Half Year Financial Report – 30 Sep 2018

ENPRISE GROUP LIMITED
HALF YEAR REPORT
FOR THE HALF YEAR ENDED 30 SEPTEMBER 2018

PAGE
1


Contents





Directors’ Report 2

Interim Consolidated Statement of Financial Position 3-4

Interim Consolidated Statement of Comprehensive Income 5

Interim Consolidated Cash Flow Statement 6

Interim Consolidated Statement of Changes in Equity 7

Notes to the Financial Statements 8-16

Directors’ Declaration 17

Corporate Information 18

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2


Directors’ Report


The Directors submit their Report on Enprise Group Limited for the half year ended 30 September 2018.

Directors
The following persons were Directors of Enprise Group Limited during the whole of the half year and up to
the date of this Report:

Lindsay John Phillips Chairman
George Elliot Cooper Chief Executive Officer
Nicholas James Paul Non-Executive Director
Ronald Baskind Executive Director

Businesses
Enprise Group Limited (Enprise) currently has one operating division, Enprise Solutions, a solution provider
for MYOB Enterprise software in Australia and New Zealand.

Enprise also has 3 joint ventures
 Datagate Innovation Limited (Datagate). Datagate is an early stage business that provides online
reporting and billing portals under Software-as-a-Service (SaaS) model for resellers of Telco/Utility
services and hosted service providers;
 Kilimanjaro Consulting Pty Limited (Kilimanjaro). Kilimanjaro is the largest MYOB enterprise partner
in Australia. Enprise acquired 47.03% of Kilimanjaro in September 2017 and granted Kilimanjaro’s
shareholders a right to “Put” their remaining 52.97% holding in Kilimanjaro to Enprise from 1
September 2019 until 31 August 2020 in return for 2,854,649 fully paid Enprise shares;
 iSell Pty Limited (iSell). iSell, in which Enprise first acquired an interest in December 2017, sells a
cloud-based quoting system used by the IT reseller market in Australia, New Zealand and the UK.

Financial Highlights
 Net loss for the period was $(28,000), which is down from the 2017 net profit $393,000.
 Cash and bank balances of $1,310,000 (2017 $265,000) at period end.

Subsequent Events
 There are no material events after reporting date.


Revenue Half Year Half Year Increase/
Sep-18 Sep-17 (Decrease)
$NZ ’000 $NZ ’000 %
Continuing Operations

Software and Licenses 971 883 10%
Services and Support 2,273 2,405 (5%)
Other Income 14 31 (55%)
Total Revenue 3,258 3,319 (2%)


Lindsay Phillips
Chairman
28 November 2018

PAGE
3


Interim Consolidated Statement of Financial Position
As at 30 September 2018

Note Unaudited Unaudited Audited


30 September
2018
30 September
2017
31 March
2018


NZ $’000 NZ $’000 NZ $’000

ASSETS


Current Assets


Cash and cash equivalents 8 1,310 265 1,265
Trade and other receivables

1,067 1,142 1,016
Related party receivables
11
662 79 330
Work In Progress 80 52 -
Lock Finance - - 3
Term deposit - 154 -
Staff receivables 52 4 51
Total Current Assets

3,171 1,696 2,665





Non-current Assets



Investments in equity accounted joint venture 3,460 4,212 3,958
Investments in equity accounted associate

745 - 738
Investments 321 98 321
Property, plant and equipment 6 99 118 103
Staff receivables

60 10 85
Deferred tax asset

369 346 341
Intangible assets

1,727 1,791 1,760
Total Non-current Assets

6,781 6,575 7,306
TOTAL ASSETS

9,952 8,271 9,971




LIABILITIES




Current Liabilities



Trade and other payables

1,174 1,086 1,083
Related party payables 11 8 13 -
Interest bearing loans - 431 -
Provisions for employee entitlements

273 223 192
Term Loan 324 - 314
Other liabilities 15 15 15
Total Current Liabilities

1,794 1,768 1,604
Non-current liabilities

Other liabilities 11 26 19
Term loan

471 - 635
Deferred tax liability 29 47 38
Total Non-current Liabilities 511 73 692
TOTAL LIABILITIES

2,305 1,841 2,296

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4


Interim Consolidated Statement of Financial Position (Cont)


Note Unaudited Unaudited Audited

30 September 2018 30 September 2017 31 March 2018

NZ $’000 NZ $’000 NZ $’000

EQUITY


Equity attributable to equity


holders of the parent


Contributed equity 9 6,566 5,105 6,566
Accumulated profit

1,081 1,325 1,109
TOTAL EQUITY

7,647 6,430 7,675




TOTAL EQUITY AND
LIABILITIES

9,952 8,271 9,971



The above Statement of Financial Position should be read in conjunction with the accompanying notes.
For and on behalf of the Board, who authorise the issue of these interim financial statements on 28
November 2017.









George Cooper

Lindsay Phillips

Chief Executive Officer

Chairman

28 November 2018

28 November 2018

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5


Interim Consolidated Statement of Comprehensive Income
For the six months ended 30 September 2018



Note

Unaudited Unaudited



30 September 2018 30 September 2017



NZ $’000

NZ $’000
Restated

Continuing operations

Revenue


Revenue


3,244 3,288
Other revenue

14 31

3 3,258 3,319




Cost of Goods Sold

(268) (406)
Advertising and Marketing expense


(49) (28)
Employee benefits expense


(1,894) (1,679)
Finance expense


(39) (20)
Professional fees


(92) (130)
Travel expenses


(97) (105)
Other operating expenses


(344) (337)
Net gain (loss) on foreign exchange


8 (3)
Depreciation & impairment (56) (55)
Profit (Loss) from continuing




operations before income tax


427 556
Share of loss from equity accounted joint
ventures, net of tax

(497) (193)
Share of profit from equity account
associated, net of tax

6 -
(Loss) Profit before tax


(64) 363
Income tax benefit 4 36 30
(Loss) Profit for the period attributable
to the shareholders
3 (28) 393
Other comprehensive income

- -
Total comprehensive income

(28) 393
for the period


Earnings per share for profit from
continuing operations attributable to the
ordinary equity holders of the company:


Basic earnings per share 7

(0.003) 0.052



Diluted earnings per share 7

(0.003) 0.052

The above Statement of Comprehensive Income should be read in conjunction with the accompanying notes.

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6


Interim Consolidated Cash Flow Statement
For the six months ended 30 September 2018



Note
Unaudited Unaudited

30 September 2018 30 September 2017

NZ $’000 NZ $’000

Cash flows from operating activities


Receipts from customers (inclusive of GST)

4,599 4,613
Payments to suppliers and employees (inclusive of GST) (4,065) (4,143)
Interest paid

(31) -
Interest received

1 6
Net cash flows generated / (used) in
operating activities
10 504 476



Purchase of property, plant and equipment 6 (17) (55)
Staff loans

29 5
Purchase of Kilimanjaro Consulting

- (1,000)
Related party loans (320) -
Net cash flows used investing activities

(308) (1,050)



Cash flows from financing activities

Dividends paid - (244)
Proceeds from borrowing

(3) 488
Loan repayments (154) -
Net cash flows from financing activities

(157) 244



Net increase / (decrease) in cash and cash equivalents
39 (330)



Net foreign exchange differences

6 (3)
Cash and cash equivalents at beginning of period
1,265 598
Cash and cash equivalents at 30 September

1,310 265


The above Cash Flow Statement should be read in conjunction with the accompanying notes.

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7



Interim Consolidated Statement of Changes in Equity

For the six months ended 30 September 2018


Unaudited
Note

Share capital
Retained earnings
Total equity

$000 $000 $000
Balance at 1 April 2017

2,936 1,176 4,112





New shares issued

2,169 - 2,169

Net Profit for the period


586 586

Other comprehensive income

- (193) (193)

Total comprehensive income for the period - 393 393

Dividend paid - 244 244

Balance at 30 September 2017 9 5,105 1,325 6,430










Unaudited
Note

Share capital
Retained earnings
Total equity

$000 $000 $000
Balance at 1 April 2018

6,566 1,109 7,675

New shares issued

- - -

Net Profit for the period

- (28) (28)

Other comprehensive income

- - -

Total comprehensive income for the period

- (28) (28)

Dividend paid

- - -

Balance at 30 September 2018
9
6,566 1,081 7,647



Audited
Note



Share capital
Retained
earnings
Total equity

$000 $000 $000
Balance at 1 April 2017

2,936 1,297 4,233
Net profit for the period

- 151 151
Other comprehensive income

- - -


Total comprehensive income for the period - 151 151
Dividends paid - (339) (339)
New shares issued 3,630 - 3,630
Balance at 31 March 2018 9 6,566 1,109 7,675




The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.

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8


Notes to the Financial Statements

For the half year ended 30 September 2018

1 Corporate information

The Interim Condensed Consolidated Financial Statements of Enprise Group Limited (the Group) for the six months
ended 30 September 2018 were authorised for issue in accordance with a resolution of the Directors on 28
November 2018.

Enprise Group Limited (the parent) is a company limited by shares incorporated in New Zealand.

The nature of the operations and principal activities of the Group are described in the Directors’ Report section of
this report.


2 Basis of preparation and accounting policies

(a) Basis of preparation

The Interim Condensed Consolidated Financial Statements have been prepared in accordance with both IAS 34
Interim Financial Reporting and NZ IAS 34 Interim Financial Reporting.

The financial statements are presented in New Zealand dollars and all values are rounded to the nearest thousand
dollars ($’000) unless otherwise stated.

The Interim Condensed Consolidated Financial Statements do not include all the information and disclosures
required in the annual financial statements, and should be read in conjunction with the Group’s annual financial
statements as at 31 March 2018 and considered together with any public announcements made by Enprise Group
Limited relating to the half year ended 30 September 2018 in accordance with continuous disclosure obligations.


(b) Significant accounting policies
The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are
consistent with those followed in the preparation of the Group’s annual financial statements for the year ended 31
March 2018.

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9


(c) Changes to accounting policies

Reference Title Summary of requirements Effective
date –
periods
beginning
on or
after
Impact on Group financial report Application
date for
Group*
NZ IFRS 9 Financial
Instruments:
Classification
and
Measurement
This standard includes a new
framework for classification and
measurement of financial
instruments and a forward-looking
expected-loss impairment model.
It requires all financial assets to be:
(a) Classified on the basis of the
entity’s business model for
managing the financial assets
and the contractual cash flow
characteristics of the financial
asset.
(b) Initially measured at fair value
plus, in the case of a financial
asset not at fair value through
profit or loss, particular
transaction costs
(c) Subsequently measured at
amortised cost or fair value.

1
January
2018
The main impact on the Group is the
measurement of trade debtors. The
Group’s policy for FY 2019 is to
specifically identify potentially
problematic debtor balances and then
apply a 1% provision on the remaining
balance of trade debtors as part of
the forward-looking impairment
requirements as extended credit
terms are rarely provided and the
Group has not had a significant
history of bad debts in the past. The
Group also has extensive credit
control policies and procedures in
place that ensure that credit is only
provided to good quality customers.
1 April 2018
NZ IFRS 15 Revenue from
Contracts with
Customers
The core principle of the Standard
is to recognise revenue for the
amount of consideration due to an
entity in exchange for goods and
services provided to the customer.
This is done following a 5 step
process:
(1) Identify the contract with the
customer
(2) Identify the performance
obligations in the contract
(3) Determine the transaction
price
(4) Allocate the transaction price
to the performance
obligations in the contract and
(5) Recognise revenue when (or
as) the entity satisfies a
performance obligation by
transferring control of an
asset to a customer. This may
be at a point in time or over
time.
The standard is expected to have a
significant impact on the timing of
revenue recognition for the
software industry.

1
January
2018
The performance obligation for
software revenue is deemed to be the
point where software codes are
provided to the customer. Software
revenue has changed to be
recognised net of cost of goods sold.
This had a significant impact on Sales
but no impact on Gross Profit and
Total Comprehensive Income. This is
because the relationship has changed
from principal to agent under the
standard.
The performance obligation for
consulting revenue is deemed to be
either the completion of a piece of
work or at go live for implementation
projects. Invoiced revenue related to
unfinished work or an
implementation project is treated as
revenue in advance and the
associated labour cost of sales is
treated as work in progress.
1 April 2018

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3 Segment Information

In presenting information on the basis of geographical segments, segment revenue is based on the geographical
location of customers. Segment assets are based on the geographical location of the assets.
The geographic segments are described in the table below:
Legal Entity Location Percentage Held Geographic region
Enprise Group Limited (Parent) New Zealand 100% New Zealand
Enprise Solutions Limited New Zealand 100% New Zealand and Globally
Enprise Australia Pty Limited Australia 100% Australia
Enprise Limited (non-trading) New Zealand 100% New Zealand
Global Bizpro (non-trading) New Zealand 100% New Zealand

Joint Venture & Associates Location Percentage Held Geographic region
Datagate Innovation Limited New Zealand 39.29% New Zealand and Globally
Kilimanjaro Consulting Pty Limited Australia 47.09% Australia
iSell Pty Limited Australia 14.6% Australia




Other Investments Location Percentage Held Geographic region
Vadacom Limited New Zealand 6.49% New Zealand
Zhik Pty Limited Australia 0.7% Australia and Globally



Geographic segments
The following table presents a summary of revenue, other income and profit and loss information regarding the
subsidiaries performance for the six months ended 30 September 2018, and for the six months ended 30
September 2017.

Six months ended
30 September 2018
(unaudited)
New
Zealand
NZ $’000

Australia
NZ $’000

TOTAL
NZ $’000
External Revenue 2,525 719 3,244
Other income 13 1 14
Total external revenue 2,538 720 3,258
Share of loss from equity
accounted joint venture
(279) (218) (497)
Share of gain/loss from equity
accounted associate
- 6 6
Net Profit (77) 49 (28)

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Six months ended
30 September 2017
(unaudited)
New
Zealand
NZ $’000
Restated

Australia
NZ $’000
Restated

TOTAL
NZ $’000
Restated
External Revenue 2,194 1,094 3,288
Other income 30 1 31
Total external revenue 2,224 1,095 3,319
Share of loss from equity
accounted joint venture
(193) - (193)
Share of gain/loss from equity
accounted associate
- - -
Net Profit 394 (1) 393





30 September 2018
Enprise
Solutions
Corporate Total
Revenue


Total segment revenue
3,058 186 3,244
Rent received
12 - 12
Interest received
2 - 2


Total group revenue
3,072 186 3,258


Share of loss from equity accounted joint
venture
- (497) (497)
Share of gain/loss from equity accounted
associate
- 6 6
Net Profit / (Loss)
673 (701) (28)



30 September 2017
Enprise
Solutions
Restated
Corporate Total

Restated
Revenue

Total segment revenue
3,222 66 3,288
Rent received
25 - 25
Interest received
3 3 6


Total group revenue
3,250 69 3,319



Share of loss from equity accounted joint
venture
- (193) (193)
Share of gain/loss from equity accounted
associate
- - -
Net Profit / (Loss)
663 (270) 393

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4 Income Tax

For the six months ended 30 September 2018 (unaudited) 2018 2017
NZ $’000 NZ $’000
(a) Income tax expense

Statement of Comprehensive Income


Current income tax
- -

(b) Reconciliation between tax at statutory rate and
tax expense in Statement of Comprehensive Income


Parent and Subsidiaries Profit taxed at 28%
Australian Subsidiary Profit (Loss) taxed at 27.5%

14 164



Relating to non-deductible differences

139 63
Relating to non-assessable income

(2) -
Relating to origination and reversal of temporary
differences

27 (30)
Tax effect of tax losses utilised

(214) (227)

Income tax expense/(benefit) reported in the Statement of
Comprehensive Income
(36) (30)

Accumulated tax losses (8,219) (8,592)


The Company continues to meet the shareholder continuity requirement to carry forward tax losses. The
recognition of deferred tax assets is based upon whether it is more likely than not that sufficient and suitable
taxable profits will be available in the future against which the reversal of temporary differences can be deducted.
To determine the future taxable profits, reference is made to the latest forecasts of future earnings of the Group.
Where the temporary differences are related to losses, relevant tax law is considered to determine the availability
of the losses to offset against the future taxable profits.

The Group has recognised the benefit of a deferred tax asset for unutilised tax losses for one years’ forecast taxable
profit in New Zealand. The Directors have not recognised the benefit of unutilised tax losses beyond one year due
to uncertainty with regards to future shareholder continuity.



5 Dividends paid and proposed

A 2018 final dividend of 1 cent per share was paid on 19 October 2018.
6 Property, plant and equipment

During the six months ended 30 September 2018, the Group acquired tangible assets to the value of NZ $17,277
(30 September 2017: NZ $37,173).

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13


7 Earnings per share

The following reflects the income used in the basic and diluted earnings per share computation:

For the six months ended 30 September (unaudited)



(a) Earnings used in calculating earnings per share
2018
2017
NZ $’000 NZ $’000

For basic earnings per share:

Net Profit attributable to ordinary equity holders of the parent (38) 393


For diluted earnings per share:

Net Profit attributable to ordinary equity holders of the parent from basic
EPS
(38) 393
Net Profit attributable to ordinary equity holders of the parent (38) 393


(b) Weighted average number of shares
2018 2017

000’s 000’s


Weighted average number of ordinary shares for basic earnings per share
9,578 7,608


Weighted average number of ordinary shares (excluding reserved shares)
adjusted for the effect of dilution
9,578 7,608


There are no instruments (eg share options) included in the calculation of diluted earnings per share that could
potentially dilute basic earnings per share in the future because they are anti-dilutive for either of the periods
presented.
There have been no transactions involving ordinary shares or potential ordinary shares that would significantly
change the number of ordinary shares or potential ordinary shares outstanding between the reporting date and the
date of completion of these financial statements.

(c) Information on the classification of securities
There are no instruments (e.g. share options) excluded from the calculation of diluted earnings per share that could
potentially dilute basic earnings per share in the future because they are antidilutive for either of the periods
presented.

8 Current assets - cash and cash equivalents
Unaudited Unaudited
(Audited)
30 September
2018
30 September
2017
31 March
2018
NZ $’000 NZ $’000 NZ $’000


Cash at bank
1,310 265 1,265
Carrying amount of cash and cash equivalents
1,310 265 1,265

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14


9 Contributed equity, retained earnings and reserves

Contributed equity consists of ordinary shares issued and fully paid. These ordinary shares carry one vote per share
and carry the rights to dividends.
Foreign currency translation reserve
The foreign currency translation reserve is used to record exchange differences arising from the translation of the
financial statements of foreign subsidiaries.

10 Cash flow statement reconciliation
For the six months ended 30 September (unaudited) 2018 2017
NZ $’000 NZ $’000

Reconciliation of net loss to net cash flows from operations


Net Profit / (Loss) (28) 393


Adjustments for:

Depreciation and amortisation 56 55
Release of fit-out loan (8) (8)
Net (gain) loss on foreign exchange (8) 3
Equity loss (gain) on equity accounted joint ventures 497 193
Equity (gain) loss on equity accounted associates (6) -
Non-cash investment in associate - (97)
Income Tax (36) (30)


Changes in assets and liabilities

Decrease/(increase) in trade and other receivables (63) 1
(Increase)/decrease in inventories (80) (52)
Increase/(decrease) in trade and other payables 99 (12)
Increase/(decrease) in other liabilities 81 30


Net cash from operating activities 504 476

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15


11 Related party disclosure
The following table provides the total amount of transactions that were entered into with related parties for the half
year ended 30 September:
Related Party

Sales to related
parties
Purchases from
related parties
Amounts owed by
related parties
Amounts owed to
related parties
NZ $’000 NZ $’000 NZ $’000 NZ $’000
Directors and related entities:

Nightingale Partners
(Related Party)
2018 - 20 - -
2017 - - - -
Datagate Innovation Ltdd
(Related Party)
2018 15 - - -
2017 24 - 13 -
The Sales Factory Ltd
(Common Director)
2018 - 16 - 4
2017 - 8 - 12
Kilimanjaro Consulting Pty Ltd 2018 237 9 583 1
(Related Party) 2017 66 2 66 1
iSell Pty Ltd (Related Party) 2018 - - 69 -
2017 - - - -
Vadacom Ltd (Related Party) 2018 10 - -

2017 - - - -
Zhik Pty Ltd (Related Party) 2018 4 8 10 3
2017 - - - -



12 Share-based payment plans
No share options were granted or forfeited in the six month period to 30 September 2018 (30 September 2017: nil).

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16


13 Commitments
(a) Leasing commitments
The Group has commercial lease commitments.
 Enprise Solutions Limited – Auckland Office
The lease of Enprise Solutions Limited, Auckland Office is for an initial term of 8 years commencing 21 June
2012 with a renewal of a further 6 years. The renewal date is 21 June 2020. The final expiry date of the lease is
20 June 2026.
 Enprise Solutions Limited – Wellington Office
The lease of Enprise Solutions Limited, Wellington office, is for a term of 12 months, commencing on the 1st
February 2018. The lease expires on 31st January 2019 with a renewal of a further one year.
 Enprise Solutions Limited – Hamilton Office
The lease of Enprise Solutions Limited, Hamilton office, commenced on the 5th November 2007. The lease
agreement continues to operate until terminated by either party by way of 3 months’ notice in writing.

Future minimum rentals payable under non-cancellable operating leases as at 30 September are as follows:

2018 2017
NZ $’000 NZ $’000
Within one year 149 149
After one year but not more than five years 101 224
After more than five years - -
Total minimum lease payments 250 373

(b) Property, plant and equipment commitments
The Group had no contractual obligations to purchase plant and equipment at balance date (31 March 2018: NZ
$Nil).

14 Events after the reporting date
There are no material events after the reporting date.

15 Contingencies
There were no know material contingent liabilities at 30 September 2018 (31 March 2018: NZ $Nil)

16 Going Concern
The financial statements have been prepared on a going concern basis.

17 Prior Period Adjustment

The Company made an adjustment in the prior period (September 2017) to account for the change in accounting
policy resulting from IFRS 15.


2017 2017

(Restated) (As Reported)
Revenue 3,288 4,756

The effect was to restate the statement of comprehensive income of the Company as at 30 September 2017.

PAGE
17


Directors’ Declaration



The Directors declare that the interim condensed consolidated financial statements:

I. Comply with NZ IAS 34 Interim Financial Reporting.

II. Give a true and fair view of the financial position of Enprise Group Limited and its subsidiaries as at
30 September 2018 and of their performance, as represented by the results of their operations and
their cash flows for the half-year ended on that date.

In the Directors’ opinion at the date of this declaration, there are reasonable grounds to believe that
Enprise Group Limited will be able to pay its debts as and when they become payable.

The declaration is made in accordance with a resolution of Directors and is signed for and on behalf of
the Board of Directors.

Dated at Auckland this 28th day of November 2018.




George Cooper Lindsay Phillips
Director Chairman
28 November 2018 28 November 2018

PAGE
18



Corporate Information

New Zealand company number 1562383
ARBN (Australian Registered Body Number) 125 825 792
ABN (Australian Business Number) 41 125 825 792


Contact details

New Zealand Principal place of business
Level 1, 16 Hugo Johnston Drive Level 1, 16 Hugo Johnston Drive
Penrose Penrose, Auckland, New Zealand
PO Box 62262 Phone: +64 9 829 5500
Sylvia Park
Auckland 1644 Registered office
Phone: +64 9 829 5500 Level 1, 16 Hugo Johnston Drive
Fax: +64 9 829 5501 Penrose, Auckland, New Zealand

Australia
P O Box R348
Royal Exchange
Sydney
NSW 1225 Registered office – Australia
Phone: +61 2 8355 7055 Level 3, 22 Market Street
Fax: +61 2 8355 7045 Sydney, NSW 2000


Internet address
www.enprisegroup.com

Email
info@enprisegroup.com


Directors Lindsay Phillips Chairman
George Cooper Chief Executive Officer
Nicholas Paul Non-Executive Director
Ronald Baskind Executive Director


Share Register Link Market Services Limited
Level 7, Zurich House
21 Queen Street
Auckland, New Zealand
Phone: +64 9 375 5990

Enprise Group Limited shares are listed on the New Zealand Stock Exchange Alternative Market


Auditor Staples Rodway, Auckland, New Zealand


Bankers ASB, Auckland, New Zealand
CBA, Sydney, Australia