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Australian Stock Exchange Company Announcements Platform 21 October 2011

UXC Limited ABN 65 067 682 928

MARKET ANNOUNCEMENT
Annual Report to Shareholders UXC Limited hereby releases the published version of the Annual Report to Shareholders, as despatched to shareholders today.

For more information please contact: Mr Cris Nicolli Managing Director UXC Limited (613) 9224 5777 Mr Mark Hubbard Finance Director / Company Secretary UXC Limited (613) 9224 5757 Toll free shareholder information line: 1800 092 092 www.uxc.com.au

ABOUT UXC LIMITED UXC Limited is an ASX listed Australian business solutions company, and one of the largest

Australian owned ICT consultancy firms. UXC services medium to large entities in the private and public sectors across Australia and New Zealand.
UXC provides ICT Solutions in Consulting, Business Applications and Infrastructure that support our customers to design, implement & enhance, and operate & manage their ICT requirements. UXC strives to be the leading Australasian IT Services and Solutions Company, delivering value, innovation and responsive business outcomes with excellent people.

INSPIRE CREATE DELIVER

REVILED ETAERC ERIPSNI


UXC Limited
ABN 65 067 682 928

Annual Report 2011

UXC A top three provider of choice for Business and ICT Solutions

Rank

Name

Market share

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

IBM UXC* Accenture KPMG International Ernst & Young CSC Deloitte PricewaterhouseCoopers SMS Management & Technology* Oakton* Salmat Dimension Data Hewlett-Packard Mincom SAP

9.1% 7.0% 5.9% 5.2% 4.4% 4.4% 4.1% 4.0% 3.0% 2.6% 2.2% 1.3% 1.3% 1.2% 1.1%

* Australian owned Source: Gartner IT Services Asia/Pacific Market Share, consulting services, May 2011

Highlights

u ignificant progress on the execution of the new strategic direction, S including completion of the divestment of the Field Solutions Group on 8 September 2011 u Special Distribution of 2 cents per share by way of a return of capital, subject to shareholder approval u Revenue from Continuing Operations (IT businesses only) up 11% to $522 million, a record result u Underlying EBITDA from Continuing Operations (IT businesses only) up 7% to $33 million (before $1.1 million in reorganisation and restructure costs, $1.6 million in disposal costs, and $0.8 million in non-IT losses) u Net Debt down 35% to $25.5 million u Loss from Discontinued Operations up 6% to $24.7 million, reflecting closure costs of terminated operations and preparation for the sale of divested businesses within the Field Solutions Group u Significant new contract wins of some $150 million have been secured since the start of the new financial year

Contents

Highlights ............................................................................................................................ 1 Our Vision............................................................................................................................ 3 Letter from the Chairman..................................................................................................... 4 Managing Directors Review ................................................................................................ 5 Review of Operations and Activities ..................................................................................... 9 Board of Directors ............................................................................................................. 12 Directors Report ............................................................................................................... 13 Auditors Independence Declaration .................................................................................. 31 Corporate Governance Statement ..................................................................................... 32 Financial Statements ......................................................................................................... 38 Notes to the Financial Statements ..................................................................................... 43 Directors Declaration ........................................................................................................ 80 Independent Auditors Report ............................................................................................ 81 ASX Additional Information ................................................................................................ 82

2 UXC Limited 2011 Annual Report

Our VisiOn
To be the leading Australasian IT Services and Solutions Company, delivering value, innovation and responsive business outcomes with excellent people.

Our FOcus
Providing ICT solutions in Consulting, Business Applications and Infrastructure that support our customers to design, implement & enhance, and operate & manage their ICT requirements.

Letter from the Chairman

Melbourne, Victoria 22 September 2011

I am very pleased that this year we are able to provide you with a positive view of the Company as we report on our progress towards the fulfilment of our plan.
4 UXC Limited 2011 Annual Report

Dear Fellow Shareholders, I am very pleased that this year we are able to provide you with a positive view of the Company as we report on our progress towards the fulfilment of our plan. In February of this year we announced plans to decouple the UXC Field Solutions Group (FSG) from the Companys core IT business, through demerger or divestment. We have now achieved this as we have completed an agreement for the sale of FSG, attracting a sales price that meets our expectations, allowing us to exit our remaining field services businesses in a single transaction. This enables us to go forward as a pure IT Services Company. This is an important milestone in the evolution of our organisation and the achievement of our strategies, and I believe it lays a strong foundation for us to return to growth and shareholder wealth creation. In recognition of this milestone, your directors propose to make a special distribution of 2 cents per share by way of a capital return, subject to shareholder approval. Further details of the distribution will be available with the Notice of Annual General Meeting. This distribution will be a return of capital as it will be payable from the proceeds of sale of the Field Solutions Group subject to its completion, and as such it is not referable to UXCs reported earnings in the period. UXC expects to pay dividends from future earnings in line with underlying performance. Preparing for the exit of our Field Solutions Group, as well as other changes we have made to pursue other strategies, has resulted in the publication of a complex set of accounts that contain many valuation adjustments and other intricacies. These are explained further in the following pages. Whilst these matters can tend to be confusing, the important points to understand and keep in mind are that:

In closing, I would like to thank the Board, management and staff for the contribution they have all made towards UXCs progress during the year.

Geoff Lord Chairman

We have completed the sale of our Field Solutions Group subsequent to year end, which allows UXC to become a pure play IT company; The proceeds from sale will significantly strengthen our balance sheet and reduce debt; and The underlying EBITDA of $33 million from our IT operations, before costs associated with business transformation projects and the FSG divestment, represents a satisfactory improvement from the prior year and is our benchmark for expected further improvement in the future.

Managing Directors Review

Melbourne, Victoria 22 September 2011

UXC is now a pure play IT Company

Dear Fellow Shareholders,

Vision
In February 2011, when presenting my first financial report to shareholders as Managing Director of UXC, I outlined the new vision for UXC that I believed was essential for creating greater value and consistency for shareholders, customers and staff. The strategy was to reshape the UXC business to become a pure Information and Technology (IT) Company and in doing so strengthen the company. The major strategy components were to: 1. Decouple UXCs IT business from the Field Solutions Group (FSG); 2. Review and remediate business lines that were failing to deliver earnings to the Company; 3. Simplify and improve the go-to-market for the IT group; and 4. Increase transparency to the market, especially our investors. I am pleased to report that a number of these activities are now finalised, with others very well advanced. UXC is now a pure play IT Company with the FSG group being fully divested. We have attracted a

reasonable sales price, and the proceeds from sale will be used to strengthen our balance sheet through debt reduction; strengthen our earnings through selected acquisitions, and strengthen our shareholder returns through a proposed return of capital, subject to shareholder approval. The effort and resources required to remediate the poor performing FSG business and prepare for sale, and the divestment process itself, were more difficult than I originally anticipated. However, the imperative to execute with speed has been achieved. Additionally, significant transformation work was undertaken to simplify the IT group and to prepare the group for a new and more focused go-to-market in FY12. With the divestment of the discontinued businesses and the restructure of the IT group successfully completed, we now expect to realise the benefits of having done so. These include operating a simplified business model; streamlining internal operations including corporate; improving accessibility to capital markets; prioritising capital investment in the sectors offering the greatest return and opportunity; and positioning the business to be better able to compete in its respective market space.

It will also allow management to have one focus, aligned to the IT markets they serve. This in turn will drive improved operational performance, and innovation aligned to customer and market needs. In order to achieve the key goals for the company and to provide a clear path for the future, a number of difficult decisions have been taken in respect of divesting and or closing business lines. Our financial results for the 2011 fiscal year are impacted by non-recurring costs and charges that have been incurred in order to enable us to pursue our strategy. The results are reported in two components in accordance with the accounting standards, such that results from Continuing Operations are separately disclosed from those of Discontinued Operations. The results from Continuing Operations are for our IT activities only. This is the new UXC going forward. The results from Discontinued Operations include the operating results for all Field Solutions Group businesses that will be divested as part of the sale or closed, as well as closure costs, valuation adjustments and impairments for other relevant discontinued assets that were not in FSG.

Managing Directors Review

Continuing Operations UXC IT Activities


I am especially pleased that we have improved our IT revenue by 11% over last year to $522 million, as significant management time and effort was consumed from our IT businesses in the first half to participate in a strategic review that focused on the possible divestment of the IT group. Additionally, more than half the IT organisation was involved in the transformation and simplifications of operations in the second half of the year. It is a strong endorsement of the confidence of our customers and the capability, work ethic and focus of our staff that revenue has grown in light of such disruption. It should be noted that the revenue increase is purely from organic growth as UXC has not made any acquisitions for some time. Underlying EBITDA increased by 7% to $33 million, before the impact of the following three notable circumstances: 1. On 1 July 2011, both UXC Consulting and UXC Connect were launched, signifying the completion of the restructuring and simplification of our consulting businesses into UXC Consulting and our IT infrastructure businesses into UXC Connect. These transformations were undertaken with the rigour applied to a customer engagement, and involved the amalgamation of some 1,150 staff and multiple business systems and processes. Some $1.1 million of reorganisation and restructure costs were incurred in the period to achieve this. 2. Reported corporate costs have increased by 5% to $7.9 million, but when the $1.6 million of costs incurred on divestment during FY11 is considered, they have shrunk 16% to $6.3 million. These sales costs include legal, accounting, vendor due diligence, electronic data room and related items. 3. We have retained a consulting business that was previously part of the Field Solutions Group UXC Engineering Solutions. With a strong customer base in utilities, there is a business model and opportunity in this space that we wish to develop. Its operations are reported in the IT group for the first time, and it has incurred a loss of $0.8 million in the period. Steps are in progress to return the business to profitability.

Adjusting our reported EBITDA for the circumstances described above results in the following underlying EBITDA: $000s From Continuing Operations, as reported Restructure and reorganisation costs Divestment costs Reclassification of business Underlying EBITDA Growth from prior year $ $ $ $ $ EBITDA 29,469 1,100 1,600 800 32,969 7%

In addition to the above noted costs, UXC has been successful in bidding for and winning larger and larger contracts, such as Dulux and Work Safe / TAC, as well as some won but not yet contracted. Whilst we will always incur bid costs in advance of the associated revenue and earnings, this year, especially the second half, has been notable as the size of the contracts have grown substantially, and thus the effort to bid and win them becomes increasingly expensive. In excess of $1.3 million of bid costs for large contracts that have yet to make meaningful earnings contribution have been incurred in the period. Our balance sheet continues to strengthen, with net debt reducing by 35% to $25.5 million, and gross debt reducing by 31% to $52.6 million. The proceeds from the sale will allow further significant reductions of gross debt, though we intend to retain some leverage on our balance sheet. At completion of the sale, UXC is expected to be in a net cash position. Closing cash of $27.2 million and cash flow from operations of $26.5 million were both satisfactory, though down on the prior year. Cash flow from operations for the second half of FY11 was 10% up on the second half of the prior year. We continue to build on our efforts to have a cash culture within UXC.

6 UXC Limited 2011 Annual Report

Discontinued Operations Field Solutions Group And Other


Our Discontinued Operations reflect the results of decisions we have taken to achieve our immediate imperatives and key strategy. In July 2011 UXC entered into an agreement with investment and advisory firm Cashel House to acquire the remaining businesses comprising the Field Solutions Group. This includes all the business and or assets of Utility Asset Management, Skilltech Consulting Services, Infrastructure Constructions, UXC Metering and Fieldforce Services. The disposal comprises net assets of some $53 million for a sales price of $61 million, inclusive of $5 million of deferred consideration payable upon the attainment of certain future earnings targets. The transaction has now completed, and will be reflected in the results of the FY12 year. Of the loss in discontinued operations, $14.8 million was reported in the first half, and I have previously addressed the components of that result in some detail. In the second half, we incurred a further $9.8 million of loss and write downs. Of these, $7.7 million, or 78%, were non-cash impairments. These losses were greater than I had anticipated at the half year due to the impact of goodwill impairments that were required. Details of the second half loss are as follows:

In the prior year, we sold a business pursuant to an agreement that provided for additional consideration upon achieving certain earnings targets at the end of calendar years 2010 and 2011. The consideration was brought to account in recognition of the likely earnings outcomes in the calculation of gain on sale in accordance with the accounting standards. The target was not met in 2010, and there is a dispute with the purchaser as to the failure of their obligations in endeavouring to secure the earnings. We have also adopted a conservative position on this, and elected to raise a provision for the deferred consideration in respect of both the 2010 and 2011 earn-out periods. The write off was $4.8 million as reported in the first half, of which we have recovered $0.6 million in the second half, though this is not classified as part of discontinued operations. Additionally, we have re-valued the investment in our joint venture NCSS, which is equity accounted, with a view to exiting our stake. The returns are not sufficient to warrant our continued involvement and management commitment. The write off is $3.97 million, though again this is not classified as part of discontinued operations. Most of these are non-cash write-downs relating primarily to goodwill, capitalised development costs, inventories, investments and property, plant and equipment. The loss of our investment in these areas is regrettable, but we are determined to eliminate operational losses, focus management attention on the performing areas of our business, and invest our capital for a better return. These are not easy decisions to take but we are steadfast in our view that they are prerequisites for realising improved returns in the future for UXC and its shareholders.

We have exited difficult operational areas and non-performing businesses that were not able to be included in the sale to Cashel House. Goodwill impairments on these activities have been incurred to the value of $7.7 million. We have provided for surplus tenancies as we exit operations, thereby incurring some $0.9 million of charges to create the provisions. We earned $4.0 million after tax from the performing businesses in the Group. We incurred $5.2 million after tax on loss making operations and asset valuation adjustments from the remainder of the businesses.

Outlook
In February, I wrote to you saying that the quicker we can simplify the business and focus on core market segments, the faster we believe we can restore earnings growth to our business and value to our shareholders. I outlined our plan to:

We are now confident that these and any related FSG issues have been dealt with or provided for to ensure a clean start to FY12. I thank the core management of the Field Solutions Group who have worked hard both to manage the ongoing business and to facilitate the sale. They provided significant support in the divestment process while maintaining a strong focus on delivering their operational targets. Without their support, much of what has been achieved would not have been possible.

Focus on our core operations to maximise opportunity in a growing IT sector and take advantage of our unique position in the market; Complete the divestment / exit of non-core businesses; Decouple the IT business from the Field Solutions business via demerger or divestment, in a manner that best realises the value inherent in the good FSG businesses, and protects our clients; and Eliminate losses from non-performing business lines.
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Managing Directors Review

I am pleased to report that we have already substantially achieved each of these. We have set strong targets in terms of revenue and especially earnings growth for the next three years as part of our new strategic plan. Our focus on simplifying the IT organisation has progressed well as has our focus on increasing the size of the projects we are tendering for. The large investment in bid costs incurred especially in the second half will be well rewarded with imminent announcements we expect to make on our success in many of these client tenders. The size of these wins and the endorsement from customers firmly establishes UXC as a true alternative to the multi-national competitors, and leaves us well advanced in the fulfilment of our vision of being the number one Australasian IT organisation. At the close of the financial year, the value of our signed contracts to be delivered in the next 12 months was up 10% on the prior year, while the value of those contracts to be delivered over the life of the project was up by 22%, to $330 million. Since the close of the year, we have won commitments pending signature for an additional $150 million of spend over the multi-year project life. While not having made an acquisition since September 2009, we continue to look for strategic and synergistic organisations to increase the depth of our capability, geographic coverage and increased earnings. To this end we are well advanced on due diligence for a potential acquisition target, that will give us added depth in a core space. We are focused on delivering other aspects of our strategic intent, including margin improvement, continued operational simplification, major new contract wins, delivery improvement, growth and improved shareholder returns. The core and continuing businesses of UXC as currently organised are very well positioned for growth and earnings improvement. With a stronger focus on accountability for outcomes, improved governance and the simplification of the business model, I am confident that the team at UXC will deliver consistent improvement and return for stakeholders.

I want to highlight how important our staff and our clients have been in helping UXC continue to grow revenue during this difficult period. We have attracted a number of large new clients over the last year, and I am confident that more will follow, and I take this opportunity to thank them, and our existing loyal clients, for their confidence in UXC, and for enabling us to be Australias preferred alternative to many of the international competitors in the market. Our most important asset in this company is our staff. I would like to take the opportunity to thank them for their exceptional contribution to the business and for their outstanding service to our clients. I am confident that they, like me, look forward to the challenges and rewards of taking UXC forward to reach its potential.

Cris Nicolli Managing Director

8 UXC Limited 2011 Annual Report

Review of Operations and Activities

The Group EBITDA contribution by segment, and other detail, is as follows: 30 June 2011 Earnings $000 UXC IT ACTIVITIES Eliminations / Unallocated / Other Income Revenue from Continuing Operations Revenue from Discontinued Operations EBITDAC1 from Continuing Operations Corporate EBITDA Depreciation & Amortisation Net Borrowing Costs PBT Impairment of investment in associate Gain/(Loss) on disposal of business Income Tax Expense NPAT from Continuing Operations Net Profit / (Loss) from Discontinued Operations NPAT attributable to members
1 EBITDA plus Corporate

Continuing Operations UXC IT Activities


30 June 2010 Earnings $000 $38,279 Revenue $000 $470,059 $3,966 $474,025 $273,098 $747,123 $38,279 ($7,490) $30,789 ($5,141) ($7,038) $18,610 $4,758 ($3,028) $20,340 ($23,212) ($2,872) UXC provides market-leading Information, Communication and Technology (ICT) solutions and services to medium and large corporates and governments across Australia and New Zealand. The group goes to market focusing on key customer requirements and specialised capabilities such as management and IT consulting, technical services, software and systems integration, ERP and other core applications, infrastructure and support services. Simply, UXC provides ICT solutions in Consulting, Business Applications and Infrastructure that support our customers to design, implement & enhance, and operate & manage their ICT and business requirements. Revenue of $522 million for the year represents 11% growth over the prior year, a record result. EBITDA was flat, though was impacted by some $1.1 million of non-recurring restructuring costs as well as the re-classification of a loss making business from FSG. EBITDAC margin of 7.1% is 1% below the prior year, though is normalised at 7.5% based on underlying EBITDA as per the Managing Directors Review. The consolidation of our consulting practices and infrastructure practices has been completed. This simplifies the business by folding multiple business units into just two, and involved new go-to-market models and solutions, affected some 1,150 people, eliminated duplicate back offices, and created two UXC brands to replace the multitude of brands previously existing. UXC has grown over the past six years from a niche IT business with narrow capabilities to now being recognised as the largest of the locally owned IT services businesses in Australia and New Zealand, and one of the top three IT consulting based organisations in Australia. This has been achieved by a focus on and development of our key differentiators. We are:

Revenue $000 $522,421 ($4,873) $517,548 $213,545 $731,093

$37,334

$37,334 ($7,865) $29,469 ($5,800) ($6,382) $17,287 ($3,970) ($4,230) ($4,557) $4,530 ($24,707) ($20,177)

Unique in our scale through depth and breadth of capability coupled with local management; Unrelenting in creating a reputation and reality that is customer centric and value adding, through the quality of our service and the character of our staff; The number one alternative to multinationals in our market space; A safe, pragmatic, go to organisation; Agile and easy to do business with;

Review of Operations and Activities

Focussed on attracting and retaining the best and most talented people in the industry; Inspired to create and deliver sustained stakeholder value.

Corporate
The Companys track record in its operating performance, financial strength and returns to shareholders is summarised in the following table: Financial Year Ending 30 June Revenue ($000) Normalized NPAT ($000)* Reported NPAT ($000) Operating Cash Flow ($000) Closing Cash ($000) Total Assets ($000) Shareholders Equity ($000) Available Franking Credits ($000) Basic EPS (Cents per share)* Dividend/Distribution (Cents per share) Dividend Payout Ratio (%)* Return on Assets (%)* Return on Equity (%)* Gearing Ratio (%)
* #
#

This in turn has enabled the achievement of market leading positions in such offerings as Microsoft Business Solutions, Oracle, SAP, and CPM. Coupled with a flexible, customer-centric approach, UXC has now built a formidable revenue stream and an outstanding customer base. UXC has improved its attractiveness as a service supplier to medium to large corporate and government organisations in Australia and New Zealand, which is being recognised through the increasing number and size of customer engagements. In particular the momentum we have gained through the strong performances of our ERP focused businesses has enable UXC to bid for larger opportunities and will see an increase in the longer term, larger scale contracts. This coupled with our increasing win rate and capability in managed infrastructure services provides clients with a unified solution to plan, design, implement and manage their mission critical applications. The manner in which all businesses have grown in capability and in relevance to customers and the market is an endorsement of the quality and hard work of the executive team and our support staff.

2011 $522,421 $12,730 ($20,177) $26,483 $27,163 $417,440 $172,443 $7,900 4.16 2.00 n/a 3.0% 7.4% 14.7%

2010 $470,059 $15,582 ($2,872) $27,956 $37,758 $447,351 $193,275 $8,600 7.00 4.7% 10.8% 20.2%

2009 $715,087 $18,850 $13,877 $15,712 $29,511 $453,238 $191,268 $14,900 8.88 7.65 86% 4.2% 9.9% 30.2%

2008 $611,571 $26,481 $24,650 $32,644 $48,219 $430,089 $161,170 $16,700 13.84 9.75 70% 6.2% 16.4% 35.3%

2007 $456,943 $24,524 $24,524 $22,696 $29,598 $343,403 $148,795 $17,900 13.73 9.00 66% 7.1% 16.5% 27.4%

Discontinued Operations Field Solutions Group and Other


The vast majority of discontinued operations are the Field Solutions Group (FSG), which is an asset partner to water, gas and electricity utilities, providing a broad range of services in asset and data management, capital works and maintenance. This group has been sold to Utility Services Group Holdings Limited subsequent to the end of the financial year. FSG reported a loss from discontinued operations of $24.7 million as discussed in the Managing Directors Review.

FY08 & FY09: before impairment of investments, redundancy, restructuring costs and other non-recurring costs; FY10 & FY11: from Continuing Operations, before impairments and disposals of business Includes conditional proposed return of capital in FY11 and the notional value of Bonus Options interim distribution in FY09

UXCs net debt stands at $25.5 million at 30 June 2011, a reduction of 35% from the prior year. Interest cover from Continuing Operations remains strong at over four times, and the gearing ratio (measured as net debt divided by equity) has reduced to 14.7%. Gross debt reduced by $29.9 million since December 2010. The proceeds from sale of FSG will enable further substantial debt reductions, though the intent is to retain some leverage.

10 UXC Limited 2011 Annual Report

Cash flow was strong despite the substantial loss from discontinued operations, with second half cash flow of $39.7 million again much stronger than the first half, as well as the previous corresponding period. UXC operated within its banking covenants for the year. Corporate costs, after consideration of some $1.6 million in sales transaction costs, reduced by 16%. Dividend policy will be to pay fully franked dividends in line with performance, without committing to a target dividend payout ratio. No dividend has been declared for the year ending 30 June 2011, however the Board proposes to make a return of capital of 2 cents per share, subject to completion of the divestment of FSG and shareholder approval (which will be sought at the Annual General Meeting in November).

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Board of Directors

Cris Nicolli
Managing Director
Aged 57 Appointed Managing Director of UXC Limited 28 October 2010. Over 25 years of management experience in the Information Technology and Communications Industry. Executive roles in sales management, channel management and services at Digital Equipment Corporation (now part of Hewlett Packard). Director of Compaq Asia Pacific Professional Services. Vice President of Nortel Networks Asia Pacific Global Professional Services. Special Responsibilities Managing Director

Geoffrey Lord
Chairman
Aged 66 B. Eco (Hons), MBA (Distinction), ASSA FAICD Appointed Director and Chairman on 13 September 2002. Over 38 years experience in business management. Chairman and Chief Executive Officer of Belgravia Group. Chairman of LCM Litigation Fund (formerly Australian Litigation Fund), Terrain Capital Limited and Melbourne Victory Limited. Deputy Chairman of Institute of Drug Technology Limited. Director of Ausmelt Limited, KLM Group, MaxiTrans Industries Limited and Northern Energy Corporation Limited. Special Responsibilities Chairman Directorships of other Listed Companies Ausmelt Ltd [Since 2001], Institute of Drug Technology Ltd [Since 1998], KLM Group [20062009], MaxiTrans Industries Ltd [Since 2000], Northern Energy Corporation Ltd [Since 2007]

Geoffrey Cosgriff
Non-Executive Director
Aged 58 BAppSc (Elec), CP Eng, FAICD, FIE Australia Appointed Director on 13 September 2002. Managing Director of MITS Ltd from 1990 to 2000. Non-Executive Director of Transurban Group since 2000. Executive Director of Logica Australia Pty Ltd from 2000 until 30 June 2008. Council Member of Leadership Victoria. Director of Infocos Pty Ltd since 1990. Special Responsibilities Chairman of Nominations & Remuneration Committee; Member of Audit Committee Directorships of other Listed Companies Transurban Group [Since 2000]

Kingsley Culley OAM


Non-Executive Director
Aged 69 MBA, BEng (Hons), Dip Mech Eng, FIE Australia, FAICD Appointed Director on 13 September 2002. Engineer with over 20 years experience in senior management. Former Chairman of Port of Melbourne Authority, Former Chairman of Pacific Hydro Ltd. Former Director of Docklands Authority, former Director of South East Water Ltd. Former CEO of Melbourne and Metropolitan Board of Works (MMBW). Special Responsibilities Chairman of Risk Management Committee; Member of Nominations & Remuneration and Audit Committees

Jean-Marie Simart
Non-Executive Director
Aged 65 Appointed Director on 10 August 2001. Former Senior Country Officer with Bank Indosuez in Saudi Arabia, South Korea, Japan and Australia (1980-1996). Former Chairman of the French Advisors Association to the French Government in South Korea, Japan and Australia. Special Responsibilities Chairman of Audit Committee; Member of Nomination & Remuneration Committee and Risk Management Committees

Ron Zammit
Non-Executive Director
Aged 59 DIP ELEC/COMS ENG, MACS, FAICD Appointed Director on 13 September 2002. Over 30 years experience in management. Former Chief Operating Officer of Logica Australia Pty Ltd. Special Responsibilities Member of Risk Management Committee

12 UXC Limited 2011 Annual Report

Directors Report

The Directors present their report together with the financial statements of UXC Limited (the Company) and the consolidated financial statements of the consolidated entity (UXC), being the Company and its subsidiaries, for the year ended 30 June 2011 and the auditors report thereon.

Company Secretary
Mark Hubbard
Chartered Accountant, aged 52, joined UXC Limited in September 2002 and is also Finance Director. Was previously Executive Director/Company Secretary of DVT Holdings Limited from August 2001. A Chartered Accountant with Deloitte in Denver and Sydney, has also served as CFO/Company Secretary with Mase Westpac Australia Limited, Spectrum Network Systems (now PowerTel), and AIDC Metals Limited. Mr Hubbard holds a degree of Bachelor of Science Business (Accounting) Cum Laude from the University of Colorado School of Business and Administration, and holds a Certified Public Accountant qualification from the USA. He is also a member of the Australian Institute of Company Directors.

Directors
The Directors of the Company in office during the financial year and up to the date of this report are:

Cris Nicolli (Managing Director) Appointed 28 October 2010 Geoffrey Lord (Chairman) Geoffrey Cosgriff Kingsley Culley Jean-Marie Simart Ron Zammit

Directors Meetings
The following table sets out the number of Directors meetings (including meetings of committees of Directors) held during the financial year and the number of meetings attended by each Director (while they were a Director or committee member). During the financial year, 15 Board meetings, 10 Audit Committee meetings, seven Nomination and Remuneration Committee meetings and two Risk Management Committee meetings were held. Audit Committee Meetings 10 10 10 10 Nomination and Remuneration Committee Meetings 7 7 7 7 Risk Management Committee Meetings 2 2 2 2

Principal Activities
During the year the principal activity of the consolidated entity was the provision of business solutions in information, communication and technology and field services in the areas of asset management and environmental services in the utilities sector.

Review of Operations and Activities


Refer to page 9.

Directors Meetings Meetings held Director Cris Nicolli Geoffrey Lord Geoffrey Cosgriff Kingsley Culley Jean-Marie Simart Ron Zammit 11 15 15 15 15 15 15

All Directors were eligible to attend all meetings held, other than the Managing Director who was eligible to attend 11 meetings.
13

Directors Report

Dividends
A dividend has not been declared for the year ended 30 June 2011 (2010: nil). The Directors propose to make a special distribution of 2 cents per share by way of a capital return, subject to shareholder approval, which will be sought at the Annual General Meeting on 24 November 2011. The distribution has not been provided for in this financial report.

Shares Under Option


Un-issued ordinary shares of UXC Limited under option pursuant to the terms of the UXC Incentive Plan at the date of this report are 6,954,460 with exercise prices ranging from nil to $1.16 and a weighted average of $0.58 and with expiry dates from 29 September 2011 to 1 July 2013. A total of 1,933,311 options and performance rights lapsed during the year with exercise prices ranging from $nil to $2.88. No amounts are unpaid on any shares.

Share Capital
During the financial year 10,189,199 UXC Ingena Performance shares (UXC IPS) with a value of $5,513,000 were reclassified into UXC ORD. Details of issues in share capital are as follows: UXC Opening balance Shares issued during the year UXC IPS shares reclassified to UXC Net movement Less transaction costs Closing balance UXC UXC IPS (note 1) Opening balance Shares issued during the year UXC IPS shares reclassified to UXC Closing balance UXC IPS Total Share Capital
Note 1

Directors Share and Option Holdings


The following table discloses options over un-issued ordinary shares of the Company granted during or subsequent to the end of the financial year to Directors, ordinary shares held by Directors at the date of this report, and options held by Directors at the date of this report. Issuing Entity Directors 2011 Cris Nicolli Geoffrey Lord Geoffrey Cosgriff Kingsley Culley Jean-Marie Simart Ron Zammit Directors 2010 Geoffrey Lord Geoffrey Cosgriff Kingsley Culley Jean-Marie Simart Ron Zammit UXC Limited UXC Limited UXC Limited UXC Limited UXC Limited UXC Limited UXC Limited UXC Limited UXC Limited UXC Limited UXC Limited Options Granted 1,529,506 Total Options Held 136,546 Total Ordinary Shares Held 3,186,648 18,400,110 4,531,704 1,771,108 597,443 3,501,416 18,400,110 4,531,704 1,771,108 497,443 3,501,416

Shares 000 295,600 10,189 305,789 305,789 10,189 (10,189) 305,789

$000 164,015 5,513 169,528 (31) 169,497 5,513 (5,513) 169,497

UXC IPS shares are unquoted shares in UXC ranking equally in all respects with ordinary UXC shares, except that UXC IPS shares may be entitled to additional UXC shares if Ingena achieved certain profit targets at June 2009 and June 2010 as set out in UXCs Bidders Statement for the acquisition of Ingena Group Limited dated 12 November 2008. All remaining UXC IPS were reclassified to UXC shares on 30 September 2010.

14 UXC Limited 2011 Annual Report

Subsequent Events
UXC completed the sale of the UXC Field Solutions Group to Utility Services Group Limited (USG) on 8 September 2011. The sale includes all the business and or assets of Utility Asset Management, Skilltech Consulting Services, Infrastructure Constructions, UXC Metering and Fieldforce Services. The disposal comprises net assets of approximately $53 million for a consideration price of $56 million plus $5 million of deferred consideration payable upon the attainment of certain future earnings targets. Disposal costs are expected to total circa $1.3 million. A profit on sale between $2 million to $7 million, before disposal costs and other adjustments, and depending on assessment of deferred consideration, is expected and will be reflected in the results of the FY12 year.

Insurance of Officers and Auditors


During the financial year the Company paid insurance premiums in respect of Directors and officers liability insurance. The liabilities insured are costs and expenses that may be incurred in defending civil or criminal proceedings that may be brought against the officers in their capacity as officers of entities in the consolidated entity. In accordance with section 300(9) of the Corporations Act 2001, further details have not been disclosed due to the confidentiality provisions of the insurance agreement. The Company has not otherwise, during or since the financial year, indemnified or agreed to indemnify an officer or auditor of the Company or of any related body corporate against a liability incurred as such an officer or auditor.

Likely Developments
Disclosure of information regarding likely developments in the operations of the consolidated entity in future financial years and the expected results of those operations is likely to result in unreasonable prejudice to the consolidated entity. Accordingly, this information has not been disclosed in this report, other than in relation to the ongoing strategic review of the Company being conducted by the Board. This is discussed in the Managing Directors Review accompanying this report.

Non-Audit Services
The directors are satisfied that the provision of non-audit services, during the year, by the auditor is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. Details of amounts paid or payable to the auditor for non-audit services provided during the year by the auditor are outlined in Note 30 to the full financial statements.

Environmental Regulations
The consolidated entity is not subject to any particular or significant environmental regulations in respect of its operations. The consolidated entity has assessed its relevant greenhouse gas emissions and energy consumption as being below the 2011 reporting thresholds under the National Greenhouse and Energy Reporting Act 2007.

Auditors Independence Declaration


The auditors independence declaration is included on page 31.

State of Affairs
The Directors are not aware of any significant change in the state of affairs of the consolidated entity that occurred during the financial year other than as reported in this annual report.

Rounding of Amounts to Nearest Thousand Dollars


The Company is of a kind referred to in Class Order 98/0100 issued by the Australian Securities & Investments Commission, relating to the rounding off of amounts in the Directors report and financial report. Amounts in the Directors report and financial report have been rounded off in accordance with that Class Order to the nearest thousand dollars, or in certain cases, to the nearest dollar.

Remuneration Report
Information about the remuneration of directors and senior executives is set out in the remuneration report on pages 16 to 30 of this Directors Report.

15

Directors Report

Remuneration Report (audited)


This report outlines the policies of the Board of Directors of UXC Limited in relation to the remuneration of the Companys directors and senior executives. It enables investors to understand:

There are five categories under which employee benefits and share benefits are paid and these are reflected in the remuneration tables which follow.

Company Performance
The table set out below shows the consolidated entitys performance over the last five financial years, in terms of key performance indicators. Financial Year Ending 30 June Revenue ($000*) NPAT ($000)* Share price at start of year Share price at end of year Interim dividend (cents per share)2 Final dividend/ Distribution (cents per share)2,3 Total dividend/Distribution (cents per share) Basic EPS (cents per share):

The costs and benefits associated with UXCs remuneration policies. The link between remuneration paid to Directors and executives and the Companys performance. Further information associated with the named company executives receiving the highest remuneration this financial year and key management personnel who have the greatest authority and responsibility for planning, directing and controlling the activities of UXC Limited.

2011 $522,421 $4,530 $0.45 $0.57 0.00 2.00 2.00 1.48 (6.60)

2010 $470,059 $20,340 $0.465 $0.45 0.004 0.00 0.00 7.13 (1.01)

2009 $715,087 $13,877 $0.975 $0.465 4.151 3.50 7.65 3.07 5.79

2008 $611,571 $24,650 $2.50 $0.975 4.25 5.50 9.75 12.88 12.88

2007 $456,943 $24,524 $1.00 $2.50 3.50 5.50 9.00 13.73 13.73

The disclosures in this report have been prepared in compliance with section 300A of the Corporations Act 2001 (Cth). Where applicable, employee benefits and share-based payments have been calculated in accordance with AASB 119: Employee Benefits and AASB 2: Share-based Payments. The Directors of UXC Limited during the year were: Chairman Geoffrey Lord (formerly Executive Chairman until 28 October 2010) Kingsley Culley Jean-Marie Simart Ron Zammit The five highest remunerated Key Management Personnel of UXC Limited (company and consolidated entity) during the year were: Executive Management Cris Nicolli Managing Director (appointed 28 October 2010, formerly CEO Business Solutions Group) Ralph Pickering Director, Divestments & Acquisitions Mark Hubbard Finance Director/Company Secretary Paul Fielding CEO Professional Solutions Group (resigned 28 July 2010) Glenn Fielding CEO Professional Solutions Group (appointed 1 July 2010) Michael Waymark CEO Field Solutions Group (resigned 24 December 2010)
16 UXC Limited 2011 Annual Report * 1 2 3 4

Non-Executive Directors Geoffrey Cosgriff

from continuing operations from continuing and discontinued operations


From Continuing Operations FY10 and FY11

FY 2009 notional value of the pro-rata 1 for 10 Bonus Options issue at $0.45, based on the closing UXC share price at 26 August 2009 of $0.865. FY07, FY08, FY09 dividends franked to 100% at 30% corporate income tax rate. FY11 proposed return of capital. Final dividends declared after the financial year end and not reflected in the financial statements. 1 for 10 bonus issue of shares declared in lieu of cash dividend.

Nomination and Remuneration Committee


The current members of the Nomination and Remuneration Committee are Mr Geoffrey Cosgriff (Chairman), Mr Kingsley Culley, and Mr Jean-Marie Simart. The Chairperson of the Committee is appointed by the Board at the beginning of each financial year and may not be the Chairperson of the Board. The Committee met seven times during the 2011 financial year. UXC Limiteds Nomination and Remuneration Committee advises the Board on remuneration practices and policies which are fair and responsible, by recognising the correlation between executive performance targets and reward, to provide the best value to shareholders. In doing so, the Committee reviews and makes recommendations to the Board regarding the remuneration of the Directors, the Chief Executive Officer, and the direct reports of the Chief Executive Officer. The Nomination and Remuneration Committee periodically engages independent, external consultants to independently advise and assess the remuneration of the Chairman, executive management and non-executive Directors. To this extent, performance incentives are available to all executives in various forms, including cash or equity entitlements. The Nomination and Remuneration Committee has a Charter which outlines the terms of reference under which the Committee operates. It is available online at www.uxc.com.au.

Remuneration of Non-Executive Directors


Remuneration Components
Non-executive Directors fees are reviewed periodically and determined by the Nomination and Remuneration Committee and the Board based on advice from external advisors and with reference to fees paid to other non-executive Directors of similar companies. Non-executive Directors fees are within the maximum aggregate limit agreed to by shareholders at a General Meeting, and are commensurate with the amount of time which non-executive Directors spend on UXC matters. Non-executive Directors receive an annual fee of $60,000 plus superannuation for being a director of the Company. Additionally, an annual fee of $12,500 is paid for being appointed as Chairman of a Board Sub-committee and $7,500 is paid for being a member of a Board Sub-committee, in recognition of the further responsibilities and work load involved.

Equity
In the current financial year, no equity entitlements have been made to any Non-executive Director. There is currently no plan available for the Non-executive Directors to receive remuneration in equity.

Remuneration Policy
The overarching tenets of the UXC Remuneration Policy are to meet the following objectives:

Retirement Benefits
Consistent with Australian Securities Exchange (ASX) Corporate Governance Rules which state that Non-executive Directors should not be provided with retirement benefits other than statutory superannuation, UXC does not provide retirement benefits to its Directors.

Ensure the Company can attract and retain high calibre executives who will create value for shareholders and who will support the Board Charter; Fairly and responsibly reward executives having regard to: the performance of the Company, the performance of the executive, and the general pay environment; Ensure a correlation between executive rewards and shareholder value; Differentiate individual rewards commensurate with contribution to overall results and according to responsibility, performance and potential; and Provide incentive to executives to meet challenging performance targets.

Remuneration of the Chief Executive Officer/Managing Director


Remuneration Components
UXC Limiteds Nomination and Remuneration Committee advises the Board on remuneration practices and policies which are fair and responsible and recognise the correlation between executive performance targets and reward, to provide the best value to shareholders. An independent consultant was engaged from time to time to assist the Committee in relation to developing its recommendations to the Board regarding the remuneration components available to Mr Geoffrey Lord, in his role as Executive Chairman until 28 October 2010 and Mr Cris Nicolli in his role as Managing Director from 28 October 2010.
17

Directors Report

For the period as Executive Chairman, Mr Lord received remuneration comprising cash and benefits in recognition of his significant role and responsibilities as the Companys Chairman, and received remuneration comprising cash, equity entitlements and benefits in recognition of his significant role and responsibilities as the Chief Executive Officer. The Nomination and Remuneration Committee and the Board are satisfied that Mr Lords remuneration was an appropriate reward in relation to the marketplace and his ongoing contribution to the Companys development and performance. The Board is also satisfied the remuneration was reasonable for the purposes of section 211(1)(b) of the Corporations Act 2001 (Cth). Mr Lord received total remuneration of $536,667 for the current financial year, comprising cash and benefits on a total employment cost to the Company basis. Of this amount, $135,000 is payable as Directors fees in recognition of his role and responsibilities as Chairman of UXC Limited. Mr Lord served the Company as its Chief Executive Officer until 28 October 2010, and remuneration of $110,000 was paid for these duties. Mr Lord received a fee for transitional support services of $125,000 and $166,667 long term incentive (LTI) earned in the prior financial year for the implementation of a succession plan for Field Solutions Group. Mr Cris Nicolli was appointed Managing Director on 28 October 2010. Mr Nicolli received total remuneration of $819,518 for the current financial year, comprising cash and benefits on a total employment cost to the Company basis. Of this amount, $381,586 was received in relation to his role as CEO Business Solutions Group and includes $214,469 performance incentive earned in FY10 and paid in the current financial year. In his role as Managing Director, Mr Nicolli received $437,932. A further amount of up to $380,500 of short and medium term performance incentive was available to Mr Nicolli for the current financial year in his role as Managing Director, as detailed below, all of which is indicated to have been earned. Mr Nicolli has elected to convert $300,000 of the STI and medium term incentive (MTI) to performance rights. Mr Nicolli is entitled to $660,000 salary for the FY12 financial year and has $450,000 STI/MTI available to be earned subject to the achievement of key performance indicators.

Performance Incentives
The performance incentive component of Mr Nicollis remuneration is subject to the achievement of key performance indicators. The KPIs for the STI and MTI are as follows: STI/MTI - KPI Targeted 2nd half PBT Targeted Cash position Divestment or demerger of UXC Field Solutions Group Development of UXC Strategic Plan Targeted Total Shareholder Return TOTAL The STI/MTI earned is payable subsequent to 30 June 2011. Composition 30% 20% 30% 10% 10% 100%

Equity
Upon achievement of the key performance indicators, Mr Nicolli is entitled to receive either cash or equity compensation. For his fiscal year 2011 STI and MTI entitlements Mr Nicolli has elected to receive equity based compensation in the form of performance rights. In addition to this equity component, Mr Nicolli has earned an over-achievement payment on these KPIs of $165,313, which will be payable in cash subsequent to 30 June 2011 upon ratification by the Nomination and Remuneration Committee and recommended to the Board of Directors for approval. The Nomination and Remuneration Committee and the UXC Board are satisfied that Mr Nicollis compensation is appropriate in relation to the marketplace and structured in such a manner as to continue to motivate his ongoing performance and valued contribution to the business. Mr Nicolli currently holds 136,546 options and 3,186,648 fully paid ordinary shares in the Company.

Retirement and Termination


Retirement benefits are provided to Mr Nicolli by UXC Limited. Mr Nicollis employment can be terminated with 12 months notice by either party.

18 UXC Limited 2011 Annual Report

Compensation of Executive Management and Business Unit Management


Executive Management comprise the direct reports of the Managing Director, and Business Unit Management comprises those executives that have responsibilities for individual Business Units. Figure 1.2 of the UXC Limited Corporate Governance Guide (available on the Companys website www.uxc.com.au) details the Group organisational structure, which should be referred to in order to assist in identifying officers that are categorised as Executive Management and Business Unit Management within this report. For the purposes of this report, each category is referred to as executives. Only Directors and Executive Management are classified as Key Management Personnel (KMP) as defined by AASB 124. KMPs have authority and responsibility for planning, directing and controlling the activities of UXC Limited, directly or indirectly and are responsible for the entitys governance. Business Unit Managements authorities and responsibilities do not extend to the Group level.

The compensation benefits provided to UXCs executives include salary, fees, bonuses and nonmonetary benefits including the provision of motor vehicles and health benefits. Salary categories include fixed entitlements, while incentive categories include at-risk remuneration and short and medium term incentives. The Company has adopted measures whereby reward is directly linked to the necessary attainment of a range of prescriptive performance objectives contributing to the Companys performance goals and profitability. This at-risk component encourages executives to consistently strive to provide shareholders with the most effective value for money. To achieve this, remuneration of executives may encompass a fixed remuneration component including salary, non-monetary benefits, and superannuation benefits, as well as a variable or at-risk component which may be settled in cash and/or securities. The relative weighting of fixed and variable components for target performance is set according to the scope of the executives role. The at-risk component is linked to those roles in which market value provides compelling reasons to provide some individuals with higher levels of remuneration, while also recognising the importance for providing shareholders with value. To ensure that fixed remuneration for the Companys most senior executives remains competitive, it is reviewed annually based on performance and market data. The at-risk component ranges from 23% to 50% of total remuneration (which is equivalent to some 30% to 100% of the fixed entitlement component), with the average occurrence being around 38% of total remuneration. There are some executives within the Field Solutions Group that have no at-risk component. In such instances, fixed remuneration has been determined relative to performance evaluation and independent market data, sometimes with the assistance of external consultants. They participate in a Nomination and Remuneration Committee recommended, and Board approved Business Unit-based bonus pool, in which a bonus pool is created at:

Compensation Components
Executives are compensated through a variety of components which include:

short-term employee benefits; post-employment benefits; other long-term benefits; termination benefits; and share-based payments.

Short-term employee benefits include cash salary, fees and short-term compensated absences, non-monetary benefits and other short-term employee benefits. Post-employment benefits include superannuation and other post-employment compensation. Share-based payments include equity-settled share-based payment transactions involving shares and options, cash-settled share-based payment transactions and other forms of share-based compensation. Basic salary, superannuation contributions and other benefits paid to executives occur within a framework called Total Fixed Remuneration (TFR) in which participants are accorded some flexibility when choosing the precise mix of cash, superannuation contributions and other benefits in which the employees remuneration is totalled.

10% of actual PBT between 90% to 100% of PBT budget, after accrual of the bonus; plus 15% of actual PBT between 100% to 200% of PBT budget after accrual of the bonus; plus % at the discretion of the CEO/Board over 200% of PBT budget.

Once the bonus pool is created in accordance with the above earnings metrics, disbursement of the full amount is still contingent upon achievement of the cash flow and health and safety performance targets.
19

Directors Report

The vesting portion of the pool is then distributed to the Business Unit management team on a discretionary basis through consultation between the Business Unit CEO and the Managing Director. This agreement is applicable only to the Field Solutions Group, and as such, will no longer be used. The key performance indicators and other targets against which performance is measured for determining the proportion of at-risk compensation which is earned are generally as follows:

Such grants are made as medium to long term incentives that are designed to allow employees to be compensated for their role in the sustained growth in shareholder value. The size of such grants is linked to the Companys performance and the individuals level of responsibility, performance and potential. The terms of the UXC Incentive Plan include the following: Options:

Financial Parameters actual compared to budget for items including revenue, EBITDA, PBT, and income tax. The actual parameters applied are dependent upon the roles and responsibilities of the executive in question. These parameters comprise some 70% to 80% of the total at-risk compensation available to be earned. No at-risk compensation is available for an actual performance that is below budget by 85% or more. Business Management Parameters performance metrics such as cash generation, number of days sales outstanding in debtors, inventory turnover, cost/revenue ratios, and staff utilisation are measured against pre-determined targets. Customer Satisfaction retention, quality, cross-selling, new accounts. Business Growth NPAT, earnings per share, price earnings ratio, revenue, new order value, acquisitions, new customers. Staff training, development, turnover, teamwork. Other governance, capital management.

Entitlement each option will entitle the option holder to subscribe for one fully paid ordinary share in the capital of the Company. Period in general, subject to the satisfaction of any performance criteria determined by the Directors, 50% of any single tranche of options may be exercisable after one year from their date of issue and the remaining 50% may be exercisable after two years from their date of issue. In addition, irrespective of the satisfaction of performance criteria, the options will be exercisable if a takeover bid is made to acquire any issued shares of the Company at the discretion of the Directors (unless, in their opinion, an intention to make an equivalent offer for the options is given), or a person gives the Company a substantial holder notice disclosing a voting interest to a number of shares that is greater than 30% of the Companys issued voting shares. Different exercise periods apply where the Executive ceases to be employed by the Company or a group company. Expiry Options which are not exercised within three years of the date of issue will lapse automatically. Exercise Price Each option will be issued for nil consideration on grant. On exercise, the option holder must pay an amount that is determined by the Directors at the date of grant, but no less than the average market sale price of ordinary shares of the Company on the ASX for the 10 trading days immediately preceding the date of the invitation to issue the option, for each share they acquire (Exercise Price). In practice, grants of options made under the terms of the ESOP over the last three years have had an exercise price established at a premium of 15% to 25% of the volume weighted average trading price of the underlying shares for the 20 days preceding issue. Quotation the options are not quoted on any stock exchange. Transferability the options are generally not transferable. Termination the options lapse upon the termination of the employee.

The targets against which performance is measured for this criteria are quantified during the annual strategic review and budgeting process undertaken by the Company. For Executive Management, the parameters are based on Group or Company performance, while for Business Unit Management; they are based on Business Unit performance, in line with the UXC business model.

Post Employment Benefits


Post employment benefits include superannuation and prescribed retirement benefits. They are included in TFR.

Share-based Payments
Equity based compensation is comprised of share options granted under the UXC Incentive Plan.
20 UXC Limited 2011 Annual Report

Capital Reconstructions customary capital re-organisation clauses apply to options issued such that the number of options and issue price, or both, must be amended in the event of rights issues, bonus issues, capital reconstructions and similar events.

Employment Agreements
Executives serve under terms and conditions contained in a standard Executive Employment Agreement, that allows for termination under certain conditions with three to six months notice, depending on the role and responsibility of the executive. The agreements include restraints of trade on the employee as well as confidentiality and intellectual property agreements.

Performance Rights:

Entitlement each performance right will entitle the option holder to subscribe for one fully paid ordinary share in the capital of the Company. Period performance rights have vesting conditions in the first year after issue tied to actual profit before tax performance compared to budget at the Business Unit level (50%), the Group level (25%) and the Company level (25%). Rights are lapsed for those conditions not achieved after year one. Additionally, the performance rights have two further exercise conditions, whereby 50% of vested rights may be exercisable after two years from their date of issue subject to continuing employment, and the remaining 50% of vested rights may be exercisable after three years from their date of issue subject to continuing employment. In addition, irrespective of the satisfaction of performance criteria, the performance rights will be exercisable if a takeover bid is made to acquire any issued shares of the Company at the discretion of the Directors (unless, in their opinion, an intention to make an equivalent offer for the options is given), or a person gives the Company a substantial holder notice disclosing a voting interest to a number of shares that is greater than 30% of the Companys issued voting shares. Different exercise periods apply where the Executive ceases to be employed by the Company or a group company. Expiry Performance rights which are not exercised after three years of the date of issue will lapse automatically. Exercise Price Each performance right will be issued for nil consideration on grant. Each performance right may be exercised into one share subject to the achievement of vesting conditions and exercise conditions for nil consideration. Quotation the performance rights are not quoted on any stock exchange. Transferability the performance rights are generally not transferable. Termination the performance rights lapse upon the termination of the employee. Capital Reconstructions customary capital re-organisation clauses apply to performance rights issued such that the number of performance rights and issue price, or both, must be amended in the event of rights issues, bonus issues, capital reconstructions and similar events.

21

Directors Report

Compensation Table
Details of the nature and amount of each element of the compensation of each Director of UXC Limited and named Company and Group executives of the consolidated entity receiving the highest emoluments are set out in the following tables. Table A: Compensation for Directors and Executive Management Year Ended 30 June 2011 Post employment benefits Superannuation $5,400 $5,400 $5,400 Share-based payments Equity-settled options1 Long Term Employee Benefits Earned not Vested8 Total $536,667 $85,400 $92.900 $87,500 $72,900

Short-term Employee Benefits Salary/Fees Chairman Geoffrey Lord Non-Executive Directors Geoffrey Cosgriff Kingsley Culley Jean-Marie Simart Ron Zammit Executive and Business Unit Management Cris Nicolli Managing Director Michael Waymark CEO Field Solutions Group Paul Fielding CEO UXC Professional Solutions Glenn Fielding CEO UXC Professional Solutions Ralph Pickering Director Divestments and Acquisitions Mark Hubbard Finance Director/Company Secretary $578,134 $173,4615 $32,178 $321,000 $320,570 $358,982 $214,4694 $144,2686 $4,8007 $5,8197 $80,000 $87,500 $87,500 $67,500 $370,000
2

Cash STI/LTI $166,667


3

Non-Monetary benefits -

% Performance Related 38% 0% 0% 0% 0%

$15,199 $15,612 $2,896 $28,899 $15,199 $15,199

$11,716 $19,576 $16,559

$300,0004 $94,502 $77,384

$1,119,518 $189,073 $35,074 $354,699 $449,847 $618,211

47% 0% 0% 0% 25% 39%

22 UXC Limited 2011 Annual Report

Options over shares issued as part of remuneration have been valued in accordance with Australian Accounting Standard AASB 2, using the Binomial Valuation Methodology. The value of the options is determined on the grant date and is included in remuneration on a proportionate basis from grant date to vesting date. Details of options issued, exercised, and lapsed is contained in Tables B and C, below. Included within salary component is $125,000 fee for transitionary support services. Prescribed details of bonus paid: The incentive paid and included as 30 June 2011 reported remuneration was an LTI for the implementation of a succession plan for the Field Solutions Group. This was earned in respect of the year ended 30 June 2010.

Prescribed details of bonus paid: The incentive paid and included as 30 June 2011 reported remuneration was 94% of the performance based at-risk compensation available in respect of the year ended 30 June 2010. The performance based at-risk compensation available in respect of the year ended 30 June 2011 is $145,000. Of this amount, approximately 85% is indicated to have been earned in respect of that period. It will vest at such time as it is recommended and ratified by the Nomination and Remuneration Committee. As such, it has not been paid during FY11 nor included in the above table. The incentive forfeited as a result of non-achievement of the performance criteria was 6% of the performance based at-risk compensation available in respect of the year ended 30 June 2010. The performance based at-risk compensation forfeited in respect of performance for the year ended 30 June 2011 is 15%, based on amounts to be vested and not paid at balance date. The performance based at-risk compensation available in respect of future years is $145,000 and is payable upon achievement of the relevant performance criteria. Based on the historical achievement of performance criteria, the capability and calibre of the executive, the current economic climate and the anticipated financial performance of the group, estimates of the range of likely minimum to maximum possible values of bonus vesting in future years is 70% to 90%.

2 3

Prescribed details of bonus paid: The incentive paid and included as 30 June 2011 reported remuneration was 88% of the performance based at-risk compensation available in respect of the year ended 30 June 2010. The performance based at-risk compensation available in respect of the year ended 30 June 2011 is $300,000 for duties as Managing Director and $80,500 for duties as CEO Business Solutions group. Of this amount, approximately 100% is indicated to have been earned in respect of that period. Mr Nicolli has elected to convert $300,000 of the performance based at-risk compensation to equity. It will vest at such time as it is recommended and ratified by the Nomination and Remuneration Committee and Board of Directors. As such, it has not been paid during FY11. The incentive forfeited as a result of non-achievement of the performance criteria was 12% of the performance based at-risk compensation available in respect of the year ended 30 June 2010. The performance based at-risk compensation available in respect of future years is $450,000 and is payable upon achievement of the relevant performance criteria. Based on the historical achievement of performance criteria, the capability and calibre of the executive, the current economic climate and the anticipated financial performance of the Group, estimates of the range of likely minimum to maximum possible values of bonus vesting in future years is 70% to 100%.

7 8

Comprising car park benefits. Vesting conditions have been met for performance rights issued as the FY11medium term incentive pursuant to the UXC Incentive Plan. Further exercise conditions are required to be met for the entitlement to be exercisable continued employment through FY12 and FY13 allows the securities to be exercised 50% and 100% respectively.

Salary is for the period of employment from 1 July 2010 until 24 December 2010. Upon termination of employment, accrued annual leave paid was $30,813.

23

Directors Report

Table A: Compensation for Directors and Executive Management Year Ended 30 June 2010 Post employment benefits Superannuation $5,400 $5,400 $5,400 Share-based payments Equity-settled options1 Long Term Employee Benefits Earned not Vested7 % Performance Related 0% 0% 0% 0% 0%

Short-term Employee Benefits Non-Monetary benefits -

Salary/Fees Non-Executive Directors Geoffrey Cosgriff Kingsley Culley Jean-Marie Simart Ron Zammit Executive Chairman Geoffrey Lord Executive and Business Unit Management Cris Nicolli CEO Business Solutions Group Michael Waymark CEO Field Solutions Group Paul Fielding CEO Professional Solutions Group Ralph Pickering Director Mergers, Acquisitions and Investments Mark Hubbard Finance Director/Company Secretary $445,539 $293,578 $223,623 $321,307 $319,720 $80,000 $87,500 $87,500 $67,500 $465,000

Cash STI -

Total $85,400 $92.900 $87,500 $72,900 $465,000

$96,6002 $27,0003 $73,2804

$15,9475 $5,8196

$14,461 $26,712 $20,127 $14,461 $14,461

$11,732 $9,402 $6,504

$96,893 $77,503 $67,843

$665,225 $347,290 $243,750 $438,620 $487,627

31% 8% 0% 20% 30%

24 UXC Limited 2011 Annual Report

Options over shares issued as part of remuneration have been valued in accordance with Australian Accounting Standard AASB 2, using the Binomial Valuation Methodology. The value of the options is determined on the grant date and is included in remuneration on a proportionate basis from grant date to vesting date. Details of options issued, exercised, and lapsed is contained in Tables B and C, below. Prescribed details of bonus paid: The incentive paid and included as 30 June 2010 reported remuneration was 40% of the performance based at-risk compensation available in respect of the year ended 30 June 2009. The performance based at-risk compensation available in respect of the year ended 30 June 2010 is $241,500. Of this amount, approximately 88% is indicated to have been earned in respect of that period. It will vest at such time as it is recommended by the Executive Chairman and ratified by the Nomination and Remuneration Committee. As such, it has not been paid during FY10 nor included in the above table. The incentive forfeited as a result of non-achievement of the performance criteria was 60% of the performance based at-risk compensation available in respect of the year ended 30 June 2009. The performance based at-risk compensation forfeited in respect of performance for the year ended 30 June 2010 is 12%, based on amounts to be vested and not paid at balance date. The performance based at-risk compensation available in respect of future years is $241,500 and is payable upon achievement of the relevant performance criteria. Based on the historical achievement of performance criteria, the capability and calibre of the executive, the current economic climate and the anticipated financial performance of the Group, estimates of the range of likely minimum to maximum possible values of bonus vesting in future years is 70% to 90%.

Prescribed details of bonus paid: The incentive paid and included as 30 June 2010 reported remuneration was 48% of the performance based at-risk compensation available in respect of the year ended 30 June 2009. The performance based at-risk compensation available in respect of the year ended 30 June 2010 is $153,000. Of this amount, approximately 94% is indicated to have been earned in respect of that period. It will vest at such time as it is recommended by the Executive Chairman and ratified by the Nomination and Remuneration Committee. As such, it has not been paid during FY10 nor included in the above table. The incentive forfeited as a result of non-achievement of the performance criteria was 52% of the performance based at-risk compensation available in respect of the year ended 30 June 2009. The performance based at-risk compensation forfeited in respect of performance for the year ended 30 June 2010 is 6%, based on amounts to be vested and not paid at balance date. The performance based at-risk compensation available in respect of future years is $153,000 and is payable upon achievement of the relevant performance criteria. Based on the historical achievement of performance criteria, the capability and calibre of the executive, the current economic climate and the anticipated financial performance of the group, estimates of the range of likely minimum to maximum possible values of bonus vesting in future years is 70% to 90%.

5 6 7

Comprising motor vehicle and other benefits Comprising car park benefits. Vesting conditions have been met for performance rights issued as the FY10 medium term incentive pursuant to the UXC Incentive Plan. Further exercise conditions are required to be met for the entitlement to be exercisable continued employment as at 30 June 2011 and 30 June 2012 allows the securities to be exercised 50% and 100% respectively.

Prescribed details of bonus paid: The incentive paid and included as 30 June 2010 reported remuneration was 19% of the performance based at-risk compensation available in respect of the year ended 30 June 2009. The performance based at-risk compensation available in respect of the year ended 30 June 2010 is $144,000. Of this amount, approximately 0% is indicated to have been earned in respect of that period. The incentive forfeited as a result of non-achievement of the performance criteria was 81% of the performance based at-risk compensation available in respect of the year ended 30 June 2009. The performance based at-risk compensation forfeited in respect of performance for the year ended 30 June 2010 is 100%. The performance based at-risk compensation forfeited in respect of performance for the year ended 30 June 2009 is 81%, based on amounts to be vested but not paid at balance date. The performance based at-risk compensation available in respect of future years is $144,000 and is payable upon achievement of the relevant performance criteria. Based on the historical achievement of performance criteria, the capability and calibre of the executive, the current economic climate and the anticipated financial performance of the Group, estimates of the range of likely minimum to maximum possible values of bonus vesting in future years is 70% to 90%.

25

Directors Report

Table B: Option holdings of Directors and Executive Management Year Ended 30 June 2011 Number of options held at 1 July 2010 Executive and Business Unit Management Cris Nicolli Managing Director Michael Waymark CEO Field Solutions Group Ralph Pickering Director Divestments and Acquisitions Mark Hubbard Finance Director/Company Secretary
1

Options granted in current financial year1

Options exercised Other changes during during the current current financial year Expiry E Lapse L financial year

Options outstanding at 30 June 2011

Number of options exercisable at end of period

273,092 550,000 218,442 191,216

283,100 215,690

550,000L 28,310L 7,052L

273,092 473,232 399,854

The above table sets out the details of options held during the year for Directors and Executive and Business Unit Management and their related parties. The options are over fully paid un-issued shares in UXC. Options issued relate to FY11 Employee Performance Rights issued in accordance with the UXC Incentive Plan.

26 UXC Limited 2011 Annual Report

Table B: Option holdings of Directors and Executive Management Year Ended 30 June 2010 Number of options held at 1 July 2009 Executive Chairman Geoffrey Lord Executive and Business Unit Management Cris Nicolli CEO Business Solutions Group Michael Waymark CEO Field Solutions Group Paul Fielding CEO Professional Solutions Group Ralph Pickering Director Mergers, Acquisitions and Investments Mark Hubbard Finance Director/Company Secretary
1 2

Options granted in current financial year1 1,529,506

Options exercised Other changes during during the current current financial year financial year2 Expiry E Lapse L 1,450,091 1,400,000E 1,529,506L 34,753E 195,413E 154,775L 297,633L 42,510E 231,000E 107,093L 154,000E 125,019L

Options outstanding at 30 June 2010 -

Number of options exercisable at end of period -

2,850,091

387,916

445,614

175,497

273,092

525,000 428,051 599,941

347,633 346,535

25,000 428,051 347,431

550,000 218,442

550,000 -

272,401

330,235

132,401

191,216

The above table sets out the details of options held during the year for Directors and Executive and Business Unit Management and their related parties. The options are over fully paid un-issued shares in UXC. Options issued include adjustment to options held for the 1 for 10 bonus issue of shares granted to all shareholders and allotted on 28 April 2010. Options exercised are for those options issued pursuant to the Prospectus dated 27 March 2009 for an offer, at no cost to shareholders, of one Bonus Option for every ten shares held on the record date of 14 April 2009. None of this pro-rata securities distribution to all shareholders was issued to executives as a component of remuneration.

27

Directors Report

Table C: Options of Directors, Executive and Business Unit Management granted, exercised or lapsed during the period Year Ended 30 June 2011 Options Granted Value at Grant date1 Executive and Business Unit Management Cris Nicolli Managing Director Michael Waymark CEO Field Solutions Group Ralph Pickering Director Divestments and Acquisitions Mark Hubbard Finance Director/Company Secretary
1 2 Valued in accordance with AASB 2, using the Binomial Valuation Methodology. Valued at the intrinsic value at the date the options were exercised, expired or lapsed (i.e. the difference between the exercise price of the option and the market price of the share).

Options Exercised Value at Exercise date -

Options Lapsed Value at Lapse date2 $16,137 $4,020

Total value of Options granted, exercised and lapsed $121,137 $84,020

Value of Options included in remuneration for the year $11,716 $19,576 $16,559

Percentage of remuneration for the year that consists of options 1% 4% 3%

$105,000 $80,000

28 UXC Limited 2011 Annual Report

Table C: Options of Directors, Executive and Business Unit Management granted, exercised or lapsed during the period Year Ended 30 June 2010 Options Granted Value at Grant date1 Executive Chairman Geoffrey Lord Executive and Business Unit Management Cris Nicolli CEO Business Solutions Group Michael Waymark CEO Field Solutions Group Paul Fielding CEO Professional Solutions Group Ralph Pickering Director Mergers, Acquisitions and Investments Mark Hubbard Finance Director/Company Secretary
1 2 3

Options Exercised Value at Exercise date2 -

Options Lapsed Value at Lapse date3 $688,278 $69,649 $133,935 $48,192 $56,259

Total value of Options granted, exercised and lapsed $1,181,611 $207,649 $229,935 $153,192 $158,529

Value of Options included in remuneration for the year $11,732 $9,402 $6,504

Percentage of remuneration for the year that consists of options 2% 3% 2%

$493,333 $138,000 $96,000 $105,000 $102,000

Valued in accordance with AASB 2, using the Binomial Valuation Methodology. Options exercised per Table B are pursuant to the Prospectus dated 27 March 2009 for an offer, at no cost to shareholders, of one Bonus Option for every ten shares held on the record date of 14 April 2009. None of this pro-rata securities distribution to all shareholders was issued to executives as a component of remuneration, and is therefore excluded from this table. Valued at the intrinsic value at the date the options were exercised, expired or lapsed (i.e. the difference between the exercise price of the option and the market price of the share).

29

Directors Report

Notes to Tables B and C 30 June 2011 Michael Waymark 550,000 unlisted options (inclusive of adjustment for the bonus share issue) issued on 31 January 2008 with a strike price of $1.80 lapsed on 24 December 2010 on resignation when the market price for UXC fully paid ordinary share was $0.50. Ralph Pickering 283,100 FY11 performance rights were issued as an FY11 medium term incentive pursuant to the UXC Incentive Plan with a nil strike price and subject to vesting and exercise conditions. 28,310 of these performance rights lapsed on 30 June 2011 as failing to meet vesting conditions, when the market price for UXC fully paid ordinary shares was $0.57. Mark Hubbard 215,690 FY11 performance rights were issued as an FY11 medium term incentive pursuant to the UXC Incentive Plan with a nil strike price and subject to vesting and exercise conditions. 7,052 of these performance rights lapsed on 30 June 2011 as failing to meet vesting conditions, when the market price for UXC fully paid ordinary shares was $0.57. Notes to Tables B and C 30 June 2010 Geoffrey Lord 1,400,000 unlisted options issued on 1 December 2006 with a strike price of $1.46 expired out of the money on 1 December 2009 when the market price was $0.78. 1,529,506 performance rights (inclusive of adjustment for the bonus share issue) issued in accordance with resolutions passed at the Annual General Meeting in November 2009 as short and long term incentives lapsed on 30 June 2010 as performance hurdles were not achieved when the market price for UXC fully paid ordinary shares was $0.45. Cris Nicolli 195,413 unlisted options (inclusive of adjustment for the bonus share issue) issued on 1 December 2006 with a strike price of $1.03 expired out of the money on 30 June 2010 when the market price was $0.45. 427,847 performance rights (inclusive of adjustment for the bonus share issue) were issued as an FY10 medium term incentive pursuant to the UXC Incentive Plan with a nil strike price and subject to vesting and exercise conditions. 154,775 of these performance rights lapsed on 30 June 2010 as failing to meet vesting conditions, when the market price for UXC fully paid ordinary shares was $0.45. 34,753 bonus options with a strike price of $0.45 expired on 31 March 2010 when the market price for UXC fully paid ordinary shares was $0.51. Michael Waymark 297,633 performance rights (inclusive of adjustment for the bonus share issue) were issued as an FY10 medium term incentive pursuant to the UXC Incentive Plan with a nil strike price and subject to vesting and exercise conditions. 297,633 of these performance rights lapsed on 30 June 2010 as failing to meet vesting conditions, when the market price for UXC fully paid ordinary shares was $0.45. Ralph Pickering 231,000 unlisted options (inclusive of adjustment for the bonus share issue) issued on 1 December 2006 with a strike price of $1.03 expired out of the money on 30 June 2010 when the market price was $0.45. 325,535 performance rights (inclusive of adjustment for the bonus share issue) were issued as an FY10 medium term incentive pursuant to the UXC Incentive Plan with a nil strike price and subject to vesting and exercise conditions. 107,093 of these performance rights lapsed on 30 June 2010 as failing to meet vesting conditions, when the market price for UXC fully paid ordinary shares was $0.45. 42,510 bonus options with a strike price of $0.45 expired on 31 March 2010 when the market price for UXC fully paid ordinary shares was $0.51. Mark Hubbard 154,000 unlisted options (inclusive of adjustment for the bonus share issue) issued on 1 December 2006 with a strike price of $1.03 expired out of the money on 30 June 2010 when the market price was $0.45. 316,235 performance rights (inclusive of adjustment for the bonus share issue) were issued as an FY10 medium term incentive pursuant to the UXC Incentive Plan with a nil strike price and subject to vesting and exercise conditions. 125,019 of these performance rights lapsed on 30 June 2010 as failing to meet vesting conditions, when the market price for UXC fully paid ordinary shares was $0.45.

No payments have been made to any executive before they took office as part of the consideration for the executive agreeing to hold office. This directors report is signed in accordance with a resolution of the Directors made pursuant to s.298(2) of the Corporations Act 2001. On behalf of the Directors

Geoffrey F Lord Director Melbourne 22 September 2011

Jean-Marie Simart Director

30 UXC Limited 2011 Annual Report

Auditors Independence Declaration


Deloitte Touche Tohmatsu ABN 74 490 121 060 550 Bourke Street Melbourne VIC 3000 GPO Box 78 Melbourne VIC 3001 Australia DX: 111 Tel: +61 (0) 3 9671 7000 Fax: +61 (0) 3 9671 7001 www.deloitte.com.au

The Board of Directors UXC Limited Level 3, 350 Collins St MELBOURNE VIC 3000

22 September 2011 Dear Board Members Auditors Independence Declaration - UXC Limited In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of independence to the directors of UXC Limited. As audit partner for the audit of the financial statements of UXC Limited for the financial year ended 30 June 2011, I declare that to the best of my knowledge and belief, there have been no contraventions of: (i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and (ii) any applicable code of professional conduct in relation to the audit.

Yours sincerely

DELOITTE TOUCHE TOHMATSU

David A Watson Partner Chartered Accountants

Liability limited by a scheme approved under Professional Standards Legislation.


Member of Deloitte Touche Tohmatsu Limited

23

31

Corporate Governance Statement

Framework and Approach


The Board of UXC supports the intent of the ASX Corporate Governance Councils principles of good corporate governance and strives to meet their spirit and wherever possible the requirements of the best practice recommendations. In carrying out its responsibilities and powers within a framework of good corporate governance practice, the Board is at all times determined to recognise its overriding responsibility to act honestly, fairly, diligently and in accordance with the law in serving the interests of UXCs shareholders, as well as its employees, customers, and the community; and to work to promote and maintain an environment within UXC that establishes its policies and procedures as basic guidelines for all of its employees and representatives. The Directors primary objective is to provide direction and governance to the business such that increased value is realised for shareholders. The Directors also ensure the employees of the Company and its subsidiaries are highly motivated and expertly managed with a high standard of legislative compliance and ethical behaviour. A description of the Companys main corporate governance practices follows. This statement reflects UXCs practices at 30 June 2011 and up to the date of the report. All of these practices were in place for the entire financial year, except where otherwise stated. The complete UXC Corporate Governance Guide can be found on the companys website at www.uxc.com.au.

ASX Corporate Governance Council Best Practice Recommendations and UXC Compliance
Principle 1 Recommendation 1.1 Comply Lay solid foundations for management and oversight Formalise and disclose the functions reserved to the Board and those delegated to management. Rationale: The Boards role and responsibility are detailed in the UXC Corporate Governance Guide Responsibilities of the Board and Delegated Authority, and the Board Charter. These can be summarised as:

Strategic Planning and Financial Management Oversight, including: Issue of Capital Expenditure & Commitments Delegation of Authority Business & Strategic Plans Annual Budget Strategic Planning & Financial Performance Oversight. Risk and Compliance Oversight, including: Internal & External Compliance Codes of Conduct Policies and Procedures ASX Announcements Other Communications Financial Reporting Internal Control Framework. Executive Management Oversight, including: Employment terms and appraisal of the Managing Director Employment terms of Executive Directors, the Company Secretary, and direct reports to the Managing Director Executive Development & Succession Planning.

Delegation of authority to management and limits thereto for each of these matters is considered within the UXC Corporate Governance Guide available on the Companys website at www.uxc.com.au. Each Director has the right to seek independent professional advice, at the Companys expense, in order to fulfil their duties as Director of the Company, with the prior consent of the Chairperson which may not be unreasonably withheld.

32 UXC Limited 2011 Annual Report

Recommendation 1.2 Comply

Formalise and disclose the process for evaluating the performance of management. Mutually agreed upon performance targets are set for senior and mid managers. These targets are reported on monthly. Further information is contained in the accompanying Remuneration Report. Provide information regarding adherence to Principal 1 and its components. The required information has been disclosed herein, the UXC Corporate Governance Guide and/or within the Directors Report. Structure the Board to add value A majority of the Board should be independent Directors. Rationale: The Board aims to have a majority of non-executive Directors who satisfy the following criteria for independence: No material relationship; Not a recent former employee; Not a recent auditor to the Company or otherwise associated as specified; and Not associated with executive management via family Not a substantial shareholder of the company. Mr Nicolli and Mr Lord are the only directors who are not independent, by virtue of Mr Nicollis executive management duties, and Mr Lords ownership interest in the Company. All other Directors in office during the year have been, and at the date of the report are, independent.

Recommendation 2.2 and Recommendation 2.3 Comply

The Chairperson should be an independent director.

The roles of the Chairperson and the Chief Executive Officer should not be exercised by the same individual. Rationale: UXC recognises the objectives of Board independence and separation of duties to better position the Board to meet goals such as independence from business operations, improved Board skills, and improved Board performance and accountability, as demonstrated through vision, leadership, external perspective, and success. UXC values these objectives, and believes that there existed mitigating factors within its Group organisational structure at that time in which Mr Lord held the role of both CEO and Chairman, which compensates for noncompliance with these underlying recommendations. Following a strategic review regarding the future direction of UXC, Cris Nicolli was appointed as the Managing Director of UXC Limited on 28 October 2010. Mr Geoff Lord will continue as UXC Chairman, in a non-executive capacity. Consequently, UXC is confident that satisfactory independence and separation of the operational management of the Company from Board oversight duties currently exists,

Recommendation 1.3 Comply

Principle 2 Recommendation 2.1 Comply

33

Corporate Governance Statement


Recommendation 2.4 Comply The Board should establish a nomination committee. Rationale: UXC Limited has a Nomination and Remuneration Committee which identifies and makes recommendations on: executive appointments and succession planning Board membership, composition and performance remuneration policies and reward structure based on individual and company performance, general pay environments and in compliance with the ASX Listing Rules and Corporations Act (2001) (Cth). The Nomination and Remuneration Committee Charter is contained within the UXC Corporate Governance Guide and is available on the Companys website at www.uxc.com.au. The Nomination and Remuneration Committee meets at least twice annually and more frequently if necessary. Current members of the Committee are Mr Geoff Cosgriff (Chairman), Mr Jean-Marie Simart and Mr Kingsley Culley. All are independent directors. Recommendation 2.5 Comply Disclose the process for evaluating the performance of the Board, its committees and individual directors. Rationale: The Chairman of the Remuneration and Nomination Committee conducts an annual survey covering areas of Board performance with all directors. At completion of the survey a report is produced which is discussed with the entire Board. In addition to the above, the Remuneration and Nomination Committee annually reviews the composition and effectiveness of all Board committees. Recommendation 2.6 Comply Provide the information indicated in Guide to reporting on Principle 2. Rationale: The required information has been disclosed herein and/or within the Directors Report. Comply Comply Principle 3 Recommendation 3.1 Promote ethical and responsible decision-making Establish a code of conduct to guide the Directors, the chief executive officer (or equivalent), the chief financial officer (or equivalent) and any other key executives as to: 3.1.1 3.1.2 3.1.3 the practices necessary to maintain confidence in the companys integrity the practices necessary to take into account legal obligations and reasonable expectations of stakeholders the responsibility and accountability of individuals for reporting and investigating reports of unethical practices.

Rationale: UXC has a Code of Conduct for Directors, executives, management and staff based upon the Australian Public Service Values and Code of Conduct. Additionally, UXC has a Code of Conduct for Finance Directors, CFOs and senior finance officers involved in or influencing financial reporting based upon the Group 100 Code of Conduct for Finance Directors. The Code requires high standards of adherence to the principles of honesty and integrity, legal compliance, confidentiality, transparent communications and dealings and internal controls to safeguard assets and risk exposure. An employee aware of activities occurring that may impact poorly on UXC is obliged to notify the relevant Executive so action can be taken to minimise the impact. These codes are contained within the UXC Corporate Governance Guide included in staff induction material, published on internal intranet sites and available on the Companys website at www.uxc.com.au.

Recommendation 3.2

Disclose the policy concerning trading in company securities by Directors, officers and employees. Rationale: UXC has an Insider Trading policy which regulates the period within which company securities can be traded, establishes policy for the management of confidential information and for the prevention of misuse of price sensitive data, and determines the designated employees covered by the policy. This policy, which is actively communicated to staff and monitored by the Company Secretary for compliance, is contained within the UXC Corporate Governance Guide and is available on the Companys website at www.uxc.com.au.

Recommendation 3.3 Comply

Provide the information indicated in Guide to reporting on Principle 3. Rationale: The required information has been disclosed herein and/or within the Directors Report.

34 UXC Limited 2011 Annual Report

Principle 4 Recommendation 4.1 Comply

Safeguard Integrity in financial reporting The Board should establish an audit committee. Rationale: The Audit Committee advises the Board on audit and financial reporting matters, and corporate governance, including review of the external auditors performance and independence, making recommendations as to the appointment of the external auditor, integrity of the financial statements, compliance with legal and regulatory requirements, and evaluating the performance, resourcing and effectiveness of internal audit programmes. The Audit Committee meets at least five times annually and more frequently if necessary.

Principle 5 Recommendation 5.1

Make timely and balanced disclosure Establish and disclose written policies and procedures designed to ensure compliance with ASX Listing Rule disclosure requirements and to ensure accountability at a senior management level for that compliance. Rationale: UXC has Continuous Disclosure Policies and Procedures that govern the manner in which UXC communicates with its shareholders and the market in compliance with its regulatory obligations and for the benefit of its stakeholders. The policies and procedures establish an internal notification and decision making process, roles and responsibilities in identifying, approving, and releasing disclosable information, process for timely disclosure, compliance, and treatment of market briefings. This policy is contained within the UXC Corporate Governance Guide and is available on the Companys website at www.uxc.com.au. UXC is committed to giving investors timely access to understandable and relevant information. Announcements may be reviewed by an external professional consultant for clear and balanced communication within the bounds of continuous disclosure requirements set out in the ASX Listing Rules and Corporations Act 2001. UXC also publishes on its website all material releases that it makes to the ASX Company Announcements Platform, media releases, its annual and interim financial reports, notices of meetings, and presentations made to fund managers, brokers and analysts.

Comply

Recommendation 4.2

Structure the audit committee so that it consists of: only non-executive Directors a majority of independent Directors an independent chairperson, who is not chairperson of the Board at least three members.

Comply

Rationale: Current members of the Audit Committee are Mr Jean-Marie Simart (Chairman), Mr Geoff Cosgriff and Mr Kingsley Culley. All are independent directors. At all times during the period the committee membership was in compliance with best practice recommendations regarding composition of the committee. The committee is deemed to be of sufficient size, independence, financial and technical expertise to discharge its mandate effectively.

Recommendation 5.2 Comply

Provide the information indicated in Guide to reporting on Principle 5. Rationale: The required information has been disclosed herein.

Recommendation 4.3 Comply

The audit committee should have a formal charter. Rationale: The Audit Committee Charter is contained within the UXC Corporate Governance Guide and is available on the Companys website at www.uxc.com.au.

Principle 6 Recommendation 6.1

Respect the rights of shareholders Design and disclose a communications policy to promote effective communication with shareholders and encourage effective participation at general meetings. Rationale: UXC provides access to company information by communicating with shareholders in the following ways: Disclosures to the ASX (placed on the Companys website www.uxc.com.au) Annual Financial Reports Half yearly reports Investor presentations, Chairmans Interviews and Chairmans General Meeting address are webcast at www.uxc.com.au Notices of Annual General Meeting and Explanatory Memoranda.

Recommendation 4.4 Comply

Provide the information indicated in Guide to reporting on Principle 4. Rationale: The required information has been disclosed herein and/or within the Directors Report. Comply

35

Corporate Governance Statement


Recommendation 6.2 Comply Provide the information indicated in Guide to reporting on Principle 6. Rationale: The required information has been disclosed herein. Principle 7 Recommendation 7.1 Comply Recognise and manage risk Establish and disclose policies for the oversight and management of material business risks. Rationale: The Risk Management Committee assists the Board in relation to the oversight of policies and procedures regarding internal control structures and risk management systems. The Risk Management Committee meets at least two times annually and more frequently if necessary. Current members of the Committee are Mr Kingsley Culley (Chairman), Mr Ron Zammit and Mr Jean-Marie Simart. All are independent. The functions of the Risk Management Committee are complemented by the Risk Management Plan, providing a holistic approach to the identification, quantification, mitigation, avoidance and/or management of risk throughout the Company. The Committee Charter and Risk Management Plan are contained within the UXC Corporate Governance Guide and are available on the Companys website at www.uxc.com.au. Recommendation 7.2 The Board should require management to design and implement the risk management and internal control system to manage the companys material business risks and report to it on whether those risks are being managed effectively. The Board should disclose that management has reported to it as to the effectiveness of the companys management of its material business risks. Rationale: The Board receives monthly reports from Executive Management and bi-annual reports from the Risk Management Committee in relation to identifying any possible risk throughout the Company. In addition internal audits are carried out by the Risk and Compliance Manager and these are reported to both the Risk Management Committee and Finance Director. Recommendation 7.4 Comply Recommendation 7.3 The Board should disclose whether it has received assurance from the chief executive officer and the chief financial officer that the declaration provided in accordance with section 295A of the Corporations Act is founded on a sound system of risk management and internal control and that the system is operated effectively in all material respects in relation to financial reporting risks. Rationale: The CEO and CFO of each business unit within the UXC Group provide a formal statement to executive management at the end of each reporting period confirming that the business units financial reports are founded on a sound system of risk management and internal compliance and control which implements the policies adopted by the Board, and that the companys risk management and internal compliance and control system is operating efficiently and effectively in all material respects. The UXC Managing Director and Finance Director then provide formal written assurance of the same to the Board. Provide the information indicated in Guide to reporting on Principle 7. Rationale: The required information has been disclosed herein and/or within the Directors Report. Principle 8 Recommendation 8.1 Comply Remunerate fairly and responsibly The Board should establish a remuneration committee. Rationale: The Nomination and Remuneration Committee performs its functions within the Nomination and Remuneration Committee. It advises the Board on remuneration policies and practices, including fairly and responsibly remunerating executives and non-executive Directors, incentive and bonus schemes, superannuation and other employment benefits, and termination payments. The Committees Charter details policies and practices that enable it to attract and retain executives and Directors who will create value for shareholders. See also 2.4 above. The Committee Charter is contained within the UXC Corporate Governance Guide and is available on the Companys website at www.uxc.com.au. The Nomination and Remuneration Committee meets at least twice annually and more frequently if necessary. Current members of the Committee are Mr Geoff Cosgriff (Chairman), Mr Jean-Marie Simart and Mr Kingsley Culley. All are independent.

Comply

Comply

36 UXC Limited 2011 Annual Report

Recommendation 8.2 Comply

Clearly distinguish the structure of non-executive Directors remuneration from that of executives. Rationale: Remuneration is detailed within the Remuneration Report accompanying the Annual Report explaining the remuneration components, equity performance incentives and Retirement benefits awarded to Non-executive Directors and the Chairman.

Recommendation 8.3 Comply

Provide the information indicated in Guide to reporting on Principle 8. Rationale: The required information has been disclosed herein and/or within the Directors Report.

37

Consolidated Income Statement


For the Financial Year ended 30 June 2011
Notes Continuing Operations Revenue Other income including gains/(losses) on disposal of non current assets Employee benefits expense Services and products used Contractor and sub-contractor expense Licence fee expense Vehicle & equipment running costs Travel expenses Depreciation and amortisation expense Occupancy expenses Professional services expense Finance charges Communication expenses Recruitment and staff training costs Operating lease costs Advertising and marketing costs Insurance costs Provision for stock obsolescence Bad and doubtful debts expense Share of profit/(loss) of associate accounted for using the equity method Impairment of investment in associate Other expenses Profit from continuing operations before income tax expense Income tax expense Net profit from continuing operations Net profit/(loss) from discontinued operations Profit/(loss) attributable to members of the parent entity Earnings per share attributable to members of the parent entity from continuing and discontinued operations Basic earnings/(loss) per share Diluted earnings/(loss) per share Earnings per share from continuing operations Basic earnings per share Diluted earnings per share 2 2 522,421 (4,873) (236,602) (106,577) (76,554) (29,696) (3,139) (10,107) (5,800) (9,203) (4,017) (7,460) (5,215) (3,584) (558) (1,597) (852) (297) (245) (32) (3,970) (2,956) 9,087 (4,557) 4,530 (24,707) (20,177) Cents (6.60) (6.59) 1.48 1.48 470,059 3,966 (212,106) (97,698) (63,132) (19,488) (2,545) (8,825) (5,141) (10,390) (8,636) (7,987) (4,156) (2,438) (520) (1,498) (1,055) (432) (960) 252 (3,902) 23,368 (3,028) 20,340 (23,212) (2,872) Cents (1.01) (1.01) 7.13 7.11 2011 $000 2010 $000

9 9

3 40 24

25 25 25 25

The above consolidated income statement should be read in conjunction with the accompanying notes.

38 UXC Limited 2011 Annual Report

Consolidated Statement of Comprehensive Income


For the Financial Year ended 30 June 2011
2011 $000 Profit/(loss) for the year Other comprehensive income Exchange differences arising on translation of foreign operations Gain/(loss) on interest rate cash flow hedges taken to equity Other comprehensive income for the year Total comprehensive income/(loss) for the year (1,353) 577 (776) (20,953) (983) 1,233 250 (2,622) (20,177) 2010 $000 (2,872)

The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.

39

Consolidated Statement of Financial Position


As at 30 June 2011
Current assets Cash and cash equivalents Trade and other receivables Accrued income Inventories Other financial assets Current tax assets Other Assets classified as held for sale Total current assets Non-current assets Trade and other receivables Investments accounted for using the equity method Other financial assets Property, plant and equipment Goodwill Other intangible assets Deferred tax assets Other Total non-current assets Total assets Current liabilities Trade and other payables Unearned income Borrowings Current tax liabilities Provisions Other financial liabilities Other Liabilities directly associated with assets classified as held for sale Total current liabilities Non-current liabilities Unearned income Borrowings Provisions Other Total non-current liabilities Total liabilities Net assets Equity Issued capital Reserves Retained earnings Total equity Notes 4 4 5 6 3 7 41 8 9 10 11 12 13 3 14 2011 $000 27,163 98,792 16,412 5,268 106 13,858 161,599 81,755 243,354 6,652 257 6,994 141,899 8,387 9,289 608 174,086 417,440 98,083 38,601 23,970 1,995 18,091 106 928 181,774 28,748 210,522 1,583 28,696 4,196 34,475 244,997 172,443 169,497 (499) 3,445 172,443 2010 $000 37,758 110,580 28,610 15,602 348 5,376 16,500 214,774 214,774 11,915 4,259 6 25,942 175,280 7,728 7,206 241 232,577 447,351 115,049 32,835 26,971 21,644 683 1,168 198,350 198,350 860 49,794 4,718 354 55,726 254,076 193,275 169,528 125 23,622 193,275

15 16 3 17 18 18 41

19 20 18

22 23 24

The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
40 UXC Limited 2011 Annual Report

Consolidated Statement of Changes in Equity


As at 30 June 2011
Issued capital $000 Balance at 1 July 2009 Profit/(loss) for the year Other comprehensive income Total comprehensive income and expense for the year Shares issued Share issue costs Dividend paid Deferred consideration in equity issued as shares Share based payments Balance at 30 June 2010 Balance at 1 July 2010 Profit/(loss) for the year Other comprehensive income Total comprehensive income and expense for the year Share issue costs Share based payments Balance at 30 June 2011 152,494 17,104 (70) 169,528 169,528 (31) 169,497 Foreign currency translation reserve $000 (1,878) (983) (983) (2,861) (2,861) (1,353) (1,353) (4,214) Share based payments reserve $000 579 579 579 579 Cash flow hedge reserve $000 (1,916) 1,233 1,233 (683) (683) 577 577 (106) Employee equity settled benefit reserve $000 2,861 229 3,090 3,090 152 3,242 Deferred shares recognised directly in equity $000 3,750 (3,750) Retained earnings $000 35,378 (2,872) (2,872) (8,884) 23,622 23,622 (20,177) (20,177) 3,445 Total attributable to members of the parent $000 191,268 (2,872) 250 (2,622) 17,104 (70) (8,884) (3,750) 229 193,275 193,275 (20,177) (776) (20,953) (31) 152 172,443

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

41

Consolidated Statement of Cash Flows


For the Financial Year ended 30 June 2011
Notes Cash flows from operating activities Receipts from customers Payments to suppliers and employees Interest received Interest and other costs of finance paid Income taxes refunded/(paid) Net cash inflow/(outflow) from operating activities Cash flows from investing activities Proceeds from business sold Payments for investments Payments for businesses acquired in current year Payments for businesses acquired in prior years Cash acquired from acquisitions Payments for property, plant and equipment Proceeds from sale of property, plant and equipment Dividends received from associates Payment for other intangible assets Net cash inflow/(outflow) from investing activities Cash flows from financing activities Proceeds from issues of equity securities Payment for share issue costs Proceeds from borrowings Repayment of borrowings Dividends paid Net cash inflow/(outflow) from financing activities Net (decrease)/increase in cash held Cash at the beginning of the financial year Effects of exchange rate changes on cash Assets classified as held for sale Cash at the end of the financial year Non-cash financing and investing activities Financing arrangements 36 (c) 36 (d) 41 22 (a) (31) 24,264 (48,598) (24,365) (8,060) 37,758 (535) (2,000) 27,163 9,707 (70) 58,275 (68,727) (8,129) (8,944) 8,340 29,511 (93) 37,758 36 (b) 188 (634) (6,043) 1,276 (4,965) (10,178) 2,466 (98) (1,080) (1,178) 259 (6,955) 534 210 (4,830) (10,672) 36 (a) 800,135 (773,098) 1,143 (8,256) 6,559 26,483 842,369 (803,901) 869 (9,065) (2,316) 27,956 2011 $000 2010 $000

The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.

42 UXC Limited 2011 Annual Report

Notes to the Financial Statements


For the Financial Year ended 30 June 2011
Statement of compliance
The financial report is a general purpose Financial Report, which has been prepared in accordance with the Corporations Act 2001, Accounting Standards and Interpretations, and complies with other requirements of the law. Accounting Standards include Australian Accounting Standards. Compliance with Australian Accounting Standards ensures that the financial statements and notes of the company and the Group comply with International Financial Reporting Standards (IFRS). The financial statements were authorised for issue by the Directors on 22 September 2011.

Note 1 Summary of Significant Accounting Policies


Standard/Interpretation

Effective for annual reporting periods beginning on or after 1 January 2010 1 January 2010

AASB 2009-5 Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project AASB 2009-8 Amendments to Australian Accounting Standards Group Cash-Settled Share-based Payment Transactions

Standards and Interpretations in issue not yet adopted


At the date of authorisation of the financial statements, the Standards and Interpretations relevant to the Groups operations listed below were in issue but not yet effective. Expected to be Effective for annual applied financial reporting periods year ending beginning on or after 30 June 2012 1 January 2011

Basis of preparation
The Financial Report has been prepared on the basis of historical cost, except for financial instruments. Cost is based on the fair values of the consideration given in exchange for assets. All amounts are presented in Australian dollars, unless otherwise noted. The Company is a company of the kind referred to in ASIC Class Order 98/0100, dated 10 July 1998, and in accordance with that Class Order amounts in the financial report are rounded off to the nearest thousand dollars, unless otherwise indicated.

Standard/Interpretation

Adoption of new and revised accounting standards


In the current year, the Group has adopted all of the new and revised Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (the AASB) that are relevant to its operations and effective for the current annual reporting period.

AASB 124 Related Party Disclosures (revised December 2009), AASB 2009-12 Amendments to Australian Accounting Standards AASB 9 Financial Instruments, AASB 200911 Amendments to Australian Accounting Standards arising from AASB 9 AASB 2009-14 Amendments to Australian Interpretation Prepayments of a Minimum Funding Requirement AASB 2010-5 Amendments to Australian Accounting Standards AASB 2010-6 Amendments to Australian Accounting Standards Disclosures on Transfer of Financial Assets AASB 2010-8 Amendments to Australian Accounting Standards Deferred Tax: Recovery of Underlying Assets AASB 10 Consolidated Financial Statements AASB 11 Joint Arrangements

30 June 2014

1 January 2013

30 June 2012

1 January 2011

Standards and Interpretations materially affecting amounts reported in the current period (and/or prior periods)
No new and revised Standards and Interpretations relevant to the Groups operations have been adopted in the current period which have materially affected the amounts reported in these financial statements.

30 June 2012 30 June 2012

1 January 2011 1 July 2011

Standards and Interpretations adopted with no material effect on the financial statements
The following new and revised Standards and Interpretations relevant to the Groups operations have been adopted in these financial statements. Their adoption has not had any significant impact on the amounts reported in these financial statements but may affect the accounting for future transactions or arrangements.

30 June 2013

1 January 2012

30 June 2014 30 June 2014

1 January 2013 1 January 2013

43

Notes to the Financial Statements


For the Financial Year ended 30 June 2011
Standard/Interpretation

Expected to be Effective for annual applied financial reporting periods year ending beginning on or after 30 June 2014 30 June 2014 30 June 2014 30 June 2014 1 January 2013 1 January 2013 1 January 2013 1 January 2013

Investments in associates An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies. The results and assets and liabilities of associates are incorporated in these financial statements using the equity method of accounting, except when the investment is classified as held for sale, in which case is accounted for in accordance with AASB 5 Non-current Assets Held for Sale and Discontinued Operations. Under the equity method, investments in associates are carried in the consolidated statement of financial position at cost as adjusted for post-acquisitions changes in the Groups share of the net assets of the associate, less any impairment in the value of individual investments. Losses of an associate in excess of the Groups interest in that associate (which includes any long-term interests that, in substance, form part of the Groups net investment in the associate) are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate. Any excess of the cost or acquisition over the Groups share of the net fair value of the identifiable assets, liabilities and contingent liabilities of the associate recognised at the date of the acquisition is recognised as goodwill. The goodwill is included within the carrying amount of the investment and is assessed for impairment as part of that investment. Any excess of the Groups share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of the acquisition, after reassessment, is recognised immediately in profit or loss. Where a group entity transacts with an associate of the Group, profits and losses are eliminated to the extent of the Groups interest in the relevant associate. (ii) Revenue recognition Sale of goods/licensing of software products Revenue from the sale of goods and licensing of software products is recognised when the Group has transferred to the buyer the significant risks and rewards of ownership of the goods or software products. Rendering of services Revenue from a contract to provide services is recognised by reference to the stage of completion of the contract. The stage of completion of the contract is determined as follows:

AASB 12 Disclosure of Interests in Other Entities AASB 127 Separate Financial Statements AASB 128 Investments in Associates and Joint Ventures AASB 2011-7 Amendments to Australian Accounting Standards arising from the Consolidation and Joint Arrangements Standards.

The Directors have not yet assessed the impact the adoption of these Standards and Interpretations in future periods will have on the financial statements of the Company or the Group. These Standards and Interpretations will be first adopted in the financial statements of the Group that relates to the first annual reporting period beginning after the effective date of pronouncement.

Significant accounting policies


The following significant accounting policies have been adopted in the preparation and presentation of the Financial Statements. (i) Basis of consolidation The consolidated financial statements are prepared by combining the financial statements of all the entities that comprise the Group, being the Company (the parent entity) and its subsidiaries as defined in Accounting Standard AASB 127 Consolidated and Separate Financial Statements. A list of subsidiaries appears in Note 32 to the financial statements. Consistent accounting policies are employed in the preparation and presentation of the consolidated financial statements. On acquisition, the assets, liabilities and contingent liabilities of a subsidiary are measured at their fair values at the date of acquisition. Any excess of the cost of acquisition over the fair values of the identifiable net assets acquired is recognised as goodwill. If, after assessment, the fair value of the identifiable net assets acquired exceeds the cost of acquisition, the deficiency is credited to profit and loss in the period of acquisition. The consolidated financial statements include the information and results of each subsidiary from the date on which the Company obtains control and until such time as the Company ceases to control such entity. In preparing the consolidated financial statements, all intercompany balances and transactions, and unrealised profits arising within the Group are eliminated in full.
44 UXC Limited 2011 Annual Report

Revenue from time and material contracts is recognised at the contractual rates as labour hours are delivered and direct expenses incurred; Revenue from fixed-price and construction contracts is recognised by reference to the stage of completion of the contract activity at the balance date, determined as the proportion of

contract costs incurred for work to date bear to the estimated total contract costs, except where this would not be representative of the stage of completion. Variations in contract work and claims are included to the extent they have been agreed with the customer. Contract costs are recognised as expenses in the period in which they are incurred. When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately. Interest revenue Interest revenue is recognised on a time proportionate basis that takes into account the effective yield of the financial asset. (iii) Income tax Current tax Current tax is calculated by reference to the amount of income taxes payable or recoverable in respect of the taxable profit or tax loss for the period. It is calculated using tax rates and tax laws that have been enacted or substantively enacted by reporting date. Current tax for current and prior periods is recognised as a liability (or asset) to the extent that it is unpaid (or refundable). Deferred tax Deferred tax is accounted for using the comprehensive statement of financial position liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax base of those items. In principle, deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised to the extent that it is probable that sufficient taxable amounts will be available against which deductible temporary differences or unused tax losses and tax offsets can be utilised. However, deferred tax assets and liabilities are not recognised if temporary differences giving rise to them arise from the initial recognition of assets and liabilities (other than as a result of a business combination) which affects neither taxable income nor accounting profit. Furthermore, a deferred tax liability is not recognised in relation to taxable temporary differences arising from goodwill. Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries except where the Group is able to control the reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with these investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period(s) when the asset and liability giving rise to them are realised or settled, based on tax rates

(and tax laws) that have been enacted or substantively enacted by reporting date. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities. Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the Company/Group intends to settle its current tax assets and liabilities on a net basis. Current and deferred tax for the period Current and deferred tax is recognised as an expense or income in the income statement, except when it relates to items credited or debited directly to equity, in which case the deferred tax is also recognised directly in equity, or where it arises from the initial accounting for a business combination, in which case it is taken into account in the determination of goodwill. Tax consolidation The Company and all its wholly-owned Australian resident entities are part of a tax-consolidated group under Australian taxation law. UXC Limited is the head entity in the tax-consolidated group. Tax expense/income, deferred tax liabilities and deferred tax assets arising from temporary differences are recognised by the members of the tax consolidated group using the separate taxpayer within group approach. Current tax liabilities and assets and deferred tax assets arising from unused tax losses and tax credits of the members of the tax-consolidated group are recognised by the Company (as head entity in the tax-consolidated group). Due to the existence of a tax funding arrangement between the entities in the tax-consolidated group, amounts are recognised as payable to or receivable by the Company and each member of the group in relation to the tax contribution amounts paid or payable between the parent entity and the other members of the tax-consolidated group in accordance with the arrangement. Further information about the tax funding arrangement is detailed in Note 3 to the financial statements. Where the tax contribution amount recognised by each member of the tax-consolidated group for a particular period is different to the aggregate of the current tax liability or asset and any deferred tax asset arising from unused tax losses and tax credits in respect of that period, the difference is recognised as a contribution from (or distribution to) equity participants. (iv) Foreign currency The individual financial statements of each group entity are presented in the currency of the primary economic environment in which the entity operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each entity are expressed in Australian dollars, which is the functional currency of the Company, and the presentation currency for the consolidated financial statements. In preparing the financial statements of the individual entities, transactions in currencies other than the entitys functional currency (foreign currencies) are recorded at the rates of exchange prevailing
45

Notes to the Financial Statements


For the Financial Year ended 30 June 2011
on the dates of the transactions. At each balance date, monetary items denominated in foreign currencies are retranslated at the rates prevailing at the balance date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange differences are recognised in profit or loss in the period in which they arise except:

(viii) Financial assets Subsequent to initial recognition, investments in subsidiaries are measured at cost. Other financial assets are classified into the following specified categories: financial assets at fair value through profit or loss, available-for-sale financial assets, and loans and receivables. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. Available for sale financial assets Certain investments held by the Group are classified as being available-for-sale and are stated at fair value less impairment. Gains and losses arising from changes in fair value are recognised directly in the available-for-sale revaluation reserve, until the investment is disposed of or is determined to be impaired, at which time the cumulative gain or loss previously recognised in the available-for-sale revaluation reserve is included in profit or loss for the period. Loans and receivables Trade receivables, loans and other receivables are recorded at amortised cost less impairment. Impairment of financial assets Financial assets are assessed for indicators of impairment at each balance date. Financial assets are impaired where there is objective evidence that as a result of one or more events that occurred after the initial recognition of the financial asset the estimated future cash flows of the investment have been impacted. For financial assets carried at amortised cost, the amount of the impairment is the difference between the assets carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables where the carrying amount is reduced through the use of an allowance account. When a trade receivable is uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss. With the exception of available-for-sale equity instruments, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised. In respect of available-for-sale equity instruments, any subsequent increase in fair value after an impairment loss is recognised directly in equity.

exchange differences on transactions entered into in order to hedge certain foreign currency risks (refer Note 1(xx)); and exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither planned nor likely to occur, and which form part of the net investment in a foreign operation, are recognised in the foreign currency translation reserve and recognised in profit or loss on disposal of the net investment.

On consolidation, the assets and liabilities of the Groups foreign operations (including comparatives) are translated into Australian dollars at exchange rates prevailing on the balance date. Income and expense items (including comparatives) are translated at the average exchange rates for the period, unless exchange rates fluctuated significantly during that period, in which case the exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are classified as equity and transferred to the Groups translation reserve. Such exchange differences are recognised in profit or loss in the period in which the foreign operation is disposed. Goodwill and fair value adjustments arising on the acquisition of a foreign entity on or after the date of transition to A-IFRS are treated as assets and liabilities of the foreign entity and translated at exchange rates prevailing at the reporting date. Goodwill arising on acquisitions before the date of transition to A-IFRS is treated as an Australian dollar denominated asset. (v) Cash and cash equivalents Cash and cash equivalents comprise cash on hand, cash in banks and investments in money market instruments net of outstanding bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the statement of financial position. (vi) Inventories Inventories are valued at the lower of cost and net realisable value. Costs have been assigned to inventory quantities on hand at balance date using the weighted average cost basis. Cost comprises material, labour, sub-contract charges and direct contract expenses and an appropriate portion of fixed and variable overhead expenses. (vii) Work in progress Contract work in progress is stated at an aggregate of direct labour and materials, project overheads, plus profits recognised, less progress billings and provision for foreseeable losses.

46 UXC Limited 2011 Annual Report

(ix) Property, plant and equipment Plant and equipment, leasehold improvements and equipment under finance lease are stated at cost less accumulated depreciation and impairment. Cost includes expenditure that is directly attributable to the acquisition of the item. Items of property, plant and equipment are depreciated/amortised over their expected useful lives from the date of acquisition using a combination of straight-line and diminishing value bases. Estimates of remaining useful lives are made on a regular basis for all assets. The expected useful lives are as follows:

(xi) Goodwill Goodwill, representing the excess of the cost of acquisition over the fair value of the identifiable assets, liabilities and contingent liabilities acquired, is recognised as an asset and not amortised, but tested for impairment annually and whenever there is an indication that the goodwill may be impaired. Any impairment is recognised immediately in profit or loss and is not subsequently reversed. For the purpose of impairment testing, goodwill is allocated to each of the Groups cashgenerating units (CGUs), or groups of CGUs, expected to benefit from the synergies of the business combination. CGUs (or groups of CGUs) to which goodwill has been allocated are tested for impairment annually, or more frequently if events or changes in circumstances indicate that goodwill might be impaired. If the recoverable amount of the CGU (or group of CGUs) is less than the carrying amount of the CGU (or groups of CGUs), the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the CGU (or groups of CGUs) and then to the other assets of the CGU (or groups of CGUs) pro-rata on the basis of the carrying amount of each asset in the CGU (or groups of CGUs). An impairment loss recognised for goodwill is recognised immediately in profit or loss and is not reversed in a subsequent period. On disposal of an operation within a CGU, the attributable amount of goodwill is included in the determination of the profit or loss on disposal of the operation. (xii) Other intangible assets Research expenditure Expenditure on research activities is recognised as an expense in the period in which it is incurred. Development expenditure Where no internally-generated intangible asset can be recognised, development expenditure is recognised as an expense in the period in which it is incurred. An intangible asset arising from development is recognised if, and only if, all the following are demonstrated:

Plant and equipment (including leased plant and equipment) Leasehold improvements Motor vehicles (including leased motor vehicles)

Between 3-10 years Between 2-10 years Between 3-10 years

(x) Leasing Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. The Group as lessor Amounts due from lessees under finance leases are recognised as receivables at the amount of the Groups net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the Groups net investment outstanding in respect of the leases. Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight-line basis over the lease term. The Group as lessee Assets held under finance leases are initially recognised at fair value or, if lower, at an amount equal to the present value of the minimum lease payments, each determined at the inception of the lease. The corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against income. Finance leased assets are amortised on a straight-line basis over the estimated useful life of the asset. Operating lease payments are recognised as an expense on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

the technical feasibility of completing the intangible asset so that it will be available for use or sale; the intention to complete the intangible asset and use or sell it; the ability to use or sell the intangible asset; how the intangible asset will generate probable future economic benefits; the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and the ability to measure reliably the expenditure attributable to the intangible asset during its development.
47

Notes to the Financial Statements


For the Financial Year ended 30 June 2011
The amount initially recognised for internally-generated intangible assets is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above. Subsequent to initial recognition, internally-generated intangible assets are reported at cost less accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets acquired separately. The following useful lives are used in the calculation of amortisation:

impaired. An impairment of goodwill is not subsequently reversed. Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a post-tax discount rate (adjusted to reflect a pre-tax discount rate as required by the relevant Accounting Standard) that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised in profit or loss immediately. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cashgenerating unit) is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised in profit or loss immediately. (xiv) Trade and other payables Trade payables and other accounts payable are recognised when the Group becomes obliged to make future payments resulting from the purchase of goods and services. (xv) Goods and Services Tax Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except:

Capitalised development costs Trademarks

Between 2-10 years Assessed as not having a finite useful life, therefore not amortised, and assessed for impairment annually.

Intangible assets acquired in a business combination Intangible assets acquired in a business combination (such as customer contracts and relationships) are identified and recognised separately from goodwill where they satisfy the definition of an intangible asset and their fair value can be measured reliably. Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets that are acquired separately. The amortisation terms of customer contracts and relationships are predominantly between 3 and 5 years, with one instance of ten years. Software Software purchased outright or under finance lease is stated at cost less accumulated amortisation and impairment. Cost includes expenditure that is directly attributable to the acquisition of the item. Occasionally software is acquired from within the Group on a competitive basis on normal commercial terms. Software is amortised on a straight-line basis over its expected useful life from the date of acquisition. Estimates of remaining useful life are reviewed at least annually. Software is amortised over terms ranging from 2 to 5 years. (xiii) Impairment of assets At each reporting date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Goodwill, intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually and whenever there is an indication that the asset may be
48 UXC Limited 2011 Annual Report

where the amount of GST incurred is not recoverable from the taxation authority, it is recognised as part of the cost of acquisition of an asset or as part of an item of expense; or for receivables and payables which are recognised inclusive of GST.

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables respectively. Cash flows are included in the cash flow statement on a gross basis. The GST component of cash flows arising from investing and financing activities which are recoverable from, or payable to, the taxation authority is classified as operating cash flows. (xvi) Borrowings Borrowings are recorded initially at fair value, net of transaction costs. Subsequent to initial recognition, borrowings are measured at amortised cost with any difference between the initial recognised amount and the redemption value being recognised in profit or loss over the period of the borrowing using the effective interest rate method. Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their

intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. All other borrowings costs are recognised in profit or loss in the period in which they are incurred. (xvii) Provisions Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably. Onerous contracts Present obligations arising under onerous contracts are recognised and measured as provisions. An onerous contract is considered to exist where the Group has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it. Restructuring A restructuring provision is recognised when the Group has developed a detailed formal plan for restructuring and has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement the plan or announcing its main features to those affected by it. The measurement of a restructuring provision includes only the direct expenditures arising from the restructuring, which are those amounts that are both necessarily entailed and not associated with the ongoing activities of the entity. (xviii) Employee benefits A liability is recognised for benefits accruing to employees in respect of wages and salaries, annual leave and long service leave when it is probable that settlement will be required and they are capable of being measured reliably. Liabilities recognised in respect of employee benefits expected to be settled within 12 months, are measured at their nominal values using the remuneration rate expected to apply at the time of settlement. Liabilities recognised in respect of employee benefits which are not expected to be settled within 12 months are measured as the present value of the estimated future cash outflows to be made by the Group in respect of services provided by the employees up to reporting date.

Contributions to defined contribution superannuation plans are expensed when employees have rendered services entitling them to the contributions. (xix) Share-based payments Equity-settled share-based payments granted after 7 November 2002 that were unvested as of 1 January 2005, are measured at fair value at the date of grant. Fair value is measured by use of a binomial model. The expected life used in the model has been adjusted, based on managements best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Groups estimate of shares that will eventually vest. (xx) Derivative financial instruments The Group enters into a variety of derivative financial instruments to manage its exposure to interest rate and foreign exchange rate risk, including forward foreign exchange contracts and interest rate swaps. Further details of derivative financial instruments are disclosed in Note 37 to the financial statements. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair value at each reporting date. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event, the timing of the recognition in profit or loss depends on the nature of the hedge relationship. The Group designates certain derivatives as hedges of highly probable forecast transactions (cash flow hedges), or hedges of net investments in foreign operations. The fair value of hedging derivatives is classified as a non-current asset or a non-current liability if the remaining maturity of the hedge relationship is more than 12 months and as a current asset or a current liability if the remaining maturity of the hedge relationship is less than 12 months. Derivatives not designated into an effective hedge relationship are classified as a current asset or a current liability. Cash flow hedge The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are deferred in equity. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss. Amounts deferred in equity are recycled in profit or loss in the periods when the hedged item is recognised in profit or loss. However, when the forecast transaction that is hedged results in the recognition of a non-financial asset or a non-financial liability, the gains and losses previously deferred in equity are transferred from equity and included in the initial measurement of the cost of the asset or liability.
49

Notes to the Financial Statements


For the Financial Year ended 30 June 2011
Hedge accounting is discontinued when the Group revokes the hedging relationship, the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting. Any cumulative gain or loss deferred in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in profit or loss. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was deferred in equity is recognised immediately in profit or loss. Net investment hedge Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges. Any gain or loss on the hedging instrument relating to the effective portion of the hedge is recognised in the foreign currency translation reserve; the gain or loss relating to the ineffective portion is recognised immediately in profit or loss. Gains and losses deferred in the foreign currency translation reserve are recognised immediately in profit or loss when the foreign operation is disposed of. (xxi) Financial Instruments Issued by the Company Debt and equity instruments Debt and equity instruments are classified as either liabilities or as equity in accordance with the substance of the contractual arrangement. Interest and dividends Interest and dividends are classified as expenses or as distributions of profit consistent with the statement of financial position classification of the related debt or equity instruments. Transaction costs on the issue of equity instruments Transaction costs arising on the issue of equity instruments are recognised directly in equity as a reduction of the proceeds of the equity instruments to which the costs relate. Transaction costs are the costs that are incurred directly in connection with the issue of those equity instruments and which would not have been incurred had those instruments not been issued. Financial guarantee contract liabilities Financial guarantee contracts are measured initially at their fair values and subsequently at the higher of the amount recognised as a provision and the amount initially recognised less cumulative amortisation in accordance with the disclosed revenue recognition policies. (xxii) Critical Accounting Judgements and Key Sources of Estimation Uncertainty In the application of the Groups accounting policies, which are described above, management is required to make judgements, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods, if the revision affects both current and future periods. Critical judgements in applying the Groups accounting policies Judgements made by management in the application of A-IFRS that have significant effects on the financial statements and estimates with a significant risk of material adjustments in the next year are disclosed, where applicable, in the relevant notes to the financial statements. Accounting policies are selected and applied in a manner that ensures that the resulting financial information satisfies the concepts of relevance and reliability, thereby ensuring that the substance of the underlying transactions or other events is reported. The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the balance date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year. Impairment of goodwill Determining whether goodwill is impaired requires an estimation of the value in use of the cashgenerating units to which goodwill has been allocated. The value in use of calculation requires the Group to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value. Details of the impairment review are provided at Note 12. Impairment of other intangible assets Determining whether intangible assets are impaired requires an estimation of the value in use of the cash-generating units to which the intangible assets have been allocated. The value in use of calculation requires the Group to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value. Details of the impairment review are provided at Note 13.

50 UXC Limited 2011 Annual Report

Note 2 Profit from Continuing Operations


(a) Revenue Revenue from the rendering of services Revenue from the sale of goods Interest revenue Other revenue Total revenue (b) Gains and losses Net gain/(loss) on disposal of property, plant and equipment Net gain/(loss) on disposal of business (c) Finance charges Interest and finance charges paid/payable (d) Other expenses Cost of goods sold Depreciation and amortisation - property, plant and equipment - other intangible assets Total depreciation and amortisation expense Impairment of trade receivables Write down of inventory to net realisable value Operating lease rental expenses - minimum lease payments Employee benefit expense: - post-employment benefits - defined contribution plans - share-based payments - equity settled share-based payments - other employee benefits Total employee benefits expense

2011 $000 390,160 130,963 521,123 1,080 218 522,421 (1,098) (4,230) 7,460 106,577 3,550 2,250 5,800 245 297 10,504 16,127 152 220,323 236,602

2010 $000 347,316 121,470 468,786 857 416 470,059 (1,189) 4,758 7,987 97,698 1,976 3,165 5,141 960 432 9,013 15,046 229 196,831 212,106

Note 3 Income Taxes


(a) Income tax recognised in profit or loss The prima facie income tax expense on pre-tax accounting profit from operations reconciles to the income tax expense in the financial statements as follows: Profit from continuing operations Profit/(loss) from discontinued operations Profit/(loss) from operations Income tax expense/(income) calculated at 30% Non-deductible expenses Impairment losses on intangible assets and goodwill that are not deductible Impairment of investment in associate Effect of higher tax rates on overseas income Research and development tax concession Benefit of capital tax losses recouped in current year De-recognition of deferred tax liability no longer required Sundry Over-provision in relation to the current tax of prior years Total tax expense/(benefit) Tax expense in relation to continuing operations Tax expense/(benefit) in relation to discontinued operations Total tax expense/(benefit) Tax expense/(benefit) comprises: Current tax expense/(benefit) Deferred tax expense relating to temporary differences Total tax expense/(benefit) (b) Current tax assets/(liabilities) Current tax assets/(liabilities) (c) Deferred tax (liabilities)/assets Deferred tax assets comprise: Tax losses - revenue Temporary differences (refer Note 3(d)) Net deferred tax (liabilities)/assets

2011 $000

2010 $000

9,087 (30,383) (21,296) (6,388) 1,995 3,353 1,191 (415) (329) 39 (554) (565) (1,119) 4,557 (5,676) (1,119) 812 (1,931) (1,119) (1,995)

23,368 (33,160) (9,792) (2,937) 355 271 47 (323) (1,427) (209) 105 (4,118) (2,802) (6,920) 3,028 (9,948) (6,920) (847) (6,073) (6,920) 5,376

779 8,358 9,137

621 6,585 7,206


51

Notes to the Financial Statements


For the Financial Year ended 30 June 2011
(d) Deferred tax balances
Opening balance $000 Charged to income $000 Acquisitions/ disposals $000 Closing balance $000

Deferred tax balances are represented in the Consolidated Statement of Financial Position as follows:
2011 $000 Deferred tax asset Directly associated with assets held for sale 9,289 (152) 9,137 2010 $000 7,206 7,206

2010 Temporary differences Capitalised development costs Accrued income Identifiable intangible asset Accrued expenses Provisions Doubtful debts and impairment losses Property, plant and equipment Other Net deferred temporary differences Tax losses Net deferred tax asset 2011 Temporary differences Capitalised development costs Accrued income Identifiable intangible asset Accrued expenses Provisions Doubtful debts and impairment losses Property, plant and equipment Other Net deferred temporary differences Tax losses Net deferred tax asset
(632) (4,181) (224) 1,852 8,902 832 (812) 848 6,585 621 7,206 468 857 69 1 1,077 (44) 162 (817) 1,773 158 1,931 (164) (3,324) (155) 1,853 9,979 788 (650) 31 8,358 779 9,137 (864) (8,493) (328) 1,215 8,048 400 (254) 906 630 503 1,133 232 4,312 104 637 854 432 (558) (58) 5,955 118 6,073 (632) (4,181) (224) 1,852 8,902 832 (812) 848 6,585 621 7,206

(e) Unrecognised deferred tax balances The following deferred tax assets have not been brought to account as assets:
2011 $000 Tax losses capital 17,984 2010 $000 17,984

(f) Tax Consolidation The Company and its wholly-owned Australian resident entities have formed a tax consolidated group with effect from 13 September 2002 and are therefore taxed as a single entity from that date. The head entity within the tax consolidated group is UXC Limited. Entities within the tax consolidated group have entered into a tax funding arrangement and a taxsharing agreement with the head entity. Under the terms of the tax funding arrangement, UXC Limited and each of the entities in the tax-consolidated group has agreed to pay a tax equivalent payment to or from the head entity, based on the current tax liability or current tax asset of the entity. Such amounts are reflected in amounts receivable from or payable to other entities in the tax-consolidated group. The tax sharing agreement entered into between members of the tax-consolidated group provides for the determination of the allocation of income tax liabilities between the entities should the head entity default on its tax payment obligations. No amounts have been recognised in the financial statements in respect of this agreement as payment of any amounts under the tax sharing agreement is considered remote.

52 UXC Limited 2011 Annual Report

Note 4 Current Assets Trade and Other Receivables and Accrued Income
Trade and other receivables1 Less: Allowance for doubtful debts2 Finance lease receivable Other receivables Trade and other receivables Accrued income Movement in the allowance for doubtful debts Balance at the beginning of financial year Allowance utilised Additional allowance recognised Balance at the end of financial year Ageing of past due but not impaired trade and other receivables 31 to 60 days 61 to 90 days 91 days and over
1

2011 $000
95,886 (2,030) 93,856 829 4,107 98,792 16,412

2010 $000
104,868 (2,772) 102,096 1,008 7,476 110,580 28,610

Note 5 Current Assets Inventories


Raw materials and stores Work in progress Finished goods

2011 $000 5,268 5,268

2010 $000 4,168 11,434 15,602

Note 6 Current Assets Other Financial Assets


Short term deposits Sundry receivable

70 36 106

271 77 348

2,772 (2,645) 1,903 2,030

1,336 (993) 2,429 2,772

Note 7 Current Assets Other Assets


Prepayments Sundry current assets

13,280 578 13,858

16,047 453 16,500

17,282 4,308 4,003 25,593

14,695 3,694 5,373 23,762

Note 8 Non-Current Assets Trade and Other Receivables


Other non-current receivables Finance lease receivable

4,494 2,158 6,652

9,110 2,805 11,915

Average credit terms are 30 days, varying from COD to 60 days on specific engagements. No interest is charged on trade receivables which are past due. Trade receivables which are past due are provided for based on the estimated irrecoverable amount, determined by reference to past default history. Included in the groups trade receivables balance are debtors with a carrying amount of $25,593,000 (2010: $23,762,000) which are past due at the reporting date for which the group has not provided as there has not been a significant change in credit quality and the group believes that the amounts are still recoverable. The group does not hold any collateral over these balances.

Note 9 Non-Current Assets Investments Accounted For Using The Equity Method
Investments accounted for using the equity method Reconciliation of movement Balance at beginning of financial year Share of (loss)/profit for the year Dividends received Impairment Balance at end of financial year Associate Entity NCSS Maintenance Services Pty Ltd (incorporated in Australia)

In determining the recoverability of a trade receivable the group considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the reporting date. The concentration of credit risk is limited due to the customer base being diverse. Accordingly, the group believes that no further credit provision is required in excess of the allowance for doubtful debts.

257 4,259 (32) (3,970) 257


% shares held

4,259 4,217 252 (210) 4,259 50%


53

50%

Notes to the Financial Statements


For the Financial Year ended 30 June 2011
Note 10 Non-Current Assets Other Financial Assets
Other investments

2011 $000
-

2010 $000
6 6

Reconciliations of the carrying amounts of each class of property, plant and equipment at the beginning and end of the current financial year are set out below.
$000 Leasehold Improvements 2010 Carrying amount at 1 July 2009 2,089 270 (217) 14,509 4,916 (843) 4,888 983 (72) 4,567 329 (146) 3,925 456 (86) 29,978 6,954 (1,364) Plant and Equipment Leased Plant and Equipment Motor Vehicles Leased Motor Vehicles

Note 11 Non-Current Assets Property Plant and Equipment


Leasehold improvements At cost Less: Accumulated amortisation Plant and equipment At cost Under finance lease Less: Accumulated depreciation and amortisation At cost Under finance lease (20,227) (4,243) (24,470) 5,960 Motor vehicles At cost Under finance lease Less: Accumulated depreciation and amortisation At cost Under finance lease (2,621) (4,401) (7,022) 338 Total property, plant and equipment Less: Accumulated depreciation and amortisation 41,338 (34,344) 6,994 (4,508) (2,728) (7,236) 6,529 63,569 (37,627) 25,942 2,959 4,401 7,360 8,438 5,327 13,765 (24,557) (3,030) (27,587) 18,015 24,684 5,746 30,430 37,554 8,048 45,602 3,548 (2,852) 696 4,202 (2,804) 1,398

Total

Additions Disposals Additions through acquisition of businesses Depreciation/ amortisation Net foreign currency exchange differences Carrying amount at 30 June 2010 Additions Disposals Additions through acquisition of businesses Depreciation/ amortisation Reclassified as held for sale (refer Note 41) Net foreign currency exchange differences Carrying amount at 30 June 2011

(744)

30 (5,615)

(781)

(820)

(1,696)

30 (9,656)

1,398 386 (238)

12,997 3,003 (264)

5,018 360 (1,785)

3,930 683 (885)

2,599 1,611 -

25,942 6,043 (3,172)

(624)

(5,068)

(1,447)

(659)

(1,673)

(9,471)

(226)

(6,172)

(643)

(2,731)

(2,537)

(12,309)

696

(39) 4,457

1,503

338

(39) 6,994

54 UXC Limited 2011 Annual Report

Note 12 Non-Current Assets Goodwill


Gross carrying amount Balance at beginning of financial year Additional amounts recognised from business combinations occurring during the year (refer Note 33) Additional amounts recognised/(derecognised) from business combinations occurring in prior years through attainment of earn-out targets Derecognised on disposal of a subsidiary Reclassified as held for sale (refer Note 41) Effects of foreign currency exchange differences Balance at end of financial year Impairment losses recognised in the current financial year Net book value Allocation of goodwill to cash-generating units Goodwill has been allocated for impairment testing purposes to nine (2010: fifteen) cash-generating units. The carrying amounts of goodwill allocated to the two operating divisions are as follows: Operating division Field Solutions Group UXC IT Total Goodwill

2011 $000
175,280 -

2010 $000
174,922 2,018 (1,147)

Cash flow projections for cash-generating units are based on budgeted gross margins during the projection period, increasing in revenue by an underlying growth rate of 2.9% per annum (2010: 3.2% p.a.) except where higher growth has been specifically forecast. The underlying growth rate has been determined by management to be conservative for impairment testing, evidenced by historical CPI and growth of the Group for the previous two years which has exceeded this rate. The Directors believe that any reasonable possible change in the key assumptions on which the recoverable amount is based would not cause the aggregate carrying amount to exceed the aggregate recoverable amount of any cash-generating unit. The recoverable amounts thus calculated exceed the carrying amounts, after the Directors assessed that an impairment charge of $11,193,000 was required for the current financial year (2010: $413,000). The impairment related to goodwill associated with non-performing businesses which were closed during the financial year. This impairment charge is included in the loss for the year from discontinued operations in the Consolidated Income Statement.

(21,563) (625) 153,092 (11,193) 141,899

(100) 175,693 (413) 175,280

141,899 141,899

31,859 143,421 175,280

Within UXC IT, the cash-generating units that individually have been allocated more than 10% of the Groups total carrying amount of goodwill are UXC Eclipse AD $25,326,805 (including QSP which was a separate cash generating unit in 2010 with a combined goodwill of $25,439,000), Red Rock Consulting $37,967,120 (2010: $38,263,000), UXC Consulting $22,157,400 (2010: $22,157,400), Integ $15,865,168 (2010: $15,865,168) and UXC Professional Solutions Pty Ltd $18,110,000 (2010: $18,110,000). The recoverable amount of the cash-generating units is determined via a value in use calculation which uses cash flow projections based on financial budgets for the subsequent financial year, which are then extrapolated over a further 14 year period, culminating with a terminal value, and then discounted to present value using a post tax weighted average cost of capital rate of 10.9% p.a. (2010: 10.7% p.a.).

55

Notes to the Financial Statements


For the Financial Year ended 30 June 2011
Note 13 Non-Current Assets Other Intangible Assets
$000 Customer Development contracts/ IT Software costs relationships 2010 Gross carrying amount Balance at 1 July 2009 Additions Disposals Balance at 30 June 2010 Accumulated amortisation Balance at 1 July 2009 Amortisation Impairment of intangible assets Disposals Balance at 30 June 2010 Net book value at 30 June 2010 2011 Gross carrying amount Balance at 1 July 2010 Additions Disposals Net foreign currency exchange differences Reclassified as held for sale (refer Note 41) Transfers Balance at 30 June 2011 Accumulated amortisation Balance at 1 July 2010 Amortisation Disposals Net foreign currency exchange differences Reclassified as held for sale (refer Note 41) Transfers Balance at 30 June 2011 Net book value at 30 June 2011

The recoverable amount of development costs is determined via a value in use calculation which uses cash flow projections based on estimated cash flows over the relevant income generating period for the specific asset [up to 10 years] and then discounted to present value using a post-tax rate of 10.9% p.a. (2010: 10.7% p.a.).
Total

Trademarks

Note 14 Non-Current Assets Other Assets


8,950 3,778 (702) 12,026 (4,665) (1,576) 511 (5,730) 6,296 3,488 1,763 (5,251) (1,054) (507) (1,845) 3,406 1,673 (153) 1,520 (532) (416) 153 (795) 725 777 7 (77) 707 (77) 77 707 14,888 5,548 (6,183) 14,253 (6,251) (2,499) (1,922) 4,147 (6,525) 7,728 Security deposits Deferred expenditure

2011 $000
107 501 608

2010 $000
98 143 241

Note 15 Current Liabilities Trade and Other Payables


Trade payables1 Other payables
1 Average credit terms is 30 days. No interest is charged on trade payables.

46,919 51,164 98,083

67,760 47,289 115,049

Note 16 Current Liabilities Borrowings


12,026 4,338 (1,179) (7) (2,514) (2,299) 10,365 (5,730) (2,763) 1,086 6 1,602 1,937 (3,862) 6,503 628 1,576 2,204 (308) (958) (1,266) 938 1,520 1,338 2,858 (795) (214) (979) (1,988) 870 707 (16) (615) 76 76 14,253 4,966 (1,179) (7) (2,530) 15,503 (6,525) (3,285) 1,086 6 1,602 (7,116) 8,387 Secured at amortised cost Commercial bills1 Lease liabilities (refer Note 27) Unsecured at amortised cost Other loans
1

19,575 3,725 670 23,970

20,540 5,578 853 26,971

Commercial bills are secured by registered fixed and floating charges over the assets and undertakings of the Company and certain subsidiaries.

56 UXC Limited 2011 Annual Report

Note 17 Current Liabilities Provisions


Employee benefits Premises leases
1 1

2011 $000
17,424 275 36 356 18,091

2010 $000
21,160 164 68 36 22 194 21,644
1

Note 19 Non-Current Liabilities Borrowings


Secured at amortised cost Commercial bills1 Lease liabilities (refer Note 27) Unsecured at amortised cost Other loans

2011 $000
24,071 4,608 17 28,696

2010 $000
43,646 6,130 18 49,794

Premises leases - onerous leases Provision for site rehabilitation1 Redundancies and restructuring1 Other1
1

Refer to Note 21 for further information.

Commercial bills are secured by registered fixed and floating charges over the assets and undertakings of the Company and certain subsidiaries.

Note 18 Other Liabilities


Other financial liabilities Interest rate swap at fair value (note 37(f)) Other liabilities Deferred consideration1 Cash Equity Current Non-current
1 1

Note 20 Non-Current Liabilities Provisions


Employee benefits 106 106 683 683 Premises leases Other
1 1

2,357 648 844 347 4,196

2,486 778 832 622 4,718

Premises leases - make good1

Refer to Note 21 for further information.

575 353 928 928 928

816 706 1,522 1,168 354 1,522

There are a number of agreements which have been entered into by the Company and certain subsidiaries with third parties which confer on those third parties rights to be issued equity, or receive cash payments at a future date. This deferred consideration arises in connection with acquisition agreements and includes earn-out obligations in favour of the vendors of the acquired entity upon their attainment of certain earnings targets within certain timeframes. Where there is a likelihood of earn-outs being met and a reliable estimate of the obligations can be made, a liability has been raised.

57

Notes to the Financial Statements


For the Financial Year ended 30 June 2011
Note 21 Provisions
Reconciliation of the carrying amounts of each category of provisions (excluding employee benefits) at the beginning and end of the previous and current financial years are set out below. $000
Premises Leases Make Good 800 32 832 832 832 Premises Leases RedundOnerous ancies and Leases Restructuring 239 (171) 68 68 68 22 22 22 22 UXC shares1 Site Rehabilitation 36 36 36 36 Balance at beginning of year Other 336 480 816 194 622 816 Shares issued during the year: Consideration for acquisitions Exercise of options Exercise of bonus options UXC IPS shares reclassified as UXC shares 1 in 10 distribution in lieu of an interim cash distribution Equity based compensation Dividend reinvestment plan Net movement 2011 Carrying amount at 1 July 2010 Additional provisions recognised Reductions arising from payments Classified as held for sale Carrying amount at 30 June 2011 Current (refer Note 17) Non-current (refer Note 20) Carrying amount at 30 June 2011 942 (20) 922 275 648 922 832 12 844 844 844 68 (68) 22 (22) 36 36 36 36 816 132 (245) 703 356 347 703 Less transaction costs Balance of UXC shares at the end of the financial year UXC IPS shares2 Balance at beginning of year Shares issued during the year: Consideration for acquisitions UXC IPS shares reclassified as UXC shares Net movement Less transaction costs Balance of UXC IPS shares at the end of the financial year Total share capital (UXC and UXC IPS shares)
1 2

Note 22 Issued Capital


(a) Issued and paid-up capital 2011 Shares 000 295,600 10,189 10,189 305,789 10,189 (10,189) (10,189) 305,789 $000 164,015 5,513 5,513 (31) 169,497 5,513 (5,513) (5,513) 169,497 2010 Shares 000 216,492 9,697 87 22,705 17,337 27,679 704 899 79,108 295,600 27,526 (17,337) (17,337) 10,189 305,789 $000 137,533 6,312 9,707 9,448 330 755 26,552 (70) 164,015 14,961 (9,448) (9,448) 5,513 169,528

Premises Leases 2010 Carrying amount at 1 July 2009 Additional provisions recognised Reductions arising from payments Carrying amount at 30 June 2010 Current (refer Note 17) Non-current (refer Note 20) Carrying amount at 30 June 2010 1,199 (257) 942 164 778 942

Fully paid ordinary shares carry one vote per share and carry the rights to dividends. UXC IPS shares are unquoted shares in UXC ranking equally in all respects with ordinary UXC shares, except that UXC IPS shares were entitled to additional UXC shares if Ingena achieved certain profit targets at June 2009 and June 2010 as set out in UXCs Bidders Statement for the acquisition of Ingena Group Limited dated 12 November 2008. All remaining UXC IPS shares were reclassified as UXC shares on 30 September 2010.

58 UXC Limited 2011 Annual Report

(b) Reconciliation of un-issued shares in respect of which options are outstanding


Options on Issue at 1 July 2010 No. 30 Aug 07 30 Aug 07 14 Sep 07 28 Sep 07 31 Oct 07 31 Jan 08 30 Apr 08 30 Jun 08 30 Sep 08 31 Oct 08 27 Feb 09 27 Feb 09 2 Apr 09 29 May 09 30 Oct 09 Sub Total 1 Jul 09 6 Dec 10 Sub Total Grand Total 148,500 77,000 110,000 22,000 44,000 550,000 27,500 346,500 88,000 55,000 38,500 55,000 38,500 66,000 275,000 1,941,500 2,556,551 2,556,551 4,498,051 $0.00 $0.00 Exercise Price $ $2.76 $2.88 $2.74 $2.80 $2.61 $1.80 $1.37 $1.30 $1.16 $0.92 $0.51 $0.49 $0.49 $0.49 $1.04 Options Issued No. 4,389,720 4,389,720 4,389,720 Options Exercised No. Options Lapsed No. (148,500) (77,000) (110,000) (22,000) (44,000) (550,000) (27,500) (346,500) (27,500) (1,353,000) (205,291) (375,020) (580,311) (1,933,311) 30 Jun 12 1 Jul 13 Options on Issue at Expiry 30 June 2011 Date 29 Aug 10 29 Aug 10 13 Sep 10 27 Sep 10 30 Oct 10 30 Jan 11 29 Apr 11 29 Jun 11 29 Sep 11 30 Oct 11 1 Mar 12 1 Mar 12 1 Apr 12 28 May 12 29 Oct 12 No. 88,000 55,000 38,500 55,000 38,500 66,000 247,500 588,500 2,351,260 4,014,700 6,365,960 6,954,460

Grant date

The employee option plan options on issue have been issued in accordance with the UXC Incentive Plan, and under the terms of their issue, options vest 50% after 12 months of issue and 100% after 24 months of issue, and may be exercised at any time from this date until the date of their expiry 36 months after issue. The employee performance rights have been issued in accordance with the UXC Incentive Plan, and under the terms of their issue, have vesting conditions in the first year after issue tied to actual profit before tax performance compared to budget at the Business Unit level (50%), the Group level (25%) and the Company level (25%). Rights are lapsed for those conditions not achieved after year one. Additionally, the performance rights have two further exercise conditions, whereby 50% of vested rights may be exercisable after two years from their date of issue subject to continuing employment, and the remaining 50% of vested rights may be exercisable after three years from their date of issue subject to continuing employment. (c) Options issued during the year
Performance rights exercisable at $nil issued to employees in accordance with the UXC Incentive Plan (refer Note 29) Total options issued during the year 4,389,720 4,389,720

UXC Incentive Plan Employee Options

UXC Incentive Plan Employee Performance Rights

59

Notes to the Financial Statements


For the Financial Year ended 30 June 2011
Note 23 Reserves
Foreign currency translation reserve1 Balance at the beginning of financial year Translation of foreign operations Balance at the end of financial year Share-based payments reserve2 Balance at the beginning of financial year Issue of options as consideration for acquisition of businesses Balance at the end of financial year Cash flow hedge reserve3 Balance at the beginning of financial year Interest rate swaps Balance at the end of financial year Employee equity-settled benefits reserve4 Balance at the beginning of financial year Share-based payments for employees Balance at the end of financial year Deferred shares recognised directly in equity Balance at the beginning of financial year Deferred shares recognised directly in equity Deferred consideration recognised directly in equity issued as shares Balance at the end of financial year Total reserves
1
5

2011 $000
(2,861) (1,353) (4,214) 579 579 (683) 577 (106) 3,090 152 3,242 (499)

2010 $000
(1,878) (983) (2,861) 579 579 (1,916) 1,233 (683) 2,861 229 3,090 3,750 (3,750) 125

Note 24 Retained Profits


Retained profits at the beginning of the financial year Net profit attributable to members of UXC Limited Dividends provided for or paid (refer Note 26) Retained profits at the end of the financial year

2011 $000 23,622 (20,177) 3,445 cents per share 1.48 (8.08) (6.60) 1.48 (8.07) (6.59) $000

2010 $000 35,378 (2,872) (8,884) 23,622 cents per share 7.13 (8.14) (1.01) 7.11 (8.12) (1.01) $000

Note 25 Earnings per Share


Basic earnings per share From continuing operations From discontinued operations Total basic earnings/(loss) per share Diluted earnings per share From continuing operations From discontinued operations Total basic earnings/(loss) per share

The earnings used in the calculation of basic and diluted earnings per share are: From continuing operations From discontinued operations Total attributable to members 4,530 (24,707) (20,177) 20,340 (23,212) (2,872)

The foreign currency translation reserve accumulates exchange differences relating to the translation of the net assets of the Groups foreign operations from their functional currencies to the Groups presentation currency (i.e. Australian dollars) which are recognised directly in other comprehensive income. The reserve includes gains and losses on hedging instruments that are designated as hedges of net investments in foreign operations. Exchange differences previously accumulated in the foreign currency translation reserve (in respect of translating both the net assets of foreign operations and hedges of foreign operations) are reclassified to profit or loss on the disposal or partial disposal of the foreign operation. The share-based payments reserve recognises share options granted to vendors as part of business combinations. The cash flow hedge reserve represents the cumulative portion of gains and losses on hedging instruments deemed effective in cash flow hedges. The cumulative deferred gain or loss on the hedging instrument is reclassified to profit or loss only when the hedged transaction affects the profit or loss, or is included as a basis adjustment to the non-financial hedged item, consistent with the relevant accounting policy. The employee equity-settled benefits reserve recognises share options granted to employees under the employee share option plan. The deferred shares recognised directly in equity recognises deferred consideration arising from business combinations due to be settled in shares where the number of shares to be issued is known.

2 3

4 5

60 UXC Limited 2011 Annual Report

No. of shares 000 Weighted average number of ordinary shares used in calculating basic earnings per share: Shares deemed to be issued in respect of business purchase agreements (deferred consideration) Shares deemed to be issued for no consideration in respect of options over ordinary shares Weighted average number of ordinary shares used in calculating diluted earnings per share Potential ordinary shares that are not dilutive and therefore excluded from the weighted average number of ordinary shares and potential ordinary shares used in the calculation of diluted earnings per share Weighted average number of converted, lapsed or cancelled potential ordinary shares included in the calculation of diluted earnings per share 305,789 504 16 306,309

No. of shares 000 285,151 691 56 285,898

Note 26 Dividends
Recognised amounts Ordinary shares A dividend was not declared for the year ended 30 June 2010 Fully franked dividend of 3.50 cents per share paid 20 November 2009 (in respect of year ended June 2009) Unrecognised amounts Ordinary shares A dividend was not declared for the year ended 30 June 2011 A dividend was not declared for the year ended 30 June 2010

2011 $000

2010 $000

8,884 8,884

8,627 8,627

391

1,742 Franked dividends

1,358

5,103

Franking account balance (tax paid basis) Impact on franking account balance of dividends not recognised

7,917 7,917

Ordinary shares issued after reporting date


1,143,532 ordinary shares have been issued after reporting date up to the date of the financial report.

The Directors propose to make a special distribution of 2 cents per share by way of a capital return, subject to shareholder approval, which will be sought at the Annual General Meeting in November 2011.

Potential ordinary shares issued after reporting date


No options or performance rights were issued over ordinary shares after the balance date. 1,143,532 performance rights were exercised and 65,994 lapsed after the reporting date up to the date of the financial report.

61

Notes to the Financial Statements


For the Financial Year ended 30 June 2011
Note 27 Lease Commitments
Operating lease commitments Commitments for minimum lease payments in relation to noncancellable operating leases are payable as follows: - Continuing operations - Discontinued operations Within one year - Continuing operations - Discontinued operations Later than one year but not later than five years Later than five years Finance lease commitments Commitments in relation to finance leases are payable as follows: - Continuing operations - Discontinued operations Within one year - Continuing operations - Discontinued operations Later than one year but not later than five years Later than five years Less: Future lease finance charges Lease liabilities provided for in the financial statements: Current (refer Note 16) Non-current (refer Note 19) Total finance lease liability 3,725 4,608 8,333 5,578 6,130 11,708 700 3,500 4,200 208 4,941 5,149 9,349 (1,016) 8,333 2,220 3,678 5,898 866 6,369 7,235 13,133 (1,425) 11,708 Contingent liabilities Particulars and estimated maximum amounts of contingent liabilities are as follows: The Company and its subsidiaries have given guarantees of the performance of various projects and security for leased premises to third parties in the normal course of business (expiring at different dates) - Continuing operations - Discontinued operations 8,203 11,193 19,396 6,632 8,829 15,461 8,129 5,328 13,457 12,905 4,202 17,107 30,564 7,430 6,182 13,612 13,276 6,205 19,481 33,093 2011 $000 2010 $000

Finance Leases
Finance leases relate to motor vehicles and plant and equipment with lease terms of between one and six years. The Group has options to purchase the equipment for a nominal amount at the conclusion of the lease agreements. The Groups obligations under finance leases are secured by the assets leased. The carrying amount of the leased assets is shown in Note 11 Property Plant and Equipment. The fair value of the finance lease liabilities is approximately equal to their carrying amount.

Operating Leases
Operating leases relate to premises and plant and equipment with lease terms ranging from one to six years, with some contracts containing an option to extend for a further term. Some operating lease contracts contain market review clauses in the event that the Group exercises its option to renew. The Group does not have an option to purchase the leased asset at the expiry of the lease period.

Note 28 Contingent Liabilities


2011 $000 2010 $000

Contractual Obligations
Certain subsidiaries have given guarantees pursuant to the performance of various projects and security for leased premises to third parties in the normal course of business. Certain subsidiaries have potential obligations and have provided warranties in the conduct of their business. Where there is a likelihood of a claim and a reliable estimate of an amount can be made, provision has been raised elsewhere in the financial report. Utility Services Corporation (USC), a wholly owned subsidiary of UXC Limited, is a defendant in legal proceedings before the Supreme Court of Victoria concerning the 7 February 2009 Black

62 UXC Limited 2011 Annual Report

Saturday bushfire known as the Kilmore East fire. UAM denies it has any liability and will vigorously defend the proceedings. UAM has liability insurance in place which provides cover for bushfire liability. USCs insurance coverage is consistent with industry standards and practice.

Deferred Consideration for Acquisitions


There are a number of agreements which have been entered into by UXC and its subsidiaries with third parties which confer on those third parties rights to be issued UXC shares, UXC options, or receive cash payments at a future date. This Deferred Consideration arises in connection with acquisition agreements and includes earn-out obligations in favour of the vendors of the acquired entity upon their attainment of certain earnings targets within certain timeframes. In addition to the Deferred Equity Right entitlements thereby conferred, some of the earn-outs also contemplate cash payments on the same or similar basis. Where there is a likelihood of earn-outs being met and a reliable estimate of the obligations can be made, a liability has been raised in the financial report (refer Note 18).

A total of 4,389,720 (2010: 5,628,518) performance rights were granted to employees pursuant to the terms of the UXC Incentive Plan during the year. These rights are exercisable at $nil per share with an expiry date of 1 July 2013. Performance rights carry no rights to dividends and no voting rights. No consideration is received for these share options at the time of their issue. No performance rights were exercised during the year (2010: nil). 580,311 performance rights lapsed during the year (2010: 3,071,967). 6,365,960 performance rights were on issue at 30 June 2011 (2010: 2,556,551) and are exercisable at $nil per share subject to satisfaction of remaining exercise conditions by 30 June 2012 and 1 July 2013. 2011 $ 577,000 150,260 365,151 1,092,411 2010 $ 687,000 239,315 10,685 937,000 83,000 5,483 1,025,483

Note 30 Remuneration of Auditors


Auditor of the parent entity Audit or review of the financial reports Taxation services Corporate Finance advice Overseas affiliate of Deloitte Touche Tohmatsu Taxation services Other Audit or review of the financial reports Total remuneration The auditor of the parent entity is Deloitte Touche Tohmatsu.

Note 29 Share Based Payments


(a) UXC Employee Share Plan
The Company has a shareholder-approved share plan comprising three awards: a $1,000 Tax Exempt Plan under which the shares are issued at a 10% discount to market value and cannot be sold for three years; a Tax Deferred Plan under which the shares are issued at market value and are subject to forfeiture in certain circumstances; and a non-qualifying loan plan allowing a full recourse loan repayable in three years, to be provided to employees to acquire shares. All employees are eligible to participate in the plan. No ordinary shares were issued under the employee share plan during the year (2010: Nil).

89,448 8,640 1,190,499

(b) UXC Incentive Plan


Nil (2010: 275,000) options were granted to employees pursuant to the terms of the UXC Incentive Plan during the year. Share options carry no rights to dividends and no voting rights. No consideration is received for these share options at the time of their issue.

It is the Companys policy to employ Deloitte Touche Tohmatsu on assignments additional to their statutory audit duties where Deloitte Touche Tohmatsu expertise and experience with the Group is important. These assignments are principally tax advice and due diligence reporting on acquisitions or where Deloitte Touche Tohmatsu is awarded assignments on a competitive basis.

Nil options were issued during the year (2010: 236,267 options were issued as an adjustment for the 1 for 10 bonus issue of shares carried out during that year). Nil options (2010: 86,983) were exercised during the year at an exercise price of nil per share. 1,353,000 options (2010: 3,263,233) lapsed during the year. 588,500 options were on issue at 30 June 2011 (2010: 1,941,500) and are exercisable at prices ranging from $0.49 to $1.16 per share with expiry dates ranging from 29 September 2011 to 29 October 2012.
63

Notes to the Financial Statements


For the Financial Year ended 30 June 2011
Note 31 Key Management Personnel Remuneration
The individuals listed below have been identified as key management personnel (KMP) as defined by AASB 124. KMP have authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly and are responsible for the entitys governance. Non-executive Directors are required to be included in this group, notwithstanding that they do not consider themselves to be part of management. The key management personnel of the Company and the Group during the financial year were:

Note 32 Subsidiaries
Parent Entity UXC Limited1,2 Subsidiaries of UXC Limited Utility Services Corporation Limited UXC BSG Holdings Pty Ltd1,3,5 UXC FSG Holdings Pty Ltd
1,4,6 1,2

Country of Incorporation

% Shares/Units Held 2011 % 2010 %

Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia
1,2,4,21

100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100

100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100

Geoffrey Lord (Chairman) Geoffrey Cosgriff (Non-Executive Director) Kingsley Culley (Non-Executive Director) Jean-Marie Simart (Non-Executive Director) Ron Zammit (Non-Executive Director) Cris Nicolli (Managing Director) Paul Fielding (Chief Executive Officer Professional Solutions Group) Resigned 28 July 2010 Glenn Fielding (Chief Executive Officer Professional Solutions Group) Appointed 1 July 2010 Michael Waymark (Chief Executive Officer Field Solutions Group) Resigned 24 December 2010 Ralph Pickering (Director, Divestments and Acquisitions) Mark Hubbard (Finance Director and Company Secretary) Post employment benefits Longterm Shareemployee based payments benefits Equitysettled options1 $ 47,851 27,638 Earned not vested $

Subsidiaries of BSG Holdings Pty Ltd Eclipse Computing (Australia) Pty Ltd1,2,3,31 Integ Group Pty Ltd (formerly eDD Holdings Pty Ltd)1,2,3,51 Oxygen Business Solutions Pty Ltd1, 2,3,32 Red Rock Consulting Pty Ltd
1,2,3,24

UXC Cloud Solutions Pty Ltd1,14 UXC Connect Pty Ltd (formerly UXC Getronics Australia Pty Ltd)1,2,3,12,27 UXC Consulting Pty Ltd (formerly UXC Management Consulting Pty Ltd)1,3,18,33 UXC Holdings Pty Ltd
1,28

UXC Professional Solutions Holdings Pty Ltd (formerly e-Data Holdings Pty Ltd)1,3,29 UXC Professional Solutions Pty Ltd (formerly Ingena Group Limited)1,3,9,50 UXC Solutions Pty Ltd1,7,30 Subsidiaries of UXC FSG Holdings Pty Ltd

Short-term employee benefits Nonmonetary benefits $ Total short-term employee benefits $

Salary/ Fees $ 2011 2010


1

Cash STI $ 525,404 196,880

Superannuation $ 109,204 106,422

Total $

ILID Pty Limited1,38 Morgan Facilities Management Pty Ltd1,47 Fieldforce Services Pty Ltd UAM Pty Ltd1,4,20 UXC Engineering Solutions Pty Ltd (formerly Hyper One Pty Ltd)1,26 UXC Infrastructure Constructions Pty Ltd (formerly Vision Energy Pty Ltd)1,4,19,46 Skilltech Consulting Services Pty Limited1,2,4,43

2,476,825 2,391,267

10,619 3,012,848 21,766 2,609,913

471,886 3,641,789 242,239 2,986,212

Options over shares issued as part of remuneration have been valued in accordance with Australian Accounting Standards AASB 2, using the Binomial Valuation Methodology. The value of the options is determined on the grant date and is included in remuneration on a proportionate basis from grant date to vesting date. Details of options issued, exercised, and lapsed is contained in Note 35.

64 UXC Limited 2011 Annual Report

Note 32 Subsidiaries

Country of Incorporation

% Shares/Units Held 2011 % 2010 %

Note 32 Subsidiaries
Subsidiary of Oxygen Business Solutions Pty Ltd

Country of Incorporation

% Shares/Units Held 2011 % 2010 % 100 100

Subsidiaries of Eclipse Computing (Australia) Pty Ltd Eclipse eOne Pty Ltd1 Eclipse Cloud Computing Pty Ltd
1,53

Australia Australia Canada USA Australia Australia Australia Australia Australia Australia Australia

100 100 100 100 100 100 100 100 100 100 100

100 100 100 100 100 100 100 100 100

Oxygen Express Pty Ltd1 Subsidiary of Planpower Pty Limited Planpower Training Solutions Pty Ltd1,41 Subsidiaries of Red Rock Consulting Pty Ltd Rocksolid SQL Pty Ltd (formerly BML & Associates Pty Ltd)1,11 Glue AP Pty Ltd1,8 Jigsaw Services Pty Ltd
1

Australia Australia

100 100

Eclipse Intelligent Solutions (Canada) Ltd10 Eclipse Intelligent Solutions (USA) Inc54 QSP Asia Pacific Pty Ltd1,2,42 UXC Applications Development Pty Ltd (formerly Dytech Solutions Pty Ltd)1,44 Subsidiaries of Gibson Quai-AAS Pty Ltd AAS Consulting Pty Ltd1 Telecommunications Consultants Pty Limited1 Telecommunications Consultants Unit Trust1 Subsidiary of ILID Pty Ltd Shelfmade Pty Limited1 Subsidiary of ILID Systems Pty Limited ILID No. 2 Pty Ltd
1

Australia Australia Australia New Zealand Australia Australia Australia


1

100 100 100 100 100 100 100 100 100 100 100 100 100 75 75 100 100 100 100 100 100 100 100

100 100 100 100 100 100 100 100 100 100 100 100 100 75 75 100 100 100 100 100 100 100 100
65

Red Rock Enterprises Ltd Subsidiary of Skilltech Consulting Services Pty Ltd UXC Metering Solutions Pty Ltd1 Subsidiaries of Utility Services Corporation Limited ACN 007 443 1651 AIT Unit Trust1 Australian Information Technology Pty Limited Golden Hills Mining Services Pty Limited1,22 ILID Systems Pty Limited1

Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia

Subsidiary of Infrastructure Constructions Pty Ltd Trenchless Group Pty Ltd (formerly e-Storage Direct Pty Ltd)1 Subsidiaries of Integ Group Pty Ltd C4 Systems Pty Ltd1 Integ Communication Solutions Pty Ltd1,2 Integ Queensland Pty Ltd (formerly Lanlink Pty Ltd)1 Pacific Consulting (Qld) Pty Ltd1 Pinedawn Pty Ltd1 Walan Systems Pty Ltd Lucid IT Pte Ltd Lucid IT Sdn Bhd Subsidiaries of QSP Asia Pacific Pty Ltd Agave Software Pty Ltd1,34 e.BI Solutions Pty Limited1 e.Fab Pty Ltd
1 1

Australia Australia Australia Australia Australia Australia Australia Singapore Malaysia Australia Australia Australia Australia
1

100 100 100 100 100 100 100 100 100 100 100 100 100 100

100 100 100 100 100 100 100 100 100 100 100 100 100 100

Insulaction Pty Ltd (formerly e.inform Pty Ltd)1 MITS Unit Trust TechComm Power International Pty Limited1 U-tel Communications Pty Ltd U-tel Communications Unit Trust UXC Retail Solutions Pty Ltd (formerly ACN 060 334 563 Pty Ltd)1,16 Subsidiary of UXC Consulting Pty Ltd Australian College of Project Management Pty Ltd1,48 Gibson Quai-AAS Pty Ltd1,37 Lucid IT Pty Ltd1,23 Option Pty Ltd
1,15,52

Subsidiaries of Lucid IT Pty Ltd

Planpower Pty Limited1,2,40 UXC Defence Pty Ltd1,25 UXC Information Management Pty Ltd (formerly BCT Group Pty Ltd)1,17,45

e.sens Pty Ltd1,36 UXC Performance Management Pty Ltd

Australia

Notes to the Financial Statements


For the Financial Year ended 30 June 2011
Note 32 Subsidiaries
Subsidiary of UXC Cloud Solutions Pty Ltd UXC Cloud Consulting Pty Ltd
1,13,49

Country of Incorporation

% Shares/Units Held 2011 % 2010 % 100 100 100 100 100 100 100
5 6 7 8 9

These wholly-owned subsidiaries entered into a deed of cross guarantee on 15 June 2011 with UXC FSG Holdings Pty Limited pursuant to ASIC Class Order 98/1418 and were relieved from the requirement to prepare and lodge an audited financial report. UXC FSG Holdings will prepare and lodge an audited financial report for 30 June 2011. UXC BSG Holdings Pty Ltd was incorporated by UXC Ltd on 14 April 2010. UXC FSG Holdings Pty Ltd was incorporated by UXC Ltd on 20 May 2010. UXC Solutions Pty Ltd was incorporated by UXC Ltd on 4 April 2010. Glue AP Pty Ltd acquired by Red Rock Consulting Pty Ltd on 10 September 2009. Ingena Group Limited changed its name to UXC Professional Solutions Pty Ltd on 7 August 2009.

Australia Australia Australia New Zealand New Zealand New Zealand New Zealand

100 100 100 100 100 100 100

Subsidiary of UXC Engineering Solutions Pty Limited Energy Assessors Australia Pty Ltd1 Datec (Qld) Pty Ltd1,35 Subsidiary of UXC Holdings Pty Ltd UXC Holdings (NZ) Ltd Subsidiaries of UXC Holdings (NZ) Ltd Eclipse New Zealand Limited Oxygen Business Solutions Limited Red Rock Limited (formerly Sequel Software Limited) UXC Infrastructure Constructions Pty Ltd (formerly Vision Energy Pty Ltd) Infrastructure Constructions Pty Ltd1,2,39 MPI Contracting Pty Ltd1 Precision Pipes and Cables Pty Ltd1 Subsidiary of UXC Performance Management Pty Ltd e.Prise Pty Ltd1 (formerly e-Data Holdings Pty Ltd) e-Data Care Pty Limited1,2 XSI Data Solutions Pty Limited1,2 Optimise IT Holdings Pty Ltd1 Optimise IT Pty Ltd1 Optimise Unit Trust
1 2
1

10 Eclipse Intelligent Solutions (Canada) Ltd was incorporated by Eclipse Computing (Australia) Pty Ltd on 16 July 2009. 11 BML & Associates Pty Ltd changes its name to Rocksolid SQL Pty Ltd on 29 April 2010. 12 UXC Getronics Australia Pty Ltd changed its name to UXC Connect Pty Ltd on 31 May 2010. 13 UXC Cloud Consulting Pty Ltd was incorporated by UXC Ltd on 23 April 2010. 14 UXC Cloud Solutions Pty Ltd was incorporated by UXC Ltd on 23 April 2010. 15 Opticon Pty Ltd was incorporated by UXC Ltd on 22 June 2010. 16 ACN 060 334 563 Pty Ltd changed its name to UXC Retail Solutions Pty Ltd on 31 May 2010. 17 BCT Group Pty Ltd resolved to change its name to UXC Information Management Pty Ltd on 27 August 2009. 18 UXC Management Consulting Pty Ltd changed its name to UXC Consulting Pty Ltd on 12 March 2010. 19 Vision Energy Pty Ltd changed its name to UXC Infrastructure Constructions Pty Ltd on 13 December 2010. 20 UAM Pty Ltd was incorporated by UXC Ltd on 13 July 2010. On 1 August 2011 this was renamed to ACN 145 504 301 Pty Ltd. 21 Ownership of Fieldforce Services Pty Ltd changed from UXC Limited to UXC FSG Holdings Pty Ltd during the financial year ended 30 June 2011. 22 Ownership of Golden Hills Mining Services Pty Limited changed from UXC Limited to Utility Services Corporation Ltd during the financial year ended 30 June 2011. 23 Ownership of Lucid IT Pty Ltd changed from UXC Limited to UXC Consulting Pty Ltd during the financial year ended 30 June 2011. 24 Ownership of Red Rock Consulting Pty Ltd changed from UXC Limited to UXC BSG Holdings Pty Ltd during the financial year ended 30 June 2011. 25 Ownership of UXC Defence Pty Ltd changed from UXC Limited to UXC Consulting Pty Ltd during the financial year ended 30 June 2011.

Australia Australia Australia Australia

100 100 100 100

100 100 100 100

Subsidiaries of UXC Professional Solutions Holdings Pty Ltd Australia Australia Australia Australia Australia 100 100 100 100 100 100 100 100 100 100

26 Ownership of UXC Engineering Solutions Pty Ltd (formerly Hyper One Pty Ltd) changed from UXC Limited to UXC FSG Holdings Pty Ltd during the financial year ended 30 June 2011. 27 Ownership of UXC Connect Pty Ltd (formerly UXC Getronics Australia Pty Ltd) changed from UXC Limited to UXC BSG Holdings Pty Ltd during the financial year ended 30 June 2011. 28 Ownership of UXC Holdings Pty Ltd changed from UXC Limited to UXC BSG Holdings Pty Ltd during the financial year ended 30 June 2011. 29 Ownership of UXC Professional Solutions Holdings Pty Ltd (formerly e-Data Holdings Pty Ltd) changed from UXC Limited to UXC BSG Holdings Pty Ltd during the financial year ended 30 June 2011. 30 Ownership of UXC Solutions Pty Ltd changed from UXC Limited to UXC BSG Holdings Pty Ltd during the financial year ended 30 June 2011. 31 Ownership of Eclipse Computing (Australia) Pty Ltd changed from Utility Services Corporation Limited to UXC BSG Holdings Pty Ltd during the financial year ended 30 June 2011. 32 Ownership of Oxygen Business Solutions Pty Ltd changed from Utility Services Corporation Limited to UXC BSG Holdings Pty Ltd during the financial year ended 30 June 2011. 33 Ownership of UXC Consulting Pty Ltd (formerly UXC Management Consulting Pty Ltd) changed from Utility Services Corporation Limited to UXC BSG Holdings Pty Ltd during the financial year ended 30 June 2011. 34 Ownership of Agave Software Pty Ltd changed from Utility Services Corporation Limited to QSP Asia Pacific Pty Ltd during the financial year ended 30 June 2011.

Subsidiaries of UXC Professional Solutions Pty Ltd (formerly Ingena Group Ltd)

These entities are members of the tax-consolidated group. UXC Limited is the head entity within the taxconsolidated group. These wholly-owned subsidiaries entered into a deed of cross guarantee with UXC Limited pursuant to ASIC Class Order 98/1418 and were relieved from the requirement to prepare and lodge an audited financial report. The deed of cross guarantee ended on 15 June 2011. These wholly-owned subsidiaries entered into a deed of cross guarantee on 15 June 2011 with UXC BSG Holdings Pty Limited pursuant to ASIC Class Order 98/1418 and were relieved from the requirement to prepare and lodge an audited financial report. UXC BSG Holdings will prepare and lodge an audited financial report for 30 June 2011.

66 UXC Limited 2011 Annual Report

35 Ownership of Datec (Qld) Pty Ltd changed from Utility Services Corporation Limited to UXC Engineering Solutions Pty Ltd during the financial year ended 30 June 2011. 36 Ownership of e.sens Pty Ltd changed from Utility Services Corporation Limited to QSP Asia Pacific Pty Ltd during the financial year ended 30 June 2011. 37 Ownership of Gibson Quai-AAS Pty Ltd changed from Utility Services Corporation Limited to UXC Consulting Pty Ltd during the financial year ended 30 June 2011. 38 Ownership of ILID Pty Limited changed from Utility Services Corporation Limited to UXC FSG Holdings Pty Ltd during the financial year ended 30 June 2011. 39 Ownership of Infrastructure Constructions Pty Ltd changed from Utility Services Corporation Limited to UXC Infrastructure Constructions Pty Ltd (formerly Vision Energy Pty Ltd) during the financial year ended 30 June 2011. 40 Ownership of Planpower Pty Limited changed from Utility Services Corporation Limited to UXC Consulting Pty Ltd during the financial year ended 30 June 2011. 41 Ownership of Planpower Training Solutions Pty Ltd changed from Utility Services Corporation Limited to Planpower Pty Ltd during the financial year ended 30 June 2011. 42 Ownership of QSP Asia Pacific Pty Ltd changed from Utility Services Corporation Limited to Eclipse Computing (Australia) Pty Ltd during the financial year ended 30 June 2011. 43 Ownership of Skilltech Consulting Services Pty Ltd changed from Utility Services Corporation Limited to UXC FSG Holdings Pty Ltd during the financial year ended 30 June 2011. 44 Ownership of UXC Applications Development Pty Ltd (formerly Dytech Solutions Pty Ltd) changed from Utility Services Corporation Limited to Eclipse Computing (Australia) Pty Ltd during the financial year ended 30 June 2011. 45 Ownership of UXC Information Management Pty Ltd (formerly BCT Group Pty Ltd) changed from Utility Services Corporation Limited to UXC Consulting Pty Ltd during the financial year ended 30 June 2011. 46 Ownership of UXC Infrastructure Constructions Pty Ltd (formerly Vision Energy Pty Ltd) changed from Utility Services Corporations Limited to UXC FSG Holdings Pty Ltd during the financial year ended 30 June 2011. 47 Ownership of Morgan Facilities Management Pty Ltd changed from UXC Infrastructure Constructions Pty Ltd (formerly Vision Energy Pty Ltd) to UXC FSG Holdings Pty Ltd during the financial year ended 30 June 2011. 48 Ownership of Australian College of Project Management Pty Ltd changed from Planpower Pty Ltd to UXC Consulting Pty Ltd during the financial year ended 30 June 2011. 49 Ownership of UXC Cloud Consulting Pty Ltd changed from UXC BSG Holdings Pty Ltd to UXC Cloud Solutions Pty Ltd during the financial year ended 30 June 2011. 50 Ownership of UXC Professional Solutions Pty Ltd changed from UXC Professional Solutions Holdings Pty Ltd to UXC BSG Holdings Pty Ltd during the financial year ended 30 June 2011. 51 Ownership of Integ Group Pty Ltd (formerly eDD Holdings Pty Ltd) changed from Utility Services Corporation Pty Ltd to UXC BSG Holdings Pty Ltd during the financial year ended 30 June 2011. 52 Ownership of Opticon Pty Ltd changed from UXC BSG Holdings Pty Ltd to UXC Consulting Pty Ltd during the financial year ended 30 June 2011. 53 Eclipse Cloud Computing Pty Ltd was incorporated by Eclipse Computing (Australia) Pty Ltd on 11 April 2011. 54 Eclipse Intelligent Solutions (USA) Inc was incorporated by Eclipse Computing (Australia) Pty Ltd on 23 February 2011.

The consolidated statement of comprehensive income and statement of financial position of entities which were party to the UXC Limited deed of cross guarantee at 30 June 2010 were: (a) Statement of Comprehensive Income Revenue Other income Services and products used Employee benefits expense Contractor and sub-contractor expense Licence fee expense Travel expenses Occupancy expenses Vehicle and equipment running costs Professional services expense Depreciation and amortisation expense Communication expenses Finance charges Advertising and marketing costs Insurance costs Recruitment and staff training costs Operating lease cost Impairment of investment in listed corporations Other expenses Profit on disposal of business Profit/(loss) before income tax expense Income tax expense Profit/(loss) for the year Other comprehensive income Gain/(loss) on interest rate cash flow hedges taken to equity Total comprehensive income/(loss) for the year 1,233 (858) 2010 $000 608,857 745 (145,060) (242,550) (112,210) (11,949) (8,462) (8,745) (19,538) (9,878) (10,019) (6,359) (8,995) (2,737) (2,243) (2,689) (3,020) (21,884) 4,758 (1,978) (113) (2,091)

67

Notes to the Financial Statements


For the Financial Year ended 30 June 2011
(b) Statement of Financial Position
Current assets Cash and cash equivalents Trade and other receivables Inventories Current tax assets Other Total Current Assets Non-current assets Trade and other receivables Investments accounted for using the equity method Other financial assets Property, plant and equipment Goodwill Other intangible assets Deferred tax assets Other Total non-current assets Total assets Current liabilities Trade and other payables Unearned income Borrowings Provisions Other Total current liabilities Non-current liabilities Borrowings Unearned income Provisions Other Total non-current liabilities Total liabilities Net assets Equity Issued capital Reserves Retained earnings1 Total equity
68 UXC Limited 2011 Annual Report

2010 $000 28,267 265,048 13,189 3,930 14,553 324,987 10,388 4,259 41,649 23,551 89,870 7,349 1,439 265 178,770 503,757 87,886 23,991 25,747 16,493 144,217 298,334 49,609 808 3,912 354 54,683 353,017 150,740 168,749 (675) (17,334) 150,740 1 Retained Earnings Retained earnings as at beginning of the financial year Net profit Dividends provided for or paid Retained earnings as at end of the financial year

2010 $000 (6,359) (2,091) (8,884) (17,334)

Note 33 Acquisitions of Businesses


No acquisitions were made during the current period. The following acquisitions were made during the previous corresponding financial year: Name of entity/business Glue AP Pty Ltd MXL Principal activity IT Consulting IT Consulting Date control gained 10 September 2009 14 May 2010 Proportion of shares acquired 100% Business and assets

Goodwill on acquisition represents the future benefits of acquiring suitably qualified workforces, typically found with services businesses, specialising in particular technologies and systems. Included in the result for the previous year is a profit for the period of $604,000 attributable to the above acquisitions. Had these business combinations been effected at 1 July 2009, the revenue of the consolidated entity would have been approximately $680,521,000 and the net loss would have been approximately $2,751,000 for the year ended 30 June 2010. Other intangible assets represent the fair value of contracts and customer relationships at acquisition date.

Details of the acquisitions are as follows: 2010 $000 Consideration 1,080 1,591 806 3,477
Book value Fair value adjustment Fair value on acquisition Fair value of net assets acquired Book value

Note 34 Segment Information


2011 $000 The Group operates predominantly in Australia. Revenue from foreign countries is not material to the Group. No single external customer generates 10% or more of the Groups revenue. The Group operates in the following segments:

Cash Share capital and options Deferred consideration Deferred consideration recognised directly in equity

Fair value adjustment Fair value on acquisition

UXC IT
UXC IT provides market-leading Information, Communication and Technology (ICT) solutions and services to medium and large corporates and governments. UXC IT has three service and solution focus areas: Consulting, Applications and Infrastructure.

Field Solutions Group


Engaged in asset and data management for utilities, including asset inspection, management and maintenance services; water conservation, energy saving, and other environmental services; the provision of utility meter installation and reading services; and related data management and GIS services. Field Solutions Group is classified within discontinued operations.

259 364 57 680 30 1,000 1,030 1,710 191 15 45 251 251 1,459

259 364 57 680 30 1,000 1,030 1,710 191 15 45 251 251 1,459 2,018

Current assets Cash and cash equivalents Trade and other receivables Other Total current assets Non-current assets Property, plant and equipment Other intangible assets Deferred tax assets Total non-current assets Total assets Current liabilities Trade and other payables Deferred consideration Unearned income Current tax liabilities Provisions Total current liabilities Non-current liabilities Provisions Total non-current liabilities Total liabilities Net assets/(liabilities) acquired Goodwill on acquisition

69

Notes to the Financial Statements


For the Financial Year ended 30 June 2011
Industry Segments Continuing Operations Sales to external customers Inter-segment sales Total sales revenue Other revenue Unallocated and eliminations Discontinued operations Total segment revenue Segment result continuing operations Unallocated revenue less unallocated expenses Profit before income tax expense Income tax expense Net profit from continuing operations Net profit/(loss) from discontinued operations Net profit/(loss) attributable to members of the parent entity Segment assets2 Unallocated assets Assets associated with discontinued operations Total assets Segment liabilities Unallocated liabilities Liabilities associated with discontinued operations Total liabilities Property, plant and equipment, intangibles and other non current assets1 Acquisitions by segment Unallocated acquisitions Total acquisitions Acquired from business acquisitions Depreciation and amortisation expense From continuing operations From discontinued operations Unallocated depreciation and amortisation expense Total depreciation and amortisation expense Other non cash expenses From continuing operations From discontinued operations
1 2 Excludes assets acquired by means of acquisition of businesses Includes associate entities

UXC IT 2011 $000 494,182 22,612 516,794 836 517,630 24,392

2010 $000 457,238 11,455 468,693 6,037 474,730 38,185

Field Solutions 2011 $000 213,545 213,545 -

2010 $000 273,098 273,098 -

Consolidated 2011 $000 494,182 22,612 516,794 836 (82) 213,545 731,093 24,392 (15,305) 9,087 (4,557) 4,530 (24,707) (20,177) 259,384 83,256 74,800 417,440 146,166 57,172 41,659 244,997 5,277 15 5,292 5,800 6,647 309 12,756 543 1,989

2010 $000 457,238 11,455 468,693 6,037 (705) 273,098 747,123 38,185 (14,817) 23,368 (3,028) 20,340 (23,212) (2,872) 277,374 61,271 108,706 447,351 138,836 67,055 48,185 254,076 10,907 1,595 12,502 5,141 6,991 23 12,155 1,347 2,234

259,384

277,374

146,166

138,836

5,277

5,179

5,728

5,800 -

5,141 -

6,647

6,991

543 -

1,347 -

1,989

2,234

70 UXC Limited 2011 Annual Report

Note 35 Related Party Disclosures


The names of each person holding the position of Director of the Company during the financial year together with details of Directors remuneration, superannuation and retirement payments are set out at Note 31. Apart from the details disclosed in this note, no Director has entered into a contract with the Company or the Group since the end of the previous financial year and there were no contracts involving Directors interests existing at year end other than the contracts disclosed in the Directors Report. 2010 Geoffrey Lord Geoffrey Cosgriff Kingsley Culley Jean-Marie Simart Ron Zammit Cris Nicolli Michael Waymark Paul Fielding Ralph Pickering 18,400,110 4,531,704 1,771,108 497,443 3,501,416 2,675,102 357,500 4,505,193 4,544,142 1,571,247 42,354,965
1

Shares held 30 June 2009 No. 14,572,905 3,818,365 1,465,907 413,292 3,085,865 2,198,500 274,000 4,280,511 3,947,405 1,396,005 35,452,755

Shares Sold No. 24,000 1,697,081 160,000 100,000 1,981,081

Options Exercised No. 1,450,091 301,365 144,191 38,929 97,240 175,497 25,000 428,051 347,431 132,401 3,140,196

Acquired No. 2,377,114 411,974 161,010 45,222 318,311 301,105 82,500 1,493,712 409,306 142,841 5,743,095

Shares held 30 June 2010 No. 18,400,110 4,531,704 1,771,108 497,443 3,501,416 2,675,102 357,500 4,505,193 4,544,142 1,571,247 42,354,965

Key Management Personnel Holdings of Shares


The interests of Key Management Personnel in the Company and their related entities in shares of the Company at year-end and movements during the year are set out below. Key Management Personnel had no interest in entities within the Group. Shares held 30 June 2010 2011 Geoffrey Lord Geoffrey Cosgriff Kingsley Culley Jean-Marie Simart Ron Zammit Cris Nicolli Michael Waymark Paul Fielding Glenn Fielding Ralph Pickering Mark Hubbard No. Shares Sold No. 138,092 100,000 238,092 Other1 No. 357,500 4,505,193 4,862,693 Options Exercised No. Shares held Acquired 30 June 2011 No. No.

- 18,400,110 375,000 4,531,704 1,771,108 497,443 3,501,416 3,050,102 4,406,050 1,471,247

Mark Hubbard

375,000 37,629,180
71

No longer included as not a member of the Key Management Personnel at 30 June 2011.

Notes to the Financial Statements


For the Financial Year ended 30 June 2011
Key Management Personnel Holdings of Share Options 2011
The interests of Key Management Personnel in the Company and their related entities in options over shares of the Company at year-end and movements during the year are set out below: Options held 30 June 2010 2011 Geoffrey Lord Geoffrey Cosgriff Kingsley Culley Jean-Marie Simart Ron Zammit Cris Nicolli Michael Waymark Paul Fielding Glenn Fielding Ralph Pickering Mark Hubbard
1

Key Management Personnel Holdings of Share Options 2010


Options held 30 June 2009 2010 Geoffrey Lord Geoffrey Cosgriff Kingsley Culley Jean-Marie Simart Ron Zammit Cris Nicolli Michael Waymark Paul Fielding Ralph Pickering Mark Hubbard
1

Options Issued No.


1

Options Exercised No. -

Options Lapsed No. (550,000) (28,310) (7,052)

Balance Options vested and held exercisable 30 June 30 June 2011 2011 No. 273,092 473,232 399,854 No. -

Options vested during year No.


1

Options Options Issued Exercised No.1 No.

Options Lapsed No.

Balance Options vested and Options vested held exercisable during 30 June 30 June year 2010 2010 No. 273,092 550,000 218,442 191,216 No. No.1 - 1,450,091 550,000 379,437 144,191 38,929 306,187 210,250 575,000 428,051 389,941 132,401

No.

2,850,091 1,529,506 (1,450,091) (2,929,506) 379,437 144,191 38,929 306,187 387,916 525,000 428,051 599,941 272,401 - (301,365) - (144,191) (38,929) (78,072) -

No. 273,092 550,000 218,442 191,216 1,232,750

283,100 215,690 498,790

(97,240) (208,947)

445,614 (175,497) (384,941) 347,633 (25,000) (297,633) -

- (428,051)

346,535 (347,431) (380,603) 330,235 (132,401) (279,019)

5,932,144 2,999,523 (3,140,196) (4,558,721) 1,232,750

550,000 4,054,478

- (585,362) 1,146,178

Options issued in FY09 and vested and exercised in FY10 are pursuant to the Prospectus dated 27 March 2009 for an offer, at no cost to shareholders, of one Bonus Option for every ten shares held on the record date of 14 April 2009. None of this pro-rata securities distribution to all shareholders was issued to executives as a component of remuneration. Options issued also includes adjustment for the 1 for 10 bonus issue of shares granted to all shareholders and allotted on 28 April 2010.

Options issued relate to FY11 Employee Performance Rights issued in accordance with the UXC Incentive Plan.

Key Management Personnel exercised nil options during the year (2010: 3,140,196). 585,362 options lapsed during the year (2010: 4,558,721).

72 UXC Limited 2011 Annual Report

Loans to Key Management Personnel


Loans are provided to Key Management Personnel as part of the Long Term Incentive share-based payment plan (note 29). At 30 June 2011 the balance of these loans was $1,906,250 (2010: $1,906,250) comprising loans to C Nicolli $875,000 (2010: $875,000), M Hubbard $687,500 (2010: $687,500), R Pickering $343,750 (2010: $343,750). There is no interest payable on the loans. The loans are due to be repaid when the underlying shares cease to be restricted shares.

Note 36 Notes to the Cash Flow Statement


(a) Reconciliation of profit/(loss) for the year to net cash flows from operating activities
2011 $000 Profit/(loss) after tax for the year Depreciation and amortisation (Profit)/loss on disposal of plant and equipment (Profit)/loss on disposal of business Equity settled share-based payment Unrealised foreign exchange (gains)/losses (Increase)/decrease in current tax assets (Increase)/decrease in deferred tax assets Impairment of investment in associate Impairment of non-current assets Impairment loss recognised on inventory Share of associates (profit)/loss Changes in operating assets and liabilities net of the effects of purchases and disposals of businesses (Increase)/decrease in trade and other receivables (Increase)/decrease in accrued income (Increase)/decrease in inventories (Increase)/decrease in other assets Increase/(decrease) in trade and other payables Increase/(decrease) in unearned income Increase/(decrease) in provision for employee benefits Increase/(decrease) in other provisions Net cash inflow/(outflow) from operating activities (16,650) 3,236 5,134 524 6,235 7,231 1,575 (417) 26,483 (5,713) 25,508 2,616 455 2,263 2,939 2,298 96 27,956 (20,177) 12,756 1,554 4,230 152 (727) 7,510 (2,070) 3,970 11,192 1,193 32 2010 $000 (2,872) 12,155 1,171 (4,758) 229 (957) (3,483) (6,074) 2,335 (252)

Other Transactions with Key Management Personnel


Profit for the year includes the following items of revenue and expense that resulted from transactions, other than compensation, loans or equity holdings, with key management personnel or their related entities. Each of the transactions was on normal terms and conditions of trading. 2011 $000 Revenue from rendering of services Purchases of services and products
39 163

2010 $000
246 147

Wholly-Owned Group
The ultimate parent entity in the wholly owned group is UXC Limited. Details of interests in wholly owned subsidiaries are set out at Note 32. The Directors have elected for wholly-owned Australian entities within the group to be taxed as a single entity from 13 September 2002 (refer Note 3(f)).

73

Notes to the Financial Statements


For the Financial Year ended 30 June 2011
2011 $000 2010 $000

Commercial Bills
Interest on commercial bills is determined with reference to the Bank Bill Swap Yield (BBSY) on the day of the drawdown.

(b) Acquisition of businesses


Outflow of cash to acquire businesses, net of cash acquired Cash consideration (refer Note 33) Less: Cash balances acquired 1,080 (259) 821 1,591 6,312 1,439

Note 37 Financial Instruments


(a) Significant Accounting Policies
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect to each category of financial asset and financial liability are disclosed in Note 1 to the financial statements.

(c) Non-cash financing and investing activities


Acquisition of businesses by means of share and option issues Deferred consideration by means of share and option issues Acquisition of assets by means of finance leases 2,884

(b) Categories of Financial Instruments


2011 $000 Financial Assets Cash 29,163 159,716 3 37,758 151,453 6 2010 $000

(d) Financing facilities


The Group has access to the following lines of credit: Total facilities available (secured) Bank overdraft Commercial bills Bank guarantee facility Facilities utilised at balance date Bank overdraft Commercial bills Bank guarantee facility Facilities not utilised at balance date Bank overdraft Commercial bills Bank guarantee facility 6,000 36,000 3,109 45,109 6,000 29,585 3,039 38,624 43,646 15,391 59,037 64,186 15,461 79,647 6,000 79,646 18,500 104,146 6,000 93,771 18,500 118,271

Trade receivables Available for sale financial assets Financial Liabilities Financial liabilities at amortised cost Derivative instruments in designated hedge accounting relationship at fair value Derivative instruments at fair value through profit and loss

(200,890) (106) (16)

(218,176) (683) 11

(c) Financial Risk Management Objectives


The Groups Corporate division monitors and manages the financial risks relating to the operations of the Group through internal risk reports, which analyse exposures to risks. These risks include:

Market risk (including currency risk, interest rate risk, price risk); Credit risk; Liquidity risk.

Bank Overdraft
Interest on bank overdraft is determined with reference to the banks variable lending indicator (Benchmark) rate. The bank overdraft is part of a set-off agreement and is subject to periodic review.
74 UXC Limited 2011 Annual Report

The Group seeks to minimise the effects of these risks by using various financial instruments to hedge these exposures. The use of financial instruments is governed by the Groups Policies and Procedures approved by the Board. The Group does not enter into or trade financial instruments for speculative purposes.

(d) Market Risk


The Groups activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates. The Group enters into derivative financial instruments to manage its exposure to foreign currency risk and interest rate risk, including:

Impact of change in foreign currency AUD $000 Account Profit or loss Receivables from New Zealand subsidiaries Receivables from Canadian subsidiaries 2011 82 353 172 2010 174 619 55

Forward foreign exchange contracts to hedge exchange rate risk arising on the import of goods and services from overseas; and Interest rate swaps and collars to mitigate the risk of rising interest rates.

There has been no material change from the prior year to the companys and the Groups exposure to market risk or in the matter to which the risks are managed and measured.

The Groups sensitivity to foreign currency has not changed materially from the prior year. Foreign Exchange Contracts The Group enters into forward foreign exchange contracts to cover specific foreign currency payments on behalf of entities within the Group. These are usually of a short-term nature (less than three months). The following table details the Groups forward foreign currency contracts outstanding as at reporting date: Average Exchange Rate 2011 Buy US Dollars Less than three months 1.0510 0.8548 2,012 3,564 (16) 11 2010 Principal Amount $000 2011 2010 Fair Value $000 2011 2010

(e) Foreign Currency Risk Management


Foreign currency risk refers to the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Groups exposure to foreign exchange risk arises from:

Net investment in New Zealand operations; Net investment in Canadian operations; Net investment in US operations; Undertaking certain transactions denominated in foreign currencies.

The carrying amount of the Groups foreign currency denominated assets and liabilities at the reporting date is as follows: Assets $000 Currency Canadian dollars (CAD) Fiji dollars (FJD) New Zealand dollars (NZD) US dollars (USD) Foreign Currency Sensitivity The Group is mainly exposed to New Zealand Dollars and Canadian Dollars. The following table details the Groups sensitivity to a 10% increase and decrease in the Australian Dollar against the New Zealand Dollar and Canadian Dollar. The sensitivity analysis only includes outstanding foreign currency denominated items and adjusts their translation at year end for a 10% change in foreign currency rates. A positive number indicates an increase where the Australian Dollar weakens against the New Zealand Dollar and/or Canadian Dollar. 2011 3,877 428 20,070 1,450 2010 2,520 506 20,112 283 Liabilities $000 2011 (1,883) (6,531) 2010 (1,013) (6,952) -

The above foreign exchange contracts were not designated as hedges and consequently, gains or losses are recognised in the profit or loss.

(f) Interest Rate Risk Management


Interest rate risk refers to the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group is exposed to interest rate risk as entities in the Group borrow funds at floating rates. The risk is managed by the Group through the use of interest rate swap contracts and cap and floor interest rate contracts. Hedging activities are evaluated regularly to align with interest rate views and defined risk appetite; ensuring optimal hedging strategies are applied by protecting interest expense through different interest rate cycles. Interest Rate Sensitivity The sensitivity analyses below have been determined based on the exposure to interest rates for both derivative and non-derivative instruments at the reporting date and the stipulated change taking place at the beginning of the financial year and held constant throughout the reporting period. A 100 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel.
75

Notes to the Financial Statements


For the Financial Year ended 30 June 2011
At reporting date, if interest rates had been 100 basis point higher/lower and all other variables were held constant:

The Groups net profit and equity would decrease/increase by $101,000 (2010: decrease/ increase by $29,000).

or interest rate risk). The Group is exposed to equity price risk arising from its equity investment. Equity investments are held for strategic rather than trading purposes. The Group does not actively trade these investments. Equity Price Sensitivity The Group has no exposure to equity price risk at the reporting date [2010: nil exposure].

This is attributable to the Groups exposure to interest rates on its variable rate borrowings. The Groups sensitivity to interest rates has increased during the current year due to an increase in variable rate debt instruments. Interest Rate Swap Contracts Under interest rate swap contracts, the Group agrees to exchange the difference between fixed and floating rate interest amounts calculated on agreed notional principal amounts. Such contracts enable the Group to mitigate the cash flow exposures on the variable rate borrowings. The fair value of interest rate swaps at the reporting date is determined by discounting the future cash flows using the curves at reporting date and the credit risk inherent in the contract, and are disclosed below. The average interest rate is based on the outstanding balances at the end of the financial year. The following table details the notional principal amounts and remaining terms of interest rate swap contracts outstanding as at reporting date for the Group. Outstanding Floating for Fixed Rate Contracts Average Fixed Interest Rate 2011 % Less than 1 year 1 to 4 years 6.7% 2010 % 6.9% 6.7% Notional Principal Amount 2011 $000 25,100 2010 $000 14,800 25,100 Fair Value 2011 $000 (106) 2010 $000 (683)

(h) Credit Risk Management


Credit risk refers to the risk that a counter-party will default on its contractual obligations resulting in a financial loss to the Group. The Group has a policy of only dealing with credit worthy counterparties as a means of mitigating the risk of financial loss from defaults. The Group does not have any significant credit risk exposure to any single counter party or any group of counter parties having similar characteristics. The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks with high credit ratings assigned by international credit-rating agencies. Trade receivables consist of a large number of customers, spread across diverse industries. Ongoing credit evaluation is performed on the financial condition of receivables. The carrying amount of financial assets recorded in the financial statements, net of any allowances, represents the Groups exposure to credit risk.

(i) Liquidity Risk Management


Liquidity risk refers to the risk that the Group will encounter difficulty in meeting obligations associated with its financial liabilities. Ultimate responsibility for liquidity risk management rests with the Board of directors, who have built an appropriate liquidity risk management framework for the management of the Groups short, medium and long-term funding and liquidity management requirements. The Group manages liquidity risk by:

The interest rate swaps settle on a quarterly basis. The floating rate on the interest rate swaps is the Australian BBSW. The Group settles the difference between the fixed and floating interest rate on a net basis. All interest rate swap contracts exchanging floating rate interest amounts for fixed rate interest amounts are designated as cash flow hedges in order to reduce the Groups cash flow exposure resulting from variable interest rates on borrowings. The interest rate swaps and the interest payments on the loan occur simultaneously and the amount deferred in equity is recognised in profit or loss over the period the floating interest payments on debt impact profit or loss.

Maintaining adequate reserves and banking facilities. Refer to note 36(d) for details of the Groups unused facilities; Continuously monitoring forecast and actual cash flows; Matching the maturity profiles of financial assets and liabilities.

(g) Other Price Risk


Other price risk refers to the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from foreign currency risk
76 UXC Limited 2011 Annual Report

The following table details the Groups remaining contractual maturity for its derivative and nonderivative financial liabilities and deferred consideration to be settled in cash. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay. The table includes both principal and interest cash flows. There were no financial guarantee contracts in place at the end of the year [2010: nil].

Liquidity Table Financial Liabilities Average Interest Rate 2011 Financial Liabilities Non-interest bearing liabilities Finance lease liability Variable interest rate instruments Fixed interest rate instruments 2010 Financial Liabilities Non-interest bearing liabilities Finance lease liability Variable interest rate instruments Fixed interest rate instruments 8.3% 5.8% 6.8% 138,007 5,898 22,095 16,933 182,933 5,090 7,235 3,469 25,422 41,216 143,097 13,133 25,564 42,355 224,149 8.3% 5.1% 6.8% 144,776 3,994 10,521 25,423 184,714 4,710 4,972 9,199 18,881 149,486 8,966 19,720 25,423 203,595 % Within 1 year $000 1 to 5 years $000 Total $000

The fair value of derivative instruments, are calculated using quoted prices, which is a level 2 fair value measurement. Where such prices are not available use is made of discounted cash flow analysis using the applicable yield curve for the duration of the instruments for non-optional derivatives.

The directors consider that the carrying amounts of financial assets and financial liabilities recorded at amortised cost in the financial statements approximates their fair values.

Note 38 Capital Risk Management


The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance. The Groups overall capital risk management strategy remains unchanged from the prior year. The capital structure of the Group consists of:

Cash; Debt, comprising the borrowings disclosed in notes 16 and 19; and Equity, comprising issued capital, reserves and retained profits as disclosed in notes 22, 23 and 24 respectively.

The following table details the Groups liquidity analysis for its derivative financial instruments. The table has been drawn up based on the undiscounted contractual net cash inflows and outflows on derivative instruments that settle on a net basis, and the undiscounted gross inflows and outflows on those derivatives that require gross settlement. When the amount payable or receivable is not fixed, the amount disclosed has been determined by reference to the projected interest rates as illustrated by the yield curves at the end of the reporting period. Liquidity Table Derivative Instruments Within 1 year $000 2011 Derivative instruments 2010 Derivative instruments 591 92 683 106 106 1 to 5 years $000 Total $000

The Group operates through a number of entities. None of the Group entities are subject to externally imposed capital requirements. Gearing Ratio The Groups senior finance team review the capital structure on a monthly basis. As a part of this review the team considers the cost of capital and the risks associated with each class of capital. Based on recommendations of the senior finance team the Board balances the overall capital structure of the Group through the payment of dividends, new share issues (including shares issued as consideration for business acquisitions) and share buy-backs as well as the issue of new debt or the redemption of existing debt. The Groups capital management measures include:

gearing (net debt as a % of equity); and interest cover (EBITDA net interest expense). 2011 2010 39,007 193,275 20% 5 times

(j) Fair Value of Financial Instruments


The fair values of financial assets and financial liabilities are determined as follows:

Net debt ($000) Equity ($000) Gearing (net debt equity) Interest cover (EBITDA continuing operations net interest expense) The Group complied with its external financial covenants for the year.

25,503 172,443 15% 5 times

The fair value of financial assets and financial liabilities with standard terms and conditions and traded on active liquid markets are determined with reference to quoted market prices; The fair value of other financial assets and financial liabilities (excluding derivative instruments) are determined in accordance with generally accepted pricing models based on discounted cash flow analysis using prices from observable current market transactions;

77

Notes to the Financial Statements


For the Financial Year ended 30 June 2011
Note 39 Parent Entity Disclosures
Notes (a) Financial position Assets Current assets Non-current assets Total assets Liabilities Current liabilities Non-current liabilities Total liabilities Net assets Equity Issued capital Reserves Share-based payments reserve Cash flow hedge reserve Employee equity-settled benefits reserve Retained earnings Total equity (b) Financial performance Profit for the year Other comprehensive income Total comprehensive income Guarantees entered into by the parent entity in relation to debts of its subsidiaries Contingent liabilities of the parent entity Commitments for the acquisition of property, plant and equipment of the parent entity (26,272) 577 (25,695) 19,396 18,899 1,233 20,132 15,461 22 23 579 (106) 3,242 (6,496) 166,716 579 (683) 3,090 17,462 189,976 169,497 169,528 Profit/(loss) for the year from discontinued operations Revenue Other income Expenses Profit/(loss) before tax Income tax benefit/(expense) Profit/(loss) from discontinued operations attributable to members of the parent entity Cash flows from discontinued operations Net cash inflows/(outflows) from operating activities Net cash inflows/(outflows) from investing activities Net cash inflows/(outflows) from financing activities Net cash inflows/(outflows) (7,463) (1,457) (1,395) (10,315) (14,798) (2,862) (1,553) (19,213) 212,743 802 213,545 (243,928) (30,383) 5,676 (24,707) 272,778 320 273,098 (306,258) (33,160) 9,948 (23,212) 48,104 24,174 72,278 166,716 30,150 43,646 73,796 189,976 181,749 57,245 238,994 123,259 140,513 263,772 2011 $000 2010 $000

Note 40 Discontinued Operations


UXC completed the sale of the Field Solutions Group to Utility Services Group Limited (USG) on 8 September 2011. The sale includes all the business and or assets of Utility Asset Management, Skilltech Consulting Services, Infrastructure Constructions, UXC Metering and Fieldforce Services. The disposal of the Field Solutions Group is part of the Groups long term strategic plan to go forward as a pure IT company. The Field Solutions Group has been classified and accounted for 30 June 2011 as a disposal group held for sale (see Note 41 and Note 43). The Group has not recognised any impairment losses in respect of the disposal group as the expected proceeds net of disposal costs exceed the carrying value of the net assets being disposed. The expected gain on sale will be reflected in the results of the financial year ended 30 June 2012. Discontinued operations also include business activities that were terminated during the year, primarily in UXC Retail Solutions. The combined results of the discontinued operations included in the Consolidated Income Statement are set out below. The comparative profit and cash flows from discontinued operations have been re-presented to include those operations classified as discontinued in the current period. 2011 $000 2010 $000

The Field Solutions Group has been classified and accounted for at 30 June 2011 as a disposal group held for sale, refer note 41.

78 UXC Limited 2011 Annual Report

Note 41 Assets classified as held for sale


As described in note 40, the Group has disposed of the Field Solutions Group subsequent year end. The major classes of assets and liabilities of the Field Solutions Group at the end of the reporting period are as follows: 2011 $000 Goodwill Property, plant and equipment Other intangible assets Other assets Inventories Trade receivables Accrued income Cash and cash equivalents Assets classified as held for sale Deferred tax liability Trade payables Unearned income Provisions Liabilities directly associated with assets classified as held for sale Net assets classified as held for sale 21,563 12,309 928 2,236 5,081 28,677 8,961 2,000 81,755 152 22,510 742 5,344 28,748 53,007

Note 42 Disposal of business


In March 2011, the Group disposed of the assets of Morgan Facilities Management Pty Ltd which carried out equipment servicing. 2011 $000 Consideration received Consideration received in cash and cash equivalents Deferred sales proceeds Total consideration received Less assets and liabilities sold Inventories Property, plant and equipment Payables Net assets disposed of Less assets written off Loss on disposal The loss on disposal is included in the loss for the year from discontinued operations in the Consolidated Income Statement. 119 266 (233) 152 208 (172) 188 188

Note 43 Subsequent Events


UXC completed the sale of the UXC Field Solutions Group to Utility Services Group Limited (USG) on 8 September 2011. The sale includes all the business and or assets of Utility Asset Management, Skilltech Consulting Services, Infrastructure Constructions, UXC Metering and Fieldforce Services. The disposal comprises net assets of approximately $53 million for a consideration price of $56 million plus $5 million of deferred consideration payable upon the attainment of certain future earnings targets. Disposal costs are expected to total circa $1.3 million. A profit on sale between $2 million to $7 million, before disposal costs and other adjustments depending on assessment of deferred consideraion, is expected and will be reflected in the results of the FY12 year. Special Distribution The Directors propose to make a special distribution of 2 cents per share by way of a capital return, subject to shareholder approval, which will be sought at the Annual General Meeting on 24 November 2011.

79

Directors Declaration
UXC Limited and Subsidiaries
The Directors declare that: (a) in the Directors opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable; (b) the attached financial statements are in compliance with International Financial Reporting Standards, as stated in Note 1 to the financial statements; (c) in the Directors opinion, the attached financial statements and notes thereto are in accordance with the Corporations Act 2001, including compliance with accounting standards and giving a true and fair view of the financial position and performance of the consolidated entity; and (d) the Directors have been given the declarations required by s.295A of the Corporations Act 2001. Signed in accordance with a resolution of the Directors made pursuant to s.295(5) of the Corporations Act 2001. On behalf of the Directors

Geoffrey F Lord Director Melbourne 22 September 2011

Jean-Marie Simart Director

80 UXC Limited 2011 Annual Report

Independent Auditors Report


Deloitte Touche Tohmatsu ABN 74 490 121 060 550 Bourke Street Melbourne VIC 3000 GPO Box 78 Melbourne VIC 3001 Australia DX: 111 Tel: +61 (0) 3 9671 7000 Fax: +61 (0) 3 9671 7001 www.deloitte.com.au

Independent Auditors Report to the Members of UXC Limited


Report on the Financial Report We have audited the accompanying financial report of UXC Limited, which comprises the consolidated statement of financial position as at 30 June 2011, the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of cash flows and the consolidated statement of changes in equity for the year ended on that date, notes comprising a summary of significant accounting policies and other explanatory information, and the directors declaration of the consolidated entity, comprising the company and the entities it controlled at the years end or from time to time during the financial year as set out on pages 38 to 80. Directors Responsibility for the Financial Report The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error. In Note 1, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that the consolidated financial statements comply with International Financial Reporting Standards. Auditors Responsibility Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditors judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control, relevant to the entitys preparation of the financial report that gives a true and fair view, in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited

Auditors Independence Declaration In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of UXC Limited, would be in the same terms if given to the directors as at the time of this auditors report. Opinion In our opinion: (a) the financial report of UXC Limited is in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the consolidated entitys financial position as at 30 June 2011 and of its performance for the year ended on that date; and (ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and (b) the consolidated financial statements also comply with International Financial Reporting Standards as disclosed in Note 1. Report on the Remuneration Report We have audited the Remuneration Report included in pages 16 to 30 of the directors report for the year ended 30 June 2011. The directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. Opinion In our opinion the Remuneration Report of UXC Limited for the year ended 30 June 2011, complies with section 300A of the Corporations Act 2001.

DELOITTE TOUCHE TOHMATSU

David A Watson Partner Chartered Accountants Melbourne, 22 September 2011

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ASX Additional Information as at 22 September 2011


Additional information required by the Australian Stock Exchange Limited Listing Rules and not disclosed elsewhere in this Report. Distribution of Shareholders Number of Shares Held 1 1,001 5,001 10,001 100,001 and Total Shareholders 1,000 5,000 10,000 100,000 over holding less than a marketable parcel Number of Shares Held 28,391,021 23,683,032 15,115,657 14,847,231 14,564,291 4,948,750 3,326,844 3,278,788 2,540,611 2,522,729 2,437,448 2,134,384 2,082,896 2,048,464 1,955,250 1,887,600 1,807,541 1,771,108 1,645,388 1,622,809 132,611,842 UXC Ordinary Shares Number of Shareholders 3,031 2,920 1,194 2,311 308 9,764 2,881 % of Issued Capital 9.25% 7.72% 4.92% 4.84% 4.75% 1.61% 1.08% 1.07% 0.83% 0.82% 0.79% 0.70% 0.68% 0.67% 0.64% 0.61% 0.59% 0.58% 0.54% 0.53% 43.21% Substantial Shareholders BELGRAVIA STRATEGIC EQUITIES PTY LTD Unquoted Equity Securities There are unquoted options outstanding for 5,744,941 ordinary shares. Class of Equity Securities and Voting Rights UXC Ordinary Shares There are 12,645 shareholders of ordinary shares in the Company. There are 186 holders of options over ordinary shares. The voting rights attaching to the ordinary shares, set out in clause 7.8 of the Companys Constitution, are subject to these articles and to any rights or restrictions attaching to any class of shares: (a) Every Member may vote; (b) On a show of hands every Member has one vote; (c) On a poll every Member has: (i) One vote for each fully paid share and each partly paid share held by him which was issued pursuant to a pro rata offer to persons entered in the Register or any branch register as the holder of ordinary shares or other securities in the Company which entitle their holders to participate in pro rata offers; and (ii) A fraction of a vote for each contributing share equivalent to the proportion which the amount paid up bears to the total issue prices for the share. There are no voting rights for options holders. UXC Ordinary Shares 15,115,657

Twenty Largest Shareholders - UXC Ordinary Shares NATIONAL NOMINEES LIMITED J P MORGAN NOMINEES AUSTRALIA LIMITED BELGRAVIA STRATEGIC EQUITIES PTY LTD CITICORP NOMINEES PTY LIMITED HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED BOND STREET CUSTODIANS LIMITED BLOTT PTY LTD INFOCOS PTY LIMITED MRS DIANNE KATHLEEN MIOLTA RBC DEXIA INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED KEYGROWTH PTY LTD EONE INTEGRATED BUSINESS SOLUTIONS PTY LTD ZAMTEK PTY LTD J P MORGAN NOMINEES AUSTRALIA LIMITED [CASH INCOME A/C] MR CRISTIANO NICOLLI & MR JOHN DU BOIS MIRLEX PTY LTD MR GREGORY KEITH WOOLLETT CAMARGARDENS PTY LTD BRADLEYS POLARIS PTY LTD MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED Total

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84 UXC Limited 2011 Annual Report

UXC Corporate Directory


UXC Limited
ABN 65 067 682 928 ACN 067 682 928

Registered Office
Level 3, 350 Collins Street Melbourne Vic 3000 GPO Box 4386 Melbourne Vic 3001 Telephone + 61 3 9224 5777 Facsimile + 61 3 9224 5778 Internet www.uxc.com.au

Stock Exchange
The Company is listed on the Australian Stock Exchange (ASX).

Directors
Managing Director Cris Nicolli

Chairman
Geoffrey Lord

Share Registry
Link Market Services Level 4, 333 Collins Street Melbourne Vic 3000 Telephone 1300 554 474 Internet www.linkmarketservices.com.au

Non-Executive Directors
Geoffrey Cosgriff Kingsley Culley Jean-Marie Simart Ron Zammit

Auditors
Deloitte Touche Tohmatsu

Management Executives
Mark Hubbard Finance Director / Company Secretary Ralph Pickering Director, Divestments and Acquisitions

Solicitors
Freehills

Bankers
National Australia Bank