Annual Report 2009 PIPE Networks Limited ABN 21 099 104 122 Annual Report 2009 Table Of Contents Corporate Directory 3 Corporate Governance Statement 4 Directors’ Report 6 Auditor’s Independence Declaration 15 Income Statements 16 Balance Sheets 17 Statements of Changes in Equity 18 Statements of Cash Flows 19 Notes to the Financial Statements 20 Directors Declaration 51 Independent Audit Report to the Members of PIPE Networks Limited 52 Shareholder Information 54 Corporate Directory Company PIPE Networks Limited ABN 21 099 104 122 Registered and Head Office Level 9, PIPE Networks House 127 Creek Street BRISBANE QLD 4000 Tel +61 7 3233 9800 Fax +61 7 3233 9880 Web www.pipenetworks.com Directors Roger Clarke (Chairman) Greg Baynton Bevan Slattery Stephen Baxter Jason Sinclair Company Secretary Louise Bolger Share Registry Link Market Services Limited Level 19, 324 Queen Street BRISBANE QLD 4000 Tel +61 2 8280 7454 Web www.linkmarketservices.com.au Auditors Hacketts DFK Level 3, 549 Queen Street BRISBANE QLD 4000 Tel +61 7 3839 9733 Web www.hacketts.com.au Annual Report 2009 PAGE 3 Corporate Governance Principles The table below details the Corporate Governance Principles and Recommendations (2nd Edition) of the ASX Corporate Governance Council and the Company’s compliance with each recommendation. Where the Company has not complied, a note details the reason for non-compliance. All documents referred to in the table below can be found on the Company’s website, www.pipenetworks.com Principle Complied Note 1. Lay solid foundations for management and oversight (i) Companies should establish the functions reserved to ✔ “Board Charter” available on website. the board and those delegated to senior executives and disclose those functions. (ii) Companies should disclose the process for evaluating ✔ “Senior Executive Performance Review” available on website. the performance of senior executives. (iii) Companies should provide the information indicated ✔ Refer to “Board Charter” and “Senior Executive Performance Review” in the Guide to reporting on Principle 1. available on website. 2. Structure the board to add value (i) A majority of the board should be independent ✔ Refer to Directors Report. directors. (ii) The chair should be an independent director. ✔ Refer to Directors Report. (iii) The roles of chair and chief executive officer should ✔ Refer to Directors Report. not be exercised by the same individual. (iv) The board should establish a nomination committee. ✘ The size and structure of the Board and the Company has not warranted the establishment of a nomination committee. The nomination and selection process is currently conducted by the full Board. The Board nominates and selects candidates based on their ability via demonstrated experience to design and formulate strategy for growing companies. (v) Companies should disclose the process for evaluating ✔ “Board Charter”, “Audit, Compliance and Risk Committee Charter” the performance of the board, its committees and and “Senior Executive Performance Review” available on website. individual directors. (vi) Companies should provide the information indicated ✔ Refer to Directors Report, “Board Charter”, “Audit, Compliance and in the Guide to reporting on Principle 2. Risk Committee Charter” and “Senior Executive Performance Review” available on website. 3. Promote ethical and responsible decision-making (i) Companies should establish a code of conduct and ✔ “Code of Conduct” available on website. disclose the code or a summary of the code: • the practices necessary to maintain confidence in the company’s integrity • the practices necessary to take into account their legal obligations and the reasonable expectations of their stakeholders • the responsibility and accountability of individuals for reporting and investigating reports of unethical practices. (ii) Companies should establish a policy concerning ✔ “Share trading policy” available on website. trading in company securities by directors, senior executives and employees, and disclose the policy or a summary of that policy. (iii) Companies should provide the information indicated ✔ Refer to this table and the “Share trading policy” available on in the Guide to reporting on Principle 3. website. 4. Safeguard integrity in financial reporting (i) The board should establish an audit committee. ✔ Refer to Directors Report. (ii) The audit committee should be structured so that it: ✘ Due to the size of the Company and the Board, the Committee • consists only of non-executive directors consists of two independent Directors and one Executive Director. • consists of a majority of independent directors This majority of independent Directors, in our opinion, ensures that • is chaired by an independent chair, who is not a the audit committee is able to exercise independent judgement. chair of the board The Board acknowledges that International Best Practice is moving • has at least three members. towards Audit Committees comprised of only independent directors. As the Company and the Board grows in size, this recommendation will be addressed. In light of the considerable experience of the Chairman, the Company has appointed Mr Clarke as the Chairman of the Committee. In the Company’s opinion, this appointment in no way diminishes the Committee’s ability to exercise independent judgement. (iii) The audit committee should have a formal charter. ✔ “Audit Committee Charter” available on website. (iv) Companies should provide the information indicated ✔ Refer to Directors Report and “Audit Committee Charter” available in the Guide to reporting on Principle 4. on website. PAGE 4 PIPE Networks Limited Principle Complied Note 5. Make timely and balanced disclosure (i) Companies should put in place mechanisms ✔ “Market disclosure policy” available on website. designed to ensure compliance with ASX Listing Rule requirements such that: • all investors have equal and timely access to material information concerning the company – including its financial position, performance, ownership and governance • company announcements are factual and presented in a clear and balanced way. “Balance” requires disclosure of both positive and negative information. (ii) Companies should provide the information indicated ✔ Refer to this table and “Market disclosure policy” available on in the Guide to reporting on Principle 5. website. 6. Respect the rights of shareholders (i) Companies should design a communications ✔ The Company takes advantage of electronic communication for policy for promoting effective communication with investor relations. The Company’s website contains extensive shareholders and encouraging their participation information about the Company’s Board and Management and all at general meetings and disclose their policy or a relevant press releases and media announcements in relation to the summary of that policy. Company’s operations. (ii) Companies should provide the information indicated ✔ Refer to this table. in the Guide to reporting on Principle 6. 7. Recognise and manage risk (i) Companies should establish policies for the oversight ✔ “Audit, Compliance and Risk Committee Charter” available on and management of material business risks and website. disclose a summary of these policies. (ii) The board should require management to design ✔ Refer to Annual Report. and implement the risk management and internal control system to manage the company’s 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 company’s management of its material business risks. (iii) The board should disclose whether it has received ✔ Refer to Annual Report. assurance from the chief executive officer (or equivalent) and the chief financial officer (or equivalent) 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 operating effectively in all material respects in relation to financial reporting risks. (iv) Provide the information indicated in the Guide to ✔ Refer to Annual Report and “Audit, Compliance and Risk Committee reporting on Principle 7. Charter” available on website. 8. Remunerate fairly and responsibly (i) The board should establish a remuneration ✔ Refer to “Remuneration Report” within Directors Report. committee. (ii) Companies should clearly distinguish the structure ✔ Refer to “Remuneration Report” within Directors Report. of non-executive directors’ remuneration from that of executive directors and senior executives. (iii) Provide the information indicated in the Guide to ✔ Refer to Directors Report. reporting on Principle 8. Annual Report 2009 PAGE 5 Directors’ Report Your directors present their report on PIPE Networks Limited (the Company) and its controlled entities for the financial year ended 30 June 2009. Directors The names of directors in office at any time during or since the end of the year are: Roger Clarke – Chairman, Age 61, Appointed 25 January 2005 Mr Roger Clarke is the Chairman of the Board and has over 30 years commercial experience in the investment banking industry, with responsibilities in fund management, banking and corporate finance. He is also the Chairman of Board of Advice at ABN AMRO Morgans Limited, and in this capacity has been involved in a significant number of initial public offerings, capital raisings and corporate transactions. Mr Clarke holds a Bachelor of Commerce