Annual Report 2008 For personal use only
Transcript of Annual Report 2008 For personal use only
Mitchell Communication Group
Annual Report 2008
…nothing is beyond our reach.
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Contents
Chairman’s report 2
CEO’s report 4
Board of directors 6
Review of operations 10
Media division
Digital division
Diversified division
Corporate social responsibility 25
Directors’ report 26
Auditor’s independence declaration 43
Corporate governance statement 44
Financial report – 30 June 2008 49
Directors’ declaration 105
Independent audit report to members 106
Shareholder information 108
Company particulars 109
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We have evolved from a media buying and planning company to a
comprehensive communications agency,
now with 20 integrated business offerings.
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In today’s world, consumers hold the levers on what
media they will consume, and when. Traditional media,
like newspapers and free-to-air television, are being
eclipsed by read/watch/listen-on-demand services. Digital
networks and online communities require us to join in the
conversation, rather than think we can control it. All of this
means new challenges for the media business.
For our company, it also presents opportunities, and
over the past year we’ve continued to implement a model
that enables us to take advantage of the new media and
communications marketplace. That’s why the theme of
this year’s report is “nothing is beyond our reach” – we can
access the new market, the individual – through any means.
During the year, we continued our evolution from a
media buying and planning company to a comprehensive
communications agency, now with 20 integrated business
offerings.
We are Australia’s number one media buying entity, the
number one digital buyer, and we’re fast becoming an
emerging leader with our diversifi ed division. We’ve been
smart about our acquisitions – buying companies that
deliver value to our bottom line, and at the same time,
adding some of the brightest, most talented minds to our
business. Individually, each business unit continues to grow
organically and we have exceeded our revenue expectations.
As a service offering for our clients however, we’re more
than the sum of our parts.
We have diversifi ed our business so that we can deliver a
comprehensive, integrated service, with a quality team of
specialists to provide communications solutions that deliver
results. Our four divisions: Media, Digital, Diversifi ed and
the recently added Technology division, cover the spectrum
of the media and communications landscape. This means
we’re well-geared to deliver sound results and value
by expanding our offering, increasing touch points and
enriching consumer experiences.
We have solid, long-standing supplier relationships that are
built on more than just transactions and which allow us to
secure competitive, cross-platform deals. We have people
in our business who are passionate, creative and intelligent,
and we’ve fostered a good balance of youthful enthusiasm
and experience.
As the global economy is affected by events elsewhere,
our largely Australian-based clients are less vulnerable
and continue to perform well. In fact, many are capitalising
on the burgeoning local economies in Western Australia
and Queensland. The outlook is for steady growth and
we look forward to further exploiting the potential of our
consolidated model to deliver a creative, innovative and
tailored suite of services.
Thank you to my fellow Board members for their vision and
commitment over the last year. The young executive team
led by Stuart Mitchell, CEO, has done an outstanding job in
delivering strong results in our fi rst full year of operation.
Harold Mitchell AO, Chairman
Chairman’s
Report
Harold Mitchell AO
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In 2008, we became Australia’s fi rst
$1 billion billing media agency – a signifi cant milestone, and a new benchmark.
…nothing is beyond our reach.
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Stuart Mitchell
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CEO’s Report
In FY’08, we completed our fi rst full year of operations as
the Mitchell Communication Group, the publicly listed entity
formed following the acquisition by emitch of Mitchell &
Partners in 2007.
We have focussed on consolidating our business, and
delivering on its potential to give clients an integrated
service offering that is unrivalled in our market space. It is
pleasing to report that we have achieved this and more.
Our billings are up 24% from FY’07, on a like-for-like
basis, which is the result of strong organic growth and
contributions from successful entity acquisitions during
the year. Our strategic acquisitions of quality businesses
brings new service offerings, growth and diversifi cation to
the company, while our signifi cant organic revenue growth
is an indicator of the health of our underlying business.
It’s a tangible sign that we are able to very effectively grow
into new business areas, while staying focussed on the
fundamentals of what makes our business successful –
delivering a service that clients want in a manner that is
better than anyone else.
In CY’08, we became Australia’s fi rst $1 billion billing media
agency – a signifi cant milestone, and a new benchmark.
Growth in our Media, Digital and Diversifi ed divisions all
exceeded targets, and each of our strategic and operational
objectives were achieved during the year. We are already
seeing the benefi ts of the internal consolidation of our
business, with strong returns and development of our cross-
selling strategy, the full benefi t of which will be realised in
the coming fi nancial year.
But our business is about more than just the numbers. We
have a long history in cultivating good relationships with our
suppliers and this year, those relationships are stronger
than ever, enabling us to be fi rst-to-market with innovative
and unprecedented media solutions for our clients.
The acquisition of a number of quality, niche businesses
during the year has complemented our existing services,
and enabled creative collaboration between our business
units, which has yielded outstanding results for our clients.
This is an exciting step in our evolution - for us and our
clients - who continue the journey with us through an
emerging media frontier.
New companies to the group include:
We recently acquired Vivid, a leading communications
and technology services company. Vivid extends our
strategic footprint in digital-based media services and adds
signifi cant technology competencies in enterprise content
management, ecommerce and customer relationship
management.
The growth of the Group has also meant that our staff
numbers have swelled from 300 to over 550 during the year,
and I extend a warm welcome to each staff member who
has joined us, and thank all staff for their dedication and
commitment to excellence during the period. In the coming
year, we will further develop our systems and procedures to
improve communication within the business.
Finally, I take this opportunity to thank the senior executive
team for their excellent contribution. Thank you also to the
Board, who have provided great support and enlightened
stewardship during a rewarding, milestone year for our
company.
Stuart Mitchell, CEO
Company
Visual Jazz
Haystac
Rodeo
Vivid Group
Mitchell & Partners WA
Co Media Oz
Coleman Group
The Media Shop
Discipline
Digital creative
Public relations
Creative design services
Branding, Digital Media &
Application Development
Offl ine planning and buying
Offl ine planning and buying
Sign production
Offl ine planning and buying
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…nothing is beyond our reach.
Experience
Harold Mitchell is Executive
Chairman of Mitchell
Communication Group. In
1976, he started the company
that is now the largest
media agency in Australia.
In December 2000, he
launched the Harold Mitchell
Foundation that distributes
funds between health and
the arts. In December 2002,
Deakin University conferred
on him an honorary degree
of Doctor of Laws. In January
2004, he was awarded
the Officer of the Order of
Australia, and in July 2005,
was awarded the Richard Pratt
Business Leader Award. He
has been Chairman of the
National Gallery Australia and
President of the Melbourne
International Festival of Arts.
Current directorships
Mr Mitchell is actively involved
with his clients and holds a
large number of community
roles including board
member of Opera Australia
Council and Care Australia.
He is Vice-Chairman of the
Care Australia Corporate
Council and Chairman of
ThoroughVision.
Experience
Stuart Mitchell is the Chief
Executive Offi cer of Mitchell
Communication Group.
Under his leadership, Mitchells
has grown to incorporate 20
communications specialists
across a broad range of
disciplines.
Stuart led the 2005
negotiations with French-
based Havas, to establish
a joint venture with their
media brand, MPG. Over the
past two years, it has been
Stuart’s vision which has
been the catalyst in shifting
the direction of the Mitchell
Communication Group from
online media buyer to a
diversifi ed communications
services provider. Stuart also
led the sales agreement for
the purchase of Mitchell
& Partners in April 2007,
creating the new Mitchell
Communication Group,
in addition to negotiating
acquisitions for Coleman Signs
and more recently, Haystac.
Stuart has worked with the
Group since 1992, learning the
business from every angle.
Experience
Ms Sparks has a background
in pharmaceutical marketing,
strategic consulting and
over 20 years experience in
the advertising industry. She
has held senior positions in
leading agencies in Australia
and UK, her most recent being
MD of M&C Saatchi.
Current directorships
Ms Sparks is currently director
of Blackmores Ltd and Racing
Victoria Ltd, Vice Chairman
of Osteoporosis Australia,
Vice President of Melbourne
International Arts Festival,
Vice President of Chief
Executive Women.
Experience
For 11 years, Mr Stewart was
National Managing Partner
of Minter Ellison, one of
Australia’s leading law fi rms,
before retiring in June 1999.
He was also a non-executive
director of Memtec Ltd, a
high technology fi ltration
company, from 1988 until
1997. Mr Stewart spent fi ve
years with Pacifi c Dunlop
from 1976 to 1981 in a variety
of general management
positions.
Current directorships
Mr Stewart is Chairman of
Melbourne IT Limited and
Metabolic Pharmaceuticals
Limited, and president of the
Baker IDI Heart and Diabetes
Institute.
Harold Mitchell AOEXECUTIVE CHAIRMAN
Naseema SparksStuart MitchellCHIEF EXECUTIVE OFFICER
Rob Stewart
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Board of Directors
Experience
Mr Nankervis has spent
more than 30 years in various
accounting, financial and
commercial roles with BHP
and Cadbury Schweppes. He
has been Finance Director
of Cadbury Schweppes
Australia Limited and Chief
Financial Officer for Cadbury
Schweppes Asia Pacific. He
has also been a member
of the Cadbury Schweppes
Global Senior Finance
Committee and a member
of the Asia Pacific Audit
Committee. Mr Nankervis
also served as a Trustee,
Director and Chairman of the
Superannuation Fund.
Current directorships
Mr Nankervis is currently a
director of Onesteel Limited
and Dairy Australia Limited.
Experience
Mr Cameron has over 35
years of experience in the
advertising and marketing
industry. Since 1970, he
has worked primarily in the
advertising industry with a
variety of global marketers
in Australia and Asia, and on
world-leading brands such as
Coca-Cola, McDonalds, Mars,
Nestlé, Levi’s and Goodyear.
Mr Cameron has held
a number of senior
management positions in
advertising agencies and was
a partner with advertising
agency George Patterson
Bates for eight years.
For seven years to December
2005, Mr Cameron was
Director of Corporate
Marketing for Optus.
Mr Cameron presently owns
and runs six Yes Optus retail
stores in metropolitan Sydney.
Experience
Mr Hounsell is a former
Senior Partner of Ernst &
Young and Chief Executive
Officer and Country Managing
Partner of Arthur Andersen.
He is also a Fellow of The
Institute of Chartered
Accountants in Australia,
and a Fellow of the Australian
Institute of Company
Directors. He holds a Bachelor
of Business (Accounting)
degree from Swinburne
Institute of Technology and
is a Certified Practicing
Accountant.
Current directorships
Mr Hounsell is currently
Chairman of PanAust Limited,
and a director of Qantas
Airways Limited, Orica Limited
and Nufarm Limited. He is
also Chairman of Investec
Global Aircraft Fund and
Prudentia Investments, and
a director of Ingeus Limited,
Freehills, and The Macfarlane
Burnet Institute for Medical
Research and Public Health
Limited.
Experience
Mr Lamplugh has over
19 years experience as a
commercial lawyer, and
is currently principal of
the law firm Lamplugh
McIntosh Lawyers. He has
a Bachelor of Laws and
Bachelor of Jurisprudence.
He was admitted to
practice law in 1988. He
has extensive experience in
media and entertainment
law and commercial law.
Current directorships
Mr Lamplugh has been
a director of Mitchell
Communication Group
since its inception.
Peter Nankervis Garry HounsellDEPUTY CHAIRMAN
Stephen Cameron Rod Lamplugh
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FY’08 Financial Results…
Key Financial Highlights (like-for-like basis):
Gross Billings
24% to $1,175.2 million
Operating Revenues
46% to $190.8 million
Operating EBIT1
38% to $32.3 million1 – FY’08 includes normalised interest income on working capital of $3.5 million and excludes normalised: (i) interest expense on
fi nance facilities and deferred consideration payable of $4.2 million; and (ii) $1.6 million of acquisition intangibles amortisation.
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Introduction
The principal activities of the economic entity constituted by
Mitchell Communication Group and the entities it controls
(the Group) are the provision of communications services,
including:
traditional and online media strategy, planning and buying
digital creative and technology services
search engine marketing and optimisation
public relations
direct marketing
outdoor advertising
Corporate social responsibility consulting services
Year in Review
The fi nancial year ended 30 June 2008 was a remarkable
year for the Group, with exceptional growth in revenue and
profi t performance. The excellent result was driven by strong
organic revenue growth by existing Group entities and the
acquisition of exciting new companies in the past year.
Gross billings topped the billion dollar mark for the fi rst time
at $1,175.2 million, up $914.2 million or 350% over the prior
comparative period. Proforma gross billings were up $224.2
million or 24%.
Total revenues were $190.8 million, an increase of 131% per
comparative period. On a proforma basis, revenues grew by
$60.1 million or 46%.
Normalised operating EBIT grew 131% to $32.3 million,
whilst net profi t after tax grew 102% or $18.2 million over the
prior comparative period. On a proforma basis, this was an
increase of 38% or $8.9 million.
Each of the divisions – Media, Digital and Diversifi ed -
recorded exceptional growth. The Media division’s gross
billings increased by 21%, retaining market leadership
position for the fourth consecutive year. The Group’s Digital
business is growing at twice the market rate in Australia,
with gross billings increasing by 48.9% to $101.7 million. The
Diversifi ed division generated strong organic growth as well
as excellent new business growth.
A fi nal dividend of 2.1 cents per share, fully franked, has been
declared, resulting in a full year dividend of 3.9 cents per
share, up 1.9 cents or 95% over the prior comparative period.
Operating cash fl ow was $37.1 million, up $3.2 million or 10%.
Market conditions
FY’08 saw a shift in the way media is consumed, with the
Group ideally positioned to capitalise on emerging media
opportunities.
In FY’08, advertising grew by 8.2% (source: CEASA), refl ecting
strong economic growth and buoyant consumer and business
confi dence. The Outdoor market increased considerably
by 17.3% (source: CEASA) as advertisers looked for more
innovative ways to build brands.
The market’s appetite for our Diversifi ed services continued
to grow strongly. Online advertising increased by 27% (source:
IAB June 2008) over the previous year. It is expected that
this will continue to grow at double-digit rates into the near
future.
Outlook
The Group has had a powerful start to FY’09 throughout each
division, with billings higher than at the same time last year.
The strategic acquisition of Vivid, Australia’s leading
communications and technology services company with a
blue chip client base, extends our footprint in digital-based
media services and adds signifi cant technology competencies
in branding, digital media and application development.
In addition, new organic pursuits in automated agency ad
templating, research through econometric modelling and
further cross-selling amongst our Diversifi ed businesses
provides exceptional scope for growth throughout the
remainder of CY’08.
We are well-geared to further capitalise on our fully
operational, diversifi ed model. Despite market sentiment to
the contrary, the traditional media-buying business continues
to go from strength to strength. We have a large Australian
client base, which is less vulnerable to global economic
concerns and able to capitalise on growth in emerging
markets in Perth and Brisbane. We also have a strong
balance sheet, with funds available for further strategic
acquisitions.
As the fallout from the US downturn becomes clearer, our
diversifi ed model, market leadership position, and strong
client and supplier relationships place us in a strong and
confi dent position.
Review of Operations
1 Like-for-like basis.
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Gross billings increased by 21% to $1.028 billion
while revenue from continuing operations grew to $41.3 million.
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Media Division
The principal activities of the Media division are the provision
of media strategy, planning and buying across traditional
(non-digital) media.
Companies within Media Division
Mitchell & Partners
Mitchell & Partners is Australia’s leading media planning
and buying agency with offi ces in Melbourne, Sydney,
Brisbane, Perth, Gold Coast and Auckland, New Zealand.
Mitchell & Partners delivers communication messages to
the right people, at the right time, in the right place and at
the best possible price. Services include media strategy,
media planning, media buying, competitive analysis,
research and post campaign reporting,
MPG
MPG is an alliance between Mitchell Communication Group
and Havas, the world’s sixth largest communications group.
MPG collaborates with clients to build meaningful and
engaging connections between consumers and brands in
the common pursuit of achieving better business results.
Services include strategic communications development,
media planning and buying, market research and effi ciency
measurement, and interactive advertising for a range
of clients. MPG has offi ces in Sydney, Melbourne and
Auckland, New Zealand.
Year in Review
The fi nancial year ended 30 June 2008 produced an
outstanding result for the Media division, which became the
fi rst media agency group in Australia to exceed $1 billion
in audited billings. The division increased billings across
all Australian offi ces and for the fourth consecutive year,
Mitchell’s was independently named as Australia’s largest
media agency (source: AC Nielsen).
Gross billings increased by 21% to $1.028 billion whilst
revenue from continuing operations grew to $41.3 million.
The Media division’s gross billings growth outpaced the
traditional media market during this fi nancial year. June
half growth for the Media division was 20% higher than for
the comparative period versus 6.2% growth for the total
advertising market (source: CEASA).
The standout market was Sydney where gross billings
increased 31% to $344 million.
Our fl agship Melbourne operations contributed a solid 16%
growth on a very large base, to deliver over $460 million
in billings. Mitchell & Partners Melbourne is the largest
individual media agency in the country.
Our Brisbane/Gold Coast businesses remain the
uncontested market leaders in the key Queensland market,
while our new Perth operation consolidated its market
position to deliver strong top and bottom line success in
FY’08. Both Perth and Gold Coast are now fully integrated
into the Group, with positive signs for continued growth in
the new fi nancial year.
The New Zealand market remains challenging due to
economic constraints, however we remain committed to
developing the business and pursuing new opportunities.
Overall billings increases for the division were largely driven
through organic growth from our existing client portfolio,
particularly in the Retail, Telecommunications, Government,
and Finance/Insurance sectors.
This was supported by a successful new business program,
which saw the division add over $50 million. In addition, our
Perth operation was appointed one of two suppliers to the
Western Australia State Government campaign advertising
services account, commencing August 2008.
Complementing our new business efforts, the division also
successfully defended a number of key accounts over the
year including: Optus Singtel, BMW Automotive, Simplot,
Flight Centre, George Weston Foods and The Good Guys.
Review of OperationsMedia Division
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The main sectors of advertising expenditure growth were:
Subscription TV (36.4%),
Online (25.3%),
and Outdoor (20.3%) (Source: CEASA).
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Market Conditions
Advertising growth for FY’08 increased by 8.2% and refl ected
the previous period of strong economic growth and buoyant
levels consumer and business confi dence. The main sectors
of advertising expenditure growth were Subscription TV
(27.9%), Online (25.3%) and Outdoor (17.3%) (source:
CEASA). Growth rates in all media were at or above CPI
levels for the period, and most analysts are maintained
expectations of modest growth.
During the second half (January – June 2008) the market
had slowed slightly with overall growth of 6.2%. The growth
media channel leaders continue to be Online, Outdoor and
Subscription TV but only Online growth continues to outpace
the previous period.
Mainstream media usage continues to account for over 80%
of media consumed by Australians, and overall time spent
with media is increasing, with the highest growth rate in
usage being online based media.
The Group is well placed to capitalise on the online growth
through integrated campaign solutions involving both our
Media and Digital divisions.
The challenges facing traditional media are to maintain
audience levels in their traditional operations whilst
fully extending their platforms into the digital space.
Included in this is the requirement to produce and deliver
engaging content for an audience which in today’s world is
increasingly consuming media on its own terms, using new
digital technologies to do so.
Outlook
Clearly the Australian economy has slowed, and consumers
have been pinched by the diffi culties of interest rate rises,
high fuel prices and a weaker housing market in key areas.
Despite this, and industry speculation of recession and
gloom, we are not seeing indications of any major downturn
in the traditional media markets. Budgets are being
modestly trimmed in some cases, but not across the board.
Clients are being more circumspect in their media planning,
and media mixes are shifting slightly.
We anticipate that clients will seek the security of the larger,
more reliable traditional media such and press and Free TV
as well as a shift from brand image campaigns to stronger
‘product and price’ and retail advertising.
As a result, the Group continues to see indications of modest
growth over the next 12 months.
Review of OperationsMedia Division (continued)
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The ability to offer clients a
one-stop solution makes us the
pre-eminent Digital agency group
in Australia.
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Review of OperationsDigital Division
Digital Division
The principal activities of the Digital division are the
provision of digital media strategy, planning and buying,
search engine marketing and creative services.
Year in review
The fi nancial year ended 30 June 2008 was a remarkable
year for the Digital division. While the Australian digital
media market grew by 27% (source: IAB June 2008), our
revenue from continuing operations in Australia (excluding
Visual Jazz) grew by 59%, while our gross billings increased
by 61% to $110 million. At no point in its history has the
Digital division’s growth been this far in front of the industry.
Our continued expansion has seen us open new emitch
offi ces in Brisbane and Perth, and a new Visual Jazz offi ce
in Sydney.
We have realised our goal to become the fi rst digital group
in Australia to genuinely offer clients a full-service solution,
and we continue to aggressively look for new opportunities
where we can cross-sell the Group’s offering.
This ability to offer clients a one-stop solution makes us the
pre-eminent Digital agency group in Australia.
Australian operations
emitch
emitch is Australia’s only truly national digital offering, with
offi ces now in Sydney, Melbourne, Brisbane and Perth. With
an aggressive approach to new business and continued
investment in an outstanding group of digital media
professionals, we have achieved all of our revenue goals in
FY’08.
emitch continues to cultivate and foster very strong
relationships with our media owner partners and strives to
deliver value over and above the market norm for all clients,
regardless of their expenditure level.
The ability of emitch to win new business as an independent
digital business continued to drive increases in revenue.
Coupled with the opportunities presented by the wider
Mitchell Communication Group, emitch is ideally placed to
take advantage of the global movement into digital channels.
Media Contacts
Media Contacts Australia is an alliance between Mitchell
Communication Group and Havas, the world’s sixth largest
communications group. Just over two years old in Australia,
FY’08 has been a defi ning year for Media Contacts. Billings
increased by 300% year-on-year, margins remain strong,
and Media Contacts Melbourne’s fi rst full year in business
achieved a very strong 15% of total digital billings. This is
a signifi cant achievement and refl ects a highly successful
year. With expectations to grow well above the market,
Media Contacts is aiming for another fruitful year in both
Sydney and Melbourne.
Columbus
In a year when spend in search and directories increased
by 34% (source: IAB June 2008) Columbus, our specialist
search engine marketing division, achieved a billings
increase of over 110% from FY’07. Staff numbers grew from
6 to 17, and our decision to invest heavily in this sector has,
and will continue to bring, substantial dividends for the
whole Group.
Visual Jazz
In FY’08, Visual Jazz enjoyed one of its most successful
years in its history. It is now clearly positioned as one of
Australia’s leading Digital Creative agencies, with more
than 90 staff. During the year, Visual Jazz continued its
aggressive growth plans, by adding a Sydney offi ce to its
Melbourne and Canberra base, and delivering a strong
fi nancial result. New business wins included:
A major achievement for Visual Jazz was being awarded
2008 Best of Show at Australia’s Interactive Advertising
Bureau awards for the interactive games site produced for
Defence Force Recruiting.
Domino’s
Australian Federal Police
ANZ
Funtastic
Jenny Craig
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Online advertising for the 12 months
ended June 2008 totalled $1,524m
This is a 27% increase on the
corresponding period last year.
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New Zealand operations
The Internet Bureau
The Internet Bureau is New Zealand’s largest online media
service company, with approximately 30% market share
of the general display internet advertising market in New
Zealand. The business has no natural direct competitors,
with the only competitive risks being agencies bringing
online media planning in-house. The company continues
to diversify its agency sales channels, with more than 55
advertising agencies in New Zealand using The Internet
Bureau in FY’08, up from 45 the previous year.
CATCH!
CATCH! is a brand new digital media business launched
in New Zealand in September 2008. The business will
specialise in digital direct response advertising, with
capabilities in search engine marketing and performance
display advertising, the latter via a New Zealand exclusive
reseller agreement with Adconion Media Group.
Market Conditions
Online advertising in Australia for the 12 months ended
June 2008 totalled $1,524m (source: IAB June 2008). This
is a 27% increase on the corresponding period last year.
All key sectors experienced strong growth year-on-year –
General 23%, Classifi eds 21% and Search and Directories
experiencing the highest growth at 34%.
The general internet advertising market should continue to
grow at strong double-digit rates for the short- to medium-
term future.
Outlook
“ Spending on online ads overtook
advertising on mainstream TV in Britain
last year, growing 40 percent to 2.8
billion pounds and accounting for 19
percent of all advertising, UK regulator
Ofcom said” Reuters August 13th 2008
Investment in digital channels worldwide continues to grow
apace, while in Australia we remain some way away from the
headlines experienced by the UK communications industry.
There is no doubt that like all developed economies, digital’s
growth prospects in Australia remain very strong.
We are ideally placed to take advantage of this growth,
because we can deliver solutions for clients that involve
business planning, creative solutions, search engine
marketing and online planning and buying.
We will continue to ensure that our clients benefi t from fi rst
class innovative thinking and solutions. We intend not only to
be fi rst with every new opportunity presented by digital, but
fi rst with advice for our clients on how they might use that
opportunity.
Our sophisticated return on investment (ROI) planning tools
enable us not only to account for each dollar spent, but
accurately predict the return from each dollar. We aim to
further grow both our analytics expertise and the ROI that
each of our clients enjoys in FY’09.
At a time when media fragmentation continues to present
new and interesting opportunities, we look forward to
helping our clients exceed their business growth targets.
We confi dently expect to out-perform the market in the
coming fi nancial year.
Review of OperationsDigital Division (continued)
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The continued development of the Diversifi ed division’s
cross-selling capability has delivered organic growth, improved profi tability and high levels
of customer satisfaction as our client’s experience the benefi ts of an
integrated service offering.
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…nothing is beyond our reach.
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The principal activity of the Diversifi ed division is the
provision of marketing services and brand communication.
The division provides services to the core Mitchell client
base as well as clients outside the Group’s media agency
relationships.
The division enjoyed a very positive year, completing
two strategic acquisitions and delivering strong
growth. Divisional profi tability to 30 June 2008 exceeded
expectations.
Particularly pleasing was the continued development of
the Diversifi ed division’s cross-selling capability, which has
delivered organic growth, improved profi tability and high
levels of customer satisfaction as our client’s experience the
benefi ts of an integrated service offering.
The division has been separated into three operating
groups:
PR and Marketing Services – this business unit
comprises the PR agencies (Haystac and Spark), the
creative services agency (Rodeo), the experiential
agency (Impact) and our Corporate Social Responsibility
business (Positive Outcomes).
Rights Management – this business unit comprises our
rights management and media sales business, Stadia
Media and our mobile marketing joint venture, Mocom.
Production Services – comprising Coleman Group,
it is anticipated that the offering of this unit will be
broadened to provide video production services within Q2
FY’09.
Year in Review
Within the FY’08 year the Group successfully completed the
business acquisitions of Coleman Group Pty Ltd and Haystac
Public Affairs Pty Ltd. The start-up of the Group’s second
digital creative business, Rodeo, was also established as a
division of Haystac.
Coleman Group is a leading provider of large format, short-
run digital printing services to the sports, exhibition and
retail sectors. The business was one of Stadia Media’s
largest suppliers and the acquisition has allowed this
company to vertically integrate a key aspect of its service
offering.
The Coleman Group results to the period ended 30 June
2008 were over 37% ahead of expectations.
Haystac is a leading provider of PR, marketing and
communication services with more than 40 staff located in
its Melbourne and Sydney offi ces. The company provides
communication strategy development, media relations,
issues management, brand building, stunts and brand
activation, public education and creative services. It has a
blue chip client base of major consumer brands, all levels
of government, not-for-profi ts, healthcare companies, peak
bodies and major event organisers.
The Haystac acquisition was completed with effect from 1
October 2007. Over the period to 30 June 2008, the business
has shown good organic growth and has integrated well
within the division and across the broader Group.
Over the period since acquisition, Haystac has won or
renewed the following accounts:
Stadia Media delivered its sixth consecutive year of record-
breaking revenues and profi tability.
The FY’08 fi nancial year represented a watershed year for
Stadia Media, with successful rights renewal negotiations
with the AFL and Cricket Australia. On the back of the
successful Melbourne Cricket Ground renewal in FY’07,
all rights held by Stadia Media have now been renewed on
multiple year agreements.
From a revenue and profi t perspective, Stadia Media
delivered its best-ever results in FY’08. Cricket revenues
across the New Zealand / India / Sri Lanka tour were up
on what was a record-breaking Ashes tour the year before.
Comparing like tour with like tour revenues (i.e. India tours)
the company’s cricket program has increased in value by
more than 70%.
Review of OperationsDiversifi ed Division
7 Eleven Stores
ANZ
Australian Defence Force
Australian Government’s
National Binge Drinking
Campaign
City of Melbourne
Jetstar
Mitre 10
Myer
Nintendo
Scanlon Foundation
Sensis / Whereis
Tourism Australia
Walt Disney Studio Home
Entertainment.
Westfi eld
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The company’s AFL program provided its sixth consecutive
year of growth.
Outside its traditional media sales role, Stadia Media
successfully negotiated Tennis Australia’s broadcast rights
renewal with the Seven Network. This activity, undertaken
on behalf of Tennis Australia, more than doubled the
value of the benefi ts enjoyed by Tennis Australia from
its broadcast rights. In addition, the company provided
consultancy services to ANZ relative to their acquisition of
the naming rights at the Olympic Stadium, Homebush (ANZ
Stadium).
Stadia Media’s profi tability for the year represented an
increase of 40% year-on-year.
To ensure that Stadia Media maintains it leadership
position within the sports-ground signage media industry,
the company conducted a review of emerging signage
technologies with a key focus on LED signage, which has
been installed at a number of sites around the world. The
fi ndings from this review indicated that whilst the technology
has some advantages over current scrolling and static
signage systems with respect to animation and production
savings, the installation requirements, resolution and capital
cost of the technology does not render it a viable alternative
for our major fi eld sports at this point. The business is
committed to providing the best solutions the stadia require,
and accordingly, we are maintaining a watching brief.
The Spark Impact brand has been separated into its
constituent parts, with the emergence of two offers – Spark
Communications (PR agency) and Impact (Experiential
Agency). Each brand has developed its own personality and
the client base has a stronger understanding of the offering
of each.
Both businesses demonstrated growth over the year with
wins including:
Business expansion continues into the new fi nancial year,
with Q1, FY’09 wins including John West and Kraft.
Positive Outcomes’ LBG (London Benchmarking Group)
client base increased from 26 to 37 over the FY’08 fi nancial
year. The LBG membership comprises a large number of
Australia’s blue chip companies. LBG continues to build as
the authoritative measure of CSR investment in this market.
Positive Outcomes’ strategic consulting service has been
integrated into the broader Haystac business to provide the
client base with an integrated CSR and communications
offer.
The division’s mobile marketing business Mocom, has had
a number of successes with implementation of its Mobot™
image recognition technology. It has delivered successful
campaigns deployed across a broad range of third party
media, including ACP’s Dolly title and News Limited
commuter newspaper mX. These relationships are ongoing
and should continue to grow.
Mocom has made signifi cant investments in proprietary
campaign management tools and has expanded its offer to
include Bluetooth and SMS campaigns.
Mocom is profi table and extremely well positioned to provide
marketers with measurable mobile-based campaigns.
Haystac’s design department was launched within Q3 of the
year as a second digital creative business within the Group,
Rodeo Agency. The business has shown extraordinary
growth in the period to 30 June 2008 and is currently
generating annualised revenues in excess of $1.5 million.
Rodeo Agency specialises in online and mobile digital
creative services along with traditional graphic design work
and has successfully completed work for:
Outlook
The Diversifi ed division is well-placed for continued strong
performance in FY’09. The companies within the division
are all profi table and hold strong and long-standing
client relationships, together with experienced and stable
employee bases.
The businesses have a proven ability to cross-sell their
services in a manner that meets client demands for effi cient
…nothing is beyond our reach.
Nintendo
3 Mobile
ANZ
Fosters
Department of
Sustainability
Renault
Pretty Girl Fashion Group
Claude Group / Torch
Media
ANZ
Fosters
Jetstar
News Limited (mX)
Renault
Walt Disney
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and integrated service. Client response and satisfaction with
these initiatives has been extremely positive. The broadening
of this cross-sell competency throughout the division (and
the broader group) - involving identifying and matching
clients’ needs with appropriate integrated responses - is
a key growth platform.
The development of a video production capability to
capitalise on client appetite for brand-funded content and to
meet the broadcasters’ and the internet’s content demands,
will occur within the fi rst half of FY’09.
Additionally, the business is looking at opportunities
to strengthen its direct marketing capabilities.
Rights Management Unit
Early indications within Stadia Media indicate that the
revenues are unlikely to be affected by reported softening
of economic conditions, with the business’ client base
appearing stable. Similarly, the business’ cricket program is
not as heavily affected by the perceived value of the touring
side. This has been an outcome of the product development
implemented over recent years, which presents the
underlying media value of the property rather than the
perception of the tour quality.
The division’s Rights Management group has a well-
deserved strong reputation of high quality rights
management and commercialisation. With renewal
processes complete for the business’ key sporting rights,
the company is focussing on leveraging this capability to
expand the rights portfolio across sport, entertainment and
niche “out-of-home” properties.
Management and sales structures have been established to
facilitate this during FY’09.
PR and Marketing Services
The outlook is very positive for the PR and Marketing
Services business unit, with strong profi t increases expected
on the previous year.
Historically, the appetite for PR and Marketing Services
during economic downturns increases rather than
decreases, due in part perhaps to the smaller budgets
required for program delivery compared to above-the-line
campaigns.
Haystac – the business unit’s fl agship public relations
business – is set to record a solid fi rst quarter with
signifi cant Australian Government and major corporate
brand project wins.
Part of Haystac’s brief is to grow nationally and regionally
beyond its current Melbourne and Sydney offi ces. An
offi ce has already been established in Canberra to lift
the business’ profi le and to allow for increased service
capacity for the Australian Government – traditionally one
of the agency’s largest clients. Haystac plans to establish
a presence in Brisbane and Perth through leveraging
Mitchell’s existing offi ces in these rapidly growing markets.
Similarly, opportunities to establish a presence in New
Zealand will be explored in the coming year.
As mentioned previously, Haystac will assume management
responsibility for some of Positive Outcomes’ consulting
services, which will increase Haystac’s Social Marketing
business unit’s remit to include broader Corporate Social
Responsibility communications consulting capabilities.
Rodeo Agency continues to grow profi tably and has
developed a solid management framework to accommodate
signifi cant client demand in the rapidly expanding digital
marketing sector. Rodeo benefi ts signifi cantly from referral
and integration with other Diversifi ed business units.
Demand for Mocom’s mobile phone marketing service is
growing quickly and Mocom relies on signifi cant digital and
creative fulfi lment for client briefs from Rodeo. This – and
the continued cross-selling of Rodeo’s services through
Haystac and the broader Diversifi ed business - should
ensure it delivers continued strong growth.
Clearer service offering delineation between the recently
split Spark and Impact businesses is likely to lead to
improved performance. Both units have started the new
fi nancial year well with signifi cant new business wins and
senior appointments.
Production Unit
Coleman Group has demonstrated strong growth within
the exhibition sector. This has been fuelled by underlying
strength within this market segment and investment by
the company over FY’08 in fabric printing and welding/
fi nishing equipment. The strength in this market segment is
expected to continue over FY’09.
Capital investment in equipment upgrades within the
business has continued with the purchase of a high volume
Durst printer, which is scheduled to be commissioned in
September 2008. This printer will increase Coleman’s
printing capacity by almost 300% and will signifi cantly
reduce client lead-times and reduce operating costs.
Review of OperationsDiversifi ed Division (continued)
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Wicked – A story of two sisters, a client
prepared to try something new, and
a Group that delivered
ANZ’s $1 million sponsorship of the Australian premier
of Wicked is the biggest commitment made in Australian
musical theatre history. ANZ’s Louise Eyres, Head of Brand
& Sponsorship says, “We wanted to take our sponsorship in
a new direction – to do things we’ve never done before.”
ANZ was keen to capitalise on the unprecedented success
of the production overseas, which had been renowned for
attracting a new, younger theatre audience. The client
engaged Haystac, part of Mitchell Communication Group’s
Diversifi ed division, with a brief that they wanted to interact
with customers, stakeholders and their staff in a fun,
interactive way.
The result was a multi-dimensional campaign that utilised
the expertise of a number of the Group’s business units
to deliver a highly successful launch event and a leverage
campaign, which included:
The launch event at the Plaza Ballroom, attended by
print, online and broadcast media as well as more than
200 ANZ staff. Coverage was overwhelmingly positive,
with ongoing editorial praising ANZ for its commitment
to the arts.
Advertising via billboards, metrolights and internet
banners
The creation of www.anzwicked.com, an interactive
website that enables users to discover the land of Oz and
learn more about ANZ, the Offi cial Bank of Oz.
Installation of bluetooth units in the Regent Theatre,
which send ‘welcome messages’ from the six leading
cast members to patrons’ mobile phones, wall papers
and a Wicked trailer, which could be forwarded to a
friend
Installation of 3-D Wicked graphics in front of 11 ANZ
ATMs around Melbourne.
The campaign was a collaborative effort between Haystac,
Rodeo, emitch, Mitchells and Mocom.
“We were looking for something different,” says Louise.
“We have been highly impressed with the creativity of the
response to our brief and the ability of the Group to deliver
what has been, and continues to be, a most successful
campaign.”
…nothing is beyond our reach.
Delivering Integrated Solutions
A scene from ‘Wicked’ featuring cast members: Lucy Durack
and Amanda Harrison.
Interactive website: www.anzwicked.com
3-D fl oor graphics positioned in front of ANZ ATMs.
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Expanding our community contributions in partnership
with our clients, staff and suppliers.
At Mitchell Communication Group, we’re serious about
leveraging our networks, resources and reputation to help
the community. We do this in a number of ways, including:
Supporting our people to help school-aged children
learn to read as part of the children’s charity, Leaning
Links’ Reading for Life program.
Using our strong media and publishing relationships to
negotiate valuable pro bono advertising value for over 25
charities. In FY’08, we increased the amount of free air
time value we secured for our community partners to
$8 million (up from $6 million in FY’07).
Supporting staff volunteering activities. In FY’08, 103
of our people volunteered, with the Group contributing
more than 730 hours in company time. This mainly
involved staff providing discounted services to our
community-partner clients, helping them to get their
messages out to the Australian and New Zealand public.
Supporting a number of charitable organisations to raise
funds or awareness about their causes. During the year,
our Brisbane offi ce team leveraged their skills, expertise
and industry networks to make a real difference for the
Leukaemia Foundation’s Shave for a Cure campaign.
The team raised approximately $85,000, to become
number one fundraiser in Queensland, and overall fourth
nationally.
In FY’08, our community contributions increased to
$464,519, compared to $109,980 in FY’07. The increase
refl ects better data collection from all our businesses, as
well as growth in our CSR program.
We use the London Benchmarking Group (LBG) reporting
model to calculate our contributions to the community.
Mitchells is a founding member of LBG Australia/New
Zealand, which has increased its membership to 37 in
FY’08, up from 26 in the previous year.
Over the past year, we supported the following community
groups through fundraising, volunteering and facilitating
community service announcements and discounted services
for our community partners:
In FY’09, we will expand our CSR activities in our focus areas
of community investment, environmental improvement
and employee wellbeing. We’ll also be establishing a more
strategic and proactive approach to our pro bono work.
The environment
We’re always looking for ways to reduce our impact on
the environment. During the year, we commissioned an
environmental audit of our buildings by external specialists.
The audit revealed that whilst our current environmental
performance was very good, there are areas in which we
can improve, and we have set out an action plan to address
these. This is an especially timely initiative as it will help us
build a strong base of experience and commitment over the
next three years through to the occupation of an exciting
new eco-friendly building in York Street, Melbourne in late
2010.
Corporate Social Responsibility
Prostate Cancer Foundation of Australia
Red Cross
Redcliffe Hospital
Royal Brisbane Womens Hospital
Shepherd Centre
SIDS and Kids
SPCA
Starlight Foundation
Sydney Children’s Hospital
The Cancer Council
The Salvation Army
Ultimo Public School
Vision Australia
Wesley Research Institute
World Vision
Australian Cancer Research Foundation
Australian Childhood Foundation
Australian Red Cross
Autism Intervention
Burnett Institute
CanTeen
Care Australia
Care International (Global)
Child Fund of N.Z.
Juvenile Diabetes Research Foundation
Kids Help Line
Leukaemia Foundation of Australia
Leukaemia Foundation of N.Z.
Pareto Fundraising
Port Melbourne Public School
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2008 2007
$’000 $’000
Final dividend for the year ended 30 June 2007 of 1.2 cents (2006 – 1.3 cents)
per fully paid share paid on 12 October 2007 (2006 – 23 October 2006). Fully franked
(2006 – unfranked) based on tax paid at 30%. 3,329 2,420
Interim Dividend for the year ended 30 June 2008 of 1.8 cents (2007 – 0.8 cents)
per fully paid share paid on 28 March 2008 (2007 - 28 March 2007). Fully franked
(2007 – 75% franked) based on tax paid at 30%. 5,182 1,496
Total 8,511 3,916
26
Directors’ Report
Your directors present their report on the Group (referred to hereafter as the Group) consisting of Mitchell Communication Group
Limited and the entities it controlled at the end of, or during, the year ended 30 June 2008.
Directors
The following persons were directors of Mitchell Communication Group Limited (the company) during the whole of the fi nancial
year and up to the date of this report:
Harold C Mitchell AO (Executive Chairman)
Stuart J Mitchell (Chief Executive Offi cer)
Garry A Hounsell
Robert J Stewart
Rodney J Lamplugh
Stephen A Cameron
Peter G Nankervis
Naseema Sparks
Principal activities
During the period the principal continuing activities of the Group consisted of:
The provision of services to clients for communications strategy and the planning and buying of traditional media.
The provision of services to clients for interactive marketing and communications strategy and planning and buying of
interactive media, and digital creative services.
The development and implementation of communications campaigns across a broad range of disciplines including public
relations, experiential marketing, brand experience, sponsorship, sports-ground marketing, direct marketing and corporate
social responsibility.
There were no signifi cant changes in the nature of the activities of the group during the fi nancial year, however the year did
represent the fi rst full year of trading post the acquisition of the Mitchell & Partners Group of companies on 1 April 2007.
Dividends
Dividends paid to members during the fi nancial year were as follows:
Since the end of the fi nancial year, the directors have approved the payment of a fully franked fi nal dividend of $6,048,390 (2007:
$3,328,628) to be paid on 26 September 2008 out of profi ts earned for the fi nancial year ended 30 June 2008.
Review of operations
The directors’ review of operations is contained on pages 10 to 23.
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2008 2007
Cents Cents
Basic earnings per share 6.5 4.5
Diluted earnings per share 6.5 4.4
27
Signifi cant changes in the state of affairs
Signifi cant changes in the state of affairs of the Group during the fi nancial year were as follows:
(a) Acquisitions:
During the fi nancial year, Mitchell Communication Group completed the purchase of the following businesses:
Mitchell & Partners (WA) Pty Ltd (51%)
Co Media Oz (100%)
Coleman Group Pty Ltd (100%)
The Media Shop (100%)
Visual Jazz Pty Ltd (100%)
Haystac Public Affairs Pty Ltd (100%)
(b)
(c) Net cash received from the increase in contributed equity amounting to $39,338,000 was predominately used to fund the
acquisitions referred to in note (a) above and to pay the deferred consideration owing from the acquisition of Mitchell &
Partners group of companies in 2007.
Earnings per share
Matters subsequent to the end of the fi nancial year
Effective 1 July 2008 the Mitchell Communication Group Limited acquired from Workhouse Advertising Pty Ltd the remaining
49% of the issued capital in Mitchell & Partners (WA) Pty Ltd, for the consideration of $6,174,000 in cash.
On 27 August 2008, with effect from 1 July 2008, the Mitchell Communication Group Limited acquired 100% of the issued capital
in Vivid Holdings Australia Pty Ltd (“Vivid Group”), a communications and technology services company which delivers innovation
in branding, digital media and application development, for consideration of $13,000,000 in cash. Further consideration is
payable on the achievement of certain profi t hurdles to FY’10.
The directors declared a 2.1 cent a share fully franked dividend on 27 August 2008 payable on 26 September 2008 with a record
date of 5 September 2008.
Except for the dividend and acquisitions discussed above, the directors are not aware of any matter or circumstance that has
occurred since the end of the fi nancial year that has signifi cantly affected, or may signifi cantly affect the operations of the Group,
the results of those operations, or the state of affairs of the Group in subsequent fi nancial years.
2008
$’000
An increase in contributed equity of $46,127,000 (from $86,944,000 to $133,071,000) (2007: $66,011,000
(from $20,933,000 to $86,944,000)) as a result of:
Issue of 4,166,667 fully paid ordinary shares at $1.15 as payment for the deferred consideration relating
to the 2007 acquisition of Mitchell & Partners Group of companies 4,792
Issue of 2,541,933 fully paid ordinary shares at an average price of $0.90 per share as part
of consideration for the acquisition of 51% of Mitchell & Partners (WA) Pty Ltd and 100% of
Visual Jazz Pty Ltd 2,284
Issue of 30,000,000 fully paid ordinary shares at $1.10 to institutional investors 33,000
Issue of 6,334,532 fully paid ordinary shares at $1.09 to shareholders as part of a share purchase plan 6,904
2,015,329 fully paid ordinary shares to be issued as deferred consideration for the acquisition of
Visual Jazz Pty Ltd and Coleman Group Pty Ltd 1,102
1,382,025 fully paid ordinary shares cancelled as part of Share buyback program (923)
Transaction costs, net of tax (1,032)
Net increase in share capital 46,127
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Likely developments and expected results of operations
Additional comments on expected results of the operations of the Group are included in this report under the review of
operations and activities on pages 10 to 23.
Further information on likely developments in the operations of the Group and the expected results of operations has not been
included in this report because the directors believe it would be likely to result in unreasonable prejudice to the Group.
Environmental regulation
The Group is not subject to any signifi cant environmental regulations.
Information on directors
Harold Mitchell AO Executive Chairman. Age 66.
Non-executive director for 8 years. Executive Chairman since 25 May 2007. Founder, principal and owner of Mitchell &
Partners, Australia’s largest independent media planning and buying agency, which was acquired by the Group on 1 April 2007.
Active involvement in arts and charitable organisations.
Other current directorships
Non-executive director of Care Australia (director since 2006), and Opera Australia (director since 1997). Also Vice-Chairman of
the Care Australia Corporate Council (from 2005).
Former directorships in last 3 years
Chairman of the National Gallery of Australia Council (from 2001 to 2005), President of the Museums Board of Victoria (from
2001 – 2007), non-executive director of Copperart Holdings Limited (from 2006 – 2007)
Special responsibilities
Executive Chairman of the Board.
Interests in shares and options
102,408,827 ordinary shares in Mitchell Communication Group Limited. As at the date of this report the Mitchell & Partners
Executive Share Plan Trust holds 1,800,000 shares in the company, which are included above. Mr H.C. Mitchell is the trustee of
the Mitchell & Partners Executive Share Plan Trust but not a benefi ciary thereof.
Stuart Mitchell Chief Executive Offi cer. Age 38.
Experience and expertise
Non-executive director for 8 years. Executive director since 25 May 2007. Involvement in media planning and buying operations
since 1992.
Other current directorships
None.
Former directorships in last 3 years
None.
Special responsibilities
Chief Executive Offi cer
Interests in shares and options
12,858,797 ordinary shares in Mitchell Communication Group Limited.
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Garry Hounsell B.Bus (Acctg) FCA CPA FAICD. Deputy Chairman – non-executive. Age 53.
Experience and expertise
Director for 2 years. Former CEO and Country Managing Partner of Arthur Andersen and Senior Partner of Ernst & Young.
Other current directorships
Non-executive director of four other publicly listed companies: Chairman of PanAust Limited (director since July 2008), Qantas
Airways Limited (director since 2005), Orica Limited (director since 2004), and Nufarm Limited (director since 2004). Also
Chairman of Investec Global Aircraft Fund and Prudentia Investments, a non-executive director of Ingeus Limited, Freehills, and
The Macfarlane Burnet Institute for Medical Research and Public Health Ltd.
Former directorships in last 3 years
None.
Special responsibilities
Deputy Chairman of the Board.
Member of Human Resources, Remuneration and Nomination Committee from 16 October 2006
Interests in shares and options
1,660,500 ordinary shares in Mitchell Communication Group Limited.
Robert Stewart LL.B (Hons), BCom, MBA (Harvard). Independent non-executive. Age 59.
Experience and expertise
Director for 8 years. Former National Managing Partner of legal fi rm Minter Ellison.
Other current directorships
Non-executive Chairman of two other publicly listed companies: Melbourne IT Limited (director since 1999), Metabolic
Pharmaceuticals Limited (director since 2007), and President of Baker IDI Heart and Diabetes Institute.
Former directorships in last 3 years
Non-executive director of an unlisted public company, Plantic Technologies Limited from 2004 to 2006, and non-executive
director of Meditech Research Limited (director from 2005 to 2006).
Special responsibilities
Lead independent director
Chairman of Human Resources, Remuneration and Nomination Committee
Interests in shares and options
307,849 ordinary shares in Mitchell Communication Group Limited.
Rodney Lamplugh LL.B, B.Juris Non-executive director. Age 45.
Experience and expertise
Director for 8 years. Legal practitioner specialising in commercial, media and intellectual property law.
Other current directorships
None.
Former directorships in last 3 years
None.
Special responsibilities
Member of the Audit and Corporate Governance Committee.
Interests in shares and options
1,040,000 ordinary shares in Mitchell Communication Group Limited.
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Information on directors (continued)
Stephen Cameron Independent non-executive director. Age 56.
Experience and expertise
Director for 2 years. Senior advertising and marketing executive with over 35 year’s industry experience.
Other current directorships
None.
Former directorships in last 3 years
None.
Special responsibilities
Member of the Audit and Corporate Governance Committee.
Interests in shares and options
71,298 ordinary shares in Mitchell Communication Group Limited.
Peter Nankervis B Ec. (Hons), FCPA, GAICD Independent non-executive director. Age 58.
Experience and expertise
Director for 1 year. Senior fi nancial executive with more than 30 years experience. Formerly Finance Director of Cadbury
Schweppes Australia and CFO of Cadbury Schweppes Asia Pacifi c.
Other current directorships
Non-executive director of Onesteel Ltd (Director since 2004) and Dairy Australia Limited (Director since 2005).
Former directorships in last 3 years
None.
Special responsibilities
Chairman of the Audit and Corporate Governance Committee.
Interests in shares and options
None
Naseema Sparks B Pharm, M Pharm (Pharmacol), MBA, GAICD Independent Non-executive director. Age 55.
Experience and expertise
Director for 1 year. Background in pharmacology and strategic consulting. Senior Advertising Agency executive for 11 years.
Formerly Managing Director and Partner of M&C Saatchi.
Other current directorships
Non-executive director of Blackmores Ltd (Director since 2005) and Racing Victoria Limited (Director since 2007); Deputy Chair
of Osteoporosis Australia, Vice President of the Melbourne International Arts Festival, Vice President of Chief Executive Women.
Former directorships in last 3 years
None.
Special responsibilities
Member Human Resources, Remuneration and Nomination Committee.
Interests in shares and options
None
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Company Secretaries
The company secretary is Mr Andrew Seaburgh FCPA. Mr Seaburgh was appointed on 4 October 2005. Mr Seaburgh has many
years experience as a senior fi nance executive and company secretary in various industries for over 30 years. Mr Dion Cust
B.Bus CA also remains a company secretary. Mr Cust was appointed to the position of company secretary on 23 August 2005.
Mr Cust has been the CFO of Mitchell Communication Group Limited for the past 8 years, and prior to that he worked as a
chartered accountant for a major chartered accounting fi rm.
Meetings of directors
The numbers of meetings of the company’s Board of directors and of each Board Committee held during the year ended 30 June
2008, and the numbers of meetings attended by each director were:
A = Number of meetings attended
B = Number of meetings held during the time the director held offi ce or was a member of the Committee during the year
* = Not a member of the relevant Committee
^ = Mr Hounsell attends the Audit and Corporate Governance Committee meetings as an observer
Retirement, election and continuation in offi ce of directors
There were no changes to directors during the year-ended 30 June 2008.
Mr Harold Mitchell is a director retiring by rotation who, being eligible, offers himself for re-election.
Mr Garry Hounsell is a director retiring by rotation who, being eligible, offers himself for re-election.
Remuneration Report
The remuneration report is set out under the following main headings:
A Principles used to determine the nature and amount of remuneration
B Details of remuneration
C Service agreements
D Share-based compensation.
E Additional information
The information provided in this remuneration report has been audited as required by section 308(3C) of the Corporations Act
2001.
A Principles used to determine the nature and amount of remuneration
The objective of the Group’s executive reward framework is to ensure that reward for performance is competitive with the
market and appropriate for the results delivered. The framework aligns executive reward with the achievement of company
goals, and therefore, the creation of value for shareholders. The Board, through the Human Resources, Remuneration and
Nomination Committee, ensures that executive rewards satisfy the following criteria:
Competitiveness in the marketplace;
Acceptability to shareholders; and
Alignment to performance.
Meetings of Committees
Full meeting of
Directors
Audit and Corporate
Governance
HR/Remuneration
Nomination
A B A B A B
H C Mitchell 10 11 * * * *
S J Mitchell 11 11 * * * *
G A Hounsell ^ 9 11 4 4 1 1
R J Stewart 10 11 * * 1 1
R J Lamplugh 11 11 4 4 * *
S A Cameron 11 11 4 4 * *
P G Nankervis 11 11 4 4 * *
N Sparks 9 11 * * 1 1
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A Principles used to determine the nature and amount of remuneration (continued)
The framework is aligned to shareholders’ interests in that it:
has revenue and profi t growth as a core component of the framework, and
assists in attracting and retaining high calibre executives.
The framework is aligned to the executives’ interests in that it:
rewards capability and performance;
refl ects competitive reward for contribution to profi t and shareholder growth; and
provides a clear structure for earning rewards.
The Human Resources, Remuneration and Nomination Committee provides advice on remuneration and incentive policies and
practices and specifi c recommendations on remuneration packages and other terms of employment for executive directors,
other senior executives and non-executive directors. The Corporate Governance Statement provides further information on the
role of this committee.
The framework consists of a mix of fi xed pay, and short term incentives.
Non-Executive directors
Fees and payments to non-executive directors refl ect the increased demands, which are made on, and the increasing
responsibility of, the directors. Non-executive directors’ fees are reviewed annually by Human Resources and the Remuneration
and Nomination Committee, on behalf of the Board. The Chairman does not receive remuneration for his role and is not present
at any discussions relating to determination of his own remuneration.
Directors’ fees
The current global limit on directors’ remuneration is $1,500,000 and was set on 28 November 2007. Directors who chair
Committees receive additional fees.
No retirement allowances are payable to directors.
The following fees have applied:
^ The Deputy Chairman also received a consultancy fee of $300,000 for additional services provided to the group for mergers and acquisition
activity. This agreement ended on 30 June 2008.
Executive Pay
The executive pay and reward framework has three components:
base pay and benefi ts
short-term performance incentives
other remuneration such as superannuation
The combination of these comprises the executive’s total remuneration.
Base Pay
Structured as a total employment cost, which may be delivered as a mix of cash and non-fi nancial benefi ts within approved
guidelines at the discretion of the executive.
Executives are offered a competitive base pay, which is reviewed annually on 1 July to ensure it remains competitive with the
market for a comparative role. There are no guaranteed base pay increases for executives.
Benefi ts
Executives can receive car fringe benefi ts as part of their total remuneration package.
Base fee
Chairman Nil
Deputy Chairman ^ $120,000
Other non-executive directors $80,000
Additional Fees
Audit and Corporate Governance Committee chairman $15,000
Human Resources, Remuneration and Nomination Committee chairman $15,000
Directors’ Report (continued)
Remuneration Report (continued)
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Short-term Incentives
Should the company reach pre-determined gross revenue and profi t targets set by the Board, and achieve personal performance
based indicators, senior executives are entitled to short-term incentives. The short-term incentives are payable by 30
September each year. The targets are set so as to ensure shareholder value is increased and the maximum available incentive
is only available for out-performance.
Each executive has a profi t target, along with individual non-fi nancial performance objectives aligned to their key performance
indicators and linked to the drivers of performance in future reporting periods including staff management, systems
improvement, and strategy development.
The Human Resources, Remuneration and Nomination Committee are responsible for assessing whether targets and KPI’s have
been met. To help make this assessment, the Committee receives detailed reports on performance from management.
Mitchell Communication Group Limited Employee Option Plan
Information on the Mitchell Communication Group Limited Employee Option Plan is set out in note 37 to the fi nancial
statements. Option grants under the scheme are not subject to performance conditions apart from the exercise price. Exercise
prices of option grants are determined by the Human Resources, Remuneration and Nomination Committee having regard to
the share price at grant date to ensure robust growth in share value is required for the exercise price to be reached. The plan is
now closed to all employees and directors.
B Details of remuneration
Amounts of remuneration
Details of the remuneration of the directors and key management personnel (as defi ned in AASB124 Related Party Disclosures)
of Mitchell Communication Group Limited and the Group are set out in the following tables.
The key management personnel of Mitchell Communication Group Limited and the Group includes the directors as per pages 28
to 30 above and the following fi ve executive offi cers, who have authority and responsibility for planning, directing and controlling
the activities of the entity:
Luke Littlefi eld – Chief Operating Offi cer (from 3 December 2007)
Jonathon White – Managing Director – Corporate
Anthony Charles – Managing Director – Diversifi ed
John Murray – Managing Director – Digital
Dion Cust – Chief Financial Offi cer
In addition the following employee must be disclosed under the are the Corporations Act 2001 as she is among the 5 highest
remunerated Group executives:
Teena Jameson – Managing Director – Mitchell & Partners (Qld) Pty Ltd
The cash bonuses are dependent on the satisfaction of performance conditions as set out in the section headed Short-term
incentive above. All other elements of remuneration are not directly related to performance.
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B Details of remuneration (continued)
Key management personnel of the Group and other executives of the Company and the Group
* On the 25th June 2008 directors forfeited their rights to options issued to them. The company subsequently cancelled the options. The
remuneration in the form of options disclosure does not include the negative value of options forfeited by the directors. The negative values of
the options were as follows: HC Mitchell ($35,447), GA Hounsell ($68,824), RJ Stewart ($35,608), SA Cameron ($35,608), PG Nankervis (nil),
N Sparks (nil).
^ Denotes one of the fi ve highest paid executives of the Group, as required to be disclosed under the Corporations Act 2001.
2008 Short-term employee benefi tsPost-employment
benefi ts
Long-term
benefi tsEquity
Name
Cash salary
and fees
$
Cash
bonus
$
Non-
monetary
benefi ts
$
Super-
annuation
$
Termination
benefi ts
$
Long
service
leave
$
Options *
$
Total
$
Non-executive directors
G A Hounsell 420,000 - - 10,800 - - - 430,800
R J Stewart 95,000 - - 8,550 - - - 103,550
R J Lamplugh 60,000 - - 27,200 - - - 87,200
S A Cameron 80,000 - - 7,200 - - - 87,200
P G Nankervis 28,945 - - 74,605 - - - 103,550
N Sparks 80,000 - - 7,200 - - - 87,200
Sub-total non-
executive directors 763,945 - - 135,555 - - - 899,500
Executive directors
H C Mitchell AO - - - - - - - -
S J Mitchell^ 375,000 375,000 - 33,750 - 675 - 784,425
Other key management personnel
L Littlefi eld
(from 3 Dec 2007) 138,141 166,000 - 25,038 - 100 - 329,279
J N Murray^ 251,720 75,000 23,280 24,750 - 317 46,942 422,009
J White^ 256,881 76,000 - 23,119 - 1,696 - 357,696
A Charles^ 255,019 76,000 1,984 22,952 - 8,200 - 364,155
D G Cust 189,925 - 21,084 18,991 - 3,670 10,763 244,433
Total key
management
personnel
compensation 1,466,686 768,000 46,348 148,600 - 14,658 57,705 2,501,997
Other Group executives
Teena Jameson^ 391,200 - 4,452 28,800 - 7,500 - 431,952
Directors’ Report (continued)
Remuneration Report (continued)
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2007 Short-term employee benefi tsPost-employment
benefi ts
Long-term
benefi tsEquity
Name
Cash salary
and fees
$
Cash
bonus
$
Non-
monetary
benefi ts
$
Super-
annuation
$
Termination
benefi ts
$
Long
service
leave
$
Options *
$
Total
$
Non-executive directors
G A Hounsell 180,000 - - 10,575 - - 68,824 259,399
R J Stewart 68,750 - - 6,188 - - 35,608 110,546
R J Lamplugh 33,750 - - 24,837 - - - 58,587
S A Cameron 53,750 - - 4,837 - - 35,608 94,195
S A Simson (to 1
Sept 2006) 18,333 - - - 165,000 - - 183,333
P G Nankervis
(from 13 Mar 2007) 7,960 - - 22,485 - - - 30,445
N Sparks (from 13
Mar 2007) 24,242 - - 2,182 - - - 26,424
Sub-total non-
executive directors 386,785 - - 71,104 165,000 - 140,040 762,929
Executive directors
H C Mitchell AO - - - - - - 35,447 35,447
S J Mitchell (CEO
from 25 May 2007) 44,621 - 9,697 4,016 - - - 58,334
Other key management personnel
J N Murray
(from 1 April 2007) 68,570 - 4,980 6,188 - - 11,415 91,153
A Charles
(from 1 April 2007) 55,482 12,500 - 4,993 - 906 - 73,881
P McBeth
(from 1 April 2007) 60,550 20,000 - 7,575 - - - 88,125
J White
(from 1 April 2007) 62,500 40,000 - 5,625 - - - 108,125
D G Cust ^ 164,871 30,000 21,084 19,976 - 8,209 7,722 251,862
L A Stephens
(to 7 May 2007) ^ 275,230 - - 31,520 - - - 306,750
Total key
management
personnel
compensation 731,824 102,500 35,761 79,893 - 9,115 54,584 1,013,677
Other Group executives
L Brahe ^ 146,789 20,917 - 15,503 - - 7,722 190,931
M Crook ^ 140,839 28,257 - 20,980 - 1,666 7,722 199,464
J Richards ^ 110,000 21,425 - 12,718 - - 5,820 149,963
Key management personnel of the Group and other executives of the Company and the Group
* Remuneration in the form of options does not include negative amounts for options that lapsed during the year for LA Stephens.
The negative value of options that lapsed was ($51,204).
^ Denotes one of the fi ve highest paid executives of the Group, as required to be disclosed under the Corporations Act 2001.For
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Fixed remuneration At risk - STI
2008 2007 2008 2007
Other key management personnel
S J Mitchell 67.1% - 32.9% -
L Littlefi eld 66.7% - 33.3% -
J N Murray 80.0% - 20.0% -
J White 87.0% - 13.0% -
A Charles 87.0% - 13.0% -
D Cust 100.0% 83.5% 0% 16.5%
36
B Details of remuneration (continued)
The relative proportions of contracted full-year remuneration that are linked to performance and those that are fi xed are as
follows:
C Service Agreements
On appointment to the Board, all non-executive directors enter into a service agreement with the company in the form of a letter
of appointment, which summarises the Board policies and terms, including compensation, relevant to the director.
Mr G Hounsell entered into a consultancy agreement with the Board, which outlined additional services to be provided to the
Group in relation to mergers and acquisition activity. This agreement ran for one year from 1 July 2007 to 30 June 2008 and was
not renewed.
Remuneration and other terms of employment for the Chief Executive Offi cer, Chief Operating Offi cer, Chief Financial Offi cer
and other key management personnel are also formalised in service agreements. Some of these agreements provide for the
provision of performance-related cash bonuses and participation, when eligible, in the Mitchell Communication Group Limited
Employee Option Plan. Other major provisions of the agreements relating to remuneration are set out below.
G Hounsell, Deputy Chairman
The agreement is with an entity associated with the Deputy Chairman for the services of the Deputy Chairman.
Agreement, commenced 1 July 2007, ran for a term of one year, with a base fee of $300,000 and was not renewed.
S Mitchell, Chief Executive Offi cer
Term of agreement - 3 years commencing 25 May 2007
Short-term incentive bonus based on achievement of agreed performance indicators, both fi nancial and non-fi nancial to a
maximum of $250,000. Additional incentive payable for internal budget out-performance.
Agreement may be terminated by either party giving six months notice.
Annual remuneration package, inclusive of superannuation, for the year ending 30 June 2009 of $420,000, reviewed annually
by the Board.
Payment in lieu of notice capped at six months salary.
L Littlefi eld, Chief Operating Offi cer
Agreement, dated 3 December 2007, may be terminated by either party giving 90 days notice.
Short-term incentive bonus based on achievement of agreed performance indicators, both fi nancial and non-fi nancial to a
maximum of $150,000. Additional incentive payable for internal budget out-performance.
Base salary, inclusive of superannuation, for the year ending 30 June 2009 of $315,000, to be reviewed annually by the
Human Resources, Remuneration and Nomination Committee.
Payment of termination benefi t is capped at three months salary.
Directors’ Report (continued)
Remuneration Report (continued)
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A Charles, Managing Director – Diversifi ed
Agreement, dated 27 May 2002, may be terminated by either party giving 90 days notice.
Short-term incentive bonus based on achievement of agreed performance indicators, both fi nancial and non-fi nancial to a
maximum of $105,000. Additional incentive payable for internal budget out-performance.
Base salary, inclusive of superannuation, for the year ending 30 June 2009 of $300,000, to be reviewed annually by the
Human Resources, Remuneration and Nomination Committee.
Payment of termination benefi t is capped at three months salary.
J White, Managing Director – Corporate
Agreement, dated 1 July 2006, may be terminated by either party giving 90 days notice.
Short-term incentive bonus based on achievement of agreed performance indicators, both fi nancial and non-fi nancial to a
maximum of $150,000. Additional incentive payable for internal budget out-performance.
Base salary, inclusive of superannuation, for the year ending 30 June 2009 of $300,000, to be reviewed annually by the
Human Resources, Remuneration and Nomination Committee.
Payment of termination benefi t is capped at three months salary.
J Murray, Managing Director – Digital
Agreement, dated 9 January 2007, may be terminated by either party giving 90 days notice.
Short-term incentive bonus based on achievement of agreed performance indicators, both fi nancial and non-fi nancial to a
maximum of $105,000.
Base salary, inclusive of superannuation, for the year ending 30 June 2009 of $400,000, to be reviewed annually by the
Human Resources, Remuneration and Nomination Committee.
Payment of termination benefi t is capped at three months salary.
D Cust, Chief Financial Offi cer
Agreement, dated 19 February 2001, may be terminated by either party giving 30 days notice.
Base salary, inclusive of superannuation, for the year ending 30 June 2009 of $230,000, to be reviewed annually by the
Human Resources, Remuneration and Nomination Committee.
Payment of termination benefi t is capped at one month salary.
D Share-based compensation
Options are granted under the Mitchell Communication Group Limited Employee Option Plan. The plan is now closed to all
employees and directors.
Options were granted under the Mitchell Communication Group Limited Employee Option Plan, which was created prior to
the listing of the company but included in the prospectus dated 9 February 2000. All staff were eligible to participate in the
plan (including directors). Options were granted under the plan for no consideration. Options granted under the plan carry
no dividend or voting rights, and were granted at the discretion of the Human Resources, Remuneration and Nomination
Committee.
On 25 June 2008 the directors elected to forfeit all options outstanding to them and the company subsequently cancelled these
options. The options were not replaced and the directors were not compensated for the forfeiture.For
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Number of options granted
during the year
Number of options vested
during the year
2008 2007 2008 2007
Directors of Mitchell Communication Group Limited
H C Mitchell AO - 1,000,000* - -
G A Hounsell - 500,000* - -
R J Stewart - 200,000* - -
S A Cameron - 200,000* - -
P G Nankervis 200,000* - - -
N Sparks 200,000* - - -
Other key management personnel of the Group
J Murray - 300,000 - -
D G Cust - 81,204 - -
Grant date Expiry date Exercise price Value at exercise date Date exercisable
29 November 2005 28 November 2010 $0.60 $0.203 29 November 2007
29 November 2005 28 November 2010 $0.70 $0.182 29 November 2007
29 November 2005 28 November 2010 $0.80 $0.164 29 November 2007
2 October 2006 2 October 2011 $0.55 * $0.290 2 October 2008
2 October 2006 2 October 2011 $0.65 * $0.258 2 October 2008
2 October 2006 2 October 2011 $0.75 * $0.290 2 October 2008
23 November 2006 28 November 2011 $0.75 * $0.599 29 November 2008
23 November 2006 28 November 2011 $1.05 * $0.463 29 November 2008
2 April 2007 2 April 2012 $1.42 * $0.288 2 April 2009
2 April 2007 30 September 2011 $1.55 * $0.234 1 October 2008
29 November 2007 29 November 2012 $1.50 $0.168 29 November 2009
38
D Share-based compensation (continued)
The terms and conditions of each grant of options affecting remuneration in this and previous reporting periods are as follows:
* The dilution to existing shareholders caused by the rights issue has led to a reduction in the exercise price of options on issue at the date of the
rights issue. The reduction was 4.7 cents per option.
When exercisable, each option is convertible into one ordinary share. Options may only be exercised in accordance with the
company policy on trading in securities. The exercise price of options is determined by the Human Resources, Remuneration
and Nomination Committee at the date of grant.
Details of options over ordinary shares in the company provided as remuneration to each director of Mitchell Communication
Group Limited and each of the key management personnel of the Group are set out below. When exercisable, each option is
convertible into one ordinary share of Mitchell Communication Group Limited. Further information on the options is set out in
note 37 to the fi nancial statements.
* Options granted during the year were forfeited in full on 25 June 2008
Directors’ Report (continued)
Remuneration Report (continued)
For
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Date of
exercise of
options
Number of ordinary shares
issued on exercise of options
during the year
2008 2007
Directors of Mitchell Communication Group Limited
R J Stewart 10 April 2007 - 200,000
Other key management personnel of the Group
L A Stephens 3 October 2006 - 1,500,000
D G Cust 1 March 2007 - 300,000
39
The assessed fair value at grant date of options granted to the individuals is allocated equally over the period from grant date to
vesting date, and the amount is included in the remuneration tables above. Fair values at grant date are determined using an
enhanced Hull-White Trinomial Lattice option pricing model that takes into account the exercise price, the term of the option,
the vesting criteria, the impact of dilution, the non-tradeable nature of the option, the share price at grant date and expected
price volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of the option.
The model inputs for options granted during the year ended 30 June 2008 included:
(a) options were granted for no consideration, and vest two years after grant date
(b) exercise price: $1.50 (2007 – $0.55, $0.65, $0.75, $1.05, $1.42, $1.55)
(c) grant date: 29 November 2007 (2007 – 2 October 2006, 23 November 2006, 2 April 2007)
(d) vesting date: 29 November 2009 (2007 – 2 October 2008, 29 November 2008, 2 April 2009, 1 October 2008)
(e) expiry date: 29 November 2012 (2007 – 2 October 2011, 29 November 2011, 2 April 2011, 30 September 2011)
(f) share price at grant date: $1.17 (2007 – $0.915, $1.30, $1.27)
(g) expected price volatility of the company’s shares: between 21% and 42% (2007 – between 26% and 56%)
(h) expected dividend yield: between 3.9% and 5.5% (2007 – between 1.5% and 5.0%)
(i) risk-free interest rate: 6.25% (2007: 6.27%)
Shares provided on exercise of remuneration options
Details of ordinary shares in the company provided as a result of the exercise of remuneration options to key management
personnel of the Group are set out below.
E Additional information
Principles used to determine the nature and amount of remuneration: relationship between remuneration and company
performance
The overall level of executive reward takes into account the performance of the Group over a number of years, with greater
emphasis given to the current year. Over the past fi ve years, the Group’s profi t from ordinary activities after income tax has
grown at an average rate of 213% per annum, and total shareholder return has grown at an average rate of 127% per annum.
During the same period, average executive remuneration has grown at an average of 27% per annum.
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E Additional information (continued)
Details of remuneration: Cash bonuses and options
For each cash bonus and grant of options included in the tables on pages 34 to 39, the percentage of the available bonus or
grant that was paid, or that vested, in the fi nancial year, and the percentage that was forfeited because the person did not meet
the service and performance criteria is set out below. No part of the bonuses or grants of options are payable in future years.
Share-based compensation: Options
Further details relating to options are set out below.
A = The percentage of the value of remuneration consisting of options, based on the value at grant date set out in column B.
B = The value at grant date calculated in accordance with AASB 2 Share-based payments of options granted during the year as part of
remuneration.
C = The value at exercise date of options that were granted as part of remuneration and were exercised during the year.
D = The value at lapse date of options that were granted as part of remuneration and that lapsed during the year.
Loans to directors
Information on loans to directors is set out in note 27 to the fi nancial statements.
Cash bonus Options
Paid ForfeitedYear
GrantedVested Forfeited
Financial
years in which
options vest
Minimum total
value of grant
yet to vest
Maximum total
value of grant
yet to vest
% % % % $ $
H C Mitchell - - 2007 - 100% - - -
G A Hounsell - - 2007 - 100% - - -
R J Stewart - - 2007 - 100% - - -
S A Cameron - - 2007 - 100% - - -
P G Nankervis - - 2008 - 100% - - -
N Sparks - - 2008 - 100% - - -
S Mitchell 85 15 - - - - - -
A Charles 83.3 16.7 - - - - - -
J White 83.3 16.7 - - - - - -
J Murray 100 - 2007 - - 30/6/2009 70,284 70,284
L Littlefi eld 83.3 16.7 - - - - - -
D G Cust - - 2007 - - 30/6/2009 21,034 21,034
A B C D E
Remuneration
consisting of
options
Value at grant
date
Value at
exercise date
Value at lapse
date
Total of
columns B-D
% $ $ $ $
J Murray 11% 70,284 - - 70,284
D G Cust 4% 21,034 - - 21,034
Directors’ Report (continued)
Remuneration Report (continued)
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Consolidated
During the year the following fees were paid or payable for services provided by the auditor
of the parent entity, its related practices and non-related audit fi rms: 2008 2007
Audit services $ $
PricewaterhouseCoopers – Australian fi rm:
Audit and review of fi nancial reports and other audit work under the Corporations Act 2001 338,550 445,505
Agreed upon procedures 5,000 -
Related practices of PricewaterhouseCoopers Australian fi rm 44,950 -
Non-PricewaterhouseCoopers audit fi rms for the audit or review of fi nancial reports of any entity
in the group - 12,390
Total audit and other assurance services 388,500 457,895
41
Shares under option
Unissued ordinary shares of Mitchell Communication Group Limited under option at the date of this report are as follows:
No option holder has any right under the options to participate in any other share issue of the company or of any other entity.
Shares issued on the exercise of options
There were no ordinary shares of Mitchell Communication Group Limited issued during the year ended 30 June 2008 and
subsequent to the end of the fi nancial year on the exercise of options granted under the Mitchell Communication Group Limited
Employee Option Plan.
Insurance of offi cers
During the period, Mitchell Communication Group Limited paid a premium of $45,948 to insure the directors and offi cers of the
company and its controlled entities.
The liabilities insured are costs and any damages, judgments or settlements that may be incurred in defending civil or criminal
proceedings that may be brought against the offi cers in their capacity as offi cers of entities in the Group.
Proceedings on behalf of company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf
of the company, or to intervene in any proceedings to which the company is a party, for the purpose of taking responsibility on
behalf of the company for all or part of those proceedings.
No proceedings have been brought or intervened in on behalf of the company with leave of the Court under section 237 of the
Corporations Act 2001.
Non-audit services
During the year ended 30 June 2008, the company did not use the auditor (PricewaterhouseCoopers) for any non-audit related
services.
Details of the amounts paid or payable to the auditor for audit and non-audit services provided during the year are set out below.
NumberIssue price of
sharesGrant date
First exercise
dateExpiry date
Mitchell Communication Group Limited
Employee Option Plan options
150,767 $0.55 2 Oct 2006 2 Oct 2008 2 Oct 2011
150,767 $0.65 2 Oct 2006 2 Oct 2008 2 Oct 2011
150,767 $0.75 2 Oct 2006 2 Oct 2008 2 Oct 2011
300,000 $1.55 2 April 2007 1 Oct 2008 30 Sept 2011
Total 752,301
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Auditors’ Independence Declaration
A copy of the auditors’ independence declaration as required under section 307C of the Corporations Act 2001 is set out on page
43.
Rounding of amounts
The company is of a kind referred to in Class Order 98/100, issued by the Australian Securities & Investments Commission,
relating to the “rounding off” of amounts in the directors’ report. Amounts in the directors’ report have been rounded off in
accordance with that Class Order to the nearest thousand dollars, or in certain cases, to the nearest dollar.
This report is made in accordance with a resolution of the directors.
Harold C Mitchell AO
Executive Chairman
Melbourne, 30 September 2008
Directors’ Report (continued)F
or p
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43
PricewaterhouseCoopersABN 52 780 433 757
Freshwater Place2 Southbank BoulevardSOUTHBANK VIC 3006GPO Box 1331LMELBOURNE VIC 3001DX 77Telephone 61 3 8603 1000Facsimile 61 3 8603 1999
Auditor’s Independence Declaration
As lead auditor for the audit of Mitchell Communication Group Limited for the year ended 30 June2008 I declare that to the best of my knowledge and belief, there have been:
a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Mitchell Communication Group Limited and the entities it controlledduring the period.
John Yeoman MelbournePartner 30 September 2008PricewaterhouseCoopers
For
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Corporate governance statement
Mitchell Communication Group Limited (the company) and the Board are committed to achieving and demonstrating the highest
standards of corporate governance. An extensive review of the company’s corporate governance framework was completed
in September 2003 in light of the best practice recommendations released by the Australian Stock Exchange Corporate
Governance Council in March 2003. The corporate governance framework is continually reviewed to ensure best practice
developments are incorporated. Changes to the company’s governance arrangements made in the course of the last year are
highlighted in this statement.
The company acknowledges the requirement to report against the Revised Principles released on 2 August 2007 in the annual
report for the fi nancial year ending 30 June 2009 and has elected not to make an early transition to the Revised Principles for
the 2008 annual report.
A description of the company’s main corporate governance practices is set out below. All these practices, unless otherwise
stated, were in place for the entire year. In order to assist shareholders understand the approach taken by the company to
corporate governance, the report has been set out using the same headings as used by the ASX Corporate Governance Council’s
“Principals of Good Corporate Governance”.
Principle 1
Lay Solid Foundations for Management and Oversight by the Board
The Board of Directors is responsible for guiding and monitoring the company on behalf of the shareholders by whom it is
elected and to whom it is accountable. In discharging its stewardship it makes use of sub-Committees which are able to
focus in greater detail on relevant issues in their areas of responsibility. The current Committees are Human Resources,
Remuneration and Nomination Committee and Audit and Corporate Governance Committee.
The key functions of the Board of Directors are:
to set strategic direction and to manage and monitor strategy against key objectives and targets;
adopting the annual budget and monitoring performance on a regular basis;
appointment and removal of the CEO and setting appropriate remuneration and performance targets;
appointment and removal of the Company Secretary;
approval of the appointment (and removal) of the Chief Financial Offi cer;
monitoring and reviewing the performance of management;
set in place effective audit, compliance and control mechanisms;
ensuring the company has effective risk management processes;
approving and monitoring fi nancial and other reporting;
approving and monitoring the progress of major capital expenditure, acquisitions and divestitures;
reviewing Board performance and remuneration and ensuring a formal and transparent Board nomination process;
ensuring that the company complies with the law and has a high standard of ethical behaviour; and
monitoring and managing potential confl icts of interest of management, Board members and shareholders.
Management’s responsibilities are:
to be responsible to the Board for the overall performance of the company;
establishing the strategic direction of the company in conjunction with, and for approval by the Board;
implementing decisions in accordance with the strategic direction of the company as approved by the Board;
providing leadership and direction for all staff;
maintaining an effective risk management and internal control system;
ensuring integrity and timeliness of reporting to the Board and shareholders; and
ensuring that all management and staff comply with company policies.
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The Chairman’s role is to ensure that the relationship between the Board, management, shareholders, other stakeholders and
the individual directors is effective, effi cient and further the best interests of the company, shareholders, the Board and other
stakeholders.
The Board meets monthly, with special meetings called if required between scheduled meetings. Agendas are established to
ensure proper coverage of strategic, fi nancial and major risk areas throughout the year.
Principle 2
Structure the Board to Add Value
The Constitution of Mitchell Communication Group Limited allows for the appointment of up to twelve directors. There are
currently eight directors. Six directors are non-executive, fi ve of whom are considered independent by the Board. The directors
have been chosen so as to provide an appropriate mix of experience and qualifi cations for the governance of the company.
The Board of Mitchell Communication Group appreciates the need for corporate transparency and accountability whilst also
balancing the need for skills, commitment, effective knowledge management and workable Board size. The current level of skill
and experience is appropriate to ensure the highest level of scrutiny.
Mr Rob Stewart, Lead Independent Director, Mr Garry Hounsell, Deputy Chairman, Mr Stephen Cameron, Mr Peter Nankervis
and Ms Naseema Sparks are independent under ASX guidelines.
The Deputy Chairman, Mr Garry Hounsell, became independent on 1 July 2008 when a consultancy agreement lapsed.
Mr Rod Lamplugh is not independent under ASX guidelines (being associated directly with a substantial shareholder); however
he brings formal legal qualifi cations, which are highly regarded by the Board and management structure.
Mr Harold Mitchell AO, whilst not an independent Director (because he is Executive Chairman), has extensive industry
experience and knowledge and, as the founder of Mitchell & Partners, a company now owned by Mitchell Communication Group
Limited, he adds signifi cant historical knowledge and strategic vision at Board level as Executive Chairman. This is a departure
from ASX corporate governance recommendations, however the Board believes the Chairman is able, and does, bring quality and
independent judgement to all relevant issues falling within the scope of the role of the Chairman.
Mr Stuart Mitchell (Chief Executive Offi cer), whilst also not independent under ASX Guidelines, brings a combination of
professional expertise and industry knowledge (media placement) to the Board. These skills are highly regarded within the
company Board.
In summary, the company’s Board has a majority of independent directors, and the Board believes the current structure is
appropriate for the company and its current state of development. The company’s Code of Conduct also ensures that directors
are aware of their responsibilities in areas such as confl icts of interest and related party transactions.
The Board is committed to developing an ongoing dialogue with its key stakeholders over any matters of concern with Board
structure and/or independence.
The company recognises the need for a clear division of responsibility at the head of the company and as such, the roles of
Chairman and CEO roles have been separated.
Materiality is assessed on a case-by-case basis by reference to each director’s individual circumstances rather than applying
materiality thresholds.
One third of directors must retire from offi ce at the time of the Annual General Meeting each year. Directors are eligible for re-
election. The directors who retire by rotation are those with the longest period in offi ce since their appointment or last election.
At the time when any director is coming up for re-election, the Board considers that question and makes a conscious decision as
to whether to recommend the re-election to shareholders.
Directors and Board Committees have the right, in connection with their duties and responsibilities, to seek independent
professional advice at the company’s expense. Prior written approval of the Chairman is required, but this will not be
unreasonably withheld.
The Board has established a Human Resources, Remuneration and Nominations Committee. This Committee has the
responsibility for ensuring that proper human resource management and remuneration policies are developed and followed by
the company and for assisting the Board in reviewing the performance of the Board and individual directors and in selecting any
new directors. The committee follows the policy set down by the board for appointment of new directors.
The Committee is chaired by Mr Rob Stewart.
Details of directors’ attendance at Human Resources, Remuneration and Nominations Committee meetings are set out in the
Directors’ Report.
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The Committee’s responsibilities include:
assisting in the annual performance review of the CEO;
recommending to the Board the compensation and key performance targets for the CEO;
assisting in the performance review of the Board;
identifying, evaluating and recommending suitable candidates for appointment as directors;
recommending to the Board appropriate remuneration policies for non-executive directors;
approving compensation packages and performance targets for senior executives;
succession planning for the Board, CEO and key executives;
review of human resource and remuneration policies and practices for the company as brought forward by the CEO and
where appropriate, recommend adoption by the Board; and
review and approve recommendations from the CEO on appointments and terminations to senior executive positions
reporting to the CEO with the exception of the CFO and Company Secretary whose appointment or termination must be
approved by the Board.
The Charter of the Human Resources, Remuneration and Nominations Committee can be viewed on the company’s website.
Principle 3
Promote Ethical and Responsible Decision-making
The company has a Code of Conduct applicable to all directors and staff. The Code is based on the premise that, in all conduct,
the company directors and staff are to act honestly, diligently, lawfully and fairly. A copy of the Code is available on the
company’s website.
The company has also developed a Securities Trading Policy. This applies to all directors and staff and sets out the approach to
be followed should any of them wish to buy or sell Mitchell Communication Group Limited securities. A copy of this policy can
also be viewed on the company’s website.
Principle 4
Safeguard Integrity in Financial Reporting
The Board has established an Audit and Corporate Governance Committee with responsibility for ensuring that proper
accounting and auditing practices are maintained; that business risks are identifi ed and managed effectively; that assets are
protected against fi nancial loss; and that legal and regulatory obligations are met.
The Audit and Corporate Governance Committee is chaired by Mr Peter Nankervis.
Details of directors’ attendance at Audit and Corporate Governance Committee meetings are set out in the Directors’ Report.
The Committee also receives regular reports from the external auditors concerning any matters which arise in connection with
the performance of their role, including adequacy of internal controls. The Committee reports to the Board on its activities after
each meeting, and copies of the minutes of the Committee’s meetings are provided to all directors.
Its role includes:
reviewing reports submitted by external auditors;
reviewing and recommending to the Board for approval half-yearly and yearly fi nancial statements;
reviewing the performance of the auditors and recommending to the Board any change in the company’s auditors;
monitoring and confi rming to the Board the continuing independence of the external auditors and the level of assurance
given by the auditors;
monitoring regulatory compliance;
evaluating the appropriateness of the company’s administrative, operating and accounting policies; and
risk management generally (including such issues as insurances, management of information systems and
internal controls).
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The removal and nomination of auditors will be determined in accordance with the Corporations Act 2001.
The Charter of the Audit and Corporate Governance Committee can be viewed on the company’s website.
The CEO and the CFO are required to state to the Board in writing, at the time of submitting the half-year and full year accounts
for Board approval, that the company’s fi nancial reports are complete and present a true and fair view, in all material respects,
of the fi nancial condition and operational results of the company and Group and are in accordance with relevant accounting
standards and that the company’s risk management and internal compliance and control system is operating effi ciently and
effectively in all material respects.
Principle 5
Make Timely and Balanced Disclosure
The Board has adopted a Disclosure Protocol to ensure the timely and appropriate release of disclosable information to the
market in accordance with the ASX Listing Rules. Details of the Protocol are available on the company’s website.
Mr Dion Cust, Company Secretary has been appointed as the Continuous Disclosure Offi cer. The Chairman or CEO approve the
fi nal form of announcements, subject to any comments from directors, who are given the opportunity to comment on proposed
material announcements prior to their release.
Principle 6
Respect the Rights of Shareholders
It is a fundamental tenet that the Board must act in the interests of all shareholders and, when Board decisions may affect
different shareholder groups differently, the Board must treat all shareholders fairly.
The company is committed to ensuring that shareholder’s are fully informed of the company’s affairs. Effective communications
with shareholders is, therefore, very important. The ways in which the company does this include:
Regular reports to shareholders, including the company’s Annual Report;
The Annual General Meeting, where the external auditor is in attendance to answer any shareholder questions about the
audit and the auditor’s report; and
Disclosure of all announcements made to the ASX on the company website, located at www.mitchells.com.au, as soon as
they have been lodged.
Principle 7
Recognise and Manage Risk
It is a key part of the role of the Audit and Corporate Governance Committee to oversee the establishment and implementation of
the risk management system.
The company has, taking into account its current size and structure, a relatively strong system of internal controls.
During the year a risk management framework and register was formerly developed and adopted.
Principle 8
Encourage Enhanced Performance
The expected performance of the CEO and the senior executive staff reporting directly to him is specifi ed each year using key
performance indicators. These KPI’s include, where appropriate, fi nancial targets for the company overall as well as personal
objectives and targets, appropriate for each individual’s role.
The Human Resources, Remuneration and Nominations Committee assists the Board to address the various issues in this
area (see Principle 2 above). The CEO reviews the performance of staff reporting directly to him and makes recommendations
to the Committee for approval. The CEO’s own performance is reviewed by the Board, facilitated by the Human Resources,
Remuneration and Nominations Committee and the Chairman.
Enhanced performance by executives and senior staff is encouraged by structuring their remuneration with fi xed and variable
elements.
It is vital that directors are provided with and have access to all relevant information to enable them to properly discharge their
duties. Management is responsible for ensuring that reporting to the Board is comprehensive and timely.
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Directors can request from management (through the CEO, CFO or the Company Secretary) whatever information they require
to enable the Board to make informed decisions. As mentioned previously, if necessary, directors may also access independent
professional advice at the company’s expense.
The Company Secretary is appointed, and can only be removed, by the Board and is accountable to the Board on all governance
matters.
Principle 9
Remunerate Fairly and Responsibly
The company’s remuneration policy has been set to ensure that remuneration of all directors and all staff properly refl ects each
person’s accountabilities, duties and their level of performance, and to ensure that remuneration is competitive in attracting,
motivating and retaining staff of the highest quality.
All remuneration packages are reviewed at least annually, taking into account individual and company performance, market
movements and expert advice.
The remuneration of non-executive directors consists of a fi xed fee, with the total payable not exceeding a global limit (currently
$1,500,000) set by shareholders at a General Meeting from time to time. Directors do not receive a fee for their membership of
Committees of the Board other than Chair’s of Committees.
Directors are not entitled to retirement benefi ts.
The remuneration of the CEO and senior executives comprises the following four elements:
Fixed salary;
Short term incentives;
Long term incentives; and
Superannuation.
Short term incentives are payable based on a formula based on achievement of budget as approved by the Board, achievement
of a defi ned level of out-performance and the assessment of qualitative criteria.
Long term incentives consist of past membership of the Mitchell Communication Group Limited Employee Option Plan.
Details of remuneration paid to directors and senior executives are set out in full in the Directors Report on pages 31 to 41.
Principle 10
Recognising Legitimate Interests of Shareholders
The company has a Code of Conduct applicable to all directors and staff. The Code is based on the premise that, in all conduct,
the company directors and staff are to act honestly, diligently, lawfully and fairly. The Code will be regularly reviewed and
updated to ensure it refl ects the highest standards of behaviour and professionalism.
In summary, the Code requires that all company personnel operate openly, honestly, with integrity and responsibility whilst
maintaining a strong sense of corporate and social responsibility. The Code includes a mechanism for employees to report any
breach of the Code without fear of retribution.
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Financial report – 30 June 2008
This fi nancial report covers both Mitchell Communication Group Limited as an individual entity and the consolidated
entity consisting of Mitchell Communication Group Limited and its controlled entities. The fi nancial report is presented
in Australian currency.
Mitchell Communication Group Limited is a company limited by shares, incorporated and domiciled in Australia.
Its registered offi ce and principal place of business is:
Mitchell Communication Group Limited
105 York Street
South Melbourne Vic 3205
A description of the nature of the Group’s operations and its principal activities is included in the review of operations and
activities on pages 10 to 23 and in the directors’ report on pages 26 to 42, both of which are not part of this fi nancial report.
The fi nancial report was authorised for release by the directors on 24 September 2008. The company has the power to amend
and reissue the fi nancial report.
Press releases and other information are available on our website: www.mitchells.com.au
For queries in relation to our reporting please call (03) 9690 5544 or e-mail [email protected]
Contents Page
Financial report – 30 June 2008 49
Income statements 50
Balance sheets 51
Statements of changes in equity 52
Cash fl ow statements 54
Notes to the fi nancial statements 55
Directors’ declaration 105
Independant audit report to the members 106
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Consolidated Parent entity
2008 2007 2008 2007
Note $’000 $’000 $’000 $’000
Revenues from the rendering of services 5 187,796 81,231 - 41,231
Other revenue 5 2,976 1,278 11,473 2,460
190,772 82,509 11,473 43,691
Cost of revenue
- Media delivery expenses 95,869 51,992 - 30,905
Total cost of revenue 95,869 51,992 - 30,905
Gross profi t before expenses 94,903 30,517 11,473 12,786
Other income 6 47 542 - 480
Expenses
- Employee, director and contractor expenses 44,409 11,815 5,177 4,618
- Finance expenses 7 3,655 571 3,627 508
- Occupancy expense 3,585 776 84 236
- Travel and accommodation expense 2,803 847 574 372
- Media research expense 2,744 845 - 139
- Accounting, legal and consultant’s expenses 1,822 704 1,236 316
- Software and infrastructure maintenance expense 1,009 259 47 54
- Communication expenses 943 152 60 42
- Insurance expenses 820 252 63 65
- Other operating expenses 2,899 1,143 576 462
Total expenses 64,689 17,364 11,444 6,812
Share of net profi ts/(losses) of joint venture entity accounted
for using the equity method 34 (13) 112 - -
Profi t before income tax expense, depreciation and
amortisation 30,248 13,807 29 6,454
Depreciation and amortisation expenses 7 3,711 973 128 199
Profi t/(loss) before income tax expense 26,537 12,834 (99) 6,255
Income tax (benefi t)/expense 8 7,720 3,826 (2,830) 1,402
Profi t after income tax attributable to members of the
company before minority interest 18,817 9,008 2,731 4,853
Minority interest 633 25 - -
Profi t after income tax attributable to members of the
company after minority interest 18,184 8,983 2,731 4,853
Basic earnings per share (cents) 36 6.5 4.5
Diluted earnings per share (cents) 36 6.5 4.4
Income statements
For the year-ended 30 June 2008
The above income statements should be read in conjunction with the accompanying notes.
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Consolidated Parent entity
2008 2007 2008 2007
Note $’000 $’000 $’000 $’000
ASSETS
Current assets
Cash and cash equivalents 9 73,318 62,100 10,146 8,609
Trade and other receivables 10 146,368 123,104 39,415 9,360
Other assets 11 9,471 6,308 2,389 7,707
Current tax assets 15 1,705 1,046 424 182
Total current assets 230,862 192,558 52,374 25,858
Non-current assets
Receivables 12 - 154 - 154
Other fi nancial assets 13 - - 188,127 171,981
Property, plant and equipment 14 5,993 3,023 623 415
Deferred tax assets 15 77 340 77 265
Intangible assets 16 204,559 160,204 207 913
Total non-current assets 210,629 163,721 189,034 173,728
Total assets 441,491 356,279 241,408 199,586
LIABILITIES
Current liabilities
Trade and other payables 17 218,255 190,841 2,275 14,048
Other Financial Liabilities 18 6,101 45,415 52,178 74,126
Provisions 19 2,268 1,903 199 39
Current tax liabilities 3,902 3,410 4,466 3,100
Total current liabilities 230,526 241,569 59,118 91,313
Non-current liabilities
Borrowings 20 60,000 26,000 60,000 26,000
Deferred tax liabilities 21 1,696 1,870 - -
Provisions 22 989 292 84 43
Other fi nancial liabilities 23 279 575 279 575
Total non-current liabilities 62,964 28,737 60,363 26,618
Total liabilities 293,490 270,306 119,481 117,931
Net assets 148,001 85,973 121,927 81,655
EQUITY
Contributed equity 24 133,071 86,944 133,071 86,944
Reserves 25(a) (220) 335 163 238
Accumulated earnings/(losses) 25(b) 8,318 (1,331) (11,307) (5,527)
Parent entity interest 141,169 85,948 121,927 81,655
Minority interest 6,832 25 - -
Total equity 148,001 85,973 121,927 81,655
Balance sheets
As at 30 June 2008
The above balance sheets should be read in conjunction with the accompanying notes.
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Consolidated June 2008
Issued
capital
Retained
earnings
Equity
plan
reserve
Foreign
currency
reserve
Minority
interestTotal
Note $’000 $’000 $’000 $’000 $’000 $’000
At 1 July 2007 86,944 (1,331) 238 97 25 85,973
Profi t for the year - 18,184 - - 633 18,817
Total recognised income and expense for
the period - 18,184 - - 633 18,817
Dividends declared and paid 26 - (8,535) - - - (8,535)
Share consideration on acquisitions 24 8,178 - - - - 8,178
Share placement and share purchase plan 24 39,904 - - - - 39,904
Share buy back 24 (923) - - - - (923)
Transaction costs arising on share issues
(net of tax) 24 (1,032) - - - - (1,032)
Minority interest 49% of M&P WA - - - - 6,174 6,174
Foreign currency translation 25(a) - - - (480) - (480)
Share-based payments 25(a) - - (75) - - (75)
At 30 June 2008 133,071 8,318 163 (383) 6,832 148,001
Consolidated June 2008
Issued
capital
Retained
earnings
Equity
plan
reserve
Foreign
currency
reserve
Minority
interestTotal
Note $’000 $’000 $’000 $’000 $’000 $’000
At 1 July 2006 20,933 (6,398) 51 6 - 14,592
Profi t for the year - 8,983 - - 25 9,008
Total recognised income and expense for
the period - 8,983 - - 25 9,008
Dividends declared and paid 26 - (3,916) - - - (3,916)
Share consideration on acquisitions 24 22,848 - - - - 22,848
Share placement and share purchase plan 24 43,681 - - - - 43,681
Share buy back 24 872 - - - - 872
Transaction costs arising on share issues
(net of tax) 24 (1,390) - - - - (1,390)
Foreign currency translation 25(a) - - - 91 - 91
Share-based payments 25(a) - - 187 - - 187
At 30 June 2007 86,944 (1,331) 238 97 25 85,973
Statements of changes in equity
For the year ended 30 June 2008
The above statements of changes in equity should be read in conjunction with the accompanying notes
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Parent entity June 2008
Issued capitalRetained
earnings
Equity plan
reserveTotal
Note $’000 $’000 $’000 $’000
At 1 July 2007 86,944 (5,527) 238 81,655
Profi t for the year - 2,731 - 2,731
Total recognised income and expense for
the period - 2,731 - 2,731
Dividends declared and paid 26 - (8,511) - (8,511)
Share consideration on acquisitions 24 8,178 - - 8,178
Share placement and share purchase plan 24 39,904 - - 39,904
Share buy back 24 (923) - - (923)
Transaction costs arising on share issues
(net of tax) 24 (1,032) - - (1,032)
Share-based payments 25(a) - - (75) (75)
At 30 June 2008 133,071 (11,307) 163 121,927
Parent entity June 2007
Issued capitalRetained
earnings
Equity plan
reserveTotal
Note $’000 $’000 $’000 $’000
At 1 July 2006 20,933 (6,464) 51 14,520
Profi t for the year - 4,853 - 4,853
Total recognised income and expense for
the period - 4,853 - 4,853
Dividends declared and paid 26 - (3,916) - (3,916)
Share consideration on acquisitions 24 22,848 - - 22,848
Rights issue 24 43,681 - - 43,681
Options exercised 24 872 - - 872
Transaction costs arising on share issues
(net of tax) 24 (1,390) - - (1,390)
Share-based payments 25(a) - - 187 187
At 30 June 2007 86,944 (5,527) 238 81,655
Statements of changes in equity (continued)
For the year ended 30 June 2008
The above statements of changes in equity should be read in conjunction with the accompanying notes.
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Cash fl ow statements
For the year ended 30 June 2008
Consolidated Parent entity
2008 2007 2008 2007
Note $’000 $’000 $’000 $’000
Cash fl ows from operating activities
Cash receipts in the course of operations 1,280,457 336,023 3,197 43,362
Cash payments in the course of operations (1,246,346) (303,408) (6,898) (37,835)
Interest received 2,976 1,240 232 498
Borrowing costs (3,331) (87) (3,302) (24)
Income taxes paid (7,825) (2,274) (4,688) (1,093)
Net cash infl ow/(outfl ow) from operating activities 35 25,931 31,494 (11,459) 4,908
Cash fl ows from investing activities
Payment for purchase of subsidiary, net of cash acquired 32 (34,739) (41,761) (15,602) (68,122)
Payments for plant and equipment (3,443) (594) (691) (273)
Payments for intangible software assets (430) (38) (236) -
Proceeds from sale of plant and equipment 35 180 - 6
Dividends received 187 - 187 -
Proceeds from sale of joint venture 274 - 274 -
Investment in joint venture (13) - (13) -
Repayment of other loans 6 166 - -
Loans to related parties (16) (125) - 421
Loans from related parties 845 - 4,835 -
Repayment of loans by joint venture entity - 40 - 40
Net cash outfl ow from investing activities (37,294) (42,132) (11,246) (67,928)
Cash fl ows from fi nancing activities
Proceeds of issue of shares 41,189 44,552 41,189 44,552
Share issue costs (928) (187) (928) (187)
Share buy-back (923) - (923)
Proceeds of borrowings net of transaction costs 33,829 25,856 33,829 25,856
Repayment of non-interest bearing liabilities (61) (193) - -
Repayment of lease liabilities (1,055) - - -
Payment of deferred consideration (40,414) - (40,414) -
Dividends paid 26 (8,535) (3,916) (8,511) (3,916)
Net cash infl ow from fi nancing activities 23,102 66,112 24,242 66,305
Net increase in cash held 11,739 55,474 1,537 3,285
Cash at the beginning of the fi nancial year 62,100 6,561 8,609 5,324
Effects of exchange rate changes on cash and cash
equivalents (521) 65 - -
Cash at the end of the fi nancial year 9 73,318 62,100 10,146 8,609
The above statements of cash fl ows should be read in conjunction with the accompanying notes
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Notes to the fi nancial statements
30 June 2008
Note Contents Page
1 Summary of signifi cant accounting policies 56
2 Financial risk management 63
3 Critical accounting estimates and judgements 64
4 Segment information 65
5 Revenue 67
6 Other income 68
7 Expenses 68
8 Income tax 69
Current assets
9 Cash and cash equivalents 70
10 Trade and other receivables 70
11 Other assets 71
Non-current assets
12 Receivables 72
13 Other fi nancial assets 72
14 Property, plant and equipment 73
15 Deferred tax assets 75
16 Intangible assets 76
Current liabilities
17 Trade and other payables 78
18 Other fi nancial liabilities 79
19 Provisions 79
Non-current liabilities
20 Borrowings 79
21 Deferred tax liabilities 81
22 Provisions 81
23 Other fi nancial liabilities 82
Equity
24 Contributed equity 82
25 Reserves and accumulated earnings/(losses) 85
26 Dividends 85
27 Key management personnel disclosures 86
28 Remuneration of auditors 90
29 Contingencies 90
30 Commitments 90
31 Related parties 91
32 Business combinations 92
33 Investments in controlled entities 100
34 Interests in joint ventures 100
35 Reconciliation of profi t after income tax to net cash infl ow from operating activities 101
36 Earnings per share 102
37 Share-based payments 102
38 Events occurring after reporting date 104
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Notes to the fi nancial statements (continued)
30 June 2008
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of the fi nancial report are set out below. These policies have been
consistently applied to all the periods presented, unless otherwise stated. The fi nancial report includes separate fi nancial
statements for Mitchell Communication Group Limited as an individual entity and the consolidated entity consisting of Mitchell
Communication Group Limited and its subsidiaries.
(a) Basis of preparation
This general purpose fi nancial report for the fi nancial year ended 30 June 2008 has been prepared in accordance with Australian
equivalents to International Financial Reporting Standards (AIFRSs), other authoritative pronouncements of the Australian
Accounting Standards Board, Urgent Issues Group and the Corporations Act 2001.
Compliance with IFRSs
Australian Accounting Standards include AIFRSs. Compliance with AIFRSs ensures that the consolidated fi nancial statements
and notes of Mitchell Communication Group Limited comply with International Financial Reporting Standards (IFRSs)
Historical cost convention
These fi nancial statements have been prepared under the historical cost convention.
Critical accounting estimates
The preparation of fi nancial statements in conformity with AIFRS requires the use of certain critical accounting estimates.
It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas
involving a higher degree of judgement or complexity, or areas where assumptions and estimates are signifi cant to the fi nancial
statements, are disclosed in note 3.
(b) Principles of consolidation
(i) Subsidiaries
The consolidated fi nancial statements incorporate the assets and liabilities of all subsidiaries of Mitchell Communication Group
Limited (‘’company’’ or ‘’parent entity’’) as at 30 June 2008 and the results of all subsidiaries for the fi nancial year then ended.
Mitchell Communication Group Limited and its subsidiaries together are referred to in this fi nancial report as the Group.
Subsidiaries are all those entities (including special purpose entities) over which the Group has the power to govern the fi nancial
and operating policies, generally accompanying a shareholding of more than one half of the voting rights. The existence and
effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group
controls another entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the
date that control ceases.
The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group (refer to note 1(h)).
Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated.
Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred.
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the
Group.
Minority interests in the results and equity of subsidiaries are shown separately in the consolidated income statement and
balance sheet respectively.
(ii) Joint ventures
The interest in a joint venture entity is accounted for in the consolidated fi nancial statements using the equity method and is
carried at cost by the parent entity. Under the equity method, the share of the profi ts or losses of the entity is recognised in the
income statement, and the share of movements in reserves is recognised in reserves in the balance sheet. Details relating to
the joint venture entity are set out in note 34.
Profi ts or losses on transactions establishing the joint venture entity and transactions with the joint venture are eliminated to the
extent of the Group’s ownership interest until such time as they are realised by the joint venture entity on consumption or sale,
unless they relate to an unrealised loss that provides evidence of the impairment of an asset transferred.
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(c) Foreign currency translation
(i) Functional and presentation currency
Items included in the fi nancial statements of each of the Group’s entities are measured using the currency of the primary
economic environment in which the entity operates (‘the functional currency’). The consolidated fi nancial statements are
presented in Australian dollars, which is Mitchell Communication Group Limited’s functional and presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation
at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income
statement.
(iii) Group companies
The results and fi nancial position of all the Group entities (none of which has the currency of a hyperinfl ationary economy) that
have a functional currency different from the presentation currency are translated into the presentation currency as follows:
assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;
income and expenses for each income statement are translated at average exchange rates (unless this is not a reasonable
approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses
are translated at the dates of the transactions); and
all resulting exchange differences are recognised as a separate component of equity.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the
foreign entities and translated at the closing rate.
(d) Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Intercompany revenue is eliminated based
on commissions earned by the mainstream media segment from sales by the digital and diversifi ed segments. Revenue is
recognised for the major business activities as follows:
(i) Media
The Media division acts as agent for its clients. Amounts disclosed as revenue represent the amount earned for planning,
buying and delivering media and is recognised in the period that the media is delivered and it is probable that the revenue will
be received, and are net of payments to media suppliers and rebates of commission to clients and to advertising agencies that
transact with the Group on behalf of their clients.
(ii) Digital
The Digital division acts as a principal and not as an agent in its transactions with clients and suppliers. Amounts disclosed as
revenue and gross billings represent the amount earned for planning, buying and delivering media impressions on third party
websites and is recognised in the period that the impression is delivered and it is probable that the revenue will be received.
This amount includes the value of the media impressions that are purchased from third party websites and sold to clients. The
Group is liable for the payment to third party websites for the cost of media impressions acquired from those websites.
Gross billings are shown before the deduction of commissions allowed to advertising agencies that transact with the Group on
behalf of their clients. Amounts disclosed as revenue are shown net of these commissions.
(iii) Diversifi ed
Revenue from the delivery of services is recognised upon the delivery of the service. Revenue relating to a specifi c contract is
recognised based over the contract and service period. Income received in advance of the service or contract period is recorded
as unearned revenue. Amounts disclosed as revenue are net of commissions paid to advertising agencies that transact with the
Group on behalf of their clients.
(iv) Interest income
Interest income is recognised on a time proportion basis using the effective interest method
(e) Deferred revenue
Deferred revenue represents gross billings received in advance for which the media has not yet been delivered. These amounts
are recognised as revenue in accordance with the revenue recognition policy in note 1(d).
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Notes to the fi nancial statements (continued)
30 June 2008
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(f) Income tax
The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the
national income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary
differences between the tax bases of assets and liabilities and their carrying amounts in the fi nancial statements, and to unused
tax losses.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets
are recovered or liabilities are settled, based on those tax rates which are enacted or substantively enacted for each jurisdiction.
The relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences to measure the
deferred tax asset or liability. An exception is made for certain temporary differences arising from the initial recognition of an
asset or a liability. No deferred tax asset or liability is recognised in relation to these temporary differences if they arose in a
transaction, other than a business combination, that at the time of the transaction did not affect either accounting profi t or
taxable profi t or loss.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future
taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases
of investments in controlled entities where the parent entity is able to control the timing of the reversal of the temporary
differences and it is probable that the differences will not reverse in the foreseeable future.
Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity.
Tax consolidation legislation
Mitchell Communication Group Limited and its wholly-owned Australian controlled entities have implemented the tax
consolidation legislation as of 1 July 2006.
The head entity, Mitchell Communication Group Limited, and the controlled entities in the tax consolidated group continue
to account for their own current and deferred tax amounts. These tax amounts are measured as if each entity in the tax
consolidated group continues to be a stand alone taxpayer in its own right.
Mitchell Communication Group Limited has fi nalised a Tax-funding and Sharing Agreement. Under the Agreement the
wholly-owned entities fully compensate Mitchell Communication Group Limited for any current tax payable assumed and are
compensated by Mitchell Communication Group Limited for any current tax receivable and deferred tax assets relating to
unused tax losses or unused tax credits that are transferred to Mitchell Communication Group Limited under tax consolidation
legislation. The funding amounts are determined by reference to the amounts recognised in the wholly-owned entities’ fi nancial
accounts.
In addition to its own current and deferred tax amounts, Mitchell Communication Group Limited also recognises the current tax
liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from controlled
entities in the tax consolidated group.
Assets or liabilities arising under tax-funding agreements with the tax consolidated entities are recognised as amounts
receivable from or payable to other entities in the group.
Any difference between the amounts assumed and amounts receivable or payable under the tax-funding agreement are
recognised as a contribution to (or distribution from) wholly-owned tax consolidated entities.
(g) Leases
Leases in which a signifi cant portion of the risks and rewards of ownership are retained by the lessor are classifi ed as operating
leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the income
statement on a straight line basis over the period of the lease.
(h) Business combinations
The purchase method of accounting is used to account for all business combinations, including business combinations involving
entities or businesses under common control regardless of whether equity instruments or other assets are acquired. Cost is
measured as the fair value of the assets given, shares issued or liabilities incurred or assumed at the date of exchange plus
costs directly attributable to the acquisition. Where equity instruments are issued in an acquisition, the value of the instruments
is their published market price as at the date of exchange unless, in rare circumstances, it can be demonstrated that the
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published price at the date of exchange is an unreliable indicator of fair value and that other evidence and valuation methods
provide a more reliable measure of fair value. Transaction costs arising on the issue of equity instruments are recognised
directly in equity.
Identifi able assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially
at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition
over the fair value of the Group’s share of the identifi able net assets acquired is recorded as goodwill (refer to note 1(p)). If the
cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in
the income statement, but only after a reassessment of the identifi cation and measurement of the net assets acquired.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their
present value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate at
which a similar borrowing could be obtained from an independent fi nancier under comparable terms and conditions.
(i) Impairment of assets
Assets that have an indefi nite useful life are not subject to amortisation and are tested annually for impairment. Assets that are
subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds
its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the
purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifi able cash fl ows
(cash generating units).
(j) Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with fi nancial institutions, and other short term, highly
liquid investments with original maturities of three months or less that are instantly convertible to known amounts of cash and
which are subject to no risk of changes in value.
(k) Trade and other receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost, less provision for doubtful
debts. Trade receivables are due for settlement no more than 45 days from the date of recognition.
Collectibility of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off
by reducing the carrying amount directly. An allowance account (provision for impairment of trade receivables) is established
when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms
of receivables. Signifi cant fi nancial diffi culties of the debtor, probability the debtor will enter bankruptcy or fi nancial
reorganisation, and default on payment arrangements are considered indicators that the trade receivable is impaired. The
amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash
fl ows, discounted at the effective interest rate. Cash fl ows relating to short term receivables are not discounted if the effect of
discounting is immaterial.
The amount of the impairment loss is recognised in the income statement within other expenses. When a trade receivable for
which an impairment allowance had been recognised becomes uncollectible in a subsequent period, it is written off against the
allowance account. Subsequent recoveries of amounts previously written off are credited against other expenses in the income
statement.
l) Investments and other fi nancial assets
The Group classifi es its investments as loans and receivables. The classifi cation depends on the purpose for which the
investments were acquired. Management determines the classifi cation of its investments at initial recognition and re-evaluates
this designation at each reporting date.
(i) Loans and receivables
Loans and receivables are non derivative fi nancial assets with fi xed or determinable payments that are not quoted in an active
market. They arise when the Group provides money, goods or services directly to a debtor with no intention of selling the
receivable. They are included in current assets, except for those with maturities greater than 12 months after the balance sheet
date which are classifi ed as non current assets. Loans and receivables are included in receivables in the balance sheet.
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Notes to the fi nancial statements (continued)
30 June 2008
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(m) Fair value estimation
The fair value of fi nancial assets and fi nancial liabilities must be estimated for recognition and measurement or for disclosure
purposes.
The nominal value less estimated credit adjustments of trade receivables and payables are assumed to approximate their fair
values. The fair value of fi nancial liabilities for disclosure purposes is estimated by discounting the future contractual cash fl ows
at the current market interest rate that is available to the Group for similar fi nancial instruments.
(n) Property, plant and equipment
Property, plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directly
attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is
probable that future economic benefi ts associated with the item will fl ow to the Group and the cost of the item can be measured
reliably. All other repairs and maintenance are charged to the income statement during the fi nancial period in which they are
incurred.
Depreciation on assets is calculated using the straight line method to allocate their cost, net of their residual values, over their
estimated useful lives, as follows:
Plant and equipment 3-10 years
Furniture and fi ttings 5-10 years
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than
its estimated recoverable amount (note 1(i)).
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the income
statement.
(o) Leasehold improvements
The cost of improvements to or on leasehold properties is amortised over the unexpired period of the lease or the estimated
useful life of the improvements to the Group, whichever is the shorter. Lease hold improvements held at the reporting date are
being amortised over between 3 and 5 years.
(p) Intangible assets
(i) Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifi able assets
of the acquired subsidiary/associate at the date of acquisition. Goodwill on acquisitions of subsidiaries would be included in
intangible assets. Goodwill on acquisitions of associates would be included in investments in associates. Goodwill acquired
in business combinations will not be amortised. Instead, goodwill will be tested for impairment annually, or more frequently
if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment
losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.
Goodwill is allocated to cash generating units for the purpose of impairment testing.
(ii) Software
Software has a fi nite useful life and is carried at cost less accumulated amortisation and impairment losses. Amortisation is
calculated using the straight-line method to allocate the cost of the software over its estimated useful life, which is currently
between 3 and 5 years.
(iii) Brand names
Brand names recognised by the company have an indefi nite useful life and are not amortised. Each period, the useful life of the
asset is reviewed to determine whether events and circumstances continue to support an indefi nite useful life assessment for
the asset.
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(iv) Customer relationships
Customer contracts acquired as part of a business combination are recognised separately from goodwill. The customer
relationships are carried at their fair value at the date of acquisition less accumulated amortisation and impairment losses.
Amortisation is calculated based on the timing of projected cash fl ows of the contracts over their estimated useful lives, which
currently vary from 7 to 10 years.
(v) Stadia rights
Stadia rights acquired as part of a business combination have a fi nite useful life and are carried at their fair value at the date
of the acquisition less accumulated amortisation and impairment losses. Amortisation is calculated based on the timing of
projected cash fl ows of the rights over their estimated useful lives, which vary from 6 to 18 months.
(q) Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of fi nancial year which are
unpaid. The amounts are unsecured and are usually paid within 45 days of recognition.
(r) Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at
amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the
income statement over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan
facilities, which are not incremental costs relating to the actual draw down of the facility, are recognised as prepayments and
amortised on a straight line basis over the term of the facility.
Borrowings are removed from the balance sheet when the obligation specifi ed in the contract is discharged, cancelled or
expired. The difference between the carrying amount of a fi nancial liability that has been extinguished or transferred to another
party and the consideration paid, including and non-cash assets transferred or liabilities assumed, is recognised in other
income or other expenses
Borrowings are classifi ed as current liabilities unless the Group has an unconditional right to defer settlement of the liability for
at least 12 months after the balance sheet date.
(s) Employee benefi ts
(i) Wages and salaries, annual leave and sick leave
Liabilities for wages and salaries, including non monetary benefi ts and annual leave expected to be settled within 12 months of
the reporting date are recognised in payables in respect of employees’ services up to the reporting date and are measured at the
amounts expected to be paid when the liabilities are settled. Liabilities for non-accumulating sick leave are recognised when the
leave is taken and measured at the rates paid or payable.
(ii) Long service leave
The liability for long service leave is recognised in provisions and measured as the present value of expected future payments to
be made in respect of services provided by employees up to the reporting date. Consideration is given to expected future wage
and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using
market yields at the reporting date on national government bonds with terms to maturity and currency that match, as closely as
possible, the estimated future cash outfl ows.
(iii) Share-based payments
Share-based compensation benefi ts have been provided to employees via the Mitchell Communication Group Limited Employee
Option Plan. The Plan has been closed and no new grants will be made in future.
The fair value of options granted under the Mitchell Communication Group Limited Employee Option Plan is recognised as an
employee benefi t expense with a corresponding increase in equity. The fair value is measured at grant date and recognised over
the period during which the employees become unconditionally entitled to the options.
The fair value at grant date is independently determined using an enhanced Hull-White Trinomial Lattice option pricing model
that takes into account the exercise price, the term of the option, the vesting, the impact of dilution, the non-tradeable nature of
the option, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the
risk-free interest rate for the term of the option.
Upon the exercise of options, the balance of the share based payments reserve relating to those options is transferred to share
capital.
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Notes to the fi nancial statements (continued)
30 June 2008
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(s) Employee benifi ts (continued)
(iv) Bonus plans
The Group recognises a liability and an expense for bonuses based on a formula that takes into consideration revenue earned.
The Group recognises a provision where contractually obliged or where there is a past practice that has created a constructive
obligation and a reliable estimation of the obligation can be made.
(t) Contributed equity
Ordinary shares are classifi ed as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from
the proceeds. Incremental costs directly attributable to the issue of new shares or options are not included in the cost of the
acquisition as part of the purchase consideration.
If the entity re-acquires its own equity instruments, for example as the result of a share buy-back, those instruments are
deducted from equity and the associated shares are cancelled. No gain or loss is recognised in the profi t or loss and the
consideration paid including any directly attributable incremental costs (net of income taxes) is recognised directly in equity.
(u) Dividends
Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the
entity, on or before the end of the fi nancial year but not distributed at balance date.
(v) Earnings per share
(i) Basic earnings per share
Basic earnings per share is calculated by dividing the profi t attributable to equity holders of the company, excluding any costs of
servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the fi nancial
year, adjusted for bonus elements in ordinary shares issued during the fi nancial year.
(ii) Diluted earnings per share
Diluted earnings per share adjusts the fi gures used in the determination of basic earnings per share to take into account the
after income tax effect of interest and other fi nancing costs associated with dilutive potential ordinary shares and the weighted
average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.
(w) Segment reporting
A business segment is a group of assets and operations engaged in providing services that are subject to risks and returns that
are different to those of other business segments. A geographical segment is engaged in providing products or services within
a particular economic environment and is subject to risks and returns that are different from those segments operating in other
economic environments.
(x) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable
from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable
from, or payable to, the taxation authority is included with other receivables or payables in the balance sheet.
Cash fl ows are presented on a gross basis. The GST components of cash fl ows arising from investing or fi nancing activities
which are recoverable from, or payable to the taxation authority, are presented as operating cash fl ow.
(y) Rounding of amounts
The company is of a kind referred to in Class order 98/0100, issued by the Australian Securities and Investments Commission,
relating to the ‘’rounding off’’ of amounts in the fi nancial report. Amounts in the fi nancial report have been rounded off in
accordance with that Class Order to the nearest thousand dollars, or in certain cases, the nearest dollar.
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30 June 2008 30 June 2007
Weighted
average
interest rate
Balance
Weighted
average
interest rate
Balance
% $’000 % $’000
Bank loans 8.48% 60,000 7.25% 26,000
(z) New accounting standards and UIG interpretations
Certain new accounting standards and UIG interpretations have been published that are not mandatory for 30 June 2008
reporting periods. The Group’s assessment of the impact of these new standards and interpretations is set out below.
(i) AASB 8 Operating Segments
AASB 8 is applicable to reporting periods commencing on or after 1 January 2009. The Group has not adopted the standard
early. Application of the standards will not affect any of the amounts recognised in the fi nancial statements, but may impact the
type of information disclosed in relation to the Group’s operating segments.
(ii) Revised AASB 123 Borrowing Costs
Revised AASB 123 is applicable to reporting periods commencing on or after 1 January 2009. The Group has not adopted the
standard early. Application of the standards will not affect any of the amounts recognised in the fi nancial statements.
(iii) AASB 101 Presentation of Financial Statements
AASB 101 applicable to reporting periods commencing on or after 1 January 2009. The Group has not adopted the standard
early. Application of the standards will not affect any of the amounts recognised in the fi nancial statements, but will impact the
type of information disclosed in the fi nancial statements.
NOTE 2. FINANCIAL RISK MANAGEMENT
The Group’s activities expose it to a variety of fi nancial risks; market risk (including currency risk and fair value interest rate
risk), credit risk, liquidity risk and cash fl ow interest rate risk. The Group’s overall risk management program focuses on the
unpredictability of fi nancial markets and seeks to minimise potential adverse effects on the fi nancial performance of the Group.
The Group uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity
analysis for interest rate and currency risk, and aging analysis for credit risk.
Risk management is carried out by the Chief Financial Offi cer under direction of the Board of Directors.
(a) Market risk
(i) Foreign exchange risk
Foreign exchange risk arises when future commercial transactions and recognised assets and liabilities are denominated in a
currency that is not the entity’s functional currency.
The Group operates internationally and is exposed to foreign exchange risk arising from currency exposures to the New Zealand
dollar.
The international operations act as a natural hedge, with the only risk arising on translation to functional currency. No hedges
are in place for this translation risk on the basis of materiality. The carrying amounts of the parent entities fi nancial assets and
liabilities are wholly denominated in Australian dollars.
(ii) Cash fl ow and fair value interest rate risk
The Group holds its funds in cash and term deposits. Term deposit maturity dates are based on future operating cash fl ow
requirements. The value and term of the cash and deposits are such that the Group’s income and operating cash fl ows are not
materially exposed to changes in market interest rates.
The Group’s interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the Group to
cash fl ow interest rate risk. There is currently no group policy to fi x interest-rates. As at the reporting date, the Group had the
following variable rate borrowings denominated wholly in Australian Dollars:
The Group manages its interest rate exposure by actively managing excess cash balances to reduce the outstanding debt
balances. Interest rates on cash balances and borrowings are based on short-term money markets and act as a natural hedge
against interest rate movements. Cash on hand at 30 June 2008 held as a natural hedge was $73.318 million.
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Consolidated Parent entity
2008 2007 2008 2007
$’000 $’000 $’000 $’000
Trade Receivables
- Covered by credit insurance policy 120,266 104,176 292 7,012
- Not covered by credit insurance policy – media and digital 9,528 12,083 - 828
- Not covered by credit insurance policy – diversifi ed and corporate 9,386 3,207 - -
Total 139,180 119,466 292 7,840
Notes to the fi nancial statements (continued)
30 June 2008
NOTE 2. FINANCIAL RISK MANAGEMENT (continued)
Group sensitivity
At 30 June 2008, if interest rates had changed by +/- 100 basis points from the year end rates with all other variables held
constant, post tax profi t for the year would have been $19,000 lower/higher (2007: change of +/- 100 bps: $79,000 higher/lower),
mainly as a result of higher interest expense on borrowing offset by higher interest revenue on bank deposits.
(b) Credit risk
Credit risk is managed on a segment basis. Credit risk arises from cash and cash equivalents as well as credit exposures on
clients, including outstanding receivables and commitments. The Group holds a mercantile insurance policy over the trade
receivable debts of all non-related party and government-related customers in the Media and Digital segments. The Group is
responsible for a deductible amount under the policy, which ranges from $nil to $200,000 in aggregate. The insurance policy
has minimum coverage levels and where the client spend is expected to fall beneath this level, the Group has policies in place to
ensure that appropriate checks are made to customer’s credit history, including checking trade references and obtaining a clear
adverse credit report. Client insurance limits are regularly checked against outstanding commitments with adjustments made
to credit limits as necessary.
The maximum exposure to credit risk at the reporting date is the carrying amount of the fi nancial assets. Refer to note 9 and 10
for further details.
The credit quality of fi nancial assets that are neither past due nor impaired can be assessed by reference to the level of
insurance coverage held:
The majority of the media and digital receivables not covered by insurance relate to clients where coverage is pending, or where
increased limits are being sought.
(c) Liquidity risk
Prudent liquidity risk management implies maintaining suffi cient cash balances to cover working capital needs, with excess
funds used to pay down debt or invested. These invested funds have varying maturity dates set with regards to potential cash
fl ow needs, with the ability to access the funds at any time. The group has the availability of funding through an adequate
amount of undrawn credit facilities – refer note 20. For details of the maturity profi le of fi nancial liabilities refer note 20.
(d) Cash fl ow and fair value interest rate risk
The Group holds its funds in cash, term deposits and 11am deposits. The value and term of the cash and deposits are such that
the Group’s income and operating cash fl ows are not materially exposed to changes in market interest rates.
The Group’s interest rate risk arises from long term borrowings. Borrowings issued at variable rates expose the Group to cash
fl ow interest rate risk. There is currently no group policy to fi x interest-rates.
NOTE 3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including
expectations of future events that may have a fi nancial impact on the entity and that are believed to be reasonable under the
circumstances.
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(a) Critical accounting estimates
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by defi nition,
seldom equal the related actual results. The estimates and assumptions that have a signifi cant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next fi nancial year are discussed below.
(i) Estimated impairment of goodwill and other indefi nite life intangible assets
The Group tests annually whether goodwill and other indefi nite life intangible assets has suffered any impairment, in accordance
with the accounting policy stated in note 1(p). The recoverable amounts of cash generating units have been determined
based on value in use calculations. These calculations require the use of assumptions. Refer to note 16 for details of these
assumptions. Management does not consider a change in any key assumptions will have a signifi cant risk of causing a material
adjustment to the carrying amount of the goodwill due to the large excess of value-in-use over the carrying amount of the
CGU’s.
(b) Critical accounting judgements
(i) Revenue recognition
The Group has made the judgement to recognise revenue from the Media division on an agency basis, while revenue from
the digital and diversifi ed segments is recognised as principal. Refer to note 1(d) for further details regarding the revenue
recognition policy of the Group.
NOTE 4. SEGMENT INFORMATION
(a) Description of segments
Business Segments
The Group is organised on a global basis into the following divisions by product and service type:
Media
The provision of services to clients for communications strategy and the planning and buying of traditional media. The activities
commenced with the purchase of the Mitchell & Partners group of companies on 1 April 2007. Information shown for the prior
year comparatives only covers the three months for the year ended 30 June 2007.
Digital
The provision of services to clients for interactive marketing and communications strategy and planning and buying of interactive
media, and digital creative production.
Diversifi ed
The development and implementation of communications campaigns across a broad range of disciplines including public
relations, experiential marketing, brand experience, sponsorship, sports ground marketing, direct marketing and corporate
social responsibility. The activities commenced with the purchase of the Mitchell & Partners group of companies on 1 April 2007.
Information shown for the prior year comparatives only covers the three months for the year ended 30 June 2007.
Corporate Central Services
The corporate and fi nancial control functions of running the Group, including Group Management, Finance, Human Resources
and Information Technology and Administration activities.
Geographic Segments
Although the Group is managed on a global basis, it operates in two main geographical areas:
Australia
The home country of the parent entity, which is also the main operating entity. The areas of operation are principally Media,
Digital, Diversifi ed, and Corporate
New Zealand
Comprises operations in the Media and Digital divisions
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Notes to the fi nancial statements (continued)
30 June 2008
NOTE 4. SEGMENT INFORMATION (continued)
Primary reporting segment
– Business segmentsMedia Digital Diversifi ed
Corporate
central servicesConsolidated
2008 2007 2008 2007 2008 2007 2008 2007 2008 2007
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
Revenue
Revenue from the rendering
of services 38,251 9,767 109,581 62,547 39,964 8,917 - - 187,796 81,231
Other revenues 2,554 690 190 581 68 7 164 - 2,976 1,278
Total Segment Revenues 40,805 10,457 109,771 63,128 40,032 8,924 164 - 190,772 82,509
Segment result
Profi t/(loss) before
depreciation, amortisation
and income tax 11,599 2,961 16,987 9,303 9,670 3,115 (8,008) (1,572) 30,248 13,807
Depreciation of plant and
equipment (556) (11) (377) (108) (445) (86) (99) - (1,477) (205)
Amortisation of intangibles (655) (164) (527) (111) (1,023) (493) (29) - (2,234) (768)
Profi t/(loss) before income
tax 10,388 2,786 16,083 9,084 8,202 2,536 (8,136) (1,572) 26,537 12,834
Income tax expense (7,720) (3,826)
Net profi t after income tax
attributable to members of
the company before minority
interest 18,817 9,008
Minority interest 633 25
Net profi t after income tax
attributable to members of
the company after minority
interest 18,184 8,983
Primary reporting segment
– Business segmentsMedia Digital Diversifi ed
Corporate
central servicesConsolidated
2008 2007 2008 2007 2008 2007 2008 2007 2008 2007
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
Assets
Segment assets 296,420 262,421 43,127 30,275 88,841 63,583 13,103 - 441,491 356,279
Segment result
Segment liabilities 185,441 168,038 28,416 21,577 11,423 8,701 68,210 71,990 293,490 270,306
Consolidated net assets 110,979 94,383 14,711 8,698 77,418 54,882 (55,107) (71,990) 148,001 85,973
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Consolidated Parent entity
2008 2007 2008 2007
$’000 $’000 $’000 $’000
Revenues
Revenue from the rendering of services 187,796 81,231 - 41,231
Other revenue
Interest received 2,976 1,240 232 498
Dividends received - - 8,250 1,300
Distributions from interest in joint venture entity - - - 187
Management fees - 38 2,991 475
2,976 1,278 11,473 2,460
Revenue from continuing operations 190,772 82,509 11,473 43,691
Secondary reporting segment – Geographical
segmentsAustralia New Zealand Consolidated
2008 2007 2008 2007 2008 2007
$’000 $’000 $’000 $’000 $’000 $’000
Revenue
Revenue from the rendering of services 171,074 68,006 16,722 13,225 187,796 81,231
Other revenues 2,608 1,146 368 132 2,976 1,278
Total segment revenue 173,682 69,152 17,090 13,357 190,772 82,509
Segment result
Profi t/(loss) before depreciation, amortisation
and income tax 28,524 12,503 1,724 1,304 30,248 13,807
Depreciation of plant and equipment (1,453) (186) (24) (19) (1,477) (205)
Amortisation of intangibles (2,159) (749) (75) (19) (2,234) (768)
Profi t before income tax 24,912 11,568 1,625 1,266 26,537 12,834
Income tax expense (7,720) (3,826)
Net profi t after income tax attributable to
members of the company before minority
interest 18,817 9,008
Minority interest 633 25
Net profi t after income tax attributable to
members of the company after minority
interest 18,184 8,983
Secondary reporting segment – Geographical
segmentsAustralia New Zealand Consolidated
2008 2007 2008 2007 2008 2007
$’000 $’000 $’000 $’000 $’000 $’000
Assets
Segment assets 421,923 336,584 19,568 19,695 441,491 356,279
Liabilities
Segment liabilities 286,507 264,698 6,983 5,608 293,490 270,306
Consolidated net assets 135,416 71,886 12,585 14,087 148,001 85,973
NOTE 5. REVENUE
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Consolidated Parent entity
2008 2007 2008 2007
Note $’000 $’000 $’000 $’000
Profi t on sale of joint venture entity 34 - 480 - 480
Foreign exchange gains (net) 47 62 - -
Total 47 542 - 480
Notes to the fi nancial statements (continued)
30 June 2008
NOTE 6. OTHER INCOME
Profi t before income tax expense includes the following specifi c
expenses:Consolidated Parent entity
2008 2007 2008 2007
$’000 $’000 $’000 $’000
Expenses
Depreciation
Plant and equipment 955 135 98 43
Furniture and fi ttings 191 40 1 27
Leasehold improvements 187 17 - 17
Plant and equipment under fi nance leases 133 13 - 3
Motor vehicles 11 - - -
Total depreciation 1,477 205 99 90
Amortisation
Software 620 121 29 109
Customer related 655 483 - -
Stadia rights 959 164 - -
Total amortisation 2,234 768 29 109
Total depreciation and amortisation 3,711 973 128 199
Finance costs
Interest and fi nance charges paid/payable 3,655 571 3,627 508
Finance costs expensed 3,655 571 3,627 508
Net loss on disposal of property, plant and equipment 115 73 - -
Net foreign exchange losses recognised in profi t before income tax
expense for the year - - - 2
Rental expense relating to operating leases
Minimum lease payments 2,953 656 43 203
NOTE 7. EXPENSES
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Consolidated Parent entity
2008 2007 2008 2007
$’000 $’000 $’000 $’000
(a) Income tax expense
Current tax 8,121 4,131 (2,770) 1,326
Under/(over) provision in prior years difference 114 17 (70) 17
Deferred tax (515) (322) 10 59
Income tax expense attributable to profi t from continuing
operations 7,720 3,826 (2,830) 1,402
Deferred income tax expense included in income tax expense
comprises:
Decrease/(increase) in deferred tax assets (341) (272) 10 59
(Decrease)/increase in deferred tax liabilities (174) (50) - -
(515) (322) 10 59
(b) Numerical reconciliation of income tax expense to prima facie
tax payable
Profi t from continuing operations before income tax expense 26,537 12,834 (99) 6,255
Tax at the Australian tax rate of 30% (2007 – 30%) 7,961 3,850 (30) 1,876
Tax effect of amounts which are not deductible/(taxable) in
calculating taxable income:
Expenditure not deductible/(taxable) for tax purposes 142 (59) 25 (61)
Acquisition costs (280) - (280) -
Non-taxable dividends - - (2,475) (413)
Sundry items (286) (19) - -
7,537 3,771 (2,760) 1,402
Previous unrecognised tax losses used to reduce deferred tax
expense 24 - - -
Difference in overseas tax rates 45 57 - -
(Over)/under provision in prior year 114 (2) (70) -
Aggregate income tax expense 7,720 3,826 (2,830) 1,402
(c) Amounts recognised directly in equity
Aggregate current and deferred tax arising in the reporting period
and not recognised in net profi t or loss but directly credited or
debited to equity.
Net deferred tax – debited/(credited) directly to equity 104 104 104 104
(d) Tax losses
Unused tax losses for which no deferred tax asset has been
recognised 277 204 - -
Potential tax benefi t @ 30% 83 61 - -
Differences in overseas tax rates 3 1 - -
Total potential tax benefi t 86 62 - -
(e) Unrecognised deductible temporary differences
Unrealised foreign exchange loss – New Zealand subsidiary 24 - - -
NOTE 8. INCOME TAX
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Consolidated Parent entity
2008 2007 2008 2007
Note $’000 $’000 $’000 $’000
Trade receivables (a) 146,694 123,621 292 8,930
Less: Provision for impaired receivables (b) (326) (517) - (34)
146,368 123,104 292 8,896
Loans to related parties * - - 43,982 5,323
Less: Provision for write-down of related party receivable - - (4,859) (4,859)
- - 39,123 464
Total 146,368 123,104 39,415 9,360
Consolidated Parent entity
2008 2007 2008 2007
$’000 $’000 $’000 $’000
Cash at bank and on hand 71,176 55,714 10,146 4,026
Deposits at call 2,142 6,386 - 4,583
Total 73,318 62,100 10,146 8,609
Notes to the fi nancial statements (continued)
30 June 2008
NOTE 8. INCOME TAX (continued)
(f) Tax consolidation legislation
Mitchell Communication Group Limited and its wholly-owned Australian controlled entities have implemented the tax
consolidation legislation as of 1 July 2006. The wholly-owned Australian controlled entities in the Mitchell & Partners
acquisition joined the group on 1 April 2007. Other acquired entity joined the Group on the date of their acquisition. The
accounting policy in relation to this legislation is set out in note 1(f).
The entities in the tax consolidated group are in the process of entering into tax sharing agreements which, in the opinion of the
directors, limits the joint and several liability of the wholly-owned entities in the case of a default by the head entity, Mitchell
Communication Group Limited.
The entities have also entered into a tax-funding agreement under which the wholly-owned entities fully compensate Mitchell
Communication Group Limited for any current tax payable assumed and are compensated by Mitchell Communication Group
Limited for any current tax receivable and deferred tax assets relating to unused tax losses or unused tax credits that are
transferred to Mitchell Communication Group Limited under the tax consolidation legislation. The funding amounts are
determined by reference to the amounts recognised in the wholly-owned entities’ fi nancial statements.
The amounts receivable/payable under the tax-funding agreement are due upon receipt of the funding advice from the head
entity, which is issued as soon as practicable after the end of each fi nancial year. The head entity may also require payment of
interim funding amounts to assist with its obligations to pay tax instalments. The funding amounts are recognised as current
inter-company receivables or payables.
NOTE 9. CURRENT ASSETS – CASH AND CASH EQUIVALENTS
(a) Cash at bank and on hand
The cash at bank and on hand is bearing a fl oating interest rate from 0% to 7% (2007: 0% to 6%).
(b) Deposits at call
The deposits are bearing fl oating interest rates from 4.55% to 7.4% (2007 – 6.25%). Deposits at call in New Zealand of
$2,072,000 (2007 - $1,735,000) are bearing fl oating interest rates of between 8.0% to 8.9% (2007 – 7.33% and 8.18%)
NOTE 10. CURRENT ASSETS – TRADE AND OTHER RECEIVABLES
* Further information relating to loans to related parties is set out in note 31.
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(a) Trade receivables
The average credit period on sale of services is 38 days. No receivables are charged interest. Material credit risk on trade
receivables is covered by a comprehensive mercantile insurance policy, refer note 2 (b) for further detail.
Before accepting new media customers, the Group applies for mercantile insurance against the potential debt. Where the
debtor falls below the insurable limit, or does not receive coverage, the Group performs a background credit check to determine
the potential customers credit quality and then defi nes the credit limits for that customer. Limits attributed to customers are
reviewed regularly.
(b) Impaired trade receivables
Included in the Group’s trade receivable balance are debtors with a carrying amount of $7.2m (2007: $3.6m) which are past due
at the reporting date and for which the Group has not provided for, as there has not been a signifi cant change in credit quality
and the amounts are considered recoverable.
NOTE 11. CURRENT ASSETS – OTHER ASSETS
Consolidated Parent entity
2008 2007 2008 2007
$’000 $’000 $’000 $’000
Accrued revenue 342 388 - 144
Loans to joint venture entities 16 - 1 -
Prepayments 6,234 2,405 146 1,215
Dividend receivable - 187 - 587
Other assets 2,879 3,328 2,242 5,761
Total 9,471 6,308 2,389 7,707
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Consolidated Parent entity
2008 2007 2008 2007
$’000 $’000 $’000 $’000
Ageing past due but not impaired:
60 – 90 days 5,000 2,863 - 400
90 – 120 days 1,877 429 - 68
120+ days 311 346 - 622
Total 7,188 3,638 - 1,090
Movement in the provision for impaired receivables:
Opening Balance 517 78 34 78
Acquired balance 15 372 - -
Impairment losses recognised on receivables 162 111 - -
Amounts written off as not collectible (15) (44) - (44)
Amounts recovered during the year 5 - - -
Transfer to group entity - - (34) -
Impairment losses reversed (358) - - -
Balance at the end of the year 326 517 - 34
Ageing of impaired trade receivables:
60 – 90 days 4 - - -
90 – 120 days 12 - - -
120+ days 310 517 - 34
Total 326 517 - 34
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Notes to the fi nancial statements (continued)
30 June 2008
NOTE 12. NON-CURRENT ASSETS – RECEIVABLES
* Represents deferred consideration receivable on sale of joint venture. For further information refer to note 34.
(a) Fair values
The fair value and carrying value of non-current receivables of the group are as follows:
(b) Interest rate and credit risk
No receivables are charged interest. There is no concentration of credit risk.
NOTE 13. NON-CURRENT ASSETS – OTHER FINANCIAL ASSETS
These fi nancial assets are carried at cost.
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Consolidated Parent entity
2008 2007 2008 2007
$’000 $’000 $’000 $’000
Shares in subsidiaries - - 188,127 171,981
2008 2007
Carrying
AmountFair Value
Carrying
AmountFair Value
$’000 $’000 $’000 $’000
Receivable from sale of joint venture interest * - - 154 154
Total - - 154 154
Consolidated Parent entity
2008 2007 2008 2007
$’000 $’000 $’000 $’000
Receivable from sale of joint venture interest * - 154 - 154
Total - 154 - 154
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NOTE 14. NON-CURRENT ASSETS – PROPERTY, PLANT AND EQUIPMENT
Plant &
equipment
Furniture &
fi ttings
Leasehold
improve-
ments
Leased
plant &
equipment
Motor
vehicleTotal
Consolidated $’000 $’000 $’000 $’000 $’000 $’000
At 1 July 2006
Cost 386 259 141 118 - 904
Accumulated depreciation (286) (148) (82) (105) - (621)
Net book amount 100 111 59 13 - 283
Year ended 30 June 2007
Opening net book amount 100 111 59 13 - 283
Additions 214 128 202 - - 544
Acquisition of subsidiary 2,050 442 103 10 55 2,660
Disposals (69) (101) (34) - (55) (259)
Depreciation/amortisation charge (135) (40) (17) (13) - (205)
Closing net book amount 2,160 540 313 10 - 3,023
At 30 June 2007
Cost 6,419 1,527 614 128 52 8,740
Accumulated depreciation (4,259) (987) (301) (118) (52) (5,717)
Net book amount 2,160 540 313 10 - 3,023
Year ended 30 June 2008
Opening net book amount 2,160 540 313 10 - 3,023
Additions 1,860 620 903 - 11 3,394
Acquisition of subsidiary 552 75 77 451 52 1,207
Disposals (87) (42) (5) - - (134)
Foreign exchange movement (12) (8) - - - (20)
Depreciation/amortisation charge (955) (191) (187) (133) (11) (1,477)
Closing net book amount 3,518 994 1,101 328 52 5,993
At 30 June 2008
Cost 9,992 2,134 1,577 1,082 132 14,917
Accumulated depreciation (6,474) (1,140) (476) (754) (80) (8,924)
Net book amount 3,518 994 1,101 328 52 5,993
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Notes to the fi nancial statements (continued)
30 June 2008
NOTE 14. NON-CURRENT ASSETS – PROPERTY, PLANT AND EQUIPMENT (continued)
Plant &
equipment
Furniture &
fi ttings
Leasehold
improvements
Leased plant
& equipmentTotal
Parent entity $’000 $’000 $’000 $’000 $’000
At 1 July 2006
Cost 362 259 141 118 880
Accumulated depreciation (275) (148) (82) (105) (610)
Net book amount 87 111 59 13 270
Year ended 30 June 2007
Opening net book amount 87 111 59 13 270
Additions 97 93 83 - 273
Disposals (4) - (34) - (38)
Depreciation/amortisation charge (43) (27) (17) (3) (90)
Closing net book amount 137 177 91 10 415
At 30 June 2007
Cost 402 352 166 118 1,038
Accumulated depreciation (265) (175) (75) (108) (623)
Net book amount 137 177 91 10 415
Year ended 30 June 2008
Opening net book amount 137 177 91 10 415
Transfer to subsidiary (136) (177) (91) (10) (414)
Additions 712 9 - - 721
Depreciation/amortisation charge (98) (1) - - (99)
Closing net book amount 615 8 - - 623
At 30 June 2008
Cost 713 9 - - 722
Accumulated depreciation (98) (1) - - (99)
Net book amount 615 8 - - 623
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Tax lossesEmployee
benefi ts
Share Issue
expensesOther Total
Movements – Consolidated $’000 $’000 $’000 $’000 $’000
At 1 July 2006 - 25 - 68 93
Charged/(credited) to the income statement - 143 - 124 267
Charged directly to equity - - 414 - 414
Acquisition of subsidiary 4 501 - 107 612
At 30 June 2007 4 669 414 299 1,386
Charged/(credited) to the income statement 3 168 - 170 341
Charged directly to equity - - (103) - (103)
Acquisition of subsidiary - 153 - 5 158
At 30 June 2008 7 990 311 474 1,782
Movements – Parent entity $’000 $’000 $’000 $’000 $’000
At 1 July 2006 - 25 - 68 93
Charged/(credited) to the income statement - 38 - (98) (60)
Charged directly to equity - - 414 - 414
At 30 June 2007 - 63 414 (30) 447
Charged/(credited) to the income statement - 22 - 135 157
Charged directly to equity - - (103) - (103)
At 30 June 2008 - 85 311 105 501
Consolidated Parent entity
2008 2007 2008 2007
$’000 $’000 $’000 $’000
The balance comprises temporary differences attributable to:
Doubtful debts 127 151 - 10
Employee benefi ts 990 669 85 63
Accrued expenses 578 263 105 75
Depreciation (100) (59) - (59)
Dividend receivable - (56) - (56)
Leased assets (37) - - -
Work in progress (94) - - -
Tax losses* 7 4 - -
Share issue expenses 311 414 311 414
Net deferred tax assets 1,782 1,386 501 447
Deferred tax assets to be recovered after more than 12 months 77 340 77 265
Deferred tax assets to be recovered within 12 months 1,705 1,046 424 182
Total 1,782 1,386 501 447
NOTE 15. DEFERRED TAX ASSETS
* The deferred tax asset attributable to tax losses does not exceed taxable amounts arising from the reversal of existing
assessable temporary differences
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Notes to the fi nancial statements (continued)
30 June 2008
NOTE 16. NON-CURRENT ASSETS – INTANGIBLE ASSETS
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Software GoodwillBrand
name
Customer
related
Stadia
rightsTotal
Consolidated $’000 $’000 $’000 $’000 $’000 $’000
At 1 July 2006
Cost 772 7,486 - - - 8,258
Accumulated amortisation - - - - - -
Net book amount 772 7,486 - - - 8,258
Year ended 30 June 2007
Additions 476 138,442 5,750 6,400 1,600 152,668
Acquisition of subsidiary 46 - - - - 46
Amortisation charge (121) - - (164) (483) (768)
Closing net book amount 1,173 145,928 5,750 6,236 1,117 160,204
At 30 June 2007
Cost 1,323 145,928 5,750 6,400 1,600 161,001
Accumulated amortisation (150) - - (164) (483) (797)
Net book amount 1,173 145,928 5,750 6,236 1,117 160,204
Year ended 30 June 2008
Additions 443 46,137 - - 46,580
Disposal (25) - - - - (25)
Acquisition of subsidiary 34 - - - - 34
Amortisation charge (620) - - (655) (959) (2,234)
Closing net book amount 1,005 192,065 5,750 5,581 158 204,559
At 30 June 2008
Cost 1,775 192,065 5,750 6,400 1,600 207,590
Accumulated amortisation (770) - (819) (1,442) (3,031)
Net book amount 1,005 192,065 5,750 5,581 158 204,559
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(a) Software
The software has a useful life of between 3 and 5 years (refer note 1(p))
(b) Determination of intangibles relating to prior year acquisition
The goodwill that was provisionally assessed, relating to the acquisition of the Mitchell & Partners Group during the year ended
30 June 2007, has been fi nalised during the period. The Group has identifi ed and independently valued intangibles of
the acquired businesses, which has resulted in a reduction of the goodwill provisionally booked in 2007 of $13,950,000.
The intangibles identifi ed are specifi ed in the note above, and includes software assets of $200,000.
(c) Impairment tests for goodwill
Goodwill is allocated to the Group’s cash-generating units (CGU’s) identifi ed according to business segment and country
of operation.
The recoverable amount of a CGU is determined based on value in use calculations. These calculations use cash fl ow
projections based on fi nancial budgets approved by management covering a ten-year period.
Software Total
Parent $’000 $’000
At 1 July 2006
Cost 772 772
Accumulated amortisation - -
Net book amount 772 772
Year ended 30 June 2007
Additions 250 250
Acquisition of subsidiary - -
Amortisation charge (109) (109)
Closing net book amount 913 913
At 30 June 2007
Cost 1,022 1,022
Accumulated amortisation (109) (109)
Net book amount 913 913
Year ended 30 June 2008
Additions 236 236
Disposal (913) (913)
Acquisition of subsidiary - -
Amortisation charge (29) (29)
Closing net book amount 207 207
At 30 June 2008
Cost 236 236
Accumulated amortisation (29) (29)
Net book amount 207 207
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Consolidated Parent entity
2008 2007 2008 2007
$’000 $’000 $’000 $’000
Trade payables 193,066 176,520 678 10,956
Accrued interest 348 249 348 249
Deferred revenue 8,277 6,725 - -
Other creditors 16,564 7,347 1,249 2,843
Total 218,255 190,841 2,275 14,048
CGU Gross margin * Growth rate ** Discount rate ***
2008 2007 2008 2007 2008 2007
% % % % % %
Mitchell & Partners Australia n/a n/a 4.5 7.5 10.0 10.7
Mitchell & Partners (Qld) Pty Ltd n/a n/a 4.5 4.4 10.0 10.7
Mitchell & Partners (NZ) Ltd n/a n/a 3.5 5.9 10.0 10.7
The Internet Bureau Limited 17.5 16.5 3.5 28.1 10.0 10.7
Visual Jazz Pty Ltd n/a - 4.5 - 10.0 -
Stadia Media Pty Ltd n/a n/a 4.5 6.2 10.0 10.7
Haystac Public Affairs Pty Ltd
& Positive Outcomes Pty Ltd n/a n/a 4.5 7.1 10.0 10.7
Spark PR Pty Ltd n/a n/a 4.5 8.9 10.0 10.7
Coleman Group Pty Ltd 50.9 - 4.5 - 10.0 -
Notes to the fi nancial statements (continued)
30 June 2008
NOTE 16. NON-CURRENT ASSETS – INTANGIBLES ASSETS (continued)
(d) Key assumptions used for value-in-use calculations
* Budgeted gross margin. Revenue from Mitchell & Partners Group of companies is recognised on an agency principle. Refer note 1(d).
** Weighted average growth rate used to extrapolate cash fl ows beyond the budget period
*** In performing the value in use calculations for each CGU, the company has applied post-tax discount rates to discount the forecast future
attributable post-tax cash fl ows. The equivalent pre-tax discount rates are disclosed above.
Management determined budgeted gross margin based on past performance prior to the purchase and its expectations for the
future. The weighted average growth rates used are consistent with forecasts included in industry reports. The growth rates are
consistent with industry forecasts and historical patterns.
(e) Impact of possible changes in key assumptions
There are no reasonably possible changes in the key assumptions that would cause the CGU’s carrying amount to exceed its
recoverable amount.
NOTE 17. CURRENT LIABILITIES – TRADE AND OTHER PAYABLES
(a) Risk exposure
Information about the Group’s and parent entities exposure to foreign exchange risk is provided in note 2.
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Consolidated Parent entity
2008 2007 2008 2007
Current assets $’000 $’000 $’000 $’000
Floating charge
Cash and cash equivalents 68,361 9,895 10,146 8,609
Trade and other receivables 139,778 14,913 39,415 9,360
Other assets 6,825 5,294 2,389 7,707
Total current assets pledged as security 214,964 30,102 51,950 25,676
NOTE 18. CURRENT LIABILITIES – OTHER FINANCIAL LIABILITIES
NOTE 19. CURRENT – PROVISIONS
NOTE 20. NON-CURRENT LIABILITIES – BORROWINGS
(a) Assets pledged as security
The bank loans of the parent entity are secured by registered mortgage debentures over the assets of the parent entity,
Neodigital Pty Ltd, Digital Artists Pty Ltd, The Internet Bureau Limited, Mitchell & Partners Pty Ltd, Mitchell & Partners Pty Ltd,
Mitchell & Partners (NSW) Pty Ltd, Mitchell & Partners (Qld) Pty Ltd, Mitchell & Partners Australia Pty Ltd, Stadia Media Pty
Ltd, Positive Outcomes Pty Ltd, Spark PR Pty Ltd, Drive Communications Pty Ltd and Mitchell & Partners (NZ) Limited (2007:
the parent entity, Neodigital Pty Ltd, Digital Artists Pty Ltd, and The Internet Bureau Limited)
The carrying amount of assets pledged as security for the non-current borrowings are:
Consolidated Parent entity
2008 2007 2008 2007
$’000 $’000 $’000 $’000
Employee entitlements 2,268 1,885 199 21
Provision for surplus lease space - 18 - 18
Total 2,268 1,903 199 39
Consolidated Parent entity
2008 2007 2008 2007
Total secured liabilities $’000 $’000 $’000 $’000
Bank loans 60,000 26,000 60,000 26,000
Consolidated Parent entity
2008 2007 2008 2007
Note $’000 $’000 $’000 $’000
Deferred consideration – acquisitions 6,101 45,415 1,036 45,415
Other – related party loans 31 - - 51,142 28,711
Total 6,101 45,415 52,178 74,126
Consolidated Parent entity
2008 2007 2008 2007
Non-current assets $’000 $’000 $’000 $’000
Floating charge
Receivables - 154 - 154
Property, plant and equipment 3,483 486 623 415
Total non-current assets pledged as security 3,483 640 623 569
Total assets pledged as security 218,447 30,742 52,573 26,245
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Fixed interest rate
Floating
interest
rate
1 year or
less
Over 1 to
2 years
Over 2 to
3 years
Over 3 to
4 years
Over 4 to
5 years
Over 5
yearsTotal
2008 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
Bank loans 60,000 - - - - - - 60,000
Weighted average interest rate 8.13% - - - - - - 8.13%
Fixed interest rate
Floating
interest
rate
1 year or
less
Over 1 to
2 years
Over 2 to
3 years
Over 3 to
4 years
Over 4 to
5 years
Over 5
yearsTotal
2007 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
Bank loans 26,000 - - - - - - 26,000
Weighted average interest rate 7.25% - - - - - - 7.25%
Consolidated Parent entity
2008 2007 2008 2007
$’000 $’000 $’000 $’000
Bank loan facilities – Pool “A”
Total facilities 50,000 40,000 50,000 40,000
Used at balance date 46,558 26,000 46,558 26,000
Unused at balance date 3,442 14,000 3,442 14,000
Bank loan facilities – Pool “B”
Total facilities 30,000 - 30,000 -
Used at balance date 13,442 - 13,442 -
Unused at balance date 16,558 - 16,558 -
Notes to the fi nancial statements (continued)
30 June 2008
NOTE 20. NON-CURRENT LIABILITIES – BORROWINGS (continued)
(b) Cash advance facility (Bank loans)
The cash advance facility is drawn down as required as separate fully drawn advances. The facility consists of two pools, $50
million for working capital purposes and $30 million for merger and acquisition activity. The facility is repayable in full by
31 August 2010. Each fully drawn advance has a variable interest rate based on the bank bill swap rate for the period of the
advance.
The current interest rates on the cash advance facility are between 8.05% and 8.20% (2007: 7.25% to 7.27%).
(c) Financing arrangements
Unrestricted access was available at balance date to the following lines of credit:
The cash advance facility may be drawn at any time up to the facility limit.
(d) Interest rate risk exposures
The following table sets out the Group’s exposure to interest rate risk, including the contractual re-pricing dates and weighted
average interest rate by maturity periods.
Exposures arise from liabilities bearing variable interest rates.
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Consolidated Parent entity
2008 2007 2008 2007
The balance comprises temporary differences attributable to: $’000 $’000 $’000 $’000
Amounts recognised in profi t or loss
Intangibles 1,696 1,870 - -
Net deferred tax liabilities 1,696 1,870 - -
Intangibles ProvisionsEmployee
benefi ts
Unrealised
exchange
differences
Total
Movements – Consolidated $’000 $’000 $’000 $’000 $’000
At 1 July 2006 - 26 (13) (6) 7
Charged/(credited) to the income statement (50) (26) 13 6 (57)
Acquisition 1,920 - - - 1,920
At 30 June 2007 1,870 - - - 1,870
Charged/(credited) to the income statement (174) - - - (174)
At 30 June 2008 1,696 - - - 1,696
2008 2007
Carrying
amountFair value
Carrying
amountFair value
$’000 $’000 $’000 $’000
On balance sheet
Non traded fi nancial liabilities
Bank loans 60,000 60,000 26,000 26,000
(e) Fair value
The carrying amounts and fair values of borrowings at balance date are for the Group and Parent:
None of the classes of borrowings are readily traded on organised markets in standardised form. Fair value is inclusive of costs,
which would be incurred on settlement of a liability.
(i) On balance sheet
The fair value of borrowings is based upon market prices where a market exists or by discounting the expected future cash fl ows
by the current interest rates for liabilities with similar risk profi les.
(f) Risk exposures
Information about the Group’s and parent entities exposure to interest rate and foreign exchange changes is provided in note 2.
NOTE 21. NON-CURRENT LIABILITIES – DEFERRED TAX LIABILITIES
NOTE 22. NON-CURRENT LIABILITIES – PROVISIONS
Consolidated Parent entity
2008 2007 2008 2007
$’000 $’000 $’000 $’000
Employee benefi ts – long service leave 989 292 84 43
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Consolidated Parent entity
2008 2007 2008 2007
$’000 $’000 $’000 $’000
Deferred consideration 279 575 279 575
Notes to the fi nancial statements (continued)
30 June 2008
NOTE 23. NON-CURRENT LIABILITIES – OTHER FINANCIAL LIABILITIES
NOTE 24. CONTRIBUTED EQUITY
82
Parent entity Parent entity
2008 2007 2008 2007
Note Number ‘000 Number ‘000 $’000 $’000
(a) Share capital
Ordinary shares
Fully paid (b)(c) 288,019 246,357 133,071 86,944
(b) Movements in ordinary share capital:
Date Details Number of sharesAverage
issue price$’000
30 Jun 2006 Balance 184,289,412 20,933
13 Sep 2006 Exercise of options (d) 45,000 $0.30 14
26 Sep 2006 Exercise of options (d) 135,000 $0.23 31
3 Oct 2006 Exercise of options (d) 180,000 $0.25 45
3 Oct 2006 Exercise of options (d) 1,500,000 $0.40 600
22 Nov 2006 Issued pursuant to the purchase of an
intangible asset, Onemail email software
(f)
424,448 $0.59 250
8 Jan 2007 Exercise of options (d) 60,000 $0.25 15
1 Mar 2007 Exercise of options (d) 300,000 $0.25 75
13 Mar 2007 Exercise of options (d) 60,000 $0.25 15
10 Apr 2007 Exercise of Director options (d) 200,000 $0.20 40
11 May 2007 Rights issue (e) 41,600,866 $1.05 43,681
21 May 2007 Issued as part consideration of purchase of
Mitchell & Partners Group
(g)
17,382,728 $1.30 22,598
28 Jun 2007 Exercise of options (d) 180,000 $0.20 37
Less: Transaction costs arising on share issue (1,805)
Deferred tax credit recognised directly in
equity
415
30 Jun 2007 Balance 246,357,454 86,944
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(c) Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the company in proportion to the
number of and amounts paid on the shares held.
On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon
a poll each share is entitled to one vote.
(d) Options over unissued shares
Information relating to the Mitchell Communication Group Limited Employee Option Plan and, including the details of options
issued, exercised and lapsed during the year ended 30 June 2008 and options outstanding at 30 June 2008 are set out in note 37.
No options were exercised by directors of Mitchell Communication Group Limited during the year ended 30 June 2008.
Information relating to these options including details of options issued, exercised and lapsed during the year ended 30 June
2008 and options outstanding at 30 June 2008 are set out in note 27.
(e) Rights issue
On 1 April 2007 the company invited its shareholders to subscribe to a rights issue of 41,600,886 ordinary shares at an issue
price of $1.05 per share on the basis of 2 shares for every 9 shares held, with such shares to be issued on, and rank for
dividends after, 11 May 2007. The issue was fully subscribed.
(f) Purchase of the software assets of Onemail Pty Ltd
The company purchased the software assets of Onemail Pty Ltd on 19 May 2006 for consideration including two tranches of
424,448 fully paid ordinary shares in the capital of Mitchell Communication Group Limited. The fair value of ordinary shares
issued was calculated by taking the average price of the fi ve trading days prior to 12 May 2006. The average was used due to
the thin trading of the shares on the day prior to the date of acquisition. The fi nal tranche payment of 424,448 fully paid ordinary
shares in the capital of the company was made on 22 November 2006.
(g) Purchase of the business’ of the Mitchell & Partners group
The company purchased 100% of the issued capital of the entities in the Mitchell & Partners Group, details of which can be
found in note 32, effective 1 April 2007 for consideration including 17,382,728 fully paid ordinary shares in the capital of Mitchell
Communication Group Limited. The fair value of ordinary shares issued was calculated by taking the average price of the fi ve
trading days prior to the date of exchange.
At 30 June 2007, the company owed the Mitchell family $45.415m in deferred consideration for the sale of Mitchell & Partners
group. During the year ended 30 June 2008, the Mitchell family elected to take part of the payment due in the form of 4,166,667
ordinary shares. The fair value of ordinary shares issued was calculated by taking the average price of the fi ve trading days prior
to the date of exchange.
(b) Movements in ordinary share capital:
Date Details Number of sharesAverage
issue price$’000
30 Jun 2007 Balance 246,357,454 86,944
16 Aug 2007 Issued as part consideration for the purchase
of Mitchell & Partners (WA) Pty Ltd (h) 1,028,160 $1.25 1,285
4 Sep 2007 Share placement to institutions (i) 30,000,000 $1.10 33,000
19 Oct 2007 Issued under share purchase plan (j) 6,334,532 $1.09 6,904
29 Nov 2007 Issued pursuant to earn-out on purchase of
Mitchell & partners Group (g) 4,166,667 $1.15 4,792
7 May 2008 Issued as part consideration of the purchase
of Visual Jazz Pty Ltd (k) 1,513,773 $0.66 999
Share buy-back, net of transaction costs (l) (1,382,025) $0.67 (923)
Shares to be issued to vendors of Visual Jazz
Pty Ltd and Coleman Group Pty Ltd as part
consideration of earn-out payments (m) 1,102
Less: Transaction costs arising on share issue (928)
Deferred tax credit recognised directly in
equity
(104)
30 Jun 2008 Balance 288,018,561 133,071
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Notes to the fi nancial statements (continued)
30 June 2008
NOTE 24. CONTRIBUTED EQUITY (continued)
(h) Issued relating to purchase of Mitchell & Partners (WA) Pty Ltd
The company purchased 51% of the issued capital of Workhouse Advertising Pty Ltd, details of which can be found in note 32,
effective 16 August 2007 for consideration including 1,028,160 fully paid ordinary shares in the capital of Mitchell Communication
Group Limited. The fair value of ordinary shares issued was calculated by taking the average price of the fi ve trading during the
period 25 June to 30 June 2007.
(i) Share placement to institutional investors
On 4 September 2007 the company announced the placement of 30,000,000 shares at $1.10 per share to institutional investors.
The equity raised is to be used in part to fund future acquisitions.
(j) Share purchase plan
On 4 September 2007 the company announced a “Shareholder Purchase Plan” whereby shareholders were offered the
opportunity to buy shares in the company at $1.09 for a maximum value of $5,000 per shareholder. Under the plan the company
issued 6,334,532 shares.
(k) Purchase of the Visual Jazz Pty Ltd
The company purchased 100% of the issued capital of Visual Jazz Pty Ltd, details of which can be found in note 32, effective 7
September 2007 for consideration including 1,513,773 fully paid ordinary shares in the capital of Mitchell Communication Group
Limited. The fair value of ordinary shares issued was calculated by taking the average price of the fi ve trading days prior to the
date of exchange.
(l) Share buy-back program
During the period, the company executed a publicly announced share buy-back program. The company made the decision to buy
back up to 10% of the company’s shares, with the strategy of effi cient capital management and maximising shareholder value.
All the shares purchased on market are cancelled. Since the announcement was made on 22 January 2008 the company has
bought back 1,382,205 shares, which have been cancelled.
(m) Shares to be issued as deferred consideration
The company will issue shares to the value of $1.102 million to the vendors of Visual Jazz Pty Ltd and Coleman Group Pty Ltd
as part payment of deferred consideration due under the sale and purchase agreements. The shares will be issued before 30
September 2008.
(n) Capital risk management
The Group and the parent entity’s objectives when managing capital are to safeguard their ability to continue as a going concern,
so that they can continue to provide returns for shareholders and benefi ts for other stakeholders and to maintain an optimal
capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return
capital to shareholders, issue new shares or sell assets to reduce debt.
The Group and parent monitor capital by analysing the net cash / debt position and gearing ratio. The gearing ratio is calculated
as net debt divided by total capital. The business is currently in a net cash position, which is consistent with the fact that the
parent is running a share buy-back program to optimise the return to shareholders.
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Consolidated Parent entity
2008 2007 2008 2007
$’000 $’000 $’000 $’000
(a) Reserves
Share-based payments reserve 163 238 163 238
Foreign currency translation reserve (383) 97 - -
(220) 335 163 238
Movements:
Share-based payments reserve
Balance 1 July 238 51 238 51
Option expense (75) 187 (75) 187
Balance 30 June 163 238 163 238
Foreign currency translation reserve
Balance 1 July 97 6 - -
Currency translation differences arising during the year (480) 91 - -
Balance 30 June (383) 97 - -
(b) Accumulated earnings/(losses)
Movements in accumulated losses were as follows:
Accumulated losses at the beginning of the fi nancial year (1,331) (6,398) (5,527) (6,464)
Net profi t attributable to members of Mitchell Communication Group
Limited 18,184 8,983 2,731 4,853
Dividends paid (8,535) (3,916) (8,511) (3,916)
Accumulated earnings/(losses) at the end of the fi nancial year 8,318 (1,331) (11,307) (5,527)
NOTE 25. RESERVES AND ACCUMULATED EARNINGS/(LOSSES)
(c) Nature and purpose of reserves
(i) Share-based payments reserve
The share-based payments reserve is used to recognise the fair value of options issued but not exercised.
(ii) Foreign currency translation reserve
Exchange differences arising on translation of the foreign controlled entity are taken to the foreign currency translation reserve,
as described in note 1(c). The reserve is recognised in profi t and loss when the net investment is disposed of.
NOTE 26. DIVIDENDS
Consolidated Parent entity
2008 2007 2008 2007
$’000 $’000 $’000 $’000
(a) Ordinary shares
Final dividend for the year ended 30 June 2007 of 1.2 cents (2006 –
1.3 cents) per fully paid share paid on 12 October 2007 (2006 – 23
October 2006). Fully franked (2006 – unfranked) based on tax paid at
30%. 3,329 2,420 3,329 2,420
Interim dividend for the year ended 30 June 2008 of 1.8 cents (2007
– 0.8 cents) per fully paid share paid on 28 March 2008 (2007 - 28
March 2007). Fully franked (2007 – 75% franked) based on tax paid at
30% 5,182 1,496 5,182 1,496
Dividend paid by subsidiary to minority interest 24 - - -
Total dividends provided for or paid 8,535 3,916 8,511 3,916
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Name Position Employer
L Littlefi eld Chief Operating Offi cer (from 3 December 2007) Mitchell Communication Group Management Services Pty Ltd
J Murray Managing Director – Digital Mitchell Communication Group Management Services Pty Ltd
J White Managing Director – Corporate Mitchell Communication Group Management Services Pty Ltd
A Charles Managing Director – Diversifi ed Mitchell Communication Group Management Services Pty Ltd
D G Cust Chief Financial Offi cer Mitchell Communication Group Management Services Pty Ltd
Consolidated Parent entity
2008 2007 2008 2007
$’000 $’000 $’000 $’000
(c) Franked dividends
Franking credits available for subsequent fi nancial years based on a
tax rate of 30% (2007 – 30%) 14,734 10,793 14,734 10,793
Record date Payment date TypeAmount per
securityTotal dividend
Franked amount per
security
Foreign sourced
dividend amount per
security
5 September
2008
26 September
2008Final 2.1 cents 6,048,390 2.1 cents Nil
Notes to the fi nancial statements (continued)
30 June 2008
NOTE 26. DIVIDENDS (continued)
(b) Dividends not recognised at year end
Details of dividends declared subsequent to the year ended 30 June 2008 are as follows:
There is no dividend reinvestment plan in operation.
The above amounts represent the balance of the franking account as at the end of the fi nancial year, adjusted for:
(a) franking credits that will arise from the payment of the current tax liability;
(b) franking debits that will arise from the payment of dividends recognised as a liability at the reporting date; and
(c) franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date.
The consolidated amounts include franking credits that would be available to the parent entity if distributable profi ts of
controlled entities were paid as dividends.
The impact on the franking account of the dividend recommended by the directors since year-end, but not recognised as a
liability at year-end, will be a reduction in the franking account of $2,592,000 (2007: 1,427,000).
NOTE 27. KEY MANAGEMENT PERSONNEL DISCLOSURES
(a) Directors
The following persons were directors of Mitchell Communication Group Limited during the fi nancial year:
Chairman H C Mitchell AO (Executive Chairman)
Executive directors S J Mitchell (Chief Executive Offi cer)
Non-executive directors G A Hounsell
R J Stewart
R J Lamplugh
S A Cameron
P G Nankervis
N Sparks
(b) Other key management personnel
The following persons also had authority and responsibility for planning, directing and controlling the activities of the Group,
directly or indirectly, during the fi nancial year:
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2008
Balance at
the start of
the year
Granted
during the
year as
remuneration
Exercised
during the
year
Lapsed
during the
year
Forfeited
during the
year
Balance at
the end of
the year
Vested and
exercisable at
the end of the
year
Directors of Mitchell Communication Group Limited
H C Mitchell 1,000,000 - - - (1,000,000) - -
G A Hounsell 500,000 - - - (500,000) - -
R J Stewart 200,000 - - - (200,000) - -
S A Cameron 200,000 - - - (200,000) - -
P G Nankervis 200,000 - - (200,000) - -
N Sparks 200,000 - - (200,000) - -
Specifi ed executives of the Group
D G Cust 81,204 - - - - 81,204 -
J Murray 300,000 - - - - 300,000 -
No options are vested and un-exercisable at the end of the year.
2007
Balance at
the start of
the year
Granted
during the
year as
remuneration
Exercised
during the
year
Lapsed
during the
year
Forfeited
during the
year
Balance at
the end of
the year
Vested and
exercisable
at the end of
the year
Directors of Mitchell Communication Group Limited
H C Mitchell - 1,000,000 - - - 1,000,000 -
G A Hounsell - 500,000 - - - 500,000 -
R J Stewart 200,000 200,000 (200,000) - - 200,000 -
S A Cameron - 200,000 - - - 200,000 -
Specifi ed executives of the Group
L A Stephens 2,460,000 - (1,500,000) (960,000) - - -
D G Cust 300,000 81,204 (300,000) - - 81,204 -
J Murray - 300,000 - - - 300,000 -
No options are vested and un-exercisable at the end of the year.
Consolidated Parent entity
2008 2007 2008 2007
$ $ $ $
Short-term employee benefi ts 3,044,979 1,256,870 3,044,979 951,520
Post-employment benefi ts 284,155 315,997 284,155 293,788
Long-term benefi ts 14,658 9,115 14,658 8,209
Share-based payments 57,705 143,420 57,705 143,420
Total 3,401,497 1,725,402 3,401,497 1,396,937
(c) Key management personnel compensation
The company has taken advantage of the relief provided by Corporations Regulation 2M.3.03 and has transferred the detailed
remuneration disclosures to the directors’ report. The relevant information can be found in sections A-C of the remuneration
report on pages 31 to 37.
(d) Equity instrument disclosures relating to key management personnel
(i) Options provided as remuneration and shares issued on exercise of such options
Details of options over ordinary shares in the company provided as remuneration and shares issued on the exercise of such
options, together with terms and conditions of the options can be found in Section D of the remuneration report on pages 37 to 39.
(ii) Option holdings
The numbers of options over ordinary shares in the company held during the fi nancial year by each director of Mitchell
Communication Group Limited and other key management personnel of the Group, including their personally-related entities,
are set out below.
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Group
Balance at the
start of the
year
Interest paid
and payable
for the year
Interest not
charged
Balance at the
end of the year
Number in
Group at the
end of the year
$ $ $ $ $
2008 - - - - -
2007 - - 833 - -
2008
Balance at the
start of the year
Received during
the year on the
exercise of options
Other changes
during the year
Balance at the end
of the year
Directors of Mitchell Communication Group Limited - Ordinary shares
H C Mitchell 100,242,160 - 2,166,667 102,408,827
S J Mitchell 12,858,797 - - 12,858,797
G A Hounsell 72,000 - 1,588,500 1,660,500
R J Stewart 305,556 - 2,293 307,849
R J Lamplugh 1,040,000 - - 1,040,000
S A Cameron 71,298 - - 71,298
Other key management personnel of the Group - Ordinary shares
J White - - 20,510 20,510
D G Cust 366,667 - 4,587 371,254
No options are vested and un-exercisable at the end of the year.
2007
Balance at the
start of the year
Received during
the year on the
exercise of options
Other changes
during the year
Balance at the end
of the year
Directors of Mitchell Communication Group Limited - Ordinary shares
G A Hounsell 40,000 - 32,000 72,000
R J Stewart 50,000 200,000 55,556 305,556
R J Lamplugh 1,040,000 - - 1,040,000
S A Cameron 58,334 - 12,964 71,298
H C Mitchell 70,918,848 - 29,323,312 100,242,160
S J Mitchell 10,020,833 - 2,837,964 12,858,797
S A Simson (resigned 1 Sept 2006) 8,753,560 - (8,753,560) -
Other key management personnel of the Group - Ordinary shares
L A Stephens (to 7 May 2007) - 1,500,000 (1,500,000) -
D G Cust - 300,000 66,667 366,667
P H McBeth 450,000 - 70,000 520,000
Notes to the fi nancial statements (continued)
30 June 2008
NOTE 27. KEY MANAGEMENT PERSONNEL DISCLOSURES (continued)
(iii) Share holdings
The numbers of shares in the company held during the fi nancial year by each director of Mitchell Communication Group Limited
and other key management personnel of the Group, including their personally-related entities, are set out below. There were no
shares granted during the reporting period as compensation.
(e) Loans to key management personnel
Details of loans made to directors of Mitchell Communication Group Limited and other key management personnel of the Group,
including their personally related parties, are set out below.
(i) Aggregates for key management personnel
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2008 2007
$ $
Amounts recognised as revenue
Gross billings - 24,115,428
Commission to advertising agencies - (2,052,669)
Rent 43,125 4,934
Telephone - 953
Total 43,125 22,068,646
Amounts recognised as expense
Research - 48,750
Rent of offi ce building 45,100 36,328
Consultancy services 300,000 62,500
Licence fees - 6,858
Legal fees 138,025 25,282
Total 483,125 179,718
(ii) Individuals with loans above $100,000 during the fi nancial year
(f) Other transactions with directors and specifi ed executives
Directors of Mitchell Communication Group Limited
Two directors, H C Mitchell AO and S J Mitchell were directors and shareholders of the Mitchell & Partners Group, which was
purchased by the company on 1 April 2007. Details of the purchase can be found in note 32. Part of the proceeds payable to the
vendors was deferred. Refer to note 18. Part of the deferred proceeds was funded by way of a share placement on 4 September
2007. Refer to note 24 for further information. Full details of the payment of the deferred consideration during the year ended
30 June 2008 to the directors is as follows:
Prior to the purchase, Mitchell & Partners was a major client of the Group. This relationship was formalised in an Alliance Deed
between Mitchell & Partners Pty Ltd and the parent entity. The Group granted an advertising agency commission on these gross
billings. The billings and commission were based on normal commercial terms.
Prior to the purchase, an entity within the Mitchell & Partners Group provided research services to the company on normal
commercial terms and conditions.
From 21 May 2007, a private entity related to Mr H C Mitchell AO and Mr S J Mitchell leased offi ce space to an entity in the
Group. The rental is based on arms length terms.
Two directors, H C Mitchell AO and S J Mitchell are directors and shareholders of the Mitchell Family Offi ce. The Mitchell Family
Offi ce sub-leased space from an entity within the Group from 21 May 2007. The rental was based on arms length terms.
A Director, H C Mitchell AO is founder of the Harold Mitchell Foundation. The Harold Mitchell Foundation sub-let space from an
entity within the Group from 21 May 2007. The rental is based on arms length terms.
A director, R J Lamplugh is a partner in the law fi rm Lamplugh McIntosh. This fi rm provided legal services to the company on
normal terms and conditions. Lamplugh McIntosh sub-leased offi ce space from an entity within the Group from 21 May 2007.
The rental was based on arms length terms.
A director, G A Hounsell provided mergers and acquisitions consultancy services to the Group.
Aggregate amounts of each of the above types of other transactions
with key management personnel of Mitchell Communication Group Limited:
Group
Balance at the
start of the
year
Interest paid
and payable
for the year
Interest not
charged
Balance at the
end of the year
Number in
Group at the
end of the year
$ $ $ $ $
2008 - - - - -
2007 - - 833 - 27,999,976
Cash paid 39,893,226
Equity issued 5,000,000
Total deferred consideration 44,893,226
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Consolidated Parent entity
2008 2007 2008 2007
$’000 $’000 $’000 $’000
Operating leases
The Group lease various offi ces under non-cancellable operating
leases expiring within two to six years. The leases have varying
terms, escalation clauses and renewal rights. On renewal, the
terms of the leases are renegotiated.
Commitments for minimum lease payments in relation to
non-cancellable operating leases are payable as follows:
Within one year 3,079 1,912 268 263
Later than one year but not later than fi ve years 4,464 2,353 164 424
Later than fi ve years 89 - - -
Total 7,632 4,265 432 687
2008 2007
$ $
Aggregate amounts of assets at balance date relating to the above types of other transactions
with key management personnel of the Group:
Current assets 470 6,018
Aggregate amounts payable to key management personnel of the Group at balance date
relating to the above types of other transactions:
Current liabilities – Mitchell Family - 44,161,767
Current liabilities – other related parties 12,620 34,412
Total 12,620 44,196,179
Consolidated Parent entity
2008 2007 2008 2007
$ $ $ $
During the year the following fees were paid or payable for services
provided by the auditor of the parent entity, and non-related audit
fi rms:
(a) Audit services
PricewaterhouseCoopers − Australian fi rm
Audit and review of fi nancial reports and other audit work under
the Corporations Act 2001 338,550 445,505 338,550 419,255
Agreed upon procedures 5,000 - - -
Related practices of PricewaterhouseCoopers Australian fi rm 44,950 - - -
Non-PricewaterhouseCoopers audit fi rms for the audit or review of
fi nancial reports of any entity in the group - 12,390 - -
Total audit and other assurance services 388,500 457,895 338,550 419,255
NOTE 29. CONTINGENCIES
The Group had no contingent liabilities at balance date.
NOTE 30. COMMITMENTS
Notes to the fi nancial statements (continued)
30 June 2008
NOTE 27. KEY MANAGEMENT PERSONNEL DISCLOSURES (continued)
NOTE 28. REMUNERATION OF AUDITORS
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Consolidated Parent entity
2008 2007 2008 2007
$ $ $ $
Purchases of goods and services
Sale of media - - - 8,716,538
Commission on sale of media - - - (638,311)
Purchase of recruitment short-listing services from joint venture
entity. - 34,250 - 34,250
Purchase of mobile marketing services from joint venture entity 60,350 - - -
Tax consolidation legislation
Current tax payable assumed from wholly-owned tax consolidated
entities - - 10,317,257 2,505,476
Dividend revenue
Subsidiaries - - 8,250,000 1,300,000
Joint venture entity - 187,500 - 187,500
Other transactions
Management fees paid to the parent entity by joint venture entity - 38,400 - 38,400
Management fees paid to the parent entity by controlled entity - - 2,991,738 437,093
Current receivables – Management fees (2007: sale of media)
Subsidiaries - - 292,124 5,968,258
Tax consolidation legislation
Current tax payable assumed from wholly-owned tax consolidated
entities - - 10,317,257 2,505,476
Current receivables (tax-funding agreements)
Wholly-owned tax consolidated entities - - 11,238,084 2,505,476
Current payables (purchases of services)
Subsidiaries - - 109,775 48,755
NOTE 31. RELATED PARTIES
(a) Key management personnel
Disclosures relating to key management personnel are set out in note 27.
(b) Subsidiaries
Interests in subsidiaries are set out in note 33.
(c) Transactions with related parties
The following transactions occurred with related parties:
(d) Outstanding balances arising from sales/purchases of good and services
The following balances are outstanding at the reporting date in relation to transactions with related parties:
No provisions for doubtful debts have been raised in relation to any outstanding balances, and no expense has been recognised
in respect of bad or doubtful debts due from related parties.
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Note Principal activityDate of
acquisition
Proportion
of shares
acquired
Cost of
acquisition
$’000
2008
Mitchell & Partners (WA) Pty Ltd (a) Offl ine planning & buying 1/7/07 51 7,108
Co Media Oz (b) Offl ine planning & buying 1/7/07 100 644
Coleman Group Pty Ltd (c) Sign production services 1/11/07 100 7,453
The Media Shop (d) Offl ine planning & buying 1/9/07 100 1,050
Visual Jazz Pty Ltd (e) Digital creative 1/7/07 100 16,353
Haystac Public Affairs Pty Ltd (f) Public relations 1/10/07 100 9,026
Total 41,634
2007
Mitchell & Partners group of companies (g) Offl ine planning & buying 1/4/07 100 165,370
Total 165,370
Consolidated Parent entity
2008 2007 2008 2007
$ $ $ $
Loans to subsidiaries
Beginning of the year - - 463,749 29,390
Loans advanced by/(to) parent - - 74,783,789 854,908
Loan payments received from subsidiaries - - (36,192,360) (420,549)
Interest charged - - 68,276
End of the year - - 39,123,454 463,749
Loans from subsidiaries
Beginning of the year - - (28,711,250) -
Loans transferred by parent - - (36,482,229) 9,479,326
Loan transfer made by subsidiaries - - 14,051,416 (38,190,576)
End of the year - - (51,142,063) (28,711,250)
Loans to/(from) joint venture entities
Beginning of the year - 40,000 - 40,000
Loans advanced by parent 559 - 559 -
Loan payments received/(advanced) by joint venture entity - (40,000) - (40,000)
Provision for loan write-down released - - - -
End of the year 559 - 559 -
Notes to the fi nancial statements (continued)
30 June 2008
NOTE 31. RELATED PARTIES (continued)
(e) Loans to / from related parties
No provisions for doubtful debts have been raised in relation to any outstanding balances, and no expense has been recognised
in respect of bad or doubtful debts due from related parties.
NOTE 32. BUSINESS COMBINATIONS
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$’000
Purchase consideration
Cash paid 5,141
Equity issued 1,285
Direct costs relating to the acquisition 682
Total purchase consideration 7,108
Minority interest 6,174
Fair value of net identifi able assets/(liabilities) acquired (refer below) (18)
Goodwill - provisional (refer below) 13,300
2008
$’000
Outfl ow of cash to acquire subsidiary, net of cash acquired
Cash consideration 5,141
Acquisition costs 682
Outfl ow of cash 5,823
Acquiree’s
carrying
amount
Fair value
$’000 $’000
Plant and equipment 7 -
Deferred tax asset - 8
Provision for employee benefi ts (26) (26)
Net identifi able assets acquired (19) (18)
(a) Acquisition of Mitchell & Partners (WA) Pty Ltd
(i) Summary of acquisition
On 16 August 2007, the Mitchell Communication Group Limited announced it had acquired 51% of the issued capital of Mitchell
& Partners (WA) Pty Ltd, a media planner and buyer, for consideration of $6,426,000, consisting of $5,140,800 in cash and
$1,285,200 in equity. The fair value of shares issued was $1.25 based on the weighted average price of the shares during the
period 25 June to 30 June 2007.
Details of the fair value of the assets and liabilities acquired and goodwill are as follows:
(ii) Purchase consideration
(iii) Assets and liabilities acquired
The assets and liabilities arising from the acquisition are as follows:
The fair value of assets and liabilities acquired are based on discounted cash fl ow models.
The fair value of identifi able assets and liabilities acquired has been assessed provisionally. The company is in the process
of appraising the value of the identifi able intangible assets, if any. The company will determine and disclose the allocation to
intangible assets and its associated tax effect within 12 months of the acquisition date in accordance with AASB3 Business
Combinations.
The goodwill is attributable to the profi table nature of the business, which is generated via customer relationships, the ability of
the business to attract high performing personnel, buying power and market dominance. Since the acquisition the company has
performed a detailed value-in-use calculation (refer note 16) that supports the carrying value of all intangibles arising out of the
acquisition.
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Acquiree’s
carrying
amount
Fair value
$’000 $’000
Plant and equipment 5 -
Net identifi able assets acquired 5 -
2008
$’000
Outfl ow of cash to acquire subsidiary, net of cash acquired
Cash consideration 644
Outfl ow of cash 644
$’000
Purchase consideration
Cash paid 644
Total purchase consideration 644
Fair value of net identifi able assets acquired (refer below) -
Goodwill 644
Notes to the fi nancial statements (continued)
30 June 2008
NOTE 32. BUSINESS COMBINATIONS (continued)
b) Acquisition of Co Media Oz
(i) Summary of acquisition
On 17 August 2007, the Mitchell Communication Group Limited announced it had acquired the business and assets of Co Media
Oz, a media planner and buyer on the Gold Coast, for consideration of $644,000 in cash.
Details of the fair value of the assets and liabilities acquired and goodwill are as follows:
(ii) Purchase consideration
(iii) Assets and liabilities acquired
The assets and liabilities arising from the acquisition are as follows:
The fair value of assets and liabilities acquired are based on discounted cash fl ow models.
The goodwill is attributable to the profi table nature of the business, which is generated via customer relationships, and the
ability of the business to attract high performing personnel. Since the acquisition the company has performed a detailed value-
in-use calculation (refer note 16) that supports the carrying value of all intangibles arising out of the acquisition.
(c) Acquisition of Coleman Group Pty Ltd
(i) Summary of acquisition
On 3 September 2007, the Mitchell Communication Group Limited announced the acquisition of 100% of the issued capital of the
Coleman Group Pty Ltd, one of the largest suppliers of sign production services to major stadia and sporting events in Australia,
for initial consideration of $5,619,000 in cash. Additional consideration is payable to the vendors subject to achievement of profi t
before tax targets for the three years ending 30 June 2010. The contingent consideration payable for the current fi nancial
year is $1,546,000, with $1,137,000 payable in cash and $409,000 payable in shares. The payment of additional consideration
for fi nancial years ending 30 June 2009 and 2010 is not probable at 30 June 2008 and has not been included in the cost of
acquisition. A reassessment of the contingent consideration will be made at 30 June 2009.
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Acquiree’s
carrying
amount
Fair value
$’000 $’000
Inventories 389 386
Work in progress 11 11
Prepayments 4 4
Fixed assets 778 778
Deferred tax asset - 40
Accrued liabilities (30) (30)
Provision for employee benefi ts - (135)
Lease liabilities (763) (751)
Net identifi able assets acquired 389 303
2008
$’000
Outfl ow of cash to acquire subsidiary, net of cash acquired
Cash consideration 5,619
Acquisition costs 288
Outfl ow of cash 5,907
$’000
Purchase consideration
Cash paid 5,619
Direct costs relating to the acquisition 288
Additional consideration – 30 June 2008 1,546
Total purchase consideration 7,453
Fair value of net identifi able assets acquired (refer below) 303
Goodwill – provisional (refer below) 7,150
Details of the fair value of the assets and liabilities acquired and goodwill are as follows:
(ii) Purchase consideration
(iii) Assets and liabilities acquired
The assets and liabilities arising from the acquisition are as follows:
The fair value of assets and liabilities acquired are based on discounted cash fl ow models.
The goodwill is attributable to the profi table nature of the business, which is generated via customer relationships, the ability of
the business to attract high performing personnel, buying power and market dominance.
The fair value of identifi able assets and liabilities acquired has been assessed provisionally. The company is in the process
of appraising the value of the identifi able intangible assets, if any. The company will determine and disclose the allocation to
intangible assets and its associated tax effect within 12 months of the acquisition date in accordance with AASB3 Business
Combinations.
Since the acquisition the company has performed a detailed value-in-use calculation (refer note 16) that supports the provisional
carrying value of all intangibles arising out of the acquisition.
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Acquiree’s
carrying
amount
Fair value
$’000 $’000
Fixed assets 12 -
Deferred tax asset - 15
Sundry debtor 49 49
Provision for employee benefi ts (52) (52)
Net identifi able assets acquired 9 12
2008
$’000
Outfl ow of cash to acquire subsidiary, net of cash acquired
Cash consideration 1,050
Acquisition costs -
Outfl ow of cash 1,050
$’000
Purchase consideration
Cash paid 1,050
Total purchase consideration 1,050
Fair value of net identifi able assets acquired (refer below) 12
Goodwill 1,038
Notes to the fi nancial statements (continued)
30 June 2008
NOTE 32. BUSINESS COMBINATIONS (continued)
(d) Acquisition of The Media Shop
(i) Summary of acquisition
On 3 September 2007, the Mitchell Communication Group Limited announced that Mitchell & Partners (WA) Pty Ltd had
acquired the media buying assets of The Media Shop, for consideration of $1,050,000 in cash.
Details of the fair value of the assets and liabilities acquired and goodwill are as follows:
(ii) Purchase consideration
(iii) Assets and liabilities acquired
The assets and liabilities arising from the acquisition are as follows:
The fair value of assets and liabilities acquired are based on discounted cash fl ow models.
The goodwill is attributable to the profi table nature of the business, and the ability of the business to attract high performing
personnel. Since the acquisition the company has performed a detailed value-in-use calculation (refer note 16) that supports the
carrying value of all intangibles arising out of the acquisition.
(e) Acquisition of Visual Jazz Pty Ltd
(i) Summary of acquisition
On 7 September 2007, the Mitchell Communication Group Limited announced it had acquired the business and assets of Visual
Jazz Pty Ltd, a digital advertising agency, for initial consideration of $10,723,000 in cash. Additional consideration is payable
to the vendors subject to achievement of profi t before tax targets for the two years ending 30 June 2009. The contingent
consideration payable for the current fi nancial year is $4,621,000, with $3,928,000 payable in cash and $693,000 payable in
shares. The payment of additional consideration for fi nancial years ending 30 June 2009 and 2010 is not probable at 30 June
2008 and has not been included in the cost of acquisition. A reassessment of the contingent consideration will be made at 30
June 2009.
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Acquiree’s
carrying
amount
Fair value
$’000 $’000
Receivables 3,260 3,260
Plant and equipment 352 352
Deferred tax asset - 59
Trade and other payables (1,822) (1,884)
Provision for employee benefi ts (176) (176)
Lease liabilities (282) (282)
Net identifi able assets acquired 1,332 1,329
$’000
Purchase consideration
Cash paid 10,723
Equity issued 999
Additional consideration – 30 June 2008 4,621
Direct costs relating to the acquisition 10
Total purchase consideration 16,353
Fair value of net identifi able assets acquired (refer below) 1,329
Goodwill – provisional (refer below) 15,024
2008
$’000
Outfl ow of cash to acquire subsidiary, net of cash acquired
Cash consideration 10,723
Acquisition costs 10
Outfl ow of Cash 5,907
2008
No.
Equity issued to acquire subsidiary
Ordinary shares issued 1,513,773
Fair value of ordinary shares issued per share $0.66
2008
$’000
Fair value of ordinary shares issued 999
Details of the fair value of the assets and liabilities acquired and goodwill are as follows:
(ii) Purchase consideration
(iii) Assets and liabilities acquired
The assets and liabilities arising from the acquisition are as follows:
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Acquiree’s
carrying
amount
Fair value
$’000 $’000
Receivables 1,668 1,668
Fixed assets 100 100
Deferred tax asset 36 36
Bank overdraft (78) (78)
Trade and other payables (786) (786)
Accrued liabilities (88) (88)
Provision for employee benefi ts (123) (123)
Net identifi able assets acquired 729 729
$’000
Purchase consideration
Cash paid 9,000
Direct costs relating to the acquisition 26
Total purchase consideration 9,026
Fair value of net identifi able assets acquired (refer below) 729
Goodwill – provisional (refer below) 8,297
2008
$’000
Outfl ow of cash to acquire subsidiary, net of cash acquired
Cash consideration 9,000
Acquisition costs 26
Outfl ow of Cash 9,026
Notes to the fi nancial statements (continued)
30 June 2008
NOTE 32. BUSINESS COMBINATIONS (continued)
(iii) Assets and liabilities acquired (continued)
The fair value of assets and liabilities acquired are based on discounted cash fl ow models.
The goodwill is attributable to the profi table nature of the business, future growth prospects, the ability of the business to attract
high performing personnel, and the current workforce in use.
The fair value of identifi able assets and liabilities acquired has been assessed provisionally. The company is in the process
of appraising the value of the identifi able intangible assets, if any. The company will determine and disclose the allocation to
intangible assets and its associated tax effect within 12 months of the acquisition date in accordance with AASB3 Business
Combinations.
Since the acquisition the company has performed a detailed value-in-use calculation (refer note 16) that supports the carrying
value of all intangibles arising out of the acquisition.
(f) Acquisition of Haystac Public Affairs Pty Ltd
(i) Summary of acquisition
On 17 October 2007, the Mitchell Communication Group Limited announced the acquisition of 100% of the issued capital of the
public relations, marketing communications and brand activation business Haystac Public Affairs Pty Ltd, for consideration of
$9,000,000 in cash.
Details of the fair value of the assets and liabilities acquired and goodwill are as follows:
(ii) Purchase consideration
(iii) Assets and liabilities acquired
The assets and liabilities arising from the acquisition are as follows:
The fair value of assets and liabilities acquired are based on discounted cash fl ow models.
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$’000
Purchase consideration
Cash paid 66,005
Equity issued 22,598
Deferred consideration – Mitchell family 45,571
Deferred consideration – Mitchell & Partners (Qld) Pty Ltd 740
Debt assumed 28,138
Direct costs relating to the acquisition 2,318
Total purchase consideration 165,370
Fair value of net identifi able assets acquired 26,247
Goodwill 139,123
Acquiree’s
carrying
amount
Fair value
$’000 $’000
Cash 26,361 26,361
Trade receivables 113,737 113,737
Prepayments 912 912
Plant and equipment 3,147 2,661
Non-interest bearing loans at call 28,034 28,034
Deferred tax asset 612 612
Investments 659 -
Brand names - 5,750
Customer relationships - 6,400
Stadia rights - 1,600
Software - 200
Trade and other payables (155,348) (155,348)
Provision for employee benefi ts (1,668) (1,668)
Current tax liability (889) (889)
Deferred tax liability - (1,920)
Lease liability (195) (195)
Net identifi able assets acquired 15,362 26,247
The goodwill is attributable to the profi table nature of the business, future growth prospects, the ability of the business to attract
high performing personnel, and the current workforce in use.
The fair value of identifi able assets and liabilities acquired has been assessed provisionally. The company is in the process
of appraising the value of the identifi able intangible assets, if any. The company will determine and disclose the allocation to
intangible assets and its associated tax effect within 12 months of the acquisition date in accordance with AASB3 Business
Combinations.
Since the acquisition the company has performed a detailed value-in-use calculation (refer note 16) that supports the carrying
value of all intangibles arising out of the acquisition.
(g) Mitchell and Partners group of companies
The goodwill that was assessed provisionally at 30 June 2007 has been fi nalised during the period. Details of the fair value of the
assets and liabilities acquired and goodwill are as follows:
Assets and liabilities acquired
The assets and liabilities arising from the acquisition are as follows:
(h) Impact on income statement
The contribution to net profi t after tax of the consolidated entity by the acquired entities from the date of their acquisition to
30 June 2008 was $5,016,535. It is not practical to disclose the full year impact of the acquisitions due to the owner related
transactions that occurred in the period up until their purchase.
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Equity Holding
Name of entityCountry of
incorporationClass of shares
2008
%
2007
%
Mitchell & Partners Pty Ltd Australia Ordinary 100 100
Mitchell & Partners (NSW) Pty Ltd Australia Ordinary 100 100
Mitchell & Partners (Qld) Pty Ltd Australia Ordinary 100 100
Mitchell & Partners Australia Pty Ltd Australia Ordinary 100 100
Drive Communications Pty Ltd Australia Ordinary 100 100
Spark PR Pty Ltd Australia Ordinary 100 100
Positive Outcomes Pty Ltd Australia Ordinary 100 100
Stadia Media Pty Ltd Australia Ordinary 100 100
Mitchell & Partners (NZ) Limited New Zealand Ordinary 100 100
Kiwispace Limited New Zealand Ordinary 67 67
The Internet Bureau Limited New Zealand Ordinary 100 100
emitch New Zealand Limited New Zealand Ordinary 100 100
WSA Media Buying Pty Ltd Australia Ordinary 100 100
Neodigital Pty Ltd Australia Ordinary 100 100
dmitch Pty Ltd * Australia Ordinary 100 100
Mitchell Communication Group Management Services
Pty Ltd ^^
Australia Ordinary 100 100
emitch Pty Ltd ^ Australia Ordinary 100 100
Digital Artists Pty Ltd Australia Ordinary 100 100
Mitchell & Partners (WA) Pty Ltd Australia Ordinary 51 -
Coleman Group Pty Ltd Australia Ordinary 100 -
Visual Jazz Pty Ltd Australia Ordinary 100 -
Haystac Public Affairs Pty Ltd Australia Ordinary 100 -
Notes to the fi nancial statements (continued)
30 June 2008
NOTE 33. INVESTMENTS IN CONTROLLED ENTITIES
* Named emitch Direct Marketing Pty Ltd until 26 July 2007
^ Named emitch Interactive Marketing Pty Ltd until 27 July 2007
^^ Named emitch Email Services Pty Ltd until 15 December 2007
The proportion of ownership interest is equal to the proportion of voting power held.
NOTE 34. INTERESTS IN JOINT VENTURES
Joint venture entity
On 3 July 2007 the Group entered into a joint venture to establish Mocom Pty Ltd, a company that operates a Mobile Advertising
business.
The parent entity had a 50% interest in Shortlist Solutions Pty Ltd, which is resident in Australia, and the principal activity
of which is recruitment short-listing services. The Group’s share of the joint venture entity was sold on 29 June 2007. Net
proceeds from the sale were $480,000.
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Consolidated Parent entity
2008 2007 2008 2007
$’000 $’000 $’000 $’000
Profi t from ordinary activities after income tax 18,817 9,008 2,731 4,853
Depreciation and amortisation 3,711 973 128 199
Net (profi t)/loss on sale of non-current assets 122 73 - -
Share-based payments (75) 187 (75) 187
Net exchange differences 128 (62) - -
Accrued interest on deferred consideration 381 - - -
Gain on sale of joint venture interest - (480) - (480)
Dividends receivable - - (8,250) -
Share of (profi ts)/losses of joint venture not received as distributions
or dividend
13 (112) - -
Change in operating assets and liabilities -
(Increase) in receivables (13,258) (3,533) (292) (5,781)
(Increase)/decrease other assets (8,755) - 446 -
(Increase)/decrease in deferred tax assets (334) (463) - 60
Increase in payables 24,453 23,871 1,374 5,610
Increase/(decrease) in provision for tax payable 404 2,022 (7,521) 250
(Decrease) in deferred tax liability (174) (7) - -
Increase in provision 498 17 - 10
Net cash infl ow from operating activities 25,931 31,494 (11,459) 4,908
The interest in the joint venture entity is accounted for in the fi nancial statements using the equity method of accounting and is
carried at cost by the parent entity. Information relating to the joint venture entity is set out below.
NOTE 35. RECONCILIATION OF PROFIT AFTER INCOME TAX TO NET CASH INFLOW
FROM OPERATING ACTIVITIES
Consolidated
2008 2007
$’000 $’000
Carrying amount of investment
At cost 13 -
Equity accounted profi ts/(losses) (13) 187
Less: Dividends receivable - (187)
- -
Proceeds from sale - 480
Profi t on sale - 480
Share of entities revenue expenses and results
Revenues 102 659
Expenses (136) (499)
Profi t/(loss) before income tax (34) 160
Income tax - (48)
Profi t/(loss) after income tax (34) 112
Prior year accounting losses recouped - -
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Consolidated
2008 2007
Cents Cents
Basic earnings per share attributable to the ordinary equity holders of the company 6.5 4.5
Diluted earnings per share attributable to the ordinary equity holders of the company 6.5 4.4
2008 2007
Number Number
Weighted average number of shares used as the denominator in calculating basic earnings
per share 278,839,852 201,790,212
Adjustments for calculation of diluted earnings per share:
Options 190,739 350,994
Weighted average number of ordinary shares and potential ordinary shares used as the
denominator in calculating diluted earnings per share. 279,030,591 202,141,206
Notes to the fi nancial statements (continued)
30 June 2008
NOTE 36. EARNINGS PER SHARE
The earnings as stated in the income statement have been used as the numerator to calculate basic and diluted earnings per
share.
Information concerning the classifi cation of securities
Options granted to non-executive directors and to executive directors and employees under the Mitchell Communication Group
Limited Employee Option Plan are considered to be potential ordinary shares to the extent the exercise price is lower than
the average market price for the year ended 30 June 2008. The options have not been included in the determination of basic
earnings per share. Details relating to the options are set out in note 37.
NOTE 37. SHARE-BASED PAYMENTS
(a) Mitchell Communication Group Limited Employee Options Plan
All full time employees of Mitchell Communication Group Limited and its controlled entities were eligible to participate in the
plan. Options are granted under the plan for no consideration. The options are vested as soon as they become exercisable.
Employee’s entitlements to the options cease upon the termination of their employment. The options granted carry no dividend
or voting rights. Each option is convertible into one ordinary share. The option plan is now closed.
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Exercise
priceGrant date
First
exercise
date
Expiry date
On issue at
start of the
year
Granted
during the
year
Exercised
during the
year
Lapsed
during the
year
Forfeited
during the
year
On issue at
end of the
year
Vested and
exercisable
at end of
the year
$ Number Number Number Number Number Number Number
Consolidated and parent entity – 2008
$0.55 2-Oct-06 2-Oct-08 2-Oct-11 180,000 - - (29,233) - 150,767 -
$0.65 2-Oct-06 2-Oct-08 2-Oct-11 180,000 - - (29,233) - 150,767 -
$0.75 2-Oct-06 2-Oct-08 2-Oct-11 180,000 - - (29,233) - 150,767 -
$0.75 23-Nov-06 29-Nov-08 28-Nov-11 400,000 - - - (400,000) - -
$1.05 23-Nov-06 29-Nov-09 29-Nov-11 500,000 - - - (500,000) - -
$1.42 2-Apr-07 2-Apr-09 2-Apr-11 1,000,000 - - - (1,000,000) - -
$1.55 2-Apr-07 1-Oct-08 30-Sep-11 300,000 - - - - 300,000 -
$1.50 29-Nov-07 29-Nov-09 29-Nov-12 - 400,000 - - (400,000) - -
2,740,000 400,000 - (87,699) (2,300,000) 752,301 -
Weighted average exercise price $1.12 $1.50 - $0.65 $1.28 $1.01
Consolidated and parent entity – 2007
$0.10 27-Jun-03 1-Jul-03 30-Jun-07 240,000 - (240,000) - - - -
$0.20 27-Dec-02 1-Jan-03 30-Jun-07 200,000 - (200,000) - - - -
$0.20 27-Jun-03 1-Jan-04 30-Jun-07 240,000 - (240,000) - - - -
$0.30 27-Jun-03 1-Jan-05 30-Jun-07 240,000 - (240,000) - - - -
$0.30 29-Nov-04 29-Nov-04 29-Nov-06 500,000 - (500,000) - - - -
$0.40 27-Jun-03 1-Jan-06 30-Jun-07 240,000 - (240,000) - - - -
$0.40 29-Nov-04 29-Nov-04 29-Nov-06 500,000 - (500,000) - - - -
$0.50 29-Nov-04 29-Nov-04 29-Nov-06 500,000 - (500,000) - - - -
$0.60 29-Nov-05 29-Nov-07 29-Nov-10 320,000 - - (320,000) - - -
$0.55 2-Oct-06 2-Oct-08 2-Oct-11 - 180,000 - - - 180,000 -
$0.70 29-Nov-05 29-Nov-07 29-Nov-10 320,000 - - (320,000) - - -
$0.65 2-Oct-06 2-Oct-08 2-Oct-11 - 180,000 - - - 180,000 -
$0.80 29-Nov-05 29-Nov-07 29-Nov-10 320,000 - - (320,000) - - -
$0.75 2-Oct-06 2-Oct-08 2-Oct-11 - 180,000 - - - 180,000 -
$0.75 23-Nov-06 29-Nov-08 28-Nov-11 - 400,000 - - - 400,000 -
$1.05 23-Nov-06 29-Nov-09 29-Nov-11 - 500,000 - - - 500,000 -
$1.42 2-Apr-07 2-Apr-09 2-Apr-11 - 1,000,000 - - - 1,000,000 -
$1.55 2-Apr-07 1-Oct-08 30-Sep-11 - 300,000 - - - 300,000 -
3,620,000 2,740,000 (2,660,000) (960,000) - 2,740,000 -
Weighted average exercise price $0.42 $1.12 $0.33 $0.67 $1.12
The dilution to existing shareholders caused by the rights issue has led to a reduction in the exercise price of options on issue at
the date of the rights issue. The reduction was 4.7 cents per option.
The weighted average remaining contractual life of share options outstanding at the end of the period was 3.26 years (2007 –
4.49 years)
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Consolidated Parent entity
2008 2007 2008 2007
$’000 $’000 $’000 $’000
Options issued under Mitchell Communication Group Limited
employee option plan
(75) 187 (75) 187
Notes to the fi nancial statements (continued)
30 June 2008
NOTE 37. SHARE-BASED PAYMENTS (continued)
Fair value of options granted
The assessed fair value at grant date of options granted during the year ended 30 June 2008 was 17 cents (2007 – between 23
cents and 60 cents). Fair values at grant date are determined using an enhanced Hull-White Trinomial Lattice option pricing
model that takes into account the exercise price, the term of the option, the vesting criteria, the impact of dilution, the non-
tradable nature of the option, the share price at grant date and expected price volatility of the underlying share, the expected
dividend yield and the risk-free interest rate for the term of the option.
The model inputs for options granted during the year ended 30 June 2008 included:
options are granted for no consideration, and vest two years after grant date
exercise price: $1.50 (2007 – $0.55, $0.65, $0.75, $1.05, $1.42, $1.55)
grant date: 29 November 2007 (2007 – 2 October 2006, 23 November 2006, 2 April 2007)
vesting date: 29 November 2009 (2007 – 2 October 2008, 29 November 2008, 2 April 2009, 1 October 2008)
expiry date: 29 November 2012 (2007 – 2 October 2011, 29 November 2011, 2 April 2011, 30 September 2011)
share price at grant date: $1.17 (2007 – $0.915, $1.30, $1.27)
expected price volatility of the company’s shares: between 21% and 42% (2007 – between 26% and 56%)
expected dividend yield: between 3.9% and 5.5% (2007 – between 1.5% and 5.0%)
risk-free interest rate: 6.25% (2007 – 6.27%)
The expected price volatility is based on historic volatility (based on the remaining life of the options), adjusted for any expected
changes to future volatility due to publicly available information.
(b) Expenses arising from share-based payment transactions
Total expenses arising from share based payment transactions recognised during the period as part of employee benefi t
expense were as follows:
NOTE 38. EVENTS OCCURRING AFTER REPORTING DATE
(a) Dividend
The directors declared a 2.1 cent a share fully franked dividend on 27 August 2008 payable on 26 September 2008 with a record
date of 5 September 2008.
(b) Acquisition of Mitchell & Partners Western Australia Pty Ltd
Effective 1 July 2008 the Mitchell Communication Group Limited acquired from Workhouse Advertising Pty Ltd the remaining
49% of the issued capital in Mitchell & Partners Western Australia Pty Ltd, for the consideration of $6,174,000 in cash.
(c) Acquisition of Vivid Holdings Australia Pty Ltd
On 27 August 2008, with effect from 1 July 2008, the Mitchell Communication Group Limited acquired 100% of the issued capital
in Vivid Holdings Australia Pty Ltd (“Vivid Group”), a communications and technology services company which delivers innovation
in branding, digital media and application development, for consideration of $13,000,000 in cash. Further consideration is
payable on the achievement of certain profi t hurdles to FY’10.
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Mitchell Communication Group Limited
Directors’ declaration
In the directors’ opinion:
(a) the fi nancial statements and notes set out on pages 49 to 104 are in accordance with the Corporations Act 2001, including:
(i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting
requirements; and
(ii) giving a true and fair view of the company’s and Group’s fi nancial position as at 30 June 2008 and of their performance,
for the fi nancial year ended on that date; and
(b) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and
payable, and
The directors have been given the declarations by the chief executive offi cer and chief fi nancial offi cer required by section 295A
of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the directors.
Harold C Mitchell AO
Executive Chairman
Melbourne
30 September 2008
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PricewaterhouseCoopersABN 52 780 433 757
Freshwater Place2 Southbank BoulevardSOUTHBANK VIC 3006GPO Box 1331LMELBOURNE VIC 3001DX 77Telephone 61 3 8603 1000Facsimile 61 3 8603 1999
Independent auditor’s report to the members ofMitchell Communication Group Limited
Report on the financial report
We have audited the accompanying financial report of Mitchell Communication Group Limited (the company), whichcomprises the balance sheet as at 30 June 2008, and the income statement, statement of changes in equity andcash flow statement for the year ended on that date, a summary of significant accounting policies, other explanatorynotes and the directors’ declaration for both Mitchell Communication Group Limited and the MitchellCommunication Group (the consolidated entity). The consolidated entity comprises the company and the entities itcontrolled 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 inaccordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and theCorporations Act 2001. This responsibility includes establishing and maintaining internal controls relevant to thepreparation and fair presentation of the financial report that is free from material misstatement, whether due to fraudor error; selecting and applying appropriate accounting policies; and making accounting estimates that arereasonable in the circumstances. In Note 1, the directors also state, in accordance with Accounting StandardAASB 101 Presentation of Financial Statements, that compliance with the Australian equivalents to InternationalFinancial 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 inaccordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevantethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurancewhether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in thefinancial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risksof 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 reportin order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressingan opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriatenessof accounting policies used and the reasonableness of accounting estimates made by the directors, as well asevaluating the overall presentation of the financial report.
Our procedures include reading the other information in the Annual Report to determine whether it contains anymaterial inconsistencies with the financial report.
For further explanation of an audit, visit our website http://www.pwc.com/au/financialstatementaudit.
Our audit did not involve an analysis of the prudence of business decisions made by directors or management.
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Independent auditor’s report to the members ofMitchell Communication Group Limited (continued)
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our auditopinions.
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 Mitchell Communication Group Limited is in accordance with the Corporations Act2001, including:
(i) giving a true and fair view of the company’s and consolidated entity’s financial position as at 30June 2008 and of their performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian AccountingInterpretations) and the Corporations Regulations 2001; and
(b) the consolidated financial statements and parent entity financial statements and notes also comply withInternational Financial Reporting Standards as disclosed in Note 1.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 31 to 41 of the directors’ report for the year ended 30June 2008. The directors of the company are responsible for the preparation and presentation of the RemunerationReport in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinionon the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
Auditor’s opinion
In our opinion, the Remuneration Report of Mitchell Communication Group Limited for the year ended 30 June2008, complies with section 300A of the Corporations Act 2001.
PricewaterhouseCoopers
John Yeoman MelbournePartner 30 September 2008
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Shareholder information
The shareholder information set out below was applicable as at 31 August 2008
A. Distribution of equity securities
Analysis of numbers of equity security holders by size of holding:
There were 725 holders of less than a marketable parcel of ordinary shares.
B. Equity security holders
Twenty largest quoted equity security holders
The names of the twenty largest holders of quoted equity securities are listed below:
Unquoted equity securities
The names of the twenty largest holders of quoted equity securities are listed below:
*Number of unissued ordinary shares under the options. John Murray benefi cially holds 300,000 of these securities, or 39.88%
C. Substantial holders
Substantial holders of ordinary shares in the company are set out below:
D. Voting rights
The voting rights attaching to each class of equity securities are set out below:
(a) Ordinary shares
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share
shall have one vote.
(b) Options
No voting rights.
Number
held
Percentage
Harold Mitchell 52,357,101 18.18
Tora Bran Nominees Pty Ltd 31,573,133 10.97
Number
on issue
Number
of holders
Options issued under the emitch Limited Employee Option Plan to take up ordinary shares 752,301 * 12
Ordinary shares
Name
Number held
Percentage of
issued shares
%
Harold Mitchell 52,357,101 18.18
Tora Bran Nominees Pty Ltd 31,573,133 10.97
HSBC Custody Nominees (Australia) Pty Ltd 14,059,153 4.88
Stuart Mitchell 12,858,797 4.46
Amanda Mitchell 12,858,796 4.46
National Nominees Pty Ltd 10,661,546 3.70
J P Morgan Nominees Australia Limited 9,303,681 3.23
Citicorp Nominees Pty Ltd 9,180,294 3.19
I7 Pty Ltd 8,442,508 2.93
Cogent Nominees Pty Ltd 6,687,214 2.32
J.T. Campbell & Co Equity P/L 6,215,432 2.16
M F Custodians Ltd 5,963,025 2.07
Beverly Mitchell 5,619,797 1.95
Amcil Ltd 3,250,276 1.13
Invia Custodian Pty Ltd 3,017,239 1.05
John, Meghann and Ian Stewart 2,801,599 0.97
Harold Mitchell Foundation Limited 2,000,000 0.69
AMP Life Ltd 1,822,065 0.63
ANZ Nominees Limited 1,725,776 0.60
UBS Wealth Management Australia Nominees Pty Ltd 1,550,078 0.54
Total 201,947,510 70.11
Ordinary shares
Shares Options
1 – 1,000 848 -
1,001 – 5,000 1,490 -
5,001 – 10,000 837 -
10,001 – 100,000 1,385 11
100,001 – And over 155 1
Total 4,715 12
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Mitchell Communication Group Limited
Company particulars
Directors
Harold C Mitchell AO
Chairman
Garry A Hounsell
Deputy Chairman
Robert J Stewart
Stephen A Cameron
Rodney J Lamplugh
Stuart J Mitchell
Peter G Nankervis
Naseema Sparks
Secretaries
Andrew J Seaburgh
Dion G Cust
Principal registered offi ce in Australia
105 York Street
South Melbourne Victoria 3205
Ph: 03 9690 5544
Country of incorporation
Australia
Share registry
Computershare Investor Services Pty Ltd
452 Johnson Street
Abbotsford Victoria 3067
Ph: 1300 85 05 05
Auditor
PricewaterhouseCoopers
Freshwater Place
2 Southbank Boulevard
Melbourne Victoria 3006
Solicitors
Mallesons Stephen Jacques
500 Bourke Street
Melbourne Victoria 3000
Bankers
Australia and New Zealand Banking Group Limited
287 Collins Street
Melbourne Victoria 3000
Stock exchange listings
Shares are listed on the Australian Stock Exchange and
trade under the code MCU.
Website Address
www.mitchells.com.au
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MEDIA PLANNING AND BUYING (OFFLINE AND ONLINE)
SEARCH ENGINE MARKETING
PR AND BRAND EXPERIENCE
DIGITAL CREATIVE AND TECHNOLOGY
VIDEO PRODUCTION
SPORTS GROUND MEDIA
CORPORATE SOCIAL RESPONSIBILITY
RESEARCH AND ANALYTICS
SYDNEY MELBOURNE BRISBANE CANBERRA GOLD COAST PERTH AUCKLAND
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