IDT Australia Limited
annual report 2014
Company Information
Contents
Directors
Graeme Kaufman
BSc, MBA
(Chairman)
Geoffrey F Lord
B.Ec (Hons), MBA (Distn), ASSA, AICD
(Deputy Chairman)
Dr Graeme L Blackman OAM
BSc (Hons), PhD, FRACI, FTSE
Reo Shigeno
BA, Dip Financial Services
David Williams
B.Ec (Hons), M.Ec, FAICD
Dr Paul MacLeman
Chairman’s Report
Managing Director’s Report
Report of the Directors
Auditors Independence Declaration
Corporate Governance Statement
Statement of Profi t or Loss and
Other Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
MBA, BVSc, Grad Dip Tech, Grad Cert Eng,
Notes To and Forming Part of
FAICD, MATTA
(Managing Director)
Secretaries
Joanna Johnson
BEc, Grad Dip Management, ICAA
Dr David Sparling
BVSc (Hons), LLB (Hons), GDi pAppCor Gov
the Financial Statements
Directors’ Declaration
Independent Audit Report to
the Members
Shareholder Information
Page No.
2
3
4 - 12
13
14 - 19
20
21
22
23
24 - 43
44
45 - 46
47 - 48
Share Register
Link Market Services Limited
Level 1, 333 Collins Street
MELBOURNE VIC 3000
Bankers
National Australia Bank Limited
NAB Health
Level 2, 151 Rathdowne Street
CARLTON VIC 3053
Auditors
Deloitte Touche Tohmatsu
550 Bourke Street
MELBOURNE VIC 3000
Stock Exchange
Australian Stock Exchange Limited
530 Collins Street
MELBOURNE VIC 3000
(ASX Code : IDT)
Registered Offi ce and Principal Place of Business
45 Wadhurst Drive
BORONIA VIC 3155
Telephone +61 3 9801 8888
Facsimile +61 3 9837 6445
CMAX
Level 5, East Wing Royal Adelaide Hospital
North Terrace
ADELAIDE SA 5000
Telephone +61 8222 3923
Facsimile +61 8223 3475
Website Address
www.idtaus.com.au
www.cmax.com.au
I D T A n n u a l R e p o r t 2 0 1 3
3
Chairman’s Report
Firstly I would like to thank shareholders for their continuing support over the past year, a year that marked the commencement of a period of
signifi cant change for the Company, and set the stage for new strategies for growth. The base businesses are being strengthened by additional
sales and marketing resources, legacy assets such as temozolomide are being deployed and the Company is actively seeking non-organic
growth opportunities.
It was with great pleasure that I joined the IDT board in the middle of 2013. With a background in manufacturing, fi nance and life sciences I
saw and understood the potential of the Company with the right additions of commercial skills and strategies. In the fi rst half of the year I was
honoured to be asked to chair the Company and accepted the request.
Board changes
In the early part of this fi nancial year Dr Graeme Blackman stood down as chairman after nearly 30 years and we are pleased to retain Graeme
on the board as a non-executive director. Graeme was a true pioneer of the sector in Australia and as founder of IDT in 1977 he built up over
that long history a world class manufacturing facility and preeminent expertise in drug development and manufacturing. The excellent facilities,
infrastructure and expertise that were built over IDT’s 30 year history are a credit to his stewardship and vision. The Board wishes to express its
gratitude for his commitment, drive and enthusiasm in building IDT.
In the latter part of the fi rst half Dr Roger Aston stepped down from the board due to mounting other executive commitments. We would like to
thank him for his expertise and contribution over a number of years.
Strategy
With board changes came the addition of new commercial skill sets at management level. New senior managers joined the Company from a
number of well-known pharmaceutical companies, bringing decades of commercial experience. The addition of this commercial acumen to the
large existing pool of technical expertise will lay the foundations for future development and facilitate execution of our growth strategies. We are
deploying strategies aimed at strengthening the base service businesses at CMAX and Boronia, leveraging existing assets and expertise into
IDT owned registrations and seeking complementary acquisitions that bring near term revenues and that leverage the manufacturing assets.
This will deliver in coming years a strong service business with the addition of an IDT owned specialty generic range of marketed products.
IDT products
The fi rst of these products to be advanced late in the 2013 calendar year was temozolomide, an anti-cancer drug for the treatment of
melanoma and brain tumours. This was fi led with the US Food & Drug Administration as an Abbreviated New Drug Registration in November
and accepted by the FDA for review early in 2014. Further such IDT registered products are planned and in development.
Financial resources
In September 2013 the Company raised approximately $6 million through a placement to sophisticated and institutional investors and a rights
issue. This brought a number of high profi le funds onto the register for the fi rst time and gave the Company a foundation of well resourced
investors to support the Company’s non-organic growth aspirations. The raising in 2013 was deployed in part to commence the development
of the IDT generic product range.
The value of the Company is underpinned by tangible assets exceeding $23 million substantially refl ecting the world class manufacturing
facilities at the Boronia campus. In addition the Company currently has no borrowings and has signifi cant debt facilities available.
2014/15
IDT, having set its growth strategy now needs to focus upon rigorous execution of the activities required to deliver the desired outcomes. The
Board has established and communicated key performance indicators to the executive team to measure and hold them to these goals. We
expect to see progress on all three strands of our strategy, with increasing base income, further products in development and securing assets
from outside the Company to spur growth.
As we move forward into 2015, I wish to thank my fellow directors for their contribution to the Company over the past year, particularly given
ongoing diffi cult market conditions both locally and internationally. We also thank the management and staff for their commitment to the
company and their response to the challenges facing us in repositioning IDT for future growth.
Graeme Kaufman
CHAIRMAN
4
I D T A n n u a l R e p o r t 2 0 1 4
Managing Director’s Report
A year of change
My fi rst full year at IDT has seen considerable change in the board, management and strategy. On top of this we have been working very hard
to build and strengthen the base businesses, both at CMAX in Adelaide and at the Boronia manufacturing campus in Melbourne. Behind the
scenes there has been a full strategic review by board and management, resulting in a concerted effort to increase the revenues of the base
businesses, increase utilisation of our assets and our share of the value chain in markets we serve.
Operational leverage
In addition to this we have been very actively looking for acquisitions that will allow us to increase the utilisation rates of the Boronia manufacturing
assets. These are world class and on the whole relatively new manufacturing facilities. Whilst they have a low depreciation cost relative to their
replacement value, they also carry high fi xed running costs relative to our current site revenues. The effect of these two factors is that any extra
product that can be manufactured in Boronia becomes increasingly profi table as we move beyond breakeven. This is because little extra costs
or capital expenditure would be needed for any of the facilities or site management functions as activity levels increase. The implications of this
are that a rapid addition of market ready assets will very quickly move the company back to profi tability. As a result we are actively seeking such
assets with two advisory groups assisting us with this search globally.
Commercial focus
The fi ling of our fi rst Abbreviated New Drug Application with the US Food & Drug Administration occurred in late 2013. This is signifi cant in its
own right, being the fi rst time IDT has sought to own its own product fi ling, thus allowing us to claim signifi cantly more of the wholesale value.
IDT for much of its history acted as a contract s drug developer and s supplier of Active Pharmaceutical Ingredients, reaping little of the overall
value chain. As announced early in the new fi nancial year, we signed a temozolomide distribution agreement with Mayne Pharma, enabling us
to share a signifi cant proportion of the profi ts of a product that has a current US market in excess of US$300 million.
The temozolomide fi ling is more signifi cant however as a broader marker for IDT’s direction in the future. As explained above we have the
opportunity to return to profi tability of we can increase our capacity utilisation. We therefore intend to continue to advance our own products
into the regulatory approval pathways, as well as to seek out close to market assets that can deploy.
Effi ciency Improvements
Once again CMAX has been a reliable performer, exceeding the previous year’s revenues and contributing cash to the group as a whole. We
have in addition been working hard to improve the effi ciency of CMAX though better labour management practices. We have also been working
hard to reduce costs in a responsible manner at Boronia, looking for effi ciencies in areas that will not compromise quality or safety. Improved
labour management and reductions in utility costs has been realised over the course of the year.
2015
We expect the 2015 Financial Year to be one where the work undertaken to date on improving both costs and revenues will allow us to
see meaningful improvements in sales and a move back towards profi tability. In addition we continue to look for acquisition opportunities for
approved drug assets that we can rapidly take to market and so better utilise our manufacturing capacity. 2015 will therefore be one entailing
both attention to detail in our growth efforts and some potential for non-organic growth through acquisition.
Dr Paul MacLeman
MANAGING DIRECTOR
I D T A n n u a l R e p o r t 2 0 1 4
5
Report of the Directors - 30 June 2014 (Including Remuneration Report)
Your Directors present their report on the fi nancial report of the company for the year ended 30 June 2014.
The following persons were Directors of IDT Australia Limited during or since the end of the fi nancial year are :
G Kaufman (Chairman from 30 September 2013)
G F Lord (Deputy Chairman)
G L Blackman (Chairman until 30 September 2013)
R Aston (resigned 20 November 2013)
P MacLeman (appointed 22 August 2013)
R Shigeno
D Williams
Principal Activities
The principal activities of the company in the course of the year were the supply of products and provision of research and development and
other technical services for the pharmaceutical and allied industries.
Review of Operations
During the year, the company continued to provide consulting research and development services and products for clients in the pharmaceutical
and allied industries. A detailed review is given on pages 2 and 3 of this annual report.
Results
The net result of operations after applicable income tax expense was a loss of $6.626m (2013: $5.354m loss).
Dividends
No dividends were paid during the course of the fi nancial year. There are no dividends or distributions recommended or declared for payment
to members, but not yet paid, during the year.
Signifi cant Changes in the State of Affairs
In the opinion of the Directors, there have been no signifi cant changes in the state of affairs of the company during the fi nancial year under
review not otherwise disclosed in this report or the fi nancial statements.
During 2014, the Company raised net proceeds of $5.846m from new and existing investors and consequently holds cash balances of
$2.415m at 30 June 2014 which the Company considers suffi cient to support organic product and business development opportunities
during 2015.
Matters Subsequent to the End of the Financial Year
The Company signed a binding Memorandum of Understanding in July 2014 with Mayne Pharma Group Limited’s US Products division
appointing them exclusively to distribute the Company’s generic Temozolomide product in the USA. Temozolomide is indicated for the treatment
of melanoma and glioblastoma multiforme and had US sales of approximately USD340 million in the 12 months ending 31 May 2014. It is
anticipated that manufacture of this product will commence at the Company’s Boronia facility in 2016.
Other than the above, there has not been any matter or circumstance occurring subsequent to the end of the fi nancial year and the date of
this report that has signifi cantly affected, or may signifi cantly affect, the operations of the Company, or the state of affairs of the company in
future fi nancial years.
Likely Developments
The Company’s objective is to deliver superior organic revenue growth and generate free cashfl ow through execution of the core strategy of
identifying, successfully tendering for and completing new manufacturing and service projects, particularly, but not limited to, the Boronia site.
Regulatory activity to support commercialisation of new products for US markets for launch in subsequent years will continue.
Environmental Regulations
The company is subject to environmental regulations and other licenses in relation to its manufacturing operations, including obligations to
comply with provisions of the Environment Protection Act and a Trade Waste Agreement with South East Water. The Company is also subject
to environmental audits by local and international clients. Systems are in place to ensure compliance with federal, state and local environmental
regulations and as at the date of this report, the Directors are not aware of any breach.
Indemnifi cation of Offi cers
During the fi nancial year, the Company paid an insurance premium insuring all offi cers of the company, including the Directors. Liabilities insured
include costs and expenses that may be incurred in defending civil or criminal proceedings that may be brought against the offi cers in their
capacity as offi cers of the company. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium.
6
I D T A n n u a l R e p o r t 2 0 1 4
Share Options
No options were granted or exercised under the Executive Share Option Plan during the year ended 30 June 2014.
(2013: 500,000 granted, nil exercised)
Details of unissued shares or interest under option at the date of this report are :
Option series
Number
Grant date
Expiry date
Exercise price
(1) Granted 15 April 2013
250,000
15/04/2013
15/04/2017
(2) Granted 15 April 2013
250,000
15/04/2013
15/04/2017
$0.298
$0.373
Meetings of Directors
The following table sets out the number of meetings of the Company’s Directors held during the year ended 30 June 2014, and the number
of meetings attended by each Director.
Director
Board
Audit Committee
Remuneration and Nomination
Committee
R Aston (to 20/11/13)
G L Blackman
G Kaufman
G F Lord
P MacLeman (from 22/8/13)
R Shigeno
D Williams
A
8
14
14
14
11
14
14
B
7
13
12
13
11
14
14
A = Meetings held while a director or member.
B = Meetings attended while a director or member.
- - = Not a member of relevant committee
Information on Directors
A
--
--
4
--
--
4
4
B
--
--
4
--
--
4
4
A
--
1
1
1
--
--
--
B
--
1
1
1
--
--
--
Graeme Kaufman
Qualifi cations: BSc, MBA
Experience: Formerly Executive Vice-President of Mesoblast Limited and Chief Financial Offi cer of CSL Limited. Non Executive Director
since 1 June 2013
Other Current Directorships: Non-executive Chairman of Bionomics Limited (since 2012), Director of Cellmid Limited (since 2012),
non-executive Chairman of Paradigm BioPharmaceuticals Limited (since 2014)
Former Directorships in Last 3 Years: nil
Responsibilities: Chairman, Member of Audit and Nomination and Remuneration Committees
Equity interests in company: 185,000 fully paid ordinary shares.
Geoffrey F Lord
Qualifi cations: BEc(Hons), MBA(Distn), ASSA, AICD
Experience: Formerly Chief Executive and Deputy Chairman of Elders Resources Limited. Non executive Director since 1998
Other Current Directorships: Presently Chairman and Chief Executive of Belgravia Group Pty Ltd. Non Executive Chairman of UXC Limited
(since 2002), Chairman of LCM Litigation Fund, Director of Maxitrans Industries Limited (since 2000) and Auto Group Limited (since 1999)
Former Directorships in Last 3 Years: Northern Energy Corporation Limited (2007-2011)
Responsibilities: Deputy Chairman from 2008. Member of Nomination and Remuneration Committee
Equity interests in company: 6,831,907 fully paid ordinary shares (indirect).
I D T A n n u a l R e p o r t 2 0 1 4
7
Dr Graeme L Blackman OAM
Qualifi cations: BSc(Hons), PhD, FRACI, FAICD, FTSE, FIoD.
Experience: Formerly Professor of Pharmaceutical Chemistry, Victorian College of Pharmacy. Extensive experience in research and
development and commercial scientifi c consulting. Chairman (1986-2013), Managing Director (1986-2007)
Other Current Directorships: None
Former Directorships in Last 3 Years: None
Responsibilities: Member of Nomination and Remuneration Committee
Equity interests in company: 6,996,376 fully paid ordinary shares
Reo Shigeno
Qualifi cations: BA, Dip Financial Services
Experience: Currently Chief Financial Offi cer of Healthy Clinical Research, a subsidiary of I’ROM Holding Group. Non Executive Director
since 1 June 2013
Other Current Directorships: nil
Former Directorships in Last 3 Years: nil
Responsibilities: Member of Audit Committee
Equity interests in company: nil.
David Williams
Qualifi cations: B.Ec(Hons), M.Ec , FAICD
Experience: Managing Director of Kidder Williams Ltd, with over 30 years’ experience in investment banking. Non Executive Director since
21 December 2010
Other Current Directorships: Chairman of Medical Developments International Limited, Chairman of Calzada Ltd
Former Directorships in Last 3 Years: Clever Communications Limited (2007-2011)
Responsibilities: Chair of Audit Committee
Equity interests in company: nil.
Dr Roger Aston (resigned 20th November 2013)
Qualifi cations: BSc(Hons), PhD
Experience: Formerly Chief Executive Offi cer of Mayne Pharma Group Limited. Non Executive Director from 20 March 2012
Other Current Directorships: Non-executive Chairman of Immuron Limited, executive Chairman of Oncosil Medical Limited, executive
Chairman of Pharmaust Ltd, Director of Regeneus Ltd, Director Calzada Ltd
Former Directorships in Last 3 Years: Mayne Pharma Group Limited (2007-2011)
Responsibilities: Member of Nomination and Remuneration Committees.
Equity interests in company: nil.
Paul Macleman (appointed 22nd August 2013)
Qualifi cations: MBA, BVSc, Grad Dip Tech, Grad Cert Eng, FAICD, MATTA
Experience: Managing Director, IDT Australia Limited
Other Current Directorships: nil
Former Directorships in Last 3 Years: G Tech International Limited
Responsibilities: Managing Director (MD)
Equity interests in company: 111,000 fully paid ordinary shares, 500,000 options.
Information on Secretaries
Dr David Sparling and Ms Joanna Johnson were jointly appointed to the role of Company Secretary in March 2014. Both have extensive
commercial experience in the pharmaceuticals industry and respectively bring considerable legal and fi nancial skills.
8
I D T A n n u a l R e p o r t 2 0 1 4
Remuneration Report
The Directors of the Company are pleased to present the following Remuneration Report which forms part of the Report of Directors and has
been prepared in accordance with s300A of the Corporations Act 2001. The Remuneration report has been audited as required by s308 (3C)
of the Corporations Act 2001 and sets out remuneration information for the Company’s key management personnel.
The Remuneration and Nomination Committee advises the Board on remuneration policies and practices generally, making specifi c
recommendations on the remuneration framework and other terms of employment for executive Directors, non-executive Directors and senior
executives, including incentives and share ownership plans.
The Corporate Governance Statement provides further information on the role of this committee and its membership.
Directors’ Remuneration
Fees and payments to non-executive Directors refl ect the demands made on, and the responsibilities of, the Directors. They are set at market
rates for our industry and size of the Company in order to attract Directors with expertise in our industry and Australian capital markets. Non-
executive Directors’ fees are reviewed annually by the Remuneration and Nomination Committee.
The Chairman’s and MD’s fees were determined independently to the fees of non-executive Directors based on comparative roles in the
external market. The Chairman and Managing Director were not present at any discussions relating to the determination of their remuneration.
Directors’ Fees
Non-executive Directors’ annual base fee is $40,000 and the Chairman received $80,000, plus superannuation contributions, as required
under the Australian superannuation guarantee legislation.
Non-executive Directors’ fees are determined within an aggregate Directors’ fee pool limit, periodically recommended for approval by
shareholders. The current maximum aggregate Directors’ fee pool is $400,000 for non-executive Directors.
Details of the nature and amount of each element of emoluments of each Director and the key management personnel are set out in the
following tables.
Key Management Personnel Remuneration
Remuneration packages are set at levels intended to attract and retain fi rst class executives capable of managing the Company’s operations
and achieving the Company’s strategic objectives. It is also designed to align achievement of Company goals with long-term shareholder value.
The Company is committed to adhering to appropriate corporate governance standards for remuneration of executives with regard to ASX
Corporate Governance Council’s Recommendations.
Key Management Personnel remuneration and other terms of employment are reviewed annually by the remuneration committee having regard
to performance against goals set at the start of the year, relevant comparative information and independent expert advice where necessary.
The executive pay and reward framework comprises :
(cid:129)
(cid:129)
(cid:129)
Base salary, including superannuation,
Short term performance incentives
Long term incentives via participation in the Company’s Share Plans.
There are no service agreements or special terms of employment for Key Management Personnel, except for the MD, Paul MacLeman. The
MD has an Executive Employment agreement specifying duties and obligations to be fulfi lled and provides the Board and MD will, early each
fi nancial year, consult and agree objectives for achievement that year. The terms of his Executive Employment agreement are:
Term of agreement
3 years
Base salary
$300,000 pa
STI
LTI
Up to 30% of base salary upon achievement of KPIs
nil
Notice period
3 months
I D T A n n u a l R e p o r t 2 0 1 4
9
Remuneration Details 2014
Short-term employee benefits
Post-employment benefits
Cash salary
and fees
Cash bonus
$
$
Non
monetary
benefits
$
Super-
annuation
Termination
benefits
$
$
Long-term
benefits
Long
Service
Leave
$
Share-based
payments
Options /
Shares
$
Total
$
Non-executive Directors
G Kaufman – Chairman **
70,000
R Aston - resigned 20
November 2013
G F Lord
R Shigeno
D Williams
16,666
40,000
40,000
40,000
Sub-total
- non-executive Directors
206,666
Executive Directors
G L Blackman *
27,499
P MacLeman, MD
301,040
Other key management
personnel
J Johnson
Chief Financial Officer
- appointed 18 March 2014 ***
R Najdecki
Chief Financial Officer
- resigned 20 March 2014
D Sparling
VP Legal & Corporate
Development ***
Sub-total
- executive management
Total key management
personnel compensation
57,000
164,890
196,040
746,469
953,135
-
-
-
-
-
-
-
6,475
1,541
-
3,670
-
11,686
14,972
27,125
-
-
-
-
27,750
5,272
49,187
18,037
14,972
127,371
14,972
139,057
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7,500
-
-
-
-
-
-
-
-
-
76,475
18,207
40,000
43,670
40,000
218,352
69,596
336,290
1,425
36,996
100,693
5,035
-
219,112
4,875
36,996
255,948
18,835
73,992
981,639
18,835
73,992
1,199,991
* Dr Blackman resigned as Chairman effective 30 September 2013
** Mr Kaufman elected Chairman effective 30 September 2013
*** On 15 May 2014 Dr Sparling and Ms Johnson were each granted 222,222 Ordinary Shares under the Employee Share Plan at
the current market value at the date of issue, $0.27. This issue was funded by an interest free limited recourse loan from the
Company, repayable on sale of the shares.
There is no performance related remuneration for any Key Management Personnel other than P MacLeman, whose performance related
remuneration was 0% of his total remuneration for the year.
10
I D T A n n u a l R e p o r t 2 0 1 4
Remuneration Details 2013
Short-term employee benefits
Post-employment benefits
Cash salary
and fees
Cash bonus
$
$
Non
monetary
benefits
$
Super-
annuation
Termination
benefits
$
$
Long-term
benefits
Long
Service
Leave
$
Share-based
payments
Options /
Shares
$
Total
$
Non-executive Directors
R Aston
A D Blackman
(resigned 30th June 2013)
R Burnet
(resigned 30th June 2013)
G Kaufman
(appointed 1st June 2013)
G F Lord
R Shigeno
(appointed 1st June 2013)
D Williams
40,000
36,666
40,000
3,333
56,667
3,333
40,000
Sub-total - non-
executive Directors
219,999
Executive Directors
G L Blackman
113,733
R Elliott MD
(resigned 28th February 2013)
328,363
P MacLeman MD
(appointed 15th April 2013)*
63,846
Other key management
personnel
P Elliott (resigned 7th May 2013),
Quality Manager
150,989
J Kelly,
General Manager, CMAX
R Najdecki
Chief Financial Officer
D Sparling (appointed 1st May
2013), VP Legal & Corporate
Development
180,606
186,721
32,500
Sub - total executive
management
1,056,758
Total key management
personnel compensation
1,276,757
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,600
6,934
3,600
-
-
-
300
-
-
-
300
-
14,734
79,145
21,806
31,703
23,417
-
-
5,746
13,485
18,548
16,165
-
-
24,269
2,925
129,396
107,813
129,396
122,547
-
-
-
-
-
-
-
8,267
8,471
-
-
-
-
-
-
-
-
-
-
43,600
43,600
43,600
3,633
56,667
3,633
40,000
234,733
222,951
391,954
1,772
41,809
113,173
4,273
4,984
5,346
902
-
-
-
-
168,747
220,303
216,336
36,327
34,015
41,809
1,369,791
34,015
418,809
1,604,524
I D T A n n u a l R e p o r t 2 0 1 4 11
-
-
-
-
-
-
-
-
-
-
-
-
-
* Dr MacLeman was appointed Managing Director effective 22nd August 2013.
Share Based Compensation
Employee Share Plan
Executive management were invited to participate in the Employee Share Plan (ESP) whereby shares of the Company were issued at the
current market value at the date of issue and funded by an interest free limited recourse loan from the Company. Grants within the framework
of the ESP were determined by the MD together with the Remuneration and Nomination Committee, and subject to approval by the Board.
The amounts disclosed for emoluments relating to these shares are the assessed fair values at issue date determined using a Black-Scholes
option pricing model taking into account the share price at grant date and expected price volatility of the underlying share, the expected
dividend yield and the risk-free interest rate for the term of the option.
Other staff, were invited to participate in the allocation of up to $1,000 of shares granted for no consideration and escrowed for 3 years whilst
participants remain employees of the Company.
Executive Option Plan
Options are granted under the terms and conditions of the Executive Option Plan. Options are granted under the plan for no consideration, for
a four year period vesting immediately upon granting and carry no dividend or voting rights. When exercisable, each option is convertible into
one ordinary share.
During the 2014 fi nancial year no options were issued. In the 2013 fi nancial year 500,000 options were issued to Dr MacLeman.
The amounts disclosed for emoluments relating to options above are the assessed fair values at grant date, allocated equally over the period
from grant date to vesting date. Fair values at grant date are independently determined using a Black-Scholes option pricing model that takes
into account the exercise price, the term of the option, the vesting and performance criteria, the impact of dilution, the non-tradeable nature
of the option, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk-free
interest rate for the term of the option.
Other Transactions with Key Management Personnel
There were no other transactions or loans provided to key management personnel other than interest free limited recourse loans provided in
association with the Employee Share Plan.
Key Management Personnel Equity Holdings
The number of shares in the Company held during the fi nancial year by Directors and each of the specifi ed executives are set out below.
2014
Directors
Name
G Kaufman
G F Lord
Executive Directors
Name
Balance at
Start of Year
-
5,693,254
Employee
Share Issue
Other Changes
During the Year
Balance at the
end of the Year
-
-
185,000
185,000
1,138,652
6,831,907
Balance at
Start of Year
Employee
Share Issue
Other Changes
During the Year
Balance at the
end of the Year
G L Blackman
5,830,313
P MacLeman
-
Other Executives
Name
D Sparling
J Johnson
Balance at
Start of Year
-
-
-
-
Employee
Share Issue
222,222
222,222
1,116,063
6,996,376
111,000
111,000
Other Changes During
the Year
Balance at the
end of the Year
37,637
-
259,859
222,222
12
I D T A n n u a l R e p o r t 2 0 1 4
2013
Directors
Name
A D Blackman
(resigned 30 June 2013)
R Burnett
(resigned 30 June 2013)
Balance at
Start of Year
129,600
417,400
G F Lord
5,693,254
Employee
Share Issue
Other Changes
During the Year
Balance at the
end of the Year
-
-
-
-
-
-
129,600
417,400
5,693,254
Executive Directors
Name
Balance at
Start of Year
Employee
Share Issue
Other Changes
During the Year
Balance at the
end of the Year
G L Blackman
5,830,313
R Elliiot
(resigned 28 February 2013)
6,851
-
-
-
-
5,830,313
6,851
Other Executives
Name
P Elliott
J Kelly
Balance at
Start of Year
Employee
Share Issue
Other Changes During
the Year
Balance at the
end of the Year
3,916
4,428
-
-
-
-
3,916
4,428
Unlisted Options
The number of unlisted options in the company held during the fi nancial year by Directors and each of the key executives are set out below.
2014
Name
Balance at
Start of Year
Granted During
the Year
Lapsed During
the Year
Balance at the
end of the Year
P MacLeman, MD
500,000
-
-
500,000
2013
Name
Balance at
Start of Year
Granted During
the Year
Lapsed During
the Year
Balance at the
end of the Year
P MacLeman, MD
-
500,000
-
500,000
Company Performance
The table below sets out summary information concerning the Company’s movements in shareholder wealth for the fi ve years to 30 June 2014 :
Share price (ASX:IDT)
30 June 2014
30 June 2013
30 June 2012
30 June 2011
30 June 2010
Start of year
End of year
High for year
Low for year
$0.20
$0.20
$0.50
$0.19
$0.24
$0.20
$0.32
$0.19
$0.35
$0.24
$0.43
$0.22
$0.62
$0.35
$0.77
$0.34
$1.38
$0.62
$1.70
$0.52
# Shares on issue
77,374,248
53,192,059
43,192,059
43,096,294
43,096,294
Market capitalisation as at 30 June
$15.47m
Increase / (decrease)
$4.83m
$10.64m
$0.37m
$10.37m
($4.71m)
$15.08m
($11.64m)
$26.72m
($32.66m)
Dividend paid
-
-
-
-
-
I D T A n n u a l R e p o r t 2 0 1 4 13
Non-Audit Services
The Directors have considered the position and are satisfi ed the provision of non-audit services is compatible with the general standard
of independence for auditors imposed by the Corporations Act 2001 and are satisfi ed this did not compromise the auditor independence
requirements for the following reasons:
(cid:129)
(cid:129)
all non-audit services have been reviewed by the Audit Committee to ensure they do not impact the integrity and
objectivity of the auditor
none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for
Professional Accountants, including reviewing or auditing the auditor’s own work, acting in a management or a decision-making
capacity for the company, acting as advocate for the company or jointly sharing economic risk and rewards.
Details of the amounts paid or payable to the auditor for audit and non-audit services provided during the year are as follows:
Total amounts receivable by RSM Bird Cameron Partners for:
(a)
Audit and review of the company’s fi nancial statements
(b)
Other Services
Total amounts receivable by Deloitte Touche Tohmatsu for:
(a) Audit and review of the company’s fi nancial statements
(b) Other Services
2014
$
-
-
-
80,850
6,100
86,950
2013
$
80,000
5,075
85,075
-
-
-
Auditor’s independence declaration
A copy of the auditor’s independence declaration as required under Section 307C of the Corporations Act 2001 is included after this report.
Proceedings on Behalf of the Company
The Corporations Act 2001, allows specifi ed persons to bring, or intervene in, proceedings on behalf of the company.
No proceedings have been brought or intervened in on behalf of the company with leave of the court under Section 237 of the Corporations
Act 2001.
Rounding of Amounts
The company is of a kind referred to in Class Order 98/100, issued by the Australian Securities and Investments Commission relating to the
“rounding off” of amounts in the Report of Directors. Amounts in the Report of Directors have been rounded off in accordance with the Class
Order to the nearest thousand dollars, or in certain cases, to the nearest dollar.
Directors Resolution
This report is made in accordance with a resolution of the Directors.
Graeme Kaufman
Chairman
19 August 2014, Melbourne
14
I D T A n n u a l R e p o r t 2 0 1 4
Deloitte Touche Tohmatsu
ABN 74 490 121 060
550 Bourke Street
Melbourne VIC 3000
GPO Box 78
Melbourne VIC 3001 Australia
DX: 111
Tel: +61 3 9671 7000
Fax: +61 3 9671 7001
www.deloitte.com.au
19 August 2014
The Board of Directors
IDT Australia Limited
45 Wadhurst Drive
BORONIA VIC 3155
Dear Members of the Board
AUDITOR’S INDEPENDENCE DECLARATION TO IDT AUSTRALIA LIMITED
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration
of independence to the directors of IDT Australia Limited.
As lead audit partner for the audit of the financial statements of IDT Australia Limited for the year ended 30 June
2014, I declare that to the best of my knowledge and belief, there have been no contraventions of:
(i)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(ii) any applicable code of professional conduct in relation to the audit.
Yours sincerely
DELOITTE TOUCHE TOHMATSU
Chris Biermann
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited
I D T A n n u a l R e p o r t 2 0 1 4 15
For the yea r ended 30 June 2014
Corporate Governance Statement
IDT Australia Limited (the Company) and the Board are committed to achieving and demonstrating high standards of corporate governance.
The Board continues to review the framework and practices to ensure they meet the interests of all stakeholders.
A description of the Company’s main corporate governance practices is set out below. All these practices unless otherwise stated, were in
place for the entire year.
Principle 1: Lay Solid Foundations for Management and Oversight
Directors are responsible to the shareholders for the Company’s performance in both the short and longer terms and seek to balance
competing objectives in the best interests of the Company as a whole. Their focus is to enhance the interests of shareholders and other key
stakeholders and ensure the Company is properly managed.
The functions of the Board include:
(cid:129)
(cid:129)
(cid:129)
providing strategic guidance to the Company including contributing to development of and approving the corporate strategy
reviewing and approving business plans, the annual budget and fi nancial plans including available resources and major capital initiatives
overseeing and monitoring:
- organisational performance and achievement of the Company’s strategic goals and objectives
- progress of major capital expenditures and signifi cant corporate projects including acquisitions and divestments
(cid:129) monitoring fi nancial performance including approval of the annual and half-yearly fi nancial reports and liaison with the Company’s auditors
(cid:129)
appointment and performance assessment of the MD and members of the senior management team against annually set key
performance indicators
enhancing and protecting the reputation of the organisation
ensuring signifi cant risks facing the Company have been identifi ed and appropriate and adequate control, monitoring and reporting
mechanisms are in place
reporting to shareholders, and
ensuring appropriate resources are available to the executive team.
(cid:129)
(cid:129)
(cid:129)
(cid:129)
Day to day management of the Company’s affairs and the implementation of the corporate strategy and policy initiatives are formally
delegated by the Board to the MD and Executive team.
Specifi c limits of authority delegated to the MD and the Executive team are outlined in a formal Delegation of Authority Policy and approved
by the Board.
Principle 2: Structure the Board to Add Value
The Board of Directors
The Board operates in accordance with the following broad principles that:
(cid:129)
it should comprise both executive and non-executive Directors, ideally with a majority of non-executive Directors. Non executive
Directors bring fresh perspective to the Board’s consideration of strategic, risk and performance matters.
recognising the importance of independent views and the Board’s role in supervising management’s activities, independence of the
Board assists exercising judgment and review and constructively challenging management’s performance
the Chair is elected by the Board and meets regularly with the MD
the Company benefi ts from having Directors with different backgrounds, possessing complementary skills and experience
the Board should consider its effectiveness and undertake an annual Board performance review
Directors should exercise independent judgment when making Board decisions. There are processes in place to enable Directors to
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
seek independent professional advice where required, at the Company’s expense.
The Board seeks to ensure:
(cid:129)
its membership represents an appropriate balance between Directors with experience and knowledge of the Company and directors
with an external position
(cid:129)
the size of the Board is conducive to effective discussions with effi cient decision making.
Responsibilities of the Chairman and MD
The Chairman is responsible for leading the Board, ensuring Directors are properly briefed in all matters relevant to their role and
responsibilities, facilitating Board discussions and managing the Board’s relationship with the Company’s senior executives. The MD is
responsible for implementing Company strategies and policies.
16
I D T A n n u a l R e p o r t 2 0 1 4
F or the year ended 30 June 201 4
Corporate Governance Statement (Continued)
Directors’ Independence
The Board has adopted specifi c principles in relation to Directors’ Independence. These state that to be deemed independent, a Director
must be a non-executive and:
(cid:129)
(cid:129)
not a substantial shareholder of the Company or an offi cer of, or otherwise associated directly with, a substantial shareholder of the Company
within the last three years not been employed in an executive capacity by the Company, or been a Director after ceasing to hold any
such employment
(cid:129)
within the last three years not been a principal of a material professional adviser or a material consultant to the Company, or an
employee materially associated with the service provided
(cid:129)
not a material supplier or customer of the Company, or an offi cer of or otherwise associated directly or indirectly with a material supplier
or customer
(cid:129) must have no material contractual relationship with the Company other than as a director of the Company
(cid:129)
free from any business or other relationship which could reasonably be perceived to materially interfere with the Director’s independent
exercise of their judgment.
In addition, a transaction of any amount or a relationship is deemed material if knowledge of it may impact the shareholders’ understanding of
the Director’s performance.
In line with the Directors’ Independence Policy, Mr Geoffrey Lord’s indirect shareholdings, Dr Graeme Blackman’s recent role as Managing
Director and his shareholdings and Dr Paul MacLeman’s role as MD deems these Directors to not to be independent.
The Chairman is considered to be an independent Director.
The Board has established two committees to assist execution of its duties and allow detailed consideration of complex issues. Current
committees of the Board are the Nomination and Remuneration Committee and the Audit Committee, the composition of each being disclosed
in the Report of Directors. All matters determined by committees are submitted to the full Board as recommendations for Board decision.
Recent thinking on corporate governance has introduced the view that a Director’s independence may be perceived to be impacted by
length of service on the Board. The Board considers it is fortunate to have long serving Directors who have contributed signifi cantly to the
Company over the years. As shareholders have freely re-elected these Directors, the Board does not currently consider length of service to
be an impairment to independence. The Nomination and Remuneration Committee will continue to consider independence of Directors and
recommend future changes in relation to composition and appointments of suitable candidates.
At the date of signing the Report of Directors, the Board consists of three independent Directors and three non-independent Directors. The
Board understands the ASX Corporate Governance recommendation that the majority of the Board should be independent Directors and will,
through its Nomination and Remuneration Committee seek to address this matter over time.
Term of Offi ce
The Company’s Constitution specifi es one-third of Directors (other than the MD) must retire from offi ce at the Annual General Meeting. They
may offer themselves for reelection at this time.
Performance Assessment
The Board undertakes annual self assessment of its performance in relation to its leadership, structure, functionality, systems, meetings and
relationship with management.
Commitment
The Board meets approximately monthly throughout the year. The number of meetings of the Company’s Board of Directors and of each
Board committee held, and the number attended by each Director is disclosed on page 5.
Board Committees
The Board has established a number of committees to assist performance of its duties and allow more detailed consideration of issues.
Current committees are the Nomination and Remuneration committee and the Audit Committee.
Each committee has its own written charter setting out its responsibilities, powers, duties and the manner in which the committee is to
operate. These charters are available on the Company’s website. All matters determined by committees are submitted to the full Board as
recommendations for Board decision. Minutes of committee meetings are tabled at the subsequent Board meeting.
I D T A n n u a l R e p o r t 2 0 1 4 17
For the yea r ended 30 June 2014
Corporate Governance Statement (Continued)
Nomination and Remuneration Committee
It was resolved to combine the Nomination and Remuneration Committees effective 20 November 2013 and appoint the following Directors:
(cid:129) Mr G Kaufman (Chair)
(cid:129)
Dr G L Blackman
(cid:129) Mr G F Lord
Details of these Directors’ qualifi cations, experience and attendance at Nomination and Remuneration Committee meetings are set out in the
Report of Directors.
The main responsibilities of the Nomination and Remuneration Committee are to:
(cid:129)
advise the Board on remuneration policies and practices generally, making specifi c recommendations on remuneration packages and
other terms of employment for non-executive Directors, executive Directors and senior executives
(cid:129)
conduct an annual review of the membership of the Board with regard to the Company’s present and future needs and make
recommendations on Board composition and appointments
conduct an annual review of the independence of Directors
propose candidates for Board vacancies
oversee the annual performance assessment program
oversee Board succession
(cid:129)
(cid:129)
(cid:129)
(cid:129)
When the need for a new Director is identifi ed or an existing Director is required to stand for re-election, the committee reviews the range
of skills, experience and expertise on the Board, identifi es its needs and prepares a short-list of candidates with appropriate skills and
experience. Where necessary, advice is sought from independent search consultants.
The full Board then appoints the most suitable candidate, but who must stand for election at the next Annual General Meeting of the
Company. Reappointment of existing Directors is not automatic and is contingent on performance and contribution to the Company.
The Committee’s objective is to ensure remuneration policies are fair and competitive. The Remuneration and Nomination Committee seeks
independent advice as an when it deems necessary.
Principle 3: Promote Ethical and Responsible Decision Making
Code of Conduct
The IDT Staff Handbook is provided to all employees and outlines the Company’s expectations that personnel act with utmost integrity,
objectivity and in compliance with relevant legislation at all times. The IDT Staff Handbook provides guidance in specifi c areas, including :
(cid:129) Mission Statement, including Values and Relationship Statement
(cid:129) Quality Policy
(cid:129) Workplace Behaviour, including Equal Opportunity and Whistleblower Policies
(cid:129) Occupational Health and Safety
(cid:129)
(cid:129)
Employment terms and conditions
Share Trading Policy
Trading in Company Securities
Directors and staff members may not buy or sell shares from 1 July of the year to the release of the Company’s interim fi nancial report, from 1
January of the year to the release of the Company’s interim half yearly fi nancial report, at other times indicated by the Board of Directors or if
a Director or staff member is aware of any information not released to the ASX which is likely to impact the price of the Company’s securities
were that information to be publicly released.
A Director or staff member wishing to buy or sell shares outside the above periods, is required to advise the Chairman of his/her intention
and obtain the Chairman’s approval or, in the case of the Chairman, approval of the Chair of the Company’s Audit Committee.
A copy of the Share Trading Policy is available on the Company’s website.
Diversity Policy
Diversity includes, but is not limited to, gender, age, ethnicity and cultural background. The Company is committed to diversity, recognising
the benefi ts arising from employee and Board diversity, the importance of benefi ting from all available talent and has established a diversity
policy which is available at the Company’s website.
18
I D T A n n u a l R e p o r t 2 0 1 4
F or the year ended 30 June 201 4
Corporate Governance Statement (Continued)
The Company considers diversity a priority and is committed to building a strong representation of female employees, including executive
management. Specifi c objectives are aimed at women participating in senior leadership roles through identifi cation and mentorship of talented
female employees with a view of promotion to management. The Company continues to make good progress in achieving these objectives.
The proportion of women employees in various positions as at 30 June 2014 is as follows:
Board of Directors
MD and Executive Team
Other Managers
All other Employees
Total Organisation
0%
29%
63%
58%
57%
Principle 4: Safeguard Integrity in Financial Reporting
Audit Committee
The Audit Committee is comprised of non-executive Directors, namely:
(cid:129) Mr D Williams, Chair
(cid:129) Mr G Kaufman
(cid:129) Mr R Shigeno
Details of these Directors’ qualifi cations and their attendance at Audit Committee meetings are set out in the Report of Directors.
The Audit Committee’s main responsibilities include :
(cid:129)
review, assess and approve the annual report, the half-yearly fi nancial report and all other fi nancial information published by the
Company or released to the market;
(cid:129)
assist the Board in reviewing the effectiveness of the organisation’s internal control environment covering:
-
-
-
effectiveness and effi ciency of operations
reliability of fi nancial reporting
compliance with applicable laws and regulations;
oversee the effective operation of the risk management framework
recommend to the Board the appointment, removal and remuneration of the external auditors, review the terms of their engagement
and the scope and quality of the audit.
consider the independence and competence of the external auditor on an ongoing basis.
review and approve non audit services provided by the external auditors to ensure it does not adversely impact auditor independence.
review and monitor related party transactions and assess their propriety.
report to the board on matters relevant to the Committee’s role and responsibilities.
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
In fulfi lling its responsibilities, the Audit Committee:
(cid:129)
receives regular reports from management and the external auditors
(cid:129) meets with external auditors at least twice a year – more frequently if necessary
(cid:129)
(cid:129)
(cid:129)
reviews the processes the MD and CFO have in place to support their certifi cations to the board
reviews any signifi cant disagreements between the auditors and management, irrespective of whether they have been resolved
provides the external auditors with a clear line of direct communication at any time to either the Chair of the Audit Committee or the
Chair of the Board.
The Audit Committee has authority, within the scope of its responsibilities, to seek any information it requires from any employee or external party.
External Audits
It is policy of the Company and the Audit Committee to appoint external auditors who demonstrate quality and independence. Performance
of the external auditor is reviewed annually and applications for tender of external audit services are requested as deemed appropriate, taking
into consideration assessment of performance, existing value and tender costs. Deloitte Touche Tohmatsu was appointed in 2013. It is policy
to rotate audit engagement partners on listed companies at least every fi ve years.
An analysis of fees paid to the external auditors, including fees for non-audit services, is provided in the Report of Directors and note 20 to
the fi nancial statements. It is the policy of the external auditors to provide an annual declaration of their independence to the audit committee.
The external auditor is requested to attend the Annual General Meeting and be available to answer shareholder questions about the conduct
of the audit and the preparation and content of the audit report.
I D T A n n u a l R e p o r t 2 0 1 4 19
For the yea r ended 30 June 2014
Corporate Governance Statement (Continued)
Principles 5 and 6: Make Timely and Balanced Disclosures and Respect the Rights of Shareholders
Continuous Disclosure
The Chairman has been appointed as the person responsible for communications with the ASX. He is also responsible for ensuring
compliance with the continuous disclosure requirements in the ASX listing rules and overseeing and coordinating information disclosure
to the ASX, analysts, brokers, shareholders, the media and the public. Management are responsible for ensuring all potential corporate
information that could materially affect the price or value of the Company’s shares is brought to the Chairman’s attention immediately it
becomes known. This is then assessed in liaison with the Board and management in regards to the ASX listing rule requirements of 3.1.
All information disclosed to the ASX is posted on the Company’s web site as soon as it is disclosed to the ASX and email alerts are available
to shareholders via the Company website. Procedures have also been established for reviewing whether any price sensitive information has
been inadvertently disclosed, and if so, this information is also immediately released to the market.
Shareholder Communication
The Company recognises the value of providing current and relevant information to its shareholders through effective communication.
All information disclosed to the ASX announcements platform is available to shareholders on the Company website including prior year
announcements. The website also holds the latest Company broker presentation used in analyst’s briefi ngs and current and historical share
price details. Shareholders can subscribe to email alerts of ASX announcements.
Shareholders may elect to receive the Company’s Annual Report in hard or soft copy. Current and prior years’ Annual Reports are also
available on the Company’s website.
Where possible, advance notice of signifi cant briefi ngs is given, including but not limited to results announcements, and makes them widely
available through the Company’s website.
Principle 7: Recognise and Manage Risk
Risk Assessment and Management
The Company’s focus on risk management recognises that risk management is, prima facie, an issue for line management. The current risk
management framework supports this focus, providing a structured context to review past performance of and to profi le current and future
risks. Management is required to ensure appropriate controls are in place to effectively manage identifi ed risks. Importance is placed on
maintaining a strong control environment within the framework of the Company Quality Policy and the organisation structure has clear lines of
accountability with authority formally delegated. Adherence to the control environment is required at all times and the Board actively promotes
a culture of quality and integrity.
The Board is responsible for satisfying itself annually, or more frequently as required, that management has developed and implemented
a sound system of risk management, compliance and internal control. Management formally presents the Company’s Risk Register to the
Board on a quarterly basis and provides more frequent updates where items have been identifi ed which materially impact the risk environment.
The Board requires each major proposal submitted to the Board for decision is accompanied by a comprehensive risk assessment and,
where required, management’s proposed mitigation strategies.
The Environment, Occupational Health and Safety
The Company recognises the importance of Environmental and Occupational Health and Safety (OH&S) issues and is committed to the
highest levels of performance. To help meet this objective the Company has regular monitoring to facilitate the systematic identifi cation of
environmental issues and the OH&S committee meets monthly to review and discuss specifi c health and safety issues. This system allows
the Company to:
(cid:129) monitor compliance with all relevant legislation
(cid:129)
(cid:129)
(cid:129)
(cid:129)
continually assess and improve the impact of its operations on the environment
encourage employees to actively participate in the management of environmental and OH&S issues
work with trade associations representing the Company’s businesses to raise standards, and
use energy and other resources effi ciently.
Information on compliance with signifi cant environmental regulations is set out in the Report of Directors.
20
I D T A n n u a l R e p o r t 2 0 1 4
F or the year ended 30 June 201 4
Corporate Governance Statement (Continued)
Corporate Reporting
Integrity of the Company’s fi nancial reporting depends on existence of sound risk oversight systems, management and internal control which
are enhanced by certifi cations to the Board made by the MD and Chief Financial Offi cer :
(cid:129)
that the Company’s fi nancial reports are complete and present a true and fair view, in all material respects, of the fi nancial condition and
operational results of the Company and are in accordance with relevant accounting standards and Corporations Act 2001 provisions.
(cid:129)
that the above statement is founded on a sound system of risk management and internal compliance and control and which
implements the policies adopted by the Board and that the Company’s risk management and internal compliance and control is
operating effi ciently and effectively in all material respects.
Principle 8: Remunerate Fairly and Responsibly
The Nomination and Remuneration Committee advises the Board on remuneration and incentives policies and practices generally, making
specifi c recommendations on remuneration packages and other terms of employment for executive Directors and non-executive Directors.
Executive remuneration and other terms of employment are reviewed annually by the committee with regard to performance, relevant
comparative information and independent expert advice. As well as base salary, remuneration packages include superannuation,
performance-related bonuses and fringe benefi ts. Eligible employees also participate in the Employee Share Plan.
Remuneration packages are set at levels intended to attract and retain fi rst class executives capable of managing the Company’s operations
and achieving the Company’s strategic objectives.
The Remuneration and Nomination Committee is also responsible for reviewing any transactions between the organisation and Directors,
or any interests associated with Directors, to ensure the structure and terms of the transaction comply with Corporations Law and are
appropriately disclosed.
Further information on Directors’ and executives’ remuneration is set out in the Report of Directors and note 25 to the fi nancial statements.
I D T A n n u a l R e p o r t 2 0 1 4 21
For the yea r ended 30 June 2014
Statement of Profit or Loss and Other Comprehensive Income
Revenue from ordinary activities
Raw materials
Employee benefits expense
Depreciation and amortisation expense
Impairment of development costs
Borrowing costs expense
Utilities
Repairs and maintenance
Subject and screenings
Insurance
Waste removal
Consumables
Travel
Share registry
Accounting
Consultants
Rent
Other expenses
(Loss) before income tax
Income tax (benefit)
(Loss) for the year
Other comprehensive Income
Items that will not be reclassified to profit or loss:
Revaluation gain on land & buildings
Income tax relating to components of other comprehensive income
Total comprehensive income
Basic earnings per share
Diluted earnings per share
Note
2
2014
$000
2013
$000
13,374
13,376
2,886
8,947
2,321
621
31
778
684
1,197
355
70
152
181
65
125
291
262
991
3,100
7,195
2,723
1,016
128
798
600
725
418
116
115
56
51
151
430
296
875
3
4
(6,583)
(5,417)
43
(63)
(6,626)
(5,354)
-
-
2,217
(665)
(6,626)
(3,802)
28
28
(9.5¢)
(9.5¢)
(12.1¢)
(12.1¢)
The above Statement of Profi t or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes.
22
I D T A n n u a l R e p o r t 2 0 1 4
As at 30 June 2014
Statement of Financial Position
Note
2014
$000
2013
$000
Assets
Current Assets
Cash and cash equivalents
Trade and other receivables
Current tax asset
Inventories
Total Current Assets
Non Current Assets
Property, plant and equipment
Deferred tax assets
Intangible assets
Total Non Current Assets
Total Assets
Liabilities
Current Liabilities
Trade and other payables
Borrowings
Provisions
Total Current Liabilities
Non Current Liabilities
Borrowings
Provisions
Total Non Current Liabilities
Total Liabilities
Net Assets
Equity
Contributed equity
Reserves
Retained profits / (accumulated losses)
Total Equity
5
6
7
8
9
15
10
11
12
16
13
16
17
18
19
The above Statement of Financial Position should be read in conjunction with the accompanying notes.
2,415
1,916
169
647
578
3,664
271
675
5,147
5,188
21,210
23,159
-
-
1,938
2,359
23,148
25,518
28,295
30,706
1,432
39
1,048
2,519
49
176
225
1,662
1,931
984
4,577
18
82
100
2,744
4,677
25,551
26,029
22,877
17,031
3,565
(891)
3,263
5,735
25,551
26,029
I D T A n n u a l R e p o r t 2 0 1 4 23
For the yea r ended 30 June 2014
Statement of Changes in Equity
Contributed
Asset
Share-based
Retained Profits/
Capital
Revaluation
Payment
(Accumulated
$000
15,377
-
-
2,000
(354)
-
8
Reserve
$000
Reserve
$000
Losses)
$000
-
-
1,552
-
-
-
-
1,669
-
-
-
-
42
-
11,089
(5,354)
-
-
-
-
-
Total
Equity
$000
28,135
(5,354)
1,552
2,000
(354)
42
8
Balance at 1 July 2012
Profit / (loss) for the year
Other comprehensive income for the year
Shares issued during the year
Transaction costs
Share options
Prior year adjustment
Balance at 30 June 2013
17,031
1,552
1,711
5,735
26,029
Balance at 1 July 2013
17,031
1,552
1,711
Profit / (loss) for the year
Shares issued during the year
Transaction costs
Vesting of arrangements involving limited
recourse loans
-
6,260
(414)
-
-
-
-
-
Balance at 30 June 2014
22,877
1,552
-
-
-
302
2,013
5,735
(6,626)
-
-
-
26,029
(6,626)
6,260
(414)
302
(891)
25,551
The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.
24
I D T A n n u a l R e p o r t 2 0 1 4
F or the year ended 30 June 201 4
Statement of Cash Flows
Cash flows from Operating Activities
Receipts from customers (inclusive of goods and services tax)
14,989
13,469
Payments to suppliers and employees (inclusive of goods and services tax)
(16,862)
(15,294)
Note
2014
$000
2013
$000
Interest and other costs of finance paid
Income taxes (paid) / refund
Interest received
(1,873)
(1,825)
-
(128)
771
-
(38)
271
64
Net Cash Inflow / (Outflow) from Operating Activities
27
(1,576)
(1,182)
Cash flows from Investing Activities
Payments for property, plant and equipment
Proceeds from sale of property, plant and equipment
Payments for development costs
Net Cash Outflow from Investing Activities
Cash flows from Financing Activities
Proceeds from issue of equity
Payments for issue of equity
Repayment bills payable
Proceeds from borrowings
Repayment of lease liabilities
Net Cash Inflow from Financing Activities
Net Increase / (Decrease) in Cash and Cash Equivalents Held
Cash and cash equivalents at the beginning of the financial year
Cash and Cash Equivalents at the End of the Financial Year
5
The above Statement of Cash Flow should be read in conjunction with the accompanying notes.
(221)
22
(291)
(490)
6,260
(414)
(1,850)
-
(93)
3,903
1,837
578
2,415
(547)
164
(587)
(970)
2,000
(354)
-
1,100
(29)
2,717
565
13
578
I D T A n n u a l R e p o r t 2 0 1 4 25
For the yea r ended 30 June 2014
Notes To And Forming Part Of The Financial Statements
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of the fi nancial report are set out below. These policies have been consistently
applied to all the periods presented, unless otherwise stated.
1.1
These fi nancial statements are general purpose fi nancial statements prepared in accordance with the Corporations Act 2001, Accounting
Statement of Compliance
Standards and Interpretations, and complies with other requirements of the law.
Accounting Standards include Australian Accounting Standards. Compliance with Australian Accounting Standards ensures that the fi nancial
statements and notes of the Company comply with International Financial Reporting Standards (IFRS).
1.2
These fi nancial statements have been prepared under the basis of historical cost, except for certain items that are measured at fair value at
Basis of Preparation
the end of the reporting period, as explained in the notes below.
In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market
participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for
measurement and/or disclosure purposes in these fi nancial statements is determined in such a basis, except for share-based payment
transactions that are within the scope of AASB 2, leasing transactions that are within the scope of AASB 117 and measurements that have
some similarities to fair value but are not fair value, such as net realiseable value in AASB 2.
After consideration of forecasts of future activity made by management, the Directors consider it reasonably foreseeable that the Company
will continue as a going concern and accordingly adopts the going concern basis in the preparation of the fi nancial report.
All amounts are presented in Australian dollars unless otherwise noted.
1.3
The Company has adopted new and revised Australian Accounting Standards issued by the AASB which are mandatory to apply to the
Change in Accounting Policy
previous reporting period and are detailed in Note 1.22. Disclosures required by these Standards that are deemed material have been
included in this fi nancial report on the basis that they represent signifi cant change in information from that previously made available.
The Company incurs certain costs directly associated with income generation which are passed through to customers and which have not
historically been separately disclosed in revenue or expense. As the Company is responsible for incurring the cost and recovering the funds
from the customer it is considered that both revenue and expense should be refl ected in the Financial Statements. This policy change does
not impact total reported profi t or loss, but sales revenue and cost of goods sold have each been increased by $2.462m (2013: $2.716m).
There have been no other signifi cant changes in accounting policies during the reporting period.
1.4
The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the notional income
Income Tax
tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and
liabilities and their carrying amounts in the fi nancial statements, and to unused tax losses.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered
or liabilities settled, based on those tax rates which are enacted or substantively enacted for each jurisdiction. The relevant tax rates are
applied to the cumulative amounts of deductible and taxable temporary differences to measure the deferred tax asset or liability. An exception
is made for certain temporary differences arising from the initial recognition of an asset or a liability. No deferred tax asset or liability is
recognised in relation to these temporary differences if they arose in a transaction, other than a business combination, that at the time of the
transaction did not affect either accounting profi t or taxable profi t or loss.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable
amounts will be available to utilise those temporary differences and losses.
Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity.
The Company is incurs eligible expenditure to support a R&D Tax Incentive Claim. This receivable balance is accounted for as a current tax
asset and income tax expense.
26
I D T A n n u a l R e p o r t 2 0 1 4
F or the year ended 30 June 201 4
Notes To And Forming Part Of The Financial Statements (Continued)
1.5
Foreign currency transactions are translated into functional currency (Australian Dollars) using exchange rates prevailing at the dates
Foreign Currency Translation
of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are translated at the rates
prevailing at that date. Foreign exchange gains and losses resulting from settlement of such transactions and from translation at period end
exchange rates of foreign currency monetary assets and liabilities denominated are recognised in the Statement of Profi t or Loss and Other
Comprehensive Income.
1.6
Revenue is measured at fair value of the consideration received or receivable. A sale is recorded when manufactured goods have been
Revenue Recognition
despatched to a customer pursuant to a sales order and title has passed.
Service revenue is recognised in accordance with percentage of completion method. The stage of completion is determined with reference
to key milestones achieved to date as a percentage of total contractual value.
Government grants from are recognised at fair value where there is reasonable assurance the grant will be received and the company will
comply with all attached conditions.
1.7
These amounts represent amounts receivable relating to the provision of goods and services to a customer pursuant to a valid order or
Trade and Other Receivables
contract. All receivables are recognised at the full amounts receivable, as they are due for settlement within 60 days of invoice date and
therefore do not require re-measurement.
Collectability of receivable balances is reviewed on an ongoing basis and a provision is raised where collection in full is no longer considered
probable. Debts which are known to be uncollectable are written off.
1.8
Inventories are valued at the lower of cost and net realisable value with the cost determined on a fi rst-in-fi rst-out basis. Net realisable value
Inventories
refl ects the estimated selling price in the ordinary course of business less the estimated costs of completion and costs necessary to make
the sale.
1.9
Leases of property, plant and equipment where the Company has substantially all the risks and rewards of ownership are classifi ed as
Leases
fi nance leases (note 21). Finance leases are capitalised as Assets at fair value at the lease’s inception, or if lower, at the present value of the
minimum lease payments. Property, plant and equipment acquired under fi nance leases are depreciated over the shorter of the asset’s useful
life and the lease term.
Leases in which a signifi cant portion of the risks and rewards of ownership are retained by the lessor are classifi ed as operating leases (note
21). Payments made under operating leases are charged to the income statement on a straight-line basis over the period of the lease.
1.10
Freehold land and buildings are shown at their revalued amounts being the fair value at date of revaluation less subsequent depreciation for
Property, Plant and Equipment
buildings. Revaluations are performed with suffi cient regularity such that carrying amounts do not differ materially from those that would be
determined using fair values at the end of each reporting period.
Any revaluation increase arising on the revaluation of such land and buildings is recognised in other comprehensive income and accumulated
in the revaluation reserve within equity. Decreases that offset previous increases of the same asset are recognised against revaluation reserve
directly in equity; all other decreases are recognised in profi t or loss.
Plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment. The cost of non-current
assets constructed by the company includes the costs of all materials used in construction, direct labour on the project, and an appropriate
proportion of directly attributable variable and fi xed overheads.
Depreciation is recognised so as to write off the cost or valuation of assets (other than land) over their estimated useful lives, net of their
residual values, using the straight line method, as follows:
(cid:129)
(cid:129)
(cid:129)
(cid:129)
Buildings
Machinery
Vehicles
40 years
10-15 years
3-5 years
Furniture, fi ttings and equipment 5-10 years
I D T A n n u a l R e p o r t 2 0 1 4 27
For the yea r ended 30 June 2014
Notes To And Forming Part Of The Financial Statements (Continued)
The cost of improvements to leasehold properties is amortised over the unexpired period of the lease or the estimated useful life of the
improvement, whichever is the shorter.
Estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any
changes in estimate accounted for on a prospective basis.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the income statement.
Plant is regularly overhauled through an ongoing cyclical maintenance program. Maintenance costs are expensed as incurred, except
where they relate to replacement of a component of an asset, in which case the cost is capitalised and depreciated. Routine operating
maintenance, repair costs and minor renewals are charged as expenses as incurred.
1.11
Research expenditure is recognised as an expense as incurred.
Intangible Assets - Research and Development
An internally generated intangible asset arising from development is recognised if all of the following conditions can be demonstrated:
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
technical feasibility of completing the project that it will be available for use or sale
intention to complete the intangible asset and use it or sell it
ability to use the intangible asset
how the intangible asset will generate probable future economic benefi ts
availability of adequate technical, fi nancial and other resources to complete the development
and the ability to measure reliably the expenditure attributable to the development of the asset.
The amount initially recognised for internally generated intangible assets is the sum of the expenditure incurred from the date the asset fi rst
met the recognition criteria. Other development expenditures that do not meet these criteria are recognised as an expense as incurred.
Developments costs previously recognised as an expense are not recognised as an asset in a subsequent period.
Subsequent to initial recognition, internally generated intangible assets are amortised on a straight-line basis over their estimated useful lives,
typically ten years or contract life, whichever is shorter. The estimated useful life and amortisation method are reviewed at the end of each
reporting period, with the effect of any change accounted for on a prospective basis.
1.12
At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets to determine if there is
Impairment of Tangible and Intangible Assets
any indication the assets may have suffered an impairment loss. Such indication could refl ect loss of a key commercial contract or material
physical damage to an asset
The Company’s intangible assets are tested at least annually, and whenever there is an indication the asset may be impaired. The
Company’s tangible assets being its property, plant and equipment are only tested for impairment when there is an indication that the asset
may be impaired.
In testing for impairment, the recoverable amount of the Company’s intangible assets is determined using a value-in-use approach based on
discounted cash fl ows for each project, and the recoverable amount of the Company’s property, plant and equipment is determined using a
fair value less costs of disposal approach, based on either independent valuations or insured replacement cost.
An impairment loss is recognised in the statement of profi t or loss immediately after identifi cation and the asset is derecognised when no
future economic benefi ts are estimated from use or disposal.
1.13
These amounts represent liabilities for goods and services provided to the company prior to the end of the fi nancial year and which are
Trade and Other Payables
unpaid. The amounts are unsecured and are usually paid within 30-60 days of recognition.
1.14
Provisions are recognised when the Company has a present obligation (legal and constructive) as a consequence of a past event, it is
Provisions
probable that the Company will be required to settle the obligation and a reliable estimate of the amount of the obligation can be made.
28
I D T A n n u a l R e p o r t 2 0 1 4
F or the year ended 30 June 201 4
Notes To And Forming Part Of The Financial Statements (Continued)
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the
reporting period, taking account of the risks and uncertainties surrounding the obligation. When a provision is measured using the cashfl ows
estimated to settle the present obligation, its carrying amount is the present value of those cashfl ows where the effect of the time value of
money is material.
A restructuring provision is recognised where the Company has developed a detailed plan for the restructuring and raised a valid expectation
in those affected that it will carry out the restructuring by starting to implement the plan or announcing its main features to those affected by it.
Measurement of the restructuring provision includes only the direct expenditures arising from the restructuring, which are those amounts that
are both necessarily entailed by the restructuring and not associated with the ongoing activities of the Company.
1.15
A liability is recognised for benefi ts accruing to employees in respect of wages and salaries, annual leave and long service leave when it is
Short and Long Term Employee Benefi ts
probable that settlement will be required and they can be reliably measured.
Liabilities recognised in respect of short term benefi ts are measured at their nominal values using the remuneration rate expected to apply at
the time of settlement.
Liabilities recognised in respect of long term employee benefi ts are measured at the present value of the estimated future outfl ows to be
made by the Company in respect of services provided by employees up to reporting date.
Payments to defi ned contribution retirement benefi t plans are recognised as an expense when employees have rendered service entitling
them to the contributions.
1.16
Share-based compensation benefi ts are provided to employees via the IDT Australia Limited Executive Option Plan (EOP) and the Employee
Share-based payments
Share Plan (ESP).
(i)
Executive Option Plan
The fair value of options granted under the EOP is recognised as an employee benefi t expense with a corresponding increase in
equity. The fair value is measured at grant date and recognised over the period during which the employees become unconditionally entitled
to the options and is independently determined using a Black-Scholes option pricing model that takes into account the exercise price, the
term of the option, the vesting and performance criteria, the impact of dilution, the non-tradeable nature of the option, the share price at grant
date and expected price volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of the option.
Upon the exercise of options, the balance of the share-based payments reserve relating to those options is transferred to share capital.
(ii)
Employee Share Plan
The ESP provides an annual value of up to $1000 of shares may be issued to employees for no consideration. The market value of shares
issued to employees for no cash consideration under the ESP is recognised as an employee benefi ts expense with a corresponding
increase in equity when the employees become entitled to the shares.
Additionally within the ESP, Executive managers were offered shares in the Company issued at the current market value at the date of issue
and funded by an interest free limited recourse loan from the Company. Grants within the framework of the ESP were determined by the MD
together with the Remuneration and Nomination Committee, and subject to approval by the Board.
Amounts disclosed for emoluments relating to these shares are the assessed fair values at issue date determined using a Black-Scholes
option pricing model taking into account the share price at grant date and expected price volatility of the underlying share, the expected
dividend yield and the risk-free interest rate for the term of the option.
1.17
For purposes of the statement of cashfl ows, cash and cash equivalents includes deposits which are readily convertible to cash on hand and
Cash and Cash Equivalents
in banks and which are used in the cash management function on a day-to-day basis, net of outstanding bank overdrafts.
I D T A n n u a l R e p o r t 2 0 1 4 29
For the yea r ended 30 June 2014
Notes To And Forming Part Of The Financial Statements (Continued)
1.18
(i)
Earnings per Share
Basic Earnings per Share - Basic earnings per share is determined by dividing the profi t or loss attributable to equity holders of
the Company, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares
outstanding during the fi nancial year.
(ii)
Diluted Earnings per Share - Diluted earnings per share adjusts the fi gures used in the determination of basic earnings per share to
take into account the after income tax effect of interest and other fi nancing costs associated with dilutive potential ordinary shares and the
weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.
1.19
Revenues, expenses and assets are recognised net of the amount of GST except where the amount of GST incurred on a purchase of
Goods and Services Tax (GST)
goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of
the asset, or as part of the expense.
Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from or payable to the taxation
authority is included as part of receivables or payables on the Balance Sheet.
Cashfl ows are included in the statement of cashfl ow on a gross basis. The GST component of cashfl ows arising from investing and fi nancing
activities, which is recoverable from, or payable to the taxation authority are classifi ed as operating cashfl ows.
1.20
Provision is made for the amount of any dividend declared, determined or publicly recommended by the Directors on or before the end of the
Dividends
fi nancial year but not distributed at balance date.
1.21
The company is of a kind referred to in Class Order 98/100, issued by the Australian Securities and Investments Commission, relating to
Rounding of Amounts
the “rounding off” of amounts in the fi nancial statements. Amounts in the fi nancial statements have been rounded off in accordance with that
Class Order to the nearest thousand dollars, or in certain cases, to the nearest dollar.
1.22
In the current year, the Company applied a number of new and revised AASBs issued by the Australian Accounting Standards Board (AASB)
Application of New and revised Accounting Standards
that are mandatorily effective for an accounting period that begins on or after 1 January 2013.
AASB 2011-4 ‘Amendments to Australian Accounting Standards to Remove Individual Key Management Personnel Disclosure
Requirements’
This standard removes individual key management personnel disclosure requirements in AASB 124 ‘Related Party Disclosures’. As a result
the Company only discloses key management personnel compensation in total and for each of the categories required in AASB 124.
In the current year the individual key management personnel disclosure previously required by AASB 124 is now disclosed in the
remuneration report due to amendment to Corporations Regulations 2001 issued in June 2013.
AASB 2012-2 ‘Amendments to Australian Accounting Standards – Disclosures – Offsetting Financial Assets and Financial Liabilities’
The Company has applied the amendments to AASB 7 ‘Disclosures – Offsetting Financial Assets and Financial Liabilities’ for the fi rst time in
the current year. The amendments to AASB 7 require entities to disclose information about rights of offset and related arrangements (such as
collateral posting requirements) for fi nancial instruments under an enforceable master netting agreement or similar arrangement.
The amendments have been applied retrospectively. As the Company does not have any offsetting arrangements in place, the application of
the amendments does not have any material impact on the fi nancial statements.
AASB 2012-5 ‘Amendments to Australian Accounting Standards arising from Annual Improvements 2009-2011 Cycle’
The Annual Improvements to AASBs 2009 - 2011 have made a number of amendments to AASBs. The amendments relevant to the
Company are the amendments to AASB 101 regarding when a statement of fi nancial position as at the beginning of the preceding period
(third statement of fi nancial position) and the related notes are required to be presented. The amendments specify that a third statement
of fi nancial position is required when a) an entity applies an accounting policy retrospectively, or makes a retrospective restatement or
30
I D T A n n u a l R e p o r t 2 0 1 4
F or the year ended 30 June 201 4
Notes To And Forming Part Of The Financial Statements (Continued)
reclassifi cation of items in its fi nancial statements, and b) the retrospective application, restatement or reclassifi cation has a material effect on
the information in the third statement of fi nancial position. The amendments specify that related notes are not required to accompany the third
statement of fi nancial position.
AASB 13 ‘Fair Value Measurement’ and AASB 2011-8 ‘Amendments to Australian Accounting Standards arising from AASB 13’
The Company has applied AASB 13 for the fi rst time in the current year. AASB 13 establishes a single source of guidance for fair value
measurements and disclosures about fair value measurements. The scope of AASB 13 is broad; the fair value measurement requirements
of AASB 13 apply to both fi nancial instrument items and non-fi nancial instrument items for which other AASBs require or permit fair value
measurements and disclosures about fair value measurements, except for share-based payment transactions that are within the scope of
AASB 2 ‘Share-based Payment’, leasing transactions that are within the scope of AASB 117 ‘Leases’, and measurements that have some
similarities to fair value but are not fair value (e.g. net realisable value for the purposes of measuring inventories or value in use for impairment
assessment purposes).
AASB 13 defi nes fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the
principal (or most advantageous) market at the measurement date under current market conditions. Fair value under AASB 13 is an exit price
regardless of whether that price is directly observable or estimated using another valuation technique. Also, AASB 13 includes extensive
disclosure requirements.
AASB 13 requires prospective application from 1 July 2013. In accordance with these transitional provisions, the Company has not made
any new disclosures required by AASB 13 for the 2013 comparative period (refer notes 9 and 20 for 2014 disclosures). Application of AASB
13 does not materially impact amounts recognised in the fi nancial statements.
1.23
At the date of authorisation of the fi nancial statements, the Standards and Interpretations listed below were in issue but not yet effective.
Standards and Interpretations in issue not yet adopted
Standard/Interpretation
Effective for annual
Expected to be initially
reporting periods
applied in the financial
beginning on or after
year ending
AASB 9 ‘Financial Instruments’, and the relevant amending standards
1 January 2018
30 June 2019
AASB 1031 ‘Materiality’ (2013)
1 January 2014
30 June 2015
AASB 2012-3 ‘Amendments to Australian Accounting Standards –
Offsetting Financial Assets and Financial Liabilities’
1 January 2014 30 June 2015
AASB 2013-3 ‘Amendments to AASB 135 – Recoverable Amount
Disclosures for Non- Financial Assets’
1 January 2014 30 June 2015
AASB 2013-4 ‘Amendments to Australian Accounting Standards –
Novation of Derivatives and Continuation of Hedge Accounting’
1 January 2014 30 June 2015
AASB 2013-5 ‘Amendments to Australian Accounting Standards –
Investment Entities’
1 January 2014 30 June 2015
AASB 2013-9 ‘Amendments to Australian Accounting Standards –
Conceptual Framework, Materiality and Financial Instruments'
1 January 2014 30 June 2015
INT 21 ‘Levies’
1 January 2014
30 June 2015
I D T A n n u a l R e p o r t 2 0 1 4 31
For the yea r ended 30 June 2014
Notes To And Forming Part Of The Financial Statements (Continued)
2.
Revenue
Sales revenue
Other revenue
- Government grants
-
-
-
Interest
Sale of property, plant and equipment
Royalties
Total Revenue
3.
Expenses
Loss from ordinary activities before income tax expense includes the following expenses:
Cost of goods sold
Finance charges relating to finance leases
Depreciation of property, plant and equipment
Amortisation
- Finance leases capitalised
- Development costs
Repairs and maintenance
Impairment of development costs
Net foreign currency loss
4.
Income Tax
(a)
Income Tax Expense
Current tax
Deferred tax
Under (over) provided in prior years
Deferred income tax (revenue) expense included in income tax expense comprises
Decrease (increase) in deferred tax assets (note 15)
(Decrease) Increase in deferred tax liabilities (note 15)
2014
$000
13,171
67
64
-
72
203
13,374
4,943
6
2,202
28
91
684
621
7
(63)
-
106
43
-
(152)
(152)
2013
$000
13,309
-
-
-
67
67
13,376
4,533
-
2,326
25
398
623
1,016
5
(271)
(199)
407
(63)
(21)
(178)
(199)
32
I D T A n n u a l R e p o r t 2 0 1 4
F or the year ended 30 June 201 4
Notes To And Forming Part Of The Financial Statements (Continued)
4.
Income Tax (Continued)
(b) Numerical reconciliation of income tax expense to prima facie tax payable
Profit/(Loss) from ordinary activities before income tax expense
Prima facie tax expense / (benefit) at 30%
Tax effect of amounts which are not deductible (taxable) in calculating taxable income
– Non deductible entertainment expenses
– Research and development tax concessions
– Motor vehicle depreciation
– Employee share issue
– Capital raising costs
Under/(over) provision in previous year
De-recognition of deferred tax losses
Deferred tax losses not brought to account
Income tax expense / (benefit) attributable to operating profit
5.
Current Assets – Cash and Cash Equivalents
2014
$000
(6,584)
(1,975)
2
33
(6)
104
-
2013
$000
(5,417)
(1,625)
2
(271)
2
-
(21)
(1,842)
(1,913)
106
-
1,779
43
407
324
1,119
(63)
Cash at bank and on hand
2,415
578
6.
Current Assets – Trade and Other Receivables
Trade receivables
Less: Provision for doubtful debts
Other receivables
Prepayments
1,493
-
1,493
79
344
3,103
-
3,103
148
413
1,916
3,664
The average collection period for sales invoices is 30-60 days from invoice date and interest is not charged on past due balances. The
Company does not have a history of collection delays or defaulted balances and accordingly does not consider a Provision for doubtful
debts is necessary.
Age of receivables which are past due, but not impaired
30-60 days
60-90 days
7. Current Asset - Current Tax Asset
Income tax receivable
8.
Current Assets - Inventories
Raw materials
- at cost
Work in progress
- at cost
The valuation policy adopted in respect of inventories is set out in Note 1.8.
267
9
276
873
-
873
169
271
462
185
647
534
141
675
I D T A n n u a l R e p o r t 2 0 1 4 33
For the yea r ended 30 June 2014
Notes To And Forming Part Of The Financial Statements (Continued)
9. Non Current Assets – Property, Plant and Equipment
Land and Buildings
Freehold land (at fair value)
Buildings (at fair value)
Less: Accumulated depreciation
Total Land and Buildings
Plant and Equipment
Plant and equipment – at cost
Less: Accumulated depreciation
Plant and Equipment under Finance Lease
Capitalised cost
Less: Accumulated amortisation
Total Plant & Equipment
Total Property, Plant and Equipment
2014
$000
4,380
4,920
(124)
9,176
38,912
(26,973)
11,939
130
(35)
95
12,034
21,210
2013
$000
4,380
4,920
-
9,300
38,710
(24,932)
13,778
143
(62)
81
13,859
23,159
The Company’s freehold land and buildings are stated at revalued amounts, being fair value at the date of revaluation, less subsequent accumulated
depreciation. The fair value measurement was performed by independent valuers effective 6 February 2014 and are no indicators to suggest this
valuation is not also effective as at 30 June 2014. The valuations, conform to Australian Valuation Standards and were calculated based on the
fair value of the land and depreciated replacement cost of the buildings.
The fair value of the land and buildings was determined based on the forced sale value approach that refl ects a sale by the receiver at public
auction or within a reasonable period after such auction having regard to the nature of the subject property after full and proper marketing and
the valuer’s view of the market conditions prevailing at the date of the valuation report, which differs to the concept of market value and represent
expressions of property prices achieved under different selling conditions. There has been no change to the valuation technique during the year.
Reconciliations
Reconciliations of the carrying amounts of each class of property, plant and equipment at the beginning and end of the current fi nancial
year are set out below.
2014
Freehold Land
$000
Carrying amount at start of year
4,380
Revaluation
Additions
Disposals
Depreciation expense
-
-
-
-
Carrying amount at end of year
4,380
Buildings
$000
4,920
-
-
-
(124)
4,796
Plant &
Equipment
$000
Leased Plant &
Equipment
$000
13,778
-
241
(2)
(2,078)
11,939
81
-
85
(43)
(28)
95
2013
Carrying amount at start of year
Revaluation
Additions
Disposals
Depreciation expense
Freehold Land
$000
Buildings
$000
Plant &
Equipment
$000
Leased Plant &
Equipment
$000
2,608
1,772
-
-
-
4,618
445
14
-
(157)
4,920
15,573
-
510
(163)
(2,142)
13,778
85
-
23
-
(27)
81
Carrying amount at end of year
4,380
34
I D T A n n u a l R e p o r t 2 0 1 4
Total
$000
23,159
-
326
(45)
(2,230)
21,210
Total
$000
22,884
2,217
547
(163)
(2,326)
23,159
F or the year ended 30 June 201 4
Notes To And Forming Part Of The Financial Statements (Continued)
10.
Non Current Assets – Intangible Assets
Development expenditure capitalised (Note 1.11)
Less: Accumulated amortisation
Reconciliation of Intangible Assets
Carrying amount at start of year
Development expenditure capitalised during the year
Amortisation of development costs during the year
Development costs – impaired during the year
Carrying amount at end of year
2014
$000
2,744
(806)
1,938
2,359
291
(91)
(621)
1,938
2013
$000
3,396
(1,037)
2,359
3,186
587
(398)
(1,016)
2,359
During the year, as the result of the lack of commercial viability, the Company carried out a review of the recoverable amount of intangible
assets. The review led to the recognition of an impairment of $0.6 million (2013: $1 million), which has been recognised in profit or loss.
The recoverable amount of the Company’s intangible assets is determined using a value-in-use approach based on discounted cashflows
for each project.
11.
Current Liabilities – Trade and Other Payables
Trade payables
Other payables
Total current liabilities
12.
Current Liabilities – Borrowings
Lease liabilities (Note 21)
Commercial bills payable
Total current borrowings
13.
Non Current Liabilities – Borrowings
Lease liabilities (Note 21)
Total non current borrowings
All non current interest bearing liabilities are secured.
14.
Financing Arrangements
Total Secured Liabilities (current and non-current)
Commercial bills
Total Lease liabilities
574
858
1,432
39
-
39
49
49
-
88
88
1,086
576
1,662
81
1,850
1,931
18
18
1,850
99
1,949
I D T A n n u a l R e p o r t 2 0 1 4 35
For the yea r ended 30 June 2014
Notes To And Forming Part Of The Financial Statements (Continued)
14. Financing Arrangements (Continued)
2014
$000
2013
$000
Unrestricted access was available at balance date to the following lines of credit with the National Australia Bank Ltd:
Total facilities
- Bank Overdraft
- Lease Facility
- Flexible Rate Loan
- Credit Card Facility
Used at balance date
- Bank Overdraft
- Lease Facility
- Flexible Rate Loan
- Credit Card Facility
Available at balance date
- Bank Overdraft
- Lease Facility
- Flexible Rate Loan
- Credit Card Facility
Security for Borrowings
The bank overdraft, lease and business loan facilities are secured by the following:
- A Registered Mortgage over property situated at 39 Wadhurst Drive, Boronia
- A Registered Mortgage over property situated at 41 Wadhurst Drive, Boronia
- A Registered Mortgage over property situated at 43-49 Wadhurst Drive, Boronia
- A Registered Mortgage over property situated at 51-57 Wadhurst Drive, Boronia
- A Registered Mortgage over property situated at 68 Wadhurst Drive, Boronia
Carrying value of assets pledged as Security
- Freehold land and buildings
- Plant and equipment under finance lease
Total assets pledged as security
36
I D T A n n u a l R e p o r t 2 0 1 4
1,000
450
2,750
100
-
238
-
38
1,000
362
2,750
62
1,000
650
2,750
-
-
98
1,850
-
1,000
552
900
-
9,176
95
9,271
9,300
81
9,381
F or the year ended 30 June 201 4
Notes To And Forming Part Of The Financial Statements (Continued)
15.
Non Current - Deferred Tax Asset / (Liabilities)
Deferred Liability
The balance comprises temporary differences attributable to:
Depreciation
Asset revaluation
Development costs
Movements
Opening balance at 1 July
Increase / (reduction) current tax asset
Current year increase not recognised
Charged / (credited) to equity
Closing balance at 30 June
Deferred tax assets
The balance comprises temporary differences attributable to:
Employee entitlements
Tax losses
Movements
Opening balance at 1 July
Increase / (reduction) current tax asset
Charged / (credited) to equity
Closing balance at 30 June
Net deferred tax assets / (liability)
Deferred tax liability expected to settle within 12 months
Deferred tax liability expected to settle more than 12 months
Deferred tax asset expected to be recovered within 12 months
Deferred tax asset expected to be recovered after more than 12 months
16.
Provisions
Current
Employee entitlements
Non Current
Employee entitlements
2014
$000
2,772
1,658
532
582
2,772
2,924
(275)
123
-
2,772
2,772
367
2,405
2,924
(275)
123
2,772
-
2,772
2,772
-
2,772
2,772
1,048
176
2013
$000
2,924
1,551
665
708
2,924
2,437
(178)
-
665
2,924
2,924
312
2,612
3,367
(443)
2,924
-
2,924
2,924
-
2,924
2,924
984
82
The provision for employee entitlements represents annual leave, vested long service leave and an estimate of long service
leave payable to employees which has not yet vested.
I D T A n n u a l R e p o r t 2 0 1 4 37
For the yea r ended 30 June 2014
Notes To And Forming Part Of The Financial Statements (Continued)
17.
Contributed Equity
2014
Shares
2013
Shares
2014
$000
2013
$000
(a) Paid up capital - Ordinary shares, fully paid
77,374,248
53,192,059
22,877
17,031
(b) Movements in ordinary share capital of the company during the past two years were as follows:
Date
Details
Notes
No. of Shares
$000
30 June 2012
10 May 2013
Share Placement
30 June 2013
Share Plan Costs from Prior years
30 June 2013
43,192,059
10,000,000
-
15,377
1,646
8
53,192,059
17,031
16 August 2013
Employee Share Plan Issue
(a)
206,235
26 September 2013
1:5 Non-renounceable Rights Issue
10,679,659
Costs associated with Rights Issue
22 October 2013
Sophisticated placement
11,481,482
Costs associated with Sophisticated placement
15 May 2014
Employee Share Plan Issue
(a)
1,814,813
Deferred tax impact on Share Issues
46
2,884
(249)
3,100
(164)
-
230
30 June 2014
77,374,248
22,877
(a)
IDT Employee Share Plan
During the year the Company issued 2,021,049 (2013: nil) ordinary shares under the rules of the IDT Australia Limited Employee
Share Plan.
Ordinary Shares entitle the holder to participate in dividends and the proceeds on winding up of the company in proportion to the number
of shares held. On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and
upon a poll each share is entitled to one vote.
18. Reserves
Share-based payments reserve
Asset revaluation reserve
Movements in share-based payment reserve
Balance 1 July
Option expense
Employee share issue expense
2014
$000
2,013
1,552
3,565
1,711
-
302
2,013
2013
$000
1,711
1,552
3,263
1,669
42
-
1,711
The share-based payments reserve is used to recognise the fair value of options issued but not exercised and the fair value of shares
issued under the IDT Australia Limited Employee Share Plan. Refer note 24.
The asset revaluation reserve is used to recognise the value of land and buildings owned by IDT Australia Limited and valued by an
independent third party valuer.
38
I D T A n n u a l R e p o r t 2 0 1 4
F or the year ended 30 June 201 4
Notes To And Forming Part Of The Financial Statements (Continued)
19.
Retained Profits
Retained profits at the beginning of the financial year
Net (loss) attributable to members of IDT Australia Limited
Dividends provided for or paid
Retained profits / (accumulated losses) at the end of the financial year
20.
Financial Reporting by Segments
2014
$000
5,735
(6,626)
-
(891)
2013
$000
11,089
(5,354)
-
5,735
The Company operates in the pharmaceutical industry and the principal activities are the provision of products, research, development
and other technical services.
The company operates predominantly in one geographic area, being Australia.
Sales Revenue consists of:
Fee for Service
Manufacturing
Clinical Trials
Total Sales Revenue
3,347
1,483
8,341
3,072
3,722
6,515
13,171
13,309
Included in the above revenues are revenues of $7.417 million which arose from sales to the Company’s three largest customers. No
other single customer contributes 10% or more to the Company’s revenue.
21. Committments fo Expenditure
(a)
Finance lease commitments
− Within one year
−
Later than one year but not later than 5 years
Minimum lease payments
Less: future finance charges
Total finance lease liability
(b)
Non cancellable operating lease commitments
- Within one year
-
-
Later than one year but not later than 5 years
Later than 5 years
(c)
Capital Commitments
45
52
97
(9)
88
323
348
-
671
86
19
105
(6)
99
272
544
-
816
The Company does not have any commitments for future capital expenditure outstanding as at 30 June 2014 (2013 : nil).
I D T A n n u a l R e p o r t 2 0 1 4 39
For the yea r ended 30 June 2014
Notes To And Forming Part Of The Financial Statements (Continued)
22. Auditor’s Remuneration
Total amounts receivable by RSM Bird Cameron Partners for:
(a) Audit and review of the company’s financial statements
(b) Other services
Total amounts receivable by Deloitte Touche Tohmatsu for:
(a) Audit and review of the company’s financial statements
(b) Other services
Total Audit Services
23. Financial Risk Management
Financial risks impacting the Company’s activities fall into three categories:
a) market risk – foreign exchange and interest rate
b)
c)
credit risk
liquidity risk
2014
$
-
-
-
80,850
6,100
86,950
86,950
2013
$
80,000
5,075
85,075
-
-
-
85,075
a) Market risk
The Company is exposed to foreign exchange risk when commercial transactions and assets and liabilities are denominated in a
currency that is not the entity’s functional currency. Due to the small value of foreign currency denominated transactions and balances
the Company does not take forward contracts and therefore has exposure to foreign exchange risk arising from currency exposures to
the US dollar and Euro. It is Company policy to contract and invoice in Australian dollars where possible.
The Company’s exposure to foreign currency risk at 30 June 2014 is detailed below. Movements in foreign currency exchange rates are
unlikely to have a material impact on the financial position of the Company
Balances denominated in foreign currencies and not hedged:
Cash at Bank (USD)
Receivables – Current (EUR)
Receivables – Current (USD)
Payables – Current (USD)
Foreign
Currency Value
FC’000
USD39
EUR255
USD1
USD25
AUD Equivalent
AUD’000
42
369
1
27
The Company has limited exposure to interest rate risk as it holds no significant interest bearing assets or borrowings.
b) Credit risk
The Company closely manages credit risk and has procedures to review customer credit worthiness and monitors exposure to any
one customer.
c) Liquidity risk
Liquidity risk is the risk that the company is not able to pay its debts as and when they fall due. The Company currently has no
borrowings, other than Finance leases, and significant undrawn banking facilities. Directors ensure sufficient cash is available to meet the
Company’s near and long term commitments.
40
I D T A n n u a l R e p o r t 2 0 1 4
F or the year ended 30 June 201 4
Notes To And Forming Part Of The Financial Statements (Continued)
23. Financial Risk Management (Continued)
The Company holds the following financial instruments:
Financial Assets
Cash and cash equivalents
Trade and other receivables
Total Financial Assets
Financial Liabilities
Trade and other payables
Borrowings, current and non current
Total Financial Liabilities
Net Financial Position
2014
$000
2013
$000
2,415
1,916
4,331
1,432
88
1,520
2,811
578
3,664
4,242
1,662
1,949
3,611
631
The Directors consider the carrying amounts of financial assets and financial liabilities recognized in the financial statements approximate
their fair values.
24. Share based Payments
Executive Share Option Plan
The establishment of the IDT Australia Limited Executive Share Option Plan was approved by a General Meeting of the company held on
16 May 1995. Senior executives (including Directors of the Company) are eligible to participate in the plan.
The number of unissued ordinary shares under the options at 30 June 2014 is 500,000 (2013 : 500,000).
Options are granted under the IDT Australia Limited Executive Option Plan terms and conditions. Options are granted under the plan for
no consideration. Options are granted for a four year period, and vest immediately when they are granted.
No options were issued in this reporting period under the IDT Australia Limited Executive Option Plan.
Options granted under the plan carry no dividend or voting rights, when exercisable, each option is convertible into one ordinary share.
The exercise price of options is based on the weighted average price at which the company’s shares are traded on the Australian Stock
Exchange during the five trading days immediately before the options are granted or at a premium to this price as the Directors may
determine.
The amounts disclosed for emoluments relating to options above are the assessed fair values at grant date of options granted to executive
Directors and other executives, allocated equally over the period from grant date to vesting date. Fair values at grant date are independently
determined using a Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the vesting and
performance criteria, the impact of dilution, the non-tradeable nature of the option, the share price at grant date and expected price volatility
of the underlying share, the expected dividend yield and the risk-free interest rate for the term of the option.
I D T A n n u a l R e p o r t 2 0 1 4 41
For the yea r ended 30 June 2014
Notes To And Forming Part Of The Financial Statements (Continued)
24. Share based Payments (Continued)
Employee Share Plan
The new Employee Share Plan (ESP) was approved at the Annual General Meeting held on 20 November 2013.
During the year ended 30th June 2014, the Company issued 2,021,048 ordinary shares under the rules of the IDT Australia Limited
ESP (2013: nil).
Under the scheme, eligible employees may be offered up to $1,000 worth of fully-paid ordinary shares in IDT Australia Limited annually for
no cash consideration. The market value of shares issued under the scheme, measured as the weighted average market price on the day
of issue of the shares, is recognised in the income statement as part of employee benefit costs in the period the shares are granted.
Shares issued under the scheme may not be sold until the earlier of three years after issue or cessation of employment with the
company. In all other respects the shares rank equally with other fully-paid ordinary shares on issue.
The number of shares issued to participants in the scheme is the offer amount divided by the weighted average price at which the
company’s shares are traded on the Australian Stock Exchange during the five trading days immediately before the date of the offer.
Additionally within the ESP, Executive managers were offered shares in the Company issued at the current market value at the date of
issue and funded by an interest free limited recourse loan from the Company. Grants within the framework of the ESP were determined
by the MD together with the Remuneration and Nomination Committee, and subject to approval by the Board.
Amounts disclosed for emoluments relating to these shares are the assessed fair values at issue date determined using a Black-Scholes
option pricing model taking into account the share price at grant date and expected price volatility of the underlying share, the expected
dividend yield and the risk-free interest rate for the term of the option.
Expenses arising from Share-based Payment Transactions
Total expenses arising from share-based payment transactions recognised during the period as part of employee benefit expenses were
as follows:
2014
$000
-
302
302
2013
$000
42
-
42
Options issued under executive option plan
Shares issued under employee share plan
25. Key Management Personnel Disclosures
The following persons were Directors of IDT Australia Limited during the financial year:
Executive Directors
GL Blackman (Chairman until 30 September 2013)
P MacLeman, Managing Director (appointed 22nd August 2013)
Non Executive Directors
G Kaufman (Chairman from 30 September 2013)
R Aston (resigned 20th November 2013)
G Lord, Deputy Chairman
R Shigeno
D Williams
Key Management Personnel
The following persons also have authority and responsibility for planning, directing and controlling the activities of the Company, directly
or indirectly, during the financial year:
Name Position
J Johnson
R.Najdecki
D Sparling
Chief Financial Officer (appointed 18 March 2014)
Chief Financial Officer (resigned 20 March 2014)
Vice President, Legal & Corporate Development
42
I D T A n n u a l R e p o r t 2 0 1 4
F or the year ended 30 June 201 4
Notes To And Forming Part Of The Financial Statements (Continued)
25. Key Management Personnel Disclosures (Continued)
Directors and Key Management Personnel
Short term employee benefits
Post employment benefits
Long term benefits
Share based payments
26. Related Party Transactions
2014
$
2013
$
968,107
1,406,153
139,057
122,547
18,835
73,992
34,015
41,809
1,199,991
1,604,524
Transactions of Directors and Key Management Personnel Concerning Shares or Share Options
Directors
The names of persons who were Directors of the company at any time during the financial year are R Aston, G L Blackman,
G Kaufman, G F Lord, P MacLeman, R Shigeno and D Williams
Key Management Personnel
The following persons also have authority and responsibility for planning, directing and controlling the activities of the
Company, directly or indirectly, during the financial year
Name
Position
J Johnson
Chief Financial Officer, appointed 18 March 2014
R Najdecki
Chief Financial Officer, resigned 20 March 2014
D Sparling
Vice President, Legal & Corporate Development
Ordinary shares acquired
Ordinary shares disposed
2014
Shares
2,588,352
-
2013
Shares
-
-
The terms and conditions of transactions relating to shares were on the same basis as similar transactions with other
shareholders.
Aggregate numbers of shares of IDT Australia Limited held directly, indirectly or beneficially by Directors or key management
personnel at balance date were as follows:
Ordinary shares
Options
14,606,364
12,085,762
500,000
500,000
Other Transactions with Directors and Key Management Personnel
A Director, Mr D Williams, is a Director of Medical Developments International Limited. In 2013 the Company entered into a
contract to provide services to Medical Developments International Limited on normal commercial terms and conditions and
at normal commercial rates.
A Director, Mr D Williams, is a Director of Kidder Williams Limited. In 2013 the company entered into a contract with this
company to receive M&A based advice and assistance on normal commercial terms.
No such arrangements were effective in 2014.
I D T A n n u a l R e p o r t 2 0 1 4 43
For the yea r ended 30 June 2014
Notes To And Forming Part Of The Financial Statements (Continued)
26. Related Party Transactions (Continued)
2014
$
2013
$
Aggregate Amount of Other Transactions with Directors and Key Management Personnel
Professional services invoiced out
M&A based advice received
Reimbursement of costs
27. Reconciliation of Net Cash (Outflow) from Operating Activities to Operating
Loss after Income Tax
Net cash (outflow) from operating activities
Depreciation and amortisation
Impairment of development costs
Non-cash share based payment
Non cash share plan costs
Change in operating assets and liabilities
(Decrease)/Increase in receivables
(Decrease)/Increase in inventories
(Decrease)/Increase in current tax asset
(Increase)/Decrease in payables
(Increase)/Decrease in provision for deferred income tax
(Increase)/Decrease in other provisions
Operating (loss) after income tax
28. Earnings Per Share
Basic earnings per share
Diluted earnings per share
-
-
-
-
2014
$’000
(1,576)
(2,321)
(621)
(302)
-
(1,748)
(28)
(102)
230
-
(158)
(6,626)
2014
(9.5¢)
(9.5¢)
160,000
335,635
20,733
516,368
2013
$’000
(1,182)
(2,723)
(1,016)
(42)
(8)
858
(567)
(443)
(317)
(265)
351
(5,354)
2013
(12.1¢)
(12.1¢)
Weighted average number of ordinary shares on issue during the year used in calculation of
basic earnings per share
69,600,776
44,616,717
Weighted average number of ordinary shares on issue during the year used in the calculation
of diluted earnings per share
69,600,776
44,616,717
2014
$’000
2013
$’000
Basic Earnings per share
(Loss) attributable to ordinary equity holders used in calculating basic earnings per share
(6,626)
(5,354)
Diluted Earnings Per Share
(Loss) attributable to ordinary equity holders used in calculating diluted earnings per share
(6,626)
(5,354)
Information Concerning the Classification of Securities
Options
Options granted under the IDT Australia Limited Executive Share Option Plan would be considered to be dilutive potential ordinary shares
if the exercise price was less than the share price as at 30 June 2014. Accordingly no options have been included in the determination
of basic earnings per share. Details relating to options are set out in Note 24.
44
I D T A n n u a l R e p o r t 2 0 1 4
F or the year ended 30 June 201 4
Notes To And Forming Part Of The Financial Statements (Continued)
29. Critical Accounting Estimates and Judgements
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of
future events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances.
The following critical judgements have been made in application of the entity’s accounting policies.
Future economic benefit of capitalised development costs
The Company applies AASB 138 Intangible Assets to determine the adequacy of the carrying value of the capitalised development
costs. Judgement is applied to periodically assess the appropriateness of the carrying value.
In making this judgement, the Company makes reasonable and supportable assumptions to represent management’s estimate of the
conditions that will exist over the useful life of the asset. Amongst other factors the Company evaluates technical feasibility to complete
the project, existence of a commercial market and sales expectations to conclude on the probability that expected future economic
benefits will flow to the entity.
Where the value of future economic benefits relative to the asset’s carrying value is considered insufficient, the Company recognises an
impairment in accordance with AASB 136 Impairment of Assets.
30. Events After the Reporting Period
The Company signed a binding Memorandum of Understanding with Mayne Pharma Group Limited’s, US Products division appointing
them exclusively to distribute the Company’s generic Temozolomide product in the USA. Temozolomide is indicated for the treatment of
melanoma and glioblastoma multiforme and had US sales of approximately USD 340 million in the 12 months ending 31 May 2014. It
is anticipated that manufacture of this product will commence at the Company’s Boronia facility in 2016.
31. Contingent Assets and Contingent Liabilities
The company has no contingent assets or liabilities to disclose at the date of this report.
I D T A n n u a l R e p o r t 2 0 1 4 45
For the yea r ended 30 June 2014
Director’s Declaration
In the Directors’ opinion:
(a)
the fi nancial statements and notes set out on pages 20 to 43 are in accordance with the Corporations Act 2001, including:
(i)
(ii)
complying with Accounting Standards, the Corporations Act 2001 and other mandatory professional reporting requirements; and
giving a true and fair view of the Company’s fi nancial position as at 30 June 2014 and of its performance, as represented by the
result of its operations, changes in equity and cash fl ows, for the fi nancial year ended on that date; and
(b)
there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable; and
(c)
the fi nancial statements and notes thereto also comply with International Financial Reporting Standards as disclosed in Note 1.
The Directors have been given the declarations required by Section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the Directors made pursuant to s295(5) of the Corporations Act 2001.
On behalf of the directors
Graeme Kaufman
Chairman
Dr Paul MacLeman
Director
Melbourne
19 August 2014
46
I D T A n n u a l R e p o r t 2 0 1 4
Deloitte Touche Tohmatsu
ABN 74 490 121 060
550 Bourke Street
Melbourne VIC 3000
GPO Box 78
Melbourne VIC 3001 Australia
DX: 111
Tel: +61 3 9671 7000
Fax: +61 3 9671 7001
www.deloitte.com.au
Independent Auditor’s Report
to the Members of IDT Australia Limited
Report on the Financial Report
We have audited the accompanying fi nancial report of IDT Australia Limited, which comprises the statement of
fi nancial position as at 30 June 2014, the statement of profi t or loss and other comprehensive income, the statement
of cash fl ows and the statement of changes in equity for the year ended on that date, notes comprising a summary of
signifi cant accounting policies and other explanatory information, and the directors’ declaration as set out on pages
20 to 44.
Directors’ Responsibility for the Financial Report
The directors of the company are responsible for the preparation of the fi nancial report that gives a true and fair view
in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as
the directors determine is necessary to enable the preparation of the fi nancial report that gives a true and fair view
and is free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on the fi nancial report based on our audit. We conducted our audit in ac-
cordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical require-
ments relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the
fi nancial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fi nancial
report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material
misstatement of the fi nancial report, whether due to fraud or error. In making those risk assessments, the auditor con-
siders internal control, relevant to the company’s preparation of the fi nancial report that gives a true and fair view, in
order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the company’s internal control. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluat-
ing the overall presentation of the fi nancial report.
We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our
audit opinion.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited
I D T A n n u a l R e p o r t 2 0 1 4 47
Auditor’s Independence Declaration
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. We
confi rm that the independence declaration required by the Corporations Act 2001, which has been given to the
directors of IDT Australia Limited, would be in the same terms if given to the directors as at the time of this
auditor’s report.
Opinion
In our opinion:
(a) the fi nancial report of IDT Australia Limited is in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the company’s fi nancial position as at 30 June 2014 and of its
performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(b) the fi nancial statements also comply with International Financial Reporting Standards as disclosed in Note 1.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 7 to 11 of the directors’ report for the year ended 30
June 2014. The directors of the company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion
on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
Opinion
In our opinion the Remuneration Report of IDT Australia Limited for the year ended 30 June 2014, complies with
section 300A of the Corporations Act 2001.
DELOITTE TOUCHE TOHMATSU
Chris Biermann
Partner
Chartered Accountants
Melbourne, 19 August 2014
48
I D T A n n u a l R e p o r t 2 0 1 4
F or the year ended 30 June 201 4
Share Holder Information
The shareholder information set out below was applicable as at 5 August 2014.
A.
Distribution of Equity Securities
Analysis of numbers of equity security holders by size of holding:
No. of Fully Paid Ordinary Shares Held
1 - 1000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - over
B.
Twenty Largest Shareholders
The names of the twenty largest holders of ordinary shares are listed below:
1. I’ROM HOLDINGS CO LIMITED
2. GRAEME LESLIE BLACKMAN
3. UBS NOMINEES PTY LTD
4. PAULENE BLACKMAN
5. BELGRAVIA STRATEGIC EQUITIES PTY LTD
6. NATIONAL NOMINEES LIMITED
7. KEYGROWTH PTY LTD
8. G & N LORD SUPERANNUATION PTY LTD
9. MR ANTHONY HUNTLEY
10. BRISPOT NOMINEES PTY LTD
11. DEBUSCEY PTY LTD
12. MR DAVID TERRENCE HAMILTON CLARKE & MRS JUDITH MARGARET CLARKE
13. PICTON COVE PTY LTD
14. COVEN-SA LTD
15. PICHERIT’S FARM PTY LTD
16. HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
17. GEOFFREY FREDERICK LORD & NANETTE KATHLEEN LORD & RONALD CHARLES
PECK
18. MR ANTHONY JOHN HUNTLEY
19. DIXSON TRUST PTY LIMITED
20. RACT SUPER PTY LTD
Holders
460
658
251
433
83
1,885
Number Held
Percentage of
Issued Shares
12,460,000
16.10%
6,996,376
4,794,481
4,457,737
2,796,419
2,766,419
2,332,116
1,149,875
1,120,654
1,049,884
896,160
850,000
800,000
782,300
751,500
688,556
553,497
532,374
516,263
512,000
9.04%
6.20%
5.76%
3.61%
3.58%
3.01%
1.49%
1.45%
1.36%
1.16%
1.10%
1.03%
1.01%
0.97%
0.89%
0.72%
0.69%
0.67%
0.66%
46,806,611
60.49%
I D T A n n u a l R e p o r t 2 0 1 4 49
For the yea r ended 30 June 2014
Share Holder Information (Continued)
C.
Substantial Holders
Substantial holders in the company are set out below:
No. of Fully Paid Ordinary Shares Held
1. I’ROM HOLDINGS CO LIMITED
2. GRAEME LESLIE BLACKMAN
3. BELGRAVIA GROUP PTY LTD
4. PAULENE BLACKMAN
D.
Voting Rights
Number Held
Percentage of
Issued Shares
12,460,000
16.10%
6,996,376
6,831,907
4,457,737
9.04%
8.83%
5.76%
A registered holder of shares in the company may attend general meetings of the company in person or by proxy and on a poll may exercise
one vote for each share held.
Option holders have no voting rights.
50
I D T A n n u a l R e p o r t 2 0 1 4
IDT Australia Limited
45 Wadhurst Drive, Boronia Victoria 3155 Australia
www.idtaus.com.au
ABN 66 006 522 970