Enterprise Products Partners Investor relations material Annual Report 2014

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Initiative.
Innovation.
Growth.

E M P I R E D L I M I T E D & I T S CO N T R O L L E D E N T I T I E S

A N N UA L F I N A N C I A L R E P O R T

F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 4

A B N 8 1 0 9 0 5 0 3 8 4 3

Contents

CORPORATE DIRECTORY

HIGHLIGHTS & RESULTS

CHAIRMAN & CEO REVIEW

DIRECTORS’ REPORT

REMUNERATION REPORT

CASE STUDIES

CORPORATE GOVERNANCE STATEMENT

CHECKLIST OF CORPORATE GOVERNANCE PRINCIPLES AND RECOMMENDATIONS

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

CONSOLIDATED STATEMENT OF CASH FLOWS

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

NOTES TO THE FINANCIAL STATEMENTS

1. CORPORATE INFORMATION

16. PROVISIONS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 46

17. RESERVES

18. ISSUED CAPITAL

19. FINANCIAL RISK MANAGEMENT OBJECTIVES

20. FINANCIAL INSTRUMENTS

21. COMMITMENTS AND CONTINGENCIES

22. IMPAIRMENT TESTING OF GOODWILL

23. INVESTMENT IN CONTROLLED ENTITY

24. EVENTS AFTER THE REPORTING DATE

25. ACQUISITIONS

26. AUDITORS REMUNERATION

27. DIVIDENDS

28. PARENT ENTITY INFORMATION

3. REVENUES

4. ADMINISTRATION EXPENSES

5. INCOME TAX

6. EARNINGS PER SHARE

7. CASH AND CASH EQUIVALENTS

8. TRADE AND OTHER RECEIVEABLES (CURRENT)

9. WORK IN PROGRESS

10. OTHER CURRENT ASSETS

11. PROPERTY, PLANT AND EQUIPMENT

12. INTANGIBLE ASSETS

13. EMPLOYEE BENEFITS

14. TRADE AND OTHER PAYABLES (CURRENT)

15. BORROWINGS

DIRECTORS DECLARATION

AUDITORS INDEPENDENT DECLARATION

INDEPENDENT AUDIT REPORT

SHAREHOLDER ANALYSIS

OTHER INFORMATION FOR SHAREHOLDERS

102

106

—

EMPIRED LTDCorporate Directory

Directors
Mel Ashton (Non-Executive Chairman)

Richard Bevan (Non-Executive Director)

John Bardwell (Non-Executive Director)

Russell Baskerville (Managing Director & CEO)

Company Secretary
Mark Waller

Legal Advisers
Jackson MacDonald

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

L25, 140 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

Country Of Incorporation
Australia

ASX Code
EPD

Company Domicile And Legal Form
Empired Limited is the parent entity and an

Australian Company limited by shares

Principal Places of Business

Perth
Level 13, Septimus Roe Square

Melbourne
Level 5, 257 Collins Street

Adelaide
Level 2, 8 Leigh Street

256 Adelaide Terrace

PERTH, WA 6000

MELBOURNE, VIC 3000

ADELAIDE, SA 5000

Telephone No: +613 8610 0700

Telephone No: +618 9223 1234

Fax No: +613 8610 0701

Fax No: +618 9223 1230

Brisbane
Level 11, 79 Adelaide Street

Level 9, Little Bourke Street

BRISBANE, QLD 4000

Level 4, 110 William Street

MELBOURNE, VIC 3000

PERTH, WA 6000

Level 2, 1292 Hay Street

WEST PERTH, WA 6005

Sydney
Level 9, 37 York Street

SYDNEY, NSW 2000

www.empired.com

—

ANNUAL REPORT 2014

Highlights & Results

• Record Revenue of $67M up 44%

• Record EBITDA of $7.1M up 98%

• Record Net Profit Before Tax of $4.3M up 119%

• Record Net Profit After Tax of $3.8M up 145%

• Positive Operating Cash Flow of $5.3M

• Cash at June 30, 2014 of $8M

• Net Interest Bearing Debt of $5.1M

• Final fully franked dividend of $0.01

Strategic Highlights

• Acquired OBS Pty Ltd in October 2013,
adding $32M of annualised Revenue in
high growth services across the East
Coast, cementing Empired as the largest
Microsoft SharePoint partner in Australia.
All 2014 financial targets met.

• Acquired eSavvy Pty Ltd in May 2014,
doubling the Sydney office and cementing
Empired as the largest Microsoft CRM
partner in Australia.

• Secured $46M contract with Main Roads
WA, underpinning contracted Revenue for
the next 5 years.

—

• Secured $50M contract with a major
resources Company, mobilisation and ramp
up costs expensed in FY14 and on track to
provide contribution in FY15 with potential
for considerable upside with the customer.

• Raised $15M of equity capital through
a strongly oversubscribed institutional
placement. This provided material
improvements to trading liquidity and
provides a strong balance sheet for
growth.

EMPIRED LTDRevenue
$67M

EBITDA
$7.1M

2010

2011

2012

2013

2014

2010

2011

2012

2013

2014

EPS
$0.0426

NPAT
$3.8M

2010

2011

2012

2013

2014

2010

2011

2012

2013

2014

FY 13 results above are based on underlying financial performance (adjusted for the acquisition of Conducive Pty

Limited) as disclosed in the FY 13 financial report.

—

ANNUAL REPORT 2014“We evolved our operational

maturity, enhanced the quality

and extended the range of

services offered by Empired.”

- RUSSELL BASKERVILLE

—

EMPIRED LTDChairman & CEO Review

Dear Shareholders,

On behalf of your Board of Directors we
are proud to report that FY14 has been a
transformational year for the Company. During
FY13 we evolved our operational maturity,
enhanced the quality and extended the range
of services offered by Empired. Today we report
that we have capitalised on these investments
during FY14 securing a $50m contract with a
global resources Company, a $46m contract with
Main Roads WA and developed a sales pipeline
of strategic deals with a combined value of
approximately $100m to be contested during FY15.

Material in their own right, these successes were
just the beginning of our transformational year.
We also made $17m in acquisitions with combined
annual revenues of 70% of our FY13 Revenue
and positioning Empired as the largest Microsoft
SharePoint and Microsoft Customer Relationship
Management (CRM) provider in Australia. These
services align with global industry mega trends
and now the Company is poised to grow strongly
in coming years.

During the year the Company strengthened its
balance sheet with a $15m strongly oversubscribed
institutional equity capital raising. This has not only
mitigated risk and provided capital for growth, it
has increased the liquidity of Empired’s shares.

All this was achieved whist delivering record
financial results against a stark backdrop of
difficult economic conditions.

FY14 delivered record financial results with
revenue up 44% to $67M, with services Revenue
representing 85% of this result. Earnings before
Interest, Taxation, Depreciation and Amortisation
(EBITDA) grew 98% to $7.1m and net profit after
tax was up 145% to $3.8m. Earnings per share
continued its consistent year on year growth
performance, delivering $0.04 per share (diluted)
up 93% on the prior year.

Operating cash conversation was strong with
$5.3m positive operating cash for the year and
a closing cash balance of $8m. This year, on the
back of a successful performance we are very
pleased to declare a $0.01 fully franked dividend.

During turbulent and uncertain economic
conditions Empired’s business model has continued
to prove its resilience through the defensive
nature of its revenue streams. We have continued
to diversify our reliance on any one particular
sector or geography. We have retained adequate
exposure to sectors where we have unique
advantage through experience and know how.
We operate in regions where we are confident of
securing a tangible and sustainable growth profile.

—

ANNUAL REPORT 2014The strategic, financial and operational success
delivered in FY14 has positioned Empired to
prosper. Our results again build on our reputation
of delivering strong growth reliably year on year.
With approximately 45% of our FY15 revenue
targets locked in and a number of key growth
initiatives underway, we look forward to another
exciting and value enhancing year ahead.

A Sharp Focus On Initiative, Innovation And Growth
Initiative, innovation and growth are the strategic
themes that underpin our vision and are
embodied throughout our organisation. They
may mean different things to different audiences
and in different contexts. To Empired and all our
stakeholders the message is very clear.

“Initiative, innovation and
growth are the strategic themes
that underpin our vision and
are embodied throughout
our organisation.”

Initiative describes the way our people think.
It underpins our approach, the tone of our
engagement and ultimately our people’s passion
for delivering remarkable experiences and
solutions to our clients.

To develop initiative throughout our workforce
we start by attracting great talent - the highest
performing graduates, ambitious young staff that
meet our strict attitude and aptitude tests and
targeting exceptional performers in their areas
of expertise. We take this great talent, our core
asset base, and enhance them with targeted real
world training and experience, support them
with proven processes and best in class tools
and systems. Finally we engrain them in our
culture, our values and empower them to make
real, accountable and action oriented decisions
with our clients. It is this combination that leads
to the Empired initiative which drives our people
to deliver creative, results oriented business
solutions for our clients.

During the year, Empired introduced a paid
employee share purchase plan. In a two week
offer window, 52% of staff elected to participate.
This tells us over half our national workforce is
electing to sacrifice part of their monthly salary
to purchase shares on market and at market price
in the Company they work for, a clear sign of
a strongly engaged, passionate workforce that
believes in the future of Empired.

Innovation to Empired is about thought leadership,
industry knowledge and business intimacy. It is
not traditional research and development.

To develop innovative solutions for our clients we
must diligently apply all the following aspects.
Our thought leadership needs to be clear and
consistent and supported by real world trends,
experiences and results. Our industry knowledge
must be relevant. We need to be keenly aware
of the changes in the technology landscape and
how new industry solutions are being deployed in
local and international markets. Finally we must
understand our customer’s business challenges
and aspirations intimately, ultimately translating
these into real solutions.

The combination of these three aspects allows
Empired to bring innovative, local and targeted
solutions to our customers that meets their
business requirements, assisting them to stay
ahead of their competition and supporting them
in achieving their strategic objectives.

Growth is critical to our relevance with all our key
stakeholders. With growth we seek to continually
develop and mature, extend our value proposition
to customers, broaden opportunities for our
people and partners and improve returns to our
shareholders.

Our customers benefit from this growth through
leveraging the initiative and innovation we bring
to them across a broader range of services. As
we mature and extend our capacity we are able
to deliver larger packages of work for them,
reducing their need to source either through
multiple partners or simply other partners for
those larger engagements. A great example
is the growth we have experienced with Main
Roads WA. Five years ago, as a much smaller
business, we entered a $12m contract to provide
Infrastructure Managed Services over five years.
This year we signed a new and broader contract
with them with a value of $46m over five years,
an achievement we are very proud of.

Our people benefit from being a key part of a
great, local success story through the myriad
of opportunities it presents to them, offering
them the chance to mature and participate in
interesting projects with some of the world’s
leading companies to deliver outcomes they are
proud of. These real career opportunities continue
to foster their passion and development within
our exciting sector and for the Company in which
they work, Empired.

—

EMPIRED LTDRussell Baskerville
Managing Director & CEO

Importantly, our growth provides Empired with
the opportunity to continue to invest in our
organisation, ensuring we remain competitive in
the market, leading to improved capital returns,
cash flow and dividends.

Our strategic investments, combined with a
simple market approach and our competitive
strengths, will ensure that Empired continues to
evolve its services to not only compete but secure
market share over its competitors in these high
growth areas.

Aligning To The Global Growth Mega Trends
Our business solutions focus is tied to a very clear
and simple value proposition. We aim to improve
our client’s organisational efficiency, productivity
and growth through the provision of consulting
and technology services.

This underpins our value proposition to
customers, drives our growth and ensures all our
stakeholders benefit from the huge opportunities
that are presented as part of these disruptive
changes in our market.

We seek to provide these business outcomes to
our customers through a broad range of services.
We continually evolve these services based on
current trends and technologies available. We
are actively developing new services and aligning
ourselves with five global mega trends in the
technology sector – Cloud, Big Data & Business
Analytics, Mobility, Social Applications and Security.

Large enterprises are rapidly adopting these new
technologies and we are partnering with some
of the world’s largest technology power houses,
Microsoft as an example, to capture growth in
these disruptive trends.

These trends play to many of Empired’s strengths.
We are a Company with a young, passionate,
vibrant and professional culture. We are nimble
and can quickly adopt disruptive change and we
boast strong credibility, expertise and reference-
ability in the delivery of Infrastructure and
Application services to deliver tangible business
outcomes to our customers.

Our success in capturing market share ahead of
our competition over the past few years has been
driven by three simple overarching themes; be
disruptive through challenging the norm, ensure
our differentiation is clear and simple and execute
our strategies at pace.

Our acquisitions have also aligned to the
development of services around these mega
trends and positioned Empired to accelerate its
growth in these areas. The acquisitions of OBS and
eSavvy delivered an additional 170 staff nationally,
focussed on portals, content management,
business intelligence (BI) and customer relationship
management (CRM). These capabilities are all
important service elements to align our delivery
with key industry mega trends. Microsoft too has
recognised the important role these technologies
will play, signaling their commitment to winning
market share in these high growth areas.

Strategic Achievements
Throughout the year there were many successes
that contributed to achieving our strategic
objectives. Of these there were a number of
highlights that we believe have materially
advanced our organisation and positioned
Empired to not only achieve outstanding results
in the coming year but capitalise on the growth
trends in our dynamic sector for years to come.

“The acquisition of OBS Pty Ltd
positioned Empired as the largest
Microsoft SharePoint partner
in Australia.”

Empired secured a $50m contract with a global
resources Company followed quickly by a $46m
contract with Main Roads WA. This continues
to develop Empired’s reputation in securing
large multi-million dollar contracts with some of
the world’s largest companies. These contracts
have accelerated our profile and credibility in
the Australian market, secured us a high degree
of certainty over future revenue, and provided
Empired with an exceptional base to leverage
growth in the coming years.

During the year Empired undertook two key
strategic acquisitions leveraged to high growth
services that align with the global mega trends
mentioned earlier. The acquisition of OBS Pty
Ltd positioned Empired as the largest Microsoft
SharePoint partner in Australia, boasting over
150 highly credentialed professional consultants
across the East Coast. It expanded Empired’s
geographic presence to every state in Australia
with an enviable client list that includes many
of Australia’s most well recognised enterprises
and large state government departments. The
combination of our strengthened brand on the
East Coast with our increased capacity and
extended East Coast client base will provide great
growth opportunities for many of Empired’s other
key service offerings.

—

EMPIRED LTDTo be a high performance
IT Services company
delivering value through
initiative, innovation and growth.

Following the acquisition of OBS Pty Ltd,
Empired acquired eSavvy Pty Ltd, arguably
Australia’s leading Microsoft Dynamics CRM
partner being awarded Australian CRM Partner of
the year in 2012 and 2013, and global Microsoft
Dynamics Cloud partner of the year in 2013.
This doubled our presence in Sydney, positioned
Empired as the largest Microsoft Dynamics CRM
partner in Australia and introduces another
service offering in a high growth market that
will be leveraged to provide extended value to
Empired’s national client base.

Importantly a strong focus has been placed on
the cultural alignment of these organisations
with a clear, well communicated integration
plan implemented. Both organisations have
exceptional cultures with OBS recognised as last
year’s winner of BRW Magazine’s “Best Places
to Work” and placing in the Top 10 for the last
four consecutive years. We are pleased to report
that during a year of change and growth we have
recorded an all-time low in staff attrition. Another
statistic we are very proud of.

To ensure our growth was well funded, provide
our largest clients with confidence and mitigate
risk, we raised $15m in equity capital during FY14.
We were overwhelmed with the strong support
provided to the Company both from existing and
new shareholders. We reiterate our appreciation

“Through this process we have
also expanded our shareholder
base, improved the liquidity of our
shares and introduced a range of
new institutional shareholders.”

to you for this support and are confident that
we have applied this capital in areas that will
continue to develop and enhance the strategic
positioning of the Company and lead to pleasing
shareholder returns. Through this process we have
also expanded our shareholder base, improved
the liquidity of our shares and introduced a range
of new institutional shareholders.

—

ANNUAL REPORT 2014Mel Ashton
Chairman

Collectively this all adds up to provide your Board
with confidence that we will once again build
on our reputation of delivering market leading
performance reliably year on year.

We would like to thank all of our key stakeholders
for their support throughout the year. Of particular
note our clients demonstrating their trust in
Empired through awarding us a number of very
large contracts, our shareholders for their continued
loyalty and support during our capital raising and
to our partners who work with us every day to
support Empired in providing valuable solutions
and remarkable experiences to our customers.

Finally to our staff, our success is a product of
your commitment, dedication and passion and we
thank you for your loyalty.

Your Board and management team look
forward to another challenging, exciting and
transformational year ahead!

Yours Sincerely,

Russell Baskerville
Managing Director & CEO

Mel Ashton
Non-Executive Chairman

Further to the highlights, we have continued a
range of other strategic investments that enhance
our competitive edge. We have further matured
our National Operations Centre and the systems
and tools we employ to deliver our services, we
have continued to develop our “near shoring”
or “extended delivery” model to ensure cost
competitiveness and driven programs around
quality management and certification.

These strategic achievements throughout the
year have been fundamental in developing a
platform that we are confident will provide an
exciting spring board into the years ahead.

An Exciting Year Ahead
We are building momentum and are confident
we will continue the track record of growth we
have established over many years. Whilst we are
conscious of the current market challenges, we
expect the year ahead to be no different.

“Our proven leadership and
passionate workforce have
delivered an excellent result and
experienced a taste of success.”

Our proven leadership and passionate
workforce have delivered an excellent result and
experienced a taste of success. They are hungry
for more and driven to exceed our expectations.
I am confident that Empired has laid the
foundations to provide them that opportunity.

We have positioned Empired with a clear
business solutions based value proposition for
our customers. These solutions are focused on
delivering efficiency, productivity and growth
for our clients, to enable them to be successful
in an economic environment that is challenging
traditional business models to deliver more for less
whilst capitalising on new growth opportunities.

Our strategic investments have accelerated the
evolution of our services to take advantage of the
global growth mega trends in Cloud, Big Data &
Business Analytics, Mobility, Social Applications
and Security. We will continue to develop services
that address these key growth areas to capture
market share and continue to fuel our growth.

Through our acquisitions we have enhanced
our capability, extended our capacity and
substantially expanded the size of the
market in which we operate. In particular, our
broader presence nationally will open up new
opportunities for us in the east coast markets.

—

ANNUAL REPORT 2014Directors’ 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 2014.

The names of the Company’s Directors in office during the year and until the date of this report are detailed below.
Directors were in office for this entire period unless stated.

Directors

Name

Age Experience and special responsibilities

Mel Ashton

Mel is a Fellow of the Australian Institute of Company Directors and a

Non-Executive Chairman

Fellow of the Institute of Chartered Accountants in Australia and has

over 30 years corporate experience in a wide range of industries.

Other current Directorships:

• Gryphon Minerals Ltd

• Venture Minerals Limited

• Resource Development Group Limited

• The Hawaiian Group of Companies

• The Institute of Chartered Accountants in Australia

Previous Directorships (last 3 years):

• Renaissance Minerals Limited

Russell Baskerville

Russell is an experienced business professional and has worked in

Managing Director & CEO

the IT industry for over 15 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.

Russell has been the Managing Director and CEO of Empired for nine

years and has successfully listed the Company on the ASX and made a

number of successful acquisitions.

Russell was previously a Non-Executive Director of BigRedSky Limited

successfully developing and commercialising a SaaS delivered eRecruitment

tool prior to the Company being acquired by Thomson Reuters.

Previous Directorships (last 3 years):

• None

—
—

17
17

ANNUAL REPORT 2014ANNUAL REPORT 2014

Directors

Name

Age

Experience and special responsibilities

Richard Bevan

Richard joined the board as a Non-Executive Director on

Non-Executive Director

31 January 2008 with corporate and senior management

experience including various Directorship’s and CEO/MD roles

in ASX listed and private companies. Richard brings experience

in the execution and integration of mergers, acquisitions and

other major corporate transactions.

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 included strategic operational management,

implementing organic growth strategies, business integration

and raising capital in both public and private markets.

Other current Directorships:

• Cassini Resources Limited

Previous Directorships (last 3 years):

• Metals of Africa Limited

John Bardwell

Mr Bardwell has had a long career in the financial services and IT

Non-Executive Director

sectors through a variety of senior leadership positions. Previous

executive experience includes Head of IT Services at Bankwest,

Managed Services Director at Unisys West and more recently

as the General Manager of Delivery Services at Empired Ltd prior

to his appointment to the Board as a Non-Executive Director.

Through his own consulting practice, Mr Bardwell also provides

management consulting expertise to a broad range of

organisations in the financial services, IT and utilities sectors.

Mr Bardwell holds a Bachelor of Business and a Graduate

Diploma in Applied Finance and Investment. He is a Graduate

Member of the Australian Institute of Company Directors and a

Fellow of the Financial Services Institute of Australasia.

Other current Directorships:

• Community West

• SwanCare Group

Previous Directorships (last 3 years):

• None

—

EMPIRED LTD

Company Secretary

Name

Age

Experience and special responsibilities

Mark Waller

CFO &

Mark has responsibility for ensuring the necessary operational

and financial processes and infrastructure are in place

Company Secretary

to support the strategic direction and continued growth

of Empired. Mark holds a degree in business from Curtin

University majoring in Accounting and Business Law and is a

Certified Practicing Accountant.

Mark has worked in the Professional Services sector for

over 15 years and also brings experience from Directorships

with IT companies involved in early stage development and

commercialisation to eventual sale to working for Ernst & Young.

Mark was previously a Non-Executive Director of BigRedSky

Limited successfully developing and commercialising a SaaS

delivered eRecruitment tool prior to the company being

acquired by Thomson Reuters.

Director’s 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

John Bardwell

No. of
meetings
held while
a Director

No. of meetings attended as
a Director during the year
ended 30 June 2014

No. of audit or remuneration
committee meetings attended
during the year ended 30 June 2014

—

ANNUAL REPORT 2014
Principal Activities

The principal activity of the consolidated entity during the year is
the continued operation of its IT services business resulting in the
provision of services covering software systems, consulting and
infrastructure design and deployment.

Revenue by Industry In the 2014 Financial Year

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

Significant Changes In The State Of Affairs

• On 30th September, 2013 Empired Limited acquired 100% of shares in OBS Pty Ltd for 17,984,332.
• On 16th May, 2014 Empired Limited acquired 100% of shares in eSavvy Pty Ltd for $2,243,650.
• 25,000,000 shares were issued during the year as part of the purchase price to acquire OBS Pty Limited.
• 2,150,000 employee options were exercised during the year.

Events Subsequent To Reporting Date
There are no events to report subsequent to reporting date.

Environmental Regulation
The consolidated entity’s operations are not subject to any significant environmental regulations under
a law of the Commonwealth or State or Territory in Australia.

—

EMPIRED LTDFinancial Position
The net assets of the consolidated group have
increased by $19,200,634 from 30 June 2013 to
$34,466,316. This is largely due to the following
factors:

• The acquisition of OBS Pty Ltd and eSavvy

Pty Ltd

• Improved operating performance of the group
• Proceeds from the exercise of options
• Issue of shares

During the past three financial years, the group
has invested in infrastructure to secure its long-
term success. In particular, strategic investments
have been made in growth by acquisition as
well as expanding investment in key business
segments. The Company’s holdings in associated
companies and joint venture entities have
increased by $20,227,984 to $30,267,072.

Dividends
The Directors recommend that a final fully
franked dividend of 1 cents per share (2013: 0.50),
amounting to $959,180 be recorded on 7 October,
2014 and paid to shareholders on 21 October 2014.

Operating Results for the Year
The net profit after tax from continuing operations
for the year for the consolidated entity is $3,793,491
(2013: $1,549,840). To refer to the operational
results within the Chairman and CEO report.

Likely Developments
Except as detailed in the Chairman and Managing
Director’s Review on pages 9 to 15, 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 and Performance Rights

Share Options and Performance Rights Granted
to Directors and Officers
Performance Rights were granted to the
Managing Director under the Long Term Incentive
Plan approved by shareholders at the AGM held
on the 31st of October 2013. Performance Rights
were also granted to Executive Officers under the
Long Term Incentive Plan. Information relating to
this grant is at note 13 to the financial statements.

Unissued Shares
At the date of this report, there were 900,000
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
2,150,000 share options were exercised during the
financial year, refer to note 18 for details.

Share Issues During The Year
25,000,000 shares were issued during the year
to raise capital for the acquisition of OBS Pty Ltd,
refer to note 18 for details.

Auditor's Independence Declaration
The lead auditor’s Independence Declaration for the
year ended 30 June 2014 has been received and can
be found on page 98 of the financial report.

Non-Audit Services
Grant Thornton Audit Pty Ltd was engaged to
perform the due diligence of OBS Pty Ltd and
eSavvy Limited prior to acquisition and appointed
to provide tax compliance services (2013: nil).

The directors in accordance with the advice
from the audit committee are satisfied that non-
audit services provided during the year did not
compromise the external auditors independence
in accordance with APES 110:Code of Ethics for
Professional Accountants set by the Accounting
Professional and Ethical Standards Board.

Indemnities Given And Insurance Premiums Paid
To Auditors And Officers
During the year, Empired Limited paid a premium
to insure officers of the Group. The officers of the
Group covered by the insurance policy include all
Directors.

The liabilities insured are legal costs that may be
incurred in defending civil or criminal proceedings
that may be brought against the officers in their
capacity as officers of the Group, and any other
payments arising from liabilities incurred by the
officers in connection with such proceedings,
other than where such liabilities arise out of
conduct involving a wilful breach of duty by the
officers or the improper use by the officers of
their position or of information to gain advantage
for themselves or someone else to cause
detriment to the Group.

—

EMPIRED LTD
Contracted Revenue In the 2014 Financial Year

$60,000,000

$50,000,000

$40,000,000

$30,000,000

$20,000,000

$10,000,000

FY11

ADDITIONAL PROJECTS FROM MULTI YEAR CONTRACTS

MULTI YEAR CONTRACTS

NEW CLIENTS/INDIVIDUAL CONTRACTS’

FY12

FY13

FY14

Details of the amount of the premium paid in
respect of the insurance policies is not disclosed
as such disclosure is prohibited under the terms
of the contract.

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:

The Group has not otherwise, during or since the
end of the financial year, except to the extent
permitted by law, indemnified or agreed to
indemnify any current or former officer or auditor
of the Group against a liability incurred as such by
an officer or auditor.

Proceedings On Behalf Of The Company
No person has applied for leave of court to
bring proceedings on behalf of the Company
or intervene in any proceedings to which the
Company is a party for the purpose of taking
responsibility on behalf of the Company for all or
any part of those proceedings.

The Company was not a party to any such
proceedings during the year.

Remuneration Report (Audited)
This report outlines the remuneration
arrangements in place for Non-Executive
Directors, the Executive Director and other Key
Management Personnel of Empired Limited
(the Company), prepared in accordance with
the Corporation Act 2001 and Corporations
Regulations 2001.

Remuneration Philosophy
The performance of the Company depends upon
the quality of its Directors and executives.

• 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; and
• 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.

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

—

ANNUAL REPORT 2014calibre, whilst incurring a cost that is acceptable
to shareholders.

a level and mix of remuneration commensurate
with their position and responsibilities within the
Company and so as to:

Structure
The constitution and the ASX Listing Rules specify
that the aggregate remuneration of non-executive
Directors shall be determined from time to 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, the
Executive Director and other Key Management
Personnel for the period ended 30 June 2014 is
detailed in Table E.

B. EXECUTIVE REMUNERATION
Objective
The Company aims to reward executives with

• Reward executives for Company, business unit

and individual performances against targets set
by reference to appropriate benchmarks;

• Align the interests of executives with those of

shareholders;

• Link rewards with the strategic goals and

performance of the Company; and

• Ensure total remuneration is competitive by

market standards.

Structure
In determining the level of remuneration paid
to senior executives of the Company, the Board
took into account available benchmarks and prior
performance.

Remuneration consists of the following key elements:

• Fixed Remuneration
• Variable Remuneration

• Short Term Incentive (STI); and
• Long Term Incentive (LTI).

The proportion of fixed remuneration and variable
remuneration (potential short term and long term
incentives) is established for each senior executive by
the Board. Table 1 below details the fixed and variable
components (%) of the executives of the Company.

Revenue by Segment In the 2014 Financial Year

—

EMPIRED LTD

Fixed Remuneration
Objective
Fixed remuneration is reviewed annually by the Board. The process consists of a review of Company
wide, business unit and individual performance, relevant comparative remuneration in the market and
internally, and where appropriate, external advice on policies and practices. As noted above, the Board
has access to external advice independent of management.

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 for 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 2014 financial year 96% of the STI cash bonus has been
paid to executives (2013: 11%).

Variable Pay - Long Term Incentive (LTI)
Objective
The objective of the LTI plan is to reward senior executives in a manner that aligns this element of
remuneration with the creation of shareholder wealth.

As such, LTI grants are only made to executives who are able to influence the generation of shareholder
wealth and thus have a direct impact on the Group’s performance against the relevant long term
performance hurdle.

Structure
LTI grants to executives are delivered in the form of performance rights (2013: performance rights).

Table F below provides details of performance rights and options granted and the value of equity
instruments granted, exercised and lapsed during the year. The performance rights were issued free of
charge. Each performance right entitles the holder to subscribe for one fully paid ordinary share in the
entity based on achieving vesting conditions at a nil exercise price. For further details of the terms and
conditions including the service and performance criteria that must be met refer to note 13.

Consequence of performance on shareholder wealth
In considering the Group’s performance and benefits for shareholder wealth, the Board have regard to
the following indices in respect of the current financial year and the previous four financial years:

Item

2014

2013

2012

2011

2010

EPS (cents)
Dividends (cents per share)
Net profit/(loss) ($000)
Share price ($)

4.3266
1.00
3,793
0.60

2.3640
0.50
2,137
0.62

2.5876
-
1,273
0.22

0.4358
-
202
0.28

0.1000
0.75
47
0.08

—

ANNUAL REPORT 2014
C. KEY MANAGEMENT PERSONNEL
(i) Directors
The following persons were directors of Empired Limited during the financial year:

• M Ashton
• R Bevan
• J Bardwell
• R Baskerville

(ii) 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)
• R McCready (Chief Operating Officer)

(iii) Remuneration Of Key Management Personnel
Information regarding key management personnel compensation for the year ended 30 June 2014 is
provided in the remuneration section of the directors’ report on pages 23 to 29.

(iv) Option Holdings Of Directors And Executives
The movement during the reporting period in the number of options over ordinary shares in Empired
Limited held, directly, indirectly or beneficially, by each of the key management person, including their
related parties, is as follows:

Balance
at beg of
period
01-Jul-13

Granted as
Remuneration

Options
Exercised/
disposed

Net
Change
Other

Balance
at end of
period
30-Jun-14

Not Vested
& Not
Exercisable

Vested &
Exercisable

30 June 2014

Directors

R. Baskerville
M. Ashton
R. Bevan
J. Bardwell

-
-
-
500,000

Executives

M. Waller
R McCready

1,150,000
750,000

Total

2,400,000

-
-
-
-

-
-

-
-
-
(500,000)

(1,150,000)
(250,000)

(1,900,000)

-
-
-
-

-
-

-
-
-
-

-
500,000

500,000

-
-
-
-

-
-

-
-
-
-

-
250,000

250,000

(v) Shareholdings of Directors and Executives
Shares held in Empired Limited

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.

—

EMPIRED LTD

30 June 2014

Balance 01-Jul-13

Granted as
Remuneration

On Exercise
of Options

Net Change
Other

Balance 30-June-14

Ord

Pref

Ord

Pref

Ord

Pref Ord

Pref

Ord

Pref

Directors

R. Baskerville
M. Ashton
R. Bevan
J. Bardwell

9,097,233
-
-
4,099,904

Total

13,197,137

Executives

M. Waller
R. McCready

1,343,070
200,000

Total

1,543,070

-
-
-
-

-
-

-
-
-
-

-
-

-
-
-
-

-
-

-
-
-
-

-
-

-
-
-
-

-
-

-
-
-
-

-
-

-
-
-
-

-
-

9,097,233
-
-
4,099,904

13,197,137

1,343,070
200,000

1,543,070

-
-
-
-

-
-

Mark Waller – Company Secretary and Chief
Financial Officer
Terms of Agreement – commenced 18 April 2005,
until terminated by either party.
Salary – base $307,237 per annum with an
additional STI cash bonus capped at $92,171 and
LTI bonus capped at $ 76,809.
Termination – one month’s written notice or one
month’s remuneration in lieu.

Rob McCready – Chief Operating Officer
Terms of Agreement – commenced 3 October
2011, until terminated by either party.
Salary – base $305,205 per annum with an
additional STI cash bonus capped at $92,171 and
LTI bonus capped at $ 76,809.
Termination – one month’s written notice or one
month’s remuneration in lieu.

D. SERVICE AGREEMENTS
Russell Baskerville – Managing Director
Terms of Agreement – commenced 1 July 2005,
until terminated by either party.
Salary – base $360,000 per annum with an
additional STI cash bonus capped at $180,188
based on achievement of targets set by the Board
of Directors and LTI bonus capped at $108,133.
Termination – three months written notice or
three months remuneration in lieu.

Mel Ashton – Chairman
Terms of Agreement - appointed 21 December
2005, until terminated by either party.
Fee – fixed $75,000 per annum.

Richard Bevan – Non Executive Director
Terms of Agreement – appointed 31 January 2008,
until terminated by either party.
Fee – fixed $50,115 per annum.

John Bardwell – Non Executive Director
Terms of Agreement – appointed 26 September
2011, until terminated by either party.
Fee – fixed $50,000 per annum.

—

ANNUAL REPORT 2014

E. DETAILS OF REMUNERATION
Details of the nature and amount of each element of the remuneration of each Key Management
Personnel (`KMP’) of Empired Limited are shown in the table below:

Name of Employee

Year

Short Term Benefits

Post
Employment

Long Term
Benefits (LTI)

Total

Perfomance
Related %

Salary &
Fees

Cash STI

Superannuation

Equity Options

Non-executive Directors

M. Ashton
Non-Executive Chairman

2014
2013

75,000
75,000

R. Bevan
Non-Exectuive Director

2014
2013

45,872
45,872

J. Bardwell
Non-Executive Director

2014
2013

50,000
50,000

-
-

Executive Directors

R. Baskerville
Chief Executive

2014
2013

360,000
360,000

180,188
-

-
-

4,243
4,128

-
-

75,000
75,000

50,115
50,000

50,000
50,000

-
-

106,650
37,612

646,838
397,612

44.35%
9.46%

Key Management

M. Waller
Company Secretary and
Chief Financial Officer

2014
2013

306,987
269,045

92,171
20,000

28,419
24,455

48,600
28,406

476,177
341,906

29.57%
14.16%

R. McCready
Chief Operating Officer

2014
2013

298,341
260,753

78,345
20,000

27,596
23,468

48,600
28,406

452,882
332,627

28.03%
14.55%

F. OTHER INFORMATION
Options and Performance Rights granted as part of remuneration

2014

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

Non-Executive
Directors

M. Ashton
R. Bevan
J. Bardwell

-
-
-

Executive
Directors

R. Baskerville

31/10/2013

900,000

$0.78

106,650

16.49%

Key
Management

M. Waller
R. McCready

24/03/2014
24/03/2014

600,000
600,000

$0.53
$0.53

48,600
48,600

10.21%
10.74%

—

EMPIRED LTD

2013

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

Non-Executive
Directors

M. Ashton
R. Bevan
J. Bardwell

-
-
-

Executive
Directors

R. Baskerville

29/11/2012

600,000

$0.40

37,612

9.46%

Key
Management

M. Waller
R. McCready

10/04/2013
10/04/2013

375,000
375,000

$0.505
$0.505

28,406
28,406

8.82%
9.09%

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

Ordinary Shares

Options

Performance Rights

Russell Baskerville

9,097,233

Mel Ashton

Richard Bevan

John Bardwell

4,099,904

1,500,000

Key Management

Ordinary Shares

Options

Performance Rights

Mark Waller

Rob McCready

1,343,070

200,000

500,000

975,000

G. VOTING AND COMMENTS MADE AT THE COMPANY’S 2013 ANNUAL GENERAL MEETING

Empired Limited received 100% of “yes” votes on its remuneration report for the 2013 financial year.
The Company did not receive any specific feedback at the AGM on its remuneration report

Signed in accordance with a resolution of Directors.

Russell Baskerville
Managing Director & CEO

27th August 2014

—

ANNUAL REPORT 2014
Case Study:
Infrastructure Services

“Empired is providing demonstrable returns in the way of

efficiency of operations and reduced risks.”

“Empired is providing demonstrable returns in the way

Working with the client, Empired is progressively

of efficiency of operations and reduced risks.”

implementing key ITIL processes which are providing

demonstrable returns in the way of efficiency of

Our client, the organisation responsible for Western

operations and reduced risks.

Australia’s highways and roads, required a provider

of services to operate and maintain their core IT

Over the next five years our client will work with

infrastructure. This infrastructure included a fibre optic

Empired as a critical partner to deliver, implement and

network, a range of real time SCADA systems and two

support their systems for both their corporate network

high availability data centres with over 750 servers.

and rapidly growing traffic control systems network.

To ensure high performance of the WA road network

and safe and efficient transport and logistics across the

entire state, a seamless IT infrastructure operation is

critical. Our client requires a partner that is reliable as

well as innovative and able to support the operation of

one of the state’s most critical assets.

Empired’s Infrastructure Services team is responsible

for managing the core IT Infrastructure covering Service

Management, Desktop, Server, Communications/

Networking and a 24/7 Service Desk. Based on a

detailed understanding of the client’s requirements,

Empired provides architectural guidance and project

roadmaps to the organisation.

—

EMPIRED LTDCase Study:
Applications & Consulting

“The solution is now in use across multiple sites and has

transformed what was languishing, inconsistent data into a

critical data asset within the organisation.”

“The solution is now in use across multiple sites and has

The solution was deployed using Empired’s proven agile

transformed what was languishing, inconsistent data into

development methodology which allowed for client

a critical data asset within the organisation.”

use and review at specified milestones throughout the

project. This meant regular feedback could be provided

Our client, a large integrated resources business,

from the client and quickly incorporated into the next

managed water, extraction and used information in an

phase, reducing issues with the production environment

ad-hoc manner, with the information being stored in

and the need for rework. Interactive communication

a number of systems as well as in hard copy. Multiple

between the client and Empired’s team ensured a

systems meant that the data was often difficult to

collaborative approach and an acceptance of the project

access and inconsistent, which made analysis and

within the business as it was felt that the project was

reporting both time consuming and costly.

being driven internally.

Our client required a platform for managing bore and

The solution is now in use across multiple sites and has

water information across the entire business, as well

transformed what was languishing, inconsistent data

as a strategy and process for migrating their existing

into a critical asset within the organisation. The benefits

information and driving the adoption of the new system

to the business have been enormous with field and

across the business.

office workers able to enter, validate and analyse data

in real time through a rich web interface incorporating

Empired’s Applications & Consulting team worked

business intelligence dashboards. Reporting is now a

intimately with the client to gain a full understanding of

simple process with a focus on providing highly valuable

the operational context in which the solution needed to

and well thought out information to the business,

be deployed. This provided valuable insights into the

where previously most of the time and effort was used

challenges the client was facing, the challenges that

collating and validating the data.

change may bring and most importantly, the criticality

of the information being managed.

—

ANNUAL REPORT 2014Case Study:
Microsoft Business Solutions

“The solution exceeded expectations by saving time and

money as well as providing a more accurate and consistent

view of critical information.”

“The solution exceeded expectations by saving time

Our client now has the capability to locate information

and money as well as providing a more accurate and

across the life-cycle of a property and having a

consistent view of critical information.”

centralised source of truth allows them to make more

effective decisions across multiple projects. The entire

Our client, a world leading global food service retailer

property process from end to end is managed in one

and property management Company , identified the

system ensuring that everything is done in compliance

need to consolidate all information relating to various

with council regulations, and all activities are monitored

stages of their property development. Their existing

and recorded.

systems made accessing specific data challenging

as individual store information was held on manual

The solution exceeded the clients expectations by saving

databases and spreadsheets.

time and money as well as providing a more accurate

and consistent view of critical information. There is

Our client required a single management solution to

improved visibility for projects, improved reporting, and

replace paper based processes and satellite software

all project information is centrally stored and managed.

applications. The main objective was to implement a

solution based in SharePoint which provided a secure

and effective system with a single point of reference.

Empired’s Microsoft Business Solutions team

implemented a solution based on Dynamics CRM,

SharePoint and SQL Server which provides operational

and executive reporting management and budgeting

functionality. The system is a single information hub for

time critical activities and communication as well as a

data and documentation repository for stakeholders

across a variety of business units.

—

EMPIRED LTDANDY PIC HERE

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.

BOARD
RESPONSIBILITIES

COMPANY

OBJECTIVE

COMPLIANCE

DIRECTION

ETHICAL
STANDARDS

STRATEGY

FINANCE

PROTECT RIGHTS &
INTERESTS OF SHAREHOLDERS

REGULATORY
REQUIREMENTS

—

EMPIRED LTDPRINCIPLE 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, executives including
executive directors were evaluated against
Board approved budgets and key performance
indicators which were approved by the Board as
part of the annual planning process.

PRINCIPLE 2 – Structure Of The Board To Add Value.

with this recommendation during the 2014
financial year. 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 15-17.

In considering whether a Director is independent
the Board considers:

• The criteria for assessing the independence

of a Director in the ASX Corporate
Governance Council’s “Principles of Good
Corporate Governance and Best Proactive
recommendations”;

• Any information, facts or circumstances that

the Board considers relevant; and

• Any materiality thresholds, standards or

guidelines that the Board may adopt from
time to time.

Recommendation 2.2 – The chair should be an
independent Director.

During 2014 the chairman of the Board of
Directors was Mel Ashton. Mel 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. Russell Baskerville is
Managing Director and Mel Ashton is Chairman of
the Board.

The names of the members of the Board as at the
date of this report are as follows:

Recommendation 2.4 – The Board should
establish a nomination committee.

• Mel Ashton (Chairman) - Independent

Non-Executive Director

• Russell Baskerville - Managing Director & CEO
• John Bardwell - Independent

Non-Executive Director

• Richard Bevan - Independent

Non-Executive Director

Currently no formal committee to the Board has
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.

Recommendation 2.1 – A majority of the Board
should be independent Directors.

The Board intends to reconsider the requirement
for and benefits of a separate committee as the
Company’s operations grow and evolve.

The Board comprises of four directors who
are appointed to ensure that the Company is
run in the best interest of the shareholders.
Of those four directors, two are independent.
Russell Baskerville is an executive Director and
is not classified as independent. John Bardwell
previously worked in the executive management
team of the Company and has a substantial
shareholding in the Company and is not classified
as independent. The Company has not complied

Recommendation 2.5 – Companies should
disclose the process for evaluating the
performance of the Board, its committees and
individual Directors.

There is currently no formal process in place
to evaluate the performance of the Board, its
committees and individual Directors. A review of
the performance of the Board and its Directors is

—

ANNUAL REPORT 2014The Board strongly believes in the

importance of effective communication

with shareholders to ensure their access

to timely and relevant information.

—

EMPIRED LTDundertaken by each Director with respect to each
other and the performance of the Board itself.

2014

WOMEN ON THE BOARD

WOMEN IN SENIOR
MANAGEMENT ROLES

WOMEN EMPLOYEES
IN THE COMPANY

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 Company human resources policies ensure
that Company assets are used appropriately for
business purposes, confidential information is
maintained as confidential and parties act so
as to no conflict with the Company’s interests.
The code of conduct adopted is available on the
Company’s website www.empired.com.

Recommendation 3.2 – Companies should
establish a policy concerning diversity and
disclose the policy or a summary of that policy.
The policy should include requirements for the
board to establish measurable objectives for
achieving gender diversity and for the board to
assess annually both the objectives and progress
in achieving them.

The Company has a policy in place to:

• Ensure all employees are treated fairly and

with respect;

• Attract, develop and retain the right employees;
• Build an environment where all employees can
be successful without bias by race, gender,
religion, age, culture or lifestyle choices;

• Ensure all employees are treated and
evaluated according to their ability,
qualifications and aptitude.

No.

2015-2016

WOMEN ON THE BOARD

WOMEN IN SENIOR
MANAGEMENT ROLES

WOMEN EMPLOYEES
IN THE COMPANY

No.

As at June 30 16% of the Company’s workforce
was female. There are no females on the Board
of Empired and 20% of the Senior Management
team are female. The Board are committed
to driving diversity through the Company’s
workforce. The Board’s goal is to increase these
figures annually taking into account the adopted
policy summarised above.

PRINCIPLE 4 – Safeguard Integrity Of Financial
Reporting.

Recommendation 4.1 – The Board should
establish an Audit Committee.

The Board has an established 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 four members. The Company
has not complied with this recommendation.

Recommendation 4.3 – The Audit Committee
should have a formal charter.

The Company’s policy is reviewed, measured and
reported to the Board annually.

An Audit Committee charter has been established
setting out the role and responsibilities, composition

—

ANNUAL REPORT 2014structure, membership requirements and the
manner in which the committee is to operate. This
charter is available on the Company website.

Empired has in place a written communications
with shareholders policy which is available on the
Company website.

PRINCIPLE 5 – Make Timely And Balanced
Disclosure.

Recommendation 5.1 – Companies should
establish written policies and procedures
designed to ensure compliance with ASX listing
rule disclosure requirements and to ensure
accountability at senior management level for
that compliance and disclose of those policies or
a summary of those policies.

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

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

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

Recommendation 7.2 – The Board should require
management to design and implement the risk
management and internal control system to
manage the Company’s material business risks
and report to it on whether those risks are being
managed to the effectiveness of the Company’s
management of its material business risks.

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.

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 identified risks.

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 2014.

—

EMPIRED LTDPRINCIPLE 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
efficiency 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
matters that would normally fall to the remuneration committee.

Recommendation 8.2 – The remuneration committee should be structured such that it:

• Consists of a majority independent Directors
• Is chaired by an independent chair
• Has at least three members

Recommendation 8.3 – 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.

EMPIRED, AS A WHOLE, ARE SUPPORTED
BY VALUES AND BEHAVIOURS.

Having this support allows us to be a high
performance IT Services company. We deliver value
through initiative, innovation and growth.

Values

• Dedication to excellence

• People are the foundation of our success

• Integrity in all our dealings

• Achievement through collaboration

Behaviours

• Understanding our customer business

• Disciplined, pragmatic delivery leading to remarkable customer experiences

• Beneficial relationships with industry and partners

• Sense of empowerment, demonstrated initiative

• Passionate about self development, learning and growth

• Sense of urgency, ownership and accountability

• Demonstrated flexibility and agility

• Ethical, value-driven business dealings

—

ANNUAL REPORT 2014

Checklist of Corporate Governance Principles and Recommendations

Principles & Recommendations

Compliance

Principle 1: Lay solid foundations for management and oversight

1.1

1.2

Establish the functions reserved to the Board and those delegated to Senior Executives and disclose those functions.

Disclose the process for evaluating the performance of Senior Executives.

Principle 2: Structure the Board to add value

2.1

2.2

2.3

2.4

2.5

A majority of the Board should be Independent Directors.

The chair should be an Independent Director.

The roles of the Chair and Chief Executive Officer should not be exercised by the same individual.

The Board should establish a Nomination Committee.

Disclose the process for evaluating the performance of the Board, its Committees, and individual Directors.

Principle 3: Promote ethical and responsible decision-making

3.1

Establish a code of conduct and disclose the code or a summary of the code as to:

• The practices necessary to maintain confidence in Company’s integrity.
• The practice necessary to take into account their legal obligations and the reasonable expectations of

stakeholders; and

• The responsibility and accountability of individuals for reporting and investigating reports of unethical practices.

3.2

3.3

3.4

Companies should establish a policy concerning diversity and disclose the policy or a summary of that policy. The
policy should include requirements for the Board to establish measurable objectives for achieving gender diversity
for the Board to assess annually both the objectives and the progress in achieving them.

Companies should disclose in each Annual Report the measurable objectives for achieving gender diversity set by
the Board in accordance with the diversity policy and progress towards achieving them.

Companies should disclose in each Annual Report the proportion of women employees in the whole organisation,
women in senior executive positions and women on the Board.

Principle 4: Safeguard integrity in financial reporting

4.1

The Board should establish an Audit Committee.

4.2

Structure the Audit Committee 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 the Chair of the Board; and
• Has at least three (3) members.

4.3

The Audit Committee should have a formal charter.

Principle 5: Make timely and balanced disclosure

5.1

Establish written policies and procedures designed to ensure compliance with ASX Listing Rule disclosure
requirements and to ensure accountability at a Senior Executive level for that compliance and disclose those
policies or a summary of those policies.

Principle 6: Respect the rights of shareholders

6.1

Design a Communications Policy for promoting effective communication with shareholders and encouraging their
participation at General Meetings and disclose the policy or a summary of the policy.

Principle 7: Recognise and manage risk

7.1

7.2

7.3

Establish policies for the oversight and management of material business risks and disclose a summary of those policies.

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
effectively. The Board should disclose that management has reported to it as to the effectiveness of the Company ’s
management of its material business risks.

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.

Principle 8: Remunerate fairly and responsibly

8.1

The Board should establish a remuneration committee.

8.2

The remuneration committee should be structured so that it:

• consists of a majority of Independent Directors.
• is chaired by an Independent Chair.
• has at least three (3) members.

8.3

Clearly distinguish the structure of Non-Executive Directors’ remuneration from that of Executive Directors and
Senior Executives.

—

YES

EMPIRED LTDConsolidated Statement of Profit or Loss

and other Comprehensive Income

For The Year Ended 30 June 2014

Revenue

Cost of Sales

Gross Profit

Other Income

Administration expenses

Marketing expenses

Occupancy expenses

Finance costs

Other expenses

Profit before income tax

Income tax expense

Profit for the year

Other comprehensive income

for the period, net of income tax

Notes

2014

2013

66,798,695

46,498,244

(45,805,277)

(33,565,921)

20,993,418

12,932,323

2,125,562

54,089

(14,816,092)

(8,700,955)

(170,028)

(73,370)

(2,474,585)

(1,076,390)

(802,190)

(530,955)

(473,289)

(683,647)

4,325,130

1,978,761

(531,639)

(428,921)

3,793,491

1,549,840

Total comprehensive income for the period

3,793,491

1,549,840

Earnings per share (cents per share)

Basic earnings per share

Diluted earnings per share

Notes

2014

2013

4.3266

4.2574

2.3640

2.2069

This Statement of Profit or Loss and other Comprehensive Income should be read in conjunction with the

accompanying notes.

—

EMPIRED LTDConsolidated Statement

of Financial Position

As At 30 June 2014

Notes

2014

2013
(Restated)

1-Jul-12
(Restated)

8,062,006

11,134,232

3,254,637

784,062

2,085,913

5,841,882

1,601,992

1,199,811

1,393,716

9,765,075

1,419,211

270,675

23,234,937

10,729,598

12,848,677

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

12,785,700

27,801,166

7,999,000

11,661,706

828,230

4,088,348

4,170,958

452,109

2 (b) (iii), 5

2,226,705

Total Non-Current assets

42,813,571

20,488,936

8,711,415

TOTAL ASSETS

LIABILITIES

Current Liabilities

Trade and other payables

Borrowings

Provisions

Total Current Liabilities

Non-Current Liabilities

Borrowings

Provisions

Deferred tax liability

66,048,508

31,218,534

21,560,092

12,389,120

3,464,781

1,999,040

7,182,271

1,874,360

1,090,922

7,596,850

511,416

991,500

17,852,941

10,147,553

9,099,766

10,579,829

4,010,807

358,426

2,790,996

172,374

1,622,118

554,095

95,346

514,928

Total Non-Current Liabilities

13,729,251

5,805,299

1,164,369

TOTAL LIABILITIES

31,582,192

15,952,852

10,264,135

NET ASSETS

EQUITY

Issued capital

Reserves

Retained profits

TOTAL EQUITY

34,466,316

15,265,682

11,295,957

24,362,663

8,779,678

711,604

461,126

2 (b) (iii)

9,392,049

6,024,878

6,456,310

407,336

4,432,311

34,466,316

15,265,682

11,295,957

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

—
—

43
43

ANNUAL REPORT 2014ANNUAL REPORT 2014
Consolidated Statement of Cash Flows

For The Year Ended 30 June 2014

Cash flows from operating activities

Receipts from customers

Payments to suppliers and employees

Borrowing costs

Income tax paid

Interest received

Notes

2014

2013

65,004,969

50,144,238

(59,879,767)

(43,308,824)

(735,276)

756,057

125,562

(383,126)

(919,919)

54,762

Net cash flows from operating activities

5,271,545

5,587,131

Cash flows from investing activities

Purchase of property, plant and equipment

Acquisition of subsidiaries net of cash

Deferred payment in relation to business acquisition of

(6,254,678)

(4,985,338)

(14,555,814)

(3,361,823)

prior year

(1,743,000)

Net cash flows (used in) investing activities

(22,553,492)

(8,347,161)

Cash flows from financing activities

Proceeds from issue of shares

Repayment of borrowings

Repayment of finance lease liabilities

Dividends Paid

Proceeds from borrowings

Net cash flows from financing activities

Net increase in cash and cash equivalents

Cash and cash equivalents at beginning of period

15,329,643

(3,086,147)

(849,464)

(339,591)

1,073,368

(1,127,824)

(762,875)

12,203,599

4,269,558

23,258,040

3,452,227

5,976,093

2,085,913

692,197

1,393,716

Cash and cash equivalents at end of period

8,062,006

2,085,913

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

—

EMPIRED LTD

Consolidated Statement

of Changes in Equity

For The Year Ended 30 June 2014

Issued
Capital

Retained
Earnings

Employee
Equity Benefits
Reserve

Total
Equity

Balance at 30 June 2012 (restated)

6,456,310

4,432,311

407,336

11,295,957

Total comprehensive income for the period

1,549,840

Exercise of options

Cost of share-based payments

Shares Issued during the year

1,080,000

1,250,000

Effect of change in accounting policy

42,727

Transaction Cost

(6,632)

1,549,840

1,080,000

53,790

1,250,000

42,727

(6,632)

Balance at 30 June 2013 (restated)

8,779,678

6,024,878

461,126

15,265,682

Prior period adjustment

Total comprehensive income for the period

Dividends

Exercise of options

Cost of share-based payments

Shares Issued during the year

Transaction cost

(86,729)

3,793,491

(339,591)

670,000

15,500,000

(587,015)

250,478

(86,729)

3,793,491

(339,591)

670,000

250,478

15,500,000

(587,015)

Balance at 30 June 2014

24,362,663

9,392,049

711,604

34,466,316

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

—
—

45
45

ANNUAL REPORT 2014ANNUAL REPORT 20141. Corporate Information

The financial report of Empired Ltd for the year ended 30 June 2014 was authorised for issue in accordance with a

resolution of the Directors on 25 August 2014.

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) General information and statement of compliance
The consolidated general purpose financial statements of the Group have been prepared in accordance with the

requirements of the Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements

of the Australian Accounting Standards Board. Compliance with Australian Accounting Standards results in full

compliance with the International Financial Reporting Standards (‘IFRS’) as issued by the International Accounting

Standards Board (IASB). Empired Limited is a for-profit entity for the purpose of preparing the financial statements.

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) New and revised standards that are effective for these financial statements
A number of new and revised standards are effective for annual periods beginning on or after 1 July 2013.

Information on these new standards is presented below.

(i) AASB 10 Consolidated Financial Statements
AASB 10 supersedes AASB 127 Consolidated and Separate Financial Statements (AASB 127) and AASB

Interpretation 112 Consolidation - Special Purpose Entities. AASB 10 revises the definition of control and provides

extensive new guidance on its application. These new requirements have the potential to affect which of the

Group’s investees are considered to be subsidiaries and therefore to change the scope of consolidation. The

requirements on consolidation procedures, accounting for changes in non-controlling interests and accounting for

loss of control of a subsidiary are unchanged.

Management has reviewed its control assessments in accordance with AASB 10 and has concluded that there

is no effect on the classification (as subsidiaries or otherwise) of any of the Group’s investees held during the

period or comparative periods covered by these financial statements.

(ii) AASB 11 Joint Arrangements
AASB 11 supersedes AASB 131 Interests in Joint Ventures (AAS 131) and AASB Interpretation 113 Jointly

Controlled Entities- Non-Monetary-Contributions by Venturers. AASB 11 revises the categories of joint

arrangement, and the criteria for classification into the categories, with the objective of more closely aligning

the accounting with the investor’s rights and obligations relating to the arrangement. In addition, AASB 131’s

option of using proportionate consolidation for arrangements classified as jointly controlled entities under that

Standard has been eliminated. AASB 11 now requires the use of the equity method for arrangements classified as

joint ventures (as for investments in associates).

The Group’s does not maintain any joint arrangement within the scope of AASB 11. The application of AASB 11 did

not have a material impact on the Company.

—

Notes to the Financial StatementsFor The Year Ended 30 June 2014EMPIRED LTDI. AASB 12 Disclosure of interests in Other Entities
AASB 12 integrates and makes consistent the disclosure

• Change the measurement and presentation of

certain components of the defined benefit cost.

requirements for various types of investments, including

The net amount in profit or loss is affected by the

unconsolidated structured entities. It introduces new

removal of the expected return on plan assets and

disclosure requirements about the risks to which an entity is

interest cost components and their replacement by

exposed from its involvement with structured entities.

a net interest expense or income based on the net

II. Consequential amendments to AASB 127
Separate Financial Statements and AASB 128
Investments in Associates and Joint Ventures
AASB 127 now only addresses separate financial

defined benefit asset or liability; and

• Enhance disclosures, including more information

about the characteristics of defined benefit plans

and related risks.

statements. AASB 128 brings investments in joint

Under the amendments, employee benefits ‘expected

ventures into its scope. However, AASB 128’s equity

to be settled wholly’ (as opposed to ‘due to be settled’

accounting methodology remains unchanged.

under the superseded version of AASB 119) within

12 months after the end of the reporting period are

III. AASB 13 Fair Value Measurement
AASB 13 clarifies the definition of fair value and provides

short-term benefits, and are therefore not discounted

when calculating leave liabilities. As the Group does

related guidance and enhanced disclosures about fair

not expect all annual leave for all employees to be used

value measurements. It does not affect which items are

wholly within 12 months of the end of reporting period,

required to be fair-valued. The scope of AASB 13 is broad

annual leave is included in ‘other long-term benefit’

and it applies for both financial and non-financial items for

and discounted when calculating the leave liability. This

which other Australian Accounting Standards require or

change has had no impact on the presentation of annual

permit fair value measurements or disclosures about fair

leave as a current liability in accordance with AASB 101

value measurements, except in certain circumstances.

Presentation of Financial Statements.

AASB 13 applies prospectively for annual periods

AASB 119 has been applied retrospectively

beginning on or after 1 January 2013. Its disclosure

in accordance with its transitional provisions.

requirements need not be applied to comparative

Consequently, the Group has restated its reported

information in the first year of application. The Group

results in the comparative period presented and

has however included as comparative information the

reported the cumulative effect as at 1 July 2012 as an

AASB 13 disclosures that were required previously by

adjustment to opening equity.

AASB 7 Financial Instruments: Disclosures.

The Group has applied AASB 13 for the first time in the
current year.

(iii) Amendments to AASB 119 Employee Benefits
The 2011 amendments to AASB 119 made a number of

changes to the accounting for employee benefits, the

most significant relating to defined benefit plans. The

amendments:

• Eliminate the ‘corridor method’ and requires the

recognition of re-measurements (including actuarial

gains and losses) arising in the reporting period in

other comprehensive income;

—

ANNUAL REPORT 2014
2. Summary of Significant Accounting Policies (Continued)
The effects of the application of AASB 119 on the statements of financial position at 1 July 2012 and 30
June 2013 are:

Pension & Other
Employee Obligations

Deferred Tax
Assets

Other Components
of Equity

Retained
Earnings

Balance as reported at 1
July 2012

(2,318,923)

470,968

6,863,646

4,388,307

Effect of AASB 119

62,863

(18,859)

44,004

Restated balance at 1 July
2012

(2,256,060)

452,109

6,863,646

4,432,311

Pension & Other
Employee Obligations

Deferred Tax
Assets

Other Components
of Equity

Retained
Earnings

(2,835,361)

865,400

9,240,804

5,938,147

Balance as reported at 30
June 2013

Effect of AASB 119

Brought forward

62,863

(18,859)

61,038

(18,311)

44,004

42,727

Total comprehensive
income for the year

Restated balance at 30
June 2013

(2,711,460)

828,230

9,240,804

6,024,878

The effects of the application of AASB 119 on the statement of financial position at 30 June 2014 are:

Decrease in pension and other employee obligations

Increase in deferred tax liability

Increase in equity

—

30 June 2014

106,567

Notes to the Financial StatementsFor The Year Ended 30 June 2014EMPIRED LTDThe effects of the application of AASB 119 on the statement of comprehensive income for the year
ended 30 June 2013 and 30 June 2014 are:

Increase / (decrease) in total comprehensive income

Statement of Profit or Loss and Other Comprehensive Income

Year to
30-Jun-14

Year to
30-Jun-13

Decrease in employee benefits expense

Decrease in finace costs

Decrease in other financial items

Decrease in tax expense

Increase in profit for the year

Decrease in profit for the year attributable to:

Non-controlling interest

Owners of the parent

Increase in profit for the year

Other Comprehensive Income:

Increase / (decrease) in gain on re-measurement of net defined benefit
liability

Decrease / (increase) in income tax relating to items not reclassified

Increase / (decrease) in other comprehensive income

Increase / (decrease) in total comprehensive income

Increase / (decrease) in total comprehensive income for the year
attributable to:

Non-controlling interest

Owners of the Parent

17,334

61,038

(18,311)

42,727

The application of AASB 119 did not have a material impact on the statement of cash flows and on the earnings per

share for the year ended 30 June 2013 and 30 June 2014.

—

ANNUAL REPORT 20142. Summary of Significant Accounting Policies (Continued)

Accounting standards issued but not yet effective
and not been adopted early by the group

36 Impairment of Assets to require disclosures about

the recoverable amount of impaired assets. The IASB

AASB 9 Financial Instruments
AASB 9 introduces new requirements for the

classification and measurement of financial assets and

noticed however that some of the amendments made

in introducing those requirements resulted in the

requirement being more broadly applicable than

liabilities. These requirements improve and simplify the

the IASB had intended. These amendments to IAS 36

approach for classification and measurement of financial

therefore clarify the IASB’s original intention that the

assets compared with the requirements of AASB 139.

scope of those disclosures is limited to the recoverable

amount of impaired assets that is based on fair value less

Effective date (annual reporting periods beginning on or

costs of disposal. AASB 2013-3 makes the equivalent

after 1 January 2018.

amendments to AASB 136 Impairment of Assets.

The entity has not yet assessed the full impact of

Effective date (annual reporting periods beginning on or

AASB 9 as this standard does not apply mandatorily

after 1 January 2014.

before 1 January 2018 and the IASB is yet to finalise

the remaining phases of its project to replace IAS 39

When these amendments are first adopted for the year

Financial Instruments: Recognition and Measurement

ending 30 June 2015, they are unlikely to have any

(AASB 139 in Australia).

significant impact on the entity given that they are largely

of the nature of clarification of existing requirements.

AASB 2012-3 Amendments to Australian
Accounting Standards – Offsetting Financial
Assets and Financial Liabilities
AASB 2012-3 adds application guidance to AASB 132 to

address inconsistencies identified in applying some of

AASB 2013-4 Amendments to Australian
Accounting Standards – Novation of Derivatives
and Continuation of Hedge Accounting
The amendments in AASB 2013-5 provide an exception

the offsetting criteria of AASB 132, including clarifying

to consolidation to investment entities and require

the meaning of “currently has a legally enforceable right

them to measure unconsolidated subsidiaries at

of set-off” and that some gross settlement systems may

fair value through profit or loss in accordance with

be considered equivalent to net settlement.

AASB 9 Financial Instruments (or AASB 139 Financial

Effective date (annual reporting periods beginning on or

9 has not yet been adopted). The amendments also

after 1 January 2014.

introduce new disclosure requirements for investment

Instruments: Recognition and Measurement where AASB

When AASB 2012-3 is first adopted for the year ending

30 June 2015, there will be no impact on the entitiy as

These amendments apply to investment entities, whose

this standard merely clarifies existing requirements in

business purpose is to invest funds solely for returns

AASB 132.

from capital appreciation, investment income or both.

entities that have subsidiaries.

AASB 2013-3 Recoverable Amount Disclosures
for Non-Financial Assets
These narrow-scope amendments address disclosure

Effective date (annual reporting periods beginning on or

after 1 January 2014.

of information about the recoverable amount of

When these amendments are first adopted for the year

impaired assets if that amount is based on fair value

ending 30 June 2015, they are unlikely to have any

less costs of disposal. When developing IFRS 13 Fair

significant impact on the entity.

Value Measurement, the IASB decided to amend IAS

—

Notes to the Financial StatementsFor The Year Ended 30 June 2014EMPIRED LTD

AASB 2013-7 Amendments to AASB 1038 arising
from AASB 10 in relation to Consolidation and
Interests of Policyholders
AASB 2013-7 removes the specific requirements in relation

AASB 2013-9 Amendments to Australian Accounting
Standards – Conceptual Framework, Materiality and
Financial Instruments (Part C: Financial Instruments)

to consolidation from AASB 1038 Life Insurance Contracts,

These amendments:

which leaves AASB 10 Consolidated Financial Statements as

• add a new chapter on hedge accounting to AASB

the sole source for consolidation requirements applicable to

9 Financial Instruments, substantially overhauling

life insurer entities.

previous accounting requirements in this area;

• allow the changes to address the so-called ‘own credit’

Effective date (annual reporting periods beginning on or

issue that were already included in AASB 9 to be

after 1 January 2014.

applied in isolation without the need to change any

other accounting for financial instruments; and

When this standard is first adopted for the year ending 30 June

• defer the mandatory effective date of AASB 9 from ‘1

2015, there will be no impact on the entity because the parent

January 2015’ to ‘1 January 2017’.

entity does not meet the definition of ‘investment entity’.

Effective date (annual reporting periods beginning on or

AASB 1031 Materiality (December 2013)
The revised AASB 1031 is an interim standard that cross-

after 1 January 2015.

references to other Standards and the Framework for the

The entity has not yet assessed the full impact of these

Preparation and Presentation of Financial Statements (issued

amendments.

December 2013) that contain guidance on materiality. The

AASB is progressively removing references to AASB 1031 in all

Standards and Interpretations, and once all these references

AASB 14 Regulatory Deferral Accounts
AASB 14 permits first-time adopters of Australian Accounting

have been removed, AASB 1031 will be withdrawn.

Standards who conduct rate-regulated activities to continue

Effective date (annual reporting periods beginning on or

accordance with their previous GAAP. Accordingly, an entity

to account for amounts related to rate regulation in

after 1 January 2014.

that applies AASB 14 may continue to apply its previous

GAAP accounting policies for the recognition, measurement,

When these amendments are first adopted for the year

impairment and derecognition of its regulatory deferral

ending 30 June 2015, they are unlikely to have any

account balances. This exemption is not available to entities

significant impact on the entity.

who already apply Australian Accounting Standards.

AASB 2013-9 Amendments to Australian Accounting
Standards – Conceptual Framework, Materiality and
Financial Instruments (Part B: Materiality)
Part B of AASB 2013-9 deletes references to AASB 1031

Effective date (annual reporting periods beginning on or

after 1 January 2016.

When AASB 14 becomes effective for the first time for the year

in various Australian Accounting Standards (including

ending 30 June 2017, it will not have any impact on the entity.

Interpretations).

Effective date (annual reporting periods beginning on or

after 1 January 2014.

AASB 2014-1 Amendments to Australian Accounting
Standards (Part A: Annual Improvements 2010–2012
and 2011–2013 Cycles)
Part A of AASB 2014-1 makes amendments to various

When the revised AASB 1031 is first adopted for the year

Australian Accounting Standards arising from the issuance

ending 30 June 2015, it is unlikely to have any significant

by the International Accounting Standards Board (IASB)

impact on the entity.

of International Financial Reporting Standards Annual

Improvements to IFRSs 2010-2012 Cycle and Annual

Improvements to IFRSs 2011-2013 Cycle.

—

ANNUAL REPORT 20142. Summary of Significant Accounting Policies (Continued)

Among other improvements, the amendments arising

service using the same attribution method required by

from Annual Improvements to IFRSs 2010-2012 Cycle:

paragraph 70 of AASB 119 for the gross benefit.

(a) clarify that the definition of a ‘related party’ includes

Effective date (annual reporting periods beginning on or

a management entity that provides key management

after 1 July 2014.

personnel services to the reporting entity (either directly

or through a group entity); and

When these amendments are first adopted for the year

ending 30 June 2015, there will be no material impact on

(b) amend AASB 8 Operating Segments to explicitly

the entitiy.

require the disclosure of judgments made by

management in applying the aggregation criteria.

Among other improvements, the amendments arising

AASB 2014-1 Amendments to Australian
Accounting Standards (Part C: Materiality)
Part C of AASB 2014-1 makes amendments to particular

from Annual Improvements to IFRSs 2011-2013 Cycle

Australian Accounting Standards to delete their references

clarify that an entity should assess whether an acquired

to AASB 1031 Materiality, which historically has been

property is an investment property under AASB 140

referenced in each Australian Accounting Standard.

Investment Property and perform a separate assessment

under AASB 3 Business Combinations to determine

Effective date (annual reporting periods beginning on or

whether the acquisition of the investment property

after 1 July 2014.

constitutes a business combination.

When these amendments are first adopted for the year

ending 30 June 2015, there will be no material impact on

When these amendments are first adopted for the year

ending 30 June 2015, there will be no material impact on

the entitiy.

the entity.

AASB 2014-1 Amendments to Australian Accounting
Standards (Part B: Defined Benefit Plans: Employee
Contributions (Amendments to AASB 119)
Part B of AASB 2014-1 makes amendments to AASB 119

Employee Benefits to incorporate the IASB’s practical

AASB 2014-1 Amendments to Australian
Accounting Standards (Part D: Consequential
Amendments arising from AASB 14)
Part D of AASB 2014-1 makes consequential

amendments arising from the issuance of AASB 14.

expedient amendments finalised in International

Effective date (annual reporting periods beginning on or

Financial Reporting Standard Defined Benefit Plans:

after 1 January 2016.

Employee Contributions (Amendments to IAS 19) in

relation to the requirements for contributions from

When these amendments become effective for the first

employees or third parties that are linked to service.

time for the year ending 30 June 2017, they will not have

any impact on the entity.

The amendments clarify that if the amount of the

contributions is independent of the number of years

of service, an entity is permitted to recognise such

contributions as a reduction in the service cost in the

AASB 2014-1 Amendments to Australian Accounting
Standards (Part E: Financial Instruments)
Part E of AASB 2014-1 makes amendments to Australian

period in which the related service is rendered, instead

Accounting Standards to reflect the AASB’s decision

of attributing the contributions to the periods of

to defer the mandatory application date of AASB 9

service. In contrast, if the amount of the contributions is

Financial Instruments to annual reporting periods

dependent on the number of years of service, an entity

beginning on or after 1 January 2018. Part E also makes

is required to attribute those contributions to periods of

amendments to numerous Australian Accounting

—

Notes to the Financial StatementsFor The Year Ended 30 June 2014EMPIRED LTDStandards as a consequence of the introduction of

Chapter 6 Hedge Accounting into AASB 9 and to

amend reduced disclosure requirements for AASB

7 Financial Instruments: Disclosures and AASB 101

Clarification of Acceptable Methods of
Depreciation and Amortisation (Amendments
to IAS 16 and IAS 38)
The amendments to IAS 16 prohibit the use of a

Presentation of Financial Statements.

revenue-based depreciation method for property,

plant and equipment. Additionally, the amendments

Effective date (annual reporting periods beginning on

provide guidance in the application of the diminishing

or after 1 January 2015.

balance method for property, plant and equipment.

The entity has not yet assessed the full impact of

The amendments to IAS 38 present a rebuttable

these amendments.

IFRS 15 Revenue from Contracts with Customers
IFRS 15:

presumption that a revenue-based amortisation

method for intangible assets is inappropriate. This

rebuttable presumption can be overcome (i.e. a

revenue-based amortisation method might be

appropriate) only in two limited circumstances:

• replaces IAS 18 Revenue, IAS 11 Construction

• the intangible asset is expressed as a measure

Contracts and some revenue-related

of revenue, for example when the predominant

Interpretations;

limiting factor inherent in an intangible asset is the

• establishes a new control-based revenue

achievement of a revenue threshold (for instance,

recognition model;

the right to operate a toll road could be based on

• changes the basis for deciding whether revenue is

a fixed total amount of revenue to be generated

to be recognised over time or at a point in time;

from cumulative tolls charged); or

• provides new and more detailed guidance

• when it can be demonstrated that revenue and

on specific topics (e.g., multiple element

the consumption of the economic benefits of the

arrangements, variable pricing, rights of return,

intangible asset are highly correlated.

warranties and licensing);

• expands and improves disclosures about revenue.

The Australian Accounting Standards Board (AASB)

is expected to issue the equivalent Australian

In the Australian context, the Australian Accounting

amendment shortly.

Standards Board (AASB) is expected to issue the

equivalent Australian Standard (AASB 15 Revenue

Effective date (annual reporting periods beginning on

from Contracts with Customers), along with a new

or after 1 January 2016.

Exposure Draft (ED) on income from transactions of

Not-for-Profit (NFP) entities by September 2014.

When these amendments are first adopted for the

year ending 30 June 2017, there will be no material

Effective date (annual reporting periods beginning on

impact on the transactions and balances recognised in

or after 1 January 2017.

the financial statements.

When this standard is first adopted for the year ending

30 June 2018, there will be no material impact on the

transactions and balances recognised in the financial

statements.

Accounting for Acquisitions of Interests in Joint
Operations (Amendments to IFRS 11)
The amendments to IFRS 11 state that an acquirer of

an interest in a joint operation in which the activity of

the joint operation constitutes a ‘business’, as defined

—

ANNUAL REPORT 20142. Summary of Significant Accounting Policies (Continued)

in IFRS 3 Business Combinations, should:

necessary to ensure consistency with the accounting

• apply all of the principles on business combinations

policies adopted by the Group.

accounting in IFRS 3 and other IFRSs except

Profit or loss and other comprehensive income of

principles that conflict with the guidance of IFRS

subsidiaries acquired or disposed of during the year are

11. This requirement also applies to the acquisition

recognised from the effective date of acquisition, or up

of additional interests in an existing joint operation

to the effective date of disposal, as applicable.

that results in the acquirer retaining joint control

of the joint operation (note that this requirement

Non-controlling interests, presented as part of equity,

applies to the additional interest only, i.e. the

represent the portion of a subsidiary’s profit or loss

existing interest is not remeasured) and to the

and net assets that is not held by the Group. The

formation of a joint operation when an existing

Group attributes total comprehensive income or loss

business is contributed to the joint operation by one

of subsidiaries between the owners of the parent and

of the parties that participate in the joint operation;

the non-controlling interests based on their respective

and

ownership interests.

• provide disclosures for business combinations as

required by IFRS 3 and other IFRSs.

The Group applies the acquisition method in accounting

The Australian Accounting Standards Board (AASB) is

for business combinations. The consideration

expected to issue the equivalent Australian amendment

transferred by the Group to obtain control of a

shortly.

subsidiary is calculated as the sum of the acquisition-

date fair values of assets transferred, liabilities

Effective date (annual reporting periods beginning on or

incurred and the equity interests issued by the Group,

after 1 January 2016.

which includes the fair value of any asset or liability

arising from a contingent consideration arrangement.

When these amendments are first adopted for the year

Acquisition costs are expensed as incurred.

ending 30 June 2017, there will be no material impact on

the transactions and balances recognised in the financial

statements.

Business Combinations
The Group recognises identifiable assets acquired and

liabilities assumed in a business combination regardless

of whether they have been previously recognised in the

acquiree’s financial statements prior to the acquisition.

Parent Company and all of its subsidiaries as of 30 June

Assets acquired and liabilities assumed are generally

2014. The Parent controls a subsidiary if it is exposed, or

measured at their acquisition-date fair values.

has rights, to variable returns from its involvement with

the subsidiary and has the ability to affect those returns

Goodwill is stated after separate recognition of

through its power over the subsidiary. All subsidiaries

identifiable intangible assets. It is calculated as the

have a reporting date of 30 June.

excess of the sum of (a) fair value of consideration

transferred, (b) the recognised amount of any non-

All transactions and balances between Group

controlling interest in the acquire, and (c) acquisition-

companies are eliminated on consolidation, including

date fair value of any existing equity interest in the

unrealised gains and losses on transactions between

acquiree, over the acquisition-date fair values of

Group companies. Where unrealised losses on intra-

identifiable net assets. If the fair values of identifiable

group asset sales are reversed on consolidation, the

net assets exceed the sum calculated above, the excess

underlying asset is also tested for impairment from a

amount (i.e. gain on a bargain purchase) is recognised in

group perspective. Amounts reported in the financial

profit or loss immediately.

statements of subsidiaries have been adjusted where

—

Notes to the Financial StatementsFor The Year Ended 30 June 2014EMPIRED LTD(d) Property, plant and equipment
Plant and equipment is stated at cost less accumulated

proceeds and the carrying amount of the item) is

included in profit or loss in the period the item is

depreciation and any impairment in value.

derecognised.

Depreciation is calculated on a diminishing value, except

computer software which is on a straight-line basis, over

(e) Borrowing costs
Borrowing costs are recognised as an expense when

the estimated useful life of the asset as follows:

incurred except where incurred in relation to qualifying

Buildings & Improvements

DV 7.5 – 20 yrs

Leasehold Improvements

DV 5 – 20 yrs

Furniture & Fittings

DV 3 – 20 yrs

Computer Hardware

DV 3 – 5 yrs

Computer Software

1 – 5 yrs

assets where borrowing costs are capitalised

(f) Goodwill
Goodwill on acquisition is initially measured at cost

being the excess of the cost of the business combination

over the acquirer’s interest in the net fair value of the

identifiable assets, liabilities and contingent liabilities.

Following initial recognition, goodwill is measured at

cost less any accumulated impairment losses.

Goodwill is not amortised. Goodwill is reviewed for

Impairment
The carrying values of plant and equipment are reviewed

impairment, annually or more frequently if events or

changes in circumstances indicate that the carrying

for impairment when events or changes in circumstances

value may be impaired.

indicate the carrying value may not be recoverable.

For an asset that does not generate largely independent

allocated to each of the cash-generating units expected

cash inflows, the recoverable amount is determined for

to benefit from the combination’s synergies.

the cash-generating unit to which the asset belongs.

Impairment is determined by assessing the recoverable

If any such indication exists and where the carrying

amount of the cash-generating unit to which the

As at the acquisition date, any goodwill acquired is

values exceed the estimated recoverable amount, the

goodwill relates.

assets or cash-generating units are written down to their

recoverable amount.

Where the recoverable amount of the cash-generating

unit is less than the carrying amount, an impairment loss

The recoverable amount of plant and equipment is the

is recognised.

greater of fair value less costs 0to sell and value in use. In

assessing value in use, the estimated future cash flows are

Where goodwill forms part of a cash-generating unit and

discounted to their present value using a pre-tax discount

part of the operation within that unit is disposed of, the

rate that reflects current market assessments of the time

goodwill associated with the operation disposed of is

value of money and the risks specific to the asset.

included in the carrying amount of the operation when

determining the gain or loss on disposal of the operation.

An item of property, plant and equipment is

derecognised upon disposal or when no future

Goodwill disposed of in this circumstance is measured on

economic benefits are expected to arise from the

the basis of the relative values of the operation disposed

continued used of the asset.

of and the portion of the cash-generating unit retained.

Any gain or loss arising on derecognition of the asset

(calculated as the difference between the net disposal

(g) Intangible Assets
Acquired both separately and from a business

—

ANNUAL REPORT 20142. Summary of Significant Accounting Policies (Continued)

combination. Intangible assets acquired separately are

capitalised at cost. Following initial recognition, the cost

(h) Impairment of non-financial assets
At each reporting date, the Group assesses whether

model is applied to the class of intangible assets.

there is any indication that an asset may be impaired.

Where an indicator of impairment exists, the Group

Where amortisation is charged on assets with finite

makes a formal estimate of recoverable amount. Where

lives, this expense is taken to profit or loss through the

the carrying amount of an asset exceeds its recoverable

‘amortisation expenses’ line item.

amount the asset is considered impaired and is written

down to its recoverable amount.

Intangible assets, excluding development costs,

created within the business are not capitalised and

Recoverable amount is the greater of fair value less costs

expenditure is charged against in the period in which

to sell and value in use. It is determined for an individual

the expenditure is incurred.

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

Intangible assets are tested for impairment where

not generate cash inflows that are largely independent

an indicator of impairment exists and in the case of

of those from other assets or groups of assets, in which

indefinite lived intangibles annually, either individually

case, the recoverable amount is determined for the

or at the cash generating unit level. Useful lives are also

cash-generating unit to which the asset belongs.

examined on an annual basis and adjustments, where

applicable, are made on a prospective basis.

In assessing value in use, the estimated future cash flows

Research and Development Costs
Research costs are expensed as incurred.

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.

Development expenditure incurred on an individual

project is carried forward when its future recoverability

(i) Operating Segments
The Group adopted AASB 8 ‘Operating Segments’ with

can be reasonably assured.

effect from 1 July 2009.

Following the initial recognition of the development

The Group has more than one reportable operating

expenditure, the cost model is applied requiring the

segment identified by and used by the Chief Executive

asset to be carried at cost less any accumulated

Officer (chief operating decision maker) in assessing

amortisation and accumulated impairment losses.

the performance and determining the allocation of

Software
Costs incurred in developing software are capitalised where

segments in accordance with the aggregation criteria

of AASB 8. During the year the Group had reliance on

future financial benefits can be reasonably be assured. These

one customer whose revenues represent 10.02% or

costs include employee costs incurred on development along

$6,902,971 of the total revenue reported by the Group.

resources. The Group however has aggregated the

with appropriate portion of relevant overheads.

Amortisation is calculated on a straight-line basis

depending on the useful life of the asset.

(j) Financial Instruments
Reconciliation and initial measurement
Financial assets and financial liabilities are recognised

when the entity becomes a party to the contractual

Gains or losses arising from derecognition of an

provisions to the instrument. For financial assets, this is

intangible asset are measured as the difference between

equivalent to the date that the Company commits itself

the net disposal proceeds and the carrying amount of

to either the purchase or sale of the asset (i.e. trading

the asset and are recognised on profit or loss when the

date accounting is adopted).

asset is derecognised.

—

Notes to the Financial StatementsFor The Year Ended 30 June 2014EMPIRED LTDFinancial instruments are initially measure at fair value

profit or loss’ when they are either held for trading for

plus transaction costs, except where the instrument is

the purpose of short-term profit taking, derivatives not

classified ‘at fair value through profit or loss’, in which case

held for hedging purposes, or when they are designated

transaction costs are expensed to profit or loss immediately.

as such to avoid an accounting mismatch or to enable

performance evaluation where a group of financial

Classification and subsequent measurement
Financial instruments are subsequently measured at

assets is managed by key management personnel on a

fair value basis in accordance with a documented risk

either of fair value, amortised cost using the effective

management or investment strategy. Such assets are

interest rate method, or cost. Fair value represents the

subsequently measured at fair value with changes in

amount for which an asset could be exchanged or a

carrying value being included in profit or loss.

liability settled, between knowledgeable, willing parties.

Where available, quoted prices in an active market are

used to determine fair value. In other circumstances,

(ii) Loans and receivables
Loans and receivables are non-derivative financial

valuation techniques are adopted.

assets with fixed or determinable payments that are

not quoted in an active market and are subsequently

Amortised cost is calculated as:

measured at amortised cost,

• the amount at which the financial asset or financial

Loans and receivables are included in current assets,

liability is measured at initial recognition;

except for those which are not expected to mature within

•

less principal repayments;

12 months after the end of the reporting period. (All other

• plus or minus the cumulative amortisation of the

loans and receivables are classified as non-current assets).

difference, if any, between the amount initially

recognised and the maturity amount calculated

using the effective interest method; and

(iii) Held-to-maturity investments
Held-to-maturity investments are non-derivative

•

less any reduction for impairment.

financial assets that have fixed maturities and fixed or

determinable payments, and it is the Group’s intention

The effective interest method is used to allocate interest

to hold these investments to maturity. They are

income or interest expense over the relevant period and

subsequently measured at amortised cost.

is equivalent to the rate that exactly discounts estimated

future cash payments or receipts (including fees,

Held-to-maturity investments are included in non-current

transaction costs and other premiums or discounts)

assets, except for those which are expected to mature

through the expected life (or when this cannot be

within 12 months after the end of the reporting period. (All

reliably predicted, the contractual term) of the financial

other investments are classified as current assets.)

instrument to the net carrying amount of the financial

asset or financial liability. Revisions to expected future

If during the period the Group sold or reclassified more

net cash flows will necessitate an adjustment to the

than an insignificant amount of the held-to-maturity

carrying value with a consequential recognition of an

investments before maturity, the entire held-to-maturity

income or expense in profit or loss.

investments category would be tainted and reclassified

as available-for-sale.

The Group does not designate any interests in

subsidiaries, associates or joint venture entities as being

subject to the requirements of accounting standards

(iv) Available-for-sale financial assets
Available-for-sale financial assets are non-derivative

specifically applicable to financial instruments.

financial assets that are either not suitable to be

(i) Financial assets at fair value through profit or loss
Financial assets are classified at ‘fair value through

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

—

ANNUAL REPORT 20142. Summary of Significant Accounting Policies (Continued)

of other entities where there is neither a fixed maturity

After initial recognition, interest-bearing loans and

nor fixed or determinable payments.

borrowings are subsequently measured at amortised

Available-for-sale financial assets are included in non-

is calculated by taking into account any issue costs, and

current assets, except those which are expected to

any discount or premium on settlement.

mature within 12 months after the end of the reporting

period. (All other financial assets are classified as

Gains and losses are recognised in the statement of

cost using the effective interest method. Amortised cost

current assets).

(v) Financial liabilities
Non-derivative financial liabilities (excluding financial

guarantees) are subsequently measured at amortised cost.

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

Impairment
At the end of each reporting period, the Group assesses

a past event, it is probable that an outflow of resources

embodying economic benefits will be required to settle

whether there is objective evidence that a financial

the obligation and a reliable estimate can be made of

instrument has been impaired. In the case of available-

the amount of the obligation.

for-sale financial instruments, a significant or prolonged

decline in the value of the instrument is considered

Where the Group expects some or all of a provision to

to determine whether an impairment has arisen.

be reimbursed, for example under an insurance contract,

Impairment losses are recognised in the statement of

the reimbursement is recognised as a separate asset but

comprehensive income.

(k) Trade and other receivables
Trade receivables, which generally have 30-45 day

only when the reimbursement is virtually certain. The

expense relating to any provision is presented in the

profit or loss net of any reimbursement.

terms, are recognised and carried at original invoice

If the effect of the time value of money is material,

amount less an allowance for any uncollectible amounts.

provisions are determined by discounting the expected

An impairment provision is recognised when there is

market assessments of the time value of money and,

objective evidence that the Group will not be able to collect

where appropriate, the risks specific to the liability.

the receivable. Bad debts are written off when identified.

Where discounting is used, the increase in the provision

future cash flows at a pre-tax rate that reflects current

(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.

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, annual leave and accumulating sick leave

expected to be settled within 12 months of the reporting

For the purposes of the statement of cash flows, cash and

date are recognised in respect of employees’ services up

cash equivalents consist of cash and cash equivalents as

to the reporting date. They are measured at the amounts

defined above, net of outstanding bank overdrafts.

expected to be paid when the liabilities are settled.

(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.

Expenses for non-accumulating sick leave are recognised

when the leave is taken and are measured at the rates paid

or payable.

—

Notes to the Financial StatementsFor The Year Ended 30 June 2014EMPIRED LTD(ii) Long service leave
The liability for long service leave is recognised and

the likelihood of market performance conditions being

met as the effect of these conditions is included in the

measured as the present value of expected future

determination of fair value at grant date.

payments to be made in respect of services provided by

employees up to the reporting date using the projected

Where the terms of an equity-settled award are

unit credit method. Consideration is given to expected

modified, as a minimum an expense is recognised as

future wage and salary levels, experience of employee

if the terms had not been modified. In addition, an

departures, and periods of service. Expected future

expense is recognised for any increase in the value

payments are discounted using market yields at the

of the transaction as a result of the modification, as

reporting date on national government bonds with

measured at the date of modification.

terms to maturity and currencies that match, as closely

as possible, the estimated future cash outflows.

Where an equity-settled award is cancelled, it is treated

as if it had vested on the date of cancellation, and any

(p) Share-based payment transactions
The Group provides to employees (including Directors)

expense not yet recognised for the award is recognised

immediately. However, if a new award is substituted for

of the Group in the form of share-based payment

the cancelled award, and designated as a replacement

transactions, whereby employees render services in

award on the date that it is granted, the cancelled and new

exchange for shares or rights over shares (‘equity-

award are treated as if they were a modification of the

settled transactions’).

original award, as described in the previous paragraph.

There are currently two plans in place to provide these

The dilutive effect, if any, of outstanding options is

benefits:

reflected as additional share dilution in the computation

(i) The Empired Employee Share Option Plan (ESOP2),

of earnings per share (see note 6).

which provides to all employees excluding Directors,

(ii) The Executive Share Option Plan (ESOP1), which

provides benefits to directors and senior executives.

(q) Leases
Finance leases, which transfer to the Group substantially

The cost of these equity-settled transactions with

leased item, are capitalised at the inception of the lease

employees is measured by reference to the fair value

at the fair value of the leased property or, if lower, at the

at the date at which they are granted. The fair value is

present value of the minimum lease payments.

all the risks and benefits incidental to ownership of the

determined using a Black Scholes model. Further details

are given in note 13.

Lease payments are apportioned between the finance

charges and reduction of the lease liability so as to

The cost of equity-settled transactions is recognised,

achieve a constant rate of interest on the remaining

together with a corresponding increase in equity, over the

balance of the liability. Finance charges are charged

period in which the performance conditions are fulfilled,

directly against income.

ending on the date on which the relevant employees

become fully entitled to the award (‘vesting date’).

Capitalised leased assets are depreciated over the shorter

of the estimated useful life of the asset or the lease term.

The cumulative expense recognised for equity-settled

transactions at each reporting date until vesting date

Leases where the lessor retains substantially all the risks

reflects the extent to which the vesting period has

and benefits of ownership of the asset are classified

expired and (ii) the number of awards that, in the

as operating leases. Initial direct costs incurred in

opinion of the Directors of the Group, will ultimately

negotiating an operating lease are added to the carrying

vest. This opinion is formed based on the best available

amount of the leased asset and recognised over the

information at reporting date. No adjustment is made for

lease term on the same bases as the lease income.

—

ANNUAL REPORT 2014
2. Summary of Significant Accounting Policies (Continued)

Operating lease payments are recognised as an expense

in a transaction that is not a business combination

in the statement of comprehensive income on a straight-

and, at the time of the transaction, affects neither

line basis over the lease term.

the accounting profit nor taxable profit or loss; and

•

in respect of taxable temporary differences associated

(r) Revenue
Revenue is recognised to the extent that it is probable

with investments in subsidiaries, associates and

interests in joint ventures, except where the timing

that the economic benefits will flow to the Group and

of the reversal of the temporary differences can be

the revenue can be reliably measured. The following

controlled and it is probable that the temporary

specific recognition criteria must also be met before

differences will not reverse in the foreseeable future.

revenue is recognised:

1. Rendering of services
Revenue from the provision of services is recognised

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

when the service has been provided.

that taxable profit will be available against which the

2. Maintenance, Hosting and Support fees
Revenue from maintenance, hosting and support is

deductible temporary differences, and the carry-forward of

unused tax assets and unused tax losses can be utilised:

recognised and bought to account over the time it is earned.

• except where the deferred income tax asset relating

Unexpired revenue is recorded as unearned income.

to the deductible temporary differences arises from

3. Interest received
Revenue is recognised as the interest accrues (using the

transaction that is not a business combination and,

at the time of the transaction, affects neither the

effective interest method, which is the rate that exactly

accounting profit nor taxable profit or loss; and

discounts estimated future cash receipts through the

•

in respect of deductible temporary differences

expected life of the financial instrument) to the net

associated with investments in subsidiaries, associates

carrying amount of the financial asset.

and interests in joint ventures, deferred tax assets

the initial recognition of an asset or liability in a

(s) Foreign currency transactions
Foreign currency transactions are translated into

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

functional currency using the exchange rates prevailing

which the temporary differences can be utilised.

at the date of the transaction.

Foreign Exchange differences arising on the

is reviewed at each reporting date and reduced to

translation of monetary items are recognised in other

the extent that it is no longer probable that sufficient

comprehensive income.

taxable profit will be available to allow all or part of the

The carrying amount of deferred income tax assets

(t) Income tax
Deferred income tax is provided on all temporary

Deferred income tax assets and liabilities are measured

differences at the reporting date between the tax bases

at the tax rates that are expected to apply to the year

of assets and liabilities and their carrying amounts for

when the asset is realised or the liability is settled, based

the financial reporting purposes.

on tax rates (and tax laws) that have been enacted or

deferred income tax asset to be utilised.

Deferred income tax liabilities are recognised for all

taxable temporary differences:

Income taxes relating to items recognised directly in

• except where the deferred income tax liability arises

equity are recognised in equity and not in the statement

from the initial recognition of an asset or liability

of comprehensive income.

substantively enacted at the reporting date.

—

Notes to the Financial StatementsFor The Year Ended 30 June 2014EMPIRED LTD(u) Other taxes
Revenues, expenses and assets are recognised net of the

amount of GST except:

i. Impairment of goodwill and intangibles with
indefinite useful lives
The group determines whether goodwill and intangibles

with indefinite useful lives are impaired at least on an

• where the GST incurred on a purchase of goods and

annual basis. This requires an estimation of the recoverable

services is not recoverable from the taxation authority,

amount of the cash-generating unit to which the goodwill

in which case the GST is recognised as part of the cost

and intangibles with indefinite useful lives are allocated. The

of acquisition of the asset or as part of the expense item

assumptions used in this estimation of recoverable amount

as applicable; and

and carrying amount of goodwill and intangibles with

• receivables and payables are stated with the amount of

indefinite useful lives are discussed in note 22.

GST included.

The net amount of GST recoverable from, or payable to,

ii. Share based payments
The consolidated entity measures the cost of equity-

the taxation authority is included as part of receivables or

settled transactions with employees by reference to the fair

payables in the statement of financial position.

value of the equity instruments at the date at which they

are granted. The fair value is determined by using Black-

Cash flows are included in the statement of cash flows on

Scholes model taking into account the terms and conditions

a gross basis and the GST component of cash flows arising

upon which the instruments were granted. The accounting

from investing and financing activities, which is recoverable

estimates and assumptions relating to equity-settled share-

from, or payable to, the taxation authority are classified as

based payments would have no impact on the carrying

operating cash flows.

amounts of assets and liabilities within the next annual

reporting period but may impact profit or loss and equity.

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

iii. Long service leave provision
The liability for long service leave is recognised and

measured at the present value of the estimated future

cash flows to be made in respect of all employees at the

reporting date. In determining the present value of the liability,

estimates of attrition rates and pay increases through

based on historical experience and other factors, including

promotion and inflation have been taken into account.

expectations of future events that may have a financial

impact on the entity and that are believed to be reasonable

under the circumstances.

Critical accounting estimates and assumptions
The Group makes estimates and assumptions concerning

iv. Estimation of useful lives of assets
The consolidated entity determines the estimated useful

lives and related depreciation and amortisation charges for

its property, plant and equipment and finite life intangible

assets. The useful lives could change significantly as a

the future. The estimates and assumptions that have a

result of technical innovations or some other event. The

significant risk of causing a material adjustment to the

depreciation and amortisation charge will increase where

carrying amounts of assets and liabilities within the next

the useful lives are less than previously estimated lives, or

financial year are discussed below.

technically obsolete or non-strategic assets that have been

abandoned or sold will be written off or written down

The Group tests annually whether goodwill has suffered any

impairment, in accordance with the accounting policies.

—

ANNUAL REPORT 2014
3. Revenues

Sales Revenue

Sales

Other Revenue

Forgiveness of business acquisition consideration

Interest

Foreign exchange gain

Insurance claim

Gain on interest swap

Total Revenue

4. Administration Expenses

Profit before income tax includes the following specific expenses:

Employee benefits

Legal expenses

Depreciation expenses

Insurance

Travel

Corporate costs

2014

2013

66,798,695

46,498,244

2,000,000

122,957

2,605

53,618

278

193

2,125,562

54,089

68,924,257

46,552,333

2014

10,013,990

290,759

2,001,018

208,185

532,230

1,769,910

2013

6,315,657

98,241

1,203,607

138,459

426,577

518,414

Total Administration Expenses

14,816,092

8,700,955

—

Notes to the Financial StatementsFor The Year Ended 30 June 2014EMPIRED LTD5. Income Tax

(a) Income tax expense

The major components of income tax expense are:

Current income tax payable

2014

2013

Deferred income tax relating to origination and reversal of temporary differences

559,626

785,105

Deferred tax asset not previously brought to account

Under provision in respect of prior years

(95,415)

(356,184)

67,428

Income tax expense reported in statement of comprehensive income

531,639

428,921

(b) Amounts charged (credited) directly to equity

Capital Raising transaction costs

Deferred tax assets recognised on acquisition

Deferred tax liabilities recognised on acquisition

2014

(253,342)

391,824

2013

(2,843)

77,860

8,354

138,482

(72,349)

(c) 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% (2013: 30%)

1,297,539

2014

Add tax effect of:

Non-deductible Expenses

Other non-deductible expenses

R&D offset income tax variance

Over/Under provision of tax prior years

Income not assessable

Deferred tax asset not previously brought to account

Aggregate income tax expense

—

224,490

(362,403)

67,428

(600,000)

(95,415)

531,639

2013

593,629

111,567

(272,907)

(3,368)

428,921

ANNUAL REPORT 2014

5. Income Tax (Continued)

(d) Recognised deferred tax assets and liabilities

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

(i) Deferred tax liabilities

Fixed assets

Work in progress

Accrued Interest

Gross deferred tax liabilities

(ii) Deferred tax assets

Provisions

Equity raising costs

Borrowing costs

s40-880 costs

R&D Tax Offsets carried forward

Trade and other receivables

Pensions and other employee obligations

Gross deferred tax assets

(e) Tax consolidation

2014

1,814,605

976,391

2,790,996

12,000

229,390

24,285

924,684

34,597

1,001,749

2,226,705

2013

1,141,076

480,598

444

1,622,118

10,950

39,789

20,662

5,334

216,476

535,019

828,230

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.

Empired Limited is forming a tax sharing agreement post reporting date with its group entities

—

Notes to the Financial StatementsFor The Year Ended 30 June 2014EMPIRED LTD6. Earnings Per Share

Basic earnings per share amounts are calculated by dividing net profit for the year attributable to ordinary equity

holders of the parent by the weighted average number of ordinary shares outstanding during the year.

Diluted earnings per share amounts are calculated by dividing net profit attributable to ordinary equity holders of the

parent by the weighted average number of ordinary shares outstanding during the year plus the weighted average number

of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares.

The following represents the income and share data used in the basic and diluted earnings per share computations:

2014

2013

Net profit attributable to ordinary equity holders of the parent

3,793,493

1,549,840

Weighted average number of ordinary shares for basic earnings per share

87,679

65,561

Effect of dilution:

Share options

1,425

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

89,104

4,665

70,226

2014

2013

Thousands

—

ANNUAL REPORT 20147. 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

Notes

(a)

2014

7,486,798

575,208

2013

1,650,890

435,023

8,062,006

2,085,913

(a) - The effective interest rate on the short term deposits was 2.85% (2013: 4.57%).

(ii) Financing facilities available

At reporting date the following facilities were available and unused:

Bank overdraft facility

Loan Facility

(b)

1,909,000

2,963,029

3,652,000

1,909,000

6,615,029

(b) - A floating charge over the assets of the consolidated group has been provided for certain debts. Refer to note 15

for further details.

—

Notes to the Financial StatementsFor The Year Ended 30 June 2014EMPIRED LTD

7. Cash and Cash Equivalents (Continued)

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

Operating profit after income tax

Depreciation

Option Plan Expense

2014

3,793,491

2,001,018

105,248

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

(Increase)/Decrease in receivables

(Increase)/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)/Increase in income tax payable

(Decrease)/Increase in provision for employee entitlements

Net cash from operating activities

(iv) Non-cash investing and financing activities

Share Issue – Refer note 18

(925,651)

(956,657)

(57,779)

1,036,833

(166,778)

705,602

88,582

(156,469)

(195,896)

5,271,544

2013

1,549,840

1,203,607

53,790

3,923,097

(182,781)

(88,648)

(1,390,640)

135,188

(847,954)

(94,419)

919,919

406,132

5,587,131

Acquisition of plant and equipment by means of finance lease

292,281

4,158,765

(v) Acquisition of Entities

Refer note 25

(vi) Credit Standby Arrangements with Banks

Refer note 15

—

ANNUAL REPORT 2014

8. Trade and Other Receivables

Trade receivables

2014

2013

11,134,232

5,841,882

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 im-

paired. 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.

9. Work in Progress

Work in progress at cost

3,254,637

1,601,992

10. Other Current Assets

Prepayments

Other Receivables

602,184

181,878

357,209

842,602

784,062

1,199,811

—

Notes to the Financial StatementsFor The Year Ended 30 June 2014EMPIRED LTD11. Property, Plant and Equipment

Lease Improvements

At cost

Accumulated depreciation

Total Lease Improvements

Computer Hardware

At cost

Accumulated depreciation

Total Computer Hardware

Computer Software

At cost

Accumulated depreciation

Total Computer Software

Equipment & Fittings

At cost

Accumulated depreciation

Total Equipment & Fittings

Total Plant and Equipment

2014

1,406,521

(557,436)

849,085

11,010,720

(3,286,027)

7,724,693

5,665,647

(1,768,485)

3,897,162

556,778

(242,017)

314,761

2013

567,742

(129,495)

438,247

6,675,152

(1,474,198)

5,200,954

3,422,648

(1,254,119)

2,168,529

332,298

(141,028)

191,270

12,785,700

7,999,000

—

ANNUAL REPORT 201411. Property, Plant and Equipment (Continued)

2014

Lease
Improvement

Computer
Hardware

Computer
Software

Furniture,
Equipment
& Fittings

Total

Gross carrying amount

Balance 1 July 2013

Additions

567,742

275,418

6,675,151

3,422,649

332,298

10,997,840

3,316,846

2,242,998

28,931

5,864,193

Acquisition through business combination

563,361

1,025,552

Disposals

(6,829)

196,278

1,785,191

(729)

(7,558)

Balance 30 June 2014

1,406,521

11,010,720

5,665,647

556,778

18,639,666

Depreciation and impairment

Balance 1 July 2013

Disposals

(129,495)

(1,474,198)

(1,254,119)

(141,028)

(2,998,840)

Acquisition through business combination

(282,362)

(681,815)

5,537

(34,988)

(999,165)

Depreciation

(145,579)

(1,135,551)

(514,366)

(66,002)

(1,861,498)

Balance 30 June 2014

(557,436)

(3,286,027)

(1,768,485)

(242,018)

(5,853,966)

Carrying amount 30 June 2014

849,085

7,724,691

3,897,162

314,760

12,785,700

2013

Lease
Improvement

Computer
Hardware

Computer
Software

Furniture,
Equipment
& Fittings

Total

Gross carrying amount

Balance 1 July 2012

Additions

Acquisition through business combination

Disposals

247,315

3,757,899

1,838,844

169,938

6,013,996

320,427

2,871,742

1,364,589

45,511

219,215

131,799

32,055

(1,494)

4,688,557

296,781

(1,494)

Balance 30 June 2013

567,742

6,675,152

3,422,648

332,298

10,997,840

Depreciation and impairment

Balance 1 July 2012

(72,712)

(903,104)

(840,350)

(109,481)

(1,925,647)

Disposals

Depreciation

627

(56,783)

(571,093)

(413,770)

(32,174)

(1,073,820)

Balance 30 June 2013

(129,495)

(1,474,197)

(1,254,120)

(141,028)

(2,998,840)

Carrying amount 30 June 2013

438,247

5,200,955

2,168,528

191,270

7,999,000

—

Notes to the Financial StatementsFor The Year Ended 30 June 2014EMPIRED LTD12. Intangible Assets

Goodwil

Cost

Accumulated impaired losses

Net carrying value

Software

Cost

Accumulated impaired losses

Amortisation charge

Net carrying value

Other

Cost

Accumulated impaired losses

Amortisation charge

Net carrying value

Total intangibles

2014

2013

27,105,898

11,296,386

27,105,898

11,296,386

700,484

310,096

(255,236)

445,248

328,286

(78,266)

250,020

(158,503)

151,593

249,303

(35,576)

213,727

27,801,166

11,661,706

Goodwill assumptions have been detailed within note 22. No impairment was recorded.

—

ANNUAL REPORT 201412. Intangible Assets (Continued)

During the financial year intangibles allocated as ‘other’ were recognised as part of the acquisition of OBS Pty Ltd

and eSavvy Pty Ltd. Refer to note 25 Business Combinations for more information.

Goodwill

Software

Other

Year end 30 June 2013

Balance at the beginning of the year

3,948,764

222,194

Additions from business combinations

7,347,622

Additions

Disposals

Amortisation charge

Impairment losses

23,611

249,303

(94,212)

(35,576)

Total

4,170,958

7,347,622

272,914

(129,788)

Closing value at 30 June 2013

11,296,386

151,593

213,727

11,661,706

Year end 30 June 2014

Balance at the beginning of the year

11,296,386

151,593

213,727

11,661,706

Additions from business combinations

15,809,512

Additions

Disposals

Amortisation charge

Impairment losses

390,389

78,983

469,372

(96,734)

(42,690)

(139,424)

Closing value at 30 June 2014

27,105,898

445,248

250,020

27,801,166

Intangible assets, other than goodwill, have finite lives and are required to be amortised over their expected lives.

Goodwill has an infinite life.

—

Notes to the Financial StatementsFor The Year Ended 30 June 2014EMPIRED LTD
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:

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

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

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

• a takeover offer or bid in respect of Empired shares is made in accordance with the Corporations Act and the

Board recommends that shareholders accept the offer.

Other relevant terms and conditions applicable to options granted under the ESOP2 include:

• 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

2014

No.

2014

WAEP

2013

No.

374,671

(74,671)

(300,000)

2013

WAEP

$0.272

$0.30

$0.20

The weighted average contractual life for the share options outstanding as at 30 June 2014 is nil years (2011: nil years).

—

ANNUAL REPORT 2014

13. Employee Benefits (Continued)

(b) Empired executive share option plan

The Group has an executive share option plan (ESOP1) for the granting of options to certain Directors and senior

executives to assist in motivating and retaining executives.

Options issued under the ESOP1 will vest on the sooner of one of the following conditions being satisfied:

• 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 third anniversary of their grant date will expire; and

• upon exercise, options will be settled in ordinary shares of Empired Limited;

The following table illustrates the number (No.) and weighted average exercise prices (WAEP) of share options

issued under the ESOP1.

As at 30 June 2014 there were 900,000 options over ordinary shares with an average exercise price of $ 0.40 each,

exercisable upon meeting the conditions outlined above and until their expiry dates as set out in the table below.

Outstanding at the beginning of the year

3,050,000

2014

No.

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

2014

WAEP

$0.35

2013

No.

6,450,000

2013

WAEP

$0.319

(2,150,000)

$0.30

(3,400,000)

$0.30

900,000

250,000

$0.40

3,050,000

$0.351

2,550,000

$0.341

The weighted average contractual life for the share options outstanding as at 30 June 2014 is 1.38 years (2013: 1.29 years).

—

Notes to the Financial StatementsFor The Year Ended 30 June 2014EMPIRED LTD

13. Employee Benefits (Continued)

Share options issued under the ESOP1 and outstanding at the end of the year have the following average exercise prices:

Expiry Date

Exercise price

01 December 2014

26 November 2012

12 January 2014

20 February 2015

20 February 2016

20 February 2017

Total

$0.40

$0.30

$0.40

2014

No.

2013

No.

400,000

800,000

250,000

1,500,000

250,000

900,000

3,050,000

The following table illustrates the number (No.) and weighted average exercise prices (WAEP) of share options

issued under the ESOP3.

Outstanding at the beginning of the year

Forfeited during the year

Outstanding at the end of the year

Exercisable at the end of the year

2014

No.

2014

WAEP

2013

No.

200,000

(200,000)

2013

WAEP

$0.30

As at 30 June 2014 there were nil options under this plan.

(d) The total expense relating to ESOP in 2014 was $ 105,248 (2013: $ 53,790)

(e) Empired Performance Rights Plan

During 2014 certain employees were eligible to participate in the Company ’s Performance Rights Plan. Each

performance right granted under this plan is subject to both performance criteria based on absolute EPS and a

vesting period. Unvested performance rights lapse on the employee’s termination, subject to Board discretion. Each

performance right has nil consideration, with each performance right converting to one ordinary share subject to

the satisfaction of the performance criteria. The performance rights are unquoted and non-transferrable. There are

voting and dividend rights attached to the shares once converted, but not the performance rights.

—

ANNUAL REPORT 2014

13. Employee Benefits (Continued)

Performance rights and weighted average exercise prices are as follows for the reporting periods presented:

Outstanding at the beginning of the year

Granted during the year

Forfeited during the year

Exercised during the year

Expired during the year

2014

No.

1,350,000

2,740,000

(320,000)

Outstanding at the end of the year

3,770,000

2014

WAEP

2013

No.

1,350,000

2013

WAEP

The weighted average share price at the date of exercise was $0.00 (no exercises in 2014).

The fair values of the performance rights plan granted were determined using a variation of the binomial option

pricing model that takes into account factors specific to the share incentive plans, such as the vesting period. The

performance condition related to the performance rights plan, being a market condition, has been incorporated into

the measurement by means of actuarial modelling. The following principal assumptions were used in the valuation:

Issue 1

Issue 2

Issue 3

Issue 4

Issue 5

Grant date

29/11/2012

10/04/2013

1/10/2013

31/10/2013

24/03/2014

Vesting period ends

1/07/2012

1/07/2016

30/09/2017

1/07/2017

Share price at date of grant

Volatility

Option life

Dividend yield

Risk free investment rate

$0.40

40%

$0.50

40%

$0.69

40%

$0.78

40%

$0.53

40%

2-4 yrs

3.15

3.28

3.85

3.94

4.17

Fair value at grant date

$46,808

$74,969

$145,230

$114,077

$97,200

Exercise price at date of grant

$0.00

Exercisable from / to

Weighted average remaining

contractual life

1.67 years

The underlying expected volatility was determined by reference to historical data of the Company’s shares over a period

of time. No special features inherent to the options granted were incorporated into measurement of fair value.

—

Notes to the Financial StatementsFor The Year Ended 30 June 2014EMPIRED LTD

14. Trade and Other Payables

Trade payables

Superannuation payable

GST payable

PAYG payable

Accrued liabilities

Credit cards payable

Other

Fringe Benefits Tax payable

Unearned Revenue

Deferred vendor payments (note 25)

2014

3,590,267

981,696

1,434,039

109,042

1,968,725

55,439

468,744

2,987

1,226,331

2,551,850

12,389,120

2013

2,049,658

520,101

711,125

800,897

774,987

38,572

135,817

408,114

1,743,000

7,182,271

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

Owing to Directors and Director related entities

44,458

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 weekly basis.

—

ANNUAL REPORT 2014
15. Borrowings

Current

Obligations under finance leases and hire purchase contracts

Obligations under premium funding contracts

Obligations under bank loan

Non-current

Obligations under finance leases and hire purchase contracts

Obligations under bank loan

Obligations under vendor payments

2014

741,769

134,605

2,588,407

3,464,781

353,888

9,368,792

857,150

2013

749,494

88,586

1,036,280

1,874,360

802,675

1,299,132

1,909,000

10,579,830

4,010,807

Hire Purchase Contracts

Hire purchase contract maturity ranges from July 2013 to June 2017. Leased assets are held as security.

A new facility was established in September 2013. The total limit of this facility is $15,700,000. This facility shall be

reviewed on an annual basis with the existing financial covenants of EBITDA and current ratio being tested quarterly.

In addition the Debt to EBITDA and EBITDA to total debt service are also tested quarterly effective 31 December 2013

and 30 June 2014 respectively.

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.

At reporting date, the following financing facilities had been negotiated and were available:

Finance facilities available

Total facilities:

Facilities used at reporting date - Bank loan

2014

2013

13,866,198

(11,957,198)

9,987,412

(2,335,412)

Facilities unused at reporting date

1,909,000

7,652,000

—

Notes to the Financial StatementsFor The Year Ended 30 June 2014EMPIRED LTD

16. Provisions

Annual Leave

Long
Service Leave

Total

Year end 30 June 2013

Balance at the beginning of the year

Additional provisions

Amounts used

Closing value at 30 June 2014

1,003,289

3,150,388

(2,307,136)

1,846,541

Analysis of total provisions

Current

Provision for Annual Leave

Provision for Long Service Leave

Non-current

Provision for Long Service Leave

17. Reserves

Options reserve

260,007

310,627

(59,709)

510,925

2014

1,846,541

152,499

1,263,296

3,461,015

(2,366,845)

2,357,466

2013

1,003,289

87,633

1,999,040

1,090,922

358,426

172,374

The Company has two share option schemes under which options to subscribe for the Company ’s shares have been

granted to certain executives and employees (refer note 13). The employee equity benefits reserve is used to record

the value of equity benefits provided to employees and Directors as part of their remuneration

—

ANNUAL REPORT 2014
18. Issued Captial

Ordinary Shares fully paid

24,362,663

8,779,678

2014

2013

Movement in ordinary shares on issue

At 1 July 2012

Issue of shares

Conversion of options

At 30 June 2013

Issue of shares

Conversion of options

At 30 June 2014

Movement in ordinary shares on issue

At beginning of the reporting period

31 August 2012

27 September 2013

1 November 2013

Conversion of options

21 November 2012

23 November 2012

26 November 2012

24 September 2013

28 November 2013

29 November 2013

No.

59,218,049

5,000,000

3,700,000

67,918,049

25,000,000

2,150,000

Value ($)

6,456,310

1,248,018

1,075,350

8,779,678

14,912,985

670,000

95,068,049

24,362,663

2014

No.

67,918,049

16,979,511

8,020,489

2,050,000

50,000

2013

No.

59,218,049

5,000,000

100,000

200,000

3,400,000

At end of the reporting period

95,068,049

67,918,049

—

Notes to the Financial StatementsFor The Year Ended 30 June 2014EMPIRED LTD

18. Issued Captial (Continued)

Ordinary shares entitle the holder to participate in dividends, and carry one vote per share. These shares have no par

value.

On 27th September, 2013, the Company issued 16,979,511 shares at $ 0.62 to raise capital for the acquisition of OBS

Pty Limited.

On 1st November, 2013, the Company issued 8,020,489 shares at $ 0.62 to raise capital for the acquisition of OBS Pty

Limited.

Capital Management
Management controls the capital of the Group in order to maintain a sustainable debt to equity ratio, generate long-

term shareholder value and ensure that the Group can fund its operations and continue as a going concern.

The Group’s debt and capital include ordinary share capital, convertible performance rights and employee options,

supported by financial assets.

There are no externally imposed capital requirements, except for the covenant on the bank overdraft referred to in

note 15.

Management effectively manages the Group’s capital by assessing the Group’s financial risks and adjusting its capital

structure in response to changes in these risks and in the market. These responses include the management of debt

levels, distributions to shareholders and share issues.

There have been no changes in the strategy adopted by management to control the capital of the Group since the

prior year. The gearing ratios for the years ended 30 June 2014 and 30 June 2013 are as follows:

Total Borrowings

Less cash and cash equivalents

Net Debt

Total Equity

Total Capital

Gearing ratio

Note

Consolidated
Group
2014

Consolidated
Group
2013

7(i)

13,187,462

3,976,167

(8,062,006)

(2,085,913)

5,125,456

24,362,663

1,890,254

8,779,678

29,488,119

10,669,932

17.39%

17.72%

—

ANNUAL REPORT 201419. Financial Risk Management Objectives and Policies

The Group’s principal financial instruments consist of bank loans and hire purchase contracts, cash, short-term

deposits, trade receivables, trade payables, loans and hire purchases.

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 average interest rate of 1.07% (2013: 1.13%) based on the cash balance at

year end. Cash on deposit attracts a variable average interest rate of 3.07% (2013: 4.40%) at the end of the year.

At 30 June 2014, if interest rates had changed by +/- 1% from the year end rates above, after tax profits would

have been $55,596 (2013: $9,119) lower/higher.

The company entered into a loan to acquire Conducive Pty Limited on 20 August 2012. To protect against the risk of

adverse interest rate movements the company entered into a swap contract to fix interest at 6.65% per annum.

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 StatementsFor The Year Ended 30 June 2014EMPIRED LTD

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:

Cash and cash equivalents (note 7)

Trade and other receivables (note 8)

2014

8,062,006

11,134,232

19,196,238

The ageing 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

2014

8,802,645

909,504

930,532

491,551

11,134,232

2013

2,085,913

5,841,882

7,927,795

2013

3,700,799

1,081,865

475,043

584,175

5,841,882

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.

—

ANNUAL REPORT 2014

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 rate

2014

i) Financial Assets

Term deposit

Cash

223,070

43,570

308,567

7,486,549

Loans and receivables

Total financial assets

8,018,186

43,570

ii) Financial liabilities –

at amortised cost

Overdraft Facility

Accounts payable

Hire purchase

Short term loans

Bank Loan

11,957,198

2,588,407

9,368,791

741,769

134,606

353,887

223,070

43,570

308,567

1.97%

4.67%

3.68%

250

7,486,799

11,134,232

11,134,482

19,196,238

3,590,267

1,095,656

134,606

11,957,198

8.40%

6.00%

5.04%

Total financial liabilities

11,957,198

3,464,782

9,722,678

3,590,267

16,777,727

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

—

2014

2,521,134

493,383

392,225

183,525

3,590,267

Notes to the Financial StatementsFor The Year Ended 30 June 2014EMPIRED LTD
20. Financial Instruments (Continued)

Floating
interest rate

Fixed Interest
Rate
1 year or less

Fixed
Interest Rate
Over 1 to 5
years

Non-interest
bearing

Carrying
amount as
per balance
sheet

Weighted
average
effective
interest rate

2013

i) Financial Assets

Term deposit

Cash

1,650,640

43,570

391,453

Loans and receivables

Total financial assets

1,650,640

435,023

ii) Financial liabilities –

at amortised cost

Overdraft Facility

Accounts payable

Hire purchase

Short term loans

749,494

88,586

Bank Loan

2,335,412

43,570

391,453

4.95%

4.56%

250

1,650,890

5,841,882

5,842,132

7,927,795

2,049,658

802,675

1,552,169

88,586

2,335,412

8.45%

5.94%

7.65%

Total financial liabilities

2,335,412

838,080

802,675

2,049,658

6,025,825

iii) The aging of the Group’s trade payables at 30 June 2013:

Not past due

Past due 0-30 days

Past due 31-60 days

Past due 60 days

2013

1,878,495

178,252

(7,089)

2,049,658

—

ANNUAL REPORT 201421. Commitments And Contingencies

No contingent assets or liabilities as at 30 June 2014.

Commitments for Expenditure

A. Hire Purchase

The consolidated entity has various computer equipment on hire purchase arrangements.

2014

2013

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

Non Current

Total Hire Purchase

B. Loan Repayments

795,023

370,896

(70,263)

1,095,656

741,769

353,888

1,095,657

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

Non Current

Total Loan Repayments

142,678

(8,073)

134,605

849,463

843,852

(141,146)

1,552,169

749,494

802,675

1,552,169

93,845

(5,259)

88,586

—

Notes to the Financial StatementsFor The Year Ended 30 June 2014EMPIRED LTD21. Commitments and Contingencies (Continued)

C. Operating leases

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

Location

Level 13, 256 Adelaide Terrace, Perth

Level 4, 110 William Street, Perth

Level 2, 1292 Hay Street, West Perth

Level 5 & 10, 257 Collins Street, Melbourne

Level 9, 451 Little Bourke Street, Melbourne

Level 9, 37 York Street, Sydney

103/66 Berry Street, North Sydney

Level 2, 8 Leigh Street, Adelaide

Suite 11A, Level 11, 79 Adelaide Street, Brisbane

Their commitment can be seen below:

State

VIC

NSW

QLD

Terms

Expires on 31 October 2015

Expires 30 June 2016

Expires 31 August 2020

Expires 1 October 2014

Expires 15 February 2015

Expires 31 May 2015

Expires 14 March 2015

Expires 1 June 2017

2014

2013

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

2,256,357

3,521,244

5,777,601

987,424

2,312,621

3,300,045

—

ANNUAL REPORT 201421. Commitments And Contingencies (Continued)

The Company has in place term deposit backed or facility backed bank guarantees in relation to rental premises

listed below:

Level 13, 256 Adelaide Terrace, Perth

Level 4, 110 William Street, Perth

Level 5, 257 Collins Street, Melbourne, VIC 3000

Suite 11A, Level 11, 79 Adelaide Street, Brisbane, QLD 4000

Level 2, 8 Leigh Street, Adelaide, SA 5000

Level 9, 37 York Street, Sydney, NSW 2000

Level 2, 1292 Hay Street, West Perth, WA 6005

Level 9, 451 Little Bourke Street, Melbourne, VIC 3000

Maximum amount the bank may call

2014

366,428

40,000

76,175

119,246

129,777

78,672

114,000

24,509

184,000

1,389,988

2013

366,428

40,000

406,428

Bank guarantees that were duplicates of the existing ones at reporting period were in the process of being cancelled

by the various banks.

—

Notes to the Financial StatementsFor The Year Ended 30 June 2014EMPIRED LTD22. 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 14.75% (2013: 10.70%) using a 3% growth rate (2013: 3%) that is

the same as the average growth rate for the IT Infrastructure Services market sector.

The recoverable amounts of the cash-generating units were determined based on value-in-use calculations, covering

a detailed three-year forecast, followed by an extrapolation of expected cash flows for the units’ remaining useful lives

using the growth rates determined by management. The present value of the expected cash flows of each segment is

determined by applying a suitable discount rate.

The growth rates reflect the long-term average growth rates for the product lines and industries of the segments (all

publicly available) and growth in EBITDA expectations. The growth rate for online retailing exceeds the overall long-

term average growth rates for Australia because this sector is expected to continue to grow at above-average rates

for the foreseeable future.

Management’s key assumptions include stable profit margins, based on past experience in this market. The Group’s

management believes that this is the best available input for forecasting this mature market. Cash flow projections

reflect stable profit margins achieved immediately before the budget period. No expected efficiency improvements

have been taken into account and prices and wages reflect publicly available forecasts of inflation for the industry.

Based on sensitivity analysis calculated on changes in assumptions, apart from the considerations described in

determining the value-in-use of the cash-generating units described above, management is not currently aware of

any other probable changes that would necessitate changes in its key estimates. However, the estimate of EBITDA

recorded within any of the service divisions is particularly sensitive to the growth and discount rate. If growth rates

decrease and discount rates increased by 4%, the company commence to recognise impairment losses that would

have to be recognised against goodwill.

Carrying amount of goodwill

27,105,898

11,296,386

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

2014

2013

—

ANNUAL REPORT 201423. Investment in controlled entity

Other Financial Assets

% Equity Interest

Investment ($)

Country of Incorporation

2014

2013

Tusk Technologies Pty Ltd

Conducive Pty Ltd

OBS Pty Ltd

eSavvy Pty Ltd

i5 Software Pty Ltd

Piaxo Pty Ltd

Australia

100

2014

2013

359,661

9,679,427

17,984,334

2,243,650

30,267,092

10,039,088

• The balance of the Tusk Technologies Pty Ltd loan as at 30 June 2014 is $ 351,651. This loan is unsecured does

not bear interest and is not repayable in the next 12 months.

• The balance of the Conducive Pty Ltd loan as at 30 June 2014 is $ 4,023,326. This loan is unsecured does not

bear interest and is not repayable in the next 12 months.

• The balance of the OBS Pty Ltd loan as at 30 June 2014 is $ 166,057. This loan is unsecured does not bear

interest and is not repayable in the next 12 months.

• The balance of the Piaxo Pty Ltd loan as at 30 June 2014 is $ 502. This loan is unsecured does not bear interest

and is not repayable in the next 12 months.

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

24. Events after the reporting date

On the 31st of July 2014 the Company issued 450,000 shares on the vesting of the 2013 Executive Performance Rights
plan. On the 31st of July 2014 the Company issued 400,000 shares on exercising of 400,000 options at $0.30 per option.

—

Notes to the Financial StatementsFor The Year Ended 30 June 2014EMPIRED LTD25. Acquisitions

25.1 Acquisition of eSavvy Pty Ltd
On the 16th of May 2014 Empired Limited (“Empired”) acquired 100% of the shares in Sydney based IT consulting

services provider eSavvy Pty Ltd (“eSavvy”) for $2,243,650. The purchase price was satisfied in cash with an initial

payment of $743,650 on completion and the balance of $1,500,000 to be paid over a three year period, subject to

performance criteria being met.

The acquisition of eSavvy has impacted the consolidated accounts and was effective from 16 May 2014.

The acquisition had the following effect on the consolidated entity’s assets and liabilities:

Fair Value

447,962

207,075

13,439

1,937

11,027

(438,573)

(29,310)

(118,700)

(64,976)

29,881

3,962

2,209,807

2,243,650

(1,500,000)

(447,962)

295,688

83,977

379,665

Net tangible assets acquired

Cash

Receivables

Other assets

Property, plant and equipment

Deferred tax assets

Trade and other payables

Employee liabilities

Deferred Revenue

Provisions

Other identifiable assets acquired

Non-compete clause

Customer relationship

Goodwill

Total consideration

Deferred payments

Cash and cash equivalents acquired

Net cash outflow on acquisition

Acquisition costs charged to expenses

Net cash paid relating to acquisition

—
—

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ANNUAL REPORT 2014ANNUAL REPORT 2014
25. Acquisitions (continued)

25.2 Acquisition of OBS Pty Ltd
On the 1st of October 2013 Empired acquired 100% of the shares in national IT consulting services provider OBS Pty

Ltd (“OBS”) for $17,984,332. OBS which is one of the most highly regarded Microsoft partners in Australia is a major

provider of Microsoft Enterprise Content Management (“ECM”) services to the Australian market.

In addition, OBS, which employs 148 staff, provide a broad range of Microsoft application consulting services that will

significantly enhance Empired’s existing Microsoft application services capability. These services are complementary

to the range of application and consulting related services acquired through the acquisition of Conducive Pty Ltd last

year. Empired intended to leverage the enhanced capability to target large multi-million dollar application managed

services contracts.

OBS operates in 5 major capital cities across Australia (VIC, NSW, QLD, SA & WA) and provide strong relationships

and access to a significant number of large corporate and government clients across Australia.

Under the terms of the transaction, Empired has paid a purchase price of $15,984,332 with a deferred payment of

$2,000,000 to the vendor of OBS. The purchase price was satisfied through a one off cash payment funded through

a combination of debt and equity. Empired had mitigated trading risks through a performance guarantee whereby

Empired may be entitled to be repaid up to $2,250,000 depending upon OBS’s FY14 EBITDA performance.

640,000 performance rights valued at $145,230 were issued as part of the purchase price.

—

Notes to the Financial StatementsFor The Year Ended 30 June 2014EMPIRED LTD
25. Acquisitions (continued)

The acquisition had the following effect on the consolidated entity’s assets and liabilities:

Net tangible assets acquired

Cash

Receivables

Work in progress

Other assets

Property, plant and equipment

Deferred tax assets

Trade and other payables

Deferred revenue

Employee liabilities

Provisions

Net tangible assets acquired

Other identifiable assets acquired

Customer relationship

Goodwill

Total consideration

Cash and cash equivalents aquired

Deferred payments

Performance rights issued as consideration

Net Cash outflow charged to expenses

Acquisition costs charged to expenses

Net cash paid relating to acquisition

Fair Value

1,578,978

4,159,624

695,989

174,099

784,088

391,824

(1,360,089)

(610,936)

(1,381,049)

(122,922)

4,309,606

75,021

13,599,705

17,984,332

(1,578,978)

(2,000,000)

(145,230)

14,260,124

481,409

14,741,533

During the year the Company negotiated the forfeiture of the deferred payments with the vendors of OBS Pty Limited

in favour of removing the performance guarantee. This has been reflected through the income statement of the group.

The conditions surrounding the acquisition of Conducive Pty Limited were met for the 2014 financial year and

therefore the second and final deferred payment will be made by the Company’s bankers on the 31st of July 2014.

Also included below are deferred vendor payments for the acquisition of eSavvy Pty Limited of $642,850, $500,000,

and $357,150 payable in FY2015, FY2016 and FY 2017 respectively. Cash payments will be funded from existing cash

reserves and operating cash flow.

—
—

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93

ANNUAL REPORT 2014ANNUAL REPORT 2014

25. Acquisitions (continued)

Deffered vendor payments (current)

Deferred vendor payment

Deffered vendor payments (non current)

Deferred vendor payment

26. Auditors’ remuneration

Amounts received or due and receivable by auditors of the parent entity:

• an audit or review of the financial report of the entity and any

other entity in the consolidated entity

Remuneration for audit and review of financial statements

Other Services

Taxation Compliance

Due diligence services

Total other services remuneration

Total auditor’s remuneration

2014

2,551,850

857,150

2014

121,805

9,000

107,169

116,169

237,974

2013

1,743,000

1,909,000

2013

113,647

—

Notes to the Financial StatementsFor The Year Ended 30 June 2014EMPIRED LTD
27. Dividends

(a) Distributions Paid

2014 final franked dividend of 1 cents (2013: 0.50 cents)

Interim franked dividend of nil cents (2013: 0 cents)

2014

959,180

2013

339,590

(b) Franking Credit Balance

Balance of franking account at year end at 30% available to the

shareholders of Empired Limited for subsequent financial years

758,950

1,256,192

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 2014 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 benefits reserve

Retained profits

Total equity

Statement of comprehensive income

Profit for year

Other comprehensive income

Total comprehensive income

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

—

2014

10,264,401

52,638,513

11,327,961

24,631,237

24,362,663

711,604

2,933,009

2013

7,858,330

26,434,228

9,142,255

14,898,524

8,779,678

461,126

2,679,932

28,007,276

11,920,736

2014

977,701

2013

158,582

ANNUAL REPORT 2014—

EMPIRED LTDDirectors’ Declaration

The Directors of the Company declare that:

1. 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 2014 and of the performance for the

year ended on that date of the consolidated group;

2. 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;

3. 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 & CEO
27th August 2014

—
—

97
97

ANNUAL REPORT 2014ANNUAL REPORT 2014Level 1
10 Kings Park Road
West Perth WA 6005

Correspondence to:
PO Box 570
West Perth WA 6872

T +61 8 9480 2000
F +61 8 9322 7787
E info.wa@au.gt.com
W www.grantthornton.com.au

Auditor’s Independence Declaration
To the Directors of Empired Limited

In accordance with the requirements of section 307C of the Corporations Act 2001, as lead
auditor for the audit of Empired Limited for the year ended 30 June 2014, I declare that, to
the best of my knowledge and belief, there have been:

no contraventions of the auditor independence requirements of the Corporations Act
2001 in relation to the audit; and

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

GRANT THORNTON AUDIT PTY LTD
Chartered Accountants

C A Becker
Partner - Audit & Assurance

Perth, 27 August 2014

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

‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the
context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm
is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and
are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its
Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.

Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current
scheme applies.

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Level 1

10 Kings Park Road

West Perth WA 6005

Correspondence to:

PO Box 570

West Perth WA 6872

T +61 8 9480 2000

F +61 8 9322 7787

E info.wa@au.gt.com

W www.grantthornton.com.au

Independent Auditor’s Report

To the Members of Empired Limited

Report on the financial report

We have audited the accompanying financial report of Empired Limited (the ‘Company’),

which comprises the consolidated statement of financial position as at 30 June 2014, the

consolidated statement of profit or loss and other comprehensive income, consolidated

statement of changes in equity and consolidated statement of cash flows for the year then

ended, notes comprising a summary of significant accounting policies and other explanatory

information and the directors’ declaration of the consolidated entity comprising the

Company and the entities it controlled at the year’s end or from time to time during the

financial year.

Directors’ responsibility for the financial report

The Directors of the Company are responsible for the preparation of the financial report

that gives a true and fair view in accordance with Australian Accounting Standards and the

Corporations Act 2001. The Directors’ responsibility also includes such internal control as

the Directors determine is necessary to enable the preparation of the financial report that

gives a true and fair view and is free from material misstatement, whether due to fraud or

error. The Directors also state, in the notes to the financial report, in accordance with

Accounting Standard AASB 101 Presentation of Financial Statements, the financial

statements comply with International Financial Reporting Standards.

Auditor’s responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We

conducted our audit in accordance with Australian Auditing Standards. Those standards

require us to comply with relevant ethical requirements relating to audit engagements and

plan and perform the audit to obtain reasonable assurance whether the financial report is

free from material misstatement.

Grant Thornton Audit Pty Ltd ACN 130 913 594

a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389

‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the

context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm

is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and

are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its

Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.

Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current

scheme applies.

EMPIRED LTD

Level 1
10 Kings Park Road
West Perth WA 6005

Correspondence to:
PO Box 570
West Perth WA 6872

T +61 8 9480 2000
F +61 8 9322 7787
E info.wa@au.gt.com
W www.grantthornton.com.au

Independent Auditor’s Report
To the Members of Empired Limited

Report on the financial report
We have audited the accompanying financial report of Empired Limited (the ‘Company’),
which comprises the consolidated statement of financial position as at 30 June 2014, the
consolidated statement of profit or loss and other comprehensive income, consolidated
statement of changes in equity and consolidated statement of cash flows for the year then
ended, notes comprising a summary of significant accounting policies and other explanatory
information and the directors’ declaration of the consolidated entity comprising the
Company and the entities it controlled at the year’s end or from time to time during the
financial year.

Directors’ responsibility for the financial report
The Directors of the Company are responsible for the preparation of the financial report
that gives a true and fair view in accordance with Australian Accounting Standards and the
Corporations Act 2001. The Directors’ responsibility also includes such internal control as
the Directors determine is necessary to enable the preparation of the financial report that
gives a true and fair view and is free from material misstatement, whether due to fraud or
error. The Directors also state, in the notes to the financial report, in accordance with
Accounting Standard AASB 101 Presentation of Financial Statements, the financial
statements comply with International Financial Reporting Standards.

Auditor’s responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We
conducted our audit in accordance with Australian Auditing Standards. Those standards
require us to comply with relevant ethical requirements relating to audit engagements and
plan and perform the audit to obtain reasonable assurance whether the financial report is
free from material misstatement.

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

Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current
scheme applies.

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99
99

ANNUAL REPORT 2014ANNUAL REPORT 2014

Report on the remuneration report

We have audited the remuneration report included in pages 23 to 29 of the directors’ report

for the year ended 30 June 2014. The directors of the Company are responsible for the

preparation and presentation of the remuneration report in accordance with section 300A of

the Corporations Act 2001. Our responsibility is to express an opinion on the remuneration

report, based on our audit conducted in accordance with Australian Auditing Standards.

Auditor’s opinion on the remuneration report

In our opinion, the remuneration report of Empired Limited for the year ended 30 June

2014, complies with section 300A of the Corporations Act 2001.

GRANT THORNTON AUDIT PTY LTD

Chartered Accountants

C A Becker

Partner - Audit & Assurance

Perth, 27 August 2014

An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial report. The procedures selected depend on the auditor’s
judgement, including the assessment of the risks of material misstatement of the financial
report, whether due to fraud or error.

In making those risk assessments, the auditor considers internal control relevant to the
Company’s preparation of the financial report that gives a true and fair view in order to
design audit procedures that are appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the Company’s internal control. An audit
also includes evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by the Directors, as well as evaluating the
overall presentation of the financial report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide
a basis for our audit opinion.

Electronic presentation of audited financial report
This auditor’s report relates to the financial report of Empired Limited and its controlled
entities for the year ended 30 June 2014 included on the Company’s web site. The
Company’s directors are responsible for the integrity of its web site. We have not been
engaged to report on the integrity of the Company’s web site. The auditor’s report refers
only to the statements named above. It does not provide an opinion on any other
information which may have been hyperlinked to/from these statements. If users of this
report are concerned with the inherent risks arising from electronic data communications
they are advised to refer to the hard copy of the audited financial report to confirm the
information included in the audited financial report presented on this web site.

Independence
In conducting our audit, we have complied with the independence requirements of the
Corporations Act 2001.

Auditor’s opinion
In our opinion:

the financial report of Empired Limited is in accordance with the Corporations Act
2001, including:

giving a true and fair view of the consolidated entity’s financial position as at 30
June 2014 and of its performance for the year ended on that date; and

complying with Australian Accounting Standards and the Corporations
Regulations 2001; and

the financial report also complies with International Financial Reporting Standards as
disclosed in the notes to the financial statements.

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100

101

EMPIRED LTD

Report on the remuneration report
We have audited the remuneration report included in pages 23 to 29 of the directors’ report
for the year ended 30 June 2014. The directors of the Company are responsible for the
preparation and presentation of the remuneration report in accordance with section 300A of
the Corporations Act 2001. Our responsibility is to express an opinion on the remuneration
report, based on our audit conducted in accordance with Australian Auditing Standards.

Auditor’s opinion on the remuneration report
In our opinion, the remuneration report of Empired Limited for the year ended 30 June
2014, complies with section 300A of the Corporations Act 2001.

GRANT THORNTON AUDIT PTY LTD
Chartered Accountants

C A Becker
Partner - Audit & Assurance

Perth, 27 August 2014

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—

101
101

101

ANNUAL REPORT 2014ANNUAL REPORT 2014

Shareholder 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 2014.

a. Distribution of Shareholding

Size of Shareholding

Number of Shareholders

1 - 1,000

1,001 - 5,000

5,001 - 10,000

10,001 - 100,000

100,001 - MAX

Total

132

113

318

699

0.03

0.43

0.98

11.88

86.68

100.00

b. Substantial Shareholders

The following are registered by the Company as substantial shareholders, having declared a relevant
interest in the number of voting shares shown adjacent as at the date of giving the notice.

Shareholder

Number of Shares held

Baskerville Investments Pty Ltd

Australian Ethical Smaller Companies Trust

Pie Funds Management Limited

Kinetic Investment Partners Pty Limited

7,450,059

6,113,331

5,030,908

4,953,885

7.84

6.43

5.29

5.22

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102

EMPIRED LTDc. Twenty Largest Shareholders

The names of the twenty largest shareholders are:

Name

Number of Shares
held

National Nominees Limited

Baskerville Investments Pty Ltd

Zero Nominees Pty Ltd

Citicorp Nominees Pty Limited

Navigator Australia Limited

Mr. Gregory David Leach

Mr. John Alexander Bardwell

UBS Nominees Pty Ltd

J P Morgan Nominees Australia Limited

Mr. David John Cawthorn

HSBC Custody Nominees (Australia) Limited

Mirrabooka Investments Limited

TT Nicholas Pty Ltd

Mrs. Kym Garreffa

Uniplex Constructions Pty Ltd

Wyllie Funds Management Pty Ltd

Pershing Australia Nominees Pty Ltd

11,102,658

7,430,059

7,025,000

6,250,037

3,669,056

3,471,225

3,000,000

1,825,000

1,718,189

1,500,000

1,400,000

1,385,000

1,300,000

1,185,167

1,166,707

1,105,000

1,100,000

Bardwell Superannuation Fund Pty Ltd

1,099,904

Three Zerbras Pty Ltd

Mr Branden Wayne Dekenah

1,000,000

900,000

11.68

7.82

7.39

6.57

3.86

3.65

3.16

1.92

1.81

1.58

1.47

1.46

1.37

1.25

1.23

1.16

1.05

0.95

Total

58,633,002

61.67

The twenty members holding the largest number of shares together held a total of 61.67% of issued capital.

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103

ANNUAL REPORT 2014Shareholding Analysis

d. Issued Capital
(i) Ordinary Shares
The fully paid issued capital of the Company
consisted of 95,068,049 shares held by 699
shareholders.

Each share entitles the holder to one vote.

h. Other Offices
The other offices are:

Level 5
257 Collins Street
MELBOURNE VIC 3000
Telephone: +61 3 8610 0700

The number of shareholdings held in less
than marketable parcels is 21.

Level 11, 79 Adelaide Street
BRISBANE QLD 4000

(ii) Unquoted Equity

• No options were issued in the year under

the Company share options plan
• 2,420,000 performance rights were
issued under the company’s LTI plan
• Options do not have any voting rights.

Level 4, 110 William Street
PERTH WA 6000
Telephone: +61 8 9223 1234

Level 2, 1292 Hay Street
WEST PERTH WA 6005

e. On-Market Buy-Back
There is no current on-market buy-back.

Level 2, 8 Leigh Street
ADELAIDE, SA 5000

f. Company Secretary
The Company Secretary is Mr Mark Waller.

Level 9, Little Bourke Street
MELBOURNE VIC 3000

g. Registered Office
The registered office of Empired Ltd is:

Level 9, 37 York Street
SYDNEY NSW 2000

Level 13, Septimus Roe Square
256 Adelaide Terrace
PERTH WA 6000
Telephone: +61 8 9223 1234

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105
105

ANNUAL REPORT 2014ANNUAL REPORT 2014

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.

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.

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.

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106

EMPIRED LTD

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 2014 Annual General Meeting of Empired
Limited will be held at:

The Melbourne Hotel
942 Hay Street,
Perth, WA 6000
at 2pm on Thursday, 27 November 2014.

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

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107

ANNUAL REPORT 2014Level 13, Septimus Roe Square
256 Adelaide Terrace
PERTH WA 6000
Telephone: +61 8 9223 1234