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www.imdex.com.au
Imdex Limited is an Australian, publicly listed,
Drilling Products and Services company,
dedicated to becoming a significant global player in supplying
Drilling Products and Services to the Mining, Oil and Gas,
Water Well, Horizontal Directional Drilling and Civil industries.
IMDEX LIMITED
ANNUAL REPORT
TABLE OF CONTENTS
Imdex at a Glance
Imdex 2005 Snapshot
Financial Highlights
Chairman’s Report
Managing Director’s Report
Imdex’s Businesses
1
2
3
4
5
8
Director Profiles 10
Financial Report 2005 12
CONTENTS
N
IMDEX
An Australian Global Drilling Products & Services Company.
"a service provider to the natural resources industries"
Registered Office
Imdex Limited, ABN 78 008 947 813
PO Box 1325
Level 3, Redgum House
West Perth WA 6872
18 Richardson Street
Telephone: (+61 8) 9481 5777
West Perth, Western Australia, 6005
Facsimile: (+61 8) 9481 6527
Email:
imdex@imdex.com.au
Website: www.imdex.com.au
Imdex is listed on the
Australian Stock Exchange
under the ASX code IMD
GROUP HEAD OFFICE
& 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
AUSTRALIAN MUD COMPANY PTY 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
SAMCHEM DRILLING FLUIDS
& CHEMICALS
31 Basalt Street
Alrode Ext 7
PO Box 455
ALBERTON 1450
South Africa
Telephone: +2711 908 5595
Facsimile: +2711 908 5526
Email: samchem@acenet.co.za
Website: www.samchem.co.za
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
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
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
REPRESENTATIVE OFFICES
WESTERN AUSTRALIA
AUSTRALIAN MUD COMPANY PTY LTD
5 Close Way
KALGOORLIE WA 6430
Telephone: +61 8 9021 2925
Facsimile: +61 8 9091 5925
Email: tmcwhinney@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
SURTRON TECHNOLOGIES PTY LTD
Lot 1598 Willis Street
NEWMAN WA 6753
PO Box 681
NEWMAN WA 6753
Tel/Facsimile: +61 8 9175 1230
OUTH WALES
NEW SOUTH WALES
MPANY PTY
AUSTRALIAN MUD COMPANY PTY 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 PTY LTD
20 Alexandra Place
ROSE PARK SA 5067
Telephone: +61 8 8364 4110
Facsimile: +61 8 8364 4151
Email: kbooth@imdex.com.au
QUEENSLAND
AUSTRALIAN MUD COMPANY PTY 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 PTY LTD
31 Koala Court, Little Mountain
CALOUNDRA QLD 4551
Telephone: +61 7 5437 0373
Facsimile: +61 7 5437 0886
Email: mcouchman@imdex.com.au
1
Imdex Limited is Australia’s leading supplier of drilling products and services to the mining, water well
and horizontal directional drilling industries and is expanding its presence in the oil and gas industry.
The Board’s continuing strategy is to transform a diverse local company into a focused global company
providing drilling products and services to the oil and gas, mining, water well and civil industries.
The Board remains committed to its four-point plan to build value for Shareholders:
➜
➜
➜
➜
Continue operational earnings improvement within Australia;
Achieve an overall improvement in Group financial performance to make Imdex a competitive
investment in the Australian market;
Progressively realise the potential of Imdex’s 20% investment in Imdex Arabia (post re-structure);
Translate the improved performance into dividend income for our Shareholders.
IMDEX’S TRADING LOCATIONS
Eastern Europe
China
Saudi Arabia
India
Laos
Thailand
Philippines
Ghana
Tanzania
Zambia
South Africa
Indonesia
PNG
Australia
Canada
USA
New Zealand
Peru
Chile
2
IMDEX 2005 SNAPSHOT
For the financial year ended 30 June 2005
(FY05) Net Profit after Tax increased
by 183% to $3.1 million, with Revenue
increasing by 21% to $48.2 million.
FINANCIAL PERFORMANCE
➜
Total revenue increased by 21% to $48.2 million in FY05 from $39.8
million in FY04;
➜
Earnings before Interest and Tax (EBIT) increased to $4.0 million in
FY05, from a loss of $3.2 million in FY04.
DIVISIONAL HIGHLIGHTS
➜
The Australian Mud Company (AMC) traded strongly in FY05,
delivering 50% of the Group’s revenue and an EBIT contribution of
$3.0 million;
➜
➜
➜
Surtron Technologies (Surtron) off the back of its Logging, Survey and
Coal Bed Methane (CBM) steering activities in Australia and the USA,
recorded 63% revenue and 237% EBIT growth in FY05;
Ace Drilling Supplies (Ace) benefited from the strong increases in
the resources sector and the introduction of the new electronic core
orientation tool, lifting revenue by 23% and EBIT by 63% in FY05;
The RTE/Imdex Joint Venture re-structure was approved by Shareholders
at the 2004 AGM and, as a result, 10 million shares held by RTE
were cancelled and RTE is repaying US$1.5 million to Imdex. On
completion of the re-structure Imdex’s interest in the Joint Venture will
reduce from 49% to 20%.
DELIVERING ON ITS STRATEGY
➜
The non-core Imdex Minerals was sold on 1 July 2005 for $6.3
million, with further, deferred, sale proceeds of $1.5 million
conditional on the future success of certain new agricultural products
being developed by the business;
➜
➜
The business of Samchem, the South African muds and chemicals
company, was acquired effective from 1 August 2005;
Continuing Divisional operational and earnings improvement forecast
for FY06.
3
FINANCIAL HIGHLIGHTS
TOTAL REVENUE
Change in percentage
Earnings before Interest, Tax, Depreciation & Amortisation (EBITDA)
Depreciation & Amortisation
EARNINGS BEFORE INTEREST & TAX (EBIT)
Change in percentage
Net Interest Expense
NET PROFIT BEFORE TAX (NPBT)
Income Tax Benefit/(Expense)
NET PROFIT AFTER TAX (NPAT)
Change in percentage
FY03
($m)
FY04
($m)
30.9
39.8
3.9
(1.8)
2.0
(0.6)
1.5
(0.6)
0.9
(1.3)
(1.9)
(3.2)
(0.6)
(3.8)
0.1
(3.7)
FY05
($m)
48.2
+ 21%
5.9
(1.9)
4.0
+ 224%
(0.5)
3.5
(0.4)
3.1
+ 183%
NET ASSETS
21.8
18.1
19.1
NET TANGIBLE ASSET BACKING PER SHARE (cents)
16.58
14.59
Change in percentage
EARNINGS PER SHARE (cents)
Change in percentage
16.78
+ 15%
0.76
(3.07)
2.69
+ 188%
INCREASING THREE YEAR REVENUE
AND EBIT TREND
THREE YEAR REVENUE (BY DIVISION)
)
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$50
$45
$40
$35
$30
$25
$20
$15
$10
$5
$0
4.0
2.0
$30.9
$39.8
$48.2
FY03
(3.2)
FY04
FY05
$5
$4
$3
$2
$1
$0
($1)
($2)
($3)
($4)
)
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(
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)
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V
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$50
$45
$40
$35
$30
$25
$20
$15
$10
$5
$0
$23.3
$6.8
$16.9
$21.3
$6.4
$11.8
FY04
FY05
$15.3
$6.2
$9.2
FY03
TOTAL REVENUE
EBIT
DRILLING PRODUCTS & SERVICES
MINERALS PROCESSING
DRILLING FLUIDS & CHEMICALS
4
CHAIRMAN’S REPORT
The year ended 30 June 2005
(FY05) has been very positive and it
is pleasing to see the benefit of the
strategy adopted in 2004 showing
through in the improved financial
results of the Company. There is no
doubt that the buoyant resources and
energy sectors have seen increased
expenditure in exploration and
IAN BURSTON
Chairman
development of which Imdex has been a beneficiary. However,
management must be able to take advantage of the favourable
trading conditions and I am pleased to report that this has been the
case in FY05.
As a result of the Samchem acquisition, we are also pleased to
welcome to the Board Mr Ivan Freeman.
Surtron’s improved financial performance was pleasing and is
a tribute to the hard work and dedication of the Surtron team.
All divisions within Surtron experienced improved revenue and
profitability and further growth is forecast for FY06.
Ace Drilling Supplies was also a significant improver in FY05.
The staged introduction of an electronic core orientation tool has
proven to be a success and further growth is expected in the new
financial year as its international roll-out gathers pace. This new
product was the concept of one of our senior staff members and
we have a patent pending on the device.
This is evidenced by the 21% increase in revenue in comparison to
FY04 with a substantial lift in Net Profit after Tax to $3.1 million for
FY05 from a loss of $3.7 million in FY04. This equates to Earnings
per Share of 2.7 cents (FY04, loss per share of 3.1 cents) with a
Net tangible Asset Backing per Share of 16.8 cents
(FY04, 14.6 cents).
The re-structure of the Saudi Arabian Joint Venture was approved
by Shareholders at the 2004 Annual General Meeting. The
cancellation of the 10 million shares previously held by Rashid
Trading Establishment (RTE) has occurred and RTE is continuing
to pay Imdex a total of US$1.5 million in instalments. The total
amount is due to be paid by RTE to Imdex by 31 December 2005.
There has continued to be a steady movement to focus on our
core businesses, and during the year we sold Imdex Minerals
and the results referred to above include the write down of $1.4
million in the net assets of Imdex Minerals at 30 June 2005 in
preparation for the sale of the business which occurred on 1 July
2005. The Board adopted a conservative approach in relation
to this issue as there remains the strong possibility of receiving an
additional sale consideration of $1.5 million in the future. This
additional cash amount is conditional on the future profitability of
certain agricultural products sold with the business. If and when the
additional consideration is received, it will be accounted for as a
credit to the Profit and Loss account.
The Balance Sheet is strong, profits are improving and the
Company’s cash position continues to strengthen. This is at a time
when, according to Metals Economics Group’s latest edition of
Corporate Exploration Strategies, 2004, worldwide non-ferrous
exploration budgets totalled US$3.8 billion which is up 58%
on 2003.
Exploration expenditure is up in most regions around the world
with sharp increases in countries such as Russia, Mongolia and
China and regions such as Africa and Latin America led by Peru
and Mexico. Increased expenditure in these regions supports the
strategy adopted by the Board in concentrating on growing our
business internationally.
The Australian Mud Company has been expanding its sales profile
internationally and was a solid profit contributor for the year. Part
of the international growth strategy includes the acquisition of the
South African drilling fluids and chemicals company, Samchem.
This acquisition was approved by Shareholders in General
Meeting on 5 August 2005. The Samchem acquisition provides a
strategic manufacturing and research and development facility in
South Africa from which the business is ideally located to supply
greater Africa and take advantage of the increased exploration
expenditure being experienced in Africa generally. There is also
good scope to expand Samchem’s oilfield business in Africa.
Our aims are to continue to focus on wealth creation for you, the
Shareholders, the owners of the business and during FY05, much
progress was made with the generation of Net Profit after Tax of
$3.1 million with continuing growth forecast for FY06.
The Board has decided not to declare a dividend for the year
ended 30 June 2005. However, delivering a sustainable and
increasing dividend stream to Shareholders remains one of the
goals set by Directors for the Company to achieve in the short to
medium term.
The timing of this goal has been balanced against the capital
needs of the business. Directors have been driving Shareholder
value by continuing to invest in the expansion of the domestic and
international businesses. This strategy has been successful and the
revenue and profit growth is now readily evident giving Directors
greater confidence that the goal for the payment of dividends to
Shareholders will be met.
Such growth cannot be achieved without the dedication and hard
work demonstrated by all of the Company’s employees, consultants
and fellow Board members. On behalf of you, the Shareholders, I
would like to extend my utmost appreciation to all of our workforce
for their efforts during the year.
In addition, I would like to thank all Shareholders for your support
and trust that this may continue and I look forward to seeing as
many of you at the forthcoming Annual General Meeting to be
held in Perth on 27 October 2005.
Ian Burston
CHAIRMAN
5
MANAGING DIRECTOR’S
REPORT
BERNIE RIDGEWAY
Managing Director
The result for the year is a
reflection of the strategy
enunciated at the 2004 Annual
General Meeting to expand
the core drilling products and
services business and the
continued good operational
performances of the core business units. Revenue was up 21%
to $48.2 million for the year ended 30 June 2005 (FY05).
Highlights for the year included the following:
➜
➜
➜
➜
continued growth in the core businesses;
Group sales up by 21% on FY04;
Earnings before Interest and Tax (EBIT) strong and expected
to improve further in FY06; and
Net Profit after Tax of $3.1 million with significant growth
forecast for FY06.
During the year, the Board decided that Imdex Minerals was
non-core and should be sold. Accordingly, an agreement
was reached with Unimin Australia Pty Ltd (Unimin) and the
business was sold for a price of $6.3 million cash which
settled on 1 July 2005. As part of the sale agreement, Imdex
Limited is entitled to a further $1.5 million, subject to the
future profitability of certain agricultural products which, at
the time of sale, were in the early stages of development
and commercialisation. Unimin have confirmed that they are
continuing the commercialisation of one of these products,
in particular, and Imdex has reason to believe that future
profitability will be sufficient to ensure the collection of the
additional consideration.
At the time of sale of the business, net assets totalled $7.6
million compared to the sale price of $6.3 million. However,
the Directors have taken a conservative view in relation
to the collection of the additional $1.5 million conditional
consideration and have written the net assets down to the cash
consideration received at settlement on 1 July 2005. This one-
off adjustment has caused the EBIT to be reduced from $5.4
million to $4.0 million.
Nevertheless, the disposal of Imdex Minerals placed the
Company in a position to acquire the business of Samchem,
further enhancing the core business of drilling products and
services and was a positive step in the implementation of the
strategic plan adopted by Imdex in 2004.
The solid performance of the Australian Mud Company (AMC)
and the continued improvement in the operations of Surtron
Technologies (Surtron) and Ace Drilling Supplies (Ace)
was pleasing.
THE AUSTRALIAN MUD COMPANY PTY LTD (AMC)
Australian Mud Company (AMC) provides drilling products
and services to the mining, oil and gas, water well and
horizontal directional drilling industries. It traded strongly
during the year generating EBIT in excess of $3 million for
FY05. AMC’s revenue accounted for approximately 50% of
total Imdex Group sales.
In November 2004, the Metals Economics Group in
Canada forecast an increase in overall non-ferrous worldwide
exploration expenditure over that experienced in 2004.
Base metals commodity markets are being supported by low
inventories and a lack of new production with the gold price
remaining buoyant. These factors continue to drive exploration
expenditure and AMC is a beneficiary of this increased
exploration spending in Australia and internationally.
AMC continues to offer a superior service which is supported
by a very strong brand identity within the industry in Australia
and overseas. International markets continue to be a focus
for AMC and increased sales have been achieved in China,
Africa, New Zealand and Asia.
AMC will continue to consolidate its presence in the Australian
market and pursue growth internationally.
SURTRON TECHNOLOGIES PTY LTD
Surtron Technologies (Surtron) provides geophysical logging,
downhole surveying and steering services. Geophysical
logging services are provided to Australia’s major iron ore
producers in BHP Billiton, and Rio Tinto. Surtron provides
downhole survey services to the major gold producers
operating in Australia and steering services are provided to
coal seam gas explorers and producers in Australia and the
United States.
6
SURTRON TECHNOLOGIES (CONTINUED)
Surtron continued to build on its improved trading performance
demonstrated in FY04 with a 63% increase in revenue and a
237% increase in EBIT in FY05 compared to FY04.
It is well documented that there is significant expansion taking
place in the iron ore industry in the Pilbara region of Western
Australia to meet demand from China and Japan. Surtron is a
beneficiary of this expansion in that the additional drilling by the
iron ore producers requires geophysical logging; and additional
logging trucks have been placed into the field. These vehicles are
operating at increased day rates and utilisation is also at
elevated levels.
Surtron’s downhole survey division has also been very active
primarily servicing the gold producers in Australia. The gold price
has been relatively buoyant and a number of the junior exploration
companies have been active in the sector. The majors have also
been active as they recognised a dearth of new projects moving to
production and exploration budgets have been increased post the
industry consolidation phase seen in 2000 and 2001.
The coal bed methane gas drainage (CBM) market continued to
be the focus for Surtron’s steering division during the year. Services
continue to be supplied to CBM explorers and producers in
Australia, including CH4 at Moranbah in Queensland. The CH4
project is a joint venture between CH4 and BHP Billiton and is
operated by CH4. It is the largest CBM project utilising surface to
in seam (STIS) technology in Australia.
Further increases in sales and EBIT margin are expected in FY06
as a result of the market acceptance of the quality products in the
Ace portfolio and the expected continuation of favourable trading
conditions in the resources sector.
RTE/IMDEX JOINT VENTURE
Imdex currently has a Joint Venture interest with Rashid Trading
Establishment (RTE) to provide drilling products and services to the
oil and gas industry in the Kingdom of Saudi Arabia.
Joint Venture sales, which commenced in June 2001, have been
building steadily and totalled US$25.3 million in 2005
(2004 – US$17.6m) producing a Net Profit of US$351,000
(100%) for the year ended 30 June 2005.
On 5 July 2004, Imdex announced a re-structure of the Saudi
Arabian Joint Venture. In summary, Imdex is reducing its equity in
the Joint Venture to 20% (being a 20% interest in Imdex Arabia
Limited). The re-structure was approved by Shareholders at the
2004 Annual General Meeting whereby it was agreed that RTE
would return 10 million shares in Imdex for cancellation and RTE
would also pay a total of US$1.5 million cash to Imdex.
try in the United
Surtron provides similar services to the CBM industry in the United
unities in that market.
States and is evaluating additional opportunities in that market.
The 10 million share
The 10 million shares in Imdex held by RTE were duly cancelled in
accordance with the re-struc
accordance with the re-structure agreement.
note and personal gua
In relation to the US$1.5 million due
In relation to the US$1.5 million due from RTE as part of the re-
ement, a further legally bindi
structure agreement, a further legally binding agreement,
including a promissory note and personal guarantee from
Mr HH Al-Merry, (the principal of RTE and currently a Director of
Imdex), was reached with RTE at the end of February 2005 which
required RTE to pay a minimum of US$100,000 per month to
Imdex with the entire amount to be paid by 31 December 2005.
As at the date of this report, RTE had paid a total of US$550,000
in accordance with this agreement.
l of RTE and current
e end of February
s re
this agr
100,000 per m
otal of US$550
31 December
ware development to assist and
Surtron continues to invest in software development to assist and
enhance the Company’s steering capability which ensures Surtron’s
rship in Australia.
continued industry leadership in Australia.
ring capability which ensu
Surtron is forecasting further revenue and EBIT growth in FY06.
g further revenue a
E DRILLING
ACE DRILLING SUPPLIES
Ace Drilling Supplies (Ace) markets drilling consumables and
ce Drilling Supplies (Ace) markets drilling consumables and
downhole motors and cameras to the drilling industry in Australia
downhole motors and cameras to the drilling industry in Australia
and internationally. Ace experienced strong demand for its
and internationally. Ace experienced strong demand for its
products
products and services during the year.
This has seen revenue increase by 23% producing a robust EBIT
This has seen revenue increase by 23% producing a robust EBIT
margin of almost 16%. The improved financial performance is
margin of almost 16%. The improved financial performance is
a result of the general increase in activity in the resources sector
a result of the general increase in activity in the resources sector
and the introduction of the new electronic core orientation tool
and the introduction of the new electronic core orientation tool
(patent pending) to the diamond drilling industry. This tool is
(patent pending) to the diamond drilling industry. This tool is
being phased into the market and is gaining wide accept
being phased into the market and is gaining wide acceptance in
Australia and internationally as the only electronic core
Australia and internationally as the only electronic core orientation
tool on the market. Marketing of this tool will continue
tool on the market. Marketing of this tool will continue in FY06
and it is expected that the Ace core tool will be the do
and it is expected that the Ace core tool will be the dominant core
orientation tool in the market by the end of FY06.
orientation tool in the market by the end of FY06.
7
COMPANY OUTLOOK
The strong performances of the core business units in FY05 has
continued into FY06.
AMC has continued to trade strongly in the initial months
of FY06, and international expansion plans continue in
order to capitalise on the buoyant business conditions being
experienced in the resources industries.
Surtron experienced a very good year in FY05 and favourable
trading conditions have continued into FY06. The Company
has expanded capacity in the geophysical logging division
and the steering division to satisfy increased demand in these
areas. Surtron will continue to pursue opportunities and grow
its business in international markets.
Ace is forecasting strong growth in both revenue and earnings
through the continued introduction of the electronic core
orientation tool into the marketplace and the expansion of its
traditional business of downhole motors and cameras.
In relation to the Imdex Group of businesses, the Board is
anticipating continuing revenue growth in FY06 of around
15% to $55 million. Profit levels are also expected to increase
on the levels achieved in FY05.
Looking ahead, the Board remains committed to its four-point
plan to build value for Shareholders:
➜
➜
➜
➜
continuing operational and earnings improvement in all
business units;
progressive realisation of the potential of its 20% investment
in Imdex Arabia;
overall improvement in Group financial performance to
make Imdex a competitive investment in the Australian
market; and,
translation of the improved performance into dividend
income for Shareholders.
Bernie Ridgeway
MANAGING DIRECTOR
SAMCHEM DRILLING FLUIDS & CHEMICALS (PTY) LTD
The acquisition of Samchem on 1 August 2005 is expected
to impact positively on earnings for FY06. The business is
currently trading well and is also a beneficiary of increased
exploration spending, particularly in Africa. There are a
number of opportunities to expand the business and these
include the oilfield and through the worldwide application for
the chemicals used in the clay brick manufacturing process.
Samchem Research and Development facility - South Africa
Samchem Manufacturing Plant
8
DRILLING FLUIDS & CHEMICALS
DRILLING FLUIDS & CHEMICALS
Drilling fluids, chemicals and services to the mining, oil
and gas, water well and horizontal directional drilling
industries.
Drilling fluids, chemicals and services to the mining, oil
and gas, water well and horizontal directional drilling
industries. Clay and cement chemical additives.
FINANCIAL
➜
➜
Revenue $23.2m
EBIT $3.0m
YEAR IN BRIEF
➜
➜
➜
➜
➜
10% increase in revenue
Continued to increase sales in onshore oil
& gas industry
Further brand development from superior
service offering
International growth initiatives continued
Increasing sales into China and India continuing
FUTURE DIRECTIONS
➜
➜
➜
Exploration sector continues to appear buoyant
Continued international expansion
Further consideration of
mergers / acquisitions / alliances
Samchem Drilling Fluids & Chemicals acquired effective 1 August 2005
NEW ACQUISITION
➜
➜
Shareholders approved acquisition on
5 August 2005
16m shares in Imdex issued, cash purchase price
of approx $3.5m
THE BUSINESS
➜
➜
➜
➜
In FY05 reported revenue of AUD$8.7m
with EBIT of AUD$1.5m
Major manufacturer and supplier of drilling fluids
and services in South Africa –
expanding in other African countries
Highly qualified and capable research and
development function
35 employees including key management
es including key management
transferred with the business
rred with the business
FUTURE DIRECTIONS
FUTURE DIRECTIONS
➜
➜
➜
➜
➜
Combined operating synergies of AMC and
Combine
Sa
Samchem to be realised
Capitalise on strategic location for manufacturing,
supply and R&D of drilling fluids & chemicals
Diversify via chemical additives for clay brick and
cement block manufacturing
Expand the mining, oil and gas business.
9
DRILLING PRODUCTS & SERVICES
DRILLING FLUIDS & CHEMICALS JOINT VENTURE
Geophysical logging, down hole surveying,
steering, sale and rental of drill hole survey
instruments, down hole motors, cameras and
drilling products.
FINANCIAL
➜
➜
Revenue $16.9m
EBIT $2.9m
YEAR IN BRIEF
➜
➜
➜
➜
➜
➜
➜
43% increase in revenue
Increased EBIT contribution by 153%
Pilbara iron ore expansion drove strong demand for
logging services
Survey operations servicing the gold sector have
been very active
Wireless steering to the CBM market was strong in
Australia and increased in the USA
Continued high demand for down hole cameras
and motors
Electronic core orientation tool gaining
market acceptance
Drilling fluids, chemicals and services to the oil and
gas and water well industries.
FINANCIAL
➜
➜
Revenue US$25.3m (100% Joint Venture)
NPAT US$351k (100% Joint Venture)
YEAR IN BRIEF
➜
➜
➜
Re-structure approved by Shareholders at 2004
AGM
10m shares held by RTE cancelled
RTE is repaying US$1.5m to Imdex at which time
Imdex’s interest will reduce from 49% to 20%
FUTURE DIRECTIONS
➜
➜
Continue to realise value of 20% investment
(post re-structure)
To consider introduction of services
F
FUTURE DIRECTIONS
MINERALS PROCESSING
➜
➜
➜
➜
➜
Additional offshore CBM steering in the USA
Additi
remains
remains a focus
Secure domin
Secure dominance of core orientation tool in the
market place
market place
Continue to service offshore survey markets
tinue to service
Toll milling, silica flour, custom packaging, agricultural
products, sand and gravel packs and micaceous iron
oxide (MIO)
SOLD EFFECTIVE 1 JULY 2005
FINANCIAL
➜
➜
Revenue $6.7m
EBIT loss $229k
YEAR IN BRIEF
➜
➜
➜
Board determination that business was non-core
Successfully negotiated sale of business
Cash proceeds realised of $6.3m. Deferred sale
proceeds of $1.5m conditional on success of
new agricultural products. Sale placed Imdex in a
position to acquire the Samchem business, reduce
debt and augment working capital
10
MR IAN BURSTON
MR ROSS KELLY
BE(Hons) FAICD
Non Executive Director
Age: 67 years
Mr Kelly graduated as an engineer
from the University of Western Australia
and has worked in Australia and many
overseas countries.
Mr Kelly was appointed to the Board on
14 January 2004.
Mr Kelly is a qualified engineer, a fellow
of the Institute of Company Directors,
a Director of Clough Limited and a
commissioner with the Western Australian
Football Commission. He has previously
been Chairman of Clough Limited, Sumich
Group Limited, Orbital Engine Corporation
Limited, Beltreco Limited and a Director
of Aurora Gold Limited, PA Consulting
Services Ltd and the Fremantle
Football Club.
He has specialised in the mining and
heavy process industries and has consulted
to many of Australia’s major mining
companies and the Western Australian
Government. He has also worked in
the offshore gas, oil refining and steel
industries.
Mr Kelly was previously a Councillor of the
Australian Institute of Company Directors,
and a Member of the Advisory Board,
Curtin Graduate School of Business.
AM
Non Executive Chairman
Age: 70 years
Mr Burston holds a Diploma in
Aeronautical Engineering and a Bachelor
of Engineering (Mechanical). 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.
Mr Burston has been the Managing
Director of Hamersley Iron, the Chief
Executive Officer for Kalgoorlie
Consolidated Gold Mines, the Managing
Director and Chief Executive Officer
of Aurora Gold Ltd and the Managing
Director of Portman 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.
MR BERNARD RIDGEWAY
B,Bus (ACCTG) ACA
Managing Director
Age: 51 years
Mr Ridgeway was appointed to the
Board on 23 May 2000 and appointed
Managing Director effective from
3 July 2000.
He is a qualified Chartered Accountant
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 20
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.
11
MR HADI HAMMED AL-MERRY
Non Executive Director
Age: 43 years
Mr Al-Merry was appointed as a
Non Executive Director in April 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 many years. He
has many long-standing business and
government relationships in Saudi
Arabia and the Middle East.
MR STEPHEN LYONS
B.BUS (ACCTG) ACA
Company Secretary
Age: 36 years
Mr Lyons is a qualified Chartered
Accountant and a Member of the
Institute of Chartered Accountants in
Australia: he has an audit, corporate
services and banking background.
He was previously the Company
Secretary for the Australian operations
of the Swiss based, Société Générale
de Surveillance (SGS) Group and has
consulted to other private and
public companies.
He was appointed Company Secretary
on 19 November 2001.
MR KEVIN DUNDO
B Com, LLB
Non Executive Director
Age: 53 years
Mr Dundo practises as a lawyer in Perth.
He was appointed to the Board on 14
January 2004.
He is also a Director of NuStar Mining
Corporation Limited (ASX: NMC). Previous
directorships include St Barbara Mines
Limited (ASX: SBM) and Defiance Mining
Corporation (listed on the Toronto Stock
Exchange).
Mr Dundo gained a Bachelor of
Commerce from the University of Western
Australia and a Bachelor of Laws from the
Australian National University.
Mr Dundo specialises in the commercial
and corporate areas (in particular mergers
and acquisitions) with experience in the
mining sector, the service industry and the
financial services industry.
Mr Dundo is a Member of the Law Society
of Western Australia, a Member of the Law
Council of Western Australia, a Fellow of
the Australian Society of Certified Practising
Accountants and a Member of the
Australian Institute of Company Directors.
MR IVAN FREEMAN
Non Executive Director
Age: 63 years
Mr Freeman is the Executive Chairman
of the Iscosa group of companies and is
based in Johannesburg, South Africa.
Mr Freeman was appointed to the Board
on 23 August 2005.
He holds advanced Diplomas in Chemical
Technology and Production Engineering
and has completed several courses in
business administration, supervisory
management, marketing and finance.
His career has focused mainly on mining
and oil exploration related projects and
he is well versed in the use of chemical
additives that improve the clay
brick making process.
He is an Associate Member of the
South African Clay Brick Association.
Administrative and fiscal disciplines form
the corner stone of his management style.
IMDEX LIMITED
FINANCIAL REPORT
CONTENTS
Directors’ Report 14
Independence Declaration 21
Corporate Governance Statement 22
Independent Audit Report 26
Directors’ Declaration 28
Statements of Financial Performance 29
Statements of Financial Position 30
Statements of Cash Flow 31
Notes to the Financial Statements 32
ASX Additional Information 65
DIRECTORS’ REPORT
The Directors of Imdex Limited (“Imdex” or “the Company”) present their report together with the annual Financial Report of the Company and
its controlled entities for the financial year ended 30 June 2005.
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
Mr I F Burston
Independent, Non Executive Chairman
Mr B W Ridgeway
Managing Director
Mr R W Kelly
Independent, Non Executive Director
Age
70
51
67
Mr K A Dundo
Independent, Non Executive Director
53
Mr H H Al-Merry
Non Executive Director
Mr I R Freeman
Non Executive Director
Mr J P O’Neil
Non Executive Director – Alternate
Director to Mr I Freeman
43
63
58
Particulars
Mechanical Engineer
Member of the Audit & Remuneration
Committees.
Director since November 2000.
Chartered Accountant
Director since May 2000.
Engineer
Member of the Audit & Remuneration
Committees.
Director since 14 January 2004.
Practicing Lawyer
Chairman of the Audit & Remuneration
Committees.
Director since 14 January 2004.
President of Rashid Trading
Establishment (involved in a Joint
Venture with Imdex, known as the
RTE/Imdex Joint Venture)
Director since April 2002.
Chemical Technology and Production
Engineer
Director since 23 August 2005.
Muds and Drilling Fluids Engineer
Alternate Director since 23 August
2005.
ß
ß
ß
ß
ß
ß
ß
ß
ß
ß
ß
ß
ß
ß
ß
ß
ß
Information on the Director’s experience and qualifications is set out under Director Profiles.
(b)
Directorships of other listed companies
Directorships of other listed companies held by the Directors in the 3 years immediately before the end of the financial year
are as follows:
Name
Company
Position
Period of Directorship
Mr I F Burston
Aztec Resources Ltd
Chairman and Chief Executive Officer
2004 - Current
Mincor Resources NL
Non Executive Director
Aviva Corporation Ltd
Non Executive Director
Mr R W Kelly
Clough Limited
Non Executive Director
2003 - Current
2003 - Current
Since 1996
Clough Limited
Chairman
During 2002 – 2003
Orbital Engine Corp Ltd
Chairman and Non Executive Director
Resigned 21 August 2003
Aurora Gold Limited
Non Executive Director
Resigned 5 February 2003
Mr K A Dundo
NuStar Mining Corp Ltd
Non Executive Director
St Barbara Mines Limited
Non Executive Director
Defiance Mining Corporation
Non Executive Director
2002 – Current
2002 – 2004
2003 - 2004
14
DIRECTORS’ REPORT
(c)
Company Secretary
Mr S J Lyons
Chartered Accountant aged 36. Mr Lyons was appointed Company Secretary of Imdex Limited on 19 November 2001. He has
an audit, corporate services and banking background. Previously, he was the Company Secretary for the Australian operations of the
Swiss based, Société Générale de Surveillance (SGS) Group and has consulted to other private and public companies. Mr Lyons is a
Member of the Institute of Chartered Accountants in Australia.
(d)
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, nine Board meetings and three Audit and Compliance Committee meetings were held.
The Remuneration Committee did not meet during the year, however has met once since the end of the year.
I F Burston
B W Ridgeway
H H Al-Merry
R W Kelly
K A Dundo
Board of Directors
Audit and Compliance Committee
Held
Attended
Held
Attended
9
9
9
9
9
9
9
-
8
9
3
-
-
3
3
3
-
-
3
3
In addition to the Directors’ and Audit and Compliance Committee meetings, there were also regular meetings of the RTE/Imdex Saudi
Arabian Joint Venture. These are attended by Mr Ridgeway on behalf of Imdex Limited and Mr Al-Merry on behalf of Rashid Trading
Company.
(e)
Directors’ Shareholdings
At the date of this report the Directors held the following interests in shares and options of the Company:
Directors
I F Burston
B W Ridgeway
H H Al-Merry
R W Kelly
K A Dundo
I R Freeman
J P O’Neil – alternate Director to Mr I Freeman
Shares Held
Indirectly
Options Held
Directly
Shares Held
Directly
100,000
-
-
5,000,000
755,000
-
-
265,000
300,000
-
-
-
16,059,002
12,847,202
-
-
-
-
-
-
-
At the date of this report, the options on issue by the Company are disclosed at (g) below and in Note 28. No shares were issued
during the year on the exercise of options granted by the Company.
15
DIRECTORS’ REPORT
(f)
Remuneration Report
Remuneration policy for Directors and Executives
The Board seeks the approval of Shareholders in relation to the aggregate of Non Executive Directors remuneration and any options
that may be granted to Directors. The remuneration for Non Executive Directors is reviewed from time to time, with due regard to
current market rates. The remuneration for Non Executive Directors is not linked to the Company’s performance. Other than statutory
superannuation, no Non Executive Director is entitled to any additional benefits on retirement from the Company.
The Managing Director’s remuneration is determined by the Remuneration Committee with due regard to current market rates. The
remuneration for the Managing Director is not linked to the Company’s performance. The Remuneration Committee intends to review
the Managing Director’s remuneration at 31 December 2005 and, at that time, the extent to which it is linked to the performance of
the Company.
All specified Executives, and all staff of the Company, are subject to formal annual reviews of their performance. The remuneration of
specified Executives comprises a fixed monetary total, not linked to the performance of the Company, although bonuses related to the
performance of the Company may be agreed between that Executive and the Company from time to time. Refer below for
further details.
Director and Executives details
The Directors of Imdex Limited during the year were:
(i) Mr I F Burston (Non Executive Chairman);
(ii) Mr B W Ridgeway (Managing Director);
(iii) Mr R W Kelly (Non Executive Director);
(iv) Mr K A Dundo (Non Executive Director); and
(v) Mr H H Al-Merry (Non Executive Director).
The Group Executives of Imdex Limited during the year were:
(i) Mr S J Lyons (Company Secretary);
(ii) Mr D L Kinley (Group Financial Controller);
(iii) Mr G E Weston (General Manager: Australian Mud Company Pty Ltd, Surtron Technologies Pty Ltd and Ace Drilling Supplies);
(iv) Mr C S Munyard (Manager Surtron Technologies Pty Ltd); and
(v) Mr I Tan (General Manager: Imdex Minerals).
Elements of Director and Executive Remuneration
Remuneration packages contain the following key elements:
(i) Primary benefits – salary/fees, bonuses and non monetary benefits including the provision of motor vehicles and health benefits;
(ii) Post-employment benefits – including superannuation and prescribed retirement benefits;
(iii) Equity – share options granted under the Staff Option Scheme as disclosed in Note 28; and
(iv) Other benefits.
Details of Directors’ remuneration are set out below. Further information is also set out in Note 26:
Primary
Post Employment
Equity
Other
benefits
Total
Salary
& fees
$
Bonus
$
Non-
monetary
$
Super-
annuation
$
Prescribed
benefits
$
Other
$
Options
$
$
$
250,000
-
22,123
22,500
-
-
-
- 294,623
Executive Director
B W Ridgeway,
Managing Director (i)
Non Executive Directors
I F Burston, Chairman
50,000
-
-
4,500
-
-
-
- 54,500
H H Al-Merry
-
-
-
-
-
-
-
-
-
R W Kelly
K A Dundo
Total
35,000
-
-
3,150
-
-
-
- 38,150
35,000
-
-
3,150
-
-
-
- 38,150
370,000
-
22,123
33,300
-
-
-
- 425,423
16
DIRECTORS’ REPORT
Details of remuneration of the highest remunerated Group Executives are set out below:
Primary
Post Employment
Equity
Other
benefits
Total
Salary
& fees
$
Bonus
$
Non-
monetary
$
Super-
annuation
$
Prescribed
benefits
$
Other
$
Options
$
$
$
S J Lyons,
Company Secretary (iii)
112,078
D L Kinley,
Group Financial Controller (iii)
107,231
G E Weston,
General Manager AMC,
Ace & Surtron (iii)
C S Munyard,
Manager Surtron (iii)
I Tan,
General Manager Imdex
Minerals (iii)
Total
200,000
106,838
152,269
678,416
-
-
-
-
-
-
-
-
9,612
9,651
6,795
17,965
9,351
9,615
6,357
13,704
32,115
50,935
-
-
-
-
-
-
-
-
-
-
-
-
600
1,200
24,000
900
-
26,700
-
-
-
-
-
-
112,678
127,694
248,760
126,704
172,330
788,166
Elements of remuneration related to performance
(i) Managing Director: The remuneration of the Managing Director is not directly linked to the performance of the Company. In
general terms, options have been the method by which Imdex has sought to reward key executives in a manner linked to the
performance of the Company. Any such options to the Managing Director, or any Director, require the approval by Shareholders
in General Meeting. As set out in (g) below, during the year the Managing Director’s options expired.
(ii) Non Executive Directors: The remuneration of Non Executive Directors is not linked to the performance of the Company. The
maximum total remuneration payable to Non Executive Directors was approved by Shareholders at the 2003 Annual General
Meeting and is currently $300,000. In the current year remuneration to Non Executive Directors totalled $130,800, including
statutory superannuation. The Board determines the apportionment of directors’ fees between each Director.
(iii) Group Executives: The remuneration of specified Executives generally comprises a fixed monetary total that is not linked to the
performance of the Company. Bonuses related to the performance of the Company may, however, be agreed between that
Executive and the Company from time to time. In addition, subject to a qualifying period, Group Executives may be issued
options in the Staff Option Plan at the discretion of the Board. The percentage of the value of remuneration that consisted of
options for each Executive is set out below.
Value of options issued to Directors and Executives
The following table discloses the value of options granted, exercised or lapsed during the year:
Options
Granted
(i)
Options
Exercised
Options
Lapsed
Value at
grant date
$
Value at
exercise date
$
Value at time
of lapse
$
S J Lyons
D L Kinley
G E Weston
C S Munyard
600
1,200
24,000
900
-
-
-
-
-
-
-
-
Total value of
options granted,
exercised and
lapsed
Value of options
included in
remuneration
during the year
(ii)
Percentage of
remuneration
for the year
that consisted
of options
$
600
1,200
$
600
1,200
24,000
24,000
900
900
%
0.5%
0.9%
8.9%
0.7%
(i)
the total value of options granted during the year is calculated based on the fair value of the option at grant date multiplied by the
number of options issued during the year;
(ii) The total value of options included in remuneration for the year is calculated in accordance with Accounting Standard AASB
1046 “Director and Executive Disclosures by Disclosing Entities”, as amended by Accounting Standard AASB 1046A. As the
options immediately vest the full value of the option is recognised in remuneration in the current year.
17
DIRECTORS’ REPORT
(g)
Share options
(i) Share options granted to Directors and Executives
During or since the end of the financial year an aggregate of 2,225,000 options were granted to the following executives of the
Group under the Staff Option Plan – refer Note 28. No options were granted during or since the end of the financial year to
Directors.
Name
S J Lyons
D L Kinley
G E Weston
C S Munyard
Number of options granted
Issuing entity
Number of ordinary shares
under option
50,000
100,000
2,000,000
75,000
Imdex Limited
Imdex Limited
Imdex Limited
Imdex Limited
50,000
100,000
2,000,000
75,000
During the financial year the following options to Directors expired:
Name
I F Burston
B W Ridgeway
Number of options
that expired
1,000,000
2,000,000
Issuing entity
Imdex Limited
Imdex Limited
Number of ordinary shares
under option
1,000,000
2,000,000
The options held by Mr Ridgeway and Mr Burston were granted on 25 October 2001, following approval by Shareholders at
the 2001 Annual General Meeting. These options expired on 24 October 2004.
(ii) Share options on issue at year end
Details of unissued shares or interests under option are:
Issuing Entity
Class of option
Class of
shares
Exercise
price of
option
Issue date
of option
Expiry date
of option
Key
terms of
option
Number of
shares under
option
Imdex Limited
Staff Share Options
Ordinary
20 cents
1 Aug 2004
31 Jul 2009
Imdex Limited
Corporate Advisor Options
Ordinary
20 cents
23 Dec 2004
31 Jul 2009
Imdex Limited
Corporate Advisor Options
Ordinary
20 cents
23 Dec 2004
31 Oct 2007
Imdex Limited
Corporate Advisor Options
Ordinary
35 cents
23 Dec 2004
31 Oct 2007
(aa)
(bb)
(cc)
(dd)
3,160,000
100,000
2,000,000
1,000,000
(aa) exercisable one year after the date of issue, in one-third lots each year thereafter;
(bb) exercisable at any point prior to expiry;
(cc) exercisable at any point prior to expiry on the condition that Imdex shares trade at 30 cents for 5 consecutive trading days; and
(dd) exercisable at any point prior to expiry.
(iii) No shares were issued during the financial year or since the end of the financial year as a result of the exercise of an option.
(h)
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.
(i)
Review of Operations
A review of the operations for the financial year together with future prospects is contained in the Chairman’s Report, the Managing
Director’s Review and the Financial Statements.
18
DIRECTORS’ REPORT
(j)
Dividends
No dividends were paid or declared by the Company during the year (2004 $Nil). The Directors do not recommend the payment of
a dividend in respect of the financial year ended 30 June 2005.
(k)
Changes in State Of Affairs
During the financial year, there were no significant changes in the state of affairs of the Consolidated Entity other than referred to in the
Financial Statements or notes thereto.
(i)
Subsequent Events
(i) On 1 July 2005 Imdex Limited sold its mineral processing business, Imdex Minerals, for a cash price of $6.3 million. As part of
the sale agreement, Imdex Limited is entitled to a further cash payment of $1.5 million, subject to the future profitability of certain
agricultural products which, at the time of sale, were in the early stages of development and commercialisation.
Whilst Imdex has reason to believe that the future profitability of these products will be sufficient to ensure the collection of the
additional consideration, a definitive assessment is unable to be made at 30 June 2005. The Directors have therefore taken a
conservative view of the carrying value of Imdex Minerals business as at 30 June 2005. As the carrying value of the net assets
of Imdex Minerals at 30 June 2005 totalled $7.6 million, the Directors have decided to write down the carrying value by $1.37
million at 30 June 2005 to $6.3 million, representing the amount realised in cash on 1 July 2005. This write down, of property,
plant and equipment, has been reflected as a charge against current period profits.
Further details concerning this event are set out in Note 31 to the Financial Report.
(ii) On 5 August 2005, Imdex Limited held a General Meeting of Shareholders at which the acquisition, and associated share issue,
of the business, certain related assets and intellectual property of SA Mud Services (Pty) Ltd and Iscosa (Pty) Ltd was approved.
On 10 August 2005, settlement of the acquisition took place and 16,059,002 shares in Imdex Limited were issued to SA
Mud Services and Iscosa. The balance of the purchase price, approximately $3.5m, was transferred to the trust account of an
independent attorney pending the finalisation of the completion accounts and other defined matters.
Apart from these matters, no other 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.
(m)
Future Developments
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.
(n)
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 by Imdex Minerals, continue
to minimise dust emission and the impact of dust on the surrounding area. A dust management and improvement program was
completed during the year which resulted in the improved efficiency of site dust collectors.
One complaint was received by the Department of Environmental Protection (DEP) during the year. The complaint related to the storm
water run off from the plant sedimentation pond. In response, a new stormwater pond and pump was installed and consequently
resulted in the matter being rectified.
During the year the Environmental Protection Act (EPA) 1986 Licence was revised by DEP representatives and presented to Imdex
Minerals management in September 2004. The revision of the licence enables Imdex Minerals to enhance their ability to monitor and
manage environmental protection matters.
As described in this Financial Report, Imdex Minerals was sold on 1 July 2005.
(o) Non-audit services
The Directors are satisfied that the provision of non-audit services, during the year, by the auditor (or by another person or firm on the
auditor’s behalf) is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001.
Details of amounts paid or payable to the auditor for non-audit services provided during the year by the auditor are outlined in Note 4
to the Financial Report.
(p)
Auditor’s Independence Declaration
The auditor’s independence declaration is included on page 21 of the Financial Report.
19
DIRECTORS’ REPORT
(q)
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, 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 end of 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.
(r)
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 Ian Burston
Chairman
PERTH, Western Australia,
22 September, 2005
20
INDEPENDENCE DECLARATION
Deloitte Touche Tohmatsu
A.B.N. 74 490 121 060
Woodside Plaza
Level 14
240 St. Georges Terrace
Perth WA 6000
GPO Box A46
Perth WA 6837 Australia
DX 206
Tel: +61 (0) 8 9365 7000
Fax: +61 (0) 8 9365 7001
www.deloitte.com.au
The Board of Directors
Imdex Limited
Level 3, Redgum House
18 Richardson Street
West Perth WA 6005
22 September 2005
Dear Sirs
Imdex Limited
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the
following declaration of independence to the directors of Imdex Limited.
As lead audit partner for the audit of the financial statements of Imdex Limited for the financial
year ended 30 June 2005, I declare that to the best of my knowledge and belief, there have been
no contraventions of:
(i)
the auditor independence requirements of the Corporations Act 2001 in relation to
the audit; and
(ii) any applicable code of professional conduct in relation to the audit.
Yours sincerely
DELOITTE TOUCHE TOHMATSU
Keith Jones
Partner
Chartered Accountant
The liability of Deloitte Touche Tohmatsu, is limited by, and to the extent of,
the Accountants’ Scheme under the Professional Standards Act 1994 (NSW).
21
CORPORATE GOVERNANCE STATEMENT
(a)
ASX Governance Principles and ASX Recommendations
The Australian Stock Exchange Corporate Governance Council sets out best practice recommendations, including corporate
governance practices and suggested disclosures. ASX Listing Rule 4.10.3 requires companies to disclose the extent to which they
have complied with the ASX recommendations and to give reasons for not following them.
Unless otherwise indicated the best practice recommendations of the ASX corporate Governance Council, including corporate
governance practices and suggested disclosures, have been adopted by the Company for the full year ended 30 June 2005. In
addition, the Company has a Corporate Governance section on its website: www.imdex.com.au (under the “Investor” heading) which
includes the relevant documentation suggested by the ASX Recommendations.
The extent to which Imdex has complied with the ASX Recommendations during the year ended 30 June 2005, and the main
corporate governance practices in place are set out below.
(b)
Principle 1: Lay solid foundation for management and oversight
The Board has implemented a Board Charter that formalises the functions and responsibilities of the Board. The Charter is published
on the Company’s website.
(c)
Principle 2: Structure the Board to add value
Imdex’s Board structure is consistent with the ASX Recommendations on Principle 2, with the exception that it does not have a separate
nomination committee for the reasons detailed below.
In addition, excluding Mr J P O’Neil who is an alternate Director for Mr I F Freeman, the Board currently has six Directors, three of
whom are considered independent. Despite not having a “majority” of independent Non Executive Directors, the structure of the
Board is considered appropriate and adequate at the current time, for the Company’s operations.
(i) Board Structure
The Board consists of a Non Executive Chairman, four 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 skills, experience, expertise and term of office of each Director is 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.
In assessing Director independence, materiality has been determined from both a quantitative and qualitative perspective. An
amount of over 5% of turnover is considered material. Similarly, a transaction of any amount, or a relationship, is deemed
material if knowledge of it impacts, or may impact, the Shareholders’ understanding of the Director’s performance. 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,
Non Executive Chairman
Mr B W Ridgeway,
Managing Director
Mr H H Al-Merry,
Non Executive Director
Mr R W Kelly,
Non Executive Director
Mr K A Dundo,
Non Executive Director
Mr I R Freeman,
Non Executive Director
Independent
Nil
Not Independent Managing Director
Not Independent
Mr Al-Merry is the principal of Rashid Trading Establishment which is
involved as a Joint Venture partner with the Company in the Middle
East.
Independent
Nil
Independent
Nil
Not Independent
Mr Freeman is a major shareholder, having an indirect interest in
16,059,002 shares of the Company.
Mr J P O’Neil,
Alternate Director to Mr I R Freeman
Not Independent
Mr O’Neil is a major shareholder, having an indirect interest in
12,847,202 shares of the Company.
Mr O’Neil is the Managing Director of Samchem Drilling Fluids and
Chemicals (Pty) Ltd, Imdex’s South African subsidiary.
22
CORPORATE GOVERNANCE STATEMENT
(iii) Board Nomination
The Board does not have a separate nomination committee and, given the Company’s size, does not intend to form such a
committee. However, the composition of the Board is determined using the following principles:
ü
·
ü
·
ü
·
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) Procedure for the selection and appointment of new Directors to the Board
The Company has published on its website, procedures for the selection and appointment of new Directors to the Board. The
Company also has 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 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.
(d)
Principle 3: Promote ethical and responsible decision-making
(i) Code of Conduct
The Company has developed a Code of Conduct that applies to all employees, officers and Directors of the Company. The
Code addresses matters relevant to the Company’s legal and other obligations to its Shareholders and covers: the way in which
we must discharge our duties; compliance with laws; conflicts of interest; confidentiality; insider trading; the use of the Company’s
resources and the environment, health and safety.
The Code is published on the Company’s website.
(ii) Share Trading Policy
The Board has developed a Share Trading Policy that restricts Directors and Senior Management to trading in the Company’s
shares during the one month periods following the annual and half yearly results announcements and the Annual General Meeting.
At all other times the Chairman must be approached, prior to trading, to determine whether trading at that particular time is
appropriate.
The Policy also reminds other staff of the laws applying to insider trading and stipulates that employees must not engage in short
term trading of Imdex’s shares.
Each of the Directors has 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.
The Policy is published on the Company’s website.
(e)
Principle 4: Safeguard integrity in financial reporting
(i) Statement by the Managing Director and Group Financial Controller
The Managing Director and the Group Financial Controller have signed a declaration to the Board attesting to the fact that the
2005 Annual Financial Report presents 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.
(ii) The Audit and Compliance Committee
The Audit and Compliance Committee consists of three independent Non Executive Directors and operates under a formal charter
approved by the Board. The Charter is published on the Company’s website.
The Committee is chaired by an independent Chairperson who is not the Chairman of the Board of Directors.
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 assurance regarding
the quality and reliability of financial information prepared for use by the Board in determining policies for inclusion in Financial
Statements.
The members of the Audit Committee during the year and at the date of this Statement were:
Mr K A Dundo (Chairman);
Mr I F Burston;
Mr R W Kelly.
23
CORPORATE GOVERNANCE STATEMENT
The experience and qualifications of each committee member is set out in the Directors’ Profiles in the first section of the Annual
Report. The Company Secretary acts as secretary of this Committee.
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 three times during the year as set out in the Directors’ Report.
(iii) 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. Information concerning the selection and appointment of external
auditors is published on the Company’s website.
The external auditors are invited to attend the Annual General Meeting of the Company and to be available to answer questions
from Shareholders.
(f)
Principle 5: Make timely and balanced disclosure
(i) Continuous disclosure policies and procedures
The Company has developed procedures to ensure that it complies with the disclosure requirements of the ASX Listing Rules. The
procedures are published on the Company’s website.
The procedures set out who is responsible for determining whether information is of a type or nature that requires disclosure, the
Boards role in reviewing the information disclosed to ASX and the procedures for ensuring that the information is released to ASX.
All information disclosed to the ASX is published on the Company’s website as soon as practicable.
(g)
Principle 6: Respect the rights of Shareholders
Shareholders Communications Strategy: The Board aims to ensure that Shareholders are informed of all major developments affecting
the Consolidated Entity’s state of affairs. Information is communicated to Shareholders through:
(i)
the Annual Report 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;
(ii) the Half-Yearly report which contains summarised financial information and a review of the operations of the Consolidated Entity
during the period. Half year 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 ASX 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 re-appointment of Non Executive 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 and Shareholders may register on the Company’s website to receive automatic notification of ASX
announcements.
The auditor is also invited to the Company’s Annual General Meetings and is available to answer Shareholders questions concerning
the conduct of the audit.
The Company’s Shareholder Communications Strategy is published on the Company’s website.
(h)
Principle 7: Recognise and manage risk
(i) Risk oversight and management policies
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.
During the year, and with the assistance of an independent consultant, the Company Secretary and the Group Financial Controller
conducted a targeted internal control review programme for the Imdex Group during the year. The results of this review were
reported to the Audit Committee,
Apart from this review, which may be conducted from time to time in the future, 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.
24
CORPORATE GOVERNANCE STATEMENT
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.
The risk management policy is published on the Company’s website.
(ii) Statement by the Managing Director and Group Financial Controller
The Managing Director and the Group Financial Controller have signed a declaration to the Board attesting to the fact that the
integrity of Financial Reports are founded on a sound system of risk management and internal compliance and control which
implements the policies adopted by the Board, and that the system is operating efficiently and effectively in all material respects.
(i)
Principle 8: Encourage enhanced performance
(i) Performance evaluation of the Board, its Committees, individual Directors and key executives
There is an informal process in place to enable the Chairman to discuss and evaluate with each Director their contribution to the
Board and to enable that Director to comment on all facets of the operation of the Board. A formal performance evaluation of the
Board was not conducted during the year.
Given the Company’s size, the Board considers that this process is adequate and does not envisage forming a Nomination
Committee to perform this function or to formalise the performance evaluation process.
All other Executives, and all staff of the Company, are subject to formal annual reviews of their performance as set out in the
Directors Report.
The description of the process for performance evaluation is published on the Company’s website.
(j)
Principle 9: Remunerate fairly and responsibly
(i) Company’s remuneration policies
Details on the remuneration of Directors and Executives are set out in Note 26. The Company’s remuneration policies are set out
in the Remuneration Report contained in the Directors Report.
(ii) Remuneration Committee
The Remuneration Committee consists of three Non Executive Directors and assists the Board in determining executive remuneration
policy, determining the remuneration of Executive Directors and reviewing and approving the remuneration of senior management.
The members of the Committee during the year and at the date of this Statement were:
Mr K A Dundo (Chairman);
Mr I F Burston; and,
Mr R W Kelly.
The experience and qualifications of each committee member is set out in the Directors’ Profiles in the first section of the
Annual Report.
The Remuneration Committee Charter is published on the Company’s website.
(iii) Non Executive Director’s remuneration
The terms and conditions governing the remuneration of Non Executive Director’s are set out in their appointment letter.
All Non Executive Directors are remunerated by way of fixed cash fees. Non Executive Directors are not provided with retirement
benefits other than statutory superannuation. The maximum total remuneration payable to Non Executive Directors was approved
by Shareholders at the 2003 Annual General Meeting and is currently $300,000.
No Non Executive Director received options in the Company during the year.
(k)
Principle 10: Recognise the legitimate interests of stakeholders
(i) Code of Conduct
As set out in Principle 3 above, the Company has developed and published to its website a Code of Conduct.
25
INDEPENDENT AUDIT REPORT
Independent audit report to the
members of Imdex Ltd
Scope
Deloitte Touche Tohmatsu
A.C.N. 74 490 121 060
Woodside Plaza
Level 14
240 St Georges Terrace
Perth WA 6000
GPO Box A46
Perth WA 6837 Australia
DX 206
Tel: +61 (0) 8 9365 7000
Fax: +61 (0) 8 9365 7001
www.deloitte.com.au
The financial report and directors’ responsibility
The financial report comprises the statement of financial position, statement of
financial performance, statement of cash flows, accompanying notes to the financial statements, and
the directors’ declaration for both Imdex Ltd (“the company”) and the consolidated entity, for the
financial year ended 30 June 2005 as set out on page 21 and pages 28to 64. The consolidated entity
comprises the company and the entities it controlled at the year’s end or from time to time during the
financial year.
The directors of the company are responsible for the preparation and true and fair presentation of the
financial report in accordance with the Corporations Act 2001. This includes responsibility for the
maintenance of adequate accounting records and internal controls that are designed to prevent and
detect fraud and error, and for the accounting policies and accounting estimates inherent in the
financial report.
Audit approach
We have conducted an independent audit of the financial report in order to express an opinion on it to
the members of the company. Our audit has been conducted in accordance with Australian Auditing
Standards to provide reasonable assurance whether the financial report is free of material
misstatement. The nature of an audit is influenced by factors such as the use of professional
judgement, selective testing, the inherent limitations of internal controls, and the availability of
persuasive rather than conclusive evidence. Therefore, an audit cannot guarantee that all material
misstatements have been detected.
We performed procedures to form an opinion whether, in all material respects, the financial report is
presented fairly in accordance with the Corporations Act 2001 and Accounting Standards and other
mandatory professional reporting requirements in Australia so as to present a view which is consistent
with our understanding of the company’s and the consolidated entity’s financial position, and
performance as represented by the results of their operations and their cash flows.
Our procedures included examination, on a test basis, of evidence supporting the amounts and other
disclosures in the financial report, and the evaluation of accounting policies and significant accounting
estimates made by the directors.
While we considered the effectiveness of management’s internal controls over financial reporting
when determining the nature and extent of our procedures, our audit was not designed to provide
assurance on internal controls.
The audit opinion expressed in this report has been formed on the above basis.
Liability limited by the Accountants' Scheme,
approved under the Professional Standards Act 1994 (NSW).
26
INDEPENDENT AUDIT REPORT
Page 2
Audit Opinion
In our opinion, the financial report of Imdex Ltd is in accordance with:
(a)
the Corporations Act 2001, including:
(i)
(ii)
giving a true and fair view of the company’s and consolidated entity’s financial position
as at 30 June 2005 and of their performance for the year ended on that date; and
complying with Accounting Standards in Australia and the Corporations Regulations
2001; and
(b)
other mandatory professional reporting requirements in Australia.
DELOITTE TOUCHE TOHMATSU
Keith Jones
Partner
Chartered Accountants
Perth, 22 September 2005
27
DIRECTORS’ DECLARATION
The Directors declare that:
(i)
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;
(ii) in the Directors’ opinion, the attached financial statements and notes thereto are in accordance with the Corporations Act 2001,
including compliance with accounting standards and giving a true and fair view of the financial position and performance of the
Company and the Consolidated Entity; and
(iii) the Directors have been given the declarations required by s.295A of the Corporations Act 2001.
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 Ian Burston
Chairman
PERTH, Western Australia,
22 September, 2005
28
STATEMENTS OF FINANCIAL PERFORMANCE
FOR THE YEAR ENDED 30 JUNE 2005
Consolidated
Company
Note
2005
$’000
2004
$’000
2005
$’000
2004
$’000
Revenue from sale of goods
Revenue from rendering of services
Other revenue from ordinary activities
Total Revenue
Share of net (profit)/loss of equity accounted investments
Write down of the investment in the RTE/Imdex Joint Venture to
recoverable amount
Prior year adjustments relating to Imdex Minerals
Write down of property, plant and equipment of Imdex Minerals to
recoverable amount
Raw materials and consumables used
Other expenses from ordinary activities
Employee benefits expenses
Depreciation and amortisation expenses
Borrowing costs
Profit/(Loss) from ordinary activities before related income tax expense
Income tax (expense)/benefit relating to ordinary activities
2
2
2
16
2,16
2
2
2
2
2
5
37,156
33,423
13,986
12,275
9,679
1,335
5,948
-
-
460
1,959
1,110
48,170
39,831
15,945
13,385
-
-
-
292
3,108
2,796
-
-
-
-
3,108
2,796
1,370
-
1,370
-
21,637
19,338
10,660
8,569
1,949
529
8,837
6,739
1,938
559
6,103
4,569
3,079
1,040
359
5,798
4,853
2,565
1,034
420
3,456
(3,776)
(575)
(7,189)
(383)
87
431
(144)
(144)
-
289
(6,900)
(6,900)
-
Profit/(Loss) from ordinary activities after related income tax expense
3,073
(3,689)
Net Profit/(Loss)
Net profit attributable to outside equity interests
3,073
(3,689)
-
-
Net Profit/(Loss) attributable to members of the Parent Entity
23
3,073
(3,689)
(144)
(6,900)
Total Changes in Equity Other than those Resulting from Transactions
with Owners as Owners
3,073
(3,689)
(144)
(6,900)
Basic Earnings per Share (cents)
Ordinary Shares
Diluted Earnings per Share (cents)
Ordinary Shares
Consolidated
2005
Cents
2004
Cents
6
6
2.69
(3.07)
2.69
(3.07)
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 2005
Current Assets
Cash Assets
Receivables
Inventories
Current Tax Assets
Other
Total Current Assets
Non Current Assets
Other Financial Assets
Property, Plant and Equipment
Exploration, Evaluation and Development Expenditure
Intangibles
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/(Accumulated Losses)
Total Equity
Consolidated
Company
Note
2005
$’000
2004
$’000
2005
$’000
2004
$’000
7
8
9
11
12
10
13
14
15
11
17
18
11
19
18
11
19
21
22
23
103
13,920
8,356
-
19
56
9,355
6,340
-
7
96
4,556
2,249
-
3
35
2,548
947
22
-
22,398
15,758
6,904
3,552
1,475
5,413
10,414
11,771
601
12
664
641
-
595
2,984
6,571
601
12
329
6,917
7,429
641
-
260
13,166
18,420
10,497
15,247
35,564
34,178
17,401
18,799
7,971
4,047
574
860
7,221
4,429
39
639
2,526
4,698
531
247
2,482
3,898
-
203
13,452
12,328
8,002
6,583
2,883
3,239
4,172
4,405
-
103
370
130
-
38
370
50
2,986
3,739
4,210
4,825
16,438
16,067
12,212
11,408
19,126
18,111
5,189
7,391
19,008
21,058
19,008
21,058
-
8
-
8
118
(2,955)
(13,819)
(13,675)
19,126
18,111
5,189
7,391
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 2005
Cash flows from Operating Activities
Receipts from customers
Other income
Consolidated
Company
Note
2005
$’000
2004
$’000
2005
$’000
2004
$’000
48,767
40,747
15,135
13,699
-
-
1,020
840
Payments to suppliers and employees
(44,975)
(38,366)
(16,027)
(13,982)
Dividends received
Interest received
Interest and other costs of finance paid
Income taxes paid
-
16
(351)
(286)
-
-
(378)
(543)
Net cash provided by Operating Activities
34
3,171
1,460
688
18
-
-
(351)
(376)
-
483
Cash flows from Investing Activities
Payments for property, plant and equipment
(2,791)
(1,926)
(1,719)
Proceeds from disposal of property, plant and equipment
Proceeds from receivable – RTE/Imdex Joint Venture
Payments for intangible assets
Payments for other assets
639
189
(11)
(216)
343
-
-
-
251
189
(11)
(216)
(14)
167
(463)
270
-
-
-
Net cash used in Investing Activities
(2,190)
(1,583)
(1,506)
(193)
Cash flows from Financing Activities
Advances from Controlled Entities
Repayments hire purchase and lease borrowings
Proceeds from borrowings
Repayment of borrowings
-
-
(1,296)
(1,234)
657
(387)
757
(522)
2,479
2,176
1,682
1,122
(1,075)
(1,250)
(1,075)
(1,250)
Net cash provided by/(used in) Financing Activities
108
(308)
877
107
Net Increase/(Decrease) in Cash Held
1,089
(431)
(146)
81
Cash at the beginning of the financial year
Cash at the end of the financial year
34
34
(1,453)
(1,022)
(1,567)
(1,648)
(364)
(1,453)
(1,713)
(1,567)
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. Cost is based on the fair values of the consideration given in exchange for 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 as follows:
(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 24 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.
(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.
32
NOTES TO THE FINANCIAL STATEMENTS
(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 5.
(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.
(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
2005
2.5%
2004
2.5%
10% - 40%
10% - 40%
13% - 22.5%
13% - 22.5%
33
NOTES TO THE FINANCIAL STATEMENTS
(i) Leased assets
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.
(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 Benefits
The provision for employee benefits to wages, salaries, annual leave and other employee benefits represents the amount which
the Consolidated Entity has a present obligation to pay resulting from employees’ services provided up to the balance date.
Provisions expected to be settled within 12 months, are calculated at nominal amounts based on the remuneration rate expected
to apply at the time of settlement.
The liability for employee benefits 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.
34
NOTES TO THE FINANCIAL STATEMENTS
Liabilities for employee benefits 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.
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.
(i)
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 28 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.
(ii) 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 27.
(n) Financial instruments issued by the Company
(i) Debt and equity instruments
Debt and equity instruments are classified as either liabilities or as equity in accordance with the substance of the
contractual arrangement.
(ii) Transaction costs on the issue of equity instruments
Transaction costs arising on the issue of equity instruments are recognised directly in equity as a reduction of the proceeds of
the equity instruments to which the costs relate. Transaction costs are the costs that are incurred directly in connection with the
issue of those equity instruments and which would normally not have been incurred had those instruments not been issued.
(iii)
Interest and dividends
Interest and dividends are classified as expenses or as distributions of profit consistent with the Statement of Financial Position
classification of the related debt or equity instrument.
(o) 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.
(iv) Dividend Revenue
Dividend revenue is recognised on a receivable basis.
(p) 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
Not partnerships are accounted for under the equity method in the consolidated Financial Statements and the cost method in
the company Financial Statements.
(q) 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.
35
NOTES TO THE FINANCIAL STATEMENTS
(r) 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.
(s) 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:
(i)
(ii)
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.
(t)
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.
(u) Receivables
Trade receivables and other receivables are recorded at amounts due less any allowance for doubtful debts.
2.
PROFIT FROM ORDINARY ACTIVITIES
Profit from ordinary activities before income tax includes the following
items of revenues and expenses:
Operating Revenue
Sale of goods
Rendering of services
Non Operating Revenue
Consolidated
Company
2005
$’000
2004
$’000
2005
$’000
2004
$’000
37,156
33,423
13,986
12,275
9,679
5,948
-
-
46,835
39,371
13,986
12,275
Gross proceeds from sale of non-current assets
1,254
343
Management fees from Controlled Entities
Dividends from Controlled Entities
Grants received
Other revenue
-
-
77
4
-
-
59
58
251
1,020
688
-
-
270
840
-
-
-
Total Revenue from Ordinary Activities
48,170
39,831
15,945
13,385
1,335
460
1,959
1,110
36
NOTES TO THE FINANCIAL STATEMENTS
Expenses
Gross proceeds from the sale of non-current assets
Written down value of non-current assets sold
Net gain on disposal of non-current assets – property, plant and equipment
Depreciation of non-current assets
- buildings
- plant and equipment
Amortisation of:
- leased assets
- exploration, evaluation and development expenditure
Consolidated
Company
2005
$’000
2004
$’000
2005
$’000
2004
$’000
1,254
(870)
384
98
1,124
1,222
687
40
727
343
(288)
55
102
1,131
1,233
660
45
705
251
(207)
44
98
695
793
207
40
247
270
(208)
62
102
708
810
179
45
224
Total Depreciation/Amortisation
1,949
1,938
1,040
1,034
Borrowing costs:
- hire purchase liabilities
- other parties
Cost of sales
Bad debts written off – trade debtors
Operating lease rental expense
Other Expenses from Other Activities
Commissions
Consultancy fees
Electricity
Repairs and maintenance
Rent and premises costs
Insurance
Freight
Communication
Hire of plant and equipment
Travel and accommodation
Vehicle expenses
Foreign exchange gain/(loss)
Other expenses
194
335
529
181
378
559
26
333
359
44
376
420
23,180
25,083
7,832
8,148
9
715
726
634
377
964
1,013
280
518
320
811
989
748
(84)
30
504
608
656
414
714
770
276
575
305
298
801
511
87
9
278
120
279
362
586
331
99
305
122
168
122
211
(6)
30
225
210
266
411
470
277
140
436
139
182
99
129
67
3,364
10,660
2,822
8,837
1,870
4,569
2,027
4,853
37
NOTES TO THE FINANCIAL STATEMENTS
Consolidated
Company
2005
$’000
2004
$’000
2005
$’000
2004
$’000
Write down of the property, plant and equipment of Imdex Minerals
to recoverable amount (i)
1,370
-
1,370
-
Write down of the investment in the RTE/Imdex Joint Venture
to recoverable amount (ii)
Prior year adjustments relating to Imdex Minerals (iii)
-
-
3,108
2,796
-
-
3,108
2,796
(i) On 1 July 2005 Imdex Limited sold its mineral processing business, Imdex Minerals, for a cash price of $6.3 million. As part of
the sale agreement, Imdex Limited is entitled to a further cash payment of $1.5 million, subject to the future profitability of certain
agricultural products which, at the time of sale, were in the early stages of development and commercialisation.
Whilst Imdex has reason to believe that the future profitability of these products will be sufficient to ensure the collection of the
additional consideration, a definitive assessment is unable to be made at 30 June 2005. The Directors have therefore taken a
conservative view of the carrying value of Imdex Minerals business as at 30 June 2005. As the carrying value of the net assets
of Imdex Minerals at 30 June 2005 totalled $7.6 million, the Directors have decided to write down the carrying value by $1.37
million at 30 June 2005 to $6.3 million, representing the amount realised in cash on 1 July 2005. This write down, of property,
plant and equipment, has been reflected as a charge against current period profits and is noted above as a significant expense.
Further details concerning this matter are set out in Note 31.
(ii) In the prior year, the Company reached agreement with Rashid Trading Establishment (RTE), to re-structure the existing drilling
fluids and chemicals joint venture in Saudi Arabia. As part of the re-structure, as at 30 June 2004, Imdex Limited wrote down the
carrying value of the investment in the Joint Venture to its recoverable amount.
(iii) In the prior year, discrepancies in the recorded value of stock and debtors, totalling $4.06 million, were uncovered at Imdex
Minerals. Of this total, $1.3 million related to the year ended 30 June 2004, and $2.8 million related to earlier financial years.
The background and rectification measures initiated by Directors as a result of the discrepancies have been the subject of previous
announcements to ASX and the 2004 Annual Financial Report. Due to the nature of the discrepancies, and the period to which
they relate, it is impracticable to restate the comparative information relating to prior financial years.
3.
SALES OF ASSETS
Sales of assets in the ordinary course of business have given rise to the following profits and losses:
Net profits
Property, plant and equipment
4.
AUDITORS’ REMUNERATION
Auditor of the parent entity – Deloitte Touche Tohmatsu
Audit or review of the financial report
Taxation services
Other non-audit services: other consulting services
Other non-audit services: advice concerning the impact of A-IFRS
Other auditors
Other non-audit services: taxation services
Consolidated
Company
2005
$’000
2004
$’000
2005
$’000
2004
$’000
384
55
44
62
Consolidated
Company
2005
$
2004
$
2005
$
2004
$
83,206
59,185
83,206
59,185
82,326
22,840
82,326
22,840
27,300
12,500
-
-
27,300
12,500
-
-
205,332
82,025
205,332
82,025
-
600
-
600
205,332
82,625
205,332
82,625
38
NOTES TO THE FINANCIAL STATEMENTS
5.
INCOME TAX
Consolidated
Company
2005
$’000
2004
$’000
2005
$’000
2004
$’000
The prima facie income tax expense on pre-tax accounting profit
reconciles to the income tax expense in the Financial Statements
as follows:
Profit/(loss) from ordinary activities before tax
3,456
(3,776)
(575)
(7,189)
Income tax expense/(benefit) calculated at 30%
1,037
(1,133)
(173)
(2,157)
Permanent Differences
Tax benefit of losses transferred to a controlled entity
Prior year adjustments relating to Imdex Minerals
Non-deductible write down of the investment in the RTE/Imdex Joint
Venture
Non-deductible expenses and capital proceeds relating to the
investment in the RTE/Imdex Joint Venture
Intercompany dividends
Bad debts written off
Non-deductible share of RTE/Imdex Joint Venture losses
Recoverable amount write off – fixed assets
Deductible share raising costs
Taxable/(Non taxable) income
Non deductible expenses
Recognition of net timing differences not previously brought to account
(Over)/under provision of income tax in previous year
(Over)/under provision of income tax in previous year – relating to the
prior year stock and debtors write-downs at Imdex Minerals
(Over)/under provision of income tax in previous year – relating to loss
transfers between entities in the wholly owned group
-
-
-
-
-
(876)
-
379
(13)
-
43
24
(211)
-
-
(25)
788
932
-
-
-
87
-
(13)
31
38
-
(4)
(788)
-
389
-
-
379
(206)
(876)
-
-
395
788
932
-
-
-
-
-
(13)
(13)
-
29
24
16
-
-
4
27
-
4
(788)
519
Income tax expense/(benefit) relating to ordinary activities
383
(87)
(431)
(289)
Future income tax benefits not brought
to account as assets:
Tax losses – revenue
Tax losses – capital
Timing differences
Consolidated
Company
2005
$’000
2004
$’000
2005
$’000
2004
$’000
-
-
-
-
135
-
-
-
-
-
135
-
The taxation benefits of tax losses and timing differences not brought to account will only be obtained if:
(i) assessable income is derived of a nature and of amount sufficient to enable the benefit from the deductions to be realised;
(ii) 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.
39
NOTES TO THE FINANCIAL STATEMENTS
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. The company and its wholly-
owned Australian resident entities are eligible to consolidate for tax purposes under this legislation and have elected to be taxed as a
single entity from 1 July 2003. The head entity within the tax consolidated group for the purposes of the tax consolidation system is
Imdex Limited.
Entities within the tax-consolidated group have entered into a tax-sharing agreement with the head entity. Under the terms of this
agreement, Imdex Limited and each of the entities in the tax consolidated group has agreed to pay a tax equivalent payment to or
from the head entity, based on the net accounting profit or loss of the entity and the current tax rate. Such amounts are reflected in
amounts receivable from or payable to other entities in the tax consolidated group.
6.
EARNINGS PER SHARE
Basic earnings per share
Diluted earnings per share
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:
Consolidated
2005
Cents Per Share
2004
Cents Per Share
2.69
2.69
(3.07)
(3.07)
Consolidated
2005
$’000
2004
$’000
Earnings
(a)
3,073
(3,689)
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:
2005
Number
2004
Number
114,055,368
120,055,368
2005
$’000
3,073
3,073
2004
$’000
(3,689)
(3,689)
2005
$’000
2004
$’000
Earnings
(a)
3,073
(3,689)
2005
Number
2004
Number
Weighted average number of ordinary shares
(b) (c)
114,086,252
120,055,368
(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/(loss)
Earnings used in the calculation of diluted EPS
2005
$’000
3,073
3,073
2004
$’000
(3,689)
(3,689)
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.
40
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
Consolidated
2005
Number
2004
Number
114,055,368
120,055,368
30,884
-
Weighted average number of ordinary shares and potential ordinary shares
used in the calculation of diluted EPS
114,086,252
120,055,368
(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 share:
Director share options
Employee and Consultants share options
Corporate Advisors share options
2005
Number
2004
Number
-
3,000,000
3,160,000
3,100,000
-
-
6,260,000
3,000,000
7.
CASH ASSETS
Cash
8.
RECEIVABLES
Current
Receivables
Consolidated
Company
2005
$’000
2004
$’000
2005
$’000
2004
$’000
103
56
96
35
Consolidated
Company
2005
$’000
2004
$’000
2005
$’000
2004
$’000
11,871
9,765
2,744
2,789
Allowance for doubtful debts
(383)
(557)
(113)
(252)
Other receivables
Due from Rashid Trading Establishment – refer Note 10
9.
INVENTORIES
Current
Raw material – at cost
Finished goods – at cost
11,488
9,208
2,631
2,537
663
1,769
147
-
13,920
9,355
156
1,769
4,556
11
-
2,548
Consolidated
Company
2005
$’000
2004
$’000
2005
$’000
2004
$’000
1,070
7,286
8,356
34
6,246
6,340
1,070
1,179
2,249
34
913
947
41
NOTES TO THE FINANCIAL STATEMENTS
10. OTHER FINANCIAL ASSETS
Consolidated
Company
2005
$’000
2004
$’000
2005
$’000
2004
$’000
Non-current: at recoverable amount (i)
Investment in Other Entities – RTE/Imdex Saudi Arabian Joint Venture (ii)
1,400
5,413
2,585
6,593
Other
Investments in Controlled Entities
75
-
-
-
75
324
-
324
1,475
5,413
2,984
6,917
(i) Based on the Directors conservative estimate of the discounted future cash flows arising from each asset;
(ii) At the Annual General Meeting on 8 November 2004, Shareholders approved the re-structure of the investment in Imdex Arabia
and the RTE/Imdex Joint Venture. The main outcomes of the re-structure were:
ü
·
ü
·
ü
·
The cancellation of 10,000,000 shares in Imdex Limited held by Mr H H Al-Merry.
This occurred on 23 November 2004. Refer Note 21;
That RTE pay to Imdex Limited, $US1.5 million net; and
That, on the completion of the re-structure, the Company’s interest in Imdex Arabia and
the RTE/Imdex Joint Venture be reduced from 49% to 20%.
In relation to the US$1.5 million due from Rashid Trading Establishment (RTE), in February 2005, a further binding agreement,
including a promissory note and personal guarantee from Mr H H Al-Merry (the principal of RTE and a Director of Imdex) was reached
with RTE which required RTE to pay US$100,000 per month to Imdex with the entire amount to be paid by 31 December 2005. At
the date of this report, of the $US1.5 million due from RTE, $US550k has been received with the balance of $US950k due from RTE
on, or before, 31 December 2005.
As at 30 June 2005, the amount due from RTE is AUD $1.769 million as disclosed in Note 8 whilst the carrying value of the
investment in Imdex Arabia Limited and the RTE/Imdex Joint Venture is AUD $1.400 million as shown above.
11.
TAX ASSETS/LIABILITIES
Current tax assets
Tax refund receivable
Consolidated
Company
2005
$’000
2004
$’000
2005
$’000
2004
$’000
-
-
-
22
Non-current tax assets
Future income tax benefit arising from timing differences
664
595
329
260
Current tax liabilities
Tax payable
Non-current
Deferred tax liability
12. OTHER ASSETS
Prepayments
42
574
39
531
-
-
370
-
370
Consolidated
Company
2005
$’000
2004
$’000
2005
$’000
2004
$’000
19
7
3
-
NOTES TO THE FINANCIAL STATEMENTS
13. PROPERTY, PLANT AND EQUIPMENT
Consolidated
Freehold Land
at cost (i)
Freehold
Buildings
at cost (i)
Plant and
Equipment
at cost
Equipment
under hire
purchase
at cost
Capital works
in progress
at cost
TOTAL
$’000
$’000
$’000
$’000
$’000
$’000
Gross Carrying Value
Balance at 30 June 2004
875
3,278
12,915
5,093
-
22,161
Additions
Disposals
Transfer
Recoverable amount write down – refer
Note 2
-
-
-
-
-
-
-
-
1,540
(627)
426
(1,370)
899
353
2,792
(1,112)
(443)
-
-
-
-
(1,739)
(17)
(1,370)
Balance at 30 June 2005
875
3,278
12,884
4,437
353
21,827
Accumulated Depreciation/Amortisation
Balance at 30 June 2004
Disposals
Depreciation expense
Transfer
Balance at 30 June 2005
Net book value
As at 30 June 2004
As at 30 June 2005
-
-
-
-
-
744
-
98
-
842
875
875
2,534
2,436
7,902
(195)
1,124
850
9,681
5,013
3,203
1,744
(674)
687
(867)
890
3,349
3,547
-
-
-
-
-
-
10,390
(869)
1,909
(17)
11,413
11,771
353
10,414
Company
Freehold Land
at cost (i)
Freehold
Buildings
at cost (i)
Plant and
Equipment
at cost
Equipment
under hire
purchase
at cost
Capital works
in progress
at cost
TOTAL
$’000
$’000
$’000
$’000
$’000
$’000
Gross Carrying Value
Balance at 30 June 2004
875
3,278
Additions
Disposals
Transfer
Recoverable amount write down – refer
Note 2
-
-
-
-
-
-
-
-
7,388
1,117
(427)
431
(1,370)
1,597
304
(99)
(441)
-
-
13,138
298
1,719
-
-
-
(526)
(10)
(1,370)
Balance at 30 June 2005
875
3,278
7,139
1,361
298
12,951
Accumulated Depreciation/Amortisation
Balance at 30 June 2004
Disposals
Depreciation expense
Transfer
Balance at 30 June 2005
-
-
-
-
-
744
4,446
-
98
-
(5)
695
(2)
842
5,134
519
(314)
207
(8)
404
-
-
-
-
-
5,709
(319)
1,000
(10)
6,380
43
NOTES TO THE FINANCIAL STATEMENTS
Company
Freehold Land
at cost (i)
Freehold
Buildings
at cost (i)
Plant and
Equipment
at cost
Equipment
under hire
purchase
at cost
Capital works
in progress
at cost
TOTAL
$’000
$’000
$’000
$’000
$’000
$’000
Net book value
As at 30 June 2004
As at 30 June 2005
875
875
2,534
2,436
2,942
2,005
1,078
957
-
298
7,429
6,571
(i)
Land and buildings located at 7-15 Spencer Street, Jandakot, Western Australia and 1 Tichbourne Street, Jandakot, Western
Australia, were independently valued in January 2005 by T D Anderson FAPI (Certified Practising Valuer – Reg No.471),
of Jones Lang LaSalle, on the basis of existing use at $3,900,000. At 30 June 2005 the carrying value of the land and buildings
was $3,310,000.
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
Consolidated
Company
2005
$’000
2004
$’000
2005
$’000
2004
$’000
98
1,124
687
1,909
102
1,131
660
1,893
98
695
207
1,000
102
708
179
989
14. EXPLORATION, EVALUATION AND DEVELOPMENT EXPENDITURE
Costs carried forward in respect of areas of interest
in production phase:
- At cost
- Accumulated amortisation
Cost
Balance at the beginning of the financial year
Expenditure incurred
Balance at the end of the financial year
Accumulated Amortisation
Balance at the beginning of the financial year
Amortisation charge
Balance at the end of the financial year
Consolidated
Company
2005
$’000
2004
$’000
2005
$’000
2004
$’000
894
(293)
601
894
-
894
253
40
293
894
(253)
641
894
-
894
208
45
253
894
(293)
601
894
-
894
253
40
293
894
(253)
641
894
-
894
208
45
253
No Government subsidies or grants were received in respect of these areas of interest.
44
NOTES TO THE FINANCIAL STATEMENTS
15.
INTANGIBLES
Patent costs
Accumulated amortisation
Aggregate amortisation allocated, whether recognised as an expense or
capitalised as part of the carrying amount of other assets during the year:
Patent costs
16.
INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
(a) Details of Joint Venture entities
Consolidated
Company
2005
$’000
2004
$’000
2005
$’000
2004
$’000
12
-
12
-
-
-
-
-
12
-
12
-
-
-
-
-
Percentage interest held
Note
Principal
Activities
Balance Date
2005
%
2004
%
Investment Carrying
Amount
2005
$’000
2004
$’000
RTE/Imdex Saudi Arabian
Joint Venture
(i)
Oil & Gas
31 Dec
20% (i)
49%
1,400 (i)
5,413
At the Annual General Meeting on 8 November 2004, Shareholders approved the re-structure of the investment in Imdex Arabia
and the Rashid Trading Establishment (RTE)/Imdex Joint Venture. The main outcomes of the re-structure were:
ü
ü
ü
The cancellation of 10,000,000 shares in Imdex Limited held by Mr H H Al-Merry. This occurred on 23 November 2004.
Refer Note 21;
That RTE pay to Imdex Limited, $US1.5 million net as set out in Note 8; and
That, on the completion of the re-structure, the Company’s interest in Imdex Arabia and the RTE/Imdex Joint Venture be
reduced from 49% to 20%.
Following the re-structure, the carrying amount of the interest in the Joint Venture was $3.363 million (refer (b) below). This
represented the investment of $1.400 million and a receivable from RTE of $1.958 million which were separately classified as
‘Other Financial Assets’ and ‘Receivables” respectively.
As at 30 June 2005, the receivable from RTE is AUD $1.769 million as disclosed in Note 8 whilst the carrying value of the
investment in Imdex Arabia Limited is AUD $1.400 million as shown in Note 10.
(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
Re-structure of the investment in the Joint Venture
Share of losses
Write down of investment
Reclassification of equity accounted investment during the year
Consolidated
2005
$’000
5,413
(4,013)
-
-
(1,400)
2004
$’000
8,811
-
(292)
(3,108)
-
Note
(e)
(i)
Equity accounted amount of investment at the end of the financial year
-
5,413
(i) As indicated above, as a result of this re-structure, Imdex will have a 20% interest in Imdex Arabia Limited which is no longer
classified as a joint venture entity. As a result, equity accounting for a joint venture entity has ceased, and the investment will be
recognised at the lower of cost and recoverable value. Refer to (a) above for further details.
45
NOTES TO THE FINANCIAL STATEMENTS
(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
Consolidated
2005
$’000
2004
$’000
-
-
-
-
-
-
-
-
-
1,725
2,035
28
142
559
(4,892)
-
-
(403)
As described above, due to the fact that the investment in the Joint Venture is no longer equity accounted, the summary of the
financial position of the Joint Venture at year end is not disclosed.
(d) Share of Reserves attributable to Joint Venture entities
Retained profit/(loss)
At the beginning of the financial year
Share of net loss of associates after income tax
Cessation of equity accounting during the year
At the end of the financial year
(e) Share of Net result of Joint Venture entities
Consolidated
2005
$’000
2004
$’000
(1,186)
-
1,186
(894)
(292)
-
-
(1,186)
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
(f) Contingent Liabilities and Capital Commitments
Consolidated
2005
$’000
2004
$’000
12,097
(12,389)
(292)
-
(292)
-
-
-
-
-
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.
46
NOTES TO THE FINANCIAL STATEMENTS
17. PAYABLES
Trade payables
Other payables
18.
INTEREST BEARING LIABILITIES
Current
Bank overdraft (i)
Bank loan – secured (i)
Hire purchase liabilities (ii)
Non-current
Bank loan – secured (i)
Hire purchase liabilities (ii)
Loans from Controlled Entities
Financing Arrangements
Consolidated
Company
2005
$’000
6,795
1,176
7,971
2004
$’000
2005
$’000
2004
$’000
6,360
2,208
1,987
861
318
495
7,221
2,526
2,482
Consolidated
Company
Note
2005
$’000
2004
$’000
2005
$’000
2004
$’000
34
27
27
467
2,500
1,080
4,047
1,125
1,758
-
1,509
2,000
920
1,809
2,500
389
1,602
2,000
296
4,429
4,698
3,898
1,700
1,539
-
1,125
1,700
331
2,716
4,172
102
2,603
4,405
2,883
3,239
The Consolidated Entity has access to the following lines of credit:
(a) Total facilities available
Bank loan
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)
2,755
3,700
2,755
3,700
500
2,175
5,430
500
1,550
5,750
500
2,175
5,430
500
1,550
5,750
2,755
3,700
2,755
3,700
500
622
3,877
257
1,509
5,466
372
622
3,749
257
1,509
5,466
47
NOTES TO THE FINANCIAL STATEMENTS
(c) Facilities not utilised at balance date
Bank loan
Equipment finance facility
Multi option facility (including bank overdraft)
(i)
Bank Overdraft and Bank Loans
Consolidated
Company
Note
2005
$’000
2004
$’000
2005
$’000
2004
$’000
-
-
1,553
1,553
-
243
41
284
-
128
1,553
1,681
-
243
41
284
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 Pty Ltd 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 25.
(ii)
The finance and hire purchase liabilities are secured over the assets to which they relate, the current market value of which
exceeds the value of the finance and hire purchase liability.
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.
19. PROVISIONS
Current
Employee entitlements
Non-current
Employee entitlements
20. EMPLOYEE BENEFITS
The aggregate employee benefit liability recognised and
included in the Financial Statements is as follows:
Provision for employee entitlements
Current
Non Current
Accrued wages and salaries (i)
Number of employees at year end
Consolidated
Company
2005
$’000
2004
$’000
2005
$’000
2004
$’000
860
639
247
203
103
130
38
50
Consolidated
Company
Note
2005
$’000
2004
$’000
2005
$’000
2004
$’000
19
19
860
103
320
1,283
127
639
130
178
947
120
247
38
63
348
50
203
50
38
291
46
(i) Accrued wages and salaries are included in the current trade payables balance in Note 17.
48
NOTES TO THE FINANCIAL STATEMENTS
21. CONTRIBUTED EQUITY
Issued and paid up capital
Fully paid ordinary shares (i)
Consolidated
Company
2005
$’000
2004
$’000
2005
$’000
2004
$’000
19,008
21,058
19,008
21,058
(i) Fully paid ordinary shares carry one vote per share and the right to dividends.
2005
2004
Note
Number of
shares
$’000
Number of
shares
$’000
Ordinary shares
Balance at beginning of financial year
120,055,368
21,058
120,055,368
21,058
Cancellation of shares held up Mr H H Al-Merry
in connection with the re-structure of the
RTE/Imdex Joint Venture
16
(10,000,000)
(2,050)
-
-
Balance at the end of financial year
110,055,368
19,008
120,055,368
21,058
22. RESERVES
Asset revaluation
Asset revaluation reserve
Balance at beginning of financial year
Written off to the Profit and Loss
Balance at end of financial year
23. RETAINED PROFITS/(ACCUMULATED LOSSES)
(Accumulated losses)/retained profits at
the beginning of the year
Net profit/(loss) attributable to members of
the members of the parent entity
Consolidated
Company
2005
$’000
2004
$’000
2005
$’000
2004
$’000
-
8
(8)
-
8
8
-
8
-
8
(8)
-
8
8
-
8
Consolidated
Company
2005
$’000
2004
$’000
2005
$’000
2004
$’000
(2,955)
734
(13,675)
(6,775)
3,073
(3,689)
(144)
(6,900)
Retained profits/(accumulated losses) at the end of the year
118
(2,955)
(13,819)
(13,675)
49
NOTES TO THE FINANCIAL STATEMENTS
24. CONTROLLED ENTITIES
Particulars in relation to Controlled Entities
Parent Entity
Imdex Limited
Controlled Entities
Australian Mud Company Pty Ltd
Surtron Technologies Pty Ltd
Australian Mud Company Chile SA
(i) Ultimate parent Company.
(ii) Under Chilean law an audit of this Company is not required.
25. ADDITIONAL FINANCIAL INSTRUMENTS DISCLOSURE
(a) Interest rate risk
Country of
incorporation
Percentage interest held
Note
2005
%
2004
%
(i)
Australia
Australia
Australia
(ii)
Chile
100
100
100
100
100
100
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
average
interest rate
Floating
interest rate
Less than
1 year
1 to
5 years
More than
5 years
Non-interest
bearing
Total
%
$’000
$’000
$’000
$’000
$’000
$’000
2005
Financial Assets
Cash
Receivables
Financial Liabilities
Payables
Bank overdraft
Bank loans
7
8
17
18
18
0.50%
-
-
8.95%
95
-
95
-
467
-
-
-
-
-
7.12%
2,625
1,000
-
-
-
-
-
-
Hire purchase/lease liabilities 18
7.56%
Employee entitlements
19 (i)
5.97%
-
-
1,080
1,758
-
-
3,092
2,080
1,758
-
-
-
-
-
-
-
-
-
8
103
13,920
13,920
13,928
14,023
7,971
7,971
-
-
-
467
3,625
2,838
963
963
8,934
15,864
50
NOTES TO THE FINANCIAL STATEMENTS
Fixed Interest Maturing in:
Note
Weighted
average
interest rate
Floating
interest rate
Less than
1 year
1 to
5 years
More than
5 years
Non-interest
bearing
Total
%
$’000
$’000
$’000
$’000
$’000
$’000
2004
Financial Assets
Cash
Receivables
Financial Liabilities
Payables
Bank overdraft
Bank loans
7
8
17
18
18
0.25%
-
-
33
-
33
-
8.70%
6.87%
1,509
2,000
-
-
-
-
-
-
-
-
-
-
-
1,700
Hire purchase/lease liabilities 18
7.62%
Employee entitlements
19 (i)
5.97%
-
-
920
1,539
-
-
4,209
920
2,539
-
-
-
-
-
-
-
-
-
23
56
9,355
9,355
9,378
9,411
7,221
7,221
-
-
-
1,509
3,700
2,459
769
769
7,990
15,658
(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.
(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.
26. DIRECTORS’ AND EXECUTIVES’ REMUNERATION
(a) Specified Directors and Executives
The specified Directors of Imdex Limited during the year were:
(i) Mr I F Burston (Independent, Non Executive Chairman);
(ii) Mr B W Ridgeway (Managing Director);
(iii) Mr H H Al-Merry (Non Executive Director);
(iv) Mr R W Kelly (Independent, Non Executive Director);
(v) Mr K A Dundo (Independent, Non Executive Director).
The specified Executives of Imdex Limited during the year were:
(i) Mr S J Lyons (Company Secretary, Imdex Limited);
(ii) Mr D L Kinley (Group Financial Controller, Imdex Limited);
(iii) Mr G E Weston (General Manager: Australian Mud Company Pty Ltd, Surtron Technologies Pty Ltd and Ace Drilling Supplies);
(iv) Mr C S Munyard (Manager: Surtron Technologies Pty Ltd);
(v) Mr I Tan (General Manager Imdex Minerals).
51
NOTES TO THE FINANCIAL STATEMENTS
(b) Specified Directors’ and specified Executives’ remuneration
All specified Executives, and all staff of the Company, are subject to formal annual reviews of their performance. The
remuneration of specified Executives generally comprises a fixed monetary total, although bonuses related to the performance of
the Company may be agreed between that Executive and the Company from time to time.
The Board seeks the approval of Shareholders, where required, in relation to the aggregate of Non Executive Director
remuneration and any options that may be granted to Directors.
Remuneration packages are reviewed and determined with due regard to current market rates.
Specified Director’s Remuneration 2005
Primary
Post Employment
Equity
Other
benefits
Total
Salary & fees Bonus
Non-
monetary
Super-
annuation
Prescribed
benefits
Other Options
$
$
$
$
250,000
-
22,123
22,500
50,000
-
35,000
35,000
370,000
-
-
-
-
-
-
-
-
-
4,500
-
3,150
3,150
22,123
33,300
$
-
-
-
-
-
-
$
-
-
-
-
-
-
$
-
-
-
-
-
-
$
$
-
294,623
-
-
-
-
-
54,500
-
38,150
38,150
425,423
Executive Director
B W Ridgeway,
Managing Director (i)
Non Executive Directors
I F Burston, Chairman
H H Al-Merry (ii)
R W Kelly
K A Dundo
Total
Specified Director’s Remuneration 2004
Primary
Post Employment
Equity
Other
benefits
Total
Salary & fees Bonus
Non-
monetary
Super-
annuation
Prescribed
benefits
Other Options
$
$
$
$
$
$
$
$
$
250,000
50,000
-
16,040
16,040
12,500
8,333
352,913
-
-
-
-
-
-
-
-
42,101
22,500
-
-
-
-
-
-
4,500
-
1,444
1,444
21,125
750
42,101
51,763
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
314,601
54,500
-
17,484
17,484
33,625
9,083
446,777
Executive Director
B W Ridgeway,
Managing Director (i)
Non Executive Directors
I F Burston, Chairman
H H Al-Merry (ii)
R W Kelly
K A Dundo
M L Gasson
G W Cobbledick
Total
(i)
The Managing Director, Mr B W Ridgeway does not, currently, have a service contract with the Company. The Managing
Director’s remuneration is reviewed and determined by the Remuneration Committee;
(ii) 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.
52
NOTES TO THE FINANCIAL STATEMENTS
Specified Executive’s (Excluding Directors) Remuneration 2005
Primary
Post Employment
Equity
Other
benefits
Total
Salary & fees
Bonus
Non-
monetary
Super-
annuation
Prescribed
benefits
Other Options
$
$
$
$
$
$
$
$
$
S J Lyons,
Company Secretary (i)
D L Kinley,
Group Financial Controller (ii)
G E Weston,
General Manager AMC,
Ace & Surtron (iii)
C S Munyard,
Manager Surtron (iv)
I Tan,
General Manager Imdex
Minerals (v)
Total
112,078
107,231
200,000
106,838
152,269
678,416
-
-
-
-
-
-
-
-
9,612
9,651
6,795
17,965
9,351
9,615
6,357
13,704
32,115
50,935
-
-
-
-
-
-
-
-
-
-
-
-
600
1,200
24,000
900
-
26,700
-
-
-
-
-
-
112,678
127,694
248,760
126,704
172,330
788,166
Specified Executive’s (Excluding Directors) Remuneration 2004
Primary
Post Employment
Equity
Other
benefits
Total
Salary & fees
Bonus
Non-
monetary
Super-
annuation
Prescribed
benefits
Other Options
$
$
$
$
$
$
$
$
$
G E Weston,
General Manager AMC,
Ace & Surtron (iii)
I Tan,
General Manager Imdex
Minerals (v)
R Hancock,
General Manager Imdex
Minerals
179,423
20,000
8,574
16,148
29,423
102,072
-
-
-
2,648
2,023
7,902
Total
310,918
20,000
10,597
26,698
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
224,145
32,071
111,997
368,213
(i)
Mr S J Lyons is party to a consulting agreement with the Company, which sets out a fixed fee basis and prescribes other general
terms and conditions. The consulting agreement specifies a two month notice period in the event that the agreement is terminated.
In the current year, Mr Lyons was granted 50,000 options, along with other staff of the Group, under the Imdex Staff Option
Scheme as set out in Note 28. The percentage of the value of remuneration that consisted of options was 0.5%;
(ii) Mr D L Kinley is a party to a service contract with Imdex Limited, which sets out a fixed remuneration package, reviewable
annually. The service contract specifies a one month notice period in the event that the contract is terminated. Additional
performance incentives may be agreed between Mr Kinley and the Company from time to time.
In the current year, Mr Kinley was granted 100,000 options, along with other staff of the Group, under the Imdex Staff Option
Scheme as set out in Note 28. The percentage of the value of remuneration that consisted of options was 0.9%;
(iii) Mr G E Weston is party to a service contract with the Australian Mud Company Pty Ltd, which sets out a fixed remuneration
package, reviewable annually. The service contract stipulates a 12 month notice period in the event that the contract is
terminated. Performance incentives may be agreed between Mr Weston and the Australian Mud Company from time to time.
Additionally, Mr Weston is party to a deed with Imdex Limited, in respect of which Mr Weston has a right of first refusal in the
event that Imdex receives an offer to purchase 100% of the shares held by Imdex in the Australian Mud Company. This ‘right’
lapses automatically should Mr Weston no longer be employed by the Australian Mud Company.
53
NOTES TO THE FINANCIAL STATEMENTS
Mr Weston was granted a cash bonus of $20,000 in 2004 due to the Australian Mud Company exceeding pre-determined
earnings hurdles for that year.
In the current year, Mr Weston was granted 2,000,000 options, along with other staff of the Group, under the Imdex Staff
Option Scheme as set out in Note 28. The percentage of the value of remuneration that consisted of options was 8.9%;
(iv) Mr C S Munyard is a party to a service contract with Surtron Technologies Pty Ltd, which sets out a fixed remuneration package
reviewable annually. The service contract specifies a one month notice period in the event that the contract is terminated.
Additional performance incentives may be agreed between Mr Munyard and the Surtron Technologies Pty Ltd from time to time.
In the current year, Mr Munyard was granted 75,000 options, along with other staff of the Group, under the Imdex Staff Option
Scheme as set out in Note 28. The percentage of the value of remuneration that consisted of options was 0.7%;
(v) Mr I Tan is party to a service contract with Imdex Limited, which sets out a fixed remuneration package, reviewable annually. The
service contract specifies a one month notice period in the event that the contract is terminated. Mr Tan was not granted any
options during the current year due to his limited tenure at the time the Staff options were issued.
27. COMMITMENTS
Operating lease expense commitments
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
Consolidated
Company
2005
$’000
2004
$’000
2005
$’000
2004
$’000
Note
(i)
537
675
300
484
746
400
251
102
-
249
327
-
1,512
1,630
353
576
Minimum future lease payments
Present value of minimum future lease payments
Consolidated
Company
Consolidated
Company
2005
$’000
2004
$’000
2005
$’000
2004
$’000
2005
$’000
2004
$’000
2005
$’000
2004
$’000
Hire purchase commitments
Hire purchase commitments
are payable as follows. Due:
Within one year
1,261
1,077
Between one and five years
1,907
1,707
Later than five years
-
-
Minimum lease payments
3,168
2,784
Less: future finance charges
(330)
(325)
2,838
2,459
425
347
-
772
(52)
720
311
104
-
415
(17)
398
1,216
920
1,622
1,539
-
-
396
324
-
2,838
2,459
720
-
-
-
2,838
2,459
720
Hire purchase liabilities
provided for in the Financial
Statements
Current - Note 18
Non current - Note 18
54
1,080
920
1,758
1,539
2,838
2,459
389
331
720
296
102
-
398
-
398
296
102
398
NOTES TO THE FINANCIAL STATEMENTS
(i)
Operating leases relate to premises and the lease of motor vehicles 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.
Superannuation commitments
The Company and its Controlled Entities contribute to various defined contribution 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.
28. SHARE OPTIONS
(a) Staff Option Plan
The Consolidated Entity has in place a Staff Option Scheme (Scheme) to reward employees (including Executives) 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.
The number of options granted to staff is generally based on an assessment of the performance of that staff member as determined
by the Board of Directors. Staff are only eligible to receive options when they have been with the Company in excess of 12
months.
Generally the options will also be taken to have expired when the option holder ceases to be employed by the Consolidated
Entity. As at 30 June 2005 all of the options had vested.
(b) Directors Options
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 after ceasing to be a Director,
and may be exercised at any time from the date of issue to their expiry date. As at 30 June 2004 all of the options had vested.
(c) Corporate Advisors Options
During the year options were issued to Corporate Advisors of the Company as a performance incentive. The options carry no
rights to dividends and no voting rights. As at 30 June 2005 all of the options had vested.
Issue Date Vesting Date Expiry Date
Exercise
Price $
Opening
balance
Issued
current
year
Exercised
current
year
Lapsed
current
year
Closing
balance
1 Aug 04
1 Aug 04
31 July 09
0.20
- 3,210,000
-
(50,000) 3,160,000
25 Oct 01 25 Oct 01
24 Oct 04
0.20
1,000,000
25 Oct 01 25 Oct 01
24 Oct 04
0.35
1,000,000
25 Oct 01 25 Oct 01
24 Oct 04
0.45
1,000,000
3,000,000
-
-
-
-
- 1,000,000
- 1,000,000
- 1,000,000
- 3,000,000
-
-
-
-
Staff Options
Tranche 1
Directors’ Options
Tranche 1
Tranche 2
Tranche 3
Corporate
Advisors
Options
Tranche 1 (i)
23 Dec 04 23 Dec 04
31 Jul 09
0.20
-
100,000
Tranche 2 (ii)
23 Dec 04 23 Dec 04
31 Oct 07
0.20
- 2,000,000
Tranche 3 (i)
23 Dec 04 23 Dec 04
31 Oct 07
0.35
- 1,000,000
- 3,100,000
-
-
-
-
-
100,000
- 2,000,000
- 1,000,000
- 3,100,000
(i)
Exercisable at any time up to expiry;
(ii)
Exercisable at any time on the condition that Imdex shares have traded at 30 cents for 5 consecutive trading days.
55
NOTES TO THE FINANCIAL STATEMENTS
29. CONTINGENT LIABILITIES
The details and estimated maximum amounts of contingent liabilities that may become payable are set out below.
Indemnity to power transmission utility
Rental bond
Department of Mines
Minister of State Development
Consolidated
Company
Note
2005
$’000
2004
$’000
2005
$’000
2004
$’000
(i)
(i)
(i)
(i)
16
100
27
12
155
16
100
27
12
155
16
100
27
12
155
16
100
27
12
155
(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.
30. 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.
(a) Business Segments
The Consolidated Entity comprises the following main business segments, based on the Consolidated Entity’s management
reporting system:
(i)
Drilling products and services: Down hole surveying, geophysical logging and directional drilling; down hole motors,
cameras and drilling products;
(ii) Minerals Processing: Milling and processing of industrial minerals; and
(iii) Drilling fluids and chemicals: Manufacture and supply of drilling fluids and chemicals to the mining, mineral exploration, oil
and gas and water well drilling industries.
(b) 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 and
chemicals; down hole motors, cameras and drilling products;
(ii)
Saudi Arabia: Supply of drilling fluids and chemicals to the oil and gas industry;
(iii) Africa: Drilling services, supply of drilling fluids and chemicals;
(iv) South East Asia: Manufacture and supply of drilling fluids and chemicals to the mining and mineral exploration industries.
56
NOTES TO THE FINANCIAL STATEMENTS
Primary Reporting: Business Segments
Segment Revenues
Revenue from external
customers
Inter-segment
Other
Total
2005
$’000
2004
$’000
2005
$’000
2004
$’000
2005
$’000
2004
$’000
2005
$’000
2004
$’000
Drilling products and services
16,880
11,796
Minerals processing
6,784
6,436
Drilling fluids and chemicals
23,171
21,139
Total of all segments
46,835
39,371
-
-
-
-
-
-
-
-
-
-
81
81
-
-
16,880
11,796
6,784
6,436
117
23,252
21,256
117
46,916
39,488
Eliminations
Unallocated
Total
-
-
1,254
343
48,170
39,831
Segment results, assets and liabilities
Segment results
Segment assets
Segment liabilities
2005
$’000
2004
$’000
2005
$’000
2004
$’000
2005
$’000
2004
$’000
Drilling products and services
2,872
1,137
12,474
8,052
6,051
3,859
Minerals processing
Drilling fluids and chemicals
Total of all segments
(229)
(3,721)
8,820
8,582
900
2,528
3,006
3,257
13,427
11,376
4,644
4,265
5,649
673
34,721
28,010
11,595
10,652
Share of net profit/(loss) of equity accounted investments
Carrying value of equity accounted investment
Receivable and investment in the RTE/Imdex Joint Venture
Eliminations
Write down of the investment in the RTE/Imdex Joint Venture
Write down of the property, plant and equipment of Imdex
Minerals to recoverable amount
-
-
-
(292)
-
5,408
3,169
-
-
(2,077)
(60)
(2,077)
(60)
(3,108)
(1,370)
-
(1,370)
-
Unallocated
(823)
(1,050)
1,121
820
6,920
5,475
Profit from ordinary activities before income tax expense
3,456
(3,776)
Income tax expense
Profit/(loss) from ordinary activities after related income tax
expense
(383)
87
3,073
(3,689)
Consolidated
35,564
34,178
16,438
16,067
57
NOTES TO THE FINANCIAL STATEMENTS
Other segment information
Drilling products and services
Minerals processing
Drilling fluids and chemicals
Total of all segments
Unallocated
Consolidated
Secondary Reporting: Geographical Segments
Australia
Saudi Arabia
Africa
South East Asia
China
Other
Total
Depreciation and
amortisation
Acquisition of segment
assets
Non cash expenses
other than depreciation
and amortisation
2005
$’000
2004
$’000
2005
$’000
2004
$’000
2005
$’000
2004
$’000
1,166
1,042
2,198
1,566
63
7
560
147
652
150
65
250
107
1,101
2,889
246
41
65
1,873
1,844
2,513
1,919
1,205
2,961
76
94
279
7
-
3,052
1,949
1,938
2,792
1,926
1,205
6,013
Revenue from external
customers
Segment assets
Acquisition of segment
assets
2005
$’000
2004
$’000
2005
$’000
2004
$’000
2005
$’000
2004
$’000
37,389
30,597
29,886
26,756
2,792
1,926
-
-
3,169
5,408
1,217
475
335
298
4,808
6,474
1,264
1,349
543
-
2,878
1,825
316
594
-
367
-
-
-
-
-
-
-
-
-
-
46,835
39,371
35,564
34,178
2,792
1,926
58
NOTES TO THE FINANCIAL STATEMENTS
31. DISCONTINUING OPERATIONS
As announced to the Australian Stock Exchange, on 9 June 2005 Imdex Limited entered into a definitive agreement for the sale of the
Imdex Minerals Division. As set out in Note 33 the sale was completed on 1 July 2005.
The sale was one part of the Company’s strategy to focus on its core business as a global provider of “drilling products and services”.
The Imdex Minerals Division is disclosed in Note 30 “Segment Information” as the Minerals Processing segment in the current and
prior financial years.
Details of the financial performance, financial position and cash flows of the Imdex Minerals Division are as follows:
Financial Performance
Revenue from operating activities
Expenses from operating activities
Loss from ordinary activities before income tax expense
Income tax benefit/(expense) relating to ordinary activities
Net Loss after tax
Financial Position
Assets
Liabilities
Net assets
Cash Flows
Net cash from operating activities
Net cash from investing activities
Net cash from financing activities
2005
$’000
2004
$’000
6,784
6,436
(8,383)
(10,157)
(1,599)
(3,721)
695
477
(904)
(3,244)
6,453
6,443
(182)
(285)
6,271
6,158
(1,077)
(65)
(285)
(1,427)
208
(41)
(842)
(675)
59
NOTES TO THE FINANCIAL STATEMENTS
32. RELATED PARTY DISCLOSURES
(a) Controlling Entity
The ultimate parent entity in the Consolidated Entity is Imdex Limited, a Company incorporated in Western Australia.
(b) Equity interests in related parties
Details of the percentage ownership of controlled entities and the wholly owned Group is set out in Note 24. The wholly owned
Group consists of Imdex Limited and its wholly owned Controlled Entities.
Details of ownership interests in joint venture entities are set out in Note 16.
(c) Directors’ and Specified Executives’ Remuneration
Information on the remuneration of Directors is disclosed in Note 26.
(d) Directors’ and Specified Executives holdings of Shares and Share Options
The numbers of shares in the Company held during the financial year by Directors’ and specified Executives of the Group are set
out below:
(i)
Fully paid ordinary shares issued by Imdex Limited
Balance at
1 July 2004
Granted as
remuneration
Received on
exercise of
options
Net other
change
Balance at
30 June 2005
Balance held
nominally
No.
No.
No.
No.
No.
No.
Directors
Mr I F Burston
Mr B W Ridgeway
100,000
6,143,993
Mr H H Al-Merry
10,755,000
Mr R W Kelly
Mr K A Dundo
Specified Executives
Mr S J Lyons
Mr D L Kinley
Mr G E Weston
Mr C S Munyard
Mr I Tan
65,000
-
17,063,993
50,000
120,000
-
-
-
170,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
100,000
(118,993)
6,025,000
(10,000,000)
755,000
-
65,000
100,000
100,000
(10,018,993)
7,045,000
-
-
-
-
-
-
50,000
120,000
-
-
-
170,000
-
-
-
-
-
-
-
-
-
-
-
-
(ii)
Share options issued by Imdex Limited
Balance at
1 July 2004
Granted as
remuneration
Exercised
Other
change
Balance at
30 June
2005
Bal. vested
at 30 June
2005
Vested
but not
exercisable
Vested and
exercisable
Options
vested
during year
No.
No.
No.
No.
No.
No.
No.
No.
No.
Directors
Mr I F Burston
1,000,000
Mr B W
Ridgeway
2,000,000
3,000,000
-
-
-
-
-
-
(1,000,000)
(2,000,000)
(3,000,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
60
NOTES TO THE FINANCIAL STATEMENTS
Balance at
1 July 2004
Granted as
remuneration
Exercised
Other
change
Balance at
30 June
2005
Bal. vested
at 30 June
2005
Vested
but not
exercisable
Vested and
exercisable
Options
vested
during year
No.
No.
No.
No.
No.
No.
No.
No.
No.
Specified
Executives
Mr S J Lyons
Mr D L Kinley
-
-
50,000
100,000
Mr G E Weston
- 2,000,000
Mr C S
Munyard
Mr I Tan
-
-
75,000
-
- 2,225,000
-
-
-
-
-
-
-
-
50,000
50,000
50,000
100,000
100,000
100,000
- 2,000,000 2,000,000 2,000,000
-
-
75,000
75,000
75,000
-
-
-
- 2,225,000 2,225,000 2,225,000
-
-
-
-
-
-
-
-
-
-
-
-
The options granted to specified Executives during the financial year were made in accordance with the Staff Option Plan, as
further described in Note 28. Each share option converts into 1 ordinary share of Imdex Limited. No amounts were paid, or are
payable, by the recipient on receipt of the option. The options are exercisable in one third lots at the end of each of the first three
years during their life.
(e) Directors’ Transactions in Shares and Share Options
During the year, and as approved by Shareholders at the 2004 Annual General Meeting, 10,000,000 shares held by Mr H H
Al-Merry, in connection with the RTE/Imdex Saudi Arabian Joint Venture, were cancelled. Refer to Note 10 for further details.
As set out in (c) above, there were no other share or share options issued to the Directors during the current year.
(f) Directors’ Share transactions with the Company or its Controlled Entities
As described in these financial statements, Imdex Limited is involved in a Joint Venture 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 Venture in some circumstances. There were no amounts recognised during the year relating
to transactions between the Company and RTE as agent.
(g) Transactions with Directors
The following transactions occurred with related parties:
Consolidated
Company
Note
2005
$
2004
$
2005
$
2004
$
Profit from ordinary activities before income tax includes the
following items of expenses relating to transactions, other than
remuneration, with Directors or their personally-related entities
Legal services
(i)
82,126
Total liabilities arising from transactions, other than
remuneration, with Directors or their personally-related entities
Current Liabilities
37,572
-
-
82,126
37,572
-
-
(i)
Mr K A Dundo is a Partner of the legal firm Q Legal, that provided legal services to the Imdex Group on normal commercial
terms and conditions.
(h) Transactions within the wholly-owned Group
Details of dividend revenue received by the ultimate parent entity is disclosed in Note 2. Amounts receivable from, and payable
to entities in the wholly-owned Group are disclosed in Note 18, Note 8 and Note 17. During the financial year Imdex Limited
provided management services to entities in the wholly-owned Group as disclosed in Note 2.
During the financial year, the Directors elected for wholly-owned Australian entities within the Group to be taxed as a single entity
from 1 July 2003. Entities within the tax-consolidated group have entered into a tax-sharing agreement with the head entity.
Under the terms of this agreement, Imdex Limited and each of the entities in the tax consolidated group has agreed to pay a tax
equivalent payment to or from the head entity, based on the net accounting profit or loss of the entity and the current tax rate.
Such amounts are reflected in amounts receivable from or payable to other entities in the tax consolidated Group.
61
NOTES TO THE FINANCIAL STATEMENTS
33. SUBSEQUENT EVENTS
(i)
On 1 July 2005 Imdex Limited sold its mineral processing business, Imdex Minerals, for a cash price of $6.3 million. As part of
the sale agreement, Imdex Limited is entitled to a further cash payment of $1.5 million, subject to the future profitability of certain
agricultural products which, at the time of sale, were in the early stages of development and commercialisation.
Whilst Imdex has reason to believe that the future profitability of these products will be sufficient to ensure the collection of the
additional consideration, a definitive assessment is unable to be made at 30 June 2005. The Directors have therefore taken a
conservative view of the carrying value of Imdex Minerals business as at 30 June 2005. As the carrying value of the net assets
of Imdex Minerals at 30 June 2005 totalled $7.6 million, the Directors have decided to write down the carrying value by $1.37
million at 30 June 2005 to $6.3 million, representing the amount realised in cash on 1 July 2005. This write down, of property,
plant and equipment, has been reflected as a charge against current period profits.
(ii) On 5 August 2005, Imdex Limited held a General Meeting of Shareholders at which the acquisition, and associated share issue,
of the business, certain related assets and intellectual property of SA Mud Services (Pty) Ltd and Iscosa (Pty) Ltd was approved.
On 10 August 2005, settlement of the acquisition took place and 16,059,002 shares in Imdex Limited were issued to SA
Mud Services and Iscosa. The balance of the purchase price, approximately $3.5m, was transferred to the trust account of an
independent attorney pending the finalisation of the completion accounts and other defined matters.
Apart from these matters, no other 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:
Cash
Bank overdraft
Note
7
18
Consolidated
Company
2005
$’000
2004
$’000
2005
$’000
2004
$’000
103
(467)
(364)
56
96
35
(1,509)
(1,809)
(1,602)
(1,453)
(1,713)
(1,567)
Reconciliation of profit from ordinary activities after income tax to net cash provided by operating activities
Consolidated
Company
2005
$’000
2004
$’000
2005
$’000
2004
$’000
Profit/(loss) from ordinary activities after related income tax
3,073
(3,689)
(144)
(6,900)
Profit on sale of non-current assets
Share of Associates loss (less dividends)
Write down of the property, plant and equipment of Imdex
Minerals to recoverable amount
(384)
-
(55)
292
(44)
-
1,370
-
1,370
(62)
-
-
Write down on the investment in the RTE/Imdex Joint venture
-
3,108
Interest on hire purchase liabilities
194
181
-
26
3,108
44
Depreciation and amortisation of non-current assets
1,949
1,938
1,040
1,034
Increase/(decrease) in current tax liability
Increase in deferred tax balances
535
(439)
(574)
(56)
(14)
(418)
(257)
(46)
62
NOTES TO THE FINANCIAL STATEMENTS
Changes in assets and liabilities during the financial year:
(Increase)/decrease in assets:
Current receivables
Current inventories
Other current assets
Increase/(decrease) in liabilities:
Current payables
Provision for employee entitlements
Net cash from operating activities
Consolidated
Company
2005
$’000
2004
$’000
2005
$’000
2004
$’000
(2,039)
(1,649)
(97)
368
(2,016)
(13)
383
(57)
(1,301)
2,398
(2)
40
748
193
1,579
59
3,171
1,460
35
32
483
453
(13)
167
(c) Non Cash Financing and Investing Activities
The following non cash financing and investing activities occurred during the year.
(i)
At the Company’s Annual General Meeting on 8 November 2004, Shareholders approved the re-structure of the investment
in Imdex Arabia and the RTE/Imdex Joint Venture. One of the outcomes of the re-structure was the cancellation of
10,000,000 shares in Imdex Limited held by Mr H H Al-Merry; and
(ii)
During the year, the Company issued 3,210,000 options to Employees and Consultants and 3,100,000 to Corporate
Advisors of the Company.
These transactions are not reflected in the statement of cash flows.
35.
IMPACTS OF ADOPTING THE AUSTRALIAN EQUIVALENTS TO INTERNATIONAL FINANCIAL REPORTING STANDARDS
(a) Management of the transition to A-IFRS
Imdex Limited will be required to prepare financial statements that comply with Australian equivalents to International Financial
Reporting Standards (‘A-IFRS’) for annual reporting periods beginning on or after 1 January 2005. Accordingly Imdex Limited’s
first half-year report prepared under A-IFRS will be for the half-year reporting period ending 31 December 2005, and its first
annual financial report prepared under A-IFRS will be for the year ending 30 June 2006.
As previously reported in the 2004 Annual Report and ASX Appendix 4E Preliminary Final Report at 30 June 2005, Imdex has
managed the transition to A-IFRS in 3 phases: phase 1, a scoping and impact analysis; phase 2, an evaluation and design
phase; and phase 3, implementation and review. Risk management and change management has been managed throughout the
life of the project.
The Company has substantially completed the transition to A-IFRS, including the assessment of likely impacts on the results and
financial position of Imdex Limited. Based on the work completed, the Board believes that the Company will be able to comply
with its reporting obligations to present a financial report appropriately prepared in accordance with A-IFRS for the half-year
ended 31 December 2005 and the full year ended 30 June 2006.
As set out in the Appendix 4E Preliminary Final Report at 30 June 2005, it was intended that the quantitative impact of A-IFRS
would be disclosed in the Consolidated Financial Report at 30 June 2005. However, despite the fact that the Company has
substantially completed the work required to transition to A-IFRS, at this time, the impacts of adopting A-IFRS have not been
finalised.
(b) The likely impacts of A-IFRS on the results and financial position of Imdex Limited
The impact of transition to A-IFRS, including the transitional adjustments disclosed is based on A-IFRS standards that management
expect to be in place, or where applicable, early adopted, when preparing the Consolidated Entity’s first complete A-IFRS
Financial Report (being the half-year ending 31 December 2005). The likely impacts of A-IFRS on the Company, which may
change as the impacts are finalised, are outlined below.
Users of the financial report should note that further developments in A-IFRS (for example, the release of further pronouncements
by the Australian Accounting Standards Board and the Urgent Issues Group), if any, may also result in changes to the accounting
policy decisions made by the Directors to date, and, consequently, the likely impacts outlined below.
In accordance with AASB 1, Imdex has elected not to restate business combinations and acquisitions of investments in associates
and interest in joint ventures prior to the date of transition.
63
NOTES TO THE FINANCIAL STATEMENTS
(i)
Share-based payments
During the year the Company issued the Staff and Corporate Advisor options set out in Note 28.
Equity settled share based payments in respect of equity instruments issued after 7 November 2002 that were unvested
as at 1 January 2005 are measured at fair value at grant date. The fair value determined at grant date of equity-settled
share-based payments is expensed on a straight-line basis over the vesting period, based on the estimated number of equity
instruments that will vest.
The impact of A-IFRS, which is expected to be immaterial, is likely to result in an increase in contributed equity with a
corresponding additional employee benefit expense and consultants’s expense recognised in the Statement of Financial
Performance for the financial year ended 30 June 2005.
(ii)
Impairment of assets
Non-current assets are written down to recoverable amount when the asset’s carrying amount exceeds recoverable amount.
Historically, although not mandated, Imdex Limited has discounted cash flows in determining the recoverable amount of some
of defined non-current assets.
Under A-IFRS, both current and non-current assets are tested for impairment. In addition, A-IFRS has a more prescriptive
impairment test, and requires discounted cash flows to be used where value in use is used to assess recoverable amount.
Based on the work completed, it is likely that there will be an impairment write down of selected property, plant and
equipment within the Imdex Minerals Division. As a consequence, as at 1 July 2004, opening retained earnings will
decrease with a corresponding write-down of the carrying amount of the applicable assets. The amount of this adjustment
has not yet been finalised.
This decrease in the carrying value of property, plant and equipment will also result in the reduction in the depreciation
expense relating to the Minerals Division.
(iii)
Income tax
The Consolidated Entity currently recognises deferred taxes by accounting for the differences between accounting profits
and taxable income, which give rise to ‘permanent’ and ‘timing’ differences. Under A-IFRS, deferred taxes are measured by
reference to the ‘temporary differences’ determined as the difference between the carrying amount and the tax base of assets
and liabilities recognised in the balance sheet.
This impact of A-IFRS is likely to result in a decrease in the opening deferred tax liability due to the expected impairment of
the property, plant and equipment relating to the Imdex Minerals impairment writedown described above. The Company is
still considering the impact of UIG 1052 Tax Consolidation Accounting.
(iv) Financial Instruments
The Directors expect to take advantage of the election to not restate comparatives for AASB 132 Financial Instruments:
Disclosure and Presentation and AASB 139 Financial Instruments: Recognition and Measurement. As a result, there are
no expected adjustments in relation to these standards as at 1 July 2004 or the year ended 30 June 2005 as the current
AGAAP will continue to apply.
The Company is still considering the impact of AASB 132 and AASB 139 on the year ended 30 June 2006.
(v) Exploration, Evaluation and Development Expenditure
The introduction of A-IFRS is not likely to result in any material change to accounting for exploration, evaluation and
development expenditure.
(vi) Proceeds from sale of assets
The current definition of revenue requires proceeds on the sale of non-current assets to be included as revenue - this has the
effect of ‘grossing up’ the statement of financial performance. Under A-IFRS, only the net gain or loss from the sale will be
recognised in the profit or loss. Consequently, there will be no net impact on the income statement.
(vii) Retained Earnings
With limited exceptions, adjustments required on first time adoption of A-IFRS are recognised directly in retained earnings
at the date of transition to A-IFRS. The cumulative effect of the expected adjustments referred to above will be treated in this
manner.
64
ADDITIONAL STOCK EXCHANGE INFORMATION
AS AT 16 SEPTEMBER 2005
(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
(b) Substantial Shareholders
Ordinary Shareholders
SA Mud Services (Pty) Ltd
J P Morgan Nominees Limited
Midcontinent Equipment (Australia) Pty Ltd
(c) Twenty Largest Holders of Quoted Equity Securities
Ordinary Shareholders
SA Mud Services (Pty) Ltd
J P Morgan Nominees Limited
Midcontinent Equipment (Australia) Pty Ltd
Wear Services Pty Ltd
Chelverton Dividend Income Fund Ltd
Iscosa (Pty) Ltd
Telic Alcatel (Australia) Pty Ltd
Merrill Lynch (Australia) Nominees Pty Ltd
Warnford Nominees Pty Limited
Australian Executor Trustees Limited
Mr Clarke James Roycroft
Mr Petrus Cornelius Nicolaas Middendorp
National Nominees Limited
Tepany Pty Ltd
Primbee Investments Pty Ltd
Longo Pty Ltd
Chippell Pty Ltd
Runyon Pty Ltd
Citicorp Nominees Pty Limited
Mrs Patricia Rachel Shackell
Fully Paid
Ordinary
Shares
Options
18
227
240
526
144
1,155
24
-
4
5
29
3
41
-
Fully Paid
Number
Percentage
12,847,202
10.19%
7,403,523
6,131,643
5.87%
4.86%
Fully Paid
Number
Percentage
12,847,202
10.19%
7,403,523
6,131,643
5,000,000
5,000,000
3,211,800
2,850,000
2,750,000
2,750,000
2,498,943
2,151,731
1,753,500
1,700,000
1,647,500
1,615,921
1,572,826
1,210,273
1,206,939
1,138,194
1,100,000
5.87%
4.86%
3.96%
3.96%
2.55%
2.26%
2.18%
2.18%
1.98%
1.71%
1.39%
1.35%
1.31%
1.28%
1.25%
0.96%
0.96%
0.90%
0.87%
65,539,995
51.97%
65
ADDITIONAL STOCK EXCHANGE INFORMATION
AS AT 16 SEPTEMBER 2005
(d) Director’s & Company Secretary’s Shareholdings
Name
Mr B W Ridgeway (indirectly)
Mr I F Burston (indirectly)
Mr H H Al-Merry (directly)
Mr R W Kelly (indirectly)
Mr K A Dundo (directly)
Mr I R Freeman (indirectly)
Mr J P O’Neil – alternate Director for Mr Freeman (indirectly)
Mr S J Lyons (directly)
Number of
Shares
Number of
Options
5,000,000
100,000
755,000
265,000
300,000
16,059,002
12,847,202
-
-
-
-
-
-
-
50,000
50,000
35,374,204
50,000
(e) Interests in Mining Tenements
Due to the disposal of Imdex Minerals on 1 July 2005, Imdex no longer holds an interest in any mining tenements at the
date of this report.
(f) Company Secretary
Mr Stephen John Lyons
(g) Registered Office
Level 3, Redgum House
18 Richardson Street
West Perth
Western Australia
Phone:
Fax:
(+61 8) 9481 5777
(+61 8) 9481 6527
(h) Share Registry
Computershare Investory Services
Level 2
45 St Georges Terrace
Perth WA 6000
Phone:
(+61 8) 9328 2000
66
TABLE OF CONTENTS
Imdex at a Glance
Imdex 2005 Snapshot
Financial Highlights
Chairman’s Report
Managing Director’s Report
Imdex’s Businesses
1
2
3
4
5
8
Director Profiles 10
Financial Report 2005 12
CONTENTS
N
IMDEX
An Australian Global Drilling Products & Services Company.
"a service provider to the natural resources industries"
Registered Office
Imdex Limited, ABN 78 008 947 813
PO Box 1325
Level 3, Redgum House
West Perth WA 6872
18 Richardson Street
Telephone: (+61 8) 9481 5777
West Perth, Western Australia, 6005
Facsimile: (+61 8) 9481 6527
Email:
imdex@imdex.com.au
Website: www.imdex.com.au
Imdex is listed on the
Australian Stock Exchange
under the ASX code IMD
GROUP HEAD OFFICE
& 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
AUSTRALIAN MUD COMPANY PTY 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
SAMCHEM DRILLING FLUIDS
& CHEMICALS
31 Basalt Street
Alrode Ext 7
PO Box 455
ALBERTON 1450
South Africa
Telephone: +2711 908 5595
Facsimile: +2711 908 5526
Email: samchem@acenet.co.za
Website: www.samchem.co.za
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
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
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
REPRESENTATIVE OFFICES
WESTERN AUSTRALIA
AUSTRALIAN MUD COMPANY PTY LTD
5 Close Way
KALGOORLIE WA 6430
Telephone: +61 8 9021 2925
Facsimile: +61 8 9091 5925
Email: tmcwhinney@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
SURTRON TECHNOLOGIES PTY LTD
Lot 1598 Willis Street
NEWMAN WA 6753
PO Box 681
NEWMAN WA 6753
Tel/Facsimile: +61 8 9175 1230
OUTH WALES
NEW SOUTH WALES
MPANY PTY
AUSTRALIAN MUD COMPANY PTY 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 PTY LTD
20 Alexandra Place
ROSE PARK SA 5067
Telephone: +61 8 8364 4110
Facsimile: +61 8 8364 4151
Email: kbooth@imdex.com.au
QUEENSLAND
AUSTRALIAN MUD COMPANY PTY 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 PTY LTD
31 Koala Court, Little Mountain
CALOUNDRA QLD 4551
Telephone: +61 7 5437 0373
Facsimile: +61 7 5437 0886
Email: mcouchman@imdex.com.au
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www.imdex.com.au
Imdex Limited is an Australian, publicly listed,
Drilling Products and Services company,
dedicated to becoming a significant global player in supplying
Drilling Products and Services to the Mining, Oil and Gas,
Water Well, Horizontal Directional Drilling and Civil industries.
IMDEX LIMITED
ANNUAL REPORT