EMPIRED LIMITED & ITS CONTROLLED ENTITIES
FOR THE YEAR ENDED 30 JUNE 2017
ABN 81 090 503 843
EMPIRED LTD | ANNUAL REPORT | 2017 Corporate Directory
Highlights & Results
Chairman & CEO Review
Directors’ Report
Case Studies
Corporate Governance Statement
Consolidated Statement of Profit or Loss & 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
2. Summary of significant accounting policies
3. Segment reporting
4. Revenues
5. Administration Expenses
6. Finance Expenses
7. Income Tax
8. Earnings per share
9. Cash & cash equivalents
10. Trade & other receivables
11. Work in progress
12. Other current assets
13. Investment in associate
14. Property, plant & equipment
15. Intangible assets
16. Share based payments
17. Trade & other payables
18. Borrowings
19. Provisions
20. Deferred consideration
21. Issued Capital
22. Dividends
23. Financial risk management objectives & policies
24. Financial instruments
25. Commitments & contingencies
26. Investment in controlled entity
27. Auditors’ remuneration
28. Parent entity
29. Related party transactions
30. Events after the reporting date
Directors’ Declaration
Auditor's Independence Declaration
Independent Audit Report
Shareholding Analysis
Other Information for Shareholders
Contents
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Page 3
EMPIRED LTD | ANNUAL REPORT | 2017 “Our clients aren’t impatient; our market reality is. It’s exciting to be able to deliver them
tomorrow’s advantage today, and that’s why we really make a difference.“
Russell Baskerville | Managing Director
Page 4
EMPIRED LTD | ANNUAL REPORT | 2017CHAIRMAN & CEO REVIEW Corporate Directory
Directors
Principal Places of Business
Richard Bevan (Non-Executive Chairman)
John Bardwell (Non-Executive Director)
Chris Ryan (Non-Executive Director)
Thomas Stianos (Non-Executive Director)
Russell Baskerville (Managing Director & CEO)
Company Secretary
David Hinton
Registered Office
Level 7
The Quadrant
1 William Street
Perth WA 6000
Telephone No: +618 6333 2200
Fax No: +618 6333 2323
Legal Advisers
Jackson McDonald Lawyers
Level 17, 225 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 11, 172 St Georges Terrace
Perth WA 6000
Country of Incorporation
Australia
Company Domicile & Legal Form
Empired Limited is the parent entity and an
Australian Company limited by shares
Company Number
A.C.N: 090 503 843
Perth
Level 7, The Quadrant
1 William Street
Perth WA 6000
Melbourne
Level 5
257 Collins Street
Melbourne VIC 3000
Sydney
Level 12
9 Hunter Street
Sydney NSW 2000
Adelaide
Level 2
8 Leigh Street
Adelaide SA 5000
Brisbane
Level 11
79 Adelaide Street
Brisbane QLD 4000
Wellington
Level 4, Press Hall
80 Willis Street
Wellington 6011
Seattle
Suite 100
2035 158th Court NE
Bellevue, WA, 98008
USA
Website
www.empired.com
ASX Code
EPD
Page 5
EMPIRED LTD | ANNUAL REPORT | 2017 2013
2014
2015
2016
2017
REVENUE
180
160
140
120
100
80
60
40
20
0
S
N
O
I
L
L
I
M
$
EBITDA
18
16
14
12
10
8
6
4
2
0
S
N
O
I
L
L
I
M
$
2013
2014
2015
2016*
2017
*FY16 EBITDA adjusted to exclude the write off of $0.7m for doubtful debtors relating to prior financial periods.
Page 6
EMPIRED LTD | ANNUAL REPORT | 2017
Highlights & Results
FY17 FINANCIAL RESULTS
•
Revenue $168m, up 5%
• EBITDA $15.4m, up 105%
• FY17 H2 EBITDA $9m, up 36% from $6.6m pcp
• Operating cash flow $9.8m, with H2 Operating cash flow $8.9m
• Net debt reduced to $13.8m (includes the repayment of all deferred
consideration by year end)
FY17 HIGHLIGHTS
•
Revenue from multi-year contracts grew to 66% of total revenue
• Underlying services Revenue up c10% – WA up 14%, East Coast up 6%, NZ up 11%
• Key growth regions ramping up with NSW sales growth of 32% and Auckland 67%
• Contracted Cohesion users up 56%
• Established an extended delivery centre in Bengaluru, India
• Expanding EBITDA margin from 5% to 9% with further operational leverage expected
FY18 OUTLOOK
• Expect continued market consolidation
• Positive growth thematic impacting broad array of industries and businesses
•
Well placed to capture market share in circa $30+ Billion market
•
Expect pleasing revenue growth in FY18
• Converting to accelerated earnings growth with strong cash conversion
•
Net debt to reduce across the year
Page 7
EMPIRED LTD | ANNUAL REPORT | 2017 “I’d like to thank to our dedicated team who have delivered a strong performance this year
and positioned Empired to capitalise on a number of exciting opportunities going forward.“
Richard Bevan | Non-Executive Chairman
Page 8
EMPIRED LTD | ANNUAL REPORT | 2017CHAIRMAN & CEO REVIEW Chairman & CEO Review
To our fellow Shareholders,
On behalf of your Board of Directors, we are delighted
to present the 2017 annual report. This time last year
we communicated that our focus in 2017, following a
period of rapid expansion and integration, focussed on
rebuilding value for shareholders through improvements
in our profitability, the strengthening of our balance sheet
and leveraging off our foundations for future sustainable
growth. We are pleased to report that we have delivered
on this strategy, providing sound improvements to
profitability and with shareholder support a materially
enhanced financial position. This has led to improved
shareholder value reflected through a material increase in
our share price across the year.
The headline results for the year included revenue of $168m
up 5%, EBITDA $15.4m up 105%, NPAT $3.2m (including
$1m in non-cash asset impairments) and operating cash
flow of $9.8m. Net debt was reduced from $30.3m at the
December half to $13.8m at June 30 representing a material
reduction in the company’s borrowings and improvements
to its working capital liquidity.
During 2017, Empired also delivered outstanding sales
growth, with overall sales up 10%. Importantly, the
key growth markets for Empired delivered exceptional
results with New South Wales up 32% and Auckland up
67%. In contrast, the company experienced contraction
in hardware sales and overall performance of its US
operations. Today, hardware sales represent a minor
contribution to profit and we are pleased to report that
following a number of changes to the US operation, we
Richard Bevan
NON-EXECUTIVE CHAIRMAN
Russell Baskerville
MANAGING DIRECTOR & CEO
with a number of implementations for our clients as a
standalone, or as part of a broader solution. We undertook
a range of investments in our managed services business
to enhance our service offering capability by establishing
a delivery centre in Bengaluru, India, to support our
domestic operations.
We are seeing a strengthening Australian economic
climate, however, we remain cautious with heightened
levels of volatility globally which in recent years appears
to be becoming somewhat the norm rather than an
exception. Despite this, our view is that Empired is well
positioned in the IT service market and continues to
experience global growth with organisations turning to
data and technology in order to transform their
businesses and gain a competitive advantage in a
modern digital world.
are expecting improved results from this region in 2018.
In recent years, we have seen a rapid consolidation of
We continued to build upon the success of our
investments in our intellectual property in managed
services, mobile and cloud applications. In New Zealand,
our Cohesion platform grew from approximately 4,500 to
7,000 contracted users across the year. We have continued
to position Cohesion for launch into Australia, with an
anticipated ‘go-live’ date in the second half of 2018. Our
mobile field services solution has delivered on-going
the Australian IT Services landscape, with a number
of our direct local competition being acquired by
large international companies. Empired has clearly
demonstrated that we possess the capability, balance sheet
strength and depth of resources required to compete
and win against these larger players. Our combination of
local management knowledge, resources and regional
knowledge make Empired the IT provider of choice.
project work throughout the year and also led to Empired
We are confident in our market offerings, the investments
securing a multi-year managed services agreement for
we have made and our market position. We believe we
application support. Early stage adoption of another
have a clear competitive advantage in an exciting growth
Empired software tool which provides a low cost, rapidly
sector and are looking forward to delivering a solid
deployable collaboration portal, has been encouraging
performance in the year ahead.
Page 9
EMPIRED LTD | ANNUAL REPORT | 2017CHAIRMAN & CEO REVIEW One team, a clear focus
A platform for operational leverage and growth
Following a number of years of significant organic and
Building upon the enhancements in our operating model,
acquisitive growth, we have more recently focused on
we have further refined our delivery frameworks, improved
ensuring we optimise our assets. This has centred on our
the rigour of our project management and contract
culture and people that underpin our services portfolio and
management processes, and engrained a high level of
operating model.
This year we matured our ‘thinking forward’ framework.
operational discipline. These changes were key to the
improvements in gross margins across the business this year.
This framework connects our purpose, our values and our
The investments made over a number of years in our core
brand promise to our clients. In 2016, we implemented the
business platform have ensured that we are well positioned
framework in New Zealand and following positive results,
we formally rolled-out the framework in Australia in 2017.
Thinking forward engages and motivates all stakeholders
involved in the delivery of services to produce outstanding
outcomes collaboratively. We believe it will continue to take
our staff engagement and client experience to a completely
new level. This is already being evidenced through
strengthening client satisfaction results.
We also introduced the Business Leadership Group (BLG),
which incorporates all our key operational management.
This group of leaders are at the face of our organisation,
dealing directly with our clients and people every day. The
formalisation of this group has allowed a strong sense of
collaboration across multiple business units, introduced
consistent messaging on company priorities versus business
unit priorities and fosters operational alignment. Members
of the BLG undertake a range of training programs to
enhance their leadership and commercial skills to underpin
excellent operational performance and ensuring the leaders
of Empired tomorrow are well trained and prepared for their
transition to senior management and leadership roles.
As part of the introduction of the BLG we also undertook a
review of our management structures and operating model.
We refined these structures and as part of this process
recruited a number of key people into new roles. These roles
ensure that we have adequate management coverage on
for future growth. As our focus moves from consolidation
of the business over the past two years to future growth,
these investments will be key to the seamless and rapid
integration of any future acquisitions and manage organic
growth to deliver predictable growth in earnings.
Our physical platform is geared for growth. Over the
past two years we have invested heavily in our physical
infrastructure with quality office environments in most
of our operations. Whilst this has been capital intensive,
we are now nearing completion of this cycle and expect
that our facilities will support increased staff numbers and
higher revenues in all our major locations. This will lead to
improved margins and greatly reduced infrastructure based
capital spend for years to come.
Our sales capability is geared for growth to capitalise in the
areas where we see the largest market opportunities. Sales
costs per revenue dollar across the east coast and Auckland
are far higher than that of our more mature regions such as
Western Australia. As we grow in these regions, we expect
sales costs per revenue dollar to reduce providing margin
leverage over time.
Our management structure has been built to support
higher levels of revenue in our targeted growth markets.
This investment ensures that our quality remains high in our
growth markets and that we are well placed to identify and
the ground in each of our locations. We are confident that
secure opportunities in the market as they arise.
these changes will support our ability to deliver outstanding
Again, as these regions develop we expect our management
quality as we continue to grow, building our business in all of
costs per revenue dollar to reduce leading to margin
the regions we operate.
improvement over time.
During the year we implemented a Net Promoter Score
Our board and senior management believe that our
based employee and client engagement framework. We are
operational platform will underpin a very exciting period of
confident that the initiatives above have been key to driving
sustainable and profitable growth for Empired, where we
the outstanding improvements that we have seen in these
leverage off it to deliver predictable profit margin expansion
measures during the year.
and earnings growth.
Page 10
EMPIRED LTD | ANNUAL REPORT | 2017CHAIRMAN & CEO REVIEW Investing in the future
In addition to our investments in operational platforms and
During the year, we opened a delivery centre in Bengaluru,
physical infrastructure, we have made careful and purposeful
India. The pace at which we have been able to implement
investment in evolving our service offerings and developing
the facility and ramp up our productive staff numbers has
IP. In the second half of the year we expanded our delivery
delighted us. The facility is now operational and delivering
centre in India to meet the demands of our Managed
services to some of our largest clients at similar levels of
Services clients.
productivity to our onshore operations.
Digital technologies are having a profound impact on
This facility will ensure that we are highly competitive when
commerce and the way in which we conduct our day-to-day
bidding on new contracts and will provide opportunities for
lives. We continue to shape our services portfolio around
margin leverage in our managed services business as we
Mobility, Digital, Cloud, Data & Analytics and Security trends
scale the size of the facility in 2018.
that we have broadly spoken to over the past two years. As
these trends move toward wide scale adoption, we are seeing
Looking to 2018!
the evolution of Artificial Intelligence and Machine Learning
We cannot recall a time we have been more excited about
as the next frontier.
our company and the prospects that lie ahead.
Our services align well to these trends with standout
The Australian and New Zealand economic climate is robust
expertise in cloud infrastructure, business systems, modern
and provides a solid foundation for a growth business.
applications and data. We believe our skills are well versed
The digital era is very much upon us, with technology
in industry and technology trends and we are well placed to
fundamentally changing the way in which business is
continue to capture market share as these trends evolve.
conducted, transforming some of the world’s oldest
To improve our competitive differentiation, accelerate our
solutions time to value and grow our recurring revenue
industries and largest companies and having a profound
impact on our day to day lives.
we have invested in a range of software solutions and
We are seeing a rapid consolidation of our sector in the local
accelerators. The most prominent and successful of these
market, disrupting the competitive environment and opening
to date has been Cohesion. Cohesion is an Enterprise
many new opportunities to Empired.
Content Management System that has been widely adopted
by New Zealand Public Sector agencies where we boast
approximately 7,000 contracted users and growing. During
the year we made a number of investments in extending the
functionality of Cohesion and preparing it for launch in the
Australian market.
We have also invested in a collaboration portal called
SNAP and a mobile field services solution where we have
had pleasing early stage commercial success. As these
solutions move into production we expect a declining capital
investment profile associated with solution development
combined with growing recurring revenue.
Our investments in our cloud platform FlexScale reduced
this year with the platform supporting several customers
and internal systems. Our clients and the market generally
continue the trend to low cost public cloud offerings as
confidence in public cloud infrastructure grows.
We are confident that the investments Empired has made
across a broad range of areas and our strategic market
position will ensure that Empired is uniquely positioned to
secure its place in this exciting transformation.
Together with our Board of Directors, we would like to thank
all of our loyal staff for their exceptional effort throughout
the year and extend our appreciation to the support of our
clients and partners.
To our fellow shareholders, we thank you for your support
through what has been a transformational period for
Empired and we look forward to delivering on an exciting
year ahead.
Yours faithfully,
Richard Bevan
NON-EXECUTIVE CHAIRMAN
Russell Baskerville
MANAGING DIRECTOR & CEO
Page 11
EMPIRED LTD | ANNUAL REPORT | 2017CHAIRMAN & CEO REVIEW “Our values reflect what we believe in and are at the heart of who we are and
why we do what we do, and we love to work with clients who share them.“
Simon Bright | Chief Operating Officer
Page 12
EMPIRED LTD | ANNUAL REPORT | 2017CHAIRMAN & CEO REVIEW Directors’ Report
The directors present their report on the consolidated entity comprising Empired Limited (“the Company“) and its
controlled entities (“the Group“) for the year ended 30 June 2017.
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 otherwise.
DIRECTORS
NAME
AGE
EXPERIENCE & SPECIAL RESPONSIBILITIES
Richard Bevan
Non-Executive Chairman
51
Russell Baskerville
Managing Director & CEO
39
Mr Bevan joined the board as a Non-Executive Director on 31 January 2008 with corporate and senior
management experience including various directorship’s and CEO/MD roles in ASX listed and private
companies, and was appointed Chairman on 29 November 2016. Mr Bevan brings experience in the
execution and integration of mergers, acquisitions and other major corporate transactions.
Mr Bevan has been involved in a number of businesses in areas as diverse as healthcare, construction
and engineering, resources and information services. Mr Bevan’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
Mr Baskerville is an experienced business professional and has worked in the IT industry for in excess
of 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, IPOs, capital raisings, divestments, mergers and acquisitions.
Mr Baskerville has been the Managing Director of Empired for ten years and has successfully listed the
company on ASX and made a number of successful acquisitions. Mr Baskerville was previously a Non
Executive Director of BigRedSky Limited, successfully developed and commercialised a SaaS delivered
eRecruitment tool prior to the company being acquired by Thomson Reuters.
Previous directorships (last 3 years):
» None
Page 13
EMPIRED LTD | ANNUAL REPORT | 2017DIRECTORS’ REPORT DIRECTORS
NAME
AGE
EXPERIENCE & SPECIAL RESPONSIBILITIES
63
57
54
Mr Stianos joined the board as a Non-Executive Director on 29 November 2016. He
is widely recognised as one of the most successful and experienced leaders in the IT
industry. Mr Stianos was previously the Managing Director of SMS Management &
Technology Limited.
He has also previously held senior positions with the Department of Premier and
Cabinet, Department of Justice, and Department of Treasury & Finance. Mr Stianos holds
a Bachelor of Applied Science from the University of Melbourne.
Other current directorships:
» Inabox Group Limited
» Escient Limited
Previous directorships (last three years):
» SMS Management & Technology Limited
Mr Bardwell has had a long career in the financial services and IT sectors through a
variety of senior leadership positions. Mr Bardwell's previous executive experience
includes Head of IT Services at Bankwest, Managed Services Director at Unisys West and
as the General Manager of Delivery Services at Empired Ltd prior to his appointment to
the Board as a Non-Executive Director on 26 November 2011.
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.
Mr Bardwell is a Board Member of Swancare Group, a specialist provider of retirement
living and aged-care services, where he is also Chair of the Business Development
Committee.
Previous directorships (last three years):
» None
Mr Ryan joined the Board on 1 May 2015. He has had extensive executive and corporate
advisory experience in Human Resources across a broad range of industries. This
includes 10 years leading the Group HR function for diversified industrial business
Wesfarmers, where he led the people aspects of major acquisitions and integrations,
including the Coles Group transaction.
Through his advisory practice Mr Ryan advises Boards and CEOs on HR strategy,
executive remuneration and executive talent management. Previously he has been an
independent director of ASX listed Resource Development Group.
Mr Ryan holds a Bachelor of Business, is a graduate member of the Australian Institute
of Company Directors, a Fellow of the Australian Institute of Management and a Fellow
of the Australian Human Resources Institute. He holds the honorary title of Adjunct
Professor with Curtin University Business School where he pursues the connection of
industry with education, and is a member of the Advisory Board of the University’s
School of Management.
Previous directorships (last three years):
» Resource Development Group Limited
Thomas Stianos
Non-Executive Director
John Bardwell
Non-Executive Director
Chris Ryan
Non-Executive Director
Page 14
EMPIRED LTD | ANNUAL REPORT | 2017DIRECTORS’ REPORT NAME
AGE
EXPERIENCE & SPECIAL RESPONSIBILITIES
Mel Ashton
Former Non-Executive Chairman
59
Mr Ashton retired on 29 November 2016 after 11 years as Chairman of the Company.
Mr Ashton is a Fellow of the Australian Institute of Company Directors and a Fellow
of the Institute of Chartered Accountants in Australia and has over 30 years corporate
experience in a wide range of industries.
Other current directorships:
» Venture Minerals Limited
Previous directorships (last three years):
» Gryphon Minerals Limited
» Renaissance Minerals Limited
» Resource Development Group Limited
» Barra Resources Limited
COMPANY SECRETARY
NAME
AGE
EXPERIENCE & SPECIAL RESPONSIBILITIES
David Hinton
CFO & Company Secretary
54
Mr Hinton joined Empired in May 2016. He has had over 10 years experience in the
technology sector having previously held the position of CFO and Company Secretary of
ASX listed Amcom Telecommunications. Prior to Amcom he held a senior executive role in
a large diversified listed company and also worked at Ernst & Young.
Mr Hinton holds a Bachelor of Business degree, is a Fellow of the Institute of Chartered
Accountants and is a graduate of the Australian Institute of Company Directors and is a
member of the Governance Institute of Australia.
DIRECTORS’ MEETINGS
The number of Directors meetings and Audit Committee meetings attended by each Director during the year are:
NAME OF
DIRECTOR
No. of Directors Meetings
held while a Director
No. of Meetings Directors
attended as a Director during
the year ended 30 June 2017
No. of Audit Committee
Meetings held while
a Director
No. of Audit Committee
meetings attended
during the year ended
30 June 2017
Russell Baskerville
Richard Bevan
John Bardwell
Chris Ryan
Thomas Stianos
Mel Ashton
10
10
10
10
6
3
10
10
10
10
6
2
2
2
2
2
1
1
2
2
2
2
1
1
Page 15
EMPIRED LTD | ANNUAL REPORT | 2017DIRECTORS’ REPORT OPERATING & FINANCIAL REVIEW
Review of operations
Empired Limited is an international IT Services Provider with a broad range of capabilities and a reputation
for delivering enterprise class IT services and solutions. Established in 1999, Empired is a publicly listed
company (ASX: EPD) formed in Western Australia.
With a team of over 900 people located across Australia, New Zealand and USA, Empired has built a
reputation for service excellence and is a leading provider of business technology solutions to both
government and private sectors. We work with clients to deliver high quality solutions to meet their business
requirements.
Our flexible service delivery approach has enabled Empired to secure clients that range from medium size
entities through to large enterprise and Government agencies.
The business operates as two segments:
Australia – which includes Singapore
New Zealand – which includes North America
Review of financial results
Revenue overall increased by 5% to $167m.
Earnings before interest, tax depreciation and amortisation (EBITDA) for the financial year increased
by 106% to $15.4m.
The profit after tax for the year was $3.2m compared to a loss after tax in the previous year of $1.7m.
Included in the current year result is a non-cash loss on disposal of assets of $1.0m resulting from a
re-location of the Wellington operations and the write-off of legacy assets.
180
160
140
120
100
80
60
40
20
0
)
S
N
O
I
L
L
I
M
$
(
E
U
N
E
V
E
R
Page 16
New Clients/
Individual
Contracts
Additional
Projects
from Multi
Year Contracts
Multi Year
Contracts
FY13
FY14
FY15
FY16
FY17
EMPIRED LTD | ANNUAL REPORT | 2017DIRECTORS’ REPORT
Review of financial results (continued)
The financial results are summarised in the following table:
$M
Revenue
Other income
EBITDA
Depreciation & amortisation
Loss on disposal of assets
EBIT
Interest (net)
Net profit / (loss) before tax
Income tax
Net profit / (loss) after tax
EBITDA / Revenue %
Basic EPS (cents)
Operating results by Segment
$M
Revenue Australia
Revenue New Zealand
Inter-segment
Segment Revenue
EBITDA Australia
EBITDA New Zealand
Segment EBITDA
1H 17
2H 17
83.6
0.1
6.4
(3.9)
-
2.5
(1.2)
1.3
(0.2)
1.1
8%
83.8
0.6
8.9
(4.3)
(1.0)
3.6
(1.1)
2.5
(0.5)
2.0
11%
1H 17
2H 17
51.6
32.8
(0.8)
83.6
3.9
2.6
6.4
52.8
32.0
(1.0)
83.8
6.8
2.2
8.9
2017
167.4
0.7
15.4
(8.2)
(1.0)
6.2
(2.3)
3.9
(0.7)
3.2
9%
2.4
2017
104.4
64.9
(1.9)
167.4
10.6
4.7
15.4
2016
160.0
0.4
7.5
(7.0)
(2.3)
(1.8)
(1.6)
(3.4)
1.0
(2.4)
5%
(1.5)
2016
101.0
62.1
(3.1)
160.0
3.0
4.5
7.5
For the financial year ended 30 June 2017 the Australian segment increased its revenue by 3% to $104m and
recorded a Segment EBITDA of $10.6m. The New Zealand segment increased revenue by 4% to $65m and reported
a Segment EBITDA of $4.7m. The New Zealand segment results were impacted during the year by adverse trading
conditions on US based contracts estimated to have impacted revenue and EBITDA by approximately $1m.
Page 17
EMPIRED LTD | ANNUAL REPORT | 2017DIRECTORS’ REPORT Cash flow
The following table summarises the cash flow for the financial year ended 30 June 2017:
$M
EBITDA
Non cash items
Tax paid
Dividends – associate
Working capital
Lease incentive
Operating cash flow
Interest paid (net)
Purchases of P&E and intangibles
Acquisitions (inc deferred consideration)
Equity raising
Repayment of borrowings
Proceeds from borrowings
Change in cash
1H 17
2H 17
6.4
-
(0.7)
0.1
(4.9)
-
0.9
(1.2)
(4.3)
(1.0)
-
(3.5)
3.2
(5.9)
8.9
0.2
-
-
(0.3)
-
8.8
(0.9)
(6.6)
(7.7)
15.1
(7.7)
0.8
1.8
2017
15.4
0.2
(0.7)
0.1
(5.2)
-
9.8
(2.0)
(10.9)
(8.7)
15.1
(11.3)
4.0
(4.0)
2016
7.5
0.2
(0.3)
0.2
1.9
3.8
13.3
(1.6)
(14.6)
(1.2)
0.2
(7.1)
4.4
(6.6)
Operating cash flow for the financial year ended 30 June 2017 was $9.8m compared to $13.3m the previous
financial year. The previous financial year included a cash lease incentive of $3.8m and after allowing for this
the Operating cash flow increased by 4% year on year.
Page 18
EMPIRED LTD | ANNUAL REPORT | 2017DIRECTORS’ REPORT Financial position and capital structure
The balance sheet as at 30 June 2017 is summarised below:
$M
Cash
Receivables & WIP
Other
Current Assets
Plant & Equipment
Intangibles and other
Non Current Assets
Trade & other payables
Borrowings*
Provisions & other
Current Liabilities
Borrowings*
Provisions & other
Non Current Liabilities
Net Assets/Equity
Net debt (Nd)
Gearing (Nd/Nd+Equity)
June 2017
Dec 2016
Pro Forma June 2016
2.0
32.5
2.4
36.8
21.0
61.3
82.2
22.1
6.7
5.9
34.7
9.1
4.0
13.1
71.3
13.8
16%
3.1
29.5
2.6
35.2
20.6
60.6
81.2
19.6
21.8
5.2
46.6
11.6
4.5
16.0
53.7
30.3
36%
3.0
32.6
2.6
38.2
21.1
58.7
79.8
26.1
8.9
6.0
41.1
19.6
4.8
24.5
52.4
25.6
33%
*Proforma in FY2016 reflects the re-classification of $6.8m of borrowings from current to non-current liabilities for bank borrowings renegotiated after 30 June 2016.
Net debt reduced during the financial year from $25.6m to $13.8m with gearing reducing from 33% to 16%.
The reduction in net debt and improvement in gearing is attributable to the equity raising of $15.1m (net of costs)
when 36.4m shares were issued at 44 cents per share.
Borrowings* in previous periods included deferred consideration payable on acquisitions completed in previous
years. These amounts due have been paid by 30 June 2017.
Risk
As part of the planning process the Company has identified the risks that could potentially have an adverse impact
on the performance of the Company. The Company has in place policies and procedures to monitor and manage
these risks which can be broadly categorised as:
• General macro economic risks
• Business risks
• Operational risks
• Financial risks
Commentary on strategy and prospects is included in the Chairman and CEO Review.
Page 19
EMPIRED LTD | ANNUAL REPORT | 2017DIRECTORS’ REPORT Dividends
The directors do not recommend payment of a dividend (2016: nil).
Likely Developments
Any likely developments are disclosed in the Chairman and CEO Review.
Performance Rights Granted to Directors and Officers
Executive Officers were granted 3,411,975 Performance Rights under the Long Term Incentive Plan. Information
relating to the grants is detailed in the notes to the financial statements.
Significant changes in the state of affairs
During the financial year the Company raised $15,137,239, net of costs, with the placement of 36,363,636 ordinary
shares at 44 cents per share. A total of 38,558,080 ordinary shares were issued during the financial year.
Auditor
The lead auditor’s Independence Declaration for the year ended 30 June 2017 has been received and can be found
on page 84 of the financial report.
Non-Audit Services
The directors, as per 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 the general standard of
independence for auditors imposed by the Corporations Act 2001.
Indemnification and insurance of directors and officers
During the year, Empired Limited paid a premium to insure directors and officers of the Group.
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.
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.
The Company has agreed, to the extent permitted by law, to indemnify each Director and Company Secretary of
the Company against any and all reasonable liabilities incurred in respect of or arising out of any act in the course
of their role as an officer of the Company.
The Company has not agreed to indemnify the auditor of the Company, however a controlled entity has provided
an indemnity to the auditor of that controlled entity for losses arising from false or misleading information
provided or third party claims except to the extent such amounts are determined to have been caused by the
auditor's fraud.
Significant events after the reporting date
There have been no events to report subsequent to reporting date.
Page 20
EMPIRED LTD | ANNUAL REPORT | 2017DIRECTORS’ REPORT Page 21
EMPIRED LTD | ANNUAL REPORT | 2017DIRECTORS’ REPORT REMUNERATION REPORT (AUDITED)
The Directors of Empired Limited present the Remuneration Report (“the Report“) for the Company and its
controlled entities for the year ended 30 June 2017 (“FY17“). This Report forms part of the Directors’ Report and
has been audited in accordance with section 300A of the Corporations Act 2001.
Remuneration Philosophy
The performance of the Company depends upon the quality of its directors and executives. To prosper, the
Company must attract, motivate and retain highly skilled directors and executives.
To this end, the Company embodies the following principles in its remuneration framework:
• Provide competitive rewards to attract high calibre executives;
• Link executive rewards to shareholder value;
• Have a portion of certain executive’s remuneration ‘at risk’, dependent upon meeting pre-determined
performance benchmarks; and
•
Establish appropriate, demanding performance hurdles for variable executive remuneration.
Linking remuneration ‘at risk’ to Company performance
The Group recorded a profit after tax of $3.2m for the year ended 30 June 2017 compared to a net loss after tax of
$1.7m in the previous financial year. As a result, no Short Term Incentive will be paid to Key Management Personnel
in respect to the 2017 financial year as the key performance indicators were not achieved.
Remuneration Structure
In accordance with the best practice corporate governance, the structure of non-executive director and executive
remuneration is separate and distinct.
A. Non-Executive director remuneration
Objective
The board seeks to set aggregate remuneration at a level that provides the company with the ability to attract and
retain directors of the highest calibre, whilst incurring a cost that is acceptable to shareholders.
Structure
The constitution and the ASX Listing Rules specify that the aggregate remuneration of non-executive directors shall
be determined from time 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 27
November 2014 when shareholders approved an aggregate remuneration of $500,000 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 2017 is detailed in the table in Section E.
Page 22
EMPIRED LTD | ANNUAL REPORT | 2017DIRECTORS’ REPORT B. Executive remuneration
Objective
The company aims to reward executives with a level and mix of remuneration commensurate with their position
and responsibilities within the company and so as to:
•
Reward executives for company, business unit and individual performances against targets set by reference to
appropriate benchmarks;
• Align the interests of executives with those of shareholders;
•
Link rewards with the strategic goals and performance of the Company; and
• Ensure total remuneration is competitive by market standards.
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. The table in Section E below details the fixed and variable
components of the executives of the company.
Fixed Remuneration
Objective
Fixed remuneration is reviewed annually by the board. The process consists of a review of companywide, business
unit and individual performance, relevant comparative remuneration in the market and internally, and where
appropriate, external advice on policies and practices. As noted above, the Board has access to external advice
independent of management.
Structure
Senior executives are given the opportunity to receive their fixed remuneration in a variety of forms including cash
and fringe benefits such as motor vehicles. It is intended that the manner of payment chosen will be optimal for the
recipient without creating undue cost for the group.
The fixed remuneration component of the company executives is detailed in the table in Section E.
Page 23
EMPIRED LTD | ANNUAL REPORT | 2017DIRECTORS’ REPORT Variable Remuneration – Short Term Incentive (STI)
Objective
The objective of the STI program is to link the achievement of the Group’s performance and 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 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
revenue, profitability, 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 2017 financial year no STI will be paid to Key Management Personnel (2016: nil).
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.
The table in Sections F and G provide 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 for nil
consideration. 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.
During the financial year 3,411,975 Performance Rights were issued under the Long Term Incentive Plan on terms
and conditions determined and approved by the Board of Directors. The number of Performance Rights offered is
based upon the share price of the company at the time of Board approval.
The vesting conditions selected are designed to align remuneration with the creation of shareholder value over the
long- term. The performance measures that have been chosen are:
• Basic Earnings per Share (EPS) (adjusted for any abnormal items) with a target set as a growth percentage
of current year budget. Due to their sensitive nature, EPS targets are disclosed retrospectively should the
Performance Rights vest.
•
Relative Total Shareholder Return this compares the Total Shareholder Return (TSR) of the company measured
from 1 July 2016 to 30 June 2019 and ranks it on a percentile basis with the constituents of the S&P/ASX 200
Industrial Index.
• Sustainability measure to be determined and assessed by the Board.
Page 24
EMPIRED LTD | ANNUAL REPORT | 2017DIRECTORS’ REPORT NUMBER
Performance Measures
% Vesting
Vesting Dates
FY 2018 EPS
Below minimum target
At minimum target
Within target range
At maximum of target range and above
FY 2019 EPS
Below minimum target
At minimum target
Within target range
At maximum of target range and above
Relative TSR
Below 60th percentile
At 60th percentile
0%
50%
50%-100% pro-rata
100%
0%
50%
50%-100% pro-rata
100%
0%
50%
Between 60th & 75th percentile
50%-100% pro-rata
At or above 75th percentile
Sustainability
FY 2017 EPS
Below minimum target
At minimum target
Within target range
At maximum of target range and above
FY 2018 EPS
Below minimum target
At minimum target
Within target range
At maximum of target range and above
Relative TSR (1)
Below 50th percentile
100%
100%
0%
50%
50%-100% pro-rata
100%
0%
50%
50%-100% pro-rata
100%
0%
Between 50th and 75th percentile
50%-100% pro-rata
At or above 75th percentile
Relative TSR (2)
Below 50th percentile
100%
0%
Between 50th and 75th percentile
50%-100% pro-rata
At or above 75th percentile
Sustainability
Sustainability
100%
100%
100%
30 August 2019
30 August 2019
30 August 2019
30 August 2019
1 July 2017
1 July 2018
1 July 2017
1 July 2018
1 July 2017
1 July 2018
617,576
617,576
1,235,150
617,576
90,452
39,183
90,452
39,183
45,210
19,617
(1) Empired TSR measured over period 1 July 2015 to 30 June 2017 as compared to TSR of the constituents of the ASX Industrials Index.
(2) Empired TSR measured over period 1 July 2015 to 30 June 2018 as compared to TSR of the constituents of the ASX Industrials Index.
Page 25
EMPIRED LTD | ANNUAL REPORT | 2017DIRECTORS’ REPORT Should an employee leave Empired then Performance Rights are retained on a pro-rata basis for the duration
of employment completed during the term of the Performance Right, except where continuing employment is
a vesting condition or where employment is summarily terminated.
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 three financial years:
ITEM
EPS (cents)
Dividends (cents per share)
Total Comprehensive Income ($000)
Share price ($)
C. Key management personnel
(i) Directors
2017
2.42
-
3,122
0.54
2016
(1.47)
-
(1,545)
0.34
2015
4.82
-
5,233
0.77
2014
4.33
1.00
3,793
0.60
The following persons were directors of Empired Limited during the financial year:
R Bevan – Non-Executive Director (Chairman from 29 November 2016)
M Ashton – Non-Executive Chairman to 29 November 2016
J Bardwell – Non-Executive Director
C Ryan – Non-Executive Director
T Stianos – Non-Executive Director from 29 November 2016
R Baskerville – Managing Director and CEO
(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:
S Bright – Chief Operating Officer
D Hinton – Chief Financial Officer and Company Secretary
(iii) Remuneration of Key Management Personnel
Information regarding key management personnel compensation for the year ended 30 June 2017 is provided
in table in Section E of this remuneration report.
Page 26
EMPIRED LTD | ANNUAL REPORT | 2017DIRECTORS’ REPORT D. Service Agreements
Russell Baskerville – Managing Director
• Terms of Agreement – commenced 1 July 2005, until terminated by either party.
• Salary – fixed remuneration $525,000 per annum with an STI cash bonus of 50% of base fees and LTI bonus of
75% of base fees.
• Termination – three months' notice.
Richard Bevan – Chairman
• Terms of Agreement – appointed 29 November 2016.
• Fee – fixed $90,000 per annum.
Thomas Stianos – Non Executive Director
• Terms of Agreement – appointed 29 November 2016.
• Fee – fixed $60,000 per annum.
John Bardwell – Non-Executive Director
•
Terms of Agreement – appointed 26 September 2011.
• Fee – fixed $60,000 per annum.
Chris Ryan – Non-Executive Director
• Terms of Agreement – appointed 1 May 2015.
• Fee – fixed $60,000 per annum.
David Hinton – Chief Financial Officer & Company Secretary
• Terms of Agreement – commenced 12 April 2016, until terminated by either party.
• Salary – fixed remuneration $400,000 per annum with an additional STI cash bonus target of 25% of base fees
and LTI bonus target of 40% of base fees.
• Termination – three months' notice.
Simon Bright – Chief Operating Officer
• Terms of Agreement – commenced 1 July 2016, until terminated by either party.
• Salary – fixed remuneration NZ$435,000 per annum with an STI cash bonus target of 30% of base fees and LTI
bonus target of 40% of base fees, plus an additional once off stretch STI of 25%.
• Termination – three months' notice.
Page 27
EMPIRED LTD | ANNUAL REPORT | 2017DIRECTORS’ REPORT 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:
SHORT TERM BENEFITS
POST
EMPLOYMENT
$
Year
Salary & Fees
Non-cash
benefits
Cash STI
Superannuation
Share-based
Payments
Total
%
Perfomance
Related
%
of STI
achieved
NON-EXECUTIVE DIRECTORS
M. Ashton
(to 29
November
2016)
R. Bevan
T. Stianos
(from 29
November
2016)
C. Ryan
J. Bardwell
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
37,500
90,000
70,984
54,795
32,379
-
60,000
60,000
54,795
54,795
-
-
-
-
-
-
-
-
-
-
EXECUTIVE DIRECTORS
R.
Baskerville
2017
2016
525,000
15,076
525,000
-
KEY MANAGEMENT
D. Hinton
(from 1 May
2016)
S. Bright
(from 1 July
2016)
2017
2016
2017
2016
365,297
15,076
81,176
-
408,073
3,716
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6,743
5,205
3,076
-
-
-
5,205
5,205
-
-
-
-
-
-
-
-
-
-
37,500
90,000
77,727
60,000
35,455
-
60,000
60,000
60,000
60,000
-
-
-
-
-
-
-
-
-
-
-
-
139,016
679,092
260,094
785,094
20.5%
33.1%
34,703
23,335
438,411
5.3%
7,712
-
88,888
-
30,318
48,335
490,442
9.9%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Share-based payments for S. Bright include a once-off share issue to the value of $25,000 for nil consideration.
Page 28
EMPIRED LTD | ANNUAL REPORT | 2017DIRECTORS’ REPORT F. Directors’ and Key Management Personnel Equity Holdings
Shares held in Empired Limited
All equity transactions with directors and executives, other than those arising from the vesting of performance
rights and as part of remuneration, have been entered into under terms and conditions no more favourable than
those the entity would have adopted if dealing at arm’s length.
Balance 01 Jul 16
Vesting of Performance Rights
Remuneration
Net Change Other
Balance 30 June 17
DIRECTORS
R. Baskerville
7,836,300
850,000
M. Ashton
R. Bevan
-
-
C. Ryan
17,000
T. Stianos
-
J. Bardwell
4,099,904
-
-
-
-
-
Total
11,953,204
850,000
KEY MANAGEMENT
D. Hinton
S. Bright
25,000
80,074
Total
105,074
-
-
-
-
-
-
-
-
-
-
-
69,444
69,444
-
-
79,800
-
143,200
8,686,300
-
79,800
17,000
143,200
-
4,099,904
223,000
13,026,204
27,093
-
27,093
52,093
149,518
201,611
Performance Rights held in Empired Limited
Performance rights are issued for nil consideration and do not have an exercise price. The movements and balances
of performance rights for the financial year are summarised in the below table.
Balance 01 Jul 16
Granted
Forfeited
Vested
Balance 30 June 17
DIRECTORS
R. Baskerville
2,294,915
Total
2,294,915
KEY MANAGEMENT
D. Hinton
S. Bright
Total
-
100,000
100,000
1,193,182
1,193,182
484,848
484,848
969,696
(650,000)
(650,000)
-
(25,000)
(25,000)
(850,000)
(850,000)
-
-
-
1,988,097
1,988,097
484,848
559,848
1,044,696
Page 29
EMPIRED LTD | ANNUAL REPORT | 2017DIRECTORS’ REPORT
Directors’ and Key Management Personnel Equity Holdings (continued)
Performance Rights granted to the Executive Team are under the Company’s Long Term Incentive Plan.
Refer to the notes to the financial statements for more detail regarding the plan.
Performance Rights granted as part of remuneration:
Grant date
Number granted
Average Value per
right at grant date
Value of rights
granted during
the year
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
9/12/2016
1,193,182
$0.48
$275,482
1/11/2016
1/11/2016
484,848
484,848
$0.42
$0.42
$106,026
$106,026
Grant date
Number granted
Average Value per
right at grant date
Value of rights
granted during
the year
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
16/11/2015
444,915
$0.86
$260,094
-
-
-
-
-
-
-
-
2017
NON-EXECUTIVE DIRECTORS
M. Ashton
R. Bevan
T. Stianos
C. Ryan
J. Bardwell
EXECUTIVE DIRECTORS
R. Baskerville
KEY MANAGEMENT
D. Hinton
S. Bright
2016
NON-EXECUTIVE DIRECTORS
M. Ashton
R. Bevan
T. Stianos
C. Ryan
J. Bardwell
EXECUTIVE DIRECTORS
R. Baskerville
KEY MANAGEMENT
D. Hinton
S. Bright
Page 30
EMPIRED LTD | ANNUAL REPORT | 2017DIRECTORS’ REPORT G. Performance Hurdles for Performance Rights vested during the financial year
The Company from time to time grants Performance Rights to executives under the Empired Executive Long
Term Incentive Plan. In the case of grants to the Managing Director, shareholder approval is sought at the Annual
General Meeting prior to Performance Rights being granted. As stated in the applicable Notice of Meeting, to
convene the members meeting to approve the grant of Performance Rights, the details of the performance hurdles
are not disclosed unless the performance hurdle is satisfied and then the Company will disclose the details in the
subsequent Remuneration Report.
During the financial year 2,125,000 Performance Rights vested and a corresponding number of ordinary shares
were issued as a result of achieving the relevant performance hurdle as follows:
PERFORMANCE HURDLE
Applicable to Russell Baskerville
- FY15 Basic EPS 4.2 cents
- FY15 Basic EPS 2.0 cents
- FY15 Basic EPS 2.1 cents
Applicable to other Executives
Total
ACHIEVED
NO. OF PERFORMANCE RIGHTS
4.82 cents
4.82 cents
4.82 cents
200,000
300,000
350,000
1,275,000
2,125,000
H. Employee Share Schemes
During the financial year, 451,323 ordinary shares were purchased on behalf of employees under the Exempt
Employee Share Plan at a cost of $215,560, and 233,554 ordinary shares were purchased on behalf of employees
under the Employee Share Ownership Loan Plan at a cost of $89,771.
I. Voting and comments made at the company’s 2016 Annual General Meeting
The company did not receive any specific feedback at the AGM on its remuneration report.
Signed in accordance with a resolution of directors.
23rd August 2017
Russell Baskerville
MANAGING DIRECTOR & CEO
Page 31
EMPIRED LTD | ANNUAL REPORT | 2017DIRECTORS’ REPORT
“By delivering holistic managed business services, we’re allowing our clients to focus on the high
value strategic activities that will allow them to make a real difference.“
Brett Gresele | Executive General Manager, Lifecycle Services
Page 32
CASE STUDYEMPIRED LTD | ANNUAL REPORT | 2017 Case Study
AIRWAYS
Transport
Airways provides air traffic control and
infrastructure to keep New Zealand’s skies safe.
Responsible for controlling all air movements across 30
We saw a need to introduce that to improve security
million square kilometres of airspace in New Zealand
and further delineate between personal and work data
and over the Pacific, the company handles over one
on personal devices.“
million air traffic movements a year.
The most obvious benefit of the shift into the cloud is
Airways had tried and trusted business systems in place.
simply that Airways now has an optimised environment,
But changes in the way necessary IT services can be
where licensing costs are accurately matched to
delivered were increasingly coming to the company’s
business requirements. Another important benefit is
attention and they looked to modernise.
Sean Kennedy, Manager Enterprise Business Systems at
Airways, says that pre-cloud, keeping track of licensing
that the successful move of common, but mission-
critical, business services is reinforcing the value and
benefit of a ‘cloud first’ approach.
agreements and costs across employees was proving
“With the cloud, the reliability is up there. Availability
onerous. Additionally, the Christchurch, Seddon and,
from anywhere is another key factor which our people
more recently, Kaikoura earthquakes “highlighted
appreciate. As a company with people all around the
the potential disadvantages of our Christchurch and
world, being able to connect straight into the data
Wellington data centres.“
centre in Australia is great,“ says Kennedy.
Kennedy says the key implementation aspects were the
Expenditure on IT services has improved not only
establishment of secure cloud identity management
on the bottom line, but in terms of visibility of costs
and the implementation of Microsoft Office 365 itself.
against licensing. “That means we can budget better,
“The big one was moving Exchange to the cloud and
know what the costs are and what we’re getting for the
introducing Mobile Device Management.
money,“ Kennedy says.
“The more we put in the cloud, the better it will be.“
Sean Kennedy
MANAGER ENTERPRISE BUSINESS SYSTEMS, AIRWAYS
Page 33
CASE STUDYEMPIRED LTD | ANNUAL REPORT | 2017 Case Study
PEREGRINE
Retail
Peregrine owns and operates
approximately 140 On the Run convenience
outlets across South Australia.
These outlets are multi-purpose, with many containing a
monitoring and reporting of temperature data, along
combination of petrol stations and fast food franchises,
with predictive analytics to determine the risk of an asset
such as Subway and Oporto.
Each of these stores has a varying number of fridges
and warmers to keep food at a safe and appropriate
breakdown. The monitoring and reporting is designed to
put real-time data in the hands of the maintenance team
for immediate follow-up.
temperature. On the Run staff were required to regularly
The contrast between the before and after scenario is
check and record the temperature of these fridges and
substantial. With a state-wide rollout of the automation
warmers, and complete a site manual which was then
solution, the financial losses from spoilage and
later sent back to the site support office. This process
equipment breakdowns could largely be a thing of
resulted in a delay in the data being presented and
the past, as would the frustrations and inefficiencies
analysed by the maintenance division; sometimes up
experienced by employees undertaking the essentially
to weeks or months. By the time the data reached the
futile task of manual data logging.
maintenance team, the asset may have already suffered a
breakdown, diminishing the value of the effort involved
in recording the temperature. This manual process not
only consumed significant staff time and effort, but also
presented the opportunity for human error to occur,
causing potentially disastrous breaches to the Food
Standard Code.
Peregrine wanted to reduce manual activities by
implementing automation tools. Based on the Azure
IoT Suite, Empired’s solution facilitates the automated
The new solution also allows for a systematic and simple
approach to adherence to compliance regulations,
which facilitates a more accurate and simple process and
removes capacity for potentially catastrophic breaches of
the Food Standard Code.
With more time to spend on the higher value tasks
on the job, this enables staff to deliver better levels of
service to customers, translating to increased customer
satisfaction and loyalty, sales and ultimately profits.
“The South Australian convenience sector is extremely competitive, so we are making a commitment to investment in
technology to increase efficiency in our site operations and ultimately, improve the customer experience.“
Brendon Hore
CIO, PEREGRINE
Page 34
CASE STUDYEMPIRED LTD | ANNUAL REPORT | 2017 Case Study
WOODS BAGOT
Architecture
Woods Bagot place users at the center of every design.
As a global design and consulting studio with a team
IP and knowledge of how organisations collaborate
of over 1100 experts across 17 studios in Australia, Asia,
effectively. Snap brings together O365’s collaboration
Europe, the Middle East and North America, effective
tools creating an integrated, targeted and relevant
communication and collaboration is a key business driver
experience for the user.
for Woods Bagot. With continual growth and a need
to operate as one connected organisation, moving to a
Modern Workplace became an even more integral part of
their strategy.
Woods Bagot now have an advanced engagement
portal for employees. They have a visually improved
front page with a focus on news, essential information
and feeds from their design platform and trusted sector
Whilst Woods Bagot’s legacy intranet had been a
pages to consolidate key sector information such as
successful platform to store and share information and
exemplar bids and templates.
knowledge, it was accepted that it was hosted on ageing
technology which needed a refresh. With the advent of
Microsoft Office 365 (O365), Woods Bagot saw a golden
opportunity to remove some of the maintenance costs
they were incurring and look at the threshold changes
that can be achieved through the introduction of
improved and more modern collaboration.
Woods Bagot is utilising most of the O365 suite of
features, predominantly Delve and Search, OneDrive
for business and Skype, all of which complete one of
their main goals of making employee communication
easy. The Snap portal allows the creation of virtual
communities to share ideas and information and
connect with one another across the globe. The portal
Empired architected a solution using their Snap 365
provides a complete, end-to-end user experience with
offering which gives organisations the ability to deploy a
the greatest gain being end to end collaboration,
templated portal to O365 rapidly using Empired’s existing
having one place for everything.
“Overall we were after an intranet that could underpin our stance as a leading global design firm – showcasing
our work, inspiring our designers while providing trusted and useful reference data.“
Tom Leydon
CIO, WOODS BAGO
Page 35
CASE STUDYEMPIRED LTD | ANNUAL REPORT | 2017 CORPORATE GOVERNANCE STATEMENT
Corporate Governance Statement
The Board is committed to achieving and demonstrating the highest standards of corporate governance.
As such, Empired Limited and its Controlled Entities ('‘the Group’') have adopted the third edition of the
Corporate Governance Principles and Recommendations which was released by the ASX Corporate Governance
Council on 27 March 2014 and became effective for financial years beginning on or after 1 July 2014.
The Group’s Corporate Governance Statement for the financial year ending 30 June 2017 was approved by the
Board on 23 August 2017. The Corporate Governance Statement is available on Empired's website at:
www.empired.com/Investor- Centre/Corporate-Governance/.
Page 36
Page 36
Empired Ltd | Annual Report | 2016
CONSOLIDATED FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2017 Consolidated Statement of Profit or
Loss & Other Comprehensive Income
For the year ended 30 June 2017
Notes
2017
$
2016
$
Continuing operations
Revenue
Cost of Sales
Gross profit
Other Income
Administration expenses
Marketing expenses
Occupancy expenses
Finance expenses
Loss on disposal of assets
Other expenses
Profit/(loss) before income tax from continuing operations
Income tax expense
Profit/(loss) from continuing operations for the year
Other comprehensive income, net of income tax
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translating foreign operations
Total comprehensive income/(loss) for the year
Earnings/(loss) per share (cents per share):
Basic earnings/(loss) per share
Diluted earnings/(loss) per share
4
4
5
6
7
8
8
167,391,710
159,982,870
(111,866,357)
(108,943,410)
55,525,353
51,039,460
663,721
390,198
(41,327,154)
(42,929,170)
(452,917)
(5,679,393)
(2,269,575)
(982,904)
(1,583,551)
3,893,580
(732,450)
3,161,130
(722,924)
(5,518,820)
(1,660,336)
(2,393,742)
(1,632,472)
(3,427,806)
1,703,428
(1,724,378)
(38,674)
179,443
3,122,456
(1,544,935)
2.42
2.42
(1.47)
(1.47)
Page 37
EMPIRED LTD | ANNUAL REPORT | 2017CONSOLIDATED FINANCIAL STATEMENTS Consolidated Statement of Financial Position
As at 30 June 2017
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Work in progress
Other current assets
Total Current Assets
Non-current assets
Investments in associate
Plant and equipment
Intangible assets
Other receivables
Deferred tax asset
Total Non-Current assets
TOTAL ASSETS
LIABILITIES
Current liabilities
Trade and other payables
Borrowings
Provisions
Deferred consideration
Total Current Liabilities
Non-current liabilities
Borrowings
Provisions
Deferred tax liability
Deferred consideration
Total Non-Current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Retained profits
TOTAL EQUITY
Page 38
Notes
2017
$
2016
$
9
10
11
12
13
14
15
10
7
17
18
19
20
18
19
7
20
21
2,004,385
23,027,144
9,452,907
2,352,211
2,970,688
22,212,724
10,399,024
2,614,113
36,836,647
38,196,549
-
20,965,878
58,052,451
33,424
3,191,630
192,085
21,139,187
55,104,355
68,161
3,246,657
82,243,383
79,750,445
119,080,030
117,946,994
22,138,984
6,720,722
5,854,399
-
26,153,318
13,451,719
6,027,245
2,200,993
34,714,105
47,833,275
9,057,872
4,028,337
-
-
13,086,209
47,800,314
71,279,716
54,204,746
2,071,835
15,003,135
6,120,877
4,834,336
694
6,753,111
17,709,018
65,542,293
52,404,701
38,783,679
1,779,017
11,842,005
71,279,716
52,404,701
CONSOLIDATED FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2017 Consolidated Statement of Cash Flows
For the year ended 30 June 2017
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Other receipts
Income tax paid
Dividends received from associate
Net cash flows from operating activities
Cash flows from investing activities
Purchase of intangibles
Purchase of plant and equipment
Deferred payment in relation to business acquisition of prior years
Proceeds from sale of associate
Net cash flows used in investing activities
Cash flows from financing activities
Finance costs (net)
Proceeds from issue of shares
Payment of capital raising costs
Repayment of bank borrowings
Options exercised
Repayment of finance lease liabilities
Proceeds from finance leases
Proceeds from borrowings
Net cash flows (used in)/from financing activities
Net (decrease)/increase in cash and cash equivalents
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
9 (i)
Notes
2017
$
2016
$
13
9 (ii)
185,368,794
165,496,214
(174,888,578)
(152,262,610)
-
(713,221)
75,943
9,842,938
(7,269,413)
(3,681,756)
(8,954,103)
231,024
88,621
(336,657)
214,887
13,200,455
(4,162,562)
(10,446,871)
(1,175,375)
-
(19,674,248)
(15,784,808)
(2,048,298)
16,000,000
(862,761)
(3,344,633)
-
(7,910,326)
2,194,991
1,900,605
5,929,578
(3,901,732)
86,131
2,970,688
(844,913)
(1,624,424)
-
(11,927)
(4,144,627)
200,000
(2,753,809)
3,243,845
932,055
(4,158,887)
(6,743,240)
109,506
9,604,422
2,970,688
Page 39
EMPIRED LTD | ANNUAL REPORT | 2017CONSOLIDATED FINANCIAL STATEMENTS Consolidated Statement of Changes in Equity
For the year ended 30 June 2017
Issued
Capital
Retained
Profits
Foreign
Currency
Translation
Reserve
Employee
Equity Benefits
Reserve
Total
Equity
$
$
$
$
$
Balance at 30 June 2015
37,779,130
13,566,383
(40,632)
1,410,259
52,715,140
Loss for the year
Other comprehensive income
Share-based payments
Options exercised
Issue of shares
Capital raising costs
-
-
-
200,000
816,475
(11,926)
(1,724,378)
-
-
-
-
-
-
179,443
-
-
-
-
-
-
229,947
-
-
-
(1,724,378)
179,443
229,947
200,000
816,475
(11,926)
Balance at 30 June 2016
38,783,679
11,842,005
138,811
1,640,206
52,404,701
Profit for the year
Other comprehensive income/(loss)
Share-based payments
Issue of shares
Capital raising costs
-
-
-
16,025,000
(603,933)
3,161,130
-
-
-
-
-
(38,674)
-
-
-
-
-
331,492
-
-
3,161,130
(38,674)
331,492
16,025,000
(603,933)
Balance at 30 June 2017
54,204,746
15,003,135
100,137
1,971,698
71,279,716
Page 40
CONSOLIDATED FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2017 “We’re passionate about helping clients achieve their strategic objectives
and encouraging our people become the absolute best they can be.“
Cheryl Adams | Practice Manager, Dynamics Solutions
Page 41
EMPIRED LTD | ANNUAL REPORT | 2017CHAIRMAN & CEO REVIEW Notes to the Financial Statements
For the year ended 30 June 2017
1. CORPORATE INFORMATION
The financial report of Empired Ltd for the year ended
30 June 2017 was authorised for issue in accordance
with a resolution of the directors on 23 August 2017.
Empired Limited, whose shares are publicly traded
on the Australian Securities Exchange, is a company
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
(b) New and revised standards that are
effective for these financial statements
A number of new and revised standards are effective
for the current reporting period, however there
was no need to change accounting polices or make
retrospective adjustments as a result of adopting
these standards. Information on these new standards
is presented below.
AASB 2014-4 Amendments to Australian
Accounting Standards – Clarification of Acceptable
Methods of Depreciation and Amortisation
The amendments to AASB 116 prohibit the use of a
revenue-based depreciation method for property,
plant and equipment. Additionally, the amendments
provide guidance in the application of the
diminishing balance method for property, plant and
equipment.
accordance with the requirements of the Corporations
The amendments to AASB 138 present a rebuttable
Act 2001, Australian Accounting Standards and other
presumption that a revenue-based amortisation
authoritative pronouncements of the Australian
method for intangible assets is inappropriate. This
Accounting Standards Board. Compliance with
rebuttable presumption can be overcome (i.e. a
Australian Accounting Standards results in compliance
revenue-based amortisation method might be
with the International Financial Reporting Standards
appropriate) only in two (2) limited circumstances:
(‘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
•
the intangible asset is expressed as a measure
of revenue, for example when the predominant
limiting factor inherent in an intangible asset
is the achievement of a revenue threshold (for
instance, the right to operate a toll road could be
based on a fixed total amount of revenue to be
generated from cumulative tolls charged); or
selected non-current assets, financial assets and
• when it can be demonstrated that revenue and
financial liabilities. The financial report is presented in
the consumption of the economic benefits of the
Australian dollars.
intangible asset are highly correlated.
AASB 2014-4 is applicable to annual reporting
periods beginning on or after 1 January 2016.
Page 42
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2017 AASB 2015-2 Amendments to Australian
AASB 2016-2 is applicable to annual reporting
Accounting Standards – Disclosure Initiative:
periods beginning on or after 1 January 2017.
Amendments to AASB 101
AASB 2016-1 Amendments to Australian
The Standard makes amendments to AASB 101
Accounting Standards – Recognition of Deferred Tax
Presentation of Financial Statements arising from the
Assets for Unrealised Losses
IASB’s Disclosure Initiative project.
The amendments:
• clarify the materiality requirements in AASB
101, including an emphasis on the potentially
detrimental effect of obscuring useful information
with immaterial information
• clarify that AASB 101’s specified line items in
the statement(s) of profit or loss and other
comprehensive income and the statement of
financial position can be disaggregated
• add requirements for how an entity should
present subtotals in the statement(s) of profit and
loss and other comprehensive income and the
statement of financial position
• clarify that entities have flexibility as to the
AASB 2016-1 amends AASB 112 Income Taxes to clarify
how to account for deferred tax assets related to debt
instruments measured at fair value, particularly where
changes in the market interest rate decrease the fair
value of a debt instrument below cost.
AASB 2016-1 is applicable to annual reporting
periods beginning on or after 1 January 2017.
(c) Impact of standards issued but not
yet applied
New and revised accounting standards and
amendments that are currently issued for future
reporting periods that are relevant to the Company
include:
AASB 9 Financial Instruments (December 2014)
order in which they present the notes, but
AASB 9 introduces new requirements for the
also emphasise that understandability and
classification and measurement of financial assets and
comparability should be considered by an entity
liabilities and includes a forward-looking ‘expected
when deciding that order
loss’ impairment model and a substantially-changed
•
remove potentially unhelpful guidance in AASB
101 for identifying a significant accounting policy.
AASB 2015-2 is applicable to annual reporting
periods beginning on or after 1 January 2016.
AASB 2016-2 Amendments to Australian
approach to hedge accounting.
These requirements improve and simplify the
approach for classification and measurement of
financial assets compared with the requirements of
AASB 139. The main changes are:
Accounting Standards – Disclosure Initiative:
• Financial assets that are debt instruments
Amendments to AASB 107
AASB 2016-2 amends AASB 107 Statement of
Cash Flows to require entities preparing financial
statements in accordance with Tier 1 reporting
requirements to provide disclosures that enable
users of financial statements to evaluate changes in
liabilities arising from financing activities, including
both changes arising from cash flows and
non-cash changes.
will be classified based on: (i) the objective of
the entity’s business model for managing the
financial assets; and (ii) the characteristics of the
contractual cash flows.
• Allows an irrevocable election on initial
recognition to present gains and losses on
investments in equity instruments that are
not held for trading in other comprehensive
income (instead of in profit or loss). Dividends in
respect of these investments that are a return on
Page 43
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2017 investment can be recognised in profit or loss and
Standard is not expected to have a material impact
there is no impairment or recycling on disposal of
on the transactions and balances recognised in the
the instrument.
financial statements when it is first adopted for the
•
Introduces a ‘fair value through other
year ending 30 June 2019.
comprehensive income’ measurement category
for particular simple debt instruments.
• Financial assets can be designated and measured
at fair value through profit or loss at initial
recognition if doing so eliminates or significantly
AASB 15 Revenue from Contracts with Customers
AASB 15 replaces AASB 118: Revenue, AASB 111
Construction Contracts and some revenue-related
Interpretations. In summary, AASB 15:
reduces a measurement or recognition
• establishes a new revenue recognition model;
inconsistency that would arise from measuring
assets or liabilities, or recognising the gains and
losses on them, on different bases.
• Where the fair value option is used for financial
liabilities the change in fair value is to be
accounted for as follows:
»
the change attributable to changes in credit
risk are presented in Other Comprehensive
Income (OCI)
»
the remaining change is presented in profit
or loss.
• changes the basis for deciding whether revenue is
to be recognised over time at a point in time;
• provides a new and more detailed guidance on
specific topics (eg multiple element arrangements,
variable pricing, rights of return and warranties);
and
•
expands disclosures about revenue.
The estimated potential impact of the impending
change, based upon current Group business
operations, would be to defer the recognition of
revenue and costs on isolated revenue streams of the
If this approach creates or enlarges an accounting
Group and recognise that revenue as performance
mismatch in the profit or loss, the effect of the
obligations are satisfied taking into consideration the
changes in credit risk are also presented in profit or
core principles of AASB 15.
loss. Otherwise, the following requirements have
generally been carried forward unchanged from AASB
139 into AASB 9:
»
classification and measurement of financial
liabilities; and
The estimated potential financial impact on revenue
and after tax profit for the year ended 30 June 2017,
based upon current Group business operations, is a
reduction of $1,347,000 and $302,000 respectively.
The effective date is for annual reporting periods
»
derecognition requirements for financial assets
beginning on or after 1 July 2018.
and liabilities.
AASB 16 Leases
AASB 9 requirements regarding hedge accounting
represent a substantial overhaul of hedge accounting
that enable entities to better reflect their risk
AASB 16 replaces AASB 117 Leases and some lease-
related Interpretations. In summary, AASB 16:
management activities in the financial statements.
•
requires all leases to be accounted for ‘on-balance
The effective date is for annual reporting periods
beginning on or after 1 January 2018.
The Company is yet to undertake a detailed
assessment of the impact of AASB 9. However, based
on the Company’s preliminary assessment, the
sheet’ by lessees, other than short-term and low
value asset leases;
• provides new guidance on the application of the
definition of lease and on sale and lease back
accounting;
Page 44
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2017 •
largely retains the existing lessor accounting
Profit or loss and other comprehensive income of
requirements in AASB 117; and
subsidiaries acquired or disposed of during the year
•
requires new and different disclosures about
leases.
The estimated impact of the impending change
as at 30 June 2017 can be summarised as follows:
introduction of a right-of-use asset of $21.7m, an
increase in other financial liabilities of $24.6m, a
reduction in provisions of $4.1m and a derecognition
of deferred tax assets of $1.2m. The financial impact
on overall profit and cash flow is not considered
material.
This preliminary assessment is indicative and has
not taken fully into consideration the transitional
arrangements or practical expedients available under
AASB 16. The assessment is also based upon current
information that may by its nature change between this
reporting date and the application date of AASB 16.
The effective date is for annual reporting periods
beginning on or after 1 July 2019.
(d) Basis of consolidation
The Group financial statements consolidate those of
the Parent Company and all of its subsidiaries as of
30 June 2016. The Parent controls a subsidiary if it
is exposed, or has rights, to variable returns from its
involvement with the subsidiary and has the ability
to affect those returns through its power over the
subsidiary. All subsidiaries have a reporting date of
30 June.
All transactions and balances between Group
companies are eliminated on consolidation, including
unrealised gains and losses on transactions between
Group companies. Where unrealised losses on intra-
group asset sales are reversed on consolidation, the
underlying asset is also tested for impairment from a
group perspective. Amounts reported in the financial
statements of subsidiaries have been adjusted where
necessary to ensure consistency with the accounting
policies adopted by the Group.
are recognised from the effective date of acquisition,
or up to the effective date of disposal, as applicable.
Non-controlling interests, presented as part of equity,
represent the portion of a subsidiary’s profit or loss
and net assets that is not held by the Group. The
Group attributes total comprehensive income or loss
of subsidiaries between the owners of the parent and
the non-controlling interests based on their respective
ownership interests.
Business Combinations
The Group applies the acquisition method in
accounting for business combinations. The
consideration transferred by the Group to obtain
control of a subsidiary is calculated as the sum of
the acquisition-date fair values of assets transferred,
liabilities incurred and the equity interests issued by
the Group, which includes the fair value of any asset
or liability arising from a contingent consideration
arrangement. Acquisition costs are expensed as
incurred.
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. Assets acquired and liabilities
assumed are generally measured at their acquisition-
date fair values.
(f) Property, plant and equipment
Plant and equipment is stated at cost less
accumulated depreciation and any impairment in
value. Depreciation is calculated on a straight line
basis over the estimated useful life of the asset as
follows:
Leased Equipment
3 yrs
Leasehold Improvements 5–20 yrs
Furniture & Fittings
1–15 yrs
Computer Hardware
1–8 yrs
Page 45
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2017 Impairment
indicate that the carrying value may be impaired.
The carrying values of plant and equipment are
Goodwill is not amortised.
reviewed for impairment when events or changes in
circumstances indicate the carrying value may not
be recoverable. For an asset that does not generate
largely independent cash inflows, the recoverable
amount is determined for the cash-generating unit to
which the asset belongs. If any such indication exists
and where the carrying values exceed the estimated
recoverable amount, the assets or cash-generating
units are written down to their recoverable amount.
The recoverable amount of plant and equipment is
the greater of fair value less costs to sell and value
in use. In assessing value in use, the estimated future
cash flows are discounted to their present value using
a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks
specific to the asset. An item of property, plant and
equipment is derecognised upon disposal or when
no future economic benefits are expected to arise
from the continued used of the asset. Any gain or
loss arising on derecognition of the asset (calculated
as the difference between the net disposal proceeds
and the carrying amount of the item) is included in
the statement of profit or loss in the period the item
is derecognised.
(g) Borrowing costs
Borrowing costs are recognised as an expense
when incurred except where incurred in relation
As at the acquisition date, any goodwill acquired
is allocated to each of the cash-generating units
expected to benefit from the combination’s
synergies. Impairment is determined by assessing the
recoverable amount of the cash-generating unit to
which the goodwill relates. Where the recoverable
amount of the cash-generating unit is less than the
carrying amount, an impairment loss is recognised.
Where goodwill forms part of a cash-generating unit
and part of the operation within that unit is disposed
of, the goodwill associated with the operation
disposed of is included in the carrying amount of
the operation when determining the gain or loss on
disposal of the operation.
Goodwill disposed of in this circumstance is measured
on the basis of the relative values of the operation
disposed of and the portion of the cash-generating
unit retained.
(i) Intangible Assets Other Than Goodwill
Amortisation is calculated on a straight-line basis over
the estimated useful life of the asset as follows:
Software
Other
1–7 yrs
3–7 yrs
Acquired both separately and from a business
combination
to qualifying assets where borrowing costs are
Intangible assets acquired separately are capitalised
capitalised.
(h) 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 reviewed for impairment, annually or
more frequently if events or changes in circumstances
at cost. Following initial recognition, the cost model is
applied to the class of intangible assets.
Where amortisation is charged on assets with finite
lives, this expense is taken to the statement of profit
or loss through the ‘amortisation expenses’ line item.
Intangible assets, excluding development costs,
created within the business are not capitalised and
expenditure is charged against profits in the period in
which the expenditure is incurred.
Intangible assets are tested for impairment where
an indicator of impairment exists and in the case
Page 46
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2017 of indefinite lived intangibles annually, either
or groups of assets, in which case, the recoverable
individually or at the cash generating unit level.
amount is determined for the cash-generating unit to
Useful lives are also examined on an annual basis
which the asset belongs.
and adjustments, where applicable, are made on a
prospective basis.
In assessing value in use, the estimated future cash
flows are discounted to their present value using
Research and development costs
a pre tax discount rate that reflects current market
Research costs are expensed as incurred.
assessments of the time value of money and the risks
Development expenditure incurred on an
individual project is carried forward when its future
recoverability can be reasonably assured.
Following the initial recognition of the development
expenditure, the cost model is applied requiring
the asset to be carried at cost less any accumulated
amortisation and accumulated impairment losses.
Software
Costs incurred in developing software are capitalised
where future financial benefits can be reasonably be
assured. These costs include employee costs incurred
on development along with appropriate portion of
relevant overheads.
Amortisation is calculated on a straight-line basis
depending on the useful life of the asset.
specific to the asset.
(k) Operating segments
The Group has more than one reportable operating
segment identified by and used by the Chief
Executive Officer (chief operating decision maker)
in assessing the performance and determining the
allocation of resources. The Group however has
aggregated the segments in accordance with the
aggregation criteria of AASB 8.
(l) Financial instruments
Recognition, initial measurement and
derecognition
Financial assets and financial liabilities are recognised
when the Group becomes a party to the contractual
provisions of the financial instrument, and are
Gains or losses arising from derecognition of an
measured initially at fair value adjusted by transactions
intangible asset are measured as the difference
costs, except for those carried at fair value through
between the net disposal proceeds and the
profit or loss, which are measured initially at fair value.
carrying amount of the asset and are recognised
Subsequent measurement of financial assets and
on the statement of profit or loss when the asset is
financial liabilities are described below.
derecognised.
(j) Impairment of non-financial assets
At each reporting date, the Group assesses whether
there is any indication that an asset may be impaired.
Where an indicator of impairment exists, the Group
makes a formal estimate of recoverable amount.
Where the carrying amount of an asset exceeds its
Financial assets are derecognised when the
contractual rights to the cash flows from the
financial asset expire, or when the financial asset
and all substantial risks and rewards are transferred.
A financial liability is derecognised when it is
extinguished, discharged, cancelled or expires.
Classification and subsequent measurement of
recoverable amount the asset is considered impaired
financial assets
and is written down to its recoverable amount.
Recoverable amount is the greater of fair value less
costs to sell and value in use. It is determined for an
individual asset, unless the asset’s value in use cannot
be estimated to be close to its fair value less costs
to sell and it does not generate cash inflows that
are largely independent of those from other assets
For the purpose of subsequent measurement,
financial assets other than those designated and
effective as hedging instruments are classified into
the following categories upon initial recognition:
•
•
loans and receivables
financial assets at Fair Value Through Profit or Loss
(‘FVTPL’)
Page 47
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2017 Held-To-Maturity (‘HTM’) investments; or
or determinable payments, and it is the Group’s
•
•
Available-For-Sale (‘AFS’) financial assets
All financial assets except for those at FVTPL are
subject to review for impairment at least at each
reporting date to identify whether there is any
objective evidence that a financial asset or a group
of financial assets is impaired. Different criteria to
determine impairment are applied for each category
of financial assets, which are described below. All
income and expenses relating to financial assets that
are recognised in profit or loss are presented within
finance costs, finance income or other financial items,
except for impairment of trade receivables which is
presented within other expenses.
(i) Financial assets at fair value through
profit or loss
Financial assets at FVTPL include financial assets that
are either classified as held for trading or that meet
certain conditions and are designated at FVTPL upon
initial recognition. All derivative financial instruments
fall into this category, except for those designated
and effective as hedging instruments, for which the
hedge accounting requirements apply.
Assets in this category are measured at fair value with
gains or losses recognised in profit or loss. The fair
values of financial assets in this category are determined
by reference to active market transactions or using a
valuation technique where no active market exists.
(ii) Loans and receivables
Loans and receivables are non-derivative financial
assets with fixed or determinable payments that
are not quoted in an active market. After initial
recognition, these are measured at amortised cost
using the effective interest method, less provision
for impairment. Discounting is omitted where the
effect of discounting is immaterial. The Group’s trade
and most other receivables fall into this category of
financial instruments.
(iii) Held-to-maturity investments
Held-to-maturity investments are non-derivative
financial assets that have fixed maturities and fixed
Page 48
intention to hold these investments to maturity. They
are subsequently measured at amortised cost.
Held-to-maturity investments are included in non-
current assets, except for those which are expected
to mature within 12 months after the end of the
reporting period. (All other investments are classified
as current assets). If during the period the Group sold
or reclassified more than an insignificant amount of
the held-to-maturity investments before maturity, the
entire held-to-maturity investments category would
be tainted and reclassified as available-for-sale.
(iv) Available-for-sale financial assets
Available-for-sale financial assets are non-derivative
financial assets that are either not suitable to be
classified into other categories of financial assets
due to their nature, or they are designated as such
by management. They comprise investments in the
equity of other entities where there is neither a fixed
maturity nor fixed or determinable payments.
Available-for-sale financial assets are included in
non-current assets, except those which are expected
to mature within 12 months after the end of the
reporting period. (All other financial assets are
classified as current assets).
Classification and subsequent measurement of
financial liabilities
The Group’s financial liabilities include borrowings
and trade and other payables. Financial liabilities
are measured subsequently at amortised cost using
the effective interest method, except for financial
liabilities held for trading or designated at FVTPL, that
are carried subsequently at fair value with gains or
losses recognised in profit or loss.
Impairment
At the end of each reporting period, the Group assesses
whether there is objective evidence that a financial
instrument has been impaired. In the case of available-
for-sale financial instruments, a significant or prolonged
decline in the value of the instrument is considered
to determine whether an impairment has arisen.
Impairment losses are recognised in the statement of
profit or loss and other comprehensive income.
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2017 (m) Trade and other receivables
Trade receivables, which generally have 30-45 day terms,
are recognised and carried at original invoice amount
less an allowance for any uncollectible amounts.
An impairment provision is recognised when there is
objective evidence that the Group will not be able to
collect the receivable. Bad debts are written off when
identified.
(n) Cash and cash equivalents
Cash and short-term deposits in the statement of
financial position comprise cash at bank, in hand and
short-term deposits with an original maturity of three
months or less.
For the purposes of the statement of cash flows,
cash and cash equivalents consist of cash and cash
equivalents as defined above, net of outstanding
bank overdrafts.
(o) Interest-bearing loans and borrowings
All loans and borrowings are initially recognised at
cost, being the fair value of the consideration received
net of issue costs associated with the borrowing.
After initial recognition, interest-bearing loans and
borrowings are subsequently measured at amortised
cost using the effective interest method. Amortised
cost is calculated by taking into account any issue
costs, and any discount or premium on settlement.
Gains and losses are recognised in the statement of
profit or loss and other comprehensive income when
the liabilities are derecognised and as well as through
the amortisation process.
(p) Provisions
Provisions are recognised when the Group has a
present obligation (legal or constructive) as a result of
a past event, it is probable that an outflow of resources
embodying economic benefits will be required to settle
the obligation and a reliable estimate can be made of
the amount of the obligation.
Where the Group expects some or all of a provision to
be reimbursed, for example under an insurance contract,
the reimbursement is recognised as a separate asset but
only when the reimbursement is virtually certain. The
expense relating to any provision is presented in the
profit or loss net of any reimbursement.
If the effect of the time value of money is material,
provisions are determined by discounting the
expected future cash flows at a pre-tax rate that
reflects current market assessments of the time value
of money and, where appropriate, the risks specific to
the liability. Where discounting is used, the increase in
the provision due to the passage of time is recognised
as a finance cost.
(q) Employee benefits
(i) Short-term employee benefits
Liabilities for wages and salaries, including non-
monetary benefits, and accumulating sick leave
expected to be settled within 12 months of
the reporting date are recognised in respect of
employees' services up to the reporting date. They
are measured at the amounts expected to be paid
when the liabilities are settled. Expenses for non-
accumulating sick leave are recognised when the
leave is taken and are measured at the rates paid
or payable.
(ii) Other long-term employee benefits
The Group’s liabilities for annual leave and long
service leave are included in other long term benefits
as they are not expected to be settled wholly within
twelve (12) months after the end of the period in
which the employees render the related service. They
are measured at the present value of the expected
future payments to be made to employees. The
expected future payments incorporate anticipated
future wage and salary levels, experience of employee
departures and periods of service, and are discounted
at rates determined by reference to market yields
at the end of the reporting period on high quality
corporate bonds published by Milliman Australia/
G100 that have maturity dates that approximate the
timing of the estimated future cash outflows. Any re-
measurements arising from experience adjustments
and changes in assumptions are recognised in profit
or loss in the periods in which the changes occur.
The Group presents employee benefit obligations as
Page 49
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2017 current liabilities in the statement of financial position
any expense not yet recognised for the award is
if the Group does not have an unconditional right to
recognised immediately. However, if a new award is
defer settlement for at least twelve (12) months after
substituted for the cancelled award, and designated
the reporting period, irrespective of when the actual
as a replacement award on the date that it is granted,
settlement is expected to take place.
the cancelled and new award are treated as if they
(r) Share-based payment transactions
The Group provides remuneration to certain
were a modification of the original award.
(s) Employee share schemes
employees, including directors, of the Group in the
In New Zealand, an Employee Share Ownership Plan
form of share-based payment transactions, whereby
operates. The scheme offers shares at a discount to
employees render services in exchange for shares or
the market price of Empired shares and provides
rights over shares (‘equity-settled transactions’).
the balance of the purchase as an interest free full
The cost of these equity-settled transactions with
employees is measured by reference to the fair value
at the date at which they are granted. The fair value
recourse loan. The shares are being held in Trust for
three years by which time the loan will be repaid and
the shares will vest to the employees.
is measured using a variation of the binomial option
In Australia, the Employee Share Plan is available
pricing model that takes into account the terms and
which involves a salary sacrifice on a monthly basis
conditions on which the instruments were granted
and a contribution from Empired to purchase shares
and the current likelihood of achieving the specified
in Empired up to a maximum of $1,000 per employee
target. Further, the cost of equity-settled transactions
per annum. The $1,000 maximum is based on a tax
is recognised, together with a corresponding increase
exemption allowable under the Australian taxation
in the Employee Equity Benefits Reserve, over the
legislation. Shares purchased are subject to a three year
period in which the performance conditions are
trading restriction whilst an employee of Empired.
fulfilled, ending on the date on which the relevant
employees become fully entitled to the award
(t) Leases
(‘vesting date’).
The cumulative expense recognised for equity-settled
transactions at each reporting date until vesting date
reflects the extent to which the vesting period has
expired and the number of awards that, in the opinion
of the directors of the Group, will ultimately vest.
Finance leases, which transfer to the Group
substantially all the risks and benefits incidental to
ownership of the leased item, are capitalised at the
inception of the lease at the fair value of the leased
property or, if lower, at the present value of the
minimum lease payments.
This opinion is formed based on the best available
Lease payments are apportioned between the finance
information at reporting date. No adjustment is made
charges and reduction of the lease liability so as to
for the likelihood of market performance conditions
achieve a constant rate of interest on the remaining
being met as the effect of these conditions is included
balance of the liability. Finance charges are charged
in the determination of fair value at grant date.
directly against income.
Where the terms of an equity-settled award are
Capitalised leased assets are depreciated over the
modified, as a minimum an expense is recognised as
shorter of the estimated useful life of the asset or the
if the terms had not been modified. In addition, an
lease term.
expense is recognised for any increase in the value
of the transaction as a result of the modification,
as measured at the date of modification. Where
an equity-settled award is cancelled, it is treated
as if it had vested on the date of cancellation, and
Leases where the lessor retains substantially all the
risks and benefits of ownership of the asset are
classified as operating leases. Initial direct costs
incurred in negotiating an operating lease are added
Page 50
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2017 to the carrying amount of the leased asset and
are measured at historical cost (translated using the
recognised over the lease term on the same bases
exchange rates at the date of the transaction), except
as the lease income.
Operating lease payments are recognised as an
expense in the consolidated statement of profit or
for non-monetary items measured at fair value which
are translated using the exchange rates at the date
when fair value was determined.
loss and other comprehensive income on a straight-
In the Group’s financial statements, all assets, liabilities
line basis over the lease term.
(u) Revenue
and transactions of Group entities with a functional
currency other than the $AUD are translated into
$AUD upon consolidation. The functional currency
Revenue is recognised to the extent that it is probable
of the entities in the Group has remained unchanged
that the economic benefits will flow to the Group and
during the reporting period.
the revenue can be reliably measured. The following
specific recognition criteria must also be met before
revenue is recognised:
Rendering of services
On consolidation, assets and liabilities have been
translated into $AUD at the closing rate at the
reporting date. Goodwill and fair value adjustments
arising on the acquisition of a foreign entity have
Revenue from the provision of services is recognised
been treated as assets and liabilities of the foreign
when the service has been provided. Stage
entity and translated into $AUD at the closing rate.
completion or percentage completion method is used
Income and expenses have been translated into
to determine earned revenue for services that have
$AUD at the average rate over the reporting period.
fixed revenue.
Maintenance, hosting and support fees
Revenue from maintenance, hosting and support is
recognised and bought to account over the time it
is earned. Unexpired revenue is recorded as
unearned income.
Interest received
Exchange differences are charged or credited to
other comprehensive income and recognised in the
currency translation reserve in equity. On disposal
of a foreign operation the cumulative translation
differences recognised in equity are reclassified to
profit or loss and recognised as part of the gain or
loss on disposal.
Revenue is recognised as the interest accrues (using
(w) Income tax
the effective interest method, which is the rate that
exactly discounts estimated future cash receipts
through the expected life of the financial instrument)
to the net carrying amount of the financial asset.
(v) Foreign currency transactions
The consolidated financial statements are presented
in Australian Dollars (‘$AUD’), which is also the
functional currency of the Parent Company.
Foreign currency transactions are translated into
the functional currency using the exchange rates
prevailing at the date of the transaction. Foreign
exchange gains and losses resulting from the
Deferred income tax is provided on all temporary
differences at the reporting date between the tax
bases of assets and liabilities and their carrying
amounts for the financial reporting purposes.
Deferred income tax liabilities are recognised for all
taxable temporary differences:
• except where the deferred income tax liability
arises from the initial recognition of an asset or
liability in a transaction that is not a business
combination and, at the time of the transaction,
affects neither the accounting profit nor taxable
profit or loss; and
settlement of such transactions and from the
•
in respect of taxable temporary differences
re- measurement of monetary items at year end
associated with investments in subsidiaries,
exchange rates are recognised in profit or loss. Non-
associates and interests in joint ventures, except
monetary items are not retranslated at year-end and
where the timing of the reversal of the temporary
Page 51
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2017 differences can be controlled and it is probable
(x) Other taxes
that the temporary differences will not reverse in
Revenues, expenses and assets are recognised net of
the foreseeable future.
the amount of GST except:
• Deferred income tax assets are recognised for all
deductible temporary differences, carry-forward
of unused tax assets and unused tax losses, to the
extent that it is probable that taxable profit will be
available against which the deductible temporary
differences, and the carry-forward of unused tax
assets and unused tax losses can be utilised:
•
except where the deferred income tax asset
•
where the GST incurred on a purchase of goods
and services is not recoverable from the taxation
authority, in which case the GST is recognised as
part of the cost of acquisition of the asset or as
part of the expense item as applicable; and
•
receivables and payables are stated with the
amount of GST included.
relating to the deductible temporary differences
The net amount of GST recoverable from, or payable
arises from the initial recognition of an asset or
to, the taxation authority is included as part of
liability in a transaction that is not a business
receivables or payables in the statement of financial
combination and, at the time of the transaction,
position. Cash flows are included in the statement of
affects neither the accounting profit nor taxable
cash flows on a gross basis and the GST component
profit or loss; and
•
in respect of deductible temporary differences
associated with investments in subsidiaries,
of cash flows arising from investing and financing
activities, which is recoverable from, or payable to,
the taxation authority are classified as operating
associates and interests in joint ventures, deferred
cash flows.
tax assets are only recognised to the extent that
it is probable that the temporary differences will
reverse in the foreseeable future and taxable profit
will be available against which the temporary
Commitments and contingencies are disclosed net of
the amount of GST recoverable from, or payable to,
the taxation authority.
differences can be utilised.
(y) Investments in associates
The carrying amount of deferred income tax assets
is reviewed at each reporting date and reduced to
the extent that it is no longer probable that sufficient
Associates are those entities over which the Group is
able to exert significant influence but which are not
subsidiaries. Investments in associates are accounted
taxable profit will be available to allow all or part of
for using the equity method.
the deferred income tax asset to be utilised.
Deferred income tax assets and liabilities are
measured at the tax rates that are expected to apply
Any goodwill or fair value adjustment attributable to
the Group’s share in the associate is not recognised
separately and is included in the amount recognised
to the year when the asset is realised or the liability
as investment.
is settled, based on tax rates (and tax laws) that
have been enacted or substantively enacted at the
reporting date.
Income taxes relating to items recognised directly in
The carrying amount of the investment in associates is
increased or decreased to recognise the Group’s share
of the profit or loss and other comprehensive income
of the associate, adjusted where necessary to ensure
equity are recognised in equity and not in profit or loss.
consistency with the accounting policies of the Group.
Unrealised gains and losses on transactions between
the Group and its associates are eliminated to the
extent of the Group’s interest in those entities. Where
unrealised losses are eliminated, the underlying asset
is also tested for impairment.
Page 52
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2017 (z) Significant accounting judgements,
estimates and assumptions
Estimates and judgements are continually evaluated
and are based on historical experience and other
factors, including expectations of future events that
may have a financial impact on the entity and that are
believed to be reasonable under the circumstances.
Critical accounting estimates and assumptions
The Group makes estimates and assumptions
concerning the future. The estimates and assumptions
that have a significant risk of causing a material
adjustment to the carrying amounts of assets and
liabilities within the next financial year are discussed
(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 promotion and inflation have been
taken into account.
The Group uses the high quality corporate bond rate
as the discount rate when measuring its Australian
dollar dominated long term employee benefits.
(iv) Estimation of useful lives of assets
below. The Group tests annually whether goodwill
The Group determines the estimated useful lives
has suffered any impairment, in accordance with the
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 result of technical innovations or
some other event. The depreciation and amortisation
charge will increase where the useful lives are
less than previously estimated lives, or technically
obsolete or non-strategic assets that have been
abandoned or sold will be written off or written down.
accounting policies.
(i) Impairment of goodwill and intangibles with
indefinite useful lives
The Group determines whether goodwill and
intangibles with indefinite useful lives are impaired at
least on an annual basis. This requires an estimation of
the recoverable amount of the cash-generating unit
to which the goodwill and intangibles with indefinite
useful lives are allocated. The assumptions used in this
estimation of recoverable amount and carrying amount
of goodwill and intangibles with indefinite useful lives
are discussed in note 15.
(ii) Share based payments
The Group measures the cost of equity-settled
transactions with employees by reference to the fair
value of the equity instruments at the date at which
they are granted. The fair value is measured by using
a variation of the binomial option pricing model
that takes into account the terms and conditions on
which the instruments were granted and the current
likelihood of achieving the specified target. The
accounting estimates and assumptions relating to
equity-settled share- based payments would have no
impact on the carrying amounts of assets and liabilities
within the next annual reporting period but may
impact profit or loss and equity.
Page 53
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2017 3. SEGMENT REPORTING
Management identifies its operating segments based on the Group's geographical presence, which represent
the main products and services provided by the Group. The Group's two operating segments are:
• Australia
• New Zealand
The revenues and profit generated by each of the Group’s operating segments and segment assets are
summarised as follows:
2017
Revenue
From external customers
From other segment
Total
Segment profit (EBITDA)
Segment assets
2016
Revenue
From external customers
From other segment
Total
Segment profit (EBITDA)
Segment assets
Australia
New Zealand
Elimination
$
$
Total
$
104,020,398
63,371,312
-
167,391,710
379,730
1,499,691
(1,879,421)
-
104,400,128
64,871,003
(1,879,421)
167,391,710
10,625,304
81,592,798
4,744,459
37,487,232
Australia
New Zealand
Elimination
$
$
100,319,331
59,663,539
-
-
-
15,369,763
119,080,030
Total
$
159,982,870
634,588
2,437,142
(3,071,730)
-
100,953,919
62,100,681
(3,071,730)
159,982,870
2,953,986
4,515,340
81,154,966
36,792,028
-
-
7,469,326
117,946,994
The Group’s segment operating EBITDA reconciles to the Group’s profit before tax as presented in the financial
statements as follows:
2017
$
2016
$
15,369,763
7,469,326
(2,251,636)
(1,624,425)
(8,241,643)
(6,878,965)
(982,904)
(2,393,742)
3,893,580
(3,427,806)
Total reporting segment operating EBITDA
Less:
Finance costs (net)
Depreciation and amortisation expenses
Loss on disposal of assets
Group profit/(loss) before tax
Page 54
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2016NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2017 4. REVENUE
Sales Revenue
Services revenue
Product and license revenue
Total sales revenue
Other Income
Gain from derecognition of consideration payable
Payroll tax rebate
Share of associate profit (see note 13)
Profit on sale of associate
Interest
Vendor warranty claim
Other
Total other income
2017
$
2016
$
152,586,167
141,791,257
14,805,543
18,191,613
167,391,710
159,982,870
-
-
92,259
21,476
17,939
532,047
-
663,721
125,611
136,000
66,304
-
35,912
-
26,371
390,198
Total revenue and other income
168,055,431
160,373,068
5. ADMINISTRATION EXPENSES
Employee benefits (not included in cost of sales)
Depreciation expenses
Amortisation expenses
Doubtful debts
Other administration expenses
Total
6. FINANCE EXPENSES
Interest expenses – bank borrowings
Interest expenses – finance leases and hire purchase
Interest expenses – other
Total
2017
2016
25,202,104
26,847,135
4,360,445
3,881,198
-
7,883,407
3,692,359
3,186,607
710,460
8,492,609
41,327,154
42,929,170
2017
2016
1,526,645
1,192,291
208,891
534,039
239,201
228,844
2,269,575
1,660,336
Page 55
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2016NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2017 7. INCOME TAX
(a) Income tax expense
The major components of income tax expense are:
Current income tax payable
Current income tax payable – prior year adjustment
Deferred income tax relating to origination and reversal of temporary differences
Under provision in respect of prior years
Income tax expense reported in profit or loss
(b) Amounts charged (credited) directly to equity
Capital raising costs
Total
(c) Reconciliation of tax expense to accounting profit
Accounting profit / (loss) before income tax
At Australia's statutory income tax rate of 30%
Adjust for tax effect of:
Tax rate differential
Non-deductible expenses
Other non-deductible expenses
Change in fair value consideration
Foreign exchange differences
R&D offset income tax variance
Under provision in respect of prior years
Other income for income tax purposes
Equity accounted earnings
Income tax expense
Page 56
2017
$
541,217
(114,885)
469,981
(163,863)
2016
$
1,385,997
(50,352)
(2,893,274)
(145,799)
732,450
(1,703,428)
2017
$
258,828
258,828
2017
$
3,893,580
1,178,240
(88,456)
133,344
102,475
-
(6,716)
(196,801)
(278,747)
(89,338)
(21,551)
732,450
2016
$
-
-
2016
$
(3,427,806)
(1,021,205)
(230,853)
248,595
53,444
(37,683)
(28,026)
(522,222)
(196,151)
30,673
-
(1,703,428)
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2016NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2017 (d) Recognised deferred tax assets and liabilities
Deferred income tax balances relate to the following:
Opening Balance
Recognised in
Profit and Loss
Recognised
in Other
Comprehensive
Income
Exchange
Differences
Closing Balance
30 JUNE 2017
$
$
$
$
$
Deferred tax liabilities
Work in Progress
Fixed Assets
Other
2,771,901
3,350,180
17,477
(165,108)
16,286
33,393
Gross deferred tax liabilities
6,139,558
(115,429)
Deferred tax assets
Provisions
Equity raising costs
Borrowing costs
R&D Tax Offsets carried
forward
Trade and other receivables
Other
Tax losses
Gross deferred tax assets
Recognised in statement of
financial position as:
Deferred tax assets (net)
Deferred tax liabilities (net)
(258,070)
(129,384)
(1,069)
891,392
(22,262)
(13,840)
(888,315)
(421,548)
(306,119)
3,527,140
201,917
8,466
3,949,233
41,596
16,615
1,640,554
9,385,521
3,245,963
3,246,657
(694)
3,245,963
-
-
-
-
-
258,828
-
-
-
-
-
258,828
258,828
-
2,886
(1,400)
1,486
40
-
-
-
(489)
(173)
(4,934)
(5,556)
(7,042)
2,606,793
3,369,352
49,470
6,025,615
3,269,110
331,361
7,397
4,840,625
18,845
2,602
747,305
9,217,245
3,191,630
3,191,630
-
3,191,630
Page 57
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2016NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2017 (d) Recognised deferred tax assets and liabilities (continued)
Opening Balance
Recognised in
Profit and Loss
Recognised
in Other
Comprehensive
Income
Exchange
Differences
Closing Balance
30 JUNE 2016
$
$
$
$
$
Deferred tax liabilities
Work in Progress
Fixed Assets
Other
1,871,734
2,617,463
-
901,382
739,668
17,477
Gross deferred tax liabilities
4,489,197
1,658,527
Deferred tax assets
Provisions
Equity raising costs
Borrowing costs
R&D Tax Offsets carried
forward
Trade and other receivables
Other
Tax losses
2,028,104
1,489,250
301,182
13,196
(99,265)
(4,730)
1,860,346
2,088,887
55,651
-
421,328
(15,752)
16,615
1,222,595
4,697,600
Gross deferred tax assets
4,679,807
(e) Tax consolidation
-
-
-
-
-
-
-
-
-
-
-
-
(1,215)
(6,951)
-
(8,166)
2,771,901
3,350,180
17,477
6,139,558
9,786
3,527,140
-
-
-
1,697
-
(3,369)
8,114
201,917
8,466
3,949,233
41,596
16,615
1,640,554
9,385,521
Effective 1 July 2002, for the purposes of income taxation, Empired Limited and its 100% Australian owned
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.
Page 58
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2016NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2017 8. 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 company by the weighted average number of ordinary shares on issue during the year.
Diluted earnings per share amounts are calculated by dividing net profit attributable to ordinary equity holders
of the parent company by the weighted average number of ordinary shares on issue during the year plus the
weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential
ordinary shares into ordinary shares.
The following represents the income and share data used in the basic and diluted earnings per share computations:
Net profit/(loss) attributable to ordinary equity holders of the parent
3,161,130
(1,724,378)
2017
$
2016
$
Weighted average number of ordinary shares for basic earnings per share
130,498
117,655
Thousands
Thousands
Effect of Dilution:
Share options
Weighted average number of ordinary shares adjusted for the effect of dilution
-
130,498
114
117,769
Page 59
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2016NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2017 9. CASH & CASH EQUIVALENTS
(a) Reconciliation of Cash
For the purposes of the statement of cash flows, cash includes cash at bank and in hand net of bank overdraft. Cash
at the end of the period 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
Bank overdraft (note 18)
2017
$
2016
$
2,004,385
2,970,688
(2,849,298)
-
(844,913)
2,970,688
(b) Reconciliation of net cash flows from operating activities to profit after income tax
Profit / (loss) after income tax
Gain from derecognition of contingent consideration payable
Finance expenses (net)
Depreciation and amortisation
Loss on disposal of assets
Share payment expense
Foreign currency unrealised (gain)/loss
Equity accounted earnings from associate
Dividend received from associate
Profit on sale of associate
Changes in assets and liabilities net of effects of purchases and disposals of controlled entities:
(Increase) / decrease in receivables
Decrease / (increase) in work in progress
Increase in prepayments and other receivables
(Decrease) / increase in trade creditors and other payables
(Decrease) / increase in lease incentives
(Decrease) / increase in unearned revenue
Decrease / (increase) in deferred tax asset
(Decrease) / increase in provision for employee entitlements
Net cash from operating activities
2017
$
2016
$
3,161,130
(1,724,378)
-
2,251,637
8,241,643
982,904
356,492
(40,711)
(92,259)
75,943
(21,476)
(814,420)
946,117
(217,747)
(3,186,459)
(808,505)
(875,345)
(125,611)
1,624,424
6,878,965
2,393,742
229,947
67,152
(66,304)
214,887
-
4,723,413
(3,637,860)
(671,004)
324,058
4,043,362
1,247,963
54,333
(3,055,353)
(170,339)
733,052
9,842,938
13,200,455
Page 60
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2016NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2017 (c) Non cash transactions
During the period the Group acquired $1,025,045 of plant and equipment and intangibles under finance leases not
involving cash.
10. TRADE & OTHER RECEIVABLES
Current
Gross trade receivables
Provision for doubtful debts
Other receivables
Non-current
Other receivables
2017
$
2016
$
22,911,739
22,238,728
(50,213)
165,618
(187,947)
161,943
23,027,144
22,212,724
33,424
68,161
Trade receivables are non-interest bearing and are generally on 30-day terms. (For further details on credit risk,
refer to note 23). A provision for impairment is recognised when there is objective evidence that an amount is
considered not collectible.
11. WORK IN PROGRESS
Work in progress
12. OTHER CURRENT ASSETS
Prepayments
2017
$
2016
$
9,452,907
10,399,024
2017
$
2016
$
2,352,211
2,614,113
13. INVESTMENT IN ASSOCIATE
During the financial year the Group disposed of its 50% holding of X4 Consulting Limited.
Share of profit
Dividend received
Carrying amount of the Group's interests in associate
2017
$
92,259
75,943
-
2016
$
66,304
214,887
192,085
Page 61
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2016NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2017
14. PROPERTY, PLANT & EQUIPMENT
Leasehold improvements
At cost
Accumulated depreciation
Total lease improvements
Computer hardware
At cost
Accumulated depreciation
Total computer hardware
Furniture, Equipment & Fittings
At cost
Accumulated depreciation
Total Furniture, Equipment & Fittings
Leased equipment
At cost
Accumulated depreciation
Total leased equipment
Total property, plant & equipment
2017
$
2016
$
6,062,054
6,350,867
(1,518,972)
(1,565,323)
4,543,082
4,785,544
20,505,974
17,315,644
(5,877,590)
(3,795,739)
14,628,384
13,519,905
2,627,798
(840,105)
1,926,526
(898,363)
1,787,693
1,028,163
39,506
(32,787)
6,719
3,022,624
(1,217,049)
1,805,575
20,965,878
21,139,187
Page 62
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2016NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2017 14. PROPERTY, PLANT & EQUIPMENT (CONTINUED)
2017
Gross carrying amount
Balance 1 July 2016
Additions
Transfers
Disposals
Exchange differences
Balance 30 June 2017
Depreciation & impairment
Leased
equipment
Leasehold
improvements
Computer
hardware
Furniture,
Equipment &
Fittings
$
$
$
$
Total
$
3,022,624
6,350,867
17,315,643
1,926,525
28,615,659
-
578,994
(1,095,169)
-
(1,868,756)
(861,395)
(19,193)
39,506
(6,412)
2,990,574
1,095,169
(887,864)
(7,548)
1,036,688
4,606,256
-
-
(325,118)
(3,943,133)
(76)
(33,229)
6,062,054
20,505,974
2,638,019
29,245,553
Balance 1 July 2016
(1,217,049)
(1,565,323)
(3,795,738)
(898,362)
(7,476,472)
Disposals
Transfers
Depreciation
Exchange differences
Balance 30 June 2017
1,768,190
(542,127)
543,694
-
999,412
542,127
233,537
3,544,833
-
-
(49,441)
(501,286)
(3,629,230)
(180,488)
(4,360,445)
7,640
3,943
5,839
(5,013)
12,409
(32,787)
(1,518,972)
(5,877,590)
(850,326)
(8,279,675)
Carrying amount 30 June 2017
6,719
4,543,082
14,628,384
1,787,693
20,965,878
2016
Gross carrying amount
Balance 1 July 2015
Additions
Disposals
Exchange differences
Balance 30 June 2016
Depreciation & impairment
Leased
equipment
Leasehold
improvements
Computer
hardware
Furniture,
Equipment &
Fittings
$
1,940,450
1,495,587
(438,746)
25,333
$
$
$
3,711,524
17,013,890
1,947,783
24,613,647
3,593,547
4,951,306
423,289
10,463,729
(967,935)
(4,657,904)
(463,076)
(6,527,661)
13,731
8,351
18,529
65,944
3,022,624
6,350,867
17,315,643
1,926,525
28,615,659
Total
$
Balance 1 July 2015
(958,905)
(1,392,556)
(5,064,252)
(995,994)
(8,411,707)
Disposals
Depreciation
Exchange differences
Balance 30 June 2016
437,800
571,855
3,417,930
279,205
4,706,790
(683,745)
(737,340)
(2,098,590)
(172,684)
(3,692,359)
(12,199)
(7,282)
(50,826)
(8,889)
(79,196)
(1,217,049)
(1,565,323)
(3,795,738)
(898,362)
(7,476,472)
Carrying amount 30 June 2016
1,805,575
4,785,544
13,519,905
1,028,163
21,139,187
Page 63
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2016NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2017 15. INTANGIBLE ASSETS
Goodwill
Cost
Net carrying value
Software
Cost
Amortisation
Net carrying value
Other
Cost
Amortisation
Net carrying value
Total intangibles
Year end 30 June 2017
Balance at the beginning of the year
Additions
Disposals
Amortisation charge
Exchange differences
Closing value at 30 June 2017
Year end 30 June 2016
2017
$
2016
$
46,446,049
46,446,049
46,446,049
46,446,049
16,280,368
14,249,913
(4,825,446)
(5,830,065)
11,454,922
8,419,848
486,483
(335,003)
151,480
491,493
(253,035)
238,458
58,052,451
55,104,355
Other
$
Total
$
238,458
55,104,355
-
-
7,369,267
(531,793)
Goodwill
Software
$
8,419,848
7,369,267
(531,793)
$
46,446,049
-
-
-
-
(3,795,268)
(85,930)
(3,881,198)
(7,132)
(1,048)
(8,180)
46,446,049
11,454,922
151,480
58,052,451
Balance at the beginning of the year
46,446,049
Additions
Disposals
Amortisation charge
Exchange differences
-
-
-
-
7,935,235
4,162,562
(574,199)
323,592
54,704,876
-
-
4,162,562
(574,199)
(3,102,309)
(84,298)
(3,186,607)
(1,441)
(836)
(2,277)
Closing value at 30 June 2016
46,446,049
8,419,848
238,458
55,104,355
Intangible assets, other than goodwill, have finite lives and are required to be amortised over their expected lives.
Goodwill has an infinite life. Goodwill assumptions have been detailed below. No impairment was recorded.
Page 64
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2016NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2017 15. INTANGIBLE ASSETS (CONTINUED)
Goodwill
Goodwill acquired through business combinations with indefinite lives are allocated to the Australian and New
Zealand cash generating units (CGUs), which are also the operating and reportable segments for impairment
testing. The carrying amount of goodwill allocated to each CGU is as follows:
Australia
New Zealand
2017
$
27,105,898
19,340,151
2016
$
27,105,898
19,340,151
Total carrying amount of goodwill
46,446,049
46,446,049
The Group performed the annual impairment test in May 2017. The Group considers the relationship between
its equity market capitalisation and the net assets as shown on the balance sheet, among other factors, when
reviewing for indicators of impairment. No indicators of impairment are noted. In considering the carrying value of
goodwill, the Directors have adopted a value in use methodology to determine the recoverable amounts of each
CGU which confirms that no impairment charge is necessary.
The recoverable amount of each CGU has been determined based on a value in use calculation that uses the cash
flow budgets over a one year period, followed by an extrapolation of expected cash flows for the CGUs over a four
year period using the growth rates determined by management and the assumptions outlined below. The present
value of the expected cash flows and a terminal value for each segment is determined by applying a suitable
discount rate.
Key assumptions used in value in use calculations and sensitivity to changes in assumptions
The calculation of value in use for each CGU is most sensitive to the following assumptions:
•
Gross profit margins – are based upon FY18 budgets and margins achieved in the current year. Gross profit
•
•
margins are the most sensitive variable to the value in use calculation.
Cost price inflation – has been based upon publicly available inflationary data.
Growth rate estimates – consistent with published industry research have been adopted. It is acknowledged
that technological change, macro-economic factors and action of competitors can have an impact on growth
rate assumptions. Growth rates for revenue and cost of sales have been held consistent post year 3 at 4%.
•
Discount rates – represent the current market risks, taking into consideration the time value of money and
specific risks not incorporated in the cash flow forecasts. The discount rate is based upon the weighted average
cost of capital (WACC). WACC is assessed taking into account the expected return on investment by investors,
the cost of debt servicing plus beta factors for industry risk. The Directors have adopted a WACC of 10.2%
which is applied to the pre-tax cash flows after replacement capital expenditure. Management have considered
the appropriateness of using the same discount rate for both CGUs noting that it would not materially impact
the results.
Page 65
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2016NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2017 16. SHARE BASED PAYMENTS
The total expense relating to equity-settled share-based payment transactions in 2017 was $331,492
(2016: $229,947).
During 2017 certain employees were eligible to participate in the Company’s Performance Rights Plan. Each
performance right granted under this plan is subject to both a performance criteria and a vesting period. At
termination of a perfomance rights holder's employment, unvested performance rights are retained on a pro-rata
basis with the balance forfeited. Each performance right is issued for nil consideration, with each performance
right converting to one fully paid ordinary share upon vesting. The performance rights are unquoted. There are no
voting or dividend rights attaching to the performance rights. Performance rights vest upon a change of control in
the Company.
The following summarises the number and movement in performance rights for the reporting periods:
Outstanding at the beginning of the year
Granted during the year
Forfeited during the year
Vested during the year
Outstanding at the end of the year
A summary of the performance criteria and vesting dates is as follows:
Number of Performance Rights
Vesting Date
Hurdle Description
2017
No.
2016
EP
5,584,076
6,770,000
3,411,975
444,915
(1,847,392)
(405,839)
(2,125,000)
(1,225,000)
5,023,659
5,584,076
125,000
250,000
866,769
209,096
209,096
104,532
98,505
98,505
49,278
602,576
602,576
1,205,150
602,576
5,023,659
31 October 2017
31 October 2017
1 July 2018
1 July 2017
1 July 2017
1 July 2017
1 July 2018
1 July 2018
1 July 2018
31 August 2019
31 August 2019
31 August 2019
31 August 2019
FY16 EBITDA contribution of acquisition and retention
Retention
FY17 Basic EPS and retention
FY17 Basic EPS
Relative Total Shareholder Return
Sustainability measure
FY18 Basic EPS
Relative Total Shareholder Return
Sustainability measure
FY18 Basic EPS
FY19 Basic EPS
Relative Total Shareholder Return
Sustainability measure
Page 66
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2016NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2017 16. SHARE BASED PAYMENTS (CONTINUED)
The fair values of the performance rights is measured using a variation of the binomial option pricing model that
takes into account the terms and conditions on which the instruments were granted and the current likelihood
of achieving the specified target. The following principal assumptions were used in the valuation of performance
rights issued in the financial year:
TRANCHE
Grant date
Vesting period ends
Share price at date of grant
Volatility
Term
Dividend yield
Risk free investment rate
Fair value at grant date
Performance rights granted
1
2
3
4
12/07/2016
1/07/2016
9/12/2016
1/11/2016
1/07/2018
1/07/2018
30/09/2019
30/09/2019
$0.36
40%
2-4 yrs
-
1.56%
$26,426
203,390
$0.33
40%
2-4 yrs
-
1.55%
$14,667
120,707
$0.50
40%
2-4 yrs
-
1.88%
$0.47
40%
2-4 yrs
-
1.70%
$275,482
$397,931
1,193,182
1,894,696
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.
17. TRADE & OTHER PAYABLES
Trade payables
Other payables
Unearned revenue
Total
Included in the above are aggregate amounts payable to the following related parties:
Owing to directors and director related entities
Trade payables are non-interest bearing and are normally settled on 30-day terms.
2017
$
2016
$
8,671,125
9,728,185
10,189,796
12,271,727
3,278,063
4,153,406
22,138,984
26,153,318
2017
$
2016
$
60,740
56,375
Page 67
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2016NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2017 18. BORROWINGS
Current – designated at amortised cost:
Obligations under bank loan
Obligations under NZ-Dollar bank loan
Obligations under NZ-Dollar bank overdraft
Obligations under finance leases and hire purchase contracts
Obligations under premium funding contracts
2017
$
1,941,201
1,110,329
2,849,298
622,999
196,895
2016
$
8,763,638
1,593,184
-
2,949,293
145,604
Total
6,720,722
13,451,719
Non-current – Designated at amortised cost:
Obligations under bank loan
Obligations under NZ-Dollar bank loan
Obligations under finance leases and hire purchase contracts
2017
$
5,723,440
3,321,913
12,519
2016
$
401,002
2,549,092
3,170,783
Total
9,057,872
6,120,877
Summary of facilities
At reporting date, the following financing facilities were available:
Bank overdraft
Facility used at reporting date
Facility unused at reporting date
Term loans
Facility used at reporting date
Facility unused at reporting date
Bank guarantees
Facility used at reporting date
Facility unused at reporting date
Bank finance leases
Facility used at reporting date
Facility unused at reporting date
Total bank facilities
Facility used at reporting date
Facility unused at reporting date
Page 68
2017
$
12,000,000
(2,849,298)
2016
$
8,911,814
-
9,150,702
8,911,814
12,174,664
15,351,384
(12,096,883)
(13,306,805)
77,781
2,044,579
3,500,000
4,073,122
(1,784,047)
(3,512,002)
1,715,953
5,000,000
561,120
5,411,814
-
(4,956,172)
5,000,000
455,642
32,674,664
33,748,134
(16,730,228)
(21,774,979)
15,944,436
11,973,155
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2016NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2017 18. BORROWINGS (CONTINUED)
Summary of covenants
During the financial year the company re-financed it’s bank debt facilities. The bank debt facilities comprise:
• non-revolving term debt of $12,174,664 maturing on 31 July 2020 with quarterly principle re-payments;
• multi option facility of $15,500,000 for working capital and bank guarantee purposes. This facility is subject to
annual review; and
•
lease facility of $5,000,000.
The term debt and multi option facility can be drawn in Australian or New Zealand dollars.
The bank facilities are subject to the customary borrowing terms and conditions of a bank facility of this kind. The
financial covenants that apply include debt service coverage ratio, leverage ratio and maximum overdraft utilisation
as a percentage of certain trade debtors and work in progress.
Security arrangements
Security for the above bank facilities has been provided as follows:
• Registered General Security Interest provided by Empired Limited and Intergen Limited;
• Specific Security deed over the shares in the subsidiaries of Empired Limited; and
•
Cross guarantee and indemnity provided by each group entity.
Page 69
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2016NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2017 19. PROVISIONS
Year end 30 June 2017
Lease
Incentives
$
Annual
Leave
$
Long Service
Leave
$
Total
$
Balance at the beginning of the year
5,143,673
4,520,039
1,197,869
10,861,581
Decrease in discounting
Additional provisions
Amounts used
-
(14,835)
-
(14,835)
107,900
5,959,596
371,241
6,438,737
(916,405)
(6,143,275)
(343,067)
(7,402,747)
Closing value at 30 June 2017
4,335,168
4,321,525
1,226,043
9,882,736
Analysis of total provisions: Current
Provision for Annual Leave
Provision for Long Service Leave
Provision for Lease Incentives
Total
Analysis of total provisions: Non-current
Provision for Long Service Leave
Provision for Lease Incentives
Total
20. DEFERRED CONSIDERATION
Amounts due to vendors for prior year acquisitions of controlled entities:
Current
Non-current
Total
2017
$
2016
$
4,321,525
566,319
966,555
5,854,399
659,724
3,368,613
4,028,337
2017
$
4,520,039
561,997
945,209
6,027,245
635,872
4,198,464
4,834,336
2016
$
2,200,993
6,753,111
8,954,104
-
-
-
Amounts above comprise consideration payable to the vendors of controlled entities acquired in prior financial years.
Page 70
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2016NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2017 21. ISSUED CAPITAL
Ordinary Shares fully paid
Movement in ordinary shares on issue
At 1 July 2015
Issue of shares
Conversion of options
At 30 June 2016
Issue of ordinary shares (net of issue costs)
At 30 June 2017
2017
$
No.
2016
$
54,204,746
38,783,679
Value ($)
37,779,130
804,549
200,000
38,783,679
15,421,067
54,204,746
115,183,253
4,365,285
500,000
120,048,538
38,558,080
158,606,618
Ordinary shares entitle the holder to participate in dividends, and carry one vote per share. These shares have no
par value.
On 1 July 2016, the company issued 2,100,000 ordinary shares for the vesting of Performance Rights.
On 14 July 2016, the company issued 69,444 ordinary shares at $0.36 per share to an executive as part of a
remuneration adjustment on promotion to Chief Operations Officer.
On 14 March 2017, the company issued 25,000 ordinary shares for the vesting of Performance Rights.
On 30 March 2017 and 19 May 2017, the company issued 30,450,000 and 5,913,636 ordinary shares respectively at
$0.44 per share. The purpose of the issue was to reduce net debt, provide certainty of funding for deferred vendor
payments and provide working capital for organic growth.
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 and convertible performance rights, supported by
financial assets. There are no externally imposed capital requirements, except for the covenants on the bank
facilities.
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.
Page 71
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2016NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2017 21. ISSUED CAPITAL (CONTINUED)
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 2017 and 30 June 2016 are as follows:
Note
18
20
9(i)
Consolidated
Group 2017
$
Consolidated
Group 2016
$
15,778,594
-
(2,004,385)
13,774,209
54,204,746
67,978,955
16%
19,572,596
8,954,104
(2,970,688)
25,556,012
38,783,679
64,339,691
33%
Total Borrowings
Deferred consideration
Less cash and cash equivalents
Net Debt
Issued Capital
TOTAL CAPITAL
Gearing ratio
22. DIVIDENDS
(a) Distributions Paid
Final franked dividend of nil cents (2016: 0 cents)
Interim franked dividend of nil cents (2016: 0 cents)
2017
$
2016
$
-
-
-
-
(b) Franking Credit Balance
$
$
Balance of franking account at year end at 30% available to the shareholders of
Empired Limited for subsequent financial years
24,841
24,841
23. FINANCIAL RISK MANAGEMENT OBJECTIVES & 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.
Page 72
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2016NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2017 23. FINANCIAL RISK MANAGEMENT OBJECTIVES & POLICIES (CONTINUED)
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 Group’s cash balances and bank borrowings at variable
interest rates. Finance leases and hire purchase agreements entered into are purchased at fixed interest rates.
Cash balances are disclosed at note 9. Refer to note 25 for detail of the Group's exposure to interest rate risks
on financial assets and liabilities.
The following table illustrates the sensitivity of profit and equity to a reasonably possible change in
interest rates of +/- 1% (2016: +/- 1%). These changes are considered to be reasonably possible based on
observation of current market conditions. The calculations are based on a change in the average market
interest rate for each period, and the financial instruments held at each reporting date that are sensitive to
changes in interest rates. All other variables are held constant.
30 June 2017
30 June 2016
Foreign currency risk
Profit for the year $
Equity $
+1%
(96,419)
(116,213)
-1%
96,419
116,213
+1%
+1%
-
-
-
-
The Group has exposure to foreign currency risk as a result of its New Zealand, USA and Singapore based
subsidiaries having trade debtors and trade creditors denominated in a currency other than the functional
currencies. Trade creditor transactions for Australian subsidiaries 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 Group.
Foreign currency denominated financial assets and liabilities which expose the Group to currency risk are
disclosed below. The amounts shown are those reported to key management translated into $AUD at the
closing rate:
Financial Assets
Financial Liabilities
Net exposure
NZD $
USD $
SGD $
2017
2016
2017
2016
2017
2016
14,652,546
12,594,975
645,772
2,429,418
898,240
694,001
(9,497,896)
(8,993,181)
(23,111)
(97,609)
(14,305)
(22,190)
5,154,650
3,601,794
622,661
2,331,809
883,935
671,811
Page 73
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2016NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2017 23. FINANCIAL RISK MANAGEMENT OBJECTIVES & POLICIES (CONTINUED)
The following table illustrates the sensitivity of profit in regards to the Group’s financial assets and financial liabilities
and the $NZD/$AUD exchange rate, $USD/$AUD exchange rate and $SGD/$AUD exchange rate ‘all other things
being equal’. It assumes a +/- 10% change of the $AUD/$NZD exchange rate, a +/- 10% change of the $AUD/$USD
exchange rate, and a +/- 10% change of the $AUD/$SGD exchange rate (2016: 10%). These percentages have been
determined based on the average market volatility in exchange rates in the previous twelve (12) months.
The sensitivity analysis is based on the Group’s foreign currency financial instruments held at each reporting date.
There is no effect on equity.
If the $AUD had strengthened against the respective currencies by 10% (2016: 10%) then this would have had the
following impact:
30 June 2017
30 June 2016
NZD
$
515,465
360,179
USD
$
62,266
233,181
SGD
$
88,394
67,181
If the $AUD had weakened against the respective currencies by 10% (2016: 10%) then this would have had the
following impact:
30 June 2017
30 June 2016
NZD
$
(515,465)
(360,179)
USD
$
(62,266)
(233,181)
SGD
$
(88,394)
(67,181)
Exposures to foreign exchange rates vary during the year depending on the volume of overseas transactions.
Nonetheless, the analysis above is considered to be representative of the Group’s exposure to currency risk.
Commodity price risk
The Group’s exposure to price risk is minimal.
Credit risk
The Group trades only with recognised, creditworthy third parties.
It is the Group policy that all customers who wish to trade on credit terms are subject to credit verification
procedures. Customers that fail to meet the Group’s creditworthiness may transact with the group only on a
prepayment basis.
In addition, receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to bad
debts is not significant.
There are no material 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 Chief Financial Officer.
With respect to credit risk arising from the other financial assets of the Group, which comprise cash and cash
equivalents and available-for-sale financial assets, 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.
Page 74
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2016NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2017 23. FINANCIAL RISK MANAGEMENT OBJECTIVES & POLICIES (CONTINUED)
Exposure to credit risk
The Group’s maximum exposure to credit risk at the report date was:
Cash and cash equivalents (note 9)
Trade and other receivables (note 10)
Total
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
Total
2017
$
2016
$
2,004,385
2,970,688
23,027,144
22,212,724
25,031,529
25,183,412
2017
$
2016
$
18,085,187
15,707,407
2,189,813
1,427,883
1,158,643
4,609,381
253,921
1,480,072
22,861,526
22,050,781
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 short and long term debt. The Group manages liquidity risk by forecasting and monitoring cash flows on a
continuing basis.
As at 30 June 2017, the Group’s financial liabilities have contractual maturities (including interest payments where
applicable) as summarised below:
30 June 2017
Insurance premium funding loan
Bank borrowings and overdraft
Finance leases and hire purchase obligations
Trade and other payables
Total
0–12 Months
1–5 years
5+ years
$
205,213
$
-
5,900,828
9,045,353
636,504
12,519
18,860,921
-
25,603,466
9,057,872
$
-
-
-
-
-
Page 75
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2016NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2017 23. FINANCIAL RISK MANAGEMENT OBJECTIVES & POLICIES (CONTINUED)
Liquidity risk (continued)
This compares to the maturity of the Group’s financial liabilities in the previous reporting periods as follows:
30 June 2016
Insurance premium funding loan
Bank borrowings and overdraft
Finance leases and hire purchase obligations
Deferred consideration
Trade and other payables
Total
0–12 Months
1–5 years
5+ years
$
151,813
$
-
$
10,356,822
2,950,094
3,130,419
3,265,127
2,200,993
6,753,111
21,999,912
-
37,839,959
12,968,332
-
-
-
-
-
-
The above amounts reflect the contractual undiscounted cash flows, which may differ to the carrying values of the
liabilities at the reporting date.
24. 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:
2017
Floating
interest rate
Fixed
interest rate
Non-interest
bearing
Carrying amount
as
per balance
sheet
Weighted
average
effective
interest rate
i) Financial Assets
Cash and cash equivalents
Trade and other receivables
Total financial assets
ii) Financial liabilities – at amortised cost
Trade and other payables
Finance leases and hire purchase obligations
Insurance premium funding loan
$
2,004,385
-
2,004,385
-
-
-
Bank Loans
14,946,181
$
$
$
-
-
-
-
635,518
205,213
-
-
2,004,385
1.00%
23,027,144
23,027,144
23,027,144
25,031,529
18,860,921
18,860,921
-
-
-
635,518
205,213
14,946,181
5.35%
5.80%
5.36%
Total financial liabilities
14,946,181
840,731
18,860,921
34,647,833
Page 76
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2016NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2017 23. FINANCIAL INSTRUMENTS (CONTINUED)
2016
i) Financial Assets
Cash and cash equivalents
Trade and other receivables
Total financial assets
ii) Financial liabilities – at amortised cost
Trade and other payables
Finance leases and hire purchase obligations
Insurance premium funding loan
Deferred consideration
Bank Loans
Floating
interest rate
Fixed
interest rate
Non-interest
bearing
Carrying amount
as
per balance
sheet
Weighted
average
effective
interest rate
$
2,970,688
-
2,970,688
-
-
-
-
13,306,916
$
$
$
-
-
-
-
6,120,075
151,813
7,978,729
-
-
2,970,688
0.20%
22,212,724
22,212,724
22,212,724
25,183,412
21,999,912
21,999,912
-
-
6,120,075
151,813
975,375
8,954,104
-
13,306,916
4.61%
6.30%
6.63%
5.51%
Total financial liabilities
13,306,916
14,250,617
22,975,287
50,532,820
Page 77
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2016NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2017 25. COMMITMENTS & CONTINGENCIES
No contingent assets as at 30 June 2017.
Commitments for expenditure
A. Leases & Hire Purchase
The consolidated entity has various computer equipment on hire purchase arrangements.
Not later than one year
Later than one year but not later than five years
Less: unexpired charges
Current
Non Current
Total hire purchase
B. Operating leases
2017
$
636,504
12,519
(13,505)
635,518
622,999
12,519
635,518
2016
$
3,130,419
3,265,127
(275,471)
6,120,075
2,949,293
3,170,782
6,120,075
Office premises are leased under non-cancellable operating leases. Their commitment can be seen below:
Minimum lease payments under non-cancellable operating leases according to the time expected to elapse
to the date of payment:
Not later than one year
Later than one year but not later than five years
Later than five years
Total
Contingent Liabilities
2017
$
2016
$
5,158,496
4,484,493
17,348,386
13,238,790
5,872,384
6,306,973
28,379,266
24,030,256
Office premises are leased under non-cancellable operating leases. Their commitment can be seen below:
A. Bank guarantees
Bank guarantees outstanding at year end
B. Parent company guarantee
2017
$
2016
$
1,784,047
3,512,002
A parent company guarantee has been provided to a third party in respect of a lease obligation of a wholly
owned subsidiary.
Page 78
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2016NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2017 26. INVESTMENT IN CONTROLLED ENTITY
Tusk Technologies Pty Ltd
Conducive Pty Ltd
OBS Pty Ltd
eSavvy Pty Ltd
i5 Software Pty Ltd
Intergen Business Solutions Pty Ltd
Intergen Limited
Intergen X4 Holdings Limited
Intergen USA Limited
Intergen ESS Limited(a)
Empired Singapore Pte Ltd
Intergen North America Limited
(a) acts as trustee for the Intergen Limited Employee Share Scheme Trust
27. AUDITORS’ REMUNERATION
Amounts received or due and receivable by auditors of the parent entity:
Audit and review of financial statements
Grant Thornton Australia
Overseas Grant Thornton network firms
Remuneration for audit and review of financial statements
Other Services
Grant Thornton Australia:
Taxation compliance
Overseas Grant Thornton network firms:
Taxation compliance
Total other services remuneration
Total auditor’s remuneration
Country of
Incorporation
% Equity Interest
2017
2016
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
New Zealand
New Zealand
New Zealand
Singapore
USA
%
100
100
100
100
100
100
100
100
100
100
100
100
%
100
100
100
100
100
100
100
100
100
100
100
100
2017
$
2016
$
152,817
30,853
183,670
150,900
48,270
199,170
38,350
29,708
3,901
42,251
225,921
2,959
32,667
231,837
Page 79
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2016NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2017 28. PARENT ENTITY
As at, and throughout, the financial year ended 30 June 2017 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
(Accumulated losses) / retained profits
Total equity
Statement of profit or loss and other comprehensive income
Loss for year
Other comprehensive income
Total comprehensive loss
2017
$
21,404,989
72,269,788
22,102,122
35,909,230
2016
$
20,931,412
71,863,458
33,754,060
50,254,001
54,204,744
38,783,679
1,971,697
1,640,205
(19,815,883)
(18,814,427)
36,360,558
21,609,457
(990,901)
(18,818,841)
-
-
(990,901)
(18,818,841)
The Parent Entity has issued the following guarantees in relation to the debts of its subsidiaries:
1. Pursuant to Class Order 98/1418, Empired Limited and OBS Pty Ltd have entered into a deed of cross guarantee
on or about 14 November 2013. The effect of the deed is that Empired Limited has guaranteed to pay any
deficiency in the event of winding up of OBS Pty Ltd. OBS Pty Ltd has also given a similar guarantee in the event
that Empired Limited is wound up. The Closed Group financial information is not disclosed as it is not materially
different to the above information for Empired Limited, the Parent Entity.
2. Empired Limited, eSavvy Pty Ltd, Conducive Pty Ltd, OBS Pty Ltd, i5 Software Pty Ltd, Tusk Technologies Pty Ltd,
Intergen Business Solutions Pty Ltd and Intergen Limited have entered into a cross guarantee and indemnity in
favour of the senior lender to the Group in respect to bank facilities provided to the Group by the senior lender.
3. Empired Limited has provided a third party lessor a guarantee to meet the obligations of a wholly owned
subsidiary under the terms of a property rental agreement.
Page 80
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2016NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2017 29. RELATED PARTY TRANSACTIONS
The Group's related parties includes its associate, subsidiaries and key management. Unless otherwise stated,
none of the transactions incorporate special terms and conditions and no guarantees were given or received.
Outstanding balances are usually settled in cash.
Transactions with associates
Balances and transactions between the Company and its subsidiaries, which are related parties of the Company,
have been eliminated on consolidation and are not disclosed in this note.
During the financial year, the Group received $92,259 in revenue from its associate, X4 Consulting Limited.
Transactions with key management personnel
Key management of the Group are the executive members of Empired’s Board of Directors and members of the
Executive Team. Refer to the Remuneration Report for compensation made to executive directors and other
members of key management personnel.
30. EVENTS AFTER THE REPORTING DATE
No significant non-adjusting events have occurred between the reporting date and the date of authorisation.
Page 81
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2016NOTES TO THE FINANCIAL STATEMENTS EMPIRED LTD | ANNUAL REPORT | 2017 “This is the now economy and we’re well positioned as an organisation to leverage the best
SaaS platforms, our IP, best practice and talented people to deliver early value to our clients.“
Russell Baskerville | Managing Director
Page 82
EMPIRED LTD | ANNUAL REPORT | 2017DIRECTORS’ REPORT DIRECTORS’ DECLARATION
Directors’ Declaration
In accordance with a resolution of the directors of Empired Limited, I state that:
1. In the opinion of the directors,
(a) the financial statements and notes of Empired Limited for the financial year ended 30 June 2017
are in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2017 and
of its performance for the year ended on that date; and
(ii) complying with Accounting Standards and the Corporations Regulations 2001;
(b) the financial statements and notes also comply with International Financial Reporting Standards
as disclosed in Note 2(a); and
(c) there are reasonable grounds to believe that the Company will be able to pay its debts as and
when they become due and payable.
2. This declaration has been made after receiving the declarations required to be made to the directors
by the Chief Executive Officer and Chief Financial Officer in accordance with section 295A of the
Corporations Act 2001 for the financial year ended 30 June 2017.
On behalf of the Board
Russell Baskerville
MANAGING DIRECTOR
23rd of August 2017
Empired Ltd | Annual report | 2016
Page 83
AUDITOR’S INDEPENDENCE DECLARATION
Page 84
INDEPENDENT AUDIT REPORT
Page 85
INDEPENDENT AUDIT REPORT
Page 86
INDEPENDENT AUDIT REPORT
22 to 31
Page 87
Page 88
EMPIRED LTD | ANNUAL REPORT | 2017CHAIRMAN & CEO REVIEW Shareholding Analysis
In accordance with Listing Rule 4.10 of ASX Limited, the Directors provide the following shareholding information
which was applicable as at 30th June 2017.
a. Distribution of Shareholding
SIZE OF SHAREHOLDING
1 – 1,000
1001 – 5,000
5001 – 10,000
10001 – 100,000
100,001 – max
Total
Number of
shareholders
134
513
350
616
136
1,749
%
0.05
1.01
1.67
13.21
84.06
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
National Nominees Ltd ACF Australian Ethical Investment Limited
Tiga Trading Pty Ltd
Wilson Asset Management Group
Baskerville Investments Pty Ltd
Number of
shares held
25,258,447
15,809,144
11,606,170
7,450,059
%
16.54
10.35
7.32
6.21
Page 89
Page 89
SHAREHOLDING ANALYSISEMPIRED LTD | ANNUAL REPORT | 2016EMPIRED LTD | ANNUAL REPORT | 2017 c. Twenty Largest Shareholders
The names of the twenty largest shareholders as at 6 July 2017 are:
NATIONAL NOMINEES LIMITED
UBS NOMINEES PTY LTD
RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LTD
J P MORGAN NOMINEES AUSTRALIA LIMITED
BASKERVILLE INVESTMENTS PTY LTD
BNP PARIBAS NOMS PTY LTD
ZERO NOMINEES PTY LTD
MR TONY JOHN ALAN STEWART
MR JOHN ALEXANDER BARDWELL
CITICORP NOMINEES PTY LIMITED
MR MARK EDWARD WALLER
MR DENNIS RONALD PAYNE
BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD DRP
PJTR PTY LTD
GABRIELLA NOMINEES PTY LTD
UNIPLEX CONSTRUCTIONS PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED – A/C 2
DEFENDER EQUITIES PTY LTD
ICE COLD INVESTMENTS PTY LTD
MS SARAH LOUISE MCCREADY
Total
Number of
shares held
25,258,447
15,809,144
11,684,184
9,024,628
8,686,300
5,174,491
5,000,000
4,323,111
4,099,904
2,416,562
2,272,260
1,770,517
1,719,820
1,487,809
1,450,000
1,220,500
1,052,299
1,036,458
1,000,000
975,000
%
15.93
9.97
7.37
5.69
5.48
3.26
3.15
2.73
2.58
1.52
1.43
1.12
1.08
0.94
0.91
0.77
0.66
0.65
0.63
0.61
105,461,434
66.48
The twenty members holding the largest number of shares together held a total of 66.48% of issued capital.
Page 90
Page 90
SHAREHOLDING ANALYSISEMPIRED LTD | ANNUAL REPORT | 2016EMPIRED LTD | ANNUAL REPORT | 2017 d. Issued Capital
(i) Ordinary Shares
The fully paid issued capital of the company consisted of 158,606,618 shares held by 1,749 shareholders.
Each share entitles the holder to one vote.
The number of shareholdings held in less than marketable parcels is 194.
(ii) Unquoted Equity
No options were issued in the year under the company share options plan
3,411,975 performance rights were issued under the company’s LTI plan
Options do not have any voting rights.
e. On-Market Buy-Back
There is no current on-market buy-back.
f. Company Secretary
The Company Secretary is Mr David Hinton
g. Registered Office
The registered office of Empired Ltd is:
Level 7, The Quadrant
1 William Street
Perth WA 6000
Telephone +61 8 6333 2200
Page 91
Page 91
SHAREHOLDING ANALYSISEMPIRED LTD | ANNUAL REPORT | 2016EMPIRED LTD | ANNUAL REPORT | 2017 OTHER INFORMATION FOR SHAREHOLDERS
Other Information for Shareholders
In accordance with Listing Rule 4.10 of the ASX Limited, the Directors provide the following information not
elsewhere disclosed in this report.
SHAREHOLDER COMMUNICATIONS
The Board of Directors aims to ensure that shareholders are informed of all major developments affecting the
Company’s state of affairs. Information is communicated to shareholders as follows:
• The annual report is distributed to shareholders who elect to receive the document. A copy of the full annual
report is available free of charge, upon request, from the Company. The Board ensures that the annual report
includes relevant information about the operation of the Company during the year, changes in the state of
affairs of the Company and details of future developments, in addition to the other disclosures required by the
Corporations Act;
• The half-year report contains summarised financial information and a review of the operations of the Company
during the period. The half-year financial report is prepared in accordance with the requirements of Accounting
Standards and the Corporations Act, and is lodged with the Australian Securities and Investments Commission
and the Australian Stock Exchange; and
• The Company’s internet website at www.empired.com is regularly updated and provides details of recent
material announcements by the Company to the stock exchange, annual reports and general information on
the Company and its business. The Board encourages full participation of shareholders at the Annual General
Meeting to ensure a high level of accountability and identification with the Company’s strategy and goals.
Important issues are presented to the shareholders as single resolutions.
INTERNET ACCESS TO INFORMATION
Empired maintains a comprehensive Investor Relations section on its website at www.empired.com/Investors/
You can also access comprehensive information about security holdings at the Computershare Investor Centre at
www-au.computershare.com/investor/
By registering with Computershare’s free Investor Centre service you can enjoy direct access to a range of functions
to manage your personal investment details. You can create and manage your own portfolio of investments, check
your security holding details, display the current value of your holdings and amend your details online.
Changes to your shareholder details, such as a change of name or address, or notification of your tax file number
or direct credit of dividend advice can be made by printing out the forms you need, filling them in and sending the
changes back to the Computershare Investor Centre.
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SHAREHOLDING ANALYSISEMPIRED LTD | ANNUAL REPORT | 2016EMPIRED LTD | ANNUAL REPORT | 2017 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 11, 172 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
To be confirmed.
STOCK EXCHANGE LISTING
Empired Limited shares are listed on the Australian Securities 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 11, 172 St Georges Terrace
Perth, WA 6000
OTHER INFORMATION FOR SHAREHOLDERS
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EMPIRED LTD | ANNUAL REPORT | 2017 EMPIRED LTD | ANNUAL REPORT | 2017