Enterprise Products Partners Investor relations material Annual Report 2011

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FY2011 Annual Report · Enterprise Products Partners Investor relations material

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Annual Report
2011

Empired Limited and its Controlled Entities
Annual Financial Report For the Year Ended 30 June 2011

ABN 81 090 503 843

CONTENTS

CORpORATE diRECTORY

diRECTORS’ REpORT

CORpORATE GOVERNANCE STATEMENT

CONSOLidATEd STATEMENT OF COMpREHENSiVE iNCOME

CONSOLidATEd STATEMENT OF FiNANCiAL pOSiTiON

CONSOLidATEd STATEMENT OF CASH FLOWS

CONSOLidATEd STATEMENT OF CHANGES iN EQUiTY

NOTES TO THE FiNANCiAL STATEMENTS

1.
2.
3.
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28.

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 Objectives And policies
Financial instruments
Commitments and Contingencies
impairment Testing of Goodwill
investment in Controlled Entity
Events After the Reporting date
Auditors’ Renumeration
Key Management personnel
dividends
parent Entity information

diRECTORS’ dECLARATiON

AUdiTOR’S iNdEpENdENCE dECLARATiON

iNdEpENdENT AUdiT REpORT

SHAREHOLdiNG ANALYSiS

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HiGHLiGHTS

Record revenue of $39.71M up 42% from pcp of $27.90M

Record EBiTdA of $1.28M up 132% from pcp of $0.55M

positive net operating cash flow of $2.33M

A continued focus on expanding EBiTdA margins

Record number of new clients secured during the period

Billable staff grew by over 24% during the period

Victorian region grew by 98% proving our regional growth strategy

Strongest run rate revenue going into July in the company’s history

Strongest forward looking sales pipeline in the company’s history

Strategic investment in rapid growth, high margin cloud computing services

Successful implementation of a fully integrated ERp business platform

Expecting Revenue and EBiTdA growth during FY2012

CORpORATE diRECTORY

diRECTOR

Mel Ashton (Non - Executive Chairman)
Richard Bevan (Non - Executive director)
Russel Baskerville (Managing director & CEO)

REGiSTEREd OFFiCE

Level 13, Septimus Roe Square
256 Adelaide Terrace
pERTH WA 6000

Telephone No: +618 9223 1234
Fax No: +618 9223 1230

COMpANY NUMBER

A.C.N: 090 503 843

COUNTRY OF iNCORpORATiON

Australia

COMpANY SECRETARY

Mark Waller

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

pRiNCipAL pLACE OF BUSiNESS

pERTH

Level 13, Septimus Roe Square
256 Adelaide Terrace
pERTH WA 6000

Telephone No: +618 9223 1234
Fax No: +618 9223 1230

WEBSiTE AddRESS

www.empired.com

MELBOURNE

Level 8
31 Queen Street
MELBOURNE ViC 3000

Telephone No: +613 8610 0700
Fax No: +613 8610 0701

RESULTS

REVENUE
$40M

EBiTdA
$1.28M

2007 2008 2009 2010 2011

CHAiRMAN + CEO REViEW

dear Shareholder

We are very pleased to report that following
a tough 2010 financial year, Empired’s
stated strategy of remaining steadfast in
our vision and retaining our core staff and
capability, combined with prudent financial
management has resulted in both a sound
financial result and strategically well
positioned for the year ahead.

during the 2011 financial year Empired
delivered significant improvements in
financial performance. Revenue is up 42%
from $27.9M to $39.7M, EBiTdA increased over
132% from $0.551M to $1.281M delivering NpAT
of $0.202M with EpS of 0.43 cents. These
results produced net positive operating cash
flow of $2.3M and increased Empired’s net
cash position to $1.385M.

We remain confident in the opportunity to
expand profit margins at a greater rate than
revenue growth. Revenue growth of 42%
translated into EBiTdA growth of over 132% in
the 2011 financial year.

Whilst further investment is still required to
sustain continued organic growth we expect
this trend to continue. Critically Empired has
achieved this growth without the requirement
to raise capital or the need to draw on
excessive debt. This has ensured minimal
shareholder dilution and rapid earnings per
share growth.

We continue to experience a somewhat
volatile economic environment and
accordingly we consider it prudent to retain
our cash reserves. To this end Empired will
not declare a final dividend for the period
however subject to Empired’s continued
strong performance, its funding requirements
and an assessment of the broader economic
environment, the board remains open to
reinstating dividend payments in current or
future periods.

A CleAr FoCus

Empired’s board and management remain
highly motivated, committed and focused
on value creation for all of its stakeholders,
through the sustained development and
growth of a leading Australian iT services
company.

Our stated objectives remain consistent.
Whilst we will always continue to adapt
and innovate in an exciting, fast paced
and evolving iT marketplace our underlying
business principles have not changed since
inception.

Firstly we recognise our client’s requirements
and the value we can offer through a genuine
diversity of services. A disciplined and
focused approach is taken to developing
a broad multifaceted service offering
through the effective implementation and
management of innovative and leading
business and technology solutions.

CHAiRMAN + CEO REViEW

WE STRiVE TO ENHANCE OUR
dEpTH OF CApABiLiTY THROUGH
ATTRACTiNG, RETAiNiNG ANd
TRAiNiNG THE BEST TALENT iN
OUR iNdUSTRY.

We continue to ensure a well balanced and
diversified client portfolio complemented by
continuing to expand our reach and access to
new markets through regional diversification.

And finally to increase the economic stability
of our organisation through strong financial
performance, a tangible growth profile and
continuing to focus on the growth of contracted
recurring income streams.

We remain confident that driving toward the
above objectives ensures Empired not only
remains relevant to its clients but leads its
competition in an ever changing marketplace,
continues to provide a workplace of choice and
consistently enhances its attractiveness to the
broader investment community. All this supports
one clear focus on value creation for all of our
stakeholders.

our PeoPle, our WAy

Empired’s human capital; its people, is by far its
largest investment and accordingly, its greatest
asset. Empired’s success rests clearly with
its ability to not only attract and retain, but to
mobilise, motivate and maximise in an efficient
and effective manner the application of its
workforce to drive Empired toward its stated
goals.

Empired is continually investing in improving the
strategies, methods and tools used to maximise
its investment in its people. Last year we told you
about the implementation of an online workforce
management system that had been implemented
to improve employee engagement, drive
improved efficiency and provide a tool for the
planning and management of our staff’s careers
within Empired.

This year we have placed a large focus on culture
and employee engagement. At the very heart
of this is a very simple message: what we are
today and where we want to be tomorrow. Clearly
and consistently communicating this message,
supported by clear and consistent education
with each of our staff on precisely understanding
how they contribute toward this goal has resulted
in a great sense of employee belonging.

On the back of this achievement we have set
out to provide a more formal framework for how
we shape the behaviour of our workforce, the
behaviour Empired will be known for and that
which all our stakeholders will come to expect
when dealing with Empired.

The result is Empired’s EpiC values: excellence in
everything that we do, People are the foundation
of our success, Integrity in all our dealings and
achievement through Collaboration. This simple
values framework is being engrained into our
culture and into everything that we do.

We have inaugurated a committee “The values
guardianship” from within the staff group,
designed a communications program, a range
of measures and tests, and a reward and
recognition program to ensure our values are
upheld and genuinely shape our culture.

From top to bottom - left column, then right:
russell Baskerville Managing director & CEO,
John Bardwell General Manager, delivery Services,
Mark Waller Chief Financial Officer & Company
Secretary, Duncan Hayes General Manager, Sales
Brendon Jarvis General Manager, Enterprise Services,
Greg leach Chief Technology Officer, Marketing &
Enablement

CHAiRMAN + CEO REViEW

INvestING IN our Future

With any great pursuit comes many great
challenges; Empired is no different. in the
current year, outside of the day to day
business imperatives and the overarching
strategies discussed in the opening
paragraphs, Empired has recognised a number
of critical areas of strategic investment.

Firstly, the advent of cloud or utility computing
is upon us and the adoption of these
alternate iT service provision and technology
consumption models is rapid. For those that
are agile in their response and innovative in
their approach to meeting client demands,
this fundamental shift within the industry
provides a great opportunity to differentiate,
rapidly acquire market share and improve the
value proposition to clients. This will lead to
growth in contracted recurring revenues and
the provision of new high margin services and
solutions.

Empired is responding to this market
opportunity rapidly and will be providing cloud
computing services through its in-house
engineered “FlexScale” service offering well
before the end of this calendar year. FlexScale
is built on world class industry recognised
technologies supplied by Empired’s key
alliance partners.

FlexScale will enable a new approach to iT by
offering organisations a flexible new range
of options for how iT services are designed,
delivered and managed. iT services will be
packaged into consumable iT ‘products’.

These products are offered through Cloud
Computing in the form of online service
catalogues, in much the same way as using
a shopping cart. These services can then be
delivered and managed using the technology
that underpins FlexScale.

We expect to be ahead of many of our
competitors and are confident that we will be
recognised as a leader in the cloud space.
We have recognised that to support

“during the 2011 financial year
Empired delivered significant
improvements in financial
performance. Revenue is up
42% from $27.9M to $39.7M,
EBiTdA increased over 132%
from $0.551M to $1.281M
delivering NpAT of $0.202M
with EpS of 0.43 cents.“

our growth ambitions we must forge new
relationships. We have secured a number of new
alliance partners that position Empired to take
advantage of strategic and growing markets.

We have secured an exclusive Asia pacific
partnership with Coreworx, a leading provider
of information Management software for large
capital intensive projects with a particular focus
on the energy and resources sectors. it is clear
with the current level of investment in major
capital projects in Australia that demand for these
types of solutions is set to escalate. Empired is
well placed to take advantage of this burgeoning
market.

in addition we have formed an exclusive
partnership with Cloupia, a US-based provider
of specialist cloud management software.
With Empired’s entry into the cloud market and
adoption of cloud services escalating throughout
Australia we expect this partnership to expand
and differentiate Empired’s service offering in this
growing market.

We are also keenly aware of ensuring we move
up the value chain with our clients and have a
range of identified opportunities leveraging the
adoption of specialist applications across a
range of industries to differentiate ourselves both
in traditional and cloud services.

Underpinning the introduction of new services
and the delivery of growth in a predictable and
profitable manner is our underlying business
systems and processes. Empired has invested
in upgrading to a seamless and integrated
ERp solution to operate and run its day to day
business operations. This has been a major
achievement for Empired, replacing six separate
and disparate systems with one integrated
solution.

it is expected that this solution will provide a
robust and scalable platform that will allow
Empired to undertake substantial growth in an
efficient and effective manner over the coming
years.

CHAiRMAN + CEO REViEW

We would like to take this opportunity to
sincerely thank Empired’s staff and partners
for their outstanding contribution to Empired’s
growth and success in the 2011 financial year.
We would also like to extend our appreciation
to our highly valued clients for their trust and
ongoing support.

Finally to our shareholders, many of whom
have continued to support us for some years
now, thank you for your patience, trust and
continual support. We are excited by the
prospects and opportunities that lie ahead
and we do believe that the 2012 financial year
holds great opportunities for value creation for
all of our stakeholders.

“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. “

tHe yeAr AHeAD

The global economy remains volatile.
We are very much in unchartered waters with
a number of economic risks and challenges
facing the traditional powerhouse economies
of the US and Europe causing subdued
performance and general market uncertainty.

At the same time we see the emerging
economies of Asia producing unabated
demand for raw materials and continuing
to consistently experience Gdp growth
well above 7% per annum. By many counts
Australia is in a sound economic position
and is well placed to benefit from the growth
profile of its major trading partners in the
emerging Asian economies. Whilst uncertain
this does provide optimism in our view of
trading conditions within the Australian
market for the year ahead.

More acutely the Australian iT sector has
recovered well throughout the 2011 financial
year with a growth rate of 1.8% from the prior
year. With many large Australian corporations
committing to significant iT investment during
the coming year we are confident of positive
trading conditions within the sector.

With the investments made during the
previous financial year, providing new
innovative services being brought to market
combined with a highly motivated and
talented workforce we are confident in
Empired’s ability to maximise the market
opportunity, deliver on its growth ambitions
and drive a solid result in our pursuit of
enhancing stakeholder value.

diRECTORS’ REpORT

The directors present their report on the consolidated entity comprising Empired Limited (“the
Company”) and its controlled entities (“the Group”) for the year ended 30 June 2011.

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.

DIreCtors

Name

Age

experience and special responsibilities

Mel Ashton
Chairman

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)
Chairman of Resource development Group Limited (ASX:RdG)
Board member of Renaissance Minerals Limited (ASX:RNS)
Board Member Barra Resources Limited (ASX:BAR)
Board member of the Hawaiian Group of Companies
Chairman of Cullen Wines (Australia) pty Ltd

russell
Baskerville
Managing
director & CEO

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 including strategy
development and execution, ipO’s, capital raisings, divestments,
mergers and acquisitions.

DIreCtors

Name

Age

experience and special responsibilities

richard
Bevan

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 com-
panies. Richard brings experience in the execution and integration of
mergers, acquisitions and other major corporate transactions.

Richard has been involved in a number of businesses in areas as
diverse as healthcare, construction and engineering, resources and
information services. Richard’s roles within these businesses have in-
cluded strategic operational management, implementing organic growth
strategies, business integration and raising capital in both public and
private markets.

Richard is currently Managing director of Cassini Resources Ltd and
Chairman of Cool Clear Water Group Ltd.

previously Richard was the Managing director and Chief Executive Of-
ficer 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 is a Member of the Australian institute of Company directors.

CoMPANy seCretAry

Name

Age

experience and special responsibilities

Mark Waller
CFO &
Company
Secretary

Mark has responsibility for ensuring the necessary operational and
financial processes and infrastructure are in place to support the stra-
tegic 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 has worked in the professional Services sector for over ten years
and also brings experience from directorships with iT companies in-
volved in early stage development and commercialization to eventual
sale to working for Ernst & Young.

diRECTORS’ REpORT

pRiNCipAL ACTiViTiES

The principal activity 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.

There were no significant changes
in the nature of the activities carried
out during the year.

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
The consolidated entity’s operations are not
subject to any significant environmental
regulations under either Commonwealth or State
Legislation.

DIvIDeNDs
The Company has not declared a final dividend
for the year ended 30 June 2011.

oPerAtING results For tHe yeAr
The net profit after tax from continuing
operations for the year for the consolidated entity
is $201,872 (2010: $47,341).

lIkely DeveloPMeNts
Except as detailed in the Chairman and Managing
director’s Review on pages 6 to 12, 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 11,806,748
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
366,666 share options were exercised during
the financial year.

sHAre Issues DurING tHe yeAr
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 82.

NoN-AuDIt servICes
The directors received the Lead Auditor’s
independence declaration which is set
out on page 82. There were no non-audit
services provided by the entity’s auditor, Grant
Thornton Audit pty Ltd (2010: nil). The directors
in accordance with the advice from the audit
committee, is satisfied that the provision
of non-audit services during the year is
compatible with the general independence
for auditors imposed by the Corporations
Act 2001. The directors are satisfied that the

services did not compromise the external
auditor’s independence for the following
reasons:

•

all non-audit services are reviewed and
approved by the audit committee; and

the nature of the services provided do
not compromise the general principles
relating to auditor independence in
accordance with AApES 110:Code of Ethics
for professional Accountants set by the
Accounting professional and Ethical
Standards Board.

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.

diRECTORS’ REpORT

•

Establish appropriate, demanding
performance hurdles for variable
executive remuneration.

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 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.

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;

“Empired’s board and
management remain highly
motivated, committed and
focused on value creation
for all of its stakeholders,
through the sustained
development and growth of a
leading Australian iT services
company.“

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 2011 is detailed in Table
1 of this report.

B. EXECUTiVE REMUNERATiON

objective

The company aims to reward executives with a
level and mix of remuneration commensurate
with their position and responsibilities within the
company and so as to:

•

Reward executives for company, business
unit and individual performances against
targets set by reference to appropriate
benchmarks;

1919

diRECTORS’ REpORT

•

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 companywide, business unit and
individual performance, relevant comparative
remuneration in the market and internally, and
where appropriate, external advice on policies
and practices. As noted above, the Board has
access to external advice independent of
management.

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.

vArIABle reMuNerAtIoN - sHort
terM INCeNtIve (stI)

objective

The objective of the STi program is to link
the achievement of the Group’s operational
targets with the remuneration received by
the executives charged with meeting those
targets.

structure

Actual STi payments granted to the company
executives depend on the extent to which
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 2011 financial year 100% of the
STi cash bonus has been paid to executives
in the 2012 financial year (2011: nil).

vArIABle PAy - loNG terM INCeNtIve (ltI)

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.

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.

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.

21
21

diRECTORS’ REpORT

C. SERViCE AGREEMENTS

russell Baskerville - Managing Director

Mel Ashton - Chairman

TERMS OF AGREEMENT – commenced 1 July
2005, until terminated by either party.

SALARY – base $240,000 per annum with an
additional STi cash bonus capped at 50% of
base fees based on achievement Company’s
target against budget.

TERMiNATiON – three months written notice or
three months remuneration in lieu.

TERMS OF AGREEMENT – appointed
21 december 2005, until terminated by
either party.

FEE – fixed $75,000 per annum.

tABle 1: directors’ and Executives’ remuneration for the year ended 30 June 2011 and 30 June 2010

sHort terM
BeNeFIts

Post
eMPloyMeNt

loNG terM
BeNeFIts
(ltI)

totAl

%
PerForMANCe
relAteD

Salary
+ Fees

Cash STi

Superan-
nuation

Equity
Options

NON-EXECUTiVE diRECTORS

M. Ashton
Chairman

r. Bevan
Non-executive
director

2011
2010

75,000
75,000

45,872
45,872

-
-

4,128
4,128

-
28,000

75,000
103,200

-
11,750

50,000
61,750

-
-

EXECUTiVE diRECTORS

r. Baskerville
Chief Executive

2011
2010

240,000
240,000

*120,000
-

-
-

-
119,850

360,000
359,850

33.33%
-

KEY MANAGEMENT

M. Waller
Company
Secretary + Chief
Financial Officer

2011
2010

233,151
193,487

*50,000
-

20,984
17,414

33,750
-

337,885
210,901

14.79%
-

* payable at 30 June 2011, paid in 2012 financial year.

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 $229,358 per annum with an
additional STi cash bonus capped at $50,000.

TERMiNATiON – one month’s written notice or
one month’s remuneration in lieu.

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 yeAr

%
reMuNerAtIoN
CoNsIstING oF
oPtIoNs For
tHe yeAr

2011

Non-executive
M. Ashton
R. Bevan

executive
R. Baskerville

key Management
M. Waller

2010

Non-executive
M. Ashton
R. Bevan

executive
R. Baskerville

key Management
M. Waller

-
-

13/01/2011

750,000

0.045

33,750

9.9%

26/11/2010
26/11/2010

600,000
250,000

0.047
0.047

28,200
11,750

27.32%
19.02%

26/11/2010 2,250,000

0.047

119,850

33.29%

“Empired’s human capital is
by far its largest investment
and accordingly, its greatest
asset.“

diRECTORS’ REpORT

DIreCtors’ MeetINGs

The number of directors meetings and the number of meetings attended by each director during
the year are:

NAMe oF DIreCtor

russell Baskerville

Mel Ashton

richard Bevan

No. oF MeetINGs HelD
WHIle A DIreCtor

No. oF MeetINGs AtteNDeD As A DIreCtor
DurING tHe yeAr eNDeD 30 JuNe 2011

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:

Director
Russell Baskerville
Mel Ashton
Richard Bevan

key Management
Mark Waller

orDINAry sHAres

oPtIoNs

9,013,233
175,000
-

2,850,000
1,000,000
500,000

1,950,724

1,464,038

Signed in accordance with a resolution of directors.

russell Baskerville
Managing director

31st of August 2011

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.

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 14 to 15.

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.

26
26

in considering whether a director is
independent the Board considers:

Mr Baskerville is Managing director and Mr
Ashton is Chairman of the Board.

•

the criteria for assessing the
independence of a director in the
ASX Corporate Governance Council’s
“principles of Good Corporate Governance
and Best proactive recommendations”;

any information, facts or circumstances
that the Board considers relevant; and

any materiality thresholds, standards or
guidelines that the Board may adopt from
time to time.

recommendation 2.2 – The chair should be
an independent director.

during 2011 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.

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.

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

CORpORATE GOVERNANCE
STATEMENT

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.

recommendation 3.2 – Companies should
establish a policy concerning trading in company
securities by directors, senior executives and
employees, and disclose the policy or a summary
of that policy.

directors and employees are prohibited from
trading in Empired Limited shares, if the director
or employee is in possession of inside or price
sensitive information or would be trading for a
short term gain. directors and employees are
encouraged to follow a long-term policy with
respect to their investments in Empired.

directors and employees are also aware of
their obligations to ensure that they do not
communicate price sensitive information to
any other person who is likely to buy or sell
Empired Limited shares or communicate that
information to another party.

The Company’s practices are documented in
the securities trading policy, details of which
are available on the Company’s website.

PrINCIPle 4 – Safeguard integrity of
financial reporting.

recommendation 4.1 – The Board should
establish an audit committee.

during the year the Board established
an Audit Committee. The role of the Audit
Committee is to ensure independent
oversight of the accounting functions and
internal controls of Empired and ensure the
objectivity of Empired’s financial statements.

recommendation 4.2 – The audit committee
should be structured so that it:

•

consists only of non executive directors,

consists of a majority of independent
directors,

is chaired by an independent chair, who
is not chair of the Board, and

has at least three members.

The Audit Committee consists of the full Board
of directors including Russell Baskerville who
is an executive director. The Chair of the Audit
Committee is also the Chair of the Board. The
Committee consists of three members.

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.

“We are confident that the steps
we have taken and the ongoing
commitment to our people will
ensure a highly motivated, loyal
and talented workforce for the
future.“

CORpORATE GOVERNANCE
STATEMENT

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 of
those policies or a summary of those policies.

The responsibility for the overall
communication has been appointed to the
Managing director and Company Secretary.

Empired Ltd is committed to:

•

ensuring that shareholders and the
market are provided with timely and
balanced information about its activities;

complying with the general and
continuous disclosure principals
contained in ASX Listing Rules and the
Corporations Act 2001; and

ensuring that all market participants have
equal opportunities to receive externally
available information issued by Empired.

The company’s continuous disclosure policy
is available on the Company website.

PrINCIPle 6 – Respect the rights of
shareholders.

recommendation 6.1 – Companies should
design and disclose a communications
strategy to promote effective communication
with shareholders and encourage effective
participation at general meetings and
disclose their policy or a summary of that
policy.

The Board strongly believes in the importance
of effective communication with shareholders
to ensure their access to timely and relevant
information.

The Company’s website is regularly
updated and provides details of recent
announcements to the ASX, annual reports,
and other 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.

The Company’s risk management program is
available on the Company’s website.

The effectiveness of the risk management
program is reviewed annually and updated
accordingly.

recommendation 7.3 – 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 2011.

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.

recommendation 8.2 – Companies should
clearly distinguish the structure of non-executive
directors’ remuneration from that of executive
directors and senior executives.

detailed information regarding the remuneration
paid to directors and senior executives is set out
in the remuneration report.

31
31

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.

CONSOLidATEd STATEMENT
OF COMpREHENSiVE iNCOME

For The Year Ended 30 June 2011

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

pROFiT FOR THE pERiOd

other comprehensive income

other comprehensive income for the period,
net of income tax

Notes

2011

39,712,614

(29,770,691)

9,941,923

6,852

(7,528)
(143,271)
(945,212)
(217,232)
(5,929,724)
(496,320)
(1,800,697)

408,791

(206,919)

201,872

2010

27,903,654

(20,642,678)

7,260,976

17,046

(73,696)
(177,291)
(716,596)
(109,158)
(4,048,437)
(331,071)
(1,710,703)

111,070

(63,729)

47,341

total comprehensive income for the period

201,872

47,341

Earnings per share (cents per share)

Basic earnings per share

diluted earnings per share

dividends per share (cents per share)

Notes

2011

2010

0.4358

0.3494

0.1

0.08

0.75

This Statement of Comprehensive income should be read in conjunction with the
accompanying notes.

CONSOLidATEd STATEMENT
OF FiNANCiAL pOSiTiON

As at 30 June 2011

ASSETS

Current Assets
Cash and cash equivalents
Trade and other receivables
Work in progress
Other current assets

total Current Assets

Non-Current 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
provisions
Unearned revenue

total Current liabilities

Non-Current liabilities
Financial liabilities
provisions
deferred tax liability

total Non-Current liabilities

TOTAL LiABiLiTiES

Net Assets

EQUiTY

issued capital
Employee equity benefits reserve
Retained profits

TOTAL EQUiTY

Notes

7(i)
8
9
10

11
12
5

14
15
16
17

15
16
5

2011

1,385,530
5,959,023
919,262
263,082

8,526,897

1,576,729
3,978,449
437,852

5,993,030

14,519,927

6,000,308
256,474
845,963
508,314

7,611,059

143,028
108,680
336,355

588,063

8,199,122

6,320,805

2,849,315
356,527
3,114,963

6,320,805

2010

250,576
4,316,395
625,999
181,977

5,374,947

974,704
3,948,764
435,136

5,358,604

10,733,551

3,198,696
246,533
755,138
325,997

4,526,364

104,067
-
191,146

295,213

4,821,577

5,911,974

2,775,982
222,901
2,913,091

5,911,974

This Statement of Financial position should be read in conjunction with the accompanying notes.

CONSOLidATEd STATEMENT
OF CASH FLOWS

For The Year Ended 30 June 2011

Cash flows from operating activities
Receipts from customers
payments to suppliers and employees
Borrowing costs
income tax paid
interest received

Notes

2011

38,235,115
(35,629,867)
(217,232)
(61,915)
6,852

2010

29,160,687
(28,243,472)
(109,158)
(134,911)
17,046

NET CASH FLOWS FROM OpERATiNG ACTiViTiES

7(iii)

2,332,953

690,192

Cash flows from investing activities
purchase of property, plant and equipment
purchase of other assets

NET CASH FLOWS (USEd iN) iNVESTiNG ACTiViTiES

Cash flows from financing activities
dividends paid
proceeds from issue of shares
Repayment of borrowings
Repayment of finance lease liabilities
proceeds from borrowings

NET CASH FLOWS (USEd iN) FiNANCiNG ACTiViTiES

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)

(1,216,091)
(29,686)

(1,245,777)

-
73,333
(156,742)
(231,745)
362,932

47,778

1,134,954
250,576

1,385,530

(397,361)
-

(397,361)

(346,668)
-
(141,812)
(234,458)
335,260

(387,678)

(94,847)
345,423

250,576

This Statement of Cash Flows should be read in conjunction with the accompanying notes.

CONSOLidATEd STATEMENT
OF CHANGES iN EQUiTY

For The Year Ended 30 June 2011

IssueD
CAPItAl

retAINeD
eArNINGs

eMPloyee
equIty BeNeFIts
reserve

totAl equIty

BALANCE AT 1 JULY 2009

2,775,982

3,212,418

Total comprehensive income for the period
Cost of share-based payments
dividends paid to equity holders

-
-
-

47,341
-
(346,668)

BALANCE AT 30 JUNE 2010

2,775,982

2,913,091

Total comprehensive income for the period
Exercise of options
Cost of share-based payments

-
73,333
-

201,872
-
-

141,618

-
81,283
-

222,901

-
-
133,626

6,130,018

47,341
81,283
(346,668)

5,911,974

201,872
73,333
133,626

BALANCE AT 30 JUNE 2011

2,849,315

3,114,963

356,527

6,320,805

This Statement of Changes in Equity should be read in conjunction with accompanying notes.

NOTES TO THE FiNANCiAL
STATEMENTS

For The Year Ended 30 June 2011

1. CorPorAte INForMAtIoN

The financial report of Empired Ltd for the
year ended 30 June 2011 was authorised for
issue in accordance with a resolution of the
directors on 29 August 2011.

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.

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.

(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 2011.
These are outlined in the table opposite.

reFereNCe

tItle

suMMAry

AASB
2009-12

AASB
2009-11

AASB
2010-6

AASB
2010-8

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

Amendments
to Australian
Accounting
Standards -
disclosures on
Transfer of Financial
Assets [AASB 1 &
AASB 7]

Amendments
to Australian
Accounting
Standards
– deferred Tax:
Recovery of
Underlying Assets

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.

This standard adds
and amends disclosure
requirements about
transfers of financial
assets involved and the
risks associated with
them.

provides a practical
approach for measuring
deferred tax liabilities
and deferred tax assets
when investment
property is measured
using the fair value
model in AASB 140
investment property.

APPlICAtIoN
DAte oF
stANDArD*

1 January
2011

IMPACt
oN GrouP
FINANCIAl
rePort

The amendments
will not have any
impact on the
Group’s financial
statements.

APPlICAtIoN
DAte For
GrouP*

1 July 2011

1 July 2013

1 January
2013

The amendments
will not have
any significant
impact on the
Group’s financial
statements.

1 July 2011

The Group does
not expect
any significant
impact.

1 January
2012

The Group does
not expect
any significant
impact.

1 July 2012

NOTES TO THE FiNANCiAL
STATEMENTS (CONTiNUEd)

For The Year Ended 30 June 2011

reFereNCe

tItle

suMMAry

AASB
2010-2

AASB
2011-1

AASB
2011-2

AASB
2010-4

AASB
2011-4

Amendments to
Australian Accounting
Standards arising
from Reduced
disclosure
Requirements

Amendments to
Australian Accounting
Standards arising
from the Trans-
Tasman convergence
project

Amendments
to Australian
Accounting Standards
arising from the
Trans-Tasman
convergence project
– Reduced disclosure
Requirements

Further Amendments
to Australian
Accounting Standards
arising from the
Annual improvements
projects

Amendments to
Australian Accounting
Standards to
Remove individual
Key Management
personnel disclosure

Reduced disclosure
requirements. AASB
1053 provides further
information regarding
the differential reporting
framework and the
two tiers of reporting
requirements for
preparing general
purpose financial reports.

This standard makes
amendments to a
range of Australian
Accounting Standards
and interpretations for
the purpose of closer
alignment to iFRSs and
harmonisation between
Australian and New
Zealand Standards.

Amendments to establish
requirements disclosure
requirements in relation to
the Australian additional
disclosures arising
from the Trans-Tasman
Convergence project.

AASB 2010-4 makes
various amendments to
a number of standards
and interpretations [AASB
1, 7, 101, 134] in line with
the annual improvements
projects.

This standard makes
amendments to
Australian Accounting
Standard AASB 124
Related party disclosure

APPlICAtIoN
DAte For
GrouP*

1 July 2013

APPlICAtIoN
DAte oF
stANDArD*

1 July 2013

IMPACt
oN GrouP
FINANCIAl
rePort

There will no
impact on
the Groups
financial
statements.

1 July 2011

The Group does
not expect
any significant
impact.

1 July 2013

The Group does
not expect
any significant
impact.

1 January
2011

The Group does
not expect
any significant
impact.

1 July 2011

1 July 2013

The Group does
not expect
any significant
impact.

“We strive to enhance
our depth of capability
through attracting,
retaining and training
the best talent in our
industry.“

NOTES TO THE FiNANCiAL
STATEMENTS (CONTiNUEd)

For The Year Ended 30 June 2011

2. suMMAry oF sIGNIFICANt
ACCouNtING PolICIes (CoNtINueD)

common control, are accounted for by
applying the purchase method.

The consolidated financial statements
comprise the financial statements of Empired
Limited and its subsidiaries as at 30 June
each year (‘the Group’).

The financial statements of subsidiaries are
prepared for the same reporting period as the
parent company, using consistent accounting
policies.

Adjustments are made to bring into line any
dissimilar accounting policies that may exist.

All intercompany balances and transactions,
including unrealised profits arising from intra-
group transactions, have been eliminated in
full. Unrealised losses are eliminated unless
costs cannot be recovered.

Subsidiaries are consolidated from the date
on which control is transferred to the group
and cease to be consolidated from the date
on which control is transferred out of the
Group.

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.

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.

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:

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

Buildings & improvements

Leasehold improvements

Furniture & Fittings

Computer Hardware

Computer Software

7.5 – 20 yrs

5 – 20 yrs

3 – 20 yrs

3 – 5 yrs

1 – 2.5 yrs

iMpAiRMENT

(f) Goodwill

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.

Goodwill on acquisition is initially measured
at cost being the excess of the cost of the
business combination over the acquirer’s
interest in the net fair value of the identifiable
assets, liabilities and contingent liabilities.

Following initial recognition, goodwill is
measured at cost less any accumulated
impairment losses.

Goodwill is not amortised.

Goodwill is reviewed for impairment, annually
or more frequently if events or changes in
circumstances indicate that the carrying
value may be impaired.

As at the acquisition date, any goodwill
acquired is allocated to each of the cash-
generating units expected to benefit from the
combination’s synergies.

impairment is determined by assessing the
recoverable amount of the cash-generating
unit to which the goodwill relates.

Where the recoverable amount of the cash-
generating unit is less than the carrying
amount, an impairment loss is recognised.
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.

NOTES TO THE FiNANCiAL
STATEMENTS (CONTiNUEd)

For The Year Ended 30 June 2011

2. suMMAry oF sIGNIFICANt
ACCouNtING PolICIes (CoNtINueD)

(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
statement of comprehensive income through
the ‘amortisation expenses’ line item.

intangible assets, excluding development
costs, created within the business are not
capitalised and expenditure is charged
against profits in the period in which the
expenditure is incurred.

intangible assets are tested for impairment
where an indicator of impairment exists and
in the case of indefinite lived intangibles
annually, either individually or at the cash
generating unit level. Useful lives are
also examined on an annual basis and
adjustments, where applicable, are made on
a prospective basis.

Research and development Costs

Research costs are expensed as incurred.

is applied requiring the asset to be carried at
cost less any accumulated amortisation and
accumulated impairment losses.

Software

Costs incurred in developing software are
capitalised where future financial benefits
can be reasonably be assured. These
costs include employee costs incurred on
development along with appropriate portion of
relevant overheads.

Amortisation is calculated on a straight-line
basis depending on the useful life of the asset.
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 statement
of comprehensive income 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.

development expenditure incurred on an
individual project is carried forward when
its future recoverability can be reasonably
assured. Following the initial recognition of
the development expenditure, the cost model

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 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 13.8% 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.

Amortised cost is calculated as:

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

less any reduction for impairment.

NOTES TO THE FiNANCiAL
STATEMENTS (CONTiNUEd)

For The Year Ended 30 June 2011

2. suMMAry oF sIGNIFICANt
ACCouNtING PolICIes (CoNtINueD)

(j) Financial Instruments (continued)

The effective interest method is used 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.)

(iii) Held-to-maturity investments

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 significant or 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.

(l) Cash and cash equivalents

Cash and short-term deposits in the statement
of financial position 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 statement of cash
flows, 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
statement of comprehensive income when
the liabilities are derecognised and as well as
through the amortisation process.

(n) Provisions

provisions are recognised when the Group has
a present obligation (legal or constructive) as
a result of a past event, it is probable that an
outflow of resources embodying economic
benefits will be required to settle the obligation
and a reliable estimate can be made of the
amount of the obligation.

NOTES TO THE FiNANCiAL
STATEMENTS (CONTiNUEd)

For The Year Ended 30 June 2011

2. suMMAry oF sIGNIFICANt
ACCouNtING PolICIes (CoNtINueD)

(n) Provisions (continued)

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 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 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’). There are currently three plans
in place to provide these benefits:

(i) The Empired Employee Share Option

plan (ESOp2), which provides to all
employees excluding directors,

(ii) The Executive Share Option plan

(ESOp1), which provides benefits to
directors and senior executives.

(iii) The Sales Executive Share Option plan
(ESOp3), which provides benefits to
senior sales executives.

The cost of these equity-settled transactions
with employees is measured by reference to
the fair value at the date at which they are
granted. The fair value is determined using a
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 reporting date.
No adjustment is made for the likelihood of
market performance conditions being met as
the effect of these conditions is included in
the determination of fair value at grant date.

Where the terms of an equity-settled award
are modified, as a minimum an expense
is recognised as if the terms had not
been modified. in addition, an expense is
recognised for any increase in the value of the
transaction as a result of the modification, as
measured at the date of modification.

Where an equity-settled award is cancelled,
it is treated as if it had vested on the date
of cancellation, and any expense not yet
recognised for the award is recognised
immediately. However, if a new award is
substituted for the cancelled award, and

designated as a replacement award on
the date that it is granted, the cancelled
and new award are treated as if they were
a modification of the original award, as
described in the previous paragraph. 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 statement of comprehensive
income on a straight-line basis over the lease
term.

NOTES TO THE FiNANCiAL
STATEMENTS (CONTiNUEd)

For The Year Ended 30 June 2011

2. suMMAry oF sIGNIFICANt
ACCouNtING PolICIes (CoNtINueD)

(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 statement of comprehensive income.

(t) Income tax

deferred income tax is provided on all
temporary differences at the reporting
date between the tax bases of assets and
liabilities and their carrying amounts for the
financial reporting purposes.

deferred income tax liabilities are recognised
for all taxable temporary differences:

•

except where the deferred income tax
liability arises from the initial recognition
of an asset or liability in a transaction
that is not a business combination and,
at the time of the transaction, affects
neither the accounting profit nor taxable
profit or loss; and

in respect of taxable temporary
differences associated with investments
in subsidiaries, associates and interests
in joint ventures, except where the
timing of the reversal of the temporary
differences can be controlled and it is
probable that the temporary differences
will not reverse in the foreseeable future.

deferred income tax assets are recognised
for all deductible temporary differences,
carry-forward of unused tax assets and
unused tax losses, to the extent that it is
probable that taxable profit will be available
against which the deductible temporary
differences, and the carry-forward of unused
tax assets and unused tax losses can be
utilised:

•

except where the deferred income
tax asset relating to the deductible
temporary differences arises from
the initial recognition of an asset or
liability in a transaction that is not a
business combination and, at the time
of the transaction, affects neither the
accounting profit nor taxable profit or
loss; and

in respect of deductible temporary
differences associated with investments
in subsidiaries, associates and interests
in joint ventures, deferred tax assets are
only recognised to the extent that it is
probable that the temporary differences
will reverse in the foreseeable future and
taxable profit will be available against
which the temporary differences can be
utilised.

The carrying amount of deferred income tax
assets is reviewed at each reporting 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 reporting date.

income taxes relating to items recognised
directly in equity are recognised in equity
and not in the statement of comprehensive
income.

(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
statement of financial position.

Cash flows are included in the statement
of cash flows on a gross basis and the
GST component of cash flows arising from
investing and financing activities, which is
recoverable from, or payable to, the taxation
authority are classified as operating cash
flows. Commitments and contingencies
are disclosed net of the amount of GST
recoverable from, or payable to, the taxation
authority.

(v) 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.

NOTES TO THE FiNANCiAL
STATEMENTS (CONTiNUEd)

For The Year Ended 30 June 2011

2. suMMAry oF sIGNIFICANt
ACCouNtING PolICIes (CoNtINueD)

(v) significant accounting judgements,
estimates and assumptions (continued)

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
has suffered any impairment, in accordance
with the accounting policies.

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-

3. reveNues

sales revenue
Services

sales revenue
interest
Foreign Exchange gain

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 22.

ii. Share based payments

The consolidated entity measures the
cost of equity-settled transactions with
employees by reference to the fair value
of the equity instruments at the date at
which they are granted. The fair value
is determined by using Black-Scholes
model taking into account the terms and
conditions upon which the instruments
were granted. The accounting estimates
and assumptions relating to equity-settled
share-based payments would have no
impact on the carrying amounts of assets
and liabilities within the next annual
reporting period but may impact profit or
loss and equity.

2011

39,712,614

6,852
-

6,852

2010

27,903,654

6,462
10,584

17,046

39,719,466

27,920,700

4. exPeNses
profit before income tax includes the following specific expenses:

2011

10,332

304,426
133,625

127,672
231,792
780,284
650,617

2010

9,279

276,535
81,282

120,880
213,429
892,918
465,197

1,790,365

1,692,424

operating lease rentals
Minimum lease payments

Superannuation expenses
Share based payments

other expenses
insurance
Travel
Administration
Other

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 statement of comprehensive income

2011

2010

62,128

40,892

142,493
2,298

206,919

23,332
(495)

63,729

NOTES TO THE FiNANCiAL
STATEMENTS (CONTiNUEd)

For The Year Ended 30 June 2011

5. INCoMe tAx (CoNtINueD)

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% (2010: 30%)

Add tax effect of:

Non-deductible expenses
Other non-deductible expenses
Other
Under provision of tax prior years

Aggregate income tax expense

2011

122,637

39,585
41,572
(14,845)
17,970

206,919

2010

33,321

12,342
16,495
1,571
-

63,729

disclosure for tax effect of capital raising costs via the equity accounts has changed since release
of the 31 december 2010 financials. This change has resulted in an increase of deferred tax assets
of $84,081, and an increase in income tax of the same value.

deferred income tax balances at 30 June relate to the following:

(i) Deferred tax liabilities

prepaid expenses
Fixed assets
Work in progress

Gross deferred tax liabilities

(ii) Deferred tax assets

provisions:
provision for doubtful debts
Equity raising costs
Borrowing costs
Tax losses

Gross deferred tax assets

2011

2010

(10,762)
(49,599)
(275,994)

(3,346)
-
(187,800)

336,355

(191,146)

406,453
-
29,544
1,855
-

437,852

314,802
12,248
59,083
3,116
45,887

435,136

(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.

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.

NOTES TO THE FiNANCiAL
STATEMENTS (CONTiNUEd)

For The Year Ended 30 June 2011

6. eArNINGs Per sHAre (CoNtINueD)

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

Weighted average number of ordinary shares for basic earnings
per share

Effect of dilution:
Share options

2011

201,872

2011
Thousands

46,322

11,456

2010

47,341

2010
Thousands

46,222

10,823

Weighted average number of ordinary shares adjusted for the
effect of dilution

57,778

57,045

7. CAsH AND CAsH equIvAleNts

(i) reconciliation of Cash

For the purposes of the statement of cash flows, cash includes cash on hand and cash in banks.
Cash at the end of the year as shown in the statement of cash flows is reconciled to the related
items in the statement of financial position as follows:

Cash at bank and in hand
Term deposit

(ii) Financing facilities available

At reporting date the following facilities were available:

2011

887,102
498,428

1,385,530

2010

12,356
238,220

250,576

Bank overdraft facility

3,000,000

2,070,717

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.

(iii) reconciliation of net cash flows from operating activities to operating profit after income tax

Operating profit after income tax
depreciation
Option plan Expense

Changes in assets and liabilities net of effects of purchases
and disposals of controlled entities:

(increase) / decrease in receivables
decrease in other assets
(increase) / decrease in prepayments
increase / (decrease) in creditors
increase / (decrease) in other creditors
increase / (decrease) in accrued liabilities
increase / (decrease) in unearned income
decrease in income tax payable
increase in provision for employee entitlements

Net cash from operating activities

2011

201,812
496,320
133,625

(1,642,628)

(81,104)
923,688
1,036,879
813,085
182,318
-
268,958

2,332,953

2010

47,341
331,071
81,282

1,505,034
28,103
(36,041)
(1,507,998)
923,390
(514,632)
(239,358)
(81,526)
153,526

690,192

(iv) Non-cash investing and financing activities

Acquisition of plant and equipment by means of finance lease

217,645

104,999

NOTES TO THE FiNANCiAL
STATEMENTS (CONTiNUEd)

For The Year Ended 30 June 2011

8. trADe AND otHer reCeIvABles (CurreNt)

Trade receivables
provision for impairment

Term deposit
Other receivables

2011

5,955,523
-

5,955,523

3,500
-

2010

4,336,535
(40,828)

4,295,707

3,500
17,188

5,959,023

4,316,395

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 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 at cost

10. otHer Assets

Current
prepayments

Total current other assets

2011

-
-

2010

-
40,828

40,828

919,262

625,999

263,082

181,977

11. ProPerty, PlANt AND equIPMeNt

Buildings and Improvements

At cost
Accumulated depreciation

Total Buildings and improvements

Plant and equipment

At cost
Accumulated depreciation

leased 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
depreciation expense

Closing balance 30 June

2011

-
-

1,758,066
(674,183)

1,083,883

533,102
(258,509)

274,593

247,315
(29,062)

218,253

1,576,729

974,704
1,224,686
(126,341)
(496,320)

1,576,729

2010

19,752
(13,731)

6,021

1,382,147
(795,050)

587,097

579,021
(278,053)

300,968

131,812
(51,194)

80,618

968,683

974,704

908,414
397,358
-
(331,068)

974,704

NOTES TO THE FiNANCiAL
STATEMENTS (CONTiNUEd)

For The Year Ended 30 June 2011

12. INtANGIBle Assets

Goodwill
Cost
Accumulated impaired losses

Net carrying value

software
Cost
Accumulated impaired losses

Net carrying value

Total intangibles

2011

3,948,764
-

3,948,764

29,685
-

29,685

2010

3,948,764
-

3,948,764

-
-

3,978,449

3,948,764

Goodwill has been tested for impairment as detailed at note 22. No impairment provision was
required.

YEAR ENd 30 JUNE 2010

Balance at the beginning of the year
Additions
disposals
Amortisation charge
impairment losses

YEAR ENd 30 JUNE 2011

Balance at the beginning of the year
Additions
disposals
Amortisation charge
impairment losses

Closing value at 30 June 2011

GooDWIll

soFtWAre

totAl

3,948,764
-
-
-
-

3,948,764

3,948,764
-
-
-
-

-
-
-
-
-

-
29,685
-
-
-

3,948,764
-
-
-
-

3,948,764

3,948,764
29,685
-
-
-

3,948,764

29,685

3,978,449

during the financial year an internally generated software product was capitalised. intangible
assets, other than goodwill, have finite lives and are required to be amortised on an expected
usage basis. Goodwill has an infinite life.

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:

ii)

on the second anniversary, one third of the grant of options;

on the third anniversary, two thirds of the grant of options;

iii)

on the fourth anniversary, all of the grant of options; or

iv)

a takeover offer or bid in respect of Empired shares is made in accordance with the Corporations
Act and the Board recommends that shareholders accept the offer.

Other relevant terms and conditions applicable to options granted under the ESOp2 include:

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.

No options were granted to employees during the financial year.

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

2011

No.

1,583,963
-
(277,215)
-
-

2011

WAEp

$0.287
-
-
-
-

2010

No.

1,403,474
300,000
(119,511)
-
-

1,306,748

$0.272

1,583,963

Exercisable at the end of the year

432,077

0.32

499,871

2010

WAEp

$0.313
$0.20
-
-
-

$0.287

$0.35

The weighted average contractual life for the share options outstanding as at 30 June 2011 is 0.75
years (2010: 1.13 years).

NOTES TO THE FiNANCiAL
STATEMENTS (CONTiNUEd)

For The Year Ended 30 June 2011

13. eMPloyee BeNeFIts (CoNtINueD)

Share options issued under the ESOp2 and outstanding at the end of the year have the following
exercise prices:

exPIry DAte

exerCIse PrICe

2011 No.

2010 No.

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 2012
26 November 2012

Total

$0.30
$0.35
$0.40
$0.30
$0.35
$0.40
$0.30
$0.25
$0.30
$0.20

-
-
-
85,805
85,802
85,799
600,000
74,671
74,671
300,000

78,383
76,081
76,081
89,779
89,776
89,771
600,000
92,046
92,046
300,000

1,306,748

1,583,963

(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:

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:

•

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

1,500,000

Fair value per option

Exercise price per option

Expiry date

$0.045

$0.30

12 January 2014

The options were granted over ordinary shares and are exercisable upon meeting the vesting
conditions outlined above and until their expiry date.

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 2011.

dividend yield (%)
Expected volatility (%)
Risk-free interest rate (%)
Expected life of option (years)
Option exercise price ($)
Share price at grant date ($)

13 JANuAry 2011
(1,500,000) oPtIoNs

0%
60%
5.14%
3 years
$0.30
$0.17

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

2011

No.

9,700,000
1,500,000
(2,883,334)
(366,666)
-

2011

WAEp

$0.30
$0.30

$0.20
-

2010

No.

8,000,000
3,400,000
(1,700,000)
-
-

Outstanding at the end of the year

7,950,000

$0.31

9,700,000

Exercisable at the end of the year

3,050,000

$0.33

3,050,000

2010

WAEp

$0.32
$0.30
$0.40
-
-

$0.30

$0.26

NOTES TO THE FiNANCiAL
STATEMENTS (CONTiNUEd)

For The Year Ended 30 June 2011

13. eMPloyee BeNeFIts (CoNtINueD)

(b) empired executive share option plan (continued)

As at 30 June 2011 there were 7,950,000 options over ordinary shares with an average exercise price
of $0.31 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 2011 is 1.209
years (2010: 1.425 years). Share options issued under the ESOp1 and outstanding at the end of the
year have the following average exercise prices:

exPIry DAte

exerCIse PrICe

2011 No.

2010 No.

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
12 January 2014

Total

$0.25
$0.25
$0.25
$0.25
$0.25
$0.40
$0.40
$0.30
$0.30
$0.30

-
-
300,000
-
500,000
-
1,200,000
1,050,000
3,400,000
1,500,000

700,000
1,100,000
300,000
750,000
500,000
700,000
1,200,000
1,050,000
3,400,000
-

7,950,000

9,700,000

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.

Outstanding at the beginning of the year
Granted during the year
Forfeited during the year
Exercised during the year
Expired during the year

Outstanding at the end of the year

Exercisable at the end of the year

2011

No.

300,000
-
-
-
(200,000)

100,000

2011

WAEp

$0.366
-
-
-
$0.40

$0.30

2010

No.

300,000
-
-
-
-

300,000

200,000

2010

WAEp

$0.366
-
-
-

$0.366

$0.40

The weighted average contractual life for the share options outstanding as at 30 June 2011 is 0.34
years (2010: 0.70 years). The fair value of the options are estimated at the date of grant using a
Black Scholes model.

d) empired sales executive share option plan

during the financial year Empired issued share options under a sales executive plan (ESOp3).
These options are performance options aligned with attaining agreed targets and vest on reaching
these targets.

Options

1,750,000
350,000
150,000
200,000

2,450,000

Fair value per option

Exercise price per option

Expiry date

$0.045
$0.057
$0.068
$0.045

$0.30
$0.30
$0.30
$0.30

12 January 2014
12 January 2015
12 January 2016
24 May 2014

The fair value of these options are 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.

12 JANuAry 2011

24 MAy 2011

12 JANuAry 2011

1,750,000

200,000

350,000

dividend yield (%)
Expected volatility (%)
Risk-free interest rate (%)
Expected life of option (years)
Option exercise price ($)
Share price at grant date ($)

0%
60%
5.14%
3 years
$0.30
$0.17

0%
60%
5.14%
3 years
$0.30
$0.26

0%
60%
5.14%
4 years
$0.30
$0.17

150,00

0%
60%
5.14%
5 years
$0.30
$0.17

NOTES TO THE FiNANCiAL
STATEMENTS (CONTiNUEd)

For The Year Ended 30 June 2011

14. trADe AND otHer PAyABles (CurreNt)

Trade payables
Superannuation payable
GST payable
pAYG payable
Accrued liabilities
Credit cards payable
Other

2011

1,957,104
353,182
1,416,896
861,648
1,277,608
42,433
91,437

2010

1,057,051
294,205
743,426
551,780
528,193
18,808
5,233

6,000,308

3,198,696

included in the above are aggregate amounts payable to the
following related parties:

Owing to directors and director related entities

142,000

22,000

Trade payables are non-interest bearing and are normally settled on 30-day terms.

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.

15. FINANCIAl lIABIlItIes

Current
Obligations under finance leases and hire purchase contracts (note 21)
Obligations under premium funding contracts

Non-current
Obligations under finance leases and hire purchase contracts (note 21)

2011

146,275
110,199

256,474

143,028

2010

169,403
77,130

246,533

104,067

Hire Purchase Contracts

Hire purchase contract maturity ranges from June 2011 to April 2014.

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

Facilities unused at reporting date

2011

2010

3,000,000

2,070,717

3,000,000

2,070,717

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
provision for Annual Leave
provision for Long Service Leave
provision for income Tax

Non-current
provision for Long Service Leave

2011

830,666
25,774
(10,477)

845,963

108,680

2010

690,386
64,752
-

755,138

NOTES TO THE FiNANCiAL
STATEMENTS (CONTiNUEd)

For The Year Ended 30 June 2011

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 2009

At 30 June 2010

Conversion of options

At 30 June 2011

2011

508,314

2011

2,849,315

No.

46,222,314
-

46,222,314

366,666

46,588,980

2010

325,997

2010

2,775,982

vAlue ($)

2,775,982
-

2,775,982

73,333

2,849,315

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, except for the covenant on the bank overdraft referred to in note 15.

options

The company has three 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 there are
100,000 options 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.

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 4.15% (2010: 0%) based on the cash
balance at year end. Cash on deposit attracts a variable interest rate of 6.30% (2010: 5.51%) at the
end of the year.

At 30 June 2011, if interest rates had changed by +/- 1% from the year end rates above, after tax
profits would have been $7,848 (2010: $146) lower/higher.

Finance leases and hire purchase agreements entered into are purchased at fixed interest rates.

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.

NOTES TO THE FiNANCiAL
STATEMENTS (CONTiNUEd)

For The Year Ended 30 June 2011

19. FINANCIAl rIsk MANAGeMeNt oBJeCtIves AND PolICIes (CoNtINueD)

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.

exposure to credit risk

The Group’s maximum exposure to credit risk at the report date was:

Loans and receivables (note 8)

2011

5,955,523

The aging of the Group’s non-impaired trade receivables at reporting date was:

Not past due
past due 0-30 days
past due 31-60 days
past due 60 days

2011

5,088,186
124,351
446,551
296,435

5,955,523

2010

4,295,707

2010

3,367,242
196,480
282,013
449,972

4,295,707

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.

NOTES TO THE FiNANCiAL
STATEMENTS (CONTiNUEd)

For The Year Ended 30 June 2011

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 statement of financial position.

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

2011
$

2011

i) Financial Assets

Term deposit
Term deposit
Term deposit
Cash
Loans and receivables

-
-
-
886,684
-

3,500
132,000
366,428
-
-

Total financial assets

886,684

501,928

-
-
-
-
-

-
-
-
417
5,955,523

3,500
132,000
366,428
887,101
5,955,523

5,955,940

7,344,552

3.35%
5.68%
5.73%
-
-

ii) Financial liabilities
– at amortised cost

Overdraft Facility
Accounts payable
Hire purchase
Short term loans

Total financial liabilities

-
-
-
-

-
-
146,275
110,199

-
-
143,028
-

-
1,957,112
-
-

-
1,957,112
289,303
110,199

-
-
10.63%
7.25%

256,474

143,028

1,957,112

2,356,614

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

2011

1,611,856
342,686
2,570
-

1,957,112

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

2010
$

2010

i) Financial Assets

Term deposit
Term deposit
Term deposit
Cash
Loans and receivables

Total financial assets

ii) Financial liabilities
– at amortised cost

Overdraft Facility
Accounts payable
Hire purchase
Short term loans

Total financial liabilities

-
-
-
4,877
-

4,877

-
-
-
-

3,500
106,220
132,000
-
-

241,720

-
-
169,403
77,130

-
-
-
-
-

-
-
-
7,479
4,312,895

3,500
106,220
132,000
12,356
4,312,895

4,320,374

4,566,971

-
-
104,067
-

-
1,057,051
-
-

-
1,057,051
273,470
77,130

246,533

104,067

1,057,051

1,407,651

3.35%
4.31%
2.29%
0.00%
-

-
-
8.57%
6.80%

iii) The aging of the Group’s trade payables at 30 June 2010:

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

NOTES TO THE FiNANCiAL
STATEMENTS (CONTiNUEd)

For The Year Ended 30 June 2011

21. CoMMItMeNts AND CoNtINGeNCIes

No contingent assets or liabilities as at 30 June 2011.

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.

Not later than one year
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

C. operating leases

2011

168,818
154,927
(34,442)

289,303

146,275
143,028

289,303

118,425

(8,226)

110,199

110,199
-

110,199

2010

189,494
111,248
(27,272)

273,470

169,403
104,067

273,470

82,375

(5,245)

77,130

77,130
-

77,130

Office premises are leased under non-cancellable operating leases for periods as follows:

loCAtIoN

Level 13 256 Adelaide Terrace

stAte

pERTH

terMs

Expires on 31 October 2015.

Level 8, Queens Street

MELBOURNE

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

2011

2010

914,706
2,213,462

3,128,168

481,006
3,472,239

3,953,245

366,428
132,000

498,428

106,220
132,000

238,220

22. IMPAIrMeNt testING oF GooDWIll

Goodwill acquired through business combinations (refer note 12) has been allocated to the 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 11.95% (2010: 11.70%) using a 2.1% growth rate
(2010: 1.4%) that is the same as the average growth rate for the iT infrastructure Services market
sector.

Sensitivity analysis calculated on changes in assumptions did not indicate any impairment.

Carrying amount of goodwill

3,948,764

There is no impairment loss in the current or prior period.

2011

2010

NOTES TO THE FiNANCiAL
STATEMENTS (CONTiNUEd)

For The Year Ended 30 June 2011

23. INvestMeNt IN CoNtrolleD eNtIty

otHer FINANCIAl Assets

% equIty INterest

INvestMeNt ($)

Country of
incorporation

Tusk Technologies pty Ltd

Australia

2011
%

100

2010
%

2011
$

2010
$

100

361,950

363,427

361,950

363,427

The balance of the Tusk Technologies pty Ltd loan as at 30 June 2011 is $351,529. 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 2011. The revaluation downwards is
recorded in the statement of comprehensive income.

Other than this related party loan there are no other related party transactions requiring disclosure.

24. eveNts AFter tHe rePortING DAte

There has not arisen in the interval between the end of the financial year and the date of this report
any item, transaction or event of a material and unusual nature likely, in the opinion of the directors
of the Company, to affect significantly the operations of the consolidated entity, the results of
those operations, or the state of affairs of the consolidated entity, in future financial years other
than as set out below:

300,000 options were exercised with an average exercise price of $0.25 and shares issued on the
5 August 2011

25. 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

2011

2010

46,467

60,622

46,467

60,622

26. key MANAGeMeNt PersoNNel

(a) Directors

The following persons were directors of Empired Limited during the financial year:

M Ashton
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

information regarding key management personnel compensation for the year ended 30 June 2011 is
provided in the remuneration section of the directors’ report on pages 18 to 23.

NOTES TO THE FiNANCiAL
STATEMENTS (CONTiNUEd)

For The Year Ended 30 June 2011

26. 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:

30 JuNe 2011

Directors
R. Baskerville
M. Ashton
R. Bevan

executives
M. Waller

BAlANCe
At BeG oF
PerIoD
01-Jul-10

4,300,000
1,000,000
500,000

GrANteD As
reMuNerAtIoN

oPtIoNs
exerCIseD

Net
CHANGe
otHer

BAlANCe
At eND oF
PerIoD
30-JuN-11

Not vesteD
& Not
exerCIsABle

vesteD &
exerCIsABle

-
-
-

(1,450,000)
-
-

2,850,000
1,000,000
500,000

2,550,000
600,000
250,000

300,000
400,000
250,000

1,064,038

750,000

(100,000)

(250,000)

1,464,038

750,000

714,038

Total

6,864,038

750,000

(100,000)

(1,700,000)

5,814,038

4,150,000

1,664,038

30 JuNe 2010

Directors
R. Baskerville
M. Ashton
R. Bevan

executives
M. Waller

BAlANCe
At BeG oF
PerIoD
01-Jul-09

GrANteD As
reMuNerAtIoN

oPtIoNs
exerCIseD

Net
CHANGe
otHer

BAlANCe
At eND oF
PerIoD
30-JuN-10

Not vesteD
& Not
exerCIsABle

vesteD &
exerCIsABle

2,850,000
1,000,000
250,000

2,550,000
600,000
250,000

1,064,038

-
-
-

(1,100,000)
(600,000)
-

4,300,000
1,000,000
500,000

2,850,000
750,000
500,000

1,450,000
250,000
-

1,064,038

671,346

392,692

(1,700,000)

6,864,038

4,771,346

2,092,692

Total

5,164,038

3,400,000

(e) shareholdings of Directors and executives

Shares held in Empired Limited

30 JuNe 2011

BAlANCe
01-Jul-10

GrANteD As
reMuNerAtIoN

oN exerCIse
oF oPtIoNs

Net CHANGe
otHer

BAlANCe
30-JuNe-11

Ord

pref

Ord

pref

Ord

pref

Ord

pref

Ord

pref

Directors
R. Baskerville
M. Ashton
R. Bevan

Total

8,983,933
175,000
-

9,158,933

-
-
-

29,300
-
-

-
-
-

9,013,233
175,000
-

29,300

- 9,188,233

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
R. Baskerville
M. Ashton
R. Bevan

Total

8,475,189
150,000
-

8,625,189

-
-
-

508,744
25,000
-

-
-
-

8,983,933
175,000
-

533,744

- 9,158,933

-
-
-

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 2011

BAlANCe
01-Jul-10

GrANteD As
reMuNerAtIoN

oN exerCIse
oF oPtIoNs

Net CHANGe
otHer

BAlANCe
30-JuNe-11

Ord

pref

Ord

pref

Ord

pref

Ord

pref

Ord

pref

specified
executives
M. Waller

Total

2,012,124

100,000

(161,400)

1,950,724

NOTES TO THE FiNANCiAL
STATEMENTS (CONTiNUEd)

For The Year Ended 30 June 2011

26. key MANAGeMeNt PersoNNel (CoNtINueD)

(e) shareholdings of Directors and executives (continued)

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

Total

27. DIvIDeNDs

1,755,124

257,000

2,012,124

(a) Distributions Paid
2010 final franked dividend of nil cents (2010: 0.50 cents)
interim franked dividend of nil cents (2010: 0.25 cents)

2011

-
-

2010

231,112
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

75,028

126

The franked dividends paid during the year were franked at the tax rate of 30%.

28. PAreNt eNtIty INForMAtIoN

As at, and throughout, the financial year ended 30 June 2011 the parent entity of the Group was
Empired Limited.

statement of financial position
Current assets
Total assets
Current liabilities
Total liabilities

issued capital
Employee equity reserve
Retained profits

Total equity

(b) Franking Credit Balance
Balance of franking account at year end at 30% available to the
shareholders of Empired Limited for subsequent financial years

statement of comprehensive income
profit for year
Other comprehensive income

Total comprehensive income

2011

8,526,897
13,004,499
7,611,058
8,550,651

2,849,315
356,527
1,248,006

4,453,848

75,028

2011

201,872
-

201,872

2010

5,374,947
9,218,245
4,526,364
5,173,228

2,775,982
222,901
1,046,134

4,045,017

126

2010

47,341
-

47,341

parent entity contingent liability disclosure has been referenced at note 21.

diRECTORS’ dECLARATiON

The directors of the company declare that:

the financial statements and notes, are in accordance with the Corporations Act 2001 and:

comply with Accounting Standards; and

give a true and fair view of the financial position as at 30 June 2011 and of the performance
for the year ended on that date of the company and consolidated group;

the Chief Executive Officer and Chief Financial Officer have each declared that:

the financial records of the company for the financial year have been properly maintained
in accordance with s286 of the Corporations Act 2001;

the financial statements and notes for the financial year comply with the Accounting
Standards; and

the financial statements and notes for the financial year give a true and fair view;

the directors’ opinion 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 in accordance with a resolution of the Board of directors.

On behalf of the Board

russell Baskerville
Managing director

31st of August 2011

“A disciplined and focused
approach is taken to
developing a broad
multifaceted service offering
through the effective
implementation and
management of innovative
and leading business and
technology solutions.“

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 2011.

a. Distribution of shareholding

sIZe oF sHAreHolDING

1 - 1,000
1,001 - 5,000
5,001 - 10,000
10001 - 100,000
100,001 - MAX

Total

NuMBer oF
sHAreHolDers

7
21
48
150
63

289

0.01
0.15
0.83
11.00
88.01

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

Baskerville investments pty Ltd
Mr John Bardwell
Mr Gregory Leach

NuMBer

7,450,059
4,000,000
3,504,225

15.99
8.59
7.52

SHAREHOLdiNG ANALYSiS

c. twenty largest shareholders

The names of the twenty largest shareholders are:

NAMe

Baskerville investments pty Ltd
Mr Gregory david Leach
Mr John Alexander Bardwell
Mr david John Cawthorn
Zero Nominees pty Ltd
Rbc dexia investor Services Australia Nominees pty Ltd
Uniplex Constructions pty Ltd
Seventy Three pty Ltd
Ms Kym Garreffa
Cornela pty Ltd
Mr Richard Armstrong Caldow
Mr John Alexander Bardwell & Mrs paola Bardwell
Mr Mark Waller
Mr Kevin peter Flynn
Locope pty Ltd
Mr Mark Edward Waller
Mr Glenn Thomas Baskerville
Mr Craig Evan Coleman & Mrs phyllis Coleman
Three Zebras pty Ltd
Westrade Resources pty Ltd

Total

NuMBer oF
sHAres HelD

7,450,059
3,504,225
3,000,000
2,000,000
2,000,000
1,952,645
1,902,414
1,464,000
1,306,167
1,103,764
1,001,470
1,000,000
898,267
750,000
650,000
638,644
572,759
500,000
500,000
500,000

32,694,414

15.99
7.52
6.44
4.29
4.29
4.19
4.08
3.14
2.80
2.37
2.15
2.15
1.93
1.61
1.40
1.37
1.23
1.07
1.07
1.07

70.18

The twenty members holding the largest number of shares together held a total of 70.18% of issued
capital.

d. Issued Capital

Ordinary Shares

The fully paid issued capital of the company consisted of 46,588,980 shares held by 289
shareholders.

Each share entitles the holder to one vote.

The number of shareholdings held in less than marketable parcels is 7.

ii.

(ii) Unquoted Equity

The options issued under the company share options plans consisted of 11,806,748 options.

Options do not have any voting rights.

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:

Level 13, Septimus Roe Square
256 Adelaide Terrace
perth WA 6000

h. other offices

The other offices are:

Level 8
31 Queens Street
Melbourne ViC 3000
Telephone + 61 3 8610 0700

OTHER iNFORMATiON FOR
SHAREHOLdERS

OTHER iNFORMATiON FOR SHAREHOLdERS

in accordance with Listing Rule 4.10 of the Australian
Stock Exchange Limited, the directors provide the
following information not elsewhere disclosed in this
report.

SHAREHOLdER COMMUNiCATiONS

The Board of directors aims to ensure that shareholders
are informed of all major developments affecting the
Company’s state of affairs. information is communicated
to shareholders as follows:

– The annual report is distributed to shareholders

who elect to receive the document. A copy of the
full annual report is available free of charge, upon
request, from the Company. The Board ensures
that the annual report includes relevant information
about the operation of the Company during the year,
changes in the state of affairs of the Company and
details of future developments, in addition to the
other disclosures required by the Corporations Act;

– The half-year report contains summarised 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.

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 2011 Annual General Meeting of Empired Limited will
be held in the:

The Melbourne Hotel
942 Hay Street, perth WA 6000
at 11Am on Monday, 21 November 2011

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

pERTH

Level 13, Septimus Roe Square
256 Adelaide Terrace
pERTH WA 6000

Tel: +618 9223 1234
Fax No: +618 9223 1230

MELBOURNE

Level 8, 31 Queen Street
MELBOURNE ViC 3000

Tel: +613 8610 0700
Fax No: +613 8610 0701