FOR THE YEAR ENDED 30 JUNE 2018
EMPIRED LIMITED ABN 81 090 503 843
Contents
Corporate Directory
Chairman & CEO Review
Directors’ Report
Operating & Financial Review
Remuneration Report (Audited)
1. Corporate Information
2. Summary Of Significant Accounting Policies
3. Segment Reporting
4. Revenue
5. Administration Expenses
6. Employee Benefits Expense
7. Finance Expenses
8. Income Tax
9. Earnings Per Share
10. Cash & Cash Equivalents
11. Trade & Other Receivables
12. Other Current Assets
13. Property, Plant & Equipment
14. Intangible Assets
15. Employee Benefits
16. Trade & Other Payables
17. Borrowings
18. Provisions
19. Reserves
20. Issued Capital
21. Dividends
22. Financial Risk Management Objectives & Policies
23. Financial Instruments
24. Commitments & Contingencies
25. Investment In Controlled Entity
26. Auditors’ Remuneration
27. Parent Entity
28. Related Party Transactions
29. Events After the Reporting Date
Directors' Declaration
Independant Auditor's Report
Shareholder Analysis
Other Information for Shareholders
4
5
9
11
16
31
31
41
42
42
42
43
43
46
47
48
48
49
51
53
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57
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Page 3
EMPIRED LIMITED | ANNUAL REPORT | 2018 Corporate Directory
Directors
Principal Places of Business
Thomas Stianos (Non-Executive Chairman)
Perth
Level 7, The Quadrant
1 William Street
Perth WA 6000
Wellington
Level 4, Press Hall
80 Willis Street
Wellington 6011
Seattle
Suite 100
2035 158th Court NE
Bellevue, WA, 98008
USA
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
Website
www.empired.com
ASX Code
EPD
John Bardwell (Non-Executive Director)
Richard Bevan (Non-Executive Director)
Chris Ryan (Non-Executive Director)
Russell Baskerville (Managing Director & CEO)
Company Secretary
David Hinton
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
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 43, 152 -158 St Georges Terrace
Perth WA 6000
Share Register
Computershare Investor Services Pty Ltd
Level 11, 172 St Georges Terrace
Perth WA 6000
Page 4
EMPIRED LIMITED | ANNUAL REPORT | 2018 Chairman & CEO Review
To our fellow Shareholders,
On behalf of your board of Directors, we are delighted
to present to you Empired’s 2018 annual report. The year
has seen expansion of our services to address high growth
markets and ensure comprehensive digital solution
offerings, improvements to our employee and client
engagement scores and importantly pleasing growth
combined with record financial results despite a difficult
year in New Zealand.
The headline results for the year include revenue of
$174m up 4%, underlying EBITDA $17m up 10%, NPAT
$4.9m up 54% and operating cash flow of $15.5m up
from $9.8m in the prior year. Net debt was reduced from
$13.8m at 30 June 2017 to $9.3m at 30 June 2018, with
reduced gearing the balance sheet is strengthened for an
exciting growth period ahead.
During the year we experienced an acute decline in
work volumes from the New Zealand public sector as a
result of a protracted election period and subsequent
change of government. The impact was a 9% reduction
in revenue year on year from NZ, however a clear focus
on commercial drivers by NZ management ensured profit
margins were maintained.
Thomas Stianos
NON-EXECUTIVE CHAIRMAN
Russell Baskerville
MANAGING DIRECTOR & CEO
throughout the year where we see a large opportunity
across Australia and New Zealand with a differentiated
Enterprise Content Management SaaS offering.
We are seeing a strengthening Australian economic
climate, particularly in WA, and remain cautiously
optimistic of these economic indicators. Our view
is that Empired is well positioned in the IT services
market which continues to experience global growth
with organisations turning to data and technology
in order to transform their businesses and gain a
In contrast, the Australian operations grew 12%, the
competitive advantage in a modern digital world.
strongest organic growth rate experienced in the past
10 years. This result was led by a recovering Western
Australian resources sector where WA experienced 10%
growth and was complemented by our increasing market
penetration across the East Coast up 14%.
In recent years, we have seen a rapid consolidation of
the Australian IT Services landscape, with a number
of our direct local competitors being acquired by
large international companies. Empired has clearly
demonstrated that we possess the capability, balance
Our Digital Transformation Solutions (circa 63% of
sheet strength and depth and quality of talent required
Revenue) were by far our strongest growth services line
to compete and win against these larger players. Our
that grew revenue 23% during the year in Australia. The
combination of local management, knowledge, people
growth was underpinned by exceptional demand for
and differentiated solutions make Empired the IT
modern applications, data analytics, digital and UX, and
provider of choice for leading commercial and public-
services relating to the Microsoft Dynamics platform.
sector clients across our key markets.
We continued to make investments in software and
With the recovery in New Zealand well underway,
Intellectual Property in order to differentiate our
our Australian operations performing strongly and
solutions, reduce risk and decrease time to value for our
our solutions aligned to high growth segments of the
clients, whilst continuing to build Empired’s SaaS annuity
market, we are confident that we have set ourselves up
revenue. Investment in our Cohesion platform was a focus
for a watershed 2019 year.
Page 5
CHAIRMAN & CEO REVIEWEMPIRED LIMITED | ANNUAL REPORT | 2018 Continuing to focus on our people
A scalable platform with operational leverage
Our people are critical to our success. If our people are
We have continued to enhance our operating model
highly engaged, well credentialed and provided with the
and strengthen all of the key ingredients that ensure we
right tools and environment we will provide higher quality
can maintain growth in a controlled, predictable manner
services and solutions to our clients, grow faster and be
whilst improving our profit margins over time.
more profitable.
Our operational platform includes a range of integrated
Talent acquisition and staff engagement was a key focus
business systems managing operational processes
for management in 2018. Last year we spoke briefly about
including opportunity identification, sales management,
our ‘Thinking Forward’ framework designed to drive a
contract, risk and operational delivery through to strong
level of customer intimacy and personal accountability,
financial controls. These systems underpin our business
and the formation of our Business Leadership Group (BLG)
and we believe allow our business to scale multiple times
designed to bring strong cross discipline collaboration
from its current size with limited additional investments.
and local accountability for our customers’ outcomes.
These initiatives were further embedded across our
company this year resulting in increased customer
satisfaction and improved engagement of our people.
The physical platform is geared for growth and is able to
support increased staff numbers and higher revenues in
all our major locations. After a relatively capital intensive
period we have established these facilities and are at the
Our over-arching people engagement approach titled
completion of this cycle.
Empired’s sales and management structure also allows
for considerable expansion of clients, revenue and
billable-staff numbers with limited additional expenses.
FY18 started to leverage some of this operational
capacity with modestly improved EBITDA margins and
we are confident that as revenue grows our platform will
ensure strengthening margins over time.
‘Completely Compelling Organisation’ encourages and
supports our leaders to do everything in our power
to ensure that our people consistently grow their
capabilities and are challenged to take advantage of the
opportunities offered. Ultimately this will result in our
people and prospective talent in the market seeing our
organisation as a completely compelling place to work.
Within the framework we set out a number of
commitments to our people under five pillars. As leaders
we commit to provide Meaningful Work, Outstanding
Management, Empowering Environment, Personal Growth
and Belief in our Mission. These are not just words on a
page, each pillar has a range of program initiatives that
are being driven across Empired and are built into regular
performance coaching.
We are confident that our investments in our people
are differentiating Empired in a competitive talent
market and we are very proud to say that our employee
engagement score and client satisfaction scores have
trended upward throughout the 2018 financial year.
Page 6
CHAIRMAN & CEO REVIEWEMPIRED LIMITED | ANNUAL REPORT | 2018 Shifting toward Industry alignment & IP enabled
A year of growth awaits!
We see a clear trend by our customers and the broader
Whilst cautious, we believe the Australian market
market toward buying specialist solutions and experience
is in good shape and that the New Zealand market
underpinned by industry know-how and differentiated
opportunities continue to strengthen.
software IP.
Digital transformation is all around us, data and digital
Empired has started to organise itself around industry,
based products and services are infiltrating our lives
‘package’ a range of industry based digital solutions,
in almost every manner imaginable. With exponential
create industry based ‘points-of-view’ and ‘thought
growth in data, a proliferation of low cost high powered
leadership’ and design the front end of our business to be
devices and the availability of high speed, highly reliable
equipped to engage in a deep industry conversation. We
connectivity we find every government, education and
need to be able to clearly articulate our knowledge of a
corporate organisation across the globe in some way
particular sector and demonstrate how our solutions solve
dealing with digital change. We believe organisations that
key industry challenges or provide new products, services
embrace these changes will thrive and become the global
and channels to market.
leaders of tomorrow.
Complementing this and allowing us to further
It is an exciting market to be a part of with IDC predicting
differentiate our position in the market is the incorporation
“By the End of 2019, Digital Spending will reach $1.7
into these solutions of Empired’s own software IP, solution
Trillion globally, a 42% increase from 2017” as digital
accelerators and industry based global leading ISV
transformation continues to drive new revenues from
(Independent Software Vendor) partners.
“Future of Commerce” business models.
In 2018, we made significant investments in our Cohesion
We are confident that the investments Empired is making
platform. We developed an application store called
today across many aspects of its business will position it
‘Resource Hub’ which allows users the ability to select
ahead of its competition and ensure it participates in an
additional modules and services through the Cohesion
exciting, high growth, global market and secures its place
interface. A range of new modules were developed and
in the digital world of tomorrow.
made available through the ‘Resource Hub’ where we have
gained strong commercial up- take. Further, significant
work was undertaken in readiness for making Cohesion
available on the Microsoft cloud platforms (both Microsoft
Azure and Microsoft Office 365) and its launch in the
Australian market resulting in Empired being selected to
be the preferred partner for the secure Microsoft Canberra
Data Centre. During the year, Cohesion achieved Microsoft
Co-Sell status, enabling the Microsoft sales organisation to
sell Cohesion and receive sales quota retirement.
In June 2018, Intergen, our New Zealand operations won
the Microsoft Country Partner of the Year for New Zealand
and in July the company was awarded the Microsoft
Dynamics Inner Circle for 2017.
We are confident that the investments we are making
will position Empired ahead of its competition and ensure
our clients view us as the digital transformation partner
of choice.
We would like to extend our appreciation to our
shareholders, partners and clients. The year saw Empired
make significant progress on its strategic priorities, deliver
exceptional solutions to our clients and deliver a solid
financial performance. This is only possible with the tireless
support, passion and loyalty our staff and we would like to
extend a special thank you to each and every one of them.
We look forward to working together with all of our
stakeholders in what is shaping up to be an exceptional
year ahead.
Yours faithfully,
Thomas Stianos
NON-EXECUTIVE CHAIRMAN
Russell Baskerville
MANAGING DIRECTOR & CEO
Page 7
CHAIRMAN & CEO REVIEWEMPIRED LIMITED | ANNUAL REPORT | 2018 Page 8
EMPIRED LIMITED | ANNUAL REPORT | 2018DIRECTORS’ REPORT 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 2018.
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
Thomas Stianos
Non-Executive Chairman
64
Mr Stianos joined the board as a Non-Executive on 29 November 2016 and was appointed Chairman
on 1 July 2018. 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.
Russell Baskerville
Managing Director & CEO
40
Richard Bevan
Non-Executive Director
52
Other current directorships of listed entities:
» Inabox Group Limited
» Gale Pacific Limited
Previous directorships (last 3 years):
» SMS Management & Technology 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 of listed entities (last 3 years):
» None
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 to 30 June 2018. 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
Page 9
EMPIRED LIMITED | ANNUAL REPORT | 2018DIRECTORS’ REPORT NAME
AGE
EXPERIENCE & SPECIAL RESPONSIBILITIES
John Bardwell
Non-Executive Director
58
Chris Ryan
Non-Executive Director
55
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):
» None
COMPANY SECRETARY
NAME
AGE
EXPERIENCE & SPECIAL RESPONSIBILITIES
David Hinton
CFO & Company Secretary
55
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. He is also Finance Director of not for profit Auspire - Australia Day Council WA.
Page 10
EMPIRED LIMITED | ANNUAL REPORT | 2018DIRECTORS’ REPORT 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 2018
No. of Audit Committee
Meetings held while
a Director
No. of Audit Committee
meetings attended
during the year ended
30 June 2018
Russell Baskerville
Thomas Stianos
Richard Bevan
John Bardwell
Chris Ryan
12
12
12
12
12
12
12
12
12
12
OPERATING & FINANCIAL REVIEW
Review of operations
2
2
2
2
2
2
2
2
2
2
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 1,000 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
• New Zealand – which includes USA
Review of financial results
Revenue overall increased by 4% to $174.3m.
Earnings before interest, tax depreciation and amortisation (EBITDA) for the financial year increased by 7% to
$16.4m and after adjusting for once off costs the company reported underlying EBITDA of $17m.
The profit after tax for the year was $4.9m compared to the previous year of $3.2m. Included in the previous year
was a non-cash loss on disposal of assets of $1.0m pre-tax resulting from a re-location of the Wellington operations
and the write-off of legacy assets.
Page 11
EMPIRED LIMITED | ANNUAL REPORT | 2018DIRECTORS’ REPORT Review of financial results (continued)
The financial results are summarised in the following table:
$M
Revenue
Other income
EBITDA
EBITDA Underlying
Depreciation & amortisation
Loss on disposal of assets
EBIT
Interest (net)
Net profit before tax
Income tax
Net profit after tax
EBITDA / Revenue %
Basic EPS (cents)
1H 18
2H 18
85.0
-
6.7
7.3
(4.2)
-
2.5
(0.5)
1.9
(0.4)
1.5
8%
89.3
-
9.7
9.7
(3.9)
-
5.8
(0.8)
5.0
(1.6)
3.4
11%
2018
174.3
-
16.4
17.0
(8.2)
-
8.3
(1.3)
6.9
(2.0)
4.9
9%
3.06
2017
167.4
0.7
15.4
15.4
(8.2)
(1.0)
6.2
(2.3)
3.9
(0.7)
3.2
9%
2.42
Multi Year Contracts
Additional Projects from Multi Year Contracts
New Clients/Individual Contracts
)
S
N
O
I
L
L
I
M
$
(
E
U
N
E
V
E
R
Page 12
EMPIRED LIMITED | ANNUAL REPORT | 2018DIRECTORS’ REPORT
Operating results by Segment
$M
Revenue Australia
Revenue New Zealand
Inter-segment
Segment Revenue
EBITDA Australia
EBITDA New Zealand
Segment EBITDA
1H 18
2H 18
56.4
29.3
(0.6)
85.0
4.3
2.4
6.7
60.3
30.0
(0.9)
89.3
6.7
3.0
9.7
2018
116.7
59.2
(1.6)
174.3
11.1
5.4
16.4
2017
104.4
64.9
(1.9)
167.4
10.6
4.7
15.4
For the financial year ended 30 June 2018 the Australian segment increased revenue by 12% to $116.7m and
recorded a Segment EBITDA of $11.1m. The revenue for the New Zealand Segment decreased by 9% to $59.2m
and reported a Segment EBITDA of $5.4m. The New Zealand Segment revenue was adversely impacted by the
disruption to Public Sector IT spending due to the protracted election period and then change of government.
Based upon recent sales activity we do expect improved revenue levels in 2019.
Cash flow
The following table summarises the cash flow for the financial year ended 30 June 2018:
$M
EBITDA
Non cash items
Tax paid
Dividends – associate
Working capital
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 18
2H 18
6.7
0.3
(0.3)
-
(1.5)
5.2
(0.7)
(3.7)
-
-
(2.0)
0.1
(1.1)
9.7
0.1
(0.5)
-
1.0
10.3
(0.7)
(5.1)
-
-
(2.4)
13.2
15.3
2018
16.4
0.4
(0.8)
-
(0.5)
15.5
(1.4)
(8.9)
-
-
(4.4)
13.3
14.2
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)
Operating cash flow for the financial year ended 30 June 2018 was $15.5m compared to $9.8m the
previous financial year.
Payments for the purchases of plant & equipment and intangibles reduced from $10.9m to $8.9m.
Page 13
EMPIRED LIMITED | ANNUAL REPORT | 2018DIRECTORS’ REPORT Financial position and capital structure
The balance sheet as at 30 June 2018 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
Other
Non Current Liabilities
Net Assets/Equity
Net debt (Nd)
Gearing (Nd/Nd+Equity)
June 2018
Dec 2017
June 2017
13.4
36.0
2.4
51.7
16.9
64.7
81.6
22.7
2.4
8.6
33.7
20.3
3.0
23.3
76.4
9.3
11%
2.2
29.8
2.2
34.1
18.6
62.8
81.4
16.5
8.1
7.3
31.8
7.5
3.5
11.0
72.7
13.5
16%
2.0
32.5
2.4
36.8
21.0
61.3
82.2
18.8
6.7
9.2
34.7
9.1
4.0
13.1
71.3
13.8
16%
Net debt reduced during the financial year from $13.8m to $9.3m with gearing reducing from 16% to 11%.
Bank debt facilities were re-financed during the year. The impact was to lower debt amortisation, lengthen maturity
and reduce the overall cost of funding. This has had a positive impact on the current ratio.
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 14
EMPIRED LIMITED | ANNUAL REPORT | 2018DIRECTORS’ REPORT Dividends
The directors do not recommend payment of a dividend (2017: 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 1,500,000 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
Nil
Auditor
The lead auditor’s Independence Declaration for the year ended 30 June 2018 has been received and can be found
on page 70 of the financial report.
Non-Audit Services
The directors are satisfied that the provision of non-audit services is compatibale with the general standard of
independence for auditors imposed by the Corporations Act 2001. The nature and scope of the type of non-audit
service provided means that auditor independence was not compromised.
Grant Thornton received or are due to receive $21,460 for the provision of tax compliance services.
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 15
EMPIRED LIMITED | ANNUAL REPORT | 2018DIRECTORS’ 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 2018 ("FY18"). 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 $4.9m for the year ended 30 June 2018 compared to $3.1m in the previous
financial year, an increase of 54%. Earnings per share increased 26% to 3.06 cents per share.
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 2018 is detailed in the table in Section E.
Page 16
EMPIRED LIMITED | ANNUAL REPORT | 2018DIRECTORS’ 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 17
EMPIRED LIMITED | ANNUAL REPORT | 2018DIRECTORS’ 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 2018 financial year an STI of $265,631, representing 50% of the STI opportunity, will be paid to Key
Management Personnel in FY2019 (2017: nil). The remaining 50% of the STI opportunity lapses.
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.
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 granted and the value of equity instruments granted
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, and up to 1.5 ordinary shares should Stretch Performance Measures be achieved.
During the financial year, 2,075,000 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) with targets set as a growth percentage of the current year budget. Due to their sensitive
nature, EPS targets are disclosed retrospectively should the Performance Rights vest.
• Relative Total Shareholder Return which compares the Total Shareholder Return (TSR) of the company measured from
1 July 2017 to 30 June 2020 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 18
EMPIRED LIMITED | ANNUAL REPORT | 2018DIRECTORS’ REPORT NUMBER
Performance Measures
% Vesting(1)
Vesting Dates
413,400
FY 2019 EPS
Below Threshold
Threshold achieved
Target achieved
Stretch achieved
FY 2020 EPS
Below Threshold
413,400
Threshold achieved
Target achieved
Stretch achieved
Relative TSR
834,800
50th Percentile Threshold achieved
Below 50th percentile - Threshold
75th Percentile Target achieved
85th Percentile Stretch achieved
413,400
Sustainability
0%
50%
100%
150%
0%
50%
100%
150%
0%
50%
100%
150%
100%
30 August 2020
30 August 2020
30 August 2020
30 August 2020
(1)Vesting to occur on a pro-rata basis
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.
Where Performance Rights vest the holder of the Performance Right has until 30 September 2022 to exercise the
Performance Right.
Should the Directors consider that a Change of Control in the company has occurred or is likely to occur then
Performance Rights will automatically vest on the basis one fully paid ordinary share for each Performance Right
held with Board discretion to provide up to 1.5 fully paid ordinary shares for each Performance Right held.
Page 19
EMPIRED LIMITED | ANNUAL REPORT | 2018DIRECTORS’ REPORT
Consequence of performance on shareholder wealth
In considering the Group’s performance and benefits for shareholder wealth, the Board have regard to the
following metrics 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
2018
3.06
-
4,685
0.51
2017
2.42
-
3,122
0.54
2016
(1.47)
-
(1,545)
0.34
2015
4.82
-
5,233
0.77
The following persons were directors of Empired Limited during the financial year:
T Stianos – Non-Executive Chairman
R Bevan – Non-Executive Director
J Bardwell – Non-Executive Director
C Ryan – Non-Executive Director
R Baskerville – Managing Director
(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 2018 is provided in
the table in Section E of this remuneration report.
Page 20
EMPIRED LIMITED | ANNUAL REPORT | 2018DIRECTORS’ REPORT
D. Service Agreements
Russell Baskerville – Managing Director
• Terms of Agreement – commenced 1 July 2005, until terminated by either party, with six months notice.
• Fees – fixed remuneration $600,000 per annum with an STI cash bonus of 50% of base fees and LTI bonus of
75%# of base fees.
Thomas Stianos – Non-Executive Chairman
• Terms of Agreement – appointed 29 November 2016.
• Fee – fixed $120,000 per annum.
Richard Bevan – Non Executive Director
• Terms of Agreement – appointed 31 January 2008
• Fee – fixed $90,000 per annum.
John Bardwell – Non-Executive Director
•
Terms of Agreement – appointed 26 September 2011.
• Fee – fixed $75,000 per annum.
Chris Ryan – Non-Executive Director
• Terms of Agreement – appointed 1 May 2015.
• Fee – fixed $75,000 per annum.
David Hinton – Chief Financial Officer & Company Secretary
• Terms of Agreement – commenced 12 April 2016, until terminated by either party, with three months notice.
• Salary – fixed remuneration $433,500 per annum with an STI cash bonus target of 25% of base fees and LTI
bonus target of 40%# of base fees.
Simon Bright – Chief Operating Officer
• Terms of Agreement – commenced 1 July 2016, until terminated by either party, with three months notice.
• Salary – fixed remuneration NZ$469,200 per annum with an STI cash bonus target of 30% of base fees and
LTI bonus target of 40%# of base fees.
#As provided by the Empired Long Term Incentive Plan Rules, should stretch targets be achieved then the LTI benefit could be 50% higher.
Page 21
EMPIRED LIMITED | ANNUAL REPORT | 2018DIRECTORS’ 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(1)
Total
%
Perfomance
Related
%
of STI
achieved
54,795
32,379
82,192
70,984
60,000
60,000
54,795
54.795
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
600,000
11,579
149,679
525,000
15,076
-
5,205
3,076
7,808
6,743
-
-
5,205
5,205
-
-
-
-
-
-
-
-
-
-
60,000
35,455
90,000
77,727
60,000
60,000
60,000
60,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
54,801
816,059
25.1%
50.0%
139,016
679,092
20.5%
-
388,128
12,633
52,388
36,872
36,646
526,667
16.1%
50%
365,297
15,076
-
34,703
23,335
438,411
5.3%
-
418,804
12,179
63,564
8.420
37,998
540,965
18.8%
50.0%
408,073
3,716
-
30,318
48,335
490,442
9.9%
-
NON-EXECUTIVE DIRECTORS
T. Stianos
R. Bevan
C. Ryan
J. Bardwell
2018
2017
2018
2017
2018
2017
2018
2017
EXECUTIVE DIRECTORS
R. Baskerville
KEY MANAGEMENT
D. Hinton
S. Bright
2018
2017
2018
2017
2018
2017
(1) In the form of Performance Rights
Page 22
EMPIRED LIMITED | ANNUAL REPORT | 2018DIRECTORS’ 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 17
Vesting of Performance Rights
Net Change Other
Balance 30 June 18
DIRECTORS
R. Baskerville
8,686,300
409,322
T. Stianos
143,200
R. Bevan
C. Ryan
79,800
17,000
J. Bardwell
4,099,904
-
-
-
-
-
-
-
43,000
-
9,095,622
143,200
79,800
60,000
4,099,904
Total
13,026,204
409,322
43,000
13,478,526
KEY MANAGEMENT
D. Hinton
S. Bright
Total
52,093
150,877
202,970
-
100,000
100,000
-
(100,000)
(100,000)
52,093
150,877
202,970
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 17
Granted as
remuneration
Lapsed
Vested
Balance 30 June 18
DIRECTORS
R. Baskerville
1,988,097
852,000
(236,949)
(409,322)
2,193,826
KEY MANAGEMENT
D. Hinton
S. Bright
484,848
559,848
Total
1,044,696
318,000
330,000
648,000
-
-
-
-
(100,000)
(100,000)
802,848
798,848
1,592,696
Page 23
EMPIRED LIMITED | ANNUAL REPORT | 2018DIRECTORS’ REPORT
F. 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 as
remuneration
Average Value per
right at grant date
Value of rights
granted during
the year
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6/12/2017
852,000
$0.49
$291.299
14/09/2017
14/09/2017
318,000
330,000
$0.63
$0.63
Grant date
Number granted as
remuneration
Average Value per
right at grant date
-
-
-
-
-
-
-
-
-
-
-
-
$138,847
$143,972
Value of rights
granted during
the year
-
-
-
-
09/12/2016
1,193,182
$0.48
$275,482
01/11/2016
01/11/2016
484,848
484,848
$0.42
$0.42
$106,026
$106,026
2018
NON-EXECUTIVE DIRECTORS
T. Stianos
R. Bevan
C. Ryan
J. Bardwell
EXECUTIVE DIRECTORS
R. Baskerville
KEY MANAGEMENT
D. Hinton
S. Bright
2017
NON-EXECUTIVE DIRECTORS
T. Stianos
R. Bevan
C. Ryan
J. Bardwell
EXECUTIVE DIRECTORS
R. Baskerville
KEY MANAGEMENT
D. Hinton
S. Bright
Page 24
EMPIRED LIMITED | ANNUAL REPORT | 2018DIRECTORS’ 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. Should the
performance hurdle be satisfied then the Company will disclose the details in the subsequent Remuneration Report.
During the financial year 1,471,301 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
FY17 Basic EPS hurdle for 90% vesting 2.3c and 2.54c for
100% vesting
Employment post acquisition of Intergen Ltd
Intergen Ltd EBITDA to March 2015 NZD 1.5m
Intergen Ltd EBITDA to March 2016 NZD 2.0m
Sustainability - as determined by the Board
Total
ACHIEVED
3.2 cents(1)
NZD 0.8m(2)
NZD 4.5m
(1)FY17 Basic EPS was 2.4 cents and after adjusting for loss on disposal of assets EPS was 3.2 cents
(2)Condition waived
H. Use of Remuneration Advisors
NO. OF PERFORMANCE RIGHTS
866,769
250,000
125,000
125,000
104,532
1,471,301
The Independent Directors approved the engagement of BDO Remuneration and Reward Pty Ltd to provide benchmarking
analysis and to provide remuneration recommendations regarding the remuneration of the Managing Director and
Chief Executive Officer and the Non-Executive Directors.
Both BDO Remuneration and Reward Pty Ltd and the Independent Directors are satisfied the advice received is free from
undue influence from the KMP to whom the remuneration recommendations may apply.
The remuneration recommendations were provided as an input into decision making only and other factors were also
taken into consideration in making remuneration decisions.
The fees paid to BDO Remuneration and Reward Pty Ltd were $7,950 and the advisor was not engaged to provide any
other services to the Company.
I. Voting and comments made at the company’s 2017 Annual General Meeting
The company did not receive any specific feedback at the AGM on its remuneration report.
End of Remuneration Report.
Signed in accordance with a resolution of directors.
Russell Baskerville
MANAGING DIRECTOR & CEO
13th August 2018
Page 25
EMPIRED LIMITED | ANNUAL REPORT | 2018DIRECTORS’ REPORT
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 ended 30 June 2018 was approved by the
Board on 9 August 2018. The Corporate Governance Statement is available on Empired's website at
www.empired.com/Investor-Centre/Corporate-Governance/.
Page 26
CONSOLIDATED STATEMENTS EMPIRED LIMITED | ANNUAL REPORT | 2018 Consolidated Statement of Profit or
Loss & Other Comprehensive Income
For the year ended 30 June 2018
Continuing operations
Revenue
Cost of Services
Gross profit
Other Income
Administration expenses
Marketing expenses
Occupancy expenses
Finance expenses
Loss on disposal of assets
Other expenses
Profit before income tax from continuing operations
Income tax expense
Profit 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 for the year
Earnings per share (cents per share):
Basic earnings per share
Diluted earnings per share
Notes
2018
$
2017
$
4
4
5
7
8
9
9
174,310,863
167,391,710
(114,055,464)
(111,866,357)
60,255,399
55,525,353
37,909
663,721
(44,816,968)
(41,327,154)
(796,427)
(5,556,385)
(1.348,691)
(14,361)
(831,763)
6,928,713
(2,046,403)
4,882,310
(452,917)
(5,679,393)
(2,269,575)
(982,904)
(1,583,551)
3,893,580
(732,450)
3,161,130
(196,813)
(38,674)
4,685,497
3,122,456
3.06
2.96
2.42
2.33
Page 27
Page 27
EMPIRED LIMITED | ANNUAL REPORT | 2018CONSOLIDATED STATEMENTS Consolidated Statement of Financial Position
As at 30 June 2018
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Work in progress
Other current assets
Total Current Assets
Non-current assets
Plant and equipment
Intangible assets
Other receivables
Deferred tax asset
Total Non-Current assets
TOTAL ASSETS
LIABILITIES
Current liabilities
Trade and other payables
Income tax payable
Borrowings
Provisions
Unearned revenue
Total Current Liabilities
Non-current liabilities
Borrowings
Provisions
Total Non-Current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Retained profits
TOTAL EQUITY
Page 28
Notes
2018
$
2017
$
10
11
12
13
14
11
8
16
17
18
17
18
20
19
13,364,679
25,092,381
10,894,165
2,352,168
2,004,385
23,027,144
9,452,907
2,352,211
51,703,393
36,836,647
16,949,293
62,712,777
-
2,004,609
81,666,679
20,965,878
58,052,451
33,424
3,191,630
82,243,383
133,370,072
119,080,030
22,247,580
18,334,643
502,472
2,381,231
6,254,407
2,293,310
526,278
6,720,722
5,854,399
3,278,063
33,679,000
34,714,105
20,327,773
2,988,001
23,315,774
56,994,774
76,375,298
54,204,746
2,285,107
19,885,445
9,057,872
4,028,337
13,086,209
47,800,314
71,279,716
54,204,746
2,071,835
15,003,135
76,375,298
71,279,716
CONSOLIDATED STATEMENTS EMPIRED LIMITED | ANNUAL REPORT | 2018 Net cash flows from operating activities
10 (b)
15,536,540
Consolidated Statement of Cash Flows
For the year ended 30 June 2018
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Income tax paid
Dividends received from associate
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
Proceeds from issue of shares
Payment of capital raising costs
Repayment of borrowings
Repayment of finance lease liabilities
Proceeds from finance leases
Proceeds from borrowings
Net cash flows from financing activities
Net increase/(decrease) 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
10 (a)
13,364,679
Notes
2018
$
2017
$
188,570,926
185,368,794
(172,221,895)
(174,888,578)
(8,888,598)
(19,674,248)
(812,491)
-
(8,153,440)
(735,158)
-
-
(1,349,361)
-
-
(3,396,923)
(998,186)
-
13,285,957
7,541,487
14,189,429
20,163
(844,913)
(713,221)
75,943
9,842,938
(7,269,413)
(3,681,756)
(8,954,103)
231,024
(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)
Page 29
EMPIRED LIMITED | ANNUAL REPORT | 2018CONSOLIDATED STATEMENTS Consolidated Statement of Changes in Equity
For the year ended 30 June 2018
Issued
Capital
Retained
Profits
Foreign
Currency
Translation
Reserve
Employee
Equity Benefits
Reserve
Total
Equity
$
$
$
$
$
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 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
Profit for the year
Other comprehensive loss
Share-based payments
-
-
-
4,882,310
-
-
-
(196,813)
-
-
-
410,085
4,882,310
(196,813)
410,085
Balance at 30 June 2018
54,204,746
19,885,445
(96,676)
2,381,783
76,375,298
Page 30
CHAIRMAN & CEO REVIEWEMPIRED LIMITED | ANNUAL REPORT | 2018 Notes to the Financial Statements
1. CORPORATE INFORMATION
The financial report of Empired Limited for the year ended
30 June 2018 was authorised for issue in accordance with a
resolution of the directors on 13 August 2018.
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 accordance
with the requirements of the Corporations Act 2001,
Australian Accounting Standards and other authoritative
pronouncements of the Australian Accounting Standards
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.
AASB 2016-2 Amendments to Australian Accounting
Standards – Disclosure Initiative: 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.
AASB 2016-2 is applicable to annual reporting periods
beginning on or after 1 January 2017.
Board. Compliance with Australian Accounting Standards
The adoption of these standards has not had a material
results in compliance with the International Financial
impact on the Group.
Reporting Standards (‘IFRS’) as issued by the International
Accounting Standards Board (IASB). Empired Limited is a
(c) Impact of standards issued but not yet applied
for-profit entity for the purpose of preparing the financial
New and revised accounting standards and amendments
statements.
The financial report has been prepared on an accruals
basis, and is based on historical costs modified where
that are currently issued for future reporting periods that
are relevant to the Company include:
AASB 9 Financial Instruments (December 2014)
applicable, by measurement at fair value of selected non-
AASB 9 introduces new requirements for the classification
current assets, financial assets and financial liabilities. The
and measurement of financial assets and liabilities and
financial report is presented in Australian dollars.
includes a forward-looking ‘expected loss’ impairment
model and a substantially-changed approach to hedge
(b) New and revised standards that are effective for
these financial statements
accounting.
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
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:
adjustments as a result of adopting these standards.
•
Financial assets that are debt instruments will be
Information on these new standards is presented below.
classified based on: (i) the objective of the entity’s
AASB 2016-1 Amendments to Australian Accounting
Standards – Recognition of Deferred Tax Assets for
Unrealised Losses
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
Page 31
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LIMITED | ANNUAL REPORT | 2018 instruments that are not held for trading in other
AASB 15 Revenue from Contracts with Customers
comprehensive income (instead of in profit or loss).
AASB 15 replaces AASB 118 Revenue, AASB 111
Dividends in respect of these investments that are a
Construction Contracts and some revenue-related
return on investment can be recognised in profit or loss
Interpretations. In summary, AASB 15:
and there is no impairment or recycling on disposal of
the instrument.
•
Introduces a ‘fair value through other 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 reduces a
measurement or recognition inconsistency that would
arise from measuring assets or liabilities, or recognising
the gains and losses on them, on different bases.
• establishes a new revenue recognition model;
• 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 specific
• Where the fair value option is used for financial
revenue streams of the Group and recognise that revenue
liabilities the change in fair value is to be accounted for
as performance obligations are satisfied taking into
as follows:
consideration the core principles of AASB 15.
»
the change attributable to changes in credit risk are
presented in Other Comprehensive Income (OCI)
The estimated potential financial impact on revenue and
after tax profit for the year ended 30 June 2018, based
»
the remaining change is presented in profit or loss
upon current Group business operations, is a reduction of
If this approach creates or enlarges an accounting
$91,000 and $26,000 respectively.
mismatch in the profit or loss, the effect of the changes in
The effective date is for annual reporting periods
credit risk are also presented in profit or loss. Otherwise,
beginning on or after 1 July 2018.
the following requirements have generally been carried
forward unchanged from AASB 139 into AASB 9:
AASB 16 Leases
AASB 16 replaces AASB 117 Leases and some lease-related
»
classification and measurement of financial
Interpretations. In summary, AASB 16:
liabilities; and
»
derecognition requirements for financial assets and
liabilities.
•
requires all leases to be accounted for ‘on-balance
sheet’ by lessees, other than short-term and low value
asset leases;
AASB 9 requirements regarding hedge accounting
•
provides new guidance on the application of the
represent a substantial overhaul of hedge accounting that
definition of lease and on sale and lease back
enable entities to better reflect their risk management
accounting;
activities in the financial statements.
The effective date is for annual reporting periods
•
largely retains the existing lessor accounting
requirements in AASB 117; and
beginning on or after 1 January 2018.
•
requires new and different disclosures about leases.
The Company is yet to undertake a detailed assessment of
The estimated impact of this impending change as at 30
the impact of AASB 9. However, based on the Company’s
June 2018 can be summarised as follows: introduction of a
preliminary assessment, the Standard is not expected to
right-of-use asset of $20.3m, an increase in lease liabilities
have a material impact on the transactions and balances
of $20.3m, a reduction in provisions of $3.4m and a
recognised in the financial statements when it is first
derecognition of deferred tax assets of $1.0m.
adopted for the year ending 30 June 2019.
Page 32
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LIMITED | ANNUAL REPORT | 2018 This preliminary assessment is indicative and has not taken
asset or liability arising from a contingent consideration
fully into consideration the transitional arrangements
arrangement. Acquisition costs are expensed as incurred.
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 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.
The effective date is for annual reporting periods
Assets acquired and liabilities assumed are generally
beginning on or after 1 July 2019.
measured at their acquisition-date fair values.
(d) Basis of consolidation
(e) Property, plant and equipment
The Group financial statements consolidate those of the
Plant and equipment is stated at cost less accumulated
Parent Company and all of its subsidiaries as of 30 June
depreciation and any impairment in value. Depreciation is
2018. The Parent controls a subsidiary if it is exposed, or
calculated on a straight line basis over the estimated useful
has rights, to variable returns from its involvement with
life of the asset as follows:
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.
Profit or loss and other comprehensive income of
subsidiaries acquired or disposed of during the year 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
• Leased Equipment 3 years
• Leasehold Improvements 5 – 20 years
• Furniture & Fittings 1–15 years
• Computer Hardware 1–8 yrs
Impairment
The carrying values of plant and equipment are reviewed
for impairment when events or changes in circumstances
indicate the carrying value may not be recoverable. For
an asset that does not generate largely independent cash
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 profit or loss in
the period the item is derecognised.
Page 33
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LIMITED | ANNUAL REPORT | 2018 (f) Borrowing costs
Borrowing costs are recognised as an expense when
incurred except where incurred in relation to qualifying
assets where borrowing costs are capitalised.
(g) Goodwill
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
Goodwill on acquisition is initially measured at cost being
expenditure is incurred.
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 indicate
that the carrying value may be impaired. Goodwill is not
amortised.
As at the acquisition date, any goodwill acquired is
Intangible assets are tested for impairment where an
indicator of impairment exists and in the case of indefinite
lived intangibles annually, either individually or at the cash
generating unit level. Useful lives are also examined on an
annual basis and adjustments, where applicable, are made
on a prospective basis.
Research and development costs
Research costs are expensed as incurred.
Development expenditure incurred on an individual project
is carried forward when its future recoverability can be
allocated to each of the cash-generating units expected
reasonably assured.
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
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.
and the portion of the cash-generating unit retained.
Gains or losses arising from derecognition of an intangible
(h) Intangible Assets Other Than Goodwill
asset are measured as the difference between the net
disposal proceeds and the carrying amount of the asset
Amortisation is calculated on a straight-line basis over the
and are recognised in profit or loss when the asset is
estimated useful life of the asset as follows:
derecognised.
• Software 1–7 years
• Other 3–7 years
Acquired both separately and from a business
combination
Intangible assets acquired separately are capitalised at cost.
Following initial recognition, the cost model is applied to
the class of intangible assets.
(i) Impairment of non-financial assets
At each reporting date, the Group assesses whether there
is any indication that an asset may be impaired. Where an
indicator of impairment exists, the Group makes a formal
estimate of recoverable amount. Where the carrying
amount of an asset exceeds its recoverable amount the
asset is considered impaired and is written down to its
recoverable amount.
Page 34
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LIMITED | ANNUAL REPORT | 2018 Recoverable amount is the greater of fair value less costs
• Held-To-Maturity (‘HTM’) investments; or
to sell and value in use. It is determined for an individual
asset, unless the asset’s value in use cannot be estimated
to be close to its fair value less costs to sell and it does not
generate cash inflows that are largely independent of those
from other assets or groups of assets, in which case, the
recoverable amount is determined for the cash-generating
unit to which the asset belongs.
In assessing value in use, the estimated future cash flows
are discounted to their present value using a pre tax
discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset.
( j) 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.
(k) 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 measured
• 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.
initially at fair value adjusted by transactions costs, except
(ii) Loans and receivables
for those carried at fair value through profit or loss,
Loans and receivables are non-derivative financial assets
which are measured initially at fair value. Subsequent
with fixed or determinable payments that are not quoted
measurement of financial assets and financial liabilities
in an active market. After initial recognition, these are
are described below.
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
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.
when it is extinguished, discharged, cancelled or expires.
(iii) Held-to-maturity investments
Classification and subsequent measurement of
financial 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’)
Held-to-maturity investments are non-derivative financial
assets that have fixed maturities and fixed or determinable
payments, and it is the Group’s intention to hold these
investments to maturity. They are subsequently measured
at amortised cost. Held-to-maturity investments are
included in non-current assets, except for those which are
expected to mature within 12 months after the end of
the reporting period. (All other investments are classified
as current assets). If during the period the Group sold or
Page 35
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LIMITED | ANNUAL REPORT | 2018 reclassified more than an insignificant amount of the held-
For the purposes of the statement of cash flows, cash and
to-maturity investments before maturity, the entire held-
cash equivalents consist of cash and cash equivalents as
to-maturity investments category would be tainted and
defined above, net of outstanding bank overdrafts.
reclassified as available-for-sale.
(n) Interest-bearing loans and borrowings
(iv) Available-for-sale financial assets
All loans and borrowings are initially recognised at cost,
Available-for-sale financial assets are non-derivative
being the fair value of the consideration received net of
financial assets that are either not suitable to be classified
issue costs associated with the borrowing. After initial
into other categories of financial assets due to their nature,
recognition, interest-bearing loans and borrowings are
or they are designated as such by management. They
subsequently measured at amortised cost using the
comprise investments in the equity of other entities where
effective interest method. Amortised cost is calculated by
there is neither a fixed maturity nor fixed or determinable
taking into account any issue costs, and any discount or
payments.
Available-for-sale financial assets are included in non-
current assets, except those which are expected to mature
premium on settlement. Gains and losses are recognised in
profit or loss when the liabilities are derecognised and as
well as through the amortisation process.
within 12 months after the end of the reporting period. (All
(o) Provisions
other financial assets are classified as current assets).
Provisions are recognised when the Group has a present
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
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.
method, except for financial liabilities held for trading or
Where the Group expects some or all of a provision to be
designated at FVTPL, that are carried subsequently at fair
reimbursed, for example under an insurance contract, the
value with gains or losses recognised in profit or loss.
reimbursement is recognised as a separate asset but only
Impairment
At the end of each reporting period, the Group assesses
whether there is objective evidence that a financial
when the reimbursement is virtually certain. The expense
relating to any provision is presented in the profit or loss
net of any reimbursement.
instrument has been impaired. In the case of available-for-
If the effect of the time value of money is material,
sale financial instruments, a significant or prolonged decline
provisions are determined by discounting the expected
in the value of the instrument is considered to determine
future cash flows at a pre-tax rate that reflects current
whether an impairment has arisen. Impairment losses are
market assessments of the time value of money and,
recognised in the statement of profit or loss and other
where appropriate, the risks specific to the liability. Where
comprehensive income.
discounting is used, the increase in the provision due to the
(l) Trade and other receivables
passage of time is recognised as a finance cost.
Trade receivables, which generally have 30-45 day terms,
(p) Employee benefits
are recognised and carried at original invoice amount less
an allowance for any uncollectible amounts.
(i) Short-term employee benefits
Liabilities for wages and salaries, including non-monetary
An impairment provision is recognised when there is
benefits, and accumulating sick leave expected to be settled
objective evidence that the Group will not be able to collect
within 12 months of the reporting date are recognised
the receivable. Bad debts are written off when identified.
in respect of employees' services up to the reporting
(m) 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.
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.
Page 36
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LIMITED | ANNUAL REPORT | 2018 (ii) Other long-term employee benefits
and the number of awards that, in the opinion of the
The Group’s liabilities for annual leave and long service
directors of the Group, will ultimately vest. This opinion
leave are included in other long term benefits as they
is formed based on the best available information at
are not expected to be settled wholly within twelve (12)
reporting date. No adjustment is made for the likelihood
months after the end of the period in which the employees
of market performance conditions being met as the effect
render the related service. They are measured at the
of these conditions is included in the determination of fair
present value of the expected future payments to be made
value at grant date.
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 current liabilities in the statement
of financial position if the Group does not have an
unconditional right to defer settlement for at least twelve
(12) months after the reporting period, irrespective of
when the actual settlement is expected to take place.
(q) Share-based payment transactions
Where the terms of an equity-settled award are modified,
as a minimum an expense is recognised as if the terms had
not been modified. In addition, an expense is recognised
for any increase in the value of the transaction as a result of
the modification, as measured at the date of modification.
Where an equity-settled award is cancelled, it is treated
as if it had vested on the date of cancellation, and any
expense not yet recognised for the award is recognised
immediately. However, if a new award is substituted for the
cancelled award, and designated as a replacement award
on the date that it is granted, the cancelled and new award
are treated as if they were a modification of the original
award, as described in the previous paragraph.
(r) Employee share schemes
There were no shares issued under the Employee Share
Ownership Plan during the financial year.
The Group provides remuneration to certain employees,
(s) Leases
including directors, of the Group in the form of share-
based payment transactions, whereby employees render
services in exchange for shares or rights over shares
(‘equity-settled transactions’).
The cost of these equity-settled transactions with
employees is measured by reference to the fair value
at the date at which they are granted. The fair value is
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. Further, the
cost of equity-settled transactions is recognised, together
with a corresponding increase in the Employee Equity
Benefits Reserve, over the period in which the performance
conditions are fulfilled, ending on the date on which the
relevant employees become fully entitled to the award
(‘vesting date’).
The cumulative expense recognised for equity-settled
transactions at each reporting date until vesting date
reflects the extent to which the vesting period has expired
Finance leases, which transfer to the Group substantially all
the risks and benefits incidental to ownership of the leased
item, are capitalised at the inception of the lease at the
fair value of the leased property or, if lower, at the present
value of the minimum lease payments.
Lease payments are apportioned between the finance
charges and reduction of the lease liability so as to achieve
a constant rate of interest on the remaining balance of
the liability. Finance charges are charged directly against
income.
Capitalised leased assets are depreciated over the shorter
of the estimated useful life of the asset or the lease term.
Leases where the lessor retains substantially all the risks
and benefits of ownership of the asset are classified as
operating leases. Initial direct costs incurred in negotiating
an operating lease are added to the carrying amount of
the leased asset and recognised over the lease term on the
same bases as the lease income.
Page 37
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LIMITED | ANNUAL REPORT | 2018 Operating lease payments are recognised as an expense in
consolidation. The functional currency of the entities in
the consolidated profit or loss on a straight-line basis over
the Group has remained unchanged during the
the lease term.
(t) Revenue
reporting period.
On consolidation, assets and liabilities have been
Revenue is recognised to the extent that it is probable
translated into $AUD at the closing rate at the reporting
that the economic benefits will flow to the Group and the
date. Goodwill and fair value adjustments arising on
revenue can be reliably measured. The following specific
the acquisition of a foreign entity have been treated as
recognition criteria must also be met before revenue is
assets and liabilities of the foreign entity and translated
recognised:
Rendering of services
Revenue from the provision of services is recognised
when the service has been provided. Stage completion
or percentage completion method is used to determine
earned revenue for services that have fixed revenue.
Maintenance, hosting and support fees
Revenue from maintenance, hosting and support is
recognised and bought to account over the time it
is earned. Revenue not yet earned is recorded as
unearned income.
Interest received
Revenue is recognised as the interest accrues (using the
effective interest method, which is the rate that exactly
discounts estimated future cash receipts through the
expected life of the financial instrument) to the net
carrying amount of the financial asset.
(u) Foreign currency transactions
The consolidated financial statements are presented in
Australian Dollars (‘$AUD’), which is also the functional
into $AUD at the closing rate. Income and expenses have
been translated into $AUD at the average rate over the
reporting period. 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.
(v) Income tax
Deferred income tax is provided on all temporary
differences at the reporting date between the tax bases
of assets and liabilities and their carrying amounts for the
financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable
temporary differences:
• except where the deferred income tax liability arises
from the initial recognition of an asset or liability in
a transaction that is not a business combination and,
at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss; and
currency of the Parent Company.
•
in respect of taxable temporary differences associated
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 settlement of such transactions
and from the re- measurement of monetary items at year
end exchange rates are recognised in profit or loss. Non-
monetary items are not retranslated at year-end and are
measured at historical cost (translated using the exchange
rates at the date of the transaction), except for non-
monetary items measured at fair value which are translated
using the exchange rates at the date when fair value was
determined.
In the Group’s financial statements, all assets, liabilities and
transactions of Group entities with a functional currency
other than the $AUD are translated into $AUD upon
with investments in subsidiaries, associates and interests
in joint ventures, except where the timing of the
reversal of the temporary differences can be controlled
and it is probable that the temporary differences will
not reverse in the foreseeable future.
•
Deferred income tax assets are recognised for all
deductible temporary differences, carry-forward of
unused tax assets and unused tax losses, to the extent
that it is probable that taxable profit will be available
against which the deductible temporary differences,
and the carry-forward of unused tax assets and unused
tax losses can be utilised:
•
except where the deferred income tax asset relating to
the deductible temporary differences arises from the
initial recognition of an asset or liability in a transaction
Page 38
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LIMITED | ANNUAL REPORT | 2018 that is not a business combination and, at the time of
(x) Work in progress and unearned revenue
the transaction, affects neither the accounting profit
When the outcome of a contract can be estimated reliably,
nor taxable profit or loss; and
•
in respect of deductible temporary differences
associated with investments in subsidiaries, associates
and interests in joint ventures, deferred tax assets
are only recognised to the extent that it is probable
that the temporary differences will reverse in the
foreseeable future and taxable profit will be available
against which the temporary differences can be utilised.
The carrying amount of deferred income tax assets is
reviewed at each reporting date and reduced to the extent
that it is no longer probable that sufficient taxable profit
will be available to allow all or part of the deferred income
tax asset to be utilised.
Deferred income tax assets and liabilities are measured
at the tax rates that are expected to apply to the year
when the asset is realised or the liability is settled, based
on tax rates (and tax laws) that have been enacted or
substantively enacted at the reporting date.
Income taxes relating to items recognised directly in equity
are recognised in equity and not in profit or loss.
(w) Other taxes
contract revenue and contract costs are recognised as
revenue and expenses respectively by reference to the
stage of completion of the contract activity at the balance
sheet date (“percentage-of-completion method”). When
the outcome of a contract cannot be estimated reliably,
contract revenue is recognised to the extent of contract
costs incurred that are likely to be recoverable. When it is
probable that total contract costs will exceed total contract
revenue, the expected loss is recognised as an expense
immediately.
Contract revenue comprises the initial amount of revenue
agreed in the contract and variations in the contract work
and claims that can be measured reliably. A variation
or a claim is recognised as contract revenue when it is
probable that the customer will approve the variation or
negotiations have reached an advanced stage such that it
is probable that the customer will accept the claim.
The stage of completion is measured by reference to the
ratio of contract costs incurred to date to the estimated
total costs for the contract. Costs incurred during the
financial year in connection with future activity on a
contract are excluded from the costs incurred to date
Revenues, expenses and assets are recognised net of the
when determining the stage of completion of a contract.
amount of GST except:
• where the GST incurred on a purchase of goods and
services is not recoverable from the taxation authority,
in which case the GST is recognised as part of the cost
of acquisition of the asset or as part of the expense
item as applicable; and
•
receivables and payables are stated with the amount of
GST included.
The net amount of GST recoverable from, or payable to,
the taxation authority is included as part of receivables or
payables in the statement of financial position. Cash flows
are included in the statement of cash flows on a gross
basis and the GST component of cash flows arising from
investing and financing activities, which is recoverable
from, or payable to, the taxation authority are classified as
operating cash flows.
Commitments and contingencies are disclosed net of
the amount of GST recoverable from, or payable to, the
taxation authority.
Such costs are shown as "work in progress" on the balance
sheet unless it is not probable that such contract costs are
recoverable from the customers, in which case, such costs
are recognised as an expense immediately.
At the balance sheet date, the cumulative costs incurred
plus recognised profit (less recognised loss) on each
contract is compared against the progress billings. Where
the cumulative costs incurred plus the recognised profits
(less recognised losses) exceed progress billings, the
balance is presented as Trade Receivables within “trade
and other receivables”. Where progress billings exceed the
cumulative costs incurred plus recognised profits
(less recognised losses), the balance is presented as
"unearned revenue".
Progress billings not yet paid by customers are included
within “trade and other receivables”.
Page 39
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LIMITED | ANNUAL REPORT | 2018 (y) Significant accounting judgements, estimates and
(iii) Long service leave provision
assumptions
The liability for long service leave is recognised and
Estimates and judgements are continually evaluated and
measured at the present value of the estimated future
are based on historical experience and other factors,
cash flows to be made in respect of all employees at the
including expectations of future events that may have a
reporting date. In determining the present value of the
financial impact on the entity and that are believed to be
liability, estimates of attrition rates and pay increases
reasonable under the circumstances.
through promotion and inflation have been taken
Critical accounting estimates and assumptions
into account.
The Group makes estimates and assumptions concerning
The Group uses the high quality corporate bond rate as
the future. The estimates and assumptions that have
the discount rate when measuring its Australian dollar
a significant risk of causing a material adjustment to
dominated long term employee benefits.
the carrying amounts of assets and liabilities within the
next financial year are discussed below. The Group tests
annually whether goodwill has suffered any impairment, in
accordance with the accounting policies.
(iv) Estimation of useful lives of assets
The Group determines the estimated useful lives and
related depreciation and amortisation charges for its
property, plant and equipment and finite life intangible
(i) Impairment of goodwill and intangibles with
assets. The useful lives could change significantly as a
indefinite useful lives
result of technical innovations or some other event. The
The Group determines whether goodwill and intangibles
depreciation and amortisation charge will increase where
with indefinite useful lives are impaired at least on an
the useful lives are less than previously estimated lives, or
annual basis. This requires an estimation of the recoverable
technically obsolete or non-strategic assets that have been
amount of the cash-generating unit to which the goodwill
abandoned or sold will be written off or written down.
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 14.
(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 40
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LIMITED | ANNUAL REPORT | 2018 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:
2018
Revenue
From external customers
From other segment
Total
Segment profit (EBITDA)
Segment assets
Segment non-current assets
2017
Revenue
From external customers
From other segment
Total
Segment profit (EBITDA)
Segment assets
Segment non-current assets
Australia
New Zealand
Elimination
$
$
Total
$
116,056,995
58,253,868
-
174,310,863
618,968
960,252
(1,579,220)
-
116,675,963
59,214,120
(1,579,220)
174,310,863
11,062,236
96,367,754
56,716,370
5,351,882
37,002,318
24,950,309
Australia
New Zealand
Elimination
$
$
104,020,398
63,371,312
-
-
-
-
16,414,118
133,370,072
81,666,679
Total
$
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
56,299,976
4,744,459
37,487,232
25,943,407
-
-
-
15,369,763
119,080,030
82,243,383
The Group’s segment operating EBITDA reconciles to the Group’s profit before tax as presented in the financial
statements as follows:
Total reporting segment operating EBITDA
Less:
Finance costs (net)
Depreciation and amortisation expenses
Loss on disposal of assets
Group profit before tax
2018
$
2017
$
16,414,118
15,369,763
(1,310,782)
(2,251,636)
(8,160,262)
(8,241,643)
(14,361)
6,928,713
(982,904)
3,893,580
Page 41
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LIMITED | ANNUAL REPORT | 2018 4. REVENUE
Sales Revenue
Services revenue
Product and license revenue
Total sales revenue
Other Income
Share of associate profit
Profit on sale of associate
Interest
Vendor warranty claim
Total other income
2018
$
2017
$
157,092,408
152,586,167
17,218,455
14,805,543
174,310,863
167,391,710
-
-
37,909
-
37,909
92,259
21,476
17,939
532,047
663,721
Total revenue and other income
174,348,772
168,055,431
2018
2017
28,217,426
25,202,104
4,571,722
3,588,540
8,439,280
4,360,445
3,881,198
7,883,407
44,816,968
41,327,154
2018
95,751,863
28,217,426
2017
96,531,367
25,202,104
123.969.289
121,733,471
5. ADMINISTRATION EXPENSES
Employee benefits (not included in cost of sales)
Depreciation expenses
Amortisation expenses
Other administration expenses
Total
6. EMPLOYEE BENEFITS EXPENSE
Employee benefits included in cost of sales
Employee benefits included in administration expenses
Total
Page 42
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LIMITED | ANNUAL REPORT | 2018 7. FINANCE EXPENSES
Interest expenses – bank borrowings
Interest expenses – finance leases and hire purchase
Interest expenses – other
Total
8. 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
2018
2017
1,308,425
1,526,645
40,266
-
208,891
534,039
1,348,691
2,269,575
2018
$
857,149
-
1,365,204
(175,950)
2,046,403
2018
$
-
-
2017
$
541,217
(114,885)
469,981
(163,863)
732,450
2017
$
258,828
258,828
Page 43
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LIMITED | ANNUAL REPORT | 2018 8. INCOME TAX (CONTINUED)
(c) Reconciliation of tax expense to accounting profit
Accounting profit before income tax
At Australia's statutory income tax rate of 30%
Adjust for tax effect of:
Tax rate differential
Non-deductible expenses
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
(d) Recognised deferred tax assets and liabilities
Deferred income tax balances relate to the following:
2018
$
6,928,713
2,079,518
(102,038)
215,743
(36,949)
-
(183,780)
73,909
-
2,046,403
2017
$
3,893,580
1,178,240
(88,456)
235,819
(6,716)
(196,801)
(278,747)
(89,338)
(21,551)
732,450
Opening Balance
Recognised in
Profit and Loss
Recognised
in Other
Comprehensive
Income
Exchange
Differences
Closing Balance
$
$
$
$
$
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
267,465
(338,302)
24,495
(24,621)
(70,963)
(101,508)
(137,901)
(4,128)
(740,585)
(16,345)
9,431
(269,182)
(1,260,218)
(1,189,255)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(604)
-
-
2,874,258
3,030,446
24,495
24,849
(604)
5,954,048
(543)
3,167,059
-
-
-
(18)
481
1,710
1,630
2,234
193,460
3,269
4,100,040
2,482
12,514
479,833
7,958,657
2,004,609
30 JUNE 2018
Deferred tax liabilities
Work in Progress
Fixed Assets
Trade and other receivables
Other
Gross deferred tax liabilities
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
Page 44
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LIMITED | ANNUAL REPORT | 2018 8. INCOME TAX (CONTINUED)
(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 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
(e) Tax consolidation
3,527,140
201,917
8,466
3,949,233
41,596
16,615
1,640,554
9,385,521
(258,070)
(129,384)
(1,069)
891,392
(22,262)
(13,840)
(888,315)
(421,548)
-
-
-
-
-
258,828
-
-
-
-
-
258,828
-
2,886
(1,400)
1,486
40
-
-
-
(489)
(173)
(4,934)
(5,556)
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
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 45
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LIMITED | ANNUAL REPORT | 2018 9. 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 attributable to ordinary equity holders of the parent
4,882,310
3,161,130
2018
$
2017
$
Weighted average number of ordinary shares for basic earnings per share
159,751
130,498
Effect of Dilution:
Performance rights
Weighted average number of ordinary shares adjusted for the effect of dilution
5,184
164,935
5,024
135,522
2018
2017
Thousands
Thousands
Page 46
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LIMITED | ANNUAL REPORT | 2018 10. 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 17)
2018
$
2017
$
13,364,679
2,004,385
-
(2,849,298)
13,364,679
(844,913)
(b) Reconciliation of net cash flows from operating activities to profit after income tax
Profit after income tax
Finances expenses (net)
Depreciation and amortisation
Loss on disposal of assets
Share payment expense
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 in receivables
(Increase) / decrease in work in progress
Decrease / (increase) in prepayments and other receivables
Increase / (decrease) in trade creditors and other payables
Decrease in lease incentives
Decrease in unearned revenue
Decrease in deferred tax asset
Increase / (decrease) in provision for employee entitlements
Net cash from operating activities
(c) Non cash transactions
2018
$
4,882,310
1,310,782
8,160,262
14,361
410,096
-
-
-
(2,077,534)
(1,441,258)
890,795
3,824,789
(934,895)
(984,753)
1,187,021
294,564
15,536,540
2017
$
3,161,130
2,251,637
8,241,643
982,904
356,492
(92,259)
75,943
(21,476)
(855,131)
946,117
(217,747)
(3,186,459)
(808,505)
(875,345)
54,333
(170,339)
9,842,938
During the period the Group acquired $259,726 (2017: $1,025,045) of plant and equipment and intangibles under
finance leases not involving cash.
Page 47
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LIMITED | ANNUAL REPORT | 2018
11. TRADE & OTHER RECEIVABLES
Current
Gross trade receivables
Provision for doubtful debts
Other receivables
Non-current
Other receivables
2018
$
2017
$
25,104,980
22,911,739
(165,920)
153,321
(50,213)
165,618
25,092,381
23,027,144
-
33,424
Trade receivables are non-interest bearing and are generally on 30-day terms. A provision for impairment is
recognised when there is objective evidence that an amount is considered not collectible.
12. OTHER CURRENT ASSETS
Prepayments
2018
$
2017
$
2,352,168
2,352,211
Page 48
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LIMITED | ANNUAL REPORT | 2018 13. PROPERTY, PLANT & EQUIPMENT
Leasehold improvements
At cost
Accumulated depreciation
Total lease improvements
Computer hardware
At cost
Accumulated depreciation
Total computer hardware
Equipment & Fittings
At cost
Accumulated depreciation
Total Equipment & Fittings
Leased equipment
At cost
Accumulated depreciation
Total leased equipment
2018
$
2017
$
6,015,328
6,062,054
(2,059,565)
(1,518,972)
3,955,763
4,543,082
21,073,555
20,505,974
(9,599,274)
(5,877,590)
11,474,281
14,628,384
2,603,290
(1,088,516)
2,627,798
(840,105)
1,514,774
1,787,693
39,506
(35,031)
4,475
39,506
(32,787)
6,719
Total property, plant & equipment
16,949,293
20,965,878
Page 49
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LIMITED | ANNUAL REPORT | 2018 13. PROPERTY, PLANT & EQUIPMENT (CONTINUED)
2018
Gross carrying amount
Balance 1 July 2017
Additions
Disposals
Exchange differences
Balance 30 June 2018
Depreciation & impairment
Leased
equipment
Leasehold
improvements
Computer
hardware
Furniture,
Equipment &
Fittings
$
$
$
$
Total
$
39,506
6,062,054
20,505,974
2,638,019
29,245,553
-
-
-
3,815
(29,917)
(20,624)
673,190
(1,607)
58,153
(2,487)
735,158
(34,011)
(104,002)
(90,395)
(215,021)
39,506
6,015,328
21,073,555
2,603,290
29,731,679
Balance 1 July 2017
(32,787)
(1,518,972)
(5,877,590)
(850,326)
(8,279,675)
Disposals
Depreciation
Exchange differences
Balance 30 June 2018
-
15,564
1,257
1,559
18,380
(2,244)
(556,586)
(3,736,521)
(276,371)
(4,571,722)
-
429
13,580
36,622
50,631
(35,031)
(2,059,565)
(9,599,274)
(1,088,516)
(12,782,386)
Carrying amount 30 June 2018
4,475
3,955,763
11,474,281
1,514,774
16,949,293
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
Page 50
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LIMITED | ANNUAL REPORT | 2018 14. INTANGIBLE ASSETS
Goodwill
Cost
Net carrying value
Software
Cost
Amortisation
Net carrying value
Other
Cost
Amortisation
Net carrying value
Total intangibles
2018
$
2017
$
46,446,049
46,446,049
46,446,049
46,446,049
24,486,954
16,280,368
(8,291,525)
(4,825,446)
16,195,429
11,454,922
480,562
(409,263)
71,299
486,483
(335,003)
151,480
62,712,777
58,052,451
Year end 30 June 2018
Goodwill
Software
$
$
Other
$
Total
$
Balance at the beginning of the year
46,446,049
11,454,922
151,480
58,052,451
Additions
Amortisation charge
Exchange differences
Closing value at 30 June 2018
Year end 30 June 2017
-
-
-
8,332,703
-
8,332,703
(3,511,144)
(77,396)
(3,588,540)
46,446,049
16,195,429
(81,052)
(2,785)
71,299
(83,837)
62,712,777
Balance at the beginning of the year
46,446,049
Additions
Disposals
Amortisation charge
Exchange differences
-
-
-
-
8,419,848
7,369,267
(531,793)
238,458
55,104,355
-
-
7,369,267
(531,793)
(3,795,268)
(85,930)
(3,881,198)
(7,132)
(1,048)
(8,180)
Closing value at 30 June 2017
46,446,049
11,454,922
151,480
58,052,451
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 51
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LIMITED | ANNUAL REPORT | 2018 14. 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
2018
$
27,105,898
19,340,151
2017
$
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 June 2018. 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 FY19 budgets and margins achieved in the current year. Gross profit
margins are the most sensitive variable to the value in use calculation. However, a reasonable possible change is
•
•
not likely to cause a material impairment.
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 costs have been assumed post year 3 at 3%.
•
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 14.6%
which is applied to the pre-tax cash flows after replacement capital expenditure of each CGU.
Page 52
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LIMITED | ANNUAL REPORT | 2018 15. EMPLOYEE BENEFITS
The total expense relating to equity-settled share-based payment transactions in 2018 was
$410,085 (2017: $331,492).
During 2018 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
2018
No.
2017
No.
5,023,659
5,584,076
2,075,000
3,411,975
(443,192)
(1,847,392)
(1,471,301)
(2,125,000)
5,184,166
5,023,659
A summary of the performance criteria and vesting dates is as follows:
Number of Performance Rights
Vesting Date
Hurdle Description
98,505
98,505
49,278
587,576
587,576
1,175,150
587,576
398,400
398,400
804,800
398,400
5,184,166
1 July 2018
1 July 2018
1 July 2018
31 August 2019
31 August 2019
31 August 2019
31 August 2019
30 August 2020
30 August 2020
30 August 2020
30 August 2020
FY18 Basic EPS
Relative Total Shareholder Return
Sustainability measure
FY18 Basic EPS
FY19 Basic EPS
Relative Total Shareholder Return
Sustainability measure
FY19 Basic EPS
FY20 Basic EPS
Relative Total Shareholder Return
Sustainability measure
Page 53
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LIMITED | ANNUAL REPORT | 2018 15. EMPLOYEE BENEFITS (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
Term
Fair value at grant date
Performance rights granted
1
2
14/09/2017
6/12/2017
30/08/2020
30/08/2020
$0.63
3 yrs
$547,183
1,223,000
$0.49
3 yrs
$291,299
852,000
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.
16. TRADE & OTHER PAYABLES
Trade payables
Other payables
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.
2018
$
10,744,831
11,502,749
2017
$
8,671,125
9,663,518
22,247,580
18,334,643
2018
$
2017
$
55,000
60,740
Page 54
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LIMITED | ANNUAL REPORT | 2018 17. BORROWINGS
Current – designated at amortised cost:
Obligations under bank loan
Obligations under NZ-Dollar bank loan
Obligations under NZ-Dollar bank overdraft (note10(a))
Obligations under finance leases and hire purchase contracts
Obligations under premium funding contracts
2018
$
1,200,000
640,559
-
245,935
294,737
2017
$
1,941,201
1,110,329
2,849,298
622,999
196,895
Total
2,381,231
6,720,722
Non-current – Designated at amortised cost:
Obligations under bank loan
Obligations under NZ-Dollar bank loan
Obligations under finance leases and hire purchase contracts
2018
$
17,445,255
2,882,518
-
2017
$
5,723,440
3,321,913
12,519
Total
20,327,773
9,057,872
Summary of facilities
At reporting date, the following financing facilities were available:
Bank overdraft
Facility used at reporting date
Facility unused at reporting date
Bank 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
2018
$
-
-
-
2017
$
12,000,000
(2,849,298)
9,150,702
22,989,396
12,174,664
(22,168,332)
(12,096,883)
821,064
77,781
3,500,000
3,500,000
(2,573,283)
(1,784,047)
926,717
1,715,953
4,000,000
5,000,000
-
-
4,000,000
5,000,000
Page 55
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LIMITED | ANNUAL REPORT | 2018 17. 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 $10,123,077 maturing in February 2021 with quarterly principal repayments;
•
borrowing base of $13,000,000 maturing in February 2020;
• bank guarantee facility of $3,500,000 maturing in February 2021; and
•
lease facility of $4,000,000 with a 3 year term.
The term debt, borrowing base and bank guarantee facilities 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 borrowing
base utilisation as a percentage of certain trade debtors.
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 56
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LIMITED | ANNUAL REPORT | 2018 18. PROVISIONS
Year end 30 June 2018
Lease
Incentives
$
Annual
Leave
$
Long Service
Leave
$
Total
$
Balance at the beginning of the year
4,335,168
4,321,525
1,226,043
9,882,736
Increase in discounting
Additional provisions
Amounts used
-
-
(491)
6,979,661
(934,893)
(6,947,550)
-
(491)
333,500
(70,555)
7,313,161
(7,952,998)
Closing value at 30 June 2018
3,400,275
4,353,145
1,488,988
9,242,408
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
19. RESERVES
2018
$
2017
$
4,353,145
945,979
955,283
6,254,407
543,009
2,444,992
2,988,001
4,321,525
566,319
966,555
5,854,399
659,724
3,368,613
4,028,337
Opening balance as at 1 July 2016
Exchange differences arising on translation of foreign operations
Share-based payments
Closing balance as at 30 June 2017
Exchange differences arising on translation of foreign operations
Share-based payments
Closing balance as at 30 June 2018
Foreign Currency
Translation Reserve
Employee Equity
Benefits Reserve
Total Reserves
$
138,811
(38,674)
-
100,137
(196,813)
-
(96,676)
$
1,640,206
-
331,492
1,971,698
-
410,085
2,381,783
$
1,779,017
(38,674)
331,492
2,071,835
(196,813)
410,085
2,285,107
Page 57
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LIMITED | ANNUAL REPORT | 2018 20. ISSUED CAPITAL
Ordinary Shares fully paid
Movement in ordinary shares on issue
At 1 July 2016
Issue of ordinary shares (net of issue costs)
At 30 June 2017
Issue of ordinary shares (net of issue costs)
At 30 June 2018
2018
$
No.
2017
$
54,204,746
54,204,746
Value ($)
38,783,679
15,421,067
54,204,746
-
54,204,746
120,048,538
38,558,080
158,606,618
1,471,301
160,077,919
Ordinary shares entitle the holder to participate in dividends, and carry one vote per share. These shares have
no par value.
On 28 August 2017, the company issued 971,301 ordinary shares for the vesting of Performance Rights.
On 1 November 2017, the company issued 500,000 ordinary shares for the vesting of Performance Rights.
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.
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 2018 and 30 June 2017 are as follows:
Note
17
10(a)
Consolidated
Group 2018
$
Consolidated
Group 2017
$
22,709,004
(13,364,679)
9,344,325
54,204,746
63,549,071
11%
15,778,594
(2,004,385)
13,774,209
54,204,746
67,978,955
16%
Total Borrowings
Less cash and cash equivalents
Net Debt
Issued Capital
TOTAL CAPITAL
Gearing ratio
Page 58
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LIMITED | ANNUAL REPORT | 2018 21. DIVIDENDS
(a) Distributions Paid
Final franked dividend of nil cents (2017: 0 cents)
Interim franked dividend of nil cents (2017: 0 cents)
(b) Franking Credit Balance
2018
$
2017
$
-
-
-
-
-
-
Balance of franking account at year end at 30% available to the shareholders of
Empired Limited for subsequent financial years
24,841
24,841
22. 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.
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 10. Refer to note 23 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% (2017: +/- 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 2018
30 June 2017
Profit for the year $
Equity $
+1%
(65,410)
(96,419)
-1%
65,410
96,419
+1%
-1%
-
-
-
-
Page 59
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LIMITED | ANNUAL REPORT | 2018 22. FINANCIAL RISK MANAGEMENT OBJECTIVES & POLICIES (CONTINUED)
Foreign currency risk
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
currency. 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 $
2018
2017
2018
2017
2018
2017
9,629,754
14,652,546
570,376
645,772
49,312
898,240
(5,143,590)
(9,497,896)
-
(23,111)
(23,261)
(14,305)
4,486,164
5,154,650
570,376
622,661
26,051
883,935
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 (2017: 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% (2017: 10%) then this would have had
the following impact:
30 June 2018
30 June 2017
NZD
$
448,616
515,465
USD
$
57,038
62,266
SGD
$
2,605
88,394
Page 60
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LIMITED | ANNUAL REPORT | 2018 22. FINANCIAL RISK MANAGEMENT OBJECTIVES & POLICIES (CONTINUED)
If the $AUD had weakened against the respective currencies by 10% (2017: 10%) then this would have had the
following impact:
30 June 2018
30 June 2017
NZD
$
(448,616)
(515,465)
USD
$
(57,038)
(62,266)
SGD
$
(2,605)
(88,394)
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 61
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LIMITED | ANNUAL REPORT | 2018 22. 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 10)
Trade and other receivables (note 11)
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
2018
$
13,364,679
25,092,381
2017
$
2,004,385
23,027,144
38,457,060
25,031,529
2018
$
2017
$
21,357,492
18,085,187
2,297,151
764,590
519,827
2,189,813
1,427,883
1,158,643
24,939,060
22,861,526
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 2018, the Group’s financial liabilities have contractual maturities (including interest payments where
applicable) as summarised below:
0–12 Months
1–5 years
5+ years
$
306,847
$
-
2,848,672
21,223,430
254,551
22,247,580
-
-
25,657,650
21,223,430
$
-
-
-
-
-
30 June 2018
Insurance premium funding loan
Bank borrowings and overdraft
Finance leases and hire purchase obligations
Trade and other payables
Total
Page 62
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LIMITED | ANNUAL REPORT | 2018 22. 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 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
$
-
-
-
-
-
The above amounts reflect the contractual undiscounted cash flows, which may differ to the carrying values of the
liabilities at the reporting date.
23. 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:
2018
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
13,364,679
-
13,364,679
-
-
-
Bank Loans
24,072,102
-
-
-
-
245,935
294,737
-
-
13,364,679
1.25%
25,092,381
25,092,381
25,092,381
38,457,060
22,247,580
22,247,580
-
-
-
245,935
294,737
24,072,102
4.84%
4.75%
4.00%
Total financial liabilities
24,072,102
540,672
22,247,580
46,860,354
Page 63
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LIMITED | ANNUAL REPORT | 2018 23. FINANCIAL INSTRUMENTS (CONTINUED)
2017
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
-
-
-
Floating
interest rate
Fixed
interest rate
Non-interest
bearing
Carrying amount
as
per balance
sheet
Weighted
average
effective
interest rate
$
$
$
-
-
-
-
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%
5.8%
5.36%
Bank Loans
14,946,181
Total financial liabilities
14,946,181
840,731
18,860,921
34,647,833
Page 64
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LIMITED | ANNUAL REPORT | 2018 24. COMMITMENTS & CONTINGENCIES
No contingent assets as at 30 June 2018.
Commitments for expenditure
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
Total
Current
Non Current
Total
Operating leases
2018
$
254,551
-
(8,616)
245,935
245,935
-
245,935
2017
$
636,504
12,519
(13,505)
635,518
622,999
12,519
635,518
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
Bank guarantees
Bank guarantees outstanding at year end
2018
$
2017
$
5,194,852
5,158,496
14,563,884
17,348,386
3,010,675
5,872,384
22,769,411
28,379,266
2018
$
2017
$
2,573,283
1,784,047
Page 65
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LIMITED | ANNUAL REPORT | 2018 25. 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
26. 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
2018
2017
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
2018
$
2017
$
167,221
88,182
255,403
152,817
30,853
183,670
14,950
38,350
6,510
21,460
276,863
3,901
42,251
225,921
Page 66
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LIMITED | ANNUAL REPORT | 2018 27. PARENT ENTITY
As at, and throughout, the financial year ended 30 June 2018 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
Total equity
Statement of profit or loss and other comprehensive income
Profit / (loss) after tax
Other comprehensive income
Total comprehensive income / (loss)
2018
$
38,968,038
86,948,970
26,123,081
2017
$
21,404,989
72,269,788
22,102,122
47,494,549
35,909,230
54,204,744
54,204,744
2,381,783
1,971,697
(17,132,106)
(19,815,883)
39,454,421
36,360,558
2,683,777
(990,901)
-
-
2,683,777
(990,901)
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.
Page 67
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LIMITED | ANNUAL REPORT | 2018 28. 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 key management personnel
Key management of the Group are the executive members of Empired’s Board of Directors and members of the
Executive Team. Key management personnel remuneration includes the following expenses:
Short-term employee benefits
Post-employment benefits
Share-based payment
Total compensation paid to key management personnel
2018
$
2017
$
1,886,549
1,495,601
58,305
129,445
74,840
210,686
2,074,299
1,781,127
29. EVENTS AFTER THE REPORTING DATE
No significant non-adjusting events have occurred between the reporting date and the date of authorisation.
Page 68
NOTES TO THE FINANCIAL STATEMENTS EMPIRED LIMITED | ANNUAL REPORT | 2018 AUDITOR’S INDEPENDENCE 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 2018
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 2018 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 2018.
On behalf of the Board
Russell Baskerville
MANAGING DIRECTOR
13th of August 2018
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EMPIRED LIMITED | ANNUAL REPORT | 2018
INDEPENDENT AUDIT REPORT
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EMPIRED LIMITED | ANNUAL REPORT | 2018 INDEPENDENT AUDIT REPORT
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EMPIRED LIMITED | ANNUAL REPORT | 2018 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 2018.
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
137
458
322
565
131
1,613
%
0.04
0.88
1.53
12.15
85.40
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
Microequities Asset Management Pty Ltd
Baskerville Investments Pty Ltd
Washington H.Soul Pattinson And Company Limited#
Pengana Capital Ltd#
#Relevant interest over the same shares in Empired
Number of
shares held
26,281,919
18,489,373
11,610,994
7,450,059
8,154,966
8,154,966
%
16.42
11.55
7.25
6.21
5.09
5.09
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SHAREHOLDING ANALYSISEMPIRED LIMITED | ANNUAL REPORT | 2018 c. Twenty Largest Shareholders
NAME
NATIONAL NOMINEES LIMITED
J P MORGAN NOMINEES AUSTRALIA LIMITED
UBS NOMINEES PTY LTD
BASKERVILLE INVESTMENTS PTY LTD
BNP PARIBAS NOMS PTY LTD
MR JOHN ALEXANDER BARDWELL
MR MARK EDWARD WALLER
MR AND MRS PAYNE + BRANDONS TRUSTEE COMPANY LTD
GABRIELLA NOMINEES PTY LTD
PJTR PTY LTD
BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD DRP
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED – A/C 2
MR TONY JOHN ALAN STEWART
UNIPLEX CONSTRUCTIONS PTY LTD
ICE COLD INVESTMENTS PTY LTD
MS SARAH LOUISE MCCREADY
NEWECONOMY COM AU NOMINEES PTY LIMITED <900 ACCOUNT>
MS KRISTY CHRISTOPHERSEN
MR GLENN THOMAS BASKERVILLE
MR STUART MARK STRICKLAND
Number of
shares held
31,683,800
20,710,411
19,239,373
9,125,283
8,421,591
4,099,904
2,407,121
1,670,517
1,650,000
1,487,809
1,421,000
1,367,236
1,134,921
1,065,500
1,000,000
975,000
925,634
800,000
668,397
666,667
%
19.79
12,.93
12.02
5.7
5.26
2.56
1.5
1.04
1.03
0.93
0.89
0.85
0.71
0.67
0.62
0.61
0.58
0.50
0.42
0.42
Total
110,520,164
69.03
The twenty members holding the largest number of shares together held a total of 69.02% of issued capital.
d. Issued Capital
(i) Ordinary Shares
The fully paid issued capital of the company consisted
of 160,077,919 shares held by 1,613 shareholders.
Each share entitles the holder to one vote.
The number of shareholdings held in less than
marketable parcels is 103.
(ii) Unquoted Equity
No options were issued in the year under the company
share options plan.
1,471,301 performance rights were issued under the
company’s LTI plan.
Options do not have any voting rights.
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e. On-Market Buy-Back
There is currently an on-market buy-back in place.
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
SHAREHOLDING ANALYSISEMPIRED LIMITED | ANNUAL REPORT | 2018 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
INTERNET ACCESS TO INFORMATION
Empired maintains a comprehensive Investor Relations
section on its website at www.empired.com/Investors/
Company’s state of affairs. Information is communicated to
You can also access comprehensive information about
shareholders as follows:
• The annual report is distributed to shareholders who
security holdings at the Computershare Investor Centre at
www-au.computershare.com/investor/
elect to receive the document. A copy of the full annual
By registering with Computershare’s free Investor Centre
report is available free of charge, upon request, from
service you can enjoy direct access to a range of functions
the Company. The Board ensures that the annual report
to manage your personal investment details. You can
includes relevant information about the operation
create and manage your own portfolio of investments,
of the Company during the year, changes in the
check your security holding details, display the current
state of affairs of the Company and details of future
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.
developments, in addition to the other disclosures
required by the Corporations Act;
• The half-year report contains summarised financial
information and a review of the operations of the
Company during the period. The half-year financial
report is prepared in accordance with the requirements
of Accounting Standards and the Corporations Act, and
is lodged with the Australian Securities and Investments
Commission and the Australian Stock Exchange; and
• The Company’s internet website at www.empired.com
is regularly updated and provides details of recent
material announcements by the Company to the stock
exchange, annual reports and general information on
the Company and its business. The Board encourages
full participation of shareholders at the Annual General
Meeting to ensure a high level of accountability and
identification with the Company’s strategy and goals.
Important issues are presented to the shareholders as
single resolutions.
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EMPIRED LIMITED | ANNUAL REPORT | 2018 Other Information for Shareholders
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
The 2018 Annual General Meeting of Empired Limited will be
held at:
Canning Room, Adina Apartment Hotel
33 Mounts Bay Road
Perth
11am on Wednesday, 28 November 2018
Formal notice of the meeting will be circulated to
shareholders separate to this report.
STOCK EXCHANGE LISTING
Empired Limited shares are listed on the Australian 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
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EMPIRED LIMITED | ANNUAL REPORT | 2018