EMPIRED Ltd.
ABN 81 090 503 843
www.empired.com
ANNUAL REPORT 2008
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EMPIRED Ltd.
ABN 81 090 503 843
CORPORATE DIRECTORY
DIRECTORS
Mel Ashton (Non – Executive Chairman)
COMPANY SECRETARY
Mark Waller
David Taylor (Non – Executive Director)
Jeremy King
Richard Bevan (Non – Executive Director)
Russell Baskerville (Managing Director & CEO)
REGISTERED OFFICE
469 Murray Street
PERTH WA 6000
LEGAL ADVISERS
McKenzie Moncrieff Lawyers
Level 5, 37 St Georges Tce
Telephone No: +618 9321 9401
Perth WA 6000
Fax No: +618 9321 9402
COMPANY NUMBER
A.C.N:
090 503 843
COUNTRY OF INCORPORATION
Australia
AUDITORS
Grant Thornton (WA) Partnership
Level 1, 10 Kings Park Road
WEST PERTH WA 6005
COMPANY DOMICILE AND LEGAL FORM
Empired Limited is the parent entity and an
SHARE REGISTER
Computershare Investor Services Pty Ltd
Australian Company limited by shares
Level 2, 45 St Georges Tce
PRINCIPLE PLACE OF BUSINESS
Perth
469 Murray Street
PERTH WA 6000
Perth WA 6000
ASX CODE: EPD
Melbourne
470 Collins Street
MELBOURNE VIC 3000
Telephone No: +618 9321 9401
Telephone No: +613 8610 0700
Fax No: +618 9321 9402
Fax No: +613 8610 0701
Level 13
Septimus Roe Square
256 Adelaide Terrace
PERTH WA 6000
Telephone No: +618 9223 1234
Adelaide
Level 5
City Central, Tower 2
121 King William Street
ADELAIDE SA 5000
Fax No: +618 9223 1230
Telephone No: +618 8423 4426
Fax No: +618 8423 4500
WEBSITE www.empired.com
CONTENTS
CORPORATE DIRECTORY
KEY ACHIEVEMENTS
RESULTS
CHAIRMAN & CEO REVIEW
DIRECTORS’ REPORT
2
4
5
6
14
CORPORATE GOVERNANCE STATEMENT 24
FINANCE REPORT
INCOME STATEMENT
BALANCE SHEET
CASH FLOW STATEMENT
STATEMENT OF CHANGES IN EQUITY
NOTES TO THE FINANCIAL STATEMENTS
DIRECTORS’ DECLARATION
AUDITOR’S INDEPENDENCE
DECLARATION
INDEPENDENT AUDIT REPORT
SHAREHOLDING ANALYSIS
28
29
30
31
32
34
81
82
83
86
RESULTS
Revenue
EBITDA
NPAT
EPS
2007
2008
Growth
$ 7,080,596
$ 19,312,728
$ 493,163
$ 1,183,148
$ 400,155
$ 1,295,055
1.1 cents per share
3.0 cents per share
172%
140%
224%
173%
Dividend Declared
-
0.5 cents per share
4
EMPIRED LIMITED | 2008 Annual Report
HIGHLIGHTS
»
Record revenue of $19.3m (up 172%), EBITDA of $1.18m (up 140%) and NPAT of
$1.30m (up 224%)
»
Earnings per share increased to a record 3.0 cents per share up 173% on the previous
year
A maiden full year fully franked dividend of 0.5 cents per share has been declared
Completed capital raising and ASX listing
Acquired and integrated Quadrant Group and Commander’s WA ICT business
Invested in our managed services business
Positioned to compete on larger multi-year contracts
Increased the number of long term contracted clients and level of recurring revenue
Expanded our service offerings and developed strong relationships with leading global
technology providers
Invested in our internal systems and processes to ensure a solid platform for growth
Expanded our executive management team
»
»
»
»
»
»
»
»
»
“Our capability can be defined by the services we offer, the
people we employ, our experience combined with “know how”
and the technologies we invest in.”
5
CHAIRMAN & CEO REVIEW
6
EMPIRED LIMITED | 2008 Annual Report
Dear Shareholder
It is with great pleasure that we present to you our fi rst annual report as an ASX listed company. In 2008 Empired
achieved strong fi nancial results experiencing triple digit growth. Revenue was up 172% to $19.3 million; EBITDA
was up 140% to $1.18 million and net profi t after tax was up 224% to $1.30 million.
Importantly the key measure of earnings per share was up 173% to 3.0 cents demonstrating tight capital and
fi scal management.
On the back of these strong results a maiden 0.5 cent per share fully franked dividend has been declared. This is
a sign of the Board’s comfort in the achievements to date and continued growth of Empired. Subject to Empired’s
continued strong performance, the Board intends to grow both the dividend payout ratio and the value of dividend
payments.
This strong performance is the result of a sound strategic plan that has been diligently executed.
“Subject to Empired’s continued
strong performance the board intends
to grow both the dividend payout ratio
and the value of dividend payments.”
7
CHAIRMAN & CEO REVIEW (cont’d)
Monthly Recurring Revenue
172%
2006
2007
2008
STAFF
205%
2007
2008
8
EMPIRED LIMITED | 2008 Annual Report
GROWING OUR RECURRING REVENUE We outlined a plan to focus on growing our managed services
business, to build a stable base of long term cumulative revenue. Our monthly recurring revenue has grown across
the year over 64% whilst increasing the number of long term contracted clients.
This has allowed Empired to develop more strategic relationships with our customers. Relationships of this nature
provide a seat at the table with the decision makers, resulting in a deeper understanding of our customers’
businesses and their core objectives, and an ability to provide strategic advice through an inherent level of trust
across the organisation.
Over 33% of Empired’s total revenue is now being derived from our long term contracted client base. This is a
natural risk mitigation against cyclical project work and increased competition.
Investments made over the previous year to ensure competitiveness include the implementation of new leading
edge technology, an increase in the scope of services offered and the continued development and evolution of our
ITIL based services framework.
Empired’s managed services sales pipeline is the strongest it has ever been and we are confi dent of achieving
further substantial growth in the year ahead.
“Empired has developed more
strategic relationships with its
customers.”
9
CHAIRMAN & CEO REVIEW (cont’d)
Resources
Government
ICT
Finance
Other
IT SERVICE OFFERINGS
IT SERVICE OFFERINGS
EMPIRED CORE SERVICE
IT Strategic Planning
IT Consulti ng
Project Management
Business Analysis
Business Process Redesign
Applicati on Development & Support
Data Management & Migrati on
Systems Integrati on
Knowledge Management
Business Intelligence
Technical Infrastructure Services
Infrastructure Outsourcing
Recruitment & Resourcing
√
√
√
√
√
√
√
√
√
√
√
√
√
10
EMPIRED LIMITED | 2008 Annual Report
“Part of our core strategy is to
focus on larger and longer managed
services contracts..”
GROWING OUR CAPABILITY Empired’s capability can be defi ned by the services we offer, the people we employ,
our experience combined with “know how” and the technologies invested in. Empired’s ongoing development and
commitment to capability enhancement in each of these areas has continued.
We have introduced new service offerings through the acquisition of Quadrant Group, a leading information
management and consulting business specialising in the provision of IT Planning & Strategy, Business Analysis,
Project Management, Change Management and Business Continuity Management.
Following this we increased the depth of our existing technical services and sales capability through the acquisition
of Commander’s WA Enterprise ICT business.
Empired’s staffi ng levels grew over 105% to 154 full time equivalent employees. In line with this we continued our
ongoing investment in training to ensure our consultants are among the best in our industry and equipped with the
skills to ensure the highest quality services are delivered to our clients.
A strategic focus has been placed on developing business relationships and partnerships with global technology
providers whilst retaining our consulting independence.
This has lead to strong relationships with world wide organisations including Microsoft, SUN Microsystems, NetApp
and VMware to name a few. These relationships provide Empired with the ability to leverage capability from
these large multinational organisations, provide consulting and technical services around their technology and be
recognised by our customers as specialists.
DELIVERING ON ACQUISITIONS During the past nine months Empired has been very active in the acquisition
and integration of complimentary IT businesses.
Acquisitions were a new area of growth for Empired. You, as a shareholder, were asked to trust our judgement
and we have demonstrated our ability to identify, execute and integrate these businesses, without detriment to our
existing operations and to translate these transactions into improved shareholder value.
The two transactions undertaken in the last twelve months have proven a great success and position us well for
future acquisitions.
Empired’s greatest asset is its people and accordingly integrating our cultures was the highest of priorities. With
staff numbers more than doubling over the last twelve months regular planned communication to all staff was
paramount. We communicated our vision, our business model, our challenges, our values and much more. We
reiterated these key messages to all staff through a variety of medium and forums.
11
CHAIRMAN & CEO REVIEW (cont’d)
Today, only a few months following our latest acquisition our employees are of similar mindset, have adopted
common workplace values and most importantly are working as a single team with a common vision.
Operational integration was also undertaken with common systems, processes and procedures rolled out across
the entire organisation. This has ensured a consistent experience for our clients, suppliers and employees.
Our sales teams operate as one cohesive unit and are well versed in our expanded services capability and solution
offerings. All of this has been communicated to our clients, both new and existing, and on the back of these
initiatives we have experienced strong cross selling of these new service offerings to many of our clients.
DRIVING OPERATIONAL IMPROVEMENTS With such growth has come great change across our business. We
have had to diligently plan and manage this growth to ensure operational effi ciency and consistent service quality.
A range of new business management tools have been implemented to ensure our effi ciency and standards are
maintained.
Active programs of work include improvements to our IT Systems, the introduction of new project management
toolsets and increased functionality to our intranet creating a central repository for all information, collaboration
and the core system to drive our business processes.
With these new tools in place we expect to not only maintain, but improve our operating margins in the year ahead.
THE ENVIRONMENT TODAY The Australian IT sector is a dynamic and growing $18 Billion market place. It
employs over 50,000 staff providing critical business systems and support to Australia’s leading companies.
Technology is a core component of our business and economic environment. Organisations today consider IT services
spend as non-discretionary and the shift is far beyond the use of technology to drive organisational effi ciency.
12
EMPIRED LIMITED | 2008 Annual Report
“The Australian IT sector is a dynamic and growing
$18 Billion market place.”
These systems are vital to our customer’s core business operations, embedded deep within their business
processes, products and services. They are reliant on these services to provide innovation, competitive advantage,
and access to new markets and revenue streams.
As we enter more uncertain times, these underlying demand drivers provide us with confi dence that Empired’s
services will remain in high demand and that our business will continue to experience sound growth.
Whilst we are confi dent in our sector, we are keenly aware of the current world economic environment and more
specifi cally the impact that this is having on the Australian economy where we have seen a tightening of credit
markets and continuing interest rate pressure.
In response to this we are assured by the strength of our robust business model, targeting long term contracted
recurring revenue. This model is geared toward core business infrastructure that customers are required to
operate and develop for the long term. Often this expenditure is a key component of their operating budgets as
opposed to capital expenditure which is traditionally more volatile in tightening market conditions.
In addition to our robust business model, Empired also boasts a sound business with a strong order book, a high
level of contracted revenue, low debt levels and strong cash fl ow.
A BRIGHT FUTURE We are very proud of Empired’s achievements over the previous year and sincerely thank all
our staff. What a fantastic effort, well done!
Looking forward, we are acutely aware that there is still so much to be done, and so much to achieve!
With our core business model now proven and our business in a strong fi nancial position we are ready to move to
the next level. The sector is ripe for consolidation and market share gains, our chosen industry is in high demand
and continues to grow. Our challenge is to take this opportunity and build a world class, leading Australian IT
services organisation.
We are excited by this prospect, our team is excited by this prospect and we are confi dent that striving toward this
goal will deliver strong fi nancial results and continue to improve shareholder value.
We thank you for your support and look forward to delivering a strong result in the year ahead.
Russell Baskerville
Managing Director & Chief Executive Offi cer
Mel Ashton
Chairman
13
DIRECTOR’S REPORT
The directors present their report together with the fi nancial report of Empired Limited (“the Company”) and the consolidated
fi nancial report of the consolidated entity, being the Company and its controlled entities, for the year ended 30 June 2008.
The names of the Company’s directors in offi ce during the year and until the date of this report are as below. Directors were in
offi ce for this entire period unless stated.
14
EMPIRED LIMITED | 2008 Annual Report
“Empired’s greatest asset is its
people.”
DIRECTORS
Name
Age Experience and special responsibilities
Mel Ashton
Chairman
50
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.
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:
Regional Councilor and former State Chairman of the WA Branch of Institute of Chartered
Accountants
Director and Vice President of the Fremantle Football Club Ltd
Chairman of Venture Minerals Limited
Chairman of Gryphon Minerals Ltd
Chairman of Empire Beer Group Limited
David Taylor
Non - executive
Director
66
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 of both Perth Market Authority and Forest
Products Commission and is a non-executive director of BigRedSky Limited.
David is a Fellow of the Australian Institute of Company Directors.
Russell Baskerville
Managing Director &
CEO
30
Mr Baskerville is an experienced business professional and has worked in the IT industry
for in excess of 10 years. He has extensive knowledge in both the strategic growth and
development of technology businesses balanced by strong commercial and corporate skills.
Prior to joining Empired, Mr Baskerville was a founding member of Tusk Technologies Pty
Ltd, which was acquired by the company in March 2002. He was also the founder and
Managing Director of Procom Holdings Pty Ltd, a company established to provide technical
service and support to merchant banking facilities on behalf of the larger banks in Australia.
Mr Baskerville currently holds non-executive Directorships with Procom Holdings Pty Ltd and
BigRedSky Limited.
15
DIRECTOR’S REPORT (cont’d)
DIRECTORS (cont‘d)
Name
Age Experience and special responsibilities
Richard Bevan
Non – executive
Director
42
Mr Bevan joined the board as a non-executive director on 31 January 2008 with corporate
and senior management experience including various directorship’s and CEO/MD roles in
ASX listed and private companies.Richard brings experience in the execution and integration
of mergers, acquisitions and other major corporate transactions.
Previously Richard was the Managing Director and Chief Executive Offi cer of Lifecare Health
Limited where he led the company through a successful initial public offer and ASX listing
and implemented a growth strategy that involved the acquisition and integration of a number
of businesses nationally.
Richard has been involved in a number of businesses in areas as diverse as healthcare,
construction and engineering, mining technology and information services. Richard’s roles
within these businesses have included operational management, implementing organic
growth strategies and acquisitions and assisting with capital raisings.
Richard is currently Managing Director of Cool Clear Water Group Limited, an unlisted public
company which operates a national business in the water services sector. He is also a non-
executive Director of e health Networks Pty Ltd which provides services in the Health care
industry. Richard is a Member of the Australian Institute of Company Directors.
COMPANY SECRETARIES
Name
Age Experience and special responsibilities
29
46
Mark Waller
CFO & Company
Secretary
(appointed as Company
Secretary 20 December
2007)
Craig Ferrier
Company Secretary
(resigned 20 December
2007)
Mark holds a degree in business from Curtin University majoring in Accounting and Business
Law. He completed his CPA studies specializing in Strategic Business Management,
Financial Planning and Taxation. Mark brings experience from running his own business in
London to working for Ernst & Young. Mark has responsibility for ensuring the necessary
operational and fi nancial processes and infrastructure are in place to support the strategic
direction and continued growth of Empired.
Mr Ferrier holds a Bachelor of Business and is a CPA with approximately 20 years
experience gained at chief fi nancial offi cer and company secretary level. He has worked
within a broad range of sectors including mining and exploration, venture capital,
manufacturing and information technology. He is principle of Seincorp Pty Ltd, a
consultancy providing specialist company secretarial and corporate advisory services. He is
also a non-executive director of ASX listed pieNETWORKS Limited.
Jeremy King (LLB)
Company Secretary
(appointed 20 December
34
Jeremy is a senior executive with Grange Consulting, providing general corporate,
transaction and strategic advice, and managing legal issues associated with the activities
undertaken by Grange’s clients.
2007)
Jeremy is a corporate lawyer with over 9 years experience in domestic and international
legal, fi nancial and corporate matters. He spent several years in London where he worked
with Allen & Overy LLP and Debevoise & Plimpton LLP and has extensive corporate
experience particularly in relation to private equity, leveraged buy-out acquisitions and acting
for banks, fi nancial institutions and corporate issuers in respect of various debt and equity
capital raisings.
16
EMPIRED LIMITED | 2008 Annual Report
PRINCIPAL ACTIVITIES
The principal activities of the consolidated entity during the year is the continued operation of its IT infrastructure services
business resulting in the provision of services covering software systems, consulting and infrastructure design and deployment.
The company demerged the BigRedSky operations in July 2007 leaving the IT infrastructure services business as the
company’s only operation.
Other than as described above there were no signifi cant changes in the nature of the activities carried out during the year.
NUMBER OF EMPLOYEES
At 30 June 2008 the Company employed 154 staff.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
There were no signifi cant changes in the state of affairs during the year.
EVENTS SUBSEQUENT TO REPORTING DATE
There has not arisen in the interval between the end of the fi nancial 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 signifi cantly the operations
of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity or in future fi nancial
years.
ENVIRONMENTAL REGULATION
The consolidated entity’s operations are not subject to any signifi cant environmental regulations under either Commonwealth or
State Legislation.
DIVIDENDS
After the balance sheet date the following dividends were proposed by the directors. The dividends have not been provided
and there are no income tax consequences.
Declared and paid during the year 2008
Total amount
Final ordinary dividend for the year ended 30 June 2008 of 0.5 cents per fully paid share to be paid 31st
of October 2008
$231,112
The fi nancial effect of these dividends has not been brought to account in the fi nancial statements for the year ended 30 June
2008 and will be recognised in subsequent fi nancial reports.
OPERATING RESULTS FOR THE YEAR
The net profi t after tax from continuing operations for the year for the consolidated entity is $1,295,055 (2007: $400,155).
LIKELY DEVELOPMENTS
Except as detailed in the Chairman and Managing Director’s Review on pages 7 to 13, likely developments, future prospects
and business strategies of the operations of the consolidated entity and the expected results of those operations have not been
included in this report, as the directors believe, on reasonable grounds, that the inclusion of such information would be likely to
result in unreasonable prejudice to the consolidated entity.
17
DIRECTOR’S REPORT (cont’d)
SHARE OPTIONS
Share Options Granted to Directors and Offi cers
Share options were granted to Directors under the Executive Share Option Plan. Information relating to this grant is at note 13
to the fi nancial statements.
Unissued Shares
At the date of this report, there were 8,026,476 unissued ordinary shares under options. Refer to note 13 of the fi nancial
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
11,666 share options were exercised during the fi nancial year.
SHARE ISSUES DURING THE YEAR
10,000,000 shares were issued during the year at $0.30 per share to raise $3,000,000.
AUDITOR’S INDEPENDENCE DECLARATION TO THE DIRECTORS OF EMPIRED LIMITED
The directors have received an Independence Declaration from Grant Thornton the auditors of Empired Limited and it is
attached at page 82.
NON-AUDIT SERVICES
Non-Audit services provided by the entity’s Auditor can be found at note 26. The Directors are satisfi ed 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 company has from 19 September 2007 and since the end of the fi nancial year, in respect of any person who has, is or
has been an offi cer of the company or a related body corporate, paid a premium in respect of Directors and Offi cers Liability
insurance which indemnifi es Directors, Offi cers and the Company of any claims made against the Directors, Offi cers of the
Company and the Company, subject to conditions contained in the insurance policy. Further disclosure required under section
300(9) of the Corporations Act 2001 is prohibited under the terms of the contract.
REMUNERATION REPORT
This report outlines the remuneration arrangements in place for directors and executives of Empired Limited (the company).
Remuneration Philosophy
The performance of the company depends upon the quality of its directors and executives. To prosper, the company must
attract, motivate and retain highly skilled directors and executives.
18
EMPIRED LIMITED | 2008 Annual Report
To this end, the company embodies the following principles in its remuneration framework:
• Provide competitive rewards to attract high calibre executives;
• Link executive rewards to shareholder value;
• Have a portion of certain executive’s remuneration ‘at risk’, dependant upon meeting pre-determined performance
benchmarks;
• Establish appropriate, demanding performances hurdles for variable executive remuneration.
Remuneration Committee
Due to the structure of the Board, a separate remuneration committee is not considered to add any effi ciencies to the process
of determining the levels of remuneration for the Directors and key executives. The Board considers that it is more appropriate
that it set aside time at Board meetings to address matters that would normally fall to the remuneration committee.
Remuneration Structure
In accordance with the best practice corporate governance, the structure of non-executive director and executive remuneration
is separate and distinct.
A. Non-executive director remuneration
Objective
The board seeks to set aggregate remuneration at a level that provides the company with the ability to attract and retain
directors of the highest calibre, whilst incurring a cost that is acceptable to shareholders.
Structure
The constitution and the ASX Listing Rules specify that the aggregate remuneration of non-executive directors shall be
determined from time by a general meeting. An amount not exceeding the amount determined is then divided between the
directors as agreed. The latest determination was at the Annual General Meeting held on the 17th of November 2006 when
shareholders approved an aggregated remuneration of $175,000 per year.
The amount of aggregated remuneration sought to be approved by shareholders and the manner in which it is apportioned
amongst directors is reviewed from time to time. The Board considers advice from external consultants as well as the fees paid
to non-executive directors of comparable companies when undertaking the annual review process.
The remuneration of non-executive directors (as defi ned in AASB 124 Related Party Disclosures) for the period ending 30 June
2008 is detailed in Table 1 of this report.
B. Executive remuneration
Objective
The company aims to reward executives with a level and mix of remuneration commensurate with their position and
responsibilities within the company and so as to:
• Reward executives for company, business unit and individual performances against targets set by reference to appropriate
benchmarks;
• Align the interests of executives with those of shareholders;
• Link rewards with the strategic goals and performance of the company; and
• Ensure total remuneration is competitive by market standards.
19
DIRECTOR’S REPORT (cont’d)
Structure
In determining the level of remuneration paid to senior executives of the company, the Board took into account available
benchmarks and prior performance.
Remuneration consists of the following key elements:
Fixed Remuneration
Variable Remuneration
- Short Term Incentive (STI); and
- Long Term Incentive (LTI).
The proportion of fi xed remuneration and variable remuneration (potential short term and long term incentives) is established
for each senior executive by the Board. Table 1 details the fi xed and variable components (%) of the executive directors of the
company.
Fixed Remuneration
Objective
Fixed remuneration is reviewed annually by the board. The process consists of a review of companywide, business unit and
individual performance, relevant comparative remuneration in the market and internally and, where appropriate, external advice
on policies and practices. As noted above, the Committee has access to external advice independent of management.
Structure
Senior executives are given the opportunity to receive their fi xed (primary) remuneration in a variety of forms including cash and
fringe benefi ts such as motor vehicles and expense payment plans. It is intended that the manner of payment chosen will be
optimal for the recipient without creating undue cost for the group.
The fi xed remuneration component of the company executives is detailed in Table 1.
Variable Remuneration - Short Term Incentive (STI)
Objective
The objective of the STI program is to link the achievement of the Group’s operational targets with the remuneration received by
the executives charged with meeting those targets.
Structure
Actual STI payments granted to the company executives depend on the extent to which specifi c operating targets set at the
beginning of the fi nancial year are met. The operational targets consist of a number of Key Performance Indicators (KPIs)
covering both fi nancial and non-fi nancial measures of performance. Typically included are measures such as contribution to net
profi t after tax, customer service, risk management, and leadership/team contribution.
Any STI payments are subject to the approval of the Remuneration Committee. Payments made are delivered as a cash bonus
in the following fi nancial year. For the 2008 fi nancial year 50% of the STI cash bonus has been paid to executives during the
2009 fi nancial year.
20
EMPIRED LIMITED | 2008 Annual Report
Variable Pay - Long Term Incentive (LTI)
Objective
The objective of the LTI plan is to reward senior executives in a manner that aligns this element of remuneration with the
creation of shareholder wealth.
As such, LTI grants are only made to executives who are able to infl uence the generation of shareholder wealth and thus have a
direct impact on the Group’s performance against the relevant long term performance hurdle.
Structure
LTI grants to executives are delivered in the form of options.
Table 2 provides details of options granted and the value of options granted, exercised and lapsed during the year. The
options were issued free of charge. Each option entitles the holder to subscribe for one fully paid ordinary share in the entity at
an exercise price of $0.40. For further details of the terms and conditions including the service and performance criteria that
must be met refer to note 13.
C. Service Agreements
Russell Baskerville – Managing Director
Terms of Agreement – commenced 1 July 2005 until terminated by either party
Salary – base $240,000 per annum with an additional STI cash bonus capped at 50% of base fees
Termination – three months written notice or three months remuneration in lieu.
Mel Ashton – Chairman
Terms of Agreement - appointed 21 December 2005 until terminated by either party
Fee – fi xed $60,000 per annum
David Taylor – Non Executive Director
Terms of Agreement - appointed 21 December 2005 until terminated by either party
Fee – fi xed $40,000 per annum
Richard Bevan – Non Executive Director
Terms of Agreement – commenced
Fee – fi xed $40,000 per annum
Mark Waller – Company Secretary and Chief Financial Offi cer
Terms of Agreement – commenced 18 April 2005, until terminated by either party
Salary – base $163,500 per annum
Termination – one month’s written notice or one month’s remuneration in lieu
21
DIRECTOR’S REPORT (cont’d)
Table 1: Directors and executives remuneration for the year ended 30 June 2008 and 30 June 2007
Short term
benefi ts
Post
Employment
Long
term
benefi ts
(LTI)
%
Performance
related
Total
Salary &
Fees
Cash
STI
Superan-
nuation
Equity
Options
-
-
4,800
68,918
6,000
56,000
34,750
2,800
42,550
25,000
6,000
36,000
-
-
16,667
-
-
-
-
-
8,800
307,000
20%
12,750
212,750
13,500
3,200
166,708
10,574
747
128,808
-
-
-
-
24,506
25,519
-
-
-
-
-
-
-
-
-
-
-
Non-Executive
Directors
Executive
Directors
Key
Management
M. Ashton
2008
64,118
Chairman
2007
50,000
D. Taylor
Non-executive
Director
2008
2007
5,000
5,000
R. Bevan
2008
16,667
2007
-
Non-executive
Director
(appointed 31
January 2008)
-
-
-
-
-
-
R. Baskerville
2008
238,200 160,000
Chief Executive
2007
200,000
M. Waller
2008
150,008
Chief Financial
Offi cer
2007
117,487
C. Ferrier
2008
24,506
Company
Secretary
2007
25,519
-
-
-
-
-
1 Payable at 30 June 2008, paid September 2008
22
EMPIRED LIMITED | 2008 Annual Report
Table 2: Options granted as part of remuneration
Grant date
Grant
Number
Average
Value per
option
at grant
date
Value of
options
granted
during
the year
%
Remuneration
consisting of
options for the
year
Total value
of options
granted,
exercised
and lapsed
during
year
Non Executive
M. Ashton
23/07/2007
600,000
0.008
D. Taylor
23/07/2007
350,000
0.008
Executive
R. Baskerville
23/07/2007
1,100,000
0.008
Key
Management
M. Waller
23/07/2007
400,000
0.008
4,800
2,800
8,800
3,200
4,800
2,800
8,800
3,200
6.96%
6.58%
3.56%
1.92%
C. Ferrier
23/07/2007
350,000
0.008
2,800
2,800
11.42%
Directors Meetings
The number of Directors meetings and the number of meetings attended by each Director during the year are:
Name of Director
Russell Baskerville
Mel Ashton
David Taylor
Richard Bevan
No. of Meetings Held
while a Director
No. of Meetings Attended as a Director
during the year ended 30 June 2008
12
12
12
6
12
11
12
6
Richard Bevan joined the board on the 31 January 2008.
Director’s and Key Management Personnel Equity Holdings
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 fi nancial year:
Director
Ordinary Shares
Russell Baskerville
Mel Ashton
David Taylor
Mark Waller
5,892,778
150,000
-
1,618,624
Signed in accordance with a resolution of directors.
Options
2,550,000
850,000
600,000
814,038
Russell Baskerville
Managing Director
30th of September 2008
23
CORPORATE GOVERNANCE STATEMENT
This statement outlines the main corporate governance practices in place throughout the fi nancial year, which comply with the
ASX Corporate Governance Council’s “Principals of Good Corporate Governance and Best Practice Recommendations”, unless
otherwise stated. The company has followed each of the Recommendations where the Board has considered the practices
appropriate, taking into account factors such as size of the company and Board, the resources available, and the activities of
the company. The corporate governance practices are reviewed regularly and will continue to be developed and refi ned to meet
the needs of the company and appropriate practices.
The company includes information about its corporate governance practices on the company’s website at www.empired.com
including the Board charter, the group’s code of conduct and other policies and procedures relating to the Board and its
responsibilities.
PRINCIPLE 1 – Lay solid foundations for management and oversight
Recommendation 1.1 - Companies should establish the functions reserved to the Board and those delegated to senior
executives and disclose those functions
The Board has the responsibility for charting the direction, strategies and fi nancial objectives for the Company and monitoring
the compliance with regulatory requirements and ethical standards of those policies. In performing their responsibilities the
Board are guided by the objective of protecting the rights and interest of shareholders.
The roles and responsibilities of the Board are set out in the Board charter and this is available on the company website. The
Board regularly reviews the charter to ensure that it is appropriate to meet the needs of the company and the Board and to
comply with developing best practice standards.
Recommendation 1.2 – Companies should disclose the process for evaluating the performance of senior executives
During the reporting year an evaluation of the Board and key executives was carried out on an informal basis. As the activities
of the Company develop, it will establish more formal evaluation procedures, including quantitative measures of performance.
PRINCIPLE 2 – Structure of the Board to add value
Recommendation 2.1 – A majority of the Board should be independent directors
The Board comprises of four directors who are appointed to ensure that the company is run in the best interest of the all
shareholders. Other than Russell Baskerville all directors are independent non-executives. The names, skills, experience and
expertise of the directors of the company in offi ce at the date of this report are located in the Directors’ report on pages 15-16.
A director is only to be regarded as independent if the director is independent of management and free of any business or other
relationship what could materially interfere with or could reasonably be perceived to materially interfere with the exercise of the
Director’s unfettered and independent judgement.
In considering whether a Director is independent the Board considers:
• the criteria for assessing the independence of a Director in the ASX Corporate Governance Council’s “Principles of Good
Corporate Governance and Best Proactive Recommendations”
• any information, facts or circumstances that the Board considers relevant; and
• any materiality thresholds, standards or guidelines that the Board may adopt from time to time.
Recommendation 2.2 – The chair should be an independent director
During 2008 the chairman of the Board of Directors was Mr Mel Ashton. Mr Ashton meets the independence criteria.
Recommendation 2.3 – The roles of chair and chief executive offi cer should not be exercised by the same individual
The role of chairperson of the Board and the Managing Director (CEO role) are not exercised by the same person. Mr
24
EMPIRED LIMITED | 2008 Annual Report
Baskerville is Managing Director and Mr Ashton is chairman of the Board.
Recommendation 2.4 – The Board should establish a nomination committee
Currently no formal committees to the Board have been established. The Board considers that given its size and that only
one member of the Board holds an executive position in the company, no effi ciencies or other benefi ts would be gained by
establishing separate committees.
The Board intends to reconsider the requirement for and benefi ts of separate committees as the company’s operations grow
and evolve.
Recommendation 2.5 – Companies should disclose the process for evaluating the performance of the Board, its committees
and individual directors
There is currently no formal process in place to evaluate the performance of the Board, its committees and individual directors.
A review of the performance of the Board and its directors is undertaken by each director with respect to each other and the
performance of the Board itself.
The Board will reconsider the requirement for appropriate measures of performance as the company’s operations grow and
evolve.
PRINCIPLE 3 – Promote ethical and responsible decision making
Recommendation 3.1 – Companies should establish a code of conduct and disclose the code or a summary of the code as to:
• the practices necessary to maintain confi dence in the company’s integrity,
• the practices necessary to take into account their legal obligations and the reasonable expectations of stakeholders, and
• the responsibility and accountability of individuals for reporting and investigation reports of unethical practices.
All directors, managers and employees are expected to act with integrity and objectivity in their dealings with people that they
come in contact with during their association with Empired Ltd. Such conduct is considered integral to the primary objective
of working to enhance the Company’s reputation and shareholder value. The code of conduct adopted is available on the
Company’s website www.empired.com.
Recommendation 3.2 – Companies should establish a policy concerning trading in company securities by directors, senior
executives and employees, and disclose the policy or a summary of that policy
Directors and employees are prohibited from trading in Empired Limited shares, if the director or employee is in possession
of inside or price sensitive information or would be trading for a short term gain. Directors and employees are encouraged to
follow a long-term policy with respect to their investments in Empired.
Directors and employees are also aware of their obligations to ensure that they do not communicate price sensitive information
to any other person who is likely to buy or sell Empired Limited shares or communicate that information to another party.
The company’s practices are documented in the securities trading policy, details of which are available on the company’s
website.
PRINCIPLE 4 – Safeguard integrity of fi nancial reporting
Recommendation 4.1 – The Board should establish an audit committee
A separate audit committee has not been formed. The role of the audit committee is carried out by the Board of directors.
The Board consider that given its size and that only one member of the Board holds an executive position in the Company no
effi ciencies or benefi ts would be gained by establishing a separate audit committee.
25
CORPORATE GOVERNANCE STATEMENT (cont’d)
The Board intends to reconsider the requirement for and benefi ts of separate committees as the company’s operations grow
and evolve.
Recommendation 4.2 – The audit committee should be structured so that it:
• consists only of non executive directors,
• consists of a majority of independent directors,
• is chaired by an independent chair, who is not chair of the Board, and
• has at least three members
This role is carried out by the Board and the requirement for a separate committee will be reconsidered on a regular basis.
Recommendation 4.3 – The audit committee should have a formal charter
An audit committee charter has been established setting out the role and responsibilities, composition structure, membership
requirements and the manner in which the committee is to operate. This charter is available on the company website.
PRINCIPLE 5 – Make timely and balanced disclosure
Recommendation 5.1 – Companies should establish written policies and procedures designed to ensure compliance with ASX
listing rule disclosure requirements and to ensure accountability at senior management level for that compliance and disclose
those policies or a summary of those policies.
The responsibility for the overall communication has been appointed to the Managing Director and Company Secretary.
Empired Ltd is committed to:
• ensuring that shareholders and the market are provided with timely and balanced information about its activities;
• complying with the general and continuous disclosure principals contained in ASX Listing Rules and the Corporations Act
2001; and
• ensuring that all market participants have equal opportunities to receive externally available information issued by Empired.
The company continuous disclosure policy is available on the company website.
PRINCIPLE 6 – Respect the rights of shareholders
Recommendation 6.1 – Companies should design and disclose a communications strategy to promote effective communication
with shareholders and encourage effective participation at general meetings and disclose their policy or a summary of that
policy.
The Board strongly believes in the importance of effective communication with shareholders to ensure their access to timely
and relevant information.
The Company’s website is regularly updated and provides details of recent announcements to the ASX, annual reports, and
other signifi cant information on the Company. Procedures are in place to review all information and to ensure all relevant
information is immediately released to the market.
Shareholders are encouraged to attend the annual general meeting, providing them with an opportunity to question the Board
and senior executives.
Empired has in place a written communications with shareholders policy which is available on the company website.
26
EMPIRED LIMITED | 2008 Annual Report
PRINCIPLE 7 – Recognise and manage risk
Recommendation 7.1 – Companies should establish policies for the oversight and management of material business risks and
disclose a summary of those policies.
The Board acknowledges that it is responsible for the overall internal control framework, but recognises there is no effective
internal control system that will prevent all errors and irregularities.
The company’s risk management program is available on the company’s website.
The effectiveness of the risk management program is reviewed annually and updated accordingly.
Recommendation 7.2 – The Board should require management to design and implement the risk management and internal
control system to manage the company’s material business risks and report to it on whether those risks are being managed to
the effectiveness of the company’s management of its material business risks.
A risk may be initiated by any employee to a member of the Empired management team. Senior management are responsible
for reviewing risks that have been escalated to them from an operational level. These risks are reviewed monthly by the Board.
The Board also reviews recommendations made by the external auditors, and where appropriate ensures that the Company
puts in place controls and systems to manage these risks identifi ed.
Recommendation 7.3 – The Board should disclose whether it has received assurance from the chief executive offi cer (or
equivalent) and the chief fi nancial offi cer (or equivalent) that the declaration provided in accordance with section 295A of the
Corporations act is founded on a sound system of risk management, and internal control and that the system is operating
effectively in all material respects in relation to fi nancial reporting risks.
This recommendation was complied with for 2008
PRINCIPLE 8 – Remunerate fairly and responsibly
Recommendation 8.1 – The Board should establish a remuneration committee
Due to the structure of the Board, a separate remuneration committee is not considered to add any effi ciencies to the process
of determining the levels of remuneration of the Directors and key executives. The Board considers that is more appropriate
that it set aside time at Board meetings to address such matter that would normally fall to the remuneration committee.
Recommendation 8.2 – Companies should clearly distinguish the structure of non-executive directors’ remuneration from that of
executive directors and senior executives
Detailed information regarding the remuneration paid to directors and senior executives is set out in the remuneration report.
27
EMPIRED LIMITED
and its Controlled Entities
Annual Financial Report
For the Year Ended 30 June 2008
28
EMPIRED LIMITED | 2008 Annual Report
INCOME STATEMENT
For the Year Ended 30 June 2008
Notes
CONSOLIDATED
PARENT
2008
$
2007
$
2008
$
2007
$
3
18,924,137
7,080,596
18,924,137
7,080,596
3
4
5
6
(13,674,937)
(4,907,888)
(13,674,937)
(4,907,888)
5,249,200
2,172,708
5,249,200
2,172,708
388,591
(2,875)
(17,598)
(305,904)
(61,370)
9,150
388,591
9,150
(36,384)
(786)
(61,569)
(16,159)
(2,875)
(17,598)
(305,904)
(61,370)
(36,384)
(786)
(61,569)
(16,159)
(2,630,014)
(1,153,224)
(2,630,014)
(1,153,224)
(149,932)
(76,849)
(145,048)
(74,872)
(1,498,252)
(436,732)
(1,503,136)
(438,709)
971,846
400,155
971,846
400,155
323,209
-
303,209
-
1,295,055
400,155
1,295,055
400,155
-
(2,610,401)
-
(2,610,401)
1,295,055
(2,210,246)
1,295,055
(2,210,246)
Continuing Operations
Revenue
Rendering of services
Cost of Sales
Gross profi t
Other Income
Legal expenses
Marketing expenses
Occupancy expenses
Finance costs
Employee benefi ts
Depreciation expenses
Other expenses
Profi t before income tax
Income tax benefi t relating to
ordinary activities
Profi t after tax from continuing
operations
Profi t / (loss) from discontinued
operations
Profi t / (Loss) after tax
attributable to members of the
Company
Earnings per share (cents per share)
Basic for profi t for the year attributable to ordinary
shareholders of the parent
Basic for profi t from continuing operations attributable to
ordinary equity holders of the parent
Diluted for profi t for the year attributable to ordinary equity
holders of the parent
Diluted for profi t from continuing operations attributable to
ordinary equity holders of the parent
2.99
2.99
2.51
2.51
(6.1)
1.1
(6.1)
1.0
29
BALANCE SHEET
As at 30 June 2008
Notes
CONSOLIDATED
PARENT
2008
$
2007
$
2008
$
2007
$
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Other current assets
8(i)
9
10
Assets classifi ed as held for Sale
6
149,117
8,104,872
153,323
8,407,312
-
-
1,355,037
93,364
1,448,401
1,596,326
149,117
8,104,872
153,323
8,407,312
-
-
1,355,037
93,364
1,448,401
1,596,326
Total Current Assets
8,407,312
3,044,727
8,407,312
3,044,727
Non-Current Assets
Other fi nancial assets
Property, plant and equipment
Intangible assets
Deferred tax asset
Total Non-Current assets
TOTAL ASSETS
LIABILITIES
Current Liabilities
Bank overdraft
Trade and other payables
Financial liabilities
Income tax payable
Provisions
Unearned revenue
Liabilities directly associated with
assets classifi ed as held for sale
Total Current Liabilities
Non-Current Liabilities
Financial liabilities
Provisions
Deferred tax liability
Total Non-Current Liabilities
24
11
12
5
8(i)
14
15
5
16
17
6
15
16
5
-
701,610
3,827,164
676,928
5,205,702
-
325,108
1,866,958
-
2,192,066
367,485
685,777
1,960,206
676,928
3,690,396
372,369
304,390
-
-
676,759
13,613,014
5,236,793
12,097,708
3,721,486
-
5,173,466
1,433,903
144,708
391,014
202,917
16,492
844,047
466,297
-
127,290
202,517
-
5,173,466
1,433,903
144,708
391,014
202,917
16,492
844,047
466,297
-
127,290
202,517
7,346,008
1,656,643
7,346,008
1,656,643
-
974,835
-
974,835
7,346,008
2,631,478
7,346,008
2,631,478
254,795
22,221
88,894
365,910
67,478
-
-
67,478
606,446
22,221
88,894
717,561
419,129
-
-
419,129
TOTAL LIABILITIES
7,711,918
2,698,956
8,063,569
3,050,607
NET ASSETS
5,901,096
2,537,837
4,034,139
670,879
EQUITY
Issued capital
Employee equity benefi ts reserve
Retained profi ts / (accumulated
losses)
18
2,775,982
98,439
5,936,265
56,602
2,775,982
98,439
5,936,265
56,602
3,026,675
(3,455,030)
1,159,718
(5,321,988)
TOTAL EQUITY
5,901,096
2,537,837
4,034,139
670,879
30
EMPIRED LIMITED | 2008 Annual Report
CASH FLOW STATEMENT
For the Year Ended 30 June 2008
Notes
CONSOLIDATED
PARENT
2008
$
2007
$
2008
$
2007
$
Cash fl ows from operating activities
Receipts from customers
12,502,533
7,957,076
12,502,533
7,957,076
Payments to suppliers and employees
(13,582,662)
(8,372,590)
(13,582,662)
(8,372,590)
Borrowing costs
Income tax rebate
Income tax paid
Interest received
(61,370)
-
-
388,591
(24,860)
332,726
(36,338)
10,385
(61,370)
-
-
388,591
(24,860)
332,726
(36,338)
10,385
Net cash fl ows used in operating activities
8(iii)
(752,908)
(133,601)
(752,908)
(133,601)
Cash fl ows from investing activities
Purchase of property, plant and
equipment
Acquisition of business acquisitions
(net of cash acquired)
(526,434)
(275,831)
(526,434)
(275,831)
21(c)
(1,555,762)
-
(1,555,762)
-
Net cash fl ows used in investing activities
(2,082,196)
(275,831)
(2,082,196)
(275,831)
Cash fl ows from fi nancing activities
Proceeds from issue of shares
Payment of share issue and capital
raising costs
Repayment of borrowings
Repayment of fi nance lease liabilities
Proceeds from borrowings
3,002,333
300,000
3,002,333
300,000
(494,401)
(23,358)
(494,401)
(23,358)
(477,398)
(113,033)
683,212
-
(477,398)
(49,998)
568,260
(113,033)
683,212
-
(49,998)
568,260
794,904
Net cash fl ows from fi nancing activities
2,600,713
794,904
2,600,713
Net increase/(decrease) in cash and
cash equivalents
Cash and cash equivalents at beginning
of period
Cash and cash equivalents at end of
period
(234,391)
385,472
(234,391)
385,472
383,508
(1,964)
383,508
(1,964)
8(i)
149,117
383,508
149,117
383,508
31
STATEMENT OF CHANGES IN EQUITY
For the Year Ended 30 June 2008
Attributable to equity holders of
the parent
Total equity
Issued
capital
$
Retained
earnings
$
Employee Equity
Benefi ts
Reserve
$
$
5,659,623
(1,244,784)
23,049
4,437,888
(23,358)
-
-
(2,210,246)
300,000
-
-
-
-
-
-
-
-
-
33,553
56,602
CONSOLIDATED
At 1 July 2006
Share raising costs
Profi t for the year
Issue of share capital
Exercise of options
Cost of share-based payments
At 30 June 2007
5,936,265
(3,455,030)
Return of capital re: discontinued
operation
(5,788,331)
5,186,650
(19,810)
Share raising costs
Profi t for the year
Issue of share capital
Exercise of options
Expiry of options
Cost of share-based payments
(374,285)
-
-
1,295,055
3,000,000
2,333
-
-
-
-
-
-
At 30 June 2008
2,775,982
3,026,675
-
-
-
(2,333)
(4,400)
68,380
98,439
32
(23,358)
(2,210,246)
300,000
-
33,553
2,537,837
(621,491)
(374,285)
1,295,055
3,000,000
-
(4,400)
68,380
5,901,096
EMPIRED LIMITED | 2008 Annual Report
Attributable to equity holders of the
parent
Total equity
Issued
capital
$
Retained
Earnings
$
Employee Equity
Benefi ts
Reserve
$
$
5,659,623
(3,111,742)
23,049
2,570,930
(23,358)
-
-
(2,210,246)
300,000
-
-
-
-
-
-
-
-
-
33,553
56,602
PARENT
At 1 July 2006
Share raising costs
Profi t for the year
Issue of share capital
Exercise of options
Cost of share-based payments
At 30 June 2007
5,936,265
(5,321,988)
Return of capital re: discontinued
operation
(5,788,331)
5,186,651
(19,810)
Share raising costs
Profi t for the year
Issue of share capital
Exercise of options
Expiry of options
Cost of share-based payments
(374,285)
-
-
1,295,055
3,000,000
2,333
-
-
-
-
-
-
At 30 June 2008
2,775,982
1,159,718
-
-
-
(2,333)
(4,400)
68,380
98,439
(23,358)
(2,210,246)
300,000
-
33,553
670,879
(621,490)
(374,285)
1,295,055
3,000,000
-
(4,400)
68,380
4,034,139
33
NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended 30 June 2008
1 CORPORATE INFORMATION
The fi nancial report of Empired Ltd for the year ended 30 June 2008 was authorised for issue in accordance with a
resolution of the directors on 30 September 2008.
Empired Limited is a company limited by shares incorporated in Australia. The fi nancial report includes the consolidated
fi nancial statements and notes of Empired Limited and controlled entities (Consolidated) and separate fi nancial
statements and notes of Empired Limited as an individual parent entity (Parent).
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of Preparation
The fi nancial report is a general-purpose fi nancial report, which has been prepared in accordance with the requirements of
the Corporations Act 2001, Australian Accounting Standards, Australian Accounting Interpretations and other authorative
pronouncements of the Australian Accounting Standards Board. The fi nancial report has been prepared on an accruals
basis, and is based on historical costs modifi ed where applicable, by measurement at fair value of selected non-current
assets, fi nancial assets and fi nancial liabilities.
The fi nancial report is presented in Australian dollars and all values are rounded to the nearest thousand unless otherwise
stated.
(b) Statement of compliance
The fi nancial report complies with Australian Accounting Standards, which include Australian equivalents to International
Financial Reporting Standard (‘AIFRS’). The fi nancial report also complies with international fi nancial standards (IFRS).
In the current year the Group has adopted all of the new and revised Standards and Interpretations issued by the
Australian Accounting Standards Board (AASB) and the Urgent Issues Group that are relevant to its operations and
effective for annual reporting periods beginning on 1 July 2006. The adoption of these new and revised Standards and
Interpretations did not have any effect on the fi nancial position or performance of the Group.
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet effective
have not been adopted by the Group for the annual reporting period ended 30 June 2008. These are outlined in the table
below.
34
EMPIRED LIMITED | 2008 Annual Report
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
(b) Statement of compliance (cont’d)
Application date
of standard*
Impact on Group fi nancial
report
Application
date for
Group*
1 January 2009 AASB 8 is a disclosure
1 July 2009
standard so will have no
direct impact on the amounts
included in the Group’s
fi nancial statements. However
the new standard may have
an impact on the segment
disclosures included in the
Group’s fi nancial report.
1 January 2009 As the Group does not
1 July 2009
currently construct or produce
any qualifying assets which
are fi nanced by borrowings
the revised standard will have
no impact.
1 January 2009 Refer to AASB 2007-3 above. 1 July 2009
1 January 2009 Refer to AASB 2007-6 above.
1 July 2009
Reference
Title
Summary
AASB
2007-3
AASB
2007-6
Amendments to
Australian Accounting
Standards arising
from AASB 8 [AASB
5, AASB 6, AASB
102, AASB 107,
AASB 119, AASB
127, AASB 134,
AASB 136, AASB
1023 & AASB 1038]
Amendments to
Australian Accounting
Standards arising
from AASB 123
[AASB 1, AASB 101,
AASB 107, AASB
111, AASB 116
& AASB 138 and
Interpretations 1 &
12]
AASB 8
Operating Segments
Borrowing Costs
AASB 123
(revised June
2007)
Amending standard
issued as a
consequence of AASB
8 Operating Segments
Amending standard
issued as a
consequence of
AASB 123 (revised)
Borrowing Costs.
This new standard will
replace AASB 114
Segment Reporting and
adopts a management
approach to segment
reporting.
AASB 123 previously
permitted entities
to choose between
expensing all
borrowing costs and
capitalizing those
that were attributable
to the acquisition,
construction or
production of a
qualifying asset. The
revised version of
AASB 23 requires
borrowing costs to be
capitalized if they are
directly attributable
to the acquisition,
construction or
production of a
qualifying asset.
35
NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended 30 June 2008
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
(b) Statement of compliance (cont’d)
Reference
Title
Summary
AASB
Interpretation
129 (revised
June 2007)
Service Concession
Arrangements:
Disclosures
IFRIC
Interpretation
13
Customer Loyalty
Programmes
IFRIC
Interpretation
14
IAS 19 – The Asset
Ceiling: Availability
of Economic
Benefi ts and
Minimum Funding
Requirements
AASB 2007-8
AASB 2008-1
Amendments
to Australian
Accounting
Standards arising
from AASB 101
Amendments
to Australian
Accounting
Standard – Share-
based Payments:
Vesting Conditions
and Cancellations
[AASB 2]
The revised
interpretation was issued
as a result of the issue
of Interpretation 12
and requires specifi c
disclosures about
service concession
arrangements entered
into by an entity,
whether as a concession
provider or a concession
operator.
Deals with the
accounting for customer
loyalty programmes,
which are used by
companies to provide
incentives to their
customers to buy their
products or use their
services.
Aims to clarify how to
determine in normal
circumstances the limit
on the asset that an
employer’s balance
sheet may contain in
respect of its defi ned
benefi t pension plan.
Amending standards
issued as a
consequence of AASB
101.
Objective of this
standard is to make
amendment to clarify
vesting conditions wthin
AASB 2 Share-based
payments.
Application
date for
Group*
1 July 2008
Application
date of
standard*
1 January
2008
Impact on Group fi nancial
report
As the Group currently
has no service concession
arrangements or public-
private-partnerships (PPP),
it is expected that this
Interpretation will have no
impact on its fi nancial report.
1 July 2008
1 July
2008
The Group does not have
any customer loyalty
programmes and as such
this interpretation is not
expected to have any impact
on the Group’s fi nancial
report.
1 July 2008
1 January
2008
The Group does not have
a defi ned benefi t pension
plan and as such this
interpretation will not have
an impact on the Group’s
fi nancial report.
1 January
2009
Refer to ASSB 101 below.
1 January
2009
1 January
2009
There will be no material
impact to the consolidated
Group.
1 January
2009
36
EMPIRED LIMITED | 2008 Annual Report
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
(b) Statement of compliance (cont’d)
Reference
Title
Summary
Application
date of
standard*
1 January
2009
Impact on Group fi nancial
report
There will be no material
impact to the consolidated
Group.
Application
date for
Group*
1 January
2009
The standard introduces
an exception to the
defi nition of fi nancial
liability to classify as
equity instruments
certain puttable fi nancial
instruments and certain
instruments that impose
on an entity only on
liquidation of the entity.
AASB 2008-2
AASB 2008 -3
AASB 2008-5
Amendments
to Australian
Accounting
Standards –
Puttable Financial
Instruments and
Obligations arising
on Liquidation
[AASB 7, AASB
101, AASB 132,
AASB 139 &
Interpretation 2]
Amendments
to Australian
Accounting
Standards arising
from AASB 3 and
AASB 127 [AASBs
1, 2, 4, 5, 7, 101,
107,112,114,
116, 121, 128,
131, 132, 133,
134, 136, 137,
138 & 139 and
interpretations 9 &
107]
Amendments
to Australian
Accounting
Standards arising
from the Annual
Improvements
Project [ AASB 5,
7, 101, 102, 107,
108, 110, 116,
118, 119, 120,
123, 127, 128,
129, 131, 132,
134, 136, 138,
139, 140, 141,
1023 & 1038]
Amending standards
arising from revised
AASB 3 and amended
AASB 127.
1 July
2009
1 July 2009
The revisions to AASB 3 and
amended AASB 127 will be
taken into consideration with
respect to transactions to
which the above revision and
amendment concern from
the operative date.
Amending standards as
a consequence from the
Annual Improvements
Project.
1 January
2009
There will be no material
impact to the consolidated
Group.
1 January
2009
37
NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended 30 June 2008
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
(b) Statement of compliance (cont’d)
Reference
Title
Summary
AASB 2008-6
AASB 2008-7
Amending standards to
include requirements
relating to a sale plan
involving loss of control
of a subsidiary.
Amending standards
relating to the cost
of investment in a
Subsidiary, Jointly
Controlled Entity or
Associate.
Further
Amendments
to Australian
Accounting
Standards arising
from the annual
Improvements
Project [AASB 1 &
AASB 5]
Amendments
to Australian
Accounting
Standards -Cost
of Investment in
Subsidiary, Jointly
Controlled Entity or
Associate [AASB 1,
AASB 118, AASB
121, AASB 127 &
AASB 136]
AASB 3
Business
Combinations
Amended March 2008.
AASB 127
Consolidated and
Separate Financial
Statements
AASB 101
Presentation
of Financial
Statements
Deals with information
that a parent entity
provides in its separate
fi nancial statements
and in its consolidated
fi nancial statements for
a group of entities under
its control.
AASB 101 is a
disclosure standard.
The new standard may
have an impact on the
disclosures included
in the Group’s fi nancial
report.
Application
date of
standard*
1 July
2009
Impact on Group fi nancial
report
There will be no material
impact to the consolidated
Group.
Application
date for
Group*
1 July 2009
1 January
2009
There will be no material
impact to the consolidated
Group.
1 January
2009
1 July 2009
1 July 2009
1 January
2009
1 July
2009
1 July
2009
1 January
2009
The Group will consider
amendments to Business
Combinations standard with
respect to any business
combinations the Group
undertakes.
The Group will consider
the application of this
amendment in respect to
producing consolidated
fi nancial statements from
the operative date.
AASB 101 is a disclosure
standard so it will have
no direct impact on the
amounts included in the
Group’s fi nancial report,
however the new standard
may have an impact on the
disclosures included in the
Group’s fi nancial report.
38
EMPIRED LIMITED | 2008 Annual Report
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
(c) Basis of consolidation
The consolidated fi nancial statements comprise the fi nancial statements of Empired Limited and its subsidiaries as at 30
June each year (‘the Group’) (note 24).
The fi nancial 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 profi ts 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 fi nancial 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 fi nancial 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 fi nancial statements include the results of Tusk Technologies Pty Ltd for the full fi nancial year. The purchase
consideration has been allocated to the assets and liabilities on the basis of the fair value at the date of acquisition.
39
NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended 30 June 2008
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
(d) Property, plant and equipment
Plant and equipment is stated at cost less accumulated depreciation and any impairment in value.
Depreciation is calculated on a diminishing value, except computer software which is on a straight-line basis, over the
estimated useful life of the asset as follows:
Buildings & Improvements
Leasehold Improvements
Furniture & Fittings
Computer Hardware
Computer Software
DV
DV
DV
DV
SL
7.5 – 20 yrs
5 – 20 yrs
3 – 20 yrs
3 – 5 yrs
1 – 2.5 yrs
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 infl ows, 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 fl ows are discounted to their present value using a pre-tax discount rate
that refl ects current market assessments of the time value of money and the risks specifi c 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 benefi ts 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.
40
EMPIRED LIMITED | 2008 Annual Report
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
(e) Borrowing costs
Borrowing costs are recognised as an expense when incurred.
(f) 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 identifi able 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 benefi t
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.
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.
(g)
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 fi nite 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 profi ts 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 indefi nite 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.
41
NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended 30 June 2008
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
(g)
Intangible Assets (cont’d)
A summary of the policies applied to the Group’s intangible assets is as follows:
Useful lives
Method used
Patents and Licences
Development Costs
Indefi nite
Finite
Not depreciated or revalued
6 years- Straight line
Internally generated/ Acquired
Acquired
Internally generated
Impairment test / Recoverable
amount testing
Annually and where an indicator of
impairment exists
Amortisation methods reviewed at each
fi nancial 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.
(h)
Impairment 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 infl ows 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 fl ows are discounted to their present value using a pre tax discount
rate that refl ects current market assessments of the time value of money and the risks specifi c to the asset.
(i) Financial assets and liabilities
All investments are initially recognised at cost, being the fair value of the consideration given and including acquisition
charges associated with the investment.
The fair value is based on the net assets of the investment at balance date.
(j) 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 identifi ed.
(k) 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 defi ned
above, net of outstanding bank overdrafts.
42
EMPIRED LIMITED | 2008 Annual Report
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
(l)
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.
(m) 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 outfl ow of resources embodying economic benefi ts 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.
If the effect of the time value of money is material, provisions are determined by discounting the expected future cash
fl ows at a pre-tax rate that refl ects current market assessments of the time value of money and, where appropriate,
the risks specifi c to the liability. Where discounting is used, the increase in the provision due to the passage of time is
recognised as a fi nance cost.
(n) Employee leave benefi ts
(i) Wages, salaries, annual leave and sick leave
Liabilities for wages and salaries, including non-monetary benefi ts, annual leave and accumulating sick leave expected to
be settled within 12 months of the reporting date are recognised in other payables in respect of employee’s services up
to reporting date. They are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for
non-accumulating sick leave are recognised when the leave is taken and are measured at the rates paid or payable.
(ii) Long service leave
The liability for long service leave is recognised in the provision for employee benefi ts and measured as the present value
of expected future payments to be made in respect of services provided by employees up to the reporting date using the
projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee
departures, and periods of service. Expected future payments are discounted using market yields at the reporting date
on national government bonds with terms to maturity and currencies that match, as closely as possible, the estimated
future cash outfl ows.
(o) 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 benefi ts:
The Empired Employee Share Option Plan (ESOP2), which provides to all employees excluding directors, and
The Executive Share Option Plan (ESOP1), which provides benefi ts 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 13.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in
which the performance conditions are fulfi lled, ending on the date on which the relevant employees become fully entitled
to the award (‘vesting date’).
43
NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended 30 June 2008
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
(p) Share-based payment transactions (continued)
The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date refl ects (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 modifi ed, as a minimum an expense is recognised as if the terms had not
been modifi ed. In addition, an expense is recognised for any increase in the value of the transaction as a result of the
modifi cation, as measured at the date of modifi cation.
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 modifi cation of the original award, as described in the previous paragraph.
The dilutive effect, if any, of outstanding options is refl ected as additional share dilution in the computation of earnings
per share (see note 7).
(q) Leases
Finance leases, which transfer to the Group substantially all the risks and benefi ts 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 fi nance 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 benefi ts of ownership of the asset are classifi ed 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 benefi ts will fl ow to the Group and the revenue
can be reliably measured. The following specifi c recognition criteria must also be met before revenue is recognised:
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 fi nancial instrument) to the net carrying amount
of the fi nancial asset.
44
EMPIRED LIMITED | 2008 Annual Report
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
(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.
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 fi nancial 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 profi t nor taxable profi t
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 profi t 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 profi t nor taxable profi t 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 profi t 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 suffi cient taxable profi t 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.
45
NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended 30 June 2008
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
(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 fl ows are included in the Cash Flow statement on a gross basis and the GST component of cash fl ows arising
from investing and fi nancing activities, which is recoverable from, or payable to, the taxation authority are classifi ed as
operating cash fl ows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation
authority.
(v) Signifi cant accounting judgements, estimates and assumptions
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including
expectations of future events that may have a fi nancial impact on the entity and that are believed to be reasonable under
the circumstances.
Critical accounting estimates and assumptions
The Group makes estimates and assumptions concerning the future. The estimates and assumptions that have a
signifi cant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next fi nancial
year are discussed below.
The Group tests annually whether goodwill costs have suffered any impairment, in accordance with the accounting
policies.
i.
Impairment of goodwill and intangibles with indefi nite useful lives
The group determines whether goodwill and intangibles with indefi nite useful lives are impaired at least on an annual
basis. This requires an estimation of the recoverable amount of the cash-generating unit to which the goodwill and
intangibles with indefi nite useful lives are allocated. The assumptions used in this estimation of recoverable amount
and carrying amount of goodwill and intangibles with indefi nite useful lives are discussed in note 23.
46
3 REVENUES
Sales Revenue
Services
Other Revenue
Interest
Government grants
Management Fee
Other
EMPIRED LIMITED | 2008 Annual Report
CONSOLIDATED
PARENT
2008
$
2007
$
2008
$
2007
$
18,924,137
7,080,596
18,924,137
7,080,596
18,924,137
7,080,596
18,924,137
7,080,596
35,261
13,330
340,000
-
388,591
2,295
-
-
6,855
9,150
35,261
13,330
340,000
-
388,591
2,295
-
-
6,855
9,150
19,312,728
7,089,746
19,312,728
7,089,746
4 EXPENSES
Profi t before income tax includes the following specifi c expenses:
Operating Lease Rentals
Minimum lease payments
Other Expenses
Insurance
Travel
Administration
Other
5
INCOME TAX
(a) Income tax expense
The major components of income tax expense
are:
Income Statement
Current income tax
Current income tax charge
Deferred income tax
Relating to origination and reversal of
temporary differences
Income tax expense / (benefi t) reported in
income statement
(b) Amounts charged or credited directly to
equity
Expenses relating to initial public offering
Income tax expense reported in equity
CONSOLIDATED
PARENT
2008
$
259,249
259,249
60,816
130,912
567,898
479,377
2007
$
43,952
43,952
23,329
90,816
220,133
58,502
2008
$
259,249
259,249
60,816
130,912
567,898
479,377
2007
$
43,952
43,952
23,329
90,816
220,133
58,502
1,239,003
392,780
1,239,003
392,780
1,498,252
436,732
1,498,252
436,732
144,708
(467,917)
(323,209)
(120,117)
(120,117)
-
-
-
-
-
144,708
(467,917)
(323,209)
(120,117)
(120,117)
-
-
-
-
-
47
NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended 30 June 2008
5
INCOME TAX (cont’d)
Prima facie tax on operating profi t
calculated at 30%
Add tax effect of:
Non-deductible expenses
Amortisation of trademark
Entertainment
Development expenditure
Timing differences not bought to account
Addition to prior year losses
Adjustments for prior year losses now
brought to account
Income tax expense / (benefi t)
CONSOLIDATED
PARENT
2008
$
2007
$
2008
$
2007
$
291,554
(663,074)
291,554
(663,074)
291,554
(663,074)
291,554
(663,074)
17,754
-
5,731
-
-
-
(638,248)
(323,209)
2,099
356
3,848
(29,234)
513,186
172,819
17,754
-
5,731
-
-
-
-
-
(638,248)
(323,209)
2,099
356
3,848
(29,234)
513,186
172,819
-
-
Deferred tax assets and liabilities as a result of temporary differences
Consolidated
Deferred Tax Liabilities
Invoices in Dispute
Work In Progress
Prepayments
Balance Sheet
2008
659
81,896
6,340
2007
659
47,704
4,977
Net Deferred Tax Liabilities
(88,895)
(53,340)
Deferred Tax Assets
Accrued Superannuation
Provision For Annual Leave
Provision for Long Service Leave
Borrowing Costs
Tax Losses
Equity Raising Costs (direct to equity)
DTA balance not recognised
Deferred Tax Assets
Net Deferred Tax Assets
48
80,172
117,304
6,667
5,393
347,276
120,117
-
676,929
588,034
35,415
57,540
-
6,494
260,876
-
(306,985)
53,340
-
EMPIRED LIMITED | 2008 Annual Report
5
INCOME TAX (cont’d)
Tax consolidation
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.
The head entity is responsible for tax liabilities of the group. Intra group transactions are ignored for tax purposes and
there is a single return lodged on behalf of the group.
Empired Limited formally notifi ed the Australian Taxation Offi ce of its adoption of the tax consolidation regime upon
lodgement of its 30 June 2003 consolidated tax return.
There was a tax funding agreement formalised at 30 June 2003. Under this tax funding agreement Empired Limited is
responsible for the tax liabilities of the group.
No tax amounts have been recognised as part of the consolidated group.
49
NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended 30 June 2008
6 DISCONTINUED OPERATIONS
The Board of Directors decided to dispose of the BigRedSky talent management software business. A sale agreement
was entered into on the 1st of July 2007.
The disposal of BigRedSky to BigRedSky Limited and the subsequent return of capital to shareholders in the form
of shares in BigRedSky Limited were executed on the 23rd of July 2007. At 30 June 2007 the assets and liabilities
associated with the business were classifi ed as assets and liabilities held for sale.
The results of the Discontinued operations are presented below:
Revenue
Amortisation
Impairment
Other expenses
Loss Before Tax from discontinued operations
Income tax (expense) / benefi t relating to discontinued operations
Loss for the year from discontinued operations
2008
$
-
-
-
-
-
-
-
The major classes of assets and liabilities of BigRedSky as at the date of demerger are as follows:
Assets
Cash
Intangibles
Property, plant and equipment
Inventories
Prepayments
Trade and other receivables
Assets classifi ed as held for sale
Liabilities
Trade creditors
Other payables
Interest bearing liabilities
Provisions
Other
Liabilities Directly associated with assets classifi ed as held for sale
Net Assets attributable to discontinued operations
50
2007
$
913,227
(505,122)
(1,168,446)
(1,850,060)
(2,610,401)
-
(2,610,401)
2007
$
400,000
834,846
89,174
5,200
16,425
250,681
1,596,326
(51,031)
(134,285)
(74,133)
(64,511)
(650,875)
(974,835)
621,491
EMPIRED LIMITED | 2008 Annual Report
6 DISCONTINUED OPERATIONS (cont’d)
The net cash fl ows of BigRedSky were as follows:
Operating activities
Investing activities
Financing activities
Net cash infl ow / (outfl ow)
2008
2007
$
-
-
-
-
$
357,931
-
42,756
400,687
The consideration receivable at the date of demerger is as follows:
Present Value of deferred sales proceeds
Total disposal consideration
Less net assets disposed of
Loss in disposal before income tax
Income tax expense
Loss on disposal after income tax
The Proceeds on the sale were equal to the book value of the related net assets. As such no
impairment expense was recognised on the reclassifi cation of these operations as held for sale.
Earnings per share (cents per share)
Basic from discontinued operations
Diluted from discontinued operations
2007
$
621,491
621,491
621,491
-
-
-
2007
-7.2
-7.2
51
NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended 30 June 2008
7 EARNINGS PER SHARE
Basic earnings per share amounts are calculated by dividing net profi t for the year attributable to ordinary equity holders
of the parent by the weighted average number of ordinary shares outstanding during the year.
Diluted earnings per share amounts are calculated by dividing net profi t attributable to ordinary equity holders of the
parent by the weighted average number of ordinary shares outstanding during the year plus the weighted average
number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary
shares.
The following represents the income and share data used in the basic and diluted earnings per share computations:
CONSOLIDATED
2008
$
2007
$
Net profi t attributable to ordinary equity holders of the parent from continuing
operations
1,295,055
400,155
Profi t / (loss) attributable to ordinary equity holders of the parent from
discontinued operations
-
(2,610,401)
Net profi t attributable to ordinary equity holders of the parent
1,295,055
(2,210,246)
2008
2007
Thousands
Thousands
Weighted average number of ordinary shares for basic earnings per share
43,294
36,210
Effect of dilution:
Share options
Weighted average number of ordinary shares adjusted for the effect of dilution
8,326
4,561
51,620
40,771
52
EMPIRED LIMITED | 2008 Annual Report
8 CASH AND CASH EQUIVALENTS
(i) Reconciliation of Cash
For the purposes of the cash fl ow statement, cash includes cash on hand and cash in banks. Cash at the end of the year
as shown in the cash fl ow statement is reconciled to the related items in the balance sheet as follows:
Cash assets
Bank accounts
Term deposit
CONSOLIDATED
PARENT
2008
$
2007
$
2008
$
2007
$
500
250
500
250
42,397
383,258
42,397
383,258
106,220
149,117
-
106,220
-
383,508
149,117
383,508
Overdraft in continuing operations
Bank accounts in discontinuing operations
-
-
-
(16,492)
400,000
383,508
-
-
-
(16,492)
400,000
383,508
(ii) Financing facilities available
Invoice Discounting Facility
1,548,725
453,900
1,548,725
453,900
The Invoice Discounting Facility has a total limit of $2,500,000 (2007: $850,000)
53
NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended 30 June 2008
8 CASH AND CASH EQUIVALENTS (cont’d)
(iii) Reconciliation of net cash fl ows from operating activities to operating profi t (loss) after income tax
Operating profi t\(loss) after income tax
1,295,055
(2,210,246)
1,295,055
(2,210,246)
CONSOLIDATED
PARENT
2008
$
2007
$
2008
$
2007
$
Depreciation
Amortisation
Write down\(up) of investment in subsidiary
Impairment of deferred expenditure
149,932
118,229
145,049
505,122
-
-
4,883
-
-
-
1,168,446
-
1,168,446
116,253
505,122
1,976
Option Plan Expense
61,647
33,554
61,647
33,554
Changes in assets and liabilities net of effects
of purchases and disposals of controlled
entities:
(Increase)/decrease in net trade debtors
(6,422,003)
(508,860)
(6,422,003)
(508,860)
(Increase)/decrease in other receivables
(213,858)
336,226
(213,858)
336,226
(Increase)/decrease in other assets
(490,138)
(224,859)
(490,138)
(224,859)
(Increase)/decrease in prepayments
(59,959)
(22,116)
(59,959)
(22,116)
(Increase)/decrease in unbilled income
(113,974)
(156,825)
(113,974)
(156,825)
(increase)/decrease in deferred R & D
-
441,205
-
441,205
Increase/(decrease) in trade creditors
2,256,763
62,256
2,256,763
Increase/(decrease) in audit fees
(13,000)
(3,500)
(13,000)
Increase/(decrease) in other creditors
1,966,574
86,199
1,966,574
Increase/(decrease) in unexpired interest
19,218
8,516
19,218
62,256
(3,500)
86,199
8,516
Increase/(decrease) in accrued liabilities
379,782
143,342
379,782
143,342
Increase/(decrease) in unearned income
399
90,318
399
90,318
Increase/(decrease) in income tax
144,708
(36,338)
144,708
(36,338)
Increase/(decrease) in provision for employee
entitlements
285,946
35,730
285,946
35,730
Net cash used in operating activities
(752,908)
(133,601)
(752,908)
(133,601)
(iv) Non-cash investing and fi nancing activities
Acquisition of plant and equipment by
338,395
172,160
338,395
172,160
means of fi nance lease
54
EMPIRED LIMITED | 2008 Annual Report
9 TRADE AND OTHER RECEIVABLES (CURRENT)
CONSOLIDATED
PARENT
2008
$
2007
$
2008
$
2007
$
Trade receivables
7,617,860
1,195,857
7,617,860
1,195,857
Term deposit receivable
Unbilled income
7,617,860
1,195,857
7,617,860
1,195,857
3,500
-
3,500
-
272,987
159,013
272,987
159,013
Hire purchase funds receivable
210,358
-
210,358
Withholding tax receivable
167
167
167
-
167
8,104,872
1,355,037
8,104,872
1,355,037
Trade receivables are non-interest bearing and are generally on 30-day terms. (For further details on credit risk refer to
Note 19).
10 OTHER ASSETS
Current
Prepayments
153,323
93,364
153,323
93,364
Total current other assets
153,323
93,364
153,323
93,364
55
NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended 30 June 2008
11 PROPERTY, PLANT AND EQUIPMENT
CONSOLIDATED
PARENT
2008
$
2007
$
2008
$
2007
$
Plant and Equipment
Plant and equipment at cost
Leased plant and equipment at cost
812,733
442,099
550,436
707,006
444,663
177,962
442,099
177,962
Accumulated depreciation
(553,222)
(403,290)
(463,328)
(318,236)
Net carrying amount of plant and equipment
701,610
325,108
685,777
304,389
Assets are held as security for hire purchase contracts.
Plant and Equipment
Movements during the year:
Opening balance 1 July 2007
Additions
Disposals
Assets included in discontinued operations
held for sale (note 6)
Depreciation expense relating to assets
included in discontinued operations held for
sale (note 6)
325,108
526,434
256,680
304,389
233,984
275,831
526,434
275,831
-
-
-
-
(89,174)
(41,380)
-
-
-
-
(89,174)
(41,380)
Depreciation expense
(149,932)
(76,849)
(145,047)
(74,872)
Closing balance 30 June 2008
701,610
325,108
685,777
304,389
56
EMPIRED LIMITED | 2008 Annual Report
12 INTANGIBLE ASSETS & GOODWILL
Year ended 30 June 2008
CONSOLIDATED
Development
costs1
$
Patents and
licenses
$
Goodwill2
$
Total
$
PARENT
Total
$
At 1 July 2007
Cost (gross carrying amount)
4,244,832
13,389
1,866,958
6,125,179
4,258,221
Accumulated amortisation and impairment
(3,411,142)
(12,235)
Intangible assets included in discontinued
operations held for sale (note 6)
(833,690)
(1,154)
-
-
(3,423,377)
(3,423,377)
(834,844)
(834,844)
-
-
-
-
-
-
-
-
-
-
1,866,958
1,866,958
1,866,958
1,866,958
-
-
1,960,206
1,960,206
1,906,206
-
-
-
3,827,164
3,827,164
1,906,206
At 30 June 2008
Cost (gross carrying amount)
Additions
Accumulated amortisation and impairment
1 Internally generated
2 Purchased as part of business combinations
57
NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended 30 June 2008
12 INTANGIBLE ASSETS & GOODWILL (cont’d)
Year ended 30 June 2007
CONSOLIDATED
Development
costs1
$
Patents and
licenses
$
Goodwill2
$
Total
$
PARENT
Total
$
At 1 July 2006
Net of accumulated amortisation
2,116,276
2,342
1,866,958
3,985,576
2,118,618
Additions
Impairment
Amortisation
At 30 June 2006,
389,795
(1,168,447)
-
-
(503,934)
(1,188)
Intangible assets included in discontinued
operations held for sale (note 6)
(833,690)
(1,154)
-
-
-
-
389,795
389,795
(1,168,447)
(1,168,447)
(505,122)
(505,122)
(834,844)
(834,844)
Net of accumulated amortisation
-
-
1,866,958
1,866,958
-
At 1 July 2006
Cost (gross carrying amount)
3,855,037
13,389
1,866,958
5,735,384
3,037,427
Accumulated amortisation and impairment
(1,738,761)
(11,047)
-
(1,749,808)
(1,209,896)
Net carrying amount
2,116,276
2,342
1,866,958
3,985,576
1,827,531
At 30 June 2007
Cost (gross carrying amount)
4,244,832
13,389
1,866,958
6,125,179
4,258,221
Accumulated amortisation and impairment
(3,411,142)
(12,235)
Intangible assets included in discontinued
operations held for sale (note 6)
(833,690)
(1,154)
-
-
(3,423,377)
(3,423,377)
(834,844)
(834,844)
-
-
1,866,958
1,866,958
-
1 Internally generated
2 Purchased as part of business combinations
58
EMPIRED LIMITED | 2008 Annual Report
12 INTANGIBLE ASSETS & GOODWILL (cont’d)
Development costs have been capitalised at cost. This intangible asset has been assessed as having a fi nite life and is
amortised using the straight line method over a period of 6 years. If an impairment indication arises, the recoverable
amount is estimated and an impairment loss is recognised to the extent that the recoverable amount is lower than the
carrying amount.
The patent acquired has been granted for a minimum of fi fty 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. In view of the small
cost to acquire this asset, it was decided to amortise over six years.
Prior to the classifi cation of BigRedSky as a discontinued operation, the recoverable amount was determined as value
in use using a discounted rate of 12.75%. The impairment loss of $1,168,446 represents the write down of that
intangible asset based on a discounted cash fl ow valuation and testing for obsolescence in the cash-generating unit.
The impairment loss has been recognised in the income statement in the line item ‘Loss for the year from discontinued
operations’.
Goodwill has been tested for impairment this is detailed at note 23.
No impairment loss was charged for continuing operations in the 2008 fi nancial year (note 23).
59
NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended 30 June 2008
13 EMPLOYEE BENEFITS
(a) Empired employee share option plan (ESOP2)
The Group has an employee share options plan (ESOP2) for the granting of non-transferable options to employees and
senior executives to assist in motivating and retaining employees.
Options issued under ESOP2 will vest on the sooner of one of the following conditions being satisfi ed:
(i) on the second anniversary, one third of the grant of options;
(ii) on the third anniversary, two thirds of the grant of options;
(iii) on the fourth anniversary, all of the grant of options; or
(iv) 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 ESOP2 include:
any vested options that are unexercised on the fi fth anniversary of their grant date will expire; and
upon exercise, options will be settled in ordinary shares of Empired Limited on the basis of one share for each option
exercised.
No options were granted to employees during the fi nancial year.
The following table illustrates the number (No.) and weighted average exercise prices (WAEP) of share options issued
under ESOP2.
2008
No.
2008
WAEP
2007
No.
2007
WAEP
Outstanding at the beginning of the year
Granted during the year
Forfeited during the year
Exercised during the year
Expired during the year
676,476
-
-
-
-
$0.35
-
-
-
-
277,550
414,389
(15,463)
-
-
Outstanding at the end of the year
676,476
$0.35
676,476
$0.35
$0.35
$0.35
-
-
$0.35
Exercisable at the end of the year
-
-
-
-
The outstanding balance as at 30 June 2008 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;
• 398,926 options over ordinary shares with an average exercise price of $0.35 each, exercisable upon meeting the
above conditions and until 22 February 2012
The weighted average contractual life for the share options outstanding as at 30 June 2008 is 3 years (2007: 4 years).
Share options issued under ESOP2 and outstanding at the end of the year have the following exercise prices:
Expiry Date
31-Jul-2010
31-Jul-2010
31-Jul-2010
22-Feb-2012
22-Feb-2012
22-Feb-2012
Total
60
Exercise
price
2008
No.
2007
No.
$0.30
$0.35
$0.40
$0.30
$0.35
$0.40
94,364
91,593
91,593
132,981
132,977
132,968
94,364
91,593
91,593
132,981
132,977
132,968
676,476
676,476
EMPIRED LIMITED | 2008 Annual Report
13 EMPLOYEE BENEFITS (cont’d)
(b) Empired executive share option plan (ESOP1)
The Group has an executive share option plan (ESOP1) for the granting of non-transferable options to certain directors
and senior executives to assist in motivating and retaining executives.
Options issued under ESOP1 will vest on the sooner of one of the following conditions being satisfi ed:
on the second anniversary of the grant of the options;
(i) 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.
(ii) Other relevant terms and conditions applicable to options granted under ESOP1 include:
(a) any vested options that are unexercised on the fi fth anniversary of their grant date will expire;
(b) upon exercise, options will be settled in ordinary shares of Empired Limited; and
(c) options are issued to executives subject to successful ASX listing which has occurred post balance date.
On 23 July 2007, 3,600,000 options were granted with a fair value as follows:
Options
3,600,000
3,600,000
Fair value per option
Exercise price per option
$0.008
$0.40
The options were granted over ordinary shares and are exercisable upon meeting the vesting conditions outlined above
and until their expiry on 23 July 2010.
The fair value of the options are estimated at the date of grant using a binomial model. The following table gives the
assumptions made in determining the fair value of the options granted in the year to 30 June 2008.
Dividend yield (%)
Expected volatility (%)
Risk-free interest rate (%)
Expected life of option (years)
Option exercise price ($)
Share price at grant date ($) (Net Asset Backing)
23 July 2008
(3,600,000)
-
40%
6.08%
3 years
$0.40
$0.15
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 refl ects 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.
61
NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended 30 June 2008
13 EMPLOYEE BENEFITS (cont’d)
(b) Empired executive share option plan (cont’d)
During the year ended 30 June 2008, 11,666 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 ESOP1.
2008
No.
2008
WAEP
2007
No.
2007
WAEP
Outstanding at the beginning of the year
3,885,000
$0.25
2,035,000
$0.25
Granted during the year
Forfeited during the year
Exercised during the year
Expired during the year
3,600,000
$0.40
1,850,000
$0.25
-
(11,666)
(123,334)
-
-
-
Outstanding at the end of the year
7,350,000
$0.32
3,885,000
$0.25
Exercisable at the end of the year
-
$ -
235,000
$0.25
As at 30 June 2008 there were 7,350,000 options over ordinary shares with an average exercise price of $0.32 each,
exercisable upon meeting the conditions outlined above and until their expiry dates as set out in the table below.
The weighted average contractual life for the share options outstanding as at 30 June 2008 is 2.39 years (2007:3.58
years).
Share options issued under ESOP1 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
28 July 2011
17 November 2010
17 November 2011
23 July 2010
Exercise
price
2008 No.
2007
No.
$0.25
$0.25
$0.25
$0.25
$0.25
$0.25
$0.25
$0.40
-
135,000
100,000
100,000
700,000
700,000
1,100,000
1,100,000
600,000
600,000
750,000
750,000
500,000
500,000
3,600,000
-
Total
7,350,000
3,885,000
62
EMPIRED LIMITED | 2008 Annual Report
13 EMPLOYEE BENEFITS (cont’d)
Empired purchaser share option plan
On the 1 November 2007 Empired Limited issued 300,000 share options to acquire the assets and liabilities of the
Quadrant Group. The estimated fair value of each share based payment option at grant date is $0.056
The fair value of the options are estimated at the date of grant using a binomial model. The following table gives the
assumptions made in determining the fair value of the options granted in the year to 30 June 2008.
Dividend yield (%)
Expected volatility (%)
Risk-free interest rate (%)
Expected life of option (years)
Option exercise price ($)
Share price at grant date ($) (Net Asset Backing)
14 TRADE AND OTHER PAYABLES (CURRENT)
1 November 2007
(300,000)
-
40%
6.30%
3 years
$0.40
$0.28
Trade payables
Superannuation payable
GST payable
PAYG payable
Accrued liabilities
Credit cards payable
Other
CONSOLIDATED
PARENT
2008
$
2007
$
2008
$
2007
$
2,547,060
290,297
2,547,060
290,297
267,237
90,349
267,237
90,349
645,853
98,955
645,853
98,955
1,076,817
91,965
1,076,817
91,965
606,476
239,694
606,476
239,694
25,948
32,787
25,948
32,787
4,075
-
4,075
-
5,173,466
844,047
5,173,466
844,047
Included in the above are aggregate amounts payable
to the following related parties:
Owing to directors and director related entities
26,292
24,709
26,292
24,709
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 24.
The net of GST payable and GST receivable and Superannuation payable and is remitted to the appropriate body on a
quarterly basis. PAYG payable is remitted to the appropriate body on a monthly basis.
63
NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended 30 June 2008
15 FINANCIAL LIABILITIES
CONSOLIDATED
PARENT
Effective
interest
rate %
2008
2007
2008
2007
$
$
$
$
Current
Obligations under fi nance leases and hire
purchase contracts (note 22)
164,981
46,423
164,981
46,423
Obligations under premium funding contracts
56,948
23,774
56,948
23,774
Invoice Discounting Facility
Deferred consideration
Non-current
Obligations under fi nance leases and hire
purchase contracts (note 22)
951,274
396,100
951,275
396,100
260,700
-
260,700
-
1,433,903
466,297
1,433,903
466,297
254,795
67,478
254,795
67,478
Loan from Subsidiary
-
-
351,651
351,651
254,795
67,478
606,446
419,129
Deferred Consideration
Payment is required 12 months after completion of the acquisition of Quadrant (Note 21).
Hire Purchase Contracts
Hire purchase contract maturity ranges from June 2008 to June 2011.
CONSOLIDATED
PARENT
2008
$
2007
$
2008
$
2007
$
Finance facilities available
At reporting date, the following fi nancing facilities had been
negotiated and were available:
Total facilities:
- Invoice discounting facility
2,500,000
850,000
2,500,000
850,000
Facilities used at reporting date
- Invoice discounting facility
Facilities unused at reporting date
(951,275)
(396,100)
(951,275)
(396,100)
- Invoice discounting facility
1,548,725
453,900
1,548,725
453,900
Invoice discounting facility
The invoice discounting facility is secured by the debtors ledger and a fl oating charge over assets of the Group.
The fi nancial covenants on the facility are an EBITDA to be maintained at $1,400,000 or greater, net worth of
$2,500,000 or greater and assessed at each quarter on a rolling previous twelve month period basis. At 30 June
2008, the EBITDA covenant was not met however, Bankwest has subsequently waived this breach and will
review this at the next quarterly period.
64
16 PROVISIONS
Current
Employee benefi ts
Non-current
Employee benefi ts
17 UNEARNED REVENUE
Current
Unearned Revenue
EMPIRED LIMITED | 2008 Annual Report
CONSOLIDATED
PARENT
2008
$
2007
$
2008
$
2007
$
391,014
127,290
391,014
127,290
391,014
127,290
391,014
127,290
22,221
22,221
-
-
22,221
22,221
-
-
CONSOLIDATED
PARENT
2008
$
2007
$
2008
$
2007
$
202,917
202,517
202,917
202,517
202,917
202,517
202,917
202,517
65
NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended 30 June 2008
18 ISSUED CAPITAL AND RESERVES
CONSOLIDATED
PARENT
2008
$
2007
$
2008
$
Ordinary Shares
Issued and fully paid
2,597,828
5,936,265
2,597,828
Issued and fully paid
2,597,828
5,936,265
2,597,828
2007
$
5,936,265
5,936,265
No.
Price ($)
Value ($)
No.
Price ($)
Value ($)
Movement in ordinary
shares on the issue
At 1 July 2006
34,210,648
5,659,623
34,210,648
5,659,623
Capital raising
2,000,000
0.15
300,000
2,000,000
0.15
Issue costs
(23,358)
300,000
(23,358)
At 30 June 2007
36,210,648
5,936,265
36,210,648
5,936,265
Return of capital in
discontinued operations
-
(5,788,331)
-
Capital raising
10,000,000
0.30
3,000,000
10,000,000
0.30
Issue costs
-
(374,285)
-
Conversion of options
11,666
0.20
2,333
11,666
0.20
(5,788,331)
3,000,000
(374,285)
2,333
At 30 June 2008
46,222,314
2,775,982
46,222,314
2,775,982
Ordinary shares entitle the holder to participate in dividends, and carry one vote per share.
Capital Management Adequacy
The Group’s objectives when managing capital is to safeguard the ability to continue as a going concern and to maintain
a conservative capital structure to allow management to focus on the core business results, including returns to
shareholders.
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 13). In addition a total 300,000 options were granted in
relation to the acquisition of Quadrant Group. The employee equity benefi ts reserve is used to record the value of equity
benefi ts provided to employees and directors as part of their remuneration.
66
EMPIRED LIMITED | 2008 Annual Report
19 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group’s principal fi nancial instruments comprise bank loans and hire purchase contracts, cash and short-term
deposits.
The main purpose of these fi nancial instruments is to raise fi nance for the Group’s operations.
The Group has various other fi nancial instruments such as trade debtors and trade creditors, which arise directly from its
operations.
It is, and has been throughout the period under review, the Group’s policy that no trading in fi nancial instruments shall be
undertaken.
The main risks arising from the Group’s fi nancial instruments are interest rate risk, liquidity risk, and credit risk. The board
reviews and agrees policies for managing each of these risks and they are summarised below.
Market risk
•
Interest rate risk
Exposure to market interest rates is limited to the Company’s cash balances. Cash balances are disclosed at note 8.
Cash at bank accounts attract a variable interest rate of 5.95% (2007: 5.85%) based on the cash balance at year end.
Cash on deposit attracts a variable interest rate of 5.00% at the end of the year.
The Invoice Discounting Facility attracts a variable business market reference rate of 11.08% (2007: 9.99%). At 30
June 2008, if this rate had changed by +/- 1% from the year end rates, this would have changed to $9,512 (2007:
$3,961) lower/higher.
At 30 June 2008, if interest rates had changed by +/- 1% from the year end rates above, after tax profi ts would have
been $5,619 (2007: $90) lower/higher.
The Company constantly monitors its interest rate exposure.
• 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 verifi cation procedures.
Customers that fail to meet the Group’s creditworthiness may transact with the group only on a prepayment basis.
In addition, receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts
is not signifi cant.
For transactions that are not denominated in the measurement currency of the relevant operating unit, the Group does
not offer credit terms without the specifi c approval of the Head of Credit Control.
67
NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended 30 June 2008
19 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (cont’d)
With respect to credit risk arising from the other fi nancial assets of the Group, which comprise cash and cash
equivalents, available-for-sale fi nancial 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.
• Exposure to credit risk
The Group’s maximum exposure to credit risk at the report date was:
Loans and receivables (note 9)
7,617,860
1,195,857
2008
$
2007
$
The aging of the Group’s trade receivables at reporting date was:
7,617,860
1,195,857
Not past due
Past due 0-30 days
Past due 31-60 days
Past due 60 days
2008
$
4,713,666
1,625,075
390,545
888,574
2007
$
988,985
56,697
91,785
58,390
7,617,860
1,195,857
The group expects to be able to recover all outstanding debts.
Liquidity risk
The Group’s objective is to maintain a balance between continuity of funding and fl exibility through the use of bank
overdrafts, invoice discounting facilities and hire purchase contracts.
The Group manages liquidity risk by forecasting and monitoring cash fl ows on a continuing basis.
68
EMPIRED LIMITED | 2008 Annual Report
20 FINANCIAL INSTRUMENTS
The fair value of fi nancial assets and liabilities must be estimated for measurement and disclosure purposes.
The tables below refl ect the undiscounted contractual settlement terms for fi nancial instruments of a fi xed period of
maturity, as well as management’s expectations of the settlement period for all other fi nancial instruments. As such, the
amounts may not reconcile to the balance sheet.
Interest Rate Risk
Exposure to interest rate risks on fi nancial assets and liabilities are summarised as follows:
2008
Floating
interest
rate
Fixed
Interest
Rate
1 year or
less
2008
$
2008
$
Fixed
Interest
Rate
Over
1 to 5
years
2008
$
Non-
interest
bearing
Carrying
amount as
per balance
sheet
2008
$
2008
$
Weighted
average
effective
interest
rate
2008
-
-
-
-
-
-
-
-
-
-
-
-
3,500
1.250%
106,220
42,397
6.74%
5.95%
7,617,860
7,617,860
210,358
210,358
273,154
273,154
8,101,372
8,253,489
-
-
-
-
-
951,272
11.08%
2,547,060
2,547,060
164,981
254,795
-
419,776
56,947
-
260,700
317,647
1,173,200
254,795
2,807,760
4,235,755
i) Financial Assets
Term deposit
Term deposit
Cash
Receivables – trade
Receivables – hire purchase
Receivables – other
-
-
3,500
106,220
42,397
-
-
-
-
-
-
-
Total fi nancial assets
42,397
109,720
ii) Financial liabilities
Invoice discounting facility
Accounts payables
Hire purchase
Short term loans
Total fi nancial liabilities
-
-
-
-
-
951,272
-
iii) The aging of the Group’s trade payables at reporting date was:
Not past due
Past due 0-30 days
Past due 31-60 days
Past due 60 days
2008
$
2,245,235
275,651
26,140
33
2,547,059
-
9.42%
6.93%
-
69
NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended 30 June 2008
20 FINANCIAL INSTRUMENTS (cont’d)
2007
Floating
interest
rate
Fixed
Interest
Rate
1 year or
less
2007
$
2007
$
Fixed
Interest
Rate
Over
1 to 5
years
2007
$
Non-
interest
bearing
Carrying
amount as
per balance
sheet
2007
$
2007
$
Weighted
average
effective
interest
rate
2007
i) Financial Assets
Receivables – trade
Receivables – other
Total fi nancial assets
ii) Financial liabilities
Invoice discounting facility
Accounts payables
Hire purchase
Short term loans
Total fi nancial liabilities
-
-
-
-
-
-
-
-
-
-
-
396,100
-
-
-
-
-
-
1,195,857
1,195,857
159,180
159,180
1,355,037
1,355,037
-
-
-
16,492
412,592
9.99%
290,297
290,297
46,423
67,478
23,744
-
-
-
113,901
23,744
466,267
67,478
306,789
840,534
-
9.03%
7.83%
-
iii) The aging of the Group’s trade payables at 30 June 2007:
Not past due
Past due 0-30 days
Past due 31-60 days
Past due 60 days
2007
$
188,840
54,142
42,159
5,156
290,297
70
EMPIRED LIMITED | 2008 Annual Report
21 BUSINESS COMBINATIONS
During the Financial Year Empired acquired two businesses, Quadrant Group and Commander Australia Limited’s WA ICT
business.
(a) Quadrant Group
On 1 November 2007 Empired Limited acquired all of the assets and liabilities in Quadrant Group business, a Western
Australian IT consulting services provider, for cash consideration of $1,719,838 plus 300,000 options at a fair value of
$0.056 per option.
In the eight months to 30 June 2008 the business contributed revenue of $2,602,283 and net profi t of $503,619 to the
Group.
Details of net assets acquired and goodwill are as follows:
Purchase consideration
Cash paid
Option costs relating to acquisition
Direct costs relating to acquisition
Total purchase consideration
Fair value of net identifi able assets acquired (refer below)
Goodwill
$
1,719,838
16,800
12,486
1,749,124
4,016
1,753,140
The goodwill is attributable to Quadrant Group business’s strong position and profi tability in providing IT consulting
services and synergies expected to arise after the company’s acquisition. Numerous uncompleted contracts were
acquired, however after review of their fi nancial effect it was considered that customer related intangibles were not
material and have not been separately recognised.
The assets and liabilities arising from the acquisition are as follows:
Property, plant and equipment
Work in Progress
Deferred tax asset
Unearned revenue
Annual leave
Net identifi able assets acquired
Total Cash Outlaid
Outfl ow of Cash for acquisition
Payment of deferred consideration
Outfl ow/ (infl ow) of cash
Acquiree’s
carrying
amount
$
22,684
2,094
8,538
(8,872)
(28,460)
(4,016)
Fair
value
$
22,684
2,094
8,538
(8,872)
(28,460)
(4,016)
$
1,124,025
347,600
1,471,625
71
NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended 30 June 2008
21 BUSINESS COMBINATIONS (cont’d)
(b) Commander Australia Limited – WA ICT Business
Empired Limited acquired Commander Australia Limited’s WA ICT business on the 13th February 2008. Consideration of
$30,000 was paid for plant & equipment, goodwill, and obligations in relation to fulfi lling customer contracts.
To disclose the profi t and loss results of Commander Australia WA ICT since the date of acquisition would not be feasible
as the business was fully integrated into the Group on purchase.
Details of the acquisition is as follows:
Purchase consideration
Cash paid
Direct costs relating to acquisition
Total purchase consideration
Fair value of net identifi able assets acquired (refer below)
Goodwill
$
30,000
54,137
84,137
122,929
207,066
The goodwill is attributable to Commander Australia Limited’s WA ICT Business’ strong position and profi tability in
providing IT consulting services and synergies expected to arise after the company’s acquisition. Numerous uncompleted
contracts were acquired, however after review of their fi nancial effect it was considered that customer related intangibles
were not material and have not been separately recognised.
The assets and liabilities arising from the acquisition are as follows:
Acquiree’s
carrying
amount
$
Fair value
$
Property, plant and equipment
80,000
80,000
Customer contract obligations (Unearned Income)
Net identifi able assets acquired
Total Cash Outlaid
Outfl ow of Cash for acquisition
Outfl ow/ (Infl ow) of cash
(202,929)
(122,929)
(202,929)
(122,929)
$
84,137
84,137
72
EMPIRED LIMITED | 2008 Annual Report
21 BUSINESS COMBINATIONS (cont’d)
(c) Summary of total cash outlaid for acquisitions
CONSOLIDATED
PARENT
2008
$
2007
$
2008
$
2007
$
Total cash outfl ow/(infl ow)
Quadrant Group 21(a)
Commander Australia Limited WA ICT Business 21(b)
1,471,625
84,137
Outfl ow/(Infl ow) of cash 8
1,555,762
-
-
-
1,471,625
84,137
1,555,762
-
-
-
22 COMMITMENTS AND CONTINGENCIES
No contingent assets or liabilities as at 30 June 2008.
Commitments for Expenditure
A. Hire Purchase
The consolidated entity has various computer
equipment on 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 fi ve years
Less: unexpired charges
B. Hire Purchase
Current (refer note 15)
Non Current (refer note 15)
CONSOLIDATED
PARENT
2008
$
2007
$
2008
$
2007
$
200,933
279,719
(60,875)
54,872
73,022
(13,994)
200,933
279,719
(60,875)
54,872
73,022
(13,994)
419,777
113,900
419,777
113,900
164,981
254,796
46,422
67,478
164,981
254,796
46,422
67,478
Total Hire Purchase
419,777
113,900
419,777
113,900
Loan Repayments
The consolidated entity has borrowed the necessary
funds from CGU to fi nance insurance. The terms of the
loans are for 10 months each.
Not later than one year
Later than one year but not later than fi ve years
Less: unexpired charges
Loan Repayments
Current (refer note 15)
Non Current (refer note 15)
60,893
-
(3,946)
56,947
25,632
-
(1,858)
23,774
60,893
-
(3,946)
56,947
25,632
-
(1,858)
23,774
56,947
-
23,774
-
56,947
-
23,774
-
Total Loan Repayments
56,947
23,774
56,947
23,774
73
NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended 30 June 2008
22 COMMITMENTS AND CONTINGENCIES (cont’d)
Operating Leases
Offi ce premises are leased under non-cancellable operating leases for periods as follows:
LOCATION
STATE
TERMS
469 Murray Street
PERTH
1 year to 30 June 2009 with an option to extend for 1 year
Lvl 13 256 Adelaide Terrace PERTH
Expire on 30 September 2010
470 Collins Street
MELBOURNE
6 months to 15 January 2009 with an option to extend for 6 months
121 King William Street
ADELAIDE
6 months to 28 February 2009 with an option to extend for 6 months
Their commitment can be seen below:
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 fi ve years
483,072
511,845
119,521
-
483,072
511,845
119,521
-
994,917
119,521
994,917
119,521
Bank Guarantee in relation to rental premises at 256
Adelaide Terrace:
Maximum amount the bank may call
106,220
-
106,220
-
74
EMPIRED LIMITED | 2008 Annual Report
23 IMPAIRMENT TESTING OF GOODWILL
Goodwill acquired through business combinations (refer Note 12 and 21) has been allocated to the individual cash
generating units for impairment testing. The recoverable amount of each of the cash generating units has been
determined based on a value in use calculation. To calculate this, cash fl ow projections are based on fi nancial budgets
approved by senior management covering a fi ve-year period.
The discount rate applied to cash fl ow projections is 11.08% (2007: 12.75%) using a 4.20% growth rate (2007: 12.7%)
that is the same as the average growth rate for the IT Infrastructure Services market sector.
Carrying amount of goodwill
CONSOLIDATED
IT Infrastructure Services
Segment
Total
PARENT
Total
2008
$
2007
$
2008
$
2007
$
2008
$
2007
$
Carrying amount of
goodwill
3,827,164
1,886,958
3,827,164
1,886,958
1,960,206
1,960,206
Key assumptions used in value in use calculation for 30 June 2008 and 30 June 2007
The following describes each key assumption on which management has based its cash fl ow projections to undertake
impairment testing of goodwill.
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 effi ciency
improvements. Bond rates - the yield on a fi ve-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 refl ect past experience, except for effi ciency improvements which have been estimated at 3% per annum.
Resources price infl ation – the basis used to determine the value assigned to the resources price infl ation is the forecast
price indices during the budget year for Australia. Key assumptions are consistent with external information sources.
24 RELATED PARTY DISCLOSURE
Other Financial Assets
% Equity Interest
Investment ($)
Country of
Incorporation
2008
%
2007
%
2008
$
2007
$
Tusk Technologies Pty Ltd
BigRedSky Limited
Australia
Australia
100
-
100
100
367,485
-
372,367
2
The balance of the Tusk Technologies Pty Ltd loan as at 30 June 2008 is $351,651. This loan is unsecured does not
bear interest and is not repayable in the next 12 months. The investment in Tusk Technologies Pty Ltd is measured at fair
value at the 30th of June 2008. The revaluation downwards is recorded in the income statement.
Other than this related party loan there are no other related party transactions requiring disclosure.
367,485
372,369
75
NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended 30 June 2008
25 EVENTS AFTER THE BALANCE SHEET DATE
There has not arisen in the interval between the end of the fi nancial 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 signifi cantly the
operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity, in
future fi nancial years other than as set out below:
After the balance sheet date the following dividends were proposed by the directors. The dividends have not been
provided and there are no income tax consequences.
Declared and paid during the year 2008
Total amount
Final ordinary dividend for the year ended 30 June 2008 of 0.5 cents
per fully paid share to be paid 8th October 2008
$231,112
26 AUDITORS’ REMUNERATION
CONSOLIDATED
PARENT
2008
$
2007
$
2008
$
2007
$
Amounts received or due and
receivable by auditors or the
parent entity:
• an audit or review of the
fi nancial report of the
entity and any other entity
in the consolidated entity
• other services in relation
to the entity and any other
entity in the consolidated
entity
tax compliance
special audits required
by regulators
Amounts received or due and
receivable by other auditors
for:
19,175
32,340
19,175
32,340
-
-
19,175
22,293
7,470
62,103
-
-
19,175
22,293
7,470
62,103
• other non-audit services
20,210
4,000
20,210
4,000
• an audit or review
the fi nancial report of
subsidiary entities
37,595
76,980
-
66,103
37,595
76,980
-
66,103
76
EMPIRED LIMITED | 2008 Annual Report
27 KEY MANAGEMENT PERSONNEL
Directors
The following persons were directors of Empired Limited during the fi nancial year:
M Ashton
D Taylor
R Bevan
R Baskerville
(b) Other key management personnel
The following persons also had authority and responsibility for planning, directing and controlling the activities of the
Group during the fi nancial year:
M Waller
C Ferrier
Chief Financial Offi cer and Company Secretary
Company Secretary (resigned 20 December 2008)
(c) Remuneration of Key Management Personnel
Information regarding key management personnel compensation is provided in the remuneration section of the directors’
report on pages 15 to 16.
77
NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended 30 June 2008
27 KEY MANAGEMENT PERSONNEL (cont’d)
(d) Option holdings of directors and executives
The movement during the reporting period in the number of options over ordinary shares in Empired Limited held, directly,
indirectly or benefi cially, by each of the key management person, including their related parties, is as follows:
Balance
at beg of
period 01-
Jul-07
Granted as
Remuneration
Options
Exercised
Net
Change
Other #
Balance
at end of
period 30-
Jun-08
Not Vested
& Not
Exercisable
Vested &
Exercisable
30 June 2008
Directors
R. Baskerville
1,450,000
1,100,000
M. Ashton
250,000
600,000
D. Taylor
R. Bevan
Executives
M. Waller
C. Ferrier
250,000
350,000
-
-
414,038
400,000
-
-
-
-
-
-
-
-
-
-
2,550,000
2,550,000
850,000
850,000
600,000
600,000
-
-
814,038
814,038
35,000
350,000
(11,666)
(23,334)
350,000
350,000
Total
2,399,038
2,800,000
(11,666)
(23,334)
5,164,038
5,164,038
-
-
-
-
-
-
-
Balance
at beg of
period 01-
Jul-06
Granted as
Remuneration
Options
Exercised
Net
Change
Other #
Balance
at end of
period 30-
Jun-07
Not Vested
& Not
Exercisable
Vested &
Exercisable
30 June 2007
Directors
R. Baskerville
700,000
750,000
M. Ashton
D. Taylor
Executives
M. Waller
C. Ferrier
-
-
250,000
250,000
350,000
64,038
35,000
-
Total
1,085,000
1,314,038
-
-
-
-
-
-
-
-
-
-
-
-
1,450,000
1,450,000
250,000
250,000
250,000
250,000
414,038
414,038
-
-
-
-
-
-
35,000
2,364,038
2,364,038
35,000
78
EMPIRED LIMITED | 2008 Annual Report
27 KEY MANAGEMENT PERSONNEL (cont’d)
(e) Shareholdings of Directors and Executives
Shares held in Empired Limited
30 June 2008
Balance 01-Jul-07
Remuneration
Options
Net Change Other
Balance 30-June-08
Granted as
On Exercise of
Ord
Pref
Ord
Pref
Ord
Pref
Ord
Pref
Ord
Pref
Directors
Mr. R Baskerville 4,889,269
Mr. M Ashton
Mr. D Taylor
Mr. R Bevan
-
-
-
Total
4,889,269
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,003,509
150,000
-
-
1,153,509
-
-
-
-
-
5,892,778
150,000
-
-
6,042,778
-
-
-
-
-
30 June 2007
Balance 01-Jul-06
Granted as
Remuneration
On Exercise of Options Net Change Other
Balance 30-June-07
Ord
Pref
Ord
Pref
Ord
Pref
Ord
Pref
Ord
Pref
Directors
Mr. R Baskerville 4,220,841
Mr. M Ashton
Mr. D Taylor
-
-
Total
4,220,841
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
668,428
-
-
668,428
-
-
-
-
4,889,269
-
-
4,889,269
-
-
-
-
All equity transactions with directors and other than those arising from the exercise of remuneration options have been
entered into under terms and conditions no more favourable than those the entity would have adopted if dealing at arm’s
length.
30 June 2008
Balance 01-Jul-07
Pref
Ord
Remuneration
Pref
Ord
Options
Net Change Other
Balance 30-June-08
Ord
Pref
Ord
Pref
Ord
Pref
Granted as
On Exercise of
Specifi ed
Executives
M. Waller
C. Ferrier
Total
1,483,811
-
1,483,811
-
-
-
-
-
-
-
-
-
-
11,666
11,666
-
-
-
134,813
-
134,813
-
-
-
1,618,624
11,666
1,630,290
-
-
-
79
NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended 30 June 2008
27 KEY MANAGEMENT PERSONNEL (cont’d)
(e) Shareholdings of Directors and Executives (cont’d)
30 June 2007
Balance 01-Jul-06
Remuneration
Options
Net Change Other
Balance 30-June-07
Granted as
On Exercise of
Ord
Pref
Ord
Pref
Ord
Pref
Ord
Pref
Ord
Pref
Executives
M. Waller
810,001
C. Ferrier
-
Total
810,001
28 DIVIDENDS
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
673,810
-
673,810
-
-
-
1,483,811
-
1,483,811
-
-
-
No dividends have been paid during the year (2007 nil). A dividend of 0.5c per ordinary share has been declared by the
Board. Record date will be the 15th of September and payment date the 8th of October.
CONSOLIDATED
2008
($)
2007
($)
(a) Dividends Proposed
Proposed fi nal fully franked ordinary dividend of 0.5 cents per ordinary
share at the tax rate of 30%
231,112
-
(b) Franking Credit Balance
Balance of franking account at year end at 30% available to the
shareholders of Empired Limited for subsequent fi nancial years
209,213
155,429
29 SEGMENT INFORMATION
(a) Primary segment – Business
The consolidated entity’s operations are predominantly in consulting services in the information technology industry.
(b) Secondary segment – Geographical
The consolidated entity operates predominantly within Australia
80
EMPIRED LIMITED | 2008 Annual Report
DIRECTOR’S DECLARATION
In accordance with a resolution of the directors of Empired Limited, I state that:
In the opinion of the directors:
a)
the fi nancial 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 fi nancial position as at 30 June 2008
and of their performance for the year ended on that date; and
(i)
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.
This declaration is made after receiving the declarations required to be made by the directors in accordance with section 295A
of the Corporations Act 2001 for the fi nancial year ended 30 June 2008.
On behalf of the Board
Russell Baskerville
Managing Director
30th of September 2008
8181
82
EMPIRED LIMITED | 2008 Annual Report
83
84
EMPIRED LIMITED | 2008 Annual Report
85
SHAREHOLDING ANALYIS
In accordance with Listing Rule 4.10 of the Australia Stock Exchange Limited, the Directors provide the following shareholding
information which was applicable as at 30th June 2008.
a. Distribution of Shareholding
SIZE OF SHAREHOLDING
NUMBER OF SHAREHOLDERS
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10001 - 100,000
100,001 - MAX
Total
3
16
52
213
74
358
%
0.01
0.11
0.88
17.19
81.81
100.00
b. Substantial Shareholders
The following are registered by the Company as substantial shareholders, having declared a relevant interest in the number of
voting shares shown adjacent as at the date of giving the notice.
SHAREHOLDER
Mr Russell Baskerville
Mr Gregory Leach
c. Twenty Largest Shareholders
The names of the twenty largest shareholders are:
NAME
Mr Russell Baskerville
Mr Gregory Leach
Uniplex Constructions Pty Ltd
Mr John Alexander Bardwell
Mr David Cawthorn
Ms Kym Garreffa
Mr Fraser Campbell
Thames Holdings Pty Ltd
Mr Mark Patton
Mr Gregory Bandy
Topsfi eld Pty Ltd
Mr Mark Waller
Mr Kevin Flynn
Mr Anthony James Farrell
GRD Limited
Trovex Pty Ltd
UBS Wealth Management
Mr Mark Waller
Locope Pty Ltd
Cornela Pty Ltd
Total
NUMBER
5,481,531
3,504,225
NUMBER OF SHARES HELD
5,481,531
3,504,225
2,333,414
2,002,500
2,000,000
1,306,167
1,200,000
971,458
965,475
800,000
779,490
666,667
650,000
603,019
600,000
600,000
563,000
547,144
528,667
500,000
%
11.9
7.6
%
11.86
7.58
5.05
4.33
4.33
2.83
2.60
2.10
2.09
1.73
1.69
1.44
1.41
1.30
1.30
1.30
1.22
1.18
1.14
1.08
26,602,757
57.56
The twenty members holding the largest number of shares together held a total of 57.56% of issued capital.
86
EMPIRED LIMITED | 2008 Annual Report
SHAREHOLDING ANALYIS
d. Issued Capital
The fully paid issued capital of the company consisted of 46,222,314 shares held by 358 shareholders.
Each share entitles the holder to one vote.
e. On-Market Buy-Back
There is no current on-market buy-back.
f. Company Secretary
The Company Secretaries are Mr Mark Waller and Mr Jeremy King.
g. Registered Offi ce
The registered offi ce of Empired Ltd is
469 Murray Street, Perth WA 6000
h. Other Offi ces
The other offi ces are:
HEAD OFFICE
469 Murray Street
Perth WA 6000
Telephone + 61 8 9321 9401
Level 13, Septimus Roe Square
256 Adelaide Terrace
Perth WA 6000
Telephone + 61 8 9223 1234
Melbourne
Level 3
470 Collins Street
Melbourne VIC 300
Telephone +61 3 8610 0700
Adelaide
Level 5
City Central
Tower 2
121 King William Street
Adelaide SA 5000
Telephone +61 8 8423 4426
87
OTHER INFORMATION FOR SHAREHOLDERS
In accordance with Listing Rule 4.10 of the Australian Stock
Exchange Limited, the Directors provide the following
information not elsewhere disclosed in this report.
SHAREHOLDER COMMUNICATIONS
The Board of Directors aims to ensure that shareholders are
informed of all major developments affecting the Company’s
state of affairs. Information is communicated to shareholders
as follows:
- The annual report is distributed to shareholders who elect
to receive the document. A copy of the full annual report is
available free of charge, upon request, from the Company.
The Board ensures that the annual report includes relevant
information about the operation of the Company during
the year, changes in the state of affairs of the Company
and details of future developments, in addition to the other
disclosures required by the Corporations Act;
- The half-year report contains summarised fi nancial
information and a review of the operations of the
Company during the period. The half-year fi nancial
report is prepared in accordance with the requirements
of Accounting Standards and the Corporations Act, and
is lodged with the Australian Securities and Investments
Commission and the Australian Stock Exchange; and
By registering with Computershare’s free Investor Centre
service you can enjoy direct access to a range of functions to
manage your personal investment details. You can create and
manage your own portfolio of investments, check your
security holding details, display the current value of your
holdings and amend your details online.
Changes to your shareholder details, such as a change of
name or address, or notifi cation of your tax fi le number or
direct credit of dividend advice can be made by printing out
the forms you need, fi lling them in and sending the changes
back to the Computershare Investor Centre.
SHARE REGISTRY ENQUIRIES
Shareholders who wish to approach the Company on any
matter related to their shareholding should contact the
Computershare Investor Centre in Melbourne:
The Registrar
Computershare Investor Services Pty Ltd
Level 2, 45 St Georges Tce
Perth WA 6000
Telephone +61 8 9323 2000
Facsimile +61 8 9323 2033
Website www-au.computershare.com/investor
ANNUAL GENERAL MEETING
- The Company’s internet website at www.empired.com is
regularly updated and provides details of recent material
announcements by the Company to the stock exchange,
annual reports and general information on the Company
and its business. The Board encourages full participation of
shareholders at the Annual General Meeting to ensure a high
level of accountability and identifi cation with the Company’s
strategy and goals. Important issues are presented to the
shareholders as single resolutions.
- As per listing rule 4.10.19, the Company has used cash
raised in listing on ASX in a way consistent with its business
objectives.
- As per listing rule 4.10.8, the Company had 17 shareholders
with unmarketable parcels of ordinary shares.
INTERNET ACCESS TO INFORMATION
The 2008 Annual General Meeting of Empired Limited will be
held in the:
The Melbourne Hotel
942 Hay Street, Perth WA 6000
at 10:00am on Wednesday, 21 November 2008.
Formal notice of the meeting will be circulated to shareholders
separate to this report.
STOCK EXCHANGE LISTING
Empired Limited shares are listed on the Australian Stock
Exchange (ASX:EPD). The home exchange is Perth.
All shares are recorded on the principal share register of
Empired Limited, held by Computershare Investor Services
Pty Limited at the following street address:
Empired maintains a comprehensive Investor Relations section
on its website at
www.empired.com/index.php?page=corpgovernance
Computershare Investor Services Pty Ltd
Level 2, 45 St Georges Tce
Perth WA 60
You can also access comprehensive information about
security holdings at the Computershare Investor Centre at
www-au.computershare.com/investor/
88
EMPIRED Ltd.
ABN 81 090 503 843
www.empired.com
ANNUAL REPORT 2008
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