Annual Report 2010
EMPIRED LTD & ITS CONTROLLED ENTITIES
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2010
ABN 81 090 503 843
CONTENTs
01: CORPORATE DIRECTORY
02: REsulTs
03: ChAIRmAN AND CEO REvIEw
04: hIghlIghTs
05: BOARD Of DIRECTORs
06: DIRECTORs’ REPORT
07: CORPORATE gOvERNANCE sTATEmENT
08: sTATEmENT Of COmPREhENsIvE INCOmE
09: sTATEmENT Of fINANCIAl POsITION
10: sTATEmENT Of CAsh flOws
11: sTATEmENT Of ChANgEs IN EQuITY
12: NOTEs TO ThE fINANCIAl sTATEmENTs
13: DIRECTORs’ DEClARATION
14: AuDITOR’s INDEPENDENCE DEClARATION
15: INDEPENDENT AuDIT REPORT
16: shAREhOlDINg ANAlYsIs
4
6
8
12
16
18
26
30
32
34
36
38
78
80
81
84
01: CORPORATE DIRECTORY
DIRECTORs
COmPANY sECRETARY
Mel Ashton (Non – Executive Chairman)
Mark Waller
Richard Bevan (Non – Executive Director)
Russell Baskerville (Managing Director & CEO)
REgIsTERED OffICE
469 Murray Street
PERTH WA 6000
Telephone No: +618 6454 9700
Fax No: +618 6454 9701
COmPANY NumBER
A.C.N: 090 503 843
COuNTRY Of INCORPORATION
Australia
lEgAl ADvIsERs
McKenzie Moncrieff Lawyers
Level 5, 37 St Georges Terrace
PERTH WA 6000
AuDITORs
Grant Thornton Audit Pty Ltd
Level 1, 10 Kings Park Road
WEST PERTH WA 6005
shARE REgIsTER
Computershare Investor Services Pty Ltd
Level 2, 45 St Georges Terrace
Perth WA 6000
COmPANY DOmICIlE AND lEgAl fORm
Empired Limited is the parent entity and an
Australian Company limited by shares
AsX CODE
EPD
mElBOuRNE
Level 8, 31 Queen Street
MELBOURNE VIC 3000
Telephone No: +613 8610 0700
Fax No: +613 8610 0701
PRINCIPAl PlACE Of BusINEss
PERTh
469 Murray Street
PERTH WA 6000
Telephone No: +618 6454 9700
Fax No: +618 6454 9701
Level 13, John Septimus Roe Square
256 Adelaide Terrace
PERTH WA 6000
Telephone No: +618 9223 1234
Fax No: +618 9223 1230
wEB sITE ADDREss
www.empired.com
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4:
OuR CulTuRE:
we recognise that our people are our biggest asset, and
our service Quality relies on our valued staff. mutual
respect within the team, and our collective view to
strive and deliver the best outcomes for our customers,
strengthens our unique value proposition as a turn-key
IT services provider.
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5:
02: REsulTs
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6:
Revenue
EBITDA
2008
$
2009
$
2010
$
19,312,728
$32,820,991
$27,903,654
$1,183,148
$1,228,186
$551,299
Revenue
EBITDA
2008
2009
Year
2010
2008
2010
2009
Year
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7:
03: ChAIRmAN AND CEO REvIEw
Dear Shareholder
The 2010 Financial Year has presented many challenges to
Empired however we have maintained our focus on increasing
contracted revenues and our investment in enhancing business
systems and capability. Whilst our financial performance with
revenue of $28 Million, EBITDA of $0.55 Million and NPAT
of $47,341 when compared to the previous year has been
disappointing, we remain confident that our investments
during the year will ensure we are well placed to take
advantage of improving market conditions.
During the period Empired placed a strong focus on expense
reduction and prudent cash management, as a result Empired
has maintained a sound financial position. In light of financial
performance and to maintain prudent cash management
during a difficult period, Empired will not declare a final
dividend payment, bringing the full year dividend to
0.25 cents per share fully franked.
NAvIgATINg A TOugh YEAR
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As these major projects started to come to completion during
the first quarter of FY2010 we quickly started to see the flow
on impact of reduced project sales during the 2009 financial
year. This translated early in the second quarter to reduced
billing rates and utilisation levels within our Enterprise Services
division. This continued until early in quarter four.
Project and consulting sales during both quarters three and four
have improved considerably and we are pleased to report that
Empired continues to see earnings improvements month on
month from quarter 3 forward. Based on current workloads and
forecast sales we are confident that the first quarter of FY2011
will again see improved earnings results.
CONTINuINg TO ENhANCE OuR POsITION
During a turbulent year where management’s attention has
regularly been drawn to tactical decisions on issues confronting
the business today, a sound and disciplined approach has been
adopted, to ensure that strategic initiatives continue to be
delivered against.
At the end of the 2009 Financial Year, while many Australian
organisations saw earnings dip significantly and many more
experienced loss making years, Empired delivered a 167%
increase in revenues against the prior financial year.
With market conditions continuing to improve, we are
confident that these initiatives will prove paramount to
ensuring that Empired is positioned to capitalise on the
opportunities that it will be presented.
This was the result of a strong foundation of long term
contracted revenue (somewhat resilient to the deteriorating
market conditions) compounded by a number of large projects
secured during FY2008 and being delivered during FY2009.
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8:
We have often stated that our most valuable asset is our people, we predict that the demand for talented professional staff within the
IT sector will outstrip supply over the coming years. We have made significant investments to ensure that we can retain and attract the
very highest calibre people and continue to invest in their development.
Last year we outlined to you a strategic initiative to implement an employee management program including career path direction,
expectations and training requirements. During the 2010 financial year this program has been significantly advanced, with the
introduction of an online portal that allows all employees and management to track and measure progress against key performance
indicators. During the 2011 year we plan to further enhance and enrich the functionality of this system improving the productivity and
effective management of Empired’s workforce whist ensuring high staff satisfaction and retention.
Empired’s business development team have invested considerable time working closely with our major clients and prospective
clients during the financial year. Whilst this did not deliver strong financial performance during FY2010 many of these initiatives are
large, typically long lead time opportunities and we believe this investment will prove invaluable to ensuring Empired is strategically
positioned with these major organisations as they commit to substantial expansion activities.
In addition to our strategic people and client initiatives we have continued to improve business processes and operational systems
and tools.
These improvements are aimed at improving Empired’s efficiency, the quality of services and solutions that we deliver and importantly
our competitive advantage.
CONTINuINg TO DElIvER AgAINsT OuR OBjECTIvEs
We have maintained a clear and consistent plan to grow Empired’s IT services business. We have outlined key areas of growth through
larger and longer contracts, growing contracted recurring revenue, increased regional diversification and greater industry spread.
Whilst Empired faced a number of obvious challenges during the 2010 financial year we continued to deliver on securing additional
large multi-year, multi-million dollar contracts with the addition of the Department of Education and Early Childhood Development
in Victoria to our Managed Services client list and a multi-year, multi-million dollar strategic services contract with the Western
Australian Police.
It is these plus a number of significant increases to existing client contracts that has again ensured a successful year in building our
long term contracted revenue base. Contracted recurring revenue has grown by approximately 22% during the financial year.
Contracted Revenue
2010
2009
2008
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
35,000,000
Existing Contracted Revenue
New Contracted Revenue
Non Contracted Revenue
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We are pleased with the strong growth in recurring and long term contacted revenue particularly given the challenges faced during
the year. This substantial increase further strengthens Empired’s overall business.
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Securing both the WA Police contract and the Department of Education and Early Childhood Development contract during the year
has significantly enhanced our experience and references within the state government sector.
State Government along with the Resources sector have been identified as major growth opportunities for Empired over the
coming years.
9:
03: ChAIRmAN AND CEO REvIEw
(CONTINuED)
State-based Revenue
Sector-based Revenue
4%
12%
1%
4%
2%
4%
9%
24%
71%
Other
VIC
WA
34%
37%
Finance
Utilities
ICT
Oil & Gas
Resources
Government
Other
IN CLoSING
over the previous year we have seen improvements across the general Australian economic environment, however we caution that
a level of uncertainty remains. We are confident that generally improving market conditions will result in greater opportunities for
Australian organisations to grow and that improved liquidity in the equity and debt markets will provide the underpinning capital
support.
The IT sector has lagged the broader economic recovery however is showing positive signs of improvement. IT is today used in
every facet of business and we turn to technology to reduce risk, enhance productivity and efficiency and as a medium to drive new
business opportunities. We are confident that as the recovery continues and major capital projects and expansion initiatives gain
traction across many industry sectors that spending and demand for IT services will grow considerably.
The strategic investments Empired has made during the previous three years will ensure that as demand continues to grow Empired
has the breadth of capability and resources depth to meet our clients needs effectively and allow Empired to capitalise on the
opportunities that it is presented.
We continue steadfast in our stated vision of building a successful and growing IT Services company. We are confident in our great
people and robust business model, these together with improving market conditions ensure that we are highly motivated and looking
forward to advancing your company in the year ahead.
We would like to extend our gratitude to all our staff and partners and sincerely thank our many shareholders for their continued
patience, commitment and support.
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Russell Baskerville
Managing Director & Chief Executive officer
Mel Ashton
Chairman
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11:
04: hIghlIghTs
mAIN ROADs wEsTERN AusTRAlIA CAsE sTuDY
Main Roads Western Australia manages 18,000
kilometres of the state’s main roads and
highways. With rapidly growing demands on
IT resources and escalating costs, Main Roads
relied on Empired and its partners to provide a
solution that would curb costs and promote a
more efficient use of its IT resources. Working
with Microsoft, Empired provided a road map
to implement virtualisation technology across
the core server infrastructure. As a result of this
roadmap Empired is working with Main Roads
to removing more than half of Main Roads
physical servers and is making savings worth up
to A$500,000 on licensing fees, contractors and
hardware costs per annum. The roads agency
has also improved its ability to implement and
resource business-critical applications.
sITuATION
Main Roads Western Australia (Main Roads) manages some
18,000 kilometres of highways and main roads, covering 2.5
million square kilometres. This represents about 12 per cent
of the state’s 150,000 kilometres of road network, carrying
approximately 60 per cent of the state’s road traffic.
With more than 1,000 employees, the government road
agency has a wide area network spanning 10 regional and four
metropolitan offices, from the Kimberley region in the north to
Albany in the south. Like many organisations, however, Main
Roads faced growing demands on its physical computing
environment.
“We had an increasing number of physical servers that were
taking up more and more space, and costing us a lot of money,”
explains John Tidy, operations Manager, Main Roads. “We wanted
to consolidate our IT environment – to reduce our physical
footprint. We also wanted to increase capacity and availability on
our machines, to get more value out of them.”
“As a result of internal reorganisations, Main Roads was also
planning to relocate its data centre. This provided an opportune
moment to virtualise its production servers, since the Agency
would have less physical hardware to shift.
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12:
SoLuTIoN
After a detailed planning process with Empired, Main Roads
was presented with a roadmap and timetable for the
implementation of Microsoft Hyper-V to virtualise the core
production infrastructure.
“Following the planning process, we were very confident Hyper-V
was the best fit for our requirements,” says Tidy.
First of all, Main Roads established Hyper-V in its test and
development environment, using five different types of guest
virtual machines to test the product’s performance. once Main
Roads was satisfied, Empired set about deploying the Hyper-V
solution in the production server area over a six-week period.
“Main Roads already had licences for Windows Server 2008,
Microsoft System Center Configuration Manager and operations
Manager,” Lucas Hough-Neilson, National Practice Manager,
Empired. “As part of the implementation, we had to install
Microsoft System Centre Virtual Machine Manager. This would
help them manage the new environment, and was also best
practice, given the imminent release of R2.”
With the recent release of Hyper-V R2, Main Roads expects that
it will be able to decommission approximately 70 of its physical
servers, which is over half its total.
BENEFITS
Through Empired and Microsoft’s virtualisation solution, Main
Roads has been able to make significant cost savings through
lower licensing and contractor fees, as well as reducing its
hardware requirements. It can also deploy new servers and
applications faster.
FEWER LICENCES
By running Hyper-V on Microsoft Windows Server 2008,
Main Roads makes better use of existing licences and saves
on new ones.
“Rather than buying Windows licences for each physical server,
the new virtualised environment lets us run an unlimited number
of guests on each licensed host server,” explains Shelton. “We
have a far greater ratio of servers to licences than we did in the
old physical day. As a result, we expect to leverage our existing
investment and save up to $15,000 a year.”
FEWER CoNTRACToRS
In choosing this solution, Main Roads has also capitalised on its
existing skills investments.
“Through ensuring a single virtualisation solution across our
production infrastructure we have achieved a significant cost
reduction in the overall management overhead. With Microsoft,
there’s no need to relearn or change direction in our product set,”
says Tidy. “If we had selected an alternative solution, we would’ve
ended up running two production virtualisation technologies
and had to carry an additional consultant to handle a separate
management toolset, which would have cost us between
$150,000 and $200,000 a year.”
LESS HARDWARE
The hardware savings are even more valuable. Main Roads
estimated it should save between $5,000 and $10,000 for each
physical server it removed from its data centre.
“Its not simply the cost of the server but a number of other
factors, such as the amount of racking, environmental benefits,
consoles, monitors … all the supporting gear,” says Shelton.
MoRE AGILITY
The Main Roads IT Department can now deploy new servers
faster and more cheaply.
“Traditionally if you wanted to develop new business
applications, you’d need to first procure new physical servers,
as well as prepare and configure them – a process that can take
weeks,” says Simon Calley, Senior Technical Consultant, Main
Roads. “With Hyper-V, we can deploy a new server and get an
application rolled out in a day. It’s a huge time-saving and we
respond far more quickly to requests.”
GREENER IT
Virtualisation is helping Main Roads deliver on its environmental
obligations.
“When we move into our new computer room, we can ensure
our design and technology will reduce our physical footprint as
well as lower our power consumption,” says Tidy.
oVERVIEW
Country: Australia
Industry: Government
CuSToMER PRoFILE
Main Roads Western Australia maintains many of the state’s
highways and roads. It has more than 1,000 employees spread
across 14 offices.
BuSINESS SITuATIoN
With increased demands on its IT, Main Roads WA wanted
to improve business responsiveness and management of its
technology systems, as well as save on hardware, licensing and
operating costs.
SoLuTIoN
The roads agency virtualised its test and development servers,
then transferred its full server production environment onto an
upgraded and virtualised infrastructure platform.
BENEFITS
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Significantly lower licensing costs
Hardware savings of up to AuD $250,000 per year
Greater business agility
Improved IT manageability
“Virtualisation enables us to use our resources more efficiently
and wisely.”
Craig Shelton, Systems Manager,
Main Roads Western Australia
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13:
04: hIghlIghTs
sT BARBARA CAsE sTuDY
St Barbara is a listed Australian Gold exploration and mining
company, first established in 1969 as Endeavour oil. Today, St
Barbara has remote mines in Western Australia and offices in
both Perth and Melbourne.
St Barbara Limited (St Barbara) went out to market in search of
an ICT partner to not only deliver ServiceDesk, Network and
Management support, but also Strategic ICT Advice.
Empired has built strong relationships within the mining
industry due to its thorough understanding of the business
drivers within the field, this unique industry knowledge
positioned Empired as a prime candidate for assisting
St Barbara with its business needs.
Empired’s proven experience with other mining clients
such as Chevron, BHP, Chinese owned MinMetals Group and
G-Resources , along with their national presence landed them
the three year contract to provide strategic and operational
ICT Services to St Barbara.
Empired have built a strong reputation as trusted advisors
with a focus on tailored, industry solutions, delivering genuine
business value to its clients.
THE SoLuTIoN
St Barbara Limited required a long-term strategic ICT partner
to ensure their IT systems were robust, scalable and secure
24 hours a day, 7 days a week, 365 days of the year. Empired’s
principle consultants ran workshops with key St Barbara
stakeholders and business users to ensure that all business
issues were discussed. This hands-on, team approach ensured
the best outcome for the business. A portfolio of strategic
initiatives was agreed and a Strategic Technology Roadmap is
currently being developed and implemented with confidence
from all parties involved. As trusted Advisors, Empired have
been able to implement sturdy Business operations through
the use of technology, and continue to help St Barbara to make
informed strategic ICT decisions for the future.
Through Empired’s flexible approach and proven partnership,
St Barbara have also been able to rely on Empired for the ICT
planning and implementation for new high profile projects
such as the ‘King of the Hills’ mine site. With a number of remote
sites being successfully supported remotely already, St Barbara
could be confident that this new Site would be set up and
supported without any issues. Empired’s Business Continuity
and Governance model ensure that St Barbara’s technology
and information assets are continually improving their business
processes and Return on Investments.
From the Strategic Plan came key initiatives that Empired and
St Barbara can drive to move the business forward, together.
“I’m pleased to say that this has made for an invaluable business
partnership,” said Peter Simko, General Manager IT & Business
Systems, St Barbara Limited, of Empired’s strive to deliver ICT
services to constantly improve business processes and reduce
unnecessary costs.
BENEFITS
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Access to experienced, well qualified ICT professional’s
not just standard call centre support: Empired deliver a
broad range of capabilities from tailored Strategic Business
Consulting through to ICT Project Management, systems
design and implementation to ongoing ICT Managed
Services
Flexible contract parameters- assistance for ramp up and
ramp down of project sites
Better management of e-business data through leveraging
Empired’s Information Management and Security expertise
Leveraging Empired’s strong vendor relationships and
expert technical staff
Joint vision for the future state of the business: Empired are
dedicated to assisting clients with constant improvements
to their business processes and lowering costs
With Head office and DataCentre facilities in Perth, Empired
is a perfect partnership for supporting mine sites in regional
areas of Western Australia
Empired’s Managed ICT Services engagement allows the
St Barbara ICT staff to focus their business engagement and
Strategic planning & initiatives
BREADTH oF SERVICES
St Barbara has taken advantage of Empired’s full suite of
business and technical solutions including:
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Managed Services including: Networking, ServiceDesk and
Desktop & Server Support
Desktop Replacement Strategy and SoE Rollout
Development of a Strategic Technology Roadmap
Development of an Information Management Framework
Disaster Recovery and Backup Strategy
oCS Integration
Storage Management
24 x 7 Monitoring & System Support
FIFo Remote Site Support
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15:
05: BOARD Of DIRECTORs
The directors present their report together with the financial report of
Empired Limited (“the Company”) and the consolidated financial report of
the consolidated entity, being the Company and its controlled entities, for
the year ended 30 June 2010.
The names of the Company’s directors in office during the year and until
the date of this report are as below. Directors were in office for this entire
period unless stated.
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16:
DIRECTORs
NAME
Mel Ashton
Chairman
AGE
ExPERIENCE AND SPECIAL RESPoNSIBILITIES
52
Mel is a Fellow of the Australian Institute of Company Directors and a Fellow of the Institute
of Chartered Accountants in Australia and has over 30 years corporate experience in a wide
range of industries.
Mel’s other directorships include:
– National Board member of the Institute of Chartered Accountants in Australia.
– Chairman of Venture Minerals Limited (ASx: VMS)
– Chairman of Gryphon Minerals Ltd (ASx: GRY)
– Board member of Renaissance Minerals Limited (ASx:RNS)
– Board member of the Hawaiian Group of Companies
– Board member of Cullen Wines (Australia) Pty Ltd
David Taylor
Non-executive Director
(resigned 31 July 2009)
68
David has extensive commercial experience with a banking and marketing background.
Since retiring as Head of the Bankwest Business Bank in 1999, David has progressed a career
in corporate governance with appointments to the boards of listed and unlisted public
companies and government business enterprises.
He is immediate past Chairman of both Perth Market Authority and Forest Products
Commission and is a non-executive director of Agrifood Skills Australia and Southern Health.
David is a Fellow of the Australian Institute of Company Directors.
Russell Baskerville
Managing Director & CEo
32
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.
Richard Bevan
Non – executive Director
43
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.
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 officer 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 strategic operational management, implementing
organic growth strategies, business integration and raising capital in both public and private
markets.
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 ehealth Networks Pty Ltd which provides services in the Health
care industry. Richard is a Member of the Australian Institute of Company Directors.
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CoMPANY SECRETARIES
Mark Waller
CFo & Company Secretary
31
Mark has responsibility for ensuring the necessary operational and financial processes and
infrastructure are in place to support the strategic direction and continued growth of Empired.
Mark holds a degree in business from Curtin university majoring in Accounting and Business
Law and is a Certified Practicing Accountant. Mark brings experience from running his own
business in London to working for Ernst & Young.
Mark is also a Non-executive Director of BigRedSky Limited.
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17:
06: DIRECTOR’s 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.
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There were no significant changes in the nature
of the activities carried out during the year.
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18:
sIgNIfICANT ChANgEs IN ThE sTATE
Of AffAIRs
There were no significant 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
financial year and the date of this report any item, transaction
or event of a material and unusual nature likely, in the opinion
of the directors of the Company, to affect significantly the
operations of the consolidated entity, the results of those
operations, or the state of affairs of the consolidated entity
or in future financial years.
ENvIRONmENTAl REgulATION
shARE IssuEs DuRINg ThE YEAR
The consolidated entity’s operations are not subject to
any significant environmental regulations under either
Commonwealth or State Legislation.
DIvIDENDs
Dividends paid during the financial year are as follows:
2009
$
2010
$
231,112
231,112
115,556
115,556
(a) Dividends paid during the year.
Final 2009 fully franked dividend
of 0.50 cents per share (2008: 0.50
cents)
Interim 2010 fully franked dividend
of 0.025 cents per share (2009 :0.025
cents)
No shares were issued during the year.
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 80.
NON-AuDIT sERvICEs
Non-Audit services provided by the entity’s Auditor can be
found at note 26. The Directors are satisfied that the provision
of non-audit services is compatible with the standard of
independence for auditors imposed by the Corporations Act.
The nature and scope of each non-audit service provided
means that auditor independence was not compromised.
346,668
346,668
INDEmNIfICATION Of OffICERs
AND DIRECTORs
The Company has during and since the end of the financial
year, in respect of any person who has, is or has been an officer
of the company or a related body corporate, paid a premium
in respect of Directors and officers Liability insurance which
indemnifies Directors, officers and the Company of any claims
made against the Directors, officers 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 (AuDITED)
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.
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’,
dependent upon meeting pre-determined performance
benchmarks;
Establish appropriate, demanding performances hurdles for
variable executive remuneration.
The Company has not declared a final dividend for the year
ended 30 June 2010.
OPERATINg REsulTs fOR ThE YEAR
The net profit after tax from continuing operations for the year
for the consolidated entity is $ 47,341 (2009: $532,411).
lIkElY DEvElOPmENTs
Except as detailed in the Chairman and Managing Director’s
Review on pages 8 to 11, 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.
shARE OPTIONs
SHARE oPTIoNS GRANTED To
DIRECToRS AND oFFICERS
Share options were granted to Directors under the Executive
Share option Plan. Information relating to this grant is at note
13 to the financial statements.
uNISSuED SHARES
At the date of this report, there were 10,653,418 unissued
ordinary shares under options. Refer to note 13 of the financial
statements for more detail. option holders do not have any
right, by virtue of the option, to participate in any share issue of
the Company or any related body corporate or in the interest
issue of any other registered scheme.
SHARES ISSuED AS A RESuLT oF THE
ExERCISE oF oPTIoNS
No share options were exercised during the financial year.
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19:
06: DIRECTOR’s REPORT
(CONTINuED)
REMuNERATIoN CoMMITTEE
B.
Executive remuneration
Due to the structure of the Board, a separate remuneration
committee is not considered to add any efficiencies 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 26th of November 2009
when shareholders approved an aggregated remuneration of
$300,000 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 defined in
AASB 124 Related Party Disclosures) for the period ended
30 June 2010 is detailed in Table 1 of this report.
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:
»
»
»
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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.
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 fixed remuneration and variable
remuneration (potential short term and long term incentives)
is established for each senior executive by the Board. Table 1
below details the fixed and variable components (%) of the
executives of the company.
Fixed Remuneration
Objective
Fixed remuneration is reviewed annually by the board. The
process consists of a review of company wide, 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 Board has
access to external advice independent of management.
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20:
Structure
Senior executives are given the opportunity to receive their
fixed (primary) remuneration in a variety of forms including
cash and fringe benefits 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 fixed remuneration component of the company executives
is detailed in Table 1.
Structure
LTI grants to executives are delivered in the form of options.
Table 2 below 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 $0.30. For further details of the terms and
conditions including the service and performance criteria that
must be met refer to note 13.
Variable Remuneration – Short Term Incentive (STI)
C.
Service Agreements
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.
Russell Baskerville
Managing Director
Terms of Agreement – commenced 1 July 2005, until
terminated by either party.
Structure
Actual STI payments granted to the company executives
depend on the extent to which specific operating targets set
at the beginning of the financial year are met. The operational
targets consist of a number of Key Performance Indicators
(KPIs) covering both financial and non-financial measures
of performance. Typically included are measures such as
contribution to net profit after tax, customer service, risk
management, and leadership/team contribution.
Any STI payments are subject to the approval of the Board.
Payments made are delivered as a cash bonus in the following
financial year. For the 2010 financial year no STI cash bonus
has been paid to executives during the 2011 financial year
(2009: 50% of cash bonus was paid).
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
influence the generation of shareholder wealth and thus have a
direct impact on the Group’s performance against the relevant
long term performance hurdle.
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 – fixed $75,000 per annum.
David Taylor
Non Executive Director (resigned 31 July 2009)
Terms of Agreement – appointed 21 December 2005,
resigned on the 31 July 2009.
Fee – fixed $50,000 per annum.
Richard Bevan
Non Executive Director
Terms of Agreement – appointed 31 January 2008, until
terminated by either party.
Fee – fixed $50,000 per annum.
Mark Waller
Company Secretary and Chief Financial Officer
Terms of Agreement – commenced 18 April 2005, until
terminated by either party.
Salary – base $183,500 per annum.
Termination – one month’s written notice or one month’s
remuneration in lieu.
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21:
06: DIRECTOR’s REPORT
(CONTINuED)
Table 1: Directors’ and executives’ remuneration for the year ended 30 June 2010 and 30 June 2009
Short term benefits Post Employment
Salary &
Fees
Cash STI
Superannuation
Long term
benefits
(LTI)
Equity
Options
Total
%
Performance
related
2010
2009
2010
2009
2010
2009
75,000
75,000
3,823
28,842
45,872
43,201
–
–
–
–
–
–
–
–
28,200
2,850
103,200
77,850
344
21,158
4,128
2,763
–
1,900
4,167
51,900
11,750
4,750
61,750
50,714
–
–
–
–
–
–
Non-Executive Directors
M. Ashton
Chairman
D. Taylor
Non-executive Director
R. Bevan
Non-executive Director
Executive Directors
R. Baskerville
Chief Executive
2010
2009
240,000
240,000
–
160,000
–
–
119,850
5,700
359,980
305,700
–
19.60%
Key Management
M. Waller
Chief Financial officer and
Company Secretary
2010
2009
193,487
183,487
–
–
17,414
16,513
–
12,350
210,901
212,350
–
–
1 Payable at 30 June 2009, paid in September 2009
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22:
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
Total value
of options
granted
during the
year
%
Remuneration
consisting of
options for
the year
2010
Non-Executive
M. Ashton
26 November 2010
600,000
D. Taylor
–
–
R. Bevan
26 November 2010
250,000
0.047
–
0.047
28,200
28,200
27.32%
–
–
–
11,750
11,750
19.02%
Executive
R. Baskerville
26 November 2010
2,550,000
0.047
119,850
119,850
33.29%
Key Management
M. Waller
–
–
–
–
–
–
2009
Non-Executive
M. Ashton
D. Taylor
R. Bevan
Executive
21/11/2008
21/11/2008
21/11/2008
150,000
100,000
250,000
0.019
0.019
0.019
2,850
1,900
4,750
2,850
1,900
4,750
3.66%
3.66%
9.37%
R. Baskerville
21/11/2008
300,000
0.019
5,700
5,700
1.86%
Key Management
M. Waller
21/11/2008
01/12/2008
250,000
400,000
0.019
0.019
4,750
7,600
4,750
7,600
5.81%
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23:
06: DIRECTOR’s REPORT
(CONTINuED)
DIRECTORs’ mEETINgs
The number of Directors meetings and the number of meetings attended by each Director during the year are:
Name of Director
No. of Meetings Held
while a Director
No. of Meetings Attended as a
Director during the year ended
30 June 2010
Russell Baskerville
Mel Ashton
David Taylor
Richard Bevan
6
6
1
6
6
5
1
6
DIRECTORs’ 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 financial year:
Ordinary Shares
Options
8,939,933
175,000
–
–
4,300,000
1,000,000
700,000
500,000
2,012,124
1,064,038
Director
Russell Baskerville
Mel Ashton
David Taylor
Richard Bevan
Key Management
Mark Waller
Signed in accordance with a resolution of directors.
Russell Baskerville
Managing Director
31st of August 2010
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QuAlITY sTATEmENT:
Empired is committed to providing business benefits
to our customers, fulfilling employment opportunities
for our staff, rewarding returns on investment for
our shareholders and trusted relationships with
our associates.
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25:
07: CORPORATE gOvERNANCE sTATEmENT
This statement outlines the main corporate governance
practices in place throughout the financial 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 refined 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 financial 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.
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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 three directors who are appointed
to ensure that the Company is run in the best interest of the
shareholders. other than Russell Baskerville all directors are
independent non-executives. The names, skills, experience and
expertise of the directors of the Company in office at the date
of this report are located in the Directors’ report on pages 17.
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 Board intends to reconsider the requirement for and
benefits of a separate committee 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 confidence 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.
The chair should be an independent director.
RECoMMENDATIoN 3.2
During 2010 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 officer 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 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 committee 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 efficiencies or other benefits would be gained by
establishing separate committees.
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.
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27:
07: CORPORATE gOvERNANCE sTATEmENT
(CONTINuED)
PRINCIPlE 4 – sAfEguARD INTEgRITY Of
fINANCIAl 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 efficiencies or benefits would be gained by
establishing a separate audit committee.
The Board intends to reconsider the requirement for and
benefits of separate committees as the Company’s operations
grow and evolve.
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’s continuous disclosure policy is available on the
Company website.
PRINCIPlE 6 – REsPECT ThE RIghTs Of
shAREhOlDERs
RECoMMENDATIoN 4.2
RECoMMENDATIoN 6.1
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.
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 significant 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.
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.
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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 8.2
Companies should clearly distinguish the structure of
non-executive directors’ remuneration from that of
executive directors and senior executives.
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 identified.
RECoMMENDATIoN 7.3
The Board should disclose whether it has received
assurance from the Chief Executive Officer (or equivalent)
and the Chief Financial Officer (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
financial reporting risks.
This recommendation was complied with for 2010.
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 efficiencies 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.
Detailed information regarding the remuneration paid to
directors and senior executives is set out in the remuneration
report.
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29:
08: sTATEmENT Of COmPREhENsIvE INCOmE
fOR ThE YEAR ENDED 30 juNE 2010
Revenue
Cost of Sales
Gross profit
other Income
Legal expenses
Marketing expenses
occupancy expenses
Finance costs
Employee benefits
Depreciation expenses
other expenses
Profit before income tax
Income tax expense relating to ordinary
activities
Notes
CONSOLIDATED
PARENT
2010
$
2009
$
2010
$
2009
$
27,903,654
32,633,570
27,903,654
32,633,570
(20,642,678)
(24,040,794)
(20,642,678)
(24,040,794)
7,260,976
8,592,776
7,260,976
8,592,776
17,046
187,421
17,046
(73,696)
(177,291)
(716,596)
(109,158)
(34,437)
(139,965)
(648,238)
(164,252)
(73,696)
(177,291)
(716,596)
(109,158)
(4,048,437)
(4,675,866)
(4,048,437)
(331,071)
(254,076)
(329,270)
(1,710,703)
(2,053,504)
(1,712,504)
111,070
809,859
111,070
187,421
(34,437)
(139,965)
(648,238)
(164,252)
(4,675,866)
(251,818)
(2,055,762)
809,859
(63,729)
(277,448)
(63,729)
(277,448)
3
3
4
5
Profit for the period
47,341
532,411
47,341
532,411
Other comprehensive income
Other comprehensive income for the
period, net of income tax
–
–
–
–
–
–
–
–
Total comprehensive income for the period
47,341
532,411
47,341
532,411
Earnings per share (cents per share)
Basic earnings per share
Diluted earnings per share
Dividends per share (cents per share)
Note
2010
2009
6
6
28
0.10
0.08
0.75
1.15
0.96
0.75
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This Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
30:
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31:
09: sTATEmENT Of fINANCIAl POsITION
As AT 30 juNE 2010
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32:
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Work in progress
other current assets
Total Current Assets
Non-Current Assets
other financial assets
Property, plant and equipment
Intangible assets
Deferred tax asset
Total Non-Current assets
TOTAL ASSETS
LIABILITIES
Current Liabilities
Trade and other payables
Financial liabilities
Income tax payable
Provisions
unearned revenue
Total Current Liabilities
Non-Current Liabilities
Financial liabilities
Provisions
Deferred tax liability
Total Non-Current Liabilities
Notes
CONSOLIDATED
PARENT
2010
$
2009
$
2010
$
2009
$
7(i)
8
9
10
24
11
12
5
14
15
5
16
17
15
16
5
250,576
345,423
250,576
345,423
4,316,395
5,844,132
4,316,395
5,844,132
625,999
181,977
616,283
145,936
625,999
181,977
616,283
145,936
5,374,947
6,951,774
5,374,947
6,951,774
–
–
974,704
908,414
363,427
962,929
365,227
894,839
3,948,764
3,948,764
2,081,806
2,081,806
435,136
463,239
435,136
463,239
5,358,604
5,320,417
3,843,298
3,805,111
10,733,551
12,272,191
9,218,245
10,756,885
3,198,696
4,254,843
3,198,696
4,254,843
246,533
–
755,138
325,997
264,358
81,526
574,293
565,355
246,533
–
755,138
325,997
264,358
81,526
574,293
565,355
4,526,364
5,740,375
4,526,364
5,740,375
104,067
–
191,146
295,213
178,563
27,318
195,917
401,798
455,718
–
191,146
646,864
530,214
27,318
195,917
753,449
TOTAL LIABILITIES
4,821,577
6,142,173
5,173,228
6,493,824
NET ASSETS
EQUITY
Issued capital
5,911,974
6,130,018
4,045,017
4,263,061
18
2,775,982
2,775,982
2,775,982
2,775,982
Employee equity benefits reserve
222,901
141,618
222,901
141,618
Retained profits
TOTAL EQUITY
2,913,091
3,212,418
1,046,134
1,345,461
5,911,974
6,130,018
4,045,017
4,263,061
This Statement of Financial Position should be read in conjunction with the accompanying notes.
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33:
10: sTATEmENT Of CAsh flOws
fOR ThE YEAR ENDED 30 juNE 2010
Notes
CONSOLIDATED
PARENT
2010
$
2009
$
2010
$
2009
$
Cash flows from operating activities
Receipts from customers
29,160,687
34,902,624
29,160,687
34,902,624
Payments to suppliers and employees
(28,243,472)
(32,449,636)
(28,243,472)
(32,449,636)
Borrowing costs
Income tax paid
Interest received
(109,158)
(134,911)
17,046
(164,252)
(19,918)
104,778
(109,158)
(134,911)
17,046
(164,252)
(19,918)
104,778
Net cash flows from operating activities
7(iii)
690,192
2,373,596
690,192
2,373,596
Cash flows from investing activities
Purchase of property, plant and equipment
(397,361)
(461,220)
(397,361)
(461,220)
Proceeds from sale of property, plant and equipment
Acquisition of businesses (net of cash acquired)
21
–
–
Net cash flows (used in) investing activities
(397,361)
136
(350,350)
(811,434)
–
–
(397,361)
136
(350,350)
(811,434)
Cash flows from financing activities
Dividends paid
Repayment of borrowings
(346,668)
(346,668)
(346,668)
(346,668)
(141,812)
(1,138,589)
(141,812)
(1,138,589)
Repayment of finance lease liabilities
(234,458)
(208,427)
(234,458)
(208,427)
Proceeds from borrowings
335,260
327,828
335,260
327,828
Net cash flows (used in) financing activities
(387,678)
(1,365,856)
(387,678)
(1,365,856)
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
7(i)
(94,847)
345,423
250,576
196,306
149,117
345,423
(94,847)
345,423
250,576
196,306
149,117
345,423
This Statement of Cash Flows should be read in conjunction with the accompanying notes.
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35:
11: sTATEmENT Of ChANgEs IN EQuITY
fOR ThE YEAR ENDED 30 juNE 2010
CONSOLIDATED
Balance at 1 July 2008
Total comprehensive income for the period
Cost of share-based payments
Dividends paid to equity holders
Balance at 30 June 2009
Total comprehensive income for the period
Cost of share-based payments
Dividends paid to equity holders
Attributable to equity holders of the parent
Total equity
Issued capital
$
Retained
earnings $
Employee
Equity
Benefits
Reserve $
$
2,775,982
3,026,675
98,439
5,901,096
–
–
–
532,411
–
–
43,179
532,411
43,179
(346,668)
–
(346,668)
2,775,982
3,212,418
141,618
6,130,018
–
–
–
47,341
–
–
81,283
47,341
81,283
(346,668)
–
(346,668)
Balance at 30 June 2010
2,775,982
2,913,091
222,901
5,911,974
PARENT
Balance at 1 July 2008
Total comprehensive income for the period
Cost of share-based payments
Dividends paid to equity holders
Balance at 30 June 2009
Total comprehensive income for the period
Cost of share-based payments
Dividends paid to equity holders
2,775,982
1,159,718
98,439
4,034,139
–
–
–
532,411
–
–
43,179
532,411
43,179
(346,668)
–
(346,668)
2,775,982
1,345,461
141,618
4,263,061
–
–
–
47,341
–
–
81,283
47,341
81,283
(346,668)
–
(346,668)
Balance at 30 June 2010
2,775,982
1,046,134
222,901
4,045,017
This Statement of Changes in Equity should be read in conjunction with accompanying notes.
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37:
FINANCIAL STATEMENTS
12: NOTES TO THE FINANCIAL STATEMENTS
CORPORATE INFORMATION
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REVENUES
EXPENSES
INCOME TAX
EARNINGS PER SHARE
CASH AND CASH EQUIVALENTS
TRADE AND OTHER RECEIVABLES (CURRENT)
wORk IN PROGRESS
OTHER ASSETS
PROPERTY, PLANT AND EQUIPMENT
INTANGIBLE ASSETS
EMPLOYEE BENEFITS
TRADE AND OTHER PAYABLES (CURRENT)
FINANCIAL LIABILITIES
PROVISIONS
UNEARNED REVENUE
ISSUED CAPITAL AND RESERVES
FINANCIAL RISk MANAGEMENT OF OBjECTIVES AND POLICIES
FINANCIAL INSTRUMENTS
BUSINESS COMBINATIONS
COMMITMENTS AND CONTINGENCIES
IMPAIRMENT TESTING OF GOODwILL
INVESTMENT IN CONTROLLED ENTITY
EVENTS AFTER THE BALANCE SHEET DATE
AUDITORS’ REMUNERATION
kEY MANAGEMENT PERSONNEL
DIVIDENDS
RELATED PARTY TRANSACTIONS
13: DIRECTORS’ DECLARATION
14: AUDITOR’S INDEPENDENCE DECLARATION
15: INDEPENDENT AUDIT REPORT
16: SHAREHOLDING ANALYSIS
38
40
40
49
49
50
52
53
55
55
55
56
57
57
62
62
63
64
64
65
67
69
70
72
72
72
73
73
76
76
78
80
81
84
12: NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 jUNE 2010
1.
CORPORATE INFORMATION
The financial report of Empired Ltd for the year ended 30 June
2010 was authorised for issue in accordance with a resolution of
the directors on 30 August 2010.
Empired Limited is a company limited by shares incorporated in
Australia. The financial report includes the consolidated financial
statements and notes of Empired Limited and controlled
entities (Consolidated) and separate financial statements and
notes of Empired Limited as an individual parent entity (Parent).
2.
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
A.
BAsis of PrEPArATion
The financial report is a general purpose financial report, which
has been prepared in accordance with the requirements of
the Corporations Act 2001, Australian Accounting standards,
Australian Accounting interpretations and other authoritative
pronouncements of the Australian Accounting standards Board.
The financial report has been prepared on an accruals basis,
and is based on historical costs modified where applicable,
by measurement at fair value of selected non-current assets,
financial assets and financial liabilities.
The financial report is presented in Australian dollars.
The Group has elected to apply the relief in Class order
10/654, issued by the Australian securities and investments
Commission, which allows the group to continue to include
parent entity financial statements in the financial report.
As part of this relief the Group is not required to present the
summary parent entity information by regulation 2M.3.01
of the Corporations regulations 2001.
B.
sTATEMEnT of CoMPLiAnCE
The financial report complies with Australian Accounting
standards, which include Australian equivalents to international
financial reporting standard (‘Aifrs’). The financial report also
complies with international financial standards (‘ifrs’).
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 2010. These are outlined in the table below.
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40:
Reference
Title
Summary
AAsB 2009-12
AAsB 2009-11
Amendments to
Australian Accounting
standards arising from
AAsB 124 [AAsB 5, 8,
108, 110, 112, 119,133
137, 139,1023 & 1031
and interpretations 2, 4,
16, 1039 & 1052]
Amendments to
Australian Accounting
standards arising from
AAsB 9
AAsB 2009-9
Amendments to
Australian Accounting
standards – Additional
Exemptions for first-
time Adopters [AAsB1]
This revision amends
the disclosure
requirements for
government related
entities and the
definition of a related
party.
introduces new
requirements for
the classification
and measurement
of financial assets.
AAsB uses a single
approach to determine
whether a financial
asset is measured at
amortised cost or fair
value, and removes
the impairment
requirement for
financial assets held at
fair value.
AAsB 2009-9 makes
amendments to ensure
that entities applying
Australian Accounting
standards for the first
time will not face
undue cost or effort in
the transaction process
in particular situations.
AAsB 2009-5
further Amendments to
Australian Accounting
standards arising
from the Annual
improvements Project
[AAsB 5, 8, 101, 107, 117,
118, 136 &139]
AAsB 2009-5 makes
various amendments to
a number of standards
and interpretations in
line with iAsB annual
improvements projects
Application date
of standard*
Impact on Group
financial report
1 January 2011
The amendments
will not have any
impact on the Group’s
financial statements.
Application
date for
Group*
1 July 2011
1 January 2013
1 July 2013
The amendments
will not have any
significant impact on
the Group’s financial
statements.
1 January 2010
1 July 2010
As this is not the
first year adoption
of ifrs’s, these
amendments will not
have any impact on
the entity’s financial
report.
31 December 2010 The Group does not
1 July 2010
expect any significant
impact.
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41:
12: NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 jUNE 2010 (CONTINUED)
Application
date of
standard*
1 January 2011
Application
date for
Group*
1 July 2010
Impact on Group
financial report
The amendments will
not have any impact
on the Group’s financial
statements.
Reference
Title
Summary
AAsB 2009-10
Amendments
to Australian
Accounting standards
– Classification of
rights issues [AAsB
132]
AAsB 2009-10 makes
amendments which clarify
rights, options or warrants
to acquire a fixed number
of an entity’s own equity
instruments for a fixed
amount in any currency
are equity instruments if
the entity offers the rights,
options or warrants pro
rata to all existing owners
of the same class of its
non-derivative equity
instruments.
Amendments to
AAsB 1 arising from
interpretation 19
[AAsB 1]
This standard amends
AAsB 1 to allow first-time
adopter to use transitional
provisions in interpretation
19.
30 June 2011
1 July 2010
As the Group is not a
first-time adopter of
ifrs, this standard will
not have any impact.
AAsB 2009-13
AAsB 2010-01
Limited exemption
from comparative
AAsB 7 disclosures for
the first time adopters
[Amendments to
AAsB 1 and AAsB 7]
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Prepayments of
Minimum funding
requirement
[Amendments to
interpretation 14]
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42:
interpretation 19
Extinguishing
financial Liabilities
with Equity
instruments
These amendments
principally give effect to
extending the transition
provisions of AAsB 2009-2
Amendments to Australian
Accounting standards
– improving Disclosures
about financial instruments
to first-time adopters of
Australian Accounting
standards.
This amendment
to interpretation 14
addresses the unintended
consequences that can
arise from the previous
requirements when an
entity prepays future
contributions into a
defined benefit
pension plan.
This interpretation
provides guidance on
how to account for the
extinguishment of a
financial liability using the
issue of equity instruments.
30 June 2011
1 July 2010
As the Group is not a
first-time adopter of
ifrs, this standard will
not have any impact.
1 January 2011
1 July 2011
As the Group does
not have a defined
benefit pension plan
this amendment to
interpretation 14 is not
expected to have any
impact on the entity’s
financial report.
1 July 2010
1 July 2010
The Group has not
yet determined the
potential effect of the
interpretation.
C.
BAsis of ConsoLiDATion
The consolidated financial statements comprise the financial
statements of Empired Limited and its subsidiaries as at 30 June
each year (‘the Group’) (note 24).
The financial statements of subsidiaries are prepared for the
same reporting period as the parent company, using consistent
accounting policies.
Adjustments are made to bring into line any dissimilar
accounting policies that may exist.
All intercompany balances and transactions, including
unrealised profits arising from intra-group transactions, have
been eliminated in full. Unrealised losses are eliminated unless
costs cannot be recovered.
subsidiaries are consolidated from the date on which control is
transferred to the group and cease to be consolidated from the
date on which control is transferred out of the Group.
Where there is loss of control of a subsidiary, the consolidated
financial statements include the results for the part of the
reporting period during which Empired Limited has control.
Business Combinations
Business combinations occur where control over another
business is obtained and results in the consolidation of its
assets and liabilities. All business combinations, including
those involving entities under common control, are accounted
for by applying the purchase method.
The purchase method requires an acquirer of the business to
be identified and the cost of the acquisition and fair values
of identifiable assets, liabilities and contingent liabilities to be
determined at acquisition date, being the date that control is
obtained. Cost is determined as the aggregate of fair values of
assets given, equity issued and liabilities assumed in exchange
for control together with costs directly attributable to the
business combination.
Goodwill is recognised initially at the excess of cost over the
acquirer’s interest in the net fair value of the identifiable assets,
liabilities and contingent liabilities recognised. if the fair value
of the acquirer’s interests is greater than cost, the surplus is
immediately recognised in profit or loss.
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
Impairment
DV
DV
DV
DV
sL
7.5 – 20 yrs
5 – 20 yrs
3 – 20 yrs
3 – 5 yrs
1 – 2.5 yrs
The carrying values of plant and equipment are reviewed for
impairment when events or changes in circumstances indicate
the carrying value may not be recoverable.
for an asset that does not generate largely independent cash
inflows, the recoverable amount is determined for the cash-
generating unit to which the asset belongs.
if any such indication exists and where the carrying values
exceed the estimated recoverable amount, the assets or cash-
generating units are written down to their recoverable amount.
The recoverable amount of plant and equipment is the greater
of fair value less costs to sell and value in use. in assessing value
in use, the estimated future cash flows are discounted to their
present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks
specific to the asset.
An item of property, plant and equipment is derecognised
upon disposal or when no future economic benefits are
expected to arise from the continued used of the asset.
Any gain or loss arising on derecognition of the asset
(calculated as the difference between the net disposal proceeds
and the carrying amount of the item) is included in the income
statement in the period the item is derecognised.
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 identifiable assets,
liabilities and contingent liabilities.
following initial recognition, goodwill is measured at cost less
any accumulated impairment losses.
Goodwill is not amortised.
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Goodwill is reviewed for impairment, annually or more
frequently if events or changes in circumstances indicate that
the carrying value may be impaired.
43:
12: NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 jUNE 2010 (CONTINUED)
As at the acquisition date, any goodwill acquired is allocated to
each of the cash-generating units expected to benefit from the
combination’s synergies.
impairment is determined by assessing the recoverable amount
of the cash-generating unit to which the goodwill relates.
Where the recoverable amount of the cash-generating unit is
less than the carrying amount, an impairment loss is recognised.
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 finite lives,
this expense is taken to the income statement through the
‘amortisation expenses’ line item.
intangible assets, excluding development costs, created
within the business are not capitalised and expenditure is
charged against profits in the period in which the expenditure
is incurred.
intangible assets are tested for impairment where an
indicator of impairment exists and in the case of indefinite
lived intangibles annually, either individually or at the cash
generating unit level. Useful lives are also examined on an
annual basis and adjustments, where applicable, are made
on a prospective basis.
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 non-finAnCiAL AssETs
At each reporting date, the Group assesses whether there is any
indication that an asset may be impaired. Where an indicator
of impairment exists, the Group makes a formal estimate
of recoverable amount. Where the carrying amount of an
asset exceeds its recoverable amount the asset is considered
impaired and is written down to its recoverable amount.
recoverable amount is the greater of fair value less costs to
sell and value in use. it is determined for an individual asset,
unless the asset’s value in use cannot be estimated to be
close to its fair value less costs to sell and it does not generate
cash inflows that are largely independent of those from other
assets or groups of assets, in which case, the recoverable
amount is determined for the cash-generating unit to which
the asset belongs.
in assessing value in use, the estimated future cash flows are
discounted to their present value using a pre tax discount rate
that reflects current market assessments of the time value of
money and the risks specific to the asset.
i.
oPErATinG sEGMEnTs
The Group has adopted AAsB 8 ‘operating segments’ with
effect from 1 July 2009.
The Group has more than one reportable operating segment
identified by and used by the Chief Executive officer (chief
operating decision maker) in assessing the performance and
determining the allocation of resources. The Group however has
aggregated the segment in accordance with the aggregation
criteria of AAsB 8. During the year the Group had reliance on
one customer whose revenues represent 13% of the revenue
of the Group.
J.
finAnCiAL insTrUMEnTs
Reconciliation and initial measurement
financial assets and financial liabilities are recognised when
the entity becomes a party to the contractual provisions to the
instrument. for financial assets, this is equivalent to the date
that the company commits itself to either the purchase or sale
of the asset (ie trading date accounting is adopted).
financial instruments are initially measure at fair value plus
transaction costs, except where the instrument is classified ‘at
fair value through profit or loss’, in which case transaction costs
are expensed to profit or loss immediately.
Classification and subsequent measurement
financial instruments are subsequently measured at either
of fair value, amortised cost using the effective interest rate
method, or cost. fair value represents the amount for which
an asset could be exchanged or a liability settled, between
knowledgeable, willing parties. Where available, quoted prices
in an active market are used to determine fair value. in other
circumstances, valuation techniques are adopted.
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44:
Amortised cost is calculated as:
(iii) Held-to-maturity investments
a.
b.
c.
the amount at which the financial asset or financial
liability is measured at initial recognition;
less principal repayments;
plus or minus the cumulative amortisation of the
difference, if any, between the amount initially recognised
and the maturity amount calculated using the effective
interest method; and
d.
less any reduction for impairment.
The effective interest method is sued to allocate interest income
or interest expense over the relevant period and is equivalent to
the rate that exactly discounts estimated future cash payments
or receipts (including fees, transaction costs and other
premiums or discounts) through the expected life (or when
this cannot be reliably predicted, the contractual term) of the
financial instrument to the net carrying amount of the financial
asset or financial liability. revisions to expected future net cash
flows will necessitate an adjustment to the carrying value with
a consequential recognition of an income or expense in profit
or loss.
The Group does not designate any interests in subsidiaries,
associates or joint venture entities as being subject to the
requirements of accounting standards specifically applicable to
financial instruments.
(i)
Financial assets at fair value through profit or loss
financial assets are classified at ‘fair value through profit or loss’
when they are either held for trading for the purpose of short-
term profit taking, derivatives not held for hedging purposes,
or when they are designated as such to avoid an accounting
mismatch or to enable performance evaluation where a group
of financial assets is managed by key management personnel
on a fair value basis in accordance with a documented
risk management or investment strategy. such assets are
subsequently measured at fair value with changes in carrying
value being included in profit or loss.
(ii)
Loans and receivables
Loans and receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active
market and are subsequently measured at amortised cost,
Loans and receivables are included in current assets, except for
those which are not expected to mature within 12 months after
the end of the reporting period. (All other loans and receivables
are classified as non-current assets.)
Held-to-maturity investments are non-derivative financial assets
that have fixed maturities and fixed or determinable payments,
and it is the Group’s intention to hold these investments to
maturity. They are subsequently measured at amortised cost.
Held-to-maturity investments are included in non-current
assets, except for those which are expected to mature within
12 months after the end of the reporting period. (All other
investments are classified as current assets.)
if during the period the Group sold or reclassified more than an
insignificant amount of the held-to-maturity investments before
maturity, the entire held-to-maturity investments category
would be tainted and reclassified as available-for-sale.
(iv) Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial
assets that are either not suitable to be classified into other
categories of financial assets due to their nature, or they
are designated as such by management. They comprise
investments in the equity of other entities where there is
neither a fixed maturity nor fixed or determinable payments.
Available-for-sale financial assets are included in non-current
assets, except those which are expected to mature within 12
months after the end of the reporting period. (All other financial
assets are classified as current assets.)
(v)
Financial liabilities
non-derivative financial liabilities (excluding financial
guarantees) are subsequently measured at amortised cost.
Impairment
At the end of each reporting period, the Group assesses
whether there is objective evidence that a financial instrument
has been impaired. in the case of available-for-sale financial
instruments, a prolonged decline in the value of the instrument
is considered to determine whether an impairment has
arisen. impairment losses are recognised in the statement of
comprehensive income.
k.
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 impairment provision is recognised when there is objective
evidence that the Group will not be able to collect the
receivable. Bad debts are written off when identified.
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45:
12: NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 jUNE 2010 (CONTINUED)
L.
CAsH AnD CAsH EqUiVALEnTs
Cash and short-term deposits in the balance sheet comprise
cash at bank and in hand and short-term deposits with an
original maturity of three months or less.
for the purposes of the Cash flow statement, cash and cash
equivalents consist of cash and cash equivalents as defined
above, net of outstanding bank overdrafts.
M.
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.
are measured at the amounts expected to be paid when the
liabilities are settled. Liabilities for 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 benefits 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 outflows.
P.
sHArE-BAsED PAyMEnT TrAnsACTions
The Group provides to employees (including directors) of
the Group in the form of share-based payment transactions,
whereby employees render services in exchange for shares or
rights over shares (‘equity-settled transactions’).
n.
ProVisions
There are currently two plans in place to provide these benefits:
Provisions are recognised when the Group has a present
obligation (legal or constructive) as a result of a past event, it is
probable that an outflow of resources embodying economic
benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation.
(i)
(ii)
The Empired Employee share option Plan (EsoP2), which
provides to all employees excluding directors, and
The Executive share option Plan (EsoP1), which provides
benefits to directors and senior executives.
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 flows
at a pre-tax rate that reflects current market assessments of the
time value of money and, where appropriate, the risks specific
to the liability. Where discounting is used, the increase in
the provision due to the passage of time is recognised as a
finance cost.
o.
EMPLoyEE LEAVE BEnEfiTs
(i) Wages, salaries, annual leave and sick leave
Liabilities for wages and salaries, including non-monetary
benefits, and annual 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
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 Black
scholes 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 fulfilled, ending on the
date on which the relevant employees become fully entitled to
the award (‘vesting date’).
The cumulative expense recognised for equity-settled
transactions at each reporting date until vesting date reflects
(i) the extent to which the vesting period has expired and (ii)
the number of awards that, in the opinion of the directors of
the Group, will ultimately vest. This opinion is formed based on
the best available information at balance date. no adjustment
is made for the likelihood of market performance conditions
being met as the effect of these conditions is included in the
determination of fair value at grant date.
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46:
Where the terms of an equity-settled award are modified,
as a minimum an expense is recognised as if the terms had
not been modified. in addition, an expense is recognised for
any increase in the value of the transaction as a result of the
modification, as measured at the date of modification.
Where an equity-settled award is cancelled, it is treated as if
it had vested on the date of cancellation, and any expense
not yet recognised for the award is recognised immediately.
However, if a new award is substituted for the cancelled award,
and designated as a replacement award on the date that it is
granted, the cancelled and new award are treated as if they
were a modification of the original award, as described in the
previous paragraph.
The dilutive effect, if any, of outstanding options is reflected as
additional share dilution in the computation of earnings per
share (see note 6).
q.
LEAsEs
finance leases, which transfer to the Group substantially all the
risks and benefits incidental to ownership of the leased item,
are capitalised at the inception of the lease at the fair value
of the leased property or, if lower, at the present value of the
minimum lease payments.
Lease payments are apportioned between the finance charges
and reduction of the lease liability so as to achieve a constant
rate of interest on the remaining balance of the liability. finance
charges are charged directly against income.
Capitalised leased assets are depreciated over the shorter of the
estimated useful life of the asset or the lease term.
Leases where the lessor retains substantially all the risks and
benefits of ownership of the asset are classified as operating
leases. initial direct costs incurred in negotiating an operating
lease are added to the carrying amount of the leased asset
and recognised over the lease term on the same bases as the
lease income.
operating lease payments are recognised as an expense in the
income statement on a straight-line basis over the lease term.
r.
rEVEnUE
revenue is recognised to the extent that it is probable that the
economic benefits will flow to the Group and the revenue can
be reliably measured. The following specific recognition criteria
must also be met before revenue is recognised:
Rendering of services
revenue from the provision of services is recognised when the
service has been provided.
Maintenance, Hosting and Support fees
revenue from maintenance, hosting and support is recognised
and bought to account over the time it is earned. Unexpired
revenue is recorded as unearned income.
Interest received
revenue is recognised as the interest accrues (using the
effective interest method, which is the rate that exactly
discounts estimated future cash receipts through the expected
life of the financial instrument) to the net carrying amount of
the financial asset.
s.
forEiGn CUrrEnCy TrAnsACTions
foreign currency transactions are translated into functional
currency using the exchange rates prevailing at the date of the
transaction.
foreign exchange differences arising on the translation of
monetary items are recognised in the income statement.
T.
inCoME TAx
Deferred income tax is provided on all temporary differences
at the balance sheet date between the tax bases of assets
and liabilities and their carrying amounts for the financial
reporting purposes.
Deferred income tax liabilities are recognised for all taxable
temporary differences:
»
»
except where the deferred income tax liability arises from
the initial recognition of an asset or liability in a transaction
that is not a business combination and, at the time of the
transaction, affects neither the accounting profit nor taxable
profit or loss; and
in respect of taxable temporary differences associated with
investments in subsidiaries, associates and interests in joint
ventures, except where the timing of the reversal of the
temporary differences can be controlled and it is probable
that the temporary differences will not reverse in the
foreseeable future.
Deferred income tax assets are recognised for all deductible
temporary differences, carry-forward of unused tax assets and
unused tax losses, to the extent that it is probable that taxable
profit will be available against which the deductible temporary
differences, and the carry-forward of unused tax assets and
unused tax losses can be utilised:
»
except where the deferred income tax asset relating to the
deductible temporary differences arises from the initial
recognition of an asset or liability in a transaction that is not
a business combination and, at the time of the transaction,
affects neither the accounting profit nor taxable profit or
loss; and
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47:
12: NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 jUNE 2010 (CONTINUED)
»
in respect of deductible temporary differences associated
with investments in subsidiaries, associates and interests in
joint ventures, deferred tax assets are only recognised to
the extent that it is probable that the temporary differences
will reverse in the foreseeable future and taxable profit will
be available against which the temporary differences can
be utilised.
The carrying amount of deferred income tax assets is reviewed
at each balance sheet date and reduced to the extent that it
is no longer probable that sufficient taxable profit will be
available to allow all or part of the deferred income tax asset
to be utilised.
Deferred income tax assets and liabilities are measured at the
tax rates that are expected to apply to the year when the asset
is realised or the liability is settled, based on tax rates (and tax
laws) that have been enacted or substantively enacted at the
balance sheet date.
V.
siGnifiCAnT 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 financial 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 significant
risk of causing a material adjustment to the carrying amounts
of assets and liabilities within the next financial year are
discussed below.
The Group tests annually whether goodwill costs has suffered
any impairment, in accordance with the accounting policies.
income taxes relating to items recognised directly in equity are
recognised in equity and not in the income statement.
i.
Impairment of goodwill and intangibles with
indefinite useful lives
The group determines whether goodwill and intangibles with
indefinite 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 indefinite useful lives are allocated. The assumptions used
in this estimation of recoverable amount and carrying amount
of goodwill and intangibles with indefinite useful lives are
discussed in note 23.
U.
oTHEr TAxEs
revenues, expenses and assets are recognised net of the
amount of GsT except:
»
»
where the GsT incurred on a purchase of goods and
services is not recoverable from the taxation authority, in
which case the GsT is recognised as part of the cost of
acquisition of the asset or as part of the expense item as
applicable; and
receivables and payables are stated with the amount of
GsT included.
The net amount of GsT recoverable from, or payable to, the
taxation authority is included as part of receivables or payables
in the balance sheet.
Cash flows are included in the Cash flow statement on a
gross basis and the GsT component of cash flows arising from
investing and financing activities, which is recoverable from,
or payable to, the taxation authority are classified as operating
cash flows.
Commitments and contingencies are disclosed net of
the amount of GsT recoverable from, or payable to, the
taxation authority.
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48:
3 REVENUES
Sales Revenue
services
Other Revenue
interest
Management fee
foreign exchange gain
other
4 EXPENSES
Profit before income tax includes the following specific expenses:
Operating Lease Rentals
Minimum lease payments
Other Expenses
insurance
Travel
Administration
other
CONSOLIDATED
PARENT
2010
$
2009
$
2010
$
2009
$
27,903,654
32,633,570
27,903,654
32,633,570
27,903,654
32,633,570
27,903,654
32,633,570
6,462
–
10,584
–
14,788
60,468
82,643
29,522
6,462
–
10,584
–
14,788
60,468
82,643
29,522
17,046
187,421
17,046
187,421
27,920,700
32,820,991
27,920,700
32,820,991
CONSOLIDATED
PARENT
2010
$
2009
$
2010
$
2009
$
9,279
9,279
120,880
213,429
892,918
465,197
6,492
6,492
133,341
205,078
862,150
846,443
9,279
9,279
120,880
213,429
892,918
475,998
6,492
6,492
133,341
205,078
862,150
848,701
1,692,424
2,047,012
1,703,225
2,049,270
1,701,703
2,053,504
1,712,504
2,055,762
0
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12: NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 jUNE 2010 (CONTINUED)
5
INCOME TAX
(A)
inCoME TAx ExPEnsE
The major components of income tax expense are:
Current income tax payable
Deferred income tax relating to origination and
reversal of temporary differences
Adjustments
income tax expense reported in income statement
CONSOLIDATED
PARENT
2010
$
2009
$
2010
$
2009
$
40,892
23,332
(495)
63,729
81,526
320,712
(124,790)
277,448
40,892
23,332
(495)
63,729
81,526
320,712
(124,790)
277,448
(B)
nUMEriCAL rEConCiLiATion BETWEEn AGGrEGATE TAx ExPEnsE rECoGnisED in THE
CoMPrEHEnsiVE inCoME sTATEMEnT AnD TAx ExPEnsE CALCULATED PEr THE sTATUTory
inCoME TAx rATE
Prima facie tax on operating profit calculated
at 30% (2009: 30%)
Add tax effect of:
non-deductible expenses
other non-deductible expenses
other
Aggregate income tax expense
0
1
0
2
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CONSOLIDATED
PARENT
2010
$
2009
$
2010
$
2009
$
33,321
33,321
12,342
16,495
1,571
63,729
242,958
242,958
26,266
14,242
(6,018)
277,448
33,321
33,321
12,342
16,495
1,571
63,729
242,958
242,958
26,266
14,242
(6,018)
277,448
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50:
(C) rECoGnisED DEfErrED TAx AssETs AnD LiABiLiTiEs
Deferred income tax balances at 30 June relate to the following:
(i) Deferred tax liabilities
Prepaid expenses
invoices in dispute
Work in progress
Gross deferred tax liabilities
(ii) Deferred tax assets
Provisions:
Annual leave
Long service leave
Accrued superannuation
Provision for doubtful debts
Equity raising costs
Borrowing costs
Tax losses
Gross deferred tax assets
CONSOLIDATED
2010
$
2009
$
(3,346)
–
(187,800)
(191,146)
(3,268)
(7,764)
(184,885)
(195,917)
207,114
172,288
19,426
88,262
12,248
59,083
3,116
45,887
435,136
8,195
83,199
–
88,631
4,445
106,481
463,239
(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 notified the Australian Taxation office 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.
0
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51:
12: NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 jUNE 2010 (CONTINUED)
5
INCOME TAX (CONTINUED)
(E)
inCoME TAx PAyABLE
income tax payable
CONSOLIDATED
PARENT
2010
$
2009
$
2010
$
2009
$
–
–
81,526
81,526
–
–
81,526
81,526
6.
EARNINGS PER SHARE
Basic earnings per share amounts are calculated by dividing net profit 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 profit 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:
net profit attributable to ordinary equity holders of the parent
47,341
532,411
CONSOLIDATED
2010
$
2009
$
Weighted average number of ordinary shares for basic
earnings per share
Effect of dilution:
share options
Weighted average number of ordinary shares adjusted
for the effect of dilution
0
1
0
2
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2010
Thousands
2009
Thousands
46,222
46,222
10,823
57,045
9,458
55,680
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52:
7 CASH AND CASH EQUIVALENTS
(i) rEConCiLiATion of CAsH
for the purposes of the cash flow statement, cash includes cash on hand and cash in banks. Cash at the end of the year as shown in
the cash flow statement is reconciled to the related items in the balance sheet as follows:
CONSOLIDATED
PARENT
2010
$
2009
$
2010
$
2009
$
12,356
238,220
250,576
239,203
106,220
345,423
12,356
238,220
250,576
239,203
106,220
345,423
Cash at bank and in hand
Term deposit
(ii) finAnCinG fACiLiTiEs AVAiLABLE
At reporting date the following facilities were available:
Bank overdraft facility
2,070,717
3,000,000
2,070,717
3,000,000
The loan facility availability is based on 50% of the Company’s debtor book at the end of month, and has an upper limit of $3,000,000.
0
1
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2
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53:
12: NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 jUNE 2010 (CONTINUED)
(iii) rEConCiLiATion of nET CAsH fLoWs froM oPErATinG ACTiViTiEs To oPErATinG ProfiT
AfTEr inCoME TAx
operating profit after income tax
Depreciation
Write down of investment in subsidiary
option Plan Expense
Changes in assets and liabilities net of effects of purchases
and disposals of controlled entities:
Decrease in receivables
Decrease in other assets
(increase)/decrease in prepayments
CONSOLIDATED
PARENT
2010
$
2009
$
2010
$
2009
$
47,341
331,071
–
532,411
254,076
–
81,282
43,179
47,341
329,270
1,801
81,282
532,411
251,818
2,258
43,179
1,505,034
1,644,457
1,505,034
1,644,457
28,103
(36,041)
213,689
7,386
28,103
(36,041)
213,689
7,386
16,939
increase/(decrease) in creditors
(1,507,998)
16,939
(1,507,998)
increase/(decrease) in other creditors
923,390
(1,202,276)
923,390
(1,202,276)
increase in unexpired interest
increase/(decrease) in accrued liabilities
increase/(decrease) in unearned income
increase in income tax payable
increase in provision for employee entitlements
–
(514,632)
(239,358)
(81,526)
153,526
2,365
373,737
362,438
(63,181)
188,376
–
(514,632)
(239,358)
(81,526)
153,526
2,365
373,737
362,438
(63,181)
188,376
Net cash from operating activities
690,192
2,373,596
690,192
2,373,596
(iV) non-CAsH inVEsTinG AnD finAnCinG ACTiViTiEs
Acquisition of plant and equipment by means of finance lease
104,999
338,395
104,999
338,395
0
1
0
2
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54:
8.
TRADE AND OTHER RECEIVABLES
Trade receivables
Provision for impairment
Term deposit
other receivables
CONSOLIDATED
PARENT
2010
$
2009
$
2010
$
2009
$
4,336,535
5,840,632
4,336,535
5,840,632
(40,828)
–
(40,828)
–
4,295,707
5,840,632
4,295,707
5,840,632
3,500
17,188
3,500
–
3,500
17,188
3,500
–
4,316,395
5,844,132
4,316,395
5,844,132
Trade receivables are non-interest bearing and are generally on 30-day terms. (for further details on credit risk, refer to note 19).
A provision for impairment is recognised when there is objective evidence that an individual trade is impaired. These amounts have
been included in the other expenses item. There are no balances within trade and other receivables that contain assets that are not
impaired and are past due. it is expected these balances will be received when due. impaired assets are provided for in full.
Movement in the provision for impairment of receivables during the year was as follows:
Balance at 1 July
impairment loss provided for
Balance at 30 June
9.
wORk IN PROGRESS
Work in progress
10.
OTHER ASSETS
Current
Prepayments
Total current other assets
–
40,828
40,828
–
–
–
–
40,828
40,828
–
–
–
625,999
625,999
616,283
616,283
625,999
625,999
616,283
616,283
0
1
0
2
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181,977
181,977
145,936
145,936
181,977
181,977
145,936
145,936
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55:
12: NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 jUNE 2010 (CONTINUED)
11.
PROPERTY, PLANT AND EQUIPMENT
Buildings and Improvements
At cost
Accumulated Depreciation
Total Buildings and improvements
Plant and Equipment
Plant and Equipment
At cost
Accumulated Depreciation
Lease Plant and Equipment
At cost
Accumulated Depreciation
Leasehold improvements
At cost
Accumulated Depreciation
Total Leasehold improvements
Total Plant & Equipment
Total Property, Plant & Equipment
Leased assets are held as security for hire purchase contracts.
Property, Plant and Equipment
Movements during the year:
opening balance 1 July
Additions
Disposals
0
1
0
2
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Depreciation expense
Closing balance 30 June
56:
CONSOLIDATED
PARENT
2010
$
2009
$
2010
$
2009
$
19,752
(13,731)
6,021
19,752
(13,041)
6,711
19,752
(13,731)
6,021
19,752
(13,041)
6,711
1,382,147
1,019,228
1,276,376
913,501
(795,050)
(664,359)
(701,054)
(572,207)
587,097
354,869
575,322
341,294
579,021
544,921
579,021
544,921
(278,053)
(100,640)
(278,053)
(100,640)
300,968
444,281
300,968
444,281
131,812
(51,194)
80,618
968,683
974,704
131,811
(29,258)
102,553
901,703
908,414
131,812
(51,194)
80,618
956,908
962,929
131,811
(29,258)
102,553
888,128
894,839
908,414
397,358
–
701,610
461,559
(679)
894,839
397,358
–
685,777
461,559
(679)
(331,068)
(254,076)
(329,268)
(251,818)
974,704
908,414
962,929
894,839
12.
INTANGIBLE ASSETS
Goodwill at cost
Accumulated impaired losses
net carrying value
CONSOLIDATED
PARENT
2010
$
2009
$
2010
$
2009
$
3,948,764
3,948,764
2,081,806
2,081,806
–
–
–
–
3,948,764
3,948,764
2,081,806
2,081,806
Balance at the beginning of the year
3,948,764
3,827,164
2,081,806
1,960,206
Additions
Accumulated amortisation and impairment
–
–
121,600
–
–
–
121,600
–
3,948,764
3,948,764
2,081,806
2,081,806
Goodwill has been tested for impairment as detailed at note 23. no impairment provision was required.
13.
EMPLOYEE BENEFITS
(A) EMPirED EMPLoyEE sHArE oPTion PLAn
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 the EsoP2 will vest on the sooner of one of the following conditions being satisfied:
i)
ii)
iii)
iv)
on the second anniversary, one third of the grant of options;
on the third anniversary, two thirds of the grant of options;
on the fourth anniversary, all of the grant of options; or
a takeover offer or bid in respect of Empired shares is made in accordance with the Corporations Act and the Board
recommends that shareholders accept the offer.
other relevant terms and conditions applicable to options granted under the EsoP2 include:
a)
b)
any vested options that are unexercised on the fifth 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.
on the 26 november 2009, 600,000 options were granted with a fair value as follows:
Options
600,000
Fair value per option
Exercise price per option
Expiry Date
$0.056
$0.20
26 november 2012
The options were granted over ordinary shares and are exercisable upon meeting the vesting conditions outlined above and until their
expiry date.
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57:
12: NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 jUNE 2010 (CONTINUED)
13.
EMPLOYEE BENEFITS (CONTINUED)
(A) EMPirED EMPLoyEE sHArE oPTion PLAn (CONTINUED)
The fair value of the options are estimated at the date of grant using the Black scholes model taking into account the terms and the
conditions upon which the options were granted. The following table gives the assumptions made in determining the fair value of the
options granted:
Dividend yield (%)
Expected volatility (%)
risk-free interest rate (%)
Expected life of option (years)
option exercise price ($)
share price at grant date ($)
26 November 2009
(600,000) options
5.55%
83%
5.08%
3 years
$0.20
$0.135
The following table illustrates the number (no.) and weighted average exercise prices (WAEP) of share options issued under the EsoP2.
outstanding at the beginning of the year
Granted during the year
forfeited during the year
Exercised during the year
Expired during the year
2010
No.
2010
WAEP
1,403,474
300,000
(119,511)
–
–
$0.313
$0.20
–
–
–
2009
No.
676,476
953,814
(63,082)
–
(163,734)
2009
WAEP
$0.35
$0.29
–
–
–
1,583,963
$0.287
1,403,474
$0.313
Exercisable at the end of the year
499,871
$0.35
700,773
$0.26
The weighted average contractual life for the share options outstanding as at 30 June 2010 is 1.13 years (2009: 1.89 years).
0
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0
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share options issued under the EsoP2 and outstanding at the end of the year have the following exercise prices:
Expiry Date
31 July 2010
31 July 2010
31 July 2010
22 february 2012
22 february 2012
22 february 2012
1 August 2011
1 August 2011
1 August 2011
26 november 2012
Total
Exercise
price
2010
No.
2009
No.
$0.30
$0.35
$0.40
$0.30
$0.35
$0.40
$0.30
$0.25
$0.30
$0.20
78,383
76,081
76,081
89,779
89,776
89,771
600,000
92,046
92,046
300,000
78,383
76,081
76,081
94,070
94,066
94,061
600,000
145,366
145,366
–
1,583,963
1,403,474
(B) EMPirED ExECUTiVE sHArE oPTion PLAn
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 the EsoP will vest on the sooner of one of the following conditions being satisfied:
i)
ii)
on the second anniversary of the grant of the options;
a takeover offer or bid in respect of Empired shares is made in accordance with the Corporations Act and the Board
recommends that shareholders accept the offer.
other relevant terms and conditions applicable to options granted under the EsoP1 include:
a)
b)
c)
any vested options that are unexercised on the fifth anniversary of their grant date will expire;
upon exercise, options will be settled in ordinary shares of Empired Limited; and
options are issued to executives subject to successful Asx listing which has occurred post balance date.
During the financial year the below options were granted to executives:
Options
Fair value per option
Exercise price per option
Expiry Date
3,400,000
$0.047
$0.30
26 november 2012
The options were granted over ordinary shares and are exercisable upon meeting the vesting conditions outlined above and until
their expiry date.
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0
2
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59:
12: NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 jUNE 2010 (CONTINUED)
13.
EMPLOYEE BENEFITS (CONTINUED)
(B) EMPirED ExECUTiVE sHArE oPTion PLAn (CONTINUED)
The fair value of the options are estimated at the date of grant using the Black scholes model. The following table gives the
assumptions made in determining the fair value of the options granted in the year to 30 June 2010.
Dividend yield (%)
Expected volatility (%)
risk-free interest rate (%)
Expected life of option (years)
option exercise price ($)
share price at grant date ($)
26 November 2009
(3,400,000) options
5.55%
83%
5.08%
3 years
$0.30
$0.135
The expected life of the options is based on historical data and is not necessarily indicative of exercise patterns that may occur.
The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may also not necessarily
be the actual outcome.
no other features of options granted were incorporated into the measurement of fair value.
The following table illustrates the number (no.) and weighted average exercise prices (WAEP) of share options issued under the EsoP1
outstanding at the beginning of the year
Granted during the year
forfeited during the year
Exercised during the year
Expired during the year
2010
No.
8,000,000
3,400,000
(1,700,000)
–
–
2010
WAEP
$0.32
$0.30
$0.40
–
–
2009
No.
7,350,000
2,250,000
(1,500,000)
–
(100,000)
outstanding at the end of the year
9,700,000
$0.30
8,000,000
Exercisable at the end of the year
3,050,000
$0.26
2,288,345
2009
WAEP
$0.32
$0.35
–
–
–
$0.32
$0.25
As at 30 June 2010 there were 9,700,000 options over ordinary shares with an average exercise price of $0.30 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 2010 is 1.425 years (2009: 1.39 years).
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60:
share options issued under the EsoP1 and outstanding at the end of the year have the following average exercise prices:
Expiry Date
28 november 2010
23 March 2011
28 July 2011
17 november 2010
17 november 2011
23 July 2010
1 December 2011
21 november 2011
26 november 2012
Total
Exercise
price
2010
No.
2009
No.
$0.25
$0.25
$0.25
$0.25
$0.25
$0.40
$0.40
$0.30
$0.30
700,000
700,000
1,100,000
1,100,000
300,000
750,000
500,000
700,000
300,000
750,000
500,000
2,400,000
1,200,000
1,200,000
1,050,000
1,050,000
3,400,000
–
9,700,000
8,000,000
(C) EMPirED PUrCHAsEr sHArE oPTion PLAn
Empired Limited issued share options as part of the acquisition of the quadrant Group. Details of the options granted can be
found below.
2010
No.
2010
WAEP
2009
No.
2009
WAEP
outstanding at the beginning of the year
300,000
$0.366
Granted during the year
forfeited during the year
Exercised during the year
Expired during the year
–
–
–
–
–
–
–
–
outstanding at the end of the year
300,000
$0.366
300,000
100,000
(100,000)
–
(100,000)
300,000
Exercisable at the end of the year
200,000
$0.40
200,000
The fair value of the options are estimated at the date of grant using a Black scholes model.
$0.40
$0.30
–
–
–
$0.366
$0.40
0
1
0
2
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61:
12: NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 jUNE 2010 (CONTINUED)
14.
TRADE AND OTHER PAYABLES (CURRENT)
Trade payables
superannuation payable
GsT payable
PAyG payable
Accrued liabilities
Credit cards payable
other
CONSOLIDATED
PARENT
2010
$
2009
$
2010
$
2009
$
1,057,051
2,563,998
1,057,051
2,563,998
294,205
743,426
551,780
528,193
18,808
5,233
277,328
406,773
–
980,214
19,859
6,671
294,205
743,426
551,780
528,193
18,808
5,233
277,328
406,773
–
980,214
19,859
6,671
3,198,696
4,254,843
3,198,696
4,254,843
included in the above are aggregate amounts payable to the following related parties:
owing to directors and director related entities
22,000
22,447
22,000
22,447
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.
0
1
0
2
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15.
FINANCIAL LIABILITIES
Current
obligations under finance leases and hire purchase
contracts (note 20)
obligations under premium funding contracts
Non-Current
obligations under finance leases and hire purchase
contracts (note 20)
Loan from subsidiary
62:
CONSOLIDATED
PARENT
2010
$
2009
$
2010
$
2009
$
169,403
192,310
169,403
192,310
77,130
246,533
72,048
264,358
77,130
246,533
72,048
264,358
104,067
178,563
104,067
178,563
–
–
104,067
178,563
351,651
455,718
351,651
530,214
HirE PUrCHAsE ConTrACTs
Hire purchase contract maturity ranges from June 2010 to June 2013.
Finance facilities available
At reporting date, the following financing facilities
had been negotiated and were available:
Total facilities:
– Bank overdraft facility
facilities used at reporting date
– Bank overdraft facility
CONSOLIDATED
PARENT
2010
$
2009
$
2010
$
2009
$
2,070,717
3,000,000
2,070,717
3,000,000
–
–
–
–
facilities unused at reporting date
2,070,717
3,000,000
2,070,717
3,000,000
A bank overdraft facility was established in December 2008. The facility is reviewed on an annual basis with financial covenants of
EBiTDA and net tangible assets tested quarterly. The loan facility availability is based on 50% of the Company’s debtor book at the end
of month, and has an upper limit of $3,000,000.
The Bank of Western Australia holds a fixed floating charge over company assets. Maximum prospective liability set out in the charge is
ten million dollars.
16.
PROVISIONS
Current
Employee benefits
Non-current
Employee benefits
CONSOLIDATED
PARENT
2010
$
2009
$
2010
$
2009
$
755,138
755,138
–
–
574,293
574,293
27,318
27,318
755,138
755,138
–
–
574,293
574,293
27,318
27,318
0
1
0
2
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63:
12: NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 jUNE 2010 (CONTINUED)
17 UNEARNED REVENUE
Current
Unearned revenue
18.
ISSUED CAPITAL AND RESERVES
Ordinary Shares
issued and fully paid
Movement in ordinary shares on the issue
At 1 July 2008
At 30 June 2009
At 30 June 2010
CONSOLIDATED
PARENT
2010
$
2009
$
2010
$
2009
$
325,997
325,997
565,355
565,355
325,997
325,997
565,355
565,355
CONSOLIDATED
PARENT
2010
$
2009
$
2010
$
2009
$
2,775,982
2,775,982
2,775,982
2,775,982
No.
Value ($)
No.
Value ($)
46,222,314
2,775,982
46,222,314
2,775,982
–
–
–
–
46,222,314
2,775,982
46,222,314
2,775,982
–
–
–
–
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. These shares have no par value.
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.
There are no externally imposed capital requirements.
oPTions
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 benefits reserve is used to record the value of equity benefits provided to employees and directors as
part of their remuneration.
0
1
0
2
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64:
19.
FINANCIAL RISk MANAGEMENT OBjECTIVES AND POLICIES
The Group’s principal financial instruments comprise bank loans and hire purchase contracts, cash, short-term deposits and trade
receivables.
The main purpose of the financial liabilities is to raise finance for the Group’s operations.
The Group has various other financial instruments such as trade debtors and trade creditors, which arise directly from its operations.
it is, and has been throughout the period under review, the Group’s policy that no trading in financial instruments shall be undertaken.
The main risks arising from the Group’s financial instruments are interest rate risk, liquidity risk, foreign currency 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 7.
Cash at bank accounts attract a variable interest rate of 0% (2009: 2.75%) based on the cash balance at year end. Cash on deposit
attracts a variable interest rate of 5.51% (2009: 3.71%) at the end of the year.
At 30 June 2010, if interest rates had changed by +/– 1% from the year end rates above, after tax profits would have been $146
(2009: $2,412) lower/higher.
The Company constantly monitors its interest rate exposure.
Foreign currency risk
»
»
The Group’s exposure to foreign currency risk is minimal. Trade debtor and trade creditor transactions may be entered into in
foreign currency and fluctuations in these currencies may have a minor impact on the Company’s financial results.
The exchange rates are closely monitored within the Company.
Commodity price risk
»
The Group’s exposure to price risk is minimal.
CrEDiT risk
The Group trades only with recognised, creditworthy third parties.
it is the Group policy that all customers who wish to trade on credit terms are subject to credit verification procedures. 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 significant.
for transactions that are not denominated in the measurement currency of the relevant operating unit, the Group does not offer
credit terms without the specific approval of the Head of Credit Control.
With respect to credit risk arising from the other financial assets of the Group, which comprise cash and cash equivalents, available-for-
sale financial assets and certain derivative instruments, the Group’s exposure to credit risk arises from default of the counter party, with
a maximum exposure equal to the carrying amount of these instruments.
0
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65:
12: NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 jUNE 2010 (CONTINUED)
19.
FINANCIAL RISk MANAGEMENT OBjECTIVES AND POLICIES (CONTINUED)
ExPosUrE To CrEDiT risk
The Group’s maximum exposure to credit risk at the report date was:
Loans and receivables (note 8)
The aging of the Group’s trade non-impaired receivables at reporting date was:
not past due
Past due 0-30 days
Past due 31-60 days
Past due 60 days
2010
$
2009
$
4,295,707
5,840,633
4,295,707
5,840,633
2010
$
2009
$
3,367,242
5,046,582
196,480
282,013
449,972
272,285
34,186
487,580
4,295,707
5,840,633
The group expects to be able to recover all outstanding debts that have not been provided for impairment.
LiqUiDiTy risk
The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts and
hire purchase contracts.
The Group manages liquidity risk by forecasting and monitoring cash flows on a continuing basis.
0
1
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66:
2010
i) Financial Assets
Term deposit
Term deposit
Term deposit
Cash
Loans and receivables
Total financial assets
20.
FINANCIAL INSTRUMENTS
The fair value of financial assets and liabilities is considered to approximate their carrying values.
The tables below reflect the undiscounted contractual settlement terms for financial instruments of a fixed period of maturity, as well
as management’s expectations of the settlement period for all other financial instruments. As such, the amounts may not reconcile to
the balance sheet.
inTErEsT rATE risk
Exposure to interest rate risks on financial assets and liabilities are summarised as follows:
Floating
interest rate
Fixed Interest
Rate
1 year or less
Fixed Interest
Rate
Over 1 to 5
years
Non-interest
bearing
Carrying
amount as
per balance
sheet
Weighted
average
effective
interest rate
2010
$
2010
$
2010
$
2010
$
2010
$
2010
$
–
–
–
4,877
–
4,877
3,500
106,220
132,000
–
–
241,720
–
–
169,403
77,130
246,533
–
–
–
–
–
–
–
–
–
–
–
7,479
4,312,895
4,320,374
3,500
106,220
132,000
12,356
4,312,895
4,566,971
–
–
1,057,051
1,057,051
3.35%
4.31%
2.29%
0.00%
–
–
–
104,067
–
–
–
273,470
77,130
8.57%
6.80%
104,067
1,057,051
1,407,651
ii) Financial liabilities – at amortised cost
overdraft facility
Accounts payable
Hire purchase
short term loans
Total financial liabilities
–
–
–
–
–
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
2010
$
1,025,981
45,273
23
(14,001)
1,057,276
0
1
0
2
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67:
12: NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 jUNE 2010 (CONTINUED)
20.
FINANCIAL INSTRUMENTS (CONTINUED)
Floating
interest rate
Fixed Interest
Rate
1 year or less
Fixed Interest
Rate
Over 1 to 5
years
Non-interest
bearing
Carrying
amount as
per balance
sheet
Weighted
average
effective
interest rate
2009
$
2009
$
2009
$
2009
$
2009
$
2009
$
2009
i) Financial Assets
Term deposit
Term deposit
Cash
Cash
Loans and receivables
–
–
238,300
–
–
3,500
106,220
–
–
–
Total financial assets
238,300
109,720
ii) Financial liabilities – at amortised cost
overdraft facility
Accounts payable
Hire purchase
short term loans
Total financial liabilities
–
–
–
–
–
–
–
192,310
72,048
264,358
–
–
–
–
–
–
–
–
–
–
–
903
3,500
106,220
238,300
903
5,840,633
5,840,633
5,841,536
6,189,556
–
–
2,563,998
2,563,998
1.250%
4.69%
2.75%
–
–
–
–
178,563
–
–
–
370,873
72,048
10.128%
6.215%
178,563
2,563,998
3,006,919
i)
THE AGinG of THE GroUP’s TrADE PAyABLEs AT 30 JUnE 2009:
0
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0
2
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not past due
Past due 0-30 days
Past due 31-60 days
Past due 60 days
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68:
2009
$
2,555,920
–
–
8,078
2,563,998
21.
BUSINESS COMBINATIONS
reconciliation of carrying amounts of goodwill from business combinations during the prior year:
CONSOLIDATED
PARENT
2010
$
2009
$
2010
$
2009
$
Carrying amount at the beginning of the financial year
3,948,764
3,827,164
2,081,806
1,960,206
Additions
– AMCoM
– quadrant Group
– Commander Australia Limited – WA iCT Business
–
–
–
24,000
88,907
8,693
–
–
–
24,000
88,907
8,693
3,948,764
3,948,764
2,081,806
2,081,806
summary of total cash outlaid in relation to Business Combinations:
Total cash outflow/(inflow)
AMCoM
quadrant Group
Commander Australia Limited WA iCT Business
Total cash outflow
21(a)
21(b)
21(c)
7
CONSOLIDATED
PARENT
2010
$
2009
$
2010
$
2009
$
–
–
–
–
–
349,607
743
350,350
–
–
–
–
–
349,607
743
350,350
(A) AMCoM
in the 2009 financial year, Empired acquired assigned customer contracts from AMCoM iT services. The purchase price for this
acquisition was $24,000.
(B) qUADrAnT GroUP
The acquisition of the quadrant Group business was made on the 1 november 2007.
Empired made final payment of $260,700 as deferred consideration for the acquisition of the group and stamp duty on the acquisition
of $88,907 during the 2009 financial year.
(C) CoMMAnDEr AUsTrALiA LiMiTED – WA iCT BUsinEss
0
1
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During the 2009 financial year the company made a review of the fair value of the net identifiable assets acquired for the Commander
Australia – WA iCT Business. it was determined that the customer obligations (unearned revenue) were understated by $7,950.
Payment of stamp duty on the acquisition was also made.
further details of these acquisitions are documented in the 2009 Annual report.
69:
12: NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 jUNE 2010 (CONTINUED)
22.
COMMITMENTS AND CONTINGENCIES
no contingent assets or liabilities as at 30 June 2010.
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 five years
Less: unexpired charges
Hire Purchase
Current (refer note 15)
non Current (refer note 15)
Total Hire Purchase
B. Loan Repayments
The consolidated entity has borrowed the necessary funds
from CGU to finance insurance. The terms of the loans are
for 10 months each.
CONSOLIDATED
PARENT
2010
$
2009
$
2010
$
2009
$
189,494
111,248
(27,272)
273,470
169,403
104,067
273,470
220,785
191,359
(41,271)
370,873
192,310
178,563
370,873
189,494
111,248
(27,272)
273,470
169,403
104,067
273,470
220,785
191,359
(41,271)
370,873
192,310
178,563
370,873
not later than one year
82,375
76,525
82,375
76,525
Later than one year but not later than five years
Less: unexpired charges
Loan Repayments
Current (refer note 15)
non Current (refer note 15)
Total Loan repayments
(5,245)
77,130
(4,477)
72,048
(5,245)
77,130
(4,477)
72,048
77,130
72,048
77,130
72,048
–
–
–
–
77,130
72,048
77,130
72,048
0
1
0
2
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70:
C. Operating Leases
office premises are leased under non-cancellable operating leases for periods as follows:
LOCATION
STATE
TERMS
469 Murray street
Level 13 256 Adelaide Terrace
PErTH
PErTH
Level 8, queens street
MELBoUrnE
Expires on 31 December 2010
Expires on 31 october 2015
Expires 30 november 2012
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 five years
The company has in place bank guarantees in relation to
rental premises at 256 Adelaide Terrace, Perth and
31 queens street, Melbourne
256 Adelaide Terrace, Perth
31 queens street, Melbourne
Maximum amount the bank may call
CONSOLIDATED
PARENT
2010
$
2009
$
2010
$
2009
$
481,006
3,472,239
3,953,245
451,370
115,353
566,723
481,006
3,472,239
3,953,245
106,220
132,000
238,220
106,220
–
106,220
106,220
132,000
238,220
451,370
115,353
566,723
106,220
–
106,220
0
1
0
2
T
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O
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71:
12: NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 jUNE 2010 (CONTINUED)
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. Value in use is calculated based on the present value of cash flow projections covering a five-year period.
The discount rate applied to cash flow projections is 11.70% (2009: 9.75%) using a 1.4% growth rate (2009: 1.4%) that is the same as the
average growth rate for the iT infrastructure services market sector.
CArryinG AMoUnT of GooDWiLL
Carrying amount of goodwill
3,948,764
3,948,764
2,081,806
2,081,806
CONSOLIDATED
Total
PARENT
Total
2010
$
2009
$
2010
$
2009
$
There is no impairment loss in the current or prior period.
24.
INVESTMENT IN CONTROLLED ENTITY
Other Financial Assets
% Equity Interest
Investment ($)
Tusk Technologies Pty Ltd
Australia
100
100
Country of
Incorporation
2010
%
2009
%
2010
$
363,427
363,427
2009
$
365,227
365,227
The balance of the Tusk Technologies Pty Ltd loan as at 30 June 2010 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 2010.
The revaluation downwards is recorded in the income statement. other than this related party loan there are no other related party
transactions requiring disclosure.
25.
EVENTS AFTER THE BALANCE SHEET DATE
There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event
of a material and unusual nature likely, in the opinion of the directors of the Company, to affect significantly the operations of the
consolidated entity, the results of those operations, or the state of affairs of the consolidated entity, in future financial years other than
as set out below:
The company completed the successful negotiation of the lease at 256 Adelaide Terrace, securing the premises for the next five years
until 31 october 2015.
0
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0
2
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72:
26.
AUDITORS’ REMUNERATION
Amounts received or due and receivable by auditors or the
parent entity:
»
»
an audit or review of the financial 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 as part of bank covenants
CONSOLIDATED
PARENT
2010
$
2009
$
2010
$
2009
$
60,622
46,375
60,622
46,375
–
–
60,622
–
7,790
54,165
–
–
60,622
–
7,790
54,165
27.
kEY MANAGEMENT PERSONNEL
(A) DirECTors
The following persons were directors of Empired Limited during the financial 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 financial year:
M Waller Chief financial officer and Company secretary
(C) rEMUnErATion of kEy MAnAGEMEnT PErsonnEL
information regarding key management personnel compensation for the year ended 30 June 2010 is provided in the remuneration
section of the directors’ report on pages 19 to 21.
0
1
0
2
T
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73:
12: NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 jUNE 2010 (CONTINUED)
27.
kEY MANAGEMENT PERSONNEL (CONTINUED)
(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 beneficially, by each of the key management person, including their related parties, is as follows:
Balance
at beg of
period
01-Jul-09
30 June 2010
Directors
Granted as
Remuneration
Options
Exercised
Net Change
Other
Balance
at end of
period
30-Jun-10
Not Vested
& Not
Exercisable
Vested &
Exercisable
r. Baskerville
2,850,000
2,550,000
M. Ashton
1,000,000
600,000
D. Taylor
r. Bevan
Executives
M. Waller
700,000
250,000
–
250,000
1,064,038
–
Total
5,864,038
3,400,000
–
–
–
–
–
–
(1,100,000)
4,300,000
2,850,000
1,450,000
(600,000)
1,000,000
700,000
500,000
750,000
100,000
500,000
250,000
600,000
–
1,064,038
671,346
392,692
(1,700,000)
7,564,038
4,871,346
2,692,692
–
–
–
Granted as
Remuneration
Options
Exercised
Net Change
Other
Balance
at end of
period
30-Jun-09
Not Vested
& Not
Exercisable
Vested &
Exercisable
Balance
at beg of
period
01-Jul-08
30 June 2009
Directors
r. Baskerville
2,550,000
M. Ashton
D. Taylor
r. Bevan
Executives
M. Waller
850,000
600,000
–
300,000
150,000
100,000
250,000
814,038
650,000
Total
4,814,038
1,450,000
–
–
–
–
–
–
–
–
–
–
2,850,000
1,800,000
1,050,000
1,000,000
700,000
250,000
750,000
450,000
250,000
250,000
250,000
–
(400,000)
1,064,038
738,346
325,692
(400,000)
5,864,038
3,988,346
1,875,692
0
1
0
2
T
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74:
(E) sHArEHoLDinGs of DirECTors AnD ExECUTiVEs
shares held in Empired Limited
30 June 2010
Balance 01-Jul-09
Granted as
Remuneration
On Exercise
of Options
Net Change Other
Balance 30-June-10
Ord
Pref
Ord
Pref
Ord
Pref
Ord
Pref
Ord
Pref
Directors
Mr. r Baskerville
8,475,189
Mr. M Ashton
Mr. D Taylor
Mr. r Bevan
Total
150,000
60,000
–
8,685,189
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
508,744
25,000
(60,000)
–
473,744
–
–
–
–
–
8,983,933
175,000
–
–
9,158,933
–
–
–
–
–
30 June 2009
Balance 01-Jul-08
Granted as
Remuneration
On Exercise
of Options
Net Change Other
Balance 30-June-09
Ord
Pref
Ord
Pref
Ord
Pref
Ord
Pref
Ord
Pref
Directors
Mr. r Baskerville
Mr. M Ashton
Mr. D Taylor
Mr. r Bevan
Total
5,892,778
150,000
–
–
6,042,778
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2,582,411
–
60,000
–
2,642,411
–
–
–
–
–
8,475,189
150,000
60,000
–
8,685,189
–
–
–
–
–
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
2010
Balance 01-Jul-09
Granted as
Remuneration
On Exercise of
Options
Net Change Other
Balance 30-June-10
Ord
Pref
Ord
Pref
Ord
Pref
Ord
Pref
Ord
Pref
Specified Executives
M. Waller
1,755,124
Total
1,755,124
–
–
–
–
–
–
–
–
–
–
257,000
257,000
– 2,012,124
– 2,012,124
–
–
0
1
0
2
T
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75:
12: NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 jUNE 2010 (CONTINUED)
27.
kEY MANAGEMENT PERSONNEL (CONTINUED)
(E) sHArEHoLDinGs of DirECTors AnD ExECUTiVEs (ConTinUED)
30 June 2009
Balance 01-Jul-08
Granted as
Remuneration
On Exercise of
Options
Net Change Other
Balance 30-June-10
Ord
Pref
Ord
Pref
Ord
Pref
Ord
Pref
Ord
Pref
Specified Executives
M. Waller
Total
1,618,624
1,618,624
–
–
–
–
–
–
–
–
–
–
136,500
136,500
–
–
1,755,124
1,755,124
–
–
28.
DIVIDENDS
(a) Distributions Paid
CONSOLIDATED
2010
($)
2009
($)
2009 final franked dividend of 0.50 cents, paid 14 october 2009 (2009: 0.50 cents)
231,112
231,112
interim franked dividend of 0.25 cents, paid 30 April 2010 (2009: 0.25 cents)
115,556
346,668
115,556
346,668
(b) Franking Credit Balance
Balance of franking account at year end at 30% available to the shareholders of Empired Limited
for subsequent financial years
126
107,806
The franked dividends paid during the year were franked at the tax rate of 30%.
29.
RELATED PARTY TRANSACTIONS
0
1
0
2
T
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O
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L
A
U
N
N
A
|
During the year ended 30 June 2010, Empired Limited made sales and management fees
to Bigredsky Ltd, a company in which Mr r Baskerville and Mr M Waller are officers and
shareholders
Transactions between related parties are on normal commercial terms and conditions no
more favourable than those available to other parties unless otherwise stated.
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76:
CONSOLIDATED
2010
($)
2009
($)
108,081
80,301
0
1
0
2
T
R
O
P
E
R
L
A
U
N
N
A
|
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77:
13: DIRECTORS’ DECLARATION
in accordance with a resolution of the directors of Empired Limited, i state that:
in the opinion of the directors:
(a)
the financial statements and notes of the company and of the consolidated entity are in accordance with the Corporations
Act 2001, including:
(i)
complying with Accounting standards and Corporations regulations 2001; and
(ii)
giving a true and fair view of the company’s and consolidated entity’s financial position as at 30 June 2010 and of their
performance for the year ended on that date; and
(iii)
complies with international financial reporting standards as disclosed in note 2; 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 financial year ended 30 June 2010.
on behalf of the Board
Russell Baskerville
Managing Director
31st of August 2010
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82:
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83:
16: SHAREHOLDING ANALYSIS
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 2010.
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
4
20
52
173
69
318
0.01
0.15
0.88
13.00
85.96
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
NUMBER
%
Baskerville investments Pty Ltd
Mr John Bardwell
Mr Gregory Leach
7,450,059
3,680,244
3,504,225
16.12
7.96
7.58
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84:
C.
TWEnTy LArGEsT sHArEHoLDErs
The names of the twenty largest shareholders are:
NAME
NUMBER OF SHARES HELD
%
Baskerville investments Pty Ltd
Mr Gregory Leach
Mr John Alexander Bardwell
Mr David Cawthorn
Uniplex Constructions Pty Ltd
Ms kym Garreffa
Mr fraser Campbell
Mr John Alexander Bardwell & Mrs Paola Bardwell
rbc Dexia investor services Australia nominees Pty Ltd
Jameker Pty Ltd
Mr Mark Waller
Cornela Pty Ltd
Mr Mark Waller
Mr Jeremy Paul McGrath & Mrs Jenny McGrath
Mr kevin flynn
Locope Pty Ltd
Grd Limited
Trovex Pty Ltd
Mr Glenn Thomas Baskerville
Jaffa Perth Pty Ltd
Total
7,450,059
3,504,225
2,680,244
2,000,000
1,902,414
1,306,167
1,200,000
1,000,000
954,115
939,500
866,667
847,333
838,644
680,000
650,000
635,000
600,000
600,000
572,759
482,048
16.12
7.58
5.80
4.33
4.12
2.83
2.60
2.16
2.06
2.03
1.87
1.83
1.81
1.47
1.41
1.37
1.30
1.30
1.24
1.04
29,709,175
64.27
The twenty members holding the largest number of shares together held a total of 64.27% of issued capital.
D.
issUED CAPiTAL
(i) Ordinary Shares
The fully paid issued capital of the company consisted of 46,222,314 shares held by 318 shareholders.
Each share entitles the holder to one vote.
The number of shareholdings held in less than marketable parcels is 27.
(ii) Unquoted Equity
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The options issued under the company share options plans consisted of 10,653,418 options held by 64 holders.
85:
options do not have any voting rights.
16: SHAREHOLDING ANALYSIS
(CONTINUED)
E. on-MArkET BUy-BACk
There is no current on-market buy-back.
f.
CoMPAny sECrETAry
The Company secretary is Mr Mark Waller.
G. rEGisTErED offiCE
The registered office of Empired Ltd is
469 Murray street, Perth WA 6000
H. oTHEr offiCEs
The other offices are:
Level 13, septimus roe square
256 Adelaide Terrace
Perth WA 6000
Telephone +61 8 9223 1234
Level 8, 31 queens street
Melbourne ViC 3000
Telephone +61 3 8610 0700
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86:
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.
Changes to your shareholder details, such as a change of
name or address, or notification of your tax file number or
direct credit of dividend advice can be made by printing out
the forms you need, filling 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 Terrace
Perth WA 6000
Telephone +61 8 9323 2000
facsimile +61 8 9323 2033
Website www-au.computershare.com/investor
AnnUAL GEnErAL MEETinG
The 2010 Annual General Meeting of Empired Limited will be
held in the:
The Melbourne Hotel
942 Hay street, Perth WA 6000
at 12pm on Monday, 22 november 2010
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:
Computershare investor services Pty Ltd
Level 2, 45 st Georges Terrace
Perth WA 6000
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 financial
information and a review of the operations of the Company
during the period. The half-year financial 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
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 identification with
the Company’s strategy and goals. important issues are
presented to the shareholders as single resolutions.
inTErnET ACCEss To inforMATion
Empired maintains a comprehensive investor relations section
on its website at
www.empired.com/Investors/
you can also access comprehensive information about security
holdings at the Computershare investor Centre at
www-au.computershare.com/investor/
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.
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87:
EmPIRED lImITED
469 murray street, Perth wA 6000
Telephone +61 8 9223 1234
facsimile +61 8 9223 1230
Email
info@empired.com
www.empired.com