Mobilarm Delivers Robust HY2011 Performance

Transcription

1 ASX Announcement and Media Release Date: 28 February 2011 ASX CODE: MBO Mobilarm Delivers Robust HY2011 Performance Significant revenue growth in HY2011 of 395% over the prior corresponding period company remains in early stage of accelerating growth HY2011 orders of $608,000 - exceeding FY2010 full year orders of $603,000 Continued to build presence in Oil & Gas sector following contract for BHP Billiton a range of projects currently under consideration Performance reflects rapid initial growth and an ongoing focus on minimising general operating expenses Strengthening project pipeline - MBO pursuing a number of growth opportunities in the oil and gas, commercial fishing and defence sectors Extension of contract with US Navy in current half exercised option for additional $300,000 of test VHF locator beacon units in anticipation of field trials in mid-2011 Agreed to acquire Mobile Rescue Technologies in current half owner of Europe s leading man overboard safety brand Sea Marshall Perth, Western Australia: Global marine safety equipment provider, Mobilarm Limited (ASX: MBO) today announced its results for the Half Year ended 31 December The company remains well placed for growth with solid first half performance, including HY2011 orders of $608,000 (exceeding FY2010 full year orders of $603,000), the second phase of contract with US Navy successfully taking up their option to acquire additional VHF Locator Beacon test units, strengthened presence in the oil & gas sector with a new project for BHP Billiton, and continued focus on managing overhead cost base whilst in initial growth phase. Mobilarm is also assessing a number of growth opportunities, both organic and potential acquisitions that is illustrated by the company s announcement of its agreement to acquire leading European man overboard ( MOB ) technology company, Marine Rescue Technologies Ltd for approximately 1.8m as announced on 28 February Ends-

2 Appendix 4D Preliminary final report Rule 4.2A.3 Appendix 4D Introduced 010/1/2003 Amended 17/12/10 Half-year report Name of entity: Mobilarm Limited ABN: Reporting period ( current period ): Half-year ended 31 December 2010 Previous corresponding period Half-year ended 31 December Results for announcement to the market 31 December 2010 $A December 2009 $A Revenue up 243% to $260.1 $ Profit from ordinary activities after tax attributable to members 2.3 Net profit for the period attributable to members up 40% to ($2,429) ($4,040) up 40% to ($2,429) ($4,040) 2.4 Dividends Amount per share cents Franked amount per share cents Final nil nil Interim nil nil 2.5 Record date for determining entitlement to dividends: N/A 2.6 Brief explanation of figures (if necessary): + See chapter 19 for defined terms. 17/12/10 Appendix 4D Page 1

3 Appendix 4D Preliminary final report 3. Net tangible assets Net tangible asset backing per ordinary share 31 December 31 December $/cents $/cents $0.00 $ Details of entities over which control has been gained or lost 4.1 Name of the entity N/A 4.2 Date of the gain or loss of control N/A 4.3 Contribution to the reporting entity s profit (where applicable) N/A 5. Dividends Amount per security Nil Total dividends paid on all securities during the financial year Nil + See chapter 19 for defined terms. 17/12/10 Appendix 4D Page 2

4 Appendix 4D Preliminary final report 7. Auditor s review report Note: The audit report or review must be provided as part of the report. For all entities, if the accounts are subject to audit dispute or qualification, a description of the dispute or qualification. This report is based on accounts to which one of the following applies: The accounts have been audited. The accounts have been subject to review. The accounts are in the process of being audited or subject to review. The accounts have notyetbeen audited or reviewed. Sign here: Director Date: 28 February 2011 Print name: Lindsay Lyon + See chapter 19 for defined terms. 17/12/10 Appendix 4D Page 3

5 HALF YEAR 2011 FINANCIAL REPORT 31 December 2010

6 REVIEW OF OPERATIONS The company remains well placed for growth with solid first half performance which included orders of $608,000 for the period ended 31 December 2010 (exceeding FY2010 full year orders of $603,000), the second phase of contract with US Navy successfully completed, strengthened presence in the oil & gas sector with a new project for BHP Billiton, and we have continued our focus on managing the overhead cost base whilst in initial ramp-up phase. The Company is also assessing a number of growth opportunities, both organic and potential acquisitions that is illustrated by the company s announcement of its agreement to acquire leading European man overboard ( MOB ) technology company, Marine Rescue Technologies Ltd for 1.9 million as announced on 28 February The half year orders of $608,000 represent a 395% increase over the prior corresponding period in FY2010. While revenue growth is still in the very early stages, we have secured an increasing number of new orders during the period ended 31 December 2010 that will continue to fast-track growth in FY2011. Revenues for the period ended 31 December 2010 increased by 441% over the prior corresponding period in FY2010. Operationally, MBO performed strongly during the first half and is well placed to continue to grow the overall revenue base and strengthen its sales pipeline across a number of target sectors. As reported on 5 January 2011, the United States Naval Sea Systems Command (NAVSEA) confirmed its support for MBO s V200 Submariner VHF Locator Beacon development project by exercising its option to purchase an additional US$300,000 worth of test units and engineering services. Sea trials are planned to take place in June 2011 when NAVSEA will undertake a large scale sea and air demonstration involving multiple vessels and aircraft from the US Navy fleet and US Coast Guard. The Company also secured a new contract to supply its VHF Locator Beacons to Bristow Helicopters Australia, the sole contractor to BHP Billiton Petroleum for offshore personnel transfers by helicopter in Australia. Mobilarm will initially supply 50 of its innovative V100 VHF Locator Beacons to Bristow Helicopters for integration into the RFD Beaufort Mark 28 life jackets to be worn by all BHP Billiton Petroleum personnel during transfers to offshore platforms. Whilst first half order performance is very encouraging, and is a testament to the strong foundations Mobilarm has established since listing. It is, however, important to recognise that we are still in the very early stages of growth with our sales and marketing efforts now progressing in line with the accelerated growth objectives previously announced to the market. MOBILARM LIMITED FINANCIAL REPORT HY

7 We have had three key developments during the first half which position us well for the year ahead and our outlook is strong. We now have much greater visibility and growth potential in the oil and gas sector through our new contract with Bristow, regulatory approval of man overboard beacons is taking place in a growing number of markets, and we have been successful in moving to a critical phase in our ongoing partnership with the US Navy s NAVSEA division. We have also continued to focus on managingg overhead costs where possible, and this will remain an ongoing focus for MBO s team as we expand our operations, product portfolio and geographical footprint. We are also currently pursuing a number of growth opportunities in the oil and gas, commercial fishing and defence sectors. The sales team continues to build our pipeline of orders and new business opportunities in a number of markets. We have several tenders pending in the oil and gas sector and expect to update the market imminently on key contract wins that further substantiate our primary product offering.in addition to MBO s acquisition announcement today, we are currently assessing further acquisition opportunities that will strengthen our market presence and expand our operations globally. Lindsay Lyon Chief Executive Officer Perth, Western Australiaa 28 February 2011 MOBILARM LIMITED FINANCIAL REPORT HY

8 DIRECTORS REPORT The Directors present their half year report of Mobilarm Limited ( the Company ) for the half year ended 31December Directors The directors of Mobilarm Limited in office at any time during or since the end of the half year are: Mr. Richard Allen* Mr. Brenton Scott** Mr. Lindsay Lyon Mr. Christian Lange Mr. Rick Parish*** - Independent Chairman - Executive Director - Chief Executive Officer - Non Executive Director - Non Executive Director The directors have been in office since the start of the financial year to the date of this report, unless otherwise stated. * Appointed Chairman on 29 October 2010 ** Served as Chairman until 29 October 2010, continues as Executive Director *** Resigned as Director on 30 November 2010 Principal Activities The principal activities of the company during the half year were the development, manufacturing and sale of a Man Overboard Safety Systems. There were no other significant changes in the nature of the activities of the company during the half year. Dividends No dividends were paid or declared for the half year. MOBILARM LIMITED FINANCIAL REPORT HY

9 Operating Results for the Year Operations of the Company The Company received orders of $608,338 in the half year ended 31 December 2010 (2009: $122,946), a 395% increase. That helped the Company increase revenue to $260,142 in the periodas compared to $75,872 in the half year ended 31 December 2009, an increase of 241%.The loss of the company after providing for income tax amounted for the half year ending 31 December 2010to $2,428,891 (2009: Losss of $4,040,257). Thedecrease in the loss was due to the increased sales and the reduction of expenses related to unsuccessful capital raising projects, the impact of the performance classs A shares onthe share based payment expense, the impact of interest expense on conversion of its convertible notes and reduced regulatory certification expenditure. This is the effect of the transition from the business from the recreational Mobilert product line to the Crewsafee and V100 commercial product lines. The Company s operating expensess decreased to $2,737,622 in the half year ended 31 December2010 as compared to $4,149,7499 in the year ended 30 June 2010, a decrease of 52%. This resulted in a net loss for the half year of $2,428,891 as compared to a loss of $4,040,,257 in the half year ended 31 December 2009, a decrease of 66%. The Company had various one time and non-cash transactions in the half year periods ended 31 December 2010 and 2009 that increased the net loss. Financial Position of the Company The Company ended December 2010 with net assets of $947,786, compared to net assets of $685,379at June The improvement in financial condition is mostly due to the conversion of the convertible notes in the period ended 31 December 2009, which removed the offsetting liability. On the asset side, the Company has improved its non restrictedcurrent assets by $73,485 from June 2010 to December 2010, mostly due to an increase in cash from the IPO and inventories. Non-current assets decreased by $17,931 due to a decrease in the level of expenditure on the US Navy development as the Company completed major deliverables in May Business strategy for future financial years The Company will continue to pursue its growth strategy of becoming the world s largest providerr of Man Overboard solutions and emergency beacons. The Company plans to increase market share through organic growth and acquisitions during the next financial year. The Company has recently signed a share purchase agreement to acquire Marine Rescue Technologies Limited in the UK to increase its position as a supplier of MOB beacons worldwide. Additional operational and market penetrationn information has been included in the operations report. Further information on likely developments in the operations of the Company and the expected results of those operations in future financial years has not been included in this report because disclosure of the information would likely result in unreasonable prejudice to the Company. Net Tangible Asset The Company had a net tangible asset of $250,976 (June 2010: deficit of $30,860).The net tangible asset per weighted average share is $0.000 (2010: Asset of $0.00). MOBILARM LIMITED FINANCIAL REPORT HY

10 Changes in the State Of Affairs There were no changes to the state of affairs of the company. Auditor s Independence Declaration under Section 307C of the Corporations Act 2001 The auditor s independence declaration is set out on page 8 and forms part of the directors report for the year ended 31December Significant events subsequent to balance date Since the end of the half year; The Company signed a share purchase agreement for the acquisition of Marine Rescue Technologies Limited ( MRT ) on 25 February The Company will acquire MRT for cash consideration of approximately $2,200,000 and deferred share based compensatio on. The maximum number of shares will equate to 1.5 times the average EBITDA of MRT for the (inclusive) financial years, divided by the average weighted share price of Mobilarm 5 trading days prior to completion of the transaction. MRT s financial year finishess on 30 April. The amount of deferredd equity consideration is approximately $900,000. Having established the maximum number of shares that can be issued, the actual number issued will depend upon the 2012 and 2013 gross revenue of MRT. 75% of the maximum number of shares will be issued if 2012 gross revenue exceeds GBP 1.6 million, and 25% of the maximum number of shares will be issued if 2013 gross revenue exceeds GBP 2.0 million. If gross revenue is less that thesee minimum limits, the number of shares issued will be adjusted downward accordingly. The acquisition is subject to funds raised upon the completion of: A private placement for up to $1,000,000 to sophisticated investors opened on 28 February 2011 and estimated to be completed on 3 March 2011 A 1 for 2. 5 entitlements offer for up to approximately $3,500,000 at $0..05 per share. The entitlements offer is expected to be completed by 7 April The Company intends the offer to be underwritten and willl advise the outcome as soon as possible. Signed in accordance with a resolution of the Directors. Richard Allen Independent Chairman Perth, Western Australiaa 28 February 2011 MOBILARM LIMITED FINANCIAL REPORT HY

11 Auditor s Independence Declaration to the Directors of Mobilarm Limited In relation to our audit of the financial report of Mobilarm Limited for the half-year ended 31 December 2010, to the best of my knowledge and belief, there have been no contraventions of the auditor independence requirements of the Corporations Act 2001 or any applicable code of professional conduct. Ernst & Young P McIver Partner Perth 28 February 2011 PM:MJ:MOBILARM:003 Liability limited by a scheme approved under Professional Standards Legislation

12 DIRECTORS DECLARATION In the opinion of the directors of Mobilarm Limited ( the Company ): In the opinion of the Directors: (a) The financial statements and notes of the consolidated entity are in accordance with the Corporations Act 2001, ncluding: (i) giving a true and fair view of financial position of the consolidated entity as at 31 December 2010 and the performance for the half year ended on that date; and (ii) complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001; and (b) Subject to the matter disclosed in Note 2 to the financial statements, there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable. Signed in accordance with a resolution of the Directors Richard Allen Independent Chairman Perth, Western Australiaa 28 February 2011 MOBILARM LIMITED FINANCIAL REPORT HY

13 STATEMENT OF COMPREHENSIVE INCOME FOR THE HALF YEAR ENDED 31DECEMBER December December 2009 $ $ Revenue Sale of goods 260,141 75,872 Interest 10, Rental income 37,990 33, , ,490 Other income - - Changes in inventories of finished goods and work in progress 60,817 41,014 Employee benefits 1,194,802 1,060,422 Share based compensation expense 367,778 1,185,952 Share option expense 26,020 - Depreciation and amortisation 221, ,657 Advertising 2,454 58,150 Audit and tax 16,380 45,000 Accountancy 16,094 26,145 Freight and cartage 9,223 8,370 External consultants and contractors 289, ,208 Rental 146, ,599 Travel and accommodation 63, ,625 Payroll tax 47,753 29,265 Legal fees 36, ,230 Telephone and internet charges 14,295 16,836 Insurance 11,986 58,818 Printing, postage and stationery 13,234 31,604 Motor vehicles 2, Finance costs 3, ,814 Foreign exchange loss/(gain) (15,991) 3,159 Variation of convertible note terms - 298,179 Other expenses 208, ,139 Loss before income tax (2,428,891) (4,040,257) Income tax expense/(benefit) - - Loss after income tax (2,428,891) (4,040,257) MOBILARM LIMITED FINANCIAL REPORT HY

14 STATEMENT OF COMPREHENSIVE INCOME (CONTINUED) FOR THE HALF YEAR ENDED 31 DECEMBER Dec Dec 2009 $ $ Other comprehensive income - - Total comprehensive loss for the period (2,428,891) (4,040,257) Basic earnings per share (cents per share) (0.02) (0.04) Diluted earnings per share (cents per share) (0.02) (0.04) The statement of comprehensive income should be read in conjunction with the notes to the financial statements. MOBILARM LIMITED FINANCIAL REPORT HY

15 STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2010 Note 31 Dec June 2010 $ $ CURRENT ASSETS Cash and cash equivalents 589,250 1,130,811 Trade and other receivables 87, ,741 Inventories 227,289 34,049 Other current assets 58,684 52,485 TOTAL CURRENT ASSETS 962,972 1,827,086 NON-CURRENT ASSETS Plant and equipment 83,495 81,997 Intangible assets 696, ,239 TOTAL NON-CURRENT ASSETS 780, ,236 TOTAL ASSETS 1,743,277 2,625,322 CURRENT LIABILITIES Trade and other payables 372, ,252 Other payable - 1,024,400 Interest bearing loans and borrowings 3,206 3,501 Provisions 373, ,469 TOTAL CURRENT LIABILITIES 748,548 1,900,622 NON-CURRENT LIABILITIES Provisions 43,124 33,741 Interest Bearing loans and borrowings 3,819 5,580 Deferred tax liability - - TOTAL NON-CURRENT LIABILITIES 46,943 39,321 TOTAL LIABILITIES 795,491 1,939,943 NET ASSETS/(LIABILITIES) 947, ,379 EQUITY (SHAREHOLDERS DEFICIT) Contributed equity 3 21,153,841 18,488,563 Accumulated Losses 4 (20,232,075) (17,803,184) Reserves 5 26,020 - TOTAL EQUITY/(SHAREHOLDER DEFICIT) 947, ,379 The statement of financial position should be read in conjunction with the notes to the financial statements. MOBILARM LIMITED FINANCIAL REPORT HY

16 STATEMENT OF CASH FLOWS FOR THE HALF YEAR ENDED 31 DECEMBER Dec Dec 2009 $ $ CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers 547, ,283 Payments to suppliers and employees (2,385,242) (1,066,394) Interest received 10, Rental income & recoveries 47,889 36,606 Interest costs (3,304) (197,814) R&D tax rebate 324, ,098 NET CASH FLOWS USED IN OPERATING ACTIVITIES (1,457,953) (820,881) CASH FLOWS FROM INVESTING ACTIVITIES Payments for plant and equipment (1,596) (10,683) Payment for research & development (256,727) (372,009) Purchase of intangible assets - (1,818) NET CASH FLOWS USED IN INVESTING ACTIVITIES (258,323) (384,510) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from / (Repayment of) borrowings related parties - 266,667 Lease and hire purchase repayments - (17,550) Proceeds from return of deposit on equipment lease - - Proceeds from issue of convertible notes - 5,486,782 Proceeds from share issue 2,383,400 98,500 Costs of share issue (184,285) (42,675) NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES 2,199,115 5,791,724 NET INCREASE/(DECREASE) IN CASH HELD 482,839 4,586,333 CASH AT THE BEGINNING OF THE FINANCIAL YEAR 106, ,263 CASH AT THE END OF THE FINANCIAL YEAR 589,250 4,690,596 The statement of cash flows should be read in conjunction with the notes to the financial statements. MOBILARM LIMITED FINANCIAL REPORT HY

17 STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2010 Attributable to equity holders of Mobilarm Limited Issued Capital Accumulated Losses Stock Option Reserve Convertible Note Reserve Total Equity $ $ $ $ $ COMPANY At 1 July ,192,597 (11,595,162) - 153,291 (2,249,274) Net loss for the period - (4,040,259) - - (4,040,257) Other comprehensive income Total comprehensive loss for the period - (4,040,259) - - (4,040,257) Transactions with owners in their capacity as owners Issue of equity 136, ,193 Costs of share issues (42,675) (42,675) Issuance of Shares in lieu of director fees payable 80, ,657 Share based payments Ordinary Shares 157, ,000 Share based payments Performance Shares 1,040, ,040,952 Equity portion of convertible notes issued , ,001 Conversion of convertible notes 4,335, (383,292) 3,952,302 As at 31 December ,900,318 (15,635,421) - - (735,101) At 1 July ,488,563 (17,803,184) ,379 Net loss for the period - (2,428,891) - - (2,428,891) Other comprehensive income Total comprehensive loss for the period - (2,428,891) - - (2,428,891) Transactions with owners in their capacity as owners Issue of equity 2,383, ,383,400 Costs of share issues (85,900) (85,900) Share based payments Performance Shares 367, ,778 Share based payments Employee Stock Options ,020-26,020 As at 31 December ,153,841 (20,232,075) 26, ,786 The statement of changes in equity should be read in conjunction with the notes to the financial statements. MOBILARM LIMITED FINANCIAL REPORT HY

18 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE CORPORATE INFORMATION The financial report of Mobilarm Limited (the Company ) for the half year ended 31 December 2010 was authorised for issue in accordance with a resolution of directors on 28 February Mobilarm Limited is a Company limited by shares incorporated and domiciled in Australia.The nature of the operations and principal activities of the Company are described in the Director s Report. 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Basis of Preparation This general purpose condensed financial report for the half year ended 31 December 2010 has been prepared in accordance with AASB 134 Interim Financial Reporting and the Corporations Act The half year report does not include all of the notes normally included within the annual financial report and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the entity as the full financial report. It is recommended that the half year financial report be read in conjunction with the annual financial report for the year ended 30 June 2010, the prospectus dated 15 April 2010 and the supplementary prospectus dated 14 July 2010 in accordance with the continuous disclosure obligations of the ASX listing rules. The half year report financial report has been prepared on a historical cost basis. For the purpose of preparing the half year financial report, the half year has been treated as a discrete reporting period. The accounting policies and methods of computation are the same as those adopted in the most recent annual financial report. Apart from the changes in accounting policies below, the accounting policies and methods of computation are the same as those adopted in the annual financial report for the year ended 30 June The financial report is presented in Australian Dollars and all values are rounded to the nearest dollar. (b) New and amending Accounting Standards and Interpretations Since 1 July 2010, the Group has adopted all the amending Standards and Interpretations, mandatory for annual periods beginning on or after 1 July 2010 including: AASB 101 Presentation of Financial Statements The revised standard stipulates that the terms of a liability that could at any time result in its settlement by the issuance of equity instruments at the option of the counterparty do not affect its classification as current or non-current. AASB 107 Statement of Cash Flows The revised standard states that only expenditures that result in a recognised asset can be classified as a cash flow from investing activities. This has resulted in a reclassification of capitalised research and development from operating to investing activities, for the periods presented. MOBILARM LIMITED FINANCIAL REPORT HY

19 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) AASB 117 Leases The revised standard removes specific guidance on classifying land as a lease so that only the general guidance remains. AASB 132 Financial Instruments: Presentation The revised standard amends the definition of a financial liability to classify certain rights (and certain options or warrants) as equity instruments if they satisfy certain conditions. AASB 136 Impairment The revised standard clarifies that the largest unit permitted for allocating goodwill acquired in a business combination is the operating segment defined in AASB 8 before aggregation for reporting purposes. Interpretation 19 Extinguishing Financial Liabilities with Equity Instruments The interpretation clarifies that equity instruments issued to a creditor to extinguish a financial liability are consideration paid. As a result, the financial liability is derecognised and the equity instruments issued are treated as consideration paid to extinguish that liability. AASB Amendments to Australian Accounting Standards Arising from the Annual improvements Project This amendment affected the following standards: AASB 3 Business Combinations; AASB 7 Financial Instruments: Disclosures; AASB 121 The Effects of Changes in Foreign Exchange Rates; AASB 128 Investments in Associates; AASB 131 Investments in Joint Ventures; AASB 132 Financial Instruments: Presentation; and AASB 139 Financial Instruments: Recognition and Measurement. Adoption of these Standards and Interpretations did not have any material effect on the financial position or performance of the Company. The Company has not early adopted any standards or interpretations. (c) Going Concern This report has been prepared on a going concern basis, which contemplates the continuity of normal business activity and the realisation of assets and settlement of liabilities in the normal course of business. The Company has incurred a net loss after tax for the half year ended 31 December 2010 of $2,428,891 (December 2009: $4,040,257) and experienced net cash outflows from operating activities of $1,712,180 (December 2009: $1,912,890). As 31 December 2010, the Company had net assets of $947,786 (June 2010: net liability $735,101). Subsequent to half year end the Company has undertaken the following: The Company signed a share purchase agreement for the acquisition of Marine Rescue Technologies Limited ( MRT ) on 25 February The Company will acquire MRT for cash consideration of approximately $2,200,000 and deferred share based compensation. The maximum number of shares will equate to 1.5 times the average EBITDA of MRT for the (inclusive) financial years, MOBILARM LIMITED FINANCIAL REPORT HY

20 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) divided by the average weighted share price of Mobilarm 5 trading days prior to completion of the transaction. MRT s financial year finishes on 30 April. The amount of deferred equity consideration is approximately $900,000. Having established the maximum number of shares that can be issued, the actual number issued will depend upon the 2012 and 2013 gross revenue of MRT. 75% of the maximum number of shares will be issued if 2012 gross revenue exceeds GBP 1.6 million, and 25% of the maximum number of shares will be issued if 2013 gross revenue exceeds GBP 2.0 million. If gross revenue is less that these minimum limits, the number of shares issued will be adjusted downward accordingly. The acquisition is subject to funds raised upon the completion of: A private placement for up to $1,000,000 to sophisticated investors opened on 28 February 2011 and estimated to be completed on 3 March 2011 A 1 for 2.5 entitlements offer for up to approximately $3,500,000 at $0.05 per share. The entitlements offer is expected to be completed by 7 April The Company intends the offer to be underwritten and will advise the outcome as soon as possible. Notwithstanding the above, the ability of the Company to continue as a going concern is reliant on: increased cash flows from operations, and/ or the raising of funds through a debt or equity issue. The directors have reviewed the business outlook and plans of the company and believe that both of the above can be achieved. Should the entity not achieve the matters set out above, there is significant uncertainty whether the entity will continue as a going concern and therefore whether it will realise its assets and extinguish its liabilities in the normal course of business and at amounts stated in the financial report. The financial report does not include any adjustments that may be necessary if the Company is unable to continue as a going concern. MOBILARM LIMITED FINANCIAL REPORT HY

21 3 CONTRIBUTED EQUITY 31 Dec Dec 2009 $ $ Issued and paid up capital: 152,692,410 ( ,120,823) ordinary Ordinary shares fully paid. 20,647,174 13,859,366 6,333,334 ( ,000,000) Performance shares 506,667 1,040,952 21,153,841 14,900, Dec Dec Dec Dec 2009 No. of shares No. of shares $ $ Reconciliation of Contributed Equity Equity at beginning of the period 134,108, ,425,398 17,283,008 9,192,597 Consolidation of Capital - (176,283,599) Issue of ordinary shares 11,917, ,647 2,383, ,193 Cost of share issue - - (85,900) (42,675) Issuance of Shares in lieu of director fees payable - 537,712-80,657 Conversion of Performance Shares Class A 6,666,666-1,066,666 - Share based payments - Ordinary Shares - 871, ,000 Conversion of Convertible Notes - 26,915,999-4,335,594 Equity at end of the period 152,692, ,120,823 20,647,174 13,859,366 Holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at shareholder meetings. MOBILARM LIMITED FINANCIAL REPORT HY

22 3 CONTRIBUTED EQUITY (continued) 31 Dec Dec 2009 Number $ Number $ Performance Shares Movement in performance shares class A on issue Balance at beginning of period 6,666,666 $888, Share issue - - 6,666,666 - Share based payment expense for the period - $177, ,286 Conversion into ordinary shares (6,666,666) (1,066,666) Balance at end of the period - - 6,666,666 $914,286 Movement in performance shares class B on issue Balance at beginning of period 3,166,666 $211, Share issue - - 3,166,666 - Share based payment expense for the period - $126,667 - $84,444 Balance at end of the period 3,166,666 $337,778 3,166,666 $84,444 Movement in performance shares class C on issue Balance at beginning of period 3,166,668 $105, Share issue - - 3,166,668 - Share based payment expense for the period - $63,334 - $42,222 Balance at end of the period 3,166,668 $168,889 3,166,668 $42,222 Total performance shares 6,333, ,667 13,000,000 1,040,952 Performance class Ashares convert to ordinary shares on a 1 for 1 basis upon obtaining ASX conditional listing. The Company obtained conditional listing on 25 August The Company amortised the shares from their issuance date through the milestone date. Performance class B shares convert to ordinary shares on a 1 for 1 basis upon the Company reaching a market capitalisation of $65 million dollars based on the five day weighted average share price on the ASX. The Company has amortised the Performance shares class B based upon the Company s financial plans to reach that milestone. Performance class C shares convert to ordinary shares on a 1 for 1 basis upon the Company reaching a market capitalisation of $100 million dollars based on the five day weighted average share price on the ASX. The Company has amortised the Performance shares class C based upon the Company s financial plans to reach that milestone. MOBILARM LIMITED FINANCIAL REPORT HY

23 4 ACCUMULATED LOSSES 31 Dec Jun 2010 $ $ Accumulated losses at the beginning of the financial period (17,803,184) (11,595,162) Net loss for the year (2,428,891) (6,208,022) Accumulated losses at the end of the financial period (20,232,075) (17,803,184) 5 RESERVES 31 Dec Dec 2009 $ $ Convertible notes Reserve Balance at the beginning of the financial period - 153,291 Equity portion of convertible notes issued - 230,001 Conversion of notes into ordinary shares - (383,292) Balance at the end of the financial period - - Share Option Reserve - Balance at the beginning of the financial period - - Share option expense amortised 26,020 - Balance at the end of the financial period 26,020 6 COMMITMENTS AND CONTINGENCIES Operating lease commitments The Company has entered into commercial leases as follows. There are no restrictions placed upon the lessee by entering into these leases. Future minimum rentals payable under non-cancellable operating leases as at 31December are as follows: 31 Dec June 2010 $ $ Within one year 100, ,433 After one year but not more than five years - - More than five years , ,433 7 SEGMENT INFORMATION The company operates solely in the development, manufacturing and sale of Man Overboard safety systems. The Company operates in one geographical location being Australia. The Company manages its operations internally as one segment under the management of the CEO. The accounting policies applied for internal reports are consistent with the policies used to prepare the financial statements. MOBILARM LIMITED FINANCIAL REPORT HY

24 8 CONTINGENT LIABILITIES As at reporting date there were no contingent liabilities. 9 SUBSEQUENT EVENTS Since the end of the half year the Company: The Company signed a share purchase agreement for the acquisition of Marine Rescue Technologies Limited ( MRT ) on 25 February The Company will acquire MRT for cash consideration of approximately $2,200,000 and deferred share based compensation. The maximum number of shares will equate to 1.5 times the average EBITDA of MRT for the (inclusive) financial years, divided by the average weighted share price of Mobilarm 5 trading days prior to completion of the transaction. MRT s financial year finishes on 30 April. The amount of deferred equity consideration is approximately $900,000. Having established the maximum number of shares that can be issued, the actual number issued will depend upon the 2012 and 2013 gross revenue of MRT. 75% of the maximum number of shares will be issued if 2012 gross revenue exceeds GBP 1.6 million, and 25% of the maximum number of shares will be issued if 2013 gross revenue exceeds GBP 2.0 million. If gross revenue is less that these minimum limits, the number of shares issued will be adjusted downward accordingly. The acquisition is subject to funds raised upon the completion of: A private placement for up to $1,000,000 to sophisticated investors opened on 28 February 2011 and estimated to be completed on 3 March 2011 A 1 for 2.5 entitlements offer for up to approximately $3,500,000 at $0.05 per share. The entitlements offer is expected to be completed by 7 April The Company intends the offer to be underwritten and will advise the outcome as soon as possible. MOBILARM LIMITED FINANCIAL REPORT HY

25 Independent Auditor s Report to the members of Mobilarm Limited Report on the 31 December 2010 Half Year Financial Report We have reviewed the accompanying 31 December 2010 Half Year financial report of Mobilarm Limited which comprises the statement of financial position as at 31 December 2010, statement of comprehensive income, statement of changes in equity and statement of cash flows for the Half Year ended on that date, notes comprising a summary of significant accounting policies and other explanatory information, and the directors declaration. Directors Responsibility for the 31 December 2010 Financial Report The directors of the company are responsible for the preparation of the Half Year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal controls as the directors determine are necessary to enable the preparation of the Half Year financial report that is free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express a conclusion on the Half Year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of Interim and Other Financial Reports Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the consolidated entity s financial position as at 31 December 2010 and its performance for the Half Year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations As the auditor of Mobilarm Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report. A review of a Half Year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Independence In conducting our review, we have complied with the independence requirements of the Corporations Act We have given to the directors of the company a written Auditor s Independence Declaration, a copy of which is included in the Directors Report. PM:MJ:MOBILARM:002 Liability limited by a scheme approved under Professional Standards Legislation

26 Conclusion Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the Half Year financial report of Mobilarm Limited is not in accordance with the Corporations Act 2001, including: a) giving a true and fair view of the company s financial position as at 31 December 2010 and of its performance for the Half Year ended on that date; and b) complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations Inherent Uncertainty Regarding Continuation as a Going Concern Without qualification to the conclusion expressed above, attention is drawn to the following matter. As a result of matters described in Note 2 Going Concern to the financial report, there is significant uncertainty whether the company will be able be able to pay its debts as and when they fall due and payable and realise its assets and extinguish its liabilities in the normal course of operations and at the amounts stated in the financial report. The financial report does not include any adjustments relating to the recoverability and classification of recorded asset amounts or to the amounts and classification of liabilities that might be necessary should the company not continue as a going concern. Ernst & Young P McIver Partner Perth 28 February 2011 PM:MJ:MOBILARM:002

27 CORPORATE DIRECTORY DIRECTORS Mr. Richard Allen Mr. Brenton Scott Mr. Lindsay Lyon Mr. Christian Lange Independent Chairman Executive Director Chief Executive Officer Non Executive Director COMPANY SECRETARY Mr. David McArthur Company Secretary REGISTERED OFFICE PRINCIPLE PLACE OF BUSINESS 768 Canning Highway 768 Canning Highway Applecross WA 6153 Applecross WA 6153 CONTACT DETAILS SHARE REGISTRY Web: Security Transfer Registrars Pty Ltd Tel: (08) Canning Highway Fax: (08) Applecross WA 6153 LAWYERS TO THE COMPANY AUDITORS Cowell Clarke Ernst and Young Level 5, 63 Pirie Street, 11 Mounts Bay Road Adelaide SA 5000 Australia Perth WA 6000 BANKERS National Australia Bank Mobilarm Limited ordinary shares are listed on the Australian Stock Exchange (ASX) under the ticker MBO. MOBILARM LIMITED FINANCIAL REPORT HY