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Annual Report 2006

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ANNUAL REPORT 2006 www.empired.com EMPIRED Ltd. ABN 81 090 503 843 Empired_cover.indd 1 Empired_cover.indd 1 19/10/06 4:28:20 PM 19/10/06 4:28:20 PM THIS PAGE INTENTIONALLY LEFT BLANK. PRINCIPLE PLACE OF BUSINESS Perth 469 Murray Street PERTH WA 6000 Telephone No: +618 9321 9401 Fax No: +618 9321 9402 Melbourne 470 Colins Street MELBOURNE VIC 3000 Telephone No: +613 8610 0700 Fax No: +613 8610 0701 Sydney 3 Spring Street SYDNEY NSW 2000 Telephone No: +612 9256 0200 Fax No: +612 9256 0201 WEB SITE ADDRESS www.empired.com CORPORATE DIRECTORY DIRECTORS Mel Ashton (Chairman) David Taylor (Non – executive Director) Russell Baskerville (Managing Director & CEO) COMPANY SECRETARY Craig J Ferrier REGISTERED OFFICE 469 Murray Street PERTH WA 6000 Telephone No: +618 9321 9401 Fax No: +618 9321 9402 COMPANY NUMBER A.C.N: 090 503 843 LEGAL ADVISERS McKenzie Moncrieff Lawyers Level 5, 37 St Georges Tce Perth WA 6000 AUDITORS Ernst & Young The Ernst & Young Building 11 Mounts Bay Road PERTH WA 6000 COMPANY DOMICILE AND LEGAL FORM Empired Limited is the parent entity and an Australian Company limited by shares COUNTRY OF INCORPORATION Australia Empired_cover.indd 2 Empired_cover.indd 2 19/10/06 4:28:23 PM 19/10/06 4:28:23 PM ANNUAL REPORT 2006 Page 2 6 CONTENTS Section KEY ACHIEVEMENTS & RESULTS CHAIRMAN & CEO REVIEW 1 2 3 4 5 6 OPERATIONAL REVIEW: EMPIRED’S IT SERVICES BUSINESS 10 OPERATIONAL REVIEW: BIGREDSKY DIRECTORS’ REPORT FINANCE REPORT Income Statement Balance sheet Cash Flow Statement Statement of Changes in Equity Notes to the Financial Statements DIRECTORS’ DECLARATION AUDIT REPORT AUDITORS’ INDEPENDENCE DECLARATION 14 18 24 25 26 27 28 30 69 70 72 KEY ACHIEVEMENTS “... Plan ... ... Develop ... ... Deliver …”  KEY ACHIEVEMENTS Corporate • Restored focus on the development of our core businesses • Developed a clear vision and a plan for growth • Full restructure of management team and group operations • Group revenue Growth of 33% It ServICeS • Implemented new management structure and business model • Focus on annuity revenue services • Developed national growth plan and expanded into Victoria • Revenue growth of 77% BIgredSky • Developed new business model and sales plan • 100% Annuity based revenue • Developed national sales team in Perth, Melbourne and Sydney • Improved product functionality and competitiveness • Reduced maintenance costs • Increased Scalability ANNUAL REPORT 2006 1  RESulTS “Last year was a year of investment and development, laying a solid foundation for the ongoing growth and success of Empired” 1  RESulTS ANNUAL REPORT 2006 Revenue $4,992,125 EBITDA $530,789 NPAT $198,399 1  2 1   CHAIRMAN & CEO REVIEw “Working together to develop a clear business strategy with thorough execution, in doing so, driving growth and shareholder value.” CHAIRMAN & CEO REVIEw Chairman and CEO Review Dear fellow shareholders We are pleased to present to you the Empired Limited 2006 Annual Report. Throughout the year we have overseen many changes within the business and our growth initiatives are well underway with positive signs emerging after just twelve months of execution. Last year was a year of investment and development, laying sound foundation for the ongoing growth and success of Empired. Whilst we focused on the development of our business model and plan we continued to deliver a profitable result of $198,399 NPAT with EBITDA of $530,789 and experienced revenue growth across the group to $4.99 Million up 32% on the previous year. With our forward momentum strong and the ongoing development of our initiatives in train, we expect continued growth for some time to come. To drive growth across our organisation we have developed three clear strategies: • Diversify our revenue and business model through a balanced investment in both our Talent Management business BigRedSky and our IT Services business • Focus on building annuity revenue and drive organic growth throughout our chosen regions • Develop deep long term relationships with our customers through the provision of high quality and valued services To reflect the new focus in 2006 a number of initiatives were undertaken: • An organisational re-structure with the appointment of a predominately new and experienced General Management team to focus on the core areas within our respective businesses • An expansion into Sydney, New South Wales and the securing of customers in every state of Australia • An investment in R&D that has increased the competitiveness and capacity of the BigRedSky service • An investment in our Services Business increasing our lines of service and improving the quality of our offering ANNUAL REPORT 2006 2  CHAIRMAN & CEO REVIEw At the operational level we experienced success in a number of areas within both our core businesses. The investment and development of the BigRedSky business achieved a number of encouraging results: • A new product version was released that provides increased functionality and competitiveness, reduced maintenance costs and greater scalability • A national sales team was established with a presence in WA, Vic and NSW • Sixteen new customers were secured in under 5 months with a 100% annuity based revenue model, significantly many of these customers were members of the top 50 ASX/SFE listed companies Whilst these early development stage successes have been gratifying there is still much to be done. We now have a proven business model that is starting to deliver returns, we need to further develop and drive this model through organic growth in Australia, expand the regions in which we operate and diversify the services BigRedSky provides to its customers. In so doing, we will position BigRedSky as an industry leader in the provision of talent management services. Our IT services business continued to provide strong results and with a renewed focus on the growth of this business we expect solid returns to continue. Highlights within the 2006 financial year included: • Delivering 77% revenue growth • Securing an IT Outsourcing contract with multi billion dollar resources company Oxiana Limited • Implementing a new management structure to provide a focus on strategic initiatives and drive growth • Developing a plan to expand the services business nationally The IT Services business is established as a sound performer in the deliver of IT projects in WA, our challenge is to increase our service offerings, grow our customer base and expand into regions that present a larger market opportunity. This will provide strong, continued growth and customer satisfaction. With the expected growth in revenue from both the BigRedSky and IT Services business the company is well poised to establish a strong diversified revenue base over the coming twelve months. This diversified income stream will represent annuity revenue from a broad range of industry sectors including financial services, mining and resources, government and health, all where strong demand levels are being experienced. 2  ANNUAL REPORT 2006 CHAIRMAN & CEO REVIEw With the expected growth in revenue from both the BigRedSky and IT Services business the company is well poised to establish a strong diversified revenue base over the coming twelve months. This diversified income stream will represent annuity revenue from a broad range of industry sectors including financial services, mining and resources, government and health, all where strong demand levels are being experienced. 2 At heart, we are a services based company and our people drive our success. We recognise the importance they play in our ongoing development and we invest in our human resources to foster a great working environment. We provide professional development and training to ensure we are at the forefront in technical and professional excellence. Our leadership in this area ensures we attract and retain the best in quality experienced professionals, proven through our excellence in customer service. As a diversified technology provider we are continually assessing the opportunities that are presented to us, these are broad and varied in nature. With growth will come greater opportunities that will improve in quality, constantly improving the companies outlook and potential. We apply a range of management methodologies to assess these opportunities, however employ a common clear goal to focus on developing and growing tangible value in your investment. Goals We are a business of great potential, with sound assets and a proven ability to provide results. Our challenge is harnessing this potential, developing it and driving it to become a great business and in turn delivering real commercial results. In achieving this challenge we will create quantifiable, tangible value. In summary we have Be a leader in our chosen technology fields Build diversified sustainable long term revenue Drive revenue and earnings growth over the following three years Create tangible, liquid shareholder value • Restored focus on the development and growth of our core businesses • Set a clear vision and direction • Proven the foundations of our business model • And developed a sound, achievable plan for growth Before us lies an exciting year that holds much promise, we look forward to delivering on our goals and providing sound progress in the growth and development of our core businesses. On behalf of the board of directors I would like to thank all our staff for their dedication and commitment to our ongoing success and to you for your confidence, patience and continued support. russell Baskerville Chief Executive Officer Mel ashton Chairman  3 10 OpERATIONAl REVIEw: EMpIREd’S IT SERVICES buSINESS “Continuing to drive solid growth, providing sound profits with strong cash flow” ANNUAL REPORT 2006 OpERATIONAl REVIEw: EMpIREd’S IT SERVICES buSINESS 2006 proved a stellar year for Empired’s IT Services business with revenue growth of 77% on 2005 and gross margin’s improving to an average of 38%. This growth was driven through a clear strategy to deepen our customer relationships, provide a broader more clearly defined range of services and focus on new business development. As a result not only have we improved revenue and profit from existing customer engagements, we have also substantially improved new business acquisition. 3 OuR SERVICES MODEL Empired’s IT Services business provides a turn key IT infrastructure solution for its clients. Our clients want more than an organisation to simply build a solution, we are meeting these customer challenges through building deep client relationships at a business level, working to identify how technology can improve and add value to our customers businesses. We work closely with our customers to design thorough solutions, implementing them in line with best practice and providing ongoing management and support of these business critical assets. 11 OpERATIONAl REVIEw: EMpIREd’S IT SERVICES buSINESS MAjOR PROjECTS Throughout the year we delivered a number of major IT projects to some of Australia’s leading corporations and government departments. We worked with unisys West to develop a national infrastructure platform for BankWest. Providing a team of up to 25 engineers working across Australia to develop a state of the art, secure, robust and functional solution allowing the Bank to meet stringent HBOS infrastructure requirements and underpin a national expansion plan. Leading resources company Oxiana Limited called on Empired’s services business to assist in the development of an infrastructure platform that allowed them to pursue an aggressive growth strategy. Oxiana now leverage Empired’s expertise in the ongoing management and support of there IT infrastructure assets across the globe. This contract sees Empired providing services throughout Australia and to locations in South East Asia including Laos, Vientiane and China. Oxiana are a top 50 ASX listed company. 3 1 OpERATIONAl REVIEw: EMpIREd’S IT SERVICES buSINESS NATIONAL EXPANSION A solid track record of delivery in Western Australia and the ongoing improvement in the quality and breadth of our services provides a strong platform to launch our services business into the two largest IT Services markets in Australia. Victoria will be established early in the 2007 financial year and is expected to provide contribution in the same year. Our model will be largely based on the successful model operated in WA. Through a number of clients we are already delivering many services in Victoria and this strategic move will position Empired’s services business to capitalise on the current strong market conditions and continue to drive substantial revenue growth. OuTLOOk A proven experienced management team, a sound business model, excellent market conditions and a detailed national growth strategy will position Empired’s IT Services business for controlled effective growth through the 2007 financial year. ANNUAL REPORT 2006 3 1 OpERATIONAl REVIEw: bIgREdSKY “Positioning to capitalise on a strong HR market and provide an exciting growth engine.” 4 1 ANNUAL REPORT 2006 OpERATIONAl REVIEw: bIgREdSKY BigRedSky has experienced a year of change and development in its underlying business model. We are confident with the investment made over the previous 12 months that BigRedSky is now positioned to become an Australian market leader in the provision of online talent management services and is poised to experience sound growth. 4 OuR SOFTWARE AS A SERVICE OFFERING Our investment in creating a competitive, best of bread solution over the previous 12 months has been substantial. It is this investment that has underpinned the recent sales growth and will drive our business to a leadership position over the coming twelve months. Extensive market research was undertaken, incorporating what is happening around the world, what our prospective customers are asking for and user groups to better understand what would vastly improve our service offerings. The outcome of this development lifecycle is the release of BigRedSky ASAP. A service that is quickly established, cost effective and functionality rich. We continue to invest in R&D ensuring we stay ahead of our competition and provide an ongoing improvement in services to our customers. Our R&D program includes a product roadmap, user feedback forums and customer based BETA testing teams. We are currently rolling out new services to all of our customers on a 4 to 6 weekly basis. This level of customer service and product improvement ensures long term strong customer relationships where real value is being demonstrated. GROWING OuR MARkET PENETRATION While investing heavily in our service offering, we also focused on developing a sound commercialisation plan to take our new offering to market. BigRedSky now provides a 100% annuity based revenue model for its service offering, that allows customers to scale up or down based on their requirements. This model provides long term recurring revenue from the BigRedSky customer base and drives strong customer relationships. A focus was placed on developing a commercialisation model that could be scaled up quickly and replicated easily at relatively low cost. We are now starting to bear fruit with the current expansion across Australia. 1 OpERATIONAl REVIEw: bIgREdSKY INCREASING OuR GEOGRAPHIC PRESENCE On the back of proving our commercialisation plan in Victoria we expanded our sales and customer service reach in Western Australia, Victoria and New South Wales. With a dedicated team of sales executives and customer service representatives now operating out of these three states, BigRedSky is addressing a far larger market with a focused plan and a dedicated team. It is expected that this will drive organic sales growth through the 2007 financial year. As the model becomes more successful within Australia, a plan is being developed to grow the regions in which we operate. DIVERSIFyING OuR SOFTWARE AS A SERVICE OFFERING As the online recruitment market matures and BigRedSky’s customer base expands a significant opportunity will exist to grow revenues through the provision of additional online talent management services. BigRedSky is well positioned to take advantage of this through an established client base that is already utilising online HR technology services from BigRedSky. R&D is currently being undertaken to move toward a model to provide broader services as this evolves BigRedSky will become a full service online Talent Management provider to the HR market. 4 1 OpERATIONAl REVIEw: bIgREdSKY OuTLOOk BigRedSky’s commercialisation plan is still in its infancy, however initial indicators are positive. With a sound plan now in place, a rapid expansion program underway and strong increasing market demand, we expect an impressive performance from this business. ANNUAL REPORT 2006 4 1 5 1 dIRECTORS’ REpORT “A clear focus on creating quantifiable tangible value.” ANNUAL REPORT 2006 dIRECTORS’ REpORT The directors present their report together with the financial report of Empired Limited (“the Company”) and the consolidated financial report of the consolidated entity, being the Company and its controlled entities, for the year ended 30 june 2006 and the auditor’s report thereon. 5 Directors Name Mel Ashton Chairman Age 48 Experience and special responsibilities Mel Ashton is a Chartered Accountant with over 25 years experience. For a majority of that time he has specialised in Corporate Reconstruction. Mel established his own practice in Western Australia, which has grown to be a market leader. Mel’s experience covers a wide range of industries and he consults to a number of Executives and Entrepreneurs as a business mentor. Mel is a Fellow of the Australian Institute of Company Directors and a Fellow of the Institute of Chartered Accountants in Australia. Mel’s other appointments include: • State Chairman of the WA Branch of Institute of Chartered Accountants • Director and Vice President of the Fremantle Football Club Ltd • Chairman of Finance and Audit of the Fremantle Football Club Ltd • Chairman of PCT Engineers Pty Ltd • Chairman of Gryphon Minerals Ltd David has extensive commercial experience with a banking and marketing background. During the nineties he held positions as General Manager of the principal operating divisions of BankWest. He was also Chairman of BankWest subsidiaries TrustWest and TW Nominees during that period. He currently holds the position of Chairman, Perth Market Authority, and is a non-executive director of HBF Financial Services and Forest Products Commission. David is a Fellow of the Australian Institute of Company Directors. With extensive business experience and exposure to the IT industry Russell brings a wealth of knowledge in both the strategic growth and development of Technology businesses and a strong understanding of the commercial benefits achieved through the application of technology. Prior to Empired, Russell was founder and Managing Director of an IT consultancy and services business. Russell led this business through a successful acquisition in early 2001. In addition Russell was founder and Managing Director of Procom Holdings Pty Ltd supplying EFTPOS service and support to a number of tier one banks in Australia. Russell remains a non- executive director and shareholder of this business. David Taylor Non-executive Director 64 Russell Baskerville Managing Director 28 1 dIRECTORS’ REpORT Principle Activity 5 The principal activities of the consolidated entity during the year have comprised: The ongoing development of the BigRedSky online Talent Management System and sales and marketing activities associated with commercialising this technology. In addition, the Company continued the operation of its services business resulting in the provision of services covering software systems, development, consulting and infrastructure deployment. Other than as described above there were no significant changes in the nature of the activities carried out during the year. Significant changes in the state of affairs Gavin Burnett removed himself for re-election as an executive director as per rule 13.2 of the company constitution, resolution 2 in the Annual General Meeting held 29th of November 2005 and as a result retired as a director of the company on that date. Gavin resigned from any position with the company on the 31st of December 2005. On the 19th of january 2006 Peter Leonhardt and Fraser Campbell resigned as Chairman and non- executive director respectively. Mel Ashton and David Taylor were appointed to the board as Chairman and Non-executive director respectively on the 21st of December 2005. Events subsequent to reporting date There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the directors of the Company, to affect significantly the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity, in future financial years other than as set out below: The company has completed its application for the research and Development (“R & D”) tax concession. The expected value of the R & D tax offset is $332,893. This amount will be payable to the Company following lodgement of its 2006 Income Tax Return. Refer note 5. The company intends to issue a company wide Share Option plan to all employees. It is hoped that the plan will align the interests 0 dIRECTORS’ REpORT Environmental Regulation The consolidated entity’s operations are not subject to any significant environmental regulations under either Commonwealth or State Legislation. However, the Board believes that the consolidated entity has adequate systems in place for the management of its environmental requirements as they apply to the consolidated entity. Dividends The directors of Empired Limited do not recommend the payment of a dividend and no dividends have been paid or declared since the commencement of the year. SHARE OPTIONS Share Options Granted to Directors and Officers There were no other options granted to Directors and Officers of the company during or since the end of the financial year. Russell Baskerville was granted 700,000 share options during the year as per shareholder approval. Unissued Shares At the date of this report, there were 2,737,550 unissued ordinary shares under options (2,737,550 at the reporting date). Refer to Note 12 of the financial statements for more detail. Option holders do not have any right, by virtue of the option, to participate in any share issue of the company or any related body corporate or in the interest issue of any other registered scheme. Shares Issued as a result of the exercise of options No share options have been exercised in the period, or to the date of this report. ANNUAL REPORT 2006 5 1 dIRECTORS’ REpORT 5 Auditor’s independence declaration to the directors of Empired Limited The directors have received an Independence Declaration from Ernst & young the auditors of Empired Limited and it is included in this Financial Report. Non-Audit Services Non-Audit services provided by the entity’s Auditor can be found at note 24. The Directors are satisfied that the provision of non-audit services is compatible with the standard of independence for auditors imposed by the Corporations Act. The nature and scope of each non-audit service provided means that auditor independence was not compromised. Indemnification of Officers and Directors The Directors, Secretary and certain former directors of Empired Limited have been indemnified by the company in respect of their potential liability to third parties. The Company does not have a policy of insurance to provide for such liabilities in place at this stage. No such indemnity or insurance exists in relation to the Auditors. Directors The following served as directors of the company during the year and since the end of the year: Name of Director No. of Meetings Held while a Director No. of Meetings Attended as a Director during the year ended 30 june 2005 Peter Leonhard Gavin Burnett Fraser Campbell Russell Baskerville Mel Ashton David Taylor 6 5 6 12 7 7 Gavin Burnett Fraser Campbell Peter Leonhardt Mel Ashton David Taylor Retired 29th of November 2005 Resigned 21st of December 2005 Resigned 21st of December 2005 Appointed 21st of December 2005 Appointed 21st of December 2005 6 4 6 12 7 7  dIRECTORS’ REpORT Director’s interests The following table sets out each Directors (including their related parties) interest in shares and options of the company as at the end of the financial year: Director Russell Baskerville Mel Ashton David Taylor Ordinary Shares 4,220,841 - - Options 700,000(1) - - (1) On 29 November 2005, 700,000 options were issued with a fair value of: Options 233,333 233,333 233,334 700,000 Fair value per option Exercise price per option $0.05 $0.044 $0.038 $0.20 $0.25 $0.30 The names of the company’s directors in office during the year and until the date of this report are as below. Directors were in office for this entire period unless otherwise stated. Mel Ashton (Appointed 21st of December 2005) David Taylor (Appointed 21st of December 2005) Russell Baskerville Signed in accordance with a resolution of directors. Russell Baskerville Managing Director ANNUAL REPORT 2006 5  fINANCE REpORT 5  ANNUAL REPORT 2006 INCOME STATEMENT For tHe year eNded 30 JUNe 2006 Notes CONSOLIDATED PARENT 2006 $ 2005 $ 2006 $ 2005 $ 5 Continuing operations revenue Rendering of services Cost of Sales gross profit Other Income Legal expenses Marketing expenses Occupancy expenses Employee expenses Amortisation expenses Depreciation expenses Other expenses 4 4 4,976,559 3,774,558 4,976,559 3,774,558 (3,112,809) (1,785,546) (3,112,809) (1,858,116) 1,863,750 1,989,012 1,863,750 1,916,442 15,566 4,370 15,566 4,370 (4,772) (30,431) (18,426) (21,220) (4,772) (30,431) (128,441) (85,650) (128,441) (18,426) (21,220) (85,650) (851,445) (614,934) (851,445) (624,291) (539,912) (400,874) (539,912) (400,874) (77,306) (61,930) (71,790) (53,488) (345,165) (341,099) (350,679) (267,614) profit before income tax (98,156) 449,249 (98,156) 449,249 Income tax expense 5 296,555 275,221 296,555 275,221 profit after tax from continuing operations 198,399 724,470 198,399 724,470    bAlANCE SHEET aS at 30 JUNe 2006 Notes CONSOLIDATED PARENT 2006 $ 2005 $ 2006 $ 2005 $ aSSetS Current assets Trade and other receivables Inventories Prepayments total Current assets Non-Current assets Other financial assets Property, plant and equipment Intangible assets & goodwill total Non-current assets totaL aSSetS LIaBILItIeS Current Liabilities Bank overdraft Trade and other payables Interest-bearing loans and borrowings Income tax payable Provisions Unearned revenue total Current Liabilities Non-current Liabilities Interest-bearing loans and borrowings total Non-current Liabilities 7 8 9 22 10 11 6 13 14 15 15 16 14 1,025,578 1,335,688 1,025,578 1,318,449 4,830 71,248 - 79,956 4,830 71,248 - 79,956 1,101,656 1,415,644 1,101,656 1,398,405 - 256,680 - 177,550 374,345 233,985 397,427 149,012 3,985,576 3,694,489 2,118,619 1,827,532 4,242,256 3,872,039 2,726,949 2,373,971 5,343,912 5,287,683 3,828,605 3,772,376 1,964 567,036 73,128 36,338 91,560 112,199 882,225 23,799 23,799 111,668 434,222 63,180 63,419 58,339 321,851 1,052,680 18,192 18,192 1,964 567,036 73,128 36,338 91,560 112,199 882,225 375,450 375,450 111,668 434,222 63,180 63,419 58,339 321,851 1,052,680 369,843 369,843 totaL LIaBILItIeS 906,024 1,070,872 1,257,675 1,422,523 Net aSSetS eQUIty Issued capital Employee equity benefits reserve Accumulated losses totaL eQUIty 4,437,888 4,216,810 2,570,930 2,349,853 17 17 5,659,623 5,659,623 5,659,623 5,659,623 23,049 370 23,049 370 (1,244,784) (1,443,182) (3,111,742) (3,310,140) 4,437,888 4,216,810 2,570,930 2,349,853 5  ANNUAL REPORT 2006 CASH flOw STATEMENT For tHe year eNded 30 JUNe 2006 Notes CONSOLIDATED PARENT 2006 $ 2005 $ 2006 $ 2005 $ 5 Cash flows from operating activities Receipts from customers 4,960,703 3,761,363 4,960,703 3,761,363 Payments to suppliers and employees (4,976,165) (4,029,625) (4,966,220) (4,071,453) Borrowing costs Income tax rebate Income tax paid Receipt of government grants Interest received Net cash flows from/(used in) operating activities Cash flows from investing activities Proceeds from sale of property, plant and equipment Purchase of property, plant and equipment (11,727) 338,686 (63,130) 12,437 3,129 (4,934) 240,716 (26,733) - 4,313 (11,727) 338,686 (63,130) 12,437 3,129 (4,934) 240,716 (26,733) - 4,313 6(iii) 263,933 (54,900) 273,877 (96,729) - - - - (159,201) (55,582) (159,201) (55,582) Purchase of other financial assets (3,500) - (3,500) - Net cash flows from/(used in) investing activities Cash flows from financing activities Payment of share issue and capital raising costs Payment of finance lease liabilities Proceeds from borrowings Repayment of loan from subsidiary Net cash flows from/(used in) financing activities Net increase/(decrease) in cash and cash equivalents Net foreign exchange differences Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period (162,701) (55,582) (162,701) (55,582) - (50,974) 59,447 - (40,000) (24,086) 33,180 - - (50,974) 59,447 - (40,000) (24,086) 33,180 42,650 8,472 (30,906) 8,472 11,744 109,704 (141,388) 109,704 (140,568) - - - - (111,668) 29,720 (111,668) 28,899 6 (1,964) (111,668) (1,964) (111,668)  STATEMENT Of CHANgES IN EQuITY For tHe year eNded 30 JUNe 2006 5  Attributable to equity holders  of the parent  Total equity CoNSoLIdated at 1 July 2004 Profit for the year Exercise of options Cost of share-based payments Issued capital $ Retained earnings $ 5,659,623 (2,167,652) - - - 724,470 - - at 30 June 2005 5,659,623 (1,443,182) Total income and expense for the year recognised directly in equity Profit for the year Issue of share capital Exercise of options Cost of share-based payments - - - - - - 198,399 - - - at 30 JUNe 2006 5,659,623 (1,244,784) Equity Benefits Reserve $ - - - 370 370 - - - - 22,679 23,049 $ 3,491,971 724,470 - 370 4,216,810 - 198,399 - - 22,679 4,437,888  ANNUAL REPORT 2006 STATEMENT Of CHANgES IN EQuITY (c’td) For tHe year eNded 30 JUNe 2006  Attributable to equity  holders of the parent  Total equity 5 pareNt at 1 July 2004 Profit for the year Exercise of options Cost of share-based payments at 30 June 2005 Total income and expense for the year recognised directly in equity Profit for the year Issue of share capital Exercise of options Cost of share-based payments at 30 June 2006 Issued capital $ Retained earnings $ Employee Benefits Reserve $ 5,659,623 (4,034,901) - - - 724,760 - - 5,659,623 (3,310,141) - - - - - - 198,399 - - - $ 1,624,722 724,760 - 370 2,349,852 - 198,399 - - - - 370 370 - - - - 22,679 22,679 5,659,623 (3,111,742) 23,049 2,570,930  NOTES TO THE fINANCIAl STATEMENTS For tHe year eNded 30 JUNe 2006 5 1 Corporate INForMatIoN The financial report of Empired Ltd for the year ended 30 june 2006 was authorised for issue in accordance with a resolution of the directors on 20 October 2006. Empired Limited is a company limited by shares incorporated in Australia. The nature of the operation and principal activities of the Group are described in note 3. SUMMary oF SIgNIFICaNt aCCoUNtINg poLICIeS 2 (a) Basis of preparation The financial report is a general-purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001and applicable Australian Accounting Standards. The financial report has also been prepared on a historical cost basis, except for investment properties, land and buildings, derivative financial instruments and available-for-sale financial assets that have been measured at fair value. The financial report is presented in Australian dollars and all values are rounded to the nearest thousand unless otherwise stated. (b) Statement of compliance The financial report complies with Australian Accounting Standards, which include Australian equivalents to International Financial Reporting Standards (‘AIFRS’). Compliance with AIFRS ensures that the financial report, comprising the financial statements and notes thereto, complies with International Financial Reporting Standards (‘IFRS’). This is the first financial report prepared based on AIFRS and comparatives for the year ended 30 june 2005 have been restated accordingly. Reconciliations of AIFRS equity and profit for 30 june 2005 to the balances reported in the 30 june 2005 financial report are detailed in Note 2 (ac) below. Australian Accounting Standards that have recently been issued or amended but not yet effective have not been adopted for the annual reporting period ended 30 june 2006. 0 ANNUAL REPORT 2006 NOTES TO THE fINANCIAl STATEMENTS (c’td) For tHe year eNded 30 JUNe 2006 SUMMary oF SIgNIFICaNt aCCoUNtINg poLICIeS (c’td) 2 (b) Statement of compliance (c’td) 5 Nature of change to accounting policy Application date of standard Application date for the Group No change to accounting policy required. Therefore no impact. No change to accounting policy required. Therefore no impact. No change to accounting policy required. Therefore no impact. No change to accounting policy required. Therefore no impact. 1 January 2006 1 January 2006 1 January 2006 1 January 2006 1 July 2006 1 July 2006 1 July 2006 1 July 2006 No change to accounting policy required. Therefore no impact. 1 January 2007 1 July 2007 AASB Amendment 2005-1 2005-5 Affected Standard AASB 139: Financial Instruments: Recognition and Measurement AASB 1: First time adoption of AIFRS AASB 139: Financial Instruments: Recognition and Measurement 2005-6 AASB 3: Business Combination 2005-9 2005-10 AASB 4: Insurance Contracts, AASB 1023: General Insurance Contracts, AASB 139: Financial Instruments: Recognition and Measurement, AASB 132: Financial Instruments: Disclosure and Presentation. AASB 132:Financial Instruments: Disclosure and Presentation, AASB 101: Presentation of Financial Statements, AASB 114: Segment Reporting, AASB 117: Leases, AASB 133: Earning per Share, AASB 139: Financial Instruments: Recognition and Measurement, AASB 1: First time adoption of AIFRS, AASB 4: Insurance Contracts, AASB 1023: General Insurance Contracts and AASB 1038: Life Insurance Contracts. 2006-1 AASB 121: The Tax Effects of Changes in Foreign Exchange Rates New Standard AASB 7: Financial Instruments UIG 4 UIG 8 Determining whether an arrangement contains a lease Scope of AASB 2 UIG 9 Reassessment of Embedded Derivatives No change to accounting policy required. Therefore no impact. No change to accounting policy required. Therefore no impact. No change to accounting policy required. Therefore no impact. No change to accounting policy required. Therefore no impact No change to accounting policy required. Therefore no impact 1 January 2007 1 January 2007 1 January 2006 1 March 2006 1 July 2007 1 July 2007 1 July 2006 1 July 2006 1 June 2006 1 July 2006 1 NOTES TO THE fINANCIAl STATEMENTS (c’td) For tHe year eNded 30 JUNe 2006 5 SUMMary oF SIgNIFICaNt aCCoUNtINg poLICIeS (c’td) 2 (c) Basis of consolidation The consolidated financial statements comprise the financial statements of Empired Limited and its subsidiaries as at 30 june each year (‘the Group’). The financial statements of subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. Adjustments are made to bring into line any dissimilar accounting policies that may exist. All intercompany balances and transactions, including unrealised profits arising from intra-group transactions, have been eliminated in full. unrealised losses are eliminated unless costs cannot be recovered. Subsidiaries are consolidated from the date on which control is transferred to the group and cease to be consolidated from the date on which control is transferred out of the Group. Where there is loss of control of a subsidiary, the consolidated financial statements include the results for the part of the reporting period during which Empired Limited has control. Tusk Technologies Pty Ltd has been included in the consolidated financial statements using the purchase method of accounting, which measures the acquiree’s assets and liabilities at their fair value at acquisition date. Accordingly, the consolidated financial statements include the results of Tusk Technologies Pty Ltd for the full financial year. The purchase consideration has been allocated to the assets and liabilities on the basis of the fair value at the date of acquisition. (d) Investment in associate The Group’s investment in its associate is accounted for under the equity method of accounting in the consolidated financial statements. This is an entity in which the Group has significant influence and which is neither a subsidiary nor a joint venture. The financial statements of the associate are used by the Group to apply the equity method. The reporting dates of the associate and the Group are identical and both use consistent accounting policies. The investment in the associate is carried in the consolidated balance at cost plus post-acquisition changes in the Group’s share of net assets of the associate, less any impairment in value. The consolidated income statement reflects the Group’s share of the results of operations of the associate. Where there has been a change recognised directly in the associate’s equity, the Group recognises its share of any changes and discloses this, when applicable in the consolidated statement of changes in equity. (e) property, plant and equipment Plant and equipment is stated at cost less accumulated depreciation and any impairment in value. Depreciation is calculated on a straight-line basis over the estimated useful life of the asset as follows: Plant and equipment - over 5 to 15 years  NOTES TO THE fINANCIAl STATEMENTS (c’td) For tHe year eNded 30 JUNe 2006 SUMMary oF SIgNIFICaNt aCCoUNtINg poLICIeS (c’td) 2 (e) property, plant and equipment (c’td) Impairment The carrying values of plant and equipment are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs. If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets or cash-generating units are written down to their recoverable amount. The recoverable amount of plant and equipment is the greater of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Impairment losses are recognised in the income statement in the cost of sales line item. An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued used of the asset. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in the income statement in the period the item is derecognised. (f) Borrowing costs Borrowing costs are recognised as an expense when incurred. (g) goodwill Goodwill on acquisition is initially measured at cost being the excess of the cost of the business combination over the acquirer’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities. Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is not amortised. Goodwill is reviewed for impairment, annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. As at the acquisition date, any goodwill acquired is allocated to each of the cash-generating units expected to benefit from the combination’s synergies. Impairment is determined by assessing the recoverable amount of the cash-generating unit to which the goodwill relates. Where the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is recognised. ANNUAL REPORT 2006 5    NOTES TO THE fINANCIAl STATEMENTS (c’td) For tHe year eNded 30 JUNe 2006 5 SUMMary oF SIgNIFICaNt aCCoUNtINg poLICIeS (c’td) 2 (g) goodwill (c’td) Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured on the basis of the relative values of the operation disposed of and the portion of the cash-generating unit retained. Any expenditure carried forward is amortised over the period of expected future sales from the related project. The carrying value of development costs is reviewed for impairment annually when the asset is not yet in use or more frequently when an indicator of impairment arises during the reporting year indicating that the carrying value may not be recoverable. (h) Intangible assets Acquired both separately and from a business combination Intangible assets acquired separately are capitalised at cost. Following initial recognition, the cost model is applied to the class of intangible assets. Where amortisation is charged on assets with finite lives, this expense is taken to the income statement through the ‘amortisation expenses’ line item. Intangible assets, excluding development costs, created within the business are not capitalised and expenditure is charged against profits in the period in which the expenditure is incurred. Intangible assets are tested for impairment where an indicator of impairment exists and in the case of indefinite lived intangibles annually, either individually or at the cash generating unit level. useful lives are also examined on an annual basis and adjustments, where applicable, are made on a prospective basis. Research and development costs Research costs are expensed as incurred. Development expenditure incurred on an individual project is carried forward when its future recoverability can reasonably be regarded as assured. Following the initial recognition of the development expenditure, the cost model is applied requiring the asset to be carried at cost less any accumulated amortisation and accumulated impairment losses.      ANNUAL REPORT 2006 NOTES TO THE fINANCIAl STATEMENTS (c’td) For tHe year eNded 30 JUNe 2006 SUMMary oF SIgNIFICaNt aCCoUNtINg poLICIeS (c’td) 2 (h) Intangible assets (c’td) A summary of the policies applied to the Group’s intangible assets is as follows: 5 Useful lives Method used Internally generated /  Acquired Impairment test /  Recoverable amount  testing Patents and Licences Development Costs Indefinite Finite Not depreciated or revalued 6 years- Straight line Acquired Internally generated Annually and where an  indicator of impairment exists Amortisation methods reviewed  at each financial year-end;  Reviewed annually for indicator  of impairment Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised on the income statement when the asset is derecognised. (i) recoverable amount of assets At each reporting date, the Group assesses whether there is any indication that an asset may be impaired. Where an indicator of impairment exists, the Group makes a formal estimate of recoverable amount. Where the carrying amount of an asset exceeds its recoverable amount the asset is considered impaired and is written down to its recoverable amount. Recoverable amount is the greater of fair value less costs to sell and value in use. It is determined for an individual asset, unless the asset’s value in use cannot be estimated to be close to its fair value less costs to sell and it does not generate cash inflows that are largely independent of those from other assets or groups of assets, in which case, the recoverable amount is determined for the cash-generating unit to which the asset belongs. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. (j) Investments All investments are initially recognised at cost, being the fair value of the consideration given and including acquisition charges associated with the investment. After initial recognition, investments, which are classified as held for trading and available-for- sale, are measured as fair value. Gains or losses on investments held for trading are recognised in the income statement.  NOTES TO THE fINANCIAl STATEMENTS (c’td) For tHe year eNded 30 JUNe 2006 5 SUMMary oF SIgNIFICaNt aCCoUNtINg poLICIeS (c’td) 2 (k) Inventories Inventories are valued at the lower of cost and net realisable value. Costs incurred in bringing each product to its present location and condition are accounted for as follows: Raw materials - purchase cost on a first-in, first-out basis; and Finished goods and work-in-progress - cost of direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity but excluding borrowing costs. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale. (l) trade and other receivables Trade receivables, which generally have 30-45 day terms, are recognised and carried at original invoice amount less an allowance for any uncollectible amounts. An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off when identified. (m) Cash and cash equivalents Cash and short-term deposits in the balance sheet comprise cash at bank and in hand and short- term deposits with an original maturity of three months or less. For the purposes of the Cash Flow Statement, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts. (n) Interest-bearing loans and borrowings All loans and borrowings are initially recognised at cost, being the fair value of the consideration received net of issue costs associated with the borrowing. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method. Amortised cost is calculated by taking into account any issue costs, and any discount or premium on settlement. Gains and losses are recognised in the income statement when the liabilities are derecognised and as well as through the amortisation process. (o) provisions Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the income statement net of any reimbursement.  ANNUAL REPORT 2006 NOTES TO THE fINANCIAl STATEMENTS (c’td) For tHe year eNded 30 JUNe 2006 SUMMary oF SIgNIFICaNt aCCoUNtINg poLICIeS (c’td) 2 (o) provisions (c’td) If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. 5 Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost. (p) Share-based payment transactions The Group provides to employees (including directors) of the Group in the form of share-based payment transactions, whereby employees render services in exchange for shares or rights over shares (‘equity-settled transactions’). There are currently two plans in place to provide these benefits: (i) The Empired Employee Share Option Plan (ESOP), which provides to all employees excluding directors, and (ii) The BRS Employee Share Option Plan (ESOP), which provides benefits to directors and senior executives. The cost of these equity-settled transactions with employees is measured by reference to the fair value at the date at which they are granted. The fair value is determined using a binomial model further details are given in note 12. In valuing equity-settled transactions, no account is taken of any performance conditions, other than conditions linked to the price if the shares of Empired Ltd (‘market conditions’). The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (‘vesting date’). The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects (i) the extent to which the vesting period has expired and (ii) the number of awards that, in the opinion of the directors of the Group, will ultimately vest. This opinion is formed based on the best available information at balance date. No adjustment is made for the likelihood of market performance conditions being met as the effect of these conditions is included in the determination of fair value at grant date. Where the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified. In addition, an expense is recognised for any increase in the value of the transaction as a result of the modification, as measured at the date of modification. Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award, and designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award, as described in the previous paragraph.  NOTES TO THE fINANCIAl STATEMENTS (c’td) For tHe year eNded 30 JUNe 2006 5 SUMMary oF SIgNIFICaNt aCCoUNtINg poLICIeS (c’td) 2 (p) Share-based payment transactions (c’td) The Group has applied the requirements of AASB 1 ‘First-time Adoption of Australian Equivalents to International Financial Reporting Standards’ in respect of equity-settled awards and has applied AASB 2 ‘Share-based Payments’ only to equity instruments granted after 7 November 2002 that had not vested on or before 1 january 2005. (q) Leases Finance leases, which transfer to the Group substantially all the risks and benefits incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against income. Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset or the lease term. Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same bases as the lease income. Operating lease payments are recognised as an expense in the income statement on a straight-line basis over the lease term. (r) revenue Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised: Licence sales Revenue from licence sales is recognised when the economic entity has passed control of the goods to the buyer Rendering of services Revenue from the provision of services is recognised when the service has been provided. Maintenance, Hosting and Support fees Revenue from maintenance, hosting and support is recognised and bought to account over the time it is earned. unexpired revenue is recorded as unearned income. Interest received Revenue is recognised as the interest accrues (using the effective interest method, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial instrument) to the net carrying amount of the financial asset.  ANNUAL REPORT 2006 NOTES TO THE fINANCIAl STATEMENTS (c’td) For tHe year eNded 30 JUNe 2006 SUMMary oF SIgNIFICaNt aCCoUNtINg poLICIeS (c’td) 2 (s) government grants Government grants are recognised at their fair value where there is reasonable assurance that the grant will be received and all attaching conditions will be complied with. 5 When the grant relates to an expense item, it is recognised as income over the periods necessary to match the grant on a systematic basis to the costs that it is intended to compensate. Where the grant relates to an asset, the fair value is credited to a deferred income amount and is released to the income statement over the expected useful life of the relevant asset by equal annual instalments. (t) Income tax Deferred income tax is provided on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for the financial reporting purposes. Deferred income tax liabilities are recognised for all taxable temporary differences: • • • • except where the deferred income tax liability arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, except where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred income tax assets are recognised for all deductible temporary differences, carry- forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused tax assets and unused tax losses can be utilised: except where the deferred income tax asset relating to the deductible temporary differences arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised. The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date. Income taxes relating to items recognised directly in equity are recognised in equity and not in the income statement.  NOTES TO THE fINANCIAl STATEMENTS (c’td) For tHe year eNded 30 JUNe 2006 5 SUMMary oF SIgNIFICaNt aCCoUNtINg poLICIeS (c’td) 2 (u) other taxes Revenues, expenses and assets are recognised net of the amount of GST except: • where the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and • receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the balance sheet. Cash flows are included in the Cash Flow statement on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority are classified as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority. (v) Impact of adoption of aIFrS The impacts of adopting AIFRS on the total equity and profit after tax as reported under previous Australian Generally Accepted Accounting Principles (“AGAAP”) are illustrated below. (i) reconciliation of total equity as presented under previous agaap to that under aIFrS CONSOLIDATED PARENT 30-Jun-05 $ 1-Jul-04 $ 30-Jun-05 $ 1-Jul-04 $ Total equity under AGAAP 3,953,924 3,434,048 2,329,166 1,567,089 Adjustments to retained earnings  (net of tax): Change in Provisions (A) Changes to Goodwill (B) 20,686 242,200 57,923 - 20,686 - 57,633 - Total equity under AIFRS 4,216,810 3,491,971 2,349,853 1,624,722 (A) A doubtful debts provision was recognised under previous AGAAP, but does not qualify for recognition as a liability under AASB 137 ‘Provisions, Contingent Liabilities and Contingent Assets’. This has resulted in an increase to total equity (B) Goodwill is not amortised under AASB 3 ‘Business Combinations’, but was amortised under previous AGAAP. This caused a retrospective increase to the carrying value of Goodwill. 0 ANNUAL REPORT 2006 NOTES TO THE fINANCIAl STATEMENTS (c’td) For tHe year eNded 30 JUNe 2006 SUMMary oF SIgNIFICaNt aCCoUNtINg poLICIeS (c’td) 2 (v) Impact of adoption of aIFrS (c’td) (ii) reconciliation of profit before tax under previous agaap to that under aIFrS 5 Prior year profit before tax as previously reported Share-based payment expense (A) Change in doubtful debts (B) Amortisation of goodwill (C) Prior year profit before tax under AIFRS CONSOLIDATED 30-Jun-05 $ 244,365 (370) (36,946) 242,200 449,249 PARENT 30-Jun-05 $ 486,565 (370) (36,946) - 449,249 (A) Share-based payment costs are charged to the income statement under AASB 2 ‘Share-based Payment’, but not under previous AGAAP. This has caused a decrease in profit for the year. (B) A doubtful debts expense was recognised under previous AGAAP, but does not qualify for recognition as a liability under AASB 137 ‘Provisions, Contingent Liabilities and Contingent Assets’. This has resulted in an decrease in profit for the year. (C) Goodwill is not amortised under AASB 3 ‘Business Combinations’, but was amortised under previous AGAAP. This caused an increase in profit for the year. (iii) explanation of material adjustments to the cashflow statements There are no material differences between the cash flow statement presented under AIFRS and the cash flow statement presented under previous AGAAP. 1 NOTES TO THE fINANCIAl STATEMENTS (c’td) For tHe year eNded 30 JUNe 2006 5 3 SegMeNt INForMatIoN The Group’s primary reporting format is business segments. The operating businesses are organised and managed separately according to the nature of the products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets. The company operates in the software contract service industry within Australia. The company operates in the following 2 segments: Services Software Designs, builds and implements software and hardware infrastructure for large corporate companies. Development and implementation of BigRedSky, an online recruitment program for the corporate, academic and government sectors. Segment accounting policies are the same as the company’s accounting policies described in note 1. No intersegment sales or transfers have occurred. Business segments The following tables present revenue and profit information and certain asset and liability information regarding business segments for the years ended 30 june 2006 and 2005.  NOTES TO THE fINANCIAl STATEMENTS (c’td) For tHe year eNded 30 JUNe 2006 3 SegMeNt INForMatIoN (c’td) ANNUAL REPORT 2006 5 2006 Business Segment Information Services 2006 $ Software 2006 $ eliminations 2006 $ Consolidated 2006 $ Business Segments Revenue Segment revenue External revenue Inter segment revenue Total segment revenue Unallocated revenue Total consolidated revenue Results Segment result Unallocated expenses Consolidated entity profit(loss) from ordinary activities before income tax revenue Income tax revenue Consolidated entity profit/(loss) from ordinary activities after income tax revenue Assets Segment assets Unallocated assets Total assets Liabilities 4,470,118 506,441 4,470,118 506,441 1,335,729 45,603 614,186 348,158 Segment liabilities 347,740 209,343 Unallocated liabilities Total liabilities Other Segment Information Acquisition of segment plant & equipment Depreciation Amortisation 143,281 69,573 - 15,920 7,733 539,912 4,976,559 4,976,559 15,566 4,992,125 1,381,332 (1,479,489) (98,157) 296,555 198,398 962,343 4,381,569 5,343,912 557,083 348,942 906,025 159,201 77,306 539,912  NOTES TO THE fINANCIAl STATEMENTS (c’td) For tHe year eNded 30 JUNe 2006 5 3 SegMeNt INForMatIoN (c’td) 2005 Business Segment Information Services 2005 $ Software 2005 $ eliminations 2005 $ Consolidated 2005 $ Business Segments Revenue Segment revenue External revenue Inter segment revenue Total segment revenue Unallocated revenue Total consolidated revenue Results Segment result Unallocated expenses Consolidated entity profit(loss) from ordinary activities before income tax revenue Income tax revenue Consolidated entity profit/(loss) from ordinary activities after income tax revenue Assets Segment assets Unallocated assets Total assets Liabilities 2,647,630 1,126,928 2,647,630 1,126,928 895,102 664,928 476,759 485,557 Segment liabilities 251,651 418,358 Unallocated liabilities Total liabilities Other Segment Information Acquisition of segment plant & equipment Depreciation Amortisation 38,908 43,351 - 16,675 18,579 400,874  3,774,558 3,774,558 4,370 3,778,928 1,560,030 (1,110,781) 449,249 275,221 724,470 962,316 4,325,367 5,287,683 670,009 400,863 1,070,872 55,583 61,930 400,874 ANNUAL REPORT 2006 NOTES TO THE fINANCIAl STATEMENTS (c’td) For tHe year eNded 30 JUNe 2006 4 reveNUeS Sales Revenue Services Software Other Revenue Interest Government grants Other 5 INCoMe taX CONSOLIDATED PARENT 2006 $ 2005 $ 2006 $ 2005 $ 5 4,470,118 506,441 4,976,559 2,647,630 1,126,928 3,774,558 4,470,118 506,441 4,976,559 2,647,630 1,126,928 3,774,558 3,129 12,437 - 15,566 4,313 57 4,370 3,129 12,437 - 15,566 4,313 57 4,370 4,992,125 3,778,928 4,992,125 3,778,928 Major components of income tax expense for the years ended 30 june 2006 and 2005 are: Income Statement Current income Current income tax charge Research & Development Rebate Receivable Deferred income tax Relating to origination and reversal of temporary differences 36,338 (332,893) 63,465 (338,686) 36,338 (332,893) 63,465 (338,686) Income tax expense reported in income statement (296,555) (275,221) (296,555) (275,221) Statement of changes in equity A reconciliation of income tax expense applicable to accounting profit before income tax at the statutory income tax rate to income tax expense at the Group’s effective income tax rate for the years ended 30 june 2006 and 2005 is as follows:  NOTES TO THE fINANCIAl STATEMENTS (c’td) For tHe year eNded 30 JUNe 2006 5 5 INCoMe taX (c’td) Prima facie tax on operating profit calculated at 30% Add tax effect of: Non-deductible expenses Amortisation of trademark Development expenditure Entertainment Timing differences not bought to account Prior year tax losses utilised Research and Development offset Income tax revenue attributable to ordinary activities Deferred tax assets and liabilities Deferred Tax Assets Deferred Tax Liabilities Current tax receivable Income tax losses Deferred tax asset arising from tax losses of the parent company has not been recognised at reporting date. Revenue losses Capital losses tax consolidation CONSOLIDATED 2005 2006 $ $ PARENT 2006 $ 2005 $ (29,447) 134,775 (29,447) 134,775 (29,447) 134,775 (29,447) 134,775 13,731 356 61,750 4,409 40,046 (54,507) (332,893) 461 356 - 2,321 20,248 (94,696) (338,686) 13,731 356 61,750 4,409 40,046 (54,507) (332,893) 461 356 - 2,321 20,248 (94,696) (338,686) (296,555) (275,221) (296,555) (275,221) (296,555) (275,221) (296,555) (275,221) 283,466 (59,992) 333,528 (138,497) 273,231 (59,992) 313,293 (138,497) 296,556 275,221 296,556 275,221 260,876 10,235 315,807 10,235 260,876 - 315,807 - Effective 1 july 2002, for the purposes of income taxation, Empired Limited and its 100% subsidiaries formed a tax consolidated group. The head entity of the consolidated group is Empired Limited. Empired Limited formally notified the Australian Taxation Office of its adoption of the tax consolidation regime upon lodgement of its 30 june 2003 consolidated tax return.  ANNUAL REPORT 2006 NOTES TO THE fINANCIAl STATEMENTS (c’td) For tHe year eNded 30 JUNe 2006 6 CaSH aNd CaSH eQUIvaLeNtS (i)  Reconciliation of Cash 5 For the purposes of the statement of cash flows, cash includes cash on hand and cash in banks. Cash at the end of the year as shown in the statement of cash flows is reconciled to the related items in the statement of financial position as follows: Consolidated Parent Cash assets Bank Overdraft (ii)  Financing facilities available 2006 ($) 152 (2,116) (1,964) 2005 ($) - (111,668) (111,668) 2006 ($) 152 (2,116) (1,964) 2005 ($) - (111,668) (111,668) At reporting date the following facilities were available but not used: Bank Overdraft 247,884 138,182 247,884 138,182 The Bank Overdraft facility has a total limit of $250,000. (iii)  Reconciliation of net cash flows from operating activities to operating profit (loss) after income  tax Operating profit\(loss) after income tax Depreciation Amortisation Write down\(up) of investment in subsidiary Option Plan Expense Loss on disposal of assets Changes in assets and liabilities net of effects of purchases and disposals of controlled entities: (Increase)/decrease in net trade debtors (Increase)/decrease in other receivables (Increase)/decrease in other assets (Increase)/decrease in prepayments (Increase)/decrease in unbilled income (increase)/decrease in deferred R & D Increase/(decrease) in trade creditors Increase/(decrease) in audit fees Increase/(decrease) in other creditors Increase/(decrease) in unexpired interest Increase/(decrease) in accrued liabilities Increase/(decrease) in unearned income Increase/(decrease) in income tax Increase/(decrease) in provision for employee entitlements 198,399 77,306 539,914 - 22,679 2,765 193,333 19,531 (10,090) 8,708 97,242 (831,000) 64,994 2,500 108,257 (3,550) (23,832) (209,651) (26,792) 724,470 61,930 400,874 - 370 - (61,345) (60,668) (2,149) (3,726) (77,069) (837,509) (292,447) 1,000 15,313 (154) 176 37,973 36,331 198,399 71,790 539,914 23,081 22,679 2,438 193,333 2,293 (146) 8,708 97,242 (831,000) 64,994 2,500 108,257 (3,550) (23,832) (209,651) (26,792) 724,470 53,488 400,874 (73,221) 370 - (61,345) (60,668) (2,149) (3,726) (77,069) (837,509) (261,970) 1,000 15,313 (154) 176 37,973 36,331 33,221 1,730 33,221 11,087 Net cash used in operating activities 263,934 (54,900) 273,878 (96,729)  NOTES TO THE fINANCIAl STATEMENTS (c’td) For tHe year eNded 30 JUNe 2006 7 trade aNd otHer reCeIvaBLeS (CUrreNt) CONSOLIDATED PARENT 2006 $ 2005 $ 2006 $ 2005 $ 686,997 - 686,997 3,500 2,187 - 332,893 897,833 (17,500) 880,333 - 99,430 17,238 338,686 686,997 - 686,997 3,500 2,187 - 332,893 897,833 (17,500) 880,333 - 99,430 - 338,686 1,025,578 1,335,688 1,025,578 1,318,449 Trade receivables Provision for doubtful debts Term Deposit Receivable Unbilled Income Loans Research & Development Rebate receivable Trade receivables are non-interest bearing and are generally on 30-day terms. 8 INveNtorIeS Online Job Ads held for Sale (at cost) Total inventories at lower of cost and net realisable value 4,830 4,830 - - 4830 4,830 - - 9 otHer aSSetS Current Prepayments 71,248 79,956 71,248 79,956 Total current other assets 71,248 79,956 71,248 79,956 10 property, pLaNt aNd eQUIpMeNt Plant and Equipment At cost Accumulated depreciation Net carrying amount of plant and equipment Plant and Equipment Movements during the year: Beginning of year Additions Disposals Depreciation expense End of year Consolidated Parent 2006 ($) 2005 ($) 2006 ($) 2005 ($) 639,692 (383,012) 495,067 (317,517) 533,919 (299,934) 386,990 (237,978) 256,680 177,550 233,985 149,012 177,550 159,201 (2,768) (77,303) 256,680 183,897 55,583 - (61,930) 149,012 159,201 (2,438) (71,790) 146,918 55,582 - (53,488) 177,550 233,985 149,012 5  ANNUAL REPORT 2006 NOTES TO THE fINANCIAl STATEMENTS (c’td) For tHe year eNded 30 JUNe 2006 11 INtaNgIBLe aSSetS & goodWILL For the year ended 30 June 2006, development costs are capitalised at cost. This intangible asset has been assessed as having a finite life and is amortised using the straight line method over a period of 6 years. 5 This asset is tested for impairment where an indicator of impairment arises. Goodwill represent intangible assets purchased through the effect of a business combination. The useful lives of these intangible assets were estimated as indefinite and the cost method was utilised for their measurement. As at 30 June 2006, these assets were tested for impairment (see note 21). The patent acquired has been granted for a minimum of fifty years by the relevant government agency with the option of renewal at the end of this period based on whether the entity meets certain predetermined targets. No impairment loss was charged for continuing operations in the 2006 financial year. Year ended 30 June 2006 At 1 July 2005, net of accumulated amortisation Additions Impairment Amortisation At 30 June 2006, net of accumulated amortisation CONSOLIDATED Patents  and  licenses $ Good  Will $ Development  costs $ PARENT Total $ Total $ 1,824,002 831,000 - (538,726) 3,528 - - (1,186) 1,866,958 - - - 3,694,488 831,000 - (539,912) 1,827,531 831,000 - (539,912) 2,116,276 2,342 1,866,958 3,985,576 2,118,619 At 1 July 2005 Cost (gross carrying amount) Accumulated amortisation and impairment Net carrying amount At 30 June 2006 Cost (gross carrying amount) Accumulated amortisation and impairment Net carrying amount 3,024,037 (1,200,035) 1,824,002 3,855,037 (1,738,761) 2,116,276 13,389 (9,861) 1,866,958 - 4,904,384 (1,209,896) 3,037,427 (1,209,896) 3,528 1,866,958 3,694,488 1,827,531 13,389 (11,047) 1,866,958 - 5,735,384 (1,749,808) 3,868,427 (1,749,808) 2,342 1,866,958 3,985,576 2,118,619  NOTES TO THE fINANCIAl STATEMENTS (c’td) For tHe year eNded 30 JUNe 2006 5 11 INtaNgIBLe aSSetS & goodWILL (c’td) Year ended 30 June 2005 CONSOLIDATED Patents  and  PARENT licenses Goodwill2 $ $ Total $ Total $ Development  costs1 $ At 1 July 2004, net of accumulated amortisation Additions Amortisation At 30 June 2005, net of accumulated amortisation 1,386,179 837,509 (399,686) 4,717 - (1,188) 1,866,958 - - 3,257,854 837,509 (400,874) 1,390,896 837,509 (400,874) 1,824,002 3,528 1,866,958 3,694,489 1,827,532 At 1 July 2004 Cost (gross carrying amount) Accumulated amortisation and impairment 2,186,528 (800,349) 13,389 (8,672) 1,866,958 - 4,066,875 (809,021) 2,199,917 (809,021) Net carrying amount 1,386,179 4,717 1,866,958 3,257,854 1,390,896 At 30 June 2005 Cost (gross carrying amount) Accumulated amortisation and impairment 3,024,037 (1,200,035) 13,389 (9,861) 1,866,958 - 4,904,384 (1,209,896) 3,037,427 (1,209,896) Net carrying amount 1,824,002 3,528 1,866,958 3,694,488 1,827,531 1 Internally generated 2 Purchased as part of business combinations 12 eMpLoyee BeNeFItS (a) empired employee share option plan The Group has an employee share options plan (ESOP) for the granting of non-transferable options to employees and senior executives. Options issued under the ESOP will vest on the sooner of one of the following conditions have been met: (i) (ii) (iii) (iv) on the second anniversary one third of the grant of the options; on the third anniversary two thirds of the grant of the options on the fourth anniversary all of the grant of the options or if a takeover offer or bid in respect of Empired shares is made in accordance with the Corporations Act and the Board recommends that shareholders accept the offer. Other relevant terms and conditions applicable to options granted under the ESOP include: - any vested options that are unexercised on the fifth anniversary of their grant date will expire; and - upon exercise, these options will be settled in ordinary shares of Empired Limited. 0 NOTES TO THE fINANCIAl STATEMENTS (c’td) For tHe year eNded 30 JUNe 2006 12 eMpLoyee BeNeFItS (c’td) (a) empired employee share option plan (c’td) On 1 August 2005, 308,070 options with a fair value of: Options 104,740 101,665 101,665 308,070 Fair value per option $0.05 $0.043 $0.038 Exercise price per option $0.30 $0.35 $0.40 were granted over ordinary shares exercisable upon meeting the above vesting conditions and until 31 july 2010. The fair value of the options are estimated at the date of grant using the binomial model. The following table gives the assumptions made in determining the fair value of the options granted in the year to 30 june 2006. Dividend yield (%) Expected volatility (%) Risk-free interest rate (%) Expected life of option (years) Option exercise price ($) Share price at grant date ($) (Net Asset Backing) 2006 - 60% 5.24% 5 years $0.30, $0.35, $0.40 $0.12 The expected life of the options is based on historical data and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may also not necessarily be the actual outcome. No other features of options granted were incorporated into the measurement of fair value. During the year ended 30 june 2006, no options were exercised over ordinary shares. The following table illustrates the number (No.) and weighted average exercise prices (WAEP) of share options issued under the ESOP. Outstanding at the beginning of the year Granted during the year Forfeited during the year Exercised during the year Expired during the year Outstanding at the end of the year Exercisable at the end of the year 2006 No. - 308,070 (30,520) - - 277,550 - 2006 WAEP - $0.35 $0.35 - - $0.35 - The outstanding balance as at 30 june 2006 is represented by 277,550 options over ordinary shares with an average exercise price of $0.35 each, exercisable upon meeting the above conditions and until 31 july 2010; ANNUAL REPORT 2006 5 1 NOTES TO THE fINANCIAl STATEMENTS (c’td) For tHe year eNded 30 JUNe 2006 5 12 eMpLoyee BeNeFItS (c’td) (a) empired employee share option plan (c’td) The weighted average contractual life for the share options outstanding as at 30 june 2006 is 4 years. Share options issued under the ESOP and outstanding at the end of the year have the following exercise prices: Expiry Date 31-Jul-2010 31-Jul-2010 31-Jul-2010 Total Exercise  price 2006     No. $0.30 $0.35 $0.40 94,364 91,593 91,593 277,550 (b) BrS employee share option plan (1) The Group has an employee share options plan (ESOP) for the granting of non-transferable options to certain directors and senior executives. Options issued under the ESOP will vest on the sooner of one of the following conditions have been met: (i) (ii) on the second anniversary the grant of the options; if a takeover offer or bid in respect of Empired shares is made in accordance with the Corporations Act and the Board recommends that shareholders accept the offer. Other relevant terms and conditions applicable to options granted under the ESOP include: - any vested options that are unexercised on the fifth anniversary of their grant date will expire; and - upon exercise, these options will be settled in ordinary shares of Empired Limited. On 29 November 2005, 700,000 options with a fair value of: Options 233,333 233,333 233,334 Fair value per option $0.05 $0.044 $0.038 Exercise price per option $0.20 $0.25 $0.30 700,000 were granted over ordinary shares exercisable upon meeting the above vesting conditions and until 28 November 2010. On 23 March 2006, 1,100,000 options with a fair value of: Options 366,666 366,667 366,667 Fair value per option $0.05 $0.044 $0.038 Exercise price per option $0.20 $0.25 $0.30 1,100,000 were granted over ordinary shares exercisable upon meeting the above vesting conditions and until 23 March 2011.  ANNUAL REPORT 2006 NOTES TO THE fINANCIAl STATEMENTS (c’td) For tHe year eNded 30 JUNe 2006 12 eMpLoyee BeNeFItS (c’td) (b) BrS employee share option plan (1) (c’td) The fair value of the options are estimated at the date of grant using the binomial model. The following table gives the assumptions made in determining the fair value of the options granted in the year to 30 june 2006. 5 Dividend yield (%) Expected volatility (%) Risk-free interest rate (%) (29 November 2005) Risk-free interest rate (%) (23 March 2006) Expected life of option (years) Option exercise price ($) Share price at grant date ($) (Net Asset Backing) 2006 - 60% 5.35% 5.32% 5 years $0.20, $0.25, $0.30 $0.12 The expected life of the options is based on historical data and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may also not necessarily be the actual outcome. No other features of options granted were incorporated into the measurement of fair value. During the year ended 30 june 2006, no options were exercised over ordinary shares. The following table illustrates the number (No.) and weighted average exercise prices (WAEP) of share options issued under the ESOP. Outstanding at the beginning of the year Granted during the year Forfeited during the year Exercised during the year Expired during the year Outstanding at the end of the year 2006 No. 2006 WAEP 2005 No. 2005 WAEP 235,000 1,800,000 - - - 2,035,000 $0.25 $0.25 $0.25 1,100,000 100,000 - - 965,000 235,000 $0.25 $0.25 $0.25 $0.25 Exercisable at the end of the year 235,000 $0.25 135,000 $0.25 The outstanding balance as at 30 june 2006 is represented by: • 2,035,000 options over ordinary shares with an average exercise price of $0.25 each, exercisable upon meeting the above conditions and until: 135,000 100,000 700,000 1,100,000 2,035,000 26 November 2007 23 November 2009 28 November 2010 23 March 2011 The weighted average contractual life for the share options outstanding as at 30 june 2006 is between 1 and 5 years (2005: 2 and 4 years).  NOTES TO THE fINANCIAl STATEMENTS (c’td) For tHe year eNded 30 JUNe 2006 5 12 eMpLoyee BeNeFItS (c’td) (b) BrS employee share option plan (1) (c’td) Share options issued under the ESOP and outstanding at the end of the year have the following average exercise prices: Expiry Date 26 November 2007 23 November 2009 28 November 2010 23 March 2011 Total Exercise  price 2006     No. 2005     No. $0.25 $0.25 $0.25 $0.25 135,000 100,000 700,000 1,100,000 2,035,000 135,000 100,000 - - 235,000 13 trade aNd otHer payaBLeS (CUrreNt) Trade payables Audit fees payable Superannuation payable GST payable PAYG payable Accrued liabilities Credit cards payable Included in the above are aggregate amounts payable to the following related parties: Due to directors and director related entities CONSOLIDATED PARENT 2006 $ 2005 $ 2006 $ 228,041 163,047 228,041 16,500 58,977 78,280 65,664 94,639 24,936 14,000 37,182 65,115 36,408 118,471 - 16,500 58,977 78,280 65,664 94,639 24,936 567,036 434,223 567,036 2005 $ 163,047 14,000 37,182 65,115 36,408 118,471 - 434,223 - 127,700 - 127,700 Trade payables are non-interest bearing and are normally settled on 30-day terms. For terms and conditions relating to related parties refer to note 22). The net of GST payable and GST receivable, PAyG payable and Superannuation payable and is remitted to the appropriate body on a quarterly basis.  NOTES TO THE fINANCIAl STATEMENTS (c’td) For tHe year eNded 30 JUNe 2006 14 INtereSt-BearINg LoaNS aNd BorroWINgS Effective  interest  rate % CONSOLIDATED PARENT 2006 $ 2005 $ 2006 $ 2005 $ Current Obligations under finance leases and hire purchase contracts (note 19) Obligations under premium funding contracts Non-current Obligations under finance leases and hire purchase contracts (note 19) Loan from Employee Loan from Subsidiary 34,272 38,856 31,955 31,225 34,272 38,856 31,955 31,225 73,128 63,180 73,128 63,180 20,299 3,500 18,192 - 20,299 3,500 18,192 - - - 351,651 351,651 23,799 18,192 375,450 369,843 Hire Purchase Contracts Hire purchase contract maturity ranges from November 2006 to September 2008. Finance facilities available At reporting date, the following financing facilities had been negotiated and were available: Total facilities: - Bank overdraft Facilities used at reporting date - Bank overdraft Facilities unused at reporting date - Bank overdraft CONSOLIDATED 2005 $ 2006 $ PARENT 2006 $ 2005 $ 250,000 250,000 250,000 250,000 (2,116) (111,818) (2,116) (111,818) 247,884 138,182 247,884 138,182 Bank overdrafts The bank overdrafts are secured by a floating charge over assets of the Group. 15 provISIoNS Current Employee entitlements Tax payable Movements in Employee Entitlements Opening Balance Movements Closing Balance CONSOLIDATED PARENT 2006 $ 2005 $ 2006 $ 2005 $ 91,560 36,338 127,898 58,339 33,221 91,560 58,339 63,419 91,560 36,338 121,758 127,898 56,609 1,730 58,339 58,339 33,221 91,560 58,339 63,419 121,758 56,609 1,730 58,339 ANNUAL REPORT 2006 5      NOTES TO THE fINANCIAl STATEMENTS (c’td) For tHe year eNded 30 JUNe 2006 5 16 UNearNed reveNUe Current Unearned Revenue 17 ISSUed CapItaL aNd reServeS CONSOLIDATED 2006 $ 2005 $ 112,199 112,199 321,851 321,851 PARENT 2006 $ 112,199 112,199 2005 $ 321,851 321,851 Ordinary Shares  Issued and fully paid Movement in ordinary shares on the  issue At 1 July 2004 At 1 July 2005 At 30 June 2006 CONSOLIDATED PARENT 2006 $ 2005 $ 2006 $ 2005 $ 5,659,623 5,659,623 5,659,623 5,659,623 No. $ No. $ 34,210,648 34,210,648 34,210,648 5,659,623 5,659,623 5,659,623 34,210,648 34,210,648 34,210,648 5,659,623 5,659,623 5,659,623 The company has two share option schemes under which options to subscribe for the company’s shares have been granted to certain executives and employees (refer note 12) Other Reserves  CoNSoLIdated pareNt Employee  equity  benefits  reserve $ Asset  revaluation  reserve $ Total $ Asset  revaluation  reserve $ Net  unrealised  gains  reserve $ Employee  equity  benefits  reserve $ - - - - - - - - - - - 370 370 22,679 23,049 At 1 July 2004 Share based payment At 30 June 2005 Share based payment As at 30 June 2006 Foreign  currency  translation Total $ $ - 370 370 - - - - 370 370 22,679 22,679 - 23,049 23,049 - - - - - - 370 370 22,679 23,049 Nature and purpose of reserves Employee equity benefits reserve The employee share option and share plan reserve is used to record the value of equity benefits provided to employees and directors as part of their remuneration. Refer to note 12 for further details of these plans. 18 FINaNCIaL rISk MaNageMeNt oBJeCtIveS aNd poLICIeS The Group’s principal financial instruments comprise bank loans and hire purchase contracts, cash and short-term deposits. The main purpose of these financial instruments is to raise finance for the Group’s operations. The Group has various other financial instruments such as trade debtors and trade creditors, which arise directly from its operations.      ANNUAL REPORT 2006 NOTES TO THE fINANCIAl STATEMENTS (c’td) For tHe year eNded 30 JUNe 2006 18 FINaNCIaL rISk MaNageMeNt oBJeCtIveS aNd poLICIeS (c’td) It is, and has been throughout the period under review, the Group’s policy that no trading in financial instruments shall be undertaken. 5 The main risks arising from the Group’s financial instruments are interest rate risk, liquidity risk, credit risk. The board reviews and agrees policies for managing each of these risks and they are summarised below. Interest rate risk The Group’s exposure to market risk for changes in interest rates relates primarily to the Group’s long-term debt obligations. The Group’s policy is to manage its interest cost using a mix of fixed and variable rate debt. At 30 june 2006, approximately 98% of the Group’s borrowings are at a fixed rate of interest. Foreign currency risk The Group’s exposure to foreign currency risk is minimal. Commodity price risk The Group’s exposure to price risk is minimal. Credit risk The Group trades only with recognised, creditworthy third parties. It is the Group policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not significant. For transactions that are not denominated in the measurement currency of the relevant operating unit, the Group does not offer credit terms without the specific approval of the Head of Credit Control. Due to unforeseen circumstances, one exposure has arisen in the year as a result of the liquidation of a customer. At the balance sheet date the loss on this contract was $17,040, and has been charged to the income statement. In light of the above exposure, the directors have reassessed the Group’s strategies for managing credit exposure, but are of the continued view that they remain appropriate for the Group’s circumstances. With respect to credit risk arising from the other financial assets of the Group, which comprise cash and cash equivalents, available-for-sale financial assets and certain derivative instruments, the Group’s exposure to credit risk arises from default of the counter party, with a maximum exposure equal to the carrying amount of these instruments. There are no significant concentrations of credit risk within the Group.      NOTES TO THE fINANCIAl STATEMENTS (c’td) For tHe year eNded 30 JUNe 2006 5 18 FINaNCIaL rISk MaNageMeNt oBJeCtIveS aNd poLICIeS (c’td) Liquidity risk The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts and hire purchase contracts. 19 FINaNCIaL INStrUMeNtS a)  Terms, conditions and accounting policies Accounting Policies Terms & Conditions Instruments Financial assets i) Cash All cash is carried at nominal amounts. Interest is recognised as revenue or expense as it accrues. receivables-trade Trade receivables are carried at nominal amounts. receivables-loans loans are recorded at All nominal value. All cash is available ‘at call’. The National Australia Bank hold a first registered mortgage debenture charge over Empired Ltd. Receivables are in accordance with company credit terms of 30 to 45 days. received The loans are interest free and unsecured. The loans are for previous employees of Tusk Technologies Pty Ltd who are now employees of Empired leave Limited. When Empired’s the loans become payable at the discretion of management. employment they ii) Financial liabilities accounts payable Hire purchase Liabilities are recognised for amounts to be paid in the future for goods and services, whether or not billed to the company. Hire purchase interest is charged or credited to the statement of financial performance. Short term loans interest is credited to statement of financial All the performance when expired. Accounts payable are normally settled on 30-day terms. Hire purchase contracts are typically for a period of 36 months. Computer equipment on hire purchase is used as security for the loan. The contracts are for 10 months and are not secured.    ANNUAL REPORT 2006 NOTES TO THE fINANCIAl STATEMENTS (c’td) For tHe year eNded 30 JUNe 2006 19 FINaNCIaL INStrUMeNtS (c’td) b) Interest Rate Risk 5 Exposure to interest rate risks on financial assets and liabilities are summarised as follows: 2006 i)  ii)  Financial Assets Cash Receivables – term deposit Receivables – trade Receivables – loans Receivables – other Total financial assets Financial liabilities Bank Overdraft Accounts payables Hire purchase Short term loans Floating interest rate Fixed Interest Rate 1 year or less 2006 $ 2006 $ Fixed Interest Rate Over 1 to 5 years 2006 $ 3,500 Non- interest bearing 2006 $ 686,997 17,239 335,081 2,116 37,432 41,858 21,473 228,041 3,500 Total financial liabilities 2,116 79,290 21,473 231,541 Carrying amount as per statement of financial position 2006 $ Weighted average effective interest rate 2006 $ 3,500 686,997 17,239 335,081 2,116 228,041 58,905 45,358 334,420 1.25% - - - 8.75% - 8.70% 7.28% 3,500 1,022,078 1,025,578 2005 Floating interest rate Fixed Interest Rate 1 year or less Fixed Interest Rate Over 1 to 5 years Non- interest bearing 2005 $ 2005 $ 2005 $ 2005 $ Carrying amount as per statement of financial position 2005 $ Weighted average effective interest rate 2005 $ iii)  Financial Assets Cash Receivables – term deposit Receivables – trade Receivables - loans Receivables - other Total financial assets iv)  Financial liabilities Bank Overdraft Accounts payables Hire purchase Short term loans 111,668 Total financial liabilities 111,668 859,356 17,239 438,116 859,356 17,239 438,116 1,314,711 1,314,711 31,954 31,225 63,179 434,222 18,193 18,193 434,222 111,668 434,222 50,147 31,225 627,262 - - - 8.75% - 8.70% 7.28%  NOTES TO THE fINANCIAl STATEMENTS (c’td) For tHe year eNded 30 JUNe 2006 5 20 CoMMItMeNtS aNd CoNtINgeNCIeS No contingent assets or liabilities as at 30 june 2006 Commitments for expenditure Hire purchase The consolidated entity has various computer equipment on two hire purchase arrangements. The lease is for a period of 35 months. Not later than one year Later than one year but not later than five years Less: unexpired charges Hire Purchase Current (refer note 12) Non Current (refer note 12) Total Hire Purchase Loan Repayments The consolidated entity has borrowed the necessary funds from CGU to finance insurance. The term of the loans are both for 10 months each. Not later than one year Later than one year but not later than five years Less: unexpired charges Loan Repayments Current (refer note 14) Non Current (refer note 14) Total Loan Repayments CONSOLIDATED 2005 2006 $ $ PARENT 2006 $ 2005 $ 37,432 21,473 (4,329) 35,149 18,783 (3,785) 37,432 21,473 (4,329) 35,149 18,783 (3,785) 54,576 50,147 54,576 50,147 34,272 20,304 31,954 18,192 34,272 20,304 31,954 18,192 54,576 50,146 54,576 50,147 41,858 - (3,002) 33,693 - (2,468) 41,858 - (3,002) 33,693 - (2,468) 38,856 31,225 38,856 31,225 38,856 - 31,225 - 38,856 - 31,225 - 38,856 31,225 38,856 31,225 Office premises are leased under non-cancellable operating leases for periods of 36 months and 37 months ending 30 june 2007. Their commitment can be seen below: Operating Leases Minimum lease payments under non-cancellable operating leases according to the time expected to elapse to the expected date of payment: Not later than one year Later than one year but not later than five years 113,102 - 76,969 48,236 113,102 - 76,969 48,236 113,102 125,205 113,102 125,205 0 NOTES TO THE fINANCIAl STATEMENTS (c’td) For tHe year eNded 30 JUNe 2006 21 IMpaIrMeNt teStINg oF INdeFINIte LIved goodWILL Goodwill acquired through business combinations has been allocated to the individual cash generating units for impairment testing. The recoverable amount of the IT Infrastructure Services cash generating unit has been determined based on a value in use calculation. To calculate this, cash flow projections are based on financial budgets approved by senior management covering a five-year period. The discount rate applied to cash flow projections is 12.75% (2005: 12.75%) and cash flows beyond the five- year period are extrapolated using a 12.7% growth rate (2005: 12.7%) that is the same as the long-term average growth rate for the IT Infrastructure Services market sector. Carrying amount of goodwill, patents and licences CONSOLIDATED PARENT IT Infrastructure Services Segment Total Total 2006 $ 2005 $ 2006 $ 2005 $ 2006 $ 2005 $ Carrying amount of goodwill 1,886,958 1,886,958 1,886,958 1,886,958 - - key assumptions used in value in use calculation for 30 June 2006 and 30 June 2005 The following describes each key assumption on which management has based its cash flow projections to undertake impairment testing of goodwill, patents and licences. Budgeted gross margins – the basis used to determine the value assigned to the budgeted gross margins is the average gross margins achieved in the year immediately before the budgeted year increased for expected efficiency improvements. Bond rates - the yield on a five-year government bond rate at the beginning of the budgeted year is utilised and the value assigned to the key assumption is consistent with external information sources. Values assigned to key assumptions reflect past experience, except for efficiency improvements which have been estimated at 3% per annum. Resources price inflation – the basis used to determine the value assigned to the resources price inflation is the forecast price indices during the budget year for Australia. key assumptions are consistent with external information sources. ANNUAL REPORT 2006 5 1 NOTES TO THE fINANCIAl STATEMENTS (c’td) For tHe year eNded 30 JUNe 2006 5 22 reLated party dISCLoSUre Other Financial Assets % Equity Interest Investment ($) Country of Incorporation Tusk Technologies Pty Ltd Australia 2006 % 100 2005 % 100 2006 $ 2005 $ 374,345 397,427 374,345 397,427 The balance of the Tusk Technologies Pty Ltd loan as at 30 june 2006 is $351,651. This loan is unsecured. Other than this related party loan there are no other related party transactions requiring disclosure. 23 eveNtS aFter tHe BaLaNCe SHeet date There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the directors of the Company, to affect significantly the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity, in future financial years other than as set out below: 1. The Company has completed its application for the Research and Development (“R & D”) tax concession. The expected value of the R & D tax offset is $332,893. This amount will be payable to the Company following lodgement of its 2006 Income Tax Return. Refer note 5. 2. The company will issue a company wide Employee Share Option plan to all employees. Details of the plan are set out in the Directors Report. 24 aUdItorS’ reMUNeratIoN CONSOLIDATED 2005 2006 $ $ PARENT 2006 $ 2005 $ Amounts received or due and receivable by Ernst & Young Australia for: • an audit or review of the financial report of the entity and any other entity in the consolidated entity 16,500 14,000 16,500 14,000 • other services in relation to the entity and any other entity in the consolidated entity * tax compliance * assurance related * special audits required by regulators Amounts received or due and receivable by auditors other than Ernst & Young Australia for: • an audit or review of the financial report of subsidiary entities 21,200 - - 37,700 31,903 - - 44,903 21,200 - - 37,700 31,903 - - 44,903 690 38,390 - 44,903 690 38,390 - 44,903  ANNUAL REPORT 2006 NOTES TO THE fINANCIAl STATEMENTS (c’td) For tHe year eNded 30 JUNe 2006 25 dIreCtor aNd eXeCUtIve dISCLoSUreS transactions with key management personnel 5 In addition to their salaries, the consolidated entity also provides non-cash benefits to key management personnel. Executive officers also participate in the consolidated entity’s share option plan (see note 12). key management personnel compensation CONSOLIDATED 2005 2006 $ $ PARENT 2006 $ 2005 $ Aggregate of income paid or payable or otherwise made available: Short-term employee benefits Termination benefits Share-based payments 285,002 343,228 285,002 343,228 49,500 30,800 171,875 370 49,500 30,800 171,875 370 To all directors by the company or by any related party 365,302 515,473 365,302 515,473 Loans to key management personnel and other related parties There are no loans to key management personnel or other related parties. other key management personnel transactions with the company or its controlled entities There have been no other key management personnel transactions with the company or its controlled entities. 26 dIvIdeNdS There were no Dividends paid or provided for during the year. 27 traNSItIoN to aIFrS For all periods up to and including the year ending 30 june 2005, the group prepared its financial statements in accordance with Australian Generally Accepted Accounting Practice (AGAAP). These financial statements are the first the company has had to prepare in accordance with Australian equivalents to International Financial Reporting Standards (AIFRS). Accordingly, the Group has prepared financial statements that comply with AIFRS applicable for periods beginning on or after 1 january 2005 and the significant accounting policies meeting those requirements are described in note 2. In preparing these financial statements, the Group has started from an opening balance sheet as at 1 july 2004, the Group’s date of transition to AIFRS, and made those changes in accounting policies and other restatements required by AASB 1 First- time adoption of AIFRS . This note explains the principal adjustments made by the Group in restating its AGAAP balance sheet as at 1 july 2004 and its previously published AGAAP financial statements for the year ended 30 june 2005.  NOTES TO THE fINANCIAl STATEMENTS (c’td) For tHe year eNded 30 JUNe 2006 5 27 traNSItIoN to aIFrS (c’td) Exemptions Applied: AASB 1 allows for certain exemptions from the general requirement to apply AIFRS retrospectively. The Group has taken the following exemptions: • Comparative information for financial instruments is prepared in accordance with AGAAP and the company and group have adopted AASB 132: Financial Instruments: Disclosure and Presentation and AASB 139 Financial Instruments: Recognition and Measurement from 1 july 2005. AASB 1 allows first-time adopters certain exemptions from the general requirement to apply AIFRS restrospectivelyretrospectively. • AASB 3 Business Combinations has not been applied to acquisitions of subsidiaries or of interests in associates and joint ventures that occurred before 1 july 2004. • Cumulative currency translation differences for all foreign operations are deemed to be zero as at 1 july 2004. • AASB 2 Share-based Payment has not been applied to any equity instruments that were granted on or before 7 November 2002, nor has it been applied to equity instruments granted after 7 November 2002 that vested before 1 january 2005. Explanation of material adjustments to the cash flow statement  There are no material differences between the cash flow statement presented under AIFRS and the cash flow statement presented under previous AGAAP.  ANNUAL REPORT 2006 dIRECTOR’S dEClARATION For tHe year eNded 30 JUNe 2006 27 traNSItIoN to aIFrS (c’td) Balance Sheet Reflecting Transition to AIFRS at 1 july 2004 5 Current Assets Cash assets Receivables Other AGAAP ($) Consolidated AIFRS Impact ($) AIFRS AGAAP ($) ($) Parent AIFRS Impact ($) AIFRS ($) 29,720 1,078,393 36,230 - 57,923 - 29,720 1,136,316 36,230 28,899 1,061,155 36,230 - 57,633 - 28,899 1,118,788 36,230 Total Current Assets 1,144,343 57,923 1,202,356 1,126,284 57,633 1,183,917 Non-Current Assets Investments Plant and equipment Intangible assets Other - 183,897 1,871,676 1,386,179 Total Non-Current Assets 3,441,752 - - - - - - 183,897 1,871,676 1,386,179 324,205 146,918 4,718 1,386,179 3,441,752 1,862,020 - - - - - 324,205 146,918 4,718 1,386,179 1,862,020 Total Assets 4,586,095 57,923 4,644,018 2,988,304 57,633 3,045,937 Current Liabilities Bank Overdraft Payables Provisions Interest bearing liabilities Other 710,180 83,408 49,864 283,878 Total Current Liabilities 1,127,330 Non-Current Liabilities Interest bearing liabilities Other financial liabilities Total Non-Current Liabilities 24,717 - 24,717 Total Liabilities 1,152,047 - - - - - - - - - 710,180 83,408 49,864 283,878 679,704 74,051 49,864 283,878 1,127,330 1,087,497 24,717 - 24,717 309,001 24,717 333,718 1,152,047 1,421,215 - - - - - - - - - 679,704 74,051 49,864 283,878 1,087,497 24,717 309,001 333,718 1,421,215 Net Assets 3,434,048 57,923 3,491,971 1,567,089 57,633 1,624,722 Equity Contributed equity Accumulated losses 5,659,623 (2,225,575) - 5,659,623 57,923 (2,167,652) 5,659,623 (4,092,534) - 5,659,623 57,633 (4,034,901) Total Equity 3,434,048 57,923 3,491,971 1,567,089 57,633 1,624,722  NOTES TO THE fINANCIAl STATEMENTS (c’td) For tHe year eNded 30 JUNe 2006 5 27 traNSItIoN to aIFrS (c’td) Balance Sheet Reflecting Transition to AIFRS at 30 june 2005 Consolidated AGAAP ($) AIFRS Impact ($) AIFRS AGAAP ($) ($) Parent AIFRS Impact ($) AIFRS ($) - 1,314,711 79,956 - 20,686 - - 1,335,397 79,956 - 1,297,472 79,956 - 20,686 - - 1,318,158 79,956 Current Assets Cash assets Receivables Other Total Current Assets 1,394,667 20,686 1,415,353 1,377,428 20,686 1,398,114 Non-Current Assets Investments Plant and equipment Intangible assets Other - 177,550 1,628,287 1,824,002 - - 242,200 - - 177,550 1,870,487 1,824,002 397,427 149,012 3,530 1,824,002 Total Non-Current Assets 3,629,839 242,200 3,872,039 2,373,971 - - - - - 397,427 149,012 3,530 1,824,002 2,373,971 Total Assets 5,024,506 262,886 5,287,392 3,751,399 20,686 3,772,085 Current Liabilities Bank Overdraft Payables Provisions Interest bearing liabilities Other 111,668 434,222 121,469 63,180 321,851 Total Current Liabilities 1,052,390 Non-Current Liabilities Interest bearing liabilities Other financial liabilities Total Non-Current Liabilities 18,192 - 18,192 Total Liabilities 1,070,582 - - - - - - - - - - 111,668 434,222 121,469 63,180 321,851 111,668 434,222 121,469 63,180 321,851 1,052,390 1,052,390 18,192 - 18,192 351,651 18,192 369,843 1,070,582 1,422,233 - - - - - - - - - - 111,668 434,222 121,469 63,180 321,851 1,052,390 18,192 351,651 369,843 1,422,233 Net Assets Equity Contributed equity Employee Equity Benefits Reserve Accumulated losses 3,953,924 262,886 4,216,810 2,329,166 20,686 2,349,852 5,659,623 (1,705,699) - 370 5,659,623 370 262,516 (1,443,183) 5,659,623 (3,330,457) - 370 5,659,623 370 20,316 (3,310,141) Total Equity 3,953,924 262,886 4,216,810 2,329,166 20,686 2,349,852  ANNUAL REPORT 2006 NOTES TO THE fINANCIAl STATEMENTS (c’td) For tHe year eNded 30 JUNe 2006 27 traNSItIoN to aIFrS (c’td) Income Statement for the year Ended 30 june 2005 5 Consolidated AIFRS Impact ($) AGAAP ($) AIFRS AGAAP ($) ($) Parent AIFRS Impact ($) AIFRS ($) Revenues from ordinary activities 3,778,928 - 3,778,928 3,778,928 - 3,778,928 Cost of sales Gross Profit (1,785,546) - (1,785,546) (1,858,116) - (1,858,116) 1,993,382 - 1,993,382 1,920,813 - 1,920,813 Legal expenses Marketing expenses Occupancy expenses Salaries and employee expenses Amortisation expense Depreciation expense Other expenses from ordinary activities (18,426) (21,220) (85,650) (614,564) (643,074) (61,930) (304,153) - - - (370) 242,200 - (36,946) (18,426) (21,220) (85,650) (614,934) (400,874) (61,930) (341,099) (18,426) (21,220) (85,650) (623,921) (400,874) (53,488) (230,668) - - - (370) - - (36,947) (18,426) (21,220) (85,650) (624,291) (400,874) (53,488) (267,615) Profit\(Loss) from ordinary activities before income tax Income tax revenue relating to ordinary activities Profit\(Loss) from ordinary activities after income tax Net Profit\(Loss) attributable to members of Empired Total changes in equity other than those resulting from transactions with owners as owners 244,365 204,884 449,249 486,566 (37,317) 449,249 275,510 - 275,510 275,510 - 275,510 519,875 204,884 724,759 762,076 (37,317) 724,759 519,875 204,884 724,759 762,076 (37,317) 724,759 519,875 204,884 724,759 762,076 (37,317) 724,759  HEAdlINE 27 traNSItIoN to aIFrS (c’td) (i) Accounting for Goodwill On transitions to AIFRS Goodwill is no longer amortised but continues to be subject to an annual assessment for impairment to ensure that the carrying value of goodwill is not greater than the recoverable amount. As a result, the statement of financial performance will no longer include an expense item reflecting the annual Goodwill Amortisation. No impairment adjustment to opening Retained Earnings arises in respect of this issue. During the AIFRS comparative financial year ended 30 june 2005, goodwill amortisation of $242,200 was recognised under Australian GAAP. This amount will be reversed in the AIFRS comparative statement of financial performance. (ii) Income Tax A “balance sheet” approach to tax-effect accounting is followed under AIFRS replacing the current “statement of financial performance” approach. This approach recognises deferred tax balances when there is a difference between the carrying value of an asset or liability and its tax base. (iii) Research & Development Replacing AASB 1011 Accounting for Research and Development costs is AASB 138 intangibles. under the prior standard research and development costs may be carried forward in relation to a project if the costs are expected, beyond reasonable doubt, to be recoverable in the future. under AASB 138 no intangible asset arising from the research phase of development is permitted to be recognised. An intangible asset arising from development is still recognised on satisfaction of certain criteria to do with future economic benefits. It is not expected that this will have a significant impact on Empired as most cost relating to research and development is development work as opposed to research. (iv) Impairment of Assets under AASB 136 Impairment of Assets, the recoverable amount of an asset is determined as the higher of fair value less costs to sell, and value in use. In determining value in use, projected future cash flows are discounted using a risk adjusted pre-tax discount rate and impairment is assessed for the individual asset or at the ‘cash generating unit’ level. Empired will have to test the Net Recruiter software and goodwill for impairment on an annual basis. On testing the Net Recruiter software and goodwill for impairment there was no impairment loss at 30 june 2005. (v) Share Based Employee Payments Empired does not currently recognise an expense for options issued to staff, under the directors, or employee Share Option Plan. under AASB2 Share Based Payments, Empired will recognise an expense for all share based remuneration over the relevant vesting periods. The standard applies to all share-based payments issued after 7 November 2002 which have not vested as at 1 january 2005. This will effectively create an expense to the income statement and a subsequent increase in equity. 5  ANNUAL REPORT 2006 dIRECTOR’S dEClARATION In accordance with a resolution of the directors of Empired Limited, I state that: In the opinion of the directors: 5 (a) the financial statements and notes of the company and of the consolidated entity are in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the company’s and consolidated entity’s financial position as at 30 june 2006 and of their performance for the year ended on that date; and (ii) complying with Accounting Standards and Corporations Regulations 2001; and (b) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable. On behalf of the Board Russell Baskerville Managing Director 20th of October 2006  0 1  THIS PAGE INTENTIONALLY LEFT BLANK. PRINCIPLE PLACE OF BUSINESS Perth 469 Murray Street PERTH WA 6000 Telephone No: +618 9321 9401 Fax No: +618 9321 9402 Melbourne 470 Colins Street MELBOURNE VIC 3000 Telephone No: +613 8610 0700 Fax No: +613 8610 0701 Sydney 3 Spring Street SYDNEY NSW 2000 Telephone No: +612 9256 0200 Fax No: +612 9256 0201 WEB SITE ADDRESS www.empired.com CORPORATE DIRECTORY DIRECTORS Mel Ashton (Chairman) David Taylor (Non – executive Director) Russell Baskerville (Managing Director & CEO) COMPANY SECRETARY Craig J Ferrier REGISTERED OFFICE 469 Murray Street PERTH WA 6000 Telephone No: +618 9321 9401 Fax No: +618 9321 9402 COMPANY NUMBER A.C.N: 090 503 843 LEGAL ADVISERS McKenzie Moncrieff Lawyers Level 5, 37 St Georges Tce Perth WA 6000 AUDITORS Ernst & Young The Ernst & Young Building 11 Mounts Bay Road PERTH WA 6000 COMPANY DOMICILE AND LEGAL FORM Empired Limited is the parent entity and an Australian Company limited by shares COUNTRY OF INCORPORATION Australia Empired_cover.indd 2 Empired_cover.indd 2 19/10/06 4:28:23 PM 19/10/06 4:28:23 PM ANNUAL REPORT 2006 www.empired.com EMPIRED Ltd. ABN 81 090 503 843 Empired_cover.indd 1 Empired_cover.indd 1 19/10/06 4:28:20 PM 19/10/06 4:28:20 PM 

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