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Bulletproof Group LimitedInterim Financial Statements

For the half-year ended 31 December 2015

2016

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Bulletproof Group Limited ABN. 84 148 162 092 | p. 1300 663 903 | f. + 61 2 9662 4744 PO Box 113, Kensington NSW 1465 [email protected] | www.bulletproof.net.au

Corporate Directory

Directors

David Paterson Non-Executive Director and Chairman

Anthony Woodward Executive Director and Chief Executive Officer

Lorenzo Modesto Executive Director and Chief Operating Officer

Company Secretary and Chief Financial Officer

Kylie Turner

Registered Office Share Registry

Street: Level 2, 5 Rosebery Avenue Link Market Services Rosebery NSW 2018 Level 12, 680 George Street, Sydney NSW 2000

Postal: PO Box 113 Locked Bag A14 Kensington NSW 1465 Sydney NSW 1235

Telephone: 1300 663 903 (within Australia) Telephone: 1300 554 474 (within Australia)

Facsimile: +61 2 9662 4744 Facsimile: +61 2 9287 0303

Email: [email protected] Email: [email protected]

Website: www.bulletproof.net.au Website: www.linkmarketservices.com.au

Auditors

Grant Thornton Audit Pty Ltd Telephone: +61 2 8297 2658

Level 17, 383 Kent Street Facsimile: +61 2 9299 4445

Sydney NSW 2000 Website: www.grantthornton.com.au

About Bulletproof

Bulletproof Group Limited is an Australian-owned, publicly listed company with offices in Sydney and Melbourne,

Australia, Auckland and Wellington, New Zealand and employees in the USA. Bulletproof Group shares are listed on the

Australian Securities Exchange (ASX) and are traded under the code BPF.

Founded in 2000, Bulletproof is Australia’s leading end-to-end mission critical Cloud Services provider, providing Cloud

Services to business, enterprise and government customers. Bulletproof has consistently been first to market with public

and private cloud based services and innovations. With over 15 years of experience in managed hosting and Cloud Services,

Bulletproof continues to drive industry innovation since being the first provider in Australia to launch a VMware public cloud

service in 2006, the first in 2012 to provide Managed AWS services and in 2013, Bulletproof was given the status of the first

and leading AWS Premier Consulting Partner in Australia and New Zealand.

Bulletproof’s world-class service allows customers to focus on their core business to ensure they have the freedom to be

remarkable.

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Contents

Directors’ Report .......................................................................................................................................................................... 3

Director Details ........................................................................................................................................................................ 3

Operating Results .................................................................................................................................................................... 3

Review of operations............................................................................................................................................................... 4

Auditor’s independence declaration ....................................................................................................................................... 5

Auditor’s Independence Declaration............................................................................................................................................ 6

Financial Statements .................................................................................................................................................................... 8

Consolidated statement of profit or loss and other comprehensive income ....................................................................... 10

Consolidated statement of financial position ....................................................................................................................... 11

Consolidated statement of changes in equity ....................................................................................................................... 13

Consolidated statement of cash flows .................................................................................................................................. 15

Notes to the Interim Financial Statements ................................................................................................................................ 16

1. Nature of operations ..................................................................................................................................................... 17

2. General information and basis of preparation .............................................................................................................. 17

3. Significant accounting policies ...................................................................................................................................... 17

4. Estimates ....................................................................................................................................................................... 17

5. Business combination ................................................................................................................................................... 18

6. Segment reporting ........................................................................................................................................................ 19

7. Fair value measurement ............................................................................................................................................... 20

8. Issued Capital ................................................................................................................................................................ 21

9. Post-Reporting Date Events .......................................................................................................................................... 21

Directors’ Declaration ................................................................................................................................................................. 24

Independent Auditor’s Review Report ....................................................................................................................................... 25

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Directors’ Report

The Directors of Bulletproof Group Limited (“Bulletproof”) present their Report together with the financial statements of

the Consolidated Entity for the half-year ended 31 December 2015.

Director Details

The following persons were Directors of Bulletproof Group during or since the end of the financial half-year up to the date

of this report:

Mr Stephe Wilks (resigned 24 September 2015)

Mr David Paterson (appointed Chair 24 September 2015)

Mr Anthony Woodward

Mr Lorenzo Modesto

Operating Results

The period shows that the execution on the strategy positioning Bulletproof as the region’s leading Cloud Services company

is delivering strong revenue and profitability growth across the business, along with a widening of appeal of the Company’s

offering to the rapidly growing cloud market.

The profit for the period of the consolidated group was $1,071,905 (H1 FY15: $808,496) after providing for income tax. The

underlying net profit after tax for the period was $60,150 (H1 FY15: loss of $566,504). The underlying EBITDA for the period

was $2,105,236 (H1 FY15: $1,155,031), representing a 82.27% increase on the corresponding period. Refer to reconciliation

between non IFRS and IFRS financial information below.

This very pleasing result reinforces the Company’s commanding position in the Cloud Services space, and is well above

market growth trends of 25-30% annually.

Reconciliation between non IFRS and IFRS financial information 31 December

31 December

2015 2014 $

$

Profit for the period 1,071,905

808,496

(Gain) / Loss on revaluation of financial liabilities 1,464,273

(1,375,000)

Write back of financial liabilities (997,777)

-

Acquisition costs 410,246

-

Gain from a bargain purchase in business combination (1,888,497)

-

Underlying Profit / (Loss) for the period 60,150 (566,504)

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Reconciliation between non IFRS and IFRS financial information continued 31 December

31 December

2015 2014 $

$

Net Interest 51,023 60,809

Depreciation and amortisation expense 1,975,940 1,487,838

Current Tax Expense (291) 59,160

Deferred Tax Expense / (Benefit) 18,414 113,728

Underlying EBITDA for the period 2,105,236 1,155,031

All non-IFRS financial information has been reviewed in accordance with Australian Auditing Standards.

Review of operations

The period saw continued strong growth of over 71.6% to the corresponding period (H1 FY15) for Managed Cloud Services,

including Public Cloud revenue sourced from Amazon Web Services (AWS) and Managed Services associated with that

platform, and Managed Private Cloud revenue contributed to by the successful acquisition of Infoplex Pty Ltd in October

2015.

The acquisition of Infoplex brought a dozen employees who are now integrated into the wider business, while customers

continue to renew and grow their private cloud footprint and consider their public cloud and associated professional

services needs from the wider Bulletproof offering. The Company is merging the product lines from the pre-existing

Managed Private Cloud offerings with those on the ISO27001-certified Infoplex platform to bring a consolidated, appealing

offering to the market. This is expected to drive growth in revenues from customers who wish to deploy Hybrid Cloud (a

combination of private cloud in 3rd party secure data centres, and public cloud services, all managed under one cohesive

relationship with Bulletproof) as a strategy for their ongoing migration to the cloud.

Professional Services revenue of $3.2m for the period, which represents growth of over 300% to the previous corresponding

period (H1 FY15), shows the ongoing high demand for Bulletproof to provide implementation services to customers

migrating workloads to the cloud, and then seeking to optimise their applications’ use of it as they transform their business.

The size of the professional services team since its inception at the beginning of FY15 and broadened following the Pantha

Corp acquisition in December 2014 has roughly doubled to cope with this ongoing demand in the market.

Monthly Recurring Revenues represented 80% of total revenues for the period, as the company continues to forge long

term, ongoing relationships with clients who seek to continue their journey with Bulletproof.

The partnership with Amazon Web Services (AWS) is considered to be market-leading. The Company was awarded Premier

Consulting Partner status for the third year, listing Bulletproof among a handful of global Premier Partners worldwide, and

the completion of the Managed Service Provider certification proves Bulletproof’s adherence to stringent skill levels,

training, standards and processes demanded by AWS. Bulletproof’s excellence in Managed Cloud was also recognised by

winning Frost & Sullivan’s Managed Cloud Services Provider of 2015, Australia award.

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The Company continues its efforts developing Managed Application Products that will allow it to provide the application

infrastructure management and automation that is critical to customers’ Cloud usage, and de-couple Managed Services

revenues from underlying infrastructure costs over time.

The activities throughout the period have positioned the Company to take full advantage of the rapidly growing Cloud

Services market, with the first-mover advantage and continued product and service development to keep pace with rapid

change in the market placing it in a commanding lead.

Along with the excellent financial and operational achievements through the period, customer numbers continue to grow,

with enterprise customer wins including Nestle Australia, Minter Ellison and Barbeques Galore. Customer spend is also

rising on a per-customer basis over time, showing the trend towards servicing the ongoing and growing needs of enterprise

customers as they migrate more workloads to the cloud.

Auditor’s independence declaration

A copy of the as required under section 307C of the Corporations Act 2001 is set out on page 6 and forms part of this

Directors’ Report.

Signed in accordance with a resolution of the Board of Directors.

Anthony Woodward

Director

18 February 2016

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Level 17, 383 Kent Street

Sydney NSW 2000

Correspondence to:

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

Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389

‘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 Bulletproof Group Limited

In accordance with the requirements of section 307C of the Corporations Act 2001, as lead

auditor for the review of Bulletproof Group Limited for the half-year ended 31 December

2015, 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 review; and

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

review.

GRANT THORNTON AUDIT PTY LTD Chartered Accountants

C F Farley

Partner - Audit & Assurance

Sydney, 18 February 2016

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Financial StatementsBulletproof Group Limitedfor the half-year ended 31 December 2015

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Consolidated statement of profit or loss and other comprehensive income For the half-year ended 31 December 2015

Notes

31 December

31 December

2015 2014

$ $

Sales revenue 21,614,430

11,353,035

Other income 39,403

558,792

Consumables used (9,175,670)

(4,527,419)

Employee benefits expense (7,265,050)

(4,496,489)

Depreciation and amortisation expense (1,975,940)

(1,487,838)

Finance costs (59,748)

(96,981)

Share based payments expense (26,500)

-

Gain from a bargain purchase in business combination 5 1,888,497

-

Gain / (loss) on revaluation of financial liabilities (466,496)

1,229,394

Consulting fees (986,672)

(348,941)

Other expense (2,496,226)

(1,202,169)

Profit before tax 1,090,028

981,384

Income tax expense (18,123)

(172,888)

Profit for the period 1,071,905

808,496

Other comprehensive income:

Items that may be reclassified subsequently to profit or loss:

Exchange differences on translating foreign operations (3,864)

14,069

Other comprehensive income for the period, (3,864)

14,069

net of income tax

Total comprehensive income for the period 1,068,041

822,565

Earnings per share from continuing operations Cents

Cents

- Basic earnings per share 0.79

0.83

- Diluted earnings per share 0.78

0.80

The accompanying notes form part of these financial statements.

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Consolidated statement of financial position As at 31 December 2015

Notes 31 December

30 June

2015 2015

Assets $ $

Current

Cash and cash equivalents 4,284,797

3,363,339

Trade and other receivables 7,890,995

4,987,950

Current tax asset 3,163

149,138

Financial asset -

25,830

Other current assets 2,384,414

821,145

Total current assets 14,563,369

9,347,402

Non-current

Property, plant and equipment 10,154,839

4,826,517

Intangible assets 4,709,467

4,019,061

Goodwill 3,466,330

3,466,330

Deferred tax asset 1,390,465

1,380,683

Other non-current assets 37,125

37,125

Total non-current assets 19,758,226

13,729,716

Total assets 34,321,595

23,077,118

Liabilities

Current

Trade and other payables 7,556,838

5,238,943

Income received in advance 960,384

994,210

Provisions (current) 754,880

470,072

Borrowings (current) 962,379

1,245,778

Deferred consideration (Earn out payable) 7 2,082,695

2,763,384

Financial liabilities (Class B Performance Shares) -

3,333,334

Total current liabilities 12,317,176

14,045,721

Non-current

Provisions (non-current) 251,209

166,073

Borrowings (non-current) 869,546

1,012,244

Deferred tax liability 1,506,261

1,005,411

Total non-current liabilities 2,627,016

2,183,728

Total liabilities 14,944,192

16,229,449

Net assets 19,377,403

6,847,669

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Consolidated statement of financial position (continued)

Notes 31 December

30 June

2015 2015

$ $

Issued capital 8 24,289,118

12,853,925

Share option reserve 820,868

794,368

Other components of equity (8,383,289)

(8,383,289)

Foreign currency translation reserve (94,886)

(91,022)

Other reserves 279,406

279,406

Retained earnings 2,466,186

1,394,281

Total equity 19,377,403

6,847,669


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Consolidated statement of changes in equity For the half-year ended 31 December 2015

Issued capital

Share option

reserve

Other components

of equity

Foreign currency

translation reserve

Other

reserves

Retained earnings

Total

$ $ $ $ $ $ $

Balance at 1 July 2015 12,853,925

794,368 (8,383,289) (91,022) 279,406 1,394,281 6,847,669

Issue of share capital 11,643,619

-

-

-

-

-

11,643,619

Employee share-based payments

26,500

-

-

-

-

26,500

Capital raising costs (208,426)

-

-

-

-

-

(208,426)

Transactions with owners 11,435,193

26,500

-

-

-

-

11,461,693

Profit for the period -

-

-

-

-

1,071,905

1,071,905

Other comprehensive income -

-

-

(3,864)

-

-

(3,864)

Total comprehensive income for the period -

-

-

(3,864)

-

1,071,905

1,068,041

Balance at 31 December 2015 24,289,118

820,868

(8,383,289)

(94,886)

279,406

2,466,186

19,377,403

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Consolidated statement of changes in equity (continued) For the half-year ended 31 December 2014

Issued capital

Share option

reserve

Other components

of equity

Foreign currency

translation reserve

Other

reserves

Retained earnings

Total

$ $ $ $ $ $ $

Balance at 1 July 2014 7,227,313

778,924

(8,383,289)

(35,710)

279,406

(3,040,925)

(3,174,281)

Issue of share capital 5,791,110

-

-

-

-

-

5,791,110

Capital raising costs (298,018)

-

-

-

-

-

(298,018)

Transactions with owners 5,493,092

-

-

-

-

-

5,493,092

Profit for the period -

-

-

-

-

808,496

808,496

Other comprehensive income -

-

-

14,069

-

-

14,069

Total comprehensive income for the period -

-

-

14,069

-

808,496

822,565

Balance at 31 December 2014 12,720,405

778,924

(8,383,289)

(21,641)

279,406

(2,232,429)

3,141,376


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Consolidated statement of cash flows For the half-year ended 31 December 2015

Notes 31 December

31 December

2015 2014

Cash flows from operating activities $ $

Receipts from customers 21,294,402

11,058,223

Payments to suppliers and employees (20,454,380)

(10,884,523)

Income taxes received 150,730

-

Net cash provided by operating activities 990,752

173,700

Cash flows from investing activities

Purchase of intangibles (1,891,311)

(1,055,015)

Purchase of property, plant and equipment (971,767)

(365,119)

Acquisition of business, net of cash (3,403,558)

(700,084)

Interest received 10,068

35,790

Net cash used in investing activities (6,256,568)

(2,084,428)

Cash flows from financing activities

Proceeds from the issue of capital 7,299,940

5,719,610

Transaction costs (297,751)

(283,728)

Repayment of finance lease (755,208)

(1,357,503)

Interest paid (59,707)

(90,903)

Net cash provided by financing activities 6,187,274

3,987,476

Net change in cash and cash equivalents held 921,458

2,076,748

Cash and cash equivalents at beginning of the period 3,363,339

2,242,904

Cash and cash equivalents at end of the period 4,284,797

4,319,652


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Notes to the Interim Financial Statements

Bulletproof Group LimitedFor the half-year ended 31 December 2015

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1. Nature of operations

Bulletproof Group Limited and subsidiaries’ (the Group) principal activities include Information Technology and Cloud

Computing both locally and overseas.

Founded in 2000, Bulletproof is the leading Australian-owned mission critical cloud provider, providing Managed Cloud

services to business, enterprise and government customers. Bulletproof has consistently been first to market with public

and private cloud based services and innovations. Bulletproof was the first company in Australia to launch a public cloud

service in 2006 and the first to launch a managed Amazon Web Services (AWS) offering in 2012.

2. General information and basis of preparation

The condensed interim consolidated financial statements of the Group are for the six months ended 31 December 2015 and

are presented in Australian dollars ($), which is the functional currency of the parent company. These general purpose

interim financial statements have been prepared in accordance with the requirements of the Corporations Act 2001 and

AASB 134 Interim Financial Reporting. They do not include all of the information required in annual financial statements in

accordance with Australian Accounting Standards, and should be read in conjunction with the consolidated financial

statements of the Group for the year ended 30 June 2015 and any public announcements made by the Group during the

half-year in accordance with continuous disclosure requirements arising under the Australian Securities Exchange Listing

Rules and the Corporations Act 2001.

The interim financial statements have been approved and authorised for issue by the Board of Directors on 18 February

2016.

3. Significant accounting policies

The interim financial statements have been prepared in accordance with the same accounting policies adopted in the

Group’s last annual financial statements for the year ended 30 June 2015.

The accounting policies have been applied consistently throughout the Group for the purposes of preparation of these

interim financial statements.

4. Estimates

When preparing the interim financial statements, management undertakes a number of judgements, estimates and

assumptions about recognition and measurement of assets, liabilities, income and expenses. The actual results may differ

from the judgements, estimates and assumptions made by management, and will seldom equal the estimated results.

The judgements, estimates and assumptions applied in the interim financial statements, including the key sources of

estimation uncertainty were the same as those applied in the Group’s last annual financial statements for the year ended

30 June 2015. The only exception is the estimate of the provision for income taxes which is determined in the interim

financial statements using the estimated average annual effective income tax rate applied to the pre-tax income of the

interim period.

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5. Business combination

On 8 October 2015, Bulletproof acquired 100% of the issued share capital of Infoplex Pty Ltd, a leading Managed Private

Cloud company that utilises third party data centres in Sydney and Melbourne. Infoplex, which was part of the Nextgen

Group, manages and hosts blue chip customers’ private cloud requirements for core enterprise applications. The acquisition

provides Bulletproof with additional, market leading, private cloud capacity and capability that not only expands the current

offering, but also presents a clear opportunity to the Company to acquire more enterprise customers.

Details of the business combination are as follows;

Purchase Consideration Infoplex Pty Ltd $

Cash 3,300,000

Deferred Payment (paid 29 January 2016) 250,000

Total Consideration 3,550,000

Fair value of assets acquired

Property, plant and equipment 5,476,818

Intangible assets 590,315

Total non-current assets 6,067,133

Trade and other receivables 433,120

Cash and cash equivalents 33,280

Deferred tax asset 70,900

Total current assets 537,300

Provisions (19,115)

Deferred tax liabilities (640,643)

Total non-current liabilities (659,758)

Provisions (217,218)

Trade and other payables (288,960)

Total current liabilities (506,178)

Identifiable net assets 5,438,497

Goodwill (Bargain Purchase) on acquisition (1,888,497)

Consideration transferred

Acquisition-related costs amounting to $410,246 are not included as part of consideration transferred and have been

recognised as an expense in the consolidated statement of profit or loss and other comprehensive income, as part of other

expenses. Deferred payment of $250,000 was paid to Nextgen Group on 29 January 2016.

Fair value of the assets and liabilities acquired

The consideration for the acquisition has been apportioned against the fair value of the assets and liabilities acquired. The

fair value of identifiable assets and liabilities at the acquisition date exceeds the sum of the consideration transferred,

therefore the excess amount has been recognised in other income as a bargain purchase gain and is not deductible for tax

purposes.

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Contribution to the Group results

Infoplex has contributed $1,678,658 and $200,805 to the Group’s revenues and net profits respectively from the acquisition

date. Had the acquisition taken place on 1 July 2015, the Group’s revenue for the period to December 2015 is estimated to

have been $23,293,088 and the Group’s net profit is estimated to have been $1,123,335. These amounts have been

calculated using the subsidiary’s results and adjusting them for:

differences in the accounting policies between the group and the subsidiary, and

the additional depreciation and amortisation that would have been charged assuming the fair value adjustments

had applied from 1 July 2015, together with the consequential tax effects.

6. Segment reporting

The Group has identified its operating segments based on internal reports that are reviewed and used by the Board of

Directors (chief operating decision makers) in assessing performance and determining the allocation of resources.

The Group operates in one business segment being cloud services.

All segment assets and liabilities, and the segment result, relate to the one business segment and consequently no detailed

segment analysis has been prepared.

The Group sources some of its revenue from the United States of America, and therefore presents the following split by

geographic region.

Sales to external customers Assets

31 December

2015

31 December 2014

31 December

2015

30 June 2015

$ $ $ $

Australia 21,310,245 11,227,089 32,935,145 21,955,996

United States of America 304,185 125,946 1,386,450 1,121,122

21,614,430 11,353,035 34,321,595 23,077,118

Major customers

During the half-year ended 31 December 2015, the Group supplied one single external customer in the cloud services

segment which accounts for $2,147,888 or 9.94% (2014: $0 or 0%) of external revenue of the Group. In the comparative

half-year ended 31 December 2014, the Group supplied one single external customer in the managed cloud services

segment which accounts for $657,041 or 5.79% (2015: $314,376 or 1.45%) of external revenue of the Group.

The next most significant customer in the managed cloud services segment accounts for $1,786,570 or 8.27% of the

external revenue of the Group (2014: $524,117 or 4.62%). For

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7. Fair value measurement

Financial assets and financial liabilities measured at fair value in the statement of financial position are grouped into three

levels of a fair value hierarchy. The three levels are defined based on the observability of significant inputs to the

measurement, as follows:

level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities

level 2: inputs other than quoted prices included within level 1 that are observable for the asset or liability, either

directly or indirectly

level 3: unobservable inputs for the asset or liability

The following table shows the levels within the hierarchy of financial liabilities measured at fair value at 31 December 2015:

31 December 2015 Level 1 Level 2 Level 3 Total

$ $ $ $

Financial liabilities

Earn out payable - - (2,082,695) (2,082,695)

Earn out Payable (Level 3)

In determining the fair value of the Earn Out in relation to the acquisition of Pantha Corp, management have considered the

likelihood of Pantha Corp meeting the targets and have concluded that a discount of the product earn out target is

warranted given current pipelines. Therefore management have discounted Earn Out for a total $997,777 to $2,082,695. A

10% decrease in the probability of the Earn Out target being met will decrease the Earn Out payable by $208,269.

31 December

2015 $

30 June 2015

$

Balance at start of period 2,763,384 -

Acquired through business combination - 2,617,778

Losses recognised in profit or loss for share revaluation 597,606 145,606

First Earn out milestone cash payment (136,838) -

First Earn out milestone revaluation upon share issue (143,679) -

Gain on revaluation of Earn out (997,777) -

Balance at end of period 2,082,695 2,763,384

Class B Performance Shares Liability of $3,333,334 related to the acquisition of Bulletproof Networks was settled with the

Class B performance Shares converted within period.

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8. Issued Capital

The share capital of Bulletproof Group Limited consists only of fully paid ordinary shares; the shares do not have a par value.

All shares are equally eligible to receive dividends and the repayment of capital and represent one vote at the shareholders’

meeting of Bulletproof Group Limited.

No. Shares Dec 2015

No. Shares

Jun 2015

$ Shares Dec 2015

$ Shares Jun 2015

Shares issued and fully paid:

Beginning of the year 112,195,940

73,324,667

12,853,925

7,227,313

Issue of capital 29,199,758

16,537,008

7,443,619

4,791,110

Conversion of Class B Performance Shares

13,789,461

16,666,667

4,200,000

-

Conversion of options -

5,667,598

-

1,133,520

Share issue costs -

-

(208,426)

(298,018)

155,185,159

112,195,940

24,289,118

12,853,925

9. Post-Reporting Date Events

Acquisition of Cloud House

On 1 February 2016 Bulletproof announced an agreement to acquire 100% of the business assets of Cloud House Limited,

the leading Cloud Services company in New Zealand, with offices in Auckland and Wellington. New Zealand’s largest AWS

Advanced Consulting partner, Cloud House provides consulting, billing and managed services for its customers on their

journey to the cloud.

The acquisition of the business assets of Cloud House was completed on 15 February 2016, with an initial NZ$1m payment

funded from existing cash reserves. A further payment of up to NZ$4.2m is contingent upon performance targets to be

achieved up to 30 June 2017, or earlier if achieved earlier. Payment will be made with a 50:50 mix of cash and shares in the

company, with the price per share for each issue being $0.49, being the 30 day VWAP prior to completion. Using a NZD:AUD

exchange rate as determined by the Reserve Bank of Australia as at 12 February 2016, of 1.065, if all performance targets

are met, this represents an issue of up to 4,062,337 shares in the Company to the vendors. The Company’s issuing capacity

under Listing Rule 7.1 is reduced by this amount to 19,608,814.

Bulletproof anticipates that the deal will be strongly earnings per share (eps) accretive, with the initial payment

representing some 2x EBITDA, and total consideration (if all performance hurdles are achieved) of the order of 3x overall

EBITDA growth brought to the Company.

The deal represents Bulletproof’s third acquisition, having previously acquired Pantha Corp, an AWS Consulting partner in

December 2014, and Infoplex, a leading Private Cloud provider, in October 2015. As well as cementing Bulletproof’s position

in the region as the largest AWS Partner, the deal will bring new cross-Tasman enterprise customers to the Company, while

tapping into a market that is leading the region’s cloud adoption rates.

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Pantha Corp Earn Out Targets

The acquisition of the business assets of Pantha Corp by the Company included contingent consideration, a component of

which was determined on certain targets being met for H1 FY16. As a result of the second of the Earn Out targets being

met, an additional $303,609 is expected to be paid in cash and 920,027 shares issued at the nominated value of $0.33 per

share on or around 26 February 2016.

Share Issue

1,752,095 Options were exercised at a strike price of 20 cents per share between 22 January and 8 February, contributing

$350,419 in additional Issued Capital in the Company.

On 8 February 2016, 481,250 and 322,500 shares (at a value of 40 cents per share) were issued to employees under the

Employee Share Ownership Plan (ESOP) and General Employee Share Plan (GESP) respectively. Both equity plans were

approved at the Annual General Meeting on 6 November 2014.

Acquisition of Infoplex

The deferred payment of $250,000 was paid to Nextgen Group on 29 January 2016.

There have been no other significant events arising after the reporting date.

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Directors’ Declaration

1. In the opinion of the directors of Bulletproof Group Limited:

a. The consolidated interim financial statements and notes of Bulletproof Group Limited are in accordance

with the Corporations Act 2001, including

i. giving a true and fair view of its financial position as at 31 December 2015 and of its performance

for the half-year ended on that date; and

ii. complying with Australian Accounting Standards (including the Australian Accounting

Interpretations) and the Corporations Regulations 2001; and

b. There are reasonable grounds to believe that Bulletproof Group Limited will be able to pay its debts as and

when they become due and payable.

Signed in accordance with a resolution of the directors:

David Paterson Anthony Woodward

Chairman Director

Dated on 18 February 2016

Sydney

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Level 17, 383 Kent Street

Sydney NSW 2000

Correspondence to:

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

Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389

‘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.

Independent Auditor’s Review Report

To the Members of Bulletproof Group Limited

We have reviewed the accompanying half-year financial report of Bulletproof Group

Limited (“Company”), which comprises the consolidated financial statements being the

statement of financial position as at 31 December 2015, and the statement of profit or loss

and other comprehensive income, statement of changes in equity and statement of cash

flows for the half-year ended on that date, notes comprising a statement or description of

accounting policies, other explanatory information and the directors’ declaration of the

consolidated entity, comprising both the Company and the entities it controlled at the half-

year’s end or from time to time during the half-year.

Directors’ responsibility for the half-year financial report

The directors of Bulletproof Group Limited 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 controls as the directors determine is

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 consolidated half-year financial report

based on our review. We conducted our review in accordance with the Auditing Standard

on Review Engagements ASRE 2410 Review of a Financial Report 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 half-year

financial report is not in accordance with the Corporations Act 2001 including: giving a true

and fair view of the Bulletproof Group Limited consolidated entity’s financial position as at

31 December 2015 and its performance for the half-year ended on that date; and complying

with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations

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Regulations 2001. As the auditor of Bulletproof Group 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 complied with the independence requirements of the

Corporations Act 2001.

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 Bulletproof Group Limited is not in

accordance with the Corporations Act 2001, including:

a giving a true and fair view of the consolidated entity’s financial position as at 31

December 2015 and of its performance for the half-year ended on that date; and

b complying with Accounting Standard AASB 134 Interim Financial Reporting and

Corporations Regulations 2001.

GRANT THORNTON AUDIT PTY LTD Chartered Accountants

C F Farley

Partner - Audit & Assurance

Sydney, 18 February 2016

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Bulletproof Group Limited

PO Box 113 Kensington NSW 1465

ABN. 84 148 162 092

p. 1300 663 903f. + 61 2 9662 [email protected] www.bulletproof.net.au

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