ordinary sharesFully paid ordinary shares

Balance as at 1 Jan 2010

249,458,707 242

Balance as at 31 December 2010

249,458,707 242

Balance as at 1 Jan 2011

249,458,707 242

Issue of Shares on 30 June 2011

812,742,548 6,252

Costs relating to share issues

- (18 )

Consolidation of shares on 1:20 basis on 15 December 2011 (1,009,090,900) -

(As approved by shareholders at the Annual General Meeting held on 30 November 2011)

Balance as at 31 December 2011

53,110,355 6,476

Fully paid ordinary shares carry one vote per share and carry the right to dividends.

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11. Assets held for sale11. Assets held for sale11. Assets held for sale11. Assets held for sale

During the period, the Board of Directors of Eftel continued a process to sell the BroadbandNext MSAN network equipment. In accordance with AASB 5 "Non-current Assets held for Sale and Discontinued Operation", the carrying value of assets were classified as held for sale. As at 1 July 2011 the assets held for sale had a carrying value of $4.912m. As at 1 July 2011 the assets were reclassified to plant & equipment in accordance with AASB 5 as the Board abandoned plans to sell the BroadbandNEXT MSAN. The assets were reclassified at a carrying amount of $3.931m which includes an adjustment for depreciation that would have been charged had the asset not been classified as held for sale. The Board and Management have taken the view that the carrying amount of the assets as at 31 December 2011 is impaired and as a consequence an impairment charge of $3.931m has been recorded giving the assets a nil written down value as at 31 December 2011. Should circumstances change in the future the impairment charge will be reversed.

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Directors’ Directors’ Directors’ Directors’ DDDDeclarationeclarationeclarationeclaration

The directors declare that:

a) in the directors’ opinion, there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable; and

b) in the directors’ opinion, the attached financial statements and notes thereto are in accordance with the Corporations

Act 2001, including compliance with accounting standards and giving a true and fair view of the financial position and performance of the consolidated entity.

Signed in accordance with a resolution of the directors made pursuant to s.303(5) of the Corporations Act 2001.

On behalf of the Directors

Scott StavretisScott StavretisScott StavretisScott Stavretis

Managing Director

Melbourne, 2Melbourne, 2Melbourne, 2Melbourne, 29999 February 201February 201February 201February 2012222

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Corporate Corporate Corporate Corporate DDDDirectoryirectoryirectoryirectory

DirectorsDirectorsDirectorsDirectors

Stephe Wilks

Larry Kestelman

Simon Ehrenfeld

Scott Stavretis

llario Faenza

Paul Stevenage

Company SecretaryCompany SecretaryCompany SecretaryCompany Secretary

John Raftis

Registered Office and Principal Place of BusinessRegistered Office and Principal Place of BusinessRegistered Office and Principal Place of BusinessRegistered Office and Principal Place of Business

1141 Hay Street

West Perth WA 6005

www.eftel.com

Other OfficesOther OfficesOther OfficesOther Offices

Melbourne Kuala Lumpur

Sydney Gold Coast

AuditorsAuditorsAuditorsAuditors

Deloitte Touche Tohmatsu

Level 14

240 St George's Terrace

Perth WA 6000

SolicitorsSolicitorsSolicitorsSolicitors

Allens Arthur Robinson

530 Collins Street

Melbourne VIC 3000

BankersBankersBankersBankers

National Bank Australia

100 St George's Terrace

Perth WA 6000

Share ReShare ReShare ReShare Registrygistrygistrygistry

LINK Market Services

Ground Floor, 178 St George's Terrace

Perth WA 6000

Stock Exchange ListingStock Exchange ListingStock Exchange ListingStock Exchange Listing

Eftel Limited shares are listed on the Australian Stock Exchange. ASX Code: EFT

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for personal use only - australian securities exchange · for personal use only the notes following...

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