Notice of Annual General Meeting ABN 78 009 947 813 Notice is given that the Annual General Meeting of Shareholders of Imdex Limited will be held at Le Meridien at Rialto, 495 Collins Street, Melbourne,Victoria, on Thursday 30 October 2003, commencing at 11am. Agenda Ordinary Business 1 To receive and consider the Annual Financial Report, together with the Directors’ and Auditor’s reports for the year ending 30 June 2003. 2 To consider and, if thought fit, pass the following Resolution as an Ordinary Resolution: That, for all purposes, Mr Ian F Burston, who retires from the office of Director by rotation, and being eligible, offers himself for re-election, is re-elected as a Director. 3 To consider and, if thought fit, pass the following Resolution as an Ordinary Resolution: That, for all purposes, Mr Gary W Cobbledick, who was appointed to the Board on 6 January 2003 to fill a casual vacancy, and being eligible, offers himself for re-election, is re-elected as a Director. Special Business 4 To consider and, if thought fit, pass the following Resolution as an Ordinary Resolution: That, for all purposes, the maximum aggregate remuneration payable to Directors in any financial year be increased by $190,000 to $300,000. 5 To consider any other business that may be brought before the Meeting in accordance with the Company’s Constitution. Snap Shot Time Regulation 7.11.37 of the Corporations Regulations 2001 permits the Company to specify a time, not more than 48 hours before the Meeting, at which a “snap shot” of Shareholders will be taken for the purposes of determining Shareholder entitlements to vote at the Meeting. The Company’s Directors have determined that all shares of the Company that are quoted on ASX at 5pm EST on Tuesday, 28 October 2003 shall, for the purposes of determining voting entitlements at the Annual General Meeting, be taken to be held by the persons registered as holding the shares at that time. Notice of Annual General Meeting Proxies Please note that: (a) a member of the Company entitled to attend and vote at the Annual General Meeting is entitled to appoint a Proxy; (b) a Proxy need not be a member of the Company; and (c) a member of the Company entitled to cast two or more votes may appoint two proxies and may specify the proportion or number of votes each Proxy is appointed to exercise, but where the proportion or number is not specified, each Proxy may exercise half of the votes. The enclosed Proxy Form provides further details on appointing Proxies and lodging the Proxy Form. Corporate Representative If a representative of a Shareholder corporation is to attend the Meeting the attached “Appointment of Corporate Representative” form should be completed and produced prior to admission. Dated 19 September 2003 By Order of the Board of Directors Stephen J Lyons Company Secretary Imdex Limited 02 Explanatory Memorandum to the Notice of Annual General Meeting This Explanatory Memorandum has been prepared to assist Shareholders with their consideration of Resolutions 2, 3 and 4 as set out in the attached Notice of Annual General Meeting. The Directors recommend that Shareholders read this Explanatory Memorandum before deciding whether to support the Resolutions or otherwise. Resolutions 2 and 3 In accordance with ASX Listing Rule 14.4 and Article 17.4 of the Constitution, at every Annual General Meeting, one third of the Directors for the time being must retire from office and are eligible for re-election. The Directors to retire are to be those who have been longest in office since their appointment or last re-appointment or, if the Directors have been in office for an equal length of time and unless mutually agreed, by lot. In addition, Article 17.3 of the Constitution, requires that any Director appointed by the Board, either to fill a casual vacancy or as an addition to the Board, must retire at the next Annual General Meeting following his or her appointment, but is eligible for re-election at that Annual General Meeting. Resolution 4 Listing Rule 10.17 and Clause 17.8 of the Constitution provide that the maximum aggregate amount of the remuneration payable to Non Executive Directors is to be determined by Shareholders in General Meeting. It has been five (5) years since Shareholders last approved an increase in Non Executive Directors’ fees. The current maximum aggregate amount is $110,000 per annum and includes Superannuation Guarantee Contributions made by the Company in relation to the Non Executive Directors. This Resolution seeks Shareholder approval to increase the maximum fees payable to Non Executive Directors in each financial year from $110,000 to $300,000 in aggregate, to be apportioned between them as determined by the Board. In 2003 the fees payable to Non Executive Directors totalled $95,375. The proposed increase will allow for fee increases in future years and also the appointment of an additional Technical Director if that is desirable in the circumstances. The Company will disregard any votes cast on this resolution by: • • the Directors of the Company; and an Associate of the Directors of the Company. However the Company need not disregard a vote if: • it is cast by a person as Proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form; or it is cast by the person Chairing the Meeting as Proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the Proxy decides. • Glossary In this Explanatory Memorandum, the following terms have the following meanings unless the context otherwise requires: ASX Board means the Australian Stock Exchange conducted by Australian Stock Exchange Limited ABN 98 008 624 691. means the Board of Directors. Company means Imdex Limited ABN 78 009 947 813. Constitution means the Constitution of the Company. Director means a Director of the Company. Shareholder means a Shareholder of the Company. EST means Australian Eastern Standard Time. 03 Shareholder Email Communication 19 September 2003 Dear Shareholder In order to keep you well informed on the latest Company information, in addition to ASX Announcements and Independent Reports, we intend to issue a regular Newsletter. So that we can distribute this quickly, it is preferable for us to do this by email. You will continue to receive the Annual Report and Notice of Meeting by regular mail, unless you have elected not to do so. If you have an email address by which we can reach you, could you please provide us with the details below and fax it back to us on +61 8 9481 6527, or email us at imdex@imdex.com.au You can be assured of complete privacy, as this address will not be passed on to any other party, unless you give us permission, in writing, to do so. We would be grateful if you could also update us with any changes to your email address throughout the year. Yours faithfully Imdex Limited B W Ridgeway Managing Director The Managing Director Imdex Limited Imdex Limited ACN 008 947 813 ABN 78 008 947 813 Level 3, 18 Richardson Street West Perth Western Australia 6005 PO Box 1325, West Perth Western Australia 6872 Phone +61 8 9481 5777 Fax +61 8 9481 6527 E-mail imdex@imdex.com.au Incorporating: Ace Drilling Products, Australian Mud Company Ltd, Imdex Minerals & Surtron Technologies Pty Ltd By Facsimile: +61 8 9481 6527, or Email: imdex@imdex.com.au Dear Sir Yes, I would like to receive Shareholder communication by email. My Full Name is My Email address is Yours faithfully (Please print) (Signed) Imdex Limited Shareholder Date: 04 2003 Annual General Meeting Proxy Form Shareholder Details Name: Address: Contact Telephone No: Contact Name (if different from above): Appointment of Proxy I/We being a Shareholder/s of Imdex Limited and entitled to attend and vote hereby appoint: The Chairman of the Meeting OR (mark with an ‘X’) Write here the name of the person you are appointing if this person is someone other than the Chairman of the Meeting. or if no person is named, the Chairman of the Meeting, as my/our Proxy to attend and act generally at the Meeting on my/our behalf and to vote in accordance with the following directions (or if no directions have been given, as the Proxy sees fit) at the Annual General Meeting of Imdex Limited to be held at Le Meridien at Rialto, 495 Collins Street, Melbourne, Victoria on 30 October 2003 at 11am and at any adjournment of that Meeting. Important information if appointing the Chairman as your Proxy If you appoint the Chairman as your Proxy, but do not wish to direct your Proxy how to vote on a Resolution, you must place a mark in the boxes below headed “Proxy’s Discretion” in respect of that Resolution. By marking this box, you acknowledge that the Chairman may exercise your Proxy even if he has an interest in the outcome of the Resolution and votes cast by him other than as Proxy Holder will be disregarded because of that interest. If you appoint the Chairman as your Proxy, but do not mark any box, the Chairman will be unable to exercise your Proxy vote. If you appoint the Chairman as your Proxy and place a mark in any box headed “Proxy’s Discretion”, the Chairman intends to exercise your Proxy to vote in favour of that Resolution. Voting directions to your Proxy – please mark to indicate your directions X For Against Abstain* Proxy’s Discretion Ordinary Business Resolution 2: Re-election of Mr I F Burston Resolution 3: Re-election of Mr G W Cobbledick Special Business Resolution 4: Remuneration of Directors *If you mark the Abstain box for a particular Resolution, you are directing your Proxy not to vote on your behalf on a show of hands or on a poll and your votes will not be counted in computing the required majority on a poll. Appointment of a second Proxy (see instructions overleaf) If you wish to appoint a second Proxy, state the percentage of your voting rights applicable to the Proxy appointed by this form. % PLEASE SIGN HERE This section must be signed in accordance with the instructions overleaf to enable your directions to be implemented. Individual or Shareholder 1 Shareholder 2 Sole Director and Sole Company Secretary Director Date 05 ✄ 2003 Annual General Meeting Proxy Form How to complete this Proxy Form 1 Your Name and Address Please print your name and address as it appears on your Holding Statement and the Company’s Share Register. If shares are jointly held, please ensure the name and address of each joint Shareholder is indicated. Shareholders should advise the Company of any changes. Shareholders sponsored by a broker should advise their broker of any changes. Please note, you cannot change ownership of your securities using this form. 2 Appointment of a Proxy If you wish to appoint the Chairman of the Meeting as your Proxy, mark the box. If the person you wish to appoint as your Proxy is someone other than the Chairman of the Meeting please write the name of that person. If you leave this section blank, the Chairman of the Meeting will be your Proxy. A Proxy need not be a Shareholder of the Company. 3 Votes on Resolutions You may direct your Proxy how to vote by placing a mark in one of the boxes opposite each Resolution. All your shareholding will be voted in accordance with such a direction unless you indicate only a portion of voting rights are to be voted on any Resolution by inserting the percentage or number of shares you wish to vote in the appropriate box or boxes. If you do not mark any of the boxes on a given Resolution, your Proxy (unless you have appointed the Chairman as your Proxy) may vote as he or she chooses. If you mark more than one box on a Resolution your vote on that Resolution will be invalid. 4 Appointment of a Second Proxy You are entitled to appoint up to two persons as Proxies to attend the meeting and vote on a poll. If you wish to appoint a second Proxy, an additional Proxy Form may be obtained by telephoning the Company Secretary, Mr Stephen Lyons on (08) 9481 5777 or you may photocopy this form. To appoint a second Proxy you must on each Proxy Form state (in the appropriate box) the percentage of your voting rights which are the subject of the relevant Proxy. If both Proxy Forms do not specify that percentage, each Proxy may exercise half your votes. Fractions of votes will be disregarded. 5 Signing Instructions You must sign this form as follows in the spaces provided: Individual: where the holding is in one name, the holder must sign. Joint Holding: where the holding is in more than one name, all of the Shareholders must sign. Power of Attorney: to sign under Power of Attorney, you must have already lodged this document with the Company’s Share Registry. If you have not previously lodged this document for notation, please attach a certified photocopy of the Power of Attorney to this form when you return it. Companies: where the company has a Sole Director who is also the Sole Company Secretary, this form must be signed by that person. If the company (pursuant to section 204A of the Corporations Act 2001) does not have a Company Secretary, a Sole Director can also sign alone. Otherwise this form must be signed by a Director jointly with either another Director or a Company Secretary. Please indicate the office held by signing in the appropriate place. If a representative of the corporation is to attend the Meeting a “Certificate of Appointment of Corporate Representative” should be produced prior to admission. A form of the certificate is included with the Notice of Annual General Meeting or may be obtained from the Company. 6 Lodgement of a Proxy This Proxy Form (and any Power of Attorney under which it is signed) must be received at the address given below not later than 48 hours before the commencement of the Meeting; ie. no later than 11am EST Tuesday, 28 October 2003. Any Proxy Form received after that time will not be valid for the scheduled Meeting. This Proxy Form (and any Power of Attorney and/or second Proxy Form) may be sent or delivered to the Company’s Registered Office at Level 3, Redgum House, 18 Richardson Street, West Perth WA, 6005 or sent by facsimile to the Registered Office on (08) 9481 6527. 06 Appointment of Corporate Representative 2003 Annual General Meeting Shareholder Details This is to certify that by a Resolution of the Directors of: (Insert name of shareholder company) The Company has appointed: (Insert name of corporate representative) (Company) (Authorised corporate representative) in accordance with the provisions of section 250D of the Corporations Act 2001, to act as the body corporate representative of that Company at the Annual General Meeting of Imdex Limited to be held on 30 October 2003 and at any adjournments of that Meeting. DATED: 2003 Please sign here Executed by the Company in accordance with its constituent documents Signed by authorised representative Signed by authorised representative Name of authorised representative (print) Name of authorised representative (print) Position of authorised representative (print) Position of authorised representative (print) Instructions for Completion 1. 2. 3. 4. 5. Insert name of appointor Company and the name or position of the appointee (eg “John Smith” or “each Director of the Company”). Execute the Certificate following the procedure required by your Constitution or other constituent documents. Print the name and position (eg Director) of each Company officer who signs this Certificate on behalf of the Company. Insert the date of execution where indicated. Send or deliver the Certificate to Imdex Limited, Level 3, Redgum House, 18 Richardson Street, West Perth WA 6005 or fax to (08) 9481 6527. 07 ✄ Imdex Trading Locations Eastern Europe Saudi Arabia Japan USA Ghana Zambia South Africa Thailand Laos Phillipines Indonesia PNG Tanzania WA QLD SA NSW VIC Peru Chile “Progress … through focus and discipline.” Imdex Limited ABN 78 008 947 813 Contents 01 Imdex at a Glance 02 Year in Review 04 Chairman’s Report 05 Managing Director’s Report 07 Imdex’s Businesses 08 Review of Operations 14 Health, Safety and Environment 15 Director Profiles 17 Financial Report Registered Office Imdex Limited Level 3, Redgum House 18 Richardson Street West Perth WA 6005 PO Box 1325 West Perth WA 6872 Telephone: +61 8 9481 5777 Facsimile: +61 8 9481 6527 Email: imdex@imdex.com.au Website: www.imdex.com.au Notice of Annual General Meeting Notice is hereby given that the Annual General Meeting of Imdex Limited will be held at Le Meridien at Rialto, 495 Collins Street, Melbourne, Victoria 3000 on 30 October 2003, commencing at 11am. Imdex Code IMD Imdex at a Glance Imdex Limited is Australia’s leading supplier of drilling products and services in the mining, water well, horizontal directional drilling and civil industries. It also services the oil and gas industry. Imdex is listed on the Australian Stock Exchange. Photo courtesy of Aramco The Imdex operating principles recognise the Company’s responsibilities to: • • • • • • create increasing returns for our shareholders; deliver value for our customers; care for our people through a safe workplace and the provision of learning opportunities; display integrity and honesty in everything we do; respect our physical environment; and utilise technology to maximise business opportunities. 01 Financial Highlight: • Imdex achieved a clear turnaround in operating performance, reporting a Net Profit After Tax of A$908,000 compared with a loss of A$520,000 in 2001/02. In Australia: • The Australian Mud Company maintained its position as the leading supplier of drilling fluids and chemicals to the mining and water well industry. • Imdex Minerals, commissioned its second large ceramic lined ball mill at Jandakot in WA. • Surtron successfully introduced new wireless steering technology into the emerging coal bed methane gas drainage industry. In the Middle East Joint Venture: • Sales increased to US$13.8m in 2002/03 (2001/02 - US$8.3m). • The RTE/Imdex Joint Venture demonstrated a track record for reliability and quality with major end users in Saudi Arabia. • Business worth approximately US$30m per annum was confirmed in July 2003. Year in Review 02 IMDEX LIMITED - THREE YEAR STATISTICS Group Results 2001 2002 2003 Group Turnover EBIT Net Assets 0 0 0 , $ A 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 (5,000) 2003 2002 $'000 % Change $'000 % Change Group Turnover: Revenue from sale of goods Revenue from rendering of services Other revenue Earnings Before Interest and Tax (EBIT) Net Profit/(Loss) after tax Net Assets 30,911 26,297 4,326 288 2,029 908 21,800 Net tangible asset backing per share 17.65 ¢ (14%) (4%) + 28% (95%) + 802% + 275% + 18% + 6% 35,986 27,270 3,390 5,326 (289) (520) + 22% + 22% (45%) + 418% (111%) (129%) 18,446 16.58 ¢ + 16% + 2% Earnings per share 0.76 ¢ + 252% (0.50) ¢ (127%) 2001 $'000 29,572 22,393 6,150 1,029 2,708 1,766 15,869 16.33 ¢ 1.84 ¢ Shares on Issue 120,055,368 + 11% 107,881,455 + 12% 95,997,231 03 Chairman’s Report The Company made satisfactory progress towards Surtron Technologies registered a small profit and has achieving its operating and financial goals during the year. positioned itself well to benefit from the growing Methane There is still some way to go before our performance Gas Drainage industry from coal drilling activities in the reaches the standards which our Shareholders can rightly Eastern States. expect. However, members of the Board and Management team are all focused in a highly disciplined fashion on an improvement in returns. Delays in developing the Saudi Arabian Joint Venture have led to much frustration, primarily from interminable delays in contract tendering and award processes. Likewise, the The benefits of this focus were evident in the improved Iraqi conflict did not help. financial performance in the past year. There was a turn around in profitability. Net Profit After Tax rose to A$908,000 after a loss of A$520,000 in the previous year. This was achieved with a 21% increase in underlying operating revenue. With the winning of a number of tenders announced in July, the RTE/Imdex Saudi Arabian Joint Venture’s trading position shows significant improvement. This has encouraged the Company to persevere with the venture with the expectation of an improved revenue and profit The Managing Director’s Report and Review of Operations position in the 2004 year. which follows, shows full details of our trading performance and financial position as well as detailing our Health, Safety and Environmental performance. With the expected continuing improvement in the results from the Australian operations and revenues and margins from the RTE/Imdex Saudi Arabian Joint Venture, we can The highlight of the Financial Statement, is the strong expect a further improvement in the financial outcome in performance by the Australian businesses, particularly that the current year. of the Australian Mud Company which registered an outstanding effort. The Company commissioned an additional ceramic ball mill at Imdex Minerals and has obtained significant additional business as a consequence. I F Burston 04 Managing Director’s Report The improved performance reported by the Company The Australian Mud Company (AMC) traded strongly reflects the substantial progress being made toward during the year with a 22% increase in operational revenue achieving the medium term goals which have been set out and a 110% rise in EBIT compared with the prior year. The for management by the Board: revenue growth flowed largely from offshore initiatives in • continuing operational and earnings improvement within Australia; • progressive realisation of the potential of our Saudi Arabian Joint Venture; the Philippines, Indonesia and Eastern Europe. AMC remains intent on maintaining and developing its markets and competitive position. During 2002/03, AMC introduced a number of innovative new products and, in 2003/04, will roll out new environmentally friendly • overall improvement in Group financial performance packaging for many of its products. to make Imdex a competitive investment in the Australian market; and Imdex Minerals achieved a similar revenue outcome to its 2001/02 result but its EBIT contribution to the Group rose • translation of the improved performance into by 400%. The prior year’s result was adversely affected dividend income for Shareholders. by one-off write-downs associated with the mining and These are the four guideposts to which the Company’s processing of Micaceous Iron Oxide (MIO). energies have been directed and which will continue to With the additional capacity now available at Jandakot, guide us in the year ahead. further penetration of the Australian silica flour market “The 02/03 Financial Year was one of contrasts for Imdex.” Earnings Before Interest and Tax (EBIT) for the Group was has been possible and Imdex is examining export $2.029 million compared with a loss of $289,000 for the year opportunities. Imdex Minerals has also taken advantage ended June 2002. The $2.921 million EBIT from the domestic of its expanded milling capacity by undertaking extra toll business was significantly higher than the year before. The milling of zircon sand. A$892,000 loss from activities in the Middle East Surtron has been making a substantial investment in the successful introduction of new steering technology and in partially offset the domestic developing logging and surveying work on the East Coast outcome. However, bearing of Australia. The benefits of this activity are now beginning in mind the early stage of to show. Surtron recorded a significant turnaround from the Middle East Joint Venture and the effect of the Iraqi war, the overall result represented creditable the loss incurred in the 2002 financial year. Offshore, sales within the Group’s Saudi Arabian Joint Venture, which commenced in June 2001, have been building steadily and totalled US$13.8 million in 2002/03 progress toward our longer (2002 – US$8.3m). The Company’s share of losses for the term financial goals. year ended 30 June 2003 totalled A$765,000. 05 Managing Director’s Report Three issues adversely affected the Joint Venture during sale of Australian Vermiculite Industries Pty Ltd of $4.85 the year: • Supply agreements with one major end user had to be extended at prices which prevented an expansion in operating margins and the anticipated re- tendering of the agreements was delayed until the third quarter of 2003. Results were eventually announced in the first quarter of 2003/04. • The war in Iraq and associated uncertainty reduced million and one-off sales to the drilling fluids & chemicals Joint Venture in Saudi Arabia at a reduced margin which subtracted a further $5.5 million. Adjusting the previous year’s revenue ($35.986 million) for these two factors implies operating revenue in 2001/02 of $25.636 million and a highly creditable revenue increase in the current year. Among other financial performance indicators: demand for drilling fluids and chemicals for several • earnings increased from a loss of 0.50 cents per months during the financial year. That temporary share to a profit of 0.76 cents per share; market influence has abated. • net assets increased from $18.446 million at • The need for the partners to adjust to cultural and 30 June 2002 to $21.800 million at 30 June 2003; and • net asset backing per share increased from 16.58 cents at 30 June 2002 to 17.65 cents at 30 June 2003. B W Ridgeway operational differences, including ensuring appropriate reporting standards for an Australian listed company, have caused some delays. The Joint Venture has learnt from these experiences and the business is on a surer footing for the next stage of its development. Despite some of these influences, the Joint Venture continued to supply existing end users and demonstrated a reliable track record for its customers. A clear sign of the progress being made is that, subsequent to balance date, the Joint Venture has secured business likely to generate revenues around US$30 million per annum. Monthly revenues have also recovered from their relatively depressed levels in the approach to and during the Iraqi war. Financial Outcomes The Group’s significantly improved profitability was achieved despite a 14% decline in reported revenue. However, underlying revenue measured on a comparative basis was actually 21% higher. Total revenue of $30.911 million was reported for the year to June 2003 compared with reported revenue for the previous corresponding period of $35.986 million. However, the previous year included proceeds from the 06 Imdex’s Businesses RTE Drilling Fluids & Chemicals Drilling Fluids & Chemicals - KSA Joint Venture Drilling Products & Services Minerals Processing Drilling fluids, chemicals and Drilling fluids, chemicals and Geophysical logging, Toll milling, silica flour, custom services to the mining, oil and services to the oil and gas and downhole surveying, steering, packaging, agricultural gas, water well and horizontal water well industries. sale and rental of drilling products, sand and gravel directional drilling industries. products. packs and Micaceous Iron Oxide (MIO). Year in brief Year in brief Year in brief Year in brief • 22% increase in revenue; • 66% increase in revenue; • 30% increase in revenue; • increase in EBIT of 400%; • exceeded budget EBIT • demonstrated reliable track • returned to profitability; • commissioning of second by 34%; record; • successful introduction of • expanded sales into • Imdex Arabia registered as wireless steering large ceramic lined ball mill; domestic oil and gas a service company in Saudi technology; • successful entry into silica industry; Arabia; • continued expansion of flour market; • diversified growth into • solid platform for future logging and survey services • expansion of commodity further international mining growth. on Australia’s East Coast and client base; and water well markets. and internationally; • entry into MIO markets in • introduction of new rental UK and Europe; product lines; • regaining of MIO markets • unprecedented level of in USA. activity in geophysical logging. Future directions Future directions Future directions Future directions • continued international • delivering on contracts worth • expansion of wireless • earnings and margin expansion; approx US $30m p.a.; steering technology in Coal growth; • earnings and margin • introduction of new Bed Methane market; • growth in domestic and growth; products; • increase of services in international silica flour • introduction of • earnings and margin logging; market; environmentally friendly growth. • continued expansion of East • additional toll milling of packaging of products. Coast logging and survey. zircon. 07 Review of Operations 08 Drilling Fluids and Chemicals Review of Operations Imdex Limited has three main areas of operation: the Company’s domestic growth. Accordingly, in 2002/03, AMC continued its strategic move into niche markets in the domestic oil and gas industry and in • the provision of drilling fluids, chemicals, tools and international mining and water well markets. AMC will equipment; • drilling services; and • minerals processing. continue to develop these niche markets during 2003/04. During the year, AMC successfully introduced new products that have improved the Company’s competitive position. These and other initiatives should ensure AMC Imdex services both domestic and international remains a market leader in the provision of drilling markets. Domestic products and services in Australia and in many countries overseas. Australian Mud Company Ltd (AMC) (Imdex 100%) The requirement for resource companies and their product and service providers, such as AMC, to be environmentally aware and responsible, continues to AMC is the Australian leader in the grow. Accordingly, AMC is introducing environmentally provision of drilling products and friendly packaging for a range of its products. Trading during the early part of 2003/04 has provided further confidence that AMC can again deliver strong earnings in the new financial year. services to the mining, water well, horizontal directional drilling and civil industries and is increasing market share in the onshore oil and gas business. AMC is a supplier to these industries both in Australia and internationally. During 2002/03, AMC was the Imdex Group’s strongest performer. AMC’s EBIT rose by 110%. AMC’s strong growth in both earnings and profitability was achieved across Australia and in a number of overseas markets. Despite a highly competitive market, AMC built on its dominant position in the Australian mining, water well and horizontal directional drilling industries, growing its market share. AMC also improved its performance in Africa and in the domestic onshore oil and gas market. In the coming years, the size of the Australian market and its already extensive penetration by AMC is likely to limit 09 Review of Operations 10 Minerals Processing Imdex Minerals (Imdex: 100%) Imdex Minerals operates a multi-purpose industrial minerals processing facility at Jandakot, Western Australia. The facility’s operations include: • toll milling; • custom packaging; The custom packaging operations did not meet budget for 2002/03 as the focus at Imdex Minerals was on toll milling. However, Imdex anticipates those operations will meet or exceed budget in the coming year. Agricultural products and sand/gravel packs Imdex Minerals’ agricultural products’ operations incorporate the screening, packaging and sale of • production and marketing of agricultural products; limesand, limestone and gypsum for agricultural uses. In • production and marketing of sand/gravel packs; and addition, Imdex Minerals produces a range of silica and gravel pack sands for water filtration, water wells, pool • Micaceous Iron Oxide processing and marketing. filters and industrial adhesives. During 2002/03, Imdex Minerals increased EBIT by These operations continued to provide steady earnings, 400% over 2001/02 on a stable revenue base. however, growth in other areas has caused them to Toll milling become decreasing contributors to profits. Toll milling is Imdex Minerals’ core MIO operation. Its customers are sourced Imdex Minerals’ mine (at Mt Gould, Western Australia), principally from Australia’s mineral processes and markets MIO, an anti-corrosive pigment sands producers, for whom the used in industrial paints. main product milled is zircon sand into zircon flour. Imdex Minerals exports MIO to markets in the USA, Japan and parts of Asia as a proprietary product branded During 2003, Imdex Minerals commissioned an additional "Imdox". Imdex Minerals is entering new markets in the large ceramic lined ball mill. That mill has allowed Imdex United Kingdom and Europe, with small shipments sent Minerals to further expand its zircon sand milling and during the year. Imdex expects a strong performance from Imdex Minerals in 2003/04 . enter the silica flour market with its own proprietary product. Imdex Minerals has obtained additional commitments for zircon milling and the entry into the domestic silica flour market is a significant step. As a result, Imdex Minerals’ profitability should again increase in 2003/04. Custom packaging Imdex Minerals custom packages industrial minerals, such as silica fume, cement, rutile, ilmenite, gypsum and quick lime. 11 Review of Operations Surtron Technologies Pty Ltd (Imdex: 100%) Ace Drilling Products & Rentals (Imdex: 100%) Rig Ace Drilling Products is the distributor of a range of diamond drilling products, including Asahi diamond products, Bradley drilling pipe, International Drillquip hammers and a range of miscellaneous consumable items. Ace Rentals hires, markets and repairs a range of down hole equipment for the drilling industry. drill rods The markets serviced by Ace Drilling Products experienced low margins and intense competition, with profitability leveraged to activity in the exploration industry. However, when combined with the complementary Ace Drilling Rentals, the business continues to meet Imdex’s internal profitability targets. During 2003/04, Imdex expects Ace Drilling Rentals to benefit from increased activity in exploration and directional drilling and its expansion into overseas markets. non magnetic rods containing wireless steering tool down hole motor magnetic ranging tool gap sub coal seam magnetic field Surtron returned to profitability on sales that were 28% higher than 2001/02. This growth was lower than expected, reflecting the slow growth in development of the Coal Bed Methane (CBM) gas drainage industry, to which Surtron provides steering services. Surtron increased development costs in respect of its CBM initiative, expensing those costs which impacted negatively on profit for 2002/03. The CBM industry took major steps forward in 2002/03 and Surtron is providing steering services to production projects on Australia’s East Coast, where the future of the CBM industry looks sound. In 2003/04, Surtron expects revenue from logging in the Pilbara to increase, given the expansion of production capacity of all the major iron ore producers, primarily to satisfy markets in China. Surtron continues to provide down hole survey services to gold and nickel producers in Australia and in some overseas locations. 12 12 Drilling Products and Services International RTE/Imdex Saudi Arabian Joint Venture Our Joint Venture partner has been very active and since the commencement of the new financial year, the Joint Venture has confirmed existing business and won new Imdex has a 49% interest in a Joint Venture with Rashid business in KSA worth approximately US$30 million per Trading Establishment (RTE) to provide drilling fluids and annum. Sales are also being made into the KSA water services to the oil and gas industry in the Kingdom of well market. Saudi Arabia (KSA). The Joint Venture expects monthly revenue to increase for The RTE/Imdex Saudi Arabian Joint Venture’s 2002/03 the remainder of the first half and anticipates monthly performance did not fulfill original expectations. sales in KSA will exceed US$2 million early in the second Despite the poor financial performance, RTE, on behalf of the Joint Venture, has demonstrated a reliable track record, supplying materials in accordance with end user specifications. half of 2004, nearly double the revenue in the second half of 2002/03 and generating gross margins of 15% or better. Imdex expects the Joint Venture to contribute positively to profits in the 2003/04 financial year, and for many years to come. Saudi Arabian Joint Venture Africa Saudi Arabia n o i l l i M $ S U 2.0 1.5 1.0 0.5 0.0 2 0 l u J 2 0 g u A 2 0 p e S 2 0 t c O 2 0 v o N 2 0 c e D 3 0 n a J 3 0 b e F 3 0 r a M 3 0 r p A 3 0 y a M 3 0 n u J 3 0 l u J 13 Review of Operations Dubai Imdex International FZC RTE International During 2003, Imdex disposed of its interests in two further Joint Ventures based in Dubai, United Arab Emirates, in order to focus attention on the KSA market. Imdex International, which was a Free Zone company in • O H & S procedures and reporting; • Company successes; • Group policies and procedures; • Supplier alerts; and • Audit findings. It is through the Quality System that Imdex records all issues related to the operations of its businesses. These issues are assigned a ‘case-worker’ and are reported on Sharjah, was liquidated during the year. Imdex also monthly at management meetings and to the Board. relinquished its 49% interest in the business of RTE International, a supplier of tools and equipment to the oil and gas industry in the Middle East. During the current year, Imdex’s overall safety performance was satisfactory with a relatively consistent safety standard at its Minerals Processing business and no Imdex may examine the feasibility of re-entering these lost time injuries at its Drilling Fluids & Chemicals or Drilling Products & Services businesses. The Minerals Processing business is labour intensive and whilst all lost time injuries were of a minor nature, this remains a priority for the management team. Imdex is very focused on achieving total compliance with environmental regulations. The improvements in the facilities at its Minerals Processing business continued in 2003 and included the installation of new equipment, further upgrading of existing plant and equipment and the ongoing concreting of unsealed yard areas. These improvements, as well as increasing productivity, have helped to minimise dust emissions from the facility. Significantly, these steps have seen the number of complaints received by Minerals Processing decrease from four in 2002 to one in 2003. markets after the main RTE/Imdex Joint Venture in the Kingdom of Saudi Arabia has been consolidated. Photo courtesy of Aramco Health, Safety and Environment The Imdex Group actively manages its health, safety and environmental risks. Over the last few years, Imdex developed, and has now refined, the Quality System. The Quality System is a group-wide, intranet based, information system used specifically to manage: • Customer feedback; • Improvement suggestions; • Customer complaints; • Environmental alerts; 14 Director Profiles Left to Right: Bernard Ridgeway, Ian Burston, Mike Gasson, Gary Cobbledick, Stephen Lyons Mr Ian F Burston, AM Non Executive Chairman Age: 68 years Mr H H Al-Merry Non Executive Director Age: 41 years Mr Burston holds a Diploma in Aeronautical Engineering Mr Al-Merry was appointed a and a Bachelor of Engineering (Mechanical). Non Executive Director in April He is a Fellow of the Institution of Engineers, Australia, a Fellow of the Australasian Institute of Mining and Metallurgy and he is a Fellow of the Australian Institute of Company Directors. Mr Burston was appointed Chairman at the Annual General Meeting held on 22 November 2000. 2002. He is currently the President of RTE and has been involved in supplying products and services to the oil and gas business in Saudi Arabia and the Middle East for several years. He has many long standing business and government relationships in Saudi Arabia and the Middle East. Mr Burston is the Chairman of Aztec Mining, Immersive Technologies, and the Broome Port Authority. Mr Burston has been the Managing Director of Hamersley Iron, the Chief Mr Bernard W Ridgeway B.Bus (Acctg) ACA Managing Director Age: 49 years Executive Officer for Kalgoorlie Consolidated Gold Mines, Mr Ridgeway was appointed to the Board on the Managing Director and Chief Executive Officer of 23 May 2000 and appointed Managing Director effective Aurora Gold Ltd and the Managing Director of Portman from 3 July 2000. He is a qualified Chartered Accountant Limited. Mr Burston’s vast experience at the helm of public companies, both listed and unlisted, makes him well qualified to lead Imdex during this important growth phase of the Company. and a Member of the Institute of Chartered Accountants in Australia and a Member of the Australian Institute of Company Directors. Mr Ridgeway has been involved with a number of public and private companies for the last twenty years as an owner, director or manager. He embraces a hands on management style and has extensive experience and expertise in finance, administration, marketing and business development. 15 Director Profiles Mr Gary W Cobbledick BA, LLB (Natal), LLM (Harvard) Non Executive Director Age: 36 years Mr Stephen J Lyons B.Bus (Acctg) ACA Company Secretary Age: 34 years Mr Cobbledick has a Bachelor of Arts and a Bachelor of Mr Lyons was appointed Company Secretary on Laws degree from the University of Natal and a Master of 19 November 2001. He is a qualified Chartered Laws degree from Harvard Law School. Accountant and a Member of the Institute of Chartered Mr Cobbledick is currently Acting Chief Executive Officer of Primelife Corporation Limited, Australia’s leading Accountants in Australia. Mr Lyons has an audit, corporate services and banking background. specialist developer and manager of senior living In addition to his role with Imdex, Mr Lyons is the residential facilities. From 1998 to early 2003, Mr Company Secretary of the Australian operations of the Cobbledick worked at Visy Industries as General Swiss based, Société Générale de Surveillance Group. Manager within the Visy Recycling business. Between 1992 and 1997, Mr Cobbledick worked as a corporate lawyer at leading New York law firm, Sullivan & Cromwell, where he specialised in international capital markets transactions and U.S. Securities law. Mr Cobbledick was appointed as a Non Executive Director in January 2003. Mr Michael L Gasson FCPA Non Executive Director Age: 56 years Mr Gasson is a Fellow of the Australian Society of Certified Practicing Accountants and a Principal of Chartered Accountants Moiler Gasson Pty Ltd. Before starting in public practice, Mr Gasson was the Group Accountant and subsequently Company Secretary/Financial Controller for a group of public companies involved in the mining/primary production industries. He is currently Managing Director of Australian operations for a Japanese corporation involved in the travel and tourism industries, and a Director of their UK operations. He joined the Board of Imdex Limited in 1989. 16 Financial Report 2003 18 Directors’ Report 22 Corporate Governance Statement 26 Independent Audit Report 28 Directors’ Declaration 29 Statements of Financial Performance 30 Statements of Financial Position 31 Statements of Cash Flows 32 Notes to the Financial Statements 67 ASX Additional Information 17 Directors’ Report The Directors of Imdex Limited present their report together with the annual financial report of the Company for the financial year ended 30 June 2003. In order to comply with the provisions of the Corporations Act 2001, the Directors’ report as follows: (a) Directors The names and particulars of the Directors of the Company during or since the end of the financial year are: Name Role Age Particulars Mr I F Burston Independent, Non Executive Chairman 68 of the Audit Member and Remuneration Committees. Director since November 2000 Mr B W Ridgeway Managing Director Mr M L Gasson Independent, Non Executive Director Mr H H Al-Merry Non Executive Director Mr G W Cobbledick Independent, Non Executive Director 49 56 41 36 Director since May 2000 Chairman of the Audit and Remuneration Committees. Director since May 1989 Director since April 2002 Director since 6 January 2003. Member of the Audit and Remuneration Committees. Information on the Director’s experience and qualifications is set out under Director Profiles. (b) Directors’ Meetings The following table sets out the number of Directors’ meetings (including meetings of committees of Directors) held during the financial year and the number of meetings attended by each Director (while they were a Director or committee member). During the financial year, eight Board meetings and two Audit and Compliance Committee meetings were held: Board of Directors Audit and Compliance Committee Held Attended Held Attended I F Burston B W Ridgeway M L Gasson H H Al–Merry G W Cobbledick (i) 8 8 8 8 3 8 8 7 2 3 2 – 2 – – 2 – 2 – – (i) Mr G W Cobbledick was appointed a Director on 6 January 2003. Three meetings of the Board have been held since his appointment. In addition to the Directors’ and Audit and Compliance Committee meetings, there are also regular meetings in relation to the RTE/Imdex Saudi Arabian Joint Venture. These are attended by Mr B W Ridgeway, and regularly by Mr I F Burston, on behalf of Imdex Limited and Mr H H Al-Merry on behalf of Rashid Trading Company. 18 Directors’ Report (c) Directors’ Interests in Shares and Options At the date of this report the Directors held the following interests in shares and options of the Company: I F Burston B W Ridgeway M L Gasson H H Al-Merry G W Cobbledick Shares Held Directly Shares Held Indirectly Options Held Directly 100,000 – – 10,755,000 10,000 – 6,000,000 5,165,838 – – 1,000,000 2,000,000 – – – At the date of this report, the options issued under the Imdex Limited Employee Share Option Plan are disclosed in Note 29. No additional options were granted during the year and no shares were issued during the year on the exercise of options granted to Directors and employees. (d) Directors’ and Senior Executives’ Emoluments The remuneration policy for Directors is set out in the Corporate Governance Statement. The Company has recently formed a Remuneration Committee to assist the Board in determining executive remuneration policy. Remuneration packages are reviewed with due regard to performance and other relevant factors. Remuneration packages contain the following key elements: (i) (ii) Salary/Fees; Benefits – including the provision of motor vehicle, superannuation and health benefits; and (iii) Incentive schemes – which for the current year, include performance related bonuses. Details of Directors’ remuneration and the remuneration of the five highest remunerated executives of the Company and the Consolidated Entity are set out below. Name Note Salary/Fees Benefits Incentive Schemes $ $ $ Executive Director B W Ridgeway, Managing Director 147,339 55,685 Non Executive Directors I F Burston, Chairman M L Gasson H H Al-Merry G W Cobbledick Executive Officers (excluding Directors) G E Weston, General Manager AMC & Surtron R Hancock, General Manager Imdex Minerals (i) 50,000 25,000 – 12,500 4,500 2,250 – 1,125 166,546 25,429 126,179 37,467 Total $ 203,024 54,500 27,250 – 13,625 191,975 163,646 – – – – – – – (i) Mr H H Al-Merry is the President and owner of Rashid Trading Establishment (RTE), which is involved in a Joint Venture with Imdex Limited in the Middle East. Mr Al-Merry is remunerated directly by the RTE/Imdex Joint Venture. 19 Directors’ Report (e) Principal Activities The Consolidated Entity’s principal continuing activities during the course of the financial year were the manufacturing and sale of a range of drilling products and services and minerals processing. (f) Consolidated Results Net profit/(loss) after income tax 908 (520) Consolidated 2003 $’000 2002 $’000 (g) Earnings Per Share Basic earnings per share Diluted earnings per share (h) Review of Operations Consolidated 2003 ¢ 2002 ¢ 0.76 0.76 (0.50) (0.50) A review of the operations for the financial year together with future prospects is contained in the Chairman’s Report and Managing Director’s Review. (i) Dividends No dividends were paid or declared by the Company during the year (2002 $Nil). The Directors do not recommend the payment of a dividend in respect of the financial year ended 30 June 2003. (j) Changes in State of Affairs During the financial year there was no significant change in the state of affairs of the Consolidated Entity other than referred to in the Financial Statements or notes thereto. (k) Subsequent Events No matter or circumstance has arisen since the end of the financial year that has significantly affected or may significantly affect the operation of the Consolidated Entity, the results of those operations, the financial position or the state of affairs of the Consolidated Entity in future financial years. (l) Likely Developments and Future Results Disclosure of information regarding likely developments in the operations of the Consolidated Entity in future financial years and the expected results of those operations is likely to result in unreasonable prejudice to the Consolidated Entity. Accordingly, this information has not been disclosed in this report. 20 Directors’ Report (m) Environmental Regulations The Consolidated Entity’s operations are conducted in environments that are subject to significant environmental regulation under both Commonwealth and State Legislation. The Directors of the Consolidated Entity are conscious of these regulations and understand that good environmental management reduces costs and minimises the impact on the environment. At its Jandakot facility, in Western Australia, Imdex Minerals, a division of Imdex Limited, carries out toll milling of mineral sands in what is a naturally dusty process. The Jandakot area is also a wind prone location. Significant efforts commenced in the prior year to minimise dust emission and the impact of dust on the surrounding area and these continued in the current year. These efforts are reflected in the significant improvement in the environmental performance of Imdex Minerals. Compared to the prior year where four complaints and one Field Notice were issued by the Department of Environmental Protection (DEP), in the current year only one complaint was received from the DEP. This complaint related to dust emissions caused by an unforeseen blockage in one of the processing plants. Imdex Minerals’ staff reacted quickly to this issue and had already rectified it by the time the DEP alerted them of the complaint. This swift response was acknowledged and commended by the DEP, which consequently recommended no further action be taken over the matter. The Consolidated Entity is committed to a program designed to achieve total compliance with environmental regulations. (n) Indemnification of Officers and Auditors During the financial year, the Company paid a premium in respect of a contract insuring the Directors of the Company, the Company Secretary, Mr S J Lyons, and all Executive Officers of the Company and of any related body corporate against a liability incurred as such a Director, Secretary or Executive Officer to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium. The Company has not otherwise, during or since the financial year, indemnified or agreed to indemnify an officer or auditor of the Company or of any related body corporate against a liability incurred as such an officer or auditor. (o) Rounding Off of Amounts The Company is a company of the kind referred to in ASIC Class Order 98/0100, dated 10 July 1998, and in accordance with that Class Order amounts in the Directors’ report and the financial report are rounded off to the nearest thousand dollars. Signed in accordance with a resolution of the Directors made pursuant to S.298(2) of the Corporations Act 2001. On behalf of the Directors Mr I F Burston Chairman PERTH, Western Australia, 19 September 2003 21 Corporate Governance Statement This statement outlines the main Corporate Governance practices in place throughout the year. (a) New ASX Governance Principles and ASX Recommendations On 31 March 2003, the Australian Stock Exchange Corporate Governance Council released its Principles and Best Practice Recommendations (ASX Recommendations) of Good Corporate Governance. Listed companies are obliged to report on whether they follow the ASX Recommendations and to detail any departures from the Recommendations. Imdex will be required to formally report on the ASX Recommendations in its 2004 Annual Report, however as it already broadly complies with the ASX Recommendations we have included in this Statement, details of whether Imdex met the ASX Recommendations and any further work being undertaken. Imdex is in the process of developing a new Corporate Governance section on its website: www.imdex.com.au that will include more information on Imdex’s governance polices and contain the relevant documentation suggested by the ASX Recommendations. (b) The Board of Directors The Board is currently implementing a formal Board Charter outlining the functions and responsibilities of the Board. Imdex’s Board structure is consistent with the ASX Corporate Governance Recommendations, with the exception that it does not have a separate nomination committee for the reasons detailed below. (i) Board Structure The Board consists of a Non Executive Chairman, three Non Executive Directors and one Executive Director. In accordance with the Company’s Constitution the minimum number of Directors is three. There is no maximum number, although it would be expected that the optimal number of Directors would be five or six. The names of the Directors of the Company in office at the date of this Statement are set out in the Directors’ Report and further details concerning the Directors are set out in the Director’s Profiles in the first section of the Annual Report. (ii) Board Independence Directors are expected to bring independent judgement to bear in the decision making of the Board. To facilitate this, each Director has the right to seek independent legal advice at the Consolidated Entity’s expense with the prior approval of the Chairman, which may not be unreasonably withheld. The Board has conducted a review of each Director’s independence and reports as follows: Director Assessment Existence of any matters contained in ASX Recommendation 2.1 affecting Independence Mr I F Burston, Chairman Independent Nil Mr B W Ridgeway, Managing Director Not Independent Managing Director Mr M L Gasson, Non Executive Director Independent Mr Gasson has been a Director of the Company for over 14 years. Despite his length of service however, Mr Gasson and the Board do not believe that this will affect his ability to act in the best interests of the Company. Mr Gasson has retired by rotation and been re-elected by Shareholders during his tenure. Mr H H Al-Merry, Non Executive Director Not Independent Mr Al-Merry is a substantial shareholder of the Company and the principal of Rashid Trading Establishment which is involved as a Joint Venture partner with the Company in the Middle East. Mr G W Cobbledick, Non Executive Director Independent Nil 22 Corporate Governance Statement (iii) Board Nomination The Board does not have a separate nomination committee and, given the Company’s size, the Board does not intend to form such a committee. However, the composition of the Board is determined using the following principles: • The Board should comprise a majority of independent, Non Executive Directors with a broad range of experience, skills and expertise; • The Chairman of the Board should be an independent, Non Executive Director; and • The roles of the Chairman and the Managing Director should not be exercised by the same individual. (iv) Company Code of Conduct The Board is currently implementing a Code of Conduct (Code) which addresses matters relevant to the Company’s legal and other obligations to its stakeholders. The Code, when released, will apply equally to all employees, Directors and officers of the Company. (v) Share Trading Policy The Board is developing a Share Trading Policy that restricts Directors and Senior Management to trading in the Company’s shares at defined periods following the release of certain ASX announcements and otherwise reminds all staff of their responsibilities in relation to Inside Information. Each of the Directors has also signed an agreement requiring them to provide immediate notification to the Company of any changes in securities held, or controlled, by the Director. The Company makes an immediate notification to the ASX providing details of any changes in a Director’s shareholding. (vi) Appointment/Retirement of Non Executive Directors The Company has developed Terms and Conditions which govern the appointment of Non Executive Directors. These are subject to the Company’s Constitution and the Corporations Act 2001, and cover: appointment, retirement, Corporate Governance, remuneration, Board meetings, and Board Committees. The Terms and Conditions are in the process of being adopted by all of the Non Executive Directors. The Board does not impose on Directors an arbitrary time limit on their tenure. Under the Company’s Constitution and the ASX Listing Rules however, each Director must retire by rotation within a three year period following their appointment. In such cases, the Director’s nomination for re-election should be based on performance and the needs of the Company. (vii) Role of the Board and Management The Board is responsible for setting the strategic direction for the Company, establishing goals for management and monitoring the achievement of these goals. The Managing Director is responsible to the Board for the day to day management of the Company. In turn, the senior management is responsible to the Managing Director and the Board relative to their particular areas of responsibility. (viii) Board and Director Performance The Board does not currently have formal processes in place to evaluate the performance of the Board as a whole, individual Directors or the Board’s committees. As part of the introduction of the ASX Recommendations, the Company is in the process of determining the most appropriate way of implementing such processes. The Remuneration Committee will take responsibility, on behalf of the Board, for conducting this review. The Managing Director is responsible for conducting a performance appraisal of senior executives and these are conducted annually. (ix) Directors’ Remuneration Details on the remuneration of Directors are set out in the notes to the Financial Report. The Managing Director’s remuneration is determined by the Chairman. The Chairman seeks independent advice on the appropriateness of the Managing Director’s salary package as required. 23 Corporate Governance Statement (c) The Audit and Compliance Committee The Audit and Compliance Committee consists of three independent Non Executive Directors and operates under a written mandate approved by the Board. The role of the Committee is to advise on the establishment and maintenance of a framework of internal control, risk management protocols and appropriate ethical standards for the management of the Company. It also gives the Board of Directors assurance regarding the quality and reliability of financial information prepared for use by the Board in determining policies for inclusion in Financial Statements. All members of the Committee must be Non Executive Directors. The members of the Audit Committee during the year and at the date of this Statement were: Mr M L Gasson (Chairman); Mr I F Burston; and Mr G W Cobbledick. The experience and qualifications of each committee member is set out in the Directors’ Profiles in the first section of the Annual Report. The external auditors, the Managing Director and the Group Financial Controller are invited to Audit Committee meetings at the discretion of the Committee. The Audit Committee met twice during the year as set out in the Directors’ Report. In future years the Managing Director and the Group Financial Controller will sign a declaration to the Board attesting to the fact that the Company’s financial reports present a true and fair view, in all material respects, of the Company’s financial condition and operational results and are in accordance with relevant accounting standards. (d) External Auditors The Board reviews the performance, skills, cost and other matters when assessing the appointment of external auditors. This review is generally undertaken at the completion of the preparation of the annual Financial Statements and involves discussions with the auditors and the Consolidated Entity's senior management. At the Annual General Meeting held on 31 October 2002, Deloitte Touche Tohmatsu replaced KPMG as the external auditors of the Company. Due to the recent appointment, the external audit engagement partner was not rotated during the year. The external auditors are invited to attend the Annual General Meeting of the Company and to be available to answer questions from Shareholders. (e) Remuneration Committee The Company has recently formed a Remuneration Committee to assist the Board in determining executive remuneration policy, determining the remuneration of Executive Directors and reviewing and approving the remuneration of senior management. The Committee is in the process of developing a written mandate which will be approved by the Board. The Committee consists of three Non Executive Directors, being: Mr I F Burston (Chairman); Mr M L Gasson; and Mr G W Cobbledick. The experience and qualifications of each committee member is set out in the Directors’ Profiles in the first section of the Annual Report. Due to its recent formation, the Remuneration Committee did not meet during the year. One of the tasks for the Remuneration Committee will be to revisit the executive remuneration packages currently in operation and to ensure that they contain a balance between fixed and incentive based pay. 24 Corporate Governance Statement (f) Risk Oversight and Management The Board has sought to minimise the business' risks by focusing on the Company's core business, making changes as outlined in the Chairman’s Report and the Managing Director’s Report. The Board is responsible for ensuring that the Company’s risk management systems are adequate and operating effectively. The Company’s risk management procedures are broadly consistent with the ASX recommendations, however an extensive company-wide review is currently being undertaken to determine whether additional disclosure is required and the form of periodic risk management disclosure. Following the completion of this review, and for future financial reporting purposes, the Managing Director and the Group Financial Controller will attest to the Board on the adequacy of the system of risk oversight, management and internal control. The Company does not have a separate internal audit function and, given the Company’s size, the Board does not intend to implement such a function. The Board believes that through the Board itself, the Audit Committee and the external auditors, there is adequate oversight of the Company’s risk management and internal controls. (g) Business Ethics All Directors, Managers, and Employees are expected to act with the utmost integrity and objectivity, striving at all times to enhance the performance of the Consolidated Entity. Every employee has a nominated supervisor, to whom they may refer any matters arising from their employment. (h) Role of Shareholders The Board of Directors aims to ensure that Shareholders are informed of all major developments affecting the Consolidated Entity's state of affairs. Information is communicated to Shareholders as follows: (i) (ii) the Annual Report is distributed to all Shareholders (unless a Shareholder has specifically requested not to receive the Report). The Board ensures that the Annual Report includes relevant information about the operations of the Consolidated Entity during the year, changes in the state of affairs of the Consolidated Entity and details of future developments, in addition to the other disclosures required by the Corporations Act 2001; the Half Yearly report contains summarised financial information and a review of the operations of the Consolidated Entity during the period. Half year audited Financial Statements prepared in accordance with the requirements of Accounting Standards and the Corporations Act 2001 are lodged with the Australian Securities & Investments Commission and the Australian Stock Exchange. The Financial Statements are sent to any Shareholder who requests them; (iii) regular reports released through the Australian Stock Exchange and the media; (iv) proposed major changes in the Consolidated Entity, which may impact on share ownership rights are submitted to a vote of Shareholders; and (v) the Board encourages full participation by Shareholders at the Annual General Meeting to ensure a high level of accountability and identification with the Consolidated Entity's strategy and goals. Important issues are presented to the Shareholders as single resolutions. The Shareholders are responsible for voting on the appointment of Directors. Further information concerning the Company and the full text of the various announcements and reports referred to above are available on the Company’s website: www.imdex.com.au. Further information can also be obtained by emailing the Company at: imdex@imdex.com.au (i) Timely and Balanced Disclosure The Board has developed a written policy to ensure that it complies with the disclosure requirements of the ASX Listing Rules. This policy, when finalised, will be published in the Corporate Governance section of the Company’s website. 25 Independent Audit Report 26 Independent Audit Report 27 Directors’ Declaration The Directors declare that: (i) (ii) (iii) (iv) the attached Financial Statements and notes thereto comply with Accounting Standards; the attached Financial Statements and notes thereto give a true and fair view of the financial position and performance of the Company and the Consolidated Entity; in the Directors’ opinion, the attached Financial Statements and notes thereto are in accordance with the Corporations Act 2001; and in the Directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. Signed in accordance with a resolution of the Directors made pursuant to S.295(5) of the Corporations Act 2001. On behalf of the Directors Mr I F Burston Chairman PERTH, Western Australia, 19 September 2003 28 Statements of Financial Performance for the year ended 30 June 2003 Note Consolidated Company Revenue from sale of goods Revenue from rendering of services Other revenue from ordinary activities Total Revenue 2 2 2 Share of net (profit)/loss of equity accounted investments 14 Raw materials and consumables used Other expenses from ordinary activities Employee expenses Depreciation and amortisation expenses Borrowing costs Profit/(Loss) from ordinary activities before related income tax expense Income tax benefit/(expense) relating to ordinary activities Profit/(Loss) from ordinary activities after related income tax expense Net Profit/(Loss) Net profit attributable to outside equity interests Net Profit/(Loss) attributable to members of the Parent Entity Total Changes in Equity Other than those Resulting from Transactions with Owners as Owners Basic Earnings per Share (cents) Ordinary Shares Diluted Earnings per Share (cents) Ordinary Shares 2 2 2 4 22 5 5 2003 $’000 26,297 4,326 2002 $’000 27,270 3,390 2003 $’000 2002 $’000 11,032 12,398 – – 288 5,912 ________________________________________________ 18,310 30,911 11,973 35,986 5,326 941 894 15,487 4,990 5,677 1,834 – 19,200 10,088 5,047 1,940 – 5,653 1,826 2,390 1,043 – 8,943 6,979 2,015 956 551 416 ________________________________________________ (999) 1,478 (788) 596 499 465 (570) 362 ________________________________________________ (637) (520) 908 268 592 (4) ________________________________________________ (637) (520) 592 908 – – ________________________________________________ (637) (520) 592 908 – – ________________________________________________ (637) (520) 592 908 ________________________________________________ ________________________________________________ 0.76 (0.50) _______________________ _______________________ 0.76 (0.50) _______________________ _______________________ The Statements of Financial Performance are to be read in conjunction with the notes to the Financial Statements. 29 Statements of Financial Position as at 30 June 2003 Note Consolidated Company 2003 $’000 2002 $’000 2003 $’000 2002 $’000 Current Assets Cash Assets Receivables Inventories Current Tax Assets Other Total Current Assets Non Current Assets Receivables Investments Accounted for using the Equity Method Other Financial Assets Property, Plant and Equipment Exploration, Evaluation and Development Expenditure Deferred Tax Assets Total Non Current Assets Total Assets Current Liabilities Payables Interest Bearing Liabilities Current Tax Liabilities Provisions Total Current Liabilities Non Current Liabilities Interest Bearing Liabilities Deferred Tax Liabilities Provisions Total Non Current Liabilities Total Liabilities Net Assets Equity Contributed Equity Reserves Retained Profits Total Equity 6 7 8 10 11 7 14 9 12 13 10 15 16 10 17 16 10 17 20 21 22 325 7,617 6,723 – 145 7,504 5,223 125 42 2,915 3,345 – 43 3,397 2,386 – 42 10 ________________________________________________ 5,836 ________________________________________________ 13,011 14,707 6,341 39 14 – 8,811 – – 6,379 56 12,027 11,355 686 572 2,243 – 10,029 8,164 686 2,400 – 6,759 8,420 572 605 556 22,129 255 ________________________________________________ 18,406 ________________________________________________ 24,242 ________________________________________________ 21,385 18,918 31,929 27,726 36,836 263 5,573 3,171 561 5,521 4,016 – 2,031 3,042 236 2,829 3,843 20 667 201 ________________________________________________ 6,893 ________________________________________________ 10,072 5,522 9,972 535 213 4,460 489 2,646 694 7,439 421 5,400 651 71 115 5,064 45 ________________________________________________ 6,096 ________________________________________________ 12,989 ________________________________________________ 13,483 13,435 15,036 7,913 3,411 53 ________________________________________________ 11,253 ________________________________________________ ________________________________________________ 18,446 14,291 21,800 21,058 18,612 21,058 18,612 8 8 8 8 734 (7,367) ________________________________________________ 11,253 ________________________________________________ ________________________________________________ 18,446 21,800 14,291 (6,775) (174) The Statements of Financial Position are to be read in conjunction with the notes to the Financial Statements. 30 Statements of Cash Flows for the year ended 30 June 2003 Note Consolidated Company 2003 $’000 2002 $’000 2003 $’000 2002 $’000 Cash flows from Operating Activities Receipts from customers Payments to suppliers and employees Interest received Interest and other costs of finance paid Income taxes paid Net cash provided by/(used in) Operating Activities 34 Cash flows from Investing Activities Payments for property, plant and equipment Proceeds from disposal of property, plant and equipment Proceeds from sale of shares Proceeds from disposal of Controlled Entities Payments for mine development Payments for other assets/investments – Saudi Arabia, Dubai Net cash used in Investing Activities Cash flows from Financing Activities Proceeds from issue of equity securities Payment for share issue costs Advances from Controlled Entities Repayments hire purchase and lease borrowings Proceeds from borrowings Repayment of borrowings Net cash provided by/(used in) Financing Activities Net Increase/(Decrease) in Cash Held Cash at the beginning of the financial year Cash at the end of the financial year 34 34 32,218 30,852 11,992 12,393 (29,487) (30,433) (11,300) (13,538) 12 (407) 9 (391) 10 (405) 9 (378) (131) – ________________________________________________ (1,514) ________________________________________________ 2,205 (245) (282) 270 (27) (2,162) (1,759) (770) (1,113) 223 54 500 (150) (1,325) 227 – 4,156 – 91 54 500 (150) 119 – 4,156 – (3,458) (1,325) (3,458) ________________________________________________ (296) ________________________________________________ (1,600) (2,860) (834) – – – (868) 3,806 3,103 (210) – (1,402) 622 – – 906 (386) 2,726 3,103 (210) 747 (855) 337 (1,000) (1,750) (1,750) ________________________________________________ 1,372 ________________________________________________ (1,000) 2,246 1,938 363 ________________________________________________ (438) ________________________________________________ 1,283 (716) 916 (2,305) ________________________________________________ (2,126) ________________________________________________ (2,564) ________________________________________________ ________________________________________________ (1,648) (2,564) (2,305) (1,022) (1,589) The Statements of Cash Flows are to be read in conjunction with the notes to the Financial Statements. 31 Notes to the Financial Statements 1 Statement of Significant Accounting Policies (a) Financial Reporting Framework The Financial Report is a general purpose Financial Report which has been prepared in accordance with Australian Accounting Standards, Urgent Issues Group Consensus Views, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001. It has been prepared on the basis of historical costs and, except where stated, does not take into account changing money values or fair values of non current assets. (b) Significant Accounting Policies Accounting policies are selected and applied in a manner which ensures that the resulting financial information satisfies the concepts of relevance and reliability, thereby ensuring that the substance of the underlying transactions or other events is reported. The accounting policies have been consistently applied by each entity in the Consolidated Entity and, except where there is a change in accounting policy, are consistent with the previous year. Comparative information has been restated where applicable to ensure consistency. The significant policies which have been adopted in the preparation of this Financial Report are: (c) Principles of Consolidation The consolidated Financial Statements are prepared by combining the financial statements of all the entities that comprise the Consolidated Entity, being the Company (the Parent Entity) and its controlled entities as defined in Accounting Standard AASB 1024 ‘Consolidated Accounts’. A list of controlled entities appears in Note 23 to the Financial Statements. Consistent accounting policies are employed in the preparation and presentation of the consolidated Financial Statements. The consolidated Financial Statements include the information and results of each controlled entity from the date on which the company obtains control and until such time as the company ceases to control such entity. In preparing the consolidated Financial Statements, all intercompany balances and transactions, and unrealised profits arising within the Consolidated Entity are eliminated in full. (d) Revenue Recognition Revenue is recognised at the fair value of the consideration received net of the amount of Goods and Services Tax (GST). Exchanges of goods or services of the same nature and value without any cash consideration are not recognised as revenues. (i) Sale of goods Revenues from sale of goods are recognised (net of returns of discounts and allowances) when the control of goods passes to the customer. (ii) Rendering of services Revenue from rendering services is recognised in the period when the service is provided, having regard to the stage of completion of the contract. (iii) Interest income Interest income is recognised as it accrues. (iv) Sale of Non Current Assets The gross proceeds of non current asset sales are included as revenue at the date control of the asset passes to the buyer, usually when an unconditional contract of sale is signed. The gain or loss on disposal is calculated as the difference between the carrying amount of the asset at the time of disposal and the net proceeds on disposal. 32 Notes to the Financial Statements (e) Goods and Services Tax Revenues, expenses and assets are recognised net of the amount of Goods and Services Tax (GST), except where the amount of GST incurred is not recoverable from the Australian Tax Office (ATO). In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the Statements of Financial Position. Cash flows from operating activities are included in the Statements of Cash Flows on a gross basis. The GST components of cash flows arising from investing and financing activities which are recoverable from, or payable to, the ATO are classified as operating cash flows. (f) Taxation The Consolidated Entity adopts the income statement liability method of tax effect accounting. Income tax expense is calculated on operating profit adjusted for permanent differences between taxable and accounting income. The tax effect of timing differences, which arise from items being brought to account in different periods for income tax and accounting purposes, is carried forward in the Statement of Financial Position as a future income tax benefit or a provision for deferred income tax. Future income tax benefits are not brought to account unless realisation of the assets is assured beyond reasonable doubt. Future income tax benefits relating to tax losses are only brought to account when their realisation is virtually certain. Legislation to allow groups, comprising a parent entity and its Australian resident wholly owned entities, to elect to consolidate and be treated as a single entity for income tax purposes was substantively enacted on 21 October 2002. This legislation, which includes both mandatory and elective elements, is applicable to the Company. Further details concerning the impact of this legislation on the Company are set out at Note 4. (g) Acquisition of Assets (i) Acquisition All assets acquired, including property, plant and equipment are initially recorded at their cost of acquisition at the date of acquisition, being the fair value of the consideration provided plus incidental costs directly attributable to the acquisition. The costs of assets constructed or internally generated by the Consolidated Entity, include the cost of materials and direct labour. Directly attributable overheads and other incidental costs are also capitalised to the asset. Expenditure including that on internally generated assets, is only recognised as an asset when the entity controls future economic benefits as a result of the costs incurred, it is probable that those future economic benefits will eventuate, and the costs can be reliably measured. Costs attributable to feasibility and alternative approach assessment are expensed as incurred. (ii) Subsequent Additional Costs Costs incurred on property, plant and equipment subsequent to initial acquisition are capitalised when it is probable that future economic benefits, in excess of the originally assessed performance of the asset, will flow to the Consolidated Entity in future years. Where these costs represent separate components, they are accounted for as separate assets and are separately depreciated over their useful lives. 33 Notes to the Financial Statements (h) Depreciation and Amortisation (i) Useful Lives All assets have limited useful lives and are depreciated using the straight line or diminishing value method over their estimated useful lives, with the exception of carried forward exploration, evaluation and development costs on areas of interest in production which is amortised on a units of production basis over the life of the economically recoverable reserves and finance lease assets which are amortised over the term of the relevant lease, or where it is likely the Consolidated Entity will obtain ownership of the asset, the life of the asset. Assets are depreciated or amortised from the date of acquisition. Amortisation is not charged on costs carried forward in respect of areas of interest in the development phase until commercial production commences. Depreciation and amortisation rates and methods are reviewed annually for appropriateness. When changes are made, adjustments are reflected prospectively in current and future periods only. Depreciation and amortisation are expensed, except to the extent that they are included in the carrying amount of another asset as an allocation of production overheads. (ii) The depreciation/amortisation rates used for each class of asset are as follows: Buildings Plant and Equipment Leased Plant and Equipment (i) Leased assets 2003 2002 2.5% 10% – 40% 13% – 22.5% 2.5% 10% – 40% 13% – 22.5% Leases of plant and equipment under which the Company or its Controlled Entities assume substantially all of the risks and benefits of ownership, are classified as finance leases. Other leases are classified as operating leases. (i) Finance Leases Finance leases are capitalised. A lease asset and liability equal to the present value of the minimum lease payments are recorded at the inception of the lease. Lease liabilities are reduced by repayments of principal. The interest components of the lease payments are expensed as incurred. Finance lease assets are amortised on a straight line basis over the estimated useful life of the asset. (ii) Operating Leases Payments made under operating leases are recognised as an expense on a basis which reflects the pattern in which economic benefits from the leased assets are consumed. (j) Inventories Inventories are carried at the lower of cost and net realisable value. Cost includes direct materials, direct labour, other direct variable costs and allocated production overheads necessary to bring inventories to their present location and condition, based on normal operating capacity of the production facilities. (i) Manufacturing activities The cost of manufacturing inventories and work in progress are assigned on a first in, first out basis. Costs arising from exceptional wastage are expensed as incurred. 34 Notes to the Financial Statements (ii) Mining activities The cost of mining inventories is determined using a weighted average basis. (iii) Net realisable value Net realisable value is determined on the basis of each inventory line's normal selling pattern. Expenses of marketing, selling and distribution to customers are estimated and are deducted to establish net realisable value. (k) Exploration, Evaluation and Development Expenditure Exploration, evaluation and development costs are accumulated in respect of each separate area of interest. Exploration and evaluation costs are carried forward where right of tenure of the area of interest is current and they are expected to be recouped through sale or successful development and exploitation of the area of interest, or where exploration and evaluation activities in the area of interest have not yet reached a stage that permits reasonable assessment of the existence of economically recoverable reserves. Development costs related to an area of interest are carried forward to the extent that they are expected to be recouped either through sale or successful exploitation of the area of interest. When an area of interest is abandoned or the Directors decide that it is not commercial, any accumulated costs in respect of that area are written off in the financial period the decision is made. Each area of interest is also reviewed at the end of each accounting period and accumulated costs written off to the extent that they will not be recoverable in the future. Provisions are made for mine site rehabilitation and restoration on an incremental basis during the course of mine life (which includes the mine closure phase). Provisions, which are determined on an undiscounted basis, include the following costs: reclamation, plant closure, waste site closure and monitoring activities. These costs have been determined on the basis of current costs, current legal requirements and current technology. Changes in estimates are dealt with on a prospective basis. (l) Recoverable Amounts of Non Current Assets The carrying amounts of Non Current assets valued on the cost basis, other than exploration and evaluation expenditure carried forward, are reviewed to determine whether they are in excess of their recoverable amount at balance date. If the carrying amount of a non current asset exceeds its recoverable amount, the asset is written down to the lower amount. The write down is expensed in the reporting period in which it occurs. Where a group of assets working together supports the generation of cash inflows, recoverable amount is assessed in relation to that group of assets. In assessing recoverable amounts of non current assets, the relevant cash flows have not been discounted to their present value, except where specifically stated. (m) Employee Entitlements (i) Wages, Salaries and Annual Leave The provision for employee entitlements to wages, salaries and annual leave represents the amount which the Consolidated Entity has a present obligation to pay resulting from employees’ services provided up to the balance date. The provision has been calculated at nominal amounts based on the remuneration rate expected to apply at the time of settlement. (ii) Long Service Leave The liability for employee entitlements to long service leave represents the present value of the estimated future cash outflows to be made by the employer resulting from employee’s services provided up to the balance date. Liabilities for employee entitlements which are not expected to be settled within twelve months are discounted using the rates attaching to national government securities at balance date, which most closely match the terms of maturity of the related liabilities. 35 Notes to the Financial Statements In determining the liability for employee entitlements, consideration has been given to future increases in wages and salary rates, and the Consolidated Entity’s experience with staff departures. Related on-costs have also been included in the liability. (iii) Employee Share and Option Plans Imdex Limited has granted options to certain employees under an Employee Share Option Plan. Further information is set out in Note 29 to the Financial Statements. Other than the costs incurred in administering the plan, which are expensed when incurred, the plan does not result in any expense being recognised in the financial report of the Consolidated Entity. (iv) Superannuation Plan The Company and other Controlled Entities contribute to several defined contribution Superannuation plans. Contributions are charged as an expense as they are incurred. Further information is set out in Note 28. (n) Investments (i) Controlled Entities Investments in Controlled Entities are carried in the Company’s Financial Statements at the lower of cost and recoverable amount. (ii) Other Companies Investments in other unlisted companies are carried at the lower of cost and recoverable amount. (iii) Associates Associates are those entities, other than partnerships, over which the Consolidated Entity exercises significant influence and which are not intended for sale in the near future. In the Consolidated Financial Statements, investments in associates are accounted for using equity accounting principles. Investments in associates are carried at the lower of the equity accounted amount and recoverable amount. The Consolidated Entity's equity accounted share of the associates' net profit or loss is recognised in the consolidated statement of financial performance from the date significant influence commences until the date significant influence ceases. Other movements in reserves are recognised directly in consolidated reserves. (o) Joint Ventures Interests in joint venture entities that are: (i) Partnerships are accounted for under the equity method in the company and the consolidated Financial Statements; and (ii) Not partnerships are accounted for under the equity method in the consolidated Financial Statements and the cost method in the company Financial Statements. (p) Accounts Payable Trade payables and other accounts payable are recognised when the Consolidated Entity becomes obliged to make future payments resulting from the purchase of goods and services. 36 Notes to the Financial Statements (q) Provisions Provisions are recognised when the Consolidated Entity has a present obligation, the future sacrifice of economic benefits is probable, and the amount of the provision can be measured reliably. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset if it is probable that recovery will be received and the amount of the receivable can be measured reliably. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cashflows estimated to settle the present obligation, its carrying amount is the present value of those cashflows. (r) Foreign Currency All foreign currency transactions during the financial year are brought to account using the exchange rate in effect at the date of the transaction. Foreign currency monetary items at reporting date are translated at the exchange rate existing at that date. Exchange differences are recognised in net profit or loss in the period in which they arise except that: • • exchange differences which relate to assets under construction for future productive use are included in the cost of those assets; and exchange differences on transactions entered into in order to hedge the purchase or sale of specific goods and services are deferred and included in the measurement of the purchase or sale. (s) Interest Bearing Liabilities Bills of exchange are recorded at an amount equal to the net proceeds received, with the premium or discount amortised over the period until maturity. Interest expense is recognised on an effective yield basis. Debentures, bank loans and other loans are recorded at an amount equal to the net proceeds received. Interest expense is recognised on an accrual basis. Ancillary costs incurred in connection with the arrangement of borrowings are deferred and amortised over the period of the borrowing. (t) Receivables Trade receivables and other receivables are recorded at amounts due less any allowance for doubtful debts. 37 Notes to the Financial Statements 2 Profit from Ordinary Activities Profit from ordinary activities before income tax includes the following items of revenue Operating Revenue Sale of goods Rendering of services Non Operating Revenue Interest from other parties Gross proceeds from sale of non current assets Gross proceeds from sale of controlled entity Management fees from Controlled Entities Grants received Other revenue Total Revenue from Ordinary Activities Consolidated Company 2003 $’000 2002 $’000 2003 $’000 2002 $’000 26,297 27,270 11,032 12,398 4,326 – ________________________________________________ 12,398 30,660 30,623 11,032 3,390 – 12 223 – – 53 9 227 4,850 – 60 10 91 – 840 – 9 119 4,850 920 – – 288 180 14 ________________________________________________ 5,912 ________________________________________________ 18,310 ________________________________________________ ________________________________________________ 35,986 11,973 30,911 5,326 941 – Profit from ordinary activities before income tax includes the following items of revenue and expense Net foreign exchange loss Prepayment write off Stock adjustment Net (gain)/loss on disposal of non current assets – property, plant and equipment Depreciation of non current assets – buildings – plant and equipment Consolidated Company 2003 $’000 2002 $’000 2003 $’000 2002 $’000 73 – – (92) 586 326 625 (1) 94 1,246 1,340 79 1,446 1,525 25 – – 19 94 763 857 459 326 625 (11) 79 776 855 38 Notes to the Financial Statements Amortisation of: – leased assets – exploration, evaluation and development expenditure Borrowing costs: – finance lease liabilities – hire purchase liabilities – other parties Consolidated Company 2003 $’000 2002 $’000 2003 $’000 2002 $’000 458 412 150 98 36 3 ________________________________________________ 101 415 494 186 36 3 – 144 21 86 – 60 – 38 407 378 ________________________________________________ 416 ________________________________________________ 392 499 465 405 551 Bad debts written off – trade debtors 9 14 6 13 Cost of sales 19,507 22,656 7,114 10,200 Operating lease rental expense 390 432 202 198 Other Expenses from Other Activities Commissions Consultancy fees Electricity Repairs and maintenance Freight Communication Travel and accommodation Prepayment write off Stock adjustment Foreign exchange loss Net (gain)/loss on disposal of non-current investment Sale of controlled entity Other expenses 399 404 318 428 186 285 564 – – 58 – – 308 151 297 317 121 251 443 326 625 586 (607) 4,850 97 192 301 268 97 141 51 – – 25 – – 104 96 285 231 110 112 73 326 625 459 (611) 4,850 2,348 319 ________________________________________________ 6,979 ________________________________________________ 10,088 4,990 2,420 1,826 654 39 Notes to the Financial Statements 3 Auditors’ Remuneration Consolidated Company 2003 2002 2003 $ $ $ 2002 $ Audit services: – Auditors of the Company – KPMG Perth – 73,500 – 73,500 – Auditors of the Company – Deloitte Touche Tohmatsu 50,425 – 50,425 – Other services: – Auditors of the Company – KPMG Perth 25,420 61,484 25,420 61,484 – Auditors of the Company – Deloitte Touche Tohmatsu Perth 4 Income Tax The prima facie income tax expense on pre-tax accounting profit reconciles to the income tax expense in the Financial Statements as follows: Profit from ordinary activities before tax Income tax expense/(benefit) calculated at 30% Permanent Differences Tax benefit of losses transferred to a controlled entity Non-deductible share of Joint Venture losses Recoverable amount write off-fixed assets Bad debts Prepayment write-off Deductible share raising costs Taxable/(Non taxable) income Other items Provision for stock obsolescence and adjustment – – ________________________________________________ 134,984 ________________________________________________ ________________________________________________ 134,984 75,845 75,845 – – Consolidated Company 2003 $’000 2002 $’000 2003 $’000 2002 $’000 1,478 (999) ________________________________________________ (300) (236) (788) 443 179 596 – 247 2 – – (13) 7 31 – – – 27 (32) 47 (13) (34) (45) 188 (198) – – 4 – – (13) 7 17 – (190) 16 – 13 – 47 (13) – (22) 188 63 Recognition of net timing differences not previously brought to account (194) 47 (354) ________________________________________________ (362) ________________________________________________ ________________________________________________ (268) 570 (53) 4 – (Over)/under provision of income tax in previous year Income tax expense/(benefit) relating to ordinary activities 40 Notes to the Financial Statements Future income tax benefits not brought to account as assets: Tax losses – revenue Tax losses – capital Timing differences Consolidated Company 2003 $’000 2002 $’000 2003 $’000 2002 $’000 – 135 – – – 135 – – – ___________________________________________________ ___________________________________________________ – – – The taxation benefits of tax losses and timing differences not brought to account will only be obtained if: i. ii. assessable income is derived of a nature and of amount sufficient to enable the benefit from the deductions to be realised; conditions for deductibility imposed by the law are complied with; and iii. no changes in tax legislation adversely affect the realisation of the benefit from the deductions. Tax Consolidation System Legislation to allow groups, comprising a parent entity and its Australian resident wholly owned entities, to elect to consolidate and be treated as a single entity for income tax purposes was substantively enacted on 21 October 2002. This legislation, which includes both mandatory and elective elements, is applicable to the Company. At the date of this report the Directors have not assessed the financial effect, if any, the legislation may have on the Company and the Consolidated Entity and, accordingly, the Directors have not made a decision whether or not to elect to be taxed as a single entity. The financial effect of the implementation of the tax consolidation system on the Consolidated Entity has not been recognised in the Financial Statements. In the event that the tax consolidation system is implemented, the head entity has also agreed to compensate its wholly owned subsidiaries for the carrying amount of their deferred tax balances. 5 Earnings per Share Basic earnings per share Diluted earnings per share Consolidated 2003 2002 Cents Per Share Cents Per Share 0.76 (0.50) 0.76 (0.50) _______________________________________ 41 Notes to the Financial Statements Basic Earnings per share The earnings and weighted average number of ordinary shares used in the calculation of basic earnings per share are as follows: Earnings (a) 908 (520) Note Consolidated 2003 $’000 2002 $’000 ____________________________________ 2003 Number 2002 Number Weighted average number of ordinary shares (a) Earnings used in the calculation of basic earnings per share reconciles to the net result in the statement of financial performance as follows: Net profit/(loss) Earnings used in the calculation of basic EPS Diluted Earnings per share The earnings and weighted average number of ordinary shares used in the calculation of diluted earnings per share are as follows: Earnings (a) Weighted average number of ordinary shares (b) (c) (a) Earnings used in the calculation of diluted earnings per share reconciles to net profit in the statement of financial performance as follows: Net profit Earnings used in the calculation of diluted EPS 118,752,211 104,466,052 ____________________________________ 2003 $’000 908 2002 $’000 (520) ____________________________________ 908 (520) 2003 $’000 2002 $’000 ____________________________________ 908 (520) 2003 Number 2002 Number 118,752,211 104,556,961 ____________________________________ 2003 $’000 908 2002 $’000 (520) ____________________________________ 908 (520) Options outstanding to Directors and Employees, under their respective option plans, have been classified as potential ordinary shares and considered for the purpose of calculating the diluted earnings per share only. 42 Notes to the Financial Statements (b) Weighted average number of ordinary shares and potential ordinary shares used in the calculation of diluted earnings per share reconciles to the weighted average number of ordinary shares used in the calculation of basic earnings per share as follows: Weighted average number of ordinary shares used in the calculation of basic EPS Shares deemed to be issued for no consideration in respect of employee and Director options Weighted average number of ordinary shares and potential ordinary shares used in the calculation of diluted EPS 2003 Number 2002 Number 118,752,211 104,466,052 ____________________________________ – 90,910 118,752,211 104,556,962 ____________________________________ ____________________________________ (c) The following potential ordinary shares are not dilutive and are therefore excluded from the weighted average number of ordinary shares used in the calculation of diluted earnings per shares 2003 Number 2002 Number Employee and Director options 6 Cash Assets Cash 7 Receivables Current Receivables Allowance for doubtful debts 6,050,000 5,890,000 ____________________________________ Consolidated Company 2003 $’000 2002 $’000 2003 $’000 2002 $’000 325 43 ________________________________________________ ________________________________________________ 145 42 Note Consolidated Company 2003 $’000 2002 $’000 2003 $’000 2002 $’000 8,151 7,581 3,116 2,958 (592) (136) ________________________________________________ 2,822 7,559 6,912 2,869 (247) (669) Other receivables (i) Non current Loans to Controlled Entity 58 575 ________________________________________________ 3,397 ________________________________________________ ________________________________________________ 7,617 7,504 2,915 592 46 – 2,400 ________________________________________________ 2,400 ________________________________________________ ________________________________________________ 2,243 2,243 – – – (i) Included in the 2002 balance is an amount of $500,000 representing the deferred proceeds of the sale of Australian Vermiculite Industries Pty Ltd – refer Note 23. 43 Notes to the Financial Statements 8 Inventories Raw materials Finished goods 9 Other Financial Assets Non current Investment in other Entities - RTE/Imdex Saudi Arabian Joint Venture Investments in Controlled Entities – at recoverable amount Investment in listed securities – at recoverable amount 10 Tax Assets/Liabilities Current tax assets Tax refund receivable Non current tax assets Future income tax benefit arising from timing differences Current tax liabilities Tax payable Non current Deferred tax liability 44 Consolidated Company 2003 $’000 2002 $’000 2003 $’000 2002 $’000 1,296 774 1,296 774 5,427 4,449 1,612 ________________________________________________ 2,386 ________________________________________________ ________________________________________________ 2,049 3,345 6,723 5,223 Consolidated Company 2003 $’000 2002 $’000 2003 $’000 – – – – 9,705 324 2002 $’000 6,379 324 – 56 ________________________________________________ 6,759 ________________________________________________ ________________________________________________ 10,029 56 56 – – Consolidated Company 2003 $’000 2002 $’000 2003 $’000 2002 $’000 – ________________________________________________ 125 – – 255 ________________________________________________ 605 556 263 20 ________________________________________________ 236 561 – 651 ________________________________________________ 421 489 694 Notes to the Financial Statements Consolidated Company 2003 $’000 2002 $’000 2003 $’000 2002 $’000 10 ________________________________________________ ________________________________________________ 39 14 42 11 Other Assets Prepayments 12 Property, Plant and Equipment Consolidated Freehold Land at cost (i) Freehold Buildings at cost (i) Plant and Equipment Equipment at cost under finance lease at cost Capital works in progress at cost TOTAL $’000 $’000 $’000 $’000 $’000 $’000 Gross Carrying Value Balance at 30 June 2002 875 2,906 10,799 Additions Disposals Transfer Balance at 30 June 2003 Accumulated Depreciation/Amortisation Balance at 30 June 2002 Disposals Depreciation expense Balance at 30 June 2003 Net book value As at 30 June 2002 As at 30 June 2003 – – 14 – 950 (348) 2,512 1,639 (58) 411 17,503 3 – 2,606 (406) – – ____________________________________________________________________________ 19,703 ____________________________________________________________________________ 11,388 4,106 2,920 414 875 (13) 13 – – – – 548 – 4,917 (259) 683 (11) – – 6,148 (270) – 94 1,798 ____________________________________________________________________________ 7,676 ____________________________________________________________________________ 1,246 5,904 1,130 458 642 – – – 875 2,358 11,355 ____________________________________________________________________________ ____________________________________________________________________________ 12,027 ____________________________________________________________________________ ____________________________________________________________________________ 5,484 1,829 5,882 2,278 2,976 414 411 875 45 Notes to the Financial Statements Company Freehold Land at cost (i) Freehold Buildings at cost (i) Plant and Equipment Equipment at cost under finance lease at cost Capital works in progress at cost TOTAL $’000 $’000 $’000 $’000 $’000 $’000 875 – 2,906 14 7,170 235 1,074 570 411 3 12,436 822 – (111) ____________________________________________________________________________ 13,147 ____________________________________________________________________________ 7,352 1,586 2,920 414 875 (53) (58) – – – – 548 – 3,228 (29) 240 (11) – – 4,016 (40) – 94 1,007 ____________________________________________________________________________ 4,983 ____________________________________________________________________________ 3,962 763 150 379 642 – – – 875 2,358 8,420 ____________________________________________________________________________ ____________________________________________________________________________ 8,164 ____________________________________________________________________________ ____________________________________________________________________________ 3,390 1,207 3,942 2,278 411 414 834 875 Gross Carrying Value Balance at 30 June 2002 Additions Disposals Balance at 30 June 2003 Accumulated Depreciation/Amortisation Balance at 30 June 2002 Disposals Depreciation expense Balance at 30 June 2003 Net book value As at 30 June 2002 As at 30 June 2003 (i) Land and buildings located at 7–15 Spencer Street, Jandakot, Western Australia and 1 Tichbourne Street, Jandakot, Western Australia, were independently valued in September 2002 by N F Freshwater AAPI (Certified Practising Valuer), of Jones Lang LaSalle, on the basis of existing use at $3,450,000. At 30 June 2003 the carrying value of the land and buildings was $3,153,000. Aggregate depreciation/amortisation allocated, whether recognised as an expense or capitalised as part of the carrying amount of other assets during the year: Freehold Buildings Plant and Equipment Equipment under finance lease 46 Consolidated Company 2003 $’000 2002 $’000 2003 $’000 2002 $’000 94 1,246 79 1,446 94 763 79 776 458 98 ________________________________________________ 953 ________________________________________________ ________________________________________________ 1,937 1,798 1,007 150 412 Notes to the Financial Statements 13 Exploration, Evaluation and Development Expenditure Costs carried forward in respect of areas of interest in production phase: – At cost – Accumulated amortisation Consolidated Company 2003 $’000 2002 $’000 2003 $’000 2002 $’000 894 744 894 744 (208) (172) (172) ________________________________________________ 572 ________________________________________________ ________________________________________________ (208) 572 686 686 Cost Balance at the beginning of the financial year 744 744 744 744 Expenditure incurred Balance at the end of the financial year Acculmulated Amortisation 150 – ________________________________________________ 744 ________________________________________________ 744 150 894 894 – Balance at the beginning of the financial year 172 169 172 169 Amortisation charge Balance at the end of the financial year 36 3 ________________________________________________ 172 ________________________________________________ 208 172 208 36 3 No Government subsidies or grants were received in respect of these areas of interest. 14 Investments accounted for using the Equity method (a) Details of Joint Venture entities Percentage interest held Investment Carrying Amount Name Note Principal Balance 2003 2002 2003 2002 Imdex International FZC (Dubai) RTE International (Dubai) RTE/Imdex Saudi Arabian Joint Venture Activities Date % (i) (i) Oil & Gas 31 Dec Oil & Gas 31 Dec – – % 49% 49% $’000 $’000 – – – – (ii) Oil & Gas 31 Dec 49% 49% 8,811 6,379 (i) (ii) During the 2003 financial year, Imdex relinquished its interest in RTE International and Imdex International, a free zone company, based in Sharjah, was wound up. The reason for this action was to focus on the RTE/Imdex Saudi Arabian Joint Venture. Imdex may examine re-entering markets based out of Dubai once the financial and operating performance of the Saudi Arabian Joint Venture has been consolidated; This represents the RTE/Imdex Saudi Arabian Joint Venture in the Kingdom of Saudi Arabia (KSA). The investment provides drilling fluids and chemicals to the oil and gas business in KSA. Imdex holds a 49% equity interest in the Venture, with Rashid Trading Establishment (RTE) holding the remaining 51%. RTE is a Saudi based entity in which Mr H H Al-Merry, a Director of Imdex, is the President and Owner. On 7 June 2001, Imdex and RTE entered into a formal Shareholders’ Agreement which set out the nature and terms of the Joint Venture and also provided for the formation and registration of Imdex Arabia Company Ltd. In compliance with the laws in the KSA, the Shareholders’ Agreement also provides for RTE to act as agent for the Joint Venture. 47 Notes to the Financial Statements (b) Movements in Investments in Joint Venture entities The following is a summary of the movement in the carrying value of the RTE/Imdex Saudi Arabian Joint Venture. Equity accounted amount of investment at the beginning of the financial year Initial acquisition of interests in associate Issue of shares to Mr H H Al-Merry on the issuance of the formal Certificate of Registration for Imdex Arabia Company Ltd Formation capital for Imdex Arabia Company Ltd and additional establishment costs Note Consolidated 2003 $’000 2002 $’000 6,379 – – 6,379 20 2,000 1,326 – – Share of losses (e) Equity accounted amount of investment at the end of the financial year (c) Share of Assets and Liabilities in Joint Venture entities The following is a summary of the financial position of the Joint Venture entities at year end. Current assets Receivables Inventories Other Non current assets Property, plant and equipment Other Current liabilities Payables Interest bearing liabilities Non current liabilities Other Net assets (d) Share of Reserves attributable to Joint Venture entities Retained profit/(loss) At the beginning of the financial year At the end of the financial year 48 (894) – _______________________ 6,379 _______________________ _______________________ 8,811 Consolidated 2003 $’000 2002 $’000 1,210 1,651 49 68 662 1,783 3,085 115 887 662 (3,746) – (5,973) (559) (4) – _____________________ – _____________________ (110) – – (894) _____________________ – Notes to the Financial Statements (e) Share of Net Result of Joint Venture Entities The following is a summary of the aggregate share of results from the RTE/Imdex Saudi Arabian Joint Venture. Revenue from ordinary activities Expenses from ordinary activities Profit/(Loss) from ordinary activities before income tax Income tax (expense)/benefit on ordinary activities Share of net profit/(loss) of associates after income tax Consolidated 2003 $’000 2002 $’000 10,731 – (11,646) – _____________________ – (915) 21 – _____________________ – _____________________ _____________________ (894) (f) Contingent Liabilities and Capital Commitments The Consolidated Entity does not have any contingent liabilities or capital commitments in relation to its interest in the RTE/Imdex Saudi Arabian Joint Venture. 15 Payables Trade payables Other payables Consolidated Company 2003 $’000 2002 $’000 2003 $’000 2002 $’000 4,912 4,438 1,764 2,079 661 1,083 750 ________________________________________________ 2,829 ________________________________________________ ________________________________________________ 5,521 5,573 2,031 267 16 Interest Bearing Liabilities Note Consolidated Company 2003 $’000 2002 $’000 2003 $’000 2002 $’000 Current Bank overdraft (i) Bank loan – secured (i) Finance lease liabilities (ii) Hire purchase liabilities (ii) 34 28 28 1,347 1,000 29 2,450 1,000 94 1,690 1,000 15 2,607 1,000 82 795 154 ________________________________________________ 3,843 ________________________________________________ ________________________________________________ 4,016 3,171 3,042 472 337 49 Notes to the Financial Statements Non current Bank loan – secured (i) Finance lease liabilities (ii) Hire purchase liabilities (ii) Loans from Controlled Entities Note Consolidated Company 2003 $’000 2002 $’000 2003 $’000 2002 $’000 28 28 2,950 – 1,510 1,750 29 867 2,950 – 400 1,750 15 295 – 3,340 ________________________________________________ 5,400 ________________________________________________ ________________________________________________ 4,089 2,646 7,439 4,460 – Financing Arrangements The Consolidated Entity has access to the following lines of credit: (a) Total facilities available Bank loan Foreign currency dealing limit Equipment finance facility Multi option facility (including bank overdraft) (b) Facilities utilised at balance date Bank loan Equipment finance facility Multi option facility (including bank overdraft) (c) Facilities not utilised at balance date Bank loan Foreign currency dealing limit Equipment finance facility Multi option facility (including bank overdraft) 3,950 100 500 2,750 100 500 3,950 100 500 2,750 100 500 1,800 4,100 ________________________________________________ 7,450 ________________________________________________ 7,450 6,350 1,800 4,100 6,350 3,950 372 2,750 248 3,950 48 2,750 43 1,407 2,851 ________________________________________________ 5,644 ________________________________________________ 3,260 5,729 1,407 6,258 5,405 – 100 128 – 100 252 – 100 452 – 100 457 393 1,249 ________________________________________________ 1,806 ________________________________________________ 1,192 840 393 945 621 (i) Bank Overdraft and Bank Loans The bank overdraft together with the other loan facilities are secured by a registered mortgage over the Company’s freehold land and a registered debenture over all of the Consolidated Entity’s assets. The loan is subject to a cross guarantee and indemnity between the Challenge Bank and Imdex limited, Australian Mud Company Limited and Surtron Technologies Pty Ltd. The bank overdraft is repayable on demand and is subject to regular review. The weighted average interest rate for the overdraft and bank loans is set out in Note 24. (ii) The finance and hire purchase liabilities are secured over the assets to which they relate. Assets Pledged as Security In accordance with the security arrangements of liabilities, as disclosed above, effectively all non current assets of the Consolidated Entity, except goodwill and deferred tax assets, have been pledged as security. 50 Notes to the Financial Statements Note Consolidated Company 2003 $’000 2002 $’000 2003 $’000 2002 $’000 27 (i) 27 595 72 201 – ________________________________________________ 201 ________________________________________________ ________________________________________________ 529 6 213 – 535 667 213 115 45 ________________________________________________ ________________________________________________ 53 71 17 Provisions Current Employee entitlements Other Non current Employee entitlements (i) Movements in Other Provisions Balance at the beginning of the financial year Additional provisions recognised Reduction from payments Balance at the end of the financial year 18 Employee Entitlements The aggregate employee benefit liability recognised and included in the Financial Statements is as follows: Provision for employee entitlements Current Non Current 6 66 – – – – ________________________________________________ – ________________________________________________ ________________________________________________ – 6 – – – – 72 6 – 595 115 201 45 ________________________________________________ 246 ________________________________________________ ________________________________________________ 529 71 213 53 600 710 266 51 Notes to the Financial Statements 19 Amounts Payable/Receivable in Foreign Currencies United States Dollars Amounts payable – current Amounts receivable – current Chilean Pesos Amounts payable – current Amounts receivable – current Euro Dollars Amounts payable – current Papua New Guinea Kina Amounts payable – current Canadian Dollars Amounts payable – current Hong Kong Dollars Amounts payable – current 20 Contributed Equity Issued and paid up capital Fully paid ordinary shares Consolidated Company 2003 $’000 2002 $’000 2003 $’000 2002 $’000 1,072 1,755 959 2,405 30 254 663 963 – 91 18 4 3 6 1 126 – 1 – – – – 18 – 3 – – – – – – – Consolidated Company 2003 $’000 2002 $’000 2003 $’000 2002 $’000 21,058 18,612 ________________________________________________ ________________________________________________ 21,058 18,612 Fully paid ordinary shares carry one vote per share and the right to dividends. 52 Notes to the Financial Statements 2003 2002 Note Number of shares $’000 Number of shares $’000 Ordinary shares Balance at beginning of financial year Share placement to clients of Bell Potter Consideration for cancellation of the Carmody Management Agreement Transaction costs arising from the issue of shares Issue of shares - 6 September 2002 Issue of shares to Mr H H Al-Merry Balance at the end of financial year (i) 107,881,455 18,612 95,997,231 15,515 – – – – – – 2,173,913 446 10,884,224 3,102 1,000,000 – – 205 (210) – 10,000,000 – ___________________________________________________ 18,612 ___________________________________________________ ___________________________________________________ 107,881,455 120,055,368 21,058 2,000 – (i) On 29 July 2002, the formal Certificate of Registration for Imdex Arabia was issued. In accordance with the Shareholders’ Agreement dated 7 June 2001 between Imdex Limited and Rashid Trading Establishment (RTE), the 51% Joint Venture party, Imdex issued 10,000,000 shares to Mr Al-Merry, the Principal of RTE. 21 Reserves Asset revaluation 22 Retained Profits/(Accumulated Losses) Retained profits/(accumulated losses) at the beginning of the year Net profit/(loss) attributable to members of the parent entity Retained profits/(accumulated losses) at the end of the year Consolidated Company 2003 $’000 2002 $’000 2003 $’000 2002 $’000 8 ________________________________________________ ________________________________________________ 8 8 8 Consolidated Company 2003 $’000 2002 $’000 2003 $’000 2002 $’000 (174) 346 (7,367) (6,730) (637) ________________________________________________ (520) 908 592 734 (7,367) ________________________________________________ ________________________________________________ (6,775) (174) 53 Notes to the Financial Statements 23 Controlled Entities (a) Particulars in relation to Controlled Entities Name Imdex Limited Country of incorporation Percentage interest held Note (i) Australia 2003 % 2002 % Controlled Entities of the Parent Company Australian Mud Company Limited Surtron Technologies Pty Ltd Australian Mud Company Chile SA (ii) (i) (ii) Ultimate parent Company. Under Chilean law an audit of this Company is not required. (b) Disposal of Controlled Entities Australia Australia Chile 100 100 100 100 100 100 On 28 February 2002 the Consolidated Entity sold its 100% interest in Australian Vermiculite Industries Pty Ltd. The trading results have been included with those of the Consolidated Entity in the prior financial year. Note 7 Consideration Received in cash Deferred receivable Less: repayment of inter-company loan Less: disposal costs Net proceeds from sale Net assets of entity disposed of: Cash Assets Receivables Inventories Property, plant and equipment Reserves Current tax benefit Payables Borrowings Other provisions Net assets disposed Profit on disposal Interest held after disposal Net cash inflow on disposal Cash consideration received Cash disposal costs Less cash balances disposed 54 Consolidated 2003 $’000 2002 $’000 – 4,350 – 500 _____________________ 4,850 – – (1,159) – (1,089) _____________________ 2,602 – – – – – – – – – 16 497 756 276 1,977 61 (349) (1,231) – (8) _____________________ 1,995 – – 607 _____________________ – – – – 4,350 (178) – (16) _____________________ 4,156 _____________________ _____________________ – Notes to the Financial Statements 24 Additional Financial Instruments Disclosure (a) Interest rate risk The Consolidated Entity’s exposure to interest rate risk and the effective weighted average interest rate for classes of financial assets and liabilities are set out below: Fixed Interest Maturing in: Note Weighted Floating average interest interest rate rate Less than 1 year 1 to 5 years More than Non-interest Total 5 years bearing % $’000 $’000 $’000 $’000 $’000 $’000 2003 Financial Assets Cash Receivables Other financial assets 6 7 9 – – – – – – – – – – 325 7,617 325 7,617 – – __________________________________________________________________________________ – – – – – Financial Liabilities Payables 15 – – – 16 7.05% 3,797 Bank overdraft and Loans Hire purchase/ lease liabilities Employee entitlements – – – – – 1,500 – – – – 7,942 7,942 5,573 5,573 – – 5,297 2,334 16 7.52% – 824 1,510 17 (i) 5.97% 710 – __________________________________________________________________________________ 710 – – – 2002 Financial Assets Cash Receivables Other financial assets 6 7 9 3,797 824 3,010 – – – – – – – – – – – 6,283 13,914 145 7,504 145 7,504 56 – __________________________________________________________________________________ 56 – – – – Financial Liabilities Payables 15 – – – 16 7.48% 3,200 Bank overdraft and loans Hire purchase/ Lease liabilities Employee entitlements – – – – – 2,000 – – – – 7,705 7,705 5,521 5,521 – – 5,200 1,462 16 7.47% – 566 896 17 (i) 5.97% 600 – __________________________________________________________________________________ 600 – – – 3,200 566 2,896 – 6,121 12,783 (i) Employee entitlements to be settled in cash fall under the definition of financial liabilities. The weighted average interest rate is the discount rate used to calculate long service leave liability. 55 Notes to the Financial Statements (b) Net fair values of financial assets and liabilities The carrying amount of financial assets and financial liabilities recorded in the Financial Statements approximates their net fair values. (c) Credit Risk Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Consolidated Entity. The Consolidated Entity has adopted the policy of only dealing with creditworthy counterparties and obtaining sufficient collateral or other security where appropriate, as a means of mitigating the risk of financial loss from defaults. The Consolidated Entity measures credit risk on a fair value basis. The Consolidated Entity does not have any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. 25 Directors’ Remuneration Consolidated Company 2003 2002 2003 $ $ $ 2002 $ The aggregate of income paid or payable, or otherwise made available, in respect of the financial year, to all Directors of the Company and each entity in the Consolidated Entity, directly or indirectly, by the entities in which they are Directors or by any related party. 298,399 348,758 ________________________________________________ ________________________________________________ 446,222 298,399 The number of Directors of the Company whose aggregate income paid or payable, or otherwise made available, falls within each successive $10,000 band of income: Company 2003 2002 $0 – $9,999 $10,000 $20,000 $50,000 $60,000 $90,000 $180,000 $200,000 – – – – – – – $19,999 $29,999 $59,999 $69,999 $99,999 $189,999 $209,999 1 1 1 1 – – – 1 1 1 1 1 1 1 1 – 56 Notes to the Financial Statements 26 Executives’ Remuneration Total income paid, or payable, or otherwise made available, to Executive Officers of the Company and Controlled Entities (including Directors) whose income is $100,000 or more. The number of Australian based Executive Officers of the Company and of Consolidated Entities (including Directors), whose remuneration from the Company or related parties, and from entities in the Consolidated Entity, falls within the following bands: $130,000 – $139,999 $160,000 – $169,999 $180,000 – $189,999 $190,000 – $199,999 $200,000 – $209,999 Consolidated Company 2003 2002 2003 $ $ $ 2002 $ 558,645 325,222 ________________________________________________ ________________________________________________ 366,670 492,237 Consolidated Company 2003 2002 2003 2002 – 1 – 1 1 1 1 1 – – – 1 – – 1 1 – 1 – – Executive Officers are those officers involved in the strategic direction, general management or control of the business at a company or operating divisional level. 57 Notes to the Financial Statements 27 Employee Entitlements The present values of employee entitlements not expected to be settled within twelve months of balance date have been calculated using the following weighted averages. Assumed rate of increase in wage and salary rates Discount rate Settlement term (years) Number of employees at year end 28 Commitments Note Consolidated Company 2003 $’000 2002 $’000 2003 $’000 2002 $’000 17 710 600 266 246 3% 5.97% 15 3% 5.97% 15 3% 5.97% 15 3% 5.97% 15 41 ________________________________________________ 101 43 93 Note Consolidated Company 2003 $’000 2002 $’000 2003 $’000 2002 $’000 Operating Lease Expense Commitments (i) Future operating lease commitments contracted for at balance date, but not provided for in the Financial Statements are as follows. Due: Within one year Between one and five years Later than five years Hire Purchase Commitments (ii) Hire purchase commitments are payable as follows. Due: Within one year Between one and five years Later than five years Less: future finance charges Hire purchase liabilities provided for in the Financial Statements 16 16 Current Non current 58 291 436 386 390 165 297 217 129 – – ________________________________________________ 346 ________________________________________________ ________________________________________________ 727 776 462 – – 936 1,661 548 944 376 426 181 321 – – ________________________________________________ 502 2,597 1,492 802 – – (292) (53) ________________________________________________ 449 ________________________________________________ ________________________________________________ 1,339 2,305 (153) 737 (65) 795 472 337 154 1,510 295 ________________________________________________ 449 ________________________________________________ ________________________________________________ 1,339 2,305 400 867 737 Notes to the Financial Statements Note Consolidated Company 2003 $’000 2002 $’000 2003 $’000 2002 $’000 Finance Lease Payment Commitments (ii) Finance lease commitments are payable as follows. Due: Within one year Between one and five years Later than five years Less: Future lease finance charges Finance lease liabilities provided for in the Financial Statements Current Non current 16 16 29 – 97 31 15 – 85 16 – – ________________________________________________ 101 128 29 15 – – – (4) ________________________________________________ 97 ________________________________________________ ________________________________________________ 123 29 15 (5) – 29 94 15 82 – 15 ________________________________________________ 97 ________________________________________________ ________________________________________________ 123 29 15 29 – (i) (ii) Operating leases relate to premises used by the Consolidated Entity in its operations, generally with terms between 2 and 5 years. Some of the operating leases contain options to extend for further periods and an adjustment to bring the lease payments into line with market rates prevailing at that time. The leases do not contain an option to purchase the leased property; Finance and hire purchase leases relate to plant and equipment used by the Consolidated Entity in its operations with lease terms generally between 3 and 5 years. The Consolidated Entity has options to purchase the equipment for a nominal amount at the end of the lease term. Superannuation Commitments The Company and its Controlled Entities contribute to various defined benefit employee superannuation funds in accordance with the requirements of the Superannuation Guarantee Administration Act 1992. The contributions are based on a percentage of employee gross salaries. All employees are entitled to benefit on retirement, disability or death. The Company and its Controlled Entities are under no legal obligation to make up any shortfall in the funds assets to meet payments due to employees. 59 Notes to the Financial Statements 29 Share Option Plans The Consolidated Entity has in place a Staff Option Scheme (Scheme) to reward employees for their past services as well as provide an incentive for future efforts. The Terms and Conditions of the Scheme are set out in the Scheme Rules with the Board of Directors responsible for the administration of the Scheme. The options carry no rights to dividends and no voting rights. The options expire on their expiry date and may be exercised at any time prior to the expiry date. Generally the options will also be taken to have expired when the option holder ceases to be employed by the Consolidated Entity. The options existing at year end are set out below. The options issued to the Directors have been approved by members in general meeting. The options carry no rights to dividends and no voting rights. The options expire on their expiry date or three calendar months of ceasing to be a Director. Issue Date Expiry Date Exercise Price $ Opening balance year Issued current year Lapsed current (i) Closing balance Employee Options Employee Options – Tranch 1 Employee Options – Tranch 2 Employee Options – Tranch 3 Employee Options – Tranch 4 Directors’ Options Directors’ Options – Tranch 1 Directors’ Options – Tranch 2 Directors’ Options – Tranch 3 31 Jan 01 31 Jan 04 0.25 1,810,000 31 Jan 01 31 Jan 04 0.45 1,000,000 10 Jan 02 31 Jan 04 0.25 80,000 – – – 110,000 1,700,000 – 1,000,000 30,000 50,000 28 Feb 03 31 Jan 04 0.25 – 300,000 – 300,000 ___________________________________________________ 2,890,000 300,000 140,000 3,050,000 ___________________________________________________ ___________________________________________________ 25 Oct 01 24 Oct 04 0.20 1,000,000 25 Oct 01 24 Oct 04 0.35 1,000,000 25 Oct 01 24 Oct 04 0.45 1,000,000 – – – – – – 1,000,000 1,000,000 1,000,000 ___________________________________________________ 3,000,000 – – 3,000,000 ___________________________________________________ ___________________________________________________ (i) Options lapsed relate to employees who have left their employ with the Consolidated Entity during the year. 60 Notes to the Financial Statements 30 Contingent Liabilities The details and estimated maximum amounts of contingent liabilities that may become payable are set out below. Note Consolidated Company 2003 $’000 2002 $’000 2003 $’000 2002 $’000 Indemnity to power transmission utility Rental bond Department of Mines Minister of State Development (i) (i) (i) (i) 16 20 27 16 20 27 16 20 27 16 20 27 12 12 ________________________________________________ 75 ________________________________________________ ________________________________________________ 12 12 75 75 75 (i) Comprise bank guarantees supporting the extension of credit or the performance of the Consolidated Entity in respect of its operations. The Directors are not aware of any circumstance or information which would lead them to believe that these liabilities will crystallise and consequently no provisions are included in the Financial Statements in respect of these matters. No material losses are anticipated in respect of any of the guarantees. 31 Segment Information Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items mainly comprise income-earning assets and revenue, interest-bearing loans, borrowings and expenses, and corporate assets and expenses. Segment capital expenditure is the total cost incurred during the period to acquire segment assets that are expected to be used for more than one period. Business Segments The Consolidated Entity comprises the following main business segments, based on the Consolidated Entity's management reporting system: (i) Drilling Services: Downhole surveying, geophysical logging and directional drilling; (ii) Minerals Processing: Milling and processing of industrial minerals; (iii) Drilling Fluids, Chemicals and Equipment: Manufacture and supply of drilling fluids and chemicals to the mining, mineral exploration, oil and gas and water well drilling industries; and (iv) Vermiculite Production: mining, processing and sale of vermiculite (sold during the prior year). Geographical Segments In presenting information on the basis of geographical segments, segment revenue is based on geographical location of customers. Segment assets are based on the geographical location of the assets. The Consolidated Entity's business segments operate geographically as follows: (i) Australia: Drilling Services, milling and processing of industrial minerals, manufacture and supply of drilling fluids, chemicals and equipment and vermiculite production/sale; (ii) Saudi Arabia: Supply of drilling fluids and chemicals to the oil and gas industry; (iii) Chile: Supply of drilling fluids and chemicals to the mining and mineral exploration industries; and (iv) South East Asia: Manufacture and supply of drilling fluids and chemicals to the mining and mineral exploration industries. 61 Notes to the Financial Statements 8 6 2 ) 0 7 5 ( _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ ) 8 8 7 ( 8 7 4 , 1 ) 0 0 5 ( ) 7 2 7 ( _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ – 7 2 2 3 5 1 2 2 9 8 8 , 0 3 3 2 6 , 0 3 0 _ _ 7 _ 8 _ , _ 4 _ _ _ _ _ _ 4 _ _ 1 _ _ _ _ _ _ 6 _ _ 8 _ 9 _ , _ 5 _ 3 _ _ _ _ _ 1 _ _ 1 _ 9 _ , 0 _ _ 3 _ _ – – 7 4 9 , 1 – ) 4 9 8 ( ) 8 8 2 ( 9 9 0 , 3 – – ) 3 6 1 ( 6 1 1 3 0 7 6 2 3 5 2 6 7 0 6 4 6 4 9 9 8 6 1 – – 4 2 8 , 1 5 3 7 , 1 ) 0 _ _ 2 _ 5 _ ( _ _ _ _ _ _ _ 8 _ _ 0 _ 9 _ _ _ _ _ – – – – – – – – 2 2 1 – – – – – – – – – – – 0 6 2 5 1 6 9 3 5 – – – – – 3 6 0 1 7 6 1 , 5 9 0 0 2 , 2 4 8 8 , 2 0 2 6 , 0 9 3 3 , – 5 2 1 6 2 3 , 4 s t e s s a t n e r r u c n o n f o l e a s m o r f s d e e c o r P e u n e v e r r e h O t l s e a s l a n r e x E t 3 1 7 3 1 1 2 , ) 4 2 3 ( 2 7 9 ) 4 1 5 ( 4 1 y t i u q e f o t l u s e r / s s o l r o t i f o r p t e n f o e r a h S t l u s e r t n e m g e S t l u s e R e u n e v e r l a t o T t d e a c o l l a n U 6 4 4 1 6 4 1 5 5 3 4 6 5 0 7 1 3 6 7 7 5 1 4 1 6 2 9 1 0 0 1 – – – – 6 2 3 5 2 6 – – – – 8 – – n o i t a i c e r p e d n a h t r e h o t s e s n e p x e h s a c n o N n o i t a s i t r o m a d n a n o i t a s i t r o m a d n a s e i t i v i t c a i y r a n d r o m o r f t i f o r P e s n e p x e x a t e m o c n I x a t e m o c n i e r o f e b s e i t i v i t c a i y r a n d r o m o r f t i f o r P x a t e m o c n i r e t f a n o i t a s i t r o m a d n a n o i t a i c e r p e D n o i t a i c e r p e d t d e a c o l l a n u r e h O t s m e t i t n a c i f i n g i s y l l i a u d v d n i I f f o e t i r w t n e m y a p e r P t n e m t s u d a j k c o S t i y r a d i s b u s f o l e a s n o t i f o r P t c a r t n o c e g n a h c x e n o s s o L d e t a c o l l a n U s e s n e p x e t e a r o p r o c t d e a c o l l a n U s t n e m t s e v n i t d e n u o c c a 2 0 0 2 0 0 0 $ ' 3 0 0 2 0 0 0 $ ' 2 0 0 2 0 0 0 $ ' 3 0 0 2 0 0 0 $ ' 2 0 0 2 0 0 0 $ ' 3 0 0 2 0 0 0 $ ' 2 0 0 2 0 0 0 $ ' 3 0 0 2 0 0 0 $ ' 2 0 0 2 0 0 0 $ ' 3 0 0 2 0 0 0 $ ' 2 0 0 2 0 0 0 $ ' 3 0 0 2 0 0 0 $ ' e u n e v e R d e t a d i l o s n o C n o i t a n m i i l E e t i l u c i m r e V i , s d u l F g n i l l i r D l e a S / n o i t c u d o r P d n a s l a c i m e h C t n e m p u q E i s l a r e n M i g n i s s e c o r P s e c i v r e S g n i l l i r D g n i t r o p e R y r a m i r P s t n e m g e S s s e n i s u B 62 Notes to the Financial Statements 0 1 5 , 1 4 2 9 9 2 9 , 1 3 6 3 8 , 6 3 9 _ _ 7 _ 3 _ , _ 6 _ _ _ _ _ _ 1 _ _ 1 _ 8 _ , 8 _ _ _ _ 0 4 0 , 4 2 1 0 1 , 7 2 ) 2 0 3 , 0 1 ( ) 8 4 8 , 1 1 ( – 0 5 7 , 6 1 8 7 , 3 ) 6 3 1 , 7 ( ) 8 4 8 , 1 1 ( – – 8 1 4 0 4 , 2 8 8 5 , 2 3 8 4 , 3 1 6 3 0 , 5 1 3 _ _ 3 _ 7 _ , _ 6 _ _ _ _ _ _ 5 _ _ 5 _ 2 _ , 1 _ _ 1 _ _ 9 6 6 , 8 1 3 9 , 5 5 _ _ 6 _ 2 _ , _ 6 _ _ _ _ _ _ 5 _ _ 2 _ 3 _ , 3 _ _ _ _ 7 2 – – – – – d e t a d i l o s n o C n o i t a n m i i l E e t i l u c i m r e V i , s d u l F g n i l l i r D l e a S / n o i t c u d o r P d n a s l a c i m e h C t n e m p u q E i s l a r e n M i g n i s s e c o r P s e c i v r e S g n i l l i r D 2 0 0 2 0 0 0 $ ' 3 0 0 2 0 0 0 $ ' 2 0 0 2 0 0 0 $ ' 3 0 0 2 0 0 0 $ ' 2 0 0 2 0 0 0 $ ' 3 0 0 2 0 0 0 $ ' 2 0 0 2 0 0 0 $ ' 3 0 0 2 0 0 0 $ ' 2 0 0 2 0 0 0 $ ' 3 0 0 2 0 0 0 $ ' 2 0 0 2 0 0 0 $ ' 3 0 0 2 0 0 0 $ ' 8 5 1 3 1 , 1 7 9 4 1 , 3 7 0 8 1 , 7 6 3 9 1 , 1 1 1 3 , 1 1 6 , 4 r o f t d e n u o c c a s t n e m t s e v n i f o l e u a v g n i y r r a C t d o h e m y t i u q e e h t g n i s u s t e s s a t e a r o p r o c t d e a c o l l a n U g n i t r o p e R y r a m i r P s t n e m g e S s s e n i s u B s t e s s a t n e m g e S s t e s s A 5 7 4 5 , 1 6 3 5 , 2 0 8 4 , 1 0 2 5 , 9 0 6 3 , 7 6 0 , 5 s t e s s A l t a o T t d e a d i l o s n o C s e i t i l i b a i l t n e m g e S 0 3 7 7 2 2 7 6 9 0 2 7 0 8 6 1 4 6 , 1 E P P – s t e s s a t n e r r u c n o n f o s n o i t i s i u q c A E P P – s n o i t i s i u q c a t e a r o p r o c t d e a c o l l a n U – s t e s s a t n e r r u c n o n f o s n o i t i s i u q c A s e i t i l i b a i L l t a o T t d e a d i l o s n o C s e i t i l i b a i l t d e a c o l l a n U 5 6 2 6 , 5 2 3 3 , – – – – A S K n i t n e m t s e v n I d e t a d i l o s n o C r e h t O a i s A t s a E h t u o S e l i h C i a b a r A i d u a S a i l a r t s u A s t n e m g e S l a c i h p a r g o e G g n i t r o p e R y r a d n o c e S 2 0 0 2 0 0 0 $ ' 3 0 0 2 0 0 0 $ ' 2 0 0 2 0 0 0 $ ' 3 0 0 2 0 0 0 $ ' 2 0 0 2 0 0 0 $ ' 3 0 0 2 0 0 0 $ ' 2 0 0 2 0 0 0 $ ' 3 0 0 2 0 0 0 $ ' 2 0 0 2 0 0 0 $ ' 3 0 0 2 0 0 0 $ ' 2 0 0 2 0 0 0 $ ' 3 0 0 2 0 0 0 $ ' 9 6 6 , 8 1 3 9 , 5 – 9 2 9 , 1 3 6 3 8 , 6 3 6 5 1 9 8 8 , 0 3 3 2 6 , 0 3 3 3 5 , 1 4 0 6 7 3 2 – – 5 3 5 – 0 7 6 5 6 0 , 3 6 7 7 4 , 9 9 4 3 7 3 3 0 1 5 8 2 1 1 1 0 4 3 5 , 9 7 3 6 , 5 6 2 6 , – 1 1 8 8 , 5 2 3 3 , 2 5 4 0 2 , 3 3 7 , 4 2 6 8 4 4 2 , 0 9 9 , 6 2 1 0 4 2 , 5 9 5 , 2 f o n o i t a c o l y b e u n e v e r t n e m g e s l a n r e x E t s t e s s a f o n o i t a c o l y b s t e s s a t n e m g e S s r e m o t s u c s t e s s a t n e r r u c - n o n f o s n o i t i s i u q c A 63 Notes to the Financial Statements 32 Related Party Disclosures (a) Directors The names of persons who were Directors of Imdex Limited at any time during the financial year were I F Burston, B W Ridgeway, M L Gasson, H H Al-Merry and G W Cobbledick. (b) Directors’ Remuneration Information on remuneration of Directors is disclosed in Note 25. (c) Directors’ holdings of Share and Share Options The interests of Directors of the Consolidated Entity, and their Director-related entities in shares and share options of entities within the Consolidated Entity, at the current date, are set out below: Note Ordinary shares Options over ordinary shares 29 2003 Number 22,030,838 3,000,000 2002 Number 11,265,838 3,000,000 (d) Directors’ Transactions in Shares and Share Options During the year there were 10,000,000 shares issued to Mr H H Al-Merry in connection with the RTE/Imdex Saudi Arabian Joint Venture, further details of which are set out at Note 20. There were no other share or share options issued to the Directors during the year. No Directors’ options were exercised during the year. (e) Directors' Transactions with the Company or its Controlled Entities As set out in this Financial Report, Imdex Limited is involved in Joint Ventures with Rashid Trading Establishment (RTE), a Company in which Mr H H Al-Merry is the President and Owner. RTE also acts as the agent of the Joint Ventures in some circumstances. The aggregate amounts recognised during the year relating to transactions between RTE as agent are as follows: Note Consolidated Company 2003 $’000 2002 $’000 2003 $’000 2002 $’000 Sales of muds and chemicals to the Joint Venture (i) 5,340 ________________________________________________ 5,340 – – (i) The Terms and Conditions of the transactions with RTE, as agents, were that a reduced margin was charged by Imdex Limited. Consolidated Company 2003 $’000 2002 $’000 2003 $’000 2002 $’000 Amounts receivable from the Joint Venture at balance date arising from these transactions are as follows: Current receivables – trade debtors 64 1,172 ________________________________________________ 1,172 – – Notes to the Financial Statements (f) Non Director related parties The classes of Non Director related parties are: (i) (ii) controlling entity of the Company; wholly owned Controlled Entities; (iii) associated companies; and (iv) Directors of related parties and their Director related entities. (g) Transactions Transactions with Non Director related parties consisted of: (i) (ii) loans advanced by Imdex Limited to Controlled Entities; loans repaid to Imdex Limited from Controlled Entities; (iii) the payment of management fees to Imdex Limited. Refer Note 2; and (iv) inter-entity transactions in relation to the sale of consumables and finished goods, on normal terms and conditions. The amounts receivable from, and payable to, Controlled Entities are set out in Note 16 and Note 7. (h) Controlling Entity The ultimate parent entity in the Consolidated Entity is Imdex Limited, a Company incorporated in Western Australia. (i) Wholly Owned Group The wholly owned group consists of Imdex Limited and its wholly owned Controlled Entities. Ownership interests in these Controlled Entities are set out in Note 23. (j) Joint Venture Entities Details of ownership interests in joint venture entities are set out in Note 14. 33 Subsequent Events No matter or circumstance has arisen since the end of the financial year that has significantly affected or may significantly affect the operation of the Consolidated Entity, the results of those operations, the financial position or the state of affairs of the Consolidated Entity in future financial years. 34 Notes to the Statement of Cash Flows (a) Reconciliation of cash For the purposes of the Statements of Cash Flows, cash includes cash on hand and at bank and short term deposits at call, net of outstanding bank overdrafts. Cash at the end of the financial year as shown in the statements of cash flows is reconciled to the related items in the statements of financial position as follows: Note Consolidated Company 2003 $’000 2002 $’000 2003 $’000 2002 $’000 Cash Bank overdraft 6 16 325 145 42 43 (1,347) (2,450) (2,607) ________________________________________________ (2,564) ________________________________________________ ________________________________________________ (2,305) (1,690) (1,022) (1,648) 65 Notes to the Financial Statements (b) Reconciliation of profit from ordinary activities after income tax to net cash provided by operating activities Consolidated Company 2003 $’000 2002 $’000 2003 $’000 2002 $’000 Depreciation and amortisation of non current assets 1,834 1,940 Profit from ordinary activities after related income tax Add/(Less) (Profit)/loss on sale of non current assets (Profit)/loss on sale of investments Share of Joint Ventures loss (less dividends) Interest on finance lease Interest on hire purchase liabilities Bad and doubtful debts Recoverable amount write downs Increase/(decrease) in current tax liability Increase/(decrease) in deferred tax balances Changes in assets and liabilities during the financial year: (Increase)/decrease in assets: Current receivables Current inventories Other current assets Non current assets Increase/(decrease) in liabilities: Current payables Provision for employee entitlements Net cash from operating activities (637) ________________________________________________ (520) 908 592 (92) – 894 – 144 (1) (607) – 21 86 9 – 686 (254) 347 42 (209) 59 (622) (1,500) (24) – (2,670) 663 262 – (19) – – – 60 1,043 6 – 216 (238) (24) (959) (29) – (11) (611) – – 38 956 66 42 (334) (68) (1,912) 603 623 – 112 (1,570) (398) (299) 110 1,912 30 ________________________________________________ (1,514) ________________________________________________ ________________________________________________ 2,205 (245) 270 20 (c) Non Cash Financing and Investing Activities The following non cash financing and investing activities occurred during the year. Note Consolidated Company 2003 $’000 2002 $’000 2003 $’000 2002 $’000 Share issue to Mr H H Al–Merry 20 2,000 – ________________________________________________ ________________________________________________ 2,000 – Refer to Note 20 for further details concerning the share issue which, as a non cash transaction, is not reflected in the Statements of Cash Flows. 66 Additional Stock Exchange Information as at 9 September 2003 (a) Distribution of Shareholders 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 – and over Holding less than a marketable parcel Options Fully Paid Ordinary Shares 14 225 236 534 145 33 – – – – _______________________ 1,154 33 _______________________ _______________________ 95 – _______________________ _______________________ (b) Substantial Shareholders Ordinary Shareholders Fully Paid Mr H H Al-Merry Wear Services Pty Ltd Number Percentage 10,755,000 6,000,000 8.96% 5.00% 67 Additional Stock Exchange Information as at 9 September 2003 (c) Twenty Largest Holders of Quoted Equity Securities Ordinary Shareholders Fully Paid Number Percentage Hadi Hammad Al-Merry 10,755,000 Wear Services Pty Ltd AMP Life Limited Mr Clarke James Roycroft Chartac Pty Ltd Telic Alcatel (Australia) ANZ Nominees Limited Helix Resources Limited Total Meat Exports Pty Ltd Chartac Pty Ltd Hughmore Securities Pty Ltd B A Conway Pty Ltd Chippell Pty Ltd Longo Pty Ltd Brumac Pty Ltd Midlec Agency Pty Ltd Mr Michael Graeme Joyce Bremecca Nominees Pty Ltd 6,000,000 4,566,848 4,449,500 3,390,838 2,994,827 2,400,000 2,173,913 2,000,000 1,775,000 1,712,000 1,615,921 1,581,000 1,572,826 1,420,000 1,326,950 1,306,939 1,208,000 Holdex Nominees Pty Ltd ( No 369 A/C ) 1,145,337 8.96% 5.00% 3.80% 3.71% 2.82% 2.49% 2.00% 1.81% 1.67% 1.48% 1.43% 1.35% 1.32% 1.31% 1.18% 1.11% 1.09% 1.01% 0.95% Janac Pty Ltd 1,120,000 0.93% ________________________ 54,514,899 ________________________ ________________________ 45.41% (d) Director’s Shareholdings Name Number of Number of Shares Options Mr B W Ridgeway (directly) – 2,000,000 Mr B W Ridgeway (indirectly) 6,000,000 – Mr I F Burston (directly) Mr M L Gasson (indirectly) Mr H H Al-Merry (directly) Mr G W Cobbledick (directly) 100,000 1,000,000 5,165,838 10,755,000 10,000 – – – (e) Interests in Mining Tenements Imdex holds the following interest in mining tenements at the date of this report. Project Particulars Tenement Imdex’s Interest Mt Gould Micaceous Iron Oxide M52/0236 Right to occupy, explore, mine and market MIO product 68 IMDEX MINERALS 15 Spencer Street JANDAKOT WA 6164 Telephone: +61 8 9417 9900 Facsimile: +61 8 9417 3222 Email: rhancock@imdex.com.au Website: www.imdexminerals.com.au ACE DRILLING PRODUCTS & RENTALS 5 Pitino Court OSBORNE PARK WA 6017 PO Box 1148 OSBORNE PARK WA 6916 Telephone: +61 8 9445 4020 Facsimile: +61 8 9445 4040 Email: mgregg@imdex.com.au Website: www.acedrilling.com.au REPRESENTATIVE OFFICES WESTERN AUSTRALIA AUSTRALIAN MUD COMPANY LTD 5 Close Way KALGOORLIE WA 6430 Telephone: +61 8 9021 2925 Facsimile: +61 8 9091 5925 Email: coliver@imdex.com.au ACE DRILLING PRODUCTS & RENTALS 5 Close Way KALGOORLIE WA 6430 Telephone: +61 8 9021 2925 Facsimile: +61 8 9091 5925 Email: dmunro@imdex.com.au SURTRON TECHNOLOGIES PTY LTD 5 Close Way KALGOORLIE WA 6430 Telephone: +61 8 9091 9511 Facsimile: +61 8 9091 9522 Email: jsmith@imdex.com.au GROUP HEAD OFFICE AND REGISTERED OFFICE IMDEX LIMITED Level 3, Redgum House 18 Richardson Street WEST PERTH WA 6005 PO Box 1325 WEST PERTH WA 6872 Telephone: +61 8 9481 5777 Facsimile: +61 8 9481 5377 Email: imdex@imdex.com.au Website: www.imdex.com.au DIVISIONS/SUBSIDIARIES/ ASSOCIATED ENTITIES IMDEX ARABIA COMPANY LTD 12TH Floor, Khashoggi Bldg PO Box 30530 Al Khobar 31952 SAUDI ARABIA Telephone: +966 3 899 1955 Facsimile: +966 3 893 5551 Email: ykhawaja@rteksa.com Website: www.imdexarabia.com AUSTRALIAN MUD COMPANY LTD 5 Pitino Court OSBORNE PARK WA 6017 PO Box 1141 OSBORNE PARK WA 6916 Telephone: +61 8 9445 4000 Facsimile: +61 8 9445 4040 Email: gweston@imdex.com.au Website: www.ausmud.com SURTRON TECHNOLOGIES PTY LTD 5 Pitino Court OSBORNE PARK WA 6017 PO Box 1130 OSBORNE PARK WA 6916 Telephone: +61 8 9445 4050 Facsimile: +61 8 9445 4060 Email: smunyard@imdex.com.au Website: www.surtron.com.au SURTRON TECHNOLOGIES PTY LTD Lot 1598 Willis Street NEWMAN WA 6753 PO Box 681 NEWMAN WA 6753 Tel/Facsimile: +61 8 9175 1230 NEW SOUTH WALES AUSTRALIAN MUD COMPANY LTD 21 Illawarra Avenue CARDIFF NSW 2285 Telephone: +61 2 4953 6165 Facsimile: +61 2 4953 6448 Email: tfuller@imdex.com.au SOUTH AUSTRALIA AUSTRALIAN MUD COMPANY LTD 20 Alexander Place ROSE PARK SA 5067 Telephone: +61 8 8364 4110 Facsimile: +61 8 8364 4151 Email: kbooth@imdex.com.au QUEENSLAND AUSTRALIAN MUD COMPANY LTD 1/26 Neon Street SUMNER PARK QLD 4074 PO Box 110 SUMNER PARK QLD 4074 Telephone: +61 7 3279 3199 Facsimile: +61 7 3279 3538 Email: amcbrisbane@imdex.com.au SURTRON TECHNOLOGIES PTY LTD 1/26 Neon Street SUMNER PARK QLD 4074 PO Box 110 SUMNER PARK QLD 4074 Telephone: +61 7 3279 2331 Facsimile: +61 7 3279 2495 Email: surtronec@imdex.com.au INTERNATIONAL SALES AUSTRALIAN MUD COMPANY LTD 31 Koala Court, Little Mountain CALOUNDRA QLD 4551 Telephone: +61 7 5437 0373 Facsimile: +61 7 5437 0886 Email: mcouchman@imdex.com.au