Global Blood Therapeutics Annual Report 2008

Plain-text annual report

Technology for Financial Markets G B S T H O L D N G S I L I M I T E D A n n u a l R e p o r t 2 0 0 8 www.gbst.com annual report 2008 CORPORATE DIRECTORY REGISTERED OFFICE c/- McCullough Robertson, Lawyers Level 11, Central Plaza Two 66 Eagle Street Brisbane QLD 4000 SHARE REGISTRY Link Market Services Level 12, 300 Queen Street Brisbane QLD 4000 Ph 02 8280 7454 STOCK EXCHANGE LISTING GBST Holdings Limited shares are quoted on the Australian Stock Exchange under the code GBT. VOLUNTARY RESTRICTIONS Details of shares that are held in voluntary escrow: Ordinary fully paid shares escrowed until 31 August 2009: 1,645,061 Ordinary fully paid shares escrowed until 31 August 2010: 1,645,061 UNQUOTED SECURITIES A total of 789,105 options are on issue to 57 employees under the GBST Holdings Limited Employee Option Plan. AUDITORS Hayes Knight Audit (Qld) Pty Ltd Level 19, 127 Creek Street Brisbane QLD 4000 Ph 07 3229 2022 Fax 07 3229 3277 Ph 07 3233 8888 Fax 07 3229 9949 PRINCIPAL PLACE OF BUSINESS 5 Cribb Street Milton QLD 4064 Ph 07 3331 5555 Fax 07 3367 0181 www.gbst.com POSTAL ADDRESS PO Box 1511 Milton QLD 4064 DIRECTORS John Francis Puttick Stephen Maurice Linton Lake Joakim James Sundell Allan James Brackin David Campbell Adams COMPANY SECRETARIES David Michael Doyle John Francis Puttick GBST is a leading provider of securities transaction and fund administration software for the ﬁ nancial services industry. GBST builds, owns and manages software products and we provide support for our customers who use these products. We are focused on earning our revenue from the ﬁ nancial services sector and aim to use technology applications to earn recurring revenue from areas such as transactions processing, reporting, account management, books and records, data and content. GBST Broker Services division is Australia’s leading provider of client accounting and securities transaction technology. Capital market participants such as banks, clearing houses, custodians, fund managers, margin lenders and institutional and retail stockbrokers use GBST’s specialist market access and transaction solutions to process up to $130 billion of ASX trades every month. GBST doubled in size in August 2007 with the purchase of InfoComp, a specialist provider of wealth management software. GBST Wealth Management division is now the leading provider of funds administration and registry software to the Australian wealth management industry. It offers an integrated system for the administration of wrap platforms, master trusts, superannuation, pensions, risk and debt. GBST’s wealth management software administers funds valued at more than $150 billion in Australia and the United Kingdom. CONTENTS Highlights Chairman’s and Managing Director’s report Financial report Corporate governance statement 1 2 7 8 Directors’ report Financial statements Independent auditor’s report Additional information Corporate directory 13 30 86 88 89 NOTICE OF AGM The Annual General Meeting of GBST Holdings Limited will be held at: McCullough Roberston Level 11, Central Plaza Two 66 Eagle Street, Brisbane on Thursday 23 October at 12.30pm. HIGHLIGHTS CASH EPS (cents) 29.1% OPERATING REVENUE ($ million) FY05 FY06 FY07 FY08 121% FY05 FY06 FY07 FY08 EBITDA ($ million) 60% FY05 FY06 FY07 FY08 1 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G Progressed growth strategy with the acquisition Growing annuity licence income accounting and integration of InfoComp for 65% of revenue Group operating revenue, including a full year’s EBITDA based on 12 months earnings from InfoComp contribution from InfoComp, up to $64.1 million, increased 60% to $18.3 million an increase of 120.5% on the prior year Exceeded forecast with revenue of $33.3 million for Wealth Management division for the full 12 months, with Broker Services division revenue of $30.8 million, up 6% Fully-franked full year dividend of 9.5 cents 21.9% increase in cash earnings per share to 23.39 cents CHAIRMAN’s and MANAGING DIRECTOR’s REPORT 2 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G During the 2008 ﬁ nancial year, we made considerable progress in our objectives of broadening our business model and advancing our growth strategy, both organically and through acquisitions. After taking this write-down to account, the Directors have declared a ﬁ nal dividend of 4.0 cents, bringing the full dividend for the year to 9.5 cents, fully franked. During the ﬁ nancial year, we were challenged by issues arising from the knock-on effects in the sub-prime GBST achieved an operating EBITDA result of crisis in the United States, which impacted markets $17.2 million for the year to 30 June 2008 on total and their participants around the world. We have not Group revenue of $60.7 million. This result includes been immune from the global decline of the ﬁ nancial a 10 month contribution by InfoComp and represents sector, however, GBST’s underlying performance EBITDA growth of 50 percent and revenue growth has remained sound despite the shift in sentiment of 99 percent. around equities and credit markets. This uncertainty has presented a number of strategic diversiﬁ cation The transformational acquisition of InfoComp during the period provided a major impetus for these results opportunities for GBST. and has reinforced our determination to remain ACQUISITIONS focussed on our strategy. The acquisition of InfoComp in August 2007 GBST has strategically invested in software provider effectively doubled the size of our business. InfoComp IT&e Limited. While we continue to see the importance extended our global reach into Europe and provided of risk management software in GBST’s existing Broker the foundations for GBST to become a signiﬁ cant Services business and offmarket and exchange traded player in the UK market. securities, the global decline of listed companies has contributed to a reduction in the value of the Group’s 16.2 percent shareholding. This has required a one-off, non-cash write-down of $2.3 million over the ﬁ nancial year. InfoComp offers a complete system for the administration of wrap platforms, master trusts, retail and wholesale unit trusts and retirement products such as superannuation plans and pensions. GBST’s underlying performance has remained sound despite the shift in sentiment around equities and credit markets. 3 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G The purchase of InfoComp follows our successful BROKER SERVICES acquisition and subsequent integration of the Palion broking business in December 2005. GBST’s share of ASX trade volumes increased from 42 percent at the start of the year to 44 percent Moving forward, we intend to continue to leverage in June 2008. the purchase of InfoComp to focus on building scale around our key operating divisions. NEW PRODUCTS This year, we are investing more than $6 million in This year, our research and development expenditure in the broker services sector was invested to strengthen the way we cater for anticipated increases in market volumes. research and development to ensure we leverage Throughout the Australian and New Zealand markets, all opportunities within the current market and drive GBST Shares processed 79 million trades, and contract wins for GBST in Australia and the 8.8 million conﬁ rmations for the year without any United Kingdom. signiﬁ cant system outages. In 2008 we released signiﬁ cant enhancements In July 2007 a total of 68 ﬁ nancial institutions, to GBST Clearview to further enhance our proven including brokers, ﬁ nancial intermediaries, and trading CHESSLink application. GBST Clearview provides a participants, relied on GBST for back ofﬁ ce equities solution for ASX participants that do not currently use and derivatives processing. This number increased to GBST products. It is a high performance and feature- 89 ﬁ nancial institutions by June 2008. rich CHESS gateway and holdings management system that allows multiple views of client holdings. Additionally, we are currently enhancing ComposerWeb to support a ﬂ exible Wrap web portal capability for the ﬁ nancial advisor and investor. CHAIRMAN’s and MANAGING DIRECTOR’s REPORT continued 4 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G Despite a challenging second half of the year, GBST’s WEALTH MANAGEMENT Broker Services business continued to provide a sound platform for our Group’s operations, achieving a six percent increase in operating revenue to $30.8 million for the full year. This is a solid result given the subdued retail broking market. A major achievement in 2008 was the successful integration of InfoComp into the GBST operating framework. InfoComp forms the basis for GBST’s Wealth Management division. This division’s full year results exceeded our revenue forecasts by $3.3 million There are clear trends emerging within our industry, to deliver revenue of $33.3 million for the full year. including some divergence between retail and institutional broking. While retail broking services remain focussed on the Australian market, institutional broking is increasingly demanding technology solutions to match the demands of regional and global businesses. The ﬁ rst two stages of the integration of InfoComp have been completed with the successful amalgamation of the HR and ﬁ nance functions, and the rationalisation of operating systems. The third and ﬁ nal stage is underway and already producing extremely positive results as we start to extract full beneﬁ ts from the two With the increasingly diverse income streams of broking technology areas. houses, our clients require technology solutions enabling them to employ tighter client management practices across a broader range of asset classes. GBST will invest more research and development expenditure into this area in the coming year. Additionally, our institutional clients require technology solutions to service their increased electronic and algorithmic trading needs. These trends are providing GBST with opportunities to continue to invest in the development of products and services, ensuring we retain our leadership position within the broker services sector. The Chief Executive of InfoComp, Robert De Dominicis, now leads GBST’s Wealth Management division. During the year, we achieved one of our key wealth management objectives – to build upon our presence in Europe and increase our number of clients. Our ﬂ agship product Composer successfully went live in August 2008 with a substantial UK and European client. During the year, we achieved one of our key wealth management objectives – to build upon our presence in Europe and increase our number of clients. 5 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G One of the UK’s largest providers of Self Invested Personal Pensions (SIPP) and Wrap products now uses Composer to administer its products. This is GBST’s ﬁ rst live client in the UK and conﬁ rms our readiness for the European market following four years of market and product development. In May 2008, we secured our second UK client and in July 2008, our third client announced its This new business unit has been established to entry into the UK Wrap market and commenced capitalise on the convergence of the broking and the implementation of Composer. wealth management industries. The size of UK ‘wrappable’ assets are estimated at Denis Orrock has been appointed the Chief Executive some £2 trillion (AUD$4.2 trillion). At present, only of this division. Denis previously ran the ﬁ nancial a small percentage – between one and ﬁ ve percent information service company InfoChoice. – are administered in Wrap Platforms. GBST has entered the UK market at an early stage to focus on the distribution and independent display of the Wrap market development. With three anchor of ﬁ nancial products and services, and to provide clients adopting the Composer Platform, we are in an a critical link between clients’ front and back excellent position to build market share. ofﬁ ce functions. Through our ﬁ nancial services division, GBST intends FINANCIAL SERVICES OUR PEOPLE AND COMMUNITY GBST Financial Services has been established to GBST now employs over 300 people across our construct and distribute a range of aggregated and Australian and UK bases and in our development proprietary data services to ﬁ nancial advisor and centre in India. wealth management professionals. CHAIRMAN’s and MANAGING DIRECTOR’s REPORT continued 6 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G We strive to employ the best people in the industry. While global markets remain volatile, our approach GBST continues to ensure our global network comprises to the year ahead is one of cautious optimism. staff with the knowledge, capability and drive to steer our company and continue to deliver outstanding results for both customers and investors. This cautious optimism derives from our commitment to continue to invest and innovate to maintain strong overall performance and future, sustainable growth. During the year, we welcomed David Adams to the We believe we are well positioned to take advantage Board as an independent non-executive director, of market pressures and we are excited about the bringing considerable expertise in the wealth opportunities that lie ahead. management industry. We also thank outgoing director David Shirley for his dedication in guiding GBST through its past three years of growth. GBST’s diversiﬁ cation strategy and the signiﬁ cant contribution of our wealth management and ﬁ nancial services operations have the potential to mitigate and GBST is proud of its established commitment to capitalise on the impacts of current market conditions. supporting community organisations and donates up to one percent of EBITDA in support of our communities. We will continue to manage our global GBST business closely against our strategic goals and will keep our This year, GBST provided ﬁ nancial support to stakeholders informed. organisations that provide long-term, socio-economic improvements for disadvantaged Australians. We also contributed to programs that support people with medical needs, or offer advice and comfort for patients and their families. This year GBST supported: • Lifeline Australia • The Salvation Army • Australian Red Cross • Youngcare • Hear and Say Centre • Autism Queensland • Boomerang project. OUTLOOK GBST is led by experienced people with a vision for the Company, who support the Board’s commitment to working to deliver long-term value. We would like to thank our staff for their hard work and commitment and our customers for their continued support. Dr John Puttick, Chairman As we move into the 2009 ﬁ nancial year, GBST’s performance will be linked to the ongoing instability of Mr Stephen Lake, Managing Director global markets and the outlook for economic growth, and Chief Executive Ofﬁ cer which will impact the broking and wealth management sectors internationally. INCOME STATEMENT FINANCIAL REPORT 7 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G 8 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G CORPORATE GOVERNANCE STATEMENT The ASX document, ‘Principles of Good Corporate (iii) oversee the performance of executive Governance and Best Practice Recommendations’ management and generally to take and fulﬁ l (‘Guidelines’) applying to listed entities was published an effective leadership role in relation to the in March 2003 by the ASX Corporate Governance Company. Council with the aim of enhancing the credibility and transparency of Australia’s capital markets. The Board has made an assessment of the Company against the Guidelines. The Board has made decisions in relation to its operations and the operations of the company that mean that it does not fully comply with all of the Guidelines but are in place to provide better performance. The Board outlines its assessment against the Guidelines below. This statement on corporate governance reﬂ ects our charter, policies and procedures on 5 September 2008. The Company is reviewing its governance practices against the second edition of the Guidelines and will report against the c) Power and authority in certain areas is speciﬁ cally reserved to the Board – consistent with its function as outlined above. These areas include: (i) composition of the Board itself including the appointment and removal of Directors and the making of recommendations to shareholders concerning the appointment and removal of Directors (ii) oversight of the Company including its control and accountability system (iii) appointment and removal of the Chief Executive Ofﬁ cer and the Company Secretary second edition of the Guidelines in the 2009 (iv) reviewing and overseeing systems of risk Annual Report. SCOPE OF RESPONSIBILITY OF BOARD a) Responsibility for the Company’s proper corporate governance rests with the Board. The Board’s guiding principle in meeting this responsibility is to act honestly, conscientiously and fairly, in accordance with the law, in the interests of GBST’s shareholders with a view to building sustainable value for them and the interests of employees and other stakeholders. management and internal compliance and control, codes of ethics and conduct, and legal and statutory compliance (v) monitoring senior management’s performance and implementation of strategy and (vi) approving and monitoring ﬁ nancial and other reporting and the operation of committees. COMPOSITION OF BOARD The Board performs its roles and function, consistent with the above statement of its overall corporate b) The Board’s broad function is to: governance responsibility, in accordance with the (i) chart strategy and set ﬁ nancial targets for following principles: the Company a) the Board should comprise at least ﬁ ve Directors (ii) monitor the implementation and execution of b) the Board shall be constituted by members having strategy and performance against ﬁ nancial an appropriate range of skills and expertise targets and c) at least two Directors will be Non-Executive Directors independent from management. BOARD CHARTER AND POLICY a) The Board has adopted a charter (which will be AUDIT AND RISK MANAGEMENT COMMITTEE kept under review and amended from time to time a) The purpose of this committee is to advise on the as the Board may consider appropriate) to give establishment and maintenance of a framework of formal recognition to the matters outlined above. internal control and appropriate ethical standards for This charter sets out various other matters that the management of the Group. Its members are: are important for effective corporate governance (i) Mr Allan Brackin, Chairman including the following: (i) a detailed deﬁ nition of ‘independence’ (ii) a framework for the identiﬁ cation of candidates for appointment to the Board and their selection (iii) a framework for individual performance review and evaluation (ii) Dr John Puttick (iii) Mr David Adams b) The committee performs a variety of functions relevant to risk management and internal and external reporting and reports to the Board following each meeting. Among other matters for which the (iv) proper training to be made available to committee is responsible are the following: Directors both at the time of their appointment and on an on-going basis (i) Board and committee structure to facilitate a proper review function by the Board (v) basic procedures for meetings of the Board and its committees – frequency, agenda, minutes and private discussion of management issues among non-executive Directors (vi) ethical standards and values – formalised in a detailed code of ethics and values (vii) dealings in securities – formalised in a detailed code for securities transactions designed to ensure fair and transparent trading by Directors and senior management and their associates and (viii) communications with shareholders and the market. b) These initiatives, together with the other matters provided for in the Board’s charter, are designed to ‘institutionalise’ good corporate governance and to build a culture of best practice in GBST’s own internal practices and in its dealings with others. (ii) internal control framework including management information systems (iii) corporate risk assessment and compliance with internal controls (iv) internal audit function and management processes supporting external reporting (v) review of ﬁ nancial statements and other ﬁ nancial information distributed externally (vi) review of the effectiveness of the audit function (vii) review of the performance and independence of the external auditors (viii) review of the external audit function to ensure prompt remedial action by management, where appropriate, in relation to any deﬁ ciency in or breakdown of controls (ix) assessing the adequacy of external reporting for the needs of shareholders and 9 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G 10 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G CORPORATE GOVERNANCE STATEMENT continued (x) monitoring compliance with the Company’s code The following are a tangible demonstration of the of ethics. Company’s corporate governance commitment. c) Meetings are held at least four times each year. A a) Independent professional advice broad agenda is laid down for each regular meeting according to an annual cycle. The committee invites the external auditors to attend each of its meetings. NOMINATIONS AND REMUNERATION COMMITTEE With the prior approval of the Chairman, each Director has the right to seek independent legal and other professional advice concerning any aspect of the Company’s operations or undertakings in order to fulﬁ l their duties and responsibilities as Directors. Any costs incurred are borne by the Company. a) The purpose of this committee with regard to b) Code of ethics and values remuneration is to review and approve the remuneration of senior executives, the remuneration policies for the group and the structure of equity based remuneration programmes. b) The purpose of this committee with regard to nominations is to consider the structure and membership of the Board, to review the performance of the Board, to set desirable criteria for future Board members and to assess candidates against those criteria. c) Due to the importance of people to the business of the group each Director is a member of the committee. Committee meetings are held from time to time as required by the Board. BEST PRACTICE COMMITMENT The Company is committed to achieving and The Company has developed and adopted a detailed code of ethics and values to guide Directors in the performance of their duties. c) Code of conduct for transactions in securities The Company has developed and adopted a formal code to regulate dealings in securities by Directors and senior management and their associates. This is designed to ensure fair and transparent trading in accordance with both the law and best practice. d) Charter The code of ethics and values and the code of conduct for transactions in securities (referred to above) both form part of the Company’s corporate governance charter which has been formally adopted and is available for review on the Company’s web site. e) Substantial compliance with ASX corporate governance guidelines and best practice maintaining the highest standards of conduct and recommendations. has undertaken various initiatives, as outlined in this section, which are designed to achieve this objective. GBST’s corporate governance charter is intended to ‘institutionalise’ good corporate governance and, to build a culture of best practice both in the Company’s own internal practices and in its dealings with others. GBST BOARD ASSESSMENT AGAINST THE GUIDELINES Principle 3 – Promote ethical and responsible decision making The Board has adopted a detailed code of ethics and Principle 1 – Lay solid foundations for management values and a detailed code of conduct for transactions and oversight in securities as referred to above. The purpose of these The role of the Board and delegation to management codes is to guide Directors in the performance of their have been formalised as described above in this duties and to deﬁ ne the circumstances in which both section and will continue to be reﬁ ned, in accordance they and management, and their respective associates, with the Guidelines, in the light of practical experience are permitted to deal in securities. The Board will gained in operating as a listed company. GBST complies with the Guidelines in this area. Principle 2 – Structure the Board to add value Together the Directors have a broad range of ensure that restrictions on dealings in securities are strictly enforced. Both codes have been designed with a view to ensuring the highest ethical and professional standards, as well as compliance with legal obligations, and therefore compliance with experience, skills, qualiﬁ cations and contacts relevant to the business of the Company. The majority of the Guidelines. the current Board is not independent. In particular, Principle 4 – Safeguard integrity in ﬁ nancial the Chairman is not independent in terms of the reporting Guidelines. There are at least two independent Directors. GBST believes that the current board of The Audit and Risk Management Committee has its own Charter. The Committee comprises three Directors, ﬁ ve Directors has been appropriate for a company of the majority of which are independent. All the members GBST’s size and the current Directors have been the of the Audit Committee are ﬁ nancially literate. best people to act in the interests of stakeholders and for this reason does not presently fully comply with the Principle 5 – Make timely and balanced disclosure recommendations. The Board will consider increasing Policies and procedures for compliance with ASX its size should suitable candidates be identiﬁ ed. The Listing Rule disclosure requirements are included in the number of Independent Directors may be increased as Company’s corporate governance charter. a result of the additional appointments. The Board calls speciﬁ c meetings of the Board as a Nominations and Remuneration Committee. 11 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G CORPORATE GOVERNANCE STATEMENT continued Principle 6 – Respect the rights of shareholders Principle 8 – Encourage enhanced performance The Board recognises the importance of this principle The corporate governance charter adopted by the and strives to communicate with shareholders both Board requires individual performance review and regularly and clearly – both by electronic means evaluation to be conducted formally on an annual and using more traditional communication methods. basis. The Board acknowledges that performance can Shareholders are encouraged to attend and participate always be enhanced and will continue to seek and 12 at general meetings. It is intended that the Company’s consider ways of further enhancing performance both auditors will always attend the annual general meeting individually and collectively. GBST’s practice complies and be available to answer shareholders’ questions. with the Guidelines in this area. 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G The Company’s policies comply with the Guidelines in relation to the rights of shareholders. Principle 9 – Remunerate fairly and responsibly Remuneration of Directors and executives will be fully Principle 7 – Recognise and manage risks disclosed in the annual report and any changes with The Board, together with management, has constantly respect to key executives announced in accordance sought to identify, monitor and mitigate risk. Internal with continuous disclosure principles. The Board from controls are monitored on a continuous basis and, time to time calls a speciﬁ c meeting of the Board as a wherever possible improved. The Company uses its Nominations and Remuneration Committee. Due to the quality management system and project management importance of people within GBST’s business all Board methodologies to identify, assess and manage risk. members considered they would have a contribution to The whole issue of risk management is formalised make to the meeting and as a result the committee is in the Company’s corporate governance charter not independent. The Chairman will lead a review of (which complies with the Guidelines in relation to the Directors and the Independent Directors will lead a risk management) and will continue to be kept under review of the Chairman. No individual will be directly regular review. Review takes place at both committee involved in deciding his or her remuneration. level (Audit and Risk Management Committee), with meetings at least four times each year, and at Board Principle 10 – Recognise the legitimate interests of level. The Board requires the CEO and CFO to sign stakeholders all statements required to be provided under the Guidelines and Corporations Act in relation to the Company’s Financial Statements and risk management generally. The Board recognises the importance of this principle (which it believes represents not only sound ethics but also good business sense and commercial practice) and continues to develop and implement procedures to ensure compliance with legal and other obligations to legitimate stakeholders. The Company and its policies and practices comply with the Guidelines in this area. DIRECTORS’ REPORT The directors of GBST Holdings Limited (‘GBST’) submit PRINCIPAL ACTIVITIES herewith the consolidated ﬁ nancial report for the year ended 30 June 2008. DIRECTORS On 31 August 2007, GBST acquired InfoComp Pty Ltd, ICP Holdings Pty Ltd and its subsidiaries for $36,784,002 in cash and an issue of 4,935,183 GBST shares. The names of the directors of the Company in ofﬁ ce during the year and to the date of this report are: The principal activities of GBST in the year, including Dr John F Puttick Mr Allan J Brackin Mr Stephen M L Lake Mr David C Shirley (resigned 29 April 2008) Mr Joakim J Sundell Mr David C Adams (appointed 1 April 2008) COMPANY SECRETARIES this acquisition, were the provision of client accounting and securities transaction technology solutions for the ﬁ nance, banking and securities industry in Australia and South East Asia; and funds administration and registry software for the wealth management industry in Australia and the United Kingdom. No other signiﬁ cant change in the nature of these activities occurred during the year. The following persons held the position of company secretary at the end of the ﬁ nancial year: OPERATING RESULT AND DIVIDEND David M Doyle – Mr Doyle joined GBST in 1997 as an in house legal advisor and was appointed Company Secretary on 18 April 2005. Mr Doyle The consolidated proﬁ t after income tax for the ﬁ nancial year amounted to $6,131,695 (2007: $8,021,396). holds Bachelor degrees in Law and Business The directors recommend a ﬁ nal dividend of 4.0 cents (Computing) from Queensland University of Technology. per share be paid to the holders of fully paid ordinary John F Puttick – Dr Puttick was appointed Company Secretary in 1984. Information on Dr Puttick is set out in the section of this report dealing with information shares. The dividend will be 100% franked at 30% corporate tax rate and will be paid on 26 September 2008. on directors. Dividends paid during the year were as follows: 2007 fully-franked ordinary dividend of 6 cents per share paid on 28 September 2007, as recommended in last year’s report $2,999,290. 2008 interim fully-franked ordinary dividend of 5.5 cents per share paid on 26 March 2008 $2,765,515. 13 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G DIRECTORS’ REPORT continued 14 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G REVIEW OF OPERATIONS • Decline in the value of the 16.2% shareholding in IT&e Limited has been taken into account, in The consolidated group operates in two business accordance with AASB 139. This one–off non–cash segments: write down is $2.3 million. GBST Broker Services provides client accounting GBST Broker Services also incurred integration, and and securities transaction technology. Capital restructure costs during the year of approximately market participants such as banks, clearing houses, $800k. The market place for equities and derivatives custodians, fund managers, margin lenders and is going through a period of signiﬁ cant change, with institutional and retail stockbrokers use GBST’s specialist new entrants into the Australian marketplace offering market access and transaction solutions to process alternative models for settlement and clearing, as approximately $130 billion of ASX trades every month. well as prospective changes to the capital liquidity GBST Wealth Management provides funds administration and registry software to the Wealth Management industry, both in Australia and the United Kingdom. It offers an integrated system for the administration of wrap platforms, master trusts, superannuation, pensions, risk and debt. GBST’s Wealth Management software administers funds valued at more than $150 billion in Australia and the United Kingdom. The highlights for the current ﬁ nancial year are as follows: • Group operating revenue up to $60.7 million, an increase of 99.7% on the prior year; • Revenue for GBST Broker Services was $31.7 million (2007: $30.4 million), up 4.0%, while GBST Wealth Management revenue was $29 million; requirements of all settlement participants in the market. Technology will play a critical role in this process and GBST is committed to the continuing investment in its products to meet the changing needs of our customers. The additional research & development (R&D) expenditure in Broker Services was incurred to increase the scale of the Shares platform, resulting in an extra $1.5 million in costs in this ﬁ nancial year, over and above historical R&D expenditure of $3 million pa. Our policy remains that all R&D is expensed as it is incurred. GBST Wealth Management revenue growth was above management expectations but the performance of the United Kingdom operation was impacted by costs of building infrastructure to service the current project pipeline and by adverse foreign exchange movements. In May 2008, the business signed its second client, in the United Kingdom – Novia Financial Plc. GBST will supply the front and back ofﬁ ce systems • GBST Broker Services Research and Development to Novia, and demonstrates the growing capabilities (R&D) costs increased by $1.5 million to $4.5 million (2007: $3.0 million); and of the Composer software in the market in the United Kingdom. GBST has strong operating cashﬂ ow and more than 65% of the Company’s revenue is earned SIGNIFICANT CHANGES IN STATE OF AFFAIRS from annuity licence income. While this is below the Company’s long term targets, this ratio is likely During the year the Company issued 5,283,171 to remain while GBST Wealth Management delivers new shares, 1,205,894 new options and 357,400 its major implementations in Australia and in the options were exercised. United Kingdom. Growth in the future will be achieved through As previously noted, on 31 August 2007, GBST Holdings Limited acquired InfoComp Pty Ltd, ICP geographic expansion and exposure to a wider range Holdings Pty Ltd and its subsidiaries for a cash payment of technology products in the ﬁ nancial services industry. of $36.78 million and the issue of 4,935,183 shares. The cash component of the consideration was funded Further information on the operational performance from existing cash reserves and a term loan facility of of the Company is included in the Chairman’s and $20 million, established with Suncorp Metway Ltd Managing Director’s Report. FINANCIAL POSITION The net assets of the consolidated entity increased by $19.16 million during the year to $39.37 million at 30 June 2008 as a result of the improved operating performance of the Group. Total assets increased from $28.35 million at 2007 to $73.4 million at 30 June 2008. for the purpose of the acquisition. The term of the facility is six years. The facility limit will reduce by $1 million at the end of each quarter, commencing December 2008. No other signiﬁ cant changes in the state of affairs of the Company occurred during the ﬁ nancial year. FUTURE DEVELOPMENTS, PROSPECTS AND BUSINESS STRATEGIES This increase has largely resulted from the following The Company is actively pursuing opportunities to factors: • Proceeds from share issues raising $18.6 million; and • Increase in software systems of $13.4 million, customer contracts $6.8 million and goodwill $28.2 million arising from the acquisition of InfoComp. The acquisition correspondingly affected ﬁ nancial liabilities to the extent borrowings were required of $20 million after utilising cash reserves for the acquisition. expand its sources of revenue from the delivery of technology to the ﬁ nancial services industry. The Company will continue to invest in the internal research and development of software products and the acquisition of businesses that expand its client base and range of software products and services. These developments, together with the current business strategies within GBST’s Broker Services and Wealth Management segments, are expected to assist in the achievement of GBST’s long term goals. 15 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G DIRECTORS’ REPORT continued 16 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G Disclosure of further information regarding future He is currently Adjunct Professor, School of Information developments and ﬁ nancial results is likely to result in Technology and Electrical Engineering at the University unreasonable prejudice to the Company. Accordingly, of Queensland and Chair of Southbank Institute of this information has not been disclosed in this report. Technology Business Council. AFTER BALANCE DATE EVENTS John is a member of GBST’s Audit and Risk Since balance date the group has incorporated three wholly owned subsidiaries in the UK. Other than for the impact (if any) of the prospects referred to in the commentary above, no matters or circumstances have arisen since the end of the ﬁ nancial year which signiﬁ cantly affected or may signiﬁ cantly affect the operations of GBST, the results of those operations, or the state of affairs of GBST in future ﬁ nancial years. ENVIRONMENTAL ISSUES GBST’s operations are not regulated by any signiﬁ cant environmental regulation under a law of the Commonwealth or of a State or Territory. INFORMATION ON DIRECTORS John Puttick Non–Executive Chairman John Puttick is the founder and Chairman of GBST and has 40 years’ experience in the IT industry, over 20 of which developing ﬁ nancial services solutions at GBST. John serves as a member of the QUT Council and on University of Queensland and Queensland University of Technology Faculty Advisory Committees. Management Committee and is Chairman of the Nominations and Remuneration Committee. Interest in Shares and Options – 7,667,760 Ordinary Shares of GBST Holdings Limited held by Dr Puttick and associated entities. Stephen Lake Managing Director and Chief Executive Ofﬁ cer Stephen Lake joined GBST in September 2001 after an extensive career in the capital markets industry in Australia, the United Kingdom and Asia. Stephen became a shareholder of GBST and was appointed Chief Executive Ofﬁ cer in 2001. Prior to joining GBST, he was Chief General Manager of Financial Markets at Adelaide Bank Limited. Stephen was Managing Director of BZW’s Capital Market’s Division Australia and also Managing Director of the Fixed Interest Division at BZW (Asia) Ltd. Stephen is a Member of the Nominations and Remuneration Committee. Interest in Shares and Options – 500,000 Options and 3,651,423 Ordinary Shares of GBST Holdings Limited held by Mr Lake. Allan Brackin Independent He is Managing Director of Crown Financial Pty Ltd, a private investment company. He was a director of Non–Executive Director Infochoice Limited (13 December 2006 to 5 February Allan Brackin was appointed 2008). Joakim is a Member of the Nominations and to the Board in April 2005. Remuneration Committee. He has detailed knowledge of the IT sector having served as Director and Chief Executive Ofﬁ cer of Volante Group Limited, one of Australia’s largest IT services companies from November 2000 to October 2004. Prior to this, Allan founded a number of IT companies including Applied Micro Systems (Australia) Pty Ltd, Prion Pty Ltd and Netbridge Pty Ltd, all national organisations operating under the group company of AAG Technology Services Pty Ltd. Allan currently serves on the board of the New South Wales Heart Foundation and is Chairman of IT software company Emagine Pty Ltd. He is a former Director of Hutchisons Child Care Services Limited (November 2005 to September 2006). Allan is Chairman of GBST’s Audit and Risk Management Committee and is a member of the Nominations and Remuneration Committee. Interest in Shares and Options – 231,943 Ordinary Shares of GBST Holdings Limited held by Mr Brackin’s associated entities. Joakim Sundell Non–Executive Director Joakim Sundell was appointed to the board in 2001. Joakim has an extensive career in private equity ﬁ nance, merchant banking, and management both in Sydney and London. Interest in Shares and Options – 15,417,605 Ordinary shares held by Mr Sundell’s associated entities. David Adams Independent Non–Executive Director David Adams was appointed to the board on 1 April 2008. David has an extensive career in the funds management industry including the establishment of Australia’s ﬁ rst cash management trust at Hill Samuel Australia in 1980 and Group Head of the Funds Management Group for Macquarie Bank. He was a director at Macquarie Bank from 1983 until 2001. David was chairman of the Investment and Financial Services Association in 2000 and 2001. He was a Visiting Fellow (Management of Financial Institutions) at Macquarie University and holds a Bachelor of Science from the University of Sydney and a Masters in Business Administration from the University of New South Wales. David is a member of the Audit and Risk Committee and the Nominations and Remuneration Committee. Interests in Shares and Options – Nil. 17 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G DIRECTORS’ REPORT continued REMUNERATION REPORT The performance of executives is considered annually against agreed performance objectives relating to The remuneration report is set out under the following both individual performance goals and contribution main headings: • Remuneration policies and practices • Company performance and remuneration 18 • Service agreements • Details of remuneration. 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G The information provided in the remuneration report includes remuneration disclosures that are required under Accounting Standard AASB 124 Related Party Disclosures. These disclosures have transferred from the ﬁ nancial report and have been audited. Remuneration policies and practices The policy for determining the nature and amount of remuneration of directors and speciﬁ ed executives is as follows: Remuneration of non–executive directors is determined by the Board with reference to market rates for comparable companies and reﬂ ective of the responsibilities and commitment required of the director. The remuneration of directors is voted on annually at the Company’s Annual General Meeting. Executive remuneration packages are aligned with the market and properly reﬂ ect the person’s duties, responsibilities and performance. to the achievement of broader company objectives. Executive remuneration packages are reviewed annually by reference to the Company’s economic performance, executive performance and comparative information from industry sectors. Remuneration paid to directors and executives is valued at the cost to the Company and expensed. The Company operates an Employee Option Scheme, comprising of two sub–schemes, being an Exempt Options Scheme for staff generally and a Deferred Options Scheme for select staff and eligible directors. Options are valued using a binomial model which includes variables such as time, volatility, risk and return. The value of equity based remuneration under the Deferred Option Scheme is recognised as an employee beneﬁ ts expense. The Board recognises that a key driver for shareholder value is the quality of the people employed by and attracted to the Company. In order to meet corporate objectives GBST must attract, motivate and retain highly skilled executives and talented employees. Remuneration principles • The Company will use competitive remuneration packages to attract, motivate and retain talented executives. The current remuneration structure has three • The employees will be rewarded for sustained and components: ﬁ xed remuneration, performance–related sustainable improvement in the performance of the bonus and equity based remuneration. Executives are Company. offered longer term incentives through an Employee • Directors and senior executives are encouraged Share Option Plan which seeks to align the executives’ to make investments in the Company but only in performance with the interests of shareholders. accordance with the Company’s share trading guidelines. • Senior executive agreements will not allow for Fixed annual remuneration signiﬁ cant termination payments if an employment The ﬁ xed remuneration consists of cash salary (‘Base’). agreement has to be terminated for cause. • The Company will make full disclosure of director and executive remuneration. To ensure that ﬁ xed remuneration arrangements remain competitive, the ﬁ xed remuneration component of executive remuneration is reviewed annually based on The Board recognises the signiﬁ cant role played by performance and market data. remuneration in attracting and retaining staff. Remuneration structure – non–executive directors Non–executive directors are paid ﬁ xed annual remuneration as set out in letters of appointment. Benchmarking of executive remuneration is against executive remuneration practices for executive roles having similar scope, accountability and complexity to those being reviewed. Positions may be benchmarked Reviews of each individual director and directors as against: a whole occur annually. Non–executive directors may • Other positions within the Company so that internal make investments in the Company in accordance with relativities are maintained; and/or the Company’s share trading guidelines but they do not participate in the Employee Share Ownership Plan. GBST does not operate a scheme for retirement beneﬁ ts to directors. • Roles situated in companies listed on the Australian Stock Exchange with market capitalisation similar to that of the Company’s and/or within an industry sector in which the Company has operations. Prior to the 2007 AGM, the Board commissioned a report and as a result the Board remuneration as an aggregate was increased after which time the Board implemented new remuneration levels consistent with the median range recommended by the advisor. Remuneration structure – senior executives Three elements make up the Company’s remuneration structure for senior executives: • Fixed remuneration of salary and superannuation. • Bonus payments based upon company performance and the meeting of corporate objectives – Short Term Incentive (STI). • Equity based remuneration – Long Term Incentive (LTI). Short Term Incentive remuneration (STI) The Company operates a short term bonus scheme to provide competitive performance based remuneration incentives to both executives and staff. Its objectives are to: • Align the interests of the executives and staff with those of shareholders; • Provide participants with the opportunity to be rewarded with at risk remuneration, where superior performance outcomes are achieved over the measurement period; and • Reﬂ ect a strong commitment towards attracting and retaining high performing executives and staff who are committed to the ongoing success of the Company. 19 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G DIRECTORS’ REPORT continued Performance objectives are established for all Executive performance is reviewed annually with executives and structured to reﬂ ect each executive’s bonuses being awarded based on an assessment of potential impact on and contribution to the business. performance against agreed criteria. The payment The performance objectives comprise elements of total of performance bonuses is subject to a consideration Company performance and individual performance of whether or not the overall performance of the and contain measures of ﬁ nancial, non–ﬁ nancial Company warrants the payment of a bonus. 20 and strategic outcomes. Achievement of performance objectives would entitle an executive to a cash bonus. Long Term Incentive Remuneration (LTI) The Company has an employee share ownership plan. 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G Generally, bonus arrangements are capped at a The plan involves the use of options to acquire shares. maximum of 50% of Base, however when exceptional The plan is designed to reward executives in a manner outcomes are delivered, or where warranted by special which aligns this element of remuneration with the circumstances, it can exceed this amount. ﬁ nancial performance of the Company and the interests All executive bonus amounts are determined based on of shareholders. Executives are also required to meet continued service conditions in order to exercise the recommendation of the Managing Director, having the options. regard to actual performance against the performance objectives. These recommendations are then put to the The objective of the LTI plan is to reward executives in Remuneration Committee for approval. a manner that aligns remuneration with the creation of Fixed remuneration levels are set with reference to commercial benchmark information and the individual’s role, responsibility, experience and geographic location. The ﬁ xed component of executive remuneration is reviewed annually. The shareholders’ wealth. As such, LTI grants are only made to executives who are able to inﬂ uence the generation of shareholder wealth and thus have an impact on the Group’s performance against the relevant long term performance hurdle. Company makes superannuation contributions on ﬁ xed LTI grants to executives are delivered in the form of remuneration amounts. Bonus and equity based schemes are designed to motivate employees for the continuing beneﬁ t of shareholders. No employee has a continuous share options under the Employee Share Options Plan. The share options generally vest over a period of three years subject to meeting performance hurdles, with no opportunity to retest. Executives are able to exercise the share option for up to two years after vesting, before entitlement to bonus payments. Performance objectives the options lapse. for each executive are set on an annual basis and are reﬂ ective of the areas of responsibility of the The Company uses Shareholder Return as a executive and the broader objectives of the Company. performance hurdle for the LTI plan, measured either Performance objectives include ﬁ nancial and non– by reference to growth in earnings before interest, tax ﬁ nancial goals. and depreciation, or growth in earnings per share. Details of the plan are shown in Note 31 of the Financial Statements. Company performance and remuneration The table below shows the ﬁ nancial performance of the Company over the last four years. GBST’s remuneration practices seek to align executive remuneration with growth in proﬁ tability and shareholder value, amongst other things. EBITDA Growth Less pre–acquisition earnings InfoComp EBITDA inclusive InfoComp earnings from 1/9/2007 Less write down of IT&e investment EBITDA adjusted for IT&e write down EPS (cents) Growth Net operating revenue Growth Net profit before tax Growth Closing share price Dividends paid (cents) *The Company listed on the Australian Stock Exchange on 28 June 2005. 2005 $ 4.0m 9% – – – – 16.73 – $22.2m 4% $ 3.5m 46% $1.23* n/a* 2006 $ 9.0m 127% – – – – 13.96 (16%) $26.7m 21% $ 8.6m 144% $2.37 0 2007 $11.4m 26% – – – – 18.11 29% $29.3m 10% $11.4m 31% $4.00 9.0 2008 $18.3m 60% $(1.1m) $17.2m $(2.3m) $14.9m 12.44 (31%) $59.8m 104% $ 9.8m (14%) $1.89 11.5 21 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G Service agreements Remuneration and other terms of employment for Apart from Mr Lake’s service agreements, the executive directors and executives are formalised agreements are expressed to be open ended in service contracts. All agreements with executives appointments but may generally be terminated by are subject to an annual review. Each of the notice by either party or earlier in the event of agreements provide for base pay, leave entitlements, certain breaches of terms and conditions. superannuation and performance–related bonus. The agreements also contain normal provisions relating to the protection of conﬁ dential information and intellectual property rights as well as post employment restraints. Mr Lake’s service agreement has a minimum term of two years ending in August 2009 and is able to be terminated at that time or after it by either party giving the other not less than six month’s notice. DIRECTORS’ REPORT continued Details of Remuneration The remuneration for each director and executive ofﬁ cers (the key management personnel) of the Company and the consolidated entity receiving the highest remuneration during the year was as follows: Benefits Post Employment Other Long– Term Benefits Leave entitlement $ Superannuation $ Share–based Payment Equity options $ Performance Related Total $ % 22 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G Short–Term Benefits Base salary & fees $ Bonus $ Other $ 87,500 15,000 50,000 580,385 50,000 50,000 832,885 – – – – – – – – – – – – – – 2008 Directors J Puttick D Adams (appointed 1/4/08) A Brackin S Lake D Shirley (resigned 29/4/08) J Sundell Total Directors Executives R De Dominicis (appointed 31/8/07) P Fowler (resigned 7/2/08) P Salis (appointed 1/10/07) I Sanchez (appointed 3/3/08) K Sprott K Wallis (resigned 12/10/07) Total Executives Group Total 321,688 166,967 179,077 66,667 169,387 83,744 987,530 1,820,415 – – 40,000 80,000 40,000 – 160,000 160,000 – 6,302 – – – 60,000 66,302 66,302 – – – 52,235 – – 52,235 13,014 – 16,118 4,803 15,245 5,850 55,030 107,265 – – 44,100 – – 44,100 – – – – – – – – – – – – 32,308 32,308 32,308 – – – – – – – – – 3,109 – – 3,109 87,500 15,000 50,000 635,729 50,000 50,000 888,229 334,702 – 175,478 2,209 236,523 1,328 151,470 – 226,474 1,842 181,902 – 5,379 1,306,549 8,488 2,194,778 – – – – – – 80,000 40,000 534,100 40,000 40,000 734,100 – – – 0.5 – – – – 1.3 17.5 52.8 18.5 – – – – – – – – – 7.0 9.0 13.0 6.0 4.0 13.0 – – 2007 Directors J Puttick A Brackin S Lake D Shirley J Sundell Total Directors Executives C Apps (resigned 16/3/07) P Ferguson P Fowler S Hayhoe (resigned 8/6/07) K Sprott (appointed 21/8/06) K Wallis Total Executives Group Total 80,000 40,000 490,000 40,000 40,000 690,000 – – – – – – – – – – – – 134,470 204,231 218,333 186,899 98,237 181,346 1,023,516 1,713,516 – 13,761 – 22,936 8,259 35,000 – 13,761 – 5,000 – 32,110 122,568 8,259 122,568 8,259 13,274 20,445 – 17,257 9,291 19,211 79,478 123,578 28,802 – – – – – 28,802 28,802 – – – – – – – – 190,307 247,612 261,592 217,917 112,528 232,667 1,262,623 1,996,723 Summary at 30 June 2008 of options issued as part of remuneration. Granted number Options granted as part of remuneration $ – – – – – – 500,000 3,109 – – – – 500,000 3,109 – 100,000 100,000 – 100,000 120,000 420,000 920,000 – 2,209 1,328 – 1,842 – 5,379 8,488 Total remuneration represented by Options % – – – 0.5 – – – – 1.3 0.6 – 0.8 – – – Options exercised and sold $ – – – – – – – – – – – – – – – Options lapsed/ forfeited ($) – – – – – – – – (2,209) – – – – (2,209) (2,209) Total $ – – – 3,109 – – 3,109 – – 1,328 – 1,842 – 3,170 6,279 23 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G Directors J Puttick D Adams A Brackin S Lake D Shirley J Sundell Total Directors Executives R De Dominicis P Fowler (i) P Salis I Sanchez K Sprott K Wallis (i) Total Executives Group Total (i) These executives resigned during the year and these options were forfeited. (ii) In addition to the above balances, Mr P Fowler held 100,000 options from a prior year which remain exercisable. (iii) In addition to the above balances, Mr K Wallis held 1,332 options from a prior year which were exercised in the current year. DIRECTORS’ REPORT continued Options granted as remuneration to key management personnel in the year ended 30 June 2008. 24 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G Directors J Puttick D Adams A Brackin S Lake D Shirley J Sundell Total Directors Executives R De Dominicis P Fowler (iii) P Salis I Sanchez K Sprott K Wallis (iii) Total Executives Group Total Vested No. (i) Granted No. (ii) Grant Date – – – – – – – – 50,000 – – – 1,332 51,332 51,332 – – – – – – 500,000 19.12.07 – – – 31.07.07 24.10.07 – 31.07.07 31.07.07 – – 500,000 – 100,000 100,000 – 100,000 120,000 420,000 920,000 Average Value per Option at Grant Date $ – – – 0.43 – – – 1.09 1.05 – 1.09 1.09 Exercise Price First Exercise Date Last Exercise Date $ – – – – – – – – – 3.85 18.06.09 18.12.09 – – – 3.92 3.92 – 3.92 3.92 – – – – – – 30.07.08 23.10.08 – 30.07.08 30.07.08 30.07.12 23.10.12 – 30.07.12 30.07.12 Details of the total holdings of options granted as remuneration in previous ﬁ nancial years are set out in Note 29 in the ﬁ nancial statements. Details of these options are set out in Note 31 in the ﬁ nancial statements. (i) These are in respect of options granted in prior years which vested in the current year. (ii) Options granted in current year. (iii) Options granted and subsequently forfeited in current year. Shares issued on exercise of compensation options in the year ended 30 June 2008. Options exercised during the year that were granted as compensation in previous ﬁ nancial years: No. of ordinary shares issued Amounts paid per share $ Amounts unpaid per share $ Directors J Puttick D Adams A Brackin S Lake D Shirley J Sundell Total Directors Executives R De Dominicis P Fowler P Salis I Sanchez K Sprott K Wallis Total Executives Group Total – – – – – – – – – – – – 1,332 1,332 1,332 – – – – – – – – – – – 0.00 25 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G – – – – – – – – – – – – DIRECTORS’ REPORT continued 26 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G Meetings of Directors During the ﬁ nancial year, 19 meetings of Directors (including committees of directors) were held. Attendances by each Director during the year were as follows: Directors’ Names Directors’ Meetings Audit And Risk Committee Remuneration And Nominations J Puttick D Adams A Brackin S Lake D Shirley J Sundell Number eligible to attend Number attended Number eligible to attend Number attended Number eligible to attend Number attended 14 3 14 14 12 14 12 2 14 13 12 9 4 1 4 – 3 – 3 – 4 * 4 3 – 1 – 1 1 1 1 1 – 1 1 1 1 *At the request of the Audit and Risk Committee Mr S Lake (CEO) attends the Audit and Risk Committee meetings even though not a member of the committee. Indemnifying Directors and Ofﬁ cers Options During the ﬁ nancial year, the Company paid a The number of options over ordinary shares outstanding premium in respect of a contract insuring the directors at 30 June 2008 are as follows: of the Company, the company secretaries and all executive ofﬁ cers of the Company against a liability incurred as such a director, secretary or executive Grant date Expiry and Exercise price Number exercise Date ofﬁ cer to the extent permitted by the Corporations Act 09.03.05 08.03.10 2001. The total amount of the premium paid for this 18.07.06 19.07.08 cover was $46,390. 25.07.07 31.07.07 24.10.07 24.10.07 19.12.07 24.07.10 30.07.10 23.10.10 23.10.10 18.12.09 In addition, the Company has entered into a Deed of Indemnity which ensures that generally the Directors and Ofﬁ cers of the Company will incur no monetary loss as a result of defending the actions taken against them as Directors and Ofﬁ cers. The Company has not otherwise, during or since the ﬁ nancial year, indemniﬁ ed or agreed to indemnify an Ofﬁ cer or auditor of the Company against a liability incurred as such an Ofﬁ cer or auditor. $0.00 $1.25 $3.90 $3.92 $3.92 $3.80 $3.85 23,976 100,000 78,202 100,000 100,000 100,000 500,000 1,002,178 The Company established an employee share trust on Non–audit services 9 March 2005 to hold shares in GBST for subsequent The Board, in accordance with advice from the Audit allocation under the GBST Share Employee Option Committee, is satisﬁ ed that the provision of non–audit Plan (ESOP). During the year ended 30 June 2008, services during the year is compatible with the general 36,844 shares were issued from the trust to meet the standard of independence for auditors imposed by the exercise of employee options (grant date 09.03.05 Corporations Act 2001. and exercise price was $.7505). GBST ESOP Pty Ltd held nil shares in GBST at reporting date. The Trust is treated as a special purpose entity and consolidated. Refer to Note 22 in the ﬁ nancial report for details of fees for non–audit services paid/payable to the The Trust’s shareholding in the Company is disclosed as external auditors during the year. treasury shares and deducted from equity. In addition, 210,000 new shares were issued to meet the exercise of employee options (no amounts are unpaid on any of the shares). Grant Date 25.08.05 05.12.05 03.01.06 Number 50,000 70,000 90,000 210,000 Auditor’s Independence Declaration The lead auditor’s independence declaration for the year ended 30 June 2008 has been received and can be found on the page following this Directors’ report. Signed in accordance with a resolution of the Board of Directors. No further shares or options have been issued since 30 June 2008. Dr J F Puttick Chairman No person entitled to exercise the option had or has any right by virtue of the option to participate in any share issue of any other body corporate. Proceedings on behalf of Company S M L Lake No person has applied for leave of court to bring Managing Director and Chief Executive Ofﬁ cer proceedings on behalf of the Company or intervene in any proceedings to which the Company is a party Brisbane for the purpose of taking responsibility on behalf of the Dated this 29th day of August 2008 Company for all or any part of those proceedings. The Company was not a party to any such proceedings during the year. 27 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G 28 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G DIRECTORS’ DECLARATION The Directors of the Company declare that: 1. The ﬁ nancial statements and notes are in accordance with the Corporations Act 2001 and: a) Comply with Accounting Standards and the Corporations Regulations 2001; and b) Give a true and fair view of the ﬁ nancial position as at 30 June 2008 and of the performance for the year ended on that date of the Company and consolidated group. 2. The Chief Executive Ofﬁ cer and Chief Financial Ofﬁ cer have each declared that: a) The ﬁ nancial records of the Company for the ﬁ nancial year have been properly maintained in accordance with section 286 of the Corporations Act 2001; b) The ﬁ nancial statements and notes for the ﬁ nancial year comply with the Accounting Standards; and c) The ﬁ nancial statements and notes for the ﬁ nancial year give a true and fair view. 3. In the Directors’ opinion there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. There are reasonable grounds to believe that the Company and its subsidiaries identiﬁ ed in Note 23 will be able to meet any obligations or liabilities to which they are or may become subject to by virtue of the Deed of Cross Guarantee between the Company and those group entities pursuant to ASIC Class Order 98/1418. This declaration is made in accordance with a resolution of the Board of Directors. 29 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G Dr J F Puttick Chairman S M L Lake Managing Director and Chief Executive Ofﬁ cer Brisbane Dated this 29th day of August 2008 GBST HOLDINGS LIMITED ABN: 85 010 488 874 GBST HOLDINGS LIMITED ABN: 85 010 488 874 Financial Report for the year enddded 30000030 JJJJuunuuneeeee 202020000200080888 Financial Report for the year ended 30 June 2008 INCOME STATEMENT GBST Group Note 30 Jun 2008 $ 30 Jun 2007 $ GBST Holdings 30 Jun 2008 $ 30 Jun 2007 $ Revenue Other income Product delivery and support expenses Cost of third party product sold Property and equipment expenses Corporate and administrative expenses Finance costs Profit before income tax Income tax expense Profit for the year Profit attributable to members of the parent company Basic earnings per share (cents) Diluted earnings per share (cents) Dividends per share (cents) The accompanying notes form part of these financial statements. 2 2 60,739,931 452,981 61,192,912 30,410,971 876,156 31,287,127 31,741,200 3,024,692 34,765,892 30,410,971 944,955 31,355,926 (32,902,128) (901,192) (5,291,671) (10,811,959) (1,533,216) (12,139,888) (1,134,720) (3,013,076) (3,641,934) (19,682) (14,379,475) (778,636) (3,223,657) (6,979,419) (2,017,314) (12,139,888) (1,134,720) (3,013,076) (3,604,248) (19,682) 9,752,746 (3,621,051) 6,131,695 6,131,695 11,337,827 (3,316,431) 8,021,396 8,021,396 7,387,391 (2,721,443) 4,665,948 4,665,948 11,444,312 (3,316,431) 8,127,881 8,127,881 12.44 12.37 11.50 18.11 17.77 9.00 3 4 32 32 5 30 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G BALANCE SHEET GBST Group Note 30 Jun 2008 $ 30 Jun 2007 $ GBST Holdings 30 Jun 2008 $ 30 Jun 2007 $ CURRENT ASSETS Cash and cash equivalents Trade and other receivables Inventories Other assets TOTAL CURRENT ASSETS NON–CURRENT ASSETS Trade and other receivables Financial assets Property, plant and equipment Intangible assets Deferred tax assets Other assets TOTAL NON–CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Financial liabilities Current tax liabilities Other liabilities TOTAL CURRENT LIABILITIES NON–CURRENT LIABILITIES Trade and other payables Financial liabilities Deferred tax liabilities Long–term provisions Other liabilities TOTAL NON–CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Issued capital Treasury shares Reserves Retained earnings TOTAL EQUITY The accompanying notes form part of these financial statements. 31 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G 6 7 8 12 7 9 10 11 15 12 13 14 15 17 13 14 15 16 17 18 19 20 1,491,521 9,711,532 471,083 711,455 12,385,591 – 1,621,543 2,518,022 53,808,072 2,835,470 230,685 61,013,792 73,399,383 7,033,699 4,485,755 367,556 4,049,311 15,936,321 – 16,259,896 175,732 1,467,339 192,367 18,095,334 34,031,655 39,367,728 25,499,241 – 135,666 13,732,821 39,367,728 15,454,992 3,797,888 – 513,605 19,766,485 16,027 781,937 1,289,967 5,339,012 1,138,404 13,453 8,578,800 28,345,285 2,186,566 – 2,080,532 2,260,754 6,527,852 – – 174,492 1,128,406 305,611 1,608,509 8,136,361 20,208,924 6,807,508 (31,253) 67,788 13,364,881 20,208,924 228,139 3,835,494 419,145 630,566 5,113,344 60,650,363 1,621,645 1,362,880 4,944,389 1,178,511 230,590 69,988,378 75,101,722 4,248,981 4,422,372 791,395 2,500,673 11,963,421 7,748,021 16,135,545 143,395 1,045,643 192,367 25,264,971 37,228,392 37,873,330 25,499,241 – 79,765 12,294,324 37,873,330 15,454,992 3,849,344 – 513,605 19,817,941 16,027 782,039 1,289,967 5,339,012 1,138,404 13,453 8,578,902 28,396,843 2,178,571 – 2,080,532 2,260,754 6,519,857 – – 174,492 1,128,406 305,611 1,608,509 8,128,366 20,268,477 6,807,508 – 67,788 13,393,181 20,268,477 32 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G GBST HOLDINGS LIMITED ABN: 85 010 488 874 Financial Report for the year ended 30 June 2008 STATEMENT OF CHANGES IN EQUITY Treasury shares (a) Retained earnings $ $ Foreign currency translation $ Equity remuneration reserve (b) $ GBST Group Balance at 1 July 2006 Profit for the year Share based payments Share Issues Exercise of options Transfer to/from ordinary capital Subtotal Dividends paid Balance at 30 June 2007 Issued capital $ 5,722,015 – – 780,696 – 304,797 6,807,508 – 6,807,508 Balance at 1 July 2007 Profit for the year Share based payments–exempt shares Share based payments–options Share Issues Exercise of options Translation of foreign controlled subsidiary Transfer to/from ordinary capital Subtotal Dividends paid (Note 5) 6,807,508 – 107,808 – 18,260,177 272,500 – 51,248 25,499,241 – (1,778,071) – – – 1,746,818 – (31,253) – (31,253) (31,253) – – – – 31,253 – – – – 9,274,432 8,021,396 – – – – 17,295,828 (3,930,947) 13,364,881 13,364,881 6,131,695 – – – – – – 19,496,576 (5,763,755) Balance at 30 June 2008 25,499,241 – 13,732,821 GBST Holdings Balance at 1 July 2006 Profit for the year Share based payments Share Issues Transfer to ordinary capital Subtotal Dividends paid Balance at 30 June 2007 Balance at 1 July 2007 Profit for the year Share based payments–exempt shares Share based payments–options Share Issues Exercise of options Transfer to financial asset reserve Transfer to ordinary capital Subtotal Net Dividends paid (Note 5) Balance at 30 June 2008 5,722,015 – – 780,696 304,797 6,807,508 – 6,807,508 6,807,508 – 107,808 – 18,260,177 272,500 – 51,248 25,499,241 – 25,499,241 – – – – – – – – – – – – – – – – – – – 9,274,432 8,127,881 – – – 17,402,313 (4,009,132) 13,393,181 13,393,181 4,665,948 – – – – – – 18,059,129 (5,764,805) 12,294,324 Total $ 13,517,192 8,021,396 73,769 780,696 1,746,818 – 24,139,871 (3,930,947) 20,208,924 20,208,924 6,131,695 44,033 127,000 18,260,177 303,753 55,901 – 45,131,483 (5,763,755) 298,816 – 73,769 – – (304,797) 67,788 – 67,788 67,788 – (63,775) 127,000 – – – (51,248) 79,765 – 79,765 39,367,728 298,816 – 73,769 – (304,797) 67,788 – 67,788 67,788 – (63,775) 127,000 – – – (51,248) 15,295,263 8,127,881 73,769 780,696 – 24,277,609 (4,009,132) 20,268,477 20,268,477 4,665,948 44,033 127,000 18,260,177 272,500 – – 79,765 43,638,135 – 79,765 (5,764,805) 37,873,330 – – – – – – – – – – – – – – – 55,901 – 55,901 – 55,901 – – – – – – – – – – – – – – – – – – – (a) During the year ended 30 June 2008, 36,844 (2007: 2,332,336) shares were issued from the Trust to meet the exercise of employee options. GBST ESOP Pty Ltd held nil shares in GBST at 30 June 2008 (2007: 36,844). The Trust is treated as a special purpose entity and consolidated. The Trust’s shareholding in the Company is disclosed as treasury shares and deducted from equity. (b) The equity remuneration reserve records items recognised as expenses on valuation of employee share/options granted. When options are exercised, the amount in the reserve relating to those options is transferred to issued capital. The accompanying notes form part of these financial statements. CASH FLOW STATEMENT GBST Group Note 30 Jun 2008 $ 30 Jun 2007 $ GBST Holdings 30 Jun 2008 $ 30 Jun 2007 $ CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers Payments to suppliers and employees Interest received Finance costs Income tax paid Net cash provided by/(used in) operating activities 25(a) CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of plant & equipment Purchase of plant & equipment Purchase of intangibles Acquisition of business (net of cash acquired) 25(d) Proceeds\(payments) of related entity receivables Proceeds from other entity receivables Purchase of investments Net cash provided by/(used in) investing activities CASH FLOWS FROM FINANCING ACTIVITIES Repayment of finance leases Exercise of options/sale of treasury shares Proceeds from issue of ordinary shares Proceeds from borrowings Dividends paid Net cash provided by/(used in) financing activities 49,928,924 (37,014,835) 452,981 (1,533,216) (5,450,585) 6,383,269 32,342,988 (22,068,505) 775,697 (9,874) (3,409,002) 7,631,304 36,579,315 (23,585,094) 234,680 (1,665,314) (5,563,287) 6,000,300 32,342,988 (22,058,056) 775,697 (9,874) (3,409,002) 7,641,753 4,108 (680,151) (168,434) (31,234,921) – 31,801 (625,286) (82,974) – – 21,129 (3,127,499) (35,185,768) 21,527 (781,937) (1,436,869) 1,976 (405,779) (50,339) 31,801 (625,286) (82,974) – – (32,527,862) 21,129 (3,127,499) (36,088,374) 1,895,751 21,527 (781,937) 458,882 (63,858) 31,253 272,500 19,000,000 (5,763,755) 13,476,140 (35,276) 1,828,015 780,696 – (3,930,947) (1,357,512) 4,836,923 10,618,069 15,454,992 (9,362) (35,276) – 272,500 19,000,000 (5,764,805) 13,498,333 (16,589,741) 15,454,992 (1,134,749) – 780,696 – (4,009,132) (3,263,712) 4,836,923 10,618,069 15,454,992 NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS Cash at beginning of the financial year Cash at end of the financial year (15,326,359) 15,454,992 128,633 25(b) The accompanying notes form part of these financial statements. 33 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G GBST HOLDINGS LIMITED ABN: 85 010 488 874 Financial Report for the year ended 30 June 2008 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES GBST Holdings Limited is a public company limited by Principles of consolidation shares, incorporated and domiciled in Australia. The A controlled entity is any entity over which GBST ﬁ nancial report covers the consolidated entity of GBST Holdings Limited has the power to control the ﬁ nancial Holdings Limited and its controlled entities, and GBST and operating policies, so as to obtain beneﬁ ts from Holdings Limited as an individual parent entity. its activities. In assessing the power to govern, the Basis of preparation The ﬁ nancial report is a general purpose ﬁ nancial existence and effect of holdings of actual and potential voting rights are considered. report prepared in accordance with the requirements A list of controlled entities is contained in Note 23 of of the Corporations Act 2001, Australian Accounting the ﬁ nancial statements. All controlled entities have a Standards, including Australian Accounting June ﬁ nancial year end. Interpretations and other authoritative pronouncements of the Australian Accounting Standards Board (AASB). As at reporting date, the assets and liabilities of all controlled entities have been incorporated into the Australian Accounting Standards set out accounting consolidated ﬁ nancial statements as well as their results policies that the AASB has concluded would result for the year then ended. Where controlled entities have in a ﬁ nancial report containing relevant and reliable entered (left) the consolidated Group during the year, information about transactions, events and conditions their operating results have been included (excluded) to which they apply. Compliance with Australian from the date control was obtained (ceased). Accounting Standards ensures that the ﬁ nancial statements and notes also comply with International Financial Reporting Standards. Material accounting policies adopted in the preparation of this ﬁ nancial report are presented below. They have been consistently applied unless otherwise stated. The ﬁ nancial report has been prepared on an accruals basis and is based on historical costs, modiﬁ ed, where applicable, by the measurement at fair value of selected non–current assets, ﬁ nancial assets and ﬁ nancial liabilities. All inter–company balances and transactions between entities in the consolidated entity, including any unrealised proﬁ ts or losses, have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with those adopted by the parent entity. Business combinations Business combinations occur where control over another business is obtained and results in the consolidation of its assets and liabilities. All business combinations, including those involving entities under common control, are accounted for by applying the purchase method. 34 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G The purchase method requires an acquirer of the Current and deferred income tax expense (income) business to be identiﬁ ed and for the cost of the is charged or credited directly to equity instead of acquisition and fair values of identiﬁ able assets, the proﬁ t or loss when the tax relates to items that are liabilities and contingent liabilities to be determined credited or charged directly to equity. as at acquisition date, being the date that control is obtained. Cost is determined as the aggregate of fair values of assets given, equity issued and liabilities assumed in exchange for control, together with costs directly attributable to the business combination. Any deferred consideration payable is discounted to present value using the entity’s incremental borrowing rate. Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the ﬁ nancial statements. Deferred tax assets also result where amounts have been fully expensed but future tax deductions are available. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business Goodwill is recognised initially as the excess of cost combination, where there is no effect on accounting or over the acquirer’s interest in the net fair value of the taxable proﬁ t or loss. identiﬁ able assets, liabilities and contingent liabilities recognised. If the fair value of the acquirer’s interest is greater than cost, the surplus is immediately recognised in proﬁ t or loss. Income tax Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates enacted or substantively enacted at reporting date. Their measurement also reﬂ ects the manner in The income tax expense (revenue) for the year which management expects to recover or settle the comprises current income tax expense (income) and carrying amount of the related asset or liability. deferred tax expense (income). Current income tax expense charged to the proﬁ t or and unused tax losses are recognised only to the extent loss is the tax payable on taxable income calculated that it is probable that future taxable proﬁ t will be using applicable income tax rates enacted, or available against which the beneﬁ ts of the deferred tax substantially enacted, as at reporting date. Current tax asset can be utilised. Deferred tax assets relating to temporary differences liabilities (assets) are therefore measured at the amounts expected to be paid to (recovered from) the relevant taxation authority. Where temporary differences exist in relation to investments in subsidiaries, branches, associates, and joint ventures, deferred tax assets and liabilities are Deferred income tax expense reﬂ ects movements in not recognised where the timing of the reversal of the deferred tax asset and deferred tax liability balances temporary difference can be controlled and it is during the year as well unused tax losses. not probable that the reversal will occur in the foreseeable future. 35 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G GBST HOLDINGS LIMITED ABN: 85 010 488 874 Financial Report for the year ended 30 June 2008 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Income tax (continued) Any current tax liabilities (or assets) and deferred Current tax assets and liabilities are offset where a tax assets arising from unused tax losses assumed legally enforceable right of set–off exists and it is by the head entity from the subsidiaries in the tax– intended that net settlement or simultaneous realisation consolidated group are recognised in conjunction 36 and settlement of the respective asset and liability will with any tax funding arrangement amounts (refer occur. Deferred tax assets and liabilities are offset below). Any difference between these amounts is 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G where a legally enforceable right of set–off exists, the recognised by the Company as an equity contribution deferred tax assets and liabilities relate to income taxes to or distribution from the subsidiary. Distributions ﬁ rstly levied by the same taxation authority on either the same reduce the carrying amount of the investment in the taxable entity or different taxable entities where it is subsidiary are then recognised as revenue. intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur in future periods in which signiﬁ cant amounts of deferred tax assets or liabilities are expected to be recovered or settled. Tax consolidation The Company recognises deferred tax assets arising from unused tax losses of the tax–consolidated group to the extent that it is probable that future taxable proﬁ ts of the tax–consolidated group will be available against which the asset can be utilised. Any subsequent period adjustments to deferred tax assets arising from unused The Company and its wholly–owned Australian tax losses assumed from subsidiaries are recognised by resident entities are part of a tax–consolidated the head entity only. group. As a consequence, all members of the tax– consolidated group are taxed as a single entity. The head entity within the tax–consolidated group is GBST Holdings Limited. The implementation date of the tax–consolidation group was 1 July 2003. The members of the tax–consolidated group have entered into a tax funding arrangement which sets out the funding obligations of members of the tax– consolidated group in respect of tax amounts. The tax funding arrangements require payments to/from The current and deferred tax amounts for the the head entity equal to the current tax liability (asset) tax–consolidated group are allocated among the assumed by the head entity and any tax–loss deferred entities in the group using a ‘stand–alone taxpayer’ tax asset assumed by the head entity. The members approach whereby each entity in the tax–consolidated of the tax–consolidated group have also entered group measures its current and deferred taxes as if it into a valid Tax Sharing Agreement under the tax continued to be a separately taxable entity in its own consolidation legislation which sets out the allocation right. Deferred tax assets and deferred tax liabilities are of income tax liabilities between the entities should measured by reference to the carrying amounts of the the head entity default on its tax payment obligations assets and liabilities in the Company’s balance sheet and the treatment of entities leaving the tax and their tax values applying under tax consolidation. consolidated group. Cash and cash equivalents Subsequent costs are included in the asset’s carrying Cash and cash equivalents includes cash on hand, amount or recognised as a separate asset, as deposits held at call with banks, other short term appropriate, only when it is probable that future highly liquid investments with original maturities of economic beneﬁ ts associated with the item will ﬂ ow to three months or less, and bank overdrafts. Bank the Group and the cost of the item can be measured overdrafts are shown within ﬁ nancial liabilities on reliably. All other repairs and maintenance are charged the balance sheet. Inventories to the income statement during the ﬁ nancial period in which they are incurred. 37 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G Inventories are measured at the lower of cost and net The depreciable amount of all ﬁ xed assets including realisable value. Work in progress is stated at the aggregate of long term project development contract costs incurred to date, plus recognised proﬁ ts, less any recognised capitalised lease assets, is depreciated over their useful lives to the entity commencing from the time the asset is held ready for use. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the losses and progress billings. improvements. Contract costs include all costs directly related to The depreciation rates used for each class of assets speciﬁ c contracts, costs that are speciﬁ cally chargeable are: to the customer under the terms of the contract and an allocation of overhead expenses incurred in connection Class of Depreciation Basis with the consolidated entity’s activities in general. ﬁ xed Asset rate Plant and equipment Owned plant, 5–67% Straight–Line/ Plant and equipment are carried at cost or fair value, equipment Diminishing Value less, where applicable, any accumulated depreciation and impairment losses. The carrying amount of plant Leased plant, 10–40% Straight–Line and equipment is reviewed annually by directors to equipment ensure it is not in excess of the recoverable amount from those assets. The recoverable amount of an asset is assessed on the basis of the expected net cash ﬂ ows that will be received from the asset’s employment and subsequent disposal. The expected net cash ﬂ ows have been discounted to their present values in determining recoverable amounts. The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included in the income statement. 38 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G GBST HOLDINGS LIMITED ABN: 85 010 488 874 Financial Report for the year ended 30 June 2008 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Asset retirement obligations Intangible assets The cost of plant and equipment includes an initial The Group’s major intangible assets are software estimate of the cost of make good allowances, and a systems, customer contracts and goodwill. corresponding provision for these future costs is raised. The Company has a number of lease agreements Acquired both separately and from a business over ofﬁ ce premises which include an obligation to combination make good the premises at the conclusion of the lease term. The Company recognises a liability and an asset for the estimated cost of making good at the time of entering a lease agreement. The resulting asset is amortised over the term of the premises lease. Leases and hire purchase Leases of ﬁ xed assets where substantially all the risks and beneﬁ ts incidental to the ownership of the asset, but not the legal ownership that is transferred to entities in the consolidated entity, are classiﬁ ed as ﬁ nance leases. Finance leases are capitalised by recording an asset and a liability at the lower of the amounts equal to the fair value of the leased property or the present value of the minimum lease payments, including any guaranteed residual values. Lease payments are allocated between the reduction of the lease liability and the lease interest expense for the period. Leased assets are depreciated on a straight–line basis over the shorter of their estimated useful lives or the lease term. Lease payments for operating leases, where substantially all the risks and beneﬁ ts remain with the lessor, are charged as expenses in the periods in which they are incurred. Lease incentives under operating leases are recognised as a liability and amortised on a straight–line basis Intangible assets acquired are capitalised at cost. Intangible assets acquired from a business combination are recognised separately from goodwill and capitalised at fair value as at the date of acquisition. Following initial recognition, the cost model is applied to the class of intangible assets. The useful lives of these intangible assets are assessed and the asset is amortised over its useful life on a straight-line basis, ranging from ﬁ ve to 10 years. Intangible assets are tested for impairment where an indicator of impairment exists. Useful lives are also examined on an annual basis and adjustments, where applicable, are made on a prospective basis. Internally developed Expenditure during the research phase of a project is recognised as an expense when incurred. Development costs are expensed in the year in which they are incurred when future economic beneﬁ ts are uncertain or the future economic beneﬁ ts cannot be measured reliably. Externally acquired Software systems externally acquired are recognised at cost of acquisition. Software systems have a ﬁ nite life and are carried at cost less any accumulated amortisation and any impairment losses. Software systems are amortised over their useful life on a straight- over the life of the lease term. line basis. Goodwill Trade date accounting is adopted for ﬁ nancial assets Goodwill is initially recorded at the amount by which that are delivered within timeframes established by the purchase price for a business acquisition exceeds marketplace convention. the fair value attributed to its net assets at date of acquisition. Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is not amortised. Financial instruments are initially measured at fair value plus transaction costs where the instrument is not classiﬁ ed as at fair value through proﬁ t or loss. Transaction costs related to instruments classiﬁ ed as at Goodwill is tested annually for any indication of fair value through proﬁ t or loss are expensed to proﬁ t impairment, or more frequently if events or changes in or loss immediately. Financial instruments are classiﬁ ed circumstances indicate that the carrying value may be and measured as set out below. impaired. Goodwill is allocated to cash generating units for the purpose of impairment testing. Loans and receivables Impairment of assets Loans and receivables are non–derivative ﬁ nancial assets with ﬁ xed or determinable payments that are not At each reporting date, the Group reviews the quoted in an active market and are stated at amortised carrying values of its tangible and intangible assets to cost using the effective interest rate method. determine whether there is any indication that those assets have been impaired. If such an indication exists, Available–for–sale ﬁ nancial assets the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is expensed to the income statement. Available–for–sale ﬁ nancial assets (investments) are reﬂ ected at fair value or cost. They comprise investments in the equity of other entities where there is neither a ﬁ xed maturity nor ﬁ xed or determinable payments. Fair value is determined with reference to market prices. Unrealised gains and losses arising from Impairment testing is performed annually for goodwill changes in fair value are taken directly to equity other and intangible assets with indeﬁ nite lives. Where it is than for impairment (see below). not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable Financial liabilities amount of the cash–generating unit to which the asset belongs. Non–derivative ﬁ nancial liabilities (excluding ﬁ nancial guarantees) are subsequently measured at amortised cost, using the effective interest rate method. Financial instruments Recognition and initial measurement Fair value Financial instruments, incorporating ﬁ nancial assets Fair value is determined based on current bid prices for and ﬁ nancial liabilities, are recognised when the entity all quoted investments. becomes a party to the contractual provisions of the instrument. 39 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G 40 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G GBST HOLDINGS LIMITED ABN: 85 010 488 874 Financial Report for the year ended 30 June 2008 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Impairment Those cashﬂ ows are discounted using market yields on At each reporting date, the Group assesses whether national government bonds with terms to maturity that there is objective evidence that a ﬁ nancial instrument match the expected timing of cashﬂ ows. Contributions has been impaired. In the case of available–for–sale are made by the Group to employee superannuation ﬁ nancial instruments, a prolonged decline in the value funds and are charged as expenses when incurred. of the instrument is considered to determine whether an impairment has arisen. Impairment losses are recognised in the income statement. Derecognition Equity–settled compensation The Group operates equity–settled share–based payment employee share and option schemes. The fair value of the equity to which employees become entitled Financial assets are derecognised where the is measured at grant date and recognised as an contractual rights to receipt of cashﬂ ows expires or the expense over the vesting period, with a corresponding asset is transferred to another party whereby the entity increase to an equity account. The fair value of shares is no longer has any signiﬁ cant continuing involvement is ascertained as the market bid price. The fair value in the risks and beneﬁ ts associated with the asset. of options is ascertained using a Black–Scholes pricing Financial liabilities are derecognised where the related model which incorporates all market vesting conditions. obligations are either discharged, cancelled or expire. The number of shares and options expected to vest is Provisions Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events, reviewed and adjusted at each reporting date such that the amount recognised for services received, as consideration for the equity instruments granted, shall be based on the number of equity instruments that for which it is probable that an outﬂ ow of economic eventually vest. beneﬁ ts will result and that outﬂ ow can be reliably measured. Employee beneﬁ ts Provision is made for the Group’s liability for employee beneﬁ ts arising from services rendered by employees to balance date. Employee beneﬁ ts expected to be settled within one year have been measured at the amounts expected to be paid when the liability is settled, plus related oncosts. Other employee beneﬁ ts payable later than one year have been measured at the present value of the estimated future cash outﬂ ows to be made for those entitlements. Revenue and other income Revenue is measured at the fair value of the consideration received or receivable after taking into account any trade discounts and volume rebates allowed. Any consideration deferred is treated as the provision of ﬁ nance and is discounted at a rate of interest that is generally accepted in the market for similar arrangements. The difference between the amount initially recognised and the amount ultimately received is interest revenue. Revenue received in advance for software usage rental Foreign currency transactions and balances is recognised over the period of the usage. Functional and presentation currency Revenue received in advance for long term project development contracts (depending on the terms of individual contracts) is deferred. This revenue is recognised over the period in which expenditure is The functional currency of each of the Group’s entities is measured using the currency of the primary economic environment in which that entity operates. The consolidated ﬁ nancial statements are presented in Australian dollars which is the parent entity’s functional incurred in relation to the development of the project. and presentation currency. Revenue from the sale of goods is recognised at the point of delivery as this corresponds to the transfer of signiﬁ cant risks and rewards of ownership of the goods and the cessation of all involvement in those goods. Interest revenue is recognised using the effective interest rate method, which, for ﬂ oating rate ﬁ nancial assets, is the rate inherent in the instrument. Dividend revenue is recognised when the right to receive a dividend has been established. Transaction and balances Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the year–end exchange rate. Non–monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non–monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined. All revenue is stated net of the amount of goods and services tax (GST). Goods and Services Tax (GST) Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax Ofﬁ ce. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the balance sheet are shown inclusive of GST. Cashﬂ ows are presented in the cashﬂ ow statement on a gross basis, except for the GST component of investing and ﬁ nancing activities, which are disclosed as operating cashﬂ ows. Exchange differences arising on the translation of monetary items are recognised in the income statement, except where deferred in equity as a qualifying cash ﬂ ow or net investment hedge. Exchange differences arising on the translation of non–monetary items are recognised directly in equity to the extent that the gain or loss is directly recognised in equity, otherwise the exchange difference is recognised in the income statement. 41 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G GBST HOLDINGS LIMITED ABN: 85 010 488 874 Financial Report for the year ended 30 June 2008 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Foreign currency transactions and balances Financial guarantees (continued) Group companies Where material, ﬁ nancial guarantees issued, which require the issuer to make speciﬁ ed payments to The ﬁ nancial results and position of foreign operations reimburse the holder for a loss it incurs because a 42 whose functional currency is different from the Group’s speciﬁ ed debtor fails to make payment when due, presentation currency are translated as follows: are recognised as a ﬁ nancial liability at fair value 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G – Assets and liabilities are translated at year–end exchange rates prevailing at that reporting date; – Income and expenses are translated at average exchange rates for the period; and – Retained earnings are translated at the exchange rates prevailing at the date of the transaction. Exchange differences arising on translation of foreign operations are transferred directly to the Group’s foreign currency translation reserve in the balance sheet. These differences are recognised in the income statement in the period in which the operation is disposed. Critical accounting estimates and judgments The Directors evaluate estimates and judgments incorporated into the ﬁ nancial report based on historical knowledge and best available current information. Estimates assume a reasonable on initial recognition. The guarantee is subsequently measured at the higher of the best estimate of the obligation and the amount initially recognised less, when appropriate, cumulative amortisation in accordance with AASB 118: Revenue. Where the entity gives guarantees in exchange for a fee, revenue is recognised under AASB 118. The fair value of ﬁ nancial guarantee contracts has been assessed using a probability weighted discounted cash ﬂ ow approach. The probability has been based on: – the likelihood of the guaranteed party defaulting in a year period; – the proportion of the exposure that is not expected to be recovered due to the guaranteed party defaulting; and – the maximum loss exposed if the guaranteed party were to default. expectation of future events and are based on current Comparative ﬁ gures trends and economic data, obtained both externally Where required by Accounting Standards comparative and within the Group. Actual results may differ from ﬁ gures have been adjusted to conform to changes in these estimates. The key estimates and judgements presentation for the current ﬁ nancial period. Details of made in this ﬁ nancial report concern the assessment any such changes are included in the ﬁ nancial report. of the fair value of assets and liabilities acquired in the InfoComp acquisition (Note 25 (d)) and carrying value of the consolidated entity’s intangible assets (Note 11). NOTE 2: REVENUE (a) Revenue: Sales revenue: Revenue from licence and service sales Revenue from sale of third party product (b) Other income: Interest revenue (c) Profit on sale of plant & equipment Other revenue Management fee income from controlled entity (c) Interest revenue: Other entities Controlled entities GBST Group 30 Jun 2008 $ 30 Jun 2007 $ GBST Holdings 30 Jun 2008 $ 30 Jun 2007 $ 59,690,794 1,049,137 60,739,931 29,086,199 1,324,772 30,410,971 30,827,555 913,645 31,741,200 29,086,199 1,324,772 30,410,971 364,328 – 88,653 – 452,981 364,328 – 364,328 866,046 9,280 830 – 876,156 1,735,128 709 62,219 1,226,636 3,024,692 866,046 – 866,046 233,635 1,501,493 1,735,128 934,845 9,280 830 – 944,955 866,046 68,799 934,845 43 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G NOTE 3: PROFIT FOR THE YEAR Profit before income tax expense includes the following items of revenue and expense: (a) Expenses: Cost of third party product sold Impairment charge on investment in listed shares Loss on sale of plant & equipment Finance costs (b) Depreciation & amortisation (c) Foreign currency translation losses/(gains) Operating lease rentals Research & developments costs Employee benefits expense (d) 901,192 2,287,893 4,492 1,533,216 4,055,438 291,667 1,912,665 8,045,210 24,617,695 1,134,720 – – 19,682 942,374 – 1,262,612 2,915,214 11,305,179 778,636 2,287,893 – 2,017,314 940,481 384 1,277,276 4,522,040 13,057,298 1,134,720 – – 19,682 942,374 – 1,262,612 2,915,214 11,305,179 GBST HOLDINGS LIMITED ABN: 85 010 488 874 Financial Report for the year ended 30 June 2008 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS NOTE 3: PROFIT FOR THE YEAR (CONTINUED) GBST Group (b) Finance costs: Interest paid to other entities Interest paid to controlled entities Finance lease charges Facility fees (c) Depreciation & amortisation: Depreciation of plant & equipment Amortisation of leased assets Amortisation of intangibles (d) Employee benefits expense: Monetary based expense (i) Share based payments expense (ii) 44 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G 30 Jun 2008 $ 1,438,048 – 18,100 77,068 1,533,216 932,500 9,538 3,113,400 4,055,438 30 Jun 2007 $ GBST Holdings 30 Jun 2008 $ 30 Jun 2007 $ – – 974 18,708 19,682 442,791 23,530 476,053 942,374 1,408,412 528,639 3,195 77,068 2,017,314 455,104 8,790 476,587 940,481 – – 974 18,708 19,682 442,791 23,530 476,053 942,374 24,446,662 171,033 24,617,695 11,231,410 73,769 11,305,179 12,886,265 171,033 13,057,298 11,231,410 73,769 11,305,179 (i) Monetary based expense includes salary and fees, bonus payments, superannuation and other benefits. (ii) Share based payments expense is calculated in accordance with AASB 2 “Share–based payments”. (e) Significant Items: The following significant expense items are relevant in explaining the financial performance: Impairment charge on investment in listed shares Amortisation of intangibles 2,287,893 3,116,005 5,403,898 – – – 2,287,893 479,192 2,767,085 – – – NOTE 4: INCOME TAX EXPENSE GBST Group (a) The components of tax expense comprise: Current Tax Deferred tax (Note 15) Under provision in respect of prior years (b) The prima facie tax on profit from ordinary activities before income tax is reconciled to income tax as follows: Operating profit Prima facie tax payable at 30% Adjust for tax effect of: Amortisation of customer contracts Impairment charge on investment in listed shares Other non–allowable items (net) Research & development expenditure claim Under provision in respect of prior years Effect of different tax rates of subsidiaries operating in other jurisdictions Income tax attributable to entity Weighted average effective tax rates: 30 Jun 2008 $ 4,713,161 (1,134,888) 42,778 3,621,051 30 Jun 2007 $ GBST Holdings 30 Jun 2008 $ 30 Jun 2007 $ 3,441,241 (104,888) (19,922) 3,316,431 2,778,555 (118,938) 61,826 2,721,443 3,441,241 (104,888) (19,922) 3,316,431 9,752,746 2,925,824 11,337,827 3,401,348 7,387,391 2,216,217 11,444,312 3,433,294 405,000 686,368 29,079 (488,524) 42,778 20,526 3,621,051 – – 41,072 (106,067) (19,922) – – 686,368 13,056 (256,024) 61,826 – – – 9,126 (106,067) (19,922) – 3,316,431 2,721,443 3,316,431 37% 29% 37% 29% The 8% increase compared to 2007 in the weighted average effective consolidated tax rate has resulted primarily from the non–allowable amortisation of customer contracts ($1,350,000 : tax effect $405,000) and non–allowable impairment of investment in listed shares ($2,287,893 : tax effect $686,368 – refer note (i) below). The 8% increase compared to 2007 in the weighted average effective company rate has resulted primarily from the non–allowable impairment of investment in listed shares ($2,287,893 : tax effect $686,368 – refer note (i) below). (i) The consolidated group and the company have not brought to account a deferred tax asset relating to the tax benefit on the impairment of the investment in listed shares due to the uncertainty of realisation of this capital loss. 45 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G GBST HOLDINGS LIMITED ABN: 85 010 488 874 Financial Report for the year ended 30 June 2008 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS NOTE 5: DIVIDENDS GBST Group 30 Jun 2008 $ 30 Jun 2007 $ GBST Holdings 30 Jun 2008 $ 30 Jun 2007 $ 46 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G Provision for dividend on ordinary shares Dividend paid in the period: Interim fully franked ordinary dividend of 5.5 cents (2007: 5 cents) per share 2007 final fully franked ordinary dividend of 6 cents (2006: 4 cents) per share paid in 2008 Total dividends paid Dividend received on Treasury Shares Net Dividend paid Franking credit balance: Balance of franking account at year end Franking credits arising from payment of provision for income tax as at the end of the financial year Impact of estimated final dividend not recognised during the period (see Note 33) Franking credits available for future reporting periods NOTE 6: CASH AND CASH EQUIVALENTS Cash at bank and on hand Short term bank deposits (a) – – – – 2,765,515 2,250,412 2,765,515 2,250,412 2,999,290 5,764,805 (1,050) 5,763,755 1,758,720 4,009,132 (78,185) 3,930,947 2,999,290 5,764,805 – 5,764,805 1,758,720 4,009,132 – 4,009,132 6,643,839 2,033,928 6,643,839 2,033,928 367,556 2,080,532 367,556 2,080,532 (862,230) 6,149,165 (1,285,000) 2,829,460 (862,230) 6,149,165 (1,285,000) 2,829,460 1,491,521 – 1,491,521 854,992 14,600,000 15,454,992 228,139 – 228,139 854,992 14,600,000 15,454,992 (a) The effective interest rate on short–term bank deposits was 6.3% in 2007; these deposits had an average maturity of 30 days. NOTE 7: TRADE AND OTHER RECEIVABLES GBST Group 30 Jun 2008 $ 30 Jun 2007 $ GBST Holdings 30 Jun 2008 $ 30 Jun 2007 $ Current Trade receivables (a) Controlled entities (c) Other amounts receivable 9,206,473 – 505,059 9,711,532 3,439,457 – 358,431 3,797,888 3,231,051 210,191 394,252 3,835,494 3,439,457 42,960 366,927 3,849,344 NOTE 7: TRADE AND OTHER RECEIVABLES (CONTINUED) GBST Group 30 Jun 2008 $ 30 Jun 2007 $ GBST Holdings 30 Jun 2008 $ 30 Jun 2007 $ 47 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G Non–Current receivables Controlled entities (d) Other amounts receivable – – – – 16,027 16,027 60,650,363 – 60,650,363 – 16,027 16,027 (a) Trade debtor terms range between 14 to 30 days. Included in the Group’s trade receivable balance are debtors with a carrying amount of $1,980,797 (2007: $89,075) which are past due at the reporting date for which the Group has not provided as there has not been a significant change in the credit quality and the Group believes that the amounts are still considered recoverable. The average age of these receivables is 86 days (2007: 39 days). Included in the Company’s trade receivable balance are debtors with a carrying amount of $200,164 (2007: $89,075) which are past due at the reporting date for which the Company has not provided as there has not been a significant change in the credit quality and the Group believes that the amounts are still considered recoverable. The average age of these receivables is 42 days (2007: 39 days). (b) There are no balances within trade and other receivables that are impaired. A provision for impairment is recognised when there is an objective evidence that an individual trade or term receivable is impaired. (c) The current year amount represents the net balance arising from the tax consolidation. (d) Intercompany balances are long term and interest bearing using the average overdraft rate of 8.94% p.a. (2007: Nil) except for one short term balance which is non–interest bearing and repayable on demand. NOTE 8: INVENTORIES Current – at cost Inventory on hand Work in progress NOTE 9: FINANCIAL ASSETS Non–Current Available for sale financial assets: Investment in controlled entities at cost (a) (Note 23) Investment in listed shares at fair value (b) 24,665 446,418 471,083 – – – 24,665 394,480 419,145 – – – – – 1,621,543 1,621,543 781,937 781,937 102 1,621,543 1,621,645 102 781,937 782,039 (a) The fair value of these investments is estimated to be at least $56 million. (b) During the year the Company increased its shareholding in IT&e to approximately 16%. At 30 June fair valuing this investment resulted in an impairment charge of $2,287,893 to the profit and loss. GBST HOLDINGS LIMITED ABN: 85 010 488 874 Financial Report for the year ended 30 June 2008 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS NOTE 10: PLANT AND EQUIPMENT GBST Group 48 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G Owned plant and equipment at cost Provision for depreciation Leased plant and equipment at cost Provision for amortisation Total plant and equipment (a) Movement in plant and equipment Consolidated Year ended 30 June 2007 Balance at the beginning of the year Additions Disposals Depreciation expense Reclassification to owned assets – cost Reclassification to owned assets – accumulated depreciation Carrying amount at the end of the year Year ended 30 June 2008 Balance at the beginning of the year Additions Additions through the acquisition of controlled entities Disposals Depreciation expense Carrying amount at the end of the year Parent Company Year ended 30 June 2007 Balance at the beginning of the year Additions Disposals Depreciation expense Reclassification to owned assets – cost 30 Jun 2008 $ 7,643,952 (5,287,263) 2,356,689 168,266 (6,933) 161,333 2,518,022 30 Jun 2007 $ GBST Holdings 30 Jun 2008 $ 30 Jun 2007 $ 3,097,181 (1,807,214) 1,289,967 – – – 1,289,967 3,441,156 (2,220,524) 1,220,632 148,433 (6,185) 142,248 1,362,880 3,097,181 (1,807,214) 1,289,967 – – – 1,289,967 Owned $ Leased $ Total $ 1,133,513 641,765 (42,520) 23,530 1,157,043 – – 641,765 (42,520) (442,791) (23,530) (466,321) 120,963 (120,963) (120,963) 1,289,967 1,289,967 849,315 1,192,595 (42,688) (932,500) 2,356,689 Owned $ 1,133,513 641,765 (42,520) – – 120,963 – 1,289,967 – 1,289,967 168,266 – – (6,933) 161,333 Leased $ 23,530 – – 1,017,581 1,192,595 (42,688) (939,433) 2,518,022 Total $ 1,157,043 641,765 (42,520) Reclassification to owned assets – accumulated depreciation Carrying amount at the end of the year (120,963) 1,289,967 (442,791) (23,530) (466,321) 120,963 (120,963) 120,963 – – – 1,289,967 NOTE 10: PLANT AND EQUIPMENT (CONTINUED) Parent Company Year ended 30 June 2008 Balance at the beginning of the year Additions Disposals Depreciation expense Carrying amount at the end of the year Owned $ Leased $ Total $ 1,289,967 419,246 (33,477) (455,104) 1,220,632 – 1,289,967 148,433 – (6,185) 142,248 567,679 (33,477) (461,289) 1,362,880 NOTE 11: INTANGIBLE ASSETS GBST Group 30 Jun 2008 $ 30 Jun 2007 $ GBST Holdings 30 Jun 2008 $ 30 Jun 2007 $ At Cost Software systems Accumulated amortisation Net carrying value Leased software Provision for amortisation Customer contracts Accumulated amortisation Net carrying value Goodwill Net carrying value Total intangibles 18,190,201 (2,756,823) 15,433,378 2,985,455 (996,504) 1,988,951 3,026,381 (1,468,521) 1,557,860 2,985,455 (996,504) 1,988,951 39,073 (2,605) 36,468 8,100,000 (1,350,000) 6,750,000 31,588,226 31,588,226 53,808,072 – – – – – – 39,073 (2,605) 36,468 – – – – – – – – – 3,350,061 3,350,061 5,339,012 3,350,061 3,350,061 4,944,389 3,350,061 3,350,061 5,339,012 49 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G GBST HOLDINGS LIMITED ABN: 85 010 488 874 Financial Report for the year ended 30 June 2008 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS NOTE 11: INTANGIBLE ASSETS (CONTINUED) (a) Movement in intangibles Consolidated Year ended 30 June 2007 Balance at the beginning of the year Additions Disposals Amortisation charge Carrying amount at the end of the year Year ended 30 June 2008 Balance at the beginning of the year Additions Additions through the acquisition of controlled entities Disposals Amortisation charge Carrying amount at the end of the year Parent Company Year ended 30 June 2007 Balance at the beginning of the year Additions Disposals Amortisation charge Carrying amount at the end of the year Year ended 30 June 2008 Balance at the beginning of the year Additions Disposals Amortisation charge Carrying amount at the end of the year Software Systems $ Leased Software $ Computer Contracts $ Goodwill $ Total $ 2,382,318 82,974 (288) (476,053) 1,988,951 – – – – – 1,988,951 – 168,434 39,073 15,044,227 (4,834) (1,763,400) 15,433,378 – – (2,605) 36,468 2,382,318 82,974 (288) (476,053) 1,988,951 – – – – – 1,988,951 – 50,339 39,073 (4,843) (476,587) 1,557,860 – (2,605) 36,468 – – – – – – – 3,350,061 5,732,379 – – – 82,974 (288) (476,053) 3,350,061 5,339,012 3,350,061 5,339,012 – 207,507 8,100,000 28,238,165 51,382,392 – (1,350,000) – – (4,834) (3,116,005) 6,750,000 31,588,226 53,808,072 – – – – – – – – – – 3,350,061 5,732,379 – – – 82,974 (288) (476,053) 3,350,061 5,339,012 3,350,061 5,339,012 – – – 89,412 (4,843) (479,192) 3,350,061 4,944,389 Intangible assets, other than goodwill, have finite useful lives. The current amortisation charges for intangible assets are included under depreciation and amortisation expense per the income statement. Goodwill has an infinite life. 50 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G 51 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G NOTE 11: INTANGIBLE ASSETS (CONTINUED) Impairment disclosures Goodwill is allocated to cash–generating (CGU) units which are based on the Group’s reporting segments. Broker segment Wealth Management segment Total 30 Jun 2008 $ 3,350,061 28,238,165 31,588,226 30 Jun 2007 $ 3,350,061 – 3,350,061 Broker Services segment goodwill relates to the 2005 the CGU is dedicated, the size of the business, Palion acquisition which has been fully integrated geographic location, past performance and other within the Broker segment. The Wealth Management segment goodwill relates to the InfoComp acquisition – see Note 25 (d). The recoverable amount of goodwill has been assessed using value in use calculations for each CGU. Key assumptions used for value–in–use calculations Value–in–use The cash–generating unit impairment tests are based on value in use calculations, using discounted cash ﬂ ow projections based on actual operating results, the budgets and ﬁ ve–year strategic plans, approved by the Board and updated where appropriate and cash forecasts extrapolated for a further ﬁ ve years. For the ﬁ nancial year ending 2009, management has used the 2009 ﬁ nancial budget approved by the Board. For future ﬁ nancial years, forecast projections or the current business strategic plan have been used. The assumptions are generally consistent with past performance or are based upon the Group’s view of future market activity. Growth and discount rates Growth rates used were generally determined by factors such as industry sector, the market to which industry factors. In particular for the emerging UK market for Wealth Management segment’s existing products, successful penetration into the market is assumed. The long term growth rate used to extrapolate the cash forecasts beyond the ﬁ ve year period range from 5% to 8%. Discount rates are pre– tax and are adjusted to incorporate the risks associated with the industries and countries the business operates in. A pre–tax discount rate of 15% has been used. Impact of possible changes to assumptions With regard to the assessment of the value–in–use of the CGUs, management has conducted sensitivity analysis on the effect of a change in the respective key assumptions on the carrying value of each CGU. For all the CGUs, the Management believe that as the excess of the recoverable amount over the carrying amount of the goodwill is signiﬁ cant, any reasonable possible change in the assumptions would not have a material impact on the recoverable amount of the goodwill. Impairment There is no impairment loss to any of the cash generating units containing goodwill in the 2008 ﬁ nancial year. GBST HOLDINGS LIMITED ABN: 85 010 488 874 Financial Report for the year ended 30 June 2008 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS NOTE 12: OTHER ASSETS GBST Group 30 Jun 2008 $ 30 Jun 2007 $ GBST Holdings 30 Jun 2008 $ 30 Jun 2007 $ 52 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G Current Prepaid expenditure Non–Current Prepaid expenditure NOTE 13: TRADE AND OTHER PAYABLES Current (unsecured) Trade payables & accruals Controlled entities Amount owing to vendors in respect of InfoComp acquisition Non–Current (unsecured) Controlled entities NOTE 14: FINANCIAL LIABILITIES Current Bank overdraft (secured) Bank loan facility (secured) Finance lease liability (Note 21) Non–Current Bank loan facility (secured) Finance lease liability (Note 21) Total secured liabilities 711,455 513,605 630,566 513,605 230,685 230,685 13,453 13,453 230,590 230,590 13,453 13,453 6,283,699 – 750,000 7,033,699 2,186,566 – – 2,186,566 2,268,043 1,980,938 – 4,248,981 2,178,571 – – 2,178,571 – – – – 7,748,021 7,748,021 1,362,888 3,000,000 122,867 4,485,755 16,000,000 259,896 16,259,896 20,362,888 – – – – – – – – 1,362,888 3,000,000 59,484 4,422,372 16,000,000 135,545 16,135,545 20,362,888 – – – – – – – – – – The bank facilities are secured by a registered charge tax is 6 to 1 in the ﬁ rst twelve months of the facility and over the assets of the Group. The facility has a six year not less than two to one going forward. In respect term, with the ﬁ rst principal repayment due on of the bank facilities, totalling $20,362,888 at 30 31 December 2008. Interest rates under the facility June 2008, the company failed to meet the Dividend are variable. The facility has a number of other Payout Ratio for the period ended 30 June 2008 and commercial terms and conditions. therefore has a breach of the covenant. The bank has The covenants within the bank borrowings require that the debt to earnings before interest and tax is not indicated no action will be taken at this time other than to adjust the borrowing rate in the facilities. greater than 2 to 1, dividend payout is 70% or less The carrying amount of group non current assets and debt service cost to earnings before interest and secured is $61,013,792. NOTE 15: TAX (a) Liabilities Current Income tax Non–Current Deferred tax liability comprises: Tax allowances relating to property, plant and equipment (b) Assets Deferred tax assets comprise: Unused tax losses Provisions and prepaid income Other items Transaction costs on equity issue (c) Reconciliations (i) Gross movement The overall movement in the deferred tax account is as follows: Opening balance Additions through the acquisition of controlled entities (Charge)/credit to income statement Charge to equity Closing balance (ii) Deferred tax liability (a) The movement in deferred tax liability for each temporary difference during the year is as follows: Tax allowances relating to property, plant and equipment Opening balance Charged to income statement Closing balance GBST Group 30 Jun 2008 $ 30 Jun 2007 $ GBST Holdings 30 Jun 2008 $ 30 Jun 2007 $ 53 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G 367,556 2,080,532 791,395 2,080,532 175,732 175,732 174,492 174,492 143,395 143,395 174,492 174,492 588,146 2,139,678 59,913 47,733 2,835,470 – – 902,584 140,353 95,467 1,138,404 1,070,865 59,913 47,733 1,178,511 – 902,584 140,353 95,467 1,138,404 963,912 608,672 1,134,888 (47,734) 2,659,738 906,758 – 104,888 (47,734) 963,912 963,912 – 118,938 (47,734) 1,035,116 906,758 – 104,888 (47,734) 963,912 174,492 1,240 175,732 144,765 29,727 174,492 174,492 (31,097) 143,395 144,765 29,727 174,492 GBST HOLDINGS LIMITED ABN: 85 010 488 874 Financial Report for the year ended 30 June 2008 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS NOTE 15: TAX (CONTINUED) GBST Group 30 Jun 2007 $ GBST Holdings 30 Jun 2008 $ 30 Jun 2007 $ 54 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G (c) Reconciliations (continued) (iii) Deferred tax assets The movement in deferred tax liability for each temporary difference during the year is as follows: Provisions and prepaid income Opening balance Additions through the acquisition of controlled entities Credited to income statement Closing balance Other Items Opening balance Credited/(charged) to income statement Closing balance Transaction costs on equity issue Opening balance Charged directly to equity Closing balance Unused tax losses Opening balance Additions through the acquisition of controlled entities Credited/(charged) to income statement Closing balance 30 Jun 2008 $ 902,584 307,894 929,200 2,139,678 140,353 (80,440) 59,913 95,467 (47,734) 47,733 – 300,778 287,368 588,146 (a) Deferred tax assets not brought to account, the benefits of which will only be realised if the conditions for deductibility set out in Note 1: Income Tax occur: – tax losses : operating losses – tax losses : capital losses – temporary differences – 1,029,157 – 853,259 – 49,325 902,584 902,584 – 168,281 1,070,865 55,063 85,290 140,353 143,201 (47,734) 95,467 – – – – – – – 140,353 (80,440) 59,913 95,467 (47,734) 47,733 – – – – – 686,368 – 853,259 – 49,325 902,584 55,063 85,290 140,353 143,201 (47,734) 95,467 – – – – – – – NOTE 16: PROVISIONS Long–Term Employee benefits (a) Asset retirement provision (b) Consolidated Balance at the beginning of the year Additional provisions Amounts used Unused amounts reversed Balance at 30 June 2008 Parent Company Balance at the beginning of the year Additional provisions Amounts used Unused amounts reversed Balance at 30 June 2008 GBST Group 30 Jun 2008 $ 30 Jun 2007 $ GBST Holdings 30 Jun 2008 $ 30 Jun 2007 $ 1,000,173 467,166 1,467,339 770,414 357,992 1,128,406 737,184 308,459 1,045,643 770,414 357,992 1,128,406 Long–term Employee benefits $ Asset Retirement $ 770,414 379,639 (149,880) – 357,992 172,174 (37,046) (25,954) Total $ 1,128,406 551,813 (186,926) (25,954) 1,000,173 467,166 1,467,339 770,414 35,782 (69,012) – 357,992 13,467 (37,046) (25,954) 1,128,406 49,249 (106,058) (25,954) 737,184 308,459 1,045,643 55 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G (a) The measurement and recognition criteria relating to employee benefits has been included in Note 1 to this report. (b) An asset retirement provision has been recognised for expected future refurbishment costs of office premises. NOTE 17: OTHER LIABILITIES Current Revenue received in advance for software usage and support services Non–Current Revenue received in advance for software usage and support services 4,049,311 4,049,311 2,260,754 2,260,754 2,500,673 2,500,673 2,260,754 2,260,754 192,367 192,367 305,611 305,611 192,367 192,367 305,611 305,611 GBST HOLDINGS LIMITED ABN: 85 010 488 874 Financial Report for the year ended 30 June 2008 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS NOTE 18: ISSUED CAPITAL GBST Group 50,296,733 (June 2007: 45,013,562) fully paid ordinary shares 30 Jun 2008 $ 25,499,241 25,499,241 30 Jun 2007 $ GBST Holdings 30 Jun 2008 $ 30 Jun 2007 $ 6,807,508 6,807,508 25,499,241 25,499,241 6,807,508 6,807,508 56 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G Movements in issued capital: Opening balance Transfer from options reserve (Note 20) Share issues during the year: 31 July 2007 Employee exempt share scheme 31 August 2007 Acquisition of InfoComp *Various dates Employee deferred options scheme *Various dates Employee exempt options scheme Ordinary Shares Opening balance Share issues during the year: 31 July 2007 Employee exempt share scheme 31 August 2007 Acquisition of InfoComp *Various dates Employee deferred options scheme *Various dates Employee exempt options scheme 6,807,508 51,248 5,722,015 304,797 6,807,508 51,248 5,722,015 304,797 107,808 18,260,177 272,500 – – – 780,696 – 107,808 18,260,177 272,500 – – – 780,696 – 25,499,241 6,807,508 25,499,241 6,807,508 No. 45,013,562 No. 43,968,000 No. 45,013,562 No. 43,968,000 27,432 4,935,183 210,000 110,556 50,296,733 – – 1,045,562 – 45,013,562 27,432 4,935,183 210,000 110,556 50,296,733 – – 1,045,562 – 45,013,562 * There were numerous share issues during the year as employees exercised options. Ordinary shares participate in dividends and the proceeds of winding up of the parent entity in proportion to the number of shares held. At shareholders’ meetings each ordinary share is entitled to one vote. The company does not have an amount of authorised capital. Options Management effectively manages the Group’s For details on options over ordinary shares, capital by assessing the Group’s ﬁ nancial risks and see Note 31. Capital Management The Board and Management controls the capital of the group in order to ensure that the Group can fund its operations and continue as a going concern as well as provide the shareholders with optimal returns. The Group also aims to maintain a capital structure that 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. During the 2008, the Group paid dividends of $5,763,755 (2007: $3,930,947). The entity currently has as a target a dividend payout ratio of 60–70%. This is subject to regular review depending on the current circumstances ensures the lowest cost of capital available to the entity. of the entity. The Board’s policy is to build and maintain a strong capital base so as to maintain investor, creditor and The Company took on debt in the current year to market conﬁ dence and to sustain future development ﬁ nance it’s acquisition activity and the current gearing of the business. The Board monitors the capital mix, ratio (net debt / total debt and equity) of 33% is within share price, as well as the return on capital. the target range of between 30% and 50%. The The Group’s capital includes ordinary share capital, reserves and retained earnings, bank facilities, other ﬁ nancial liabilities; supported by ﬁ nancial assets. gearing ratio’s for the year ended 30 June 2008 and 30 June 2007 are as follows: GBST Holdings Total borrowings Less cash and cash equivalents Net debt Total equity Total debt and equity Gearing ratio GBST Group 30 Jun 2008 $ 30 Jun 2007 $ 30 Jun 2008 $ 30 Jun 2007 $ 20,745,651 1,491,521 19,254,130 39,367,728 58,621,858 – 15,454,992 (15,454,992) 20,208,924 4,753,932 20,557,917 228,139 20,329,778 37,873,330 58,203,108 – 15,454,992 (15,454,992) 20,268,477 4,813,485 33% In funds 35% In funds The Group is not subject to any externally imposed capital requirements, other than the facility covenants set out in Note 14. 57 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G GBST HOLDINGS LIMITED ABN: 85 010 488 874 Financial Report for the year ended 30 June 2008 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS NOTE 19: TREASURY SHARES GBST Group 30 Jun 2008 $ 30 Jun 2007 $ GBST Holdings 30 Jun 2008 $ 30 Jun 2007 $ 58 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G Treasury Shares (Note 31) NOTE 20: RESERVES Equity Remuneration Reserve Foreign Currency Translation Reserve – – 31,253 31,253 – – – – 79,765 55,901 135,666 67,788 – 67,788 79,765 – 79,765 67,788 – 67,788 (a) The option reserve records the amount recognised as an expense on valuation of employee share options granted. When options are exercised, the amount in the reserve relating to those options is transferred to issued capital. (b) The share remuneration reserve records total cost of share issues less amortisation expense, based on a vesting period of three years and employee employment status. The actual shares were issued at grant date. (c) The foreign currency translation reserve records exchange differences arising on translation of a foreign controlled subsidiary. NOTE 21: CAPITAL, LEASING AND OTHER COMMITMENTS (a) Finance leasing commitments Payable on leases: Not later than one year Later than one year but not later than five years Less future finance charges Total liability Lease liabilities are included in the Balance Sheet as: Current (Note 14) Non–current (Note 14) 150,167 280,892 431,059 (48,296) 382,763 122,867 259,896 382,763 – – – – – – – – 75,341 148,345 223,686 (28,657) 195,029 59,484 135,545 195,029 – – – – – – – – Finance leases relate to items of plant and equipment and have options to acquire the items on termination. NOTE 21: CAPITAL, LEASING AND OTHER COMMITMENTS (CONTINUED) GBST Group 30 Jun 2008 $ 30 Jun 2007 $ GBST Holdings 30 Jun 2008 $ 30 Jun 2007 $ (b) Non–cancellable operating leases Lease amounts are payable: Not later than one year Later than one year but not later than five years Later than five years 1,758,991 5,293,464 1,007,907 8,060,362 1,252,771 4,800,307 2,262,742 8,315,820 1,268,223 4,865,081 1,007,907 7,141,211 1,252,771 4,800,307 2,262,742 8,315,820 Non–cancellable leases include rental premises with lease terms up to eight years. The lease agreements require that the minimum lease payments shall be increased by incremental contingent rentals based on market or CPI. Certain leases contain options to renew at the end of their term. (c) Capital and other expenditure commitments Contracted for: Capital and other operating purchases Payable Not later than one year NOTE 22: AUDITORS’ REMUNERATION Remuneration of the auditor of the company for: Auditing or reviewing the financial report Other taxation and statutory compliance assistance Remuneration of other auditors of subsidiaries for: Auditing the financial report Other taxation and statutory compliance assistance 495,008 29,680 495,008 29,680 495,008 495,008 29,680 29,680 495,008 495,008 29,680 29,680 149,616 7,320 156,936 23,217 2,039 60,350 4,250 64,600 5,985 2,721 73,183 6,120 79,303 – – 60,350 4,250 64,600 – – 59 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G GBST HOLDINGS LIMITED ABN: 85 010 488 874 Financial Report for the year ended 30 June 2008 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS NOTE 23: OTHER GROUP ENTITIES (a) Controlled entities consolidated Group entity: GBST Pty Ltd Country of Incorporation: Australia Percentage owned: 100% (June 2007: 100%) Group entity: GBST ESOP Pty Ltd Country of Incorporation: Australia Percentage owned: 100% (June 2007: 100%) Group entity: GBST Australia Pty Ltd Country of Incorporation: Australia Percentage owned: 100% (June 2007: 100%) Subsidiaries of GBST Australia Pty Ltd: Group entity: GBST Hong Kong Limited Country of Incorporation: Hong Kong Percentage owned: 100% (June 2007: 100%) Group entity: InfoComp Pty Ltd Country of Incorporation: Australia Percentage owned: 100% (June 2007: nil) Group entity: ICP Holdings Pty Ltd Country of Incorporation: Australia Percentage owned: 100% (June 2007: nil) Subsidiaries of ICP Holdings Pty Ltd: Group entity: InfoComp UK Limited Country of Incorporation: Australia Percentage owned: 95.9% (June 2007: nil) (b) Acquisition of controlled entities 60 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G On 31 August 2007 GBST Australia Pty Ltd acquired 100% of ‘InfoComp Pty Ltd and ICP Holdings Pty Ltd’, with GBST Australia Pty Ltd entitled to all profits earned from purchase date, for a purchase consideration of $55,794,179. As at 30 June 2008 a 4.1% interest in ICP UK still remained to be settled. That settlement is to be recovered from the deferred consideration payable to the vendors (Note 13). Consequently no minority interest has been accounted for in the consolidated accounts. (c) Disposal of controlled entities One of the subsidiaries of InfoComp which was a dormant entity was liquidated on 27 November 2007. (d) Deed of cross guarantee Pursuant to ASIC Class Order 98/1418 (as amended), a number of wholly–owned controlled entities as listed below are relieved from the Corporations Act 2001 requirements for preparation, audit and lodgement of financial reports and Directors’ Report. It is a condition of the class order that the Company and each of the controlled entities enter into a Deed of Cross Guarantee (“Deed”). The effect of the Deed is that the Company guarantees to each creditor payment in full of any debt in the event of winding up any of the controlled entities under certain provisions of the Corporations Act 2001. If a winding up occurs under other provisions of the Corporations Act 2001, the Company will only be liable in the event that after six months any creditor has not been paid in full. The controlled entities have also given similar guarantees in the event that the Company is wound up. The controlled entities subject to the Deed are: GBST Pty Ltd GBST ESOP Pty Ltd GBST Australia Pty Ltd ICP Holdings Pty Ltd InfoComp Pty Ltd NOTE 23: OTHER GROUP ENTITIES (CONTINUED) Financial information in relation to: i. Income Statement Profit before income tax Income tax expense Profit after income tax Profit attributable to members of the parent entity ii. Retained Earnings Retained profits at the beginning of the year Retained profits of subsidiaries acquired Profit after income tax Dividends provided for or paid Retained earnings at the end of the year iii. Balance Sheet CURRENT ASSETS Cash and cash equivalents Trade and other receivables Inventories Other assets TOTAL CURRENT ASSETS NON–CURRENT ASSETS Financial assets Property, plant and equipment Intangible assets Deferred tax assets Other assets TOTAL NON–CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Financial liabilities Current tax liabilities Other liabilities TOTAL CURRENT LIABILITIES Closed Group 30 Jun 2008 $ 6,860,385 (4,111,094) 2,749,291 2,749,291 13,364,881 1,745,767 2,749,291 (5,763,755) 12,096,184 1,045,096 8,828,767 419,145 673,646 10,966,654 1,644,830 2,512,896 53,603,575 2,247,324 230,685 60,239,310 71,205,964 6,389,945 4,485,755 367,556 4,049,311 15,292,567 Parties to deed of cross guarantee 30 Jun 2008 $ 6,860,385 (4,111,094) 2,749,291 2,749,291 13,364,881 1,745,767 2,749,291 (5,763,755) 12,096,184 1,045,096 8,828,767 419,145 673,646 10,966,654 1,644,830 2,512,896 53,603,575 2,247,324 230,685 60,239,310 71,205,964 6,389,945 4,485,755 367,556 4,049,311 15,292,567 61 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G GBST HOLDINGS LIMITED ABN: 85 010 488 874 Financial Report for the year ended 30 June 2008 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS NOTE 23: OTHER GROUP ENTITIES (CONTINUED) NON–CURRENT LIABILITIES Financial liabilities Deferred tax liabilities Long–term provisions Other liabilities TOTAL NON–CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Issued capital Reserves Retained earnings Closed Group 30 Jun 2008 $ 16,259,896 175,732 1,467,339 192,367 18,095,334 33,387,901 37,818,063 25,499,241 222,638 12,096,184 37,818,063 Parties to Deed of Cross Guarantee 30 Jun 2008 $ 16,259,896 175,732 1,467,339 192,367 18,095,334 33,387,901 37,818,063 25,499,241 222,638 12,096,184 37,818,063 NOTE 24: FINANCING ARRANGEMENTS GBST Group 30 Jun 2008 $ 30 Jun 2007 $ GBST Holdings 30 Jun 2008 $ 30 Jun 2007 $ Other financing facilities (a) Amount utilised Unused credit facilities 23,668,799 (21,048,518) 2,620,281 2,625,000 (319,709) 2,305,291 23,467,198 (20,846,916) 2,620,282 2,625,000 (319,709) 2,305,291 (a) This amount comprises bank facilities and lease facilities. The bank overdraft and loan facility are secured by a registered charge over the assets of the Group. The facility has a six year term, with the ﬁ rst principal repayment due on 31 December 2008 and the end of each quarter after that. Interest rates under the facility are variable. The facility has a number of other commercial terms and conditions. The lease facility is a “revolving asset ﬁ nance facility” to enable equipment ﬁ nancing, required for business operations. Each draw on the lease facility creates a rental agreement for a 36 month period. The facility is subject to annual review. There are no conditions/covenants in place and drawdown is subject to the bank’s acceptance of assets proposed for ﬁ nancing under the facility. 62 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G NOTE 25: CASH FLOW INFORMATION GBST Group (a) Reconciliation of net cash provided by operating activities 30 Jun 2008 $ 30 Jun 2007 $ GBST Holdings 30 Jun 2008 $ 30 Jun 2007 $ 63 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G to profit after income tax Profit after income tax Non–cash flows in operating profit: Depreciation and amortisation Write down on investments (Profit)/loss on sale of plant & equipment Share based payments expensed Changes in assets and liabilities: (Increase)/decrease in receivables (Increase)/decrease in other assets Increase/(decrease) in other liabilities (Increase)/decrease in inventories (Increase)/decrease in deferred tax balances Increase/(decrease) in tax provision Increase/(decrease) in trade and other payables Increase/(decrease) in provisions Cash flow from operations (b) Reconciliation of cash Cash at the end of the financial year as shown in the Statement of Cash Flows is reconciled to items in the Balance Sheet as follows: Cash at bank (Note 6) Short term deposit (Note 6) Bank overdraft (Note 14) (c) Non cash financing activities 6,131,695 8,021,396 4,665,948 8,127,881 4,055,438 2,287,893 4,492 171,033 (2,994,900) (111,809) (2,560,120) 439,859 763,219 (2,609,019) 737,525 67,963 6,383,269 942,374 – (9,280) 73,769 (647,460) (215,756) (526,228) 2,572 (57,154) (35,416) 148,114 (65,627) 7,631,304 940,481 2,287,893 (709) 171,033 (84,146) (334,098) 126,675 (419,145) (71,204) (1,289,137) 89,472 (82,763) 6,000,300 942,374 – (9,280) 73,769 (743,496) (215,756) (526,228) 2,572 (57,154) (35,416) 148,114 (65,627) 7,641,753 1,491,521 – 854,992 14,600,000 228,139 – 854,992 14,600,000 (1,362,888) 128,633 – 15,454,992 (1,362,888) (1,134,749) – 15,454,992 During the 2008 financial year the group acquired plant and equipment with an aggregate value of $207,339 (2007: $nil) by means of finance leases and the company acquired plant and equipment with an aggregate value of $187,506 (2007: $nil) by means of finance leases. During the year the following ordinary shares were issued as non cash consideration: – InfoComp acquisition – Employee exempt share plan – Employee exempt options scheme These items are not reflected in the Statement of Cash Flows. Number 4,935,183 27,432 110,556 Issue Price $3.7000 $3.9300 $0.7505 64 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G GBST HOLDINGS LIMITED ABN: 85 010 488 874 Financial Report for the year ended 30 June 2008 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS NOTE 25: CASH FLOW INFORMATION (CONTINUED) GBST Group 30 Jun 2008 $ (d) Acquisition of business The Group acquired ‘InfoComp Pty Ltd, ICP Holdings Pty Ltd and its subsidiaries’, a software developer of highly regarded and advanced funds administration and registry software for the wealth management industry, and the dominant provider to Australian wrap and master trusts, on 31 August 2007. 30 Jun 2007 $ GBST Holdings 30 Jun 2008 $ 30 Jun 2007 $ The purchase was allocated as follows: Purchase consideration Transaction costs Total purchase consideration This was funded by: 4,935,183 ordinary shares (a) Cash consideration Consideration paid at 31 August 2007 Amounts yet to be paid (a) Market price at purchase date $3.70 Assets and liabilities acquired at acquisition date: Intellectual Property – Software Systems Intellectual Property – Customer Contracts Cash Future Income Tax Benefit Other Assets Payables and Provisions Borrowings Goodwill Total 54,848,640 945,539 55,794,179 18,260,177 36,784,002 55,044,179 750,000 55,794,179 15,000,000 8,100,000 5,549,081 608,672 6,642,914 (8,131,201) (213,452) 27,556,014 28,238,165 55,794,179 – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – The goodwill is attributable to the high proﬁ tability of the acquired business and signiﬁ cant synergies expected to arise after the acquisition of software systems. The assets and liabilities arising from the acquisition are recognised at fair value which is equal to their carrying value. Proﬁ t before tax amounting to $2,333,966 is included in the consolidated income statement for the year. Had the results of InfoComp been consolidated for the full year, consolidated revenue would have been $65,682,152 and consolidated proﬁ t $9,794,444. 65 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G NOTE 26: SEGMENT REPORTING The Broker Services division supports and provides software solutions to stockbrokers and banks in connection with share trading, margin lending and option trading in Australia, Hong Kong and New Zealand. The Wealth Management division supports and provides software solutions to fund managers, superannuation providers and wrap account providers in connection with client and investment management in Australia and the United Kingdom. The Wealth Management division also provides a Union membership management system for use in Australia and New Zealand. Primary reporting – business segments Broker Services Wealth Management Eliminations GBST Group 30 Jun 2008 $ 7,421,975 REVENUE Sales to external customers 31,741,200 Inter-segment revenues – 31,741,200 Total segment revenue RESULT Segment result Unallocated expenses net of unallocated revenue Finance costs Profit before income tax Income tax expense Profit after income tax ASSETS Segment assets Unallocated assets Total Assets LIABILITIES Segment liabilities Unallocated liabilities Total Liabilities OTHER Investments accounted for using the equity method Acquisitions of non–current segment assets Depreciation and amortisation of segment assets Other non–cash segment expenses 14,506,534 8,921,640 2,458,926 759,113 940,481 – 30 Jun 2007 30 Jun 2008 30 Jun 2007 30 Jun 2008 30 Jun 2007 30 Jun 2008 30 Jun 2007 $ $ $ $ $ $ $ 30,410,971 28,998,731 42,169 30,410,971 29,040,900 – 11,357,509 3,863,987 – – – – – (42,169) (42,169) – 60,739,931 30,410,971 – – – – 60,739,931 30,410,971 – – 11,285,962 11,357,509 – (1,533,216) – (19,682) 9,752,746 11,337,827 (3,316,431) 8,021,396 (3,621,051) 6,131,695 28,345,285 58,892,849 – – – 73,399,383 28,345,285 – – 73,399,383 28,345,285 8,136,361 25,110,015 – – – 34,031,655 – 34,031,655 8,136,361 – 8,136,361 – – 724,739 51,675,879 942,374 3,114,957 73,769 – – – – – – – – – – – – – 52,434,992 724,739 – 4,055,438 942,374 – 2,458,926 73,769 66 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G GBST HOLDINGS LIMITED ABN: 85 010 488 874 Financial Report for the year ended 30 June 2008 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS NOTE 26: SEGMENT REPORTING (CONSOLIDATED) Secondary reporting – geographical segments Segment revenues from external customers Carrying amount of segment assets Acquisitions of non-current segment assets 30 Jun 2008 $ 30 Jun 2007 $ 30 Jun 2008 $ 30 Jun 2007 $ 30 Jun 2008 $ 30 Jun 2007 $ Geographical Location: Australia United Kingdom 49,145,990 30,410,971 70,547,557 28,345,285 11,593,941 – 2,851,826 – 60,739,931 30,410,971 73,399,383 28,345,285 51,002,103 1,432,889 52,434,992 724,739 – 724,739 Accounting policies Broker Services division provides client accounting Segment revenues and expenses are those directly and securities transaction technology solutions for the attributable to the segments and include any joint ﬁ nance, banking and securities industry in Australia revenue and expenses where a reasonable basis of and South East Asia. Major product lines of the allocation exists. Segment assets include all assets division include: Shares, Palion, Margin Lending, used by a segment and consist principally of cash, Business Continuity Service, Business Interface receivables, inventories, intangibles and property, plant and CMT. and equipment, net of allowances and accumulated depreciation and amortisation. While most such assets can be directly attributed to individual segments, the carrying amount of certain assets used jointly by two or more segments is allocated to the segments on a reasonable basis. Segment liabilities consist principally of payables, employee beneﬁ ts, accrued expenses, provisions and borrowings. Segment assets and liabilities do include deferred income taxes. Intersegment transfers Segment revenues, expenses and results include transfers between segments. The prices charged on intersegment transactions are the same as those charged for similar goods to parties outside of the consolidated group at an arm’s length. These transfers are eliminated on consolidation. Business and geographical segments The consolidated Group has the following two business segments: Wealth Management division provides funds administration and registry software for the wealth management industry in Australia and the United Kingdom. Major product lines of the division include: Composer, Unison and ASP Access. A controlled entity within the division, which is a dormant entity was liquidated during the year. Geographical segments The consolidated Group’s business segments are located in Australia with the Wealth Management division also having operations in the United Kingdom. The Broker Services division has a customer base in South East Asia from sales to Australian entities. Impairment losses An impairment loss amounting to $2,287,893 relating to Investment in listed shares within the broker services segment was recognised as an expense for the year ended 30 June 2008. NOTE 27: FINANCIAL RISK MANAGEMENT (a) Financial risk management policies The risk management policies are established to The Group’s principal ﬁ nancial instruments comprise identify and analyse the risks faced, to set appropriate of accounts receivable and payable, bank accounts, risk limits and controls, and to monitor risks and loans and overdrafts, investments and ﬁ nance leases. adherence to limits. The Company’s principal ﬁ nancial instruments include these items and intercompany receivables/payables. A ﬁ nance committee consisting of senior executives of the Group meet on a regular basis to analyse ﬁ nancial The main purpose of these ﬁ nancial instruments is to risk exposure and to evaluate treasury management provide operating ﬁ nance to the Group. strategies in the context of the most recent economic conditions and forecasts. It is, and has been throughout the period under review, the Group’s policy that no trading in ﬁ nancial The Executive Management Team’s overall risk instruments shall be undertaken. The Company and the Group have exposure to the following risks from their use of ﬁ nancial instruments management strategy seeks to assist the consolidated Group in meeting its ﬁ nancial targets, whilst minimising potential adverse effects on ﬁ nancial performance. – credit risk, liquidity risk and market risk. This note Risk management policies are approved and reviewed presents information about the exposure to each of by the Board on a regular basis. the above risks. Further quantitative disclosures are included throughout these consolidated ﬁ nancial (b) Market risk statements. Market risk is the risk that changes in market prices, such as foreign exchange rates, share prices and The Board of Directors has overall responsibility for the interest rates will affect income or the value of holdings establishment and oversight of the Company and the of ﬁ nancial instruments. The objective of market Group’s risk management framework. Management risk management is to manage and control market is responsible for developing and monitoring the risk risk exposures within acceptable parameters, while management policies, and reports to the Board. optimising the return. 67 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G 68 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G GBST HOLDINGS LIMITED ABN: 85 010 488 874 Financial Report for the year ended 30 June 2008 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS NOTE 27: FINANCIAL RISK MANAGEMENT (CONTINUED) Interest rate risk The exposure to market risk for the changes in interest rates relates primarily to borrowing obligations. The policy at the present is to manage interest cost using ﬁ xed and variable rate debt. At balance date, the Group had the following mix of ﬁ nancial assets and liabilities exposed to Australian variable interest rate risk. Financial Assets Cash Loans Other Entities Loans Controlled Entities Financial Liabilities Bank Overdraft Bank Loan Loans Controlled Entities GBST Group GBST Holdings 2008 $ 2007 $ 2008 $ 2007 $ 1,491,521 16,074 – 1,507,595 1,362,888 19,000,000 – 20,362,888 15,454,992 33,828 – 15,488,820 – – – – 228,139 16,074 60,650,363 60,894,576 1,362,888 19,000,000 9,728,959 30,091,847 15,454,992 33,828 – 15,488,820 – – – – Lease liabilities have ﬁ xed rates, all other items The Company’s only exposure is for intercompany are variable rate. The exposure to market interest payables of $1,980,938 (2007: $nil). rates relates primarily to long and short term debt obligations. Foreign currency risk Share price risk The Company and Group have an investment in an ASX listed company, IT&e Limited (see Note 9). This is The Group is exposed to ﬂ uctuations in foreign a long term shareholding, however exposure exists to currencies arising from the sale and purchase of goods movements in the market price. and services in currencies other than the Group’s measurement currency. (c) Liquidity risk The Group constantly monitors it’s foreign currency Group will not be able to meet its ﬁ nancial obligations exposure, and consideration is given to alternative as they fall due. The approach to managing liquidity Liquidity risk is the risk that the Company and the hedging positions. At balance sheet date the Group had exposure to movements in the exchange rate for Great Britain Pounds in cash and receivables of $2,505,571 (2007: $nil) and payables of $643,755 (2007: $nil). is to ensure, as far as possible, that there will always be sufﬁ cient liquidity to meet liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company and the Group’s reputation. NOTE 27: FINANCIAL RISK MANAGEMENT (CONTINUED) The Group’s objective is to maintain a balance receivables. In addition, receivables balances are between continuity of funding and ﬂ exibility through monitored on an ongoing basis with the result that the the use of overdrafts, loans and ﬁ nance leases. The Group’s exposure to bad debts is not signiﬁ cant. liquidity risk is managed by monitoring forecast cash ﬂ ows, the collection of trade receivables and payment of trade payables, use of borrowing facilities and ensuring that adequate unutilised borrowing facilities are maintained. (d) Credit risk The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date to recognised ﬁ nancial assets is the carrying amount, net of any provisions for impairment of those assets, as disclosed in the balance sheet and notes to the ﬁ nancial statements. The Company’s and Group’s exposure to credit risk arises from potential default of the counter party, with a maximum exposure equal to the carrying amount of these instruments. Credit risk arises primarily from exposures to customers. The Group trades only with recognised, creditworthy third parties, and as such collateral is not requested nor is it the Group’s policy to securitise it’s trade and other In respect of the parent entity, credit risk also incorporates the exposure of GBST Holdings Limited to the liabilities of all members of the closed Group under the deed of cross–guarantee. Refer to Note 23 for further information. Except for the following concentrations of credit risks, the Group does not have any material credit risk exposure to any single debtor or group of debtors under ﬁ nancial instruments entered into. Approximately 46% (2007: 50%) of the Group’s revenue is derived from ﬁ ve customers. Approximately 57% (2007: 50%) of the company’s revenue is derived from ﬁ ve customers. The carrying amount of the ﬁ nancial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was: 69 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G GBST Group GBST Holdings carrying amount carrying amount 2008 2008 $ $ 2007 $ 2007 $ Cash and cash equivalents Trade and other receivables Other financial assets 1,491,521 9,711,532 1,621,543 12,824,596 15,454,992 3,813,915 781,937 20,050,844 The maximum exposure to credit risk for trade and other receivables at reporting date by geographic region was: Australia UK 7,856,394 1,855,138 9,711,532 3,813,915 – 3,813,915 228,139 64,485,857 1,621,645 66,335,641 66,335,641 – 66,335,641 15,454,992 3,865,371 782,039 20,102,402 3,865,371 – 3,865,371 GBST HOLDINGS LIMITED ABN: 85 010 488 874 Financial Report for the year ended 30 June 2008 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS NOTE 27: FINANCIAL RISK MANAGEMENT (CONTINUED) (e) Financial Instruments (i) Financial instrument composition and maturity analysis: The table below reﬂ ects the undiscounted contractual settlement terms for Group ﬁ nancial instruments of a ﬁ xed period of maturity, as well as management’s expectations of the settlement period for all other ﬁ nancial instruments. As such, the amounts may not reconcile to the balance sheet. GBST Group 0–1 Years 1–2 Years 2–5 Years Over 5 Years Total 08 $ 07 $ 08 $ 07 $ 08 $ 07 $ 08 $ 07 $ 08 $ 07 $ FINANCIAL ASSETS Cash (i) Trade and other receivables Available for sale financial assets TOTAL FINANCIAL ASSETS FINANCIAL LIABILITIES Bank loan and overdraft (i) Lease facilities (ii) 1,491,521 15,454,992 – – 9,711,532 3,797,888 – 16,027 1,621,543 781,937 – – 12,824,596 20,034,817 – 16,027 – – – – – – – – – – – – – 1,491,521 15,454,992 – 9,711,532 3,813,915 – 1,621,543 781,937 – 12,824,596 20,050,844 4,362,888 150,167 – 4,000,000 – 150,167 Trade & other payables 7,033,699 2,186,566 – – 12,000,000 – – – 20,362,888 – – – 130,725 – – – 431,059 – – – – – 7,033,699 2,186,566 TOTAL FINANCIAL LIABILITIES 11,546,754 2,186,566 4,150,167 – 12,130,725 – – – 27,827,646 2,186,566 (i) These items have variable interest rates. (ii) These items have fixed interest rates. All other items are non–interest bearing. 70 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G NOTE 27: FINANCIAL RISK MANAGEMENT (CONTINUED) The table below reﬂ ects the undiscounted contractual settlement terms for Parent Entity ﬁ nancial instruments of a ﬁ xed period of maturity, as well as management’s expectations of the settlement period for all other ﬁ nancial instruments. As such, the amounts may not reconcile to the balance sheet. GBST Holdings 0–1 Years 1–2 Years 2–5 Years Over 5 Years Total 08 $ 07 $ 08 $ 228,139 15,454,992 3,625,303 3,806,384 210,191 42,960 1,621,645 782,039 5,685,278 20,086,375 – – – – – 07 $ – 16,027 – – 16,027 FINANCIAL ASSETS Cash (i) Trade and Other Receivables Amounts Receivable Related Parties Available for Sale Financial Assets TOTAL FINANCIAL ASSETS 08 $ 07 $ 08 $ 07 $ 08 $ 07 $ – – – – – – – – – – 228,139 15,454,992 – 3,625,303 3,822,411 – 60,650,363 – 60,860,554 42,960 – – – 1,621,645 782,039 – 60,650,363 – 66,335,641 20,102,402 FINANCIAL LIABILITIES Bank Loan and overdraft (i) 4,362,888 Lease Facilities (ii) 75,341 – 4,000,000 – 75,341 Trade & Other Payables 2,268,043 2,178,571 Amounts Payable Controlled Entities TOTAL FINANCIAL LIABILITIES 1,980,938 – (i) These items have variable interest rates. (ii) These items have fixed interest rates. All other items are non–interest bearing. – 12,000,000 – – – 73,004 – – – – – – – – – 20,362,888 223,686 – – 2,268,043 2,178,571 – – – 7,748,021 – 9,728,959 – – – 8,687,210 2,178,571 4,075,341 – 12,073,004 – 7,748,021 – 32,583,576 2,178,571 71 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G GBST HOLDINGS LIMITED ABN: 85 010 488 874 Financial Report for the year ended 30 June 2008 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 72 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G NOTE 27: FINANCIAL RISK MANAGEMENT (CONTINUED) (ii) Net fair values at market interest rates of similar items, to their present The fair value of investments traded on active liquid value. No ﬁ nancial assets and ﬁ nancial liabilities are markets is determined with reference to quoted readily traded on organised markets in standardised market prices. form other than listed investments. Term receivables and other loans and amounts due Financial assets where the carrying amount exceeds are determined by discounting the cash ﬂ ows, at net fair values have not been written down as the market interest rates of similar items, to their present Group intends to hold these assets to maturity. value. Other ﬁ nancial assets and ﬁ nancial liabilities net fair value approximates their carrying value. Loans payable are determined by discounting the cashﬂ ow Aggregate net fair values and carrying amounts of ﬁ nancial assets and ﬁ nancial liabilities at balance date. Financial Assets Cash and cash equivalents Trade and other receivables Available–for–sale Financial Assets at fair value Financial liabilities Trade and payables Bank loans and overdrafts Lease facilities 2008 2007 Carrying amount $ Net fair value $ Carrying amount $ Net fair value $ 1,491,521 9,711,532 1,621,543 12,824,596 7,033,699 20,362,888 382,763 27,779,350 1,491,521 9,711,532 1,621,543 12,824,596 7,033,699 20,362,888 382,763 27,779,350 15,454,992 15,454,992 3,813,915 781,937 3,813,915 781,937 20,050,844 20,050,844 2,186,566 2,186,566 – – – – 2,186,566 2,186,566 Fair values are materially in line with carrying values. A discount rate of 8.66% (2007: nil%) has been applied to all non–current borrowings to determine fair value. NOTE 27: FINANCIAL RISK MANAGEMENT (CONTINuEd) (iii) Sensitivity analysis Interest Rate Risk, Foreign Currency Risk and Price Risk The Group has performed sensitivity analysis relating to its exposure to interest rate risk, foreign currency risk and price risk at balance date. This sensitivity analysis demonstrates the effect on the current year results and equity which could result from a change in these risks. Interest rate sensitivity analysis At 30 June 2008, the net effect on full year profit and equity as a result of changes in the interest rate on variable rate financial instruments, with all other variables remaining constant would be as follows: GBST Group 2008 $ 2007 $ GBST Holdings 2008 $ 2007 $ Change in profit Increase in interest rate by 1% Decrease in interest rate by 1% Change in Equity Increase in interest rate by 1% Decrease in interest rate by 1% (203,629) 146,000 (203,629) 146,000 203,629 (146,000) 203,629 (146,000) (203,629) 203,629 146,000 (146,000) (203,629) 203,629 146,000 (146,000) Foreign currency risk sensitivity analysis At 30 June 2008, the effect on profit and equity as a result of changes in the value of the Australian Dollar to the Great British Pound, with all other variables remaining constant is as follows: GBST Group 2008 $ 2007 $ GBST Holdings 2008 $ 2007 $ Change in profit Improvement in AUD to GBP by 10% Decline in AUD to GBP by 10% Change in Equity Improvement in AUD to GBP by 10% Decline in AUD to GBP by 10% Price risk 191,375 (191,375) 191,375 (191,375) – – – – 198,094 – (198,094) – 198,094 – (198,094) – At 30 June 2008 the net effect on profit and equity of a 1 cent change in the Group’s and the company’s listed investment, with all other variables remaining constant is $438,255 up\down (2007: $55,656 up\down). 73 8 0 0 2 t r o p e R l a u n n A d e T i m i l i S G n d l o H T S B G GBST HOLDINGS LIMITED ABN: 85 010 488 874 Financial Report for the year ended 30 June 2008 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS NOTE 28: CONTINGENT LIABILITIES GBST has with its clients a variety of software supply Under the terms of a Deed of Cross Guarantee agreements, each of which contain service and described in Note 23, the Company has guaranteed performance warranties and indemnities. These the repayment of all current and future creditors in the warranties and indemnities are of the standard type event of any of the entities party to the Deed being used in the industry. wound up. No deﬁ ciency in net assets exists in these companies at reporting date. Contingent liabilities considered remote: Guarantees During the year the company entered into a Deed of Cross Guarantee under which the company and its subsidiaries guarantee the debts of each other. NOTE 29: KEY MANAGEMENT PERSONNEL DISCLOSURES (a) Names and positions held of Group and company key management personnel in ofﬁ ce at any time during the ﬁ nancial year are: Key Management Person Position J Puttick D Adams A Brackin S Lake D Shirley J Sundell Director (Non–executive Chairman) Director (Independent) (appointed 1 April 2008) Director (Independent) Director (Managing Director and Chief Executive Ofﬁ cer) Director (Independent) (resigned 29 April 2008) Director (Non–executive) R De Dominicis Chief Executive Wealth Management (appointed 31 August 2007) P Fowler P Salis I Sanchez K Sprott K Wallis Head of Product and Client Services (resigned 7 February 2008) Chief Financial Ofﬁ cer (appointed 1 October 2007) Chief Technology Ofﬁ cer (appointed 3 March 2008) Human Resource Executive Chief Financial Ofﬁ cer (resigned 12 October 2007) 74 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G NOTE 29: KEY MANAGEMENT PERSONNEL DISCLOSURES CONTINUED (b) Key management personnel compensation GBST Group 2008 $ 2007 $ GBST Holdings 2008 $ 2007 $ Short–term employee benefits Post–employment benefits Other long–term benefits Share–based payments 2,046,717 107,265 32,308 8,488 2,194,778 1,844,343 123,578 28,802 – 1,966,723 979,149 47,126 32,308 5,349 1,063,932 1,844,343 123,578 28,802 – 1,966,723 Detailed disclosures on compensation for key management personnel are set out in the Remuneration Report included in the Directors’ Report. (c) Equity instrument disclosures relating to key management personnel Details of options provided as compensation and shares issued on the exercise of such options, together with terms and conditions of the options, can be found in the remuneration report section of the Directors’ Report. (d) Shareholdings The numbers of shares in the Company held (directly, indirectly or beneﬁ cially) during the ﬁ nancial year by key management personnel, including their related parties, are set out below. 75 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G Directors J Puttick D Adams A Brackin S Lake D Shirley J Sundell GBST ESOP Pty Ltd as trustee (ii) Total Directors Executives R De Dominicis P Fowler P Salis I Sanchez K Sprott K Wallis Total Executives Group Total Balance at 1/7/07 Received as compensation Options exercised Net change other (i) Balance at 30/06/08 7,667,760 – 169,241 3,867,428 – 14,336,053 36,844 26,077,326 – – – – – 132,578 132,578 26,209,904 – – – – – – – – – – – – – – – – – – – – – – – – – – – – – 1,332 1,332 1,332 – – 62,702 (216,005) – 1,081,552 (36,844) 7,667,760 – 231,943 3,651,423 – 15,417,605 – 891,405 26,968,731 1,780,996 – – – – (133,910) 1,647,086 2,538,491 1,780,996 – – – – – 1,780,996 28,749,727 (i) Shares purchased or sold, consideration for shareholdings purchased by Group, or excluded from disclosure due to resignation. (ii) Shares held as trustee for the ESOP Trust (refer Note 31). GBST HOLDINGS LIMITED ABN: 85 010 488 874 Financial Report for the year ended 30 June 2008 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 76 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G NOTE 29: KEY MANAGEMENT PERSONNEL DISCLOSURES (CONTINUED) (e) Option holdings The numbers of options in the Company held (directly, indirectly or beneﬁ cially) during the ﬁ nancial year by key management personnel, including their related parties, are set out below. Balance 01.07.07 Granted as compensation Options exercised or sold Options cancelled/ forfeited Balance 30.06.08 Total Vested 30.06.08 Total exercisable 30.06.08 Total unexercisable 30.06.08 Directors J Puttick D Adams A Brackin S Lake D Shirley J Sundell Total Directors Executives R De Dominicis P Fowler P Salis I Sanchez K Sprott K Wallis Total Executives Group Total – – – – – – – – 100,000 – – – 1,332 101,332 101,332 – – – 500,000 – – 500,000 – 100,000 100,000 – 100,000 120,000 420,000 920,000 – – – – – – – – – – – – – – – – – – – – (100,000) – – – (1,332) (120,000) (1,332) (1,332) (220,000) (220,000) – – – 500,000 – – 500,000 – 100,000 100,000 – 100,000 – 300,000 800,000 – – – – – – – – – – – – – – – – 100,000 100,000 – – – – – – – – 100,000 100,000 100,000 100,000 – – – 500,000 – – 500,000 – – 100,000 – 100,000 – 200,000 700,000 NOTE 30: RELATED PARTY TRANSACTIONS Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated. (a) Transactions with Directors and key management personnel GBST Group 2008 $ 2007 $ GBST Holdings 2008 $ 2007 $ Compensation and equity interests are set out in Note 29. Occupancy fees paid to entities of which Mr R De Dominicis has a beneficial interest. Maximum deferred consideration payable on InfoComp acquisition to Mr R De Dominicis and associates. (b) Transactions with controlled entities 299,554 250,000 – – – – – – Details of transactions & balances with controlled entities are set out in Notes 2, 3, 7, 13 & 23. NOTE 31: SHARE BASED PAYMENTS On 9 March 2005, GBST established the GBST The Trust is treated as a special purpose entity and Employee Option Plan. The plan comprised two sub– consolidated. The trust’s shareholding in the company schemes, being an Exempt Options Scheme for staff has been disclosed as treasury shares and deducted generally and a Deferred Options Scheme for select from equity (refer Note 19). staff and eligible Directors. During the year two further schemes were established, an Exempt Shares Plan and a Zero Exercise Price Option Scheme. A total of 1,002,178 (2007: 481,376) share options remain outstanding at 30 June 2008 under these schemes. Exempt Options Scheme Under this Scheme employees were offered the right to acquire $1,000 worth of shares in GBST. There was no performance or vesting criteria which needed to be satisﬁ ed before employees had the beneﬁ t from GBST ESOP Pty Ltd, in its capacity as trustee of the holding the share options. Divestiture of the shares is GBST Employee Share Trust, holds shares in GBST restricted for a period of 3 years, subject to cessation for subsequent allocation under the GBST Employee of employment. No share options were granted during Option Plan. During the year ended 30 June 2008, the year under this scheme (2007: nil), and 23,976 36,844 (2007: 2,332,336) shares were issued from share options (2007: 134,532) remain outstanding at the trust to meet the exercise of employee options. 30 June 2008. The options lapse on 8 March 2010. GBST ESOP Pty Ltd held nil shares in GBST at 30 June 2008 (2007: 36,844). 77 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G GBST HOLDINGS LIMITED ABN: 85 010 488 874 Financial Report for the year ended 30 June 2008 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 78 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G NOTE 31: SHARE BASED PAYMENTS (CONTINUED) Deferred Options Scheme During the year the board exercised its discretion to Under this Scheme select staff are made individual issue additional options under the company’s deferred offers of speciﬁ c numbers of share options at the option scheme. The following further grants were discretion of the Board. The Board may determine made under this scheme. the number of share options, issue price, vesting conditions, vesting period, exercise price and expiry date. Share options may be granted at any time, On 31 July 2007, 420,000 options were issued to select executive employees. The exercise price for subject to the Corporations Act and ASX Listing Rules. each option is $3.92. At the beginning of the year there were three separate issues of options outstanding under this scheme, and On 24 October 2007, 100,000 options were issued to select executive employees. The exercise price for a total of 346,844 options were outstanding. During each option is $3.92. the year in respect two of those issues, 159,344 options were exercised and no further options were outstanding. The status of the third issue under this scheme at 30 June 2008 is as follows: On 5 December 2005, 240,000 options were granted to staff in connection with the acquisition of the Palion business unit. The options have an exercise price of $1.25. The share options were granted in two equal tranches. Each tranche includes performance criteria relating to continued employment with GBST and ﬁ nancial hurdles as summarised below. During the year 87,500 options were exercised and 100,000 options remain outstanding at balance date. The options lapsed on 19 July 2008. On 24 October 2007, 100,000 options were issued to select executive employees. The exercise price for each option is $3.80. These deferred options are divided into three tranches. The ﬁ rst tranche of 20% vest and may be exercised after 12 months and lapse if unexercised in 36 months. The second tranche of 30% vest and may be exercised after 24 months and lapse if unexercised in 48 months. The third tranche of 50% vest and may be exercised after 36 months and lapse if unexercised after 60 months. On cessation of employment all unvested options lapse. In addition to continuity of employment, the vesting of options is conditional upon the company’s ﬁ nancial growth rate exceeding certain thresholds. NOTE 31: SHARE BASED PAYMENTS (CONTINUED) Executive options Employee share option plan zero exercise price The shareholders of the company at the 2007 annual option scheme general meeting approved the issue of 500,000 options to the company’s Chief Executive Ofﬁ cer and this occurred on 19 December 2007. The exercise price for each option is $3.85. The options vest 18 months after the date of grant. The options have a term of 24 months from the date of grant. On cessation of Under this scheme select staff are made individual offers of speciﬁ c numbers of share options at the discretion of the Board. There is no price to be paid to exercise the options and convert the options into shares but the options cannot be exercised until continuity of employment all unvested options lapse. employment tests have been passed. The executive options are subject to ﬁ nancial performance measures being met. Exempt shares plan 85,894 Zero exercise price options (ZEPOs) were granted on 20 July 2007. The ZEPOs are divided into three tranches. The ﬁ rst tranche of 20% vest and may be exercised after 12 months and lapse if Under this plan employees were offered $1,000 unexercised in 36 months. The second tranche of worth of ordinary shares. There was no payment or 30% vest and may be exercised after 24 months and performance criteria that was required to be met prior lapse if unexercised in 48 months. The third tranche of to receiving the shares. Divestiture of the shares is 50% vest and may be exercised after 36 months and restricted to the earlier of 3 years from the date of issue lapse if unexercised after 60 months. On cessation of of the shares and cessation of employment. 27,432 employment all unvested options lapse. shares were issued under the exempt scheme. At the company’s 2007 annual general meeting the issue of these shares was ratiﬁ ed and the exempt employee share plan was approved by shareholders. At the company’s 2007 annual general meeting the issue of these ZEPOs was ratiﬁ ed and the Employee Share Option Plan Zero Exercise Price Option Scheme was approved by shareholders. 79 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G GBST HOLDINGS LIMITED ABN: 85 010 488 874 Financial Report for the year ended 30 June 2008 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS NOTE 31: SHARE BASED PAYMENTS (CONTINUED) The performance criteria associated with each grant of share options made under the Deferred Options Scheme Continued employment until Performance criteria financial performance hurdle 80 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G is summarised below: Grant date 5 December 2005 Tranche 1 31 October 2007 Tranche 2 31 October 2008 31 July 2007 Tranche 1 (20%)* 31 July 2008 Tranche 2 (30%)* 31 July 2009 Tranche 3 (50%)* 31 July 2010 24 October 2007 Tranche 1 (20%)* 24 October 2008 Targeted growth of 15% or greater in GBST’s normalised earnings per share for the year ended 30 June 2007. The target growth percentage is moderated against relative increases or decreases in ASX trading volumes. Either; • The annual percentage growth in earnings before interest, tax, depreciation and amortisation (EBITDA) for the year ended 30 June 2008 meets or exceeds 25%, or • The annual percentage growth in earnings per share for the year ended 30 June 2008 meets or exceeds 15%. If normalised EPS CAGR for 2008 compared to 2007 is: • Less than 10%: no options vest • Equal to 10%: 33.33% of options vest • Greater than 10% but less than 20%: pro rated vesting between 33.33% and 100% • Equal to or greater than 20%: 100% vesting. If normalised EPS CAGR for the combined 2008 and 2009, compared to 2007 is: • Less than 10%: no options vest • Equal to 10%: 33.33% of options vest • Greater than 10% but less than 20%: pro rated vesting between 33.33% and 100% • Equal to or greater than 20%: 100% vesting. If normalised EPS CAGR for the combined 2008, 2009 and 2010, compared to 2007 is: • Less than 10%: no options vest • Equal to 10%: 33.33% of options vest • Greater than 10% but less than 20%: pro rated vesting between 33.33% and 100% • Equal to or greater than 20%: 100% vesting. If normalised EPS CAGR for 2008 compared to 2007 is: • Less than 10%: no options vest • Equal to 10%: 33.33% of options vest • Greater than 10% but less than 20%: pro rated vesting between 33.33% and 100% • Equal to or greater than 20%: 100% vesting. 81 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G NOTE 31: SHARE BASED PAYMENTS (CONTINUED) Grant date Continued employment until 24 October 2007 continued Tranche 2 (30%)* 24 October 2009 Tranche 3 (50%)* 24 October 2010 24 October 2007 Tranche 1 (20%)* 24 October 2008 Tranche 2 (30%)* 24 October 2009 Tranche 3 (50%)* 24 October 2010 19 December 2007 19 June 2009 Performance criteria financial performance hurdle If normalised EPS CAGR for the combined 2008 and 2009, compared to 2007 is: • Less than 10%: no options vest • Equal to 10%: 33.33% of options vest • Greater than 10% but less than 20%: pro rated vesting between 33.33% and 100% • Equal to or greater than 20%: 100% vesting. If normalised EPS CAGR for the combined 2008, 2009 and 2010, compared to 2007 is: • Less than 10%: no options vest • Equal to 10%: 33.33% of options vest • Greater than 10% but less than 20%: pro rated vesting between 33.33% and 100% • Equal to or greater than 20%: 100% vesting. If normalised EPS CAGR for 2008 compared to 2007 is: • Less than 10%: no options vest • Equal to 10%: 33.33% of options vest • Greater than 10% but less than 20%: pro rated vesting between 33.33% and 100% • Equal to or greater than 20%: 100% vesting. If normalised EPS CAGR for the combined 2008 and 2009, compared to 2007 is: • Less than 10%: no options vest • Equal to 10%: 33.33% of options vest • Greater than 10% but less than 20%: pro rated vesting between 33.33% and 100% • Equal to or greater than 20%: 100% vesting. If normalised EPS CAGR for the combined 2008, 2009 and 2010, compared to 2007 is: • Less than 10%: no options vest • Equal to 10%: 33.33% of options vest • Greater than 10% but less than 20%: pro rated vesting between 33.33% and 100% • Equal to or greater than 20%: 100% vesting. The Company’s financial performance in the financial year ending 30 June 2008 is when measured at the Earnings per Share level 20% greater in the financial year ending 30 June 2008 when compared to the financial year ending 30 June 2007. * If the performance condition for Tranche 1 is not met at the first exercise date, then 50% of those options lapse and 50% are rolled into Tranche 2. If the performance condition for Tranche 2 is not met at the first exercise date for Tranche 2, then 50% of those options lapse and 50% are rolled into Tranche 3. If the performance condition for Tranche 3 is not met at the first exercise date for Tranche 3, then all remaining options will lapse. EPS – Earnings per share CAGR – Compound average growth rate GBST HOLDINGS LIMITED ABN: 85 010 488 874 Financial Report for the year ended 30 June 2008 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS NOTE 31: SHARE BASED PAYMENTS (CONTINUED) The following table illustrates the number (No.), weighted average exercise price (WAEP) and movement in share options under these schemes issued during the period. Outstanding at the beginning of the period Granted during the period Forfeited during the period Exercised during the period Expired during the period Outstanding at the end of the period Exercisable at the end of the period Jun 2008 No. Jun 2008 WAEP Jun 2007 No. Jun 2007 WAEP 481,376 1,205,894 327,692 357,400 – 1,002,178 123,976 $0.92 $3.60 $3.83 $0.88 – $3.21 $1.01 3,911,932 – 52,658 3,377,898 – 481,376 111,844 $0.80 – $1.28 $0.77 – $0.92 $1.27 The options outstanding at 30 June 2008 had a weighted average exercise price of $3.21 and a weighted average remaining contractual life of 19 months. The exercise price for share options outstanding under the Exempt and Zero Exercise Price Options Schemes is nil, the exercise prices for share options outstanding under the Deferred Options Scheme and Executive Scheme range from $1.25 to $3.92 in respect of options outstanding at 30 June 2008. The expense recognised in the income statement in relation to share–based payments is disclosed in Note 3. No person entitled to exercise any option had or has any right by virtue of the option to participate in any share issue of any other body corporate. 82 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G NOTE 32: EARNINGS PER SHARE Basic earnings per share (cents) Diluted earnings per share (cents) (a) Reconciliation of earnings to Net Profit or Loss Net Profit Earnings used in the calculation of basic EPS Earnings used in the calculation of dilutive EPS (b) Weighted average number of ordinary shares Weighted average number of ordinary shares outstanding during the year used in calculation of basic EPS Weighted average number of options outstanding or exercised during the year (i) Weighted average number of ordinary shares outstanding during the year used in calculation of dilutive EPS GBST Group 2008 GBST Group 2007 12.44 12.37 $ 6,131,695 6,131,695 6,131,695 18.11 17.77 $ 8,021,396 8,021,396 8,021,396 49,308,236 44,302,441 268,810 846,643 49,577,046 45,149,084 (i) Options issued under the GBST Employee Option Plan are not included in the basic or dilutive EPS to the extent that the issue of shares is contingent upon future events and, as at reporting date, conditions which would result in the issue of shares had not been obtained (refer to Note 31). NOTE 33: SUBSEQUENT EVENTS The directors recommend a ﬁ nal dividend of The ﬁ nancial report was authorised for issue on 4.0 cents per share to be paid to the holders of fully 29 August 2008 by the board of directors. paid ordinary shares on 26 September 2008. The total amount of the dividend will approximate $2.0 million. The dividend has not been provided for in the ﬁ nancial statements. As outlined in the Future Developments section of the Directors’ Report, the company is actively pursuing opportunities to expand. Other than for the impact (if any) of these prospects, no matters or circumstances Since balance date the group has incorporated three have arisen since the end of the ﬁ nancial year which wholly owned subsidiaries in the UK. signiﬁ cantly affected or may signiﬁ cantly affect the operations of GBST, the results of those operations, or the state of affairs of GBST in future ﬁ nancial years. 83 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G 84 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G GBST HOLDINGS LIMITED ABN: 85 010 488 874 Financial Report for the year ended 30 June 2008 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS NOTE 34: CHANGE IN ACCOUNTING POLICY The following Australian Accounting Standards have been issued or amended and are applicable to the parent and Group but are not yet effective. They have not been adopted in preparation of the ﬁ nancial statements at reporting date. AASB Amendment AASB Standard affected Nature of change in accounting policy and impact Application date of the Standard Application date for the Group 1.1.2009 1.7.2009 The disclosure requirements of AASB 114: Segment Reporting have been replaced due to the issuing of AASB 8: Operating Segments in February 2007. These amendments will involve changes to segment reporting disclosures within the financial report. However, it is anticipated there will be no direct impact on recognition and measurement criteria amounts included in the financial report. AASB 2007–3 Amendments to Australian Accounting Standards AASB 5: Non–current Assets Held for Sale and Discontinued Operations AASB 6: Exploration for and Evaluation of Mineral Resources AASB 102: Inventories AASB 107: Cash Flow Statements AASB 119: Employee Benefits AASB 127: Consolidated and Separate Financial Statements AASB 134: Interim Financial Reporting AASB 136: Impairment of Assets 1.1.2009 1.1.2009 1.7.2009 1.7.2009 AASB 8 Operating segments AASB 114: Segment Reporting As above AASB 2007–6 Amendments to Australian Accounting Standards AASB 1: First time adoption of AIFRS AASB 101: Presentation of Financial Statements AASB 107: Cash Flow Statements AASB 116: Property, Plant and Equipment AASB 138: Intangible Assets The revised AASB 123: Borrowing Costs issued in June 2007 has removed the option to expense all borrowing costs. This amendment will require the capitalisation of all borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset. However, there will be no direct impact to the amounts included in the financial Group as they already capitalise borrowing costs related to qualifying assets. AASB 123 Borrowing costs AASB 123 Borrowing Costs As above AASB 2007–8 Amendments to Australian Accounting Standards AASB 101: Presentation of Financial Statements The revised AASB 101: Presentation of Financial Statements issued in September 2007 requires the presentation of a statement of comprehensive income and makes changes to the statement of changes in equity. 1.1.2009 1.1.2009 1.7.2009 1.7.2009 AASB 101 AASB 101: Presentation of Financial Statements As above 1.1.2009 1.7.2009 NOTE 35: COMPANY DETAILS The registered ofﬁ ce of the company is: GBST Holdings Limited c/- McCullough Robertson Level 11, Central Plaza Two 66 Eagle Street Brisbane QLD 4000 The Group’s principal places of business are: 5 Cribb Street Milton QLD 4064 Suite 1, Level 26 259 George Street Sydney NSW 2000 Level 2 63 Market Street Wollongong NSW 2530 Suite 102 150 Minories London 85 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G 86 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G 87 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G ADDITIONAL INFORMATION Shareholding Information as at 5 September 2008 (e) 20 Largest Shareholders – Ordinary Shares (a) Distribution of Shareholders Name Category (size of holding) Number ordinary No of ordinary shares % Held of Issued Ordinary Capital 1 CROWN FINANCIAL PTY LTD 14,571,605 28.96% 2 MR JOHN FRANCIS PUTTICK 5,010,440 9.96% 88 8 0 0 2 t r o p e R l a u n n A D E T I M I L I S G N D L O H T S B G 1 to 1,000 1,001 to 5,000 5,001 to 10,000 10,001 to 100,000 100,001 and over 179 403 169 175 34 (b) The number of shareholdings in less than marketable parcels is 116 (c) The names of the substantial shareholders listed in the company’s register are: Shareholder Number ordinary Crown Financial Pty Ltd 15,400,605 John Francis Puttick Perpetual Limited 7,667,760 7,480,506 Stephen Maurice Linton Lake 3,567,428 (d) Voting rights The company only has ordinary shares on issue. There are 50,308,524 ordinary shares on issue. 3 4 5 6 7 8 9 RBC DEXIA INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED STEPHEN MAURICE LINTON LAKE RBC DEXIA INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED GERALDINE ANN MAUNDER & JOHN FRANCIS PUTTICK NATIONAL NOMINEES LIMITED ROBERT DE DOMINICIS RAYMOND TUBMAN 10 BARRY BECAREVIC 11 COGENT NOMINEES PTY LIMITED 12 WANGARUKA HOLDINGS PTY LTD 13 TIMENOW PTY LTD 14 MR JOHN FRANCIS PUTTICK & MS GERALDINE ANN MAUNDER 15 BERISLAV BECAREVIC & IVANKA BECAREVIC 520,783 16 J P MORGAN NOMINEES AUSTRALIA LIMITED 480,809 17 MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED 4,643,781 3,567,428 9.23% 7.09% 2,249,240 4.47% 2,000,000 1,467,865 1,061,758 1,061,758 872,408 807,213 709,238 709,238 657,320 343,285 300,000 248,000 3.98% 2.92% 2.11% 2.11% 1.73% 1.60% 1.41% 1.41% 1.31% 1.04% 0.96% 0.68% 0.60% 0.49% 248,000 0.49% Each ordinary share is entitled to one vote when a poll is called, otherwise each member present at a meeting or by proxy has one vote on a show of hands. 18 TPIC PTY LIMITED 19 BOGASI PTY LTD 20 BOGASI PTY LTD CORPORATE DIRECTORY REGISTERED OFFICE c/- McCullough Robertson, Lawyers Level 11, Central Plaza Two 66 Eagle Street Brisbane QLD 4000 SHARE REGISTRY Link Market Services Level 12, 300 Queen Street Brisbane QLD 4000 Ph 02 8280 7454 STOCK EXCHANGE LISTING GBST Holdings Limited shares are quoted on the Australian Stock Exchange under the code GBT. VOLUNTARY RESTRICTIONS Details of shares that are held in voluntary escrow: Ordinary fully paid shares escrowed until 31 August 2009: 1,645,061 Ordinary fully paid shares escrowed until 31 August 2010: 1,645,061 UNQUOTED SECURITIES A total of 789,105 options are on issue to 57 employees under the GBST Holdings Limited Employee Option Plan. AUDITORS Hayes Knight Audit (Qld) Pty Ltd Level 19, 127 Creek Street Brisbane QLD 4000 Ph 07 3229 2022 Fax 07 3229 3277 Ph 07 3233 8888 Fax 07 3229 9949 PRINCIPAL PLACE OF BUSINESS 5 Cribb Street Milton QLD 4064 Ph 07 3331 5555 Fax 07 3367 0181 www.gbst.com POSTAL ADDRESS PO Box 1511 Milton QLD 4064 DIRECTORS John Francis Puttick Stephen Maurice Linton Lake Joakim James Sundell Allan James Brackin David Campbell Adams COMPANY SECRETARIES David Michael Doyle John Francis Puttick GBST is a leading provider of securities transaction and fund administration software for the ﬁ nancial services industry. GBST builds, owns and manages software products and we provide support for our customers who use these products. We are focused on earning our revenue from the ﬁ nancial services sector and aim to use technology applications to earn recurring revenue from areas such as transactions processing, reporting, account management, books and records, data and content. GBST Broker Services division is Australia’s leading provider of client accounting and securities transaction technology. Capital market participants such as banks, clearing houses, custodians, fund managers, margin lenders and institutional and retail stockbrokers use GBST’s specialist market access and transaction solutions to process up to $130 billion of ASX trades every month. GBST doubled in size in August 2007 with the purchase of InfoComp, a specialist provider of wealth management software. GBST Wealth Management division is now the leading provider of funds administration and registry software to the Australian wealth management industry. It offers an integrated system for the administration of wrap platforms, master trusts, superannuation, pensions, risk and debt. GBST’s wealth management software administers funds valued at more than $150 billion in Australia and the United Kingdom. CONTENTS Highlights Chairman’s and Managing Director’s report Financial report Corporate governance statement 1 2 7 8 Directors’ report Financial statements Independent auditor’s report Additional information Corporate directory 13 30 86 88 89 NOTICE OF AGM The Annual General Meeting of GBST Holdings Limited will be held at: McCullough Roberston Level 11, Central Plaza Two 66 Eagle Street, Brisbane on Thursday 23 October at 12.30pm. Technology for Financial Markets G B S T H O L D N G S I L I M I T E D A n n u a l R e p o r t 2 0 0 8 www.gbst.com annual report 2008

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