Notice of Annual General Meeting of Shareholders

Transcription

1 UXC Limited ACN INSPIRE CREATE DELIVER Notice of Annual General Meeting of Shareholders The 2011 Annual General Meeting of UXC Limited will be held as follows: Date: Thursday 24 November 2011 Time: 4.00pm (Melbourne time) Venue: Bayside Rooms 5&6, RACV Club, Level 2, 501 Bourke Street, Melbourne Ordinary Business 1 Adoption of accounts To receive and consider the financial report of the Company for the year ended 30 June 2011 and the reports of the directors and auditors. 2 Remuneration Report To adopt the Remuneration Report for the year ended 30 June Note: The vote on this resolution is advisory only and does not bind the directors or the Company. 3 Approval of election of directors To consider, and if thought fit, to pass the following resolutions as ordinary resolutions: 3.1 That Ms Gail Pemberton, a director appointed by the Board in accordance with the Company s Constitution, be elected as a director of the Company. 3.2 That Mr Geoff Lord, a former managing director appointed by the Board in accordance with the Company s Constitution, be elected as a director of the Company. 4 Approval of re-election of directors To consider, and if thought fit, to pass the following resolutions as ordinary resolutions: 4.1 That Mr Geoff Cosgriff, a director retiring in accordance with the Company s Constitution, and being eligible for re-election, be re-elected as a director of the Company. 4.2 That Mr Kingsley Culley, a director retiring in accordance with the Company s Constitution, and being eligible for re-election, be re-elected as a director of the Company. Special Business 5 Approval of the proposed Return of Capital to shareholders To consider, and if thought fit, to pass the following resolution as an ordinary resolution: That, for the purposes of Part 2J.1 of the Corporations Act 2001 (Cth), and for all other purposes, approval is given for the share capital of the Company to be reduced by approximately $6.139 million, such reduction of capital to be effected by the Company paying to each registered holder of fully paid ordinary shares in the Company as at 7.00pm on Friday 25 November 2011 the amount of $0.02 per fully paid ordinary share in the Company held by that holder at that time. 6 Approval of the proposed Issue of Securities to the Managing Director, Mr Cris Nicolli To consider, and if thought fit, to pass the following resolutions as ordinary resolutions: 6.1 That approval is given for the purposes of Listing Rule and all other purposes, for the issue of 808,843 Performance Rights to Mr Cris Nicolli to subscribe for fully paid ordinary shares in the Company, vesting upon the achievement of certain exercise conditions and in accordance with the terms described in the Explanatory Memorandum accompanying and forming part of this Notice of Meeting. 6.2 That approval is given for the purposes of Listing Rule and all other purposes, for the issue of 1,730,769 Performance Rights to Mr Cris Nicolli to subscribe for fully paid ordinary shares in the Company, vesting upon the achievement of certain Incentive targets and exercise conditions and in accordance with the terms described in the Explanatory Memorandum accompanying and forming part of this Notice of Meeting. As required by Listing Rule , the issue of these securities will be made within 12 months after the date of the Meeting. 7 Approval of the proposed amendment to the UXC Constitution To consider, and if thought fit, to pass the following resolution as a special resolution: That the Company s constitution be amended by deleting Clause 8.1(a) and replacing it with the following: The minimum number of directors is three (3). The maximum number of directors is to be fixed by the directors, but may not be more than eight (8) unless the company in general meeting resolves otherwise. The directors must not determine a maximum which is less than the number of directors in office at the time the determination takes effect. By Order of the Board Mark C Hubbard Company Secretary 21 October

2 Voting Exclusion Statement Item 2 Remuneration Report Pursuant to Section 250R of the Corporations Act, the Company will disregard any votes cast on Resolution B by or on behalf of: (a) A member of the Key Management Personnel of the Company, details of whose remuneration is disclosed in the Remuneration Report for the year ended 30 June 2011; (b) As a proxy by a member of the Key Management Personnel; and (c) A closely related party of a person in (a) and (b), unless the vote is cast by a person as proxy for a person entitled to vote, in accordance with a direction on the proxy form. Key Management Personnel and closely related parties should be aware that Section 250R of the Corporations Act prohibits them from casting a vote that will be disregarded in accordance with the statement above. Key Management Personnel are those persons that have authority and responsibility for planning, directing and controlling the activities of the Company, whether directly or indirectly. Members of Key Management Personnel include directors and certain senior executives. A closely related party of a member of Key Management Personnel includes any of the following: A spouse, child or dependent of the member; A child or dependant of the member s spouse; Anyone else who is one of the member s family and may be expected to influence, or be influenced by, the member in the member s dealings with the Company; A company the member controls; and A person described by the regulations. The proxy form accompanying this notice of meeting contains detailed instructions regarding how to complete the proxy form if a shareholder wishes to appoint the Chairman or other Key Management Personnel as proxy. You should read those instructions carefully to ensure your vote is not disregarded where it otherwise would be valid. Items 6.1 and 6.2 Approval of the proposed Issue of Securities to the Managing Director, Mr Cris Nicolli The Company will disregard any votes cast on Items 6.1 and 6.2: by or on behalf of Mr Cris Nicolli or any associate of Mr Nicolli; and as a proxy by a member of Key Management Personnel or any of their closely related parties, unless the vote is cast as proxy for a person entitled to vote, in accordance with a direction on the proxy form. Voting in Person or by Proxy 1 The venue will open at 3:00 pm to facilitate registration for the Annual General Meeting. 2 If you are a shareholder entitled to attend and vote, you are entitled to appoint one or two proxies. If you attend in person, all proxies are suspended. 3 A proxy need not be a shareholder of the Company and may be either an individual or a body corporate. Should you appoint a body corporate as your proxy, that body corporate will need to ensure that it appoints an individual as its corporate representative to exercise its powers at meetings, in accordance with section 250D of the Corporations Act 2001 (Cth) and provides satisfactory evidence of the appointment of its corporate representative prior to commencement of the meeting. If such evidence is not received before the meeting, then the body corporate (through its representative) will not be permitted to act as your proxy. 4 On a poll, shareholders have one vote for each fully paid ordinary share held. 5 If you wish to appoint one proxy, please use the Proxy Form provided. 6 If you wish to appoint two proxies, an additional Proxy Form may be obtained by telephoning the share registry or you may copy the Proxy Form provided. Where two proxies are appointed, you may specify the number or proportion of votes that each may exercise, failing which each may exercise half the votes. Neither proxy is entitled to vote on a show of hands if more than one proxy attends. 7 Proxy Forms must be signed by a member or the member s attorney or, if a corporation, executed under seal or in accordance with section 127 of the Corporations Act 2001 or signed by an authorised officer or agent. 8 The Company has arranged for the Proxy Forms (and if the appointment is signed by the appointor s attorney, the original authority under which the appointment was signed or a certified copy of the authority) to be collected and collated by a shareholder proxy agent ( the Agent ). Proxy Forms can be returned to the Agent by mail to Link Market Services, Locked Bag A14, Sydney South NSW 1235 or by fax on (02) To be effective, the Agent must receive Proxy Forms not later than 4.00pm (AEST) on Tuesday 22 November Proxies can also be lodged online at Link s website ( by following the steps below: Step 1 Select Investor Login through the Investor Centre from the top right. Step 2 Enter UXC Limited as the Issuer. Step 3 Enter your Holder Identifier (which appears under the barcode on the front of your proxy form), your postcode, type the Security code. Step 4 Read and agree to the terms and conditions by selecting the tick box, and Step 5 Select the orange >Login box. Step 6 Select Vote under the heading Action and follow the prompts. You will be taken to have signed your proxy form if you lodge it in accordance with the instructions given on the website. The Board has determined, in accordance with the Company s Constitution and Corporations Regulations that any shareholder registered at 7.00pm (Melbourne time) on 22 November 2011 is entitled to attend and vote at the Annual General Meeting. 2

3 Explanatory Notes to Shareholders Ordinary Business Item 1: Adoption of accounts Pursuant to section 317 of the Corporations Act 2001, the Financial Report, Directors Report and Auditor s Report of UXC Limited for the financial year to 30 June 2011 will be laid before the meeting. The Corporations Act 2001 does not require a vote of the shareholders on the reports or the statements. The Annual Report is available on the UXC website, at Item 2: Remuneration Report Pursuant to section 250R of the Corporations Act 2001, a resolution must be put to members that the Remuneration Report be adopted. The vote on this resolution is advisory only and does not bind the Directors or the Company. However, the Directors of the Company will take into account the discussion on this item and the outcome of this vote when considering future remuneration arrangements of the Company. The Remuneration Report is set out on pages 16 through 30 of the Company s 2011 Financial Report. The Remuneration Report explains the Board s policies in relation to the: a) nature and scope of remuneration paid to directors, the company secretary and group executives; b) inter-relationship with the Company s performance and performance conditions chosen, and short and long term incentive measurements; c) remuneration details for each director and group executive; and d) differences between remunerating non-executive directors as discrete from the basis upon which group executives are remunerated. A reasonable opportunity will be provided to the members for discussion of the Remuneration Report at the meeting. The Directors recommend that shareholders vote in favour of the adoption of the Remuneration Report. Item 3.1: Approval of election of a Director Ms Gail Pemberton FAICD Ms Pemberton, Non-Executive Director, presents for election in accordance with Listing Rule 14.4 and Article 8.1(c) of the Constitution of the Company, and being eligible under Article 8.1(k)(1) offers herself for election. Ms Pemberton, aged 58, was appointed as a non-executive director of UXC Limited on 1 November 2011 as a result of a board candidate search designed to refresh the Board and attract new directors able to support and contribute to the Company s new strategic direction. Ms Pemberton does not have any material relationship with the Company, is not a recent former employee or auditor and is not associated with executive management of the Company through any family connection. Therefore Ms Pemberton satisfies all the criteria for independence in her role as Director of the Company, as set out in the Corporate Governance Statement of the Company s Annual Report. Ms Pemberton has held the post of Chief Operating Officer UK at BNP Paribas Security Services, following her role as CEO and Managing Director, BNP Paribas Securities Services Australia and New Zealand. Prior to this, Ms Pemberton was Group CIO and COO of the Financial Services Group of Macquarie Bank during a successful 20 year career there. Ms Pemberton is Chairman of OneVue and is also a director of Baycorp, SIRCA and Onthehouse.com. She previously served on the boards of Alleron Funds Management, Air Services Australia, the Sydney Opera House Trust, and Harvey World Travel. Ms Pemberton is experienced in risk management, change management, business process rationalisation and outsourcing. Her skill, experience and expertise complement the existing skill set of the Board of Directors of the Company and she has been selected to make a valuable contribution to the Board on this basis. The Directors recommend shareholders vote in favour of this resolution. Item 3.2: Approval of election of a Director Mr Geoff Lord B Eco (Hons) MBA (distinction) ASSA FAICD Mr Lord, Non-Executive Chairman, presents for election in accordance with Listing Rule 14.4 and Article 8.1(c) of the Constitution of the Company, and being eligible under Article 8.1(k)(1) offers himself for election. Mr Lord, aged 66, was appointed as Executive Chairman of UXC Limited on 13 September 2002 and is now Non-Executive Chairman, having relinquished his executive duties on 28 October Mr Lord is the founder of the Company. Mr Lord is the largest individual shareholder of the Company and a former executive, and as such does not satisfy the criteria for independence in his role as Director of the Company, as set out in the Corporate Governance Statement of the Company s Annual Report. However, all other directors in office at the date of the notice of meeting with the exception of the Managing Director are independent. Mr Lord is Chairman and Chief Executive Officer of Belgravia Group, Chairman of LCM Litigation Fund, Terrain Capital Limited, and former Chairman of Melbourne Victory Limited. Mr Lord is also Deputy Chairman of the Institute of Drug Technology Limited, and a director of KLM Group, MaxiTRANS Industries Limited and Northern Energy Corporation Limited. He has over 38 years experience in business management. His skill, experience and expertise complement the existing skill set of the Board of Directors of the Company and he has made a valuable contribution to the Board. The Directors recommend shareholders vote in favour of this resolution. Item 4.1: Approval of re-election of a Director Mr Geoff Cosgriff BAppSc (Elec) CP Eng FAICD FIE Australia Mr Cosgriff, Non-Executive Director, retires by rotation in accordance with Listing Rule 14.4 and Article 8.1(d) of the Constitution of the Company and being eligible under Article 8.1(k)(1) offers himself for re-election. Mr Cosgriff, aged 58, was appointed as a non-executive Director of UXC Limited on 13 September 2002 and is currently the Chairman of the Nominations and Remuneration Committee and a member of the Audit Committee. Mr Cosgriff does not have any material relationship with the Company, is not a recent former employee or auditor and is not associated with executive management of the Company through any family connection. Therefore Mr Cosgriff satisfies all the criteria for independence in 3

4 4 his role as Director of the Company, as set out in the Corporate Governance Statement of the Company s Annual Report. Mr Cosgriff was Managing Director of MITS Ltd from 1990 to 2000 and was Executive Director of LogicaCMG Pty Ltd until June He is currently a Non-Executive Director of Transurban Ltd, and a Council Member of Leadership Victoria. He is a director of Infocos Pty Ltd and is currently engaged on a number of executive coaching and mentoring assignments. His skill, experience and expertise complement the existing skill set of the Board of Directors of the Company and he has made a valuable contribution to the Board. The Directors recommend shareholders vote in favour of this resolution. Item 4.2: Approval of re-election of a Director Mr Kingsley Culley MBA BEng (Hons) Dip Mech Eng FIE Australia FAICD Mr Culley, Non-Executive Director, retires by rotation in accordance with Listing Rule 14.4 and Article 8.1(d) of the Constitution of the Company and being eligible under Article 8.1(k)(1) offers himself for re-election. Mr Culley, aged 69, was appointed as a non-executive Director of UXC Limited on 13 September He is currently the Chairman of the Risk Management Committee and a member of the Nominations and Remuneration and Audit Committees. Mr Culley does not have any material relationship with the Company, is not a recent former employee or auditor and is not associated with executive management of the Company through any family connection. Therefore Mr Culley satisfies all the criteria for independence in his role as Director of the Company, as set out in the Corporate Governance Statement of the Company s Annual Report. Mr Culley is a professional engineer with significant public and private experience. He was formerly CEO of the Melbourne and Metropolitan Board of Works (MMBW). Former directorships include Chairman Pacific Hydro Limited, Chairman Port of Melbourne Authority, Director South East Water, Director Docklands Authority and Director Rural Water Corporation. He has made a significant contribution to the Board. The Directors recommend that shareholders vote in favour of this resolution. Special business Item 5: Return of capital to Shareholders 5.1 Return of capital The Company proposes to make a cash payment to shareholders of $0.02 per fully paid ordinary share (representing approximately $6.139 million in total) as a return of capital. The record date for determining entitlements to receive the return of capital is 7.00pm on Friday 25 November As at 21 October 2011, there were 306,933,250 ordinary shares in the Company on issue. This number may decrease prior to the Record Date as a consequence of the Company buying back shares pursuant to the on market buy back announced on 26 September 2011 (see paragraph 5.5 below). 5.2 Payment details If the return of capital is approved by shareholders, payment will be made to entitled shareholders, being registered holders of shares in the Company at the record date referred to above by direct credit or cheque in accordance with the details held at the share registry, Link Market Services. Shareholders who have not already provided the Company s share registry with their bank account details may do so by contacting Link Market Services Limited on or by visiting www. linkmarketservices.com and completing and returning the form titled Request for Direct Credit of Payments. This form must be returned by 25 November 2011 if you would like to have your Capital Return paid directly into your account. A cheque will be mailed otherwise. The payment date will be 2 December Reasons for the return of capital As set out in the 2011 full-year financial results released to the market on 31 August 2011 and the 2011 Annual Report, the Board proposes to return capital surplus to the Company s needs to shareholders out of the proceeds of sale of the Field Solutions Group. Your Directors believe that returning this amount will leave the Company sufficiently capitalised to grow its business while taking account of the interests of all stakeholders. The Directors believe that returning capital to shareholders from the proceeds of a capital transaction is the best way for shareholders to participate in this milestone transaction for the Company. Future distributions of earnings will be made as franked dividends as performance permits. The Company remains committed to pursuing future growth and maximising sustainable returns through the operation of the simplified business model, streamlining internal operations, improving accessibility to capital markets, prioritising capital investment in the sectors offering the greatest return and opportunity, and positioning the business to be better able to compete in the market place. 5.4 Requirements for the return of capital Equal reduction The proposed return of capital constitutes an equal reduction of the Company s share capital for the purposes of the Corporations Act 2001 (Cth) (the Corporations Act). This is because it only relates to ordinary shares; it applies to each shareholder in proportion to the number of ordinary shares that the shareholder holds; and the terms of the reduction are the same for each shareholder. Statutory requirements Each of the requirements under the Corporations Act for a company to reduce its share capital is set out below, together with a description of how that requirement is met in relation to the proposed return of capital. Requirement How the requirement is satisfied The reduction must be fair and reasonable to the Company s shareholders as a whole. The reduction must not materially prejudice the Company s ability to pay its creditors. The reduction must be approved by shareholders under section 256C of the Corporations Act. The Company s Directors consider that the return of capital is fair and reasonable to the Company s shareholders as a whole. All shareholders will be treated in the same manner in terms of the proportion of the share capital of the Company being returned. The Company s Directors have carefully reviewed the Company s assets, liabilities and expected cash flows and believe that the return of capital will not materially prejudice the Company s ability to pay its creditors. The Company s Directors have also satisfied themselves as to the solvency of the Company following the return of capital. This requirement is the reason that shareholder approval is being sought. The capital return is an equal capital reduction and therefore must be approved by an ordinary resolution of the Company s shareholders. In accordance with section 256C(5) of the Corporations Act, a copy of this Notice of Annual General Meeting has been lodged with the Australian Securities and Investments Commission.

5 5.5 Effect of the return of capital on the Company Effect on the capital structure After the return of capital, the number of fully paid ordinary shares on issue will remain the same as there will be no cancellation of shares as a result of the return of capital. As announced to the market on 26 September 2011, the Company has established an on-market share buy back program of up to 10,000,000 shares over the 12 months following the announcement. Impact on financial position The return of capital will be funded from the Company s cash balance. As at the close of business on 30 June 2011, the cash balance of the Company was approximately $ million. This amount was increased by approximately $ million upon completion of the sale of the Field Solutions Group on 8 September The key financial implications of the capital return on the Company are as follows: the Company s share capital and cash balance will be reduced by approximately $6.139 million being the total amount of the capital return (subject to rounding, and any cancellation or issue of shares subsequent to the date of this notice); and the funds that are returned to shareholders will no longer be part of the interest earning cash balance available to the Company, nor be available for use in further reduction of debt. In determining to implement a return of capital, your Directors have carefully reviewed the Company s assets, liabilities and expected cash flows. The Directors believe that the return of capital will not materially prejudice the Company s ability to pay its creditors. The Directors have also satisfied themselves as to the solvency of the Company following the return of capital. Impact on growth strategies The Company has used the majority of the proceeds from sale to strengthen the balance sheet through debt reduction. Other uses of the funds may be for select strategic acquisitions, as well as the return of capital. Your Directors believe that the return of capital is not of a magnitude to disrupt or compromise the realisation of any of the Company s growth strategies. Though UXC expects to continue to maintain some debt, there will be borrowing cost benefits from completion of the sale. Share price impact If the proposed capital return is implemented, the Company s shares may trade at a lower share price from the ex date (21 November 2011) for the return of capital than they would have done had the return of capital not been made, in a manner similar to that which applies to dividend payments. Dividends As previously stated, the divestment of the Field Solutions Group has provided the funds to allow us to return a portion of shareholder s capital invested in the divested group. This distribution will be payable from the proceeds of sale of the Field Solutions Group. Your Directors expect to pay ordinary franked dividends that are referrable to UXC s reported earnings going forward, in line with underlying performance. Tax implications of the capital return for the Company No adverse tax consequences are expected to arise for the Company from the capital return. 5.6 Tax implications of the capital return for UXC shareholders UXC is in the process of applying for a Class Ruling from the Australian Taxation Office ( ATO ). If successful, the ruling will confirm that the ATO agrees with the tax treatment of UXC s capital return as summarised in item 3.7 below, and that anti-avoidance rules concerning the provision of capital benefits in substitution of dividends will not apply. While the summary reflects the expected tax treatment to be confirmed by the ATO in the Class Ruling, the final Class Ruling may not be issued until after the return of capital is actually completed. It is possible that the ATO may in the end express a view contrary to that expressed below. For example, the ATO may take the view that some portion of the distribution should be regarded as a dividend for tax purposes. When issued, the final Class Ruling will be available on the ATO website at UXC will also publish the Class Ruling on its website at The summary in this section is general in nature and for information purposes only. The particular taxation implications will depend on the circumstances of each shareholder. Specifically, this summary only outlines the position for Australian resident individual shareholders who hold their shares on capital account, who will be therefore taxed under the provisions that apply to capital transactions. Shareholders who hold their shares on revenue account or as trading stock will be taxed under the general provisions of the income tax law. Accordingly, all shareholders are encouraged to seek appropriate independent professional advice that considers the tax implications in respect of their own specific circumstances. Neither the Company nor any of its officers, employees or advisors assumes any liability or responsibility for advising shareholders about the tax consequences for them from the proposed capital return. 5.7 Resident individual shareholders The Company has sought a Class Ruling from the ATO confirming that for resident individual shareholders who hold their shares on capital account: No part of the proposed capital return should be treated as a dividend for tax purposes; If the cost base (after any adjustment, as may be relevant) of a share of the Company is less than the capital return amount (on a cents per share basis), then a capital gain will arise for the difference; and Otherwise, the cost base for each share of the Company will be reduced by the capital return amount (on a cents per share basis) for the purpose of calculating any capital gain or loss on the ultimate disposal of that share. The application for the Class Ruling is expected to be lodged by 14 October 2011, and the ATO is expected to provide its ruling within six to eight weeks of that date. There is a possibility that some indication as to the ultimate success of the Class Ruling will be available by the time of the Annual General Meeting, and should this be the case, shareholders will be informed. 5.8 Non-resident shareholders Shareholders who are not residents of Australia for tax purposes should seek specific advice in relation to the taxation consequences arising from the return of capital under the laws of their country of residence. The Directors recommend that shareholders vote in favour of this resolution. 5

6 Item 6: Approval of the proposed Issue of Securities to the Managing Director, Mr Cris Nicolli Under Items 6.1 and 6.2 the Company is proposing to seek shareholder approval for the issue of securities to Mr Nicolli as part of the performance incentive component of his total remuneration package in respect of both the 2011 and 2012 financial years in accordance with ASX Listing Rule 10.14, on the terms set out in this notice. Why is shareholder approval being sought? ASX Listing Rule requires that shareholders approve awards of securities issued to directors. Shareholder approval is required only if new securities are issued to a director and not if securities are purchased on market. The intention of the requirement is to protect shareholders from dilution in the value of securities that may occur as a result of securities issued under employee incentive plans. No such dilution occurs if securities are purchased on market. The Board may determine whether the shares allotted upon the future exercise of the Performance Rights will be purchased on market or issued. Approval is being sought to allow the Company to either issue new shares or to purchase shares on market for allocation to Mr Nicolli upon vesting and exercise of the Performance Rights. Overview of Mr Nicolli s remuneration package The granting of Performance Rights forms an important part of the Company s executive remuneration policy, details of which are set out in the Company s Remuneration Report. UXC Limited s Nominations and Remuneration Committee advises the Board on remuneration practices and policies which are fair and responsible and recognise the correlation between executive performance targets and reward, to provide the best value to shareholders. An independent consultant reviews the Committee s recommendations from time to time in relation to the remuneration components available to the Executive Management team, including the Managing Director, Cris Nicolli. Mr Nicolli receives remuneration comprising cash, equity entitlements and benefits in recognition of his role and responsibilities as the Company s Managing Director. The Nominations and Remuneration Committee and the Board are satisfied that Mr Nicolli s remuneration is an appropriate reward in relation to the marketplace and his ongoing contribution to the Company s development and performance. The Board is also satisfied the remuneration is reasonable for the purposes of section 211(1)(b) of the Corporations Act 2001 (Cth). The Company pays the following remuneration to Mr Nicolli based on the advice of independent experts, the recommendation of the Nominations and Remuneration Committee, and the approval of the Board: a) Remuneration of $660,000 for Mr Nicolli s duties and responsibilities as Managing Director, comprising cash and benefits on a total employment cost to the Company basis. b) Short Term Performance Incentive of up to $200,000 available in relation to Mr Nicolli s duties and responsibilities as Managing Director, subject to the achievement of key performance indicators as summarised below, payable in cash. c) Long Term Performance Incentive of up to $900,000 over three years, available in relation to Mr Nicolli s duties and responsibilities as Managing Director, subject to the achievement of key performance indicators as summarised below, payable in equity based compensation. Mr Nicolli was appointed Managing Director on 28 October An amount of $380,500 of Short Term Incentive (STI) and Medium Term Incentive (MTI) was available to him for the financial year ending 30 June 2011 in his role as Managing Director. The performance incentive component of Mr Nicolli s remuneration is subject to the achievement of Key Performance Indicators (KPI). The KPIs for the STI and MTI were as follows for the financial year ending 30 June 2011: STI/MTI KPI Composition Targeted 2nd half PBT 30% Targeted Cash position 20% Divestment or demerger of UXC Field Solutions Group 30% Development of UXC Strategic Plan 10% Targeted Total Shareholder Return 10% TOTAL 100% Mr Nicolli earned the entire $380,500 of performance incentive available, as well as an overachievement entitlement of $165,313. Upon achievement of the KPIs, Mr Nicolli is entitled to receive either cash or equity compensation. For his fiscal year 2011 STI and MTI entitlements, Mr Nicolli has elected to convert $300,000 of the incentive into equity based compensation in the form of Performance Rights. Had Mr Nicolli not been a director at the time of the allotment of the FY11 Performance Rights program, he would have participated in the program as other executives without the requirement for shareholder approval. As such, these securities will be allotted using the option pricing valuation applied to all other securities so issued, $ If shareholder approval is not granted for the issue of these securities, the cash equivalent that is due to Mr Nicolli will be paid. For the FY12 financial year, Mr Nicolli is entitled to an STI of $200,000 and an equity based Long Term Incentive (LTI) of $300,000 per annum over three years, available to be earned subject to the achievement of key performance indicators. The KPIs for the STI and LTI are as follows: STI The amount of STI payable to Mr Nicolli will be assessed at the end of the 2012 financial year based upon his achievement of the following STI KPIs, and payable in cash: STI KPI Composition Achievement of Budgeted FY12 UXC NPAT 60% Achievement of Targeted FY12 Cash conversion 20% Stakeholder Management 10% Leadership and Management Development 10% TOTAL 100% LTI The LTI grant to Mr Nicolli will comprise two equal tranches, with each tranche subject to a different performance condition which is tested at the end of the three year performance period (ie in 2014) as described below. LTI KPI Composition Achievement of FY12-FY14 Targeted Relative Total Shareholder Return 50% Achievement of FY12-FY14 Targeted Relative Earnings per share 50% TOTAL 100% 6

7 Tranche 1 TSR performance condition The performance condition applicable to Tranche 1, comprising 50% of the LTI Performance Rights, is based on the relative TSR of the Company. TSR is the return to shareholders provided by share price appreciation, plus dividends, expressed as a percentage of investment. The relative TSR performance condition compares the TSR performance of the Company with the TSR performance of entities in a comparator group of entities over the performance condition measurement period. The comparator group for the FY12 grant comprises selected companies which are included in the ASX Listed GICS IT Industry Participants (ASX Technology Index). In the event that any of these companies are not listed in the ASX Technology Index on 30 June 2014 they will be omitted from the calculations. The calculation will exclude the 2 cent capital return that is associated with the disposal of the FSG Group (see Item 5 above). The level of TSR achieved by the Company over the relevant vesting period will be given a percentile ranking having regard to the Company s performance compared with the performance of other companies in the comparator group. The percentage of Performance Rights in Tranche 1 which vest at particular percentile rankings is as follows: UXC TSR Ranking Below the 50th percentile At the 50th percentile Between 51st and 74th percentile At or above 75th percentile % of Performance Rights which vest 0% vest 50% vest Between 50% and 100% vest (on a straight line basis) 100% vest Vesting is contingent on the Company s TSR over the period being positive. Tranche 2 EPS performance condition The performance condition applicable to Tranche 2, which comprises the remaining 50% of the LTI Performance Rights, is based on the Company s earnings per share (EPS). EPS means net profit after tax divided by the average number of shares on issue. The relative EPS performance condition compares the EPS growth of the Company with the EPS growth of entities in the same comparator group as the TSR KPI. At the end of the performance period, the selected comparator group will be ranked by an independent accounting firm based on their EPS growth for that period. In the event that any of the comparator companies are not listed in the ASX Technology Index on 30 June 2014 they will be omitted from the calculations. The Company s ranking relative to the comparator group will determine how many Performance Rights will vest as follows:. UXC EPS Growth Ranking Below the 50th percentile At the 50th percentile Between 51st and 74th percentile At or above 75th percentile % of Performance Rights which vest 0% vest 50% vest Between 50% and 100% vest (on a straight line basis) 100% vest Vesting is contingent on the Company s EPS growth over the period being positive. Details of Performance Rights to be granted to Mr Nicolli The Performance Rights will be granted to Mr Nicolli at no cost. The details of the proposed issue of securities to Mr Nicolli are set out below: Director Cris Nicolli Role Managing Director Number of Equity Securities 808,843 Unlisted Options over Ordinary Shares (FY11 STI Performance Rights) 1,730,769 Unlisted Options over Ordinary Shares (FY12- FY14 LTI Performance Rights) Deemed Issue Price The Performance Rights that vest will be exercised into shares at the exercise price upon exercise. The Performance Rights that vest will be exercised into shares at the exercise price upon exercise. Exercise Price nil Vesting Date Key performance indicators have been achieved as at 30 June Further exercise conditions exist such that 50% of the securities can be exercised after 30 June 2012 conditional upon Mr Nicolli s continued employment, and 100% of the securities can be exercised after 30 June 2013 conditional upon Mr Nicolli s continued employment. Upon achievement of key performance indicators by 30 June Expiry Date August 2013 Value of Financial Benefit $300,000 Cris Nicolli Managing Director nil August 2014 Up to $900,000 (based on achievement of key performance indicators) (1) 808,843 FY11 STI Performance Rights are valued at $300,000 using the binomial method and underlying valuation assumptions existing at the commencement of the 2011 financial year, as at 1 July 2010 (LR ). These securities are valued on a basis consistent with all other Key Employees participating in the 2011 UXC Incentive Plan, which provides equity based compensation as a component of at-risk, 7

8 performance based remuneration, providing UXC with key staff retention benefits. These Performance Rights will only be available for exercise upon achievement of the further exercise conditions, being continued employment at 30 June 2012 for 50% and at 30 June 2013 for 100%. (2) 1,730,769 FY12-FY14 LTI Performance Rights are valued at $900,000 using the binomial method and underlying valuation assumptions existing at the commencement of the 2012 financial year, as at 1 July 2011 (LR ). These securities are valued on a basis consistent with all other Key Employees participating in the 2012 UXC Incentive Plan, which provides equity based compensation as a component of at-risk, performance based remuneration, providing UXC with key staff retention benefits. These Performance Rights will only be available for exercise upon achievement of the relevant individual Key Performance Indicators as outlined above. (3) Subject to receipt of shareholder approval, the Board intends to grant the Performance Rights at the first Board meeting following the Company s Annual General Meeting. In any event, no Performance Rights will be issued under this approval to Mr Nicolli later than 12 months after the Company s Annual General Meeting. (4) Up to a maximum of 2,539,612 Performance Rights will be issued to Mr Cris Nicolli or associates of Mr Nicolli (for example his superannuation fund), vesting over a period of up to three years (as outlined above) upon Mr Nicolli s achievement of key performance indicators and further exercise conditions as relevant. (5) Subject to the discretion of the Board, any entitlement to Performance Rights which have not vested will lapse if Mr Nicolli resigns from employment with the Company or ceases employment for any reason. In the event of a takeover of the Company or other change of control, Performance Rights may, at the discretion of the Board, vest and become exercisable in their entirety. (6) Mr Nicolli currently holds 136,546 options and 3,186,648 fully paid ordinary shares in the Company. Further details are set out in the Company s Annual Report [in the Directors Report and the Remuneration Report]. Should the resolutions to issue the securities fail, Mr Nicolli will continue to be entitled to the underlying cash equivalent of the STI and LTI in accordance with their terms. There is no incremental cost to the Company for the equity based compensation components of Mr Nicolli s remuneration as compared to cash. Other information Mr Nicolli is the only director entitled to participate in the STI, MTI and LTI schemes. Since his appointment as Managing Director on 28 October 2010, no securities have been issued to Mr Nicolli under the STI, MTI or LTI schemes requiring approval under ASX Listing Rule No securities have been issued to persons under the scheme requiring approval under ASX Listing Rule since the last approval. Details of securities issued pursuant to previous approvals are contained in the Company s Remuneration Report. No loans will be made in relation to the acquisition of securities under this approval. A voting exclusion statement applies to Items 6.1 and 6.2, as set out in the notice of meeting. Mr Nicolli declines to make a voting recommendation in relation to Items 6.1 and 6.2 due to his material personal interest in the outcome, and his votes will be excluded in accordance with the voting exclusion statement set out in the notice of meeting. To the extent that the Company s other Directors do not have a material personal interest, each Director recommends that shareholders vote in favour of Items 6.1 and 6.2 as they believe that the issue of securities to Mr Nicolli is an appropriate form of remuneration and provides him with an incentive to maximise returns to shareholders. favour of Items 6.1 and 6.2. Item 7: Approval of the proposed amendment to the UXC Constitution The Company s constitution currently sets the maximum number of directors at 14. This resolution proposes a reduction in that number to eight, by deleting the existing Clause 8.1(a) and replacing it with a clause identical in all respects other than reducing the maximum number of directors permitted by the constitution to eight, to better reflect what is considered to be the maximum optimum size for the Company s Board. Under the existing Clause 8.1(a), as well as the proposed replacement the subject of this resolution, the directors still have the authority to set the maximum number of directors to a number below the constitutional maximum. However, shareholders should be aware that recent changes to the Corporations Act require the Company to seek shareholder approval to declare that no vacant positions exist should the number of directors determined by the Board be less than the constitutional maximum. This resolution is not requesting a declaration of no vacancies it is simply reducing the maximum allowable number of directors under the constitution. Your Board believes that a reduction in the maximum number of directors allowed by the constitution is necessary to better reflect what is considered to be the maximum optimum size for the Board to ensure the efficient and effective governance of the Company. Given the size and nature of the Company s operations, the Board believes that it is not necessary for the maximum size of the Board permitted under the constitution to be up to 14 directors. The Company has operated for many years with a board of five directors. This changed in the 2011 financial year with the Chairman stepping down from his executive duties and the appointment of Mr Nicolli as Managing Director, resulting in five non-executive directors and one executive director. On 1 November 2011, a further nonexecutive director appointment was made by the directors for ratification by the shareholders, with a view to preparing to refresh the Board with new talent contribution. This brings the Board to seven directors in total, six being non-executive, and allows a further appointment to be made should the need arise. Should the Board subsequently declare that no vacancy exists for an eighth director, further shareholder approval would be required in accordance with recent amendments to the Corporations Act. As this resolution proposes an amendment to the Company s constitution, it is classified as a special resolution. A special resolution must be passed by 75% of the votes cast by members entitled to vote on the resolution. The Directors recommend that shareholders vote in favour of this resolution. 8