MULTI CHANNEL SOLUTIONS LIMITED For personal use only · 2010-09-30 · Multi Channel Solutions...

MULTI CHANNEL SOLUTIONS LIMITED

A.B.N. 60 006 569 124

ANNUAL REPORT

FOR THE YEAR ENDED

30 JUNE 2010

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Multi Channel Solutions Limited ABN 60 006 569 124 and Controlled Entities

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COMPANY INFORMATION

Directors in Office: Desmond Smale (Executive Chairman)

Roger Smith (Non-executive Director)

John White (Non-executive Director)

Clay Moore (Executive Director)

Company Secretary: Errol Graham

Auditors: Hall Chadwick

Level 29

31 Market Street

Sydney NSW 2000

Share Registry: Computershare Investor Services Pty Ltd.

Level 12

565 Bourke Street

Melbourne, Vic. 3000

Bankers National Australia Bank

402-410 Chapel Road

Bankstown NSW 2200

Registered Office: Unit 1, 2 Turbo Road

Kings Park, NSW, 2148

Telephone (02) 9114 8066

Facsimile (02) 9671 1808

Stock Exchange Listing: The Australian Stock Exchange Limited

ASX Code: MUT

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Financial Report for the Year Ended 30 June 2010

DIRECTORS’ REPORT

Your directors present their report on the company and its controlled entities for the financial year

ended 30 June 2010.

Directors

The names of directors in office at any time during or since the end of the year are:

Desmond Smale, Executive Chairman

Roger Smith, Non Executive Director

Roland Tudor, Executive Director (resigned 31st December 2009)

John White, Non Executive Director (appointed 21st December 2009)

Clay Moore, Executive Director (appointed 21st December 2009)

Directors have been in office since the start of the financial year to the date of this report unless

otherwise stated.

Company Secretary

The following person held the position of company secretary at the end of the financial year:

Errol Graham

Errol was Finance Director of Davids Ltd (now Metcash Limited) for 12 years. He was appointed

Company Secretary on 31st December 2009, and is currently the Chief Financial Officer of the

Company.

Principal Activities

The principal activity of the company during the year consisted of the marketing and distribution of

consumer based products. There were no other significant changes in the nature of the economic

entity’s principal activities during the financial year.

Operating Results

The consolidated loss of the group after providing for income tax amounted to $1,537,307.

Dividends

No interim dividend (2009: Nil) was paid during the year. No final dividend is recommended by the

Directors.

Review of Operations

The consolidated loss for the 2010 financial year is $1,537,307 as compared to the loss of

$4,327,977 for the prior corresponding period. Revenue for the 2010 financial year was $4,329,054

compared to $5,171,227 for the corresponding period. The loss for the current year was a result of

the unfavourable economic climate, impairment of goodwill ($747,860), and provision for slow

moving stock ($203,186).

The product range has continued to be diversified and this will continue during the 2011 financial

year. Biscuits, shampoos, conditioners and hair gel have been added to our range in addition to our

bath and beauty products.

Home & Business Consumer Products, LLC was impacted by poor retail sales in USA, caused by

the unfavourable economic climate resulting from the Global Financial Crisis. Our product range

has expanded and diversified into the cat litter market which is expected to greatly benefit the

results for the 2011 financial year.

Significant Changes in State of Affairs

The following significant changes in the state of affairs of the operations of the Company occurred

during the financial year:

A total of $560,000 in cash was raised by the issue of convertible notes during the year.

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DIRECTORS’ REPORT

Information on Directors

Desmond Smale — Chairman and Executive Director

Experience and

qualifications

— Appointed Chairman 2007. Board member since 2007. Has a

finance and marketing background having held various senior

management positions in Qantas Airways. He has guided

Bronson Marketing over the last 15 years.

Interest in Shares and

Options

— 472,289,494 Ordinary Shares in Multi Channel Solutions

Limited and options to acquire a further 80,000,000 ordinary

shares

Directorships held in other

listed entities

— Nil

Roger Smith — Non Executive Director

Experience and

qualifications

— Board member since 1991. Has many years experience in

retail trade and financial planning.


Options

— 7,217,072 Ordinary Shares in Multi Channel Solutions Limited


listed entities

— Current Chairman of Black Ridge Mining NL (Director since

2003)

John White — Non Executive Director

Experience and

qualifications

— Board member since December 2009. Has vast experience in

all aspects of business particularly in direct mailing. He owns

and runs a successful and established mailing house facility.


Options

— 1,500,000 Ordinary Shares in Multi Channel Solutions Limited


listed entities

— Nil

Clay Moore — Executive Director

Experience and

qualifications

— Board member since December 2009. Has over 20 years

experience in sales and marketing. He is the president - sales

and marketing of Home and Business Consumer Products LLC

in which he has a 49% shareholding in this joint venture

company.


Options

— Nil


listed entities

— Nil

REMUNERATION REPORT

This report details the nature and amount of remuneration for each key management person of

Multi Channel Solutions Limited, and for the executives receiving the highest remuneration.

Throughout the financial year, the company did not have a remuneration committee as the directors

believe the size of the consolidated entity and the size of the Board did not warrant its existence.

The company’s remuneration policy has been tailored to attract and retain key management

personnel and staff to attain the targets set by the Board and management.

Upon retirement, Executive Directors and Executives are paid employee benefit entitlements

accrued to date of retirement. The Non Executive Directors are not entitled to retirement benefits.

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DIRECTORS’ REPORT

Key Management Personnel Remuneration

Key Management Person Cash, salary and

commissions

Superannuation Options Total

$ $ $ $

2010

Desmond Smale 240,484 21,600 - 262,084

Roland Tudor 107,372 9,455 - 116,827

Errol Graham 122,585 10,800 - 133,385

Roger Smith - - - -

John White - - - -

Clay Moore - - - -

470,441 41,855 - 512,296

2009

Desmond Smale 241,938 21,600 - 263,538

Steve Hill 73,352 5,313 - 78,665

Roland Tudor 116,296 10,314 - 126,610

Roger Smith - - - -

Errol Graham 92,308 8,308 - 100,616

Denise Kovac 80,064 - - 80,064

603,958 45,535 - 649,493

Meetings of Directors

During the financial year, 14 meetings of directors were held. Attendances by each director during the

year were as follows:

Directors’ Meetings

Number eligible to attend Number attended

Desmond Smale 14 14

Roger Smith 14 14

Roland Tudor 8 8

John White 6 6

Clay Moore 6 5

Indemnification and Insurance of Officers and Auditors

During the year the Company did not take out Directors and Officers Liability Insurance and did not take

out any indemnification against company auditors.

Options granted as remuneration

No options were granted as remuneration in the year and no options were exercised during the year that

were granted as compensation in prior periods.

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DIRECTORS’ REPORT

Options

At the date of this report, the unissued ordinary shares of Multi Channel Solutions Limited under option

are as follows:

Grant Date Exercise Price & Expiry Number

under Option

Pre-conditions to vesting

27th

Nov 2007 $0.00 30th Oct 2010 20,000,000 Share Price exceeds $0.06

on 5 consecutive days

27th



27th



27th

Nov 2007 $0.00 30th Oct 2010 20,000,000 NPAT of at least $6 million

in a single financial year

80,000,000

Events Subsequent to Balance Date

There are no matters or circumstances that have arisen since the end of the financial year which

significantly affect or may significantly affect the economic entity.

Environmental Regulations

To the best of the Directors’ knowledge, all activities have been undertaken in compliance with the

requirements of environmental regulations.

Corporate Governance

In recognising the need for the highest standard of corporate behaviour and accountability, the directors

of Multi Channel Solutions Limited support and have adhered to the principles of good corporate

governance. The company’s corporate governance statement is on page 47.

Proceedings on behalf of the company

No person has applied for leave of Court to bring proceedings on behalf of the company or intervene in

any proceedings to which the company is a party for the purpose of taking responsibility on behalf of the

company for all or part of those proceedings.

The company was not a party to any such proceedings during the year.

Non Audit Services

The Board of Directors is satisfied that the provision of non-audit services during the year is compatible

with the general standard of independence for auditors imposed by the Corporations Act 2001. The

directors are satisfied that the services disclosed below did not compromise the external auditor’s

independence for the following reasons:

• all non-audit services are reviewed and approved by management prior to commencement to

ensure they do not adversely affect the integrity and objectivity of the auditor; and

• the nature of the services provided do not compromise the general principles relating to auditor

independence in accordance with APES 110: Code of Ethics for Professional Accountants set by

the Accounting Professional and Ethical Standards Board.

The following fees were paid or payable to Hall Chadwick for non-audit services provided during the year

ended 30 June 2010.

Taxation Services - $2,400 For

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DIRECTORS’ REPORT

Auditor’s Independence Declaration

The auditor’s independence declaration for the year ended 30 June 2010 has been received and can be

found on page 8 of the financial report.

Desmond Smale, Director

Dated this 29th

day of September 2010

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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED

30 JUNE 2010

Consolidated Group

Note 30.06.2010 30.06.2009

$ $

Revenue 2 4,329,054 5,171,227

Expenses

Cost of product sold 2,563,047 2,934,909

Advertising and media expenses 64,068 1,002

Travel expenses 19,527 129,143

Financial expenses 306,636 154,753

Depreciation and amortisation 46,897 63,546

Impairment of goodwill 747,860 3,398,642

Royalty and commission expenses - 91,131

Employee benefit expenses 977,012 1,264,023

Legal compliance and professional fees 123,115 225,353

Rental and operating lease expenses 366,276 469,506

Provision for doubtful debts - 92,039

Provision for slow moving stock 203,186 222,582

Option issue expense 3,260 25,913

Other expenses 445,477 430,615

Total Expenses 5,866,361 9,503,157

(Loss) before income tax 3 (1,537,307) (4,331,930)

Income tax benefit/(expense) 4 - 3,953

(Loss) for the year (1,537,307) (4,327,977)

Other comprehensive income

Adjustments from translation of foreign controlled entities (73,414) (6,796)

Other comprehensive income for the year, net of tax (73,414) (6,796)

Total comprehensive income for the year (1,610,721) (4,334,773)

Loss attributable to members of the parent entity (1,537,307) (4,327,977)

(1,537,307) (4,327,977)

Total comprehensive income attributable to members of the parent entity (1,610,721) (4,334,773)

(1,610,721) (4,334,773)

Earnings per share

Basic and diluted earnings per share (cents per share) 8 (0.15373) (0.43279)

The accompanying notes form part of these financial statements.

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2010

Consolidated Group

Note 30.06.2010 30.06.2009

$ $

CURRENT ASSETS

Cash and cash equivalents 9 205,875 67,411

Trade and other receivables 10 714,786 1,216,468

Inventories 11 812,993 1,525,133

Other current assets 16 739,039 447,545

TOTAL CURRENT ASSETS 2,472,693 3,256,557

NON-CURRENT ASSETS

Plant and equipment 14 151,428 194,761

Intangible assets 15 3,417,956 4,165,816

TOTAL NON-CURRENT ASSSETS 3,569,384 4,360,577

TOTAL ASSETS 6,042,077 7,617,134

CURRENT LIABILITIES

Trade and other payables 17 986,449 1,005,704

Short-term provisions 18 58,014 55,842

Current tax liabilities 19 225,114 391,588

Borrowings 20 1,009,898 1,475,937

TOTAL CURRENT LIABILITIES 2,279,475 2,929,071

NON-CURRENT LIABILITIES

Borrowings 20 1,891,271 1,209,271

TOTAL NON-CURRENT LIABILITIES 1,891,271 1,209,271

TOTAL LIABILITIES 4,170,746 4,138,342

NET ASSETS 1,871,331 3,478,792

EQUITY

Issued capital 21 8,013,687 8,013,687

Reserves 1,353 71,507

Retained earnings (6,143,780) (4,606,473)

Parent interest 1,871,260 3,478,721

Non controlling interests 71 71

TOTAL EQUITY 1,871,331 3,478,792

The accompanying notes form part of this financial report.

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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED

30 JUNE 2010

Consolidated Group

Share Capital

Ordinary

Accumulated

(Losses)/

Profit

Option

Reserve

Foreign

Currency

Translation

Reserve

Non

Controlling

Interests

Total

$ $ $ $ $ $

Balance at 1.7.2008 8,013,687 (278,496) 58,176 (5,786) - 7,787,581

Loss attributable to members

of parent entity

- (4,327,977) - - - (4,327,977)

Revaluation increment - - 25,913 - - 25,913

Total other comprehensive

income for the year

- - - (6,796) 71 (6,725)

Balance at 30.06.2009 8,013,687 (4,606,473) 84,089 (12,582) 71 3,478,792

Balance at 1.7.2009 8,013,687 (4,606,473) 84,089 (12,582) 71 3,478,792

Loss attributable to members

of parent entity

- (1,537,307) - - - (1,537,307)

Revaluation increment - - 3,260 - - 3,260

Total other comprehensive

income for the year

- - - (73,414) - (73,414)

Balance at 30.06.2010 8,013,687 (6,143,780) 87,349 (85,996) 71 1,871,331


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CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED

30 JUNE 2010

Consolidated Group

Note 30.06.2010 30.06.2009

$ $

CASH FLOWS FROM OPERATING ACTIVITIES

Receipts from customers 4,819,780 4,630,273

Payments to suppliers (4,512,038) (5,775,109)

Interest received 549 34,509

Interest paid (223,050) (83,012)

Income tax paid (166,474) (69,104)

Other income 5,377 50,043

Net cash inflow/(outflow) from operating activities 26b (75,856) (1,212,400)

CASH FLOWS FROM INVESTING ACTIVITIES

Payment for plant and equipment (8,333) (4,452)

Proceeds from disposal of plant and equipment 9,800 -

Net cash (outflow)/inflow from investing activities 1,467 (4,452)

CASH FLOWS FROM FINANCING ACTIVITIES

Repayment of hire purchase liabilities (17,100) (42,392)

Payments to related parties (114,281) (75,484)

Proceeds from convertible notes 560,000 430,000

Net cash inflow/(outflow) from financing activities 428,619 312,124

Net increase/(decrease) in cash held 354,230 (904,728)

Cash at beginning of year (609,820) 301,633

Effect of exchange rates on cash holdings in foreign currencies (3,094) (6,725)

Cash at end of year 26a (258,684) (609,820)


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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2010

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NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

This financial report includes the consolidated financial statements and notes of Multi Channel Solutions Limited and

controlled entities (‘Consolidated Group’ or ‘Group’).

Basis of Preparation

The financial report is a general purpose financial report that has been prepared in accordance with Australian

Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian

Accounting Standards Board and the Corporations Act 2001.

Australian Accounting Standards set out accounting policies that the AASB has concluded would result in a financial

report containing relevant and reliable information about transactions, events and conditions to which they apply.

Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with

International Financial Reporting Standards. Material accounting policies adopted in the preparation of this financial

report are presented below. They have been consistently applied unless otherwise stated.

The financial report has been prepared on an accruals basis and is based on historical costs, modified, where

applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities.

Going Concern

The financial statements have been prepared on the going concern basis, which assumes the continuity of normal

business activities and the realisation of assets and settlement of liabilities in the ordinary course of business.

The net loss after income tax for the consolidated entity for the financial year ended 30 June 2010 was $1,537,307.

The Directors nevertheless believe that it is appropriate to prepare the financial report on a going concern basis

because:-

The Group has raised funds throughout the year by issuing convertible notes to fund the company’s ongoing working capital requirements.

The Group has the ability to raise further funding for its operations through the further issue of convertible notes and/or equity.

Based on the Group’s budget for the year ended June 2011, the directors expect the Group to be profitable in the 2011 financial year. In particular, diversification into the cat litter market in the USA is expected to greatly benefit the results for the 2011 financial year.

a. Principles of Consolidation

A controlled entity is any entity over which Multi Channel Solutions Limited has the power to govern the financial and

operating policies so as to obtain benefits from its activities. In assessing the power to govern, the existence and

effect of holdings of actual and potential voting rights are considered. A list of controlled entities is contained in Note

13a to the financial statements.

As at reporting date, the assets and liabilities of all controlled entities have been incorporated into the consolidated

financial statements as well as their results for the year then ended. Where controlled entities have entered the

consolidated group during the year, their operating results have been included from the date control was obtained.

All inter-group balances and transactions between entities in the consolidated group, including any unrealised profits

or losses, have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where

necessary to ensure consistency with those adopted by the parent entity.

Non-controlling interests, being the equity in a subsidiary not attributable, directly or indirectly, to a parent, are

shown separately within the Equity section of the consolidated Statement of Financial Position and Statement of

Comprehensive Income. The non-controlling interests in the net assets comprise their interests at the date of the

original business combination and their share of changes in equity since that date.

Reverse Acquisition

The consolidated financial statements have been prepared using reverse acquisition accounting. In reverse

acquisition accounting, the cost of the business combination is deemed to have been incurred by the legal

subsidiary Bronson Marketing Pty Ltd (the acquirer for accounting purposes) in the form of equity instruments issued

to the owners of the legal parent, Multi Channel Solutions Limited (the acquiree for accounting purposes).

As set out in Note 15, goodwill amounting to $7,564,458 arose on the difference between the fair value of the net

assets of Multi Channel Solutions Limited at the date of acquisition and the fair value of the portion of Bronson

Marketing Pty Ltd shares deemed to be issued to Multi Channel Solutions limited shareholders to complete the

acquisition. As at 30 June 2010, this goodwill has been impaired to $3,417, 956.

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Business Combinations

Business combinations occur where an acquirer obtains control over one or more businesses and results in the

consolidation of its assets and liabilities.

A business combination is accounted for by applying the acquisition method, unless it is a combination involving

entities or businesses under common control. The acquisition method requires that for each business combination

one of the combining entities must be identified as the acquirer (ie parent entity). The business combination will be

accounted for as at the acquisition date, which is the date that control over the acquiree is obtained by the parent

entity. At this date, the parent shall recognise, in the consolidated accounts, and subject to certain limited

exceptions, the fair value of the identifiable assets acquired and liabilities assumed. In addition, contingent liabilities

of the acquiree will be recognised where a present obligation has been incurred and its fair value can be reliably

measured.

The acquisition may result in the recognition of goodwill or a gain from a bargain purchase. The method adopted for

the measurement of goodwill will impact on the measurement of any non-controlling interest to be recognised in the

acquiree where less than 100% ownership interest is held in the acquiree.

The acquisition date fair value of the consideration transferred for a business combination plus the acquisition date

fair value of any previously held equity interest shall form the cost of the investment in the separate financial

statements. Consideration may comprise the sum of the assets transferred by the acquirer, liabilities incurred by the

acquirer to the former owners of the acquiree and the equity interests issued by the acquirer.

Fair value uplifts in the value of pre-existing equity holdings are taken to the statement of comprehensive income.

Where changes in the value of such equity holdings had previously been recognised in other comprehensive

income, such amounts are recycled to profit or loss.

Included in the measurement of consideration transferred is any asset or liability resulting from a contingent

consideration arrangement. Any obligation incurred relating to contingent consideration is classified as either a

financial liability or equity instrument, depending upon the nature of the arrangement. Rights to refunds of

consideration previously paid are recognised as a receivable. Subsequent to initial recognition, contingent

consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity.

Contingent consideration classified as an asset or a liability is remeasured each reporting period to fair value

through the statement of comprehensive income unless the change in value can be identified as existing at

acquisition date.

All transaction costs incurred in relation to the business combination are expensed to the statement of

comprehensive income.

b. Income Tax

The income tax expense (revenue) for the year comprises current income tax expense (income) and deferred tax

expense (income).

Current income tax expense charged to the profit or loss is the tax payable on taxable income calculated using

applicable income tax rates enacted, or substantially enacted, as at reporting date. Current tax liabilities (assets)

are therefore measured at the amounts expected to be paid to (recovered from) the relevant taxation authority.

Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the

year as well as unused tax losses.

Current and deferred income tax expense (income) is charged or credited directly to equity instead of the profit or

loss when the tax relates to items that are credited or charged directly to equity.

Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax bases of

assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets also result where

amounts have been fully expensed but future tax deductions are available. No deferred income tax will be

recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no

effect on accounting or taxable profit or loss.

Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the

asset is realised or the liability is settled, based on tax rates enacted or substantively enacted at reporting date.

Their measurement also reflects the manner in which management expects to recover or settle the carrying amount

of the related asset or liability.

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Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it

is probable that future taxable profit will be available against which the benefits of the deferred tax asset can be

utilised.

Where temporary differences exist in relation to investments in subsidiaries, branches, associates, and joint

ventures, deferred tax assets and liabilities are not recognised where the timing of the reversal of the temporary

difference can be controlled and it is not probable that the reversal will occur in the foreseeable future.

Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that

net settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred

tax assets and liabilities are offset where a legally enforceable right of set-off exists, the deferred tax assets and

liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different

taxable entities where it is intended that net settlement or simultaneous realisation and settlement of the respective

asset and liability will occur in future periods in which significant amounts of deferred tax assets or liabilities are

expected to be recovered or settled.

Tax Consolidation

Multi Channel Solutions Limited and its wholly-owned Australian subsidiaries have formed an income tax

consolidated group under tax consolidation legislation. Each entity in the group recognises its own current and

deferred tax assets and liabilities. Such taxes are measured using the ‘stand-alone taxpayer’ approach to allocation.

Current tax liabilities (assets) and deferred tax assets arising from unused tax losses and tax credits in the

subsidiaries are immediately transferred to the head entity. The group notified the Australian Tax Office that it had

formed an income tax consolidated group under the tax consolidation regime. The tax consolidated group has

entered a tax funding arrangement whereby each company in the group contributes to the income tax payable by

the group in proportion to their contribution to the group’s taxable income. Differences between the amounts of net

tax assets and liabilities derecognised and the net amounts recognised pursuant to the funding arrangement are

recognised as either a contribution by, or distribution to the head entity.

c. Inventories

Inventories are measured at the lower of cost and net realisable value.

d. Plant and Equipment

Each class of plant and equipment is carried at cost or fair value as indicated less, where applicable, any

accumulated depreciation and impairment losses.

Plant and equipment is measured on the cost basis.

The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the

recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash

flows that will be received from the asset’s employment and subsequent disposal. The expected net cash flows have

been discounted to their present values in determining recoverable amounts.

Depreciation

The depreciable amount of all fixed assets including buildings and capitalised lease assets, but excluding freehold

land, is depreciated on a straight-line or diminishing value basis as appropriate over the asset’s useful life to the

consolidated group commencing from the time the asset is held ready for use. Leasehold improvements are

depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the

improvements.

The depreciation rates used for each class of depreciable assets are:

Class of Fixed Asset Depreciation Rate

Leasehold improvements 5–40%

Plant and equipment 11–40%

Office equipment 10– 67%

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is

greater than its estimated recoverable amount.

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Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and

losses are included in the statement of comprehensive income. When revalued assets are sold, amounts included in

the revaluation reserve relating to that asset are transferred to retained earnings.

e. Impairment of Assets

At each reporting date, the group reviews the carrying values of its tangible and intangible assets to determine

whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable

amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is compared to the

asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is expensed to the

statement of comprehensive income.

Impairment testing is performed annually for goodwill and intangible assets with indefinite lives.

Where it is not possible to estimate the recoverable amount of an individual asset, the group estimates the

recoverable amount of the cash-generating unit to which the asset belongs.

f. Intangibles

Goodwill

Goodwill is carried at cost less accumulated impairment losses. Goodwill is calculated as the excess of the sum of:

(i) the consideration transferred;

(ii) any non-controlling interest; and

(iii) the acquisition date fair value of any previously held equity

interest,

over the acquisition date fair value of net identifiable assets acquired.

The value of goodwill recognised on acquisition of each subsidiary in which the Group holds less than a 100%

interest will depend on the method adopted in measuring the aforementioned non-controlling interest. The Group

can elect to measure the non-controlling interest in the acquiree either at fair value (full goodwill method) or at the

non-controlling interest’s proportionate share of the subsidiary’s identifiable net assets (proportionate interest

method). The Group determines which method to adopt for each acquisition.

Under the full goodwill method, the fair values of the non-controlling interests are determined using valuation

techniques which make the maximum use of market information where available. Under this method, goodwill

attributable to the non-controlling interests is recognised in the consolidated financial statements.

Goodwill on acquisitions of subsidiaries is included in intangible assets.

Goodwill is tested for impairment annually and is allocated to the Group’s cash generating units or groups of cash

generating units, which represent the lowest level at which goodwill is monitored but where such level is not larger

than an operating segment. Gains and losses on the disposal of an entity include the carrying amount of goodwill

related to the entity sold.

Changes in the ownership interests in a subsidiary are accounted for as equity transactions and do not affect the

carrying values of goodwill.

g. Foreign Currency Transactions and Balances

Functional and presentation currency

The functional currency of each of the group’s entities is measured using the currency of the primary economic

environment in which that entity operates. The consolidated financial statements are presented in Australian dollars

which is the parent entity’s functional and presentation currency.

Transaction and balances

Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date

of the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary

items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-

monetary items measured at fair value are reported at the exchange rate at the date when fair values were

determined.

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Exchange differences arising on the translation of monetary items are recognised in the statement of comprehensive

income, except where deferred in equity as a qualifying cash flow or net investment hedge.

Exchange differences arising on the translation of non-monetary items are recognised directly in equity to the extent

that the gain or loss is directly recognised in equity, otherwise the exchange difference is recognised in the

statement of comprehensive income.

Group companies

The financial results and position of foreign operations whose functional currency is different from the group’s

presentation currency are translated as follows:

— assets and liabilities are translated at year-end exchange rates prevailing at that reporting date;

— income and expenses are translated at average exchange rates for the period; and

— retained earnings are translated at the exchange rates prevailing at the date of the transaction.

Exchange differences arising on translation of foreign operations are transferred directly to the group’s foreign

currency translation reserve in the balance sheet. These differences are recognised in the statement of

comprehensive income in the period in which the operation is disposed.

h. Employee Benefits

Provision is made for the company’s liability for employee benefits arising from services rendered by employees to

balance date. Employee benefits that are expected to be settled within one year have been measured at the

amounts expected to be paid when the liability is settled. Employee benefits payable later than one year have been

measured at the present value of the estimated future cash outflows to be made for those benefits. Those cashflows

are discounted using market yields on national government bonds with terms to maturity that match the expected

timing of cashflows.

i. Provisions

Provisions are recognised when the group has a legal or constructive obligation, as a result of past events, for which

it is probable that an outflow of economic benefits will result and that outflow can be reliably measured.

j. Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, deposits held at call with banks, and bank overdrafts. Bank

overdrafts are shown within short-term borrowings in current liabilities on the balance sheet.

k. Revenue

Revenue is measured at the fair value of the consideration received or receivable after taking into account any trade

discounts and volume rebates allowed.

Revenue from the sale of goods is recognised at the point of delivery as this corresponds to the transfer of

significant risks and rewards of ownership of the goods and the cessation of all involvement in those goods.

Interest revenue is recognised using the effective interest rate method, which, for floating rate financial assets, is the

rate inherent in the instrument. Dividend revenue is recognised when the right to receive a dividend has been

established.

All revenue is stated net of the amount of goods and services tax (GST).

l. Trade and Other Payables

Trade and other payables represent the liability outstanding at the end of the reporting period for goods and services

received by the Group during the reporting period which remains unpaid. The balance is recognised as a current

liability with the amount being normally paid within 30 days of recognition of the liability.

m. Borrowing Costs

Borrowing costs directly attributable to the acquisition, construction or production of assets that necessarily take a

substantial period of time to prepare 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 borrowing costs are recognised in income in the period in which they are incurred.

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n. Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST

incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of

the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the balance

sheet are shown inclusive of GST.

Cash flows are presented in the cash flow statement on a gross basis, except for the GST component of investing

and financing activities, which are disclosed as operating cash flows.

o. Share-based payments

Equity-settled share-based payments are measured at fair value at the date of grant, Fair value is measured by use

of the Black and Scholes Option Pricing model. The expected life used in the model has been adjusted, based on

management’s 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 over the vesting

period.

For cash-settled share-based payments, a liability equal to the portion of the goods or services received is

recognised at the current fair value determined at each reporting date.

p. Comparative Figures

When required by Accounting Standards, comparative figures have been adjusted to conform to changes in

presentation for the current financial year.

q. Critical Accounting Estimates and Judgments

The directors evaluate estimates and judgments incorporated into the financial report based on historical knowledge

and best available current information. Estimates assume a reasonable expectation of future events and are based

on current trends and economic data, obtained both externally and within the group.

Key Estimates — Impairment

The group assesses impairment at each reporting date by evaluating conditions specific to the group that may lead

to impairment of assets. Where an impairment trigger exists, the recoverable amount of the asset is determined.

Value-in-use calculations performed in assessing recoverable amounts incorporate a number of key estimates.

The discounted cash flow method has been used to arrive at the carrying value of goodwill in the accounts. As a

result, goodwill acquired on the acquisition of Bronson Marketing Pty Ltd has been impaired by $747,860.

The financial report was authorised for issue on 29th

September 2010 by the Board of Directors.

r. Adoption of New and Revised Accounting Standards

During the current year the Group adopted all of the new and revised Australian Accounting Standards and

Interpretations applicable to its operations which became mandatory.

The adoption of these standards has impacted the recognition, measurement and disclosure of certain transactions.

The following is an explanation of the impact the adoption of these standards and interpretations has had on the

financial statements of Multi Channel Solutions Limited.

AASB 8: Operating Segments

In February 2007 the Australian Accounting Standards Board issued AASB 8 which replaced AASB 114: Segment

Reporting. As a result, some of the required operating segment disclosures have changed with the addition of a

possible impact on the impairment testing of goodwill allocated to the cash generating units (CGUs) of the entity.

Below is an overview of the key changes and the impact on the Group’s financial statements.

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Measurement impact

Identification and measurement of segments — AASB 8 requires the ‘management approach’ to the identification

measurement and disclosure of operating segments. The ‘management approach’ requires that operating

segments be identified on the basis of internal reports that are regularly reviewed by the entity’s chief operating

decision maker, for the purpose of allocating resources and assessing performance. This could also include the

identification of operating segments which sell primarily or exclusively to other internal operating segments. Under

AASB 114, segments were identified by business and geographical areas, and only segments deriving revenue

from external sources were considered.

The adoption of the ‘management approach’ to segment reporting has resulted in the identification of reportable

segments largely consistent with the prior year.

Under AASB 8, operating segments are determined based on management reports using the ‘management

approach’, whereas under AASB 114 financial results of such segments were recognised and measured in

accordance with Australian Accounting Standards. This has resulted in changes to the presentation of segment

results, with inter-segment sales and expenses such as depreciation and impairment now being reported for each

segment rather than in aggregate for total group operations, as this is how they are reviewed by the chief operating

decision maker.

Impairment testing of the segment’s goodwill

AASB 136: Impairment of Assets, paragraph 80 requires that goodwill acquired in a business combination shall be

allocated to each of the acquirer’s CGUs, or group of CGUs that are expected to benefit from the synergies of the

combination. Each cash generating unit (CGU) which the goodwill is allocated to must represent the lowest level

within the entity at which goodwill is monitored, however it cannot be larger than an operating segment. Therefore,

due to the changes in the identification of segments, there is a risk that goodwill previously allocated to a CGU

which was part of a larger segment could now be allocated across multiple segments if a segment had to be split as

a result of changes to AASB 8.

Management have considered the requirements of AASB 136 and determined the implementation of AASB 8 has

not impacted the CGUs of each operating segment.

Disclosure impact

AASB 8 requires a number of additional quantitative and qualitative disclosures, not previously required under

AASB 114, where such information is utilised by the chief operating decision maker. This information is now

disclosed as part of the financial statements.

AASB 101: Presentation of Financial Statements

In September 2007 the Australian Accounting Standards Board revised AASB 101 and as a result, there have been

changes to the presentation and disclosure of certain information within the financial statements. Below is an

overview of the key changes and the impact on the Group’s financial statements.

Disclosure impact

Terminology changes — the revised version of AASB 101 contains a number of terminology changes, including the

amendment of the names of the primary financial statements.

Reporting changes in equity — the revised AASB 101 requires all changes in equity arising from transactions with

owners, in their capacity as owners, to be presented separately from non-owner changes in equity. Owner changes

in equity are to be presented in the statement of changes in equity, with non-owner changes in equity presented in

the statement of comprehensive income. The previous version of AASB 101 required that owner changes in equity

and other comprehensive income be presented in the statement of changes in equity.

Statement of comprehensive income — the revised AASB 101 requires all income and expenses to be presented in

either one statement, the statement of comprehensive income, or two statements, a separate income statement

and a statement of comprehensive income. The previous version of AASB 101 required only the presentation of a

single income statement.

The Group’s financial statements now contain a statement of comprehensive income.

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Other comprehensive income — The revised version of AASB 101 introduces the concept of ‘other comprehensive

income’ which comprises of income and expenses that are not recognised in profit or loss as required by other

Australian Accounting Standards. Items of other comprehensive income are to be disclosed in the statement of

comprehensive income. Entities are required to disclose the income tax relating to each component of other

comprehensive income. The previous version of AASB 101 did not contain an equivalent concept.

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Consolidated Group

2010

$

2009

$

NOTE 2: REVENUE

Revenue from operating activities

Product Sales 4,318,522 5,086,675

Interest received or due and receivable from other persons 549 34,509

Other revenue 9,983 50,043

4,329,054 5,171,227

NOTE 3: OPERATING (LOSS)

(Loss) before income tax expense includes

the following expenses

Cost of product sold 2,563,047 2,934,909

Financial expenses 306,636 154,753

Depreciation and amortisation 46,897 63,546


Employee benefit expenses 977,012 1,264,023

Rental and operating lease expenses 366,276 469,506

Provision for doubtful debts - 92,039

Provision for slow moving stock 203,186 222,582

Option issue expense 3,260 25,913

Legal compliance and professional fees 123,115 225,353

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NOTE 4: INCOME TAX EXPENSE

Consolidated Group

2010 2009

$ $

a. The components of income tax expense comprise:

Current tax - -

Deferred tax (461,195) (1,305,104)

Deferred tax assets not recognised (losses) 258,299 265,054

Deferred tax assets not recognised (temporary) 202,896 1,040,050

Underprovision of prior year - 3,953

- 3,953

b. The prima facie tax on (loss) from ordinary activities before income

tax is reconciled to the income tax as follows:

Prima facie tax payable on (loss) from ordinary activities before

income tax at 30% (2009: 30%)

(461,192) (1,299,558)

Add:

Tax effect of:

— Tax effect of tax consolidation adjustments to asset values -

— other non-allowable items 10,071 12,340

— share options expensed during year 978 7,774

Less:

Tax effect of:

— Difference in tax rate (11,052) (25,660)

— Deferred tax assets not recognised (losses) 258,299 265,054

— Deferred tax assets not recognised (temporary) 202,896 1,040,050

— Under(over) provision for prior year - 3,953

Income tax expense/(benefit) - 3,953

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NOTE 5: KEY MANAGEMENT PERSONNEL COMPENSATION

a. Names and positions held of consolidated and parent entity key management personnel in

office at any time during the financial year are:

Key Management

Person

Position

Desmond Smale Managing Director and Chairman

Roger Smith Non Executive Director

John White Non Executive Director

Clay Moore Executive Director

Roland Tudor Executive Director and Company Secretary, resigned 23rd

April 2010

Errol Graham Company Secretary and Chief Financial Officer

Key management personnel remuneration has been included in the Remuneration Report section

of the Directors Report

b. Options and Rights Holdings

Number of Options Held by Key Management Personnel

Balance 1.7.2009 Granted as

Compensation

Options

Exercised*

Net Change Other*

Desmond Smale 80,000,000 - - -

Roger Smith - - - -

John White - - - -

Clay Moore - - - -

Denise Kovac 3,000,000 - - (3,000,000)

Roland Tudor - - - -

Errol Graham - - - -

Total 83,.000,000 - - (3,000,000)

Balance 1.7.2008 Granted as

Compensation

Options

Exercised*

Net Change Other*

Desmond Smale 80,000,000 - - -

Steve Hill - - - -

Denise Kovac 3,000,000 - - -

Roger Smith 3,949,999 - - (3,949,999)



Total 86,949,999 - - (3,949,999)

The Net Change Other reflected above includes those options that have been forfeited by holders or expired

during the year under review.

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NOTE 5: KEY MANAGEMENT PERSONNEL COMPENSATION (CONTINUED)

Number of Options Held by Key Management Personnel

Balance Total Vested Total Exer-

cisable

Total Unexer-

cisable

30.06.2010 30.06.2010 30.06.2010 30.06.2010

Desmond Smale 80,000,000 - - 80,000,000

Roger Smith - - - -

John White - - - -

Clay Moore - - - -



Total 80,000,000 - - 80,000,000

Balance

Total Vested

Total Exer-

cisable

Total Unexer-

cisable

30.06.2009 30.06.2009 30.06.2009 30.06.2009

Desmond Smale 80,000,000 - - 80,000,000

Steve Hill - - - -

Denise Kovac 3,000,000 - 1,000,000 2,000,000

Roger Smith - - - -



Total 83,000,000 - 1,000,000 82,000,000

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NOTE 5: KEY MANAGEMENT PERSONNEL COMPENSATION (CONTINUED)

c. Shareholdings

Number of Shares held by Key Management Personnel

Balance

01.07.2009

Received as

Compensation

Options

Exercised

Net Change

Other*

Balance

30.06.2010

Desmond Smale 472,289,494 - - - 472,289,494

Roger Smith 7,217,072 - - - 7,217,072

John White - - - 1,500,000 1,500,000

Clay Moore - - - - -

Roland Tudor - - - - -

Errol Graham - - - - -

Total 479,506,566 - - 1,500,000 481,006,566

Balance

1.7.2008

Received as

Compensation

Options

Exercised

Net Change

Other*

Balance

30.6.2009

Desmond Smale 472,289,494 - - - 472,289,494

Steve Hill 1,078,381 - - - 1,078,381

Denise Kovac - - - - -

Roger Smith 7,217,072 - - - 7,217,072

Roland Tudor - - - - -

Errol Graham - - - - -

Total 480,584,947 - - - 480,584,947

* Net Change Other refers to shares purchased or sold during the financial year.

NOTE 6: AUDITORS’ REMUNERATION

Consolidated Group

2010

$

2009

$

Remuneration of the auditor of the parent entity for:

— auditing or reviewing the financial report 70,121 67,793

— taxation services 2,400 8,722

Total 72,521 76,515

NOTE 7: DIVIDENDS

No dividends have been paid during the financial year.

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NOTE 8: EARNINGS PER SHARE

Consolidated Group

2010

2009

a. Net (loss) used in the calculation of basic and dilutive EPS $ (1,537,307) (4,327,977)

b. Weighted average number of ordinary shares outstanding during

the year used in the calculation of basic earnings per share.

No. 10,000,167 10,000,167

Consolidated Group

2010

$

2009

$

NOTE 9: CASH AND CASH EQUIVALENTS

Cash at bank and in hand 205,875 67,411

205,875 67,411

NOTE 10: TRADE AND OTHER RECEIVABLES

CURRENT

Trade receivables 850,027 1,410,863

Less provision for settlement discount (43,202) (102,356)

Less provision for doubtful debts (92,039) (92,039)

714,786 1,216,468

Contract terms are up to 70 days. Of the above amount $16,154 (2009: $818) is past due not impaired.

Settlement discounts are provided as part of trading terms for payment within specified time frames.

NOTE 11: INVENTORIES

CURRENT

Finished Goods at cost 1,234,882 1,747,715

Less provision for slow moving stock (421,889) (222,582)

812,993 1,525,133

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NOTE 12: PARENT ENTITY DISCLOSURES

As at, and throughout, the financial year ending 30 June 2010 the parent Company of the Group was Multi

Channel Solutions Limited.

Parent Entity

2010

$

2009

$

Results of the parent entity

(Loss) for the year (1,188,080) (4,129,698)

Other comprehensive income - -

Total comprehensive income for the year (1,188,080) (4,129,698)

Financial position of the parent entity at year end

Current assets 181,442 7,176

Total assets 3,965,520 4,525,239

Current Liabilities 444,974 704,907

Total liabilities 1,519,756 894,655

Total equity of the parent entity comprising of:

Share capital 36,310,803 36,310,803

Reserves 621,979 618,719

Retained earnings (34,487,018) (33,298,938)

Total equity 2,445,764 3,630,584

Parent entity guarantees in respect of its subsidiaries

The parent entity has guaranteed the liabilities of its subsidiary, Bronson Marketing Pty Ltd, to its bankers.

NOTE 13: CONTROLLED ENTITIES

a. Controlled Entities Consolidated

Country of Incorporation Percentage Owned (%)*

2010 2009

Subsidiaries of Multi Channel Solutions Limited

Bronson Marketing Pty Ltd Australia 100% 100%

Icon Marketing International Pty Ltd # Australia 100% 100%

Bay Street Brands LLC (subsidiary of Icon

Marketing International Pty Ltd)

United States 100% 100%

Ab Solutions LLC (subsidiary of Icon Marketing

International Pty Ltd) #

United States 80.16% 80.16%

Home & Business Consumer Products LLC United States 51% 51%

# These companies did not trade during the financial year * Percentage of voting power is in proportion to ownership

b. Controlled Entities

No controlled entities were acquired or disposed of during the financial year.

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NOTE 14: PLANT AND EQUIPMENT

Consolidated Group

2010

$

2009

$

Office furniture and equipment, motor vehicles 474,391 495,497

Less accumulated depreciation (322,963) (300,736)

151,428 194,761

Opening Balance 194,761 255,834

Additions 8,333 4,452

Disposals (4,769) (1,979)

Depreciation (46,897) (63,546)

151,428 194,761

NOTE 15: INTANGIBLE ASSETS

Goodwill at cost 14,791,630 14,791,630

Less accumulated impairment losses (11,373,674) (10,625,814)

Net carrying value 3,417,956 4,165,816

Impairment Disclosure

Goodwill is allocated to cash-generating units which are based on the Group’s reporting segments.

2010

$

2009

$

Distribution segment 3,417,956 4,165,816

Total 3,417,956 4,165,816

The recoverable amount of the cash-generating unit above is determined based on value-in-use calculations.

Value-in-use is calculated based on the present value of cash flow projections over a five-year period. The

cash flows are discounted using a discount rate of 12.50%, based on a weighted average of the group’s debt

facilities, inclusive of a risk free premium.

The following assumptions were used in the value-in-use calculations:

Growth Rate Discount

Rate

Distribution segment 5.0% 12.5%

Management has based the value-in-use calculations on budgets for each reporting segment. These budgets

use future estimated average growth rates. Costs are calculated taking into account historical costs as well as

estimated inflation rates over the period.

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Consolidated Group

2010

$

2009

$

NOTE 16: OTHER CURRENT ASSETS

Prepayments and deposits 27,689 28,074

Other assets 711,350 419,471

739,039 447,545

NOTE 17: TRADE AND OTHER PAYABLES

CURRENT

Trade Creditors 388,623 568,099

Sundry creditors and accrued expenses 597,826 437,605

986,449 1,005,704

NOTE 18: SHORT TERM PROVISIONS

Employee entitlements 58,014 55,842

58,014 55,842

Opening Balance 55,842 44,746

Additional provisions 80,305 22,532

Amounts used (78,133) (11,436)

58,014 55,842

NOTE 19: CURRENT TAX LIABILITY

Income Tax 225,114 391,588

225,114 391,588

The current tax liability relates to the 2008 tax liabilities of Bronson Marketing Pty Ltd and Multi

Channel Solutions Ltd.

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NOTE 20: BORROWINGS

Consolidated Group

2010

$

2009

$

CURRENT

Unsecured liabilities

Convertible notes 230,000 430,000

Trade finance 296,174 296,159

526,174 726,159

Secured liabilities

Bank overdrafts 464,559 677,231

Hire purchase 19,165 72,547

Total current borrowings 1,009,898 1,475,937

NON-CURRENT

Unsecured liabilities

Convertible notes 760,000 -

Loan from related party 1,094,990 1,209,271

1,854,990 1,209,271

Secured liabilities

Hire purchase 36,281 -

Total non-current borrowings 1,891,271 1,209,271

Total borrowings 2,901,169 2,685,208

a. Total current and non-current secured liabilities 520,005 749,778

Convertible notes are issued for a term of 12 months and 24 months and on expiry can be converted into

ordinary shares or redeemed for their face value. The conversion price is the weighted average price of the

shares for the last five trading days prior to exercise date less a discount of 25% of this value. The interest

rate applicable is 15% per annum on $330,000 and 11% per annum on $660,000.

The hire purchase liabilities are secured over the Company’s motor vehicles.

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NOTE 21: ISSUED CAPITAL

Consolidated Group

2010

2009

10,000,167 (2009: 10,000,167) fully paid ordinary shares 8,013,687 8,013,687

8,013,687 8,013,687

a. Ordinary shares No. No.

At the beginning of reporting period 10,000,167 10,000,167

At reporting date 10,000,167 10,000,167

$ $

Opening Share Capital 8,013,687 8,013,687

At Reporting Date 8,013,687 8,013,687

Ordinary shares participate in dividends and the proceeds on winding up of the parent entity in proportion to the number of shares held.

At shareholders meetings each ordinary share is entitled to one vote when a poll is called,

otherwise each shareholder has one vote on a show of hands

b. Options

i. For information relating to the Multi Channel Solutions Limited option plan, including details

of options issued, exercised and lapsed during the financial year and the options

outstanding at year-end, refer to Note 27 Share-based Payments.

ii. For information relating to share options issued as acquisition options and outstanding at

year-end, refer to Note 27 Share-based Payments.

c. Capital Management

Management controls the capital of the group in order to maintain a good debt to equity ratio,

provide the shareholders with adequate returns and ensure that the group can fund its operations

and continue as a going concern.

The group’s debt and capital includes ordinary share capital, convertible notes and financial

liabilities, supported by financial assets.

There are no externally imposed capital requirements.

Management effectively manages the group’s capital by assessing the group’s financial risks and

adjusting its capital structure in response to changes in these risks and in the market. These

responses include the management of debt levels, distributions to shareholders and share issues.

NOTE 22: RESERVES

a. Foreign Currency Translation Reserve

The foreign currency translation reserve records exchange differences arising on translation of a

foreign controlled subsidiary.

b. Option Reserve

The option reserve records items recognised as expenses on valuation of employee share options.

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NOTE 23: CAPITAL AND LEASING COMMITMENTS

Consolidated Group

2010

$

2009

$

a. Operating Lease Commitments

Non-cancellable operating leases contracted for but not

capitalised in the financial statements

Payable

minimum lease payments

— not later than twelve months 165,855 382,919

— Later than twelve months but not later than 5 years 660,914 69,839

826,769 452,758

The four property leases are non-cancellable leases with various terms to 5 years, with rent payable

monthly in advance. Contingent rental provisions within the lease agreement require the minimum

lease payments shall be increased by CPI per annum. An option exists to renew the head office lease

at the end of the five year term for an additional term of three years.

b. Hire Purchase Commitments

Payable

Minimum hire purchase payments

— not later than twelve months 23,478 76,181

— Later than twelve months but not later than 5 years 39,129 -

62,607 76,181

Less future finance charges (7,161) (3,634)

Present value of Minimum Hire Purchase payments 55,446 72,547

NOTE 24: CONTINGENT LIABILITIES

There are no contingent liabilities within the group at reporting date.

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Segment Information

Identification of reportable segments

The group has identified its operating segments based on the internal reports that are reviewed and used by the board of

directors (chief operating decision makers) in assessing performance and determining the allocation of resources.

The Group is managed primarily on the basis of geographic segments. Operating segments are therefore determined on

the same basis.

Reportable segments disclosed are based on aggregating operating segments where the segments are considered to have similar economic characteristics and are also similar with respect to the following:

• the products sold and/or services provided by the segment;

• the type or class of customer for the products or service;

• the distribution method; and

• external regulatory requirements.

Types of products and services by segment

(i) USA

Supplies consumer products to USA Club stores and retail groups.

(ii) Australia

Marketing and distribution of consumer based products to large retailers.

(iii) Corporate

Provide corporate and legal services to the Group.

Basis of accounting for purposes of reporting by operating segments

Accounting policies adopted

Unless stated otherwise, all amounts reported to the Board of Directors as the chief decision makers with respect to

operating segments are determined in accordance with accounting policies that are consistent to those adopted in the

annual financial statements of the Group.

Inter-segment transactions

All such transactions are eliminated on consolidation in the Group’s financial statements.

Segment assets

Where an asset is used across multiple segments, the asset is allocated to the segment that receives the majority of

economic value from the asset. In the majority of instances, segment assets are clearly identifiable on the basis of their

nature and physical location.

Segment liabilities

Liabilities are allocated to segments where there is direct nexus between the incurrence of the liability and the operations

of the segment. Segment liabilities include trade and other payables and certain direct borrowings.

Comparative information

This is the first reporting period in which AASB 8: Operating Segments has been adopted. Comparative information has

been re-stated to conform to the requirements of the Standard.

NOTE 25: SEGMENT REPORTING

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NOTE 25: SEGMENT REPORTING (CONTINUED)

USA Australia Corporate Total

$ $ $ $

(i) Segment Performance

Year Ended 30.06.2010

Revenue

External Sales 1,143,555 3,174,967 - 4,318,522

Interest Income - 4 545 549

Other Revenue - 9,983 - 9,983

Inter-Segment Sales 3,272 719,029 - 722,301

Total Segment Revenue 1,146,827 3,903,983 545 5,051,355

Inter-Segment Elimination (3,272) (719,029) - (722,301)

Total Group Revenue 1,143,555 3,184,954 545 4,329,054

Segment Net (Loss)/Profit before tax (221,039) (128,188) (1,188,080) (1,537,307)

Year Ended 30.06.2009

Revenue

External Sales 825,674 4,261,001 - 5,086,675

Interest Income - 33,623 886 34,509

Other Revenue 36,695 13,348 0 50,043

Inter-Segment Sales 68,928 1,032,685 - 1,101,613

Total Segment Revenue 931,297 5,340,657 886 6,272,840

Inter-Segment Elimination (68,928) (1,032,685) - (1,101,613)

Total Group Revenue 862,369 4,307,972 886 5,171,227

Segment Net (Loss)/Profit before tax (513,279) 118,716 (3,937,367) (4,331,930)

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NOTE 25: SEGMENT REPORTING (CONTINUED)

USA Australia Corporate Total

$ $ $ $

(ii) Segment Assets

As at 30.06.2010

Segment Assets 1,870,095 7,333,665 3,965,519 13,169,279

Segment asset increases for the period

Capital Expenditure - 8,333 - 8,333

Inter-segment eliminations (748,562) (6,020,851) (366,122) (7,135,535)

Total Group Assets 1,121,533 1,321,147 3,599,397 6,042,077

As at 30.06.2009

Segment Assets 2,132,458 7,849,315 4,525,238 14,507,011

Segment asset increases for the period

Capital Expenditure - 4,052 - 4,052

Inter-segment eliminations (613,293) (5,928,389) (352,247) (6,893,929)

Total Group Assets 1,519,165 1,924,978 4,172,991 7,617,134

(iii) Segment Liabilities

As at 30.06.2010

Segment Liabilities 6,835,023 9,829,631 1,519,755 18,184,409

Inter-segment eliminations (6,716,993) (6,981,889) (314,781) (14,013,663)

Total Liabilities 118,030 2,847,742 1,204,974 4,170,746

As at 30.06.2009

Segment Liabilities 6,821,907 10,212,812 894,655 17,929,374

Inter-segment eliminations (6,619,976) (6,981,309) (189,748) (13,791,033)

Total Liabilities 201,931 3,231,503 704,907 4,138,341

(iv) Major customers

The Group has a number of customers to which it provides products. In the USA segment, the Group supplies

one single external customer which accounts for 84.2% of external revenue (2009: 76.8%). The next most

significant client accounts for 10.7% (2009: 17.8%).

In the Australia segment the Group supplies one external customer which accounts for 37.6 % of external

revenue (2009: 31.5%). The next most significant client accounts for 31.2% (2009: 21.2%).

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NOTE 26: CASH FLOW INFORMATION

Note Consolidated Group

2010

$

2009

$

a. Reconciliation of Cash Flow

Cash at the end of the financial year as showing in the statement of

cash flows is balanced to items in the statement of financial position

as follows:

Cash and cash equivalents 9 205,875 67,411

Bank overdraft 20a (464,559) (677,231)

(258,684) (609,820)

b. Reconciliation of (loss) from ordinary activities after income tax

expense to net cash provided by operating activities

(Loss) after income tax (1,537,307) (4,327,977)

(Less)/add non-cash flows in (loss) from ordinary activities:

Depreciation 46,897 63,546

Share option expense 3,260 25,913


(Profit)/loss on disposal of fixed assets (4,606) 1,979

Changes in assets and liabilities

Decrease /(increase) in accounts receivables 431,362 (223,505)

(Increase)/decrease in prepayments and other current assets (291,919) (232,897)

Decrease /(increase) in inventories 712,140 (709,882)

(Decrease) /increase in Income Tax payable (166,474) (73,057)

(Decrease) /increase in Creditors and other payables (19,241) 853,742

Increase/(decrease) in Employee entitlements 2,172 11,096

(75,856) (1,212,400)

No controlled entities have been acquired or disposed of in the financial year.

NOTE 27: SHARE-BASED PAYMENTS

The following share-based payment arrangements existed at 30 June 2010:

On 27 November 2007, 80,000,000 share options were granted to accept ordinary shares at an exercise price

of nil. These options were granted as part of the consideration for the acquisition of 100% of Bronson Marketing

Pty Ltd and are exercisable on or before 30 October 2010. The pre-conditions to vesting for these share options

are disclosed on page 6.

All options granted to key management personnel are ordinary shares in Multi Channel Solutions Limited, which

confer a right of one ordinary share for every option held.

c. Acquisition of Entities

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NOTE 27: SHARE-BASED PAYMENTS (CONTINUED)

Consolidated Group

2010 2009

Number of

Options

Weighted

Average

Exercise

Price

$

Number of

Options

Weighted

Average

Exercise

Price

$

Outstanding at the beginning of the year 92,990,000 0.01 138,571,140 -

Granted (expired) (12,990,000) 0.11 (45,581,140) 0.08

Outstanding at year-end 80,000,000 - 92,990,000 0.01

Exercisable at year-end - - 4,330,000 0.07

NOTE 28: RELATED PARTY TRANSACTIONS

Transactions between related parties are on normal commercial terms and conditions no more favourable

than those available to other parties unless otherwise stated.

Transactions with related parties:

a. Directors and director related entities

The names of each person holding the position of Director of Multi Channel Solutions Limited during

the financial year are:

- Desmond Smale, Roger Smith, Roland Tudor, John White, Clay Moore

No loans were advanced to any of the Directors during the year.

Remuneration received or receivable by the Directors of entities in the Company and aggregate

amounts paid to superannuation plans in connection with the retirement of Directors and executive

officers of entities in the Company are disclosed in the Remuneration Report in the Directors Report.

b. Directors shareholdings

At the year end, the Directors in office held a total of 481,006,566 fully paid ordinary shares and

80,000,000 options in the Company. Details of the directors’ share and option holdings are disclosed

in Note 5 to the Financial Statements.

c. Other transactions with directors of the Company and their director-related entities

The Company’s warehouse at Bessemer Street is rented on commercial terms from Scanbeer Pty

Ltd, a company controlled by Desmond Smale. The amount paid during the year was Nil (2009:

$105,996)

Desmond Smale and Scanbeer Pty Ltd, a company controlled by Desmond Smale, has advanced the

Company the sum of $1,094,990 (2009: $1,209,271). This advance was provided interest free.

John White has advanced the Company $550,000 secured by the issue of convertible notes in the

Company. The convertible notes were issued prior to him being appointed a director of the Company.

Clay Moore has received a profit draw in advance from the Home & Business Consumer Products

division amounting to $291,879. Of this amount $140,994 was received by him subsequent to his

appointment as a director of the company. In total $711,350 is receivable from Clay Moore as of 30

June 2010. This amount is included in other assets at 30 June 2010 as disclosed in Note 16 to the

financial statements.

No other transactions have been entered into with the director related entities during the year.

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NOTE 29: FINANCIAL RISK MANAGEMENT

a. Financial Risk Management Policies

The group’s financial instruments consist mainly of deposits with banks, accounts receivable and

payable, loans to and from subsidiaries, convertible notes and hire purchase agreements.

i. Financial Risks

The main risks the group is exposed to through its financial instruments are interest rate risk,

foreign currency risk, liquidity risk and credit risk.

Interest Rate Risk – for further details on interest rate risk refer to Note 29(b).

Foreign Currency Risk – the group is exposed to fluctuations in foreign currencies arising from

the sale and purchase of goods and services in currencies other than the group’s

measurement currency. The group manages this risk by monitoring the movements in the

applicable foreign exchange rates in which it deals, primarily the AUD:USD exchange rate.

Liquidity Risk – the group manages liquidity risk by monitoring forecast cash flows.

Convertible notes were issued during the year for the term of 12 months and 24 months and

on expiry can be converted into ordinary shares or redeemed for their face value.

Credit Risk – The maximum exposure to credit risk, excluding the value of any collateral or

other security, at balance date to recognised financial assets, is the carrying amount, net of

any provisions for impairment of those assets, as disclosed in the balance sheet and notes to

the financial statements.

The economic entity does not have any material credit risk exposure to any single receivable

or group of receivables under financial instruments entered into by the economic entity.

b. Interest rate Risk

The company’s exposure to interest rate risk, which is the risk that the financial instrument’s

value will fluctuate as a result of changes in market interest rates and the effective weighted

average interest rate for each class of financial assets and financial liabilities is set our below:

Consolidated Group Weighted Average

Interest Rate

Floating Interest

Rate $

Non-interest

bearing $

Total

$

2010

Financial Assets

Cash 3.94% 205,875 - 205,875

Receivables - - 714,786 714,786

205,875 714,786 920,661

Financial Liabilities

Bank Overdraft 9.48% 464,559 - 464,559

Payables - - 986,449 986,449

Trade Finance Facility 7.79% 296,174 - 296,174

Hire Purchase 8.32% 55,446 - 55,446

Convertible Notes 12.33% 990,000 - 990,000

Loan from Related Party - - 1,094,990 1,094,990

1,806,179 2,081,439 3,887,618

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NOTE 30: EVENTS SUBSEQUENT TO BALANCE DATE

There are no matters or circumstances that have arisen since the end of the financial year which

significantly affect or may significantly affect the economic entity.

NOTE 29: FINANCIAL RISK MANAGEMENT (CONTINUED)

Consolidated Group Weighted Average

Interest Rate

Floating Interest

Rate $

Non-interest

bearing $

Total

$

2009

Financial Assets

Cash 1.5% 67,411 - 67,411

Receivables - - 1,216,468 1,216,468

67,411 1,216,468 1,283,879

Financial Liabilities

Bank Overdraft 8.33% 677,231 - 677,231

Payables - - 1,005,704 1,005,704

Trade Finance Facility 7.2% 296,159 - 296,159

Hire Purchase 7.25% 72,546 - 72,546

Convertible Notes 14.0% 430,000 - 430,000

Loan from Related Party - - 1,209,271 1,209,271

1,475,936 2,214,975 3,690,911

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NOTE 31: NEW ACCOUNTING STANDARDS FOR APPLICATION IN FUTURE PERIODS

The AASB has issued new and amended accounting standards and interpretations that have mandatory

application dates for future reporting periods. The Group has decided against early adoption of these

standards. A discussion of those future requirements and their impact on the Group follows:

AASB 9: Financial Instruments and AASB 2009–11: Amendments to Australian Accounting

Standards arising from AASB 9 [AASB 1, 3, 4, 5, 7, 101, 102, 108, 112, 118, 121, 127, 128, 131,

132, 136, 139, 1023 & 1038 and Interpretations 10 & 12] (applicable for annual reporting periods

commencing on or after 1 January 2013).

These standards are applicable retrospectively and amend the classification and measurement of

financial assets. The Group has not yet determined the potential impact on the financial

statements.

The changes made to accounting requirements include:

— simplifying the requirements for embedded derivatives;

— removing the tainting rules associated with held-to-maturity assets;

— allowing an irrevocable election on initial recognition to present gains and losses on

investments in equity instruments that are not held for trading in other comprehensive

income. Dividends in respect of these investments that are a return on investment can be

recognised in profit or loss and there is no impairment or recycling on disposal of the

instrument; and

— reclassifying financial assets where there is a change in an entity’s business model as they

are initially classified based on:

a. the objective of the entity’s business model for managing the financial assets; and

b. the characteristics of the contractual cash flows.

AASB 124: Related Party Disclosures (applicable for annual reporting periods commencing on or

after 1 January 2011).

This standard removes the requirement for government related entities to disclose details of all

transactions with the government and other government related entities and clarifies the definition

of a related party to remove inconsistencies and simplify the structure of the standard. No

changes are expected to materially affect the Group.

AASB 2009–4: Amendments to Australian Accounting Standards arising from the Annual

Improvements Project [AASB 2 and AASB 138 and AASB Interpretations 9 & 16] (applicable for

annual reporting periods commencing from 1 July 2009) and AASB 2009-5: Further Amendments

to Australian Accounting Standards arising from the Annual Improvements Project [AASB 5, 8,

101, 107, 117, 118, 136 & 139] (applicable for annual reporting periods commencing from 1

January 2010).

These standards detail numerous non-urgent but necessary changes to accounting standards

arising from the IASB’s annual improvements project. No changes are expected to materially

affect the Group.

AASB 2009–8: Amendments to Australian Accounting Standards — Group Cash-settled Share-

based Payment Transactions [AASB 2] (applicable for annual reporting periods commencing on

or after 1 January 2010).

These amendments clarify the accounting for group cash-settled share-based payment

transactions in the separate or individual financial statements of the entity receiving the goods or

services when the entity has no obligation to settle the share-based payment transaction. The

amendments incorporate the requirements previously included in Interpretation 8 and

Interpretation 11 and as a consequence, these two Interpretations are superseded by the

amendments. These amendments are not expected to impact the Group.

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NOTE 31: NEW ACCOUNTING STANDARDS FOR APPLICATION IN FUTURE PERIODS

AASB 2009–10: Amendments to Australian Accounting Standards — Classification of Rights

Issues [AASB 132] (applicable for annual reporting periods commencing on or after 1 February

2010).

These amendments clarify that rights, options or warrants to acquire a fixed number of an entity’s

own equity instruments for a fixed amount in any currency are equity instruments if the entity

offers the rights, options or warrants pro-rata to all existing owners of the same class of its own

non-derivative equity instruments. These amendments are not expected to impact the Group.

AASB 2009–13: Amendments to Australian Accounting Standards arising from Interpretation 19

[AASB 1] (applicable for annual reporting periods commencing on or after 1 July 2010).

This standard makes amendments to AASB 1 arising from the issue of Interpretation 19. The

amendments allow a first-time adopter to apply the transitional provisions in Interpretation 19.

This standard is not expected to impact the Group.

AASB 2009–14: Amendments to Australian Interpretation — Prepayments of a Minimum Funding

Requirement [AASB Interpretation 14] (applicable for annual reporting periods commencing on or

after 1 January 2011).

This standard amends Interpretation 14 to address unintended consequences that can arise from

the previous accounting requirements when an entity prepays future contributions into a defined

benefit pension plan.

AASB Interpretation 19: Extinguishing Financial Liabilities with Equity Instruments (applicable for

annual reporting periods commencing on or after 1 July 2010).

This Interpretation deals with how a debtor would account for the extinguishment of a liability

through the issue of equity instruments. The Interpretation states that the issue of equity should

be treated as the consideration paid to extinguish the liability, and the equity instruments issued

should be recognised at their fair value unless fair value cannot be measured reliably in which

case they shall be measured at the fair value of the liability extinguished. The Interpretation deals

with situations where either partial or full settlement of the liability has occurred. This

Interpretation is not expected to impact the Group.

The Group does not anticipate the early adoption of any of the above Australian Accounting Standards.

NOTE 32: COMPANY DETAILS

The registered office of the company is:

Multi Channel Solutions Limited

Unit 1, 2 Turbo Road

Kings Park 2148

The principal places of business are:

— Bronson Marketing Pty Ltd

Unit 1, 2 Turbo Road

Kings Park 2148

— Home and Business Consumer Products LLC

21 Brook Street # 16A

Seekonk MA 02771

USA

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DIRECTORS’ DECLARATION

The directors of the company declare that:

1. the financial statements and notes, as set out on pages 9 to 41, are in accordance with the

Corporations Act 2001 and:

a. comply with Accounting Standards; and

b. give a true and fair view of the financial position as at 30 June 2010 and of the performance

for the year ended on that date of the company and consolidated group;

2. the Chairman and Chief Finance Officer have each declared that:

a. the financial records of the company for the financial year have been properly maintained in

accordance with section 286 of the Corporations Act 2001;

b. the financial statements and notes for the financial year comply with the Accounting

Standards; and

c. the financial statements and notes for the financial year give a true and fair view;

3. in the directors’ opinion there are reasonable grounds to believe that the company will be able to

pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the Board of Directors.

Director

Desmond Smale

Dated this 29th

of September 2010

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ADDITIONAL INFORMATION FOR LISTED PUBLIC COMPANIES

The following additional information is required by the Australian Stock Exchange Ltd in respect of listed

public companies only.

1. Shareholding

a. Distribution of Shareholders Number

Category (size of holding) Ordinary Redeemable

1 – 1,000 48 -

1,001 – 5,000 54 -

5,001 – 10,000 90 -

10,001 – 100,000 241 -

100,001 – and over 255 -

688 -

b. The number of shareholdings held in less than marketable parcels is 403.

c. The names of the substantial shareholders listed in the holding company’s register as at 20

September 2010 are:

Number

Shareholder Ordinary Preference

Desmond Smale 236,144,747 -

Scanbeer Pty Ltd 236,144,747 -

d. Voting Rights

The voting rights attached to each class of equity security are as follows:

Ordinary shares

— Each ordinary share is entitled to one vote when a poll is called, otherwise each

member present at a meeting or by proxy has one vote on a show of hands.

Redeemable and converting preference shares

— These shares have no voting rights.


e. 20 Largest Shareholders — Ordinary Shares

Name Number of

Ordinary

Fully Paid

Shares Held

% Held of

Issued

Ordinary

Capital

1. Scanbeer Pty Limited 236,144,747 30.01

2. Mr Desmond Gregory Smale 236,144,747 30.01

3. Nohuni Pty Ltd 16,600,000 2.11

4. Mr Trevor Neil Hay 14,772,878 1.88

5. Colepin Pty Ltd 13,400,000 1.70

6. UBS Nominees Pty Ltd 9,439,278 1.20

7. Amber Management Pty Ltd 8,200,000 1.04

8. Mrs Yvonne Desaunettes 7,408,500 0.94

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e. 20 Largest Shareholders — Ordinary Shares

Name Number of

Ordinary

Fully Paid

Shares Held

% Held of

Issued

Ordinary

Capital

9. Mr Michael Bushell 7,204,635 0.92

10. Mr Gary Snow 6,450,000 0.82

11. Mossco Capital Inc 6,363,637 0.81

12. Halith Pty Ltd 5,587,663 0.71

13. Amber Management Pty Ltd 5,000,000 0.64

14. Mr Stephen Clarke Jones 5,000,000 0.64

15. Kalonda Pty Ltd 5,000,000 0.64

16. Mr Samuel Rudzyn 5,000,000 0.64

17. Mini Investments Pty Ltd 4,800,000 0.61

18. Monacan Nominees Pty Ltd 4,628,299 0.59

19. Mr Murphy Tsai 4,545,455 0.58

20. Ponite Pty Limited 4,487,500 0.57

606,177,339 77.03

2. The name of the company secretary is Errol Graham

3. The address of the principal registered office in Australia is Unit 1, 2 Turbo Road, Kings Park, NSW

2148. Telephone (02) 9114 8066

4. Registers of securities are held at the following addresses

Victoria Computershare Investor Services Pty Ltd

Yarra Falls

452, Johnston Street

Abbotsford, VIC 3067

5. Stock Exchange Listing

Quotation has been granted for all the ordinary shares of the company on all Member Exchanges of

the Australian Stock Exchange Limited.

6. Unquoted Securities

Options over Unissued Shares

A total of 80,000,000 options are on issue to Desmond Smale.

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CORPORATE GOVERNANCE STATEMENT

30 JUNE 2010

Unless disclosed below, all the best practice recommendations of the ASX Corporate Governance Council

have been applied for the entire financial year ended 30 June 2010.

Board Composition

The skills, experience and expertise relevant to the position of each director who is in office at the date of

the annual report and their term of office are detailed in the directors’ report.

The names of independent directors of the company are:

Roger Smith and John White

When determining whether a non-executive director is independent the director must not fail any of the

following materiality thresholds:

— less than 10% of company shares are held by the director and any entity or individual directly or

indirectly associated with the director;

— no sales are made to or purchases made from any entity or individual directly or indirectly

associated with the director; and

— none of the directors’ income or the income of an individual or entity directly or indirectly associated

with the director is derived from a contract with any member of the economic entity other than

income derived as a director of the entity.

Independent directors have the right to seek independent professional advice in the furtherance of their

duties as directors at the company’s expense. Written approval must be obtained from the chair prior to

incurring any expense on behalf of the company.

Ethical Standards

The Board acknowledges and emphasises the importance of all directors and employees maintaining the

highest standards of corporate governance practice and ethical conduct.

A code of conduct has been established requiring directors and employees to:

• act honestly and in good faith;

• exercise due care and diligence in fulfilling the functions of office;

• avoid conflicts and make full disclosure of any possible conflict of interest;

• comply with the law;

• encourage the reporting and investigating of unlawful and unethical behaviour; and

• comply with the share trading policy outlined in the Code of Conduct.

Directors are obliged to be independent in judgment and ensure all reasonable steps are taken to ensure

due care is taken by the Board in making sound decisions.

Trading Policy

The company’s policy regarding directors and employees trading in its securities is set by the board of

directors. The policy restricts directors and employees from acting on material information until it has been

released to the market and adequate time has been given for this to be reflected in the security’s prices.

Audit Committee

The Board has not established an Audit committee at this point in the Company’s development. It is

considered that the size of the Board along with the level of activity of the Company renders this

impractical and the full Board considers in detail all of the matters for which the directors are responsible.

Although there is no Audit Committee, formal meetings are held between nominated directors and the

external auditor, to discuss the findings of the half year review and the year end audit.

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CORPORATE GOVERNANCE STATEMENT

Performance Evaluation

Given the current size of the Multi Channel Solutions Ltd Board and level of activity of the Company, the

Board does not currently have a formal process for the evaluation of individual Directors and would

consider the implementation of one at this particular point as impractical. The Directors do consider, on an

ongoing basis, the overall performance of the Board in context of the Company meeting and exceeding its

stated objectives and the trading price of its shares on the ASX.

Board Roles and Responsibilities

The Board is first and foremost accountable to provide value to its shareholders through delivery of timely

and balanced disclosures.

The Board is ultimately responsible for ensuring its actions are in accordance with key corporate

governance principles.

Shareholder Rights

Shareholders are entitled to vote on significant matters impacting on the business, which include the

election and remuneration of directors, changes to the constitution and receipt of annual and interim

financial statements. Shareholders are strongly encouraged to attend and participate in the Annual

General Meetings of Multi Channel Solutions Limited, to lodge questions to be responded by the Board

and/or the CEO, and are able to appoint proxies.

Risk Management

The Board considers identification and management of key risks associated with the business as vital to

maximise shareholder wealth. A yearly assessment of the business’s risk profile is undertaken and

reviewed by the Board, covering all aspects of the business from the operational level through to strategic

level risks. The CEO has been delegated the task of implementing internal controls to identify and manage

risks for which the Board provides oversight. The effectiveness of these controls is monitored and

reviewed regularly. The worsening economic environment has emphasised the importance of managing

and reassessing its key business risks.

Remuneration Policies

The Board has not established a Remuneration committee at this point in the Company’s development. It

is considered that the size of the Board along with the level of activity of the Company renders this

impractical and the full Board considers in detail all of the matters for which the directors are responsible.

Remuneration to the Executive Directors is by way of salary only, with the level of salary, having been set

by the Board to an amount it considers to be commensurate for a company of Multi Channel Solutions Ltd

size and level of activity. There is currently no link between performance and remuneration. Further there

are no schemes for retirement benefits in existence.

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MULTI CHANNEL SOLUTIONS LIMITED For personal use only · 2010-09-30 · Multi Channel Solutions...

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Transcript of MULTI CHANNEL SOLUTIONS LIMITED For personal use only · 2010-09-30 · Multi Channel Solutions...