Hansen Technologies Limited
Annual Report 2010

Plain-text annual report

ANNUAL REpORT 0 1 0 FLEXIBLE SOLUTIONS 2 1 Hansen Technologies Limited ABN 90 090 996 455 CONTENTS 02 Highlights 03 Chairman and Chief Executive Officer Joint Report 07 Information on Directors and Company Secretary 09 Directors’ Report 18 Financial Statements and Notes 19 Consolidated Statement of Comprehensive Income 20 Consolidated Statement of Financial Position 21 Consolidated Statement of Changes in Equity 22 Consolidated Statement of Cash Flows 23 Notes to the Financial Statements 52 Directors’ Declaration 53 Independent Auditor’s Report 55 Corporate Governance 65 ASX Additional Information NOTICE OF ANNUAL GENERAL MEETING The Annual General Meeting of the Company is to be held on Thursday 25th November 2010 at 11.00am at 2 Frederick Street, Doncaster, Victoria 3108. A separate Notice of Meeting and Proxy Form are included with this report. COMpANY pROFILE Hansen Technologies is a leading independent provider of billing, customer care, and IT solutions. Hansen’s billing software is used by companies in the telecommunications, electricity, gas, and water industries. Hansen also provides facilities management and IT services from its purpose-built data centres in Melbourne, as well as superannuation administration software. The Company prides itself on long-term relationships with its customers, many of whom have renewed their contracts several times. We have an experienced management team, supported by highly capable business and technical experts who have extensive industry knowledge. Founded in 1971, Hansen has offices in Australia, New Zealand, the United States, and the United Kingdom and employs more than 250 people. HIGHLIGHTS $11.1 million after-tax profit EBITDA percentage of revenue 30% Fully-franked dividends totalling 5 cents per share for the fiscal year Increase in performance from ongoing operations Earnings per share - 7.2 cents Operating revenue $57.8 million Net tangible assets per share at 30 June 2010 - 13.8 cents 6% EBITDA $17.2 million 20% After-tax profit $11.1 million 37% s t h g i l h g H i 2 CHAIRMAN AND CHIEF EXECUTIVE OFFICER jOINT REpORT We are again pleased to be able to report on a very positive year for Hansen representing the 4th year of consecutive year on year growth in operational performance with: Earnings after tax of 7.2 cents per share Earnings before Interest, Taxation, Depreciation and Amortisation (EBITDA) as a % of revenue reaching 30%, and The annual dividend has been maintained at 5 cents per share fully franked, representing a 70% distribution of after tax profit. We have successfully negotiated our way through the global economic instability which has impacted the world over the past two years and emerged with stronger and improved operating efficiencies as well as a fundamentally strengthened business and underlying net asset base. During the period April 2009 to January 2010 we conducted a share buy back programme which proved to be a positive support for our business even though it did not result in a large volume of shares actually being acquired, 211,418 in total. In addition in recognition of the tightly held nature of the Company’s shareholding and on the advice of E.L. & C. Baillieu the Hansen family agreed to sell 5.5%, ( 5,700,000 shares) of their shareholding in the Company to increase the liquidity of Hansen shares and to introduce a larger spread of investors to the Hansen share register. As a result we now have a larger number of active shareholders and there has been substantially increased interest and trading activity in our shares over recent months. This past year we have achieved a heightened awareness of Hansen in the investment community. Our improving operating performance and strong dividend distribution have generated a significant rise in our share price over the year. The increase from 40 cents per share back in June 2009 to the mid 70 cents per share in September 2010 has resulted in the market capitalization of our Company rising from $ 62 million at June 2009 to $110 million plus today, a rise of 75% plus. We have been able to readily fund our business growth, launch a number of sales and marketing initiatives and distribute healthy franked dividends while maintaining a strong liquid asset position. Our Net Tangible Asset backing per share has risen 28% to 13.8 cents per share. We have retained a core base of cash reserves sufficient to fund our business initiatives and geographic sales expansion plans for the current year and we are well positioned to execute on and fund strategic growth utilising in house cash resources, third party debt and additional equity as required. In Fiscal 2010 we successfully invested in and delivered on a number of key initiatives: Enhancing the operational efficiency of our software development processes and project delivery capabilities to reduce development cycles and support costs and maintain our admirable record of on budget delivery of new project implementations In response to the evolutionary technology advances occurring within the Energy markets world wide, we have completed the development of our Meter Data Management (MDM) solution software to accommodate the demanding requirements of smart/interval meters and Smart Grid initiatives. We have also successfully bench marked our MDM solutions to a linear performance of a world class standard of 1 million multi registered interval meters being processed within a one hour window. We installed our software solution to handle complex time of use meter billing at four customer locations in three separate countries. As a result our capabilities in this space are clearly demonstrable. We have invested in growing our Sales and Marketing capacity and capabilities in both the Energy and Telecommunications markets. We have recruited a new Sales Director and additional sales personnel. We have conducted analysis on the world market demand for our products and services and as a result we are investing in those defined markets where we are confident we have an identified market value proposition.  We have established a corporate presence and partner relationships in India on the basis that this country is in the process of a major government funded programme to enhance electricity consumption management. New Billing and Customer Information System solutions are an integral part of this initiative. We are continuing to evaluate the optimum consortium relationships for responding to these opportunities so that we may optimise our return on investment in this market. We have continued to investigate compatible businesses in our market space around the world with the objective of delivering on our objective of strategic growth through acquisition. Although we have not as yet closed the deal on a desirable purchase we have been disciplined in the process we followed and we have had the strength to walk away when the business or the acquisition terms were not right for us. 2009/10 FINANCIAL pERFORMANCE Despite the unsettled global economic conditions we have again been able to grow our business and maintain the fundamental strength of our underlying asset value. Operational Revenue for the year was $ 57.8 Million, an increase for ongoing operations of 6% over the previous year. EBITDA (Earnings before Interest, Tax Depreciation and Amortisation) of $17.2 million was a 20% increase on the previous year. EBITDA as a percentage of revenue continues to be a key measurement of performance and at 30% our business is performing at or above industry standards. Profit after tax of $11.1 million represents a 37% ($3 Million) increase on the prior year. ACqUISITIONS With the benefits of recent acquisitions now demonstrable and our managements’ ability to acquire and integrate a major acquisition having been successfully confirmed, we have been actively pursuing further opportunities to grow our business through business acquisition. This year we have evaluated a number of prospective targets and undertaken due diligence on a select few. We have identified a short list of genuine prospects deemed desirable for reasons associated with product or industry compatibility and/or which represent geographic expansion opportunities for our business as a whole. We are firmly committed to growing our IT business through strategic expansion. We have the internal cash resources as well as access to both external debt and shareholder funding which are collectively sufficient to provide the formulae we will need to support the size of the acquisitions being contemplated. OUR pEOpLE At Hansen we are blessed with a team of true professionals comprised of industry leading experts in our areas of influence. Our Company’s strength is founded on our people and it is their positive attitude and commitment that represents a significant market differentiation for Hansen. On behalf of the Board of Directors and shareholders we wish to record our appreciation to our dedicated employees for their efforts over the past year and strong commitment to our Corporate goals. In respect of this year’s operational performance shareholders received in March 2010 an interim fully franked dividend of 2 cents per share. Following the release of the full year’s results the Director’s declared a final fully franked dividend of 3 cents per share, paid to shareholders on 27 September 2010. This year’s total distribution to shareholders of a 5 cent per share dividend is the third consecutive year of consistent dividend distribution. 8 7 8 8 KEY INDICATORS FROM CONTINUING OPERATIONS KEY INDICATORS FROM CONTINUING OPERATIONS KEY INDICATORS FROM CONTINUING OPERATIONS 20 15 10 5 0 s n o i l l i M $ 20 15 10 5 0 s n o i l l i M $ 2010 20 15 10 5 s n o i l l i M $ 2008 Financial Year 2009 2009 2010 r e c fi f O i f e h C d n a n a m r i a h C m o r f t r o p e R t n o J i 4 8 7 6 5 4 3 2 1 0 e r a h S r e P KEY INDICATORS FROM CONTINUING OPERATIONS 7 7 e r a h S r e P 6 5 4 3 2 1 0 e r a h S r e P 2006 e r a h S r e P 6 5 4 3 2 1 0 6 20 5 4 15 3 2 10 1 0 5 s n o i l l i M $ 2006 2007 2006 2007 2008 Financial Year 2009 2010 EPS EBITDA NPAT EPS EBITDA 0 NPAT 2006 2007 2008 Financial Year EPS EBITDA NPAT 2007 2008 Financial Year EPS 2009 2010 0 EBITDA NPAT OUR BUSINESS 1. CORE MARkET FOCUS 3. ENERGY UTILITIES Our core business is the delivery of proprietary customer care, meter data management and billing software solutions to the energy and telecommunications industry coupled with an optional full scale outsourcing service. 2. MARkET DIFFERENTIATION We compete on the international market with the worlds largest software houses. These competitors commonly target the delivery of full enterprise solutions through systems integrators world wide. We on the other hand differentiate ourselves by: • Focusing on selected geographies where we may most readily deliver our solutions on budget and on time • Specialising in the provision of “best of breed” applications that deliver the specific solution required by our customers. • Commonly working directly with our customers with a “hands on” and collaborative approach to delivering the optimum outcome for their project • Being large enough with a strong installed customer base to provide the highest level of confidence for our customers but while retaining a more flexible product and management accessible approach than our “hands off” competition. • Offering to most of our customers the option of a fully outsourced facility managed solution service • Utilising our historical telecommunications product history we deliver solutions to both Energy and Telco customers which offer enhanced rating flexibility for the increasing demand for complex, flexible and multi level billing solutions. We are positioned in our selected geographies as the flexible alternative provider of best of breed solutions in our areas of core business focus. The Electricity industry, from the perspective of our core business, continues to be strongly focused world wide on initiatives associated with Smart Grid optimisation and the associated roll out of automated interval/smart meters. These changes are a direct response to environmental and related political pressures requiring the optimisation of raw material resource utilisation. To modify energy consumption the industry requires tools by which they may be able to influence and change energy usage patterns. The introduction of time of use smart meters offers electricity retailers, among other things, the opportunity to introduce flexible rating tables to incentivise customers so that the peaks of energy consumption may be lowered and consumption of electricity optimised. Changes in the way the electricity participants bill their customers requires the software solutions we provide as part of our core business to adapt to the dramatically increased data volumes which result and offer the flexibility in the rating tables which the competitive electricity industry participants will require. The shift towards enhanced metering technology is also spreading into the gas and water industries but at a different rate and with different economic drivers substantiating the speed of change. The environmental and political drivers behind these initiatives are real. The technology required by this change is substantially available and rapidly evolving further. However the timing of the roll-out of these initiatives does have some limitations. The Capital cost involved is considerable and at this stage many industry participants are struggling to understand where the return on investment will be generated. Further more some of the political forces pushing these changes are beginning to realise that variable rating patterns may disadvantage certain sectors of the community and they are imposing moratoriums on the introduction of variable billing changes pending further community consultation. Never the less the introduction of advanced metering technologies is inevitable and they will require changes to and enhancement of billing software. We have developed the solution which will handle the volumes of data required and we have the flexibility in our rating tables that our customers will demand. We are not just ready for these fundamental changes, we are already there with four implementations of interval meter solutions in operation this year. 4. TELECOMMUNICATIONS THE FUTURE The provision of software billing solutions to the Telecommunications industry is the historical foundation of the Hansen billing solution suite of products. We have a long history of delivering reliable, market ready Telco solutions and application support services. The Mobile phone market is experiencing universal pain in the ongoing need to reduce customer churn and be more competitive. Legacy systems make it difficult to adapt to changing demands for ever increasing complexity in tariff and pricing models in order to attract new customers as well as retain existing ones. The Hansen HUB solution is highly configurable, enabling new and novel packages to be launched with ‘speed-to-market’ in mind. Building off the back of our recent successful implementations we are taking measured steps to market our Telco solution into selected geographies. The Telecommunications industry, whilst a mature market, is serviced by a number of fragmented software solution providers. We have identified and are pursuing opportunities for Hansen to acquire alternative Telco solution providers which would extend our product range, expand our geographic markets and drive economies of scale benefits. 5. SUpERANNUATION We continue to evolve and develop the CLASSIC superannuation membership administration solution on behalf of a select group of key superannuation fund managers. In our 22nd year of supporting this application we are converting the product to a client server environment. We are optimistic this will represent a significant step forward for the current users and open opportunities for additional super funds to utilise this first class member administration solution. 6. OUTSOURCING With a large internal demand for IT development capacity and with a full service approach offering to our customers we run and operate a 24*7 IT department incorporating a first grade data centre and facilities management operation. As a natural business progression we offer a full range of IT service to customers who are in need of varying degrees of outsourced support. This business unit represents a valuable contribution to our Company’s market differentiation and is a strong contributor to our overall business performance. In recognition of a limited supply of outsourced data centre capacity in Australia we intend this year to invest in increasing the energy supply to our Melbourne based data centre. This initiative will deliver a substantially increased capacity for growth in our provision of outsourced facilities management services to existing customers as well as our ability to attract additional customers. We have an outstanding team of world leading industry experts and our products are positioned in industries undergoing fundamental structural and operational change which we are ideally situated to service. We have a clearly defined market differentiation which we believe is valued by existing and prospective customers. In addition, we have the strength of balance sheet to drive our organic growth objectives as well as our acquisitive growth aspirations. In the coming year we will be focusing on: Deriving return on our investment in our product suite as smart meter and smart grid initiatives gain momentum Expanding our direct sales force, partnering relationships and marketing focus into selected international markets Continuing to pursue efficiencies in our software development processes and project delivery practises Expanding the level of thought leadership activities we provide to our existing as well as prospective customers Pursuing compatible acquisition opportunities in IT with businesses in possession of intellectual property in software solutions which have a healthy mix of annuity and growth revenue potential. We are conscious that the speed of change in our target markets may be influenced by unpredictable economic and political factors but we have a solid base of customers with a high level of annuity business which under pins our financial strength. Fiscal 2010 was a solid year of consolidation and product investment. We continue to be quietly optimistic of another strong year in fiscal 2011. Finally may we record our appreciation for the continued support of our shareholders. This past year we are pleased to have been able to deliver strong growth in value to our shareholders. We remain absolutely committed to the objective of growing and improving the business of Hansen Technologies with the objective of continuing to enhance shareholder value. kenneth Hansen Chairman Director 30 September 2010 Andrew Hansen Chief Executive Officer Director 30 September 2010 r e c fi f O i f e h C d n a n a m r i a h C m o r f t r o p e R t n o J i 6 INFORMATION ON DIRECTORS AND COMpANY SECRETARY The qualifications, experience and special responsibilities of each person who has been a director of Hansen Technologies Ltd at any time during or since the end of the financial year is provided below, together with details of the Company Secretary as at the year end. Mr kenneth Hansen Age 77 Chairman Chairman since 2000 Non-Executive Director Mr Andrew Hansen Age 50 Managing Director & CEO Managing Director since 2000 Kenneth has over 35 years experience in the IT industry. Recognising the need for the safeguarding of computer records, Kenneth founded the business of Hansen in 1971 by establishing a facility in Australia providing offsite storage of computer media and records management. Andrew has over 30 years experience in the IT industry, joining Hansen in 1990. Prior to Hansen he held senior management positions with Amfac- Chemdata, a software provider in the health industry. Andrew is responsible for implementing the Group’s strategic direction and overseeing the everyday affairs of the Hansen Group. Mr Grant Lister Age 58 CFO & Company Secretary CFO since 2002 Company Secretary since 2004 Grant is a qualified Chartered Accountant with more than 30 years experience in senior financial management roles and over 15 years experience in such roles within the IT industry in Australia, Asia and the USA. As CFO he has responsibility for all of the financial aspects of the Hansen Group’s operations throughout the world. Grant joined the Hansen Group in 2002. Mr Bruce Adams Age 50 Non-Executive Director Director since 2000 Chairman of Audit and Remuneration Committees Mr David Osborne Age 61 Non-Executive Director Director since 2006 Member of the Audit and Remuneration Committees Mr phillip james Age 60 Non-Executive Director Director since 2008 Member of the Audit and Remuneration Committees Bruce has over 20 years experience as a commercial lawyer. He has practiced extensively in the areas of information technology law, mergers and acquisitions and has considerable experience advising listed public companies. In early 2002, after more than ten years as a partner of two Melbourne law firms, Bruce took up a position as General Counsel of Club Assist Corporation Pty Ltd, a worldwide motoring club service provider. Bruce holds degrees in law and economics from Monash University. David is a Fellow of the Institute of Chartered Accountants, a Fellow of CPA Australia, and a Fellow of the Australian Institute of Company Directors, with over 30 years of financial management, taxation and accounting experience in public practice. David has a long standing association with Hansen having been a Board member for some years prior to the Company’s listing on the ASX in June 2000. Phillip has over 30 years experience in the Australian and New Zealand energy sectors, holding senior executive positions with AGL Energy and NGC Holdings (NZ). Phillip’s extensive career of over 25 years with AGL (Australia’s largest energy retailer) included positions in sales, marketing, operations and senior executive roles, culminating in his appointment in 2005 as Group General Manager Retail, with responsibility for AGL’s energy retail business Australia wide. s r o t c e r i D f o d r a o B 8 No Directors of Hansen Technologies Ltd held any other Directorships of listed companies at any time during the three years prior to 30 June 2010. DIRECTORS’ REpORT The Directors present their report together with the financial report of the consolidated entity consisting of Hansen Technologies Ltd and the entities it controlled, for the financial year ended 30 June 2010 and Auditor’s report thereon. This financial report has been prepared in accordance with Australian equivalents of International Financial Reporting Standards. pRINCIpAL ACTIVITIES The principal activities of the consolidated entity during the financial year were the development, integration and support of billing systems software for the telecommunications and utilities (gas, electricity and water) industries. Other activities undertaken by the consolidated entity include IT outsourcing services and the development of other specific software applications. There has been no significant change in the nature of these activities during the financial year. RESULTS The consolidated profit after income tax attributable to the members of Hansen Technologies Ltd increased by 37% to $11,139,573 (2009: $8,130,920). REVIEW OF OpERATIONS Fiscal 2010 represents the 4th year of consecutive year on year growth in operational performance for Hansen Technologies Ltd. The strong performance of the first half year continued throughout the second half, with the full year’s results highlighted by: Operating revenue of $57.8 million, up 6% Earnings before interest, tax, depreciation and amortisation (EBITDA) - $17.2 million, an increase of 20%. - representing a return on revenue of 30% After Tax Profit ($11.1 million) representative of 7.2 cents per share With an EBITDA to revenue ratio approaching 30%, we are positioned at the high end of operating performance for an IT business. Our products are targeted at industries undergoing technological and structural change which we are ideally suited to support. We have an excellent customer base with strong annuity revenue streams. Our balance sheet is strong with a solid level of cash reserves. This past year we have made strategic investments in our future: We have invested substantially in improving our internal processes to deliver both short and long term efficiencies in our software development and support activities Increased our sales and marketing commitment in both the Energy and Telecommunications industries in our core geographies as well as investing in new geographies to generate partnering opportunities Enhanced our products and services to deliver the solution requirements of billing systems arising from the development in energy metering technology and energy grid optimisation initiatives Completed the full integration of the Peace Software business acquired in October 2008 while optimising the Hansen and Peace Software development methodologies Advanced our relationships with key existing customers worldwide resulting in a number of major new projects being undertaken We remain as focused on supporting our existing customers as we are committed to also growing our business through delivering new software solutions to new customers. We have once again emerged from the year with a strengthened balance sheet and accordingly remain positioned to support our continued objective of growth through prudent acquisitions. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS DIVIDEND pAID, RECOMMENDED AND DECLARED There have been no significant changes in the consolidated entity’s state of affairs during the financial year. AFTER BALANCE DATE EVENTS As part of normal business activities the Company is from time to time in negotiations with customers and third parties over prospective new business opportunities. When these new opportunities are significant in the overall context of our business and the negotiations reach a level where the transaction contemplated is confirmed then releases are made to the ASX in accordance with the Listing rules on Continuous Disclosure. No other matters or circumstances have arisen since the end of the financial year that have significantly affected or may significantly affect the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity in future financial years. LIkELY DEVELOpMENTS The Company will continue to pursue its operating strategy of providing proprietary billing solutions to our targeted industries of energy and telecommunication while pursuing appropriate acquisitions to create shareholder value. In the opinion of the Directors, disclosure of any further information would be likely to result in unreasonable prejudice to the consolidated entity. ENVIRONMENTAL REGULATIONS The consolidated entity’s operations are not subject to any significant environmental Commonwealth or State regulations or laws. A 3 cent per share fully franked final dividend was declared on 23 August 2010 with payment made on 27 September 2010. The amount declared has not been recognised as a liability in the accounts of Hansen Technologies Ltd as at 30 June 2010. Dividends paid during the year:- 3 cent per share fully franked final dividend paid 2 October 2009 2 cent per share fully franked interim dividend paid 29 March 2010 SHARE OpTIONS Options over unissued ordinary shares granted by Hansen Technologies Ltd during or since the end of the financial year to the key management personnel as part of their remuneration are as follows. No options were granted to Directors during or since the end of the financial year. Executives C Hunter G Lister D Meade G prior S Weir Total Granted Number 75,000 75,000 75,000 75,000 75,000 75,000 40,000 40,000 40,000 570,000 Grant Date 1 July 2009 1 July 2010 1 July 2009 1 July 2010 1 July 2009 1 July 2010 1 July 2009 1 July 2009 1 July 2010 t r o p e R ’ s r o t c e r i D 10 SHARES UNDER OpTION INSURANCE Unissued ordinary shares of Hansen Technologies Ltd under option at the date of this report are as follows: Grant Date Exercise Date Expiry Date Exercise price 1 July 2007 1 July 2010 1 July 2012 $0.265 1 July 2008 1 July 2011 1 July 2013 $0.390 1 July 2009 1 July 2012 1 July 2014 $0.410 1 July 2010 1 July 2013 1 July 2015 $0.580 Total Number of Options at Date of Report 180,000 540,000 610,000 680,000 2,010,000 If the Company makes a bonus issue of securities to ordinary shareholders, each unexercised option will, on exercise, entitle its holder to receive the bonus securities as if the option had been exercised before the record date for the bonus issue. SHARES ISSUED ON EXERCISE OF OpTIONS The following ordinary shares of Hansen Technologies Ltd were issued during or since the end of the financial year as a result of the exercise of an option: Date Issued 31 August 2009 31 August 2009 14 September 2009 4 November 2009 4 November 2009 25 August 2010 Total Number of Ordinary Shares Issued Amount paid per Share 190,000 230,000 75,000 75,000 75,000 260,000 905,000 $0.110 $0.260 $0.110 $0.260 $0.110 $0.265 There are no amounts unpaid on shares issued on exercise of options. Since the end of the previous financial year, the Company has paid insurance premiums in respect of Directors’ and Officers’ liability and legal expenses, insurance policies for current and former Directors and Officers, including Executive Officers of the Company and Directors, Executive Officers and Secretaries of its controlled entities. The Directors have not included details of the nature of the liabilities covered or the amount of the premium paid in respect of the Directors’ and Officers’ liability and legal expenses insurance contracts, as such disclosure is inappropriate under the terms of the contract. DIRECTORS’ MEETINGS The number of meetings of the Board of Directors and of each Board Committee held during the financial year and the numbers of meetings attended by each Director were: Director K Hansen A Hansen B Adams D Osborne P James Board Meetings Audit Committee Meetings Remuneration Committee Meetings A 12 12 12 12 12 B 11 11 11 11 12 A - - 3 3 3 B - - 3 3 3 A - - 1 1 1 B - - 1 1 1 A - Number of meetings eligible to attend B - Number of meetings attended DIRECTORS’ INTERESTS IN SHARES OR OpTIONS Directors’ relevant interest in shares of Hansen Technologies Ltd or options over shares in the Company are detailed below. Directors’ relevant interests in: Ordinary Shares of Hansen Technologies Ltd Options over Shares in Hansen Technologies Ltd K Hansen A Hansen B Adams D Osborne P James 93,784,600 5,846,174 215,520 301,802 - - - - - - INDEMNIFICATION AND INSURANCE OF DIRECTORS, OFFICERS AND AUDITORS INDEMNIFICATION The Company has agreed to indemnify all of the current and former Directors and Officers of the Company and its controlled entities against all liabilities to another person (other than the Company or a related body corporate) that may arise from their position as Directors and Officers of the Company and its controlled entities, except where the liability arises out of conduct involving a lack of good faith. The agreement stipulates that the Company will meet the full amount of any such liabilities, including costs and expenses. The Company has not entered into any agreement to indemnify its Auditors against any claims that might be made by third parties arising from their report on the annual financial report. DIRECTORS’ INTERESTS IN CONTRACTS REMUNERATION REpORT Directors’ interests in contracts with the Company are limited to the provision of leased premises on arms length terms and are disclosed in note 23 to the financial statements. AUDITOR’S INDEpENDENCE DECLARATION A copy of the Auditor’s independence declaration as required under section 307C of the Corporations Act 2001 in relation to the audit for the financial year is provided with this report. NON-AUDIT SERVICES Non-audit services are approved by resolution of the Audit Committee and approval is provided in writing to the Board of Directors. Non-audit services provided by the Auditors of the consolidated entity during the year, Pitcher Partners, and their affiliates, are detailed below. The Directors are satisfied that the provision of the non-audit services during the year by the Auditor is compatible with the general standard of independence for Auditors imposed by the Corporations Act 2001. Amounts paid or payable to an Auditor for non-audit services provided during the year by the Auditor to any entity that is part of the consolidated entity for: REMUNERATION pOLICIES The Remuneration Committee is responsible for making recommendations to the Board on remuneration policies and packages applicable to the Board members and Senior Executives of the Company. The remuneration policy is to ensure the remuneration package properly reflects the person’s duties and responsibilities and that the remuneration is competitive in attracting, retaining and motivating people of the highest quality. Executive Directors and Senior Executives may receive bonuses and options at the absolute discretion of the Directors. All bonuses are subject at a minimum to the achievement of specified key performance indicators which vary from executive to executive but are all targeted at enhanced operating performance and agreed corporate objectives. Options issued are conditional upon the group achieving budgeted performance levels for the year of issue and are further subject to continuous employment through to the third anniversary of the issue date. Non-Executive Directors do not receive any performance related remuneration. The names and positions of each person who held the position of Director at any time during the financial year are provided on pages 7 and 8 of this report. The other key management personnel in the consolidated group for the financial year are: Consolidated EXECUTIVES pOSITION 2010 $’000 2009 $’000 C Hunter Chief Operations Officer G Lister D Meade G prior S Weir Chief Financial Officer & Company Secretary Client Services Manager General Manager, North America General Manager, Europe Auditors of the Company Australia - taxation services - advisory services Overseas Firms - taxation services - advisory services Total non-audit services 29 22 51 9 36 45 96 43 18 61 20 18 38 99 t r o p e R ’ s r o t c e r i D 12 DIRECTORS’ AND EXECUTIVES’ REMUNERATION 2010 Short-Term Employee Benefits post- Employment Benefits Cash Bonus Non- Monetary $ - $ - Directors K Hansen A Hansen B Adams D Osborne P James Executives C Hunter G Lister D Meade G Prior S Weir Salary Fees $ 70,648 455,619 211,009 37,037 37,037 146,789 - - - 747,130 211,009 183,486 241,557 203,776 210,204 163,959 36,697 36,697 36,697 23,356 26,399 Directors K Hansen A Hansen B Adams D Osborne P James Executives C Hunter G Lister D Meade G Prior (began 17 Feb 09) Salary Fees $ 70,648 431,919 199,541 37,037 37,037 52,753 - - - 629,394 199,541 174,312 207,846 174,976 45,872 50,459 45,872 83,903 - $ - - - - - - - 16,703 - - - $ - - - - - - - 17,648 - - - 1,002,982 159,846 1,750,112 370,855 16,703 16,703 2009 Short-Term Employee Benefits post- Employment Benefits Cash Bonus Non- Monetary Share- Based Benefits Options Issued Other Long- Term Benefits Other Benefits $ - - - - - - 6,175 6,175 6,175 3,293 3,293 25,111 25,111 $ - - - - - - - - - - - - - Share- Based Benefits Options Issued Other Long- Term Benefits Other Benefits $ - - - - - - 6,836 6,836 6,836 Super $ - 50,000 3,333 3,333 13,211 69,877 19,817 25,043 20,642 6,481 7,385 79,368 149,245 Super $ - 50,000 3,333 3,333 39,152 95,818 19,817 49,047 19,876 Total $ 70,648 716,628 40,370 40,370 160,000 1,028,016 246,175 326,175 267,290 243,334 201,036 1,284,010 2,312,026 Total $ 70,648 681,460 40,370 40,370 91,905 924,753 246,837 331,836 247,560 86,420 221,302 1,133,955 2,058,708 Total performance Related Options as % of Total % - 29% - - - 21% 17% 13% 16% 11% 15% 14% 17% % - - - - - - 3% 2% 2% 1% 2% 2% 1% Total performance Related Options as % of Total % - 29% - - - 22% 21% 17% 21% - 16% 17% 19% % - - - - - - 3% 2% 3% - 2% 2% 1% $ - - - - - - - - - - - - - S Weir 182,744 30,800 823,781 173,003 1,453,175 372,544 17,648 17,648 2,517 - 4,112 95,369 191,187 3,646 24,154 24,154 In accordance with the remuneration policy, options granted as remuneration are subject to continuing service with the Company. Options granted as remuneration are valued at grant date in accordance with AASB 2 Share-based Payments. No options previously granted as remuneration have lapsed during the year. 2010 Short-Term Employee Benefits Benefits Benefits Term Benefits post- Employment Share- Based Other Long- Cash Bonus Non- Monetary Options Super Issued Other Benefits Total performance Options as % Related of Total Directors K Hansen A Hansen B Adams D Osborne P James Executives C Hunter G Lister D Meade G Prior S Weir Directors K Hansen A Hansen B Adams D Osborne P James Executives C Hunter G Lister D Meade $ - - - - $ - - - - Salary Fees $ 70,648 37,037 37,037 146,789 183,486 241,557 203,776 210,204 163,959 Salary Fees $ 70,648 37,037 37,037 52,753 455,619 211,009 747,130 211,009 16,703 36,697 36,697 36,697 23,356 26,399 1,002,982 159,846 1,750,112 370,855 16,703 16,703 431,919 199,541 629,394 199,541 174,312 207,846 174,976 45,872 50,459 45,872 17,648 $ - - - - - - - - - - $ - - - - - - - - - - $ - 50,000 3,333 3,333 13,211 69,877 19,817 25,043 20,642 6,481 7,385 79,368 149,245 $ - 50,000 3,333 3,333 39,152 95,818 19,817 49,047 19,876 6,175 6,175 6,175 3,293 3,293 25,111 25,111 $ - - - - - - $ - - - - - - 6,836 6,836 6,836 G Prior (began 17 Feb 09) 83,903 - 2,517 - S Weir 182,744 30,800 823,781 173,003 1,453,175 372,544 17,648 17,648 4,112 95,369 191,187 3,646 24,154 24,154 Total $ 70,648 716,628 40,370 40,370 160,000 1,028,016 246,175 326,175 267,290 243,334 201,036 1,284,010 2,312,026 Total $ 70,648 681,460 40,370 40,370 91,905 924,753 246,837 331,836 247,560 86,420 221,302 1,133,955 2,058,708 $ - - - - - - - - - - - - - $ - - - - - - - - - - - - - 29% % - - - - 21% 17% 13% 16% 11% 15% 14% 17% 29% % - - - - 22% 21% 17% 21% - 16% 17% 19% % - - - - - - 3% 2% 2% 1% 2% 2% 1% % - - - - - - 3% 2% 3% - 2% 2% 1% 2009 Short-Term Employee Benefits Benefits Benefits Term Benefits post- Employment Share- Based Other Long- Cash Bonus Non- Monetary Super Other Benefits Options Issued Total performance Options as % Related of Total COMpENSATION OpTIONS: GRANTED AND VESTED DURING THE YEAR During the financial year, options previously granted to key management personnel vested upon the third year anniversary of their issue date. In addition, during the financial year the Company granted options over unissued ordinary shares to the following key management personnel of the Company as part of their remuneration. Vested During the Year During the Year Granted Grant Date Value per Option at Grant Date Exercise price Vesting Date Last Exercise Date Terms and Conditions For Each Grant Specified Executives C Hunter (Chief Operations Officer) G Lister (CFO & Company Secretary) D Meade (Client Services Manager) G Prior (General Manager, North America) S Weir (General Manager, Europe) 75,000 75,000 75,000 - - 75,000 1 July 2009 75,000 1 July 2009 75,000 1 July 2009 40,000 1 July 2009 40,000 1 July 2009 $0.410 $0.410 $0.410 $0.410 $0.410 $0.410 1 July 2012 1 July 2014 $0.410 1 July 2012 1 July 2014 $0.410 1 July 2012 1 July 2014 $0.410 1 July 2012 1 July 2014 $0.410 1 July 2012 1 July 2014 Total 225,000 305,000 All grants of options are subject to the achievement of performance measurements for the year of issue. Subject to continuation of employment criteria, options vest 3 years after issue date. If the vesting criteria are not met the options may be forfeited at the discretion of the Directors. Vested options expire after two years or 28 days after termination of employment. NUMBER OF OpTIONS HELD BY kEY MANAGEMENT pERSONNEL Specified Executives C Hunter (Chief Operations Officer) G Lister (CFO & Company Secretary) D Meade (Client Services Manager) Balance 30 june 2009 300,000 300,000 300,000 G Prior (General Manager, North America) - S Weir (General Manager, Europe) Total 40,000 940,000 Granted as Remuneration Options Exercised Options Forfeited 75,000 150,000 75,000 150,000 75,000 150,000 40,000 40,000 - - 305,000 450,000 - - - - - - Balance 30 june 2010 225,000 225,000 225,000 40,000 80,000 795,000 Vested at 30 june 2010 Total Exercisable Un-exercisable - - - - - - - - - - - - - - - - - - t r o p e R ’ s r o t c e r i D 14 VALUE OF OpTIONS GRANTED AS REMUNERATION THAT HAVE BEEN EXERCISED OR LApSED DURING THE FINANCIAL YEAR: Specified Executives C Hunter G Lister D Meade G Prior S Weir Total Balance 1 july 2009 Value Granted Value Exercised Value Lapsed Balance 30 june 2010 27,256 27,256 27,256 - 3,646 85,414 6,175 6,175 6,175 3,293 3,293 11,604 11,604 11,604 - - 25,111 34,812 - - - - - - 21,827 21,827 21,827 3,293 6,939 75,713 ROUNDING OF AMOUNTS The amounts contained in the report and in the financial report have been rounded to the nearest $1,000 (where rounding is applicable) under the option available to the Company under ASIC Class Order 98/0100. The Company is an entity to which the Class Order applies. Signed in accordance with a resolution of the Directors: kenneth Hansen Director 30 September 2010 Andrew Hansen Director 30 September 2010 An independent Victorian Partnership ABN 27 975 255 196 AUDITOR’S INDEpENDENCE DECLARATION To the Directors of Hansen Technologies Ltd In relation to the independent audit for the year ended 30 June 2010, to the best of my knowledge and belief there have been: (i) No contraventions of the Auditor independence requirements of the Corporations Act 2001 (ii) No contraventions of any applicable code of professional conduct S SCHONBERG partner 30 September 2010 pITCHER pARTNERS Melbourne Liability limited by a scheme approved under Professional Standards Legislation Pitcher Partners, including Johnston Rorke, is an association of independent firms Melbourne | Sydney | Perth | Adelaide | Brisbane An independent member of Baker Tilly International s e t o N d n a s t n e t m r o e p t e a t R S ’ s l a r i o c t n c a e n r i i D F 16 2010 FINANCIAL STATEMENTS AND NOTES CONTENTS Consolidated Statement of Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Notes to the Financial Statements Directors’ Declaration Independent Auditor’s Report ASX Additional Information 19 20 21 22 23 52 53 65 s e t o N d n a s t n e m e t a t S l a i c n a n F 0 1 0 2 i 18 CONSOLIDATED STATEMENT OF COMpREHENSIVE INCOME FOR YEAR ENDED 30 jUNE 2010 Note Revenue from ongoing operations Other revenues Total revenues Employee expenses Depreciation and amortisation expenses Property and operating rental expenses Contractor and consultant expenses Software licence expenses Hardware and software expenses Travel expenses Communication expenses Professional expenses Other expenses Total expenses profit before income tax Income tax expense profit after income tax from ongoing operations Other comprehensive income Exchange difference on translation of foreign operations Other comprehensive income for the year Total comprehensive income for the year attributable to members of the parent Basic earnings per share for ongoing operations Total basic earnings per share Diluted earnings per share for ongoing operations Total diluted earnings per share 4 4 5 5 5 6 Consolidated Entity 2010 $’000 57,766 1,020 58,786 2009 $’000 54,298 2,039 56,337 (29,384) (29,045) (3,913) (2,318) (1,757) (106) (2,882) (1,308) (698) (448) (1,890) (44,704) 14,082 (2,942) 11,140 94 94 11,234 (4,258) (2,485) (1,350) (309) (3,021) (1,421) (741) (926) (1,823) (45,379) 10,958 (2,827) 8,131 (22) (22) 8,109 Note 20 20 Cents per Share Cents per Share 7.2 7.2 7.2 7.2 5.3 5.3 5.3 5.3 This consolidated statement of comprehensive income is to be read in conjunction with the notes to the financial statements set out on pages 23 to 50. CONSOLIDATED STATEMENT OF FINANCIAL pOSITION AS AT 30 jUNE 2010 Note Current Assets Cash and cash equivalents Receivables Other current assets Total Current Assets Non-Current Assets Plant, equipment & leasehold improvements Intangible assets Deferred tax assets Total Non-Current Assets Total Assets Current Liabilities Payables Current tax payable Provisions Unearned income Total Current Liabilities Non-Current Liabilities Provisions Total Non-Current Liabilities Total Liabilities Net Assets Equity Share capital Foreign currency translation reserve Options granted reserve Retained earnings (accumulated losses) Total Equity 8 9 10 11 12 6 13 6 14 14 15 16(a) 16(b) 16(c) Consolidated Entity 2010 $’000 23,450 8,178 2,817 34,445 3,441 27,497 1,075 32,013 66,458 4,350 1,526 4,680 5,547 2009 $’000 20,518 7,016 1,961 29,495 3,588 29,012 196 32,796 62,291 4,096 2,270 4,831 4,384 16,103 15,581 458 458 16,561 49,897 48,715 (407) 200 1,389 49,897 887 887 16,468 45,823 48,199 (501) 166 (2,041) 45,823 s e t o N d n a s t n e m e t a t S l a i c n a n F 0 1 0 2 i 20 This consolidated statement of financial position is to be read in conjunction with the notes to the financial statements set out on pages 23 to 50. CONSOLIDATED STATEMENT OF CHANGES IN EqUITY FOR THE YEAR ENDED 30 jUNE 2010 Note Contributed Equity $’000 Reserves $’000 Retained Earnings $’000 Total Equity $’000 Consolidated Entity 48,199 (335) Balance as at 1 july 2009 Profit for the year Exchange differences on translation of foreign operations Total comprehensive income for the year Transactions with owners in their capacity as owners: Employee share plan Options exercised Value attributed to employee share options issued Capital issued under dividend reinvestment plan Share buy back Dividends paid Total transactions with owners in their capacity as owners 15 15 15 15 7 - - - 130 117 - 308 (39) - 516 Balance as at 30 june 2010 15 & 16 48,715 - 94 94 - - 34 - - - 34 (207) (2,041) 11,140 - 11,140 - - - - - (7,710) (7,710) 1,389 45,823 11,140 94 11,234 130 117 34 308 (39) (7,710) (7,160) 49,897 Note Contributed Equity $’000 Reserves $’000 Retained Earnings $’000 Total Equity $’000 Consolidated Entity Balance as at 1 july 2008 Profit for the year Exchange differences on translation of foreign operations Total comprehensive income for the year Transactions with owners in their capacity as owners: Employee share plan Options exercised Value attributed to employee share options issued Capital issued under dividend reinvestment plan Share buy back Dividends paid Total transactions with owners in their capacity as owners 15 15 15 15 7 47,916 - - - 126 21 - 188 (52) - 283 Balance as at 30 june 2009 15 & 16 48,199 (342) - (22) (22) - - 29 - - - 29 (335) (5,588) 8,131 - 8,131 - - - - - (4,584) (4,584) (2,041) 41,986 8,131 (22) 8,109 126 21 29 188 (52) (4,584) (4,272) (45,823) This consolidated statement of changes in equity is to be read in conjunction with the notes to the financial statements set out on pages 23 to 50. CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 jUNE 2010 Note Cash flows from operating activities Receipts from customers Payments to suppliers and employees Interest received Income tax paid Net cash provided by operating activities 17(a) Cash flows from investing activities Payment for acquisition of business Payment for plant and equipment Payment for capitalised research and development Net cash used in investing activities Cash flows from financing activities Proceeds from share issue Payments for share buy back Proceeds from options exercised Dividends paid net of dividend re-investment Net cash used in financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of the year 15 15 15 8 Consolidated Entity 2010 $’000 60,509 (44,136) 615 (4,566) 12,422 - (1,212) (1,103) (2,315) 130 (39) 117 (7,383) (7,175) 2,932 20,518 23,450 This consolidated statement of cash flows is to be read in conjunction with the notes to the financial statements set out on pages 23 to 50. 2009 $’000 60,901 (46,048) 927 (3,230) 12,550 (7,465) (1,134) (1,003) (9,602) 126 (52) 21 (4,396) (4,301) (1,353) 21,871 20,518 s e t o N d n a s t n e m e t a t S l a i c n a n F 0 1 0 2 i 22 NOTES TO THE FINANCIAL STATEMENTS CONTENTS Note 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 Statement of Significant Accounting Policies 24-27 Critical Accounting Estimates and Judgements Financial Risk Management Revenue Profit from Continuing Operations Income Tax Dividends Cash and Cash Equivalents Receivables Other Current Assets Plant, Equipment and Leasehold Improvements Intangibles Payables Provisions 27 28-29 30 30 31-32 33 33 33 34 34 35 35 36 Contributed Equity 37-39 Reserves and Retained Earnings Cash Flow Information Business Combinations Commitments and Contingencies Earnings Per Share 39 40 41 42 43 Directors’ and Executives’ Equity Holdings 43-45 Auditor’s Remuneration Related Party Disclosures Parent Entity Details Segment Information Subsequent Events 45 46 47 48-50 50 1. STATEMENT OF SIGNIFICANT ACCOUNTING pOLICIES (a) Basis of preparation of the financial report This financial report is a general purpose financial report that has been prepared in accordance with Australian Accounting Standards, Interpretations and other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001. COMpLIANCE WITH IFRS Australian Accounting Standards include Australian equivalents to International Financial Reporting Standards. Compliance with Australian equivalents to International Financial Reporting Standards ensures compliance with International Financial Reporting Standards (IFRSs). The financial report covers Hansen Technologies Ltd and controlled entities as a consolidated entity. Hansen Technologies Ltd is a Company limited by shares, incorporated and domiciled in Australia. The financial report was authorised for issue by the Directors on 30 September 2010. The following is a summary of material accounting policies adopted by the consolidated entity in the preparation and presentation of the financial report. The accounting policies have been consistently applied, unless otherwise stated. HISTORICAL COST CONVENTION The financial report has been prepared under the historical cost convention. (b) principles of consolidation The consolidated financial statements are those of the consolidated entity, comprising the financial statements of the parent entity and of all entities, which the parent has the power to control the financial and operating policies of, so as to obtain benefits from its activities. The financial statements of subsidiaries are prepared for the same reporting period as the parent entity, using consistent accounting policies. All inter-company balances and transactions, including any unrealised profits or losses have been eliminated on consolidation. (c) Revenue Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer and the costs incurred or to be incurred in respect of the transaction can be measured reliably. Risks and rewards of ownership are considered passed to the buyer at the time of delivery of the goods to the customer. Revenue from the provision of services to customers is recognised upon delivery of the service to the customer. Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets. All revenue is stated net of the amount of goods and services tax (GST). s t n e m e t a t S l a i c n a n F e h t o t i s e t o N 24 (d) Cash and cash equivalents (g) Intangibles Cash and cash equivalents include cash on hand and at banks, and short term deposits with an original maturity of three months or less held at call with financial institutions. (e) plant, equipment & leasehold improvements COST AND VALUATION All classes of plant, equipment and leasehold improvements are stated at cost less depreciation. GOODWILL Goodwill represents the excess of the cost of an acquisition over the fair value of the consolidated entity’s share of net identifiable assets of the acquired entities at the date of acquisition. Goodwill is not amortised but is tested annually for impairment, or more frequently if events or changes in circumstances indicate that it might be impaired. Goodwill is carried at cost less accumulated impairment losses. DEpRECIATION TRADEMARk AND LICENCES Trademark and licences are recognised at cost and are amortised over their estimated useful lives, which range from 5 to 10 years. Trademarks and licences are carried at cost less accumulated amortisation and any impairment losses. RESEARCH AND DEVELOpMENT Expenditure on research activities is recognised as an expense when incurred. Expenditure on development activities is capitalised only when technical feasibility studies identify that the project will deliver future economic benefits and these benefits can be measured reliably. Capitalised development expenditure is stated at cost less accumulated amortisation. Amortisation is calculated using a straight-line method to allocate the cost of the intangible asset over its estimated useful life commencing when the intangible asset is available for use. Other development expenditure is recognised as an expense when incurred. (h) Impairment Assets with an indefinite useful life are not amortised but are tested annually for impairment in accordance with AASB 136. Assets subject to annual depreciation or amortisation are reviewed for impairment whenever events or circumstances arise that indicate that the carrying amount of the asset may be impaired. An impairment loss is recognised where the carrying amount of the asset exceeds its recoverable amount. The recoverable amount of an asset is defined as the higher of its fair value less costs to sell and value in use. The depreciable amounts of all fixed assets are depreciated on a straight-line basis over their estimated useful lives 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 improvements. The useful lives for each class of assets are: plant, equipment & leasehold improvements: 2010 2009 2.5 to 12 years 2.5 to 12 years Leased plant and equipment: 2.5 to 12 years 2.5 to 12 years (f) Leases Leases are classified at their inception as either operating or finance leases based on the economic substance of the agreement so as to reflect the risks and benefits incidental to ownership. FINANCE LEASES Leases of fixed assets, where substantially all of the risks and benefits incidental to ownership of the asset, but not the legal ownership, are transferred to the consolidated entity are classified as finance leases. Finance leases are capitalised, recording an asset and liability equal to the present value of the minimum lease payments, including any guaranteed residual values. The interest expense is calculated using the interest rate implicit in the lease and is included in finance costs in the statement of comprehensive income. Leased assets are depreciated on a straight line basis over their estimated useful lives when it is likely the consolidated entity will obtain ownership of the asset, or over the term of the lease. Lease payments are allocated between the reduction of the lease liability and the lease interest expense for the period. OpERATING LEASES Lease payments for operating leases are recognised as an expense on a straight line basis over the term of the lease. (i) Income tax Current income tax expense or revenue is the tax payable on the current period’s taxable income based on the applicable income tax rate adjusted by changes in deferred tax assets and liabilities. A balance sheet approach is adopted under which deferred tax assets and liabilities are recognized for temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred tax asset or liability is recognised in relation to temporary differences arising from the initial recognition of an asset or a liability if they arose in a transaction, other than a business combination, that at the time of the transaction did not affect either accounting profit or taxable profit or loss. Deferred tax assets are recognised for temporary differences and unused tax losses only when it is probable that future taxable amounts will be available to utilize those temporary differences and losses. Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity. TAX CONSOLIDATION The parent entity and all eligible Australian controlled entities have formed an income tax consolidated group under the tax consolidation legislation. The parent entity is responsible for recognising the current tax liabilities and the deferred tax assets arising in respect of tax losses, for the tax consolidated group. The tax consolidated group has also entered a tax funding agreement whereby each Company in the group contributes to the income tax payable in proportion to their contribution to the net profit before tax of the tax consolidated group. (j) provisions Provisions are recognised when the consolidated entity has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured. (k) Employee benefits Liabilities arising in respect of wages and salaries, annual leave, long service leave and any other employee benefits expected to be settled within twelve months of the reporting date are measured at their nominal amounts based on remuneration rates which are expected to be paid when the liability is settled. All other employee benefit liabilities are measured at the present value of the estimated future cash outflow to be made in respect of services provided by employees up to the reporting date. DEFINED CONTRIBUTION SUpERANNUATION pLAN The consolidated entity makes contributions to defined contribution superannuation plans in respect of employee services rendered during the year. These superannuation contributions are recognised as an expense in the same period when the employee services are received. SHARE-BASED pAYMENTS The consolidated entity operates an employee share option plan and an employee share scheme. The fair value of the options to which employees become entitled is measured at grant date and recognised as an expense over the vesting period, with a corresponding increase to an equity account. The fair value of shares is ascertained as the market bid price. The number of shares and options expected to vest is 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 eventually vest. (l) Financial instruments CLASSIFICATION The consolidated entity classifies its financial instruments in the following categories: loans and receivables and financial liabilities. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its financial instruments at initial recognition. LOANS AND RECEIVABLES Loans and receivables are measured at fair value at inception and subsequently at amortised cost using the effective interest rate method. FINANCIAL LIABILITIES Financial liabilities include trade payables, other creditors and loans from third parties including inter-company balances. (m) Foreign currencies translations and balances FUNCTIONAL AND pRESENTATION CURRENCY The financial statements of the entities in the consolidated group are measured using the currency of the primary economic environment in which that entity operates. The consolidated financial statements are presented in Australian dollars which is the consolidated entity’s functional and presentation currency. s t n e m e t a t S l a i c n a n F e h t o t i s e t o N 26 TRANSACTIONS AND BALANCES Transactions in foreign currencies of entities within the consolidated group are translated into functional currency at the rate of exchange ruling at the date of the transaction. Foreign currency monetary items that are outstanding at the reporting date (other than monetary items arising under foreign currency contracts where the exchange rate for that monetary item is fixed in the contract) are translated using the spot rate at the end of the financial year. Resulting exchange differences arising on settlement or re-statement are recognised as revenues and expenses for the financial year. Entities that have a functional currency different to the presentation currency are translated as follows: Assets and liabilities are translated at year-end exchange rates prevailing at that reporting date; Income and expenses are translated at actual exchange rates or average exchange rates for the period, where appropriate; and All resulting exchange differences are recognised as a separate component of equity. Exchange differences arising on translation of foreign operations are transferred directly to the group’s foreign currency translation reserve as a separate component of equity. (n) 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 Tax Office. In these circumstances the GST is recognised as part of the acquisition of the asset or as part of an item of the expense. Receivables and payables in the statement of financial position are shown inclusive of GST. Cashflows are presented in the statement of cashflows on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cashflows. (o) Comparatives Where necessary, comparative information has been reclassified and repositioned for consistency with current year disclosures. (p) Rounding amounts The parent entity and the consolidated entity have applied the relief available under ASIC Class Order CO 98/0100 and accordingly, amounts in the consolidated financial statements and the Directors’ report have been rounded off to the nearest thousand dollars, or in certain cases, to the nearest dollar. (q) New accounting standards and interpretations A number of accounting standards and interpretations have been issued at the reporting date but are not yet effective. The Directors have not yet assessed the impact of these standards or interpretations 2. CRITICAL ACCOUNTING ESTIMATES AND jUDGEMENTS The group makes certain estimates and assumptions concerning the future, which, by definition will seldom represent actual results. Estimates and assumptions based on future events have a significant inherent risk, and where future events are not as anticipated there could be a material impact on the carrying amounts of the assets and liabilities discussed below: (a) Impairment testing of intangible assets The intangible assets of goodwill and capitalised software development are subjected to annual review to assess if their carrying value has been impaired. This assessment compares the carrying book value with the recoverable amount of these assets using value in-use discounted cash flow projection calculations based on management’s determination of budgeted cash flow projections and gross margins, past performance and its expectation for the future. Given the long term income generating nature of the intangible assets the valuation applies a discounted value to cash flow over a five year period plus a terminal value at the end of the period. In respect of this fiscal year a 14.50% weighted cost of capital discount rate has been applied. The growth rates utilised vary by business unit from zero to a maximum of 10% per annum. (b) Income tax Income tax benefits are based on the assumption that no adverse change will occur in the income tax legislation and the anticipation that the group will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law. There has been significant expenditure on research and development on the HUB billing software in the 2010 year. Returns are now being derived from this investment, which comprises the majority of the carried forward losses. Recognition of the carried forward losses is based upon the probable future profits of the group. 3. FINANCIAL RISk MANAGEMENT The consolidated entity is exposed to a variety of financial risks comprising: (a) Interest rate risk (b) Credit risk (c) Liquidity and foreign exchange risk (d) Fair values The Board of Directors has overall responsibility for identifying and managing operational and financial risks. (a) Interest rate risk Interest rate risk is the risk that the fair value or future cashflows of a financial instrument will fluctuate as a result of changes in market interest rates. The consolidated entity’s exposure to interest rate risk and the effective interest rates of financial assets and financial liabilities, both recognised and unrecognised at balance date, are as follows: Financial Instruments 2010 Financial assets Cash Trade and other receivables Other assets Financial liabilities Trade and other payables 2009 Financial assets Cash Trade and other receivables Other assets Financial liabilities Trade and other payables Consolidated Entity Note Interest Bearing $’000 Non-interest Bearing Total Carrying Amount Weighted Avg. Effective Interest Rate Fixed / Variable Rate $’000 $’000 % 8 9 10 13 8 9 10 13 23,450 - - 23,450 - - 20,518 146 - 20,664 - - - 8,178 2,817 10,995 4,350 4,350 - 6,870 1,961 8,831 4,096 4,096 23,450 8,178 2,817 34,445 4,350 4,350 20,518 7,016 1,961 29,495 4,096 4,096 5.42% fixed / variable 4.50% 8.17% fixed / variable fixed s t n e m e t a t S l a i c n a n F e h t o t i s e t o N 28 (b) Credit risk exposures Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date of recognised financial assets is the carrying amount of those assets, net of any provisions for impairment of those assets, as disclosed in the consolidated statement of financial position and notes to the consolidated financial statements. Credit risk for derivative financial instruments arises from the potential failure by counterparties to the contract to meet their obligations. The credit risk exposure to forward exchange contracts is the net fair value of these contracts. The consolidated entity does not have any material credit risk exposure to any single debtor or group of debtors under financial instruments entered into by the consolidated entity. The consolidated entity minimises concentrations of credit risk in relation to trade receivables by undertaking transactions with a large number of customers. Concentrations of credit risk on trade and term debtors are: Utilities 68% (2009: 61%), Finance Sector 2% (2009: 9%), Telecommunications 25% (2009: 22%) and Other 5% (2009: 8%). (c) Liquidity and foreign exchange risk Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. The Hansen Group operates internationally and as such has exposure to foreign currency movements as part of its day to day operational realities. The Group has a substantial surplus of cash assets compared to its nominal third party or foreign currency designated payables. The Group has no third party debt obligations, other than normal operational trade payables, which are designated in foreign currency. Accordingly the Group’s liquidity and foreign currency exchange risks are assessed as nominal. (d) Fair values The fair value of financial assets and financial liabilities approximates their carrying amounts as disclosed in the consolidated statement of financial position and notes to the consolidated financial statements. 4. REVENUE Revenues from continuing operations Revenue from sale of goods and services Other income from operating activities: Interest received Net foreign exchange gains / (losses) Other income Total other revenues Total revenue from continuing operations Consolidated Entity 2010 $’000 2009 $’000 57,766 57,766 823 (259) 456 1,020 58,786 54,298 54,298 927 1,054 58 2,039 56,337 5. pROFIT FROM CONTINUING OpERATIONS profit from continuing operations before income tax has been determined after the following specific expenses: Note Consolidated Entity 2010 $’000 2009 $’000 Employee benefit expenses Wages and salaries Superannuation costs Share based payments Total employee benefit expenses Depreciation of non-current assets Plant, equipment & leasehold improvements Total depreciation of non-current assets Amortisation of non-current assets Plant and equipment under finance lease Patents, contracts and software Research and development Total amortisation of non-current assets property and operating rental expenses Rental charges Total property and operating rental expenses 11 11 12 12 27,238 2,112 34 29,384 1,287 1,287 12 333 2,281 2,626 2,318 2,318 26,989 2,027 29 29,045 1,434 1,434 14 290 2,520 2,824 2,485 2,485 s t n e m e t a t S l a i c n a n F e h t o t i s e t o N 30 6. INCOME TAX (a) The components of tax expense: Current tax Deferred tax Under / (over) provision in prior years Total income tax expense (b) prima facie tax payable Consolidated Entity 2010 $’000 3,680 (879) 141 2,942 2009 $’000 2,992 (429) 264 2,827 The prima facie tax payable on profit before income tax is reconciled to the income tax expense as follows: Prima facie income tax payable on profit before income tax at 30% 4,224 3,287 Add/(less) tax effect of: Research and development allowances Non deductible share based payments Current year losses not brought to account Losses brought forward Non assessable income Under / (over) provision in prior years NZ deferred research and development expenditure utilised NZ deferred research and development expenditure recognised Investment allowance Prior year losses not brought to account Other non allowable items Income tax expense attributable to profit (c) Current tax liability Current tax relates to the following: Current tax liabilities / (assets) Opening balance Prior year under / (over) provision Income tax Tax payments (92) 10 - - (105) 141 (985) (527) (24) (79) 379 2,942 2,270 141 3,680 (4,565) 1,526 (107) 9 15 44 - 264 - - (39) (1,630) 984 2,827 2,244 264 2,992 (3,230) 2,270 (d) Deferred tax Deferred tax relates to the following: Deferred tax assets balance comprises: Difference in depreciation and amortisation of plant and equipment for accounting and income tax purposes Other payables Employee benefits Provisions Losses available for offset against future taxable income NZ deferred research and development expenditure recognised Other Deferred tax liabilities balance comprises: Research and development expenditure capitalised Other income not yet assessable Net deferred tax (e) Deferred income tax (revenue) / expense included in income tax expense comprises: Decrease / (increase) in deferred tax assets Decrease in deferred tax liabilities (f) Deferred tax assets not brought to account Gross capital losses Gross operating losses Consolidated Entity 2010 $’000 2009 $’000 24 303 1,193 - 228 527 20 17 341 1,142 2 161 - 43 2,295 1,706 (1,146) (74) (1,220) 1,075 (589) (290) (879) 2,824 3,172 5,996 (1,499) (11) (1,510) 196 15 (444) (429) 2,824 3,282 6,106 s t n e m e t a t S l a i c n a n F e h t o t i s e t o N 32 7. DIVIDENDS 2010 A 3 cent per share fully franked final dividend was paid on 27 September 2010. The amount paid, $4,652,907 (2009: $4,620,644), has not been recognised as a liability in the accounts of Hansen Technologies Ltd as at 30 June 2010. 2009 A 3 cent per share fully franked final dividend was paid on 2 October 2009. A 2 cent per share fully franked interim dividend was paid on 29 March 2010. Dividends provided for or paid during the year - 3 cent per share final dividend paid 2 October 2009 - 1 cent per share final dividend paid 17 October 2008 -2 cent per share interim dividend paid 29 March 2010 - 2 cent per share interim dividend paid 26 March 2009 period 2010 $’000 4,621 - 3,089 - 7,710 2009 $’000 - 1,527 - 3,057 4,584 Dividend franking account 30% franking credits, on a tax paid basis, are available to shareholders of Hansen Technologies Ltd for subsequent financial years 2,201 2,890 The above available amounts are based on the balance of the dividend franking account at year-end adjusted for: a) franking credits that will arise from the payment of any current tax liability; b) franking debits that will arise from the payment of any dividends recognised as a liability at year-end; c) franking credits that will arise from the receipt of any dividends recognised as receivables at year-end; d) franking credits that the entity may be prevented from distributing in subsequent years The ability to utilise the franking credits is dependent upon there being sufficient available profits to declare dividends. 8. CASH AND CASH EqUIVALENTS Current Cash at bank and on hand Term deposits 9. RECEIVABLES Current Trade receivables Less: Provision for impairment Term and sundry debtors Consolidated Entity 2010 $’000 1,514 21,936 23,450 Consolidated Entity 2010 $’000 7,683 - 7,683 495 8,178 2009 $’000 5,121 15,397 20,518 2009 $’000 6,588 (13) 6,575 441 7,016 10. OTHER CURRENT ASSETS Current Prepayments Accrued revenue 11. pLANT, EqUIpMENT & LEASEHOLD IMpROVEMENTS Plant, equipment & leasehold improvements, at cost Accumulated depreciation Plant and equipment under finance lease, at cost Accumulated amortisation Total plant, equipment & leasehold improvements Consolidated Entity 2010 $’000 1,134 1,683 2,817 Consolidated Entity 2010 $’000 14,686 (11,245) 3,441 3,566 (3,566) - 3,441 Reconciliations Reconciliations of the carrying amounts of plant, equipment & leasehold improvements at the beginning and end of the current financial year. plant, equipment & leasehold improvements Carrying amount at 1 July 2009 Additions Disposals Depreciation expense Net foreign currency movements arising from foreign operation Carrying amount at 30 june 2010 plant and equipment under finance lease Carrying amount at 1 July 2009 Amortisation expense Carrying amount at 30 june 2010 3,576 1,212 (1) (1,287) (59) 3,441 12 (12) - 2009 $’000 1,089 872 1,961 2009 $’000 16,175 (12,599) 3,576 3,566 (3,554) 12 3,588 3,299 1,740 (31) (1,434) 2 3,576 26 (14) 12 s t n e m e t a t S l a i c n a n F e h t o t i s e t o N 34 12. INTANGIBLES Goodwill, patents, contracts at cost Accumulated amortisation & impairment Software research and development, at cost Accumulated amortisation Total intangible assets Reconciliation of goodwill, patents and contracts, at cost Opening amount Increase due to acquisition Closing amount Accumulated amortisation & impairment at beginning of year Amortisation of patents and contracts Amortisation adjustment Accumulated amortisation & impairment at end of year Reconciliation of software research and development at cost Opening amount Expenditure capitalised in current period Closing amount Accumulated amortisation at beginning of year Current year charge Accumulated amortisation at end of year 13. pAYABLES Current Trade payables Other payables Consolidated Entity 2010 $’000 28,928 (5,249) 23,679 24,724 (20,906) 3,818 27,497 28,928 - 28,928 (4,912) (333) (4) 2009 $’000 28,928 (4,912) 24,016 23,621 (18,625) 4,996 29,012 17,935 10,993 28,928 (4,625) (290) 3 (5,249) (4,912) 23,621 1,103 24,724 (18,625) (2,281) (20,906) Consolidated Entity 2010 $’000 941 3,409 4,350 22,618 1,003 23,621 (16,105) (2,520) (18,625) 2009 $’000 863 3,233 4,096 14. pROVISIONS Current Employee benefits Onerous lease* Other Non-current Employee benefits Onerous lease* (a) Aggregate employee benefits liability (b) Number of employees at year end Reconciliations Movements in provisions other than employee benefits: provisions Onerous Lease - current Carrying amount at beginning of year Provisions made during the year Provisions released during the year Carrying amount at end of year provisions Onerous Lease - Non current Carrying amount at beginning of year Provisions made during the year Provisions released during the year Carrying amount at end of year Other - current Carrying amount at beginning of year Net provisions (payments) made during the year Carrying amount at end of year * The onerous lease arose upon the acquisition of the Peace Software business due to vacant office space not being fully utilised. Consolidated Entity 2010 $’000 4,253 378 49 4,680 273 185 458 4,526 264 523 - (145) 378 639 - (454) 185 207 (158) 49 2009 $’000 4,101 523 207 4,831 248 639 887 4,349 296 - 523 - 523 - 639 - 639 155 52 207 s t n e m e t a t S l a i c n a n F e h t o t i s e t o N 36 15. CONTRIBUTED EqUITY a) Issued and paid-up capital Ordinary shares, fully paid Fully paid ordinary shares carry one vote per share and carry the right to dividends. Consolidated Entity 2010 $’000 2009 $’000 48,715 48,199 Consolidated Entity 2010 Number of Shares 2010 $’000 2009 Number of Shares 2009 $’000 b) Movements in shares on issue Balance at beginning of the financial year 153,575,594 48,199 152,654,389 47,916 Shares issued under dividend reinvestment plan Shares issued under employee share plan Options exercised Share buy back 477,358 216,060 645,000 (77,111) 308 130 117 (39) 580,530 359,982 115,000 (134,307) 188 126 21 (52) Balance at end of the financial year 154,836,901 48,715 153,575,594 48,199 c) Rights of each type of share Ordinary shares participate in dividends and the proceeds on 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 when a poll is called. d) Share options Employee share option plan The Company continues to offer employee participation in short-term and long-term incentive schemes as part of the remuneration packages for the employees of the companies. The Employee Share Option Plan (“the Plan”) was approved by shareholders at the Company’s annual general meeting on 9 November 2001. The maximum number of options on issue under the Plan must not at any time exceed 7.5% of the total number of ordinary shares on issue at that time. The Board may issue options under the Plan to any employee of the Company and its subsidiaries, including Executive Directors and Non-Executive Directors. Options will be issued free of charge, unless the Board determines otherwise. Each option is to subscribe for one ordinary share and, when issued, the shares will rank equally with other shares. The options are not transferable. Quotation of the options on the ASX will not be sought but the Company will apply to the ASX for official quotation of shares issued on the exercise of options. Options may be granted subject to conditions specified by the Board which must be satisfied before the option can be exercised. Unless the terms on which an option was offered specified otherwise, an option may be exercised at any time after the vesting date. An option may also be exercised in special circumstances, that is, at any time within six months after the employee’s death, total and permanent disablement, retirement or retrenchment. An option lapses 28 days after termination of the employee’s employment with the Company and, unless the terms of the offer of the option specify otherwise, lapses five years after the date upon which it was granted. The Directors have the discretion to vary the terms of the options as deemed appropriate. The exercise price per share for an option will be the amount determined by the Board at the time of the grant of the option. There are no voting rights or dividend rights attached to the options prior to the options being exercised. Option holders will not be entitled to participate in any new issue of securities in the Company unless they exercise their options prior to the record date for the determination of entitlements to the new issue. If the Company makes a bonus issue of securities to ordinary shareholders, each unexercised option will, on exercise, entitle its holder to receive the bonus securities as if the option had been exercised before the record date for the bonus issue. If the Company makes a pro-rata rights issue of ordinary shares for cash to its ordinary shareholders, the exercise price of unexercised options may be adjusted to reflect the diluting effect of the issue. If there is any reorganisation of the capital of the Company, the exercise price of the options will be adjusted in accordance with the Listing Rules. Since the end of the financial year 680,000 (2009: 610,000) options have been granted under this scheme. Grant Date Consolidated 2010 1 July 2005 1 July 2006 1 July 2007 1 July 2008 1 July 2009 TOTAL Grant Date Consolidated 2009 1 July 2004 1 July 2005 1 July 2006 Options issued and not yet exercised at 30 june. Exercise Date Expiry Date Exercise price No. of options at beg of year Options Granted Options Exercised or Lapsed No. of options at end of year Issued Vested 1 November 2006 1 Nov 2009 1 Nov 2011 1 July 2008 1 July 2010 1 July 2009 1 July 2011 1 July 2010 1 July 2012 1 July 2011 1 July 2013 1 July 2012 1 July 2014 $0.260 $0.110 $0.110 $0.265 $0.390 $0.410 305,000 265,000 75,000 440,000 540,000 - - - - - - 610,000 305,000 265,000 75,000 - - - - - - 440,000 540,000 610,000 1,625,000 610,000 645,000 1,590,000 - - - - - - - Exercise Date Expiry Date Exercise price No. of options at beg of year Options Granted Options Exercised or Lapsed No. of options at end of year Issued Vested 1 July 2007 1 July 2009 1 July 2008 1 July 2010 1 July 2009 1 July 2011 1 November 2006 1 Nov 2009 1 Nov 2011 1 July 2007 1 July 2008 TOTAL 1 July 2010 1 July 2012 1 July 2011 1 July 2013 $0.180 $0.260 $0.110 $0.110 $0.265 $0.390 115,000 305,000 265,000 75,000 440,000 - - - - - - 540,000 115,000 - - - - - - 305,000 265,000 75,000 440,000 540,000 - 305,000 - - - - 1,200,000 540,000 115,000 1,625,000 305,000 EMpLOYEE SHARE pLAN The Employee Share Plan (“ESP”) was approved by shareholders at the Company’s annual general meeting on 9 November 2001. The ESP is available to all eligible employees to acquire ordinary shares in the Company. Shares to be issued or transferred under the ESP will be valued at the volume weighted average share price of shares traded on the ASX in the ordinary course of trading during the five business days immediately preceding the day the shares are issued or transferred to qualifying employees or participants. The Board has a discretion as to how the shares are to be issued or transferred to participants. Such shares may be acquired on or off market or the Company may allot shares, or they may be obtained by any combination of the foregoing. On application, employees pay no application monies. The amount of the consideration to be provided by qualifying employees to acquire the shares can be foregone from future remuneration (before tax). To qualify, employees must be full-time or permanent part-time employees of the Company or any subsidiary of the Company. Shares issued under the ESP will rank equally in all respects with all existing shares from the date of allotment. A participant must not sell, transfer or otherwise dispose of any shares issued or transferred to the participant under the ESP until the earlier of: (a) the end of the period of 3 years (or, if a longer period is specified by the Board in the offer, the end of that period) commencing on the date of the issue or transfer of the shares to the participant; and (b) the date on which the participant is no longer employed by the Company or a related body corporate of the Company. s t n e m e t a t S l a i c n a n F e h t o t i s e t o N 38 Details of the movement in employee shares under the ESp are as follows: Number of shares at beginning of year Number of shares distributed to employees Number of shares transferred to main share registry and/or disposed of Number of shares at year-end Consolidated Entity 2010 No of Shares 2009 No of Shares 925,370 216,060 (312,585) 828,845 1,212,049 359,982 (646,661) 925,370 The consideration for the shares issued on the 23 April 2010 was 60.16 cents (17 April 2009: 35 cents). The amounts recognised in the financial statements of the consolidated entity and the Company in relation to the ESp during the year were: Current receivables Issued ordinary share capital Consolidated Entity 2010 $’000 33 130 2009 $’000 32 126 The market value of ordinary Hansen Technologies Ltd shares closed at $0.565 on 30 June 2010 ($0.42 on 30 June 2009). 16. RESERVES AND RETAINED EARNINGS Consolidated Entity Foreign currency translation reserve Options granted reserve Accumulated profits (losses) (a) Foreign currency translation reserve This reserve is used to record the exchange differences arising on translation of a foreign entity. Note 16 (a) 16 (b) 16 (c) Movements in reserve Balance at beginning of year Movement during the year Balance at end of year (b) Options granted reserve This reserve is used to record the fair value of options issued to employees as part of their remuneration. Movements in reserve Balance at beginning of year Movement during the year Balance at end of year (c) Accumulated profits (losses) Balance at the beginning of year Dividends paid Other comprehensive income Net profit attributable to members of Hansen Technologies Ltd Balance at end of year 2010 $’000 (407) 200 1,389 (501) 94 (407) 166 34 200 (2,041) (7,710) (94) 11,234 1,389 2009 $’000 (501) 166 (2,041) (479) (22) (501) 137 29 166 (5,588) (4,584) 22 8,109 (2,041) 17. CASH FLOW INFORMATION (a) Reconciliation of the net profit / (loss) after tax to net cash flows from operations Net profit from ordinary activities after income tax Add / (less) items classified as investing / financing activities: (Profit) / loss on sale of non-current assets Add / (less) non cash items: Amortisation and depreciation Unrealised foreign exchange Net cash provided by operating activities before change in assets and liabilities Changes in assets and liabilities adjusted for effects of purchases and disposal of controlled entities during the year: (Increase) / decrease in trade debtors (Increase) / decrease in sundry debtors and other assets Increase / (decrease) in trade creditors Increase / (decrease) in other creditors and accruals Increase/ (decrease) in provisions (Increase) / decrease in deferred taxes Increase / (decrease) in income tax payable Increase / (decrease) in reserves Net cash provided by operating activities (b) Reconciliation of cash Cash at bank Consolidated Entity 2010 $’000 11,140 (4) 3,913 248 15,297 (1,161) (856) 255 1,164 (599) (352) (1,272) (54) 12,422 2009 $’000 8,131 30 4,258 - 12,419 4,146 (1,035) (5,970) 6,175 (2,790) (429) 26 8 12,550 23,450 20,518 s t n e m e t a t S l a i c n a n F e h t o t i s e t o N 40 18. BUSINESS COMBINATIONS a) The Company acquired 100% of the share capital of peace Software, with the effective date being 17 October 2008. Consideration Cash Paid Professional Fees Total Cash paid Shares Issued as Consideration Total Acquisition Cost Less Cash Acquired payment for Acquisition of Business Net Assets Acquired Assets Cash Trade and other receivables Plant & equipment Total Assets Acquired Liabilities Trade and other payables Provisions Total Liabilities Acquired Net Assets Acquired Total Acquisition Cost adjusted for Net Assets Acquired Tradename Customer relationships & patented technology Goodwill Net Intangibles Consolidated Entity 2010 $’000 - - - - - - - 2009 $’000 8,317 417 8,734 - 8,734 (1,269) 7,465 Fair Value $’000 Carrying Amount on Acquisition $’000 2009 2009 1,269 5,401 937 7,607 5,633 2,577 8,210 (603) 1,269 5,401 610 7,280 5,633 3,906 9,539 (2,259) 10,993 717 1,794 8,482 10,993 Goodwill arose on the acquisition of Peace Software due to the difference between the consideration paid for the business and the net assets acquired, less intangibles in the form of tradenames, customer relationships and patented technology. b) Revenue and profit of peace Software included in consolidated results of the Group in the year of acquisition Total revenue profit after income tax 19. COMMITMENTS AND CONTINGENCIES Lease expenditure commitments Operating leases (non-cancellable): Not later than one year Later than one year and not later than five years Later than five years Aggregate lease expenditure contracted for at reporting date OpERATING LEASES (NON-CANCELLABLE) period Consolidated Entity 2010 $’000 1,961 2,598 - 4,559 2009 $’000 16,290 2,374 2009 $’000 2,293 4,367 - 6,660 The consolidated entity leases property under non-cancellable operating leases expiring from one to five years. Leases generally provide the consolidated entity with a right of renewal at which time all terms are renegotiated. Contingent rental provisions within the lease agreements require the minimum lease payments to be increased by CPI per annum. s t n e m e t a t S l a i c n a n F e h t o t i s e t o N 42 20. EARNINGS pER SHARE Reconciliation of earnings used in calculating earnings per share: Basic earnings - ordinary shares Diluted earnings - ordinary shares Weighted average number of ordinary shares used in calculating basic earnings per share: Number for basic earnings per share - ordinary shares Number for diluted earnings per share - ordinary shares Basic earnings per share from continuing operations Total basic earnings per share Diluted earnings per share from continuing operations Total diluted earnings per share Consolidated Entity 2010 $’000 11,140 11,140 2009 $’000 8,131 8,131 2010 Number of Shares 2009 Number of Shares 154,359,555 152,973,482 155,947,884 154,597,002 Cents per Share Cents per Share 7.2 7.2 7.2 7.2 5.3 5.3 5.3 5.3 CLASSIFICATION OF SECURITIES AS pOTENTIAL ORDINARY SHARES The securities that have been classified as potential ordinary shares and included in diluted earnings per share only, are options outstanding under the Employee Share Option Plan. 21. DIRECTORS’ AND EXECUTIVES’ EqUITY HOLDINGS a) Compensation Options: Granted and vested during the year: During the financial year, options previously granted to key management personnel vested upon the third year anniversary of their issue date. In addition, during the financial year the Company granted options over unissued ordinary shares to the following key management personnel of the Company as part of their remuneration. Specified Executives C Hunter (Chief Operations Officer) G Lister (CFO & Company Secretary) D Meade (Client Services Manager) G Prior (General Manager, North America) S Weir (General Manager, Europe) Vested During the Year Granted During the Year Grant Date Value per Option at Grant Date Exercise price Vesting Date Last Exercise Date Terms & Conditions for each Grant 75,000 75,000 75,000 - - 75,000 1 July 2009 75,000 1 July 2009 75,000 1 July 2009 40,000 1 July 2009 40,000 1 July 2009 $0.410 $0.410 $0.410 $0.410 $0.410 $0.410 $0.410 $0.410 $0.410 $0.410 1 July 2012 1 July 2014 1 July 2012 1 July 2014 1 July 2012 1 July 2014 1 July 2012 1 July 2014 1 July 2012 1 July 2014 Total 225,000 305,000 b) Number of options held by key Management personnel: Balance 30-jun-09 Granted as Remuneration Options Exercised Options Forfeited Balance 30-jun-10 Total Exercisable Unexercisable Vested at 30 june 2010 Specified Executives C Hunter (Chief Operations Officer) G Lister (CFO & Secretary) D Meade (Client Services Manager) G Prior (General Manager, North America) S Weir (General Manager, Europe) 300,000 300,000 300,000 - 40,000 75,000 75,000 75,000 40,000 40,000 150,000 150,000 150,000 - - Total 940,000 305,000 450,000 - - - - - - 225,000 225,000 225,000 40,000 80,000 795,000 - - - - - - - - - - - - - - - - - - Any options not exercised are forfeited if not exercised within 28 days of termination of employment. Share based payments represent a value attributed to options over ordinary shares issued to Executives. They expire during the period up to 1 July 2014. Each option entitles the holder to purchase one ordinary share in the Company. The share based payment value disclosed above is calculated at the date of grant using the Black-Scholes model. For those options issued to key management personnel this year the Black-Scholes model applied a: share price volatility factor in respect of the Company’s historical share price movement compared with the industry average, for a period equal to the 3 year option vesting period of 52%, a continuously compounding risk free interest rate of 5.58%. a probability factor for the likelihood of the options being exercised based on historical trends of 64%, and compared the issue price ($0.41 cents per share) with the market price on day of issue ($0.41 cents per share), to determine a weighted average fair value for the options issued as at grant date of $0.082 cents per option. s t n e m e t a t S l a i c n a n F e h t o t i s e t o N 44 c) Number of shares held by key Management personnel: Specified Directors K Hansen (Chairman) A Hansen (MD & CEO) B Adams D Osborne P James Specified Executives C Hunter (Chief Operations Officer) G Lister (CFO & Company Secretary) D Meade (Client Services Manager) G Prior (General Manager, North America) S Weir (General Manager, Europe) Balance 30-jun-09 Received as Remuneration Options Exercised Net Change Other Balance 30-jun-10 93,999,585 11,546,174 215,520 268,321 - 277,120 909,949 77,777 - - 107,294,446 - - - - - - - - - - - - - - - - (214,985) 93,784,600 (5,700,000) 5,846,174 - 21,243 - 215,520 289,564 - 150,000 150,000 150,000 - - 2,038 429,158 - 1,059,949 (223,338) 4,439 - - - - 450,000 (6,115,042) 101,629,404 22. AUDITOR’S REMUNERATION Audit services: Amounts received or due and receivable by the Auditors of the Company for: Australia - an audit and review of the financial report of the entity and any other entity in the consolidated entity Overseas Firms - audit and review of financial reports Other financial services: Australia - tax related services - advisory services Overseas Firms - tax related services - advisory services Consolidated Entity 2010 $’000 2009 $’000 179 122 301 29 22 51 9 36 45 96 205 139 344 43 18 61 20 18 38 99 Total Auditor’s remuneration 397 443 23. RELATED pARTY DISCLOSURES a) The consolidated financial statements include the financial statements of Hansen Technologies Ltd and its controlled entities listed below: Name parent entity Hansen Technologies Ltd Subsidiaries of Hansen Technologies Ltd Hansen Corporation Pty Ltd Hansen Research & Development Pty Ltd Hansen Corporation Investments Pty Ltd Hansen Holdings (Asia) Pty Ltd Hansen Corporation Limited Hansen Corporation Europe Limited Hansen Corporation USA Limited Hansen North America, Inc. Hansen Corporation Asia Limited Hansen New Zealand Limited Peace Software New Zealand Limited Peace Software Australia Limited Peace Software Australia Pty Ltd Peace Software North America Limited Peace Software Inc Peace Software Canada Inc Peace Software Europe Limited Note Country of Incorporation Ordinary share consolidated entity interest 2010 % 2009 % Australia Australia Australia Australia Australia New Zealand United Kingdom United States of America United States of America Hong Kong New Zealand New Zealand New Zealand Australia New Zealand United States of America Canada New Zealand (i) (i) (i) 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 Notes: (i) Merged into Peace Software New Zealand Limited, a New Zealand registered Company and subsidiary of Hansen Technologies Limited, on 30 June 2010. b) The following provides the total amount of transactions that were entered into with related parties for the relevant financial year: Transactions with key management personnel of the entity or its parent and their personally related entities The terms and conditions of the transactions with Directors and their Director-related entities were no more favourable than those available, or which might reasonably be expected to be available, on similar transactions to non-Director related entities on an arm’s length basis. The following table provides the total amount of transactions that were entered into with related parties for the relevant financial year: K Hansen - Lease Rental Payments Consolidated Entity 2010 $ 2009 $ 819,218 794,616 LEASE RENTAL pAYMENTS Mr K Hansen has, through entities with which he is related, leased properties to the consolidated entity on an arms length basis. Total lease rental payments made to these director-related entities for the year ended 30 June 2010 were $137,581 and $681,637 respectively (2009: $134,777 and $659,839 respectively). s t n e m e t a t S l a i c n a n F e h t o t i s e t o N 46 24. pARENT ENTITY DETAILS Summarised presentation of the parent entity, Hansen Technologies Ltd, financial statements: (a) Summarised statement of financial position Assets Current assets Non-current assets Total assets Liabilities Current liabilities Non-current liabilities Total liabilities Net assets Equity Share capital Retained earnings Share based payments reserve Total equity (b) Summarised statement of comprehensive income Profit for the year Other comprehensive income for the year Total comprehensive income for the year (c) parent entity guarantees Hansen Technologies Ltd, being the parent entity, has not entered into any guarantees in relation to debts of its subsidiaries. parent Entity 2010 $’000 2009 $’000 69 44,542 44,611 1,487 3,821 5,308 39,303 48,715 (9,612) 200 39,303 4,641 - 4,641 65 48,669 48,734 2,657 4,257 6,914 41,820 48,199 (6,545) 166 41,820 4,597 - 4,597 25. SEGMENT INFORMATION a) Description of segments Inter-segment pricing is determined on an arm’s length basis. Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items mainly comprise income-earning assets and revenue, and corporate assets and expenses. Segment capital expenditure is the total cost incurred during the period to acquire segment assets that are expected to be used for more than one period. Business segments The consolidated entity comprises the following main business segments, based on the consolidated entity’s management reporting system: BILLING: Represents the sale of billing applications and the provision of consulting services in regard to billing systems. IT OUTSOURCING: Represents the provision of various IT outsourced services covering facilities management, systems and operations support, network services, telehousing and business continuity support. OTHER: Represents software and service provision in superannuation administration. Geographical segments In presenting information on the basis of geographical segments, segment revenue is based on the geographical location of customers. Segment assets are based on the geographical location of the assets. The consolidated entity’s business segments operate geographically as follows: AUSTRALIA : Sales and services in all Australian states and territories NORTH AMERICA : Sales and services throughout North America EUROpE : Sales and services throughout Europe OTHER : Sales and services throughout Asia and New Zealand s t n e m e t a t S l a i c n a n F e h t o t i s e t o N 48 b) Segment Information 2010 Segment revenue Total segment revenue Segment revenue from external source Segment result Total segment result Segment result from external source Total segment assets Total segment liabilities 2009 Segment revenue Total segment revenue Segment revenue from external source Segment result Total segment result Segment result from external source Total segment assets Total segment liabilities Financial Year $’000 Billing Outsourcing Other Total 45,311 45,311 11,878 11,878 29,271 13,883 57,766 57,766 17,117 17,117 32,141 15,934 5,163 5,163 1,779 1,779 1,198 851 7,292 7,292 3,460 3,460 1,672 1,200 Financial Year $’000 Billing Outsourcing Other Total 42,018 42,018 10,397 10,397 33,089 13,195 6,844 6,844 3,157 3,157 1,380 1,056 5,436 5,436 2,456 2,456 1,282 862 54,298 54,298 16,010 16,010 35,751 15,113 2009 $000 32,361 10,797 9,512 1,628 2010 $000 34,413 13,235 9,626 492 57,766 54,298 i) Reconciliation of segment revenue from external source to the consolidated statement of comprehensive income Revenue from external customers attributed to individual countries is detailed as follows: Segment revenue from external source 57,766 54,298 Australia 2010 $000 2009 $000 Other revenue Interest revenue Total revenue 197 823 1,112 927 58,786 56,337 North America Europe Other Total revenue ii) Reconciliation of segment result from the external source to the consolidated statement of comprehensive income iii) Reconciliation of segment assets to the consolidated statement of financial position 2010 $000 2009 $000 Segment result from external source 17,117 16,010 Segment assets Interest revenue Interest expense Depreciation & amortisation Other expense Total profit before income tax Unallocated assets Total assets 823 (12) (269) (3,577) 14,082 927 - (311) (5,668) 10,958 2010 $000 32,141 34,317 66,458 2009 $000 35,751 26,540 62,291 Non-current assets attributed to individual countries is detailed as follows: iv) Reconciliation of segment liabilities to the consolidated statement of financial position Australia North America Europe Other Total non-current assets 2010 $000 2009 $000 46,847 42,095 Segment liabilities 1,553 3,163 14,895 66,458 3,828 3,721 12,647 62,291 Unallocated liabilities Total liabilities 2010 $000 15,934 627 16,561 2009 $000 15,113 1,355 16,468 26. SUBSEqUENT EVENTS There has been no matter or circumstance, which has arisen since 30 June 2010 that has significantly affected or may significantly affect: (a) the operations, in financial years subsequent to 30 June 2010, of the consolidated entity, or (b) the results of those operations, or (c) the state of affairs, in financial years subsequent to 30 June 2010, of the consolidated entity. s t n e m e t a t S l a i c n a n F e h t o t i s e t o N 50 DIRECTORS’ DECLARATION The Directors of the Company declare that: 1. The financial statements and notes, as set out on pages 19 to 50, are in accordance with the Corporations Act 2001: (a) Comply with Accounting Standards in Australia and the Corporations Regulations 2001; and (b) As stated in Note 1, the consolidated financial statements also comply with International Financial Reporting Standards; and (c) Give a true and fair view of the financial position of the consolidated entity as at 30 June 2010 and its performance for the year ended on that date. 2. 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. This declaration has been made after receiving the declarations required to be made by the Chief Executive Officer and Chief Financial Officer to the Directors in accordance with sections 295A of the Corporations Act 2001 for the financial year ending 30 June 2010. This declaration is made in accordance with a resolution of the Board of Directors. kenneth Hansen Chairman Director / Melbourne 30 September 2010 Andrew Hansen Chief Executive Officer Director / Melbourne 30 September 2010 n o i t a r a l c e D ’ s r o t c e r i D 52 An independent Victorian Partnership ABN 27 975 255 196 INDEpENDENT AUDITOR’S REpORT To the Members of Hansen Technologies Limited We have audited the accompanying financial report of Hansen Technologies Ltd and controlled entities. The financial report comprises the consolidated statement of financial position as at 30 June 2010, the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year ended on that date, a summary of significant accounting policies, other explanatory notes and the Directors’ declaration of the consolidated entity comprising the Company and the entities it controlled at the year’s end or from time to time during the financial year. DIRECTORS’ RESpONSIBILITY FOR THE FINANCIAL REpORT The Directors of the Company are responsible for the preparation and fair presentation of the financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001. This responsibility includes establishing and maintaining internal control relevant to the preparation and fair presentation of the financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. In Note 1, the Directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that compliance with the Australian equivalents to International Financial Reporting Standards ensures that the financial report, comprising the financial statements and notes, complies with International Financial Reporting Standards. AUDITOR’S RESpONSIBILITY Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the Auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the Auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. INDEpENDENCE In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. AUDITOR’S OpINION In our opinion, (a) the financial report of Hansen Technologies Ltd is in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2010 and of its performance for the year ended on that date; and (ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001; and (b) the consolidated financial report also complies with International Financial Reporting Standards as disclosed in Note 1. REpORT ON THE REMUNERATION REpORT We have audited the remuneration report included in pages 12 to 15 of the Directors’ report for the year ended 30 June 2010. The Directors of the Company are responsible for the preparation and presentation of the remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the remuneration report, based on our audit conducted in accordance with Australian Auditing Standards. AUDITOR’S OpINION In our opinion the remuneration report of Hansen Technologies Ltd and controlled entities for the year ended 30 June 2010, complies with section 300A of the Corporations Act 2001. S SCHONBERG partner 30 September 2010 pITCHER pARTNERS Melbourne Liability limited by a scheme approved under Professional Standards Legislation Pitcher Partners, including Johnston Rorke, is an association of independent firms Melbourne | Sydney | Perth | Adelaide | Brisbane An independent member of Baker Tilly International t r o p e R ’ s r o t i d u A t n e d n e p e d n I 54 CORpORATE GOVERNANCE The Corporate Governance principles and related Charters and policies for the management and operation of the Hansen Group of Companies are available for review on the corporate website: www.hsntech.com The Board Ethics and Responsibilities Risk Management Remuneration 55 59 62 64 AppROACH TO GOVERNANCE The Hansen Corporate Governance principles provide direction to the business to help meet our responsibilities to shareholders, customers, employees and community. In relation to Corporate Governance, the Board aims to: Embrace best practice in Corporate Governance Remain mindful of operating practices in the international jurisdictions in which we operate Recognise and comply with the principles of the ASX Corporate Governance Council Ensure Directors, Executives, Management, and staff are cognisant of the Hansen Governance principles. 1. THE BOARD The primary role of the Board of Directors is to provide effective governance over the performance and affairs of the Hansen Technologies Group. In carrying out its responsibilities, the Board undertakes to serve the interest of shareholders, employees, customers and the broader community honestly, fairly, diligently and in accordance with applicable laws. DUTIES AND RESpONSIBILITIES The specific functions established and reserved for the Board are: Providing strategic direction and approving corporate strategies. Selecting and appointing the Chief Executive, determining conditions of service and monitoring performance against established objectives. If necessary removing the CEO from office. Monitoring financial performance against budgeted objectives. Ensuring adequate risk management controls and reporting mechanisms are maintained. Approving and monitoring progress of major capital expenditure, capital management, acquisitions and divestments. Ensuring that continuous disclosure requirements are met. Ensuring responsible corporate governance is understood and observed at Management, Executive, and Board level. The Board shall have full and free access to Executives and other employees of the Group. Collectively or individually, the Board may take independent advice considered necessary to fulfil their relevant duties and responsibilities at the Group’s expense. Individual Board members seeking such advice must obtain the approval of the Chairman, which will not be unreasonably withheld, and the advice will be made available to all Board members as appropriate. DELEGATION OF RESpONSIBILITY The Board has delegated to the Chief Executive Officer the authority and responsibility for implementing the Group’s strategic direction and overseeing the everyday affairs of the Hansen Group. The Chief Executive Officer’s specific responsibilities include ensuring business activities are in accordance with the Group’s overall business strategy, ensuring the Group conducts its affairs within the law and the principles outlined in Hansen’s Corporate Governance policies, keeping the Board informed of all major developments and approving expenditure and setting remuneration levels of personnel within the normal course of business. The Chief Executive consults with the Chairman of the Board and respective Committees on matters that are sensitive, extraordinary or of a strategic nature. Through the Chief Executive Officer, the Board has delegated authority and responsibility to other Executives and Management for their respective business functions. Where potential for conflict is identified the Board appoints a Sub-Committee specifically structured, authorised and tasked to determine the appropriate actions or responses so as to eliminate any potential for conflicts. pERFORMANCE Board members may periodically review and evaluate the Board’s performance and that of the Board Committees. Given the limited size of the Board and its Committees an annual formal review is not deemed warranted. However there is an ongoing and constant provision for each Director to contribute judgements and observations at any time. The performance evaluation process is as follows: Each Director, as they see fit, will periodically evaluate the effectiveness of the Board and its Committees and submit observations to the Chairman. The Chairman of the Board will make a presentation incorporating his assessment of such observations to enable the Board to assess and, if necessary, take action. The Board will agree and develop actions that may be required to improve performance. Outcomes and actions will be minuted. The Chairman will assess the progress of the actions to be achieved. This process aims to ensure that individual Directors have an unlimited opportunity to assess and comment on the performance of the Board and its Committees with the objective of enhancing the Board’s effectiveness in achieving its duties and responsibilities. Periodically the Chairman may propose a formal performance evaluation review and he may commission a third party to assist in such a review if deemed desirable. No such formal review was conducted during this reporting period. MEETINGS The Board will meet as often as deemed necessary by the Directors in order to fulfil their duties and responsibilities as Directors, and as dictated by the needs of the business. As a matter of practice the Board schedules to meet once each month. COMpOSITION The Board determines the Board’s size and composition, subject to limits imposed by the Group’s Constitution. The Constitution determines the basis for the election and appointment of Directors and specifies a minimum of three Directors and a maximum of ten. Currently, the Board comprises the Chairman, Kenneth Hansen, three other Non-Executive Directors, and one Executive Director, the CEO Andrew Hansen. The skills, tenure of office, experience and expertise relevant to the position of Director held by each Director is detailed in the Annual Report. INDEpENDENCE The Board’s definition of an independent Director is one who is unaffiliated with the Executive and free from any business, significant shareholding, or other relationship that could materially interfere with the exercise of independent judgement. The Board currently has two independent Directors, Bruce Adams and Phillip James. The Chairman of the Board, Kenneth Hansen, is the original Founder of the Company and currently its majority shareholder. As a result he is not considered an independent Director. His background in computer services, outsourcing and software development offer a depth of experience and skills that are important for the position of Chairman. Given the specialist nature and industry specific focus of Hansen’s business an independent Chairman is not regarded as necessary at this time. Whilst the current Board is not composed of a majority of independent Directors, when considering the Group’s level of operations and the experience of the current Directors, the Board is satisfied with the current composition. However, as it is an objective of the Board to strive for a majority of independent Directors the Board will continue to seek new Directors that possess relevant skills and experience specific to the industries in which our Company operates. e c n a n r e v o G e t a r o p r o C 56 COMMITTEES purpose To assist it in carrying out its responsibilities, the Board has established two standing Committees comprising some or all of its members: the Audit Committee, and the Remuneration Committee. Considering the level of operations of the Group and the current number of Board members, the appointment of a formal Nominations Committee is not deemed necessary. Nominations for positions on the Board are considered during a meeting with all Board members present. Other Committees of the Board may be established to undertake specific tasks if deemed appropriate. AUDIT COMMITTEE Membership The Audit Committee was formed in May 2000. The members are appointed by the Board of Directors and shall preferably comprise three Directors that have diverse and complementary backgrounds with a majority of independent members. The Committee Chairman shall be independent, possess leadership experience and a sound finance or business background. All Committee members must be financially literate. Such qualification is interpreted by the Board in its business judgement. Furthermore, at least one member shall have accounting or related financial management expertise. The members of the Committee as at 30 June 2010 were Non-Executive Directors, David Osborne, Phillip James, and the Chairman of the Committee Bruce Adams. Both the Chairman of the Committee, Bruce Adams and Phillip James are considered independent members of the Committee. The skills, tenure of office, experience and expertise relevant to the positions of the members of the Audit Committee is detailed in the Annual Report. Meetings The Committee shall meet as required, but no less than twice each year. The purpose of these meetings shall be to: Review and approve the half-year financial report. Review and approve the annual financial report. Review the external audit reports. Perform the general responsibilities of the Committee. The Audit Committee met three times throughout the year ended 30 June 2010 and all members of the Audit Committee at the time were present at all meetings. The Audit Committee shall provide assistance to the Board of Directors in fulfilling its Corporate Governance and oversight responsibilities in relation to the Group’s financial reporting, internal control structure, risk management systems, and external audit functions. In doing so, it is the responsibility of the Committee to maintain free and open communication between the Committee, external Auditors, and the Hansen Executive team. In discharging its oversight role, the Committee is empowered to investigate any matter brought to its attention with full access to all books, records, facilities, and personnel of the Hansen Group. The Committee has the authority to engage independent counsel and other advisers as it determines necessary to carry out its duties. Duties and Responsibilities The following shall be the principal duties and responsibilities of the Audit Committee. These are set forth as a guide with the understanding that the Committee may supplement them as appropriate. Understanding the Business The Committee shall ensure it understands the Group’s structure, controls, and types of transactions in order to adequately assess the significant risks faced by the Group in the current economic environment. Financial Reporting The primary responsibility of the Audit Committee is to oversee the Group’s financial reporting process on behalf of the Board and report the results of its activities to the Board. The external Auditors are responsible for auditing the Group’s financial reports and for reviewing the Group’s interim financial reports. The Board of Directors is ultimately responsible for the Group’s financial reports including the appropriateness of the accounting policies and principles that are used by the Group. The Committee, in carrying out its responsibilities, believes its policies and procedures should remain flexible, in order to best react to changing conditions and circumstances. The Committee will take appropriate actions to guide corporate philosophies for quality financial reporting, sound business risk practices, and ethical behaviour. Scope of External Audit The Committee shall discuss with the external Auditors the overall scope of the external audit, including identified risk areas and any additional agreed-upon procedures. In addition, the Committee shall also review the external Auditor’s compensation to ensure that an effective, comprehensive and complete audit can be conducted for the agreed compensation level. Independence of External Auditors The Committee shall review and assess the independence of the external Auditor, including but not limited to any relationships with the Group or any other entity that may impair, or appear to impair, the external Auditor’s judgment or independence in respect of the Group. The Committee shall give clear direction in hiring policies for employees, or former employees, of the external Auditor in order to prevent the impairment or perceived impairment of the external Auditor’s judgment or independence in respect of the Hansen Group. Furthermore, the Committee shall include in the Group’s annual report a statement that the Committee is satisfied the provision of non-audit services has not impacted the external Auditors independence. REMUNERATION COMMITTEE Membership The Remuneration Committee currently consists of three Non–Executive Directors, David Osborne, Phillip James, and the Chairman Bruce Adams. Both the Chairman of the Committee, Bruce Adams and Phillip James are considered independent members of the Committee. Meetings The Committee will meet at least annually to assess annual remuneration changes, and will hold additional meetings where required. A performance evaluation of the CEO and Senior Executives was undertaken during the reporting period in accordance with this Remuneration Policy. The Remuneration Committee met one time during the financial year and all members of the Remuneration Committee at the time were present. Assessment of Accounting, Financial and Internal Controls The Committee shall discuss with the Senior Executives and the external Auditors, the adequacy and effectiveness of the accounting and financial controls, including the Group’s policies and procedures to assess, monitor, and manage business risk, as well as legal and ethical compliance programs (including the Group’s Code of Conduct). The Committee shall receive periodic reports from the external Auditor on the critical policies and practices of the Group as well as compliance with generally accepted accounting principles. Any opinion obtained from the external Auditors on the Group’s choice of accounting policies or methods should include an opinion on both appropriateness and acceptability of that choice or method. Periodically, the Committee shall meet separately with the Senior Executive and the external Auditors to discuss issues and concerns warranting Committee attention, including but not limited to their assessments of the effectiveness of internal controls and the process for improvement. The Committee shall provide sufficient opportunity for the external Auditors to meet privately with the members of the Committee. The Committee shall review with the external Auditor any audit observations and the Senior Executive’s responses. Appointment of External Auditors The Committee shall be directly responsible for making recommendations to the Board of Directors on the appointment, reappointment or replacement (subject, if applicable, to shareholder ratification), remuneration, monitoring of the effectiveness, and independence of the external Auditors, including resolution of disagreements between the Senior Executives and the Auditors regarding financial reporting. The Committee shall approve all audit and non-audit services provided by the external Auditors and shall not engage the external Auditors to perform any non-audit or assurance services that may impair the external Auditor’s judgment or independence in respect of the Hansen Group. Assessment of External Audit The Committee, at least on an annual basis, shall meet and discuss with the external Auditors: Any material issues raised by any control review, or peer review, of the audit firm, or by any inquiry or investigation by governmental or professional authorities, respecting one or more independent audits carried out by the firm, and any steps taken to deal with any such issues. All relationships between the external Auditor and the Group (to assess the Auditor’s independence). e c n a n r e v o G e t a r o p r o C 58 purpose, Duties and Responsibilities Behave as a good corporate citizen: The responsibilities of the Committee are to: Advise on remuneration policies and practices generally. Provide specific recommendations on remuneration packages and other terms of employment for Executive Directors and Non-Executive Directors. Evaluate the performance of and determine an appropriate remuneration base and structure for the CEO in accordance with specified key performance indicators and budgeted financial performance expectations. Assess the reasonableness of and approve the remuneration proposals put forward by the CEO for the Executive team, including the performance objectives specified for each Executive. 2. ETHICS AND RESpONSIBILITY CODE OF CONDUCT At Hansen Technologies we recognise that our Company is made up of the individual employees representing our operations globally. Each person has an individual responsibility for their own behaviour and should take accountability for their actions and choices. The Hansen Technologies Code of Conduct has been established to assist all Hansen representatives to make considered choices with regard to their behaviour. The Code of Conduct reflects the Hansen Group’s primary values of ethical behaviour, compliance with legal obligations, and respecting the expectations of all stakeholders. Our Code To respect the law and act accordingly, including the following: Hansen employees operate in numerous countries and it is essential that the laws of each jurisdiction are observed and followed. It is important to note that the observance of the laws is not simply because they exist, it is because it is right to do so. Breaching laws and regulations can result in serious consequences for the Hansen Group and the individual involved. We should respect customs and business practices of countries in which we operate, whilst always observing the primary principles of this code. Where we believe our product or service provision would be used in relation to illegal activities, we shall withdraw from involvement. Discharging of authority to sign documents on behalf of the Hansen Group should be performed responsibly and indicates we have received and understood the document being signed. We are not to act outside our authority. Breaches of any law should be notified to a Senior Executive. Whilst pursuing our business objectives we should aim to contribute to the communities we operate within and should consider the impact of decisions on our colleagues, customers and community. Respect confidentiality: We respect the confidential nature of the Hansen Group’s business affairs and those of our customers and colleagues. As a part of our employment contract with the Hansen Group we commit to keeping confidential any information we obtain in the course of our employment. Confidential information is to be used only for authorised work-related tasks, and never for personal gain or for the gain of others. Value professionalism: A cornerstone of the Hansen business is the professionalism and conduct of individuals and of the Hansen Group. In addition to conducting ourselves ethically, we should continually aim for excellence in all our business activities. Act to avoid conflicts of interest: A conflict of interest occurs where an employee has a personal or professional interest sufficient to influence, or appear to influence, the objective performance of their duties and responsibilities to the Hansen Group. No employee of the Group should allow themselves to be placed in a position where they have a conflict with their duties and responsibilities to the Hansen Group, or which are prejudicial to the Group. Employees should speak to their manager where they have concerns regarding a potential conflict of interest. Breaches of the Code of Conduct Employees who breach this Code may face disciplinary action, which could result in changes to their employment. COMMUNICATIONS Hansen has established communication mechanisms to provide shareholders with information about the Group and to enable them to exercise their rights as shareholders in an informed manner. Communication Methods Information is communicated to shareholders through: Website: Hansen encourages the use of electronic communications by providing up-to-date information on the Group web site, www.hsntech.com. The “Investors” section of the website contains a range of information relevant to shareholders including: - ASX announcements - Annual Reports and presentations Communications Representative Hansen has appointed the Company Secretary as the Communications Representative. The Communications Representative has responsibility for: Coordinating and controlling disclosure of information to ASX, shareholders, analysts, brokers, the media and the public. Ensuring complete records are maintained of all disclosures of information by Hansen and the related authorisations. Reporting and making recommendations to the Board on information potentially warranting disclosure. Developing and maintaining relevant guidelines to help employees understand what information is price sensitive. Educating Hansen staff, Management, Executives, and Directors on disclosure guidelines and raising awareness of the principles underlying continuous disclosure. Supporting the Directors and Executives in ensuring that Hansen complies with continuous disclosure requirements. The Board has nominated a limited number of individuals that are authorised as spokespersons for Hansen as follows. The Chairman. The Chief Executive Officer. Company Secretary. The Chief Financial Officer. Other Executives may become spokespersons for specific areas under their control, however any comments are to be limited to their area of expertise. - Financial results - Corporate Governance - Key dates - Share registry contact details and links - Contact link for more shareholder information Annual Report: distributed either over the web or by post. Notice of Annual General Meeting by mail. Mail or upload to the web site whenever there are other significant developments to report. The Annual General Meeting is seen as an important communication forum. In preparing notices of meeting and related explanatory information, Hansen aims to provide all information that is relevant to shareholders in making a decision on the matter to be voted on by shareholders in a clear and concise format. During the meeting, time is dedicated to accommodating shareholders questions and the external Auditors are in attendance to respond to any relevant questions. Following the meeting, Directors and shareholders are able to further communicate informally. Hansen is committed to continuing to improve communication with shareholders. Communication mechanisms will be reviewed regularly to ensure they provide the optimum information flow to Shareholders and potential investors, enabling them to make decisions in an informed manner. CONTINUOUS DISCLOSURE The Hansen Continuous Disclosure and Communication Policy has been developed to provide clear guidelines for the operations of the Hansen business and establishes appropriate processes and criteria for continuous disclosure to ensure compliance with the requirements of the ASX and other securities and corporations legislation. The Policy’s primary objective is the promotion of effective communication with Shareholders and related stakeholders. The key principles of the Policy are: Material Company information is issued to shareholders and the market in a timely manner and in accordance with our obligations to the market. Such information is communicated in a way that allows for all interested parties to have equal and timely access. Communication is presented in a clear, factual and balanced manner. ASX reporting obligations are met. e c n a n r e v o G e t a r o p r o C 60 Directors and Executives responsibilities Directors and Senior Executives are primarily responsible for the compliance with continuous disclosure guidelines. The appointment of the Communications Representative is to facilitate overall awareness and the ability of Hansen to comply with disclosure guidelines. Directors and Executives are responsible for communicating to the Communications Representative: Any price sensitive information of which they become aware of which they believe the Communications Representative will not be aware. If individuals are uncertain as to whether an issue could be sensitive, they should report the matter for the Board to consider. Disclosures of any information from Hansen that they believe the Communications Representative may not be aware. If they undertake any dealings in securities of Hansen. Their comments and ultimate approval of draft announcements, presentations and general communications to shareholders, ASX and the market. All information, as specified by ASX and ASIC, that requires market announcements. Communications for Disclosure Hansen will make market disclosures on any event that is deemed to have possible material effect on the price of Hansen securities. Events warranting disclosure include: Financial performance and significant changes in financial performance. Changes in Board Directors and Senior Executives. Mergers, acquisitions, divestments, joint ventures or changes in assets. Significant developments in regard to new projects or ventures. Events regarding an entity’s shares or securities. Major new contracts, orders, or changes in suppliers or customers. Significant changes in products, product lines, supplies or inventory. Industry issues that may have a material impact on the Group. Major litigation. Decisions on significant issues affecting the entity by regulatory bodies in Australia such as the Australian Foreign Investment Review Board, Australian Takeovers Panel, Australian Competition and Consumer Commission. If there is any uncertainty, Hansen Directors and Senior Executives will discuss the matter, seek legal advice if necessary, and if considered appropriate, approach the ASX to seek its position on whether the information should be disclosed to the market. Hansen is aware that outside of statutory and listing rule requirements, communication with the market will occur in other forms. Communication channels include: Investor briefings and presentations. One-on-one meetings with stockbroking analysts or institution fund managers. Industry forums. Company literature. Media interviews. In participating in such communications Hansen will act to avoid against unintended disclosure of material information to selected market participants. Communications procedures A representative of Hansen, the Directors or the Senior Executives, may not release any information that is required to be disclosed to the ASX under the continuous disclosure rules to any person before: The information has been given to the Communications Representative and the approval and sign-off process for disclosure has been effected. The information has been given to ASX. An acknowledgement of the receipt of that information has been received from ASX. SHARE TRADING pOLICY Directors, Officers, employees and their associates must not engage in insider trading, or the disclosure of inside information to third parties. Insider trading means the buying and selling of shares on the basis of price-sensitive information that is not generally available to others. This includes procuring another person to purchase or sell shares on the basis of insider information. Rules for Employees, Directors and Officers Employees, Directors, Executives and their associates who have price-sensitive information about Hansen shares, or other securities, which is not generally available to others: Must not subscribe for, buy or sell shares, other securities of the Group, or other price sensitive products to which the inside information relates, either for themselves, or for others.  Must not get another person (whether a family member, friend, associate, colleague, or your broker, investment adviser, private Company or trust) to subscribe for, buy or sell the affected shares or other securities or other price sensitive products for the employee, for another person or for themselves. Must not, either directly or indirectly, give the inside information, or allow it to be given to another person who they know, or should know, would be likely to do any of the prohibited things described above. Must not communicate inside information to anybody who works for the Hansen Group except on a “need to know” basis and in accordance with the rules and policies of the relevant business division. As a general rule, Directors and Executives are only permitted to trade Hansen shares in the 30-day period commencing two days after: The release of Hansen’s half yearly results. The release of Hansen’s yearly results. Hansen’s Annual General Meeting. A “special circumstance”, that will be notified on a case-by-case basis by the Chairman or Chief Executive Officer (example being the release of a trading update to the ASX or the issue of a prospectus). Where Directors or Executives want to trade outside of this general rule, they are required to discuss the matter with the Chairman and Chief Executive Officer who will only give approval if determined that there is no price-sensitive information held that is not available to the market. The Corporations Act The Corporations Act 2001 section 1002G deals with insider trading. Contravention of the insider trading provisions of the Corporations Act constitutes an offence that is punishable by a maximum penalty of $200,000 or imprisonment for five years, or both. Where individuals are concerned about breaching the insider trading provisions of the Corporations Act they should immediately obtain independent legal advice. 3. RISk MANAGEMENT Hansen recognises that the daily activities and existence of its business is subject to various elements that can create uncertainty which brings with it potential risk and opportunity. At Hansen all members of the Group aim to promote a culture of internal controls and reporting which will empower all employees to manage risk as and when it occurs, with the aim of achieving the stated goals and strategic objectives. With contribution from all layers of management and the Board, a Register of Risks has been developed and will be maintained. Each risk is assessed for the likelihood and consequence of a risk eventuating and a combined inherent risk rating developed. Risk management practises to mitigate and manage the identified risks are then specified and put into action. It is the intention that the Risk Register be regularly reviewed and updated on a case by case basis as new risks are identified or the situation surrounding previously identified risks are varied. During this reporting period a thorough process has been undertaken, with the assistance of external risk advisors, to identify risks and develop relevant risk management practises. The outcome of this process and the effectiveness of the Group’s risk management processes are being reported to the Board. ROLES AND RESpONSIBILITIES The Board of Directors is responsible for approving and reviewing Hansen’s Risk Management Policy and overseeing all aspects of internal control including compliance activities, the appropriateness of accounting policies and the adequacy of financial reporting. It delegates daily management responsibility to the Chief Executive Officer. The Executive team is responsible for implementing the Board approved Risk Management Policy, maintaining the currency of the Risk Register and developing operational policies, internal controls, processes and procedures for identifying and managing risks in all of Hansen’s activities. Management must also periodically report to the Board on the maintenance of the Risk Register and the effectiveness of the risk management processes. Independent Review will be conducted including: External audit being an overall independent evaluation of the adequacy and effectiveness of management’s control of operational risk. Quality Assurance audits verifying that systems are operating as planned. Independent reviews that may be conducted for special assessment as required. e c n a n r e v o G e t a r o p r o C 62 kEY RISk CATEGORIES Operational Risk Operational risk is the risk of loss resulting from inadequate or failed internal processes or systems, decisions of employees or from external events. Hansen operates under a Risk Management framework that is approved by the Board. Implementation and accountability is the responsibility of management with effectiveness being subject to external audit review. Each individual business unit is responsible for the identification, measurement, monitoring and mitigation of operational risk. This is supported by input from corporate level functions such as the office of Chief Operating Officer, Risk Management Group, Legal and Finance Departments. The internal control system is an integral part of Hansen’s operations and involves all levels of personnel. The controls are preventative and detective in nature and are reviewed regularly for relevance and effectiveness. Key elements to the internal control system are Change Management, Finance Procedures, Delegation of Authority, Segregation of Duties, Access Security, Reconciliation, Documentation and Reporting. This is further supported by Contingency Planning and Continual Improvement activities. Credit Risk Credit risk is the potential for financial loss where customers or business associates fail to meet their financial obligations to Hansen. The foundation control is that individuals throughout the Hansen Group are aware of credit risk and act to identify, report and manage situations that arise. Specific policies and procedures are in place to deal with credit risk, the critical element of these policies being segregation of duties and delegation of authority. Throughout the course of the credit cycle each phase is assessed by the relevant specialist group. Each group is trained and independent in the cycle. Market Risk Market risk is the potential for financial loss arising from Hansen’s activities in the information technology market across all regions. The components of the market risk framework Hansen operates in are: Origination Environment Target markets Know your customers Know your vendors Assess the market & region Assess the product for the region Global Hansen policies to Product planning & management be observed Pricing models Resource planning Manage segregation of duties Monitoring and reporting Authorities Transparency and communication Delegation of authority Change management Central reporting on product, financials, Central authorities Supports segregation of duties operations, legal and operations, operations, legal and risk legal and risk management management Assurances The integrity of the Group’s financial reporting depends upon the existence of a sound system of risk oversight and management and internal control. The Board receives regular reports about the financial condition and operational results. The CEO and the CFO annually provide a formal statement to the Board that in all material respects: The financial records of the Group for the financial year have been properly maintained in that they: Accurately record and explain its financial position and performance. Enable true and fair financial statements to be prepared and audited. The financial statements and notes required by the accounting standards for the financial year comply with the accounting standards. The risk management and internal compliance and control systems are sound, appropriate and operating efficiently and effectively. Such a statement has been provided in respect of the current financial year. Overall Risk Treatment Base pay Hansen relies on the internal control systems and the ability and culture of staff and management to identify, report and manage risk. All risks are to be reported to the appropriate line manager, registered in the Risk Register and raised to the attention of the Executive team which will develop and document the steps which are required to manage the risk. Where Hansen identifies risk, the risk will be managed with the aim of minimising the likelihood of an adverse event occurring, maximising the likelihood of a positive outcome and reducing the impact of the risk. 4. REMUNERATION The Group aim in remunerating the CEO and other Executives is to provide a base pay plus rewards and other benefits that will attract, motivate and retain key Executives while aligning their financial interests with those of our shareholders. Our policy is to provide individual Executives with a level of income that: Recognises the market value of each position in a competitive market. Recognises the individual’s capabilities and experience. Rewards the performance of individuals. Assists in Executive retention. The structure provides a mix of fixed and variable pay, and a blend of short- and long-term incentives. CEO AND EXECUTIVES The Remuneration Committee sets the remuneration package for the CEO. The CEO establishes employment arrangements and remuneration packages for the Executives. Each year performance based incentives, at the discretion of the Directors, are set for the CEO and the Executives, incorporating objectives designed around Group, business unit and individual goals, with agreed short- and long-term performance incentives. The CEO submits the proposed annual Executive package to the Remuneration Committee where it is assessed for reasonableness. The structure of Hansen Executive pay and reward is made up of four parts: base pay, short-term performance incentives, long-term equity-linked performance incentives, and other compensation, being superannuation. The combination of these comprises the Executive’s total compensation. Details of the pay and rewards for Hansen’s top five key management personnel and their total remuneration are set out in the Annual Report each year. Senior Executives are offered a competitive base pay that reflects the market for each position. It is generally revised annually to recognise inflationary impacts, job responsibility changes or if there has been a marked structural shift in market rates. Short-term performance Incentives Each year the performance of the Executives is reviewed by the CEO and the Remuneration Committee and key performance objectives are established with potential bonuses linked to the achievement of the objectives specified. If individual performance objectives are met, a short-term incentive in the form of a bonus may be paid. Long-term performance Incentives Long-term incentives for the CEO and Senior Executives are designed to align their financial interests with those of our shareholders. Long-term performance incentives can be represented by the issue of share options to the CEO and Senior Executives. The issue of options would be based at the absolute discretion of the Directors and in accordance with the Employee Share Option Plan. Other Benefits – Superannuation All Executives and staff are required to be members of an approved superannuation fund. Hansen contributes superannuation for Executives and staff from their remuneration package to a level that complies with the Superannuation Guarantee Scheme. In addition to this, Executives and staff have the option to elect to contribute additional amounts to superannuation from their remuneration package. NON-EXECUTIVE DIRECTORS The Remuneration Committee recommends the remuneration of Non-Executive Directors to the Board for final approval. Remuneration for Non-Executive Directors consists of a base pay and related superannuation to meet the requirements of the Superannuation Guarantee Scheme. An increase in the maximum amount paid to Non-Executive Directors is to be submitted to shareholders for approval where significant change occurs. No retirement benefits are provided for Non-Executive Directors. e c n a n r e v o G e t a r o p r o C 64 ASX ADDITIONAL INFORMATION As at 28 September 2010 Additional information required by the Australian Stock Exchange Limited Listing Rules and not disclosed elsewhere in this report is set out below: SUBSTANTIAL SHAREHOLDERS The number of shares held by substantial shareholders is set out below: Shareholder Othonna Pty Ltd – including associates Cogent Nominees Pty Limited Number of Ordinary Shares percentage Held 93,784,600 21,144,140 60.47% 13.60% VOTING RIGHTS Ordinary shares and Options - refer Note 15 DISTRIBUTION OF EqUITY SECURITY HOLDERS Category 1 to 1,000 1,001 to 5,000 5,001 to 10,000 10,001 to 100,000 100,001 and Over Number of Equity Security Holders Ordinary Shares Options 130 460 283 541 49 - - - 7 8 The number of shareholders holding less than a marketable parcel of ordinary shares is 67. TWENTY LARGEST SHAREHOLDERS Name Othonna Pty Ltd Cogent Nominees Pty Limited Antan Pty Ltd National Nominees Limited Mr Bruce Rodney Pettit Mr Anthony David Hansen Equitas Nominees Pty Limited Ozcun Pty Ltd Mr James Lucas & Ms Lesley Dormer Mrs Yvonne Irene Hansen J P Morgan Nominees Australia Limited Mr Kenneth Hansen Mr Cameron Hunter Mr Stephen Cocker & Mrs Denise Cocker Mr Grant Lister Mr John Eldred Williams & Mrs June Mabel Williams Exwere Investments Pty Ltd Mr Christopher James Piggott & Mrs Shirley Janice Piggott Layuti Pty Ltd Rezann Pty Ltd Total Number of Ordinary Shares Held percentage of Issued Capital 91,160,249 21,144,140 5,843,397 4,613,046 1,055,000 941,421 775,086 739,154 738,788 655,607 625,253 532,107 476,387 413,000 375,000 313,967 307,263 307,220 269,019 260,000 58.65% 13.60% 3.76% 2.97% 0.68% 0.61% 0.50% 0.48% 0.48% 0.42% 0.40% 0.34% 0.31% 0.27% 0.24% 0.20% 0.20% 0.20% 0.17% 0.17% 131,545,104 84.64% Directors Kenneth Hansen, Chairman Andrew Hansen, Managing Director & Chief Executive Officer Bruce Adams, Non-Executive Officer David Osborne, Non-Executive Officer Phillip James, Non-Executive Director Company Secretary Grant Lister principal registered office 2 Frederick Street, Doncaster VIC 3108 T (03) 9840 3000 F (03) 9840 3099 Share registry Link Market Services Level 1, 333 Collins Street Melbourne VIC 3000 T (02) 8280 7761 or 1300 554 474 F (02) 9287 0309 - Proxy forms F (02) 9287 0303 - General Stock exchange The Company is listed on the Australian Stock Exchange. ASX Code: HSN Auditors Pitcher Partners Level 19, 15 William Street Melbourne VIC 3000 Solicitors TressCox Level 9, 469 La Trobe Street Melbourne VIC 3000 Other information Hansen Technologies Limited, incorporated and domiciled in Australia, is a publicly listed Company limited by shares. Design and production – www.forge.co.nz y r o t c e r i D 66 2 Frederick Street, Doncaster, Victoria, 3108 Australia T +61 3 9840 3000 F +61 3 9840 3099 E info@hsntech.com www.hsntech.com 

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